The US real estate giant WeWork has filed for bankruptcy under US law and is raising strong concerns as there are many predictions of a real estate “bubble” bursting (their skyrocketing prices are not normal), which may bring a global financial crisis.<\/p>\n\n\n\n
For those who have not understood it, it is reminded that an economic crisis starts and ends with the real estate market. <\/p>\n\n\n\n
WeWork said it had reached an agreement with creditors to extend a 30-day grace period on some of its debt until November 6. The company said in a statement that it has entered into a restructuring agreement with shareholders representing about 92% of its guaranteed bonds. The bankruptcy filing will not affect WeWork’s operations outside the US and Canada. He also added that its premises remain open and functional.<\/p>\n\n\n\n
However, it is reported that it will “further streamline its commercial office leasing portfolio” as part of the restructuring. Its property portfolio spans 777 locations in 39 countries! <\/p>\n\n\n\n
At its peak, the company was valued at $47 billion unlisted. But the startup has been in turmoil since plans to go public in 2019 collapsed amid concerns about the company’s profitability.<\/p>\n\n\n\n
Japanese investment firm SoftBank has poured billions of dollars into the real estate startup and remains its majority shareholder. However, WeWork has never turned a profit. In the first half of the year, the company lost $696 million.<\/p>\n\n\n\n
As of 2019, the company’s valuation has continued to fall. In April, the stock price fell below $1 and faced the possibility of delisting from the New York Stock Exchange. And in August, WeWork announced that it “substantially doubted” whether it could survive much longer. WeWork’s bankruptcy comes amid a multi-year reorientation for the office leasing industry.<\/p>\n\n\n\n
Commercial real estate firms have struggled to recover from the world-record pandemic-driven shift to remote work that has weakened office demand worldwide, even as many companies have shifted to a hybrid model or required employees to return to the office full-time. <\/p>\n\n\n\n
WeWork currently operates in more than 300 locations around the world. The process of the US bankruptcy code allows companies to write off part of the debt and reorganize.<\/p>\n\n\n\n
In 2019 and early 2020, WeWork laid off thousands of employees, cut dozens of office leases and cut employee benefits, all while facing multiple government investigations. WeWork’s woes continued. Less than a month after its new CEO began 2020, the pandemic hit (one of the first public cases of the coronavirus in New York was traced to a man who worked in a WeWork office.)<\/p>\n\n\n\n
All over the world, offices emptied and the once-stable real estate industry plunged into unprecedented chaos, from which it has not recovered.<\/p>\n","protected":false},"excerpt":{"rendered":"
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