Knotel is looking to get out of 10 Manhattan locations with lease commitments of nearly $200 million as the company clashes with landlords over unpaid rent.
The flex-office startup, valued at $1.6 billion in August 2019 but thought to be worth substantially less now, is offering nearly 375,000 square feet of space up for sublease, according to marketing materials reviewed by The Real Deal.
Most of the leases commenced within the last 18 months and carry a term of about 10 years. The annual base rent on the combined spaces totals about $21 million, which would have the total commitment starting at about $191 million – not accounting for rent escalations built into the leases.
Knotel did not immediately respond to a request for comment.
Some of the spaces appear to be up and running, while others are listed as built out yet unfurnished. One of the spaces is unbuilt, with the lease becoming effective in October.
The largest of the locations is at Savanna and Pacific Oak Capital’s 110 William Street in the Financial District, where Knotel is offering two floors covering roughly 80,000 square feet.
The move to sublease comes as Knotel fends off several lawsuits from landlords who claim the company has stopped paying rent. It doesn’t appear, however, that any of the spaces listed for sublease are the subject of a current lawsuit.
Knotel has about 2.5 million square feet in New York and a total of 5 million square feet spread across its 17 markets. Earlier this year, the company was reportedly looking to give back 20 percent of its overall portfolio to landlords. Knotel also went through two significant rounds of layoffs in 2020.
Knotel is also reportedly looking to raise $100 million in new funding at a price that would slash its most recent August 2019 valuation of $1.6 billion in half. The company lost $223 million last year, even before the coronavirus hit.
The flex-office market has been hit hard by pandemic-related stay-at-home orders.
Regus last month put a small number of locations in several U.S. cities into Chapter 11 bankruptcy protection. Other smaller players have either filed for bankruptcy or shut down locations.
And WeWork, which has been working to trim its massive portfolio, has closed and exited locations.
Correction: A previous version of this article misstated estimates for rent commitments at spaces Knotel is looking to sublet.