NORTH CAROLINA — In one of his first moves as newly elected attorney general, Jeff Jackson announced Tuesday that North Carolina, the U.S. Department of Justice, and eight other states amended a national antitrust lawsuit against real estate software firm RealPage to include six of its largest landlord clients. Several of the property management firms have a significant presence in the tri-county region.
READ MORE: Wilmington rental market cited in national landlord collusion lawsuit
RealPage sells data analytics products that suggest ideal rent prices to property management companies. In August, Gov. Josh Stein announced North Carolina’s participation in the national antitrust suit against the company alleging it illegally and artificially raised rents by sharing its clients’ confidential information — such as nonpublic rental rates, changes in competitors’ occupancy and rates, and future apartment availability — in its daily pricing algorithm.
The amended complaint names six of the country’s largest property management companies as co-conspirators for coordinating with each other and RealPage to raise rents. They include Greystar Real Estate Partners, Blackstone’s LivCor, Camden Property Trust, Cushman & Wakefield and Pinnacle Property Management Services, Willow Bridge Property Company, and Cortland Management.
“North Carolinians are struggling to afford their rent as it is — we won’t stand for landlords and real estate companies making the problem worse to line their own pockets,” Attorney General Jackson wrote in a press release. “I’m suing these landlords to make sure they play by the rules so North Carolinians can get fair prices for rent.”
Port City Daily reached out to the attorney’s general office but did not hear back by press.
In addition to sharing competitively sensitive data in RealPage’s algorithm, the suit cites numerous examples of alleged collusion including:
- Executives from competing companies discussed pricing strategies, renewal increases, and concessions in RealPage-hosted “user groups”
- Willow Bridge and Greystars’ directors of revenue management shared information on how to optimally use RealPage’s “auto-accept” function
- Greystar and Cushman & Wakefield used Willow Bridge’s proprietary Covid-19 strategic plans to “preserve rent integrity” with RealPage software
Jackson alleges the seven defendants violated the North Carolina Unfair or Deceptive Trade Parties Act — which prohibits methods of competition that substantially injure consumers, violate public policy, or deemed unethical. The AG requested civil penalties deemed appropriate by the court and injunction to prevent price-fixing and market monopolization.
RealPage tracks rental units that use its products in North Carolina submarkets, including Wilmington; in April, the firm cited the city as the fastest-growing renter household market in the nation. RealPage found, after 25 months of rent increases above national norms, that Wilmington had one of the “best showings nationwide” for its 2022 rental rate hike of 12.4% — nearly twice the national average.
A Washington Post analysis found 15% of Wilmington’s multifamily units are managed by companies named in rent-setting lawsuits. Greystar — the country’s biggest property management firm — has the largest Wilmington presence among the six companies. It manages housing units in the tri-county region, including but not limited to:
- City Block Apartments
- Overlook at River Place Apartments
- Banyan Silo
- Element Barclay Apartments
- Element Barclay Station
- Riverwood Apartments & Townhomes
- The Range on Oleander Apartments
- Headwater at Autumn Hall Apartments
- Seaboard at Sidbury Station
- The Village at Compass Pointe Rental Townhomes
- Jackey’s Ridge
- River Rock at Shingletree
“We are disappointed that the DOJ added us and other operators to their lawsuit against RealPage,” Greystar wrote in a statement. “Greystar has and will conduct its businesses with utmost integrity. At no time did Greystar engage in any anti-competitive practices. We will vigorously defend ourselves in this lawsuit.”
According to the suit, an unnamed Willow Bridge executive said RealPage’s software is “designed to always test the top of the market whenever it feels safe to.” Willow Bridge manages local complexes Bellingham Park, Crosswinds Apartments, and The Cordelia.
Cushman & Wakefield is the former manager of Cypress Pointe apartments. Cushman & Wakefield and Cape Fear Commercial partnered for the $58.46 million sale of Riverwood Apartments LLC — Greystar is currently the property manager of the 206 unit-complex. Cushman and CFC also represented Thermo Fisher in the $68-million sale of the Skyline Center to the City of Wilmington.
A number of property management firms in the tri-county region that use RealPage are not included in the national suit, but are named in other litigation related to its use, including Bell Partners, Highmark Residential, Brookfield Properties, and RPM Living. The Washington Post published an interactive map Tuesday displaying properties managed by the firms.
Jackson’s amended complaint alleges RealPage’s products help clients increase prices while reducing the risk that competitors could undercut them. Its software includes guardrails such as “revenue protection mode” that activates when demand is too low for a landlord to meet target occupancy; instead of lowering price to stimulate demand the algorithm reduces clients’ target number of leases.
RealPage said in the suit its revenue protection mode may seem counterintuitive, but the company “sees the way to make more revenue is to lease fewer units at higher prices.”
The software firm disputes arguments its software has contributed to the housing affordability crisis, which it claims is driven by other factors, such as the undersupply of affordable housing, increasing demand, and inflation. It states it serves a much smaller portion of the rental market than alleged, that its nonpublic data is used responsibly for pro-competitive uses, and its customers have total discretion to accept its recommendations and reject them at far higher rates than alleged. The company did not respond to PCD’s request for comment.
The suit cites a 2018 client training session indicating RealPage understood legal concerns posed by its practices: “Can we just update the rents for you? Unfortunately, no, we can’t. That could be considered price collusion, and it’s illegal.”
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