Goldman Expansion Beyond N.Y. Leads Shareholders to TexasMichael J. Moore
Goldman Sachs Group Inc. has expanded its workforce outside New York and San Francisco mainly to cut costs. Its office in Irving, Texas, also aims to boost revenue.
The office, among the firm’s largest in the nation with about 650 employees, hosted the investment bank’s annual shareholders meeting today with Texas Governor Rick Perry giving a speech. In addition to typical back-office functions such as accounting and information security, the location houses a commercial real estate lending group and is the headquarters for the realty-management division.
That group is the descendant of a joint venture named Archon that Goldman Sachs set up in 1991 with J.E. Robert Cos. to buy distressed assets from the Resolution Trust Corp. after the savings and loan crisis. The division, led by partner Tom Dowling, now sources deals and manages real estate investments for the bank’s special-situations group and property funds.
While the division doesn’t have its own balance sheet, and instead aids deals by the firm’s revenue-producing units, it deployed about $7 billion in loans and investments last year, according to a person with knowledge of its operations.
Goldman Sachs acquired all of Archon in 2000, and the business operated as an independent subsidiary for years. It purchased more than $1 billion of property in the U.S. in some years, mostly for the bank’s Whitehall real estate funds, according to a former employee. That activity dropped as the U.S. property market plunged, and the last Whitehall fund was raised in 2008.
Irving, in Dallas’s shadow with a population of about 225,500, is home to businesses including Exxon Mobil Corp., the world’s second most valuable company, and CEC Entertainment Inc., owner of the Chuck E. Cheese pizza chain. Goldman Sachs also has an office in Dallas with several private wealth management advisers and one investment banker, managing director Peter Brundage.
Chief Executive Officer Lloyd C. Blankfein, 59, said in November that a quarter of the firm’s employees were located near Dallas, Salt Lake City, Singapore and Bangalore, India. That’s increased from 10 percent in 2007 as the bank looks to cut expenses, he said. The firm hosted its annual meeting in Salt Lake City last year.
Shareholders elected all of the firm’s nominees for the board of directors, General Counsel Greg Palm said today, announcing a preliminary count of the votes. About 83 percent of votes approved the bank’s executive pay plan, he said.
Like Morgan Stanley’s annual meeting earlier this week, today’s gathering featured no questions from shareholders and lasted fewer than 40 minutes. About half the meeting was taken up by Perry’s speech, which extolled the benefits of companies moving to Texas.
Blankfein thanked Perry for his support of Goldman Sachs’s businesses in the state. The CEO didn’t accept a shareholder’s invitation to move the firm’s headquarters to Texas.
“I think there’s a lot of compelling reasons to move to Texas and a lot of compelling reasons to stay where we are, including Newton’s first law of inertia,” Blankfein said in an interview after the meeting.
Beyond the meeting, Goldman Sachs is trying to cement ties to the area. Dina H. Powell, a partner who leads the firm’s charitable efforts, announced this week the start of the bank’s 10,000 Small Businesses education and funding program in Dallas.