Two billion-dollar flexible office rivals haven't paid some April rents while they plan the next steps after a month filled with layoffs and financial fallouts amid the coronavirus crisis.
WeWork and Knotel were financially strained before the coronavirus hit, but as large portions of the economy shut down nationally to prevent the virus from spreading, missed rent payments show their situations may be becoming more dire.
WeWork failed to pay April rent at several of its locations and has recruited debt brokers JLL and Newmark Knight Frank to help renegotiate the terms of its leases in order to lower its costs, a plan it has been pursuing since before the outbreak, The Wall Street Journal reported.
WeWork recently cut rent up to 50% for tenants that were willing to sign long-term leases amid the uncertainty of the current situation. It continues to charge its tenants’ rent despite the stay-at-home orders in place in New York City and its other markets around the country. The company is also suing SoftBank after the Tokyo investment giant, which has a controlling interest in WeWork, pulled out of a $3B stock purchase agreement amid the pandemic.
Knotel had several overdue payments left outstanding before the global crisis in addition to skipping this month’s rent for at least three New York City locations, Business Insider reported. CEO Amol Sarva told Commercial Observer that Knotel planned to give back the space for roughly 20% of its portfolio, including many of its Manhattan locations, which equates to 1M SF of killed deals.