IWG forecasts profit in 2021 will be well below crisis-hit 2020 – ET RealEstate

BENGALURU: Office space provider IWG warned on Monday that its 2021 core earnings will be well below last year’s crisis-hit level as continuing curbs in some markets and new COVID-19 variants derail recovery, sending its shares as much as 16% lower.

The grim forecast in an unscheduled trading update underlines the challenges facing an industry that has seen occupancy levels plummet as a shift to remote working during the health crisis emptied out many office buildings.

Shares in the Regus owner were 15% lower at 310 pence by 0741 GMT, heading for their worst one-day drop since March last year.

IWG and its rivals have to some extent pinned their hopes on offering work spaces that would align with a permanent shift to a flexible working model, dividing week days between the office and home.

IWG, which has already signed deals with companies including bank Standard Chartered for hybrid working services, said on Monday it was making good progress on larger master franchise agreements, with several in the final stages of talks.

For 2020, IWG suffered a 17% slide in adjusted core earnings and took COVID-19 costs of 389.8 million pounds ($550.24 million).

Rival Workspace has warned that a recovery to pre-pandemic levels will take a couple of years.

“For it (underlying core profit) to be ‘well below’ is remarkable, when Q1 commentary was upbeat, occupancy troughed in February and price was supposed to be moving up,” Peel Hunt analysts wrote.

“There is no question that this is disappointing.”

IWG said it still expects a strong recovery in 2022, adding it has continued to see “unprecedented demand” for its hybrid work options.

The company said occupancy was improving in markets where pandemic curbs were easing, including the United States, while enquiries touched pre-crisis levels.

Softbank-backed office-sharing startup WeWork, which posted a first-quarter loss of more than $2 billion as it prepares to go public, also said last month it was starting to see signs of a recovery as more people returned to the office.

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WeWork reports quarterly loss of nearly $2.1 billion ahead of public listing – ET RealEstate

BENGALURU: SoftBank-backed office-sharing startup WeWork on Thursday reported a first-quarter net loss of $2.06 billion, as it was hit by restructuring charges while it prepares to go public through a merger with a blank-check firm.

WeWork said its business was recovering as more people returned to offices due to easing of COVID-19 curbs, after work-from-home arrangements last year weighed heavily on the company by reducing occupancy and increasing operating costs.

Total occupancy ticked up to 50% in the first quarter compared to 47% in the fourth quarter, the company said.

WeWork in March agreed to go public through a merger with BowX Acquisition Corp, a special purpose acquisition company, in a deal that valued it at $9 billion. SoftBank Group Corp said it would retain a majority stake in the company after the merger.

The company, whose attempt at an initial public offering in 2019 spectacularly imploded due to investor concerns over its business model and co-founder Adam Neumann‘s management style, said first-quarter revenue nearly halved to $598 million from a year ago.

WeWork said it had 490,000 members in the first quarter, compared to 693,000 in March 2020.

The company said it incurred restructuring costs of $494 million, driven by non-cash SoftBank stock purchases and a settlement with Neumann. It posted an impairment charge of $299 million partly due to an exit out of some real estate.

SoftBank and Neumann, WeWork’s former chief executive officer reached a settlement in February ending a legal battle that started in 2019 when SoftBank agreed to buy around $3 billion in WeWork stock belonging to Neumann and other employees, but later contested its obligation to purchase the shares.

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SoftBank-backed WeWork to begin accepting payments in cryptocurrencies – ET RealEstate

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BENGALURU: SoftBank-backed office-sharing startup WeWork said on Tuesday it would begin accepting payments in select cryptocurrencies and partner with Coinbase Global Inc and payment app Bitpay to facilitate transactions.

WeWork joins a clutch of high-profile firms that have dived into the digital currency space recently, including Tesla Inc , Visa Inc, Bank of NY Mellon, prompting the move away from the fringes of finance for crytocurrencies like bitcoin.

Visa Inc said last month it would allow payment settlements using cryptocurrency while PayPal Holdings Inc launched a crypto checkout service on March 30.

Bitcoin, the biggest crytocurrency, reached a record high last week, ahead of the trading debut of U.S. crytocurrency exchange Coinbase, but its rally has since cooled off.

