Building on a Strong Foundation, Realty Management Division Grows Out of Archon Acquisition

In 2012, Goldman Sachs’ Realty Management Division (RMD) is created as a new, standalone division from former subsidiary Archon Group, offering a fully integrated real estate services platform.

In 1991, Goldman Sachs established its first real estate equity fund, Whitehall Street Real Estate Fund. The Fund purchased distressed commercial real estate assets sold by the Resolution Trust Corporation (RTC), a government entity established to liquidate mortgage loans and investments from thrifts that failed during the savings and loan crisis of the 1980s and 1990s.

In the early stages, Goldman Sachs invested heavily in RTC-related distressed assets and made many of its investments through partnerships with real estate firms. Archon Group, an Irving, Texas-based subsidiary of the privately held real estate firm J. E. Robert Companies, provided investment, asset and development services on an exclusive basis for the Whitehall Street Real Estate Funds. In 1996, Goldman Sachs acquired a 94 percent interest in Archon.

In 2000, Archon became a wholly-owned subsidiary of Goldman Sachs. Unlike prior acquisitions such as J. Aron (1981), which was subsumed into Goldman Sachs’ Fixed Income Division in 1997, and Spear, Leeds & Kellogg, which became part of the Equities Division in 2000, Archon operated independently. Its activities included real estate finance, mezzanine finance, corporate finance, distressed corporate finance and commercial and industrial (C&I) loans, real estate equity, and residential loan servicing.

In 2012, the decision was made to transform Archon into a new, standalone division of Goldman Sachs – the Realty Management Division, or RMD. In mid-2019, certain groups within RMD were merged with other divisions of the firm as Goldman Sachs sought to create integrated platforms for specific alternative investment disciplines and position these for sustainable long-term growth. RMD’s Realty Investment Group was merged into the firm’s Merchant Banking Division, along with the Global Special Situations Group (GSSG), Principal Strategic Investment Group (PSI), Private Real Estate (PRE) group within Goldman Sachs Asset Management and the Urban Investment Group (UIG).

In a similar move, RMD’s Residential Mortgage Asset Management Group and its consumer and warehouse lending teams were subsumed by the Securities Division, where these groups would be more closely aligned with the Mortgage desk, enhancing operational efficiency to the benefit of the firm’s people and clients.

 

This article was originally published as part of a series commemorating the 150th anniversary of Goldman Sachs’ founding in 1869.