Neumann’s new business is based on a booming market: residential real estate. What Neumann is planning is reminiscent of old WeWork ideas.
Large real estate investors have been investing in apartment buildings for years, especially in fast-growing cities. There was initially a fear that the Corona crisis would mean a catastrophe for urban housing construction, but it quickly became apparent that the pandemic was accelerating the already overheated housing market. Adam Neumann is now also active in this area. The founder and former CEO of coworking space provider WeWork recently acquired a majority stake in eight apartment buildings estimated at more than a billion dollars, such as the Wall Street Journal (WSJ) reported. Documents reviewed by Business Insider in the US show that Neumann was involved in these housing deals two former WeWork executives and longtime allies: Mark Lapidus and Stella Templo. A person familiar with Neumann’s plans told the US media his goal is to turn apartment buildings into a branded lifestyle, a community of sorts. Even as the founder and CEO of WeWork, Neumann, who grew up in the kibbutz, had talked about his vision, which centered on his We family. Soon it was no longer just about coworking, in the Welive apartments people could live the lifestyle in common rooms and communal kitchens. With the Wegrow kindergartens, Neumann wanted to “raise the collective consciousness of the world to a new level”. Neumann spoke a lot about happiness and the superpowers of every individual.
This time he follows a trend that has long been recognized by other real estate investors: residential real estate. According to the Mortgage Bankers Association, sales of such buildings in the US accounted for the bulk of commercial real estate transactions at $399.7 billion in the first three quarters of 2021. That’s a 72 percent increase over the same period in 2020.
Familiar Faces
Neumann’s family office, 166 2nd Financial Services, has been led since April 2019 by Ilan Stern, a former mortgage bond trader at Soros Fund Management and Merrill Lynch. At the time, Neumann was CEO of WeWork, which was preparing for a $47 billion IPO. So far, there have been few obvious links between 166 2nd’s activities and WeWork, but a closer look at the eight apartment deals reveals some familiar faces. Neumann enlisted the help of Mark Lapidus at at least two of the eight locations named by the WSJ. Lapidus, who is also Neumann’s wife’s cousin, joined WeWork in 2012 and served as global head of real estate until 2016 before moving on to other roles within the company. Lapidus had left the company in 2018 after some Members of the leadership team had pressured Neumann to fire him. There were allegations of drug use and problematic sexual relationships in Lapidus’ department – but not against Lapidus personally. The allegations could have jeopardized an upcoming investment by Softbank, which would value WeWork at $47 billion.
Ownership records for one of the apartment buildings show that another Neumann representative has joined: Stella Templo, WeWork’s former associate general counsel for litigation and former Neumann chief of staff. Templo’s LinkedIn profile states that she worked on Pete Buttigieg’s presidential campaign after she left in 2019 and then moved to a “private family office” in April 2020.
Big ideas in a busy market
The pandemic had triggered a short-term panic over the housing stock in the northern US, with rents rising today at record speed. Lenders have flooded the sector with cheap financing. Neumann wants to take advantage of this. Its more recent portfolio includes buildings in cities where demand for space has increased during the pandemic, including Miami and Fort Lauderdale in Florida, Atlanta and Norwalk in Connecticut, a commuter town near New York. Apparently, Neumann’s agenda revolves around concierge-style amenities and property management. The ex-WeWork boss recently invested $30 million in Alfred, a housing services company that took its name from Alfred Pennyworth, Batman’s butler. Neumann may have adopted some elements of his Welive ideas. All four properties named by the WSJ are branded properties. Several of the properties also include short term rental units offering a mix of luxury care and living. Apparently, Neumann’s family office is also in talks to get involved in the market for single-family homes in addition to its residential portfolio. DJ Mauch, a partner in Neumann’s family office, told the Handelsblatt: “Since Spring 2020, we have been drawn to housing solutions for families in vibrant cities, where a new generation of young people is increasingly settling, the kind of cities that are reshaping life in the future define. We are excited to play a part in that future.” 
This text was translated from English and edited by Mascha Wolf. You can find the original here.
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