WeWork in talks to sell off Managed by Q to free up some cash

WeWork's Artie Minson and Managed by Q's Dan Teran 

WeWork’s Artie Minson and Managed by Q’s Dan Teran

WeWork is in talks to the sell the biggest acquisition it made in its free-spending days.

The co-working company is in discussions to sell the workplace management company Managed by Q to a group including one of the company’s co-founders, Bloomberg reported. It’s one of three companies WeWork put on the chopping block as it looks to cut costs.

Co-founder and former chairman Dan Teran is working with a group of investors and executives to buy the company just about eight months after WeWork acquired it.

The deal could free up cash for WeWork as it tries to focus on the core of its business. To stave off a bankruptcy, WeWork’s biggest investor SoftBank recently provided a $9.5 billion rescue package. This week, Goldman Sachs arranged a $1.75 billion line of credit to WeWork and SoftBank.

During a panel in Abu Dhabi on Wednesday, Teran said he is “actively working to buy back my company.”

Managed by Q was valued at $249 million in January following a new funding round, according to a report citing PitchBook data. It wasn’t clear how much the company is being valued at now in the negotiations between WeWork and Teran. [Bloomberg] – Rich Bockmann

Goldman Sachs will lead Phase II of SoftBank’s WeWork rescue plan

Softbank CEO Masayoshi Son and Goldman Sachs CEO David Solomon (Credit: Getty Images)

Softbank CEO Masayoshi Son and Goldman Sachs CEO David Solomon (Credit: Getty Images)

WeWork’s got a new bank and a new line of credit.

Goldman Sachs arranged a $1.75 billion line of credit for SoftBank Group with WeWork listed as a co-borrower, according to Bloomberg. The credit line is part of a larger bailout package SoftBank has committed to securing.

WeWork was listed as a co-borrower in a bid to attract other lenders willing to front lines of credit to the beleaguered co-working company, which is desperate for cash after its failed initial public offering, Bloomberg reported.

The new credit line replaces the company’s previous $1.1 billion facility and will reportedly free up additional cash previously being used as collateral. To complete SoftBank’s plan for $5 billion in debt financing for WeWork, a further $3.3 billion is needed. According to Bloomberg, Goldman is canvassing other banks in a bid to secure the rest of the plan by the end of the year.

Following WeWork’s botched IPO in September, co-founder Adam Neumann was ousted from his role as CEO and SoftBank assumed a controlling stake in the company.

To prevent the co-working firm’s bankruptcy, SoftBank ironed out a $9.5 billion rescue package with a $5 billion debt facility, a $1.5 billion commitment and a $3 billion stock tender offer.

SoftBank had delayed paying out the $3 billion offer, prompting WeWork’s junk bond price to sink and its risk premium to skyrocket.

Prior to Goldman Sachs leading its search for financing, WeWork largely relied on advice from JPMorgan Chase, which has had to defend its role in the failed IPO and the suspect corporate governance. JPMorgan’s CEO Jamie Dimon last month said he and the bank have “learned lessons” following the WeWork implosion. [Bloomberg] — Erin Hudson

As co-working firms leave London, a new arriver plans to make a splash

Newable Flexible Workspace's Brett Million and Serendipity Labs CEO John Arenas

Newable Flexible Workspace’s Brett Million and Serendipity Labs CEO John Arenas

A flexible office space firm is entering the London co-working market, at a time when others are shuttering operations there.

Serendipity Labs, a company that provides on-demand office space in primary and secondary markets, said Friday that it has entered an agreement to license 25 locations in the U.K., including 12 in London.

The New York-based firm, which uses franchise and management partnership agreements with its landlords, will partner with U.K.-based firm Newable Flexible Workspace, a subsidiary of consulting firm Newable Limited.

“Through licensing arrangements, it’s a way for us to grow in an asset-light brand approach to this industry,” said John Arenas, a former executive at Regus, who launched Serendipity Labs in 2011.

London is considered among the most crowded co-working markets in the world, with close to a dozen major companies operating in the city, and a multitude of smaller firms. Nearly 5 percent of the city’s office stock is co-working, according to a Cushman & Wakefield report from April. The competitive landscape has prompted some firms to reevaluate their strategy there.

