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WeWork could fail as costs spiral and social distancing hits offices, real-estate boss predicts

WeWork could fail as costs spiral and social distancing hits offices, real-estate boss predicts
Reuters



WeWork could collapse within years as its costs balloon and social-distancing measures sap demand for shared workspaces, real-estate investor Michael Franco said earlier this month.




"In terms of their willingness to survive and to thrive, I personally view it as in doubt," the president of Vornado Realty Trust said on an earnings call.




Franco made his comments before the publication of WeWork's first-quarter financials, which showed solid revenue growth, a smaller cash outflow, and $3.9 billion in cash and cash commitments.




WeWork is also adapting its office spaces to enable social distancing and minimize virus transmission.




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Troubled coworking giant WeWork could fail in the next few years as its costs spiral and the coronavirus pandemic upends its business model, Michael Franco, the president of Vornado Realty Trust, said on the real-estate investment group's earnings call this month.
"Their ability to survive is dependent on SoftBank's willingness to fund those deficits, which will probably be more significant near-term given this crisis," Franco replied to an analyst's question about how long WeWork will stay in business, according to a call transcript on Sentieo, a financial-research site.
WeWork's business model of signing long-term office leases, refurbishing and dividing up the spaces, then renting them out on a short-term, flexible basis is "driven by high density," Franco said.
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