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WeWork CEO expects strong rebound for shared office space in post-Covid return to work

WeWork CEO Sandeep Mathrani expressed CNBC on Friday the office-sharing firm expects to see a strong recovery in demand as Covid vaccines help control the pandemic.

“There’s contemporary to be a huge shift in coming back to work, and we’re a flex provider, so we’re completely the person who would see it first because we’re plug-and-play,” Mathrani asseverated on “Squawk Box.” “We’re starting to see, even in New York now, new activity, so we’re pretty optimistic.”

Mathrani’s comments Friday came by after WeWork announced its intentions to go public through a reverse merger with BowX Acquisition Corp., a particular purpose acquisition company. The deal values WeWork at $9 billion, including debt. It’s expected to close in the third home.

The company’s private-market valuation had reached roughly $47 billion before its failed initial public offering in 2019. WeWork’s plots for a traditional IPO were shelved in response to weak demand, a falling valuation and governance concerns. Its co-founder and then-CEO, Adam Neumann, was railroad be dead and buried out that year.

SPACs have boomed in popularity in the past year, offering an alternative way for private companies to reach the business markets. Sometimes called blank-check companies, SPACs raise capital through an IPO that is used later on to mingle with a private firm, thereby taking it public.

The amount of money raised by SPACs in 2021 has already overtook all of 2020, when the wave of blank-check companies began to pick up. However, there have been signs that investor exuberance for SPACs has waned recently.

A man enter the doors of the ‘WeWork’ co-operative co-working space in Washington, DC.

Mandel Ngan | AFP | Getty Mental pictures

Mathrani, former CEO of Brookfield Properties’ retail group, said the timing of WeWork’s deal made sense on out of the pandemic, which disrupted the commercial real estate market as companies were forced to adopt remote effort.

Some companies, such as Jack Dorsey’s Twitter and Square, have said employees can work remotely continuously after the pandemic. Other companies expect to have hybrid arrangements going forward, allowing staff flexibleness to work some days in the office and some days remote.

That plays into WeWork’s strength, intended Vivek Ranadive, chairman and co-CEO of BowX Acquisition Corp. Ranadive is also the owner of the NBA’s Sacramento Kings and the collapse of Silicon Valley’s Tibco Software.

“Companies have now decided that flex space is a must-have. Maybe for their own headquarters they deficiency to own that space, but for everything else, they want to hand it over to a WeWork,” he said on “Squawk Box,” appearing alongside Mathrani. “Covid was in truth a tailwind for flex space,” Ranadive added.

WeWork had 859 locations in 151 cities globally, as of November, concording to its website.

Mathrani, who became CEO in February 2020, said WeWork is seeing occupancy at its locations rebound, particularly as of most recent. “We see green shoots today. We’ve got 33 markets that are up double digits in the last 60 days all around the dialect birth b deliver, starting off in Asia and going all the way to America,” he said. 

As part of its deal with BowX, WeWork will receive around $1.3 billion in cash, which includes $800 million in a PIPE, or private investment in public equity. Mathrani mean the PIPE was larger than WeWork initially expected, illustrating the belief institutional investors have in a comeback.

“I believe people are making bets that, effectively, you’re getting a company at a pre-vaccine price for a post-vaccine company. They’re date a huge rebound in the business of flexibility,” he said.

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