Goldman, Morgan Stanley need to cut stakes in real estate investments

New York /
Aug.August 10, 2010 12:30 PM

Goldman Sachs Group and Morgan Stanley have invested almost $20 billion of their own money in private equity, private debt, real estate and hedge funds, and they may each have to cut those stakes by more than 60 percent to comply with the Volcker rule, which limits a bank’s total investments to 3 percent of its capital, Businessweek reported. Goldman Sachs had $15.4 billion in such investments — including $910 million in real estate funds — as of June 30. They have to reduce their stakes to about $2.1 billion. Morgan Stanley had $4.22 billion in investments — including $887 million in real estate funds — as of June 30, and the financial services firm has to reduce their stakes to about $1.6 billion. Goldman said in its regulatory filing that “substantially all” of the underlying assets of the funds will be liquidated within 10 years. Morgan Stanley said 46 percent of the fair value of its private equity funds and 49 percent of its real estate funds are likely to be liquidated in the next 10 years. “The regulators are likely to give them several years in order to comply, so I think it will be a steady, slow process,” said Richard Staite, a London-based analyst at Atlantic Equities. “I think they’ll find it fairly easy to sell those size investments over a multi-year period.” [Businessweek]

 

Related Articles

arrow_forward_ios
From left: Wells Fargo’s Charles Scharf, SL Green's Marc Holliday, Goldman Sachs’ David Solomon and One Vanderbilt (Getty)
Goldman Sachs, Wells Fargo leading $2.25B refi of One Vanderbilt
Goldman Sachs, Wells Fargo leading $2.25B refi of One Vanderbilt
Morgan Stanley’s James P. Gorman and their Broadway headquarters. (Getty)
Morgan Stanley plans “full return” to office
Morgan Stanley plans “full return” to office
Goldman Sachs CEO David Solomon (Getty)
Goldman Sachs plans move to South Florida
Goldman Sachs plans move to South Florida
Denizen Bushwick at 54 Noll Street (Photos via Denizen Bushwick)
All Year nears $650M financing for Bushwick luxury rentals
All Year nears $650M financing for Bushwick luxury rentals
Gap Senior Director of Real Estate Jennifer Rondholz, Morgan Stanley Prime Property Fund head Scott Brown and 170 Broadway (Linkedin, Google Maps)
Lower Manhattan retail condo squeezed by lender as Gap refuses to pay rent
Lower Manhattan retail condo squeezed by lender as Gap refuses to pay rent
30 Hudson Street in Jersey City and WeWork CEO Sandeep Mathrani (Wikipedia)
WeWork scores big lease at Goldman Sachs’ Jersey City office tower
WeWork scores big lease at Goldman Sachs’ Jersey City office tower
A photo illustration of Goldman Sachs CEO David Solomon (Getty; iStock)
Goldman Sachs to juice cash-strapped RE owners with $3B fund
Goldman Sachs to juice cash-strapped RE owners with $3B fund
Goldman CEO David Solomon and 1 Flatbush Avenue (Credit: Michael Kovac/Getty Images; Hill West Architects)
Goldman reactivates real estate platform in NYC with big DoBro buy
Goldman reactivates real estate platform in NYC with big DoBro buy
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...