(This story has been updated to confirm WeWork is a tenant in 51 Eastcheap.)
WeWork's investment arm WeWork Capital Partners has exchanged contracts with mutual giant Fidelity to sell 99 Queen Victoria Street in the City, in a move that means it is one building away from selling all of the London offices it bought during its rapid expansion in the 2010s.
The transaction was first tipped by CoStar News in June.
WeWork Capital Partners, advised by Cushman & Wakefield, had attached a quoting price of around £70 million, the same price it paid in 2019.
According to Savills' latest City Market in Minutes, Fidelity has exchanged on the acquisition of the long leasehold for around £48 million or £542 per square foot, a 31% discount to the quoting price.
Close to St Paul’s Cathedral, it comprises 88,518 square feet of offices and ancillary accommodation and was sold with full vacant possession, with a partial strip-out undertaken after WeWork surrendered its lease.
WeWork's investment business began exiting much of its London office portfolio more than a year ago. Ark, as it was known then, launched as a multibillion-dollar real estate investment business affiliated to the global coworking group and was a highly active player in UK, European and US markets at the end of the last decade. It had the ability to de-risk the occupational side of an investment opportunity by bringing in a WeWork flexible office or WeLive coliving scheme as its tenant.
The business bought a number of buildings in London and in the US from 2017 to 2019 in the lead-up to WeWork's high-profile failed first attempt to become a publicly listed company.
At the end of 2021, CoStar News revealed that Ark was in the process of launching a sale of 99 Queen Victoria Street. As WeWork Property Investors, it had bought the building from the State General Reserve Fund, an Omani sovereign wealth fund, in 2019. After a pause in the process last year, WeWork Capital Partners began approaching select parties again at the start of this year.
In January last year Ark sold 120 Moorgate to Singapore investor Sun Venture for £148 million. CoStar News revealed the building had come to market in September 2021 for £147 million, in a significant test of investor appetite for WeWork-anchored product as it pursued a second attempt at a public listing. The company eventually went public at the second time of asking via a special-purpose acquisition company.
Most recently WeWork Capital Advisors sold Film House, 140 Wardour Street, part of its Film House development in Soho, to Hines for £132 million in July. Newmark advised Ark on the sale of the former headquarters of Nike in Soho, which Ark bought with a hotel scheme stapled to the asset.
At the end of last year WeWork Capital Advsors also sold its 10% ownership stake in Devonshire Square to Nuveen and Denmark's PFA. It owned the stake alongside a consortium of TIAA and Danish pension fund PFA Global Real Estate. The trio paid Blackstone £580 million for the complex in 2018, putting up £345 million of equity and taking £275 million of debt.
WeWork Capital Advisors retains London property 51 Eastcheap, which WeWork occupies. WeWork Property Investors bought it for £47 million via receivers on behalf of City Site Estates in 2017 with vacant possession. It has marketed the building for sale previously, and it is thought it will consider a sale after renegotating the lease as part of its ongoing global lease negotiations.
WeWork launched Ark with an initial $2.9 billion (£2.26 billion) in May 2019. It used its previous move into real estate acquisition and management, WeWork Property Advisors, as its platform. WPA was an investment adviser affiliated with the coliving provider's parent company and Rhône Group that had been investing under the joint venture co-mingled fund WeWork Property Investors.
The investment arm is now called WeWork Capital Advisors or WeCap, and is understood to be 80% owned by WeWork and 20% by Rhône.
It is unclear what real estate the joint venture retains globally. According to a Securities and Exchange Commission filing published at the end of March of this year WeCap then had $886 million in assets under management. In July reports emerged that lenders were suing for foreclosure after WeWork Capital Advisors had defaulted in April on a $240 million loan for 600 California Street, a San Francisco office tower. WeWork co-working offices are an anchor tenant in the building.
The latest update on Companies House for WeWork Capitol Advisors UK says its accounts for the period to 31 December 2022 were due on 30 September 2023 and are overdue.
This week the wider WeWork coworking group said it had missed interest payments of about $95 million in what it described as a deliberate attempt to help start conversations with some lenders as it has already begun doing with landlords.
In another WeWork-related deal, CoStar News revealed earlier this month that Hong Kong investor CSI Properties has sold 17 St Helen’s Place, EC3, off-market. The property comprises 23,986 square feet of office accommodation let in its entirety to the coworking company until October 2034. It generates a net passing rent of £1.26 million,, reflecting an overall rent of £58.37 per square feet. It was bought by a private European investor for £19 million, a 6.51% net initial yield and £792 per square feet overall.
WeWork Capital Advisors did not respond at time of publication.