Can WeWork’s new owner succeed where Adam Neumann failed?

Anant Yardi will not be caught up in any private jet mischief like Adam Neumann. On Thursday, the low-key California software tycoon was cleared to take over WeWork when a federal bankruptcy court handed control of the co-working business the hustling Neumann once ran to its creditors.

Yardi, an engineer who immigrated from India in 1968, has quietly amassed a multibillion-dollar fortune over four decades selling property management software to commercial and residential landlords. Yardi Systems, the business he started with his wife Eileen, remains family-owned even as its annual revenues approach $3bn.

Less than two years ago, Yardi put in more than $200mn in equity and debt through an anonymous vehicle to prop up WeWork. He agreed to inject another $337.5mn two months ago to counter an offer from Neumann, who wanted back into the company that had funded his jet-setting party lifestyle until his abrupt exit in 2019.

Yardi favoured economy seating on commercial flights until back problems recently sent him to business class. But by gaining control of one of the most polarising companies in recent memory, he will become a pivotal figure shaping the future of urban real estate, with a public profile he has been unused to.

“WeWork is such a popular and well-known brand, it didn’t seem right to let it go down,” Yardi explained in an interview with the Financial Times. “I realise financial decisions are not made on right and wrong. But there’s also a tremendous opportunity in terms of turning around WeWork.”

Judge John Sherwood of the New Jersey district bankruptcy court confirmed a reorganisation plan on Thursday that wiped out $4bn of existing WeWork loans and bonds. That ended a seven-month process in which WeWork cut its aggregate rent liability by a projected $12bn.

In April, WeWork advisers pegged its official new enterprise value at roughly $750mn, sharply below its peak private market valuation of $47bn, and projected that its annual revenue would double to $2.5bn by 2028.

Neumann, in court filings, challenged that outlook as too optimistic but Yardi said he was comfortable with the figures. WeWork’s operating costs have “been contained”, he said: “[WeWork’s] in a good spot. The balance sheet looks very good to us.”

The billions in equity invested in WeWork as a private company and when it went public through a special purpose acquisition company have gone. Holders of its pre-bankruptcy debt may recover just 5 cents on the dollar.

The bankruptcy proved expensive enough for creditors to be asked to put in $450mn of new cash. Yardi Systems put in the largest share, giving it a majority stake in the new WeWork. Other lenders, including SoftBank and King Street, will have minority stakes.

After the bankruptcy, Yardi wants to expand WeWork’s marketing to small businesses and to embrace technology used by hotels, such as real-time bookings. The company also hopes to launch an affiliate programme, in which it would team up with other co-working operators.

“Our view of co-working is that it’s an interesting combination of hospitality or hotelling, apartment leasing and commercial leasing,” he said.

This is new territory for Yardi’s asset-light software company, but he said he had no doubts that he could make a success of WeWork. “If there were doubts, I think we would’ve been much more cautious.”

The companies will be managed as separate entities.

Office properties have been under pressure but Yardi told the FT that their owners should embrace flexible space to make better use of vacant capacity. Over time, he said, “office buildings will continue to be in demand, and flex will be an integral part of all office buildings”.

He has kept a low profile, in stark contrast to Neumann’s fondness for appearing in the media, sometimes with celebrities, to promote his start-up. Neumann tried throughout the bankruptcy to get a foothold in WeWork, first by offering $200mn in financing, and then with an unsolicited offer of more than $550mn.

During the proceedings, Neumann objected to the company’s plan to let existing lenders including Yardi determine WeWork’s fate, calling Yardi “a potential insider”.

Yardi declined to comment on the allegation. Neumann withdrew his objection on Tuesday and abandoned his bid.

“For several months, we tried to work constructively with WeWork to create a strategy that would allow it to thrive,” he said in a statement. “Instead, the company looks to be emerging from bankruptcy with a plan that appears unrealistic and unlikely to succeed.”

Acquiring WeWork was not part of Yardi’s original plan, but came about unexpectedly in recent weeks after the company disclosed its cash crunch, Yardi said.

Yardi Systems and WeWork first teamed up in 2022 on an office management and data analytics product. WeWork then turned to Yardi for help when it restructured its debts in early 2023. At that time, the software group agreed to buy $175mn in secured notes and about $40mn in shares through a legal entity called Cupar Grimmond.

Its identity was a mystery until April, when the FT revealed that Yardi was behind the pseudonym. It combines Cupar, the town Eileen Yardi’s ancestors immigrated from in Scotland, and Grimmond, a family name.

Then WeWork made an even bigger ask: whether Yardi would be willing to become its majority owner with the second investment, taking its total commitment above $500mn.

Yardi Systems is happy going unnoticed by most of the business world, but it is well-known in real estate circles as a back-end software company with a large market share.

“Every commercial landlord I’ve ever spoken to uses Yardi Systems. Anyone sizeable — shopping mall, apartment building — they use Yardi,” said Daniel Gielchinsky, a partner at DGIM Law who often advises on real estate matters.

In contrast to WeWork’s dash for growth, its evolution has been more measured. Yardi fondly recalls his wife writing its first tech manual and says the family has no interest in taking the company public.

“I’m hoping that over the course of time, most people will know RentCafe and WeWork,” Yardi said, referring to the prominent online rent payment platform Yardi Systems runs, whose customers do not associate it with the parent company. “And Yardi can go into its shell.”