WeWork

Coworking networkWeWork was founded in New York in 2010 by Adam Neumann and Miguel McKelvey. The company also develops a number of other services, including WeLive (engaged in colivings) and WeBank (financial service).

Performance indicators

2018: Revenue - $1.82 billion; losses - $1.93 billion

In 2018, WeWork's revenue amounted to $1.82 billion against $886 million a year earlier and $436.1 million in 2016. At the same time, the company's net losses are also growing: in 2016 they were measured at $429.7 million, and in the next two years - $933.5 million and $1.93 billion, respectively.

Thus, in two years, the cash losses of the world's largest coworking network increased more than 4 times, and losses for the 2018 year exceeded revenue.

The world's largest coworking network WeWork, which has offices in Russia, increased losses by 4 times

Losses are due to the active expansion of the company. By August 2019, she manages more than 520 offices in 111 cities in 29 countries, the number of her clients reached 527 thousand people. The network plans to start work in 169 more cities.

Business in Russia

2024

The new owner of WeWork coworking spaces in Russia resumed their lease

At the end of May 2024, it became known that the American company WeWork completed the transfer of operational management to the new owner of its business in Russia, the flexible office space operator Space 1. The new owner of co-working spaces, WeWork, has resumed renting them, without ruling out the possibility of an increase in value. Read more here.

Breakdown of O1 Properties deal, WeWork business in Russia buys Space 1

In mid-April 2024, WeWork announced the sale of Russian business. The buyer of the assets was the operator of flexible office space space Space 1.

The fact that Space 1 LLC buys 100% of ViWork Rus LLC, WeWork reported in a letter that was sent to customers. According to the publication RB.ru with reference to this document, that the agreement with Space 1 was concluded on April 10, 2024. Financial and other parameters of the transaction are not disclosed.

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WeWork

All agreements and agreements concluded with ViWork Rus2 LLC continue to be valid until their expiration in full, without changes, - said in a letter to WeWork.

It also follows from it that operational control from WeWork to Space 1 will go from April 20 to 21, 2024, so during this period there may be violations in the operation of the wireless network and the access control system. It is assumed that the company "ViWork Rus" will be renamed, but its new name is not reported by April 17, 2024.^[1]

Taking into account the agreements with Space 1, it turns out that WeWork terminated the deal to sell Russian business to the investment group O1 Properties. This agreement became known in early 2024. Then it was said that the perimeter of the transaction will include four sites in Moscow for 3 thousand jobs with a total area of ​ ​ 18 thousand square meters.

WeWork is in bankruptcy by mid-April 2024. The company expects to withdraw from this procedure by the end of May 2024 after restructuring a significant part of real estate lease agreements. As part of the restructuring, which, among other things, includes the sale of assets, including Russian ones, the company will save about $8 billion on future lease payments by restructuring contracts of 90% of the approximately 500 office premises in its portfolio. The company also said it expects to emerge from bankruptcy "with little or no debt."

O1 Properties bought out Russian business WeWork

O1 Properties bought out the Russian business of the co-working company WeWork. This became known on January 22, 2024.

According to Vedomosti, the perimeter of the transaction includes four sites in Moscow (lease rights and operating business) with a total area of ​ ​ about 18,000 square meters. m, the number of jobs in them is about 3000. The newspaper clarifies that by January 2024, WeWork has coworking spaces in the Belaya Ploshchad business centers near the Belorussky railway station, Krasnaya Roza on the street. Timur Frunze, Arkus III on Leningradsky Prospekt and in the trade gallery "Bolshaya Yakimanka, 26." The company planned to open another facility in Imperial Plaza near Komsomolskaya Square, but no agreements were signed with them, the publication says.

