Dive Brief:
- Arizona Attorney General Kris Mayes announced a lawsuit against RealPage and nine apartment landlords last week for allegedly conspiring to illegally raise rents for hundreds of thousands of renters in the Phoenix and Tucson metro areas.
- The state of Arizona alleged that the Richardson, Texas-based company’s revenue management software compiles competitively sensitive lease data on pricing and occupancy. The software and analytics firm then directs the landlords on which apartments to rent out and at what price, according to the complaint.
- Mayes said that RealPage’s alleged conspiracy with the nine landlords violated both the Arizona Uniform State Antitrust Act and the Arizona Consumer Fraud Act. The antitrust law prohibits conspiracies in restraint of trade and any attempts to establish monopolies to control or fix prices, while the consumer fraud statute makes it unlawful for companies to engage in deceptive or unfair acts or practices or to conceal or suppress material facts in connection with a sale.
Dive Insight:
The Arizona suit alleges that the landlords and RealPage, which declined to comment for this story, colluded to raise rents artificially and concealed them from the public in what Mayes referred to as a conspiracy.
“RealPage collects and shares pricing and occupancy information for many multifamily apartments in the Phoenix and Tucson metropolitan areas,” the suit said. “It feeds this data into a common algorithm and then tells the participating landlords what prices to charge based on all this data. And so, competitors have stopped using independent judgment to set prices and started working together.”
The companies named in the suit include:
- Apartment Management Consultants
- Avenue5 Residential
- BH Management Services
- Camden Property Trust
- Crow Holdings, L.P./Trammell Crow Residential
- Greystar Management Services
- HSL Properties
- RPM Living
- Weidner Property Management
Only one of the nine landlords named in the suit provided a comment for Multifamily Dive. Apartment Management Consultants issued a statement saying that one 160-unit property, which represents less than 1% of its Arizona portfolio, uses RealPage software. Additionally, it said that it has neither “promoted nor encouraged” any client to use RealPage software.
“AMC strongly denies the allegations in the complaint pertaining to AMC’s direct involvement or usage of these Real Page products in Arizona, and will seek the immediate dismissal of AMC from this lawsuit,” the company said.
Market saturation
As a result of the alleged illegal practices, Phoenix and Tucson-area residents paid millions of dollars more in rent than they otherwise would have, according to Mayes. The suit claims that approximately 70% of multifamily apartment units listed in the Phoenix metropolitan area are owned, operated or managed by companies that have contracted with RealPage for revenue management.
In Tucson, 50% of apartments listed are owned, operated or managed by companies that have contracted with RealPage for revenue management, according to the suit.
“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizonans and directly contributed to Arizona’s affordable housing crisis,” Mayes said in a news release. “In the last two years, residential rents in Phoenix and Tucson have risen by at least 30% in large part because of this conspiracy that stifled fair competition and essentially established a rental monopoly in our state’s two largest metro areas.”
The state of Arizona seeks an injunction requiring defendants to stop their anticompetitive practices, restitution for consumers harmed by their conduct and civil penalties to the full extent authorized by Arizona law.
Other legal action
Arizona isn’t the first locality to target RealPage. Last November, Washington, D.C., Attorney General Brian Schwalb brought suit against RealPage and 14 landlords, accusing them of “unlawfully colluding” by collectively adopting the rents set by the company’s technology and “unlawfully agreeing to exchange competitively sensitive data in violation of the District of Columbia Antitrust Act.”
Tenants have also sued RealPage and several apartment landlords, bringing roughly 30 cases alleging antitrust violations by the company and several owners and operators of multifamily housing utilizing the company’s revenue management systems. While those cases were combined and advanced in a Nashville, Tennessee, federal court last year, Denver-based Apartment Income REIT and Dallas-based Pinnacle Property Management Services, owned by real estate services firm Cushman & Wakefield, have decided to settle.
Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.