WeWork Renegotiates 300K SF Lease at 1440 Broadway

WeWork, which has cancelled nearly 70 leases since filing for bankruptcy protection on November 7, has successfully renegotiated the terms of its lease for 300K SF of office space at 1440 Broadway.

The co-working giant will continue to operate 10 floors of the Times Square building in a deal that reduces the rent and shortens the lease term, according to a report in Bloomberg.

Most of the WeWork space at 1440 Broadway is occupied by Amazon, which in August renewed a sublease for 210K SF.

“We’ve reached a significant number of positive agreements with landlord partners globally, representing sizeable progress towards our goal of reduced rent and tenancy expenses,” Peter Greenspan, WeWork’s head of global real estate, said in a statement. “We look forward to finding more win-win solutions that create long-term, sustainable value.”

The deal, which will need court approval, comes on the heels of a hearing on Monday in Newark before the judge overseeing WeWork’s Chapter 11 case. Steven Serajeddini, a Kirkland & Ellis attorney representing WeWork, told Judge John Sherwood that the firm expects to ask the court for permission to cancel more of its leases, Bloomberg reported.

Monday’s hearing produced a resolution of a dispute between WeWork and a group of landlords over WeWork’s bankruptcy financing arrangement. Sherwood approved a compromise agreement that will see WeWork financial backer SoftBank set up a $683M reserve fund to backstop WeWork’s rent obligations.

The compromise, which was worked out with a group of 18 landlords, including Beacon Capital Partners and Boston Properties, will avoid a scenario in which landlords attempt to collect funds posted by Softbank as collateral for WeWork’s rent costs, according to a report in Reuters.

A WeWork spokesperson characterized the agreement as “an important step forward” in the company’s Chapter 11 restructuring, reflecting continued support from the company’s lenders and key financial partners.

Douglas Rosner, an attorney representing the landlords, said WeWork must now provide more information to landlords about its future business plans, so landlords can decide whether rent concessions to WeWork are “an investment worth making,” Reuters reported.

WeWork, once valued at $47B, posted a net loss of almost $700M in the first six months of 2023, after recording $10.7B in net losses over the previous three years. In its November Chapter 11 filing, the firm estimated its liabilities at nearly $19B.

Prior to the bankruptcy, the company was the largest private-sector tenant in NYC, occupying an estimated 7M SF of office space in Manhattan. WeWork’s national office footprint was twice as large, at nearly 17M SF, according to CoStar data.

In August, after WeWork notified the SEC it was on the verge of bankruptcy, Barclay’s estimated that $7.5B of CMBS are backed by office buildings with potential exposure to WeWork, with 38% of that total concentrated in NYC.

In October, a $399M loan backed by 1440 Broadway went to special servicing, Trepp reported. Los Angeles-based CIM Group and QSuper, an Australian pension fund, stopped making payments on the loan.

Chapter 11 proceedings give companies up to 210 days to decide whether to exit a lease. According to Bloomberg’s report, WeWork has exited “dozens” of its NYC leases since the Nov. 7 filing.