Unions representing 110,000 workers at 10 University of California campuses have demanded the system divest $4 billion in holdings from Blackstone’s real estate investment trust.
The demand comes based on the idea that the school’s link to the New York-based private equity firm would worsen a housing shortage for students and employees, Bloomberg reported.
The call for divestment follows a deal this month by the UC investment office to inject $4 billion into Blackstone Real Estate Income Trust.
Union leaders posted their demand in a letter to Jagdeep Bachher, chief investment officer for the university system’s $152 billion pension and endowment funds.
“The University of California’s current housing investment strategy combined with the bolstering of Blackstone’s BREIT will only further deepen a hostile housing market for millions across California,” the unions’ letter said.
Blackstone didn’t immediately respond to a request for comment by the news agency.
The $4 billion investment announced Jan. 3 came as the Blackstone Real Estate Income Trust faced heightened pressure from investors pulling cash, according to the news agency.
The UC deal gives the $68 billion BREIT a longer-term source of capital.
In exchange, the investment agreement ensures the University of California gets a minimum annualized net return of 11.25 percent over the six-year holding period.
BREIT, designed for wealthy individual investors, has struggled in recent months and has been forced to limit withdrawals, raising concerns about Blackstone’s growing reliance on rich people who are proving more fickle in volatile markets than the firm’s traditional institutional investor base, according to Bloomberg.
The redemption restrictions across the industry have prompted queries from the Securities and Exchange Commission.
The University of California operates 10 campuses in Berkeley, Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara and Santa Cruz.
In April, Blackstone funds paid $12.8 billion for student-housing landlord American Campus Communities, which owns 150 properties with 112,000 beds next to college campuses. Bloomberg didn’t name which unions demanded the UC divestment from BREIT.
A representative for the University of California confirmed it has received the letter and was reviewing it.
The spokesperson also reiterated earlier comments by Bachher that the investment “is an opportunity that comes only through strong, trusted partnership” and provides the university system with a well-diversified real estate portfolio.
— Dana Bartholomew
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