General Electric's finance arm plans to cut its holdings of commercial real estate by half as part of a broader shrinking of the lending division, a top executive said recently.
GE Capital CEO Mike Neal said on Friday that the company is reducing its portfolio of office buildings and other commercial properties to about $40 billion, down from the current $80 billion. He did not provide a time frame for when that will happen.
Commercial real estate has been the source of many of GE Capital's woes in the past several years, struggles that have dragged down the overall profit for the industrial and financial conglomerate.
GE is in the process of shrinking GE Capital and its reliance on profits from the division that once made up about half of GE's overall income.
GE Capital has managed to stabilize most of its other problem spots, like credit card lending and overseas mortgages. But commercial real estate has posted large losses in recent quarters.
Neal said that commercial real estate has historically been a good business for GE Capital, but that valuations of properties have fallen sharply as the broader market for office space has crumbled.
"We just never imagined, or at least I never imagined, values that could drop as much as they have," Neal said at an analyst conference.
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