SoftBank is pouring $1.1 billion more into WeWork as the flexible-office giant sees membership fall.
In a memo to employees, chief financial officer Kimberly Ross called the infusion “another sign of SoftBank’s continued support for our business,” according to Bloomberg. The funding will come in the form of senior secured notes, and will bring the company’s cash on hand to $4.1 billion.
WeWork’s membership fell 12 percent from the first quarter to 612,000, and the company recorded $882 million in second-quarter revenue — down from $1.1 billion during the first three months of the year. It also burned through $671 million in cash, including $116 million in non-recurring expenses such as severance pay due to layoffs.
“Covid-19 has had an impact on our business,” Ross wrote in her memo. Last month, WeWork tapped JLL and CBRE to help lease millions of square feet of vacant office space in New York City and Los Angeles. In New York, its availability rate is more than 20 percent, nearly double Manhattan’s overall rate. It also recently shuttered its first location ever, at 154 Grand Street.
Following WeWork’s botched IPO last fall, controversy has swirled over SoftBank’s continued commitment to the company, now totalling $10 billion in total support.
Cost-cutting measures have helped reduce cash burn that peaked at $1.3 in the last quarter of 2019. [Bloomberg] — Orion Jones