Joel Schreiber, WeWork's first investor, under fire on multiple fronts
WeWork halves annual loss to $2.3 billion
“This is WeWork’s moment,” CEO Sandeep Mathrani says
WeWork never made losses part of its narrative during its meteoric early years, but it does now.
The flex office giant gleefully reported Wednesday that it cut its net losses in half last year to $2.3 billion from the year before.
WeWork’s negative cash flow from operating activities dropped from $1.9 billion in 2021 to $700 million, and the company’s revenue last year was $3.25 billion, a 26 percent increase from 2021.
In a letter to shareholders, CEO Sandeep Mathrani celebrated WeWork’s year and claimed that the firm was built to benefit from the higher-interest-rate environment, which has made it harder to refinance office properties and stalled office leasing.
“This is WeWork’s moment,” Mathrani said.
WeWork’s revenue bump was driven by increased occupancy and memberships, according to Mathrani. The company ended the year with 682,000 memberships, the most in its history, and it had a 70 percent occupancy rate in more than two-thirds of its markets.
“In a time of uncertainty for space occupiers, WeWork can provide certainty,” Mathrani boasted. “We believe a seismic behavioral shift is transforming the traditional commercial office landscape — putting WeWork front and center as the flexible solution.”
However, it’s not all sunshine and rainbows for WeWork. The company’s red ink last year brought its accumulated losses to an astounding $16.2 billion. The firm lost $454 million in the fourth quarter and finished the year with just $287 million in its coffers — down from $924 million at the end of 2021.
WeWork has been cutting back, but its lease obligations were still $15.6 billion when this year began.
WeWork attributed its historical losses to investments into expanding WeWork’s footprint, the operation of non-core businesses and the pandemic. The firm said that its growth plans “placed a significant strain on the company’s resources.”
WeWork entered into a series of agreements this month that will reduce its net debt by $1.5 billion, extend the maturity of its senior loans to 2027 and produce new funding and rolled-over capital commitments of roughly $1 billion.
WeWork was close to a deal earlier this month to restructure more than $3 billion in debt and raise cash. The cash boost would be in the hundreds of millions, enough to keep the company afloat for another few years.
Real estate software provider Yardi was among those considering a new investment in WeWork.
SoftBank, the company’s largest investor and creditor, was part of the negotiations but not expected to put more money into a firm it has already dumped $10 billion into since 2017. SoftBank lent WeWork $250 million in January and increased the size of a debt facility and postponed a repayment deadline in February.
WeWork said at the start of the year that it would cut 300 jobs. Nearly 39 percent of the company’s publicly tradable shares were shorted as of March 15. Its stock price rose 7 percent Wednesday to 75 cents a share but is down 46 percent this year and 89 percent in the past 12 months.
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