WeWork ready to exit Chapter 11, Italian real estate reorganisation kicks off

Italy is also on the road to restructuring the debt of WeWork, the coworking giant, which in November declared insolvency in the New Jersey courts under the rules of Chapter 11 and launched a restructuring plan. On 30 May, senior creditors are expected to make official their vote to take control of the company, with a new $450 million injection, a debt write-off and a definitive exit from the Chapter 11 procedure. But to achieve the goal, Italy also played its (minimal) part.

WeWork's five Milanese locations - via Meravigli, via Mazzini, via Pisani, via San Marco and via Turati - have become four. With Turati closed, the group assures, however, that the other four will remain unchanged, both in terms of location and available square footage, despite the fact that Milan was the only city in which the company - which rents these buildings, as everywhere else - was unable to renegotiate the leases.

"If in the main cities of continental Europe - explains to Il Sole 24Ore Rebecca Nachanakian, WeWork's general manager for Southern Europe, Benelux and the Nordic countries since October 2020, moving to Milan - it was possible to minimally revise renegotiations below 10% and in the United Kingdom renegotiations went even beyond 10%, in Italy this was not possible. Hence, the decision to close the least profitable location, keeping four active and unaffected, betting on the strong return of customers and the pressure on the demand for space. Since Chapter 11 was activated, the occupancy rate here has risen by 9 per cent and in the next two months we estimate an increase of 20 per cent". For the 2023 turnover, however, we will have to wait for the figures to be released in July.

"In Milan," Nachanakian continues, "there are a total of 3500 desks and 250 companies. They range from single professionals to start-ups, up to larger companies with established brands, which also opt to provide employees with more central and strategically connected workspaces in terms of services and infrastructure. A mix that allows for a virtuous balance in tenant diversification'. That the sector in Italy enjoys excellent health is also demonstrated by the fact that coworking spaces are growing. By June, even Poste Italiane will open its first 30 co-working and training locations for professionals, companies, associations and citizens, for an investment of EUR 120 million.

Globally, however, "The rationalisation of the lease portfolio has been a key pillar of WeWork's strategic restructuring," added Nachanakian. "To date, WeWork has defined a path for more than 97% of its global lease portfolio. This has enabled us to activate rent savings of USD 800 million and will reduce the total committment, also on leases, by about USD 11 billion. WeWork has already announced the acquisition of 77 leases and, upon completion of this transaction, expects to manage more than 170 sites in the US and Canada and 337 sites worldwide.