WeWork Reports Best Sales Since Dropping IPO Plans in 2019

SoftBank Group Corp. employees and members of the media gather during a vaccination simulation at the WeWork Nogizaka co-working office in Tokyo, Japan. (Photographer: Toru Hanai/Bloomberg)

WeWork Reports Best Sales Since Dropping IPO Plans in 2019

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As vaccination rates rise and workers start to trickle back into offices, WeWork is having its best months in almost two years.

The global co-working company said Monday that it sold enough desks in April and May -- and had fewer cancellations -- to record its best net desk sales since September 2019.

Back then, WeWork’s attempt at an initial public offering fizzled and it drastically cut expenses, laid off thousands of employees, and ousted its chief executive officer. As new CEO Sandeep Mathrani started his job months later, the pandemic hit and prompted a significant chunk of customers to cancel their office rentals and stay at home.

New York-based WeWork, however, has maintained that it’s well-positioned to regain customers as workers return to the office and employers opt for more flexible workspaces rather than years-long leases. WeWork’s occupancy rate, which used to hover above 70%, dropped to 47% late last year. It has since risen to 53% at the end of May, the company said.

Now, WeWork aims to go public again in the third quarter via a $9 billion merger with a special purpose acquisition company, BowX Acquisition Corp. Shares in the SPAC were briefly elevated when trading opened in New York on Monday before declining more than 1%.

WeWork’s recovery is fairly widespread across the globe. For the first time since September 2019, almost all of its regional markets sold more new desks than they lost through cancellations or other departures.

At its peak, WeWork reported 662,000 memberships in December 2019, which dropped to 490,000 a year later, in the midst of the pandemic. The metric is climbing again: At the end of May, WeWork had 505,000 memberships, which is getting close to where it was around the time of the IPO attempt. Many of those memberships are passes that allow more flexibility for workers, such as booking on-demand or having access to multiple office locations under one membership.

The company has also continued trimming the number of locations it operates in, after aggressive growth pushes in 2019 and earlier. In the last two months, it has left 17 buildings and renegotiated the leases for 51 more to further cut expenses, it said.

Last month, WeWork also said it had formed a joint venture with SoftBank Latin America Fund to oversee the operations of its buildings in Argentina, Brazil, Chile, Colombia and Mexico, similar to other franchise agreements the company has in countries such as India and Israel. Mathrani has said the company is on track to be profitable by the end of this year.

©2021 Bloomberg L.P.

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