Bankrupt coworking company WeWork is nearly finished shrinking its money-losing real estate portfolio and could leave court protection by the end of next month, the troubled firm said.
By abandoning about 150 locations and by negotiating with landlords to rewrite leases on 150 others, the company will save more than $8 billion in future rent, a reduction of about 40%, according to a WeWork statement released Tuesday. The key to reorganizing has been reducing its real estate footprint, officials said, adding the firm has finished negotiations on 90% of its portfolio.
“With the 10% of the portfolio that we still have to work through over the next couple of weeks, we are spending a lot of time with landlords, sitting with them on the phone, in person, talking to them, trying to find ways for us to maintain our presence in the buildings,” Peter Greenspan, who is in charge of WeWork’s real estate, said in an interview.
WeWork announced its progress at a critical time. Last month, co-founder Adam Neumann renewed his effort to buy back his company, offering more than $500 million. That proposal is at odds with a months-old deal the company cut last year at the start of its restructuring case with longtime backer SoftBank Group and existing creditors. Under that proposal, WeWork would slash more than $3 billion of debt, wipe out most of its shares and hand ownership to senior lenders, according to court records.
During its Chapter 11 bankruptcy case, the company came under fire for withholding payments from property owners who wouldn’t agree to lower rent. The company said about 150 of its current leases will be unchanged.
The deals that its has struck with landlords “all have a component that allows WeWork to manage the downside of its risk,” Greenspan said. That could include rent reduction or reducing the size of its offices, he said.
Steven Church and Natalie Wong, Bloomberg , 2024-04-02 18:02:52
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