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Property owners looking at a home for rent in California. Photo: Jane Tyska/The Mercury News via Getty Images

I came today to bury The Blackstone Group. But after learning a bit more, I'll just throw a shovel at it.

The quick version: Blackstone is helping to defeat a proposition to increase rent control in California, while simultaneously raising money from the state's public pensioners.

There have been numerous reports this week about how investment giant the Blackstone Group is helping to bankroll opposition to Proposition 10 in California, which would allow cities to expand rent control. More specifically, Blackstone has been doing so via real estate investment funds whose limited partners include California public pension funds — i.e., groups that represent some of the very people who could benefit from expanded rent control.

  • At first glance, it appears that Blackstone is calling capital that is then funneled to political groups. And that's indeed what some media outlets have suggested.
  • But a deeper reading of the disclosure documents shows that it's Blackstone portfolio companies footing the bill, with the Blackstone funds listed first on disclosure documents only because they are the portfolio companies' ultimate owner (admittedly, the docs are needlessly confusing).

One could certainly argue that this is a distinction without more than a legal difference, but Blackstone portfolio companies do have a fiduciary duty to... well, themselves. And any limited partner in a generic real estate investment fund should expect that portfolio companies will take actions to maintain/increase the value of its properties (whether directed by the PE owner or not).

It's also worth noting that a Blackstone spokesman emailed:

"We agree steps should be taken to address housing affordability in California, but virtually all independent economists agree this measure exacerbates California's existing shortage by discouraging new construction and reducing new investment in affordable housing.”

So why the shovel? First, because the above rhetoric is empty. There are three other ballot initiatives aimed at increasing affordable housing in California, and Blackstone portfolio companies donated to none of them.

The bigger picture: I see no evidence that Blackstone warned the public pensions that it might indirectly lobby against the immediate interests of pensioners — let alone that it had done so — and the firm is savvy enough to know that most public pension oversight of PE investments is inadequate at best. Just because LPs should know something doesn't mean they do, and that goes triple for public pension LPs.

Go deeper

"Atmospheric river" to whiplash Northern California from drought to flood

A map depicting 24-hour preciptation forecast (inches) ending Monday at 5a.m. local time. Photo: NOAA

A series of powerful "atmospheric river" storms are set dump historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest from this weekend, forecasters warn.

Why it matters: A strong atmospheric river, packing large amounts of moisture, is predicted to whiplash Northern California from drought to flood.

10,000 trees near giant sequoia groves to be removed after fires

A firefighter looks up at a giant sequoia tree after fire burned through the Sequoia National Forest near California Hot Springs, California, on Sept. 23. Photo: Patrick T. Fallon/AFP via Getty Images

"Upwards of" 10,000 trees near giant sequoia groves have been "weakened by drought, disease, age, and/or fire" and must be removed in the wake of California's wildfires, the Sequoia and Kings Canyon National Parks announced.

Why it matters: The damage to these trees, considered "national treasures," and work to remove them means a nearby key highway must remain closed to visitors as they have "the potential to strike people, cars, other structures, or create barriers to emergency response services," per a statement from the national parks.

Obama stumps for McAuliffe, urges Virginians not "to go back to the chaos"

Photo: Win McNamee/Getty Images

Former President Barack Obama framed a Nov. 2 gubernatorial race as a bellwether for the Democratic Party and the country, telling a crowd at a campaign event for Terry McAuliffe on Saturday that "I believe you, right here in Virginia, are going to show the rest of the country and the world that we're not going to indulge in our worst instincts."

Why it matters: With just over a week to go before Election Day in the Commonwealth, McAuliffe is bringing out the big guns. The 44th president appeared on the campus of Virginia Commonwealth University to urge supporters to get to the polls.