Concerns about WeWork might amplify the negative impact of a weakening economy on Singapore’s commercial real-estate investment trusts (REITs), a Credit Suisse Group AG report said.
Poor sentiment on the company could further dampen demand for coworking spaces amid slowing GDP growth, hurting office REITs, analysts led by Nicholas Teh wrote in a report.
“Office REITs have mentioned in recent briefings that corporate demand has slowed, while the narrow drivers are tech and coworking,” the analysts wrote. “There are growing market concerns around the sustainability of coworking demand, going forward.”
WeWork’s parent company, We Co, this week decided to withdraw its planned initial public offering (IPO) amid difficulties with its fundraising.
WeWork has also been rattled by the departure of Adam Neumann as chief executive and market concerns over demand.
The rental office company took another hit when its credit grade on Tuesday was cut by Fitch Ratings to reflect its “uncertain liquidity profile in the absence of its earlier plan to raise at least US$3 billion in an IPO.”
Fitch downgraded WeWork’s credit rating by two notches to “CCC+,” putting the Softbank Group Corp-backed firm deep into junk territory.
“In the absence of an IPO and associated senior secured debt raise, WeWork does not have sufficient funding to meet its growth plan,” it said.
There is a potential for WeWork’s clients, particularly big firms, to “hesitate to sign membership agreements” given the current flux, Fitch said, but added that there was no evidence of this yet.
WeWork’s rating outlook is also negative, it said.
Separately, WeWork pulled out of a deal to rent space in a Dublin office block, people familiar with the matter said.
The company had been in talks to take space at Central Quay, an office block in Dublin’s docklands controlled by Hibernia REIT, the people said.
The negotiations fell apart because of specific factors about the building, but other deals in Dublin are still going ahead, one of the people said.
“We’re committed to Dublin and excited to continue growing such a strong community here in the city,” an e-mailed statement from a WeWork spokeswoman said. “We consider many buildings in the markets in which we’re located but, of course, may not decide to proceed with all of them.’
Additional reporting by Reuters
China’s economic planning agency yesterday outlined details of measures aimed at boosting the economy, but refrained from major spending initiatives. The piecemeal nature of the plans announced yesterday appeared to disappoint investors who were hoping for bolder moves, and the Shanghai Composite Index gave up a 10 percent initial gain as markets reopened after a weeklong holiday to end 4.59 percent higher, while Hong Kong’s Hang Seng Index dived 9.41 percent. Chinese National Development and Reform Commission Chairman Zheng Shanjie (鄭珊潔) said the government would frontload 100 billion yuan (US$14.2 billion) in spending from the government’s budget for next year in addition
Sales RecORD: Hon Hai’s consolidated sales rose by about 20 percent last quarter, while Largan, another Apple supplier, saw quarterly sales increase by 17 percent IPhone assembler Hon Hai Precision Industry Co (鴻海精密) on Saturday reported its highest-ever quarterly sales for the third quarter on the back of solid global demand for artificial intelligence (AI) servers. Hon Hai, also known as Foxconn Technology Group (富士康科技集團) globally, said it posted NT$1.85 trillion (US$57.93 billion) in consolidated sales in the July-to-September quarter, up 19.46 percent from the previous quarter and up 20.15 percent from a year earlier. The figure beat the previous third-quarter high of NT$1.74 trillion recorded in 2022, company data showed. Due to rising demand for AI, Hon Hai said its cloud and networking division enjoyed strong sales
TECH JUGGERNAUT: TSMC shares have more than doubled since ChatGPT’s launch in late 2022, as demand for cutting-edge artificial intelligence chips remains high Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday posted a better-than-expected 39 percent rise in quarterly revenue, assuaging concerns that artificial intelligence (AI) hardware spending is beginning to taper off. The main chipmaker for Nvidia Corp and Apple Inc reported third-quarter sales of NT$759.69 billion (US$23.6 billion), compared with the average analyst projection of NT$748 billion. For last month alone, TSMC reported revenue jumped 39.6 percent year-on-year to NT$251.87 billion. Taiwan’s largest company is to disclose its full third-quarter earnings on Thursday next week and update its outlook. Hsinchu-based TSMC produces the cutting-edge chips needed to train AI. The company now makes more
Protectionism: US trade chief Katherine Tai said the hikes would help to counter unfair trade practices from China, while boosting domestic clean energy investments US Trade Representative Katherine Tai (戴琪) defended stiff tariff hikes against countries such as China, saying that paired with investment, they were a “legitimate and constructive” tool for reinvigorating domestic industries. Tai’s comments come a week after sharp tariff increases on Chinese electric vehicles (EVs), EV batteries and solar cells took effect — with levies down the line on other products also recently finalized. The latest moves targeting US$18 billion in Chinese goods come weeks before next month’s US presidential election, with Democrats and Republicans pushing a hard line on China as competition between Washington and Beijing intensifies. In an interview on Thursday
RSS