WeWork, the world’s largest coworking firm, is currently assessing whether to proceed on 28 new leases in the city, Bloomberg reported, as it plans massive job cuts in the city. Recently, San Francisco-based RocketSpace, told employees it would close its 1,500 seat London location by the end of the year.

“I dont think its a harbinger of things to come,” Arenas said of RocketSpace’s closure. “It really was an accelerator helping businesses.”

Serendipity Labs expansion to the U.K. overshadows the challenges facing other office space firms in the U.S. Aside from WeWork, which in recent months has taken drastic steps to salvage its business, smaller firms have also encountered disruptions.

Last month, New York-based Corporate Suites was briefly evicted from a Manhattan office building due to a payment dispute. And on Thursday, The Real Deal reported that Montreal-based firm Breather had laid off 17 percent of its staff.

In the meantime, Arenas said his firm is discussing similar licensing agreements with operators in Australia and Canada. He previously has said he plans to open as many as 300 locations.

Last year, Serendipity Labs entered an agreement with China’s largest co-working firm, UCommune, to serve as its U.S. partner, and open a location at 28 Liberty Street in Manhattan. In the U.S., Serendipity Labs currently has 37 locations in 29 cities.

South Florida home sales struggle in October, Cipriani and Terra plan luxury condo

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to [email protected]

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October was a rough month for home sales in South Florida. Single-family home sales rose in Miami-Dade and Broward counties in October, but fell in Palm Beach County, and condo sales fell across the region, according to newly released figures from the Miami Association of Realtors. [TRD]

The Cipriani family’s next project will be a luxury condo tower in Coconut Grove. Less than a year after opening its Mr. C Miami hotel in the Grove, the Ciprianis are working with David Martin’s Terra to launch a Mr. C branded mixed-use condo project nearby at 2655 South Bayshore Drive, according to a press release. The development is the first major residential project for the Mr. C brand. [TRD]

The Miami Association of Realtors launched a commercial multiple listing service. South Florida Commercial Property Search is the only commercial MLS in South Florida with a consumer-facing website, according to a press release. The website was launched with the Beacon Council and Florida Power & Light. [TRD]

SoftBank is looking to whittle down its WeWork rescue package. The $9.5 billion agreement has drawn ire from WeWork employees because of a generous payout to founder and former CEO Adam Neumann, according to Bloomberg. [TRD]

The Related Group’s Jon Paul Pérez is partnering with an affordable housing developer to launch a new venture focused on Section 42 housing. Pérez, executive vice president at Related, is working with Patrick Plunkett on Perez Housing Associates. The company will operate independently from Related, and will focus solely on buying, rehabbing and running properties under Section 42 of the low income housing tax credit program. [TRD]

The Green Companies purchased a four-story Class A office building in Kendall for $13.2 million. The Green Companies bought the 63,206-square-foot building at 11731 Mills Drive in Miami for $209 per square foot, records show. The seller is Nuveen, a subsidiary of TIAA. The property is 84.6 percent occupied by two tenants, Everglades University and VITAS Healthcare. [TRD]

These stores are defying the retail norm. Department stores like Macy’s are struggling while discount stores like Target, Walmart, TJMaxx and Marshalls have increased their market share. Macy’s sales fell 3.9 percent at stores that have been open for at least a year. Target’s physical stores and online shop saw a 4.5 percent bump, with a 10 percent increase in clothing sales. [CNN]

Rep. Ilhan Omar’s housing plan has a $1 trillion price tag. The plan seeks to create 12 million affordable units and repeal the Faircloth Amendment, which has barred the construction of public housing units since 1998. The plan comes on the heels of plans released by Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez. [TRD]

Sen. Kamala Harris and Rep. Maxine Waters are the latest federal politicians to introduce a housing bill. The proposal, dubbed the Housing is Infrastructure Act, would invest $70 billion in the construction of new public housing and $10 billion to ease zoning restrictions for new affordable housing. The pair also proposed $6 billion to invest in housing for the elderly, the disabled or veterans. [CNBC]

Do not hide or delete documents, WeWork execs tell employees amid layoffs. As thousands of WeWork employees prepare to be laid off this week, the embattled company’s leadership has issued a warning to them: don’t leak information, and don’t delete anything. [TRD]

