From Jacobin
The world’s largest private equity firm has bankrolled campaigns against rent control and been accused by the United Nations of fueling a global housing crisis. Now, as millions are threatened with eviction during the pandemic, Blackstone’s top executive is openly bragging that the firm is making huge profits off of rent increases.
At the Goldman Sachs Financial Services Conference on December 9, 2020, Blackstone’s billionaire CEO, Stephen Schwarzman, boasted that after the 2008 financial crisis, his firm was able to cash in on the mortgage crisis. At the time, the company was able to buy up foreclosed homes and convert them into rental properties subsequently plagued by accusations of dilapidation and excessive fees — all while it received a big financial boost from the government.
Schwarzman, a top Republican donor and close ally of Donald Trump, indicated his firm is positioning itself for a similar jackpot.
“You always have winners and losers — Blackstone was a huge winner coming out of the global financial crisis, and I think something similar is going to happen,” he said.
He then discussed how his firm is generating big revenues today.
“About half of the firm’s earnings are from a real estate business. Just to give you some idea how this breaks, we pick the good neighborhoods, if you will. Real estate has a lot of different sub-asset classes. And we’ve concentrated in logistics. It’s about 36 percent of all the real estate we own,” he said. “We’re the largest owner of real estate in the private world. And that asset class has boomed with huge increases in rents, almost no occupancies, rent collections from almost everyone.”
Blackstone recently made billions selling off its single-family residential rental business — but in the last year, the company has been buying new stakes in residential rental properties. In 2018 and 2020, it gave millions to political groups that successfully fought to defeat rent control ballot initiatives in California, where Blackstone has significant real estate investments.
Blackstone has also been evicting residents during the pandemic, according to court filings compiled by the Private Equity Stakeholder Project. And Blackstone has faced a legal showdown with New York tenants at one of the city’s largest rental complexes, which it owns. There, the company has been trying to exempt thousands of units from rent regulation laws. The company has reportedly even kept Manhattan units empty rather than face rent control regulations.
For its part, Blackstone told us that the firm is not evicting people, and that the only evictions have been “matters of public nuisance and/or risk to public health or public safety.”
During the Goldman Sachs conference, Schwarzman seemed to insinuate that his firm may buy up even more residential real estate to try to squeeze even more revenue out of renters in the pandemic-ravaged economy.
“In the suburbs, for example, suburban residential has turned out to be quite a good place to be,” he said. “When the cities get cheap enough, then you go back to doing that. So, there’s a lot of interesting things, and every part of the firm is really operating full out, which, if you would have asked me in April whether anything like this would have been possible, you’d have to say no.”