Newmark Close to Finalizing Deal to Acquire Knotel
The stalking-horse auction for Knotel ended on Friday after no other bidders, but a subsidiary for Newmark threw its hat in the ring to buy the company, according to a document filed in Delaware bankruptcy court.
Newmark provided about $20 million in financing to Knotel and made a $70 million stalking-horse bid to acquire the company in February when Knotel filed for bankruptcy.
Now, it appears that it’s the winning bidder, although the acquisition is still subject to approval by the Delaware court, which set a March 18 hearing for the sale.
“The acquisition of Knotel is subject to the approval of the United States Bankruptcy Court for the District of Delaware at a scheduled March hearing and to customary closing conditions,” a spokesperson for Newmark said in a statement.
A spokesperson for Knotel did not immediately respond to a request for comment.
(Disclosure: Observer Capital, led by Observer Media Chairman and Publisher Joseph Meyer, is a Knotel investor.)
Knotel was crowned a unicorn in 2019, but faced a brutal 2020, as the coronavirus pandemic upended the flexible workspace model and its members stayed home to avoid the spread of the virus.
Despite pitching itself as a more stable alternative to WeWork, Knotel also had a high cash burn and threw money around to expand its footprint rapidly.
Experts previously told Commercial Observer that Newmark’s acquisition of Knotel makes perfect sense, as its able to salvage its earlier investment into the company, and gives it a flex office platform to meet the expected surge in the market and join brokerages like CBRE in owning their own coworking brand.
“It’s now becoming very common for the big landlords to have their own coworking facilities,” Ruth Colp-Haber, president and CEO of brokerage Wharton Property Advisors, previously told CO. “There’s just a lot of need for easy and short-term space, and Newmark, they’re talking to tenants and they hear it.”