The Numbers Behind WeWork’s Growing Empire

WeWork has provided a rare glimpse into the numbers behind its rapid expansion by turning to the bond market for the first time. The co-working company has amassed a global portfolio of more than 1.3 million square metres and is looking for $500 million to finance even more growth. The documents show that the company has committed to pay at least $18 billion in rent for that space in total.

The company has drastically expanded its membership with 220,000 members as of March in 234 locations spanning almost two dozen countries. The massive jump in locations and memberships has driven revenue growth past 100 per cent but costs are rising faster which resulted in a total net loss of $934 million last year. Documents also show that the revenue generated from each of its members is pushed down by the company’s growing use of discounts to attract new members.

WeWork’s general and administrative costs rose almost threefold in 2017, mostly due to buying back stock from employees in October.

WeWork is now seeking to manage its eye-watering rent bill by expanding into owning or managing buildings instead of just renting them. The company has committed to pay at least $5 billion in rent by 2022, with a further $13.2 billion due from 2023 onwards.

Investors can take comfort from the fact that each of WeWork’s locations isn’t directly leased by the parent company and is housed in a separate subsidiary. Credit letters from the parent usually last for just six to 12 months on an average 15-year lease which should give WeWork more flexibility to close locations when needed.

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