University of California investment officials said Thursday that their controversial decision to invest $4 billion in private equity giant Blackstone was a "capitalistic decision" to maximize returns for UC retirees and rebuffed criticism that it was worsening the student housing crisis.
Controversy over the investment heated up this week, when more than 40 organizations representing UC faculty, students, workers and statewide housing advocates demanded the university divest from Blackstone. The groups blame Blackstone for exacerbating the state's housing crisis by buying up homes and apartments in California and elsewhere, pushing up rents to unaffordable levels. The groups also demanded a rent freeze on all UC housing, both on and off campus, a commitment to end no-fault evictions and other protections in a letter to top UC officials.
UC Chief Investment Officer Jagdeep Singh Bachher defended the investment Thursday at the Board of Regents meeting in San Francisco. He said he "deeply appreciates" the housing crunch but also recognized a pension crisis across the nation that had steeled his commitment to invest in assets with a robust rate of return for current and future UC retirees. Under the deal with the Blackstone Real Estate Income Trust, UC would get a minimum 11.25% annual return over six years — well above the 6.75% needed to keep the UC pension fund on solid footing, according to university investment officials.
