On December 16, 2021, tenants from the Veritas Tenants Association (VTA) held a hybrid meeting in San Francisco to discuss their landlord’s response to their four-month-long debt strike. Fifty households had withheld their applications to California’s rent-relief program, using their combined rent debt as collateral, to force Veritas Investments to negotiate a debt-relief deal for tenants who had experienced financial hardship as a result of the pandemic. If the tenants didn’t apply for rent relief, Veritas would receive nothing from the state.
Many tenants had lost their job due to COVID-19, and many had borrowed money from family and friends, maxed out their credit cards, or taken out payday loans to continue paying rent — accruing a form of debt known as “shadow debt” not addressed by California’s rent-relief program. Yet in spite of the global public health crisis and the related unemployment crisis, as well as the fact that the state’s program provided only partial relief, Veritas refused to negotiate with tenants. So seeing that their corporate landlord, a $4.5 billion company, was receiving public funds — first through the Paycheck Protection Program, a program intended for small businesses and then through California’s rent-relief program — tenants grew infuriated and resolved to leverage their debt to bring Veritas to the bargaining table. Their debt strike began in September 2021, right before the statewide eviction moratorium was set to expire.
By December, Veritas had partially caved, offering to waive the scheduled annual rent increase for 2022 and forgive any residual debt held by tenants who applied for government relief by January 31, 2022 — yet still ignoring the issue of shadow debt. Having already won significant concessions, the striking tenants needed to decide how to proceed. While some of the strikers had accrued significant shadow debt, others would have their entire debt forgiven by that Veritas offer. Brad Hirn, an organizer with the Housing Rights Committee of San Francisco who assisted the tenants, said, “Part of what made that meeting so challenging was that people had to really listen and see other members who were dealing with something that the concessions on the table were not going to do anything about.”
Maria Toriche, a VTA member who lost her job in the beginning of the pandemic and was risking eviction to participate in the strike, was determined to carry on:
I knew a lot of tenants had lost work, and I was learning more about how big of a company Veritas is and seeing that they have the money to forgive debt and make concessions from their own wealth, and not just rely on public money through the rent-relief program.
At that December meeting, in a show of solidarity, the VTA tenants voted unanimously to continue their debt strike.
The Veritas Tenants Association, which represents 1,200 tenants from over one hundred buildings across California, has been organizing since 2017, supported by the Housing Rights Committee of San Francisco. Their corporate landlord, Veritas Investments, considered San Francisco’s largest landlord, is a real estate investment firm that owns and operates over three hundred properties — more than seven thousand units — in the Bay Area and Los Angeles. Founded in 2007, Veritas specializes in acquiring smaller rent-stabilized properties and maximizing profitability by “optimizing” management, increasing fines and fees, and utilizing cash-for-keys offers, tenant harassment, and legislative loopholes to hike up rents, push out original tenants, and convert their units to market rate. California’s 1995 Costa-Hawkins Rental Housing Act provides landlords with an exemption from rent-stabilization ordinances, allowing them to reset the rent when a tenant vacates their unit, effectively incentivizing the displacement of long-term tenants.
Founder and CEO Yat-Pang Au has publicly explained that Veritas’s target demographic in the Bay Area is millennial “techie” transplants — not the tenants actually living in the buildings his company purchases, most of whom are working-class people paying significantly below market rate thanks to rent-stabilization regulation. In 2013, reports 48 Hills, Veritas filings showed that it had “achieved an annual turnover of 30.7 percent of total units,” meaning that over an eighteen-month period, 30 percent of tenants had vacated their homes. Describing the displacement of nearly a third of all their tenants as an “achievement” speaks volumes to the kind of landlord Veritas is.
Veritas’s growing dominance in the Bay Area housing market reflects a larger trend of financial actors and practices becoming increasingly embedded within rental housing markets, particularly since the 2008 recession. The post-2008 era has seen the increasing consolidation of rental housing into corporate hands — not just through well-known conglomerates like Blackstone Group and American Homes 4 Rent but also through smaller investment firms backed by private equity, including investment banks, hedge funds, college endowments, insurance companies, and pension funds. The foreclosure crisis entrenched global finance’s colonization of residential real estate, focused initially on single-family homes but expanding eventually into multifamily rentals.
