Yardi To Operate WeWork As Separate, Arm's-Length Entity

After it was revealed in court Monday that Yardi Systems will be the majority owner of WeWork as it emerges from bankruptcy, the California-based real estate software management firm has issued its first public statements about its investment in and plans for the embattled coworking company.

Yardi Systems' investment arm, Cupar Grimmond, is contributing $337M of the $450M WeWork needs to exit bankruptcy. It said in a statement to Bisnow Tuesday that the company's executives believe “a hybrid workplace is the model of the future” and that its technology can help fuel the transition.

The financing arrangement and restructuring deal are contingent upon a bankruptcy judge's approval.

“We intend to help drive the revitalization of WeWork in a manner that sustainably serves the best interests of its stakeholders — including the Company’s landlords,” Yardi said in a statement. “Importantly, post-bankruptcy WeWork would be operated as a separate entity managed at arms-length from Yardi’s core business.”

Yardi's relationship with WeWork began in 2022 when the companies teamed up to develop the WeWork Workplace app. Last year, as WeWork was struggling under its massive lease and debt obligations, Cupar Grimmond injected capital into the business as part of a $3B debt restructuring, Yardi revealed in its release.

That capital gave Yardi, through its subsidiary, secured lender status and a seat at the negotiating table during WeWork's arduous bankruptcy proceedings. 

During the hearing Monday, WeWork's attorneys said Yardi would take a 60% stake in a privately owned WeWork, while other senior lenders would control a 20% stake and a group including SoftBank would own the rest.

SoftBank, which has lost roughly $14B on its investments in WeWork over the years, would own a 16.5% share, which could go up to 36% if WeWork fails to hit certain financial benchmarks. WeWork is also creating a settlement pool for its landlords. 

Yardi provides technology, software and consulting services for nearly every niche aspect of real estate. Its subsidiaries include CommercialEdge, RentCafe and Multi-Housing News, and it publishes data on the office, industrial and multifamily markets, as well as more focused sectors like self-storage and parking garages. The Santa Barbara, California-based company is celebrating the 40th anniversary of its founding by CEO Anant Yardi this year.

“As a leading global provider of software and software services for commercial and residential property owners, Yardi is committed to supporting the long-term success of WeWork and the co-working industry,” Yardi said in the statement. 

If the bankruptcy exit plan is approved, WeWork would emerge at less than half the size it was at its pre-pandemic peak. It also plans to close its 300K SF headquarters and coworking operations at Tower 49 in Midtown Manhattan.

“Under the plan, WeWork would emerge from bankruptcy with no debt, adequate working capital and positive free cash flow,” Yardi said in the statement. “We believe the company’s fundamental value proposition remains intact and that it can have a successful future.”