Ex-Goldman partner’s investment firm issues US$1 billion in homebuilder loans

A screen at a trading post on the floor of the New York Stock Exchange is juxtaposed with the Goldman Sachs booth. (THE CANADIAN PRESS / Richard Drew)

NEW YORK — Pretium, a real-estate focused investment firm founded by Goldman Sachs alum Don Mullen, said on Thursday it has originated more than US$1 billion in loans to homebuilders in the last six months.

The company, which manages $60 billion of assets, started issuing these loans, in partnership with its real estate arm Anchor Loans, to expand its footprint in the residential real estate market.

The ongoing housing shortage in the United States, coupled with traditional banks retreating from real estate lending due to regulatory pressures and risk concerns, has opened up space for private capital firms like Pretium to step in and play a larger role in residential financing.

As of September 30 last year, the U.S. was short about 3.7 million homes, according to estimates by Freddie Mac. Such shortages can drive up home prices and rents, and also restrict workforce mobility.

Pretium said the $1 billion of loans were expected to help construct nearly 5,000 new homes. The company aims to become one of the biggest lenders to the U.S. homebuilding industry by 2027.

It is another sign of how private credit players are expanding into areas of lending earlier dominated by regional or smaller banks.

“These smaller builders build half the homes every year in the United States and they’re critical to addressing this housing shortage that we have. And, that’s the client that we’re looking for, that we’re trying to finance,” Co-President Jonathan Pruzan told Reuters.

“These are experienced, qualified borrowers that have been finding it much more challenging to find financing than they did two to four or five years ago, where they used to get financed by smaller or regional banks.”

Mullen founded the firm in 2012 after serving as a Goldman partner. Former Morgan Stanley MS.N Chief Operating Officer Pruzan and former Goldman Chief Financial Officer Stephen Scherr serve as Pretium’s co-presidents.

(Reporting by Niket Nishant in Bengaluru and Saeed Azhar in New York; Editing by Tasim Zahid and Louise Heavens)