[tompetry]

It's a very interesting thing they are doing though, one must admit. It really highlights to me the fact that pricing long-term leases is really hard. Companies (the tenants) are living, breathing things that change and evolve. Their staffing and office needs are constantly changing. Not to mention changes in remote working, be it 100% remote companies, or satellites within larger companies. This makes matching supply and demand difficult, and it's a problem for owners of commercial real estate that isn't going away. Lost revenue due to vacancy is uncomfortable for them to stomach - they will pay a premium for known cash flows.

You are right in that there is risk to what WeWork is doing, but if it's a hard enough problem, the premium paid by owners may be big enough to provide an acceptable margin of error. Secondly, perhaps there is a valid hedging mechanism? Third, does their large network and brand give them a competitive advantage at top of the funnel such that they can charge a higher risk-premium (spread) to owners?

We shall see.

[mattrp]

Ive long held the view that there’s zero reason for them to be valued any higher than a REIT. Of course Reits typically generate a dividend and I don’t see we work doing that.... ever? Ps, I’ve also held the view since at least 2010 that Netflix shouldn’t be any higher valued than Lionsgate or hbo if it were its own entity. So you see where holding these views have gotten me. Ps, Spacex is a tech company.