WeWork, which recently renamed itself The We Company, has built a multibillion-dollar valuation with its business model of renting out spaces. The company now wants to expand into owning the buildings as well, according to a report from CNBC.
The company is starting a “global real estate acquisition and management platform” to purchase stakes in buildings that it plans to lease, according to a press release. The fund will be called ARK, and will start with $2.9 billion of total equity capital.
“ARK builds on the strong foundation in real estate acquisition and management represented by WeWork Property Advisors, an investment advisor affiliated with The We Company and Rhône Group, and will combine with ARK as part of the launch,” the company said in the release. “ARK will focus on acquiring, developing and managing real estate assets in global gateway cities and high-growth secondary markets that will benefit from WeWork’s occupancy. WeWork will deploy its space-as-a-service model in ARK-owned or -operated properties for our member companies, including our growing Enterprise business – now representing over 40 percent of global memberships – in conjunction with our anchor tenant strategy.”
The move is complicated, considering it was revealed that CEO Adam Neumann has made money by leasing his own buildings to WeWork. In the new ARK plan, Neumann will transfer some of his real estate into the ARK fund.
“We have seen firsthand the value that the WeWork ecosystem can create for landlords and real estate partners. The launch of ARK will help drive growth by leveraging The We Company’s extensive real estate experience and network,” said Rich Gomel, managing partner of ARK. “ARK has been set up to capitalize on that opportunity and allow us to provide different partnership options for the real estate community to participate in the growth and expansion of The We Company.”
The move could very well offer some stability for investors, which is important because the company is considering an IPO, although the company is not profitable and recently posted a quarterly loss of $264 million.