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Old 17-04-2018, 03:40 PM   #12
st jimmy
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Location: Amsterdam, Netherlands
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Default Vanguard, Blackstone, Goldman Sachs – Real estate

One of the leading owners of the tax exempt Real Estate Investment Trusts (REITs) - that own many of offices, shopping centres, apartments, hotels, warehouses, and data and storage centres across the US - is Vanguard.
According to William Crow, Vanguard, BlackRock, and other index funds “own about 30 percent of REIT stocks, and Vanguard is by far the largest”.

Vanguard owns:
18% of Host Hotels & Resorts (including Ritz-Carlton, Marriott, and Westin hotels);
16% of Brandywine Realty Trust, which owns a majority of Center City’s highest buildings;
16% of Liberty Property Trust, which develops offices for Comcast and is a landlord to... Vanguard;
16% of the Pennsylvania Real Estate Investment Trust (including Cherry Hill Mall and Willow Grove Park);
15% of Simon Property Group, the national mall owner (including King of Prussia Mall);
15% of Prologis, the warehouse giant.

Vanguard also owns more than 10% of pesticide maker FMC Corp., whose headquarters is the lead tenant in a 49-story tower owned by Brandywine.
For obvious reasons, REIT tax protections ends when the owner of 10% of a REIT landlord also owns 10% of a REIT tenant. Tax deducted renting to itself – money laundering and/or tax evasion. But that restriction is void for mutual funds with many owners.

Of course there is no real competition between these corporate giants. This causes (tax deducted) lower landlord costs, but higher tenant rents:
(archived here:

In the crash of 2008, orchestrated by the big banks, the value of real estate plummeted...
Blackstone Group spent more than $10 billion buying distressed residential real estate all over the US, pennies for dollars.

Bonesman, Blackstone CEO Stephen Schwarzman claims to have said:
Oh my goodness, this could be huge. Nobody is going to be able to borrow, they’re going to need housing. So we went out and started to buy houses to rent to people.
Oh my goodness, that sounds almost philanthropic. It would have been better if the big banks had not orchestrated the crash:

In 2013, Blackstone was the largest of the big house buyers. Wall Street keeps “lending” so the big investors can keep buying. In the fall of 2013, Invitation Homes, a subsidiary of the Blackstone Group, raised $479 million in a bond offering.
Invitation Homes purchased homes from banks, foreclosure auctions or individual sellers, and turned them into rentals. Invitation Homes averagely paid $150,000 to buy a house and another $21,000 for renovation.

This prevents “normal” people from owning their homes and inflates real estate prices.
Robert Shiller said:
I don’t quite understand why the housing market shot up so much in the last year when expectations didn’t go up, at least not among homebuyers.

Because of the orchestrated crisis, the big investors could buy the real estate cheap, knowing that in time riches will follow.

After Europe was ravaged by the financial and economic crisis, the giant investment bank Goldman Sachs (THE major orchestrator of the 2008 crisis) snapped up huge amounts of distressed debt in Ireland, including the loans of Tyrrelstown’s developer in 2014. Tyrrelstown wanted out of the rental game and sold its properties.
Wall Street has become the biggest new landlord in Europe. From 2012 to 2016, Goldman Sachs, Cerberus Capital Management, Lone Star Funds, Blackstone Group and others big US investment funds bought more than 223 billion Euros’ worth of troubled real estate loans around Europe, nearly 80% of the total sold.

Some tenants northwest of Dublin received a letter ordering them to leave their homes when their lease expired. In Ireland, homeowners seeking protection have demonstrated outside Parliament.
In 2016, protesters in Barcelona occupied empty apartments whose mortgages had been bought by Blackstone, and rallied around tenants in Madrid who were served eviction by a Goldman-run subsidiary.

The firms pay little or no tax, by simple strategies.
The Goldman subsidiary Beltany earned interest income of €44 million on debt portfolios in Ireland by the end of 2014. After lowering taxable profit to €1,000, the net tax charge was only €250.

To buy the debt, Cerberus’s Dutch Promontoria companies lent money to Cerberus’s Irish Promontoria firms at a high interest rate. The Irish Promontoria paid almost the same amount in interest that was earned on the real estate investments. Since the interest was deductible, Cerberus drastically cut its tax bill.
In 2014, the Irish subsidiary Promontoria Eagle earned interest income of £111 million (around $140 million). After deducting interest charges and fees, taxable profit was only £7,788, resulting in a tax charge of just £1,947:
(archived here:

In short “free market” economy at its finest...
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