Software exec sells Palm Beach vacant lot for $17M. A software executive sold a vacant lot in Palm Beach for $17 million, after receiving town approval for a new custom home. Bill and Julie McDermott sold the 0.8-acre property at 445 North Lake Way for $475 per square foot, records show. 444 North Lake LLC, led by Holly Gershon of Boca Raton, bought the property. [TRD]

Bridgewater wagers $1B on market drop. Bridgewater Associates LP has bet more than $1 billion that stock markets around the world will decline by March, according to the Wall Street Journal. The bet would pay off for Bridgewater if either the S&P 500 or the Euro Stoxx 50 decline, according to the Journal. [WSJ]

Do not hide or delete documents, WeWork execs tell employees amid layoffs

WeWork co-CEOs Sebastian Gunningham and Artie Minson (Credit: Getty Images and Twitter)

WeWork co-CEOs Sebastian Gunningham and Artie Minson (Credit: Getty Images and Twitter)

As thousands of WeWork employees prepare to be laid off this week, the embattled company’s leadership has issued a warning to them: don’t leak information, and don’t delete anything.

In an email sent Wednesday evening from co-CEOs Artie Minson and Sebastian Gunningham, employees were reminded that the company would take violations of its policy “seriously.”

“It has come to our attention that some employees may be considering deleting materials from their WeWork computers, or forwarding information and documents outside of WeWork,” the email read, a copy of which was seen by The Real Deal.

“You should all be aware that company computers are WeWork property and you may not delete or destroy company materials on these devices. Additionally we want to remind you that you may not share information or documents outside of the company.”

When asked, a WeWork representative would not say if a particular incident prompted the email, and declined to comment further.

The email follows a steady string of news reports about the company’s demise, many of which cited anonymous sources. Since abandoning plans to go public at a valuation of $47 billion over the summer and then ousting disgraced CEO Adam Neumann (who received a $1.7 billion golden parachute), the company has been in freefall.

Sources told TRD that as many as 4,000 employees are expected to be laid off in coming weeks, though WeWork said Thursday that 2,400 would be affected globally. It’s unclear if WeWork’s figure includes 1,000 maintenance workers who would be transferred to JLL, or employees at other companies WeWork acquired.

Fear that employees could delete or remove documents is the latest concern for WeWork executives as regulators begin to pick apart the downfall, and probe allegations of self-dealing. Following a whistleblower complaint, the firm is being investigated by the U.S. Securities and Exchange Commission about allegations WeWork executives approved the $42 million acquisition of another office-space startup, Spacious, without going through due diligence — a highly unusual move. The New York Post first reported the investigation.

A separate investigation was launched by the New York State Attorney General’s office to probe multiple transactions involving former CEO Adam Neumann that were scrutinized for potential self-dealing.

The company’s largest investor, SoftBank, last month committed to a $9.5 billion financing package to save WeWork from potential bankruptcy, a payment that included Neumann’s $1.7 billion exit package.

Ten-X Commercial laid off half of its workforce, Miami professor who taught class on money laundering allegedly laundered millions

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to [email protected]

This page was last updated at 6:30 p.m.

Private equity giant scoops up mobile home park in Hollywood. The Carlyle Group purchased a mobile home park in Hollywood for $25.2 million, another example of private equity firms buying up mobile home communities. [TRD]

Gables Residential sells dev site near Shops at Merrick Park. A national apartment builder sold a development site near Shops at Merrick Park in Coral Gables to BF Group, a local developer. Development options for the property include a hotel and office building. [TRD]

Copperline Partners closes on bulk co-op deal in Palm Beach. The price was $35 million, and the property could be redeveloped by its new owner into a luxury hotel. [TRD]

Grove Isle developers face new lawsuit over proposed project. Grove Isles Associates is facing another legal challenge to its plans for a new condominium complex in the waterfront luxury community in Coconut Grove. [TRD]

CMBS loan for Starwood’s Mall at Wellington Green is in trouble. The $680 million CMBS loan for a Starwood mall portfolio that includes a large Wellington property has been sent to special servicing, according to Trepp. [TRD]

