The Real Deal Miami

Flailing market raises questions for REITs

July 14, 2009 01:58PM

Goldman Sachs has seen a recovery in stock value, with shares rebounding from below $50 per share to $150 per share according to the company’s most recent two-year performance report. This market value is tenuous, however, said David Faber on CNBC’s “the Faber Report” today. The volatile commercial real estate market is raising serious questions about the future of real estate investment trusts. Cushman & Wakefield determined that available office space rose to 41.2 million square feet in the second quarter of this year, the highest level in the past four and a half years, The Real Deal reported earlier today. Goldman Sachs saw a $700 million loss in commercial mortgage loans and a $500 million loss in real estate principal investments over the last two years. With office rents already at a dismal $60.23 per square foot, Faber predicts these rent values could drop further. Among the hardest hit is SL Green Realty Corp., whose market value dropped approximately 75 percent in the last year.