IN THE SUPERIOR COURT OF THE DISTRICT OF COLUMBIA
Civil Division
DISTRICT OF COLUMBIA,
a municipal corporation,
400 6th Street N.W., 10th Floor
Washington, D.C. 20001,
Plaintiff,
v.
REALPAGE, INC.
,
2201 Lakeside B
oulevard,
Richardson, T
exas 75082;
AVENUE5 RESIDENTIAL, LLC
,
901 5th Avenue, Suite 3000,
Seattle, Washington 98164
;
AVALONBAY COMMUNITIES, INC.
,
4040 Wilson Boulevard, Suite 1000,
Arlington, Virginia
22203;
BELL PARTNERS, INC.
,
300 N
. Greene Street, Suite 1000,
Greensboro, North Carolina 27401
;
BOZZUTO MANAGEMENT COMPANY
,
6406 Ivy Lane, Suite 700,
Greenbelt, Maryland 20770
;
CAMDEN
DEVELOPMENT, INC.,
11
Greenway Plaza, Suite 2400,
Houston, Texas 77046
;
EQUITY
RESIDENTIAL MANAGEMENT,
LLC
,
Two North Riverside Plaza, Suite 400,
Chicago, Illinois 60606
;
GABLES RESIDENTIAL SERVICES, INC.
,
3399 Peachtree Road N.E., Suite 600,
Atlanta, Georgia 30326
;
C
ase No.: ______________
Judge:_________________
C
OMPLAINT
JURY TRIAL DEMANDED
GREYSTAR MANAGEMENT SERVICES,
L.P.
,
465 Meeting Street, Suite 500,
Charleston, South Carolina
29403;
HIGHMARK RESIDENTIAL, LLC
,
5429 LBJ Freeway, Suite 800,
Dallas, Texas
75240;
JBG
ASSOCIATES, LLC,
4747 Bethesda Avenue, Suite 200,
Bethesda, Maryland
20814;
MID
-AMERICA APARTMENTS, LP,
6815 Poplar Avenue, Suite 500,
Germantown, Tennessee
38138;
PARADIGM
MANAGEMENT II, LP,
1515 North Courthouse Road, #600,
Arlington, Virginia 22201
;
UDR, INC.
,
1745 Shea Center Drive, Suite 200,
Highlands Ranch, Colorado 80129
;
WILLIAM C.
SMITH & CO., INC.,
1100 New Jersey Avenue S.E.,
Washington, D.C. 20003
,
Defendants.
i
TABLE OF CONTENTS
INTRODUCTION .......................................................................................................................... 1
JURISDICTION ............................................................................................................................. 4
THE PARTIES ............................................................................................................................... 4
RELEVANT FACTS .................................................................................................................... 11
I. RealPage and Defendant Landlords Position RealPage’s RM Software to Dominate the
Market. .............................................................................................................................. 11
A. RealPage’s RM Software Uses Public and Proprietary Data to Increase Landlords’
Returns. ....................................................................................................................... 11
B. RealPage’s RM Software is Modeled Off Software Previously Deemed
Anticompetitive........................................................................................................... 13
C. RealPage Acquires its Largest RM Competitor, LRO, Cementing its Dominant
Market Position in 2017. ............................................................................................. 14
D. RealPage’s RM Software Is Used to Set Rents for the Substantial Majority of Large
Apartment Building Units in the D.C. Metropolitan Area.......................................... 16
II. Defendant Landlords Unlawfully Agree to Delegate Rent-Setting Authority to RealPage
and Share Sensitive Data. ................................................................................................. 17
A. RealPage and Defendant Landlords Agree to Delegate Rent-Setting Authority to
RealPage, Which Enforces Compliance. .................................................................... 17
B. Defendant Landlords Agree Among Themselves to Forgo Competition and Set Rents
Using RealPage’s RM Software. ................................................................................ 22
C. Market “Plus Factors” Support the Existence of an Agreement Among Defendants to
Use RealPage RM Software........................................................................................ 28
D. Defendant Landlords Agree to Share Competitively Sensitive Data for the Purpose of
Raising Rents. ............................................................................................................. 31
III. Impact and Damages: Defendants’ Agreement to Set Rents and Information Sharing
Unlawfully Increased Rents, Overcharging Residents Millions. ...................................... 33
IV. Defendants Have Market Power in the Relevant Market. ................................................ 36
COUNT ONE (Violation of the D.C. Antitrust Act) .................................................................... 41
PRAYER FOR RELIEF ............................................................................................................... 42
1
COMPLAINT
1. Plaintiff District of Columbia (the “District”), by and through the Office of the
Attorney General, brings this action against Defendants RealPage, Inc. (“RealPage”) and fourteen
