An $18B Rent Bill, A $934M Loss, But WeWork’s Membership And Occupancy Is Growing

WeWork CEO and co-founder Adam Neumann
Former Wework Ceo And Co-Founder Adam Neumann

WeWork is looking to raise $500M of debt in the junk bond market, and the offering documents for the bonds give rare insight into the flexible working giant’s finances.

A report from Bloomberg, which reviewed the bond documents, showed that the company valued at $20B has an eye-watering rent bill and lost money last year, but is growing its membership and its occupancy.

WeWork has a global portfolio of 14M SF across 234 locations comprising 251,000 desks, the bond documents said. It has 220,000 members, up from 7,000 four years ago. It said that it had an 81% occupancy rate at the end of 2017, up 5% on the year before, and needs a location to be 60% occupied to make a profit.

However, the cost of acquiring those members, in the form of discounts, is increasing, and the revenue from each member dropped 6% to $6,928.

Revenue rose by 100% in 2017 but costs rose faster, Bloomberg said, causing the company to lose $934M last year. Its 2017 revenue was $886M and its costs were $1.8B, according to the Financial Times.

In terms of its rent liabilities, the bond documents showed that WeWork has committed to paying $5B in rent between now and 2022. It has committed to paying a further $13.2B from 2023 onward.

But Bloomberg pointed out that each building it occupies is leased through a separate special purpose vehicle, and while the parent company provides a guarantee on the leases, this guarantee lasts for an average of 12 months on a 15-year lease.

The documents also showed that founder Adam Neumann holds 65% of the voting power in the company and can dictate who sits on the board.

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