GIC’s US$675m loss juz be the beginning?

In GIC on 24/01/2010 at 7:17 am

What should concern S’poreans more than GIC’s US$675m loss from “its investment in Manhattan’s largest residential enclave” is that GIC is a big investor in US property, spending billions of dollars over the years (sorry can’t insert links on examples: they all break) though to be fair to it in 2006 it said it was diversifying into Brazil, India and China.

“Anybody who bought property in the last six years has their equity pretty well washed out,” said Ray Torto, chief economist at CB Richard Ellis, a real estate firm. “People are looking back on that period as the peak of the madness, the bubble. The expectation was that there was always someone who would pay a higher price after you,” part of  an article about the promoter of the investment that lost GIC about US$675 million.

“Instead of rents and values rising unchecked, the value of commercial office buildings in the United States has dropped 43 percent, on average, since November 2007, according to economists’ estimates. If unemployment continues to rise, an ugly situation could turn nightmarish,” it continues.

As to the promoter,

“Tishman Speyer, which has no corporate debt, earns fees for developing and operating the buildings but usually puts little of its own money into a deal … In the $5.4 billion Stuyvesant Town deal, for instance, BlackRock and Tishman Speyer invested only $112 million each of their own money, which they have written off … Tishman Speyer took $18 million a year in fees; company executives say they began waiving the fees in fall 2008.”

Update 25/1/10

Complex Is Turned Over to Creditors

Question is whether GIC is one of the creditors? Trying to find out.

Update 26/1/10

It is confirmed that it is likely not to get anything back.

  1. […] ‘But BlackRock’s most public and costly mistake—for its clients, at least—was its purchase of the iconic Manhattan housing complex Stuyvesant Town and Peter Cooper Village, a $5.4 billion deal that went into default in early January.” Remember GIC is an investor in this too. […]

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