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Aug 22, 2016

DealBook Morning News - August 22, 2016: Tenants Struggle in Win-Win Contracts for Landlord.

The New York Times


By Amie Tsang
If you pay rent to a property management company with the aim of eventually owning the place, are you a renter or a homeowner? Some companies are blurring that line.
Rent-to-own contracts allow dwellers in the United States who lack good credit or cannot qualify for a mortgage to pay rent to a landlord with the eventual promise of owning the home.
But the renters are responsible for repairs, and they do not receive a legal title to the home until the last payment is made. Unlike a contract for deed, they also still need to find financing to complete the deal.
The companies get the best of both worlds — all the rent and no need to fix up the properties. Tenants, however, often walk away with nothing. Many struggle to pay for the repairs. Others, meanwhile, find themselves facing evictions because they are not aware of the state the houses are in and cannot meet deadlines to bring the property up to scratch.
”Financially, they kind of stuck it to me,” said one person with a rent-to-own contract. However, “when you don’t have any options and someone is willing to work with you, it’s really a blessing.”
Beryl Satter, who has chronicled the exploitation of black homeowners in Chicago in a book, “Family Properties,” doesn’t see it that way. “If you’re doubling your money off of people who are scraping by and you’re taking advantage of their vulnerability to enrich yourself, that is being predatory.”
Should these companies be subject to landlord-tenant obligations? Yes, says Judith Fox, a law professor at the University of Notre Dame. “You can’t have it both ways.”
Pfizer Said to Be Near Deal for Medivation
Pfizer is apparently close to nabbing a leader in the cancer drug market, according to reports from The Financial Times and The Wall Street Journal, which cite people familiar with the talks. Pfizer would pay about $14 billion to buy Medivation, a biotechnology company based in California that makes the world’s best-selling prostate cancer drug.
The purchase would mark a return to big ticket deal making for Pfizer, which abandoned a $152 billion merger with Allergan because of tax rules and lost out in the race to buy Pharmacyclics last year. Medivation’s big-selling drug and its experiments in stopping tumor cells from multiplying have companies in hot pursuit. It has already rejected the advances of Sanofi, the French drug maker.
Private Equity Keeps the Elderly at Home
With the elderly care sector already littered with stories of abuse, can for-profit companies enter an industry that has traditionally been the realm of nonprofit do-gooders? Eager entrepreneurs think so.
A year ago, the government opened up programs that keep older and disabled Americans out of nursing homes to for-profit companies with the hope of expanding the services faster.
The business appeal is clear. Medicare enrollment is expected to grow and the programs have hefty profit margins — as much as 15 percent, compared with an average of 2 percent for nursing homes.
One program — PACE, or the Program of All-Inclusive Care for the Elderly — is still relatively small with only 40,000 people enrolled as of January this year.
But it has piqued the interest of the tech industry, which is notoriously aggressive and deep-pocketed and could play a significant role in the program as it grows. Private equity money has also made its way into the system.
Contact amie.tsang@nytimes.com
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Monday, August 22, 2016