Public pension investments: How we reported the story

Ben Poston, Andrew Khouri
1-min read
EL CAJON, CA -APRIL 13, 2023: Iraides Gonzalez with two of her three children, Brianna, 7, and Brandon, 9, has had to bring other tenants into her apartment to afford the rent increases since Blackstone bought her apartment building on April 13, 2023 in El Cajon, California. Six people live in her 3 bedroom apartment, including herself and her three children. She makes $15/hour as a cashier. "Am I able to get enough money together for this month's rent," she worries. If her rent is three days late she is slapped with a $75 late fee. Blackstone used pension fund investments to purchase her building along with many others in California.(Gina Ferazzi / Los Angeles Times)
Iraides Gonzalez and her children live in the Terre at Madison apartment complex in El Cajon, Calif. In 2021, it was purchased by a private equity fund, according to CoStar. (Gina Ferazzi/Los Angeles Times)

To cover this story, Times reporters built a database of deals made by private real estate funds that received investment commitments from public pensions in California from 2015 to 2022.

Using information from data provider PitchBook, reporters identified so-called value add and opportunistic real estate funds that often purchase underperforming apartment complexes, renovate them and sharply increase rents to maximize their returns.

Real estate data provider CoStar tracks acquisitions of multifamily properties by investment funds, as well as rent data for individual properties and entire geographic areas. Using that information, reporters built a database that contained 133 deals from California and included average asking rents per square foot for vacant units at the properties and their surrounding submarkets.

By tracking both, the analysis was able to determine whether those apartment complexes were outpacing the local markets on rent.

In conducting its analysis, The Times reached out to 13 fund managers identified by CoStar and shared with them a list of buildings the real estate service said their funds bought. Four companies said their funds did not buy a total of four buildings CoStar said they did. The Times did not include the buildings in its analysis.

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This story originally appeared in Los Angeles Times.