Tuesday, December 15, 2020

World's Biggest Landlord Anticipates Boom

 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.  The firm is also now the world’s largest commercial landlord

Schwarzman indicated his firm is positioning itself for a similar jackpot from the pandemic economic pain. 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.

“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

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.

“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.”

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.

In Britain, Blackstone has become UK's small businesses’ largest landlord — and the company has been accused of jeopardizing the viability of those businesses by refusing to waive rent when they were forced to shut down during the pandemic.

Blackstone CEO Celebrates “Huge Increases in Rents” as Millions Face Eviction (jacobinmag.com)

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