As pandemic evictions increase, Spaniards declare ‘war’ on Wall Street owners

BARCELONA, Spain – Ana María Banegas lives on a sunny street in central Barcelona, ​​a short walk from the school where her children attend. Outside, a doormat welcomes visitors: “Home Sweet Home”.

But this is where the domestic idyll ends. The owner of the building is not your typical landlord, she says, but rather a private equity firm thousands of miles away. And Ms Banegas is not a typical tenant: along with a dozen other families who struggled financially during the pandemic, she has occupied the building since April and now refuses to leave.

“This property is owned by Cerberus,” Ms. Banegas said, referring to Cerberus Capital Management, a New York-based private equity firm. “And from this house, we aim to put pressure on them. “

His protest is part of a battle taking place in the courtrooms, lounges and streets of Barcelona, ​​between foreign investment firms that have bought thousands of homes across Spain in the past decade against residents and activists who use a new strategy to try to stop them from evicting late tenants.

On the one hand, Cerberus, which, along with other giant investment firms like Blackstone and Lone Star, has been grabbing properties across Spain at bargain prices since the global financial crisis that began in 2008. companies then rented them out at a time when the country’s economy was on a more solid footing.

But the pandemic has pushed Spain’s unemployment rate to 15%, and nationwide evictions have increased in the first half of 2021. The owners of the investment firm have sent a multitude of eviction notices to tenants across the country or have canceled leases for those who have fallen behind on rent, residents say.

On the streets of Barcelona, ​​a group called War Against Cerberus decided to fight back.

When lawyers from private equity firms come with police to force residents out of their homes, members of the group – some of whom are longtime housing activists – surround the building to block their entry. As residents are driven from apartments, the group sends squatters to occupy business-owned properties elsewhere in the city – sometimes breaking and entering to enter.

Activists even took over the offices of a Cerberus real estate agent in Barcelona for some time last year.

Dozens of families have occupied buildings owned by private equity firms in Barcelona, ​​which has long been the target of outside investors, according to War Against Cerberus. This can translate into years of courtroom hearings and millions of dollars in legal fees to take out the squatters.

Miquel Hernández, a spokesperson for War Against Cerberus who helped Ms. Banegas find the house she squats in, accused private equity firms of profiting from the economic distress caused by the pandemic.

“They treat them like any other asset,” he said, referring to the houses owned by the companies.

The issue has caught the attention of Spain’s national government, led by a left-wing coalition. He proposed imposing rent controls on investment funds and other large landlords.

The proposed legislation, backed by Barcelona Mayor Ada Colau, would allow rent caps for owners of more than 10 properties in areas where rent increases have exceeded inflation.

“We need to civilize a market that has gotten out of hand,” said Ms Colau, a former housing activist who came to power with an organization that fought foreclosures. “A problem that was serious before the pandemic suddenly got worse. “

She attributed much of the increase in evictions to investment firms who refused to negotiate deals with late tenants, choosing instead to force them to leave and find others who can pay.

Spain has imposed a partial moratorium on evictions for much of the pandemic, but only for people in “vulnerable situations”, such as single parents. In court cases, the judiciary was seen to be largely on the side of the owners.

Cerberus said it is committed to treating every resident with dignity and respect and to upholding the law.

“We believe that it is the responsibility of all corporate citizens not only to respect the dignity of each person, but also to appropriately fight against illegal activities that can harm communities,” said a spokesperson for the company in a statement to the New York Times.

The Rental Owners Association, a Spanish group that includes some of the outside investment companies, has taken on the housing bill, saying rent controls will only discourage landlords from building new ones. rental housing during a low supply period.

The conflict in Barcelona has its roots in the financial crisis that began in 2008. This slowdown hit homeowners hard, pushing many of them, as well as the banks that held their mortgages, into bankruptcy. The crisis has also fueled evictions and the rise of a protest movement to defend homeowners against predatory lending.

But thousands of people still lost their homes and many of them became tenants. And in the current crisis, tenants have suffered the brunt of the damage, campaigners say.

As defaults have become common and credit has become more difficult to obtain, the number of tenants in the country has increased by more than 40% over the past decade. At the same time, private companies have accumulated at least 40,000 properties in Spain, according to estimates by economists and Spanish media.

Despite this, the homeownership rate has remained relatively high in Spain, at around 75%.

In one case in 2013, Blackstone, now considered the largest landlord in Spain, purchased more than 1,800 apartments from the city government of Madrid, which was in short supply.

But these types of acquisitions did not make a splash until the pandemic left businesses, like many other landlords, issuing eviction notices to those who couldn’t pay rent.

In the first quarter of 2021, tenant evictions in Spain increased by 14% compared to the same period the year before, according to the government. In the second quarter of this year, they reached eight times more than during the same period in 2020.

One complaint about private equity owners is that being based overseas, they are difficult to reach to negotiate settlements, unlike local owners.

Irma Vite, a 47-year-old Ecuadorian immigrant, first received notice in 2019 that the lease for her rental apartment would not be renewed by Divarian, a real estate company owned by Cerberus in Spain. She has spent the entire pandemic fighting in court to stay home.

Its history provides a window into the unregulated world of Spanish housing that has allowed private equity firms to become such dominant landlords here. She bought the apartment in 2005 for 216,000 euros, or about $ 267,000 at the time, without a down payment, from a local Spanish bank. His monthly mortgage payments amounted to € 900.

The mortgage had a fluctuating interest rate, however, and by 2009 its payments had reached € 1,200. In 2015, she could no longer afford the payments, and she filed for foreclosure proceedings with the bank, which allowed her to stay in the house as a tenant.

But this bank, Caixa Catalunya, was itself barely solvent. In 2016, it merged with Spanish giant BBVA, which extended its rental contract until 2019.

In October 2019, she received a letter from Divarian, the Cerberus Company, telling her that she now owned the property and would no longer rent to it. Ms. Vite sought help in the war against Cerberus and has spent the past two years refusing to leave her home.

Cases like his are becoming more common and have provided War Against Cerberus with opportunities to work their muscles. In October, the group was informed of five planned evictions in L’Hospitalet de Llobregat, a town on the outskirts of Barcelona.

When a lawyer representing the firm that owns the apartments arrived with the police, they were greeted by around 50 activists who surrounded the building. A crowd of locals soon arrived, chanting for the officers to leave.

“You are vultures,” one of the protesters shouted.

Police backed down, saying they would give the owners an extension before their eviction.

War Against Cerberus is also trying to offend private equity firms by sending residents like Ms. Banegas to occupy apartments the firms own in Barcelona. Mr. Hernández, the activists’ spokesperson, said the group’s goal was ultimately to pressure Cerberus to agree to allow the squatters to stay and pay reasonable monthly rents.

Ms Vite said she would much rather start paying rent again than continue to squat. But so far, Cerberus has refused to make a deal with her and has asked a court to deport her.

A nursing assistant at a nearby hospital, Ms Vite said she recently met a man with depression who was also forced to leave his home after being unable to pay rent, and that they briefly complained.

“I was there as a nurse, him as a patient, and I was just like, ‘Look at what’s causing all these problems,” she said.

Samuel Aranda contributed reporting.