“Predatory Equity” is a particularly nasty form of real estate speculation. Backed by huge institutional investors, real estate speculators purchase rent-regulated properties at prices that cannot be justified by the current income flow from rents at the buildings. These speculators promise their investors high rates of return that can only be achieved, if at all, by aggressively raising rents and driving out existing rent-controlled tenants. After acquiring the property, they implement a broad range of tactics to drive out tenants, including harassment, exorbitant rent increases and/or evictions. Predatory equity schemes are forcing thousands of low-income Californians out of their homes.
East Palo Alto and CalPERS
Tenants Together is working to expose and confront predatory equity schemes in California. We worked with tenants in the city of East Palo Alto standing up to Page Mill Properties. In 2006, Page Mill bought up more than half of the city's rent controlled housing and then began aggressively raising rents and circumventing East Palo Alto’s rent control ordinance.
Page Mill's predatory equity scheme in EPA was partially financed by a $100 million investment from CalPERS, California's public employee pension fund. Tenants Together doesn't not believe that the pension dollars of working people should be invested in schemes designed to displace working people from their homes.
We have worked with tenants, advocates, labor groups, and city officials to push CalPERS to take responsibility for this predatory equity investment, to take action to mitigate the impact of this investment in EPA, and to adopt predatory-free real estate investment policies that will prevent the fund from ever again investing in schemes designed to displace tenants.
Tenants Together worked with the EPA City Council and SEIU Local 521 to pass resolutions calling on CalPERS to intervene with Page Mill on behalf of East Palo Alto tenants.
CalPERS also invested $500 million in a predatory equity scheme in New York City (Stuyvesant Town and Peter Cooper Village) that collapsed in early 2010.