New York Times publishes excellent letter and article on predatory equity

The New York Times published a great letter today from one of it's readers who calls out CalPERS and CalSTRS for their investments in a predatory equity scheme in New York in which profits were premised on the displacement of middle-income tenants.

One outrageous aspect of the “failed” deal for Stuyvesant Town and Peter Cooper Village, where the buyers have turned the keys over to the lenders, was that pension funds for teachers and public employees in California — California State Teachers’ Retirement System and Calpers — squandered hundreds of millions of dollars on an investment predicated on pushing middle-class tenants like New York City teachers and public employees out of their apartments and shrinking the supply of affordable housing for those constituencies and other middle-income New Yorkers.
-- Ellen Freilich

This follows an outstanding piece by Gretchen Morgenson from Saturday's edition of the Times about a rash of predatory equity schemes in New York City titled "All Those Little Stuyvesant Towns."

Morgenson reports that New York Attorney General Andrew Cuomo is preparing to sue private equity firm, Vantage Properties, for it's practices as a predatory landlord. In a letter warning Vanguard of impending litigation the AG's office contends that Vanguard:

engaged in a “systemic pattern of harassment” to generate significant tenant turnover. Increasing turnover was central to Vantage’s business strategy, the attorney general’s office said, so that it could charge much higher rents after renovating the newly vacant apartments.

Replace "Vantage" with "Page Mill" and you'll get an almost perfect description of what Page Mill Properties, backed by a $100 million CalPERS investment, attempted to do in East Palo Alto:

“Vantage’s ability to satisfy its projected profits largely depends on its ability to evict rent-regulated tenants and raise rents to market levels,” wrote Alphonso B. David, chief of the Civil Rights Bureau in the attorney general’s office, in a letter to the company last week. Vantage tried to force out long-term tenants “by serving baseless legal notices and commencing frivolous housing court eviction proceedings,” he wrote.

The article is definitely recommended reading. Attorney generals in states where predatory equity schemes have been perpetrated may find it particularly interesting.