262018 Big Landlords Pile Into Co-Working as WeWork’s Ascent.docx

2/6/2018 Big Landlords Pile Into Co-Working as WeWork’s
Ascent Continues - WSJ
https://www.wsj.com/articles/big-landlords-pile-into-co-
working-as-weworks-ascent-continues-1516712400 1/5
Co-working is coming of age.
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MARKETS PROPERTY REPORT
Big Landlords Pile Into Co-Working as
WeWork’s Ascent Continues
Blackstone, Brook�ield and Hines are exploring a wide range
of deals with shared-space �irms like
WeWork and Convene
|

A common room inside a WeWork location in San
Francisco. PHOTO: MICHAEL SHORT�BLOOMBERG NEWS
Jan. 23, 2018 8�00 a.m. ET
By Peter Grant
Some of the world’s largest landlords, facing weak growth in
traditional office rents
and occupancies, are investing heavily in what until recently
was viewed as a niche
office business that catered primarily to technology startups and
millennials.
A venture of Brookfield Asset Management and Onex Corp.
is negotiating to buy IWG PLC, which has a market
capitalization of £2.48
billion ($3.46 billion) and operates co-working facilities as well
as more traditional
offices for small and midsize businesses. On Saturday, the
U.K.’s Takeover Panel
extended the deadline for the venture to make an offer until
Feb. 2. Brookfield declined
to comment on the negotiations.
Meanwhile, Blackstone Group LP last year purchased the Office
Group in a
deal that valued the U.K.-based co-working provider at £500

million. Blackstone,
Brookfield and Houston-based Hines also are exploring a wide
range of deals with new
shared-space firms like WeWork Cos., IWG, Industrious and
Convene.
The new workplace trend “is certainly something we’re
spending a lot of time focusing
on in our office space business,” said Rob Harper, head of U.S.
asset management at
Blackstone’s real estate group.
Co-working at its
core is a new
name for a
business that has
been around for
decades. Firms
simply lease big
blocks of space from landlords and subdivide it for smaller
tenants and provide a range
of office services.
But as the economy began to recover after the 2008 recession, a
new set of co-working
companies led by WeWork found surging demand among young
workers for densely
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packed spaces with hip designs and buzzy vibe.
The changes are permeating most dimensions of the traditional
office space business,
including lease terms and structure, building financing and even
valuations.
Traditional office building investors are watching closely. So is
the tech world, given
WeWork’s stratospheric $20 billion valuation.
The interest among major landlords is being fueled by the
recognition that the co-
working business has been one of the few bright spots in the
office market during the

economic recovery.
Overall, growth in the U.S. market has been much slower than
in previous upcycles.
Current occupancy in the top 50 markets is roughly 85%,
according to research firm
Green Street Advisors. It was close to 92% in 2000 and greater
than 87% in 2007, Green
Street said.
Co-working firms are one of the few sources of growing
demand, a point stressed at an
October investor presentation by Boston Properties Inc., one of
the country’s largest
office real-estate investment trusts. The firms accounted for 30
million square feet of
absorption during the current cycle, or 9.1% of the total, said
Owen Thomas, Boston
Properties’ chief executive.
The firm has cut numerous leasing deals with WeWork. In one
high-profile project,
Boston Properties, WeWork and Rudin Development, currently
are developing a 14-
story building in the Brooklyn Navy Yard that will include a
food hall, health center,

open lawn conference center and access to a new ferry terminal.
“It’s clearly an important trend in our business,” said Mr.
Thomas.
But it also poses headaches for building owners. Up until
recently, firms like WeWork
have attracted thousands of entrepreneurs and small firms to
spaces in major office
buildings that in the past didn’t serve such tenants.
The co-working approach to office space, especially its focus on
flexible and short-term
commitments, is beginning to spill over into the more
traditional office space
businesses, however. Big companies are pressing landlords for
space with a hipper
vibe, more amenities and that can be expanded and contracted
easily.
This will likely increase landlord costs for building out spaces.
“If you want to attract
and retain tenants, you’ve got to be a little bit more bling,” said
Jed Reagan, a Green
Street analyst.

Also, because co-working generally uses less space per worker,
occupancy likely will
decline as big tenants begin to transition to more flexible
spaces. If big tenants succeed
in reducing lease lengths from the standard 10 or 15 year
contracts to a few years,
building owners are going to have a tougher time obtaining
financing.
“If you’re a landlord you have to feel somewhat threatened,”
said Matt Kopsky, a REIT
analyst at financial-services firm Edward Jones.
Landlords are responding with a variety of strategies. Some of
the biggest players are
buying co-working and flexible-space businesses, like
Blackstone did with the Office
Group and Brookfield might do with IWG.
Owners also are exploring a wide range of business deals with
firms like WeWork and
Industrious. In some cases, landlords will simply lease space to
co-working businesses.
In other cases, landlords are cutting management agreements
with co-working
companies similar to the kind of deals that hotel owners may cut
with hotel brands like
Hilton or Marriott.
Brookfield Property Partners, a listed company controlled by
Brookfield Asset
Management, also has acquired a roughly 18% stake in
Convene, which offers co-
working spaces as well as on-demand meetings and conferences.

