Prime US REIT reaches deal to terminate WeWork lease at Emeryville property

U.S. five dollar currency note; taken September 2018.

Prime US REIT said Friday it has reached a deal with a WeWork Co. subsidiary to terminate its lease at tower one of its Emeryville property.

“Per the terms of the agreement, PRIME’s security package has been converted into a termination fee that has been received, which when added to the cash security already on hand would cover the tenant’s lease payments to PRIME through to early 4Q 2022,” the REIT’s manager said in a filing to SGX.

“PRIME has also taken possession of the said space, allowing for it to be marketed to potential new tenants with immediate effect,” the filing said.

The tenant had occupied 56,977 square feet of space out of Prime US REIT’s 4.38 million square foot portfolio, and had contributed around 2.2 percent of the REIT’s cash rental income, the filing said.

In mid-September, the REIT had said it was in talks with the WeWork subsidiary on resolving its lease obligations after news reports said the co-working company was planning to close its operations there.

The September comment followed a report in the San Francisco Business Times saying WeWork had asked its tenants to move out of the building by month-end.

In June, the REIT had said WeWork was current on its rental obligations through mid-June, but had approached Prime US REIT with a proposal to restructure the lease, with the terms under evaluation. At the time, the REIT said it called on the tenant to continue to meet its rental obligations, calling upon the security package for the payment.