NYC Pension Funds Take Hit from Rent-Stabilized Investments, City Sticks Head in Sand
Will NYC acknowledge the impact of rent-stabilized losses or continue to ignore the looming crisis?
The 2019 overhaul of New York's rent laws dealt a major blow to the city's rent-stabilized housing market, and now the consequences are coming to light. Recent data on increased foreclosure filings and critical reports from watchdog groups and researchers have solidified the widely accepted belief that the legislation will ultimately lead to the demise of much of the city's regulated housing stock.
While landlords have been sounding the alarm for years, it seems the city and state government have chosen to turn a blind eye to the issue. With the looming threat of a housing crisis on the horizon, it's time for them to break their silence and take action.
The city's pension funds are now feeling the impact of these rent-stabilized losses. According to a report by The Real Deal, the New York City Employees' Retirement System (NYCERS) and the New York City Teachers' Retirement System (TRS) have both seen significant drops in their returns due to investments in rent-stabilized properties.
The Real Deal's analysis of NYCERS' 2020 financial report showed that the pension fund suffered a 3.4% loss on its real estate portfolio. Similarly, TRS reported a 4.6% loss on its real estate investments in 2020.
The blame for these losses can be placed on the city's rent laws. The changes made in 2019, including stricter regulations on rent increases and tenant protections, have made it more difficult for landlords to generate profits from rent-stabilized units. As a result, pension funds and other investors are now facing significant financial losses.
Despite these alarming reports, the city and state government have remained silent on the