WeWork has started discussions with landlords around the world to renegotiate almost all of its leases and exit any that are deemed “unfit”.
In a letter posted on the company’s website, chief executive David Tolley said that “following a period of unsustainable hyper-growth” the flex operator is taking action to “permanently fix” its “inflexible and high-cost lease portfolio” in a bid to create a sustainable operating model.
The company plans to renegotiate terms with its landlords and create new covenants that cut costs without sacrificing its services.
Tolley said: “As part of these negotiations, we expect to exit unfit and underperforming locations and to reinvest in our strongest assets as we continuously improve our product.” The company said it intends to “remain in the majority” of its buildings and markets.
Even with efforts to improve its real estate portfolio, Tolley acknowledged that “current lease liabilities still remain too high” and are “dramatically out of step with current market conditions”.
Despite the company’s recent reverse stock split to keep it listed on the New York Stock Exchange following its dip in share price, Tolley remained confident that “WeWork is here to stay”. At the end of the note he added: “Let me finish by making one thing clear… We will remain a global flex space leader and trusted real estate partner to our members.”
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