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I read that Wework had $4B in the bank at the beginning of the year. Also they are actively trying to reduce their own rent up to 30% from their landlords. An
by llsf 7y ago
I read that Wework had $4B in the bank at the beginning of the year. Also they are actively trying to reduce their own rent up to 30% from their landlords. And at the same time Wework gives up to 50% discount to its own large tenants, so they can stay during this hard time.
No idea how long it can operate like that. If Wework had to crash, I am concerned for the whole US commercial real-estate. Wework is renting so many square feet, that it could be a tsunami of empty offices. Hopefully, current final tenants could work something with the landlords to stay.
Either Softbank is trying to get a better deal... or they already know that it is not salvageable anymore.
- JumpCrisscross 7y ago> WeWork is renting so many square feet WeWork is big. CRE is huge. WeWork is not even among the top ten largest lessees in America.
- pgwhalen 7y agoSource for that? I’d be curious what the top ten are.
- eldavido 7y agoOffhand...Walgreens? CVS? Wells Fargo? Chase Bank? Just look around you, much of the Fortune 500 is in mass consumer retail, and they tend to rent rather than own.
- pgwhalen 7y agoAh fair, I was assuming office space but obviously “commercial” means a lot more than that. It seems worth diving office and retail markets though, I can’t imagine there’s much overlap.
- DamnYuppie 7y agoDo you mean CBRE? Regus is also very large in the rental space.
- csmiles 7y agoI think the parent is referring to “Commercial Real Estate” generally, not CBRE the firm. Though as an aside, CBRE is launching its own co-working arm named “Hana.”
- csmiles 7y agoWeWork may not account for a huge fraction of the entire US CRE market, but I’m sure there are office landlords with significant exposure. Two articles from Sept 2019 suggest WeWork was, at least at that time, the largest private office tenant in NYC, London, and Downtown Chicago. https://www.bloomberg.com/news/articles/2019-09-27/wework-landlords-in-london-new-york-bracing-for-market-fallout https://www.bloomberg.com/news/articles/2019-09-27/wework-la... https://www.chicagotribune.com/business/ct-biz-wework-postpones-going-public-20190917-j6ywvxslujdetiwfzjkthzld7u-story.html https://www.chicagotribune.com/business/ct-biz-wework-postpo...
- DebtDeflation 7y agoI tried to do some back of the napkin math. - According to their financial reports, they burned through $1.4B in Q4 and they ended 2019 with $4.4B in "cash and commitments". - The $4.4B number is comprised of $1.3B in cash, $2.2B in LOCs from SoftBank that they can draw against, $800M in Restricted Capital, and $100M in money owed to it by another company from a joint venture. - Given their burn rate, it's likely that they're actually out of actual cash now and can probably survive for another 4-5 months by drawing down their LOCs. - However, that assumes revenues remain constant, which they're not - tenants are canceling due to both Covid-19 as well as concerns about WeWork's financial viability. Realistically, they have until maybe the end of June?
- nick_kline 7y agoTheir revenue should shrink by massive margins, as a start all temp rental agreements month to month are gone. Did they even have 50% long term rental? Their main hope is survive until this goes away, then wait for step 2, startups and entrepreneurs need their space, in bulk. Those are not happening for many months in total.
- csomar 7y ago> Wework is renting so many square feet, that it could be a tsunami of empty offices. Wework has a dozen locations in San Francisco. If that's a tsunami of office space, then the commercial real-estate market in the tech city of the US is much smaller than I thought.