Co-spaced operators are transitioning from an occupier with a long-term rental agreement to an operator of space, which aim to boost profits and growth.
Co-space giant WeWork raised an additional $341 million for its WeWork Property Investors, according to recent U.S. Securities and Exchange Commission filings. The total amount raised is approximately $745.4 million.
The company with its partner Rhône Capital recently closed its $850 million buy of the former Lord & Taylor flagship location at 424 Fifth Avenue in New York.
WeWork Property Investors — the name of the joint partnership between WeWork, recently rebranded as The We Company, and Rhône — bought the 676,000-square-foot property from Lord & Taylor parent company Hudson’s Bay Company. The Canada-based Hudson’s Bay will still own a $125 million minority stake.
And in London, WeWork acquired a 10 percent stake in Devonshire Square Estate, while TH Real Estate and Denmark’s PFA Ejendomme A/S will hold 45 percent each. The seller was Blackstone Group.
WeWork is not the creator of this idea, raising money to launch real estate investment funds. Several other co-space operators have started fundraising prior to WeWork’s rebrand. Bond Collective, a New York–based firm that provides shared workspace for startups, has stakes in properties in New York, Chicago, Miami and Nashville.
The Wall Street Journal reported these investment funds bring other risks and potential conflicts as these firms become tenant and property owner. For example, it took WeWork two years to complete the Lord & Taylor acquisition. The Wall Street Journal article noted, “After failing to attract other equity partners, the fund borrowed $950 million, and the building’s seller, Hudson’s Bay, kept a $125 million stake in the property. WeWork also invested some of its own money alongside fund investors. WeWork assumed other risks.”
