Offices giant WeWork downgraded by ratings agency

By September 30, 2019 offices
we-work

It has just been announced that the office behemoth WeWork is now facing further bad news, after Fitch Ratings, the influential ratings agency downgraded the company’s debt.

What did the ratings agency do?

Fitch has changed the co-working space provider, as well as its parent company WeCo current rating from a B rating to now CCC+. This change in ratings comes just a day after it was revealed that WeWork would be now shelving plans for a New York float.

A difficult September for WeWork 

The workspace giant WeWork has had a difficult past month. There has been increasing investor skepticism in recent weeks over the high valuation increase, and it also saw the WeWork chief, Adam Neumann being removed from the business completely. 

Why did Fitch downgrade WeWork’s rating?

The agency said it had decided to decrease the company’s rating in order to better reflect the uncertain liquidity profile of WeWork. Fitch said it also expects WeWork to scale back its growth ambitions as well as its overhead expense which has caused its liquidity position.

The agency was also concerned about WeWork’s business and market position in the near future. Fitch warned that there was potential for the company to be threatened by customers’ hesitation to go ahead and sign up membership agreements.

Losses for WeWork leading to downgrade

Another potential reason that has contributed to the downgrade in WeWork’s rating could be due to investor worries that were initially raised in August. This was the month that the business filed a prospectus that showed it had racked up a staggering amount in losses – amounting to billions.

WeWork, which has leased a number of properties across the capital, had previously been valued at over 47 billion dollars, with the co-working market has grown exponentially in recent years. However, in recent months, doubts have started to surface as to whether the company’s business model is in fact sustainable.

Pilcher Hershman does not offer co-working space, instead providing creative offices in London, tailored to each company’s requirements. We operate as relocation agents, helping companies of all sizes move offices in the most efficient and cost-effective way possible.

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