A thing which frustrates me with the discourse about WeWork is that if you assert that it is a real estate company which occasionally presents as a tech company when advantageous to court investment, and you argue the valuation comparable should be large CRE operators, then
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Honestly just slapping a friendly UX on top of commercial real estate has be worth something.
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But also much more effective at self-dealing, and levered to the business cycle in more ways than one.
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If the argument is “In an industry full of incompetent sleazy guys, these are the competent sleazy guys...” well then maybe that is fine but given what happens when insiders are not acting as fiduciaries they should get a multiple closer to Gazprom than Google.
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Agreed that wework seems to be a pretty effective operator, but as a sublessor they’re fundamentally just highly levered to the business cycle.
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When rents and occupancy are going up as they have been (remember US is currently experiencing historically long period of sustained growth) they do really well. When things reverse they’re likely in deep s***. They literally operate on the margin.
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I don’t quite understand the conclusion. Incompetent CRE people still present well? How does it relate to WeWork valuation?
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If they are “reasonably effective” CRE operators, that supports a CRE valuation rather than a tech-unicorn valuation. Right?
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Would love to hear what your dad thinks ...
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