Within hours of US co-working provider WeWork announcing its expansion into Taiwan, a US news report revealed that co-founder Adam Neumann has cashed out more than $700 million from the company which hopes to achieve a public listing in the coming months.
The Israeli-American billionaire has raised the capital through a combination of stock sales and debt, according to the Wall Street Journal, citing people close to the matter.
With the post-IPO slide of Uber and other unicorns fueling doubts about the prospects for WeWork’s market debut, the company declined to comment on suggestions that the leak could raise questions about Neumann’s confidence in the listing.
Personal Portfolio of Mansions and Offices in New York and California
Public records show that since 2014 Neumann has spent $80 million of the wealth derived from his WeWork shareholding on five homes including a 1,208 square foot New York mansion replete with a guitar-shaped room that cost $21 million.
The WeWork chief executive has also used the proceeds to buy commercial real estate in the US capital and in California’s San Jose.
The 40-year-old entrepreneur leases four of these properties to WeWork, which pays Neumann several million dollars in rent every year.
Criticism of this arrangement prompted the company to announce the launch a real estate investment and management platform called Ark in May backed by Canadian fund manager Ivanhoe Cambridge. Part of the proposal is that Neumann will sell the buildings he leases to WeWork to the platform at cost before the initial public offering takes place.
Profiting from Share Price Rises and IPO Optimism
Neumann is reported to have taken his cash out of WeWork prior to filing for an initial public offering in the US last December, and is said to have sold shares during most of the company’s investment rounds.
People familiar with the matter said that the surfing enthusiast has exercised his stock options early on previous occasions to profit from later rises in price, as well as a way to pay less tax, and has already appointed former Soros Fund Management executive Ilan Stern to set up a family office to manage his wealth.
The chief executive is said to be optimistic about WeWork’s impending IPO, despite the loss-making company’s major backer, Softbank, reducing a promised $16 billion investment to $2 billion in January and disappointing listings this year by Lyft and Uber.
Entering Tech-Centric Taiwan
The timing of the revelations coincide with the launch of WeWork’s first location in Taiwan, suggesting that Neumnann has no intention of slowing his company’s expansion strategy prior to the planned IPO.
Just three days ago, the manager of CapitaLand Commercial Trust REIT announced that the shared office operator will taking over 20 storeys of a 21-storey tower at 21 Collyer Quay in Singapore when HSBC moves out early next year, marking WeWork’s twelfth location in the city.
The Taiwan location, in Taipei’s financial district, Xinyi, brings the company’s global footprint to 485 locations in 105 cities across 28 countries.
Spread across eight floors of eighteen-storey Exchange Square Two at 97 Songren Lu, the location is 600 metres from Taipei 101 and a ten minute walk from Xiangshan metro station.
Filled with art that tells the story of Taiwan, the location features the beer on tap, phone booths and retro-chic design that WeWork spaces are well known for.
Monthly rent for private offices at the Taipei location starts at NT$40,700 ($1,311) per month, while hot desks go for NT$11,900.
Commenting on the launch, vice chair of WeWork Asia Christian Lee said that the company hoped to support Taiwan’s innovative technologies and startups as well as providing space for international businesses expand in the country.
Co-Working Picks Up Pace in Taipei
Neumann’s step into new territory comes at a time when international co-working operators are expanding their presence in Taiwan.
Singapore’s Kafnu, Spaces by IWG, and Hong Kong co-working provider The Hive have all opened their first premises in the city over the last two years.
“By the end of 2019, the total space occupied by international co-working space brands and instant office brands will reach 75,000 square metres,” said Erin Ting, a director of research at Savills in Taipei.
“The demand is being driven by the growth of gaming, fintech and pharmaceutical startups, amongst others, which prefer high quality office space but find the unit size of grade A offices too large,” according to the Savills analyst.
Ting said that international companies in Taipei will also consider renting co-working space, which is usually located in grade A buildings in prime locations, because of a current shortage of new offices in Taipei.
Asking rents for grade A space in Xinyi, where WeWork has launched its first coworking location, averaged NT$3,389 per ping (3.3 square metres) per month in the first quarter of the year, a 3.3 percent increase over the same period in 2018.