WeWork’s Adam Neumann looking at the Lord & Taylor building at 424 Fifth Avenue (Credit: Getty Images, iStock, and Wikipedia) Almost a year after WeWork announced the $850 million acquisition of the Lord & Taylor building in Midtown Manhattan, the co-working company still hasn’t closed on the deal and is on the hunt for an equity partner, according to sources familiar with the situation. WeWork Property Advisors, the real estate investment vehicle managed by WeWork and private equity firm Rhone Group, was scheduled to close on the acquisition of 424 Fifth Avenue in August. Instead, it paid an additional $25 million deposit and moved the deadline to Nov. 13, the seller, Hudson’s Bay Company, said last month. WPA had put down a $75 million deposit when it signed the contract in October. According to several sources, WeWork is looking for an equity partner to help fund the deal and has been showing the historic Midtown property to potential investors in recent weeks. Separately, the company has also been looking for $738 million in debt and hired Eastdil Secured to find it, Commercial Mortgage Alert reported in June. 424 Fifth Avenue A source close to WeWork said the company has “multiple funding options and offers” and is exploring its options. If WeWork doesn’t close on the 663,000-square-foot building by Nov. 13, it has the option to pay another $25 million and extend the deadline until Jan. 31. WeWork also has the option to convert $125 million into equity, which would be controlled by Hudson’s Bay Company through a joint venture. WeWork’s $850 million winning bid was well above the roughly $700 million another serious suitor, Brookfield Property Partners, had bid, the Wall Street Journal reported in March. WeWork would likely have to spend more than $200 million to redevelop the property, which would push the total cost closer to $1 billion. This means that even after landing $738 million in debt, the company would likely still have to write a big equity check — hence the search for a partner. Some potential investors are put off by the high purchase price, multiple sources said. WeWork has raised billions in venture capital, but that money isn’t earmarked for real estate acquisitions. Instead, the company buys buildings with money from outside investors through a real estate investment vehicle managed in partnership with private equity firm Rhone Group. That vehicle, WeWork Property Advisors, had raised $404 million through four separate funds as of March, SEC filings show. It wasn’t clear how much money the funds have raised since. WeWork and Hudson’s Bay Company declined to comment. Lord & Taylor initially said it would continue operating a store in the building after the sale to WeWork, but changed tack in June and announced that its flagship store will close after 104 years. The company said it expects to close the store by early 2019. WeWork plans to lease part of the building for its global headquarters. Clarification: This story has been updated to specify WeWork’s equity option with Hudson’s Bay.
WeWork has yet to complete the deal to buy the former Lord & Taylor flagship store in Manhattan announced last October , and is still seeking an equity partner to complete the acquisition . WeWork Property Advisors , which was scheduled to close the deal in August , paid an additional $ 25 m deposit to move the deadline to 13 November . The company , which previously paid a deposit of $ 75 m , has one more option that allows it to pay another $ 25 m to push the deadline to 31 January . At that point , if it is unable to complete , the $ 125 m paid converts into a deposit in the building .