The Spanish subsidiary of the American giant of the coworking WeWork had liquidity problems in 2019, as recognized by the company in the accounts for that year, recently deposited with the Mercantile Registry. The young company lost 10.1 million euros that year, on top of 7.2 million losses in 2018.
The RSM auditor notifies in the accounts about these problems, although he collects the explanation of the company in which he admits that he needs the injection of his matrix. “The company has incurred losses that led to a reduction in equity and the existence of negative working capital, factors that put into question the follow-up of the going concern accounting principle and, consequently, the company’s ability to realize its assets and settle its liabilities for the amounts and according to the classification with which they appeared in the balance sheet, which was prepared assuming that such activity would continue ”, WeWork itself explains in the accounts. “The financial support of the parent company is a factor that tends to reduce or eliminate the doubt about the company’s ability to continue as a going concern.”
The company also justifies the reasons for the company’s situation: “The deficit and the net losses of the company are, mainly, the result of the significant investments required for the growth of the business, including the increase in the number of locations where the society operates. After opening in a new market, considerable losses are expected during the first few years, given the considerable amount of development and rental expenses that occur in the period of time between the opening of a location in which expenses are incurred, until it is able to generate income ”.
Offices in Spain
This subsidiary, called WeWork Community Workspace, also recognizes that in 2020 it decided to terminate one of the lease contracts signed during 2019, that of Calle Llacuna 42 in Barcelona. Specifically, it corresponds to a building developed by Inmobiliaria Colonial in the 22 @ district. In Spain, the company has offices for rent in Barcelona (in six locations) and in Madrid, with five offices and the next opening on Calle Goya.
Precisely the year 2019 that of the hecatomb for the American parent founded by Adam Neumann In New York. Although it was expected to go public that year as the largest real estate company in the world, doubts about the model made its main shareholder, the Japanese group Softbank, finally come to the rescue. The Spanish subsidiary acknowledges that of the 60.2 million in debt, 50.4 million correspond to loans with group companies.
The company’s business model consists of renting office buildings that it then rents out as flexible spaces with attractive designs and contracts that can be of short duration. In the accounts of the Spanish subsidiary, it shows that in 2019 it paid 15.4 million in rentals and obtained income of 22.3 million (compared to 8.4 million the previous year). The company also advances that due to the crisis caused by the pandemic, it has made redundancies in the workforce, at a cost of 400,000 euros in compensation.