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WeWork owner starts $2.9 bln platform to invest in real estate

Kitco News

May 15 (Reuters) - Shared office space company WeWork’s owner, The We Company, on Wednesday set up a new real-estate investment platform, Ark, to buy and develop commercial properties around the world.

Ark will reut.rs/2JMBbq1 have an initial investment of about $2.9 billion, with $1 billion from Ivanhoé Cambridge, a unit of Canada-based investor, CDPQ.

The move to acquire and manage properties is a departure for the New York-based company, which has largely focused on renting office spaces, rather than owning them.

WeWork, which was valued at about $47 billion in a private fundraising round in January, is currently heading toward what may be the year’s largest IPO after ride-hailing firm Uber .

Last month, it confidentially submitted a draft registration statement for its initial public offering with the U.S. Securities and Exchange Commission.

But its unprofitable operations, similar to Lyft Inc and Uber, have refuelled investor concerns over the unicorn’s ability to flourish in an uncertain economy.

A weak economy could reduce the company’s client base and leave WeWork, which reported a $1.93 billion loss and $1.82 billion in revenue in fiscal year 2018, in a bind, investors have said.

WeWork’s critics also point to the risk of relying on revenue from its tenants’ short-term contracts to cover its own leases with property owners that can run 10 years or more.

Reporting By Aparajita Saxena in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur.

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