Faraday Future has sold its Los Angeles headquarters in a move to help fill the EV startup’s exhausted coffers, according to property documents obtained by The Verge. A subsidiary of New York-based real estate firm Atlas Capital purchased the headquarters on March 8th and immediately began leasing the building back to Faraday Future for an undisclosed amount.
The documents did not reveal how much Faraday Future received in the sale of its headquarters, which consists of two buildings just off of South Figueroa Street in the city of Gardena, California, about 15 miles from downtown Los Angeles. One former employee familiar with the sale pegged the number at around $10 million. It could be higher; Faraday Future took a $17 million loan against its headquarters in May 2018, which it has since repaid, according to the lender iBorrow. The EV startup also took a $14 million “rescue loan” against the headquarters in July 2017 during the early stages of a separate financial crisis. The company finished paying back that loan in January 2018. It bought the buildings in 2014 for $13.2 million.
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The sale of the headquarters is the latest move by Faraday Future to keep itself afloat after a nasty breakup with Chinese real estate conglomerate Evergrande, which backed out of a $2 billion investment deal at the end of 2018. Just last week, Faraday Future announced that it is selling the 900 acres of land it owns in Las Vegas and is looking for $40 million, confirming a February report by The Verge. Faraday Future also recently decided not to bring back hundreds of employees who have been on unpaid leave since at least December.
Faraday Future once planned to build a $1 billion factory on the Las Vegas land where it would produce the company’s all-electric luxury SUV, the FF91. It canceled those plans in 2017 in favor of leasing a smaller, existing factory in Hanford, California, where tire company Pirelli used to operate. The company has made a few prototypes of the FF91, but it has been unable to start production due to the clash with Evergrande.
John Schilling, Faraday Future’s director of communications, confirmed the sale of the company’s headquarters in an email. “As with the sale of the Las Vegas property, the sale of our Gardena HQ is part of our optimization of business strategies as we direct all of our resources at our core goal of delivering FF 91 later this year,” he wrote. Atlas Capital did not immediately respond to a request for comment.
The relationship with Evergrande started to publicly fray last October after the Chinese conglomerate announced that Faraday Future founder and CEO Jia Yueting had spent the entire first installment of the $2 billion investment — $800 million — by July 2018, way ahead of schedule. Jia asked Evergrande to advance $700 million of the remaining $1.2 billion that was promised, which the conglomerate initially agreed to, court records showed. Evergrande asked Jia to reduce his role at the company in return for the money, but it wasn’t satisfied with the evidence that he did, so the conglomerate never sent more money.
As a result, Faraday Future found itself very low on cash. The startup had just $18 million in the bank at the start of September, and it was carrying a payroll of $15.8 million per month, according to court records. It also owed around $59 million to suppliers and contractors, those same records showed. So in October, it laid off some employees and cut salaries across the company. A co-founder and a number of key executives resigned as a result, and hundreds more employees were furloughed in December.
Evergrande and Faraday Future struck a truce at the end of December and agreed to restructure the deal. Evergrande walked away with some of the assets that the two companies had built up in China (including land for a factory), and it’s now working on building its own EV empire. (The conglomerate also still holds a 32 percent stake in the startup, though.) Jia retained his control over Faraday Future, but Evergrande pulled the remaining $1.2 billion off the table.
The split left Faraday Future without a main source of investment money. Jia was, at one point, a billionaire, thanks to the empire he built in China with Leshi, which was once referred to as the “Netflix of China.” But he has been living in the United States in self-exile since 2017 because of the massive amount of debt he owes to creditors of that company. Faraday Future says it has spent the months since the breakup with Evergrande holding discussions with potential investors, but it still has no deal in place.
Faraday Future still has around 250 employees at the LA headquarters who are working on the FF91 through the furloughs at reduced pay, multiple current and former employees tell The Verge. But the startup needs close to $500 million in order to get the FF91 into production at the Hanford factory. In the meantime, lawsuits from suppliers and contractors are piling up. The Verge learned last month that at least 11 companies are individually suing the startup for unpaid bills, with the total owed running close to $80 million. In a new lawsuit that was filed in Los Angeles Superior Court after that piece was published, FedEx claims Faraday Future owes the delivery company nearly $400,000, too.