WeWork Defends Disclosures After Report on CEO Lease Deals
(Bloomberg) -- WeWork Cos. defended its process for reviewing related-party transactions after a report said the real estate startup’s chief executive leased multiple properties to the company after he bought them.
The Wall Street Journal reported Wednesday that Chief Executive Officer Adam Neumann has made millions of dollars by leasing multiple properties in which he has an ownership stake back to WeWork. According to the paper, several investors said the arrangement concerned them as a potential conflict of interest, because the CEO could benefit on rents or other terms with the company.
“Those transactions are reviewed and approved by the board, and they are disclosed to investors,” WeWork said in a statement.
Neumann is WeWork’s biggest individual shareholder and has voting control over the company he co-founded in 2010 in New York. Backed by Japan’s SoftBank Group Corp., WeWork has built itself into one of the world’s most valuable startups, last valued at as much as $42 billion, through a global leasing spree. It has 400 locations in 100 cities, and says it’s the biggest private office user in Manhattan, London and Washington, D.C.
The Journal said a prospectus related to a debt offering last year showed that WeWork had leases with multiple properties owned in part by Neumann. The document also said WeWork paid more than $12 million in rent to buildings “partially owned by officers” of the company between 2016 and 2017, and future payments total more than $110 million over the life of the leases. The specific properties weren’t listed, according to the Journal. There were four related-party transactions disclosed in the bond offering document.
Neumann declined to comment through a spokesman. Details of Neumann’s private investments in WeWork properties were disclosed last year by The Real Deal.
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