Embattled WeWork puts on hold plan to open co-living spaces in Israel

Embattled WeWork puts on hold plan to open co-living spaces in Israel

Office sharing company had planned to open WeLive residential facilities in Tel Aviv and Jerusalem, but program put on ice after disastrous IPO announcement, ouster of CEO

A man enters the WeWork cooperative co-working space in Washington, DC, on March 13, 2014. (AFP/Mandel Ngan)
A man enters the WeWork cooperative co-working space in Washington, DC, on March 13, 2014. (AFP/Mandel Ngan)

WeWork has put on hold its plans to open shared living units in Tel Aviv and Jerusalem amid ongoing fallout over its disastrous August IPO announcement.

Company sources told the Globes and Calcalist business dailies on Sunday that the program would not be moving forward, although representatives for the shared office space company have not commented publicly.

WeLive, which like WeWork is a branch of the We Company, runs two shared living programs in New York City and Washington, DC. WeLive offers both temporary and long-term residential units and aspires to create a “community-driven experience” in its housing projects by connecting residents with their neighbors through events and common spaces.

The sites offer fitness and craft classes, and kitchen, laundry and gym facilities. An apartment at its Wall Street building in New York costs $3,050 a month, and in Crystal City, Washington, DC, $1,050, Globes reported.

In January 2018, Tel Aviv’s chief city planner told Calcalist that WeWork was planning to build a 17-story building near the city’s Azrieli Center with the support of the municipality. The complex regulatory process for approving the project was expected to take two to three years.

The company is not currently planning on shutting down any of its 11 WeWork office spaces in Israel.

WeWork announced on September 30 that it was withdrawing its plan to go public, but said that it would revive an initial public offering down the road.

The company’s co-CEOs Artie Minson and Sebastian Gunningham said in a statement they decided to “postpone our IPO to focus on our core business, the fundamentals of which remain strong.”

But they signaled they still intend to take the company public, saying, “We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”

The announcement came six days after a shakeup atop the business that led to Minson’s and Gunningham’s appointments after controversial co-founder Adam Neumann stepped down.

Adam Neumann, co-founder and CEO of WeWork, attends the opening bell ceremony at Nasdaq, in New York, January 16, 2018. (AP Photo/Mark Lennihan, File)

The charismatic Neumann was credited with growing WeWork, founded in 2010, into a real estate giant with operations in 111 cities in 29 countries.

However, the company faced questions over its prospects for achieving profitability, and Neumann came under scrutiny for perceived self-dealing between his personal assets and WeWork and over unconventional personal conduct, including drug use.

Before the executive shakeup, WeWork’s bankers were eyeing a much smaller IPO than initially envisioned. It was originally valued at $47 billion, but that figure has plummeted to some $15 billion as investors opened the company’s books and raised questions about its operations.

Skepticism about WeWork’s business model had been mounting after it delayed a planned initial public offering. The company’s revenue has risen sharply, reaching $1.8 billion in 2018. But its losses have mounted almost as quickly, climbing to $1.6 billion last year.

A Wall Street Journal profile published earlier in September portrayed Neumann and his wife as eccentric executives who made rash decisions. According to the profile, Neumann has plans to become prime minister of Israel and the world’s first trillionaire.

The 40-year-old Israeli grew up on a kibbutz and in the US, and served as an officer in the Israeli navy.

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