Goldman Sachs Had Another Reason to Want AIG Bailed Out

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Goldman Sachs owns quite a lot of office property, the Observer, er, observes today. And, as savvy financiers are wont to do, they also occasionally rent out things they don't actually own. Like the property at 180 Maiden Lane, currently occupied by AIG, which recently sold its old headquarters at 70 Pine Street. Back in June 2008, just a few short months before the Great Crash of 2009, AIG took over Goldman's lease in the glass building downtown. It was what the pink paper called "the largest lease transaction so far this year": 800,000 square feet, valued at around $215 per. And should AIG have failed to pay their rent, guess who would have taken the fall?

According to a conversation between Paul McDowell, the CEO of Caplease — which holds the lease for embattled property owner Joe Monian — and an analyst on the company's recent earnings call, that would be Goldman.


CRAIG MAILMAN: Okay. All right. Just switching topics, do you guys have any update on the 180 Maiden Lane loans? It sounded like the landlord was considering not servicing the debt anymore, from market reports.

PAUL MCDOWELL: That's not our understanding. We don't particularly have much in the way of an update, other than we are expecting and have currently been modeling that that loan will likely extend...

CRAIG MAILMAN: Okay. Then just going back to your second half '09 --

PAUL MCDOWELL: Actually, let me -- I actually do want to make one other point there. With respect to 180 Maiden Lane, it's important to remember their in-place leases are pretty long. They run to 2014, 2015, with Goldman Sachs as the primary tenant. So the cash flows at the property are stable. It's just a question of the maturity of the loan.

CRAIG MAILMAN: Okay. So Goldman's still on the hook if AIG were to vacate that space that they're subletting?

PAUL MCDOWELL: That's correct.

We're not saying it's a conspiracy or anything. After all, a little fancy math and that exposure totally rounds to zero.

CAPLEASE INC Earnings Conference Call (Q2 2009) [Yahoo Finance]