WeWork ends new leases to reduce losses

WeWork ends all new leases with the owners because the company – which is bleeding money – is trying to control its costs quickly, according to people informed about it.

The move will shake commercial property owners around the world who have rented to WeWork, and homeowners are bracing for the possibility that WeWork, become the largest tenant in New York and one of the largest in London, suspends its expansion.

The decision to terminate all new leases comes as WeWork's parent group – We – plans to lay off thousands of its 12,000 or more employees in the coming weeks.

On Thursday, the company also planned to cut the jobs of about 20 employees close to the co-founder – and former managing director – Adam Neumann, as well as some of his key leaders, said those who had been briefed.

Michael Gross, Vice President, and Chris Hill, brother-in-law of Rebekah, wife of Neumann. Gross was one of the top executives and accompanied Artie Minson – who was elevated to co-CEO of WeWork this week, alongside Sebastian Gunningham – during investor-focused road shows. ;last year.

Others, among what one insider called "Adam's saga," are involved in the company's Neumann's Maybach cuts. The new co-CEOs also put on sale a Gulfstream G-650 jet that WeWork bought nine for more than $ 60 million last year.

Hill quickly rose through the ranks of the company, holding titles including "Chief of Japanese Operations" in Japan, and was most recently the product manager for the group.

Jennifer Berrent – the legal officer who has been perceived as marginalized by the promotion of Minson and Gunningham to the position of co-CEO – is expected to remain in the company, added some people. Berrent was co-chair alongside Minson before coming in this week.

Past staff members said the cost reductions indicated that Minson and Gunningham were sending a signal to Wall Street that they were serious about changing a culture known for its excesses. The imminent departure of employees with close ties to Neumann had already been reported by the Wall Street Journal.

The co-CEOs made the decision to sell three of the acquisitions completed under Neumann – Orchestra Lead, run by Q and Meetup – for which they have already received timid expressions of interest in recent days, said two people informed about it.

However, the company is expected to retain Flatiron School, a teaching coding firm purchased two years ago.

WeWork's headquarters in Chelsea has been in crisis since Neumann was fired Tuesday as a result of the dramatic collapse of its initial public offering, which was to be a landmark event in a record year for IPOs. Instead, the company is now trying to get a new lifeline.

The group spent more than 500 offices in 111 cities and recorded a loss of $ 1.6 billion on a $ 1.8 billion business figure.

The company will receive a boost in the near term as it is expected to receive a $ 1.5 billion capital injection next year from its largest funder, the Japanese company SoftBank. Both parties are in talks about an increase in SoftBank's planned injection of at least $ 1 billion, with negotiations focused on reducing the value of the acquisition, WeWork would be treated as part of the transaction.

The new capital is essential for WeWork, which is also seeking a heavily reduced loan of $ 3-4 billion from a group of Wall Street banks. Lenders refuse to fund an agreement of this size unless WeWork first raises new equity, according to several sources.

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Creditors expressed concerns about its capital reserves, which stood at around $ 2.5 billion at the end of June. Analysts S & P Global on Thursday reduced the credit rating of the company deeper in the territory of waste. WeWork's debt yield climbed more than 10% during the decommissioning, a sign of financial pressure on the group.