RealPage Colluded With Landlords To Inflate Student Housing – Lawsuit Featured

A class-action lawsuit was recently filed by a University of Washington student alleging collusion among 10 of the largest players in the U.S. student rental housing industry.

According to the lawsuit there was an unlawful agreement among student housing managers to “artificially inflate the prices of student housing across the United States,” specifically in college towns including in Seattle; Eugene, Tuscon, Salt Lake City, Ann Arbor, Columbus and Gainesville.

The student property managers named in the lawsuit include some of the biggest operators in the rental housing industry. They include:

  • Greystar Real Estate Partners
  • Cushman & Wakefield
  • Pinnacle Property Management Services
  • BH Management Services
  • Campus Advantage
  • Cardinal Group Holdings
  • CA Ventures Global Services
  • D.P. Preiss Company
  • The Michaels Organization
  • GEDR Lakeview Company.

RealPage’s Revenue Management System Enables Industry Collusion

Each of the companies named in the suit used RealPage’s YieldStar revenue management platform, which employs an algorithm to suggest asking rents for vacant units.

Similar to the pricing programs airlines and hotels have used for decades, revenue management has only been widely adopted in the multifamily industry more recently. Developers of the software have said they were conscious of collusion concerns even when the technology was in its infancy.

The lawsuit argues that “RealPage provided the platform and the algorithm for collusion.” In doing so, it gave student housing operators the ability to collaborate and track every detail of its competitors’ properties.

Before RealPage, Lessors Of Student Housing Set Prices Independently

The suit points out that student housing operators have separate challenges compared to conventional apartment managers. Before RealPage, it argued that these companies set prices independently with an emphasis on having “heads in beds” when the school year started. But the introduction of this technology changed that use-it-or-lose it approach by giving operators a peek behind their competitors’ pricing curtains and emboldend them to accept the higher rates recommended by the software.

Lessor’s Eliminate Competition by Outsourcing Price Supply Decisions to RealPage

“RealPage provided pricing information for student housing providers that allowed them to closely analyze their pricing in comparison to their competitors at a bedroom-by-bedroom level,” the suit said.

The lawsuit cites numerous instances whereby users of RealPages’s platform would “outperform” the student housing market by double digit percentages. RealPage itself boasts Yieldstar’s results as outperforming the market by 2% to 7% annually with a 95% client satisfaction rate.

This is the second class-action lawsuit RealPage has faced in recent weeks. The company and seven property management firms were accused last month of forming a “cartel” to artificially inflate apartment prices above competitive levels.

Major apartment managers including Lincoln Property Company, Sam Zell’s Equity Residential were named in the previous suit. Greystar is on the receiving end of both lawsuits.


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