FBI agents raided corporate landlords Cortland Management in Atlanta on May 22, a dramatic step forward in a potential antitrust investigation into price-fixing by property management companies who control over 70% of the United States’ multi-family rental units.
The raid comes amidst a class action antitrust lawsuit that has been simmering in a federal court since 2023 and alleges a conspiracy between a group of corporate landlords including Cortland Management and a constellation of heavyweights in corporate renting, including Lincoln Property Co., Equity Residential, and Morgan Properties. The lawsuit also targets RealPage, Inc. whose AI Revenue Management software plaintiffs claim has been a key tool used by corporate landlords to keep properties off the market and collude to keep prices high.
There are a number of other corporate landlords named in the 35-page civil complaint.
A parallel criminal probe is reportedly being pursued by the FBI, which resulted in the raid in May. The names of other companies involved in the probe have not been publicly disclosed.
While investigators have been collecting documents and digging into allegations that the biggest corporate landlords in the country algorithmically colluded to jack up rental prices 7% above market rate, regular tenants in some properties owned by the companies voiced their own complaints for years across social media and in reviews of the companies online.
“They will often offer you renewals at a much higher price than similar listings,” u/Mental-Opinion-6282 posted in an NYC Apartments subreddit last year in response to another redditor asking for advice on Equity Residential, one of the companies named in the civil complaint. “Also don't forget all bills are on top of the listed rent, typically pushing your rent up by 100-150 usd (not including electricity). In my experience, their units are typically priced 150-300 usd higher than similar in the area.”
While consolidation by corporate landlords has taken off since the COVID-19 pandemic, some people were already complaining about the less-than-stellar reputations of the property management companies for years before.
“Dealing with this company has been one of the worst experiences I have ever had with any type of organization in my life,” posted one Chicago-based renter in 2017 on Yelp about Cortland Properties, which was raided. “It is impossible to get a response from anyone in anyway. The staff neglect to follow up on conversations or complaints that have been unresolved for long periods of time. The owner refuses to acknowledge the thievery of taking money from people and not providing the services they promise.”
A June 2019 thread in the r/KansasCity subreddit also documented alleged problems with some Lincoln Property-owned buildings, with a poster detailing the company changing the locks on apartments to lock tenants out, months going by without any cleaning done, and a lack of responsiveness from the building offices.
According to the lawsuit, the alleged price-fixing took off when private equity firm Thoma Bravo acquired RealPage in April 2021.
“Thoma Bravo was aware of RealPage’s anticompetitive activities and acquired RealPage with the intent to maintain and enhance its cartel profits, which RealPage, with Thoma Bravo’s active guidance and participation, has done,” the lawsuit alleged.
An r/Rochester thread from January 2022 pointed to price hikes from a Morgan Properties-owned development that seems in line with the time of price raises the lawsuit claimed the AI Revenue Management software was powering.
In the thread, renters complain about rent going up $300 per unit after putting in a bunch of new amenities they never asked for. Amenities and services are specifically mentioned in the lawsuit complaint as some of the data that the rental companies were sharing with one another and plugging into the RealPage software to drive up prices.
“Just got the letter that rent was being increased 20% due to COVID-19 give me a break,” posted u/TGR331 in the r/Rochester thread.
“I’m in elmwood terrace apartments, you just described everything they did in my complex,” added u/Professional_Dream17. “Rent is up 150 from last year when I moved in, they’re evil.”
But even then some people had an inkling about what might be going on.
“Never in my life would I have thought Rochester would become an overheating real estate market....” posted one redditor. “Corporations are buying up properties all over the country to increase rents even in lower income neighborhoods and trailer parks. It's some kind of tactic to keep their money during an economic downturn when a lot of businesses are going under.”
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