Why Compass, @properties and tech startups are diving into bridge loans. To help clients increase their purchasing power, a number of residential brokerages have launched bridge loan programs that let clients borrow money to pay for a new home before they sell their old one. [TRD]

Long Island politicians want HUD to investigate real estate discrimination. U.S. representatives Kathleen Rice and Thomas Suozzi are drafting a letter to HUD Secretary Ben Carson to call for a probe into the “steering” that a Newsday investigation found was commonplace in the broker community. The representatives will also request that the department end its “harmful rollback of fair housing measures.” [Newsday]

Proptech startup Eden completes $25M Series B. Eden, a proptech startup that helps landlords manage parts of the workplace like scheduling cleaning services and ordering snacks, raised $25 million in its Series B funding round. Soho-based venture-capital firm Reshape led the funding round, Eden announced Tuesday. [TRD]

Ten-X Commercial laying off half of its workforce. Ten-X Commercial, an online real estate transaction platform, eliminated half its workforce after efforts to sell the company fell through. Close to 100 employees in offices in Texas, New York and California were given notice on Monday morning during a call with executives, according to people on the call and those familiar with the matter. [TRD]

Miami professor who taught class on money laundering allegedly laundered millions. University of Miami professor and author Bruce Bagley taught classes on corruption and money laundering, but federal prosecutors are saying that he also helped launder at least $3 million in money from Venezuela through his bank accounts, according to the Miami Herald. On Monday, the 73-year-old Bagley was arrested on one count of conspiracy to commit money laundering and two counts of money laundering. He could face 20 years in jail on each count. [Miami Herald]

The New York State Attorney General’s office has launched an investigation into WeWork. The embattled office-space company, which is soon set to lay off thousands of workers, confirmed to Reuters that it had received a request from the state’s AG office, led by Letitia James. [TRD]

Compiled by Keith Larsen

New York AG is investigating WeWork: report

The New York State Attorney General’s office has launched an investigation into WeWork, Reuters reported.

The embattled office-space company, which is soon set to lay off thousands of workers, confirmed to the news outlet that it had received a request from the state’s AG office, led by Letitia James.

James’ office is reportedly looking into multiple transactions involving former CEO Adam Neumann that were scrutinized for potential self-dealing. One arrangement involved millions of dollars paid to Neumann by WeWork to lease buildings that he owned. Another transaction reportedly being examined is a $5.9 million payment to Neumann by the company to buy from him the trademark “We.”

The inquiry follows a Bloomberg report last week that stated the U.S. Securities and Exchange Commission had launched a separate probe into WeWork, and pointed to the same transactions as potentially being examined by the agency. [Reuters] — David Jeans

WeWork execs face first lawsuit over botched IPO

Softbank CEO Masayoshi Son and former WeWork CEO Adam Neumann (Credit: Getty Images, iStock)

Softbank CEO Masayoshi Son and former WeWork CEO Adam Neumann (Credit: Getty Images, iStock)

Shareholder litigation against WeWork’s major players has begun.

Co-founder Adam Neumann, SoftBank head Masayoshi Son and board members of the embattled office-space company were sued this week by a minority shareholder who accuses them of self-dealing and unjustly enriching themselves.

The complaint, by former WeWork employee Natalie Sojka, targets SoftBank’s $9 billion takeover of the company, and says the Tokyo-based conglomerate increased its stake in the company to 80 percent from 29 percent through a “fire sale.” It also skewers a $1.7 billion package SoftBank provided to Neumann.

A spokesperson for WeWork called the suit “meritless.” A spokesperson for SoftBank did not respond to a request for comment, nor did a representative for Neumann.

WeWork’s valuation plummeted to $8 billion from $47 billion as its plans to go public during the fall fell apart. SoftBank, its largest investor, agreed to provide $9 billion to buy out shareholders and provide WeWork with enough capital to stave off bankruptcy.

As part of SoftBank’s bailout, founder Adam Neumann was paid almost $1 billion for his stake in the company and received a $185 million consulting fee. SoftBank also settled his $500 million debt with JPMorgan and other banks.

