{"id":10752,"date":"2023-11-07T18:38:14","date_gmt":"2023-11-07T18:38:14","guid":{"rendered":"https:\/\/infundpros.com\/investment\/wework-files-for-bankruptcy-capping-a-stunning-downfall\/"},"modified":"2023-11-07T18:38:15","modified_gmt":"2023-11-07T18:38:15","slug":"wework-files-for-bankruptcy-capping-a-stunning-downfall","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=10752","title":{"rendered":"WeWork files for bankruptcy, capping a stunning downfall"},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0002693860\" role=\"document\">\n<p>Office-sharing company WeWork Inc. filed for chapter 11 bankruptcy protection in New Jersey on Monday, after a decade of financial turmoil and four years since it was valued at $47 billion valuation.<\/p>\n<div class=\"paywall\">\n<p>In a statement Monday night, WeWork said it has entered into a restructuring agreement with lenders holding about 93% of its secured notes, to \u201cdrastically reduce\u201d its debt load. The company also said it is requesting the ability to reject certain leases, at locations it called \u201clargely non-operational.\u201d Most of its locations will continue to operate as usual.<\/p>\n<p>\u201cWeWork has a strong foundation, a dynamic business, and a bright future,\u201d Chief Executive David Tolley said in a statement. \u201cNow is the time for us to pull the future forward by aggressively addressing our legacy leases and dramatically improving our balance sheet.\u201d<\/p>\n<p>Israeli entrepreneur Adam Neumann co-founded WeWork<br \/>\n        WE,<br \/>\n        <bg-quote field=\"percentchange\" format=\"0,000.00%\" channel=\"\/zigman2\/quotes\/222085303\/composite\" class=\"negative\">-24.73%<\/bg-quote><br \/>\n       in 2010 in New York City, serving as the fast-growing company\u2019s chief executive until he was ousted nine years later, a rise and fall that inspired the \u201cWeCrashed\u201d miniseries.<\/p>\n<p>Neumann talked often about reinventing the way people work. But his company\u2019s business plan was simple: charge members more for office space than it owed big-time landlords.<\/p>\n<p>At its peak, the company accumulated a nearly $50 billion pile of lease obligations, with a 15-year average life. It has yet to become a consistently profitable business.<\/p>\n<p>Here are the big numbers that help tell WeWork\u2019s story, from a venture-capital darling to the present day:<\/p>\n<ul class=\"articleList\">\n<li>\n      $47 billion peak valuation in 2019<\/p>\n<\/li>\n<li>\n      $25 billion owed to landlords in outstanding full-term lease obligations as of this summer<\/p>\n<\/li>\n<li>\n      $15 billion in losses since the end of 2017, per the New York Times<\/p>\n<\/li>\n<li>\n      $12.5 billion in savings on restructured leases from 2019 to 2023<\/p>\n<\/li>\n<li>\n      $9 billion valuation at its IPO via a SPAC merger in 2021<\/p>\n<\/li>\n<li>\n      $6.8 billion in commercial mortgage bonds with WeWork exposure, per KBRA<\/p>\n<\/li>\n<li>\n      $3.3 billion of which is in New York City<\/p>\n<\/li>\n<li>\n      $2.9 billion in long term WeWork debt as of June<\/p>\n<\/li>\n<li>\n      $680 million in liquidity of June<\/p>\n<\/li>\n<\/ul>\n<p>While WeWork has partial ownership in a portfolio of buildings, it has far fewer assets, other than the company\u2019s outstanding lease obligations.<\/p>\n<p><strong>Read<\/strong>: WeWork landlords could see steep losses on any rejected leases in bankruptcy<\/p>\n<p>\u201cTypically when a significant tenant goes bankrupt, they have a pretty clear idea of what leases are profitable and what are not,\u201d said Douglas Mintz, co-chair of the business reorganization group at law firm Schulte Roth &amp; Zabel, in a phone interview.<\/p>\n<p>But the bankruptcy filing of WeWork comes as the value of office buildings, and lease, have rarely been tougher to discern. A few months after Neumann\u2019s exit came the onset of the pandemic. It triggered remote work that emptied out downtowns in many big cities and quickly overhauled how many people spend their workday. <\/p>\n<p>Then came the Federal Reserve\u2019s rate hikes, starting in March 2022, which have made it even harder to finance half-empty office buildings. Barclays recently estimated that any distressed office properties are likely worth only the price of the land or development costs.<\/p>\n<p>Volatility in the 10-year Treasury rate this fall hasn\u2019t helped landlords. The benchmark rate is a peg for new property loans but also for the broader economy.<\/p>\n<p>\u201cThe bankruptcy of WeWork will certainly have a negative impact on the market and the ability to finance those buildings, but that pain will not be equally distributed,\u201d said Moody\u2019s Analytics\u2019 commercial real-estate industry practice lead, Jeffrey Havsy, in emailed comments.<\/p>\n<p>Leases in top buildings that remain in high demand might end up producing little fallout to landlords, he said, while also noting that the need \u201cfor flexibility\u201d is increasing in the office landscape. <\/p>\n<p>Havsy also said, \u201ctaking one data point from a single firm that has struggled for a decade and using that write off the entire sector is a mistake.\u201d <\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/story\/wework-files-for-bankruptcy-after-a-decade-of-turmoil-f1e8b544?mod=investing\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Office-sharing company WeWork Inc. filed for chapter 11 bankruptcy protection in New Jersey on Monday, after a decade of financial turmoil and&#8230;<\/p>\n","protected":false},"author":1,"featured_media":10753,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[],"class_list":{"0":"post-10752","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investment"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>WeWork files for bankruptcy, capping a stunning downfall | inFundPros<\/title>\n<meta name=\"description\" content=\"Office-sharing company WeWork Inc. filed for chapter 11 bankruptcy protection in New Jersey on Monday, after a decade of financial turmoil and four years\" 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