Prime US REIT to undergo lease restructuring with WeWork

A wholly-owned subsidiary of WeWork is occupying 56,977 sq ft of Prime’s California property.

Prime US REIT reported that co-working space operator WeWork has approached them with a proposal to restructure its lease, but discussions are still ongoing.

The tenant is a wholly-owned subsidiary of WeWork and occupies 56,977 sq ft within Tower I at Emeryville, Prime’s Class A office property in California.

The tenant contributes less than 2.5% of PRIME’s cash rental income as of 31 March 2021, and has been current on their rental obligations up to mid-June 2021.

Earlier, Prime was approached with a proposal to restructure its lease, the terms of which are currently under evaluation. Prime has called on the tenant to continue to meet its rental obligations and has called upon the existing security package for the payment of such rental obligations. 

As at the date of this announcement, Prime’s security in relation to the lease consists of a combination of protections and if the counterparty honours its obligations thereunder, such protections cover the tenant’s monthly lease obligations through as much as the end of 2022. 

Based on independent valuation advice sought by Prime, this development would not materially impact the value of its portfolio as compared to the portfolio appraisal conducted in December 2020. 

Prime added that it would like to advise unitholders that notwithstanding this development, rental collections across the portfolio have remained resilient in 2021 and continue to trend in line with collection rates achieved in 2020.