After word of mass layoffs and a shift toward austerity, the inevitable is happening: WeWork is quietly trying to back out of leases.
Executives at the embattled co-working company have been negotiating with landlords to find a way out of agreements it signed in up to 100 buildings around the world, The Information reported.
Meanwhile in New York, Chestnut Holdings is trying to boot WeWork from a Midtown building, according to Crain’s. The landlord alleged WeWork violated the terms of its lease because of its restructuring and owed $30,000 in rent and fees, according to court documents. WeWork filed evidence to show it paid the $30,000, and a judge granted a temporary injunction to allow it to stay.
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The leases WeWork is seeking to exit represent 10 percent to 15 percent of its office space, although many are in buildings yet to open as WeWork locations. Those that have opened have been filling slowly. The company disclosed $47 billion in lease obligations in its since-abandoned IPO filing.
This is not the first example of WeWork walking away: In downtown Pittsburgh WeWork dropped out of a 100,000-square-foot lease, and in Seattle it axed plans for a 36-story mixed-use development.
According to a WeWork spokesperson, the company is “conducting an in-depth review of operations and assets globally in order to improve performance and best optimize our real estate portfolio.” She added that “only a small number of open locations may be subject to any change.”
WeWork is also trying to sublease 80,000 square feet of its corporate offices at San Francisco’s Salesforce Tower, where former CEO Adam Neumann had planned to spend time at a Turkish bath house–inspired hot tub.
In October, WeWork’s primary investor, SoftBank, announced a $9.5 billion rescue package with a $5 billion debt facility, a $1.5 billion commitment and a $3 billion stock tender offer. As part of the package, Goldman Sachs extended a $1.75 billion line of credit. [The Information, Crain’s] — Georgia Kromrei