WeWork Cos. set to rent space in Hong Kong’s bar dis­trict

Irish Independent - Business Week - - COMMERCIAL PROPERTY - Al­fred Liu, Vinicy Chan, Moxy Ying and Kath­leen Chu

said. “We were both con­trar­i­ans, but he was bet­ter, brighter and more ag­gres­sive in build­ing his own brand. I had great peo­ple around me and the wind at my back a lit­tle.”

With money from Bass, Bar­rack founded Colony Cap­i­tal in 1991 and built a pri­vate equity gi­ant by in­vest­ing in soured loans and real es­tate, in­clud­ing celebrity-cen­tric deals such as buy­ing Nev­er­land Ranch and sav­ing pho­tog­ra­pher An­nie Lei­bovitz from bank­ruptcy. The com­pany per­se­vered af­ter some mis­steps in the mid-2000s — in­clud­ing back­ing the $8.5bn pur­chase of Sta­tion Casi­nos, which ended up go­ing bank­rupt, and get­ting crushed on Xanadu, the trou­ble-plagued $2bn re­tail and en­ter­tain­ment com­plex in New Jersey’s Mead­ow­lands, dur­ing the fi­nan­cial cri­sis — and Bar­rack now has a per­sonal for­tune that’s es­ti­mated at $1.3bn, ac­cord­ing to the Bloomberg Bil­lion­aires In­dex.

His col­lec­tion of res­i­dences in­cludes a ranch, polo fa­cil­ity and win­ery near Santa Ynez, Cal­i­for­nia, and a condo in Man­hat­tan’s Trump Parc East. In Los Angeles’s Bel Air neigh­bour­hood, he’s de­vel­op­ing a man­sion that will be at least 4,900 sq m (53,000 sq ft) and a Colony spokesman said it is be­ing built for a friend, whom he de­clined to iden­tify.

Peo­ple close to Colony say Bar­rack sur­rounds him­self with a tight cir­cle of lieu­tenants and val­ues loy­alty. Se­nior lead­ers, who typ­i­cally num­ber 10 to 15 at a time, stay for an av­er­age of 12 years, and many have worked with him since Colony Cap­i­tal’s in­cep­tion, ac­cord­ing to the com­pany. He some­times hires peo­ple he knows or as a favour to oth­ers. Such em­ploy­ees are known as friends of Tom, or “FOTs”, by Colony work­ers, ac­cord­ing to peo­ple close to the firm. Some FOTs lack the nec­es­sary busi­ness ex­pe­ri­ence or acu­men, and of­ten end up hav­ing am­bigu­ous roles, said the peo­ple, who asked not to be named dis­cussing in­ter­nal mat­ters. Still, em­ploy­ees are rarely fired, they said.

Bar­rack took Colony Cap­i­tal public in 2015, merg­ing it into Colony Fi­nan­cial, a pub­licly traded Reit, giv­ing the com­pany ac­cess to $9bn in as­sets and mak­ing it less de­pen­dent on out­side money.

“I was giv­ing back to all the peo­ple who had been loyal to me all that time and giv­ing them a cur­rency, a balance sheet, a com­pany and a fu­ture,” Bar­rack said. “And it’s given me space to think about other things.”

The mar­riage of Colony and the North­Star com­pa­nies — one of which fo­cused on com­mer­cial prop­erty in­vest­ments and debt, with the other man­ag­ing the Reit’s as­sets — ac­cel­er­ated growth for Colony Cap­i­tal, which had been slower to raise money from in­sti­tu­tional in­vestors af­ter its fi­nan­cial-cri­sis losses. By 2010, Colony’s flag­ship pri­vate equity fund had lost 60pc of its value.

North­Star had the abil­ity to pool money from in­di­vid­ual in­vestors through en­ti­ties like non-traded Reits, which are sold to “mom-and-pop” in­vestors and aren’t traded on stock ex­changes. Colony had al­ready been ex­plor­ing buy­ing or build­ing such ve­hi­cles it­self.

