Spain currently has an excess of 1.4 million homes. So two years ago, Goldman Sachs and Blackstone Group took some low-income housing units off the hands of struggling local municipalities, including the city of Madrid.
Now those investments are turning into a headache for the Wall Street firms.
That’s according to Bloomberg’s Sharon R Smyth, who reports that Blackstone and Goldman, which in 2013 invested in 1,860 and 3,000 units, respectively, are now up against allegations of evictions and unfair rent increases.
Spain’s revolutionary Podemos party has made affordable housing a priority in its regional election campaign. And activist group Platform Against Evictions (la Plataforma de Afectados por la Hipoteca) has launched a “Blackstone Evicts” campaign, complete with an accusatory YouTube video that’s starting to gain traction.
“Maybe you think you are untouchable, hiding in your nice building in Manhattan, but you are not. You don’t know what we are capable of,” the video says, before cutting to a rowdy protest scene in a building lobby.
The Wall Street firms plead innocent — and may also be regretting their investments.
“No one mentions the money we’ve invested to improve the properties and lives of more than 3,000 tenants who pay their rents,” Bloomberg quoted a Madrid-based Blackstone representative as saying. “Anyone who can show me that we’ve raised their rents, community charges or evicted a single person unfairly should come to me and prove it.”
Goldman Sachs claims they have only evicted one resident, who was years behind on rent and was illegally subletting multiple other units that he’d broken into.
This is also turning into a headache for Spain. The country is hungry for foreign investment, and as Goldman’s Madrid-based rental manager put it, all the backlash could harm the “nascent” industry.
“Even if there was a large portfolio of units on sale now from a public administration, international investors would think twice about buying,” he reportedly said.