- Elon Musk's decision not to pay Twitter's rent is causing pain for Goldman Sachs, the FT reported.
- Goldman helped originate a $1.7 billion loan to Columbia Property, which owns many Twitter offices.
Elon Musk's decision not to pay rent on Twitter's offices is causing pain to Goldman Sachs' commercial-mortgage portfolio.
Citing data from the Federal Deposit Insurance Corporation, the Financial Times reported this week that Goldman Sachs' banking arm saw the value of delinquent commercial-real-estate loans rise 612% to $840 million over the first quarter. That dwarfs the rise of commercial-real-estate delinquencies across the US banking industry, with bad commercial real-estate loans rising just 30% nationwide, notching $12 billion over the first quarter.
Delinquent loans – which are late on payments by a certain number of days or more – have become a growing concern in the commercial-real-estate sector as credit conditions tighten, borrowing costs rise, and prices for assets like office properties fall as remote work persists.
But the jump in Goldman Sach's bad commercial-property loans appears partly attributable to Twitter, which has reportedly not paid rent on its offices since November. Goldman is part of a group of banks that made a $1.7 billion loan to the Columbia Property Trust, a real-estate investment firm that owns several of Twitter's office spaces.
Forgoing rent payments appears to be one of the radical cost-cutting measures Musk has implemented at the company since acquiring it last year, as Twitter squares up its finances and pays off the $12.5 billion of debt Musk took out in Twitter's name to purchase the social-media platform.
Twitter is facing a lawsuit from Columbia Property that accused the company of failing to make payments on its lease and alleged that it owed more than $136,000 as of December. The lawsuit also alleged that Musk said he would only pay Twitter's rent "over his dead body."
A spokesperson from Columbia Property declined to comment on the suit. Meanwhile, Twitter, which has a policy of auto-replying to press emails with a poop emoji, did not immediately respond to a request for comment.