The We Company tries a new approach at raising billions: selling its debt

The We Company tries a new approach at raising billions: selling its debt

Company hopes the move will boost confidence in its business

July 08, 2019 09:03AM
The We Company CEO Adam Neumann (Credit: Getty Images and iStock)

The We Company CEO Adam Neumann (Credit: Getty Images and iStock)

The We Company needs to take care of something before its initial public offering: raising a few billion dollars by selling its considerable debt.

The company, which remains unprofitable, wants to raise up to $3 billion or $4 billion through a debt facility that could eventually increase to $10 billion, according to the Wall Street Journal. The We Company hopes that this will help boost confidence in its business, especially following the IPOs of Lyft and Uber, whose stock prices are below the value of their debuts. The We Company, which rebranded from WeWork earlier this year, lost $1.9 billion last year and has been frequently compared to the two ridesharing companies. It was valued at $47 billion earlier this year, though the Financial Times recently reported that some investors don’t believe the public markets will match that valuation.

JPMorgan Chase and Goldman Sachs are structuring the deal. It would allow the startup to use its cash flows from individual buildings to fund interest payments on the debt.

The transaction could be finalized over the next few weeks, and the We Company hopes to move forward with its IPO late this year or early next year. The We Company would not need to raise as much money from public stockholders if it raises billions in new debt, and the deal also aims to show off the value of WeWork’s leases and its ability to control profitability. [WSJ] – Eddie Small

WeWork to acquire social networking company Meetup

From left: Meetup’s Scott Heiferman and WeWork’s Adam Neumann (Credit: Meetup and WeWork)
From TRD New York: WeWork is acquiring Meetup, a social network that connects people who want to meet up and pursue a common hobby.
The acquisition is another step in the co-working company’s planned transformation into a “physical social network” active in a broad range of community-centric real estate and software ventures. “It’s like a magical puzzle that fits together,” Meetup’s co-founder Scott Heiferman told the New York Times.
Meetup facilitates around 15,000 meetings per day, according to the firm, and around 100,000 of them have taken place in WeWork spaces to-date. According to Heiferman, Meetup will continue to operate as-is, but may become integrated into WeWork’s offerings the way Instagram is into Facebook’s (where users can link their accounts).
The Times reported that Meetup’s general counsel David Pashman was friendly with an unnamed WeWork executive, and that the first meeting between Heiferman and WeWork co-founder Adam Neumann took place in August.
Last week, news broke that WeWork invested in the women-only co-working company The Wing, which took in a total of $32 million in a Series B funding round. And in October, WeWork acquired the coding bootcamp Flatiron School. As The Real Deal exclusively reported last week, WeWork is working on a push into retail. It’s also reportedly considering raising hundreds of millions in additional funding on the Israeli bond market.  [NYT] — Konrad Putzier

Source: The Real Deal Miami

National Cheat Sheet: Newmark seeks $100M IPO, WeWork bags Lord & Taylor iconic Fifth Avenue flagship for $850M … & more

