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Blackstone, one of the world’s largest investment managers, has bought 678 rent-controlled apartment buildings around the U.S. from insurance giant AIG for $5.1 billion, the Financial Times reported.
The apartments are covered by the federal Low Income Housing Tax Credit program, which gives developers tax breaks if they limit rents to no more than 20 percent of an area’s median income.
Blackstone will comply with all relevant regulations while making “significant” investments to maintain and improve the properties, a company spokesperson said, adding that “we look forward to being long-term owners,” in comments quoted by the FT.
The regulations covering rent rates last for a few decades, after which owners can charge market rates.
The sale is part of a $7.3-billion deal by which Blackstone will own 9.9 percent of AIG’s retirement savings and life insurance businesses and manage tens of billions of dollars’ worth of AIG’s assets.
The new purchase follows Blackstone’s $6-billion June purchase of Home Partners of America, which buys suburban single-family houses and rents them to aspiring homeowners unable to qualify for a mortgage.
TRENDPOST: The new purchase broadens Blackstone’s already considerable presence in the U.S. housing market, both directly and through its Invitation Homes subsidiary. (See “Invitation Homes to Buy $1 Billion Worth of Houses This Year,” Trends Journal, 1 June 2021.)
With Blackstone, Cerebus Capital Management, and other private equity firms snapping up houses—sometimes buying them out from under individual families who have made offers—home prices will not only remain elevated for the indefinite future, but also fewer families will realize the dream of home ownership.
Instead of fulfilling their American dream, more families will remain tenants of private equity masters and other Bigs who leverage their ever-growing wealth to gather more money for themselves at the expense of ordinary people and families.