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Blackstone is the largest alternative asset manager in the world, with over $1 trillion in assets under management. The recent “Helter Shelter: How Blackstone Contributes to and Profits from California’s Broken Housing System” report from industry watchdog, Private Equity Stakeholder Project and the Alliance of Californians for Community Empowerment highlighted Blackstone’s residential real estate buying spree in regions facing acute housing shortages like in the communities of San Diego, California, to profit from the affordable housing crisis. The largest corporate landlord in the US has expanded its real estate empire aggressively since 2021 to own 350,000 rental units while allegedly fighting rent control measures and significantly hiking rents to maximise profits.
The report highlighted several links between Blackstone and RealPage. It stated that there is ample evidence of the private equity giant leveraging RealPage’s YieldStar real estate software, which is under investigation by the US Department of Justice for allowing landlords and property managers to collude in fixing higher-than-expected rents that affected millions of renters.
Blackstone Hiked Its Property Rents By 38% In San Diego Vs. Market Average Of 20%
In 2021, Blackstone reportedly bought 66 rental properties comprising 5,800 units in San Diego for over $1 billion. The watchdog report highlighted that since then, it hiked rents across these properties by an average of 38% to $2,339 monthly from $1,696, with some building rents increasing by over 70%. San Diego’s rent across all apartments jumped by 20% in the same period. However, Blackstone stated last month that the “average rents at these San Diego communities are 20% below the San Diego market average” and that “we have invested approximately $100 million to improve living conditions for thousands of San Diego residents who live in our communities.”
Blackstone Halts Moratorium On Evictions For Non-Payments
The Helter Shelter report noted that Blackstone, in 2022, ended its moratorium on evictions for non-payment on rental units nationwide, introduced due to the pandemic. Soon after, the company filed to evict several hundred tenants and reportedly has plans to “potentially evict tenants with outstanding rent balances” in San Diego. The report alleges that Blackstone might be incentivised to evict current San Diego tenants since its properties are considered “naturally occurring affordable housing” as government programs do not subsidise them, making them susceptible to substantial rent hikes during ownership changes. Although rent hikes in California are limited to 10% annually for nearly all residential tenants, it doesn’t cap new tenant’s rent prices. Hence, evictions could mean a potential windfall for the property owners.
The report raised the overall issue of Blackstone frequently conveying to investors about its profits from the affordable housing crisis and the new construction slump. For instance, the company told stockholders in a letter last year that a “structural shortage of housing has resulted in pricing power for rental housing assets.” Given Blackstone’s impact on countless US tenants, the report recommends the asset management company limit rents across all properties by 3% annually, offer relocation assistance to those who can’t afford the rent hikes, and refrain from resisting rent control measures. Furthermore, Blackstone should also help tenants who are behind on rent with flexible payment plans and financial assistance initiatives.
