While RealPage and multiple apartment owners and operators are facing class-action lawsuits and state and federal litigation, some larger landlords are revising how they share data behind the scenes.

Remen Okoruwa, co-founder and CEO of Propexo, a Boston-based firm that develops a product that serves as a conduit between different management systems, has seen this firsthand.

After the Department of Justice filed an antitrust lawsuit against RealPage in August, he says a major REIT, who he declined to identify, created a new data processing agreement dictating that its vendors are no longer allowed to aggregate and use their data for anything other than the specified purpose.

“They're pushing it out to every single vendor they work with,” Okoruwa told Multifamily Dive.

Why the sudden change? Apartment firms are trying to protect themselves from liability, according to Okoruwa.

“The contractual statement [from operators] that vendors are going to assure us they're not aggregating data, and they do not have our permission to aggregate, is one of the easiest ways to shift some of this liability,” Okoruwa said.

Though multiple REITs and large owners declined to comment when asked if their data-sharing agreements have changed, other tech vendors and lawyers reiterate what Okoruwa said — that the RealPage case is causing apartment firms to rethink how information is handled. And that could have repercussions on how operators run their buildings.

Tighter terms

Okoruwa expects more apartment owners and operators to restrict data sharing in the coming months.

“It might not be immediate, nor is it necessarily happening all in one go, but everyone's looking at what's happening to RealPage, and it's really clear that this will change things,” Okoruwa said.

Vidur Gupta, CEO of Beekin, a New York City-based firm that offers an artificial intelligence-based real estate analytics platform, is also seeing that “contract terms are getting a bit tighter.” He notices a certain group of owners specifically concerned with the RealPage suits. 

“Some of the institutional investors are quite nervous about pooling information,” Gupta said.

While the RealPage cases are forcing many owners and operators to change their data-sharing agreements, it isn’t universal, according to Gupta. “Some people are saying, ‘Look, we'll wait and watch how this unravels,’” he said. “And some are definitely in the camp where they're not going to share data with anyone else.”

The one definite in the market right now is uncertainty, and a lot of people are “more gun shy” than anything else, says Blerim Zeqiri, CEO and co-founder of Scottsdale, Arizona-based Radix, a multifamily analytics company.  “In the short term, everyone is going to ask, ‘Hey, do I want to share this?’” Zeqiri said. 

Uncertainty in the market

Michelle Lowery, an antitrust and competition law partner at the Chicago-based firm McDermott Will & Emery, isn’t surprised by some apartment firms deciding to change their data policies in the wake of the RealPage suits. She thinks the RealPage cases could also lead to a “chilling effect” in apartment industry information sharing.

“People don't know exactly what position the DOJ will take as to what's competitively sensitive and what's not,” Lowery said. 

For instance, historically, sharing pricing information is off limits between competitors. But what if companies are providing other types of data, like maintenance information? Okoruwa doesn’t think it matters after reading the DOJ lawsuit.

“What happens if they did something similar with tenant screening?” Okoruwa said. “You can see other use cases where a lawyer can make an argument that there's going to be harm to consumers by the pooling and sharing of this private data, even if it's not directly about rent prices.”

What the market needs right now, Okoruwa said, is clarity. “There’s not a clear, bright line around the kind of data that is OK to share and the kind of data that is not OK to share,” he said. “Rather, the rule seems to be, as competitors in a market, the general sharing of data, writ large, is going to be looked at really unfavorably.”

An operational loss

Gupta laments that the RealPage cases came just as apartment owners were beginning to really embrace technology. 

“In general, multifamily is a bit of a laggard,” Gupta said. “So just at the point they are jumping onto the bandwagon to start using analytics and artificial intelligence, they have this case in front of them.”

The end result of the data spigot being shut off could hurt apartment operators and, by extension, consumers, Lowery argues. 

“There's no good way to do true benchmarking without the sharing of data,” Lowery said. “And benchmarking, I think, has been shown to be pro-competitive over and over and over again. So there's obviously got to be some middle ground there.”

Gupta agrees, saying information disclosure allows companies to understand and improve their business and make better investments. “Otherwise, you'll regress to the lowest common denominator,” he said. “There are benefits to sharing information. If you want the whole industry to be efficient, profitable and self-sustaining, then you need some way to benchmark.”

Even if apartment firms cut off private information, they’ll still rely on data to make decisions. “I doubt you will get to a point where people don't access information,” Gupta said.

However, it will be readily available public data. “Rental housing has a big footprint of public data,” Gupta said. “If you rent your home on an internet listing site, there is information about how much something rents for, where it is, what kind of schools there are and stuff like that. It's all public.”

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