WeWork may be losing money, but its parent company plans to spend even more – this time, by investing in real estate.
The We Company announced on Wednesday the launch of ARK, a real estate acquisition and management operation with the goal to own stakes in buildings where it operates coworking space. ARK raised $2.9 billion in capital ahead of the launch.
In an email announcement, a spokesman for We Company said that “over a short period of time, WeWork’s approach to real estate has evolved significantly to where it is today.” Historically, the company signed long-term leases but did not own buildings it operates in.
New York-based WeWork, which has made a name for itself as a global network of coworking spaces, was founded in 2010 by Adam Neumann and Miguel McKelvey. The company has taken ambitious and costly bets over the years, from setting up co-living buildings to starting a school. In January, it rebranded itself as The We Company to serve as an umbrella company to its various businesses.
The We Company claims its value lies not only in its physical spaces but in creating a sense of belonging and community.
ARK is majority owned by The We Company; Ivanhoé Cambridge, a Canadian real estate company, is a strategic investor and has provided “substantial capital.”
The move comes at an interesting time for the company, which filed confidential paperwork for an IPO last month.
The company has raised $6.5 billion to date and has been valued as high as $47 billion, according to CB Insights. Meanwhile, the company is bleeding money. At the end of March, The We Company released select financial results which showed its revenue more than doubled last year to $1.8 billion but its losses hit $1.9 billion.
In January, reports surfaced that Neumann “made millions of dollars by leasing multiple properties in which he has an ownership stake back to WeWork.” The practice raised eyebrows about potential conflict of interests.
The company confirmed to CNN Business that ARK will buy Neumann’s real estate property investments for the price he paid for them.
In an interview with Bloomberg, Neumann said he doesn’t believe the investments were a conflict of interest. “If I don’t put my own money on it, why would other real estate owners have the courage to buy it?”