WeWork Inc. is asking a federal bankruptcy court to allow the embattled co-working giant to exit the lease for its largest Boston-area location — at One Lincoln Street in the Financial District — even as the company continues to negotiate with the landlord to remain in place.
Recent court filings show that WeWork filed a motion to reject the lease at One Lincoln, formerly known as the State Street Financial Center. The court has scheduled a hearing for May 16, documents show.
But a WeWork spokesperson told the Globe that the company still wants to work out a new deal with Fortis Property Group, the Brooklyn, New York-based firm that owns One Lincoln, before the hearing next month. The two sides are still in active conversations and WeWork has yet to make a final decision on the property, the spokesperson said.
“Our intention is to stay in as many buildings as possible under economic terms that position all parties for a sustainable future,” the company said in an emailed statement. “Unfortunately, we have been unable to reach an agreement with our landlord at One Lincoln Street, and it is therefore prudent that we plan for other outcomes, which may include an exit.”
A representative for Fortis said the company would not be able to comment because its office was closed for the Jewish Passover holiday.
Founded in 2010, WeWork was built on the concept of offering freelancers and small startups what amounted to a pay-as-you-go subleases in swanky digs, complete with lounge furniture, beer on tap, and WeWork-branded wine. As WeWork grew, it focused more on courting corporate tenants, either for satellite offices or more flexible versions of their traditional space.
WeWork filed for Chapter 11 bankruptcy protection in November, a victim of the COVID-19 pandemic, over-expansion, and a disastrous pre-COVID IPO. The company, once valued at nearly $50 billion, initially reported debts of $18.65 billion against total assets of $15.06 billion.
Once among the biggest occupiers of office space in Boston, WeWork has pared back operations to just eight facilities, including One Seaport Square and One Beacon Street, down from a 2019 peak of at least 1.5 million square feet in 17 buildings. Last week, the company also filed to exit its 31,000 square foot lease at 711 Atlantic.
At One Lincoln, WeWork occupies 11 floors, or about 20 percent of the skyscraper. Fortis first purchased One Lincoln in 2006, when State Street Corporation occupied a lease that would run until September 2023. On its website, Fortis said it signed a long term lease with WeWork in 2018 to jump start its effort to convert the building into a Class A+ property.
A spokeswoman for WeWork declined to disclosed how much of its space at One Lincoln is occupied.
Since its bankruptcy filing, WeWork has been trying to restructure its debts and form a new business plan. One major source of debt are the long term leases and rents it still owes its landlords.
Earlier this month, WeWork said it has been able to eliminate $3 billion in secured debt. The company also reached agreements with landlords to amend 150 leases, allowing it to reduce over $8 billion in rent obligations or about 40 percent of what it owes landlords.
WeWork’s efforts to restructure its debt has been aided by the continued struggles of the post-pandemic downtown commercial office markets in cities across America, including Boston. For the first three months of the year, Greater Boston saw only 1.3 million square feet of leasing activity, marking one of its weakest quarters in recent memory, according to a report by commercial real estate advisor Avison Young.The soft market may make some landlords more inclined to cut a deal to keep an existing tenant, even at less-advantageous terms.
But WeWork still has not been able to strike deals to restructure leases with a handful of landlords, including…
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