As WeWork tries to renegotiate and exit leases under the threat of bankruptcy, one landlord intends to get paid in full.
DivcoWest is suing the flailing co-working operator for $30 million after WeWork walked away from its location at 311 West 43rd Street.
San Francisco-based Divco said it learned of WeWork’s departure after the company failed to pay its December rent, according to a lawsuit filed in Manhattan Thursday. Divco terminated the lease as a result, but contends that it’s entitled to rent for all the months of the original deal, which ran through 2032.
WeWork claimed that it vacated the property, according to Divco’s lawsuit, but the landlord said the tenant never sent notice it was walking away. WeWork also didn’t act like a company surrendering the space, as it didn’t remove its property, the suit claims.
The deal WeWork signed “prohibits early surrender or ‘abandonment of this lease’ without landlord’s written consent, which [the] landlord had never provided,” the lawsuit reads.
WeWork was $1.9 million in arrears when it stopped paying rent and Divco now wants $30 million in damages, which includes rent for the next nine years. The location is between Eighth and Ninth avenues.
Representatives for DivcoWest and WeWork did not immediately respond to requests for comment.
DivcoWest, headed by CEO and founder Stuart Shiff, bought the 14-story building for $131 million from Billy Macklowe in 2018 and borrowed $91 million against it from Citizens Bank. WeWork had signed a lease two years earlier for about 64,000 square feet.
The dispute comes as WeWork is making a last-ditch effort to cut costs. The company told its landlords that it was going to try to renegotiate “nearly all” of its leases.
The company announced in August that it had ”substantial doubt” about whether it could continue operating. Should WeWork file for bankruptcy, even if Divco wins a judgment, it could find itself on a long list of creditors.
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