WeWork was upgraded to CCC+ from CCC by Fitch and its senior unsecured notes to CCC- from CC due to an improvement in its financial position over the past year. Fitch expects WeWork to end 2021 with approximately $1.3bn in wholly-owned cash thanks to $333mn in trust proceeds, $150mn equity backstop from a wholly-owned subsidiary of Cushman & Wakefield and $800mn in PIPE (private investment in public equity) investments. The rating action comes after WeWork completing its SPAC merger and going public, more than two years after its failed IPO in 2019. The 2019 IPO listing plan fell through after investors raised concerns over its business model, corporate governance and then CEO Adam Neumann.
The company has undergone a successful restructuring post the pandemic by exiting over 150 full leases and amending 350 leases YTD. Also, right-sizing its portfolio has led to a significant decrease in rent and tenancy costs, reducing overhead expenses by $1.1bn, Fitch added. Another positive is the recovery in flexible workspace with WeWork’s occupancy rate improving 15% from 4Q2020 to 64% in 3Q2021. “WeWork would be considered a going-concern in bankruptcy and that the company would be reorganized rather than liquidated”, the rating agency noted.
WeWork’s 7.875% 2025s were down 0.5 to 101.9, yielding 7.26%.
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