The move by WeWork to skip out of 250,000 square feet of offices in Downtown San Francisco could cost the company hundreds of millions of dollars.
Landlords Kennedy Wilson, based in Beverly Hills, and Japan-based Takenaka have sued WeWork for the alleged breach of its lease at 430 California Street, the San Francisco Business Times reported.
The property owners claim the New York-based co-working firm owes them more than $250 million in unpaid rent, future rent and other costs.
According to the lawsuit, WeWork has signaled its intent to exit its lease for 250,000 square feet on 19 floors, plus three basement floors.
At the end of August, WeWork told its landlords it had vacated and surrendered the building, according to the complaint. Kennedy Wilson and Takenaka allege the company failed to pay base rent and other expenses for July and August.
WeWork, whose lease at 430 California expires in 2036, did not respond to request for comment.
The lawsuit comes a month after WeWork CEO David Tolley told investors the company would seek to renegotiate “nearly all” of its leases and exit others to shed an “unsustainably large” number of locations.
It appears the 58-year-old building at 430 California, which WeWork leased in 2018, was on that list.
Kennedy Wilson and Takenaka bought 430 California and the 27,300-square-foot former Bank of California building next door at 400 California in 2016 for $135 million, or $475 per square foot.
In August, WeWork announced ”substantial doubt” about whether it can continue operating, citing a high level of membership cancellations and a shortage of cash.
— Dana Bartholomew
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