WeWork Inc. Chief Executive Officer and Chairman Sandeep Mathrani is stepping down to take a job at Sycamore Partners, bringing fresh upheaval to a former high-flier in the midst of a restructuring effort.
David Tolley, a WeWork board member and telecom veteran, will become interim CEO, according to a statement Tuesday. Another board member, Daniel Hurwitz, will become chairman and lead a committee to seek a permanent CEO. Mathrani’s exit is effective May 26.
“Having worked with David Tolley over the last several months, I know that his financial acumen and leadership will keep WeWork moving forward as it continues to disrupt and lead the industry,” Mathrani said.
Mathrani was enlisted in February 2020 to stabilize an office-space company reeling from management problems and real estate pressures. Since the end of 2019, WeWork eliminated $2.3 billion in recurring costs, and it’s been working to restructure its debt. But the Covid-19 pandemic and the work-from-home shift has brought added woes to the former venture capital darling.
Mathrani, who previously ran Brookfield Properties’ retail group, will become a director at Sycamore, the private equity firm said in a separate statement. “Sandeep has invaluable operating experience over many cycles and I am confident that his real estate expertise will enhance Sycamore’s ability to realize value across our portfolio,” Sycamore Managing Director Stefan Kaluzny said.
WeWork also reaffirmed its second-quarter guidance, saying it expects revenue of $840 million to $865 million in the period. On an adjusted basis before interest, taxes, depreciation and amortization, results will range from a loss of $10 million to a profit of $15 million. WeWork previously outlined the forecast on May 9.
The New York-based company’s cash level at the end of the quarter will be “consistent with or slightly better than projections provided with its debt restructuring transactions,” it said.
When Mathrani was hired in early 2020, he had a reputation as a real estate veteran who had overseen a successful turnaround for an ailing mall company. At the time, WeWork had been rocked by a disastrous attempt to go public and the highly watched ouster of its co-founder Adam Neumann as CEO, followed by job cuts for thousands of employees.
Once Mathrani took over, the pandemic walloped the company and occupancy dropped dramatically before eventually returning to pre-pandemic levels. Mathrani also oversaw efforts like WeWork Workplace, which tried to sell WeWork’s technology to landlords who wanted to improve their office analytics.
Though Mathrani cut many of Neumann’s side businesses, he still shared some of Neumann’s optimistic thinking. Mathrani first projected that WeWork would be profitable by 2021; though the company has gotten closer to profitability, it still loses money.
By Tom Giles and Ellen Huet / Bloomberg