WeWork Is Long $46 Billion In Leases – And Selling Short

The problem with banking is maturity mismatch. Actually, that’s what we have banking for, to do the maturity transformation that we get from maturity mismatch. Banks borrow short and lend long. That’s why we can’t all turn up and demand the money back and thereby create bank runs.

OK, we solve that, central banks. But maturity mismatch is a problem. One that must be watched and managed:

WeWork’s S-1: some quick observations

That’s Alphaville. And the little detail that struck me:

As of June 30, 2019, future undiscounted minimum lease payments under these leases were approximately $236.6 million, which represents 0.5% of the Company’s total lease commitments as of June 30, 2019.

My calculator tells me that means WeWork is long $46 billion in lease payments. And they’re selling those short. Any customer can drop out – perhaps not exactly and immediately when they like but certainly faster than WeWork can drop the underlying lease. So, again, WeWork is long $46 billion in leases….

Not getting me anywhere near that IPO.

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A lot of young people seem to like working at a WeWork facility. I’ve been in a few. I’ve found them quite noisy and not really conducive to actually getting work done, though they are great for socializing – errr “networking”, ie., looking for another job or perhaps meeting some young ladies. While there are established companies with staff in WeWork places, many are very small or startup firms, and they may hold a few useful seminars. Still, I think a lot of people will eventually grow tired of them as they age, and millennials are aging. If that becomes… Read more »