Flying into Honolulu at night, the towering hotels glitter against the dark like the gold they mean for the state’s economy. But beneath the spectacle, there’s a prosaic reality that few Hawaiians know — about a third of the hotel rooms are owned by private equity investors.

Readers can learn a lot when local newsrooms get the chance to dig into private equity ownership.

In Hawaii, they learned about the reach of private equity into the state’s largest industry.

In Bloomington, Indiana, they learned that the number of local news stories fell by 75% after private equity owners took control of the local paper.

In Milwaukee, Wisconsin, they learned that right under their noses, a single firm had quietly acquired more than 1,000 single-family homes, many in predominantly Black neighborhoods.

Last year, Poynter’s Beat Academy awarded three private equity reporting grants from funds provided by the Omidyar Network, and it’s time to look back and see what those grants produced.

“This is something that we’ve wanted to do for four or five years,” said Noelle Fujii-Oride, a reporter with grant recipient Hawaii Business Magazine. “Finally doing it was so important for us as a magazine. I can’t think of other local media or even national media outlets that really investigated ownership and impacts in Hawaii.”

A heavy lift

Private equity, and its close cousin in housing, the real estate investment trust, is a daunting subject to tackle. A landscape littered with phrases like leveraged buyout, harvest phase and dividend recapitalization would scare off even a seasoned reporter. By design, private equity lies behind a curtain of privacy, with nominal reporting requirements and none of the disclosures that come with firms trading on the New York Stock Exchange.

Each news organization faced different reporting challenges.

In a span of three years, VineBrook Homes Trust grew to be Milwaukee’s largest single-family landlord. Milwaukee Journal Sentinel reporters Genevieve Redsten and Cary Spivak spent months working through property records and court filings.

“Their work required a considerable amount of time to learn the structure and strategy of VineBrook, a very complicated and seemingly deliberately confusing company with numerous subsidiaries,” said editor Jim Nelson.

The Journal Sentinel reporters came upon an unexpected development — VineBrook was in a debt squeeze. Nationwide, it had lost $213 million and was unloading homes, including 200 in Milwaukee. It was a shift that both threatened community stability, but also opened the door to a large-scale affordable ownership intervention that is still playing out in the city.

Hawaii Business Magazine’s Fujii-Oride, who had never taken a single course in business, found herself following a cookie-crumb trail of press releases, corporate filings and proprietary data to build a picture of Hawaii’s hotel industry.

In Bloomington, the reporting team at Indiana Public Media painstakingly gathered the hard numbers on declines in staffing at seven publications. For one newspaper, the Herald Times, they tallied local news articles in 2014 and 2018 by going through microfilm, one page of archived coverage at a time.

There’s a reason private equity goes uncovered. It’s tough work. But the effort isn’t without rewards.

The payoff

In a time when media grapples to retain trust, all three projects drew newsrooms into substantive conversations with people across their market area. Residents told Indiana Public Media’s Sarah Vaughan about the hole it left when high school sports went uncovered, and a former Bloomington mayor decried the risk to democracy when local lawmakers saw zero coverage of their votes and decisions.

The Milwaukee project was a team effort of the Milwaukee Journal Sentinel and the Milwaukee Neighborhood News Service, a nonprofit aimed at boosting coverage of the city’s less affluent communities. MNNS reporter PrincessSafiya Byers found that community leaders had no idea that a multi-million dollar real estate firm had a foothold in their neighborhood.

“A quick Google search lets us know this group is a potential slumlord, so I can’t understand how we allowed this to happen,” North Side resident Chrystal West told Byers.

After it ran its story, Hawaii Business Magazine held a community conversation about the impact of private equity. To be sure, its findings had a measured tone. Outside investors had pumped hundreds of millions of dollars into hotels and resorts, chiefly so they could charge hundreds of dollars more per night. And the gamble generally has paid off.

The tourists are coming, and if hotel employment has yet to reach pre-pandemic levels, it has been steadily rising.

“We haven’t seen the same type of aggressive profit-extracting tactics they’ve used in other industries,” Fujii-Oride, said.

But at the event, the conversation focused not on whether workers were abused, but on the much trickier question of whether they, and the rest of the community, were getting a fair shake. Tourism is Hawaii’s No.1 industry. Thriving tourism is a good thing, said Cade Watanabe with the union Unite Here Local 5. But that impact, he said, wasn’t equal across the board.

“We have one of the highest rates of outmigration,” Watanabe said. “We have people working multiple jobs to be able to earn a decent living. Why should the people of Hawaii continue to support tourism if tourism doesn’t support our ability to stay and live here?”

Going forward

Each of the private equity projects made a real contribution to its community.

In south-central Indiana, Indiana Public Media gathered original data that no one else had assembled, and sparked a public conversation about the ties between democracy, community life and local news.

Hawaii Business Magazine provided a solid understanding of private equity ownership that any journalist or researcher can turn to in years to come, and they got people talking about a broader question — that economic growth isn’t good in itself, but in how its benefits are spread around.

The Milwaukee Journal Sentinel and the Milwaukee Neighborhood News Service helped citizens and local leaders see the invisible owner that had permeated their city. Their coverage was one reason U.S. Sen. Tammy Baldwin, D-Wisc., pressed the Federal Home Loan Bank of Chicago to help first-time home buyers and introduced a bill to impose a tax on firms that buy homes in bulk.

Each project was a case study of news that doesn’t tell people what to think, but tells them what is worth thinking about.