Moody’s Withdraws WeWork’s Credit Rating
The rating agency cited a lack of information for its unusual move.
NEW YORK CITY–Moody’s Investors Service has taken the unusual step of withdrawing its credit rating for WeWork Cos. and its seven-year $702 million unsecured bond, citing insufficient information to support the ratings.
WeWork has told reporters that it did not pay Moody’s to rate its debt offering–only Fitch Ratings and S&P Global Ratings, both of which rated the bond higher than Moody’s.
Moody’s rated the company B3 and its bond at Caa1. Fitch Ratings rated the notes BB- and S&P Global Ratings B+.
WeWork, which has been valued at $20 billion, has made inroads in most major US markets, in some cases such as New York City becoming one of the largest tenants.
100% Commission
As part of its growth strategy, the company has been working closely with brokers offering them lucrative commissions on both the landlord and tenant side.
Next month WeWork will be debuting a new service called Space Services as a pilot in New York City this September. Aimed specifically at small to medium-sized businesses, Space Services will help these companies find office space by “giving them access to inventory they would not otherwise have,” Dave Fano, chief growth officer, wrote in a blog post announcing the service. He called it a “a one-stop solution that caters to their real estate needs, both in the short and long term.”
More recently Bloomberg reported that WeWork is offering brokers worldwide a 100% commission on the first year of rent paid by any tenant who switches to WeWork from a top competitor and signs a lease by October 1. Tenants also get half off the first year’s rent if they sign for at least 12 months.