(Bloomberg) — Stephen Scherr, the previous chief financial officer of Goldman Sachs Group Inc., is looking for a Wall Street comeback by joining the leadership of one among the biggest investors in US housing.
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Scherr starts this week as co-president at Pretium, a serious landlord of US single-family homes founded by his former Goldman colleague Don Mullen. The brand latest hire will share his post atop the $55 billion investment firm with one other heavyweight Mullen recruited last 12 months: former Morgan Stanley CFO Jon Pruzan.
“The firm has grown extremely fast. I have to be ready that I even have people around me that, if I get hit by a bus, can run the place,” Mullen, 66, said in an interview. “That doesn’t mean that, if I drop dead, they arrive out of a glass case to run the place. There’s loads to do now.”
That features expanding the firm.
“Bringing folks like that on board goes to position us ready to offer you the choice to grow in a reasoned and mature way,” he said. “We’re still a tween in our growth path.”
Scherr, 60, spent most of his occupation at Goldman, including his last three years as finance chief, until 2021. The banker then ran car-rental company Hertz Global Holdings Inc. before stepping down from that role in March as the company teetered from its mistimed bet on electric vehicles.
In joining Pretium, he returns to the familiar turf of finance, this time specializing in a residential real estate market that’s being reshaped by giants. Mullen made a shrewd bet throughout the aftermath of the US foreclosure crisis, snapping up homes at depressed prices as he walked neighborhoods in California and Arizona.
He has since expanded Pretium, amassing a portfolio of nearly 100,000 rental homes and plowing deeper into more corners of real estate. That encompasses a nascent bet on apartment buildings. For investors, the multifamily market has presented opportunities, as some landlords and their lenders fret over a wave of loan maturities, and as some parts of the country work through a supply glut. Pretium might be throughout the business of originating and servicing home loans and is attempting to bulk up in real estate debt.
Pretium has grown at a moment of deep public frustration over the dearth of within your means housing. That’s turned attention — and scorn — toward Wall Street players. Each Republican and Democratic leaders have argued institutional investors are making it tougher for people to buy their first homes.
Large investors have countered by arguing they own only a small percentage of US rental homes and are offering a worthwhile alternative to buying.
“We should always at all times be an element of the reply even once we’re seen by some as a component of the difficulty,” Mullen said. He added that Pretium has worked with some mayors to take care of the housing challenge.
Earlier this 12 months, Mullen agreed to sell a minority stake in his firm to Bennett Goodman’s Hunter Point Capital in a deal to help fund expansion.
Scherr said the ambition is to be “greater and larger.” While there there are other markets and areas where Pretium can expand, it doesn’t must stray faraway from its chief remit.
“The organization understands where it has edge and is type of disciplined in areas of real estate where it could make headway,” he said. “There’s loads to do there long before we go further afield.”
Scherr might be working alongside Pruzan after the duo spent years at competing banks jostling for investor attention, often presenting public updates on successive days, looking for to talk up their firms’ shares.
“I used to tell my team my second-favorite stock was Morgan Stanley,” Scherr said. “The speculation was that it could rub off and help the Goldman Sachs multiple. I feel the two of us can coexist just about on the similar firm.”
Private Credit
Pruzan and Scherr have been friends longer than rivals. As Pruzan was exiting Morgan Stanley, it was Scherr who hooked him up with Pretium.
Actually, the pair were vacationing together last 12 months when the collapse of Silicon Valley Bank set off tumult in US banking. While they no longer must obsess over banking regulations and valuations, they’re feeling the repercussions of tempered lending at troubled regional banks.
That’s opening up a beautiful business line for Pretium, which desires to marry its presence in area of interest local markets with the pliability to also finance homebuilders and developers in those areas.
Construction lending as a percentage of the final loan portfolio at banks has dropped to 4% from 8% in 2006, in accordance with regulatory data compiled by Pretium. It might end in only more business for nonbank players, in accordance with Pruzan.
“Banks have gotten less relevant in certain lending spaces,” Pruzan said. “The next private-credit market goes to be around residential real estate. The prospect set is large.”
–With assistance from Patrick Clark.
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