WeWork Inc. named David Tolley chief executive officer, shifting his temporary status to permanent at the head of the struggling co-working real estate company.
Tolley takes over at a pivotal time for WeWork, which warned in August that it had “substantial doubt” about its ability to continue as a viable company. In September, Tolley said WeWork would renegotiate nearly all of its leases with landlords and planned to exit “unfit and underperforming” locations, in an effort to cut costs and stave off bankruptcy.
Tolley replaces Sandeep Mathrani, who stepped down in May, unsettling the market over the abrupt change in management at a critical juncture. The New York-based company’s shares are down more than 95 per cent this year amid concerns over how it will meet its financial obligations with staggering losses. They were up about 3% Monday morning in New York.
The reorganisation efforts will continue under Tolley’s official leadership, WeWork said in a statement.
The steps we are taking now to achieve our goals not only help us achieve profitability and sustain growth, but will position us to serve our members better for the long term
WeWork, which is backed by SoftBank Group Corp., went from star start-up, under flamboyant and charismatic co-founder Adam Neumann, to a stunning collapse after a failed attempt at an initial public offering in 2019. The pandemic decimated demand for communal working, leaving the company with expensive leases and a lot of empty office space. In 2021 Mathrani took WeWork public via a blank-cheque merger at the height of the frenzy for special purpose acquisition companies, or SPAC’s.
As the pandemic dragged on, WeWork was convinced that the shift toward remote and hybrid work would actually favour the company rather than weaken its business. It figured employers would be less inclined to sign long-term leases and would instead turn to WeWork’s flexible models.
WeWork seemed to be on a more positive trajectory when it struck a deal in March with some of its biggest creditors and SoftBank to cut its debt load by around $1.5 billion and extend other maturities. But then in May, after three years on the job, Mathrani suddenly stepped down for a job at Sycamore Partners, leaving WeWork without a permanent replacement.
In August, company said more customers were leaving and fewer new members were signing up than it had anticipated. That churn pushed the occupancy rate lower in the second quarter compared with the previous one.
72 %
WeWork's physical occupancy as of the end of June, according to its latest statement.Tolley, who has been a WeWork board member since February, previously served as chief financial officer of European satellite company Intelsat SA from 2019 to 2022.
