WeWork Ditches San Jose, Houston Leases

On Monday, WeWork announced a plan to exit bankruptcy while avoiding a buyout bid from its founder, Adam Neumann. As part of that effort, it will reject leases in key Texas and California markets.

On April 30, WeWork rejected its lease at 75 East Santa Clara Street in San Jose. The company leased five full floors in the 209,000-square-foot building, one of two called Valley Towers.

The building is owned by a subsidiary of Brookfield Properties.

The coworking giant also plans to reject its lease at 609 Main Street in Houston. The 48-story tower was developed in 2017 by Hines as part of a partnership with CalPERS to build green office buildings.

WeWork moved into the space in 2019, taking 50,000 square feet across two floors. At the time, it was WeWork’s fourth location in the Bayou City. It also had locations at 708 Main Street, the Woodlands and the Galleria. The company was targeting higher-paying customers at 609 Main, charging $200 more for private offices than the other downtown location, CultureMap reported.

The coworking firm plans to cut nearly $4 billion in debt and score $450 million in fresh financing to exit Chapter 11 bankruptcy, Bloomberg reported. Most of the new cash comes from real estate software provider Yardi, which will put up $337 million. It will also draw on $112 million from bondholders.

In following the restructuring plan, WeWork spurned Neumann’s offer to take back the company.

“After misleading the court for weeks, WeWork finally admitted it is trying to sell the company to a group led by Yardi for far less than we are continuing to propose, so we anticipate there will be robust objections to confirming this plan,” a lawyer for Neumann’s company, Flow, told Commercial Observer.

The company has already saved billions of dollars by amending or rejecting leases across the country.