Lenders appear to have become increasingly skittish about whether WeWork can repay the $675 million it borrowed in April 2018. WeWork’s bonds are trading at a distressed price of 63 cents on the dollar. This explains SoftBank’s strategy to try and back away from part of its planned bailout.
- Worth Noting: WeWork notably reported a net loss of $1.25 billion in the third quarter of 2019 in its S-1 filing ahead of its aborted IPO. Moreover, the company has almost $2.2 billion of “non-cancelable operating lease commitments” due in 2020.
- Nightmare scenario: The coronavirus pandemic obviously makes co-working less palatable even when social distancing guidelines abate. More ominously though, WeWork is on average locked in to 15 year leases, while its tenants have the option to sign on for monthly commitments (28% choose such an arrangement), Forbes noted. The rest of the leases are one-year deals.