WeWork Moves To Reject 9 More Leases As Landlords Push For Back Rent
WeWork wants to add nine more locations to its pile of rejected leases, according to a motion filed in bankruptcy court Wednesday, the latest move by the company to reduce its portfolio as it seeks to emerge from its emergency restructuring.
Its decision not to pay January rent to landlords who won't agree to discounts has gotten even more pushback, as seven WeWork landlords filed motions Tuesday asking the judge overseeing its bankruptcy to compel the coworking company to pay rent. Two of those landlords own locations on the latest lease rejection list.
WeWork owes its landlords at least $33M in unpaid January rent, attorneys for a committee of creditors told the court earlier in the month.
The majority of the buildings included in the most recent notice of lease rejection are no longer active WeWork locations, WeWork said in a statement emailed to Bisnow Wednesday.
“We have previously notified all impacted members and, where possible, relocated members to nearby WeWork offices,” the company said.
The list of locations closing includes three New York City locations — 75 Rockefeller Plaza, 214 W. 29th St. and 115 W. 18th St. — bringing the total number of New York locations closed during the bankruptcy proceeding to nearly 50.
WeWork is also seeking to reject leases at 200 Berkeley St. in Boston, 1019 E. Fourth Place in Los Angeles, 101 E. Washington St. in Phoenix, the Power & Light Building in Portland, Oregon, 1725 Hughes Landing in The Woodlands, Texas, and 1557 W. Innovation Way in Lehi, Utah. It is also seeking to reject a Common Desk management contract at 400 E. Las Colinas Blvd. in Irving, Texas.
RXR Realty, owner of 75 Rockefeller Plaza in New York City, and The Green Cities Co., owner of the Power & Light Building, asked the judge in motions filed Tuesday to force WeWork to cover rent for its use of the spaces during January.
The 90K SF 75 Rockefeller Plaza location is leased by Amazon, and attorneys for RXR wrote in a filing that WeWork didn't pay nearly $800K in January rent despite continuing to operate the space.
“RXR’s counsel reached out numerous times before the filing of this Motion in an effort to resolve the matter consensually with payment in full of the Post-Petition Amount Due,” the motion says. “Despite repeated representations by the Debtors’ advisors that they were looking into the matter, no payment was forthcoming.”
WeWork informed tenants at its 15-floor space in the Power & Light Building they would have to vacate Jan. 12, Willamette Week reported.
RXR, Green Cities and their attorneys didn't immediately respond to requests for comment Wednesday evening.
In late December, WeWork asked to reject another batch of leases, including locations in California, Georgia, Texas and Toronto. That was on top of the company's initial request to reject 69 leases, made when it filed for bankruptcy in November.
Judge John Sherwood, who is overseeing the restructuring in the U.S. Bankruptcy Court for the District of New Jersey, approved the rejection of 67 of those, with the other two having expired before the filing.
It has been a busy week for WeWork's bankruptcy proceedings.
On Monday, the company filed a motion for four lease assumptions, including locations in Arizona, New York, Ohio and Virginia, according to court filings.
Although WeWork will maintain its presence at those locations, it will reduce space at some of them and pay less rent at all of them.
Later Monday, WeWork struck a deal to keep space at Dock 72 in the Brooklyn Navy Yard and 71 Fifth Ave. in Manhattan. At Dock 72, WeWork occupies 200K SF. It will reduce its rent payment there as well, along with shortening its lease.
So far, WeWork has realized over $1.5B in savings through its lease renegotiation efforts, the company reported.