of the largest landlords in the District: Avenue5 Residential, LLC; AvalonBay Communities, Inc.;
Bell Partners, Inc.; Bozzuto Management Company; Camden Development, Inc.; Equity
Residential Management, LLC; Gables Residential Services, Inc.; Greystar Management Services,
L.P.; Highmark Residential, LLC; JBG Associates, LLC; Mid-America Apartments, LP; Paradigm
Management II, LP; UDR, Inc.; and William C. Smith & Co., Inc. (collectively “Defendant
Landlords”) for unlawfully colluding to raise rents by collectively adopting the rents set by
RealPage’s technology and unlawfully agreeing to exchange competitively sensitive data in
violation of the District of Columbia Antitrust Act, D.C. Code §§ 28-4501 et seq. In support of its
claims, the District states as follows:
INTRODUCTION
2. Defendant Landlords and RealPage, a technology company, have unlawfully
agreed to use a centralized system—RealPage’s “Revenue Management” (“RM”) Software—to
inflate rents for tens of thousands of apartments across the District, causing District renters to pay
millions of dollars they would not have, but for Defendants’ misconduct. Defendant Landlords
have extracted these inflated rents by agreeing to delegate their price-setting authority to a
centralized entity—RealPage—rather than competing on price.
3. As part of this scheme, Defendant Landlords have also agreed, in writing, to share
competitively sensitive data for RealPage to feed into its rent-setting RM Software. This data
includes the rents that Defendant Landlords actually charge, providing RealPage with a mechanism
2
for assessing whether Landlords “cheat” on their agreement by deviating from the rent dictated by
RealPage’s RM Software.
4. RealPage actively polices Defendants’ agreement to ensure compliance. And, in
fact, Defendant Landlords have abided by their agreement, imposing rents set by RealPage’s RM
Software in the vast majority (greater than 90%) of instances.
5. This misconduct extends beyond District boundaries. Indeed, many of the largest
providers of multifamily housing in the nation count themselves as members of this rent-setting
cartel and have agreed to use RealPage RM Software. But the impact of the scheme is particularly
significant in the D.C. metropolitan area.
6. Defendant Landlords are some of the largest providers of multifamily housing in
the District, and within the broader D.C. metropolitan area, RealPage’s RM Software is used to set
rents for more than 90% of units in large buildings (those with 50 or more units). Almost all of
the buildings that use the software are large buildings, but even if one were to take a broader view
of the multifamily housing market, the scope of this misconduct is significant. RealPage’s RM
Software is used to set the rents at more than 50,000 units in the District—a sizable portion of its
available housing.
7. The consequences of Defendants’ anticompetitive scheme are widespread and
severe. To recruit more landlords to their cartel, Defendants have publicly advertised that
landlords who participate in the scheme, agreeing to use RealPage’s RM Software to set rents, can
boost revenue (i.e., rents) by 2-7%. Increases of this magnitude translate to millions in wrongfully
inflated rents in the last four years alone.
8. Defendants achieve results like these by limiting market competition. Rather than
pursue a “heads in beds” strategy—i.e., competing on price to attract the most renters—Defendants
3
have conspired to share information, limit supply, and drive up rents. In a truly competitive
market, one would expect competitors to keep their pricing strategies confidential—especially if
they believe those strategies provide a competitive edge. Here, in contrast, Defendants understand
that recruiting more would-be competitors to their anticompetitive scheme only increases their
mutual ability to extract unlawfully higher rent, confident that their competitors will not
dramatically undercut their prices.
9. The ever-climbing cost of housing is one of the toughest challenges facing District
residents today. The District of Columbia is a majority-renter city. In recent years, however,
staggering rent increases have become an unfortunate fact of life for District residents;
approximately a quarter of all renters are forced to spend over 50% of their income on rent.
10. Defendants’ anticompetitive agreement has exacerbated D.C.’s affordable housing
crisis, forcing numerous District renters to overpay, month after month, for what is likely the single
largest expense in their lives: rent. Housing is a human necessity. By demanding unlawfully high
cartel rents, Defendants have inflicted real harm on neighborhoods across the District. Every dollar
of increased rent that the cartel illegally squeezes from District renters contributes to widening
wealth gaps, forces hardworking residents to forgo other uses of their money, and pushes residents
out of a District whose housing they increasingly cannot afford.
