Blackstone Real Estate Fund, Where Pensions Are Largest Investors, Comes Under Fire From Housing Rights Activists

Protesters in several cities around the world this week rallied against the Blackstone Group and one of its funds that invests heavily in foreclosed homes and other distressed real estate assets.

Tenants rights groups contend that Blackstone charges above-median rent, forces out low-income tenants and neglects their properties.

The fund in question is the Blackstone Real Estate Partners VII; and pension funds are getting caught in the crossfire because dozens of pensions have collectively invested billions in the fund.

Details from Al-Jazeera:

Protesters in Spain as well as U.S. cities such as New York and Atlanta demanded on Wednesday that the firm stop its purchases of foreclosed houses and troubled mortgage loans, which they believe put homeowners and tenants in both countries at risk. Of particular concern are Blackstone’s purchases of tens of thousands of single-family homes, which it now rents out at prices out of reach for low-income tenants, said demonstrators.

[…]

Blackstone names public pensions as the largest category of investor in the fund, Blackstone Real Estate Partners VII, and data from pensions’ annual reports and the investment research database Prequin show that more than 30 state and local pensions have committed at least $3.2 billion to the fund. Those include the California State Teachers Retirement System (CalSTRS) and the Florida State Board of Administration, which made commitments of $100 million and $300 million, respectively. Three New York City pension funds made a collective commitment of $300 million.

Additional investors in the fund include university endowments and private pension funds, including the Walt Disney Co. retirement plan.

Blackstone’s rental practices have drawn fire from tenant advocates in Atlanta, San Francisco and several other areas where its home purchases are concentrated. In a series of reports, housing groups such as Occupy Our Homes Atlanta have contended that Invitation Homes is a Wall Street slumlord that charges rents well above area medians, fails to return tenant phone calls and neglects its properties, forcing renters to pay for repairs themselves. In some cases, Invitation Homes has done this through leases that appear to violate local rental ordinances, including agreements for some Chicago residents that require them to rent properties as is — a measure that local housing attorneys say shifts risk and expense to the tenant, in contravention of the city’s residential landlord tenant ordinance.

Blackstone is the largest owner of single-family homes in the United States.

Photo by  thinkpanama via Flickr CC License