O1 Properties bought out the Russian business of the co-working company WeWork

According to the general director of Remain Dmitry Klapsha, if we count according to the model of buying lease agreements for three years, then the amount of the transaction for the sale of Russian business WeWork may amount to about 1.6 billion rubles. WeWork offices are unlikely to require serious investments, since they were initially made with quite high quality, believes NF Group partner Maria Zimina. In her opinion, after the closure of the transaction, all WeWork sites can be reformatted to the format of the Space 1 flexible office network created by O1 Properties. Space 1's portfolio, according to the company's own data, includes about 35,000 square meters. m of flexible offices. Among them are Balchug (11,500 sq. m) and Arbat (4600 sq. m) in the center of Moscow, Mercury (2525 sq. m) in the tower of the same name in the Moscow City business district. After the closure of the transaction, Space 1 will already be managed by 53,000 square meters. m, the consultants interviewed by the publication noted.

O1 Properties is one of the largest owners of Class A offices in Moscow. Her portfolio includes 11 business centers with a total area of ​ ​ over 624 thousand square meters (by January 2024).^[2]

2020: Vedomosti: WeWork coworking network is looking for a buyer of Russian business

On August 16, 2020, it became known that WeWork put up for sale its operating business in Russia and is now looking for buyers for it. According to Vedomosti sources, the company is agreeing to assign lease rights to all its premises in Moscow with several large networks of coworking spaces and flexible offices.

We are talking about the fate of five coworking spaces in Moscow. Among their largest tenants are Yandex, X5 Retail Group and Citymobil. In addition, another co-working space in Imperial Plaza on Komsomolskaya Square awaits the imminent opening.

Real estate consultants call the sale of rights to network offices the only example on the Russian coworking market. WeWork plans to keep its brand, and under the terms of the contract, the buyer of the operating business will be able to use it under a franchise, the publication said.

Coworking network WeWork is looking for a buyer of Russian business

A source close to the company told the newspaper that "the network for development in Russia is considering various financing options in line with the global strategy."

Analysts interviewed by Vedomosti admit a return to the old scheme of work in Russia after the end of the pandemic and putting things in order. In the meantime, the main contenders for the purchase of rights to offices are companies that are just thinking about entering the coworking house market, as well as the owners of the premises themselves. It is more profitable for large players to develop their brand than to work under a franchise.

How much the rights to the Moscow offices of the network can cost is not known for sure. But it is possible that the deal will be cash-strapped, experts said. This will be the first such sale on the Russian coworking market.

A spokesperson for WeWork declined to comment to the publication. By August 17, 2020, in Moscow, premises with a total area of ​ ​ 26 thousand meters ² under five coworking spaces^[3]

2019

WeWork freezes projects in Moscow

On November 21, 2019, it became known about the freezing of new WeWork projects in Russia. The problems faced by the company may prevent it from becoming the largest coworking network in the Russian market.

The fact that WeWork has suspended the search for new space was reported by Vedomosti with reference to the company's partner, as well as three top managers of consulting companies that worked with it. According to the interlocutors of the publication, due to the failed IPO, WeWork began financial difficulties, which forced the company to postpone expansion in the Russian Federation.

Thanks to the IPO, the company intended to raise about $3 billion, but in the end it had to abandon the listing due to low investor activity.

It became known about the freezing of new WeWork projects in Russia

WeWork freezes projects in Moscow related to those areas for which lease agreements have not been signed. We can talk about at least 40 thousand square meters. m in three business centers. If WeWork signed these agreements, it would become the largest coworking network in Russia with a portfolio of 66 thousand square meters. m.

WeWork planned to open the largest co-working space in Russia with an area of ​ ​ 25,000 square meters. m in the multifunctional complex Neva Towers in Moscow City. Negotiations were also underway to lease 10,000 sq. m in the Mercury Tower and 4000 sq. m in the Romanov Dvor business center.

A representative of WeWork in a conversation with Vedomosti said that by November 21, 2019, the owner of the company, the Japanese holding SoftBank, and the new management are engaged in the formation and approval of a new strategy, according to which plans for signing new sites will be adjusted. He noted that the company plans to expand its presence in Russia.