11. The Attorney General brings this action in his parens patriae capacity to recover
treble the damages that Defendants have forced District renters to incur, civil penalties, and other
relief identified below.
4
JURISDICTION
12. This Court has subject matter jurisdiction over this case pursuant to D.C. Code
§§ 1-301.81, 11-921, 28-4507, and 29-412.20(a). This Court has personal jurisdiction over
Defendants pursuant to D.C. Code §§ 13-422 and 13-423(a).
THE PARTIES
13. Plaintiff District of Columbia, a municipal corporation empowered to sue and be
sued, is the local government for the territory constituting the permanent seat of the government
of the United States. The District is represented by and through its chief legal officer, the Attorney
General for the District of Columbia. The Attorney General has general charge and conduct of all
legal business of the District and all suits initiated by and against the District and is responsible
for upholding the public interest. D.C. Code § 1-301.81(a)(1). The Attorney General is
specifically authorized to enforce the District’s antitrust laws, including D.C. Code §§ 28-4501 et
seq.
14. Defendant RealPage is a corporation headquartered in Richardson, Texas,
organized and existing under the laws of Delaware. RealPage provides software and services to
managers of residential rental apartments, including the RealPage RM Software described herein.
RealPage was a public company from 2010 until December 2020, when it was purchased by
Chicago-based private equity firm Thoma Bravo.
15. Defendant Bozzuto Management Company (“Bozzuto”) is a corporation
headquartered in Greenbelt, Maryland, organized and existing under the laws of Maryland.
Bozzuto is a residential apartment manager and owner that relies on the RealPage RM Software
as part of the process for determining the price of rental leases in the District of Columbia. Bozzuto
and its affiliates own and/or operate approximately 15,457 units in the District of Columbia, and
5
during at least all or part of the past four years used RealPage RM Software. Bozzuto has used
RealPage RM Software pursuant to contracts with RealPage including, among others, its August
2021 RealPage One Master Agreement. Bozzuto uses the RealPage RM Software at buildings in
the District including Cathedral Commons located at 3401 Idaho Avenue NW, and Elevation at
Washington Gateway located at 100 Florida Avenue NE.
16. Defendant William C. Smith & Co., Inc. (“W.C. Smith”) is a corporation
headquartered in Washington, District of Columbia, organized and existing under the laws of the
District of Columbia. W.C. Smith is a residential apartment manager and owner that relies on the
RealPage RM Software as part of the process for determining the price of rental leases in the
District of Columbia. W.C. Smith has used RealPage RM Software pursuant to contracts with
RealPage including, among others, its June 16, 2016 RealPage One Master Agreement. W.C.
Smith and its affiliates own and/or operate approximately 9,384 units in the District of Columbia,
and during at least all or part of the past four years used RealPage RM Software at buildings in the
District, including for example The Garrett located at 150 I Street SE, and Agora at the Collective
located at 800 New Jersey Avenue SE.
17. Defendant Greystar Management Services, L.P. (“Greystar”) is a limited
partnership headquartered in Charleston, South Carolina, organized and existing under the laws of
Delaware. Greystar is a residential apartment manager and owner that relies on the RealPage RM
Software as part of the process for determining the price of rental leases in the District of Columbia.
Greystar and its affiliates own and/or operate approximately 7,730 units in the District of
Columbia, and during at least all or part of the past four years used RealPage RM Software.
Greystar has used RealPage RM Software pursuant to contracts with RealPage including, among
others, its August 23, 2017 Master Agreement, which states that “Greystar will use commercially
6
reasonable efforts to . . . cause new and existing Sites to use . . . YieldStar Asset Optimization
(revenue management).” Greystar uses RealPage RM Software at buildings in the District
including, for example, The Gantry located at 300 Morse Street NE, and Illume located at 853
New Jersey Avenue SE.
18. Defendant Camden Development, Inc. (“Camden”) is a corporation headquartered
in Houston, Texas, organized and existing under the laws of Delaware. Camden is a residential
apartments manager and owner that relies on the RealPage RM Software as part of the process for
determining the price of rental leases in the District of Columbia. Camden and its affiliates own
and operate approximately 6,199 units in the District of Columbia, and during at least all or part
of the past four years used RealPage RM Software. Camden has used RealPage RM Software
pursuant to contracts with RealPage including, among others, a Master Agreement with RealPage
dated December 22, 2017. Camden uses RealPage RM Software at buildings in the District
including, for example, Camden Grand Parc located at 910 15th Street NW, and Camden
Roosevelt, located at 2101 16th Street NW.