This process has been aided by the development of “PropTech”: digital products and platforms that automate real-estate transactions and management and use algorithms to determine the profitability of specific investments. “iBuyers,” for instance, are companies that use an “automated valuation model” to appraise a home, make an offer instantly, and resell it at a markup after carrying out light repairs. Real estate platforms like Roofstock, meanwhile, facilitate the selling and buying of occupied investment rental properties, using a “neighborhood rating algorithm” to calculate risks. Further, companies like TenantCloud and Avail optimize the management of rental properties through online portals that automate tenant screening, property listing, maintenance requests, and rent collection. As Big Tech and real estate prices skyrocketed during COVID-19 and many struggling smaller landlords sold their properties to institutional investors, private equity’s monopolies in housing markets only grew.
According to a recent report by Desiree Fields and Manon Vergerio, the four largest single-family rental operators alone now own more than 200,000 units nationwide, and the sector has seen more than $50 billion in investor and capital transactions since the start of the pandemic. A ProPublica investigation showed that private equity firms accounted for 85 percent of Freddie Mac’s twenty largest apartment complex deals, all of them since 2013. As of 2022, the largest apartment owner in the United States, Starwood Capital Group, single-handedly holds over 115,000 units — up from 89,000 in 2021 — while the ten largest apartment owners own more than 800,000 units combined. The vast majority of these apartment owners are real estate investment trusts (REITs) whose combined financial assets increased from $65 billion in 2000 to $812 billion in 2018. This data speaks to the growing influence of private equity in the housing sector and the exorbitant value that has been generated by this “novel asset class.”
Creating Corporate Landlords
While the US housing market has always been exploitative, favoring landlords’ property rights over tenants’ protections, the financialization of housing over recent decades has tethered global capital to local households in unprecedented ways, exacerbating inequalities within capitalist housing systems. These processes have been fueled by decades of interventions at various scales that include the systematic dismantling of rental protections, the privatization of public housing, the deregulation of financial markets and mortgage securitization, the lowering of interest rates after the 2008 recession, and the creation of financial products like Limited Liability Corporations (LLCs) and REITs. These interventions fundamentally altered the political economy of housing, turning homes — a basic human need — into financial assets on speculative markets.
The transformation of housing is closely associated with the global rise of finance capitalism. Finance capital has exerted an extraordinary influence on the global economy since the crisis-generated restructuring of capital accumulation that resulted from declining Western hegemony in the 1970s. As other markets became saturated, housing was increasingly integrated into global financial markets as a tradable commodity, providing what David Harvey calls a “spatial fix,” describing “capitalism’s insatiable drive to resolve its inherent crisis tendencies by geographical expansion and geographical restructuring.” First, the mortgage market was financialized through the rise of securitization and expansion of secondary mortgage markets, culminating in the 2008 subprime-mortgage crisis. Then, in the wake of the resulting collapse, private equity firms exploited the depressed home values, restrictive mortgage conditions, and growing rental demand to buy up foreclosed properties and convert them to rental housing — a process that was incentivized by the US government.
Financialization has occurred with varying intensity across different regions, depending on local legislative contexts, tenant protections, and market conditions. In the United States, the Sun Belt was the primary target after 2008. Private equity firms and other investors, for instance, bought close to 90 percent of the 7,500 homes sold between January 2011 and June 2012 in one Atlanta zip code and own at least 20 percent of single-family rentals in several parts of the Atlanta metro area. Meanwhile, 43 percent of all rental units in Los Angeles are owned by corporate vehicles. Prior to 2008, financial actors were primarily holders and traders of mortgage bundles. Since, they have become corporate landlords that are even more intimately associated with people’s everyday lives.
