WeWork Declares Intent to Renegotiate Almost All Leases

After WeWork warned final month that it may not be in enterprise for for much longer, its chief government stated on Wednesday that the co-working firm was going to attempt to renegotiate almost all of its leases and would most likely pull out of underperforming places.

The actions, detailed in a letter from David Tolley, who took over as chief government after the sudden resignation of Sandeep Mathrani in May, are meant to cut back how a lot WeWork spends leasing workplace house.

WeWork, which has misplaced $15 billion because the finish of 2017, has been negotiating decrease rents for over three years — and has had some success doing so at a time when landlords are determined to fill workplace towers which have been emptied by the work-from-home shift that began through the peak of the pandemic.

“We will seek to negotiate terms with our landlords that allow WeWork to maintain our unmatched quality of service and global network, in a financially sustainable manner,” Mr. Tolley stated within the letter. “As part of these negotiations, we expect to exit unfit and underperforming locations and to reinvest in our strongest assets as we continuously improve our product.”

Still, it isn’t clear whether or not landlords will need to scale back the prices of the leases additional, and which will clarify why WeWork stated it was ready to stroll away from sure areas.

WeWork’s empire remains to be enormous. At the top of June, the corporate stated it had 777 places globally, the identical quantity as a 12 months earlier. And demand for its house seems to be declining. WeWork reported that occupancy and memberships declined within the second quarter from the primary quarter.

Under Adam Neumann, a co-founder and former chief government, WeWork grew exponentially earlier than the pandemic. Mr. Neumann contended that shared work areas would revolutionize how individuals labored. But the corporate’s enormous losses prompted it to withdraw an preliminary public providing in 2019 and obtain a bailout from SoftBank, the Japanese conglomerate.

WeWork went public in 2021 by merging with a clean test firm, however its inventory traded for pennies for months, prompting it to hold out a reverse inventory break up final week that was geared toward acquiring a share value above $1, a requirement for a New York Stock Exchange itemizing.

“Substantial doubt exists about the company’s ability to continue as a going concern,” WeWork stated final month. And the corporate remains to be burning by means of giant quantities of money. In the primary half of this 12 months, WeWork’s operations consumed $530 million, virtually as a lot as within the first half of 2022.

Still, Mr. Tolley stated on Wednesday that WeWork was “here to stay.”