Hacker News Reader

Comment by donedeals | Hacker News Reader

Wework Brooklyn #22 LLC signs the lease with the landlord and thus is responsible for the lease obligations. Wework LLC (proper) guarantees these lease payments for only 6- 12 months of the lease. After this time the only party responsible for the lease is the LLC that was formed.

Landlords are likely agreeing to this only because Wework would never be able to sign a lease with any owner if they defaulted on a location.

View on HN

Which sets them up for WeWork subsidiaries to default on any building that's more than X months old and unprofitable. That's a terrible deal for the landlord, if the landlord priced it as a 15 year deal instead of a one year. Absolutely great for WeWork. Terrible for anyone who wants offices, since WeWork will sit on a large chunk of the market.

If WeWork subsidiaries were defaulting right and left they wouldn't be able to get these deals.

They aren't, so they are.

Your comment seems to imply that the landowner has no choice.

Agreed. If, and when, they default it would most likely make news in the real estate / tech sector. Something seems too good to be true here but so far they haven't closed any locations.

Maybe WeWork is picking up left-over locations. Some rent is better than no rent.

If the landlord could find a better tenant, WeWork would have zero chance to rent any of it.

They'd be smart to move towards a franchise model then I suppose?

Reply on news.ycombinator.com