In November 2019, WeWork announced the launch in Russia of its global startup development program WeWork Labs. It helps young companies grow, as well as find customers, mentors and investors.^[4]

Information about offices in Russia on the WeWork website

WeWork also came to Russia. By August 15, 2019, the website indicates 4 offices that the company is going to open in Moscow - in the Krasnaya Roza business district, in the Yakimanka 26 trading gallery, in the Belaya Ploshchad business center and in the office center on Leningradsky Prospekt. Prices start at 22 thousand rubles for a loose place.

History

2023: Filing for bankruptcy

On November 7, 2023, WeWork filed for bankruptcy. One of the world's largest coworking networks has filed an application in a New Jersey court under "Chapter 11," allowing restructuring and continued operations, the company's press service said.

WeWork clarified that its offices outside the United States and Canada are not involved in this process. In its press release, the company called it a restructuring in order to strengthen its capital structure and financial performance, as well as the best positioning of the company for future success.

WeWork files for bankruptcy

According to documents submitted to the court in November 2023, WeWork owns assets worth about $15 billion, and its debts amount to $18.6 billion. In addition, the company owes real estate owners about $100 million in rent and other deductions.

In September 2023, WeWork CEO David Tolley told landlords that almost all leases would have to be restructured as they resulted from a "period of unsustainable hyperrost." On November 5, 2023, he also stated that landlords approach these negotiations realistically, understanding the significance of WeWork's presence in their buildings.

By November 2023, WeWork has more than 150 coworking spaces in the U.S. and seven in Canada. A majority stake in WeWork, about 60% in size, is owned by Japan's SoftBank holding, which works in telecommunications, marketing and finance, Reuters said. According to the agency, the holding invested billions of dollars in WeWork in an attempt to save the company from bankruptcy. The WeWork business model, management miscalculations and the controversial behavior of founder Adam Neumann led to the fact that in just a couple of years the startup's operations began to decline rapidly, and he himself suffered multimillion-dollar losses, the agency adds.^[5]

2021: Going public

In mid-October 2021, shares of the WeWork coworking network began trading on the NYSE exchange under the ticker symbol WE. The listing took place through a merger with the SPAC-company BowX Acquisition.

Thanks to the release on the WeWork exchange, we managed to raise $1.3 billion. The funds will be used to finance the company's projects and expand the network of coworking spaces. The Japanese company SoftBank, which received a controlling stake in WeWork in 2019, gradually reduced the company's valuation to $7.3 billion at the end of December 2019 and to $2.9 billion at the beginning of 2020.

Co-working company WeWork went public

The office rental company scrapped its IPO plans in 2019, after investors raised concerns about its business model and corporate governance, as well as its founder and then-CEO Adam Neumann.

By October 2021, WeWork has 762 locations around the world and 575 thousand coworker subscribers. A significant share of the company's customers are enterprises - approximately 47% of the total number of subscribers.

Approximately 60% of WeWork's space is leased, and if you consider customers who have purchased a subscription but are not yet using it, then 64%. Compared to the period before the COVID-19 pandemic, the demand for WeWork services did not weaken much. In the second quarter of 2019, the employment rate of space was 82%. WeWork predicts that by the end of 2022, the occupancy rate will increase to 90%, which is even more than before the pandemic.

It's a dramatic story, "WeWork Executive Chairman Marcelo Claure noted on CNBC. - Many thought 2019 was the final year for WeWork. But the tenacity of the WeWork team is incredible. This company is here, it is stronger than ever, and there is no doubt that this is not its last achievement, which we will celebrate.[6]

2020: Paying employees $100 a day to go to the office in infected cities

At the end of March 2020, the WeWork network of coworking spaces and offices offers employees $100 a day for entering an office in infected cities.

