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NEW YORK CITY—WeWork is reportedly ceasing new lease agreements, according to a report in the Financial Times, which cited people briefed on the matter.
Also, in a separate account in Bloomberg, it was reported that WeWork planned to sell three businesses it acquired in recent years: Managed by Q, Meetup and Conductor.
These are not completely unanticipated steps for the company, which has been spiraling downward having burned through $2 billion in 2018 and appears likely to run through what cash is on hand sometime this year.
The move to stop new lease agreements comes as the company’s new co-CEOs Artie Minson and Sebastian Gunningham assume the helm of WeWork. They also plan to lay off thousands of workers in the coming weeks to help staunch the bleeding, according to the FT.
As the largest office tenant in New York City, WeWork’s troubles are likely to spread through the city’s commercial real estate sector as well as other markets where the co-working giant has a significant presence, such as Washington, DC. Building valuations will likely be affected, especially if WeWork starts to pull out of existing leases. According to some reports, at the end of 2018 WeWork had about $34 billion in lease obligations up from $18.2 billion a year earlier.