WeWork may exit or rethink one in five of its leases as the troubled co-working firm slashes expenses and chases profitability.
In a call with Citigroup analysts last month, CEO Sandeep Mathrani detailed the steps WeWork is taking to review its global portfolio, which had 828 locations as of March. According to the Financial Times, the troubled co-working firm has tapped Knight Frank to help restructure its leases in the United Kingdom.
“If I look at the portfolio, like anyone’s portfolio, it’s 80:20. Eighty percent [of WeWork’s leases] are great, 20 percent need to be restructured,” Mathrani said on the call with analysts.
Until last year, WeWork grew at breakneck speed, guaranteeing leases to landlords to secure an ever-growing portfolio of office space. Since its botched IPO, the SoftBank-backed company’s valuation has plunged from $47 billion to just under $3 billion. Mathrani, who took over as CEO in February, is reviewing the entire portfolio.
In Hong Kong, WeWork reduced its footprint by 20 percent, sources told the FT.
Not all shared-space companies are retrenching. IWG recently scooped up a 30,000-square-foot lease that WeWork vacated in March. IWG, formerly known as Regus, recently raised £320 million, or $402.5 million, which it will use to expand, including investing in distressed properties.
In London, WeWork is in talks to reduce its commitment at an office development where it previously agreed to lease 190,000 square feet. In 2017, WeWork committed to leasing two buildings at Cain Hoy Enterprises’ Stage development. Now it may take just one building spanning 70,000 square feet, Bloomberg reported.
[FT, Bloomberg] — E.B. Solomont