Blackstone CEO Celebrates “Huge Increases in Rents” as Millions Face Eviction

Billionaire Blackstone CEO Steve Schwarzman bragged that his firm “was a huge winner coming out of the global financial crisis” in 2008. Today, he’s boasting about his firm’s big earnings off high rents, even as millions of tenants face eviction.

Blackstone CEO Stephen Schwarzman speaks at the Bloomberg Global Business Forum in 2017. (John Moore / Getty Images)

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.”

Blackstone’s Commercial Real Estate Empire

In recent years, Blackstone has been buying up warehouse space in a play to reap rents off the burgeoning e-commerce business, and the firm is now the world’s largest commercial landlord. That gives Blackstone enormous power to jack up rents and potentially bankrupt pandemic-battered small businesses.

A situation in Britain is a cautionary tale: Blackstone has become UK 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 could now benefit from congressional proposals to use government money to bail out the commercial real estate industry.

Prospects for Eviction Moratorium Legislation

In October, House Democrats passed legislation that would create a one-year eviction moratorium, which could limit the power of Blackstone and other Wall Street landlords to throw people out of their homes during the pandemic.

The bill, though, is being blocked by Senate Republicans, whose political machine has received $35 million from Schwarzman in the 2020 election cycle. Schwarzman donated another $15 million in late November, as the GOP group ramped up spending in the two January runoff races in Georgia that will decide which party controls the Senate.

Blackstone also has ties to Democrats who could block or limit any eviction moratorium legislation in 2021. Seven Blackstone executives, including chief operating officer Jon Gray, each donated $50,000 to a super PAC that backed president-elect Joe Biden. Gray raised money for Biden’s campaign and also donated $2 million to Senate Democrats’ super PAC.

During the presidential campaign, Biden told Gray during a teleconference fundraiser that while “corporate America has to change its ways, it’s not going to require legislation — I’m not proposing any.”

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David Sirota is editor-at-large at Jacobin. He edits the Daily Poster newsletter and previously served as a senior adviser and speechwriter on Bernie Sanders's 2020 presidential campaign.

Andrew Perez is a writer and researcher living in Maine.

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