Advertisement
Singapore markets open in 5 hours 59 minutes

  • Straits Times Index

    3,332.80
    -10.55 (-0.32%)
     

  • S&P 500

    5,460.48
    -22.39 (-0.41%)
     

  • Dow

    39,118.86
    -45.24 (-0.12%)
     

  • Nasdaq

    17,732.60
    -126.10 (-0.71%)
     

  • Bitcoin USD

    61,947.14
    +989.27 (+1.62%)
     

  • CMC Crypto 200

    1,281.99
    -1.84 (-0.14%)
     

  • FTSE 100

    8,164.12
    -15.56 (-0.19%)
     

  • Gold

    2,336.90
    +0.30 (+0.01%)
     

  • Crude Oil

    81.46
    -0.28 (-0.34%)
     

  • 10-Yr Bond

    4.3430
    +0.0550 (+1.28%)
     

  • Nikkei

    39,583.08
    +241.58 (+0.61%)
     

  • Hang Seng

    17,718.61
    +2.11 (+0.01%)
     

  • FTSE Bursa Malaysia

    1,590.09
    +5.15 (+0.32%)
     

  • Jakarta Composite Index

    7,063.58
    +95.63 (+1.37%)
     

  • PSE Index

    6,411.91
    +21.33 (+0.33%)
     

CICT and CDL remain unaffected by WeWork's bankruptcy warning (update)

Felicia Tan, The Edge Singapore
·3-min read


Shares in WeWork plunged to an all-time low of 13 US cents (17.5 cents) on Aug 9 (US time) after the co-working company warned that it was at risk of going bankrupt.

According to several media outlets including Bloomberg, WeWork warned there is “substantial doubt” that it can sustain its business due to its financial losses and cancelled office space membership.

For the 2QFY2023 ended June 30, WeWork reported a net loss of US$397 million, bringing its total net loss for the 1HFY2023 to US$696 million.

Read also: JustCo and Changi Airport Group to launch pay-per-min co-working centre

As at June 30, WeWork’s consolidated physical occupancy stood at 72%.


The WeWork workspace at 21 Collyer Quay in Singapore, which officially opened in September 2022 (Photo: Samuel Isaac Chua/EdgeProp Singapore)

ADVERTISEMENT

In a Bloomberg article referencing WeWork’s Aug 8 statement, the company said it would work on lowering its rental costs, negotiating “more favourable leases”, and raising revenue and capital.

The news of WeWork’s potential bankruptcy may come as bad news to some of the Singapore-listed REITs and property groups.

According to a table posted by the Washington Post, WeWork has offices in several of CapitaLand Integrated Commercial Trust’s (CICT) C38U 1.55% buildings, including an entire building at 21 Collyer Quay (the former HSBC building).

WeWork is also a tenant at the REIT’s property at Funan. Other REITs such as Suntec REIT T82U -0.8% and Mapletree Pan Asia Commercial Trust (MPACT) N2IU -0.63% are also exposed with WeWork offices present at Suntec City’s Tower 5 and Mapletree Anson at 60 Anson Road.


WeWork occupies the entire office tower spanning a total area of 220,665 sq ft at 21 Collyer Quay, making it the largest in Asia Pacific region (Photo: Samuel Isaac Chua/EdgeProp Singapore)

Property group City Developments Limited (CDL) C09 -2.39% , also has a WeWork office at City House and St. Katharine Docks in London, while United Engineers, which is a part of Yanlord Land Group Z25 -2.58% , has a WeWork office at UE Square.

“As the largest landlord of commercial space in Singapore’s central business district (CBD), CICT maintains close engagements with an extensive network of prospects and existing tenants to understand their business space requirements and remain attuned to prevailing market trends. Singapore remains a vibrant hub for a diverse range of business sectors, continually attracting leasing interest from various industries," says a spokesperson from the REIT.

Read also: CapitaLand Ascott Trust 'top pick' of some analysts following 1HFY2023 results, DPS up 19% y-o-y

"In cases where a tenant defaults on its lease agreement, CICT will follow established procedures to regain possession of the space, including retention of the security deposit. Depending on the circumstances, CICT may explore options such as reletting the space or collaborating with other operators to continue operations smoothly," adds the REIT's spokesperson.

Kwek Eik Sheng, group chief operating officer (COO) of CDL notes that the news from WeWork “has to do with its US operations” with the country’s office sector facing a “challenging time” from the current work-from-home (WFH) trend.


WeWork's rental income at St Katharine Docks makes up about 9% of the total revenue of CDL's UK commercial portfolio (Photo: CDL)

Meanwhile, he says that the group’s WeWork offices in City House and St. Katharine Docks have “strong” occupancies and that the local markets are “pretty good”.

He adds: “WeWork has been prompt in paying its rentals so far, but of course, with the news, we’ll continue to monitor them closely.”

Sherman Kwek, CDL’s group CEO said that the group will monitor the situation closely but is comfortable with its exposure at City House and St Katharine Docks for the time being. WeWork is a substantial tenant at City House, with its rental income making up about 2% to 3% of its total gross rental income (GRI) in its Singapore office portfolio. Its rental income at St Katharine Docks makes up about 9% of the total revenue of CDL's UK commercial portfolio.

The Edge Singapore has also contacted Suntec REIT, MPACT and Yanlord Land for comment.

See Also: