It has been nearly a year since WeWork announced it would pay $850M to acquire 424 Fifth Ave., better known as Lord & Taylor's Manhattan flagship location, but the deal has still not closed.
WeWork is still touring investors around the building and looking for another equity partner and $738M in acquisition financing, The Real Deal reports. WeWork Property Advisors, the company's subsidiary that bought the building, already partnered with private equity firm Rhone Group on the purchase, but it appears to be seeking another player to join the investment.
When WeWork announced the deal, the plan for the building was to reduce Lord & Taylor's footprint to 150K SF on the lower three floors, with WeWork occupying 500K SF on the top eight. In June, however, Lord & Taylor parent company Hudson's Bay Co., which is selling the property to the coworking giant, announced Lord & Taylor would leave the building entirely.
WeWork initially was scheduled to close on the purchase last month, according to TRD, but Hudson's Bay granted its buyer an extension to Nov. 13 in exchange for another $25M deposit. In addition to its search for equity partners, Eastdil Secured is on the hunt for lenders to provide a $738M loan package to help fund the buy and an estimated $200M worth of renovations the building would need, Commercial Mortgage Alert reports.
While WeWork has billions in cash thanks to its venture capital investment from SoftBank, that money is not earmarked for property acquisition, according to TRD, which is why WPA and Rhone have raised at least $404M to buy property outside of WeWork's balance sheet. It is unclear how much of that equity will go into 424 Fifth Ave., and how much they are hoping to bring in from a third party.
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