Goldman Sachs’ Whitehall Street platform was hit hard in 2008 with the equity on some investments being entirely wiped out, The Wall Street Journal has reported.
Whitehall Street's biggest vehicle, the $4.1 billion Whitehall Street Global Real Estate 2007 fund, saw enormous write downs in 2008, after the bulk of the capital was invested at the height of the market in 2007. In 2008, the bank's real estate arm wrote down $2.1 billion of the $3.7 billion of capital it invested between May 2007 and August 2008.
The liberal use of leverage on the fund’s investments means that the value of the equity was depleted even more severely than the portfolio overall.
According to the report, equity invested by the Whitehall fund in certain investments is worth next to nothing or, in some cases, less than nothing.
Whitehall invested $372 million into timeshare company ASNY in June 2007. That equity was valued at $0 at the end of 2008. The fund also invested $103 million in New York's Helmsley Building at 230 Park Avenue, however that is now $58 million in the red. Whitehall's investment in the Stratosphere Hotel and casino on the Las Vegas Strip also saw its $326 million in equity reduced to $5 million.
The fund’s $139 million co-investment in casino operator Station Casinos, majority owned by Los Angeles-based Colony Capital, was also written down to $31 million, the report added.
Now Whitehall is turning to its lender, parent Goldman Sachs, to restructure the debt on such transactions.