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Lenders are growing increasingly wary of providing debt for transactions where WeWork provides all or most of the income in an office building, according to a report from Bloomberg.
Dutch bank ING blocked an unnamed investor from leasing an entire eight-storey office building, Bloomberg said, as lenders look to limit their exposure to the flexible office giant, which has rapidly grown its footprint, revenue and its losses in equal measure.
Lenders want to avoid having too much exposure to a single office tenant, with WeWork now being the biggest single private-sector office occupier in London and New York. There is also that the company is loss making, its leases are made to special-purpose vehicles rather than the parent company, and its major backer, SoftBank, recently scaled down a new investment in the company, though it still invested $6B.
Bloomberg said WeWork is now working directly with banks to educate them about its business. The company argues that its established locations are profitable and have an average occupancy rate of 80%. The company also pointed out that there have been multiple deals where banks have provided finance for the purchase of assets where it is the major occupier, or refinanced these assets.
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