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Goldman Sachs’ REPIA cuts Q3 losses to $66m

The Wall Street Bank saw the value of its stakes in its real estate assets under management fall by just $66 million in the third quarter of the year. It is the latest sign that prices across the sector are leveling out.

Goldman Sachs Real Estate Principal Investment Area (REPIA) marked the value of its global real estate portfolio down by just $66 million to the end of September, bringing to an end a series of large, successive quarterly write-downs.

As a result, the value of its stake in REPIA’s assets under management was recorded at $1.75 billion.

The platform, led by global head Ed Siskind, recorded a write-down of $499 million in the second quarter this year, a write-down of $640 million in the first quarter this year and a write-down of $961 million in the last quarter of last year.

Siskind described the sequence to PERE as proof of “stabilisation” in the sector following a period of “pain”.

He said: “As a mark to market institution we took a lot of pain early on our real estate portfolio, and we are now beginning to see signs of stabilisation. This is a positive backdrop as we continue to look at opportunities to invest the $6bn of dry powder we have available.”

Within Goldman Sachs’ wider Principal Investments division, real estate remained one of the only loss-making asset classes when the investment bank reported its earnings for the quarter yesterday.

The bank said the division had recorded net revenues of $1.26 billion for the quarter, including a gain of $977 million on corporate principle investments and $344 million from its investment in the shares of Industrial and Commercial Bank of China.

Overall Goldman Sachs reported total net revenues for the quarter of $3.19 billion, resulting in diluted earnings per common share of $5.25.

REPIA typically invests both directly from its balance sheet and through third party comingled funds in which it contributes a significant proportion of the equity. Since the division’s inception in 1991, Goldman Sachs has committed approximately $9 billion of firm and personal capital to REPIA funds.