WeWork is embracing a future — albeit a smaller one — at RFR Realty and Kushner Companies’ Dumbo property.
The co-working company agreed to a modified lease with the landlords at 77 Sands Street, according to a motion filed in bankruptcy court reported by the Commercial Observer. WeWork will move forward with a discounted rent and a smaller footprint than the 72,000 square feet it leased in 2015; it will drop from five floors to three.
RFR and Kushner were among the top unsecured creditors of WeWork, as the company owed more than $3.1 million in unpaid rent at the 12-story, 226,000-square-foot building when bankruptcy began. The lease at the property was among those WeWork initially moved to reject upon bankruptcy.
WeWork is instead altering its deal with the property, though it’s unclear exactly how much square footage it will occupy. The company will also pay $930,000 to cure its rent default.
WeWork and RFR declined to comment to the Observer, while Kushner didn’t reveal any more details about the lease.
WeWork is approaching an exit out of bankruptcy protection after evaluating its leases, rejecting some, modifying others and keeping the status quo on the rest. There’s plenty of drama stretching beyond leases, however, as WeWork plots its escape, owing to company co-founder Adam Neumann.
Neumann’s current venture, Flow, is reportedly willing to offer 10 percent more to purchase WeWork than any other bidder. An attorney for the company, however, alleged WeWork won’t enter into a non-disclosure agreement, which would get negotiations going.
In its statements, WeWork has shown little interest in veering off its course to get out of bankruptcy as a solvent company. But unsecured creditors this week demanded WeWork consider Flow’s offer for the company.
WeWork is one piece of a challenging puzzle for RFR and Kushner at 77 Sands. In September, the venture defaulted on a $180 million loan attached to its Dumbo office campus after failing to refinance the debt.