Co-working space provider WeWork recently stopped paying its rent at some U.S. locations, according to The Wall Street Journal and multiple news outlets. The pause in rent payments in part due to the economic downturn during the Coronavirus pandemic, which has cut into the company’s revenue.
WeWork has not mailed April rent checks at several properties as it attempts to negotiate its leases, according to people familiar with the matter. The company has been trying to lower its rent costs and change its leases to management agreement prior to the Coronavirus outbreak, according to The Wall Street Journal. WeWork looked to cut costs after its initial public offering attempt failed and the co-working space provider almost ran out of money. SoftBank Group stepped in with a $4.4 billion bailout in cash and cash commitments at the end of 2019, however.
The company’s U.S. locations remain open, but are mostly vacant because large parts of the economy are still shut down because of the health crisis. WeWork’s not alone however; a lot of companies have stopped paying rent in an effort to hold on to cash given no one knows how long the current economic downturn will last. As it stands, WeWork has paid some landlords, but not others.
“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.”
WeWork turns to JLL and Newmark to negotiate its rent relief
Although WeWork has skipped some of its rent payments this month, the co-working space provider is still looking to meet its obligations—the company hired JLL and Newmark Knight Frank to help negotiate rent relief or turn its lease deals into profit sharing agreements, according to The Real Deal.