GE’s Real Estate Holdings Hurting Profits
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Even General Electric has been caught in the real estate downturn. The company is a large player in the commercial real estate game buying and selling large properties every year. The internal nickname for the real estate division in GE is “The Honey Pot”.
It is called The Honey Pot because it provides the company the ability to hit it’s earning numbers ever quarter. If they need to raise 300 million to hit the number, sell a building with 300 million in profit in it. It was not that easy, but in the complicated world of corporate finance, it was as good as it gets.
Now the company is caught on the other side of the equation. With property values dropping and 16 billion invested in real estate last year General Electric is upside down on many of their properties. So instead of making revenue they have assets that are depreciating.
No wonder GE’s stock is trading so low, the ability to massage their earnings just took a big hit. And according to the company, they expect no profits through 2009 from the real estate division.
Ouch.
Falling property values could also hurt GE by forcing it to take hits on its balance sheet. As of the end of last year, the estimated market value of its real-estate investments exceeded what the company had paid for the properties by about $3 billion.
But if, as expected, the commercial real-estate market continues to weaken, GE runs the risk of having to take a write-down on those investments. Nationwide, as office vacancies rise, retail sales slow and travel bookings plunge, commercial-property values have already fallen as much as 20% in many areas.via WSJ.com.
It probably is a really good time to buy real estate - monthly payments are about equal to market rents ...
The part about the inventory is right on but in my area they are mostly low end and beat up ...
I worked for this man, he is a great con man and has done this in more than States then ...
You're right. If you come from Central Jersey (as the Boss and I do), you go to Florida at some ...
Maybe it was kryptonite...
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By Mike ...
I couldn't agree more.
The newspaper has always "stuck" it to the real estate agent with rates that were much higher ...
By the way, homeowners trying to get short sale approval should be aware that lenders are comparing the initial loan ...
Ouch! Thankfully I haven't come across anything like that yet. We normally don't have situations like that in ...
well, the guy was here illegally.
serves him right. 
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Comment by Miami Beach Real Estate on 15 October 2008:
Commercial sales are up in Miami, but not for the benefit of the seller. Many sellers cannot get the financing or refinancing they need, and the cash buyers are coming in with low offers sellers cannot refuse in order to avoid foreclosure.