WeWork slashes £320m of UK leases as it slams brakes on expansion

James Titcomb
·2-min read
We Work - TIMOTHY A. CLARY/AFP
We Work - TIMOTHY A. CLARY/AFP

WeWork pulled out of more than £320m worth of lease agreements with UK landlords last year as it attempted to reduce its ballooning property exposure amid the pandemic.

The office rental company terminated at least four major leases in the UK, according to a Telegraph analysis of documents filed at Companies House.

The exits came after its total lease liabilities in the UK had swelled to £4.2bn at the end of 2019, a billion-pound increase over the year.

WeWork, the SoftBank-backed office space company, was forced to pull out of a $47bn flotation in 2019 due to questions from investors and revelations about the erratic conduct of its founder Adam Neumann.

SoftBank Vision Fund: read more
SoftBank Vision Fund: read more

It had opened scores of properties in London and other cities, becoming the capital’s largest private tenant amid a cash-fuelled expansion drive meant to justify its valuation.

However, after its failed IPO and Mr Neumann’s exit, the company has sought to shut certain properties and slammed the brake on expansion.

In July, WeWork terminated a £30m lease on a 13-storey office in Manchester, and in September, terminated £290m worth of agreements at a major site in Shoreditch, London, which have been renegotiated.

In September, it terminated a lease in Birmingham, whose value was not disclosed in company accounts. WeWork leases floors or entire buildings on long-term leases and packages them up into smaller spaces where they are rented by the month.

The company’s plans to revolutionise office space attracted billions in investment and saw it commit to decades-long leases, some of which it is now trying to unwind as it scales back its portfolio.

WeWork, under new management, has said it expected to be profitable in 2021, and has cut jobs and lease payments in an attempt to get costs under control.

However, its revenues fell 13pc year-on-year in the third quarter of the year, with many tenants leaving WeWork due to the pandemic. Globally, WeWork has shut or cancelled openings on 66 locations since the start of 2020, cutting $1.5bn (£1.1bn) in lease commitments.