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Following its absolute dumpster fire of an IPO attempt in 2019, WeWork made some big changes and is now a publicly-traded company. So this week, I'm taking a look at one of the world's most famous fails to see if it might be a good investment today.
Firstly, let's not get bogged down in the past. It's often easy to overlook great investments because of some perceived issue that may have been addressed. It's worth noting that behind all the nonsense that came with the WeWork 2019 IPO, there was still an underlying business there that was generating a lot of revenue and had a potential route to profitability. What we need to establish, therefore, is whether or not the problems that were outlined back then have been resolved, or is WeWork 2.0 just as much of a basketcase.
There's three areas I think we need to explore -- management and governance, business viability, and valuation.
Management and Governance
So, obviously, Adam Nuemann is no longer associated with WeWork. Following his ouster, Sandeep Mathrani was named CEO in 2020 and was recently appointed Chairman of the Board.
Mathrani is a seasoned real estate executive with plenty of bona fide experience in executing turnaround strategies.
From Business Chief:
None of this is surprising given Sandeep's real estate track record, which, over nearly three decades of retail real estate leadership, includes a number of transformations and turnarounds.
As executive VP in charge of retail for Vornado Realty Trust (2002 to 2010), Sandeep both stabilized the grew the portfolio, as well as repositioning and saving a once dying New Jersey mall - bringing in a Whole Foods store to make it work.
In 2010, as chief executive of General Growth Properties, GGP (2010-2018), Sandeep began the successful transformation of the then second-largest US shopping centre operator, leading the Chicago-based REIT through bankruptcy in 2010. Sandeep raised US$2.3bn and recaptialised the company with another US$6.8bn to turn around GGP's fortunes. It was sold to Brookfield Properties, and Sandeep was named chief executive of Brookfield's retail group.
Ok, we're off to a good start...
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