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British landlords face £3bn hit as WeWork warns of collapse

wework office in london
wework office in london

Landlords face losing billions in rent owed by WeWork, as the work space provider grapples with the rise of home working.

British landlords are exposed to more than £3bn in rental commitments from WeWork, London’s biggest private tenant.

A Telegraph analysis of WeWork’s UK subsidiaries shows the pay-as-you-go office provider has signed leases worth £3.1bn at more than 50 locations in Britain.

But the firm, once valued at $47bn (£37bn), has warned that there are “substantial doubts” over its ability to keep operating and its shares have lost 97pc of their value over the past 12 months.

The company, which takes long leases from office providers and sublets them on monthly contracts, slammed the brakes on a global expansion and pursued profitability after founder Adam Neumann’s 2019 plans for a New York flotation publicly unravelled.

The company went public two years later. However, the rise of working from home and a surplus of office capacity has hit the business.

WeWork had £3.8bn in UK lease commitments at the end of 2021, according to the most recent filings by its various UK subsidiaries.

After closing some locations, it continues to owe at least £3.1bn in leases that in some cases last as long as 20 years across 56 properties.

WeWork remains London’s largest private tenant with around 3 million sq ft of space, according to data company CoStar – equivalent to the amount of floorspace in three Shard buildings.

They include a 301,488 sq ft building on London’s Southbank owned by Mike Hussey’s Almacantar and 1 Poultry of South Korea’s Hana Financial.

Other landlords include the Qatari royal family and Brookfield Property Partners, who own a 285,000 sq ft WeWork office in Canary Wharf.

Landlords are concerned that a potential collapse of the shared workspace company could leave them exposed to millions of pounds in owed rent.

WeWork has been shedding office leases and properties it owns through its property arm, WeWork Capital Advisors. It is currently in the process of selling its 99 Victoria Street office which is under offer to a subsidiary of Fidelity, and it is looking to sell its 51 Eastcheap building in a sale and leaseback transaction.

David Tolley, interim chief executive of WeWork, said earlier this month that the firm’s woes were down to an oversupply of offices as people continue to work remotely.

He said: “Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships.”

A WeWork spokesman said: “We are confident in our ability to meet the evolving workplace needs of businesses of all sizes across sectors and geographies, and our long term company vision remains unchanged.

“Our members remain our top priority, and we are resolutely focused on delivering for them for the long term.”