In a high-stakes showdown between co-working giant WeWork and major landlord DivcoWest, the battle for millions will unfold on the streets of Manhattan.
As WeWork teeters on the brink of bankruptcy, DivcoWest has hit the hammer, demanding a whopping $30 million in a lawsuit filed in Manhattan on Thursday. according to The Real Deal. That sum could send the co-working juggernaut reeling.
The Post has reached out to DivcoWest and WeWork representatives for comment.
DivcoWest, the San Francisco-based real estate giant, is claiming breach of contract and demanding full payment.
At the heart of the skirmish is WeWork’s abrupt abandonment of its location at 311 W. 43rd St.
The opening salvo in the litigation came when WeWork failed to improve its December rent.
DivcoWest smelled blood in the water and immediately terminated the lease.
But that wasn’t enough for DivcoWest, which claims WeWork owes rent for the entire term of the original agreement – all the way to 2032.
WeWork shot back, claiming it had vacated the site. However, DivcoWest claims that the tenant never formally announced his departure. Additionally, WeWork’s failure to remove its property from the space is inconsistent with the actions of a company abandoning its lease, as DivcoWest argues in its lawsuit.
The lease signed by WeWork expressly prohibits “any early surrender or ‘waiver of this Lease’ without the written consent of Landlord [the] “The landlord never provided,” the lawsuit states.
WeWork was already $1.9 million in the red when it stopped paying rent.
This prime location is between Eighth and Ninth Avenues, and DivcoWest won’t let WeWork fall through the cracks.
DivcoWest, led by CEO and founder Stuart Shiff, made a splash when it purchased the 14-story building from Billy Macklowe for $131 million in 2018.
For the purchase, DivcoWest secured a hefty $91 million loan from Citizens Bank. WeWork had signed the lease two years earlier and took up around 64,000 square meters.
This dispute is just one of many signs that WeWork is in trouble.
The company is currently making a final attempt to cut costs, signaling to landlords that it intends to renegotiate “almost all” leases.
Since WeWork expressed “significant doubts” about its continued operations in August, even if DivcoWest obtains a judgment in its favor, the co-working giant could find itself at the end of a very long line of creditors should bankruptcy proceedings be initiated become.