WeWork and Knotel Struggle to Pay April Rent

By April 29, 2020 News
wework-building

Reports suggest that WeWork and Knotel have had difficulties paying their rents during the past month. The two flexible office companies were both already struggling financially before the current pandemic, however, these issues could now be greatly exacerbated; with many businesses having to close up shop and operate remotely.

Large parts of the working world have had to shut down in order to prevent the spread of the virus, working from home where possible or placing employees on furlough.

home-office-coronavirus

As empty offices and cost-cutting become the global norm, both WeWork and Knotel’s struggles with rent may just be the start to an incredibly challenging and turbulent period.

 

The Impact of COVID-19 on Knotel and WeWork

Whilst Knotel has been reported to have skipped April’s rent for some of their New York City locations, the company were facing numerous overdue payments before the current crisis. The flexible office company, much like WeWork, has been hit quite hard in the past year, COVID-19 only worsening this, with staff numbers recently being cut in half.

WeWork have also failed to keep up with several different rent payments for April. The company have enlisted the help of debt brokers Newmark Knight Frank and JLL to help them renegotiate lease terms, and hopefully lower costs. Whilst fitting given the current climate, reports show that the office space company begun pursuing this prior to the outbreak.

Amidst the crisis, WeWork also started offering rent cuts of up to 50% for tenants who agreed to long-term leases, and has continued to charge tenants in a variety of different locations.

Additionally, the company are suing SoftBank after they pulled out of a £2.45 billion purchase deal. The Japanese conglomerate claimed they had to scrap the deal after WeWork failed to uphold numerous different conditions for it, as well as concerns on “multiple, new, and significant pending criminal and civil investigations”.

WeWork’s special committee have stated that “SoftBank has already received most of the benefits provided to it under the [Master Transaction Agreement], including broad control of WeWork and additional economic benefits” and further that “SoftBank’s wrongful conduct in failing to consummate the tender offer deprives WeWork’s minority stockholders of the liquidity that they were promised.” 

Battling issues both due and prior to the pandemic, only time will tell how these two businesses navigate their financial struggles, as the world waits for lockdown measures to ease.

Leave a Reply