Since Neumann’s departure the office-space company has installed a new chairman, Marcelo Claure, a SoftBank executive and the former CEO of Sprint. Artie Minson and Sebastian Gunningham, two WeWork executives who worked under Neumann, are running the company as co-CEOs.

Most board members who have faced scrutiny for perceived corporate governance abuses also remain at the company. Some were named as defendants in the shareholder lawsuit, including Steve Langman, John Zhao, Ronald Fisher, Lewis Frankfort, Mark Schwartz and Bruce Dunlevie.

The plaintiff worked as an executive assistant and team lead at the company in San Francisco, leaving in September. She now works as an executive assistant to the CEO of financial firm SoFi, according to her LinkedIn page. Sojka’s attorney did not respond to a request for comment.

Sojka’s complaint, which is seeking class-action status and was filed in California Superior Court in San Francisco County, claims that WeWork attracted talented employees by offering them stock options that they were led to believe would spike in value once WeWork went public.

Instead, the suit alleges, WeWork’s major shareholders breached their fiduciary duty and forced the company to pull its IPO plans. While minority shareholders lost the value of their stock options, the majority investors engaged in self-dealing to protect their own interests, the complaint alleges. Reuters first reported on the lawsuit.

The lawsuit caps a tumultuous week for Softbank. After posting operating losses of $6.5 billion for the third quarter Wednesday, the firm’s stock dropped almost 4 percent. Son, SoftBank’s CEO, told news reporters in Tokyo that his “own investment judgement was really bad,” and that “I regret it in many ways.”

In the meantime, WeWork employees await to hear news of layoffs, which could hit as much as a third of the company’s 12,000 employees. This week 150 signed a letter to management that called for workers to be treated “humanely.”

“We don’t want to be defined by the scandals, the corruption, and the greed exhibited by the company’s leadership,” wrote the employees, who call themselves the WeWorkers Coalition, according to the New York Times.

Other legal offensives have been launched against those with ties to the company. Last month a former executive assistant to Neumann sued him and other WeWork executives for gender discrimination last month, alleging that she was targeted and harassed for being pregnant.

Compass sweetens agent stock program for 2020, affordable housing project in downtown Fort Lauderdale lands $27M loan: Daily digest

Every day, The Real Deal rounds up South Florida’s biggest real estate news, from breaking news and scoops to announcements and deals. We update this page throughout the day. Please send any tips or deals to [email protected]

This page was last updated at 6:00 p.m.

Moody’s dumps stake in Doug Curry’s data firm. Moody’s Analytics has abandoned an investment in a commercial real estate data firm tied to an embattled industry figure. The information-services firm, which oversees a commercial real estate data portal, had taken a 23.8 percent stake in Empirical CRE, a company led by Doug Curry. [TRD]

Extending its reach: Limousines of South Florida picks up car dealership in Lauderdale Lakes for $7M. Elan Holdings, managed by Oded Haims, sold the 7.8-acre property at 2000 North State Road 7 for $897,435 per acre. The property is occupied by a Haims Motors dealership, which will continue to operate at the location, according to a release. [TRD]

Broward moves to expand affordable housing supply by amending land-use plan. Broward County gave initial approval to a land-use change that would encourage affordable housing construction on commercial sites near major roads. [TRD]

Startup HomeLight lands $109M in new funding round. HomeLight, which began its life matching sellers and buyers with real estate agents, has much bigger ambitions. And it’s just raised $109 million in new financing to build up mortgage lending and instant buying operations. [TRD]

The doctors will see you now: Co-working medical office space operator plans major expansion. An owner and operator of co-working spaces for doctors has tapped Florida as its next big market for expansion. ShareMD, a San Diego-based investment firm led by President and managing partner George Scopetta, is looking to purchase medical office buildings throughout the Sunshine State’s major cities and convert vacant space into its co-working concept. [TRD]

A royal deal: Majestic Plaza shopping center sells in Westchester. A North Miami Beach investor purchased a shopping center in Westchester for $13 million amid a development boom in the western part of Miami-Dade County. [TRD]

Affordable housing project in downtown Fort Lauderdale lands $27M loan. Atlantic | Pacific Communities closed on a $26.64 million loan from Bank of America for an affordable housing development in Fort Lauderdale. AP Communities received the financing for Sailboat Bend II, a 110-unit rental project for seniors, ages 55 and older, on the New River near downtown Fort Lauderdale. [TRD]

