Blackstone REIT’s latest adversary: tenants
Renters rallied in Los Angeles about roaches, rent, repairs and eviction fears
Blackstone’s real estate investment trust is under pressure on multiple fronts.
As it works through an investor scare triggered by withdrawal restrictions, Blackstone Real Estate Income Trust is now getting unwanted publicity at a San Diego apartment complex it owns, Insider reported. Tenants traveled to Los Angeles for a Tuesday rally at which they complained about cockroaches, maintenance problems and eviction fears.
The residents demanded that UC Investments — BREIT’s $4 billion savior — pull out of the fund if Blackstone does not meet their demands, which include capping rent increases and holding off on evictions for those behind on payments.
Blackstone took the unusual step of sending executives to the rally to defend BREIT. They included Blackstone’s head of real estate for the Americas, Nadeem Meghji, and Kathleen McCarthy, global co-head of Blackstone Real Estate.
A spokesperson said Blackstone has completed 20,000 work orders in the San Diego buildings it acquired and is implementing $100 million in improvements, adding that zero residents in those homes have been evicted for non-payment.
Fears of eviction seem valid, though, given Meghji’s comment in an internal company call days after BREIT closed the gates on redemptions last month, according to a transcript viewed by Insider.
“We’re also seeing a meaningful increase in economic occupancy as we move past what were voluntary eviction restrictions that had been in place for the last couple of years,” he said.
But he also said on the call that rents at BREIT’s properties were growing at a modest 5 percent, which is below the rate of inflation. He predicted rent growth in the high single digits across the $68 billion fund’s affordable housing portfolio, and that in its student housing portfolio, it was “signing leases today for the next academic year at 9 percent higher rents than this year.”
Meghji previously credited UC Investments with changing the narrative around BREIT, which appeared to be on its heels after Blackstone restricted investor withdrawals.
The rallying tenants might have been unaware that UC Investments’ commitment for common equity in BREIT is effectively locked in for six years.
— Holden Walter-Warner