A new PESP report detailing the North Carolina Retirement System’s (NCRS) history of investing over $3.2 billion in the private equity firm Landmark Partners has gained media coverage by the NC press.
WUNC reported how PESP lays out Landmark Partners’ investments into real estate companies accused of mistreating rental tenants in order to maximize profits, including to tenants in North Carolina, and how PESP is now calling on NC Treasurer Folwell to stop any future investments with Landmark Partners, and to leverage its sizable investment in Landmark Partners to influence landlord reforms in the real estate holdings.
“From a public investment perspective, Landmark Partners has a far larger investment from the North Carolina pension fund than from any other public pension fund in the nation, according to Private Equity Stakeholder Project. Since Folwell became treasurer in 2017, the North Carolina pension fund has invested $2.6 billion with Landmark Partners. No other pension fund has invested more than $500 million and the median investment is $102 million, according to Private Equity Stakeholder Project.”
The News and Observer noted how PESP ‘wants North Carolina’s treasurer to use his agency’s influence as an investor to curb “abuses” by the country’s largest corporate landlord.’ It included how PESP’s report “detailed the North Carolina Retirement System’s more than $3 billion in commitments to a firm called Landmark Partners, the largest stakes of any state pension fund nationwide.
“Such financial heft, the report says, grants North Carolina pension fund managers the power to sway Landmark and companies it funds. And among those Landmark-funded companies: Progress Residential, a firm that in recent years has gobbled up tens of thousands of single-family homes across the country.
Raleigh News and Observer, December 2, 2022: https://www.newsobserver.com/news/state/north-carolina/article268767412.html
“This is directly impacting North Carolinians in terms of housing, in terms of renters, in terms of squeezing out would-be homebuyers,” Private Equity Stakeholder Project housing campaign and research director Jordan Ash told the News and Observer. “And there doesn’t seem to be any discussion about it in terms of the impact of this investment.”
The News and Observer reported that researchers with the Private Equity Stakeholder Project say those financial gains came at a cost. ‘They note in their November report that Progress has faced “repeated allegations of deceptive business practices, hasty evictions and property neglect,” some of which prompted Minnesota Attorney General Keith Ellison to sue on behalf of renters in his state earlier this year.’
The News and Observer continued to cite PESP’s report, including findings by The Charlotte Observer, which detailed the impacts from the company’s practices on tenants across North Carolina. “It’s cliche, but it is the American dream to own your own home, not just to live in a single-family home,” Ash told the Herald. “This really is directly opposed to that.”
“Although home ownership rates overall have remained steady in the state, the report links a disproportionate decline in home ownership among Black North Carolinians to the concentration of corporate landlords in starter home neighborhoods and communities of color.
“There are places where these companies clearly are just profiting off of and causing really big problems,” said Madeline Bankson, housing research coordinator with the Private Equity Stakeholder Project told the Herald. “It’s apparent that this is not helping working people in our state.”
Ash said those harms are clear when it comes to Progress Residential. “This is not about being ‘woke.’ This is about a direct impact on people in North Carolina.”
With few policy proposals for regulating the corporate landlord industry on the table, Bankson said using the pension fund’s leverage could be a useful tool.
“The extent to which you’re able to regulate someone’s ability to own property, even if that someone is a corporation, is pretty limited,” Bankson, one of the report’s co-authors, said. “And the political will, even where it’s logistically or constitutionally possible, is pretty limited.”
But Ash said they’re explicitly not calling for divestment — or for the treasurer to abandon his duty to grow the pension fund. “We understand the reality is that the retirement boards are under pressure to generate enough money to pay for current and future retirees,” Ash said. “I do not want to advocate for them to do something that is not in their financial best interest.”