Sandeep Mathrani has resigned as chair and chief executive of WeWork, joining private equity firm Sycamore Partners to head its real estate division.
The flexible workspace provider said David Tolley would be stepping in as interim chief executive. Lead independent director Daniel Hurwitz will serve as chair and lead a special committee to search for a permanent CEO.
Mathrani said: “It has been a privilege to lead WeWork during a notable transformation. Over the past three years we have restored the brand, grown revenue, right-sized the company, restructured our debt, and developed new product lines.
“I am grateful to have been able to lead such a resilient group of employees who, through it all, stepped up to meet and beat every challenge. I am firm in my belief that this is WeWork’s moment.”
Mathrani, former chief executive of Brookfield Properties’ retail group and vice-chair of Brookfield Properties, took over as WeWork CEO in 2020 and was tasked with rebuilding the company after its botched IPO and the aftermath of Adam Neumann’s leadership.
He took WeWork public in 2021 with a mission to cut costs and lead the business to profitability.
Profitability is still elusive for the flex space giant, with Q1 losses this year at $299m (£237m), although Mathrani was keen to point out this was a $205m improvement on the previous year. He added that the company was now on “the runway to deliver”.
But WeWork was keen to point to all that had been achieved under his leadership. Revenue has grown, reaching $849m in Q1 2023 from $593m in Q2 2021. The bulging portfolio has been right-sized, with more than $2.3bn of recurring costs eliminated in part by terminating leases. Debt has also been reduced by $1.2bn, while liquidity has been improved with more than $1bn in new funding and new and rolled capital commitments brought in.
WeWork confirmed that it hoped to make a profit in Q2, predicting adjusted EBITDA to be between a $10m and a $15m profit.
Interim chief executive Tolley only joined the board in February. He was previously chief finance officer of satellite company Intelsat, as well as a private equity partner at Blackstone.
The announcement has not been welcomed by the markets, so far causing the share price to drop from $0.35 to $0.26.
Meanwhile, Sycamore said Mathrani will lead its real estate activity, improving and optimising real estate often embedded within Sycamore’s target companies.
Sycamore managing director Stefan Kaluzny said: “We are thrilled to have Sandeep join the Sycamore Partners team, as the firm has a long history of underwriting real estate while evaluating portfolio company opportunities. Given the current environment, we believe real estate will continue to be a significant source of value.”
He added: “Sandeep has invaluable operating experience over many cycles and I am confident his real estate expertise will enhance Sycamore’s ability to realise value across our portfolio.”
Mathrani said: “Sycamore Partners has an outstanding reputation for driving profitable growth across its leading retail and consumer brands.”
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