19. Defendant Equity Residential Management, LLC (“Equity”) is a limited liability
company headquartered in Chicago, Illinois, organized and existing under the laws of Delaware.
Equity is a residential apartment manager and owner that relies on the RealPage RM Software as
part of the process for determining the price of rental leases in the District of Columbia. Equity
and its affiliates own and operate approximately 4,622 units in the District of Columbia, and during
at least all or part of the past four years used RealPage RM Software. Equity has used RealPage
RM Software pursuant to contracts including, among others, a contract with The Rainmaker Group
Real Estate, LLC entered into on or about July 28, 2011, and an April 2018 contract with RealPage,
following RealPage’s acquisition of LRO. Equity uses RealPage RM Software in buildings
7
including Park Connecticut Apartments located at 4411 Connecticut Avenue NW, and 455 Eye
Street Apartments located at 455 I Street NW.
20. Defendant JBG Associates, LLC (“JBG Smith”) is an limited liability company
headquartered in Bethesda, Maryland, organized and existing under the laws of Delaware. JBG
Smith is a residential apartment manager and owner that relies on the RealPage RM Software as
part of the process for determining the price of rental leases in the District of Columbia. JBG
Smith and its affiliates own and operate approximately 4,553 units in the District of Columbia, and
during at least all or part of the past four years used RealPage RM Software. JBG Smith has used
RealPage RM Software pursuant to contracts with RealPage including, among others, a January
27, 2020 RealPage One Master Agreement. JBG Smith has used RealPage RM Software at
buildings in the District, including The Batley located at 1270 4th Street NE, and West Half located
at 1201 Half Street SE.
21. Defendant AvalonBay Communities, Inc. (“AvalonBay”) is an equity real estate
investment trust (“REIT”) headquartered in Arlington, Virginia, organized and existing under the
laws of Maryland. AvalonBay is a residential apartment manager and owner that relies on the
RealPage RM Software as part of the process for determining the price of rental leases in the
District of Columbia. AvalonBay and its affiliates own or operate approximately 2,602 units in
the District of Columbia, and during at least all or part of the past four years used RealPage RM
Software, including at buildings such as 770 5th Street NW, 55 M Street NE, and 1160 First Street
NE. AvalonBay uses RealPage RM Software pursuant to contracts including, among others, a
contract it entered into with The Rainmaker Group Real Estate, LLC in March 2017, and a contract
with RealPage following RealPage’s acquisition of LRO in 2017.
8
22. Defendant Paradigm Management II, LP (“Paradigm”) is a limited partnership
headquartered in Arlington, Virginia, organized and existing under the laws of Virginia. Paradigm
is a residential apartment manager and owner that relies on the RealPage RM Software as part of
the process for determining the price of rental leases in the District of Columbia. Paradigm and
its affiliates own and/or operate approximately 1,852 units in the District of Columbia, and during
at least all or part of the past four years used RealPage RM Software. Paradigm has used RealPage
RM Software pursuant to contracts with RealPage including, among others, a February 2, 2020
RealPage One Master Agreement. Paradigm has used RealPage RM Software at buildings in the
District including Meridian on First located at 1000 First Street SE and Park Triangle Lofts & Flats
located at 1375 Kenyon Street NW.
23. Defendant Gables Residential Services, Inc. (“Gables”) is a corporation
headquartered in Atlanta, Georgia, organized and existing under the laws of Texas. Gables is a
residential apartment manager and owner that relies on the RealPage RM Software as part of the
process for determining the price of rental leases in the District of Columbia. Gables and its
affiliates own and operate approximately 1,779 units in the District of Columbia, and during at
least all or part of the past four years used RealPage RM Software. Gables uses RealPage RM
Software in the District pursuant to its contracts with RealPage including, among others, a
September 2017 Products and Services Master Agreement, signed for Gables by its Vice President
of Marketing & PR, Gigi Giannoni. Gables uses RealPage RM Software at buildings in the District
including, for example, Gables City Vista located at 460 L Street NW, and Gables Dupont Circle
located at 1750 P Street NW.
24. Defendant UDR, Inc. (“UDR”) is a corporation headquartered in Highlands Ranch,
Colorado, organized and existing under the laws of Maryland. UDR is a residential apartment
9
manager and owner that relies on the RealPage RM Software as part of the process for determining
the price of rental leases in the District of Columbia. UDR and its affiliates own and/or operate
approximately 1,753 units in the District of Columbia, and during at least all or part of the past
four years used RealPage RM Software. UDR uses RealPage RM Software in the District pursuant
to its contracts with RealPage including, among others, a RealPage One Master Agreement with
RealPage dated April 15, 2017. UDR uses RealPage RM Software in buildings including View
14 located at 2303 14th Street NW, and Waterside Towers located at 907 6th Street SW.