“We’re keeping our options alive and open at this point and
we’ve got many,” said Ric
Clark, chairman of Brookfield Property Partners.
—Eliot Brown contributed to the article.
Write to Peter Grant at [email protected]
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ghts Reserved
2/6/2018 A Venture Capitalist Talks About Her Best and Worst
Investments - WSJ
https://www.wsj.com/articles/a-venture-capitalist-talks-about-
her-best-and-worst-investments-1512356940 1/6

https://www.wsj.com/articles/a-venture-capitalist-talks-about-he
r-best-and-worst-investments-1512356940
MARKETS JOURNAL REPORTS: FUNDS & ETFS BEST
BET�WORST BET
A Venture Capitalist Talks About Her Best
and Worst Investments
Cyan Banister of Founders Fund o�ers the lessons she has
learned from both winning and losing
| |
Cyan Banister says her Postmates investment was instructive—
and pro�itable. PHOTO: ANTHONY THORNTON
Dec. 3, 2017 10�09 p.m. ET
By Chris Kornelis
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Investments - WSJ
After Cisco Systems Inc. bought IronPort in 2007, Cyan
Banister, an early employee of
the acquired company, found herself with money from the
acquisition that she didn’t
know what to do with. She considered putting it in the stock

market or in land, but
settled on startups. The first check she wrote was to SpaceX.
Without quantifying the size of her investment or her returns,
she says “I’ve done quite
well.”
Over the past decade, she has written other
personal checks to companies that have
become familiar names—including Uber
Technologies and DeepMind Technologies,
which was purchased by Google in 2014. In
2016, she became a partner at the venture-
capital firm Founders Fund, where she has
invested in companies such as Brave Software
and Contraline, which is developing a male
contraceptive.
Ms. Banister has been an employee and she
has been a CEO—co-founding the pinup-
photography platform Zivity—but she says
investing is a better fit for the way her brain works: She’s a
sprinter, she says, not a
marathon runner.
“I really like to work on different things at different times and
think about different
problems,” she says, adding that as an investor in various
startups she can “shift from
helping a hardware company, to the next day a consumer-apps
company, and the next
day a biotech company. I think it really just keeps me
intellectually curious.”
Here, she talks about the best and worst bets she has made.

JOURNAL REPORT
Insights from The Experts
Read more at WSJ.com/FundsETFs
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Investments - WSJ
Best Bet: Postmates
INVESTMENT: “Well over a million dollars”
GAINS: Millions. Her stake in the company is currently valued
at several times her

investment.
Ms. Banister made a personal investment in Postmates Inc.
early, in 2012, when
the company was still a bike-messenger service. Today, its
value has been
estimated at about $800 million, and it delivers everything from
food to office
supplies in under an hour.
Postmates is just the kind of solution Ms. Banister likes to
invest in: “Someone has
the skill. Someone needs the skill. What sort of technology or
platform can enable
those two people to come together as efficiently as possible?”
she says. “I just
found it really compelling. It seemed like an underserved
market.”
Ms. Banister says Postmates is one of the biggest personal
investments she has
made, but not necessarily the investment that provided her with
the greatest
monetary return. In some ways, she says, that speaks to the
difference between
her life as an angel investor and her current role as a venture
capitalist, where her

job is to return as much value as possible to her partners and
limited partners.
“As an angel investor,” she says, “it’s the company that I was
the closest to, had the
most fun with, and had really great financial rewards, and did
big things for the
world.”
THE TAKEAWAY: Postmates has done well in certain regions
of the country, such
as Los Angeles, but it isn’t dominant nationwide in a way that,
say, Uber is. Ms. Banister
says that demonstrates that a company need not be a nationwide
force to succeed.
“If you have an investment thesis that ‘I only invest in
monopolies’ and you took that
thesis down the path of national monopoly, then I may have
never done that
I
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Investments - WSJ

investment,” she says. “So I think that has definitely informed
my thinking as well as
people here at Founders Fund,” which is also an investor.
Ms. Banister says her Postmates experience also taught her to
put less emphasis on
product and more on the design of product and its founders.
Products and strategies
are likely to change, she says, and they should. The long-term
relationships, she says,
tend to be with founders more than initial product ideas.
“I’m much more open to the fact that I’m going to be in a
relationship with this founder
for 10 years,” she says. “Do I believe in them? If the answer is
yes, then the product is
kind of secondary.”
Worst Bet: GameCrush
INVESTMENT: $250,000
LOSSES: $250,000
In 2010, Ms. Banister became interested in a website called
GameCrush that enabled

