WeWork Venture Defaults on Loan for 600 California St Property in San Francisco
Posted on 04/13/2023
A holding company owned by WeWork Inc. and Rhone Group defaulted on a US$ 240 million loan for a San Francisco office tower. The building is 600 California Street, San Francisco, CA. In 2019, WeWork Inc. and Rhone Group acquired the property. WeWork became an anchor tenant at 600 California Street which is located in San Francisco’s Financial District. WeWork is the coworking company co-founded by Adam Neumann.
In March 2023, WeWork reached a deal for a major restructuring to help reduce its debt and secure more capital commitments. WeWork took on more expensive debt at higher interest rates. WeWork is under a new CEO – Sandeep Mathrani. The office-share company has been slashing expenses as it continues to try and turn a profit. At December 31, 2022, WeWork had net operating loss carryforwards for U.S. federal income tax purposes of approximately US$ 7.6 billion, of which approximately US$ 6.7 billion may be carried forward indefinitely and US$ 0.9 billion will begin to expire starting in 2033 if not utilized. At December 31, 2022, WeWork had future undiscounted minimum lease cost payment obligations under signed operating and finance leases of US$ 27.9 billion.
On March 1, 2022, WeWork closed the acquisition of Common Desk, a Dallas-based coworking operator with 23 locations in Texas and North Carolina, that operates a majority of its locations under asset-light management agreements with landlords to minimize operational and capital expenses. WeWork previously divested certain assets or businesses that no longer fit with its strategic direction or growth targets, including businesses that the Company had acquired. For example, the Company has divested several non-core businesses, including Meetup Holdings, Inc. (“Meetup”), Managed by Q Inc. (“Managed by Q”), Flatiron School LLC and its affiliates (“Flatiron”), Effective Technology Solutions, Inc.(“SpaceIQ”), Teem Technologies, Inc. (“Teem”), Conductor Inc. (“Conductor”) and Fieldlens.