WeWork to close operations at Prime US Reit property; in talks over lease obligation

THE manager of  Prime US ReitOXMU  : OXMU 0%is in discussions with tenant WeWork on the resolution of the latter's lease obligations at Tower 1 at Emeryville, a Class A office property in California.

The statement comes after the local San Francisco press reported that WeWork will be closing its co-working operation at the building.

WeWork occupies 56,977 square feet (sq ft) of space within the real estate investment trust's 3.89 million sq ft portfolio, the manager said in a bourse filing on Monday.

The co-working operator also contributes about 2.5 per cent of Prime US Reit's cash rental income as at June 30.

WeWork previously approached the Reit with a proposal to restructure its lease, the manager said in June.

It added at the time Prime US Reit's security in relation to that WeWork lease consists of a combination of protections. If the counterparty honours its obligations, such protections will cover the tenant's monthly lease obligations through as much as end-2022.

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In light of the security package, the manager does not expect the lease to have any impact on Prime US Reit's distribution per unit for the current financial year.

Units of Prime US Reit were trading 0.6 per cent or 0.5 US cent lower at 85.5 cents as at 9.29am on Monday.

READ MORE:

• Prime US Reit in talks with WeWork on proposed lease restructuring
• Prime US Reit H1 DPU down 5.4% on higher expenses