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After a rollercoaster year of losses and revenue, the We Company has reportedly doubled its lease obligations.
According to the Wall Street Journal, the company had about $34 billion in lease obligations at the end of last year, up from $18.2 billion from the year before.
Due to new enforced federal accounting rules, the value of these obligations will have to be counted as liabilities on the company’s balance sheet. A filing at the end of 2017 stated that the firm had $2.4 billion in liabilities, but the accounting change and a $700 million bond sale last year are expected to push that number way higher.
This could lead to some concern for potential investors ahead of the company’s IPO, as well as current landlords who have started demanding stronger guarantees from the We Company.
“The risk of entering into long-term leases (supported by short-term tenants) is one of the biggest issues investors have with the WeWork concept,” said Sanford C. Bernstein & Co. analysts.
