WeWork Launches $2.9B Investment, Management Platform

The We Co. teamed up with Ivanhoé Cambridge to create ARK, which will focus on acquiring, developing and managing real estate properties in global gateway cities and high-growth secondary markets.
Brooklinen team at WeWork. Image courtesy of WeWork

The parent company of WeWork is trying its hand at real estate investing with help from Canadian pension giant Ivanhoé Cambridge. The We Co. has set up a new property acquisition and management platform, dubbed ARK, with initial plans to deploy around $2.9 billion in total equity capital.

The newly formed platform builds upon the existing WeWork Property Advisors business, a joint venture between The We Co. and private equity firm Rhône Capital that has already picked up a slew of property assets, including the flagship Lord & Taylor building on Manhattan’s Fifth Avenue.

The investment unit will focus on acquiring, developing and managing property assets in global gateway cities as well as high-growth secondary markets. The We Co. will deploy its WeWork offerings in the spaces owned or operated by ARK, including its Enterprise business which now accounts for more than 40 percent of global WeWork memberships.

Ivanhoé Cambridge, a unit of pension fund manager Caisse de dépôt et placement du Québec, had nearly $47.6 billion of real estate assets under management as of year-end 2018. The institutional investor is providing “substantial” capital to ARK, according to a statement by The We Co. Sylvain Fortier, chief investment and innovation officer at Ivanhoé Cambridge, noted in a prepared statement that collaborative space has huge potential for growth as it accounts for just 0.06 percent of global office space. A 2018 survey by Yardi Matrix of 20 metros across the U.S. found that 1.7 percent of total office inventory was being rented as shared space, or 43.5 million square feet.

Continued growth spree

Aside from promising upside for pension managers, the new arrangement may placate investors who are reportedly concerned about potential conflicts of interest involving properties partially owned by WeWork co-founder Adam Neumann. The entrepreneur told the Financial Times that any asset he owns that is occupied by WeWork or has potential for a WeWork venue in the future would be transferred to the new company.

In the meantime, WeWork’s office leasing spree continues unabated in its hometown of Manhattan, where the company has rapidly become the largest private office tenant. The We Co. separately announced two new leasing deals totaling more than 118,000 square feet within 48 hours this week.

WeWork will take approximately 50,000 square feet at 30 Wall St., spanning across the 2nd, 3rd, 4th, 6th and 11th floors of the 12-story office building in Manhattan’s Financial District. The new space will be used for the headquarters by WeWork offering, which allows companies to set up private customized workspaces.

The brand has also agreed to take up 67,858 square feet across five floors at 419 Park Ave. S., a 20-story midtown office tower owned by Walter & Samuels. WeWork plans to open the location to its members in the fourth quarter and will have signage and a newly renovated, dedicated entrance on 29th Street.

The company said last month it planned to file for an IPO.