25. Defendant Bell Partners, Inc. (“Bell Partners”) is a corporation headquartered in
Greensboro, North Carolina, organized and existing under the laws of North Carolina. Bell
Partners is a residential apartment manager and owner that relies on the RealPage RM Software as
part of the process for determining the price of rental leases in the District of Columbia. Bell
Partners and its affiliates own or operate approximately 1,380 units in the District of Columbia,
and during at least all or part of the past four years used RealPage RM Software. Bell Partners
uses RealPage RM Software in the District pursuant to its contracts with RealPage including,
among others, a RealPage One Master Agreement dated May 1, 2014. Bell Partners has
specifically contracted with RealPage to use RealPage RM Software in the District of Columbia,
including for buildings such as Revel at NoMa Center located at 1005 1st Street NE, and Bell
Capitol Hill located at 1717 E. Capitol Street SE.
26. Defendant Avenue5 Residential, LLC (“Avenue5”) is a limited liability company
headquartered in Seattle, Washington, organized and existing under the laws of Delaware.
Avenue5 is a residential apartment manager that relies on the RealPage RM Software as part of
the process for determining the price of rental leases in the District of Columbia. Avenue5
manages approximately 542 units in the District of Columbia, and during at least all or part of the
10
past four years has used RealPage RM Software to set the rents for all or a substantial portion of
them. Avenue5 uses RealPage RM Software in the District pursuant to its contracts with RealPage
including, among others, a RealPage One Master Agreement entered on or about August 4, 2016.
Avenue5 uses RealPage RM Software at buildings in the District of Columbia, including for
example, an August 2020 contract for the Coda on H building located at 315 H Street NE, and a
November 2020 contract for the Legacy West End building located at 1255 22nd Street NW.
27. Defendant Highmark Residential, LLC (“Highmark”) is a limited liability company
headquartered in Dallas, Texas, organized and existing under the laws of Delaware. Highmark is
a residential apartment manager that relies on the RealPage RM Software as part of the process for
determining the price of rental leases in the District of Columbia. Highmark operates
approximately 327 units in the District of Columbia, and during at least all or part of the past four
years used RealPage RM Software. Highmark has used RealPage RM Software pursuant to
contracts with RealPage including, among others, a January 2016 RealPage One Master
Agreement. Highmark has used RealPage RM Software at Ellicott House, located at 4849
Connecticut Avenue NW.
28. Defendant Mid-America Apartment Communities, Inc. (“MAA”) is a corporation
headquartered in Germantown, Tennessee, organized and existing under the laws of Tennessee.
MAA is a residential apartment manager that relies on the RealPage RM Software as part of the
process for determining the price of rental leases in the District of Columbia. MAA and its
affiliates own and/or operate approximately 269 units in the District of Columbia, and during at
least all or part of the past four years used RealPage RM Software. MAA has used RealPage RM
Software in the District at the Post Massachusetts Avenue, 1499 Massachusetts Avenue NW.
11
RELEVANT FACTS
I. RealPage and Defendant Landlords Position RealPage’s RM Software to Dominate
the Market.
29. RealPage offers a variety of technology-based services to real estate owners and
property managers including, among others, property management software, sales and marketing
solutions, tenant screening capabilities, and, most relevant for purposes of this complaint, revenue
management applications and services. RealPage’s unparalleled access to proprietary data, and
significant market share, have positioned RealPage as the “Big Tech” company of rental housing.
Former CEO Steve Winn described the company’s powerful market position as, essentially, a
“soup to nuts” technology provider for apartment landlords.
30. RealPage’s RM software first hit the residential real estate industry in the early
2000s and, in the intervening twenty years, has been adopted by a substantial portion of the
multifamily housing rental market nationwide and here in the District.
A. RealPage’s RM Software Uses Public and Proprietary Data to Increase Landlords’
Returns.
31. RealPage markets three revenue management products: YieldStar, LRO, and
AIRM. The products are functionally identical in that they automate pricing of multifamily units
using algorithms fueled by RealPage’s vast data repositories which are shared among the three
products. RealPage’s RM Software allows clients to “[o]ptimize rents to achieve the overall
highest yield, or combination of rent and occupancy, at each property.” Stated simply, these
products employ statistical models that use data—including proprietary, non-public data—to
estimate supply and demand for multifamily housing that is specific to particular geographic areas
and unit types, and then generate a “price” to charge for renting those units that maximizes the
landlord’s revenue.