The term “corporate landlord” covers an array of disparate institutional frameworks and sizes — from LLCs and Limited Liability Partnerships (LLPs) to REITs and corporations owning a few dozen or several thousand rental units in one or multiple markets. One owner may also use several LLCs or LLPs to manage their holdings, further obfuscating ownership structures and decreasing the transparency of rental markets writ large.
While the institutional frameworks and property types differ and the mechanisms and strategies of speculation depend on local contexts — ranging from creating scarcity through vacancy in London and targeting areas with weak renters’ protections like Ontario to affecting the entire rental market through sheer scale of ownership in Berlin — corporate landlord practices follow a similar pattern. In addition to displacing long-term tenants through evictions, cash-for-keys offers, tenant harassment, or rent increases — for instance through minor upgrades or “passthroughs” that transfer repair costs onto renters, which are legal in some states, like California — corporate landlords will try to squeeze profits through economies of scale, maintenance delays or neglect, automation and digitalization through PropTech products, and increased fines and fees for things like parking, utilities, late rent payments, or pets. The resulting profits are then passed on to shareholders.
Corporate landlords typically view their property holdings as long-term income-generating assets that provide continuous profits to their investors, like a stock portfolio. Investors can buy a share of the income generated by the properties held by a publicly traded REIT, for instance, and the REIT is required to distribute 90 percent of its earnings — rental income — in dividends to shareholders. The endemic growth imperative incentivizes corporate landlords to constantly increase revenue from rental properties, and the value extracted from tenants directly serves shareholders. This circumstance speaks to a fundamental change in the tenant-landlord relationship; the corporate landlord’s client is not the tenant but the shareholder.
Taken together, these changes to the rental housing sector have had extraordinary consequences for tenants, as displacement is integrated into business models (a recent study showed that, over a fifteen-year period in Boston, large landlords evicted tenants of single-family homes at two-to-three times the rate of smaller landlords) and the increasing consolidation of rental housing exacerbates the ongoing affordability crisis, ultimately worsening the nation’s ever-growing homelessness crisis.
When housing transitions from its primary use value of home to a financial asset on the speculative market, it inevitably leads to conflict. Financialization is a process of accumulation by dispossession that subjects tenants to extractive, predatory economic practices, and tenants can appear to be vulnerable and helpless, the inevitable victims of that process.
Yet groups like the VTA are increasingly mobilizing against their corporate landlords. Recognizing the potential of building collective power across Veritas-owned buildings, VTA tenants were able to leverage their debt as power and use Veritas’s emerging housing monopoly against them. Lenea Maibaum, a VTA member and organizer with the Housing Rights Committee, explained:
I’ve always said that the more buildings Veritas buys, the smaller they actually become, because the more tenants will choose to fight for their housing rights. Yes, they own three hundred buildings, but imagine the power of the bodies in those buildings.
The Potential of Multibuilding Campaigns
In January 2022, the VTA ended its debt strike, winning historic concessions from Veritas. In addition to waiving the scheduled rent increases for 2022 and canceling residual debt not covered by the state for all tenants, Veritas committed to addressing the issue of “shadow debt.” But VTA tenants also harnessed their experiences to secure tenants’ rights at the legislative level.
The VTA, along with the Housing Rights Committee, helped formulate an unprecedented right-to-organize ordinance for the city of San Francisco that went into effect on April 11, 2022. The ordinance bars landlords from retaliating against organizing tenants and obligates them to bargain with tenants’ associations in good faith. If the landlord doesn’t comply, tenants are entitled to rent reductions. Brad Hirn said:
The attempted negotiating in 2020 and 2021 and then the strike, everything Veritas was doing and not doing, served as material for how the legislation should be crafted. And the VTA really showed the [Board of] Supervisors what kind of language was needed.
Contrary to how Veritas stonewalled its tenants for years, only responding when a debt strike threatened its ability to generate profits for shareholders, it is now legally required to negotiate with tenants’ associations as a direct result of the collective power built by the VTA through a multibuilding campaign.
