The Real Deal New York

WeWork is selling $500M in junk bonds

In debut sale, company is issuing seven-year senior unsecured bonds
April 24, 2018 12:10PM

Adam Neumann and Wall Street (Credit: Getty Images and Public Domain Pictures)

WeWork is planning to make its debut sale on the bond market with a $500 million selloff of junk bonds.

The Adam Neumann-led co-working company will be issuing seven-year senior unsecured bonds to raise funding for general corporate purposes, and they should price on April 26, according to Bloomberg.

WeWork saw revenue of $886 million in 2017, and the company has $706 million in lease commitments this year. It generated $244 million in cash last year and spent $1.5 billion of investments, and the company has at least $5 billion of committed lease contracts through 2022.

This marks WeWork’s first time on the bond market since it was founded in 2010. In August, the company received a $4.4 billion investment from SoftBank, giving it a $20 billion valuation.

WeWork has been working to diversify its worldwide portfolio of co-working spaces and recently paid about $810 million for an office complex in London. The company also bought the Chinese co-working startup Naked Hub earlier in April for $400 million.

Fitch gave the company a BB- rating, telling Bloomberg, “As a company in sustained growth mode, WeWork is not profitable on a combined basis, as significant growth operating expenses more than offset existing property cash flows.”

Several large financial companies such as JPMorgan Chase, Morgan Stanley and Wells Fargo are managing the sale. [Bloomberg]Eddie Small