WeWork skips rent payments as empty office sites drain revenue
WeWork's push to lower its rent costs, switch leases to management agreements started long before the coronavirus outbreak
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WeWork has stopped paying rent at some U.S. locations, in the latest sign that the co-working company is aggressively trying to cut costs as the economic downturn eats into its revenue.
People briefed on the matter said WeWork has yet to mail in its April rent check at numerous properties while it tries to renegotiate leases.
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The New York-based company recently hired brokerage firms JLL and Newmark Knight Frank to negotiate rent relief or convert lease deals into profit-sharing agreements in a bid to drive down its fixed monthly expenses.
WeWork is among a growing number of U.S. businesses that are skipping out on rent payments as companies look to preserve cash ahead of what could be a long economic downturn brought on the pandemic.
WeWork's push to lower its rent costs and switch leases to management agreements started long before the coronavirus outbreak. The shared-office provider came close to running out of money after a failed attempt at an initial public offering in the fall, in part because of its massive real-estate expenses.
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Following a bailout by SoftBank Group Corp., WeWork had $4.4 billion in cash and cash commitments at the end of 2019. While its U.S. locations are still open, many are mostly empty as large parts of the economy remain shut down.
The company's bonds traded at 37 cents on the dollar as of Wednesday, down from 90 cents in late February.
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WeWork isn't treating all landlords the same: while some say they have been paid, others say they are still waiting for their checks.
"WeWork believes in the long-term prospects of our locations and our relationships with landlords across the world," a WeWork spokeswoman said in a statement. "Rather than implementing a companywide policy on rent payments, we are individually reaching out to our more than 600 global landlord partners to work in good faith towards finding asset-specific solutions that benefit all parties involved."
Eliot Brown contributed to this article.
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