WeWork raises $700M in bond sale, but concerns are raised

Adam Neumann's company sold 7-year notes at 7.875%

TRD NEW YORK /
Apr.April 26, 2018 09:40 AM

Adam Neumann (Credit: Getty Images and thenails via Flickr)

WeWork sold $700 million in bonds Wednesday to investors wary of another startup with unstable cash flow entering the debt market.

The New York-based firm that offers hip co-working spaces initially sought to raise $500 million, but the company was able to raise an additional $200 million in seven year bonds with an interest rate of 7.875 percent. JPMorgan Chase advised WeWork on the bond sale.

Adam Neumann’s company doubled its revenue last year to $886 million, with $244 million in cash and spent $1.5 billion on investments. But the firm also lost $933 million last year and has $18 billion in lease obligations.

The bond documents offered the public a rare glimpse at the company’s financials.

While some expressed concerns over the company’s negative cash flow, few assets and at least $5 billion in lease obligations until 2022,  investors were attracted by the high interest rate and WeWork’s B-credit rating, the Journal reported.

Valued at around $20 billion and bolstered by a $4 billion investment from Softbank, WeWork has sought to expand its portfolio of co-working spaces internationally, including the purchase of an $810 million London office complex and the acquisition of Chinese co-working startup Naked Hub this month for $400 million.

The fundraising effort comes as WeWork fends off competition from rivals in a space that has a low barrier to entry. Knotel, another flexible office space startup, this month raised $70 million in second round fundraising, and is valued at $500 million. The company has leased more than 1.1 million square feet in New York, San Francisco and London, and expects to double in size. [WSJ] — David Jeans


Related Articles

arrow_forward_ios
Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

WeWork CEO Adam Neumann (Credit: Getty Images and iStock)

WeWork’s side businesses are fizzling

Sarah Pontius (Credit: Union College)

Another head rolls at WeWork

WeWork COO Shyam Gidumal (Credit: Getty Images)

WeWork announces Shyam Gidumal as new COO

Denizen Bushwick at 54 Noll Street (Credit: Google Maps, iStock)

A major Bronx landlord is shorting All Year’s bonds. Are his concerns legit?

CrowdStreet CEO Tore Steen (Credit: iStock)

CrowdStreet hits $1B milestone, crowdfunding firm claims

Adam Neumann and some of the properties, Museum Place and 225 West Julian in San Jose 

Adam Neumann no longer has a vision for San Jose

Greystar CEO Bob Faith and the Parkside Place Apartments in Cary, North Carolina (Credit: Greystar and Apartments)

What Greystar’s belief in multifamily says about the health of the economy

arrow_forward_ios
Loading...