WeWork has opened almost as many new locations in the last 3-1/2 months as it di...
NEW YORK - WeWork has opened almost as many new locations in the last 3-1/2 months as it did in the whole first half of this year, likely accelerating the speed with which the office-sharing company is burning through cash as increasingly hard-nosed investors scrutinize its prospects for going public.
The website also identifies 89 sites as “coming soon” and 117 sites as “just announced” - all new locations that are yet to open. The company is now cutting back, including laying off some employees and closing or selling entities that are not essential to its core operations as it seeks to avoid running out of cash. On Friday, WeWork said it will shut down its WeGrow private school in New York City as it pares peripheral operations.
“Investors don’t want to invest in a company with such a high cash-burn rate,” said Gina Szymanski, a portfolio manager at real estate-focused AEW Capital Management LP in Boston. “They have got to slow their growth down and focus a little bit more on profitability.”WeWork has only about $2.5 billion of cash on hand as of June 30, according to the prospectus that was issued in August.
IFR reported banking sources as saying on Friday that WeWork is in talks with JPMorgan Chase to seek $1.75 billion in bank financing that would provide it with enough liquidity to see it through to the end of the year. Chase is in talks with other banks to syndicate the letter of credit, it said. WeWork has certainly slowed new leasing in response to investor feedback, said Szymanski, citing AEW’s analysis of WeWork’s market presence.
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