After WeWork’s tumultuous 2019, the coronavirus pandemic may just be the endgame for the infamous coworking startup.
Before the outbreak, WeWork was at risk of running out of money and relying on a bailout from its largest shareholder SoftBank to keep it afloat.
Now, with landlords revealing that WeWork stopped paying rent in April in some of its US locations, as well as hiring JLL and Newmark Knight Frank to help renegotiate some of its leases, things are looking bleak for the company. Additionally, its occupancy rate fell 64% at the beginning of April and thousands of its members refused to pay rent or cancel their leases.
“It is appalling because they are making members pay membership dues in full yet we can’t use the space, they are not providing any services at all while their employees work from home,” said a two-year WeWork member. “We have been trying to come to an agreement about April dues but they go radio silent in between communications leaving no just resolution.”
Another snag that WeWork has hit recently is SoftBank walking away from its $3 billion tender offer that would buy back shares from WeWork stockholders. The deal would have largely helped former CEO Adam Neumann rather than the company itself, but allows SoftBank to withhold $1.1 billion in financing to the coworking firm.
“If they can’t survive this, they probably wouldn’t survive anyway,” said Dror Poleg, a former advisor to WeWork competition Breather. “They’re dependent on SoftBank. It would be hard to find anyone that would be willing to help them.”