WeWork and its major financial backers including SoftBank Group have struck a new restructuring deal to get the ailing workspace provider out of bankruptcy, spurning a competing financing proposal from co-founder Adam Neumann.
WeWork has struck an agreement with senior lenders, who have agreed to provide the business with roughly $450 million in Chapter 11 and exit financing in exchange for equity in the reorganized business. SoftBank and other owners of the company’s existing letters of credit could also swap their debt holdings for stock after exiting Chapter 11, WeWork lawyer Steven N. Serajeddini said during a Monday bankruptcy court hearing in New Jersey.
The restructuring deal represents a major milestone for the company after it filed for bankruptcy in November. If approved by the court, the business will be on a path to exit court protection in the coming months with less debt and a leaner, less expensive lease portfolio.
WeWork would be majority owned by Yardi, a provider of software for commercial and residential property owners, according to lawyers and a company statement issued after Monday’s hearing.
Eli Vonnegut, a lawyer representing a senior lender group backing the deal, said the agreement “is some of the best news we’ve had in this case,” and the company now has a “fast and reliable path out of bankruptcy.” WeWork needs to leave bankruptcy as quickly as possible because the Chapter 11 case has been extremely expensive and administrative costs incurred during the case aren’t sustainable, he said.
The proposal, which lawyers are still documenting, has support from owners of most of WeWork’s $4 billion in senior debt as well as a committee representing the company’s unsecured creditors. The deal leaves out Neumann, who had earlier floated an offer to buy back WeWork for more than $500 million.
Neumann could challenge the proposal, but for his offer, which he values at $650 million, to work, he would need to win support from senior lenders.
WeWork’s advisors have refused to negotiate with him and agreed to the restructuring transaction without public bidding on the firm’s assets, Neumann’s attorney, Susheel Kirpalani, said during the hearing.
‘Economic interests’
Federal bankruptcy Judge John K. Sherwood said it was up to the lenders, who are owed billions of dollars, to decide whether or not to negotiate with Neumann.
“I’m not going to second guess those economic interests,” Sherwood said.
If the restructuring is executed, WeWork would be majority owned by Yardi’s investmnt arm, Cupar Grimmond, which has offered to provide the business with roughly $337 million in financing. A group of WeWork bondholders have also agreed to provide $112 million in financing, Serajeddini said.
SoftBank would still own a portion of WeWork under the new deal. The company would receive at least 16.5% of WeWork at the time it exits Chapter 11 and its share could increase to as much as 36%, depending on how the letters of credit are equitized, lawyers said.
In the coming weeks, WeWork must put the proposed deal into a final contract and ask creditors to vote on the company’s broader reorganization plan. Neumann could still oppose the deal by trying to convince Sherwood to reject the reorganization proposal.
“It’s not over until the money is in the bank,” Sherwood said.
The Battery Park City Authority has issued a request for proposals (RFP) for a new restaurant in Wagner Park, a 3.5-acre green space currently being rebuilt and redesigned as part of a major resiliency project. The new restaurant would take up one wing of the newly constructed Wagner Park Pavilion and offer high-quality, healthy food [...]
The post Battery Park City Authority seeks proposals for new restaurant in redesigned Wagner Park first appeared on 6sqft.
Leases
American Eagle inks massive office lease
Address: 63 Madison Ave., Manhattan
Landlord: George Comfort & Sons
Sublandlord: CBS
Tenant: American Eagle Outfitters
Lease size: 338,085 square feet
Lease length: 20 years
Asset type: Office
Brokers: Savills' Mitti Liebersohn, David Goldstein, Anna Erickson, Nate Brozowski and Will Demuth represented the tenant. Peter Duncan, Matt Coudert and Alex Bermingham represented the landlord in-house. Cushman & Wakefield's Mark Boisi represented the sublandlord.
Read more here.
Restaurant heading to ground floor of NoMad office building
Address: 1245 Broadway, Manhattan
Landlord: GDS Development Management and Corem
Tenant: JKS Restaurants
Lease size: 7,900 square feet
Lease length: 15 years
Asset type: Retail
Sales
Norwood ex-gas station eyed for affordable housing site trades
Address: 3083 Webster Ave., Bronx
Seller: Atlantis Management
Buyer: SKF Development
Sale price: $7 million
Asset type: Development site
Brokers: Cushman & Wakefield's Jonathan Squires, Josh Neustadter and Austin Weiner represented the seller and the buyer.
Vornado Realty Trust is working on a $65 million streetscape project around Penn Station even as broader plans for transforming the neighborhood remain up in the air.
The project aims to make the area more hospitable to commuters by adding a new pedestrian plaza and rebuilding the sidewalks to be twice as wide as they are now. The plaza will span 16,000 square feet on West 33rd Street outside the station's new East End Gateway and feature five October Glory maple trees, new seating and new restaurants. It should be ready to open in June.
The firm is adding 10 feet to the sidewalks along Seventh Avenue between West 31st and West 34th streets and replacing a half-mile of them with 4 acres of granite paver stones imported from Belgium. Vornado recently completed the first section of the expanded sidewalk, and the entire project should be done by the fall.
"Our vision is to welcome office workers, commuters, visitors and shoppers with wide granite sidewalks, expansive tree-lined plazas, new and accessible entrances to Penn Station, and storefronts activated by outstanding curated restaurants and retailers," Vornado's co-head of real estate, Barry Langer, said in a statement.
The real estate firm did not name potential restaurants and retailers in its statement.
Vornado has long dreamed of completely transforming the area around Penn Station, although higher interest rates and the persistence of hybrid work have added new challenges to the effort. The developer recently floated plans to turn the site of the neighborhood's now-demolished Hotel Pennsylvania into space for tennis matches, Fashion Week events and a giant billboard, although this has drawn criticism for not including housing.
In 2021 Gov. Kathy Hochul unveiled the latest plan for the neighborhood, which would still include a large amount of office space but also roughly 1,800 apartments. Hochul also said last year that she was "decoupling" renovations at Penn Station itself from the surrounding real estate project, although her administration and Vornado have both insisted that the broader plan for the neighborhood is still alive, despite its lack of a firm construction timeline.
Macy’s has issued a new mandate to its corporate employees: Get to the office two days a week or face disciplinary actions.
On Monday, the mall-based retailer informed its hybrid employees via email that the new policy will go into effect May 13, according to people familiar with the matter. The new policy will affect a large swath of the workforce, including the merchandising, marketing, and customer and digital teams.
The company has given employees a three-month grace period to move back to the New York City area. If they haven’t returned by then, workers will risk consequences that could include termination. Previously Macy’s remote work policy was more ad hoc and varied by team.
Macy’s move comes amid a broader push by companies across corporate America to boost office attendance, a campaign that has shifted from cajoling to compelling in recent months. Return-to-office proponents argue that collaboration and mentoring happen best in person, while remote-work advocates say flexible schedules raise employee morale.
Most white-collar workplaces have decided on a bit of both, with hybrid arrangements that require workers to be onsite a few days a week. Of those, three days a week is the most common setup, followed by two, according to Scoop Technologies, which tracks policies for more than 8,000 firms.
Macy’s mandate comes about three months after Tony Spring assumed the role of chief executive. Like many mall-based retailers, Macy’s has struggled with a long-term shift in consumer behavior that favors online shopping.