While Blackstone was sitting on its high horse and withholding apartments from the market, it came out that they had actually received $200 million in interest free loans from the government, on the condition they used the funds to renovate StuyTown/Peter Cooper Village. Their temper tantrum potentially violated the terms of this loan, so the government decided it was going to investigate. Upon hearing that, Blackstone quietly reversed policy and is now renovating and putting these units back on the market.
There are a few takeaways from this:
Companies like Blackstone often get benefits (interest free loans, massive development opportunities) that individuals do not. But when they don’t get their way they act like children. And I’m glad that, in this case, the company was reprimanded the same way a child would be, rather than accommodated.
This reversal was not as publicized as the news they were withholding the apartments, which points to my argument this was largely a PR move. Come on, guys, spread the word!
I’m tired of the rhetoric that landlords can “never increase rents again” that is the base of their whole complaint. Rents go up in rent stabilized apartments, the same way they do in free market apartments. The difference is that they all go up by the same amount, which for 2019/2020 is 1.5%. Yes, that’s a small increase, but it’s in keeping with plenty of free market apartments. And I have a whole lot to say about this idea of “prices always increase every year” — it’s part of why sellers have been so unrealistic since the pricing peak of 2016.
Just going to leave this WSJ quote here: “Growing rents and a gradual conversion of more rent-regulated units to market rates has brought the net operating income of the property up each year since 2006. With about 45% of the complex’s residents still paying the regulated rents – down from 71% in 2006 – income is above $200 million a year”
And the last takeaway is that I clearly had an impact here (jk jk, trust I know that no one listens to me). No, the last takeaway is that these things do matter, and people are paying attention. Which is good, because it makes me feel like I’m not just screaming into the void.