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GS Whitehall Funds Down to Last $30M … From $1.8B!

April 16, 2010

And you thought that Morgan Stanley Real Estate Funds were the only players in town who had an expertise in losing massive amounts of money. The Financial Times is reporting that Whitehall Street International, GS’s international REF has essentially been wiped out.

The fund is down to its last $30m, from about $1.8bn, a loss of about 98 cents on the dollar, according to the annual report sent to investors last month.

Goldman was the largest single investor in Whitehall, with a commitment of $436m, according to the annual report. The fund, raised in 2005, invested more than half its capital in the US, with the second largest exposure in Germany.

Luckily for investors, the fund acknowledged the “negative impact of leveraged investing in a market in which estimated asset values have declined materially”.

Blaming the market is the easy thing to do. Real courage is announcing forced retirements and naming names.

Still, what gets me more than all this is that so many investors, sovereign wealth funds, and so on continue to insist upon established sponsorship a la Tishman, Morgan, GS, etc.

They’ve all made home-run investments at one point or another in their lifetimes, but some of the later vintage vehicles should really raise some serious questions with any investor. Sure the market was going ape and these guys had to jump in, but isn’t the whole premise of investing for so many now to go after the deals these guys so expertly misjudged?

[via FT]

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Categories: Commercial Finance and Lending | Commercial Real Estate Investing
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Comments
Lloyd Hanford April 16, 2010


Isn't this just another example of competitive investing with other people's money? One must wonder how much personal money was lost by the people who made the purchase decisions and managed the investments.

joshua April 16, 2010


$36M is a nice little loss for them. what astounds me is how in the hell you can lose 98 cents on the dollar in any real estate deal. how much leverage did they use? god damn. these guys really went overboard and the investors deserve what they got. that was far from leveraged investing, or investing in any fashion. it was purely throwing money into the wind and hoping more came back.

Net Lease April 19, 2010


It appears the experts were not investing properly. Jumpimg in because others were making huge gains does not warrant a real time line to get in.
Such a huge loss must have devasted the Investors. I feel for them.

Guest April 20, 2010


Props to GS for writing the value of their properties to market. All RE funds started in 2006-2007 are in the same position, all the equity is gone, the difference is simply accounting and honesty – those saying they've lost 30-50% are holding assets at values that no one would pay.

And to a previous comment on leverage: 65% leverage is considered 'safe' and 'conservative' even. With a 35% drop in value, equity is 100% lost on that safe bet.

Amy April 22, 2010


$36M is a nice little loss for them. what astounds me is how in the hell you can lose 98 cents on the dollar in any real estate deal. how much leverage did they use? god damn. these guys really went overboard and the investors deserve what they got. that was far from leveraged investing, or investing in any fashion. it was purely throwing money into the wind and hoping more came back.

Paul October 13, 2011


a building is merely a good excuse for a loan. evidently GS took the opportunity on quite a few more buildings than they might have in retrospect.

in an operating environment where the fed backstops one and all banks, who can blame the banks, or GS.

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