- Goldman Sachs’ asset management division notched 27% higher net revenues in Q2, reaching $3.88B thanks mostly to CRE.
- The firm reported fewer real estate markdowns this year, contrasting with significant write-downs last year.
- Goldman recently closed a $3.4B real estate fund, targeting private real estate fund stakes and portfolio acquisitions.
According to CoStar, Goldman Sachs’ (GS) asset management division enjoyed substantial gains from its CRE investments in Q2, following Goldman’s closing of a multibillion-dollar real estate fund just last month.
By The Numbers
Goldman’s asset and wealth management division saw net revenues shoot up 27% YoY to $3.88B.
The primary revenue driver for their portfolio was real estate, which recovered from significant markdowns in 2023. CFO Denis Coleman noted during a conference call that Goldman had been proactive in addressing real estate risks, leading to fewer write-downs this year.
Compared to its rivals, Goldman’s early action on problematic CRE loans has paid off. While Wells Fargo (WFC) and JPMorgan Chase (JPM) reported higher losses and charge-offs related to office properties, Goldman appears to have dodged a bullet.
In Other News
Meanwhile, net revenue from equity investments within the firm’s asset and wealth management division hit $292M in Q2, a big turnaround from a net loss of $403M in the same period last year. The improvement was largely due to net gains from real estate investments.
Additionally, net revenue from debt investments rose by 51% to $297M, again reflecting lower net losses from real estate investments.
Portfolio Insights
Goldman’s improved quarterly performance follows its successful June closing of the $3.4B Vintage Real Estate Partners III fund. The fund targets stakes in private real estate funds and portfolio acquisitions, providing liquidity to institutional investors and fund managers.
Meanwhile, Goldman cut its CRE loan exposure by 3.6% to $27B by the end of Q2. Residential real estate loans remained stable at $24B YoY. The bank did not disclose further details on its real estate loan portfolios during the earnings release or conference call.
What’s Next
Bank of America, PNC Financial Services Group, and Morgan Stanley are set to report their earnings soon, offering more insights into the U.S. financial sector’s performance amid ongoing real estate challenges.
