The fallen WeWork star is working on a comeback

new York What is WeWork founder Adam Neumann planning to do with his fortune? There is finally an answer to this question: The founder and former CEO of the co-working empire is building a new real estate empire.

This time he is not investing in offices, but in residential real estate. According to a report in the Wall Street Journal, Neumann has almost unnoticed already amassed majority stakes in a total of 4,000 apartments in the southern United States, which are estimated to be worth a billion dollars.

With his new project, the fallen co-working star is not only following the trend of rising prices for residential property. It also follows the move of the Americans to the south: more and more US citizens have recently settled in smaller towns in states such as Florida, Texas and Arizona.

“Adam Neumann wants to rehabilitate himself, his reputation and part of his vision,” says economics professor Ari Ginsberg from the NYU Stern School of Management. “And he does it with his own money.”

It’s been more than two years since the global WeWork empire almost completely collapsed. Neumann wanted to take the company public at the time – and it was the prospectus for the IPO, of all things, that produced the company’s massive losses and absurd governance.

Instead of strong numbers, there were bombastic formulations of how WeWork wants to change the world. The documents also made it clear that the IPO candidate was not a tech company, as Neumann liked to propagate, but ultimately a traditional office property provider that rented most of the office space in order to sublet it – and at enormous losses. There were also other scandals, such as with marijuana in private jets.

Softbank cost WeWork billions

The planned IPO was ultimately called off. Neumann only allowed himself to be pushed out of his company in exchange for horrendous pay. Major shareholder Softbank Group paid him nearly $200 million in consulting fees and also bought $578 million worth of stock to get him out of the company.

Meanwhile, Softbank has taken WeWork public, where it’s valued at around $7 billion — a far cry from the $47 billion it was valued at just three years ago. Spicy: Neumann had previously collected ten billion dollars from investors. Forbes estimates his net worth at $2.3 billion.

Wework office

The company is worth around $7 billion on the stock exchange. It was once valued at $47 billion.

(Photo: Reuters)

What does Neumann want today? As the founder and CEO of WeWork, he liked to fantasize about a new world in which he creates the new human being with his We family.

After all, the founder, who grew up in the kibbutz, had long since expanded his wework empire to other levels: In the Welive apartments, people could live the lifestyle with common rooms and communal kitchens. In the “Wegrow” kindergartens Neumann wanted to “raise the collective consciousness of the world to a new level” by “expanding happiness and unleashing the superpowers of every individual”. The chance for superpowers was available in New York for $ 40,000 a year.

Also, Neumann had dreamed of We gyms, Webank, Wesail and even Wemars. However, nothing came of it. Welive and Wegrow also closed their doors with the scandals. With today’s WeWork, only the classic co-working business has remained.

Neumann probably has the same target group in its sights

So now Neumann is looking for his new fortune in large residential complexes, each with more than 200 apartments. According to the newspaper report, he controls 4,000 apartments in Miami and Fort Lauderdale in Florida, in Atlanta in the state of Georgia and in Nashville in Tennessee, among other places. He told his friends that he wanted to start a company that would shake up the housing market.

DJ Mauch, a partner in Neumann’s family office, said: “Since spring 2020 we have been attracted to housing solutions for families in vibrant cities, where a new generation of young people are increasingly settling, the kind of cities that are enjoying life in the Redefine the future. We are excited to play a part in that future.”

Apparently, Neumann wants to attract the same young, high-income earners that he has served with his WeWork model. It is still unclear what is supposed to be special about his apartments. According to the website, the Stacks on Main residential complex in Nashville, Tennessee, offers a saltwater pool, communal barbecue grills, and music and fitness rooms. While that’s luxurious, it’s not entirely uncommon for furnished apartments. Cost point in this rather cheap market: between 1500 and 2000 dollars for almost 100 square meters.

Neumann focuses on convenience and community

In itself, the business model is nothing special, explains NYU professor Ginsberg. But it is above all the community spirit that makes Neumann’s real estate in Miami something special. “They offer fitness events, readings, food trucks, speakers or artists’ residencies,” Ginsberg cites just a few examples of services for the residents of these residential complexes. “And Neumann is convinced that there are families who are willing to pay a premium for it.”

Neumann’s investment of 30 million dollars in the start-up Alfred should also be seen in this context. This offers concierge services for the residents of real estate, which, similar to a luxury hotel, range from picking up the laundry and shopping to shoe repairs and cocktail parties.

After the scandals of the past, Neumann had maintained an unusually quiet lifestyle for him. He gave the New York Times his first interview in two years in November. In it he spoke of his new ventures, which included the family office as well as a company that wants to save CO2 emissions. Thousands of apartments were not mentioned.

Neumann was not particularly successful with his We live housing project. The building on Wall Street, for example, had a high vacancy rate and was supposed to be saved before the flopped IPO two years ago by converting it into a kind of hotel.

This time he is playing it safe by buying already existing and mostly rented apartments. “He’s taking less of a risk because he’s not going to be sitting on half-filled properties,” Ginsberg says. With his investments in smaller cities in the southern United States, he is also following a trend that other classic real estate investors are also following.

More: Wework stock is in demand on Wall Street debut

.
source site-12