Clockwise from top left: Tesla is taking a new space in Los Angeles, Manhattan’s NoMad neighborhood is going to get a super tall building and WeWork is buying Lord & Taylor’s Fifth Avenue flagship.
Newmark Group files for $100M initial public offering
From TRD New York: Newmark Group filed for a $100 million initial public offering Monday in a bid to spin off from its parent company, Howard Lutnick’s BGC Partners. The filing with the U.S. Securities and Exchange Commission said the entity will include the commercial brokerage Newmark Knight Frank and the mortgage firm Berkeley Point and it will be listed on the Nasdaq under the symbol NMRK. Goldman Sachs, Bank of America Merrill Lynch, Citibank and Cantor Fitzgerald are affiliates on the deal. The New York-based Newmark Group generated revenues of $1.5 billion for the 12-month period ended June 30, 2017. Last year, NKF’s president Jimmy Kuhn said the brokerage quadrupled its revenue since it was acquired by BGC. [TRD]
Blackstone intends to double assets under management to $800B
The Blackstone Group is setting its sights on increasing its assets under management to around $800 billion in the next five years. That’s according to CEO Stephen Schwarzman who told Bloomberg on a quarterly conference call, “We have internal targets, plans, aspirations to basically double where we are.” The private equity firm had $387 billion in assets under management as of late September. That’s more than double the amount it oversaw five years ago. Real estate is the company’s largest business line, with $111.3 billion in assets under management. [TRD]
Nationwide, new-home sales hit 10-year high
Government data show that last month saw the biggest monthly gain in home sales since January 1992, due in part to a surge in the number of properties for which construction hadn’t yet started. The figures show 236,000 newly planned properties, the most since January 2007. The spike signals that residential building will strengthen in coming months, according to Bloomberg. The boom was concentrated mostly in the South, a possible reflection of growing demand following hurricanes Irma and Harvey. [TRD]
Major Market Highlights
WeWork bags Lord & Taylor iconic flagship for $850M for new HQ
Hudson’s Bay Company, succumbing to pressure unload its real estate assets, is selling Lord & Taylor’s flagship, a landmark 1914 building, to co-working giant WeWork and a partner for $850 million. WeWork Property Advisors — a joint venture with Rhône Capital, which is making a $500 million equity investment in HBC as part of the deal — is purchasing the 676,000-square-foot landmark building to become WeWork’s new global headquarters. The Real Deal first reported that WeWork and Rhône were raising several hundred million dollars for a real estate investment fund. Lord & Taylor will lease the lower floors, taking less than a quarter of its current space. The move is expected to hit after the 2018 holiday season. [TRD]
NoMad supertall at 262 Fifth Avenue gets approval from the city
The historic Manhattan neighborhood that some call NoMad — a nod to its location north of Madison Square Park — could be getting its first super tall building. Israeli developer Boris Kuzinez received approval from the city’s Department of Buildings for what could be the tallest building between Downtown and Midtown. Buildings on the lot have been demolished to make way for the 1,009-foot-tall tower with 41 apartments and an observation deck at 262 Fifth Avenue, according to New York YIMBY, which first reported on the DOB filings. [TRD]
Paramount Fort Lauderdale resi tower expected to sell out for $210M
The residential tower Paramount Fort Lauderdale Beach, which launched sales in 2014, is now completed and expected to sell out for about $210 million, broker Peggy Fucci told The Real Deal. The 95-unit, 18-story project at 701 South Atlantic Boulevard has three units remaining, including two penthouses asking $9 million and a unit on the amenity level asking $2.8 million. Records show 56 units have closed so far. About 15 percent of the building was sold to foreign buyers from Brazil, Mexico, Venezuela, Argentina and other countries, Fucci said. The project required 30 percent deposits, lower than the standard 50 percent required in Miami. [TRD]
Tesla takes 131K sf at Marina del Rey’s Omnicom building
Tesla is cruising into a new location in Los Angeles. Elon Musk’s electric car company signed a lease this month for the entire former Omnicom building at 4729-4755 Alla Road in Marina del Rey, The Real Deal first reported. Tesla will have 131,000 square feet of space across the four-story property, which sits on four acres of land. Tesla’s lease runs at least seven years and is valued at about $30 million, sources said. The building has been vacant since 2015, when former tenant ad agency Omnicom moved to Playa Jefferson. Grant Newman of Madison Partners, formerly of L.A. Realty Partners, was part of the listing team. [TRD]
Beverly Hills office trophy hits the market
A prized Beverly Hills office building that has not traded hands for more than 40 years hit the market last month. The Union Bank of California Building, a 97,000-square-foot building — with 24,500 square feet of street-facing retail space — has been owned by the limited partnership Beverly Union Company since 1978. The six-story building at 9460-9470 Wilshire Boulevard is 91 percent leased. Union Bank has been a tenant since it was built in 1959. The sale price of the building is expected to exceed $1,200 per square foot, Marc Renard of Cushman & Wakefield said. That would put the value of the building at over $116 million. [TRD]
Home billed as the country’s safest hits the market for $15M
A new home on the market in in Alpharetta, Georgia has all the requisite bells and whistles for an eight-bedroom mansion that’s 30 minutes from Atlanta, plus the superlative of being one of the safest homes in America. The Rice House was recently relisted for $14.7 million, down from its original $17.5 million, and is not yet complete. It was envisioned by a security architect who designed buildings for the U.S. Department of Justice for 20 years, and Bloomberg News reports the bedrooms have doors that can withstand fire from AK-47 assault rifles. There’s also a 15,000-square-foot bunker with its own power source. “This is a home where you could put a $20 million painting on the wall and sleep comfortably at night,” Paul Wegener of Atlanta Fine Homes Sotheby’s International told Bloomberg. [TRD]
Vail and Aspen consolidate their ski resort empires
Vail Resorts and Aspen Skiing Co. are increasingly dominating the ski resort industry, Bloomberg News reports. They’ve acquired 50 of North America’s biggest mountain resorts in the past five years. Vail’s latest moves include buying Vermont’s Stowe and, for $1.3 billion, Canada’s Whistler Blackcomb Holdings. Aspen partnered with KSL Capital Partners to make a $1.5 billion purchase of six ski resorts throughout Canada and the U.S. from Intrawest Resort Holdings. They also acquired four additional mountain properties in California and Utah. [TRD]

Source: The Real Deal Miami