Compass sweetens agent stock program for 2020. Compass is making it easier for agents to cash in on shares of the company stock. The Softbank-backed firm announced changes to its agent equity program, which now allows agents to purchase shares of restricted stock that will vest by 2021 — or sooner if the company goes public. Previously, agents could buy stock options that would vest in four years. [TRD]

Softbank CEO expresses regret over WeWork investment. “My own investment judgment was really bad. I regret it in many ways,” Masayoshi Son said at a news conference in Tokyo following SoftBank’s earnings release, according to the Wall Street Journal. Speaking of WeWork co-founder Adam Neumann, who was ousted as CEO in September, Son said, “I shut my eyes to a lot of his negative aspects.” [WSJ]

Miami’s District 1 race is heading to a runoff. The District 1 seat for outgoing Miami commissioner Wifredo “Willy” Gort is going to a runoff between former state senator Alex Diaz de la Portilla and auto parts retailer Miguel Angel Gabela, according to the Miami Herald. District 2 incumbent Ken Russell won overwhelmingly on Tuesday in a district that covers downtown Miami, Edgewater, Coconut Grove and Brickell. [Miami Herald]

The stakes are high as Jersey City residents vote on Airbnb. After a fraught campaign in which both Airbnb and the hotel lobby were accused of underhanded tactics, Jersey City residents were heading to the polls Tuesday to decide whether to restrict short-term rentals. [TRD]

— Compiled by Keith Larsen

CoStar reaches $11M settlement in copyright infringement suit against Xceligent

CoStar CEO Andy Florance (Credit: Getty Images, iStock)

CoStar CEO Andy Florance (Credit: Getty Images, iStock)

CoStar Group says it has settled its years-long copyright infringement claim against its bankrupt and now defunct competitor, Xceligent.

The commercial real estate data conglomerate reached a $10.75 million settlement with its competitor’s insurer, according to court filings. That’s a fraction of the $450 million CoStar initially sought.

The two firms were at loggerheads in 2017, after CoStar alleged Xceligent had stolen thousands of images and proprietary material from its commercial real estate listings platform. Xceligent counter-sued, alleging anti-competitive practices, but couldn’t afford to continue the legal battle and filed for Chapter 7 bankruptcy at the end of 2017.

Other real estate data firms have pointed CoStar’s history of aggressive lawsuits and public-relations warfare against rivals. But Florance reiterated his firm’s stance during the earnings call.

“This represented a fundamental threat to CoStar and we had to stop it,” CoStar’s CEO Andrew Florance said during an earnings call Tuesday.

The settlement, which was approved by a court-appointed trustee overseeing Xceligent’s estate, is subject to approval by Delaware Bankruptcy Court.

The legal win for CoStar came as it released strong financial figures for the third quarter. The company said it generated $353 million revenue for the third quarter, a 15 percent year-over-year increase that fueled a 34 percent surge in its net income.

It also said it closed Tuesday on a $450 million all-cash acquisition of STR Global, a Tennessee-based data firm that provides supply and demand insights on the hospitality industry. CoStar said it still has $1 billion in cash, and no debt.

CoStar said that it expects to generate between $1.385 billion and $1.391 billion revenue for 2019; up from $1.2 billion last year. It caps a solid stretch of growth for the company, which has a market cap of $20.93 billion. Its share price was $572.63 as the markets closed Tuesday, a jump from $382 a year ago.

The company has embarked on an aggressive acquisition spree in the past two years, which includes the additions of Realla, a major online commercial real estate marketplace in the United Kingdom, and Off Campus Partners, a student housing listing service that has contracts with 132 universities.

Earlier acquisitions also are paying off. The company said Apartments.com, which it acquired in 2013, generated 20 percent year-over-year revenue growth in the third quarter, and now has a revenue run rate of over $500 million for 2019. As a result, the company said it is doubling down on the platform, and would increase marketing spending to $250 million for 2020, up from $150 million this year.

For the first three quarters of the year, the company said that its net new sales bookings climbed an average $52 million a quarter, a 32 percent increase on the same period in 2018.