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Twitter Sued for Nonpayment of Rent on San Francisco Office

bloomberg.com

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Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#61

Post by recuter »

jeffbee wrote: post #35
xqcgrek2 wrote: post #17

Seems HN is does not have expertise in this and who holds the cards in the current market in SF. The lease previously negotiated by the past regime has little relevance as Twitter is currently occupying less than 50% of the floor space. The landlord has to either accept lower payment, or look for a new tenant and Twitter moves to Austin. Given the current environment in SF, it's likely a new tenant won't be found for…

What a completely bizarre interpretation of contract law. Lessors may be in a bind after the lease expires, but during the term of the lease they are entitled to its terms. Nobody can simply stop performing the terms of a lease, outside of bankruptcy.

Sometimes to get out of the lease you break the contract. This contingency and associated penalties are often clearly specified in the contract.

That being said, I would bet the article is just lazy journalists trolling for clicks as usual.

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#62

Post by enkid »

maxclark wrote: post #53
jeffbee wrote: post #35

Earlier quoted context omitted.

What a completely bizarre interpretation of contract law. Lessors may be in a bind after the lease expires, but during the term of the lease they are entitled to its terms. Nobody can simply stop performing the terms of a lease, outside of bankruptcy.

Enforced how? Sure you have a contract but you need to enforce it. So you have to sue which takes time - a lot of time. Then you “win” but the other party can still not pay, or they could appeal - back to court and even more time. The landlord has an iron clad contract sure - but Twitter has what they want ($) and the leverage as a result.

How does twitter get out of paying short of bankruptcy?

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#63

Post by phpisthebest »

gorbachev wrote: post #57
chasing wrote: post #36

Reputation matters.

I wonder if any commercial real estate company would rent Twitter anything at this point. It's pretty clear Musk intends to save money by f*cking others. Might as well go 100% remote.

They will in Texas, FL, or TN which is most likely where the company will be moved to

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#64

Post by Someone »

jeffbee wrote: post #35
xqcgrek2 wrote: post #17

Seems HN is does not have expertise in this and who holds the cards in the current market in SF. The lease previously negotiated by the past regime has little relevance as Twitter is currently occupying less than 50% of the floor space. The landlord has to either accept lower payment, or look for a new tenant and Twitter moves to Austin. Given the current environment in SF, it's likely a new tenant won't be found for…

What a completely bizarre interpretation of contract law. Lessors may be in a bind after the lease expires, but during the term of the lease they are entitled to its terms. Nobody can simply stop performing the terms of a lease, outside of bankruptcy.

I think xqcgrek2 says “has to” in the pragmatic sense.

It likely is true that the landlord can legally force Twitter to pay up, but if that leads to Twitter’s bankruptcy, they won’t get the money.

Also, if they end up with a building that isn’t rented out, they may have to devalue their property and take a huge administrative loss. If their personnel’s bonuses are somewhat tied to their balance capital and/or revenues, their employees won’t want to end up there.

It is a bit of playing chicken. If the landlord thinks Twitter will go down if they play it as hard as possible, they will (grudgingly) accept changes to the lease contract. A common tactic is to decrease rents per m² or decrease the amount of floor space in exchange for restarting the lease period (e.g. if they’re in year 4 of a five year lease period, halve the rent, but start a new five year period). That way, the landlord can (somewhat) declare this as a victory because there’s more ‘certainty’ that the property will still make money in three years time.

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#65

Post by enkid »

propogandist wrote: post #49
kibwen wrote: post #16

Earlier quoted context omitted.

Tesla stock is down 69% (yes, really) over the past 12 months, and part of what's triggering the price collapse is Musk's own sell-off. When a CEO divests from their company, markets historically do not react with confidence. The more Elon Musk sells, the less value he has and the more stock he'll have to sell the next time that he wants to leverage his wealth to buy something pointless.

Tesla surged pointlessly during the pandemic, as with many stocks. Stock valuations are dropping across the board. Amazon rallied too, and even though it has 2X revenue and built a large moat since covid lockdowns, their current stock price resembles what it is was in Jan 2020.

Stocks aren't down 69%

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#66

Post by itsoktocry »

joegahona wrote: post #24

> Twitter hasn’t paid rent on its headquarters, or any of its other global offices, in weeks, the New York Times reported on Dec. 13. Isn’t rent paid once per month? When I was a renter, this could’ve been said about me literally every month, once two weeks had elapsed between payments.

So you think Twitter is being sued for non-payment of rent based on misinterpreted semantics?

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#67

Post by skippyboxedhero »

nostrademons wrote: post #26
tonystubblebine wrote: post #7

Earlier quoted context omitted.

I agree this is where things are headed. Is it a sure thing that Elon maintains control in a restructuring?

Usually not. Typically in a bankruptcy the debtholders become the new shareholders and then replace existing management with ones more friendly to their interests.

That wouldn't happen in this case because there would still be residual value in the equity. Is Twitter worth $45bn? No. Is Twitter worth more than the $13bn in debt? Yes.

In this case, they can file, rollover the debt into a new company with no financial loss and then recap the equity with Musk (who obviously has the money to do so) and other shareholders.

Also, the banks who own the debt do not want to run Twitter. All they want is to be able to mark the loan as performing...that is it. In cases where debtholders take over the company, the debt has usually been sold for significantly less than par to someone who wants to run the company. This isn't the case here because the debt is still worth par (imo, largely because it is obvious that a recap would be straightforward...it may be the case that Twitter's financial position is significantly worse, but we will need to wait and see).

Obviously, the question for the leases is how much it is, whether it is worth it, whether the landlord thinks they can get a new tenant (unlikely at this point), and whether the company can be relocated...the lease would have to be a rather large proportion of expenses to make this all worth it...but it may be worth it if the company is going to recap anyway (which seems likely).

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#68

Post by rsfern »

joegahona wrote: post #24

> Twitter hasn’t paid rent on its headquarters, or any of its other global offices, in weeks, the New York Times reported on Dec. 13. Isn’t rent paid once per month? When I was a renter, this could’ve been said about me literally every month, once two weeks had elapsed between payments.

According to the landlord Twitter is supposed to have been “in default” on their lease as of Dec 21. It’s like the second sentence of the Bloomberg article we’re commenting on, before the subscription fold.

Re: Twitter Sued for Nonpayment of Rent on San Francisco Office

#69

Post by jmyeet »

Some claim Twitter is attempting to renegotiate. That may well be true. But this doesn't fit in well with the greater narrative.

Since Elon's takeover of Twitter, it's been one PR disaster after the next. Mass layoffs, begging people to come back, cutting remote work, cutting in-office catering, the whole Twitter Blue debacle, unbanning some of the worst, the drop of advertising spend on Twitter (which, at least in part, is somewhat explained by the general market but part of it isn't), trying to fire the previous executives for cause to avoid golden parachutes, arguably not paying promised severance, Elon's controversial politics going front-and-center, the list goes on.

Reputation matters.

Not paying rent fits into the broader narrative that Twitter is desperately cutting costs and is haemorrhaging money. Elon's Tesla stock sales fit this too. How do you attract and retain talent when people aren't sure about the company's future or they see how easily Elon discards staff?

Even in today's market, companies have to work to hire and retain good staff. And they can't completely rely on work visa indentured servitude, as much as they seem to be trying.

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