Former WeWork CEO Adam Neumann's new firm signaled that his bid to buy out of bankruptcy the flexible office provider he co-founded has exceeded the half-billion-dollar mark as the corporate leader ousted more than four years ago steps up his effort to regain control of his old company.
Neumann recently sent an offer to buy New York-based WeWork for more than $500 million, the Wall Street Journal reported late Monday, citing people familiar with the situation. It’s not clear how Neumann plans to finance a potential purchase, the Journal said.
A spokesperson for Neumann's new real estate startup, Flow, backed by venture capital firm Andreessen Horowitz, said in an emailed statement late Monday to CoStar News without elaborating that "two weeks ago, a coalition of half a dozen financing partners — whose identities are known to WeWork and its advisors — submitted a potential bid for substantially more than The Wall Street Journal reported without contacting us."
The move shows how the high-profile rise and fall of the commercial real estate company, a drama once chronicled in an Apple TV+ limited series called "WeCrashed," is still playing out as the coworking industry adjusts to changes in office demand brought about by the pandemic.
A WeWork spokesperson acknowledged getting offers, issuing the following response: “It's no surprise we receive expressions of interest from third parties on a regular basis,” adding that the company's board and advisers "review those approaches in the ordinary course, to ensure we always act in the best long-term interests of the company. WeWork remains intensely focused on finishing the important work we began back in November, and believe we will emerge from Chapter 11 in the second quarter as a financially strong and profitable company.”
In a separate report Monday, CNBC, citing a person familiar with the matter, said Neumann’s bid could go up to $900 million pending due diligence.
In a letter in February to WeWork's legal advisers, Flow said it had financial backing from Dan Loeb’s prominent hedge fund, Third Point, and other investors. At the time, Third Point said it had yet to make any final decisions. On Monday, CNBC reported Third Point was not involved in the latest offer.
CoStar News emailed Third Point for comment but didn't immediately hear back.
Rise and Fall
Under Neumann, WeWork gained a high profile with fast growth in the years following its 2010 launch and made hip the idea of drinking beer in a nicely decorated communal workspace. The expansion continued after Neumann met SoftBank CEO Masayoshi Son, who led SoftBank to become a majority investor. With SoftBank’s backing, WeWork’s valuation at one point rose to $47 billion before plunging to $9 billion after its first attempt at becoming a public company faltered under corporate governance and other concerns that eventually led to Neumann’s removal.
The money-losing company filed for Chapter 11 bankruptcy protection in early November, weighed down by its leasing costs following years of signing expensive deals at the cost of profit.
WeWork in 2018 claimed it had become the largest private occupier of office space in Manhattan, larger than even the four banking giants, including JPMorgan Chase, that WeWork said had dominated the city’s commercial real estate market for years.
"As the co-founder of WeWork who spent a decade building the business with an amazing team of mission-driven people, the company’s anticipated bankruptcy filing is disappointing," Neumann said in an emailed statement to CoStar News in November. "It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully."
WeWork’s trouble has cast new shadows across the U.S. real estate industry that’s already battling with record-high office vacancy. It’s also led to increased worries about loans backed by buildings where WeWork was or has been a major tenant.
WeWork, in a bid to turn profitable, has sought to restructure lease terms with its landlords, but so far it has only assumed 21 locations as of early March and rejected about 90 leases among approximately 300 U.S. and Canada locations, where the bankruptcy case applies.
A WeWork spokesperson has told CoStar News there are many more deals that the company has struck, even though leases have not been officially assumed yet. WeWork has renegotiated well over 100 leases globally, amounting to more than $1.5 billion in total rent savings, the spokesperson has said.
A panel representing WeWork's unsecured creditors recently filed a motion seeking bankruptcy court approval to sue SoftBank and related parties to help recover hundreds of millions of dollars for landlords and its other unsecured creditors.
The bankruptcy filing also has led to payment disputes with partners such as the brokerage Cushman & Wakefield. WeWork is a tenant in a Virginia building CoStar acquired earlier this year, making CoStar a creditor in the case.