The WeWork crisis: major landlords and real estate funds under pressure

Several companies have significant exposure to WeWork's occupancy. Brookfield leads the list, with over 27,000 m² of A+, A, and B class office space leased to the company. BSP Empreendimentos, the real estate arm of Bradesco, ranks second with 9,400 m².

When asked for comment, Brookfield stated, “We value the trust built with our clients and partners, and as such, we do not discuss the details of our commercial relationships.” BSP Empreendimentos Imobiliários Ltda, Iguatemi, and Idea! Zarvos have yet to provide updates on whether there are any rental payment delays from WeWork at the time of publication.

Last Friday, Santander Asset Management announced an agreement with WeWork to pay off part of the debt the company owed due to the lease of the WTorre Morumbi office. The project belongs to the SARE11 fund and the agreement was closed with the payment of 50% of the debt upon signing the agreement and the remainder will be paid in the following months.

The space remains open for statements from these companies.

The coworking business model has gained significant traction in the Brazilian market over the past eight years. SiiLA's monitoring data in São Paulo reveals that coworking occupancy in A+, A, and B class buildings grew nearly fivefold between the end of 2016 and 2020, as shown in the graph above.

 WeWork was one of the key companies driving the transformation of corporate spaces into coworking hubs during this period. Between 2017 and 2019, WeWork aggressively pursued large-scale developments, securing leases in high-profile buildings such as JK Complex - Tower D, Vista Faria Lima, WTorre Morumbi, and HBR Lead Corporate, all A+ class properties.

At least six real estate investment funds (FIIs) and two property owners have reported that WeWork is behind on rent payments. They are:

Owner/Property/Occupied Area  

• HBR I: HBR Lead Corporate Faria Lima | 9,300 m²  
• STAN: Grande Ufficiale Evaristo Comolatti | 8,600 m²  
• TRNT11: Centro Empresarial Nações Unidas (CENU) | 6,700 m²*  
• SARE11: WTorre Morumbi | 4,600 m²  
• RCRB1: 555 Blocks A, B, and C | 4,400 m²  
• VGRI11: Brazilian Financial Center (BFC) | 2,200 m²  
• VVMR11: Edifício One Eleven | Class C property** 

Among the funds and companies mentioned above, the most affected owner is HBR Realty. Next is Stan, the owner of the Edifício Grande Ufficiale Evaristo Comolatti, located in the Avenida Paulista area, where WeWork occupies the entire building, corresponding to an area of 8,600 m².

The third most affected owner due to WeWork's delays was FII TRNT11 — Torre Norte —, which owns the Centro Empresarial Nações Unidas - Torre Norte in the Berrini area, south of São Paulo, where the coworking company occupies 6,700 m². However, last week, the fund reported that it had received the rent for July.

The same occurred with the fund ALMI11, owner of Torre Almirante, a Class A property located in downtown Rio de Janeiro. According to the FII, WeWork settled the rent payments for the three months overdue for May, June, and July.

Recently, WeWork addressed the news regarding eviction actions and debts to creditors. Read the full statement below:

“We are not aware of any eviction notices. The company continues to operate fully in all buildings in Brazil. Our temporary actions aim to accelerate discussions to reach resolutions that are in the best interest of our entire ecosystem, mutually beneficial, and better aligned with current market conditions. Our members remain our top priority. The negotiations are already resulting in agreements with landlords, and we remain committed to providing the excellent service our members expect.”

* The FII TRNT11 — Torre Norte —, owner of the Centro Empresarial Nações Unidas - Torre Norte, reported that WeWork settled the rent for July 2024.  

** The Edifício One Eleven, owned by FII VVMR11, is a Class C property and, for this reason, is not included in the current analysis by SiiLA, which considers assets of classes A+, A, and B.