The Hidden Challenge Facing WeWork

Our well-informed readers are likely aware that on October 2, WeWork withheld interest payments due on five senior secured notes totaling approximately $95 million. In an 8-K report, WeWork stated that it has a 30-day grace period to make the payments before an event of default, that it has the liquidity to make the interest payments, and that it may decide to do so in the future. However, as an on the ground office leasing agent I believe that an important factor has been overlooked in the commentary on the payments that WeWork elected to withhold. That is the negative impact on tenant demand that will likely result from protracted negotiations with WeWork’s creditor constituencies.

WeWork also claims in the 8-K that “entering the grace period is intended to allow discussions with certain stakeholders in its capital structure to begin while also enhancing liquidity as the Company continues to take action to implement its strategic plan.” WeWork October 2, 2023 FORM 8-K. As a corollary, in an interview with the New York Times WeWork’s interim chief executive David Talley described the move as “typical” as a “precursor to a conversation.” New York Times article.