[bctt tweet=”Hundreds of landlords are exposed to WeWork’s $47.2 billion in rental commitments with little to no alternative if the company does not pay.” username=”allwork_space”]
Over 220 landlords have leased space to WeWork in the U.S., and real estate data firm CoStar has revealed that TIAA-CREF, Boston Properties, Beacon Capital Partners and Moinian Group are among the coworking firm’s biggest landlords.
If WeWork does have trouble during a recession, there is only so much landlords can do to enforce rental commitments as they do not have direct recourse to the parent company if it cannot pay rent.
“There are so many WeWork leases in town, and I think there are a lot of landlords who are very cautious, not about the quality of service but about the financial model. I’m one of them,” said one large London-based landlord who chose to stay anonymous.
WeWork has promised a portion of its rental payments to ease concerns, having paid $4.5 billion of payments backed by corporate guarantees and $1.1 billion by bank guarantees according to its pre-IPO filing. Additionally, it has paid $268.3 million in cash deposits and $183.9 million of surety bonds. Still, this is just a small portion of its commitments.
In the meantime, landlords have paid cash to WeWork in the form of “tenant improvement allowances” that allows the company to renovate its buildings. So far, WeWork has collected $455 million of these in the first six months of the year.