WeWork Signed Just 4 New Leases Last Quarter, Part Of A 93% Drop

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Topline: Months after its failed IPO and emergency bailout from SoftBank, WeWork is still losing money despite efforts to turn the business around, with leasing activity slowing to a crawl in the last three months of 2019.

• WeWork only signed four new leases—covering 184,022 square feet of space—in the fourth quarter, which is a 93% drop from from its average of 2.54 million square feet over the previous four quarters, according to data from real estate firm CBRE that was shared with CNBC.
• That slowdown caused WeWork to lose its top spot in the flexible office leasing market, to IWG-owned Spaces, which now leads after leasing 284,916 square feet last quarter, an 11% increase from its average over the preceding twelve months, according to CBRE.
• Two of WeWork’s leasing projects this last quarter were in Manhattan—still the largest market despite an overall drop in new leases, while the others were in San Francisco and Philadelphia, respectively.
• The coworking startup has in recent months also continued to sell non-core parts of its business in a bid to cut costs and raise cash: The latest moves came on Monday, when WeWork completed the sale of meeting space technology company Teem to workplace solutions company iOffice.
• “The successful divestiture of Teem is another step forward in WeWork’s strategy to renew our focus on our core workspace business,” said Sebastian Gunningham, co-CEO of WeWork, in a press release.&nbsp;
• WeWork’s investors have also continued to slash their stakes in the company: SoftBank wrote down $4.6 billion, it said in its November earnings report. Goldman Sachs said last October that it had taken an $80 million hit from its investment, while Jefferies Financial Group earlier this week took an almost $70 million writedown to its WeWork stake.

Key background: After huge losses that put WeWork on the verge of financial collapse, the company canceled its IPO plans and was eventually bailed out by its largest shareholder, Japanese conglomerate SoftBank. Mounting concerns led to the ouster of CEO and founder Adam Neumann, who has since been replaced as chairman by SoftBank executive Marcelo Claure, who outlined his plan to turnaround the business and achieve profitability by 2023. WeWork lost a net $1.25 billion in the third quarter of 2019 alone. But the slowdown in new lease activity reflects WeWork’s overall downsizing of its business, following SoftBank’s $5 billion emergency financing package that saw it take 80% control of the struggling office startup. In November, WeWork announced 2,400 layoffs, almost 20% of its total workforce, as it tried to cut costs and revamp its struggling business.&nbsp;

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Topline: Months after its failed IPO and emergency bailout from SoftBank, WeWork is still losing money despite efforts to turn the business around, with leasing activity slowing to a crawl in the last three months of 2019.

• WeWork only signed four new leases—covering 184,022 square feet of space—in the fourth quarter, which is a 93% drop from from its average of 2.54 million square feet over the previous four quarters, according to data from real estate firm CBRE that was shared with CNBC.
• That slowdown caused WeWork to lose its top spot in the flexible office leasing market, to IWG-owned Spaces, which now leads after leasing 284,916 square feet last quarter, an 11% increase from its average over the preceding twelve months, according to CBRE.
• Two of WeWork’s leasing projects this last quarter were in Manhattan—still the largest market despite an overall drop in new leases, while the others were in San Francisco and Philadelphia, respectively.
• The coworking startup has in recent months also continued to sell non-core parts of its business in a bid to cut costs and raise cash: The latest moves came on Monday, when WeWork completed the sale of meeting space technology company Teem to workplace solutions company iOffice.
• “The successful divestiture of Teem is another step forward in WeWork’s strategy to renew our focus on our core workspace business,” said Sebastian Gunningham, co-CEO of WeWork, in a press release. 
• WeWork’s investors have also continued to slash their stakes in the company: SoftBank wrote down $4.6 billion, it said in its November earnings report. Goldman Sachs said last October that it had taken an $80 million hit from its investment, while Jefferies Financial Group earlier this week took an almost $70 million writedown to its WeWork stake.

Key background: After huge losses that put WeWork on the verge of financial collapse, the company canceled its IPO plans and was eventually bailed out by its largest shareholder, Japanese conglomerate SoftBank. Mounting concerns led to the ouster of CEO and founder Adam Neumann, who has since been replaced as chairman by SoftBank executive Marcelo Claure, who outlined his plan to turnaround the business and achieve profitability by 2023. WeWork lost a net $1.25 billion in the third quarter of 2019 alone. But the slowdown in new lease activity reflects WeWork’s overall downsizing of its business, following SoftBank’s $5 billion emergency financing package that saw it take 80% control of the struggling office startup. In November, WeWork announced 2,400 layoffs, almost 20% of its total workforce, as it tried to cut costs and revamp its struggling business.