Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

StockBeat: IWG Bets on the Return of the Office

Stock MarketsDec 02, 2020 06:04AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Geoffrey Smith 

Investing.com -- Europe’s stock markets, like the U.S.’s, have bought in to the idea of a vaccine-driven recovery next year so heavily that there is no energy left among buyers to reward a company for positioning itself to do likewise.

On a day when the broader market was taking a breather after another giddying rally to kick off December, IWG (LON:IWG) shares fell over 7% as the office rental company moved to take advantage of the acquisition opportunities created by the pandemic.

IWG, whose longer-term outlook had already been substantially improved by rival WeWork’s implosion last year, said Wednesday it’s raising around 300 million pounds in convertible bonds with an eye to snapping up opportunities in the U.S., Europe, the U.K. and Asia, betting that the city office (and, equally, the suburban office) has a bright future as and when the coronavirus recedes.  

That’s a clear change in tone from its third-quarter results posted only a couple of weeks ago, which were still dominated by news of rationalizations, rent deferrals and provisions. The company’s sales were down 13% in constant currency terms as of September, while occupancy rates fell over 4 percentage points to 70.5%.

Even then, there were signs that IWG was turning the corner, having managed to swing to a net cash position. But Wednesday’s announcement is a very different kettle of fish. It’s the act of a company that knows that bargains are available now that may not be available for very long.

IWG has already begun snapping up properties, notably from WeWork itself. Last week, it took over a 79,000 square foot former WeWork location in Williamsburg, just across the East River from Manhattan. It’s also taken over another WeWork location in Hong Kong.

The bonds being offered will run for five years with coupons of between 0.5% and 1.25%. The initial conversion price is expected to be set at a premium of between 35% and 40%, which would guarantee founder Mark Dixon – the owner of the shares underlying the conversion option – a price equivalent to the one where they were trading before the pandemic struck.

Skeptics may see the move as a sell-down by the company’s biggest shareholder. The company would argue that it has prioritized keeping debt at manageable levels in such an uncertain environment and, having succeeded, doesn’t want to undo the good work by issuing plain vanilla debt now.

Either way, the shares, which were on a tear before the pandemic, have still only recovered half of their losses since February. That only makes the company’s optimism even more conspicuous.

StockBeat: IWG Bets on the Return of the Office
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email