WeWork turmoil raises high-stakes questions about co-working business model

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TORONTO (BLOOMBERG) - Does co-working work?. Read more at straitstimes.com.

After the co-working giant WeWork sidelined co-founder Adam Neumann to resolve governance and leadership issues, the next question is a more traditional one for prospective IPO investors: Does its business model make sense? It all depends on execution.

For WeWork rival IWG Plc, the world's largest operator of serviced offices, the business of offering customers short-term office space around the world has made chief executive officer Mark Dixon a billionaire. Founded three decades ago as Regus, for much of IWG's history, its spaces were pretty plain vanilla - shared office equipment, someone to answer phones - compared with WeWork's flash, its kombucha on tap and other amenities.

WeWork is also starting to pursue more management contracts. It's also shifted its tenant base in the past year toward more corporate and enterprise clients. In these management agreements, landlords fund the buildout of spaces to WeWork's specifications and maintain responsibility for them. WeWork then collects a fee for managing the office.

MOST EXPOSED Investors across markets like Manhattan, London, San Francisco are among the most exposed to WeWork. Deals for two big London office buildings leased mostly to WeWork are on the ropes. Several large landlords and brokerages who invest in and lease space to WeWork declined to comment for the story. Other landlords with less exposure to WeWork aren't too concerned.

"It's been a disruptive business model for the industry; we want to understand it, and we want to participate in it," Fortier said.

 

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SoftBank in talks to boost WeWork investment by $1.38b or more, says FTLONDON (REUTERS) - SoftBank Group Corp is planning to invest an additional US$1 billion (S$1.38 billion) or more in WeWork, altering a warrant agreement struck before WeWork postponed its IPO plans, the Financial Times reported, citing people briefed on the matter.. Read more at straitstimes.com.
Source: The Straits Times - 🏆 8. / 63 Read more »