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Elon Musk’s decision not to pay Twitter rent is hurting Goldman Sach’s commercial property portfolio, the FT has reported.
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Goldman was part of a group that provided a $1.7 billion loan to Columbia Property, which owns several Twitter offices.
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Columbia is suing Twitter for nonpayment of rent, claiming it owed more than $100,000 in December 2022.
Elon Musk’s decision not to pay rent for Twitter offices is causing difficulties for Goldman Sachs’ commercial mortgage portfolio.
Citing data from the Federal Deposit Insurance Corporation, the Financial Times reported this week that the banking arm of Goldman Sachs saw the value of delinquent commercial real estate loans rise 612% to $840 million in the first quarter. This dwarfs the rise in commercial real estate defaults seen across the U.S. banking industry, with delinquent commercial real estate loans rising just 30% nationally, reaching $12 billion over the past year. first trimester.
Delinquent loans – which are a number of days or more overdue – have become a growing concern in the commercial real estate industry as credit conditions tighten, borrowing costs rise and the prices of assets like office buildings fall while working from home persists.
But the jump in bad commercial real estate loans from Goldman Sach seems partly attributable to Twitter, which has not paid rent for its offices since November last year. Goldman is part of a group of banks that provided a $1.7 billion loan to Columbia Property Trust, a real estate investment firm that owns several Twitter office spaces.
Forgoing rent payments appears to be one of the sweeping cost-cutting measures Musk has implemented at the company since its acquisition last year, as Twitter straightens out its finances and repays the $12.5 billion of debt that Musk incurred on behalf of Twitter to buy the social media platform.
In private conversations, Musk said he would only pay Twitter’s rent “over his dead body”, although the company now faces legal action from Columbia Property for failing to make payments on his lease. He owed $136,260 on his office space in December 2022, Columbia Property said in its lawsuit.
A spokesperson for Columbia Property declined to comment to Insider on the lawsuit. Meanwhile, Twitter, which has a policy of automatically replying to press emails with a poo emoji, did not immediately respond to a request for comment.
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