These historic victories demonstrated for VTA tenants the power they hold as renters, particularly in the corporate landlord structure. Maria Toriche explained how the strike illustrated that
when tenants pay their rent, or in the case of the strike, fill out these applications, and the money goes to Veritas, tenants lose leverage. But when tenants withhold rent, or those applications, then it becomes leverage. And that is really important to a company like Veritas, because its investors were expecting that money.
While rent strikes have always been a powerful tool of tenant movements, the corporate landlord structure amplifies their potential. Because corporate landlords like REITs take on significant debt to expand their portfolios, often securitizing rental streams to facilitate that expansion, and rely on rental income to pay shareholders and bondholders, tenants can fundamentally imperil the business model by withholding that revenue — a form of leverage that is multiplied by the size of the mobilizable tenant body. And if tenants are able to identify investors linked to specific properties and “you strike right,” as Hirn explained:
then the investors could potentially pull out, and then Veritas is forced to sell the buildings. That’s when the tenants’ association can intervene and say, these need to be taken off the private market, or make a different set of demands around affordability and things like that.
The VTA has provided a blueprint for how tenants can build collective power across buildings and use that power to make demands of corporate landlords, to force legislative change, and potentially to decommodify their homes.
Targeting Vulnerabilities in the Corporate Landlord Structure
Another group carrying out a multibuilding campaign is the K3 Tenant Council in Los Angeles. Over the last couple of years, their corporate landlord, K3 Holdings, has bought up more than forty properties across LA, focusing on rent-stabilized buildings in rapidly gentrifying areas like Highland Park and Koreatown and utilizing cash-for keys offers, harassment, and intimidation — even threatening to call Immigration and Customs Enforcement (ICE) on undocumented tenants — along with the legislative loophole provided by Costa-Hawkins to displace long-term tenants and convert their units to market rate. Between October 2019 and January 2021, K3 Holdings — owned by millionaire heirs Nathan and Michael Kadisha — paid tenants more than $4.3 million in move-out incentives.
In response, the K3 Tenant Council has organized twenty K3-owned buildings, with support from the Los Angeles Tenants Union, beginning in late 2020. Having mapped out their landlord’s predatory practices, the tenant council has been able to mobilize new K3 tenants, inform them of their right to stay put before K3’s tactics clear out the buildings, and help tenants coordinate code violation complaints to the cit, while creating greater public awareness of the issues associated with rental housing consolidation and corporate landlord practices, for instance through a recent protest at K3’s headquarters in Beverly Hills. Sixteen tenants have also filed a lawsuit against K3 Holdings for violating the Fair Housing Act by systematically targeting Latino tenants for displacement.
Since K3 Holdings depend upon these exploitative practices to turn a profit, the tenants’ council is putting a cog in the wheel of their corporate landlord while building a powerful tenant movement one K3 building at a time. As one K3 tenant, Andrew Elrod, explained: “Keeping people in their units is not only good because it keeps people in their units — it also disrupts their business.”
The types of multibuilding campaigns carried out by the VTA and the K3 Tenant Council expose vulnerabilities in the corporate landlord structure exploitable by tenants’ associations, as well as the legislative loopholes and hypercommodified conditions that allow for this type of accumulation by dispossession. Clearly, as the VTA demonstrated with the right-to-organize ordinance, the severity and scale of housing financialization requires additional legislative action.
Scholars like Fields and Vergerio recommend limiting corporate-landlord ownership in local markets, ensuring greater transparency of ownership and practices, and passing universal, broad-based renters’ protections. These measures would significantly regulate corporate power in the housing sector and should be implemented in tandem with a massive expansion of public housing stock and universal rent control to address the ongoing affordability, displacement, and homelessness crises affecting not just US cities but cities across the world.
With private equity expanding its market share during the pandemic and eviction moratoriums and renters’ protections expiring, the need for action has only grown more urgent. VTA tenant Maria Toriche argues, “As much as the owners of the apartments need our money to continue growing, we need a place to live.”