12
32. Each of the Defendant Landlords have used one or more of the RealPage RM
products to set the price of multifamily housing leases in the District. The Defendant Landlords
who have used YieldStar include at least Avenue5, Bozzuto, Greystar, and UDR. The Defendant
Landlords who have used AIRM include at least Bozzuto, Camden, Greystar, Highmark, MAA,
and Paradigm. The Defendant Landlords who have used LRO include at least AvalonBay, Bell
Partners, Bozzuto, Equity, Gables, Greystar, JBG Smith, Paradigm, and WC Smith.
33. RealPage contracts with property managers and owners to provide its RM Software
(though in some instances the property manager and owner are the same entity). Each of the
Defendant Landlords in this case entered into contracts and otherwise participated in and acted to
materially advance the anticompetitive agreements. Even where a Defendant is a property
manager rather than owner, its success is tied to that of the buildings it manages and it therefore
possesses an economic incentive to implement the scheme for its own benefit. Property managers
also can receive fees in connection with implementing the anticompetitive scheme in addition to
the standard fees that property managers receive for their building-management services.
34. While access to the RealPage RM Software is typically purchased on a per-building
basis, RealPage charges the landlord an initial setup fee for the RealPage RM Software and then a
monthly fee for each unit. This has been incredibly lucrative for RealPage, which has earned
hundreds of millions in revenue as a result.
35. In addition to fees, Defendant Landlords compensate RealPage by providing their
valuable proprietary data. This exchange is expressly stated in Defendant Landlords’ contracts
with RealPage. For example, the contract between RealPage and Defendant JBG Smith states:
“RealPage’s Product Centers [i.e., products including the RealPage RM Software] rely upon Site
Owner Data to function and deliver value to Site owners, managers, and residents. The pricing for
13
the Product Centers is partially based on the expected value exchange whereby Site Owner grants
to RealPage certain limited rights in the Site Owner Data.”
B. RealPage’s RM Software is Modeled Off Software Previously Deemed
Anticompetitive.
36. RealPage purchased its first RM product, YieldStar, from Defendant Camden in
2002. From the get-go, RealPage used YieldStar as an opportunity for competitors to coordinate
pricing strategies. In the fall of 2002, RealPage hosted a series of “executive-level revenue
management summits” with key clients (i.e., landlords) to “discuss” various elements of revenue
management, including:
• “Methods for establishing a forecast of weekly supply for each floor plan based
on vacant units . . .” and “Methods for establishing a forecast of weekly demand
for each floor plan[.]”
• “Methods to price units in real time based on statistically validated price
elasticity models that predict the relationship between price imbalances in
supply and demand[.]”
• “Methods to adjust pricing to reflect nonoptimal lease terms . . .” and “Methods
to adjust pricing to optimize renewal pricing[.]”
• “Methods to manage concessions as a marketing tool that gross up net effective
base rents computed by the pricing engine.”
RealPage promised to incorporate feedback from these “summits” into future releases of YieldStar.
37. Two years later, in 2004, RealPage acquired Re-Opt, which marketed a competing
RM product, “Price Optimizer.” Like YieldStar, Re-Opt’s “Price Optimizer” used a proprietary
model to maximize revenue in the apartment rental market. As part of the acquisition, RealPage
named Re-Opt’s CEO, Jeffrey Roper, “President and Principal Scientist” of YieldStar.
38. Roper had previously served as Alaska Airlines’ Director of Revenue Management
in the 1980s. In that capacity, he developed price-setting software for the airline industry that the
Department of Justice Antitrust Division later challenged as facilitating illegal anticompetitive
14
agreements among the nation’s largest airlines, costing customers more than a billion dollars in
artificially increased airfares between 1988 and 1992. After the airlines abandoned their expansive
revenue management program to satisfy the DOJ, Roper went to work at Talus, a consulting firm
that developed revenue management programs for multifamily housing.
39. Leveraging his experience in the airline industry and at Talus, Roper expanded
YieldStar’s use of proprietary data and incorporated Re-Opt’s pricing model into YieldStar to
improve on the model’s efficacy.
40. Roper predicted that market participants would quickly embrace revenue
management for pricing: “[c]learly the whole industry will embrace it one day . . . [i]t will reach
the point where [industry participants] don’t have a choice because [they] can’t compete
effectively with what is going on around you.”
