Dear Readers,
I'm back on the newsletter this week - thanks to my deputy Meredith for subbing in!
We're hot on the trail of WeWork, the high-flying, but money-losing, $47 billion coworking company expected to IPO this fall. It's known for its well-designed office space, which it leases itself and then rents out to customers like startups and, increasingly, big corporate clients.
As WeWork prepares to go public, there's increasing scrutiny on it that can be boiled down to three major concerns: the stability of its model (pairing long-term office leases with short-term occupants and what that might look like during a downturn), its categorization (is it a tech or real-estate company?), and the wild card that is its CEO, Adam Neumann.
This week, we did a deep dive on the company's top landlords, which until now have largely avoided media scrutiny. We also spotlighted a little-known Mexican real-estate investment trust, which is WeWork's biggest landlord and highlights how quickly the company has grown overseas.
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While coworking is seen as primed for explosive growth, large real-estate companies will have to decide how much they want to work with young flex-space firms that haven't been tested through a downturn. If the economy were to turn, it would mean that some of its tenants may choose not to renew their leases (or negotiate lower rent), while WeWork would still owe payments to its own landlords.
WeWork's financials, in particular, are also giving some prospective IPO investors pause. The company is hemorrhaging money: $219,000 every hour of every day during the 12 months leading up to March, according to the Financial Times. As the company moves toward an IPO, it will need to convince investors that its significant growth makes it a worthwhile long-term investment despite equally large losses.
You can check out a roundup of our latest WeWork reporting here.
There was also a relatively small piece of news that we reported on this week that you may have missed but may have major ripple effects in the next couple of months. Swell, a 2-year-old environmental, social, and governance (ESG) investing app, is shutting down. While socially conscious investors are pouring capital into these types of funds that claim to support social good like clean water and gender diversity, there is no one consistent standard for ESG qualifications, and some are skeptical that these funds are more than a marketing gimmick. With tons of ESG-focused funds popping up every day, a shakeout may be on the horizon.
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Have a great weekend!
Olivia

Getty Images
WeWork CEO Adam Neumann.