News and blog

RealPage-associated landlord subject of FBI probe

June 12, 2024

Once again, landlords associated with the property management software RealPage find themselves in hot water. On May 22nd, the FBI raided Cortland Management, an Atlanta-based multifamily property developer. Using a limited search warrant, the US Department of Justice declined to comment on the raid other than stating that “FBI Atlanta division agents were at the listed location conducting court-authorized activities.” The raid is believed by housing advocates, and even Cortland Management, to be due to ongoing investigations within the multifamily housing sphere in regards to potential antitrust behavior by corporate landlords. These behaviors include the alleged sharing of personal information about potential tenants, and also rental price data between competitors in an alleged attempt to fix rental prices. These ongoing investigations are the result of a wave of lawsuits against RealPage, with the lawsuits alleging that the software is rapidly changing the conditions of the housing market, and creating a “rental  monopoly.” 

As previously written about on the PESP blog, RealPage is a corporation that creates software programs for property management and real estate. The corporation is owned by Thoma Bravo, a Chicago-based private equity real estate investment firm that currently maintains over $130 billion in assets. RealPage and Thoma Bravo became the subject of public scrutiny after a 2022 expose by ProPublica titled “Rent Going Up? One Company’s Algorithm Could Be Why.”  Empowered by the ProPublica research, over 30 lawsuits have been filed against RealPage and their clients for inflating rent prices and engaging in anti-competitive business practices. In addition, the Attorneys General of Washington, DC and Arizona have also brought lawsuits, and the North Carolina Attorney General has begun an investigation. 

It is still unclear why the FBI decided to focus on Cortland Management in particular, and if similar raids can be expected in the future. There are currently no charges that have resulted from the raid, yet some housing justice advocates are taking this probe as a positive sign. Andrea Beaty, research director for PESP partner The Revolving Door Project stated in a recent press release that 

“The DOJ’s raid on Cortland is an encouraging sign that the Biden administration is taking the threat of price-fixing in the rental market seriously. While President Biden’s housing platform is focused on the ever-important housing supply issue, increasing supply alone will not decrease rents when large swaths of the market are colluding instead of competing. Biden must call out corporations like RealPage and Cortland and their senior executives by name for their apparent rent-gouging and leaving American families in desperate straits.” 

As RealPage and corporate landlords become the subject of more lawsuits, continued investment into Thoma Bravo by public pension funds poses extreme reputational risks. While another FBI probe may not be imminent, negative press about RealPage continues to be published at a daily rate, with more tenants and Attorney Generals becoming empowered to launch lawsuits. 

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