The chief executive officer of WeWork issued a rallying call to shareholders for support and continued patience, saying this is his company's "moment" and that the global office market is increasingly in need of its flexible spaces.

It comes just days after the still loss-making flexible space provider announced proposals to cut its debt by $1.5 billion and secure over $1 billion in new funding and capital commitments following deals with an ad hoc group of investors that owns 60% of its public bonds and includes BlackRock, as well as with its major backer SoftBank and a third-party investor.

Since CEO Sandeep Mathrani joined in 2020 WeWork has faced a battle to cut debt and shore up investor sentiment in a company battered both by a first failed attempt at a public listing, and in turn the pandemic. He has repeatedly called for patience, saying the business model is being placed to eventually benefit from structural changes in how offices are occupied.

In a public letter to shareholders posted on the WeWork website on Tuesday, Mathrani points out that in 2022 revenue, memberships and occupancy increased in each quarter of the year, while it continued to reduce costs. Revenue rose 26% to $3.25 billion year over year.

"This is WeWork’s moment," he said, with need for the company's "turnkey solutions" to occupying space that bring certainty in a time of uncertainty. Mathrani said the group does not own the assets where it operates, so is not "bootstrapped" by mortgages on any assets.

He said a "new world of work" emerged during the pandemic and is defined by these key components: companies demand flexibility across space, time and cost, seek certainty and convenience in uncertain times, and require turnkey space that can bring people together when and where they need it.

Mathrani argues that the demand that traditionally drove the commercial office industry has fundamentally changed. The traditional office industry was built on "larger footprints, long-term leases" and long lead times. But these elements are "far less attractive to occupiers and the model is in question" in the current economy after years of a pandemic.

He also argues that the fundamentals that contributed to profit opportunities for owners and lenders are diminishing. "With net effective rents falling, higher interest rates and less access to capital to improve office buildings, the tried-and-true strategy of buying buildings, repositioning them, leasing them up, and selling for a profit" has become harder.

Mathrani said a "seismic" shift in the office market is set to follow the same pattern as that which saw the brick-and-mortar retail industry reshaped by e-commerce. And, naturally, he argues WeWork will be "front and center" as a flexible work space provider.

Much of that argument is based on the globally known name WeWork has built. He describes the group as a category-leading brand. "We stand alone in the commercial real estate industry as a household name" around the world.

He said the fact that its spaces have been largely built out already with "enterprise-grade designs and materials" means a company’s ability to sign a WeWork membership agreement "contrasts starkly with a tenant’s ability to sign" a traditional lease.

Mathrani confirmed that earlier this month WeWork proposed a transaction with equity and bond holders to provide needed capital, significantly reduce leverage and extend maturities through 2027 that subject to bondholder and shareholder approval could result in total funding and capital commitments of over $1 billion.

He made no promises on when the company will be profitable in the letter, but said increasing occupancy is critical. Occupancy reached 75% globally with 547,000 consolidated physical memberships in the final quarter, an increase of 17% year-over-year. He said the group ended the year with 682,000 physical memberships, the highest in WeWork’s history. The group has also increasingly seen the opportunity to increase pricing as offices filled up over the year.

At the end of 2022, 68 of 99 total markets were over 70% occupied including New York, London, San Francisco, São Paulo, and Paris, making up 75% of revenue.

WeWork said its 2022 gross sales in Manhattan were equivalent to 18% of the traditional office market leasing on a square-foot basis, while WeWork’s portfolio accounts for approximately 1% of total office stock. In London, it said WeWork’s 2022 gross sales were equivalent to 35% of traditional leasing activity, while accounting for roughly 1.5% of total office stock.

Mathrani added he believes flexible space is on a trajectory to be a separate channel of distribution for office space, similar to the transformation of retail and e-commerce.

His argument is that in 2000, e-commerce represented roughly 1% of retail sales but grew to 21% of the market in the United States by 2020. By the same token flexible office space today represents just 2% of the overall commercial real estate market.

But commercial real estate brokerages CBRE and JLL have projected it to become between 13% and 30% of total office supply by 2030 in the United States. Mathrani says this represents a revenue opportunity of between $45 and $105 billion.