When Mann Report spoke with Pamela Swidler, then global head of real estate transactions and special counsel of WeWork, in May 2019, the company was in major growth mode, with multiple brands that also included housing (WeLive), wellness (Rise by We) and even education (WeGrow). It also was continuing global expansion plans for its core office concept.
A lot can happen in four years and did for WeWork: a failed initial public offering, the ouster of its co-founder, the closure of its ancillary brands and multiple locations, a new executive team and a pandemic that kept office workers at home. Yet Swidler has remained at WeWork, helping to steer it through the turmoil and seeing her own career grow. Recently promoted to chief legal officer, chief compliance officer and corporate secretary, her purview has expanded beyond overseeing real estate to financial matters as well.
“For 15 years, I focused mainly on real estate,” she said. “I’ve acted as a generalist in some matters. Often, you just have to dig and research to best advise your internal clients and partners. For me, I’m excited to add a new set of skills on top of my real estate knowledge that I’m just starting to dive into.”
Case in point: Swidler spoke just days after WeWork announced a recapitalization that at closing will result in approximately $540 million in new funding, $175 million in new capital commitments and $300 million in rolled capital commit-ments, totaling over $1.0 billion, resulting in the cancellation of approximately $1.5 billion in debt and net incremental liquidity.
The move saved the company from a much-rumored bankruptcy filing and puts it on a path to profit- ability as occupancy levels have rebounded. In fiscal year 2022, the company grew revenue by 26% year-over- year, increased physical memberships by 17% year-over-year, and grew physical occupancy to 75%, a 12% increase year-over-year.
“This was a transaction that had a lot of moving parts,” Swidler said. “My role was to work with our outside counsel [Kirkland & Ellis] and our own internal stakeholders to make sure everyone is on the same page as well as doing what I can to resolve any issues.”
The transaction is something Swidler would not have been involved with prior to her most recent promotion, she said, as she focused on the company’s real estate portfolio. But her career has grown steadily in her seven years at WeWork.
After beginning her career as an associate at Kramer Levin Naftalis & Frankel, where she focused on complex commercial real estate transactions, she joined WeWork in 2016 as senior counsel for real estate. She eventually became deputy general counsel and then regional general counsel, Americas, later heading all real estate transactions for the rapidly expanding company.
“We have over 600 consolidated properties under the WeWork name and more that are franchised. That is a large and active portfolio for our teams to manage,” she said. “Prior to 2019, I was overseeing a very large team to manage the rapid expansion when we were in growth mode. We were expand- ing our footprint globally and there was a lot of legal work, oversight and negotiation across the world.”
Then it all came crashing down. WeWork filed paperwork for an initial public offering in August 2019, and the subsequent analysis of its unprofitable financials and reckless actions of co-founder and CEO Adam Neumann (including smoking marijuana on a private jet on an international trip) saw the valuation drop from $47 billion to below $5 billion. By November of that year, the company’s largest investor, SoftBank, had taken control, Neumann had exited and 2,400 employees were laid off.
“It was very hard on a personal and professional level, seeing the company change so rapidly,” she recalled. “For me, what helped me through that time was a strong belief in the company, the product and in the amazing team that I work with. The people here at WeWork are incredible and they also care about each other, the product and the brand. Everyone came together to prop each other up when it was critical to do so.”
In February 2020, Sandeep Mathrani, former CEO of Brookfield Properties’ Retail Group and vice chairman, and previously CEO of shopping center developer GGP Inc. (which he led out of Chapter 11 and was acquired by Brookfield in 2018) was named WeWork CEO and chairman.
“Having someone come in with that restructuring background and both office and retail background from his time at GGP and Vornado Realty Trust, he was the right person at the right time,” she said. “We’ve been extremely fortunate to have him leading the charge over the last three years.”
All seemed to be stabilizing. Other We concepts were divested and Swidler and her team were and remain focused on right-sizing the office portfolio, closing some 200 locations and renegotiating rents on some others, reinventing the leases they’d created years before. It was an educational experience.
“I spent my first three years here signing deals, and there’s a ton of work in that,” she said. “There’s a lot of drafting, negotiating, working in the details and internal management to make sure everyone is on the same page.”
Leases are 10- to 30-year documents and must be complex to accommodate any number of contingencies in finance and operations to allow the product to grow and change.
“I learned a lot and everyone on my team learned a ton all very quickly by working on a wide variety of leasing and management deals during the growth process, from a legal, real estate business, real estate and internal operation perspective,” she continued.
When the business changed, so did their mindset as they focused on undoing some of their earlier work. It’s an ongoing process.
“This has been an education on how to improve our negotiation of our deal documents going forward to plan for downside cases,” she said. “We’ve seen what works and what doesn’t work as well in a downsizing scenario. From a legal perspective, I know we will be even stronger negotiators going forward. I like to tell my team that just in their limited time here, they have experienced multiple real estate cycles.”
Then came COVID-19. Occupancy dropped as lockdowns began. But WeWork’s locations remained open, as they provided essential services, Swidler explained.
“This was foreign territory for everyone in real estate. People had to look at their own situation to figure out how to manage. No one knew exactly what to do,” she said. “After the initial two weeks of the lockdown were extended indefinitely, there were a lot of questions, a lot of discussions internally and complex management as each city had a different set of lockdown rules.”
WeWork determined early on that it would adopt a universal approach to its locations — they were essential businesses, supporting first responders, medical workers and other services.
“We have members who are essential services providers or who support them,” she said. “It was important to provide a space for those services. We had to operate and provide them with support. For example, we provided mail — members always need to be able to collect checks or important documents.”
With the recapitalization still ongoing, Swidler couldn’t offer specifics about future growth, but remains positive about WeWork.
“Businesses are optimizing their spaces, and this can mean different things for everyone whether that’s a large enterprise, small or medium business or a solo entrepreneur that needs space,” she said. “You might have a situation where people come in every day or a few days a week. We have offerings through WeWork Workplace that allow you to optimize your workspace and have employees check in at desks. Or a member company may just want a place where colleagues can gather when they’re in town or for a couple of days a week. Everyone wants or needs that flex space solution for different purposes that are unique to their situation, and WeWork has offerings and products that answer to the wide variety of those needs.”
For example, during a trial, a law firm rented a WeWork space that was located next to the courthouse, allowing documents to be stored and associates to work more conveniently.
And despite the slow return of full-time office workers to many downtowns, WeWork is maintaining its commitment to central business districts. In March, it reopened its eight-level location at Moor Place in London after a major refurbishment.
“We’re still seeing the bulk of the demand in central business districts,” she said. “Even if it’s a flexible solution for people who are coming into the office a couple of times a week, or they want access for a team gathering, they want that CBD location.”
Some of WeWork’s famous amenities have ended; U.S. locations no longer have beer or wine on tap.
“We’re constantly trying to stay ahead of what members want as part of their optimization efforts,” she said. “What they want out of their office space is going to be different from before COVID-19.”
After all, adapting to changing needs is what WeWork is about.
“There is always something happening here. And it’s always about how we improve the business and the product to changing flexible office needs in this environment. The whole company is continuously working on that,” she said. “Part of what has been exciting about the new role is being a part of the wonderful WeWork leadership team, who both want to drive that focus on the core business and our customer and celebrate all that we’ve accomplished.”