Not a single mention on the valuation of their properties, the regular metrics regarding real estate (initial yields, WALT - not sure if that's directly applicable though) and their cashflow projections. For real estate there are many measures that seek to disambiguate things like "costs come upfront".
And remember, for real estate several billions is quite small potatoes. Fifty or less not too large office buildings sets you back a billion. The market (at least prime European that I see) is overly competitive right now with markets accepting gross yields of 4% and funds making target yields by increasing leverage. Interest rates come up, valuations come down, unless you've got the cashflow locked in via long leases. That last part of the game, I think WeWork will lack. They surf the economic cycle, instead of evening it out long leases.
Edit: in reading other comments they are not owning buildings but doing term swaps. In that case they are on the receiving end of a whole lot of risk. 84% occupancy is fine, but in this market that is not too high. Most commercial funds will be a lot higher right now and they have the incentives on investments better aligned with longer contracts. How WeWork thinks to weather an economic downturn beats me.
At least in NYC, many commercial leases are 20 or 30 years. I imagine WeWork gets similar terms. In highly appreciating markets (London, NYC) towards the end of such a long lease (the last ten years or so), the lessee is paying well under market rate, and the lease becomes an asset rather than a liability. So if office real estate continues an upward trajectory for a decade or so, they can easily weather a downturn if it occurs in the later part of their lease term.
If it happens in the next 3-5 years, it’ll probably be catastrophic for them.
And remember, for real estate several billions is quite small potatoes. Fifty or less not too large office buildings sets you back a billion. The market (at least prime European that I see) is overly competitive right now with markets accepting gross yields of 4% and funds making target yields by increasing leverage. Interest rates come up, valuations come down, unless you've got the cashflow locked in via long leases. That last part of the game, I think WeWork will lack. They surf the economic cycle, instead of evening it out long leases.
Edit: in reading other comments they are not owning buildings but doing term swaps. In that case they are on the receiving end of a whole lot of risk. 84% occupancy is fine, but in this market that is not too high. Most commercial funds will be a lot higher right now and they have the incentives on investments better aligned with longer contracts. How WeWork thinks to weather an economic downturn beats me.