WeWork to Sell $500M of Bonds in Debut Sale

Re:WeWork to Sell $500M of Bonds in Debut Sale by fanzhang on Tuesday April 24, 2018 @02:14PM (#16915098)

It may be also of interest to note that WeWork's leases with their landlords are not signed with WeWork Inc, but instead with limited-liability subsidiaries that WeWork owns.

This means that when the cyclical tenants leave, WeWork is not left with the whole bag; instead, its landlords are.

When the tenants of a building stop paying, WeWork would default on that subsidiary, but WeWork corporate would not default.

This was hugely surprising to me when I first heard it.

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Re:WeWork to Sell $500M of Bonds in Debut Sale by pm90 on Tuesday April 24, 2018 @03:08PM (#16915623)

Why would a landlord accept these terms? Isn't the landlord increasing their exposure to financial default? And if the parent is true and they are operating in premium markets, there should be a lot of other willing tenants right?

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Re:WeWork to Sell $500M of Bonds in Debut Sale by YokoZar on Tuesday April 24, 2018 @04:33PM (#16916274)

You may have answered your own question. If you can relet the space more easily when WeWork Subsidiary LLC breaks the lease, then the landlord's default risk is reduced.

Plus, maybe there's a large deposit.

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Re:WeWork to Sell $500M of Bonds in Debut Sale by fanzhang on Tuesday April 24, 2018 @07:46PM (#16917662)

A lot of other potential tenants are small anyway and have the same problems as WeWork Subsidiary LLC -- they can default and go under.

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Re:WeWork to Sell $500M of Bonds in Debut Sale by dogma1138 on Tuesday April 24, 2018 @02:44PM (#16915423)

This isn’t that uncommon especially in high risk industries it can increase your overall tax liability depending on the exact structure but reduces the risk considerably.

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