Table of Contents WEWORK COMPANIES INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2018 Note 4. Property and Equipment, Net Property and equipment, net, consists of the following: December 31, (Amounts in thousands) 2017 2018 Leasehold improvements $ 1,908,673 $ 3,562,651 Capital lease assets 43,710 44,443 Equipment 170,469 371,455 Furniture 225,453 423,346 Construction in progress 280,851 538,384 Property and equipment 2,629,156 4,940,279 Less: accumulated depreciation (292,064) (571,507) Total Property and equipment, net $ 2,337,092 $ 4,368,772 Depreciation expense for the years ended December 31, 2016, 2017, and 2018 was $86.4 million, $156.6 million, and $284.1 million, respectively. Note 5. Noncontrolling Interests During 2018, the Company launched a fund (the “Creator Fund”) that will make investments in recipients of WeWork’s “Creator Awards” and other investments through use of a venture capital strategy. A wholly-owned subsidiary of the Company is the managing member of the Creator Fund. As of December 31, 2018, the Creator Fund had received contributions from Softbank Group Capital Limited totaling $44.7 million, representing 99.99% of the interest of the Creator Fund. An affiliate of Softbank Group Capital Limited is a principal stockholder with representation on the Company’s board of directors. During 2018, the Creator Fund purchased certain investments that had been previously warehoused by WeWork on behalf of the Creator Fund for $12.1 million, as a result of these purchases, the Company recognized a $1.2 million increase to additional paid in capital, which represents the difference between the cash received and the carrying value of the investments transferred. See Note 9 for additional details of investments acquired by the Creator Fund. The portion of consolidated equity attributable to the interest of the Creator Fund’s investors in the Creator Fund is reflected as noncontrolling interests, within the equity section of the accompanying consolidated balance sheet as of December 31, 2018. During 2018, the Company formed a 50% owned and consolidated joint venture entity (“WeWork Waller Creek”) to facilitate an investment in an unconsolidated joint venture (“Waller Creek”) that acquired a parcel of land in Texas. See Note 9 for additional details. The Company is the managing member of WeWork Waller Creek, which owns 5% of Waller Creek. As of December 31, 2018, the Company and the other WeWork Waller Creek investor have each funded $3.2 million related to the closing of the land purchase. The portion of the consolidated equity attributable to the interest of WeWork Waller Creek’s other investor is reflected as a redeemable noncontrolling interest, within the mezzanine section of the accompanying consolidated balance sheet as of December 31, 2018. During 2018, a consolidated subsidiary of the Company (“ChinaCo”) sold to investors $500.0 million of Series B Preferred Stock at a price of $18.319 per share and a liquidation preference of $18.319 per share. During 2017, ChinaCo sold to investors $500.0 million of Series A Preferred Stock at a price of $10.00 per share and a liquidation preference of $10.00 per share. The portion of consolidated equity attributable to ChinaCo’s Series A and B Preferred shareholders are reflected as redeemable noncontrolling interests, within the mezzanine section of the accompanying consolidated balance sheets as of December 31, 2017 and 2018. See Note 6 for a discussion of the Class A Ordinary shares issued during 2018 by ChinaCo in connection with an acquisition. There were no Class A Ordinary shares F-26