Jake Mooney | S&P Global Market Intelligence
Goldman Sachs Group Inc. has marked down or impaired its office-related commercial real estate exposures across both equity investments and consolidated investment entities by approximately 50% in 2023.
Overall, the firm started the year with about $15 billion of on-balance-sheet commercial real estate (CRE)-related alternative investments and has reduced that total to $9.7 billion, which includes loans, debt securities, equity securities and equity exposure in the firm’s consolidated investment entities portfolio, CFO Denis Coleman said in an earnings conference call.
Three-quarters of the CRE reduction came through paydowns or dispositions, with the rest through marks and impairments, Coleman added. Aside from the approximately 50% marks or impairments in office, the firm’s marks or impairments in the non-office CRE portfolio are about 15% year to date, Coleman said.
“We’re making very, very significant progress against those exposures,” Coleman said, adding that the firm’s targets call for further CRE reductions.
About 43% of the firm’s CRE-related on-balance sheet alternative investments consisted of historical principal investments that Goldman Sachs intends to exit over the medium term, according to an investor presentation.
As of the third quarter, the firm’s approximately $25 billion in CRE loans accounted for 14.0% of total loans, net of allowance for loan and lease losses, according to the presentation. The firm has another $3.2 billion of CRE-related unfunded lending commitments, including about $600 million of office-related commitments.
