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$32M Chunk Of WeWork Fraudster's Retail Empire Sold, Including Atlanta-Area Center

Atlanta Retail

As Jonathan Larmore awaits sentencing for a fraud conviction over his manipulation of pre-bankruptcy WeWork’s stock price, pieces of his commercial real estate portfolio that once was worth $600M are being sold off by the federal government.

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Hiram Square strip retail center in Hiram, Georgia, previously owned by Jonathan Larmore.

Fourteen retail properties across the U.S., previously owned by Larmore's Arciterra Cos. but in the hands of a federal receiver, were auctioned off last month in a sale process led by Marcus & Millichap. 

The auctions were the result of a civil lawsuit against Larmore and Arciterra filed by the Securities and Exchange Commission, which accused the company in November 2023 of defrauding its investors out of $35M. A judge placed the properties in receivership a month later, and the receiver hired Marcus & Millichap to find buyers.

That was also the time when Larmore gained notoriety for his public offer to buy $77M worth of WeWork shares at a ninefold premium. The offer turned out to be fake, and Larmore was charged with fraud and found guilty in October.

The biggest former Arciterra property to change hands was Hiram Square, a 28K SF strip center at 5157 Jimmy Lee Smith Parkway in Hiram, Georgia, about 30 miles west of Downtown Atlanta.

The center, which has tenants such as a locally owned jeweler, pizza chain Mellow Mushroom and a boot camp-style gym, was bought by an affiliate of Norcross-based retail investment firm Safeway Group Inc. for $5.5M. Marcus & Millichap Senior Managing Director Zachary Taylor and Senior Associate Eric Abbott brokered the auction for Hiram Square locally.

In total, the 14 properties netted almost $32M, said Mike Banwell, a vice president of auction services with Marcus & Millichap. The other properties were in Texas, Tennessee, Indiana, Alabama, North Carolina, Michigan, Iowa and Mississippi. 

The proceeds from the sale will be used to pay back investors the SEC claims were bilked out of millions to fund Larmore's “lavish lifestyle of private jets, yachts and expensive residences,” according to its suit. The SEC filed suit in November 2023, and a receiver was appointed a month later.

Banwell told Bisnow the sale was designed to benefit Arciterra investors by holding the auctions at the same time in December but selling off each asset individually to “avoid any discounting that could have happened with a portfolio acquisition.” 

Banwell also said the firm received a considerable number of bidders for the portfolio, who saw the underlying value of the properties. 

“The fundamental real estate was really attractive with a lot of these, it was just mismanaged,” he said. “You have new ownership coming in and [they can] squeeze more juice out of those.”

Larmore amassed a $600M strip mall empire and was known in the industry for throwing lavish yacht parties and wooing business partners with private jet trips, Bloomberg reported last year. He ran Arciterra for two decades, buying up rundown strip malls, fixing them up and cashing out via refinancing loans, according to Bloomberg.

He resigned as manager of Arciterra in September 2023, just two months before trying to execute his scheme to buy a large stake in WeWork through call options he amassed under an LLC he created called Cole Capital Funds. When he made an offer to buy WeWork shares on Nov. 3, it pushed the stock price up 150% in overnight trading.

But Larmore failed to account for the time it would take to publish a press release. Instead, many of his stock options expired before Larmore was able to cash them in. Three days later, WeWork filed for bankruptcy, wiping out the holders of its common stock.

U.S. District Judge Paul Engelmayer is scheduled to sentence Larmore on March 4. Larmore was convicted on one count of tender offer fraud and one count of securities fraud, which each carry a maximum sentence of 20 years.

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