WeWork Confident It Will Exit Bankruptcy by May 31
Coworking giant reveals it lost $122M last month but says restructuring efforts are paying off
By Mark Hallum April 2, 2024 12:00 pm
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WeWork/" title="WeWork" class="company-link">WeWork (WE) expects to be out of Chapter 11 bankruptcy by the end of next month after it renegotiated or exited 90 percent of its leases, the coworking giant announced Tuesday.
The coworking firm, which has not been the same since a failed initial public offering in 2019, said it has locked down about $8 billion in savings after court-mediated negotiations with landlords since November when it filed for bankruptcy.
Those savings were calculated by the amount of time left on each lease in its portfolio, a WeWork spokesperson said.
However, while WeWork touted the savings it made by exiting onerous lease obligations, the coworking company disclosed it still lost $122 million in February, an improvement over the $153.7 million loss it recorded in January, Bisnow reported.
WeWork plans to continue operating more than 20 million square feet of outposts in 20 countries, according to the company. Of those, 150 are in locations where leases were amended and 150 more are in locations where lease terms were left unchanged. It plans to shutter another 150 offices that were underperforming or where talks with landlords were unsuccessful.
“We are well on our way to building a strong and sustainable WeWork,” David Tolley, WeWork’s CEO, said in a statement. “The size, scope and complexity of our real estate restructuring is unprecedented in our industry, and we’ve made remarkable progress to date optimizing our building footprint.”
While WeWork has been grappling with its bankruptcy status, its co-founder in exile, Adam Neumann, has been raising money to buy back the company with a bid that could range between $500 million and $900 million, but WeWork has asserted it will emerge from Chapter 11 in a state where it will turn a profit.
Neuman, after all, was forced out as CEO due to his management style that accelerated the speed of growth and saw WeWork sign an unsustainable number of leases, resulting in its current state.
One such lease that was recently canceled was its 92,000-square-foot location in Brookfield’s Gas Company Tower in Los Angeles at the end of February.
Landlords have been fighting back against WeWork with lawsuits claiming that it is withholding rent as a negotiating tactic, and distress on up to $1.85 billion of commercial mortgage-backed securities loans have been tied to WeWork’s bankruptcy.
Mark Hallum can be reached at mhallum@commercialobserver.com.
