Although on this blog, we have focused on the risk/reward issue surrounding UC's sudden $4.5 billion pension and endowment investment in the Blackstone Real Estate Investment Trust (BREIT), much of the bad PR that has resulted has centered on landlord-tenant issues. (If you are unfamiliar with the issue, put "BREIT" in the search option on this blog.) The bad PR shows no signs of going away. From CalMatters: [Excerpt from lengthy article.]
Gladys Balcazar says she can barely afford food after paying rent to her new landlord, Blackstone Inc, one of the world’s largest private equity firms. Balcazar, a 60-year-old janitor, lives with her 27-year-old son in a two-bedroom apartment in Imperial Beach. She supports her son, who has a disability, on a salary of $2,800 a month.
Blackstone bought her building and 65 others in San Diego County in 2021, becoming one of the region’s biggest landlords and alarming lawmakers, affordable housing advocates and Balcazar. In March Balcazar’s monthly rent rose $200 to $2,000. “All of this has really depressed me because I don’t see a way out,” she said in Spanish. “I only earn enough to pay the rent, and after that there is nothing left.” Adding to her stress were large swaths of dark mold outside her building, on walls and window ledges, climbing to a roofline. A building manager said she would be responsible for mold remediation in her unit if she moves out, Balcazar said. “They said we’re responsible because we’re not ventilating the unit,” she said.
When asked by CalMatters, Blackstone said in a written statement that Balcazar would not be responsible for mold remediation. “This is not something that would be required of our residents in any scenario,” the statement reads. “In the event where any issues like this are raised to management, the team addresses the situation as quickly as possible.”
Balcazar isn’t the only tenant getting the squeeze from Blackstone, advocates say. Two years ago, Blackstone bought a portfolio of 66 relatively low-rent apartment buildings in San Diego County from a well-known charitable foundation for $1.48 billion. This year, tenants of those 5,800 dwellings say they’re worried about rent increases, maintenance issues and potential evictions. And advocates and tenant groups have mounted an organized campaign, warning that thousands of previously affordable homes are becoming less affordable as Blackstone’s influence grows. Residents have protested a $4.5 billion investment in Blackstone by the University of California. They staged a public town hall with San Diego’s city council president, and they lobbied state lawmakers to increase renter protections.
Some lawmakers share their concerns. Senate President Pro Tem Toni Atkins, a Democrat from San Diego, said so many affordable units under one corporation’s control is cause for “major concern,” especially if the company is raising rents. “Unlike many of our mom-and-pop property owners, who themselves may be trying to stay afloat in today’s economy, Blackstone is a huge company, and should not be building its portfolio on the backs of working Californians,” Atkins said...
Jagdeep Singh Bachher, head of UC Investments, told the Board of Regents the decision to invest in a fund with an annual rate of return of 11% was a “capitalistic” one in the best interest of UC pensioners. “The job of this team, day in and day out, is to pick assets that are going to be accretive to future generations and future retirees,” Bachher said. “And to do that … I have to make some capitalistic decisions.” ...
Full story at https://calmatters.org/california-divide/2023/05/california-renters-fear/.
As we have pointed out in past postings, it is not clear how "capitalistic" the decision to invest was. BREIT was experiencing a run on the bank. Thus, its "guarantee" of a super-normal return for UC in exchange for a bailout raises questions of both the risk/return tradeoff and the legal risk. As we have pointed out, the Regents are the trustees of the pension and endowment funds. But only one seemed to raise this issue.*
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*http://uclafacultyassociation.blogspot.com/2023/03/hernandez-approaches-right-question-on.html.
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