WeWork and its landlord Almacantar have reached a settlement in a High Court battle over the co-working group's flagship 290,000-square-foot office in London.
In a joint statement the two parties said: "We are pleased to have reached a settlement in the ongoing court case at 10 York Road. This agreement allows both parties to move forward positively, reinforcing our shared commitment to a long-term, mutually beneficial partnership, and continued success of this flagship WeWork location in London.”
The statement makes it clear that WeWork will stay in occupation at the building. The duo confirmed to CoStar News that there will be no change to the amount of space occupied, or to the operating and managing of the building. "It is business as usual for WeWork members," they said.
Last month, WeWork said it was fully committed to the office after the High Court had dismissed one of two legal moves by landlord Almacantar to evict it.
The judge, Deputy Master Francis, at the High Court threw out the second of two lease forfeiture claims against WeWork special-purpose vehicle 2 Southbank Tenant Ltd. A separate broader forfeiture claim was ongoing until the latest settlement.
Landlord Almacantar filed its claims at the end of 2023 in a move that has been keenly followed by WeWork's other landlords.
The High Court battle has focused on WeWork's largest London office, 10 York Road, which it occupies on a lease with 14 years left to run and which is its most profitable London operation. It is understood to be the group's largest global office.
Almacantar had sought a ruling which amounted to whether United States or United Kingdom law takes precedent on lease forfeitures in the United Kingdom when a company files for bankruptcy protection in the United States.
WeWork said in September 2023 it was attempting to renegotiate most of its leases globally. It typically leases buildings on long-term leases and then agrees deals with tenants for the space with a package of services agreed at much shorter terms.
In November 2023 it filed for Chapter 11 bankruptcy protection in a move that it said only affected its business in the United States and Canada. Almacantar lodged its first forfeiture claim on 18 December 2023, which related to the Chapter 11 bankruptcy protection, and its second, which related to WeWork's ability to pay, on 28 December 2023.
WeWork announced in June 2024 that it had completed its lease negotiations in the UK and Ireland as part of a strategic restructuring of its remaining operations in London, Cambridge, Edinburgh, Birmingham, Manchester and Dublin. It also exited Chapter 11 bankruptcy protection in June.
It has been shedding its massive portfolio of British and Irish offices for several years, a process that accelerated in 2023. WeWork has always said it is committed to staying at 10 York Road and has paid all of its rent on time with no debt accrued.
Almacantar's claim to take back the space was sparked by WeWork's United States bankruptcy filing. It argued that the guarantor for the lease entered into administration as part of the Chapter 11, therefore under United Kingdom law the lease can now become forfeit. Almacantar first issued a Section 146 notice, which applies when a tenant breaks a lease covenant, threatening forfeiture.
WeWork's leases are held in separate special purpose vehicles in the United Kingdom. WeWork argued that the guarantor didn't enter into Chapter 11, following a division of the company.
In its counterclaim, WeWork argued that its landlord wanted to relet the premises to a third party, "most likely a direct competitor" who would operate the premises in the same or similar manner while taking advantage of a £50 million fit-out it carried out with a substantial contribution from Almacantar.
The first judgment related to the second claim by Almacantar for forfeiture of the lease. WeWork sought for this to be struck out because it said service of this claim was premature because a reasonable time had not elapsed for it to respond to the section 146 notice served a few days before.
WeWork agreed a deal to take 290,000 square feet at Almacantar's development, called Southbank Place, in 2017. The lease was granted for a term of 20 years at a passing rent of just under £20 million a year in 2019. The building sits on a 5.5-acre site on the edge of the River Thames, opposite Whitehall and the Houses of Parliament and adjacent to London’s Waterloo station. WeWork shares the development with the headquarters of Shell.
WeWork is a tenant in a Virginia building CoStar Group acquired last year. CoStar also competes with WeWork's majority owner Yardi in providing real estate data.