2020-03-18 — forbes.com
But after speaking with tenants in New York, London, Washington, D.C., Santa Monica and Phoenix, all of whom report thin attendance, it's clear that workers are avoiding WeWork like, well, the plague. "I think WeWork is potentially the worst place you can be during this pandemic," says Chase Feiger, a serial entrepreneur and Under 30 alumnus whose latest venture RxDefine previously rented space in Dallas, Santa Monica and San Francisco from WeWork. A tech-consulting tenant in Brooklyn Heights estimated there were just eight people on a floor designed to hold 100 workers of small startups on Monday.
"They did just take on a huge influx of cash," says Jake Schwartz, cofounder and CEO of General Assembly, an education company that previously also did coworking and has long been critical of WeWork. "They probably didn't want to spend it burning through a couple of months where people aren't there and don't pay their rent."
... its lenders appear to have become increasingly skittish about whether the company can repay the $675 million it borrowed in April 2018. WeWork's bonds traded at a distressed price of 65 cents on the dollar on Friday, according to CapIQ, a level typically reserved for companies at risk of defaulting on interest payments and possibly heading for bankruptcy.
SoftBank backed away from part of its planned bailout, telling shareholders on Tuesday that it would not complete a deal to purchase $3 billion worth of WeWork shares from existing investors, including Neumann. Its pullback may also delay indefinitely $1.1 billion in new debt it was promised after the buyout went through; it does not affect the $5 billion it promised to WeWork last fall, well before the coronavirus wreaked havoc on their business model
WeWork has been keeping afloat now largely thanks to bailouts and asset sales. In October, it received $5 billion from SoftBank. It has since laid off more than 2,400 people (with reports of more to come), and has been selling off pieces of its business at huge losses, including workplace technology startup Managed by Q and a 23% stake in The Wing. In March, it reportedly reached a deal to sell the famed Lord & Taylor building in New York to Amazon for $1.15 billion, likely taking a nine-digit loss.
There may be a bit of a buffer for the New York-based company from its push into the corporate market, which represents 40% of tenants and one-third of revenue, as the coronavirus renews interest in catastrophe planning. Goldman Sachs, for example, has a full floor of a WeWork building in London reserved and set up for emergency use, though the bank is not currently using that space.
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