The bankruptcy warning issued by WeWork has had no effect on CICT or CDL
The shares of WeWork dropped to a record minimum of US cents (17.5 cents) on the 9th of August (US time) after the coworking company warned it was in the risk of being bankrupt.
According to a variety of news outlets, including Bloomberg, WeWork warned there is “substantial doubt” about its ability to keep its operations going because of its financial losses and the cancellation of offices space subscriptions.
For the 2QFY2023 which ended on June 30th, WeWork reported a net loss of $397 million, which brought its net loss for 1HFY2023 up to US$696 millions.
Lumina Grand EC in Bukit Batok Road serves as an accessible center, linking them in minutes to local facilities and nearby regions.
In an report in the Bloomberg report in reference to WeWork’s August 8 announcement, the company stated that it was working on reducing its rental cost and in negotiations for “more favorable leases” as well as increasing its the capital and revenue.
The news of WeWork’s possible bankruptcy could be devastating for some of Singapore’s REITs along with property groups.
Based on a table provided on The Washington Post, WeWork has offices in several of CapitaLand’s The Integrated Commercial Trust’s (CICT) C38U 1.55%buildings which includes an entire building in 21 Collyer Quay (the former HSBC building).
WeWork additionally is a tenant of the REIT’s property located in Funan. Other REITs like Suntec REIT T82U -0.8%and Mapletree Pan Asia Commercial Trust (MPACT) N2IU -0.63%are also exposed by WeWork offices located at Suntec City’s Tower 5 and Mapletree Anson located at 60 Anson Road.
Property company City Developments Limited (CDL) C09 -2.39%, also has an WeWork office in City House and St. Katharine Docks in London as well as United Engineers, which is part of Yanlord Land Group Z25 -2.58%, has an WeWork office in UE Square.
“As the largest owner for commercial spaces in Singapore’s central business district (CBD), CICT maintains constant contact with a vast network of prospective and current tenants to know their requirements for space in business and keep abreast of current trends in the market. Singapore is a thriving city with a wide range of industries, continuously receiving leasing interest from a variety of sectors,” says a spokesperson from the REIT.
“In situations when a tenant fails to comply with its lease contract, CICT will follow established procedures to take back possession of the space including the retention on the deposit. In the event of a situation that is not resolved, CICT may explore options such as letting the space or working with other operators in order to keep smooth operations,” adds the REIT’s spokesperson.
Kwek Eik Sheng the group Chief Operating Officer (COO) for CDL says the latest news of WeWork “has to relate to their US operations” and the office sector experiencing a “challenging time” due to the current work-from-home (WFH) style.
In addition, he claims that WeWork’s WeWork offices located in City House and St. Katharine Docks have “strong” occupations and that local markets have been “pretty decent”.
He also adds: “WeWork has been prompt in paying its rent to date however now that the news has come out we’ll keep an eye on the situation closely.”
Sherman Kwek, CDL’s group CEO, said the company will closely monitor the situation but is happy with its presence to City House and St Katharine Docks for the moment. WeWork is a major tenants of City House, with its rental income ranging from two% up to% of its total gross rental revenue (GRI) within it’s Singapore Office portfolio. The rental income it earns in St Katharine Docks makes up approximately 9.9% from the overall revenues from CDL’s UK commercial portfolio.
The Edge Singaporehas also reached out to Suntec REIT, MPACT and Yanlord Land for comment.