Private credit disarray spells opportunity for housing giant Pretium, which targets high returns by lending to US homebuilders. “Our private credit looks a little bit different than other private credit in the sense that we are secured, we have real good downside protection,” Jon Pruzan, the company’s co-president, tells Bloomberg News’ James Crombie and Bloomberg Intelligence’s Erica Adelberg in this episode of the Credit Edge podcast. “We have a lot of people who want capital and not a lot of people providing capital — that puts us in an opportunity to continue to generate attractive returns,” says Pruzan, who was previously chief financial officer at Morgan Stanley. They also discuss housing fundamentals, opportunity by region, how Pretium achieves midteens returns and political risks going into the November US midterm elections.<br>See omnystudio.com/listener for privacy information.

Real Estate Is Next Bet for Debt Investors Avoiding Private Credit

The Credit Edge by Bloomberg Intelligence

# Full Transcript

**Podcast:** The Credit Edge by Bloomberg Intelligence

## Participants

- **James Crombie** (None)
- **Erica Edelberg** (None)
- **John Prouzan** (Pretium)

## Transcript

Hi, I'm David Weston. Join me every week for the Wall Street Week podcast to hear stories of capitalism from around the world. From geopolitical tensions and central bank decisions to artificial intelligence, energy and infrastructure, we sit down with the CEOs, economists, policymakers and thought leaders whose decisions are shaping markets everywhere we find them. Subscribe to the Wall Street Week podcast on Apple, Spotify or anywhere you listen.

Hello and welcome to The Credit Edge, a weekly markets podcast. My name is James Crombie. I'm a senior editor at Bloomberg.

And I'm Erica Edelberg, a senior strategist at Bloomberg Intelligence and Mortgage Fact Securities. This week, we're very pleased to welcome John Prouzan to the show, who oversees residential credit, including financing to home builders at Pretium now. John, how are you? I'm great. Thank you. Great. John's been in the market for 35 years. Before Predium, he was at Morgan Stanley, most recently as the chief operating officer and before that he was the CFO.

John's also on the board of the Peterson Institute of International Economics and a trustee of the New York Presbyterian Hospital. I'm going to flip it back to James for the first question. Thank you very much, Erica. And great to have you on the show, John. So we have talked a lot about private credit on this show and mostly about the negativity around it, around all the redemptions, around all of the challenges on the marks, around the liquidity issues, etc.

So investors globally, though, have a lot of cash and it's been pretty hard to find value anywhere. Predium, you're a large alternative asset manager focused primarily on U.S. real estate, housing related credit and private debt investments. How does all of this negativity around private credit, around private markets, how does that affect your ability to raise funds and invest? Well, thank you for having me. And there's been a lot of discussion about private credit and the nuances of private credit.

When we think about Predium and the private credit that we're generating, we think of ourselves as sort of private credit arriving at housing. And what I mean by that is we finance houses that are being built, being renovated, being upgraded. And so we have a real physical asset, an underlying real estate asset that we're secured by. These are loans that are attractive in terms of both the yield and the profile in terms of duration and the risk.

And so our private credit looks a little bit different than I think other private credit in the sense that we are secured. We have real good downside protection because we have that security. Our security is not cash flows. Our security is a physical house. It could be land that's ready for development. And so we have the ability to take that...

Real Estate Is Next Bet for Debt Investors Avoiding Private Credit

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

Real Estate Is Next Bet for Debt Investors Avoiding Private Credit

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.