What's the problem with a private equity firm applying its
shareholder first mentality to the rental business?
Reuters reported, the picture that emerges is one of leaky pipes, vermin,
toxic mold, nonfunctioning appliances, and months long waits for repairs.
>> Private equity firm, Blackstone Group is now the country's number one landlord,
meaning they own more rental properties than any other institutional investor or
mom and pop landlord in the country.
In fact, if you think mom and pop landlords would even have a shot at
beating Blackstone Group, you would be mistaken.
Because Blackstone Group has acquired quite a bit of real estate,
both single family homes and apartment buildings.
And their whole play here is to focus their energy on low income
neighborhoods and moderately priced real estate.
Essentially take these single family homes and these rental units, maybe
do some renovations, shoddy renovations to be sure, and then jack up rent.
And evict people by the way, with no problem at all, if they're unwilling or
unable to pay the insanely high rental prices or pay some of the needless
fees that are associated with corporate landlords like Blackstone.
Now, recently there was a report done on how Blackstone and
its real estate ventures have impacted San Diego specifically.
And the report was done by two organizations,
the Private Equity Stakeholder Project and the Alliance of Californians for
Community Empowerment.
And the report is damning, and it's not just about San Diego.
The report might just be about San Diego, but this is a practice by
Blackstone across the country and it could very likely be impacting you.
So the report highlights San Diego County where private equity firm Blackstone
purchased 5,600 naturally occurring affordable housing units in 2021.
And how as units become vacant, the company has raised rents
in some units between 43 to 64% in just two years.
Let that sink in, let that sink in.
Who can afford rent that increases that much?
Especially in the midst of a pandemic, at a time when the economy, yes, I know,
I've heard all the lies from the Biden administration they've created so many
jobs, yada yada ya, the economy is garbage for the vast majority of Americans.
Inflation has crushed them and to add insult to injury, you got Blackstone
group coming into communities buying up all this real estate and jacking up rent.
So, Blackstone is now the third largest landlord in San Diego.
At the Fashion Hills apartment complex,
the average rent as of September of 2021 was $1,641 a month.
Under California law, the maximum cap of 10% for
an annual rate hike would mean an increase to an average of $1,805.
Yet, Blackstone is listing one bedroom unit starting at $2,354 a month,
which by the way is 43% higher than the previous average.
And two bedrooms starting at $2,690 a month,
which is 64% higher than the previous average.
I don't know how and why they're able to get away with that,
considering California has some pretty strict laws, pertaining to,
tenants rights and tenants protections.
I mean, I just, I don't understand why Blackstone is able to do whatever it
wants whenever it wants with absolutely no consequences with complete impunity.
But the story gets worse, Blackstone in addition to jacking up
rents also charges ridiculous fees, unnecessary fees.
And it does impact communities, and
families who just can't afford the jacked up rent and the fees on top of it.
Here's the story impacting one family in Los Angeles, California.
>> Blackstone tenants also face predatory fees.
According to a recent lawsuit, an elderly Los Angeles woman who had fully paid her
rent was threatened with eviction because she had $40 in unpaid fees.
>> What a great country we live in, right?
Threatening to evict an elderly woman because of her inability to pay a $40 fee.
They don't care, they'll evict an elderly woman over
$40 even though we're talking about, I mean,
a company that manages over $900 billion in assets.
It's never enough, the greed is unbelievable.
And they don't hesitate to evict people.
For instance, Blackstone filed over 350 evictions in Florida between August and
November of 2022.
And there may be way more evictions coming up as
Blackstone may impose larger rate hikes or rent hikes.
So in December of 2022, for instance,
the head of America's real estate for Blackstone estimated that the private
equity firm can increase rents 20% higher than the company was charging.
Apparently, it's not enough, go higher,
charge 20% more than what you've already jacked up the rents to.
It's unbelievable, but except it's not unbelievable, it's absolutely believable.
And look, the one thing I want everyone to keep in mind is that while we
absolutely need to build more housing, what's to stop Blackstone or
some other private equity firm from jumping in and immediately snatching
up those new homes that are built in order to alleviate the housing crisis?
There needs to be a legislative effort to stop this from happening.
I mean, you're gonna have a lot more luck in my opinion if you try
to get legislation passed on a state level, so do it.
Organize in your state and try to get something done legislatively.
The Biden administration, this isn't even on his radar.
Congress isn't thinking about this,
besides which we can't even get Congress to pass common sense gun legislation after
children are slaughtered in mass shootings.
You think they're gonna do a damn thing about Blackstone Group and
private equity firms?
Now, Blackstone also lobbies to prevent policies that would protect and
create affordable housing.
So, Blackstone spent millions of dollars fighting against rent control in
California.
Blackstone in fact gave over seven million in 2018 and
more than seven million in 2020 to oppose statewide
ballot initiatives that would have limited rent increases.
The private equity firm specifically focuses on snatching up properties in
minority communities which shouldn't be surprising where tenants are more
vulnerable economically.
A review of almost 400 properties owned by Blackstone found that 240 of them were
in neighborhoods where people of color make up more than half of the residents,
including almost 100 properties where people of color account for
80% or more of the area's residents.
The average Blackstone owned property is in a neighborhood where
people of color make up 58% of residents.
And I should note, I said it once, I'm gonna say it again.
We're talking about a company, a private equity firm,
I should say, that manages $975 billion in assets.
And despite the economic fallout of the pandemic, Blackstone founder and
CEO Stephen Schwarzman, who by the way is a good friend of Joe Biden.
Received $1.3 billion in compensation in 2022,
a 15% increase from the 1.1 billion he received in 2021.
Schwarzman is also one of the wealthiest people in the world
with a net worth of $30 billion as of February 2023.
They're real quick to evict an elderly woman from her home over $40,
knowing full well that they're raking in the executive,
the head, the CEO is raking in.
I mean, you really need a billion dollars in your annual
salary on top of your already fabulous $30 billion wealth?
But make sure you evict that poor elderly woman from her home because of
her inability to pay a $40 fee.
We have no one actually protecting ordinary Americans and
that's the problem here.
When you have a capitalist system, which has one goal and
one goal only, maximize profits,
you need to have a robust government effort to protect consumers,
to protect workers, to protect the American people.
We have no watchdogs.
There is no cop on the beat.
And in the meantime, what was left of the American dream is
being gobbled up by private equity firms who just can't get enough money,
enough resources, who can't get richer.
They just, it's never enough for them.
This is how the system's working out, because we have no one looking out for us,
that's the reality of the situation.
And as I said, it's not just San Diego, this is happening all across the country.
Not a single piece of legislation proposed, at least that I know of,
to mitigate this.
It's just gonna keep happening.