Blackstone-contracted property manager Cortland raided by FBI as part of RealPage investigation

In May, the FBI raided the Atlanta headquarters of apartment manager Cortland Management as “part of an ongoing investigation by the U.S. Department of Justice into potential antitrust violations in the multifamily housing industry”, according to the company.[1]

Cortland, which manages over 11,000 apartment units for Blackstone,[2] is one of the landlords and property managers that have been named in the many lawsuits against RealPage, alleging that it sold a software program called YieldStar that enabled landlords and property managers to allegedly collude to inflate rents.

The more than 30 private lawsuits that have been filed against RealPage have been consolidated in federal court in Tennessee and are currently pending.[3]  Cortland is one of 14 property managers that Blackstone uses that were named as co-defendants in the RealPage lawsuits. These companies manage at least 350 Blackstone properties, totaling over 100,000 units, more than 2/3 of Blackstone’s multi-family portfolio.[4]  The lawsuits do not allege specifically that the property managers engaged in price fixing at Blackstone-owned properties.

The Arizona and Washington, DC Attorneys General have also filed lawsuits against RealPage, and the North Carolina Attorney General announced an investigation into RealPage’s practices.[5]

“The conspiracy allegedly engaged in by RealPage and these landlords has harmed Arizona and directly contributed to Arizona’s affordable housing crisis,” said Arizona Attorney General Kris Mayes in February. “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. RealPage and its co-defendants must be held accountable for their role in the astronomical rent increases forced on Arizonans.”[6]

In addition to the number of its property managers that use RealPage, there is significant other evidence that Blackstone uses RealPage to set rents at properties it owns.

A 2021 prospectus prepared by Morningstar for a trust securitized by Blackstone-owned multifamily properties cited the use of RealPage’s YieldStar at specific properties, noting “The property uses the revenue management system YieldStar.”[7]

Ads for revenue management positions with Blackstone require experience with YieldStar, RealPage’s revenue management system. For example: A job ad stated, “The Revenue and Performance Senior Manager will be involved in all aspects of Revenue Management including oversight of YieldStar.”[8]

The Vice-President of Revenue Management at Blackstone’s multi-family properties has been featured as a RealPage expert on at least three RealPage webcasts about revenue management, including one titled “Smart Solutions: How to Outperform in a Changing Market with Revenue Management.”[9]

As the largest landlord in the United States and one of the largest landlords in the world, Blackstone’s actions impact hundreds of thousands of tenants. Blackstone should establish itself as a leader by committing to not use RealPage to set its rents and not allow RealPage to share Blackstone’s rent information with other landlords.

[1]https://www.multifamilydive.com/news/FBI-investigation-antitrust-suit-realpage-apartment-rents/718063/

[2] Yardi Matrix. (List attached)

[3] Kathy Carlon, “Judge Allows Rent-Fixing Lawsuits Against Real Page, More Than 20 Big Multifamily Owners to Proceed,” BisNow, August 8, 2023, https://www.bisnow.com/national/news/multifamily/judge-allows-rent-fixing-lawsuits-against- realpage-more-than-20-big-multifamily-owners-to-proceed-120151, Case No. 3:23-md-3071

[4] Yardi Matrix

[5] Katharine Carlon, “Report: DOJ opens criminal probe into RealPage, multiple landlords,” Multifamily Dive, March 25, 2024, https://www.multifamilydive.com/news/DOJ-antitrust-suit-price-fixing-algorithm-RealPage/711152/#

[6] “Attorney General Mayes Sues RealPage and Residential Landlords for Illegal Price-Fixing Conspiracy,” February 28, 2024, https://www.azag.gov/press-release/attorney-general-mayes-sues-realpage-and-residential-landlords-illegal-price-fixing

[7] Presale Report BX Trust 2021-BXMF, DBRS Morningstar October 20, 2021, https://assets.ctfassets.net/dqx4ywg83raq/644MqJDkioY9pTycV6MseY/9890bafb3a6ccef0b79143157a315ca8/386332.pdf

[8]https://www.linkedin.com/jobs/view/sr-manager-revenue-performance-at-livcor-a-blackstone-portfolio- company-3723908293/

[9]https://www.realpage.com/webcasts/smart-solutions-outperform-changing-market/