What does WeWork even have to do with interest rates?
Photo: Jackal Pan/Visual China Group via Getty Images Eric Rosengren, the president of the Federal Reserve Bank of Boston, was one of two members of the Federal Open Market Committee who dissented from last week’s vote to cut interest rates by a quarter point. On Friday, he gave a speech about why.
WeWork’s business model is risky in part because it agrees to long-term leases with the owners of office buildings, and then effectively subleases that space on a short-term basis. WeWork’s leases are years long, but its clients are often on month-to-month terms, and if the economy goes south, WeWork could face a sudden exodus of clients whose businesses are failing, or who are even choosing to work from home to save money.
Plus, a key source of cash WeWork has used to finance money-losing operations — eager equity investors willing to invest at high valuations based on expectations of massive growth — has already dried up. This is where it’s important to note that Rosengren was talking about WeWork as just one example of a broader phenomenon. He’s also worried about leveraged loans to corporations: These have gotten more leveraged in recent years, meaning a relatively small decline in economic or corporate performance can push the borrowing corporation into default.
Australia Latest News, Australia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
WeWork Investors Look To Oust CEO Adam NeumannKey WeWork investors are leading a boardroom campaign to oust chief executive and co-founder Adam Neumann.
Read more »
WeWork could cause a disaster for New York City's real-estate marketWeWork has a fundamental business problem and poses a serious threat to the real-estate markets in New York and London, even after the CEO change.
Read more »
WeWork co-founder Adam Neumann stepping down as CEONeumann will stay on in WeWork, the company he co-founded, in a non-executive role as chairman of the board
Read more »
Exclusive: We Company CEO Neumann starts talks on his role at WeWork parent - sourcesWeWork co-founder Adam Neumann has started talks with board directors and invest...
Read more »
WeWork board members reportedly seeking Adam Neumann to step down as CEOReports are that some board members are pushing for the CEO to step down a week after the startup delayed its IPO.
Read more »
WeWork CEO comes under pressure – four experts weigh inWeWork's public debut looks even more tenuous with CEO Adam Neumann's future in question.
Read more »