Got 'Em Comin' And Goin'
Emailed on January 18, 2019 in The Friday Forward
The WSJ reports WeWork CEO Adam Neumann made millions by snatching up private stakes in several valuable commercial real estate properties under his own name...then leasing those spaces back to WeWork.
Goes without saying, but this has sparked a number of concerns among investors over conflicts of interest.
WeWork, which was recently valued at $47 billion by investor SoftBank Group Corp. , signs long-term leases for office space with landlords, then subleases the space on a short-term basis to companies. Mr. Neumann, the 39-year-old executive who founded WeWork in 2010, is WeWork’s largest individual shareholder and has voting control over the company.
In a prospectus related to a debt offering last year, WeWork said it had leases with multiple properties owned in part by Mr. Neumann. It also said WeWork paid more than $12 million in rent to buildings “partially owned by officers” of WeWork between 2016 and 2017, and future payments total more than $110 million over the life of the leases. The specific properties weren’t listed.
Maybe this is business as usual? Bloomberg’s Matt Levine argues that conflicts of interest are par for the course in the real estate industry, where stories like those of the Trump empire’s early days set a certain standard.