Vo­cal share­hold­ers had ar­gued that top man­agers were col­lect­ing mil­lions of dol­lars in com­pen­sa­tion even as the stock was un­der­per­form­ing. The new com­pany has about $56bn in as­sets, com­pared with about $25bn for Colony be­fore the merger. Bar­rack per­son­ally owns or con­trols an al­most 5pc stake, ac­cord­ing to public fil­ings.

Bar­rack has be­come less vis­i­ble at Colony North­Star, with Richard Saltz­man its CEO now the public face of the firm, as it takes shape and finds its place among other Reits. Bar­rack has be­come more vis­i­ble when it comes to de­fend­ing Trump. He con­tin­ues to weigh in, as a friend, but con­tends the pres­i­dent knows what he’s do­ing.

“I have given my thoughts on a va­ri­ety of top­ics,” Bar­rack said. “And he has thanked me for my opin­ion and then said, ‘But if I lis­tened to you I would never be pres­i­dent. I’d still be on ‘ The Ap­pren­tice.”

(Bloomberg) WEWORK Cos., the cowork­ing space com­pany that’s among the world’s most valu­able start-ups, is in ad­vanced talks to rent a build­ing in Hong Kong’s pop­u­lar nightlife dis­trict near the city’s busi­ness cen­tre, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter.

The New York-based firm is seek­ing to rent Ho­tel LKF by Rhom­bus on Wyn­d­ham Street, said the peo­ple, who asked not to be iden­ti­fied be­cause the in­for­ma­tion hasn’t been pub­licly dis­closed. The bou­tique ho­tel, lo­cated in the Lan Kwai Fong dis­trict that’s known for its bars and night­clubs, closed down on July 1 and will be con­verted into an of­fice build­ing by the mid­dle of next year, the owner Peter­son Group said in June.

WeWork’s ex­pan­sion in the world’s prici­est prop­erty mar­ket comes as soar­ing of­fice rents have pushed fi­nan­cial firms and hedge funds out of the fi­nan­cial dis­trict. De­mand for f lex­i­ble and shared of­fices is surg­ing in Asia, with the area taken up by such work spa­ces in Hong Kong’s cen­tral busi­ness dis­trict ex­pected to dou­ble this year to 23,200 sq m (250,000 sq ft), ac­cord­ing to prop­erty bro­ker Col­liers In­ter­na­tional. Flex­i­ble work spa­ces ac­counted for about 9pc of the of­fice space in the city’s fi­nan­cial dis­trict as of 2016, Col­liers said.

Spokeswomen at Peter­son Group and WeWork de­clined to com­ment. The agree­ment isn’t fi­nal and ne­go­ti­a­tions may still fall through, one of the peo­ple said.

WeWork rents out f lex­i­ble of­fice spa­ces to start-ups, free­lancers and busi­nesses and runs more than 20 of­fice projects across Asia. As part of its ex­pan­sion across Asia, WeWork an­nounced a joint ven­ture with SoftBank Group last week in Ja­pan and plans to open its first of­fice in Tokyo in 2018. WeWork ear­lier this month raised $ 760m in a fund­ing round that val­ues it at about $ 20bn af­ter the in­vest­ment, said a per­son fa­mil­iar with the mat­ter, rank­ing it among the world’s five most valu­able start-ups.

The com­pany last year rented more than 9,300 sq m (100,000 sq ft) in Hong Kong’s Wan Chai and Cause­way Bay ar­eas, ac­cord­ing to data from Jones Lang LaSalle Lim­ited. Ho­tel LKF, which in­cludes 14 f loors of rooms and nine f loors of re­tail space, is housed above Gor­don Ram­say’s Bread Street Kitchen & Bar restau­rant, which is ex­pected to stay.

The av­er­age an­nual prime of­fice rent in Hong Kong is $112 per sq ft, higher than the $ 86 per sq ft in Lon­don’s city cen­tre and $ 82 per sq ft in mid­town New York, ac­cord­ing to Col­liers. Cowork­ing spa­ces let peo­ple stay in tra­di­tional of­fice ar­eas while re­duc­ing rental costs.


Tom Bar­rack is a close friend and an in­for­mal ad­vi­sor to Don­ald Trump

High of­fice rents have made flex­i­ble work spa­ces more pop­u­lar

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