While WeWork has given employees the opportunity to work from home, many of the company's offices have remained open as they employ a variety of social start-ups - companies in health care, financial services, food production and distribution. WeWork invites some of its employees to pay $100 a day to go to work in the context of the coronavirus outbreak in order to serve the workspace of these startups. The offer applies to teams operating in the United States and Canada.

WeWork coworking and office network offers employees $100 a day for entering an office in infected cities

WeWork teams include employees responsible for maintaining offices in working order, as well as meeting various tenant requirements, including sending mail or solving problems on the ground. WeWork claims that it did not want to encourage employees to come to work, but only tried to encourage employees who feel comfortable in the office, even in a pandemic. The bonuses, which will be paid in a lump sum each month, are given as "a reward to an employee who is ready to support the community during these difficult times," WeWork Chief Operating Officer Shyam Gidumal said in a memorandum.

Prior to the mailing of this memo, WeWork sent all employees, including community teams, to work from home until at least the end of March. all these employees must be paid regularly for time spent in remote work and are not required to use paid leave or paid sick leave.

However, WeWork is a service provider and we have a duty to keep our buildings open. Some of our tenants expect our offices to stay open - that's the only way they can run their companies, generate revenue, pay their employees and continue to serve their customers.[7]

2019

SoftBank invested more of Bolivia's GDP in WeWork

On October 23, 2019, the new chairman of the board of directors of WeWork, MarceloClaure, sent an email to the company's employees, in which he said that SoftBank had invested $18.5 billion in the largest coworking service, which is more than Bolivia's GDP, in which 11.5 million people live.

The announcement comes after SoftBank announced it was taking a majority stake (80%) in WeWork. To do this Japanese telecommunication , the giant will spend up to $3 billion to buy back shares from current investors and shareholders of WeWork, fulfill previously announced obligations in the amount of up to $1.5 billion and provide additional financing in the amount of $5 billion.

Investors spooked by Softbank's plans to invest about $10 billion in financial support for WeWork, which is experiencing an acute crisis amid growing losses and declining investor interest

As Bloomberg notes, as part of this deal, WeWork was valued at about $8 billion, while at the beginning of 2019, after the next round of financing, the company cost about $47 billion. According to the source of the news agency, SoftBank will write off at least $5 billion due to a decrease in the market value of the coworking company.

Some analysts were skeptical about WeWork's business valuation and prospects, despite the company's global expansion and rapid growth. The fact is that the average lease term for a property for WeWork as a tenant is 15 years. At the same time, the average customer of the company removes coworking space from WeWork for a period of 15 months.

The problems around WeWork led to the cancellation of the IPO, the resignation of CEO Adam Neumann and job cuts.

As it became  known to the Financial Times (FT), WeWork plans to cut up to 4 thousand jobs as part of a restructuring plan. That's just under 30% of WeWork's total worldwide workforce. According to the FT, about 1,000 cuts will be made to service personnel, whose work WeWork intends to transfer to an outsourcing company.

Marcelo Claure confirmed that the layoffs were being prepared, but did not name their size.^[8]

Purchase of restaurant rental service for work issues

In late August 2019, the world's largest co-working company, WeWork, announced the acquisition of Spacious. Its participants did not disclose the financial and other terms of the transaction. It is only reported that the team of Spacious employees will move to WeWork. According to the results of the last round of funding for Spacious, investors valued the startup at $29.1 million. Read more here.

Announcement of going public

On August 14, 2019, the U.S. Securities and Exchange Commission released a document that WeWork sent to the regulator in connection with its upcoming release to the exchange.

As part of the IPO, the company is going to raise $1 billion. At the same time, she did not name the platform on which she is going to place her shares.

In its IPO prospectus, WeWork said it did not intend to pay dividends on its shares for the foreseeable future. After that, the international rating agency Fitch downgraded the credit rating of the coworking network from BB- to B with a stable forecast.^[9]

WE Holdings and structures Benchmark, JP Morgan and SoftBank are the largest shareholders in WeWork, according to the prospectus.

See also

• Coworking in Russia

Notes