On September 21st, 2022, a tenant representative from Southern Towers attended the annual Council for Institutional Investors (CII) Fall Conference, and spoke on a panel titled, “Responsible Investment in Residential Real Estate.” The tenant informed conference attendees about the mass eviction filings, unaddressed mold issues, hostile treatment, and significant rent increases at the Southern Towers apartment complex in Alexandria, Virginia.
Referring to itself as “the voice of corporate governance,” the CII is a nonpartisan nonprofit association. The association consists of US public, corporate and union employee benefit funds, and other entities that invest public assets. The association also consists of foundations and endowments. The CII conference gathers stakeholders from across the country every year with the goals of furthering discussions around the implementation of best corporate governance practices, and creating opportunities for policymakers, and investment executives to interact.
The CIM Group is a Los Angeles-based private equity firm founded in 1994 by Shaul Kuba, Richard Ressler, and Avi Shemesh. As of 2022, the firm owns $29.7 billion worth of property across the country. In 2020, CIM Group acquired Southern Towers, a five-building apartment complex in Alexandria, Virginia. The blue-collar residents of Southern Towers find themselves in the midst of an ongoing battle with CIM. The apartment complex was once revered as a stable home for blue-collar workers to raise their families, particularly those of African descent. Tenants worked together with ACT to build a campaign to fight for their homes, and Sami Bourma, a tenant advocate from Southern Towers and a member of ACT, was invited to speak at the CII conference.
Titled “Responsible Investments Residential Real Estate,” the list of panelists at the CII Conference panel also included Alison Hirsh, the Assistant Comptroller for Pensions and Senior Advisor to the Comptroller of the City of New York, along with Kevin Thomas, the CEO of Shareholder Association for Research and Education. Dr. Desiree Fields, an Associate Professor at the University of California served as the final panelist with Elena Botella, a Principal at the Omidyar Network Fund acting as the panel moderator. The panel came together to discuss the ethical considerations that must take place as institutional investors purchase and renovate housing stock for community members at large, but also specific beneficiaries of a pension fund.
Sami Bourma shared his experience as a tenant in the CIM Group-owned Southern Towners. He said that he understands the need for investors to make money, but detailed how their practices for earning money can negatively impact members of the original community. He stated that pension funds and investors should hold corporate landlords accountable in order to make sure that they do not exorbitantly increase rent, and instead should place annual limits on rent increases. Sami also said that the Black community has been taken advantage of due to lack of engagement on the part of institutional investors. When speaking specifically about the situation at Southern Towers, Bourma called tenants’ experiences with CIM Group a “nightmare.”
Dr. Desiree Fields shared research that showed that since the foreclosure crisis, corporate investors tend to focus their acquisitions on lower-priced homes that were typically reserved for first-time buyers, in predominantly Black and Latinx neighborhoods. While discussing the trend in the rise of home prices and rental prices, Alison Hirsh said that “investors have a real role to play” in ensuring that when they make investments they are establishing standards that are not predatory. Hirsh stated that pension fund members do not want to see the people within their community evicted. She continued to say that they also do not want to see rent prices raised so much that they are essentially evicted, giving the example of a 30% rent raise which will push tenants out by default.
As exhibited by the racial makeup of the residents at Southern Towers, the issues of private equity, along with pension fund investment into private equity are heavily racialized. As exhibited by the statements of people on the Residential Real Estate Panel, more people are making the connections about the impact that private equity firms have on the housing market, particularly as it relates to Black homeownership. Residents of Southern Towers, along with people negatively affected by CIM Group across the country will continue to organize until their issues are addressed, and the CII conference served as a great opportunity for further engagement with other tenants impacted by private equity, along with pension fund stakeholders.