WeWork appoints new CEO amid rapid expansion plans

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 03 Feb 2020

WeWork has appointed real estate executive Sandeep Mathrani as CEO and member of the board of directors, effective 18 February.

According to the American multinational shared workspaces company, Mathrani brings extensive leadership experience in real estate, with a proven track record of transforming companies and driving meaningful growth to create value for stakeholders.

He replaces co-CEOs Artie Minson and Sebastian Gunningham, who took over from co-founder and former CEO Adam Neumann. They will both remain with the company through a transition period to ensure a smooth on-boarding process, it says.

Mathrani will report to Marcelo Claure, who will remain executive chairman.

WeWork was on the brink of financial collapse until it signed an $8 billion rescue deal with SoftBank in October 2019, which saw the Japanese tech giant take over 80% of the shared workspaces company.

“I am honoured to be joining WeWork at this pivotal time in its history,” said Mathrani.

“The company has redefined how people and companies approach work with an innovative platform, exceptionally talented team and significant potential if we stick to our shared values and maintain our members-first focus. I am grateful for the confidence Marcelo and the board have placed in me and look forward to partnering with Marcelo and the very talented employees at WeWork.”

Mathrani most recently served as CEO of Brookfield Properties’ retail group. Prior to that, he served as CEO of GGP for eight years, during which it was recapitalised in November 2010 and experienced eight years of growth.

Prior to joining GGP, he was president of retail for Vornado Realty Trust, where he oversaw the firm’s US retail real estate division and operations in India comprised principally of office properties.

Mathrani also serves on the executive board and board of trustees for the International Council of Shopping Centres, the executive board and 2019 chairman of the National Association of Real Estate Investment Trusts, as well as the board of directors for Host Hotels & Resorts.

Chasing profitability

In September, WeWork shelved its plans for an initial public offering, after its investment bankers struggled to persuade money managers on Wall Street to invest in shares of what was described as a “risky” business model.

Neumann was criticised for a series of what was described as irresponsible financial decisions, which included the purchase of a $60 million luxury private jet, and his erratic management style, as the company accrued more debt than it could pay off.

As part of the SoftBank deal, Neumann reportedly received a $1.7 billion “golden handshake” for stepping down as the company's chairman. The pay-out entails $1 billion of stock which Neumann was expected to sell, a $185 million consulting fee, and $500 million in credit for leaving his post.

In a statement, the company says over the last 100 days, it has outlined a five-year strategic plan, built around six pillars, that guides a growth-led transformation plan.

“As an important first step, we have recapitalised the business and have a plan that will provide in excess of $2.5 billion in liquidity to execute our growth plans. We have implemented a five-year financial plan that positions WeWork to achieve profitability on adjusted earnings before interest, tax, depreciation and amortisation basis by 2021 and positive free cash flow in 2022.

“We have established a strong liquidity position that allows the company to execute its strategic and financial plans on a fully funded basis with access to additional liquidity of approximately $2.5 billion, after executing its plan and becoming cash flow positive, for future growth.”

In addition, the company says it has made important changes to its operating model and organisation structure with a clear governance structure, to enable the proper execution of its plan with proper accountability throughout the organisation.

In SA, WeWork opened its main office in Rosebank, Johannesburg, in September and two other offices were opened this year – one in Cape Town and one in Sandton.

Since opening its doors, its Rosebank office space has reached a 99% occupancy rate, with 43% of its members consisting of large enterprises.