WeWork has doubled down on its demand for rent from members unable to pay, in some cases threatening debt collection if clients don’t fork over the money.
Covid-related eviction moratoriums in many cities, including New York, have been extended, offering some relief to commercial and residential tenants. But WeWork has memberships, not leases so it doesn’t have to abide by those moratoriums.
The office-space provider is now taking a tougher stand with members unable to pay rent, according to Business Insider. It sent hundreds of letters from in-house lawyers to members in the U.S. and Canada, demanding rent, according to the report. About 100 letters were sent from outside attorneys to members with higher outstanding balances.
The move comes as WeWork’s credit rating was further downgraded on concerns that the pandemic could seriously weaken demand for office space. Fitch dropped WeWork’s long-term issuer default rating last week one notch from CCC+ to CCC. Both are non-investment grades, otherwise known as junk or high-yield status, representing a real possibility that the company will default on its credit obligations.
Earlier in the pandemic, WeWork took a softer approach toward rent issues. But that was only after the company faced backlash for working out its own rent breaks with landlords but refusing to extend the same concessions to members. WeWork allowed memberships to remain intact through the spring, and offered relief in the form of payment plans and rent discounts.
But the situation didn’t improve, and WeWork lost 81,000 members in the second quarter, according to the report.
A WeWork spokesperson declined to comment. [BI] — Raji Pandya