By Meghan Hall
WeWork’s movements heading into the first quarter of 2020 have been carefully watched by the commercial real estate industry as the coworking firm rolled out a new business plan focusing on core pillars of the firm. Now, it is looking like the impact of those plans are taking effect, and WeWork has divested its interest in four San Jose properties for a total of $184 million. The properties were co-owned with developer Gary Dillabough.
The properties in which WeWork sold its share were the Bank of Italy office tower, a surface parking lot adjacent to the Bank of Italy, the Museum Place site, a Valley Title property and Bo Town restaurant.
The transaction was first reported Wednesday evening by The Mercury News, who cited property documents and industry sources with knowledge of the transaction. The properties were bought Westbank, a major institutional investor.
The current buyers paid $113 million for the Valley Title lot, $33 million for the Bank of Italy, $27 million for the adjacent parking lot and $11 million for the Bo Town Restaurant. Four different affiliates were listed as the buyers on county documents. The new ownership, noted The Mercury News, will contribute to already underway renovations to the Bank of Italy and potential redevelopment of the three other properties. Westbank also has the option to purchase the Davidson, an office building located at 255 W. Julian St. Dillabough has proposed 650,000 square feet of office at the site.
The new ownership also acquired $193.5 million in financing from Acore Capital Mortgage.
Dillabough and WeWork had originally purchased the Bank of Italy and its adjacent lot for $30.6 million in December of 2017. The Valley Title parcels were acquired in 2018 for $64 million, and in July of last year, the joint venture paid $15 million for Bo Town.
In the third quarter of 2019, WeWork reported a $1.25 billion net loss, up from a $497 million in losses in the third quarter of 2018. The news continued to shake up the commercial real estate world, who had been closely measuring the company’s success after a largely-failed IPO. In October, WeWork released an investor presentation in which it would stated that it would focus on focusing on its core businesses and pursue plans for more moderated growth.