41. This prediction proved accurate. Between 2004, when Roper joined RealPage, and
2016, use of revenue management for pricing grew significantly, and RealPage was a key part of
that growth. In 2016, RealPage was reporting double-digit growth largely driven by YieldStar.
C. RealPage Acquires its Largest RM Competitor, LRO, Cementing its Dominant
Market Position in 2017.
42. Like YieldStar, LRO was initially developed in the early 2000s by a REIT—
Archstone (which was subsequently acquired by Defendants Equity Residential and AvalonBay).
As Archstone’s Chief Information Officer Daniel Amedro explained, LRO was created to be a
“better way of pricing” than the “old model . . . where the pricing authority was effectively your
onsite staff[.]” Archstone hired Talus—the same software company where Roper had worked—
to develop LRO.
43. Like YieldStar, LRO used timely and competitively sensitive, non-public data to
generate the revenue-maximizing rent to charge for landlords’ multifamily units.
15
44. By 2017, YieldStar and LRO were the two largest RM products for rental real estate
in the United States. RealPage then solidified its position as the dominant player in the revenue
management space by purchasing LRO from its prior owner for $300 million. Prior to the
acquisition, YieldStar was pricing approximately 1.5 million multifamily housing units in the
United States; combining forces with LRO would immediately bring that number to 3 million.
45. As soon as the deal went through, RealPage acknowledged the significant market
advantage obtained as a result. RealPage’s access to data exceeded that of any other possible
competitor. As Winn told investors, “Simply put, we have more of it [data] than anyone else, and
we figured out how to create immense value from it.”
46. Between 2018 and 2020, RealPage continued to market both YieldStar and LRO,
noting that RealPage’s RM products used an “unmatched database” reflecting “lease transaction
data on over 12M units.”
47. RealPage has used its control over the relevant industry data to expand the scope of
its RM product offerings. In February 2020, RealPage announced the launch of its “super charged”
price optimization product, AI Revenue Management (“AIRM”). RealPage claims that AIRM
incorporates machine learning into its modeling, to (1) provide “more accurate supply/demand
forecasting” and (2) allow users to “optimize the price of amenity and rentable items.” Since
introducing AIRM, RealPage has allowed legacy YieldStar and LRO users to continue with those
products but new clients can only purchase AIRM, and RealPage has taken steps to transition
existing clients to AIRM. AIRM’s core functionality and purpose, however, remain identical to
YieldStar and LRO.
48. RealPage’s dominant market position stems directly from its unrivaled access to
proprietary data—something RealPage itself has acknowledged at multiple investor meetings.
16
Importantly, RealPage possesses not only a massive amount of data, but also extraordinarily
detailed data. This highly specific, proprietary data can then be used daily to generate rental prices
for each unit in the building that uses RM software.
D. RealPage’s RM Software Is Used to Set Rents for the Substantial Majority of Large
Apartment Building Units in the D.C. Metropolitan Area.
49. Given this powerful market edge, RealPage dominates the market for multifamily
housing, including both nationally and here in the District. In the District, well over 30% of
apartments in multifamily buildings (i.e., buildings with five or more units) are priced using
RealPage’s RM software.
50. In practice, RealPage has focused on recruiting into the cartel the buildings with
the largest number of units (i.e., buildings with fifty or more units). In the District, a sizable
majority of units in large multifamily buildings—approximately 60%—set their prices using
RealPage’s RM software. In the Washington-Arlington-Alexandria Metropolitan Statistical Area,
that number is even higher: over 90% of units in large buildings are priced using RealPage’s RM
software. As a practical matter, this leaves many District residents with no choice but to pay
RealPage’s inflated rents.
51. Several of the nation’s largest landlords—including the largest, Defendant
Greystar—use RealPage RM Software for pricing, as do landlords operating exclusively in the
D.C. area. Defendant JBG Smith, for example, operates properties exclusively in Washington,
D.C. and the surrounding region. The same is true of Defendant W.C. Smith.
52. Indeed, Defendant Landlords—all of whom use a RealPage RM product for many
of their units—represent more than 58,000 of the available multifamily housing units in the
District, including over 40,000 that are priced using RealPage’s RM software. And Defendant
Landlords are not the only landlords here in the District that use RealPage’s RM products.
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53. Nor is usage of the RealPage RM Software limited to any one particular
neighborhood in the District. Landlords have implemented the anticompetitive agreement at issue
in buildings in neighborhoods including (but not limited to) Navy Yard, NoMa, Dupont Circle,
Forest Hills, Logan Circle, Observatory Circle, Adams Morgan, Southwest Waterfront, Shaw, and
others.
