6 Major Landlords Accused Of Anticompetitive Behavior In DOJ’s Reinvigorated RealPage Investigation

The U.S. Department of Justice expanded its antitrust case against RealPage to include six major landlords it alleges colluded to fix rents for more than one million apartments. 

The update to the case first filed in August ensnares some of commercial real estate’s biggest names in a civil suit that alleges RealPage’s algorithmic rent-setting tool was anticompetitive and allowed landlords to illegally coordinate rents.

“DOJ is clearly sending a signal that they're trying to shut this thing down,” said Joe Hernandez, a partner at Bilzin Sumberg’s real estate practice in Miami. “Now, anybody who’s thinking of using this service has got a very strong incentive not to do so.”

Greystar Real Estate Partners, Blackstone’s LivCor asset management firm, Camden Property Trust, Cushman & Wakefield, Willow Bridge Property Co. and Cortland Management were added to the amended complaint filed by the DOJ in the U.S. District Court for the Middle District of North Carolina. 

Together, the landlords operate more than 1.3 million apartments across 43 states. Specific interactions between the named landlords and others are mentioned in the complaint dating back to 2018.

In conversations both facilitated by a RealPage member group and independently, the companies allegedly discussed how to navigate market challenges posed by the pandemic and how quickly to scale back concessions or raise rents as lockdowns eased.

“While Americans across the country struggled to afford housing, the landlords named in today’s lawsuit shared sensitive information about rental prices and used algorithms to coordinate to keep the price of rent high,” Acting Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division said in a statement. “Today’s action against RealPage and six major landlords seeks to end their practice of putting profits over people and make housing more affordable for millions of people across the country.”

RealPage denied the allegations Tuesday and previously filed a motion to have the lawsuit dismissed.

“It does not make sense to now sue these, or any, property management companies using RealPage, as our software was purposely built to be legally compliant,” RealPage Senior Vice President of Communications and Creative Jennifer Bowcock said in an email. “It’s past time to stop scapegoating RealPage — and now our customers — for housing affordability problems.”    

The DOJ also announced that it had filed a consent decree with the court that would resolve all claims against Cortland in exchange for its cooperation in the investigation. 

A Cortland spokesperson said the firm looked forward to moving past the investigation, which included a raid of its Atlanta office in June.

“We believe we were only able to achieve this result because Cortland has invested years and significant internal resources into developing a proprietary revenue management software tool that does not rely on data from external, non-public sources,” the spokesperson said via email. 

The consent decree would bar Cortland from using sensitive data from competitors or third-party software to price apartments and prohibit the landlord, which has 80,000 units in 13 states, from sharing any of its own data for rental pricing recommendations.

“If I were one of the other landlords, I'd be very worried about what the party cooperating with the government is telling them,” Hernandez said.

The attorneys general of Illinois and Massachusetts were also added to the amended complaint as co-plaintiffs, joining attorneys general from North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington.

Greystar said in a statement that it was disappointed to be named in the suit and promised to vigorously defend itself in court.

“Greystar has and will conduct its business with the utmost integrity,” the statement said. “At no time did Greystar engage in any anti-competitive practices.” 

Cushman & Wakefield, whose Pinnacle Property Management subsidiary was named in the suit, also denied that it worked with other firms to set rents and said pricing decisions were ultimately made by the landlords.

“Pinnacle is solely a property manager and does not own any properties or set strategy, pricing, or occupancy targets,” a company spokesperson said in a statement. “We also do not decide whether the properties managed by Pinnacle use revenue management services and software, which software provider to use, if any, and whether to accept recommendations provided by such software.”

The other firms named in the suit didn’t respond to Bisnow’s request for comment. 

The amended complaint lays out alleged anticompetitive practices the landlords and RealPage engaged in that extended beyond leveraging an algorithm to maximize rents, an already controversial strategy that is banned in some cities.

Senior managers at competing firms directly communicated about rents, occupancy and other sensitive data and shared pricing strategies, the suit alleges. Landlords joined user groups to collectively discuss adjusting the algorithm’s pricing while sharing internal data with RealPage to inform the tool, today known as AI Revenue Management but previously dubbed YieldStar.

The complaint additionally alleges that these executives communicated via weekly calls, texts, in-person meetings and shared online files.

“If they were having meetings and they were comparing notes then that definitely looks like colluding to fix the price. That’s substantially worse for those individually named landlords,” Hernandez said.

A criminal probe was also reportedly opened into the anticompetitive practices, but RealPage said last month that the investigation was closed without any charges being brought. 

Rent-setting algorithms added roughly $3.8B to tenants’ bills in 2023, according to a recent study from the White House Council of Economic Advisers. The report specifically criticized RealPage’s tool as anticompetitive and harmful to tenants, charges RealPage categorically denied. 

“We are still reviewing the DOJ’s new claims, but we continue to believe this lawsuit will do nothing to make housing more affordable and will stifle the innovation that helps the U.S. remain globally competitive,” Bowcock said.

UPDATE, JAN 7, 7:20  P.M. ET: This story has been updated with analysis and statements from RealPage, Cortland, Greystar and Cushman & Wakefield.