We'll likely hear more about this

As faithful blog readers will know, the UC chief investments officer put $4.5 billion of pension and endowment monies in the Blackstone Real Estate Trust as a kind of bailout for the trust as it experienced a run on the bank. All of this was in search of a special UC extra-high rate of return in exchange for the bailout. 

It's unclear whether this return has actually been received; back in February we noted an article indicating that the extra return was a kind of IOU being carried by BREIT rather than an actual payout.* There have also been stories questioniing BREIT's valuation of its assets.**

This blog has focused primarily on the financial side of the story. At the Regents, there have been protests concerning the landlord-tenant side of BREIT investments. Now the LA Times has published an extensive review of public pension plan (including UC) investments in funds such as BREIT, largely from the landlord-tenant perspective: Do their investments raise rents in California?

The article is quite lengthy. You can find it at:

https://www.latimes.com/california/story/2024-08-01/to-help-the-middle-class-retire-public-pensions-are-driving-gentrification-critics-say. Excerpt:

"The data tracked by The Times covers rent for available units and thus show an increase in housing costs for people looking for a new place to live. Several tenants also told The Times their rent climbed faster once the pension-linked funds in The Times’ analysis took over."

Basically, the article describes a strategy of funds such as BREIT, using in part investments from public pension funds, of buying older buildings, doing some refurbishing which upscales them, and then raising rents. The funds respond that rents are rising because of low rates of new construction.

In any case, we may see renewed complaints at the Regents from tenants in response to the article.

===

*https://uclafacultyassociation.blogspot.com/2024/02/does-this-make-you-nervous.html.

**https://uclafacultyassociation.blogspot.com/2024/05/maybe-outlook-isnt-so-breit.html. Using the search option for "BREIT" on this blog will bring up other related stories.