Sandeep Mathrani.
Sandeep Mathrani
CEO at WeWork
WeWork’s year has been disastrous. And that’s putting it politely.
It started off 2019 with an eye-popping $47 billion valuation and it all went downhill from there. Its initial public offering was scuttled after it shined a light on its money-burning business model. Its bombastic CEO Adam Neumann stepped down amid a spate of jaw-dropping news stories. It laid off thousands of workers. It needed a multibillion-dollar bailout from backer SoftBank Group. It had its valuation cut to $2.9 billion, and co-founder Miguel McKelvey left the company last month.
Things started to look up at the beginning of 2020 when the coworking giant tapped real estate legend Sandeep Mathrani — pivotal in steering mall owner GGP out of one of the biggest real estate bankruptcies in history — as CEO.
“Since I joined WeWork in February, we have been executing against our strategic five-year plan: refocusing our core businesses, divesting non-core initiatives, rightsizing the business and becoming a leaner, more efficient company,” Mathrani said in a statement to Commercial Observer.
When the pandemic hit, it left most WeWork locations empty, with the firm facing growing anger from members for still charging fees.
But it also showed WeWork’s true real estate power — it might be the real estate equivalent of “too big to fail.”
WeWork is the largest office tenant in Manhattan, where it leases a total of 8.5 million square feet, a report from Savills found. For some landlords, losing WeWork could wipe out their entire rent roll.
Mathrani told investors WeWork was looking to exit or restructure 20 percent of its deal and WeWork has already ditched the 115,000-square-foot space at 149 Madison Avenue it leased two years ago.
Even with the troubles, Mathrani said the company will be in a great position post-COVID-19 since flexibility will be key for many companies.
“COVID-19 has increased the need for the flexibility of space, geography and time,” Mathrani said in the statement. “We have been on the path to becoming EBITDA positive by 2021, and with the increased demand for flexibility, we see no change in this plan.”
And after taking over as CEO, Mathrani stocked WeWork’s C-suite with plenty of pedigreed execs.
He hired former Ernst & Young executive Shyam Gidumal as its new chief operating officer and tapped former oil executive Kimberly Ross as chief financial officer.—N.R.
