Inside WeWork’s Statements: Bonds, Rent Bills, and Ownership
With a $4.4 billion investment from SoftBank, co-working behemoth WeWork is continuing its global expansion, dipping its toes into ownership, entering the bond market, and all the while trying to mitigate its risk in real estate.
In its first-ever offering, WeWork sold $702 million worth of bonds to yield roughly 8%, as demand was greater than initially expected upon its debut. But, the numbers surrounding WeWork’s financial standing are big and must be managed properly to avoid disaster. For example, the company is liable for an $18 billion rent bill through 2023 and beyond, of which it has already committed to pay $5 billion of by 2022. With this in mind, the company is aiming to diversify into building ownership and management, rather than solely renting. WeWork’s model works on signing long-term leases under separate subsidiaries, and then renting the space to its members on short-term contracts.
With 220,000 members in 234 location across roughly two dozen countries, WeWork has a lot to lose. Despite its cash-burning history, investors have still just proven to be keen on the company’s financial outlook.