Private Equity Stakeholder Project (PESP) and the Alliance of Californians for Community Empowerment (ACCE) have published an analysis of private equity giant Blackstone’s profit-seeking practices in California as residents suffer amidst one of the nation’s worst housing crises. “Helter Shelter: How Blackstone Contributes to and Profits from California’s Broken Housing System,” examines how Blackstone has profited from rent hikes and ramped up evictions, and even depends on the continuation of the affordable housing crisis for sustained profits. According to the report, Blackstone has touted to investors multiple times how the firm’s real estate investments benefit from declining new supply of housing, a key driver of the affordable housing crisis.
In 2021, Blackstone acquired 5,800 rental units in the San Diego area. Since then, the report shows, Blackstone has increased the rent at these properties 38% — almost double the 20% average rent increase for all apartments in the San Diego market during this period. The increase at some Blackstone-owned buildings has been especially high – up to 79%.
The report also outlines how Blackstone used over $14 million of investor capital – including from California public employee pension funds and the University of California – to lobby against regulation to limit rent increases in California.
Notably, the report analyzes evidence pointing to Blackstone’s use of RealPage’s YieldStar, a controversial real estate software that allegedly enables landlords to inflate rents in a cartel-like manner. RealPage has been the target of multiple lawsuits and a criminal investigation by the Department of Justice. According to the report, ads for revenue management positions with Blackstone require experience with the software, and the Vice-President of Revenue Management at Blackstone’s multi-family properties has been featured as a RealPage expert on at least three RealPage webcasts about revenue management. Additionally, FPI Management, which Blackstone contracts with to manage its San Diego properties, is a named defendant in several of the lawsuits involving YieldStar.
In June, Blackstone expanded its housing footprint with the finalization of its acquisition of AIR Communities, adding nearly 30,000 units to its portfolio. The AIR Communities inventory includes 6,000 units in Southern California.