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They are really just trying to price the risk spread of taking on long term debt (their leases) and re-lending with short term leases at a higher interest rate.
by formercoder 7y ago
They are really just trying to price the risk spread of taking on long term debt (their leases) and re-lending with short term leases at a higher interest rate.
I would guess this is super high beta (overall market exposure). When the next downturn comes we'll see if they have the capital to survive the credit event.
- xhgdvjky 7y agohonestly pretty sure they can buy whatever they want given their funding. whether that pays off for investors is another story
- deleted 7y ago[deleted]
- danieltillett 7y agoHas this model ever worked for long? I wonder how many of these business models are going to survive the next recession.
- formercoder 7y agoThere is no bad debt, just bad prices. Of course there may be no demand at the correct price. We’ll see how we work did
- Tehdasi 7y agoIt's actually the reverse of how a bank makes money, they take on sell long term debts and buy short term debts.
- danieltillett 7y agoNot exactly encouraging given the failure rate of banks before deposit insurance.
- naravara 7y agoWhen there’s an economic downturn I would think freelancers and new, small companies are probably going to get hit hardest. Seems like a tough position for WeWork to be in. Even leases on normal office spaces would be getting cheaper.