WeWork’s UK arm wrestles with ‘material uncertainty’

WeWork is facing “material uncertainty” at group level that poses a risk to its UK business, according to its latest accounts. Accounts for WeWork International, covering 2022 and published last week, said its operations “are intrinsically linked to the ongoing trading position of the group headed by WeWork Inc” and that a “material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern”. WeWork International is the company through which WeWork invests in UK operating entities and which also provides services to other WeWork businesses outside the US. The company boosted management fee and service revenue to £59m in 2022 from £22m in 2021, while its loss narrowed from £153m to £110.7m. The company said “the recent macroeconomic environment has caused higher churn and weaker demand” than anticipated at group level, resulting in fewer memberships and “a reduction in revenue and cash flows” for the global business. It added: “Management is taking steps to address the risk posed to the going concern position of the group.” This includes reducing rent and tenancy expense through continued lease renegotiations, increasing revenue through member retention and new recruits, limiting capital expenditures and securing additional capital “through the issue of debt or equity securities or the sale of assets”. In August, WeWork raised “substantial doubt” about its ability to stay in business in a 10-Q filing that said its ability to continue as a going concern hinged on its ability to up liquidity and profit over the coming year. The company filed for Chapter 11 bankruptcy protection in the US in November and stated it planned to file for similar recognition in Canada, but said locations outside those countries are not part of the process and that franchisees globally are unaffected. The company’s UK workforce shrank to 390 employees in 2022 from 415 at the end of 2021. As the company continues its restructuring efforts, it noted a substantial increase in termination costs, which jumped from £498,000 to almost £2.9m in the same period. A spokesperson for WeWork said: “These stand-alone accounts, which represent the 2022 financial year, refer only to WeWork International Ltd, a services holding company which generates revenue through service, management and franchise fees. “These accounts show a year-on-year improvement relating to both revenue and operating losses, driven by the recovery from the pandemic and companies continuing to recognise the value of flexible space solutions in this new era of work. “Since 2022, WeWork has taken decisive steps to strengthen its balance sheet on a global scale, and continues to do so today. The UK and Ireland remain key markets for WeWork, particularly London, which saw its best month on record for bookings in November.” To send feedback, e-mail chante.bohitige@eg.co.uk or tweet @bohitige or @EGPropertyNews