Quote:
Originally Posted by East7thStreet
I was also under the impression that WeWork was doing well specifically in the Austin market.....and that was the reason they were going to buy and develop those vacant lots. If the company as a whole goes under maybe the Austin properties are some of the few profitable leases they have and may continue to function in their current form?
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Who knows how well they are doing in the Austin market. The cited article suggests that they have been juggling the books to create the impression that their existing leased properties in NY and Chicago were filled with tenants and generating profits. This paragraph from the NY Magazine article seems to sum up WeWork's current predicament:
"There probably are a minority of WeWorks that are cash-flow positive and could sustain a corporate headquarters with 80 percent fewer staff. They have 15,000 employees; I don’t see any path that doesn’t involve 5,000 to 10,000 layoffs in the next 60 days. Then the question is how to restructure. This is now a distressed asset that requires immediate restructuring. So does SoftBank want to put more capital in? If SoftBank does not want to put more capital in, they can’t cut costs fast enough and it will be a Chapter 11. If SoftBank does want to put money in, they need to basically cut costs. They’re going to need to close a massive number of offices, and they’re going to need to lay off somewhere between a third and two-thirds of staff at corporate. The consensual hallucination here continues. This is a distressed asset in free fall that is inarguably worth less than zero. Because all we have here is an entity burning $700 million a quarter."
And this: " There’s reports that they were giving 100 percent commissions to put tenants in the buildings and then figuring out some sort of accounting jiujitsu to try to turn those expenses into revenues."
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