men to play videogames online with female gamers and video
chat with them as well—
then tip them if they enjoyed the experience. Ms. Banister, who
calls herself “a little
more libertine than a lot of people,” pledged $250,000, which
was her default
investment at the time. “I was really excited about the prospect
of gamers meeting
each other,” she says, “as well as these female gamers being
able to make a living doing
what they love.”
The warning signs, she says, were there from the beginning.
At an early dinner—after she had committed but before the
money was sent—she says
it became clear that among the three founders, there wasn’t a
clear leader. No single
person was in charge. However, since she had already agreed to
fork out the cash, she
stuck to her word. (The founders didn’t reply to requests for
comment for this article.)
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Investments - WSJ
Later, the company’s biggest investors pressured the founders to
make the site more
mainstream. GameCrush eliminated some of the features, like
certain tipping
mechanisms, that Ms. Banister says had made the site
successful.
Women and men, she says, lost interest in the site. Ms. Banister
lost her entire
investment when the company went under.
“That was a great disappointment to me,” she says, “because I
really like sites that
push boundaries and products and companies that try to move
social norms.”
THE TAKEAWAY: Ms. Banister says the experience has, in
many ways, fundamentally
changed the way she invests.
To start, she tells companies up front that if material
information arises, she’s free to
withdraw her offer. She also started investing in smaller
amounts depending on her
level of conviction—$10,000 or $75,000 a throw, for example—
and saving those
$250,000 personal checks only for those opportunities she is
“willing to bet the farm
on.”
Critically, she says she no longer invests in companies without

a clear leader.
“There have been companies I have not invested in after
GameCrush because I can
smell the hint of founders not being able to be agreeable,
nobody was really in charge,”
Ms. Banister says. “And sure enough, within six months, they
implode.”
She says the rules she set up for herself in the wake of the
GameCrush experience
compelled her to sit out some deals that “maybe arguably I
should have been in, but I
feel better about them, because you know what, this could have
gone wrong. It’s better
that I stick to this rigidity.”
Mr. Kornelis is a writer in Seattle. He can be reached at
[email protected]
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Investments - WSJ
Appeared in the December 4, 2017, print edition as 'Cyan
Banister???s Lessons About
Startup Investments.'
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CURRENT EVENT EXAMPLE (first article is assigned, second
article is also assigned, last article you find on your own to
summarize – do NOT use first or second article to summarize)
1. What is different about new iPhone? Apple is offering many
upgrades in the new phone, such as battery life, better camera,

more storage, and brighter screens. I believe that these
enhancements are incremental versus revolutionary. This is one
of the first times in recent history that the iPhone has not under
gone a major design change.
2. How are pricing strategies of wireless carriers affecting
sales? Pricing strategies of wireless carriers have resulted in
declining iPhone sales recently. The strategy that affected this
is that it is more expensive to upgrade your phone and people
are keeping their old iPhones longer because they do not see big
improvements in newer versions. This could have long lasting
consequences on the industry.
3. What is WAZE? Google acquired WAZE in 2013. WAZE
provides real time driving conditions from other drivers. Google
is planning on having different drivers from the same companies
communicate with each other regarding morning and after work
commutes. They are able to share information relatively easily
through WAZE.
4. Talk about role of driverless cars. The role of driverless cars
at Google and Uber are attempting to revolutionize the way we
use transportation. One of the main goals of driverless cars is
safety. There still is much testing to be done until driverless
cars are in the marketplace on a regular basis. Other companies
who are pursuing this technology include GM, Ford, and Tesla.
5. Article summary – Wall Street Journal, “Global Air Travel
Continues to Grow”, Cowan, Sept. 18, 2015.
According to many industry experts, air travel has grown
tremendously in the last ten years. This makes sense as the
economic times have been relatively good in most parts of the
world. There are many new airlines in Asia which have increase
the supply of flights. There are some areas of uncertainty in
terms of growth of air travel. One such area is Europe where
Britain’s vote to exit the European Union could decrease air

travel between countries. Also, the rise of terrorist attacks
around the world may keep more people closer to home. While
this could cause some in the airline business to lower
expectations, there are still plenty of growth opportunities in
China where the number of people now able to afford air travel
has increased. Oil prices also affect air travel, which has helped
with keeping costs lower.
Current Event
"A Venture Capitalist Talks About Her Best and Worst
Investments", Kornelis, Dec. 3
1. Ms. Banister invests in start ups who are headed by
entrepreneurs. In your opinion, why is it so important for the
new companies to have clear leadership? What problems could
you see if there is not a clear leader in these infant companies?
2. If you had lots of capital to invest in start up companies like
Ms. Banister, what types of businesses would you invest in and
why. What sorts of attributes would you be looking for in
budding entrepreneurs to ensure you were making a sound
investment?
"Big Landlords Pile Into Co-Working as WeWork Ascent
Continues", Grant, Jan 23
3. If you were an entrepreneur, would you enjoy working in a
co-working space, why or why not?
4. What are the downsides, if any of working in a co-working
space?
5. To what degree do you see WeWork as a "disruptor" in the
office space environment?
6. Find any current business article and summarize in 8
sentences or more.

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