Elon Musk’s decision not to pay rent

Elon Musk’s decision not to pay rent

elon musk and twitter

  • Elon Musk’s decision not to pay Twitter’s rent is causing pain for Goldman Sach’s commercial real estate portfolio, the FT reported.
  • Goldman was part of a group that originated a $1.7 billion loan to Columbia Property, the owner of several of Twitter’s offices.
  • Columbia is suing Twitter for not paying rent, saying it owed over $100,000 as of December 2022.

Elon Musk’s decision not to pay rent on Twitter’s offices is causing some pain in 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 seen across the entire 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 work from home persists.

But the jump in Goldman Sach’s bad commercial property loans appears partly attributable to Twitter, which has not paid rent on its offices since November of last year. Goldman is part of a group of banks that made a $1.7 billion loan to 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.

In private conversations, Musk has said he would only pay Twitter’s rent “over his dead body,” though the company is now facing a lawsuit from Columbia Property for its failure to make payments on its lease. It owed $136,260 on its office spaces as of December 2022, Columbia Property said in its suit.

A spokesperson from Columbia Property declined to comment to Insider 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.

Leave a Reply

Your email address will not be published. Required fields are marked *

Pin It on Pinterest