Bloodshed In Goldman's Commercial Mortgage Portfolio Continues

It’s not all good news coming out of Goldman Sachs. The losses from Goldman’s commercial mortgage portfolio kept mounting last quarter, amoung to a loss of $700 million, according to the firm’s earnings release today.

Goldman held around $8 billion in commercial mortgages and commercial mortgage backed securities at the end of last year. The firm lost around $800 million on that portfolio in the last quarter, a huge 10% decline. This quarter things slowed a bit, with that commercial mortgage portfolio losing almost the same share of its value, declining by an additional 9.7% or $700 million.

Of course, some of this is guess work. Goldman is notoriously unforthcoming about exactly what it holds and how it is calculating the values of those assets. We don’t know the current size of the mortgage portfolio. If the firm sold off a lot of commercial mortgages since the start of the year, the decline in the retained portion might be even great than estimated.

This loss comes after Goldman’s CFO had stated that he thought losses in the commercial mortgage sector would be far more limited than those in the residential mortgage sector because the underlying property was more valuable. Unfortunately, as consumer spending remains punishingly frugal, the underlying value of commercial properties is declining as well.

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