The multi-fold rise in the value of cryptocurrencies has also been driven by investors seeking high-yielding assets amid low interest rates.

Earlier in the day, PayPal-owned peer-to-peer payment service Venmo said it had started allowing users to buy, hold and sell cryptocurrencies on its app.

WeWork agreed to go public late last month through a merger with a blank-check firm in a deal that values the start-up at $9 billion. SoftBank Group Corp said it would retain a majority stake in the company after the merger.

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Adam Neumann’s final WeWork act: helping SoftBank’s SPAC deal – ET RealEstate

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BOSTON | BENGALURU: An unlikely figure helped set the spark for SoftBank Group Corp’s $9 billion deal to take WeWork public.

Adam Neumann, WeWork’s co-founder and ousted chief executive, met in November with the head of the special purpose acquisition company (SPAC) that would go on to clinch a deal with WeWork, according to people familiar with the matter.

Neumann was locked in a fierce legal battle at the time with SoftBank over a $3 billion deal for a portion of his and other investors’ stake in the office space-sharing company.

The introduction between Neumann and BowX Acquisition Corp co-chief executive Vivek Ranadive over a Zoom call was facilitated by a senior UBS Group AG capital markets banker, the sources said. It preceded discussions the SPAC chief had with WeWork.

Neumann played up WeWork’s prospects on the call and the conversation piqued Ranadive’s interest, the sources said.

Ranadive’s SPAC had been looking for an acquisition target after raising $420 million in an IPO in August.

The ensuing deal announced on Friday cushions some of the blow SoftBank has suffered with its investment in WeWork. It has invested at least $18.5 billion in WeWork since 2017, including $6 billion when a fundraising round valued the startup at $47 billion in January 2019.

The sources described the meeting between Neumann and Ranadive on condition of anonymity. Representatives for Neumann, WeWork, UBS and SoftBank declined to comment. Ranadive did not respond to multiple requests for comment.

Neumann, who has kept a low profile since his unceremonious ouster after WeWork’s failed IPO attempt in 2019, has had a contentious relationship with SoftBank.

The Japanese tech investment giant pushed for his ouster before it took over WeWork in a $10 billion rescue financing deal in October 2019. It later backtracked on an agreement to buy $3 billion of WeWork shares from Neumann and other investors, citing criminal and civil investigations into WeWork, the company’s failure to restructure a joint venture in China, and the shift to remote work due to the COVID-19 outbreak.

One week before the case was due to go to trial, SoftBank reached a settlement with Neumann and other investors in February to pay out about half of its original commitment. It did not want the potential legal liability to jeopardize the SPAC deal, the sources said.

Neumann also stands to benefit from the SPAC deal as he still has a roughly 10% stake in WeWork, worth around $790 million.

Limited options

Neumann had no role in the SPAC deal after his discussion with Ranadive, the sources said. Ranadive and his team began discussions with WeWork in December. SoftBank Chief Operating Officer and WeWork Executive Chairman Marcelo Claure led the negotiations on behalf of SoftBank, with SoftBank CEO Masayoshi Son also stepping in, one of the sources said.

WeWork was apprehensive about opting for a traditional IPO following its failed attempt in 2019, and its options for a SPAC deal were limited. BowX was the only SPAC that expressed a serious interest in WeWork, two of the sources said.

Ranadive, a 63-year-old technology executive turned investor and owner of the Sacramento Kings basketball team, said last week WeWork stood to benefit from a shift by many companies to a hybrid model of working that calls for employees to come in to a workplace just a few days a month.

He called the shift a tailwind for WeWork.

The deal was received well by Wall Street, with BowX shares ending trade on Friday up 20% following the merger’s announcement.

WeWork’s valuation was revised down in the final stages of the negotiations. Investors participating in the private investment in public equity (PIPE) transaction managed to drive down WeWork’s valuation in the agreement from $9.9 billion to $9 billion, including debt, the sources said. The size of the PIPE increased to $800 million from $500 million.

Ranadive and the rest of the BowX senior team will receive WeWork shares worth almost $90 million after investing $11.7 million of their own money. They will be restricted from selling these shares for the first year unless certain share price targets are met.

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