WeWork, the under-pressure US flexible offices giant seeking rent cuts across its global portfolio, briefly moved its occupiers at The Bower in London's Old Street to alternative accommodation last Friday before finalising an 11th-hour agreement to stay with landlord Helical.
WeWork warned in August "substantial doubt exists" about its ability to continue as a going concern and in September announced 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. For a review of how those negotiations are playing out click here. In October WeWork said it had missed $95 million in interest payments as it begins negotiations with its lenders.
WeWork has confirmed in a statement to CoStar News that its operations at Helical's The Bower in Old Street in London shut on Friday (27 October) with all members accommodated in temporary workspace in close proximity while it hammered out a solution.
Today it confirmed members are back in their space. A spokesperson said: The Bower location is open and operating. We apologize to members for any inconvenience caused by our temporary closure on Friday and are committed to providing the best possible experience moving forward.”
WeWork occupies around 59,000 square feet at the 188,000-square-foot The Tower building at The Bower across the first to sixth floor. Helical completed a prelet with WeWork for the space in 2016 when the coworking group was fast becoming London's busiest taker of office space.
Market sources, who declined to be quoted because of the sensitivity of negotiations, suggest that where WeWork wants to retain its occupancy at key buildings such as The Bower it has been calling for a rent reduction of a minimum of 15%, up to as much as 60%. A source negotiating said: "These are not always over-rented buildings but at offices where rents have been rebased and are in fact reversionary."
In London WeWork has also been serving notice to tenants at some buildings it has decided are surplus to requirements. Last month the Daily Mail reported WeWork is shutting down 133 Houndsditch in the City of London. The company has said it will find alternative options for occupiers at the office.
WeWork's immediate problem is it is fast running out of cash. In its second quarter results it said cash and cash equivalents declined to $205 million from $625 million in the year-earlier second quarter. It said then it has already exited or amended 590 leases since the fourth quarter of 2019 and cut $12.7 billion in future lease payments.
It was trading at a near record low of 13 cents a share in late August and New York Stock Exchange rules meant it needed to ensure its stock price moved above $1 a share for it to remain on the exchange. It concluded a 1-for-40 reverse stock split in August to resolve the problem and by today (30 October) was trading at $2.44 a share, or a market cap of $129.94 million.
When WeWork finally listed in 2021 it was valued at $9 billion, down from the $47 billion valuation that the company and majority shareholder SoftBank had attached to it at its first failed attempt at listing in 2019.