WeWork fund loses last London office after Deutsche Bank breach

A FUND tied to beleaguered flexible office giant WeWork has lost control of its last remaining London property after breaching its banking covenants.

Deutsche Bank placed 51 Eastcheap into receivership after a deal to sell the property collapsed, sources with knowledge of the process said.

The building near the Monument in the City of London was owned by WeWork Capital Advisors, which had repeatedly attempted to sell the property over the past two years, the sources said, asking not to be identified as the process was private. The fund is independent of WeWork, though the office company invested in it.

Spokespeople for Deutsche Bank and WeWork declined to comment. WeWork Capital Advisors did not immediately respond to a request for comment.

Brokers were originally instructed to sell the property, which is rented to WeWork, for about £125 million (S$213 million) in 2022. Another attempt was made last autumn with a price tag of about £70 million, the sources said. The fund agreed initial terms to sell the 10-storey building for almost £50 million, roughly the level of the outstanding debt, but those talks collapsed and Deutsche Bank has now enforced on its loan to the fund.

The receivership comes as WeWork retrenches following its US bankruptcy filing last year. The business reached a peak valuation of US$47 billion and once ranked as London’s biggest private office tenant, but has recently been closing sites across the UK capital.

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WeWork Capital Advisors was launched in May 2019, close to WeWork’s peak, with an aim to build a US$2.9 billion portfolio with backing from major institutional investors. It has since sold numerous properties, hit by the travails of its major investor as well as rising interest rates and shifting working patterns that have dented office values.

A fixed charge receiver can be appointed only when there is a breach of banking covenants.

Steve Absolom, head of real estate at Interpath and joint fixed charge receiver, said he would be assessing options to sell the building in the coming weeks and months. BLOOMBERG