II. Defendant Landlords Unlawfully Agree to Delegate Rent-Setting Authority to
RealPage and Share Sensitive Data.
54. Multifamily property owners and managers (collectively, “landlords”) traditionally
competed with one another for customers (tenants) in the rental housing market, including
competing on the price of rental leases to increase occupancy. Prospective tenants in multifamily
housing units routinely consider multiple options when evaluating potential leases, and their
decision of which unit to lease is determined in large part by the rent offered.
55. The RealPage scheme represents a fundamental departure from the traditional,
competitive marketplace that historically existed for multifamily rentals. RealPage and its clients
(“Participating Landlords” which include Defendant Landlords) have transformed a competitive
marketplace into one in which competing landlords work together for their collective benefit at the
expense of renters. Indeed, when a former high-ranking manager at Defendant Greystar was asked
whether landlords use the RealPage RM Software to collude on raising rental prices, he responded
that of course they did—it’s the entire reason landlords used the software.
A. RealPage and Defendant Landlords Agree to Delegate Rent-Setting Authority to
RealPage, Which Enforces Compliance.
56. RealPage, the Defendant Landlords, and other Participating Landlords have
unlawfully agreed to forgo competition in favor of using a central entity—the RealPage RM
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Software—to set apartment rents. Their agreement is reflected in existing documents, has been
publicly acknowledged by cartel members, and is closely policed to ensure compliance.
57. RealPage documents show the methods by which the company suppresses the
Defendant Landlords’ independent price decision-making while also securing their cooperation in
the cartel. RealPage training documents state: “You should be compliant”—i.e., each, individually
participating landlord must impose the rents generated by the RealPage RM Software—“90+% of
the time to see the best results in your revenue management.” This principle is reinforced during
in-person trainings when landlords join the cartel.
58. RealPage documents are replete with references to the need for “discipline”—i.e.,
adherence to the prices generated by RealPage. For example, an LRO training presentation
emphasizes the importance of “disciplined . . . pricing practices portfolio wide.” Similarly, an
AIRM training presentation references Participating Landlords’ commitment to the “disciplined
use of formal quotes.” When training landlords on LRO’s Lease Audit Report, RealPage instructs
landlords: “We should have all compliant leases. Just use the LRO price and you won’t have to
worry about it.”
59. Deviations from the RealPage-generated rent are referred to as “overrides.”
Consistent with their agreement to impose rents generated by RealPage RM Software nearly all
the time, Defendants agreed to limit overrides. For example, a RealPage LRO training document
states: “Overrides should be few and far between.” Similarly, internal RealPage LRO training
documents teach cartel members’ regional managers to beware of “Override Overload” or “rogue”
leasing agents who too frequently override the LRO-generated pricing.
60. Defendant Landlords have publicly and privately acknowledged their agreement to
impose rents set by RealPage’s RM Software in nearly all instances. For example:
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• Executives at Defendant Camden stated in a 2019 earnings call that “we’re very
disciplined around our revenue management system [YieldStar],” “it’s rare that
we have an exception to the recommended YieldStar rate.”
• Defendant UDR’s Director of Revenue Management Chris Long stated that
“[leasing] prospects understood that a system was producing the pricing and it
wasn’t up to the leasing agent’s whim,” touting the “sense of discipline.”
• An internal presentation created by Defendant Greystar explicitly
acknowledges that RealPage RM Software users should each seek to accept at
least 95% of the RealPage-generated prices, emphasizing that “Discipline [o]f
using revenue management increases more consistent outcomes.”
• Former Greystar employees have similarly confirmed that negotiating rents
other than those set by the RealPage RM Software was unacceptable.
• Defendant Equity Residential’s Executive Vice President, Operations, likewise
referred to the “disciplined process” as a “chief benefit” of agreeing to use LRO.
61. RealPage facilitates landlords’ compliance with the agreement in many ways,
including through a software feature that automatically accepts rents generated by the RM
Software. In both AIRM and YieldStar, this feature is called “Auto Pilot” and, if enabled, causes
the RealPage-generated rents to be automatically “accepted” and deployed to the landlord’s
property management system. LRO offers a similar feature referred to as “Rent Syndication”
which automatically sends LRO pricing information to Internet Listing Services where the
landlord’s units are marketed.
62. RealPage’s message to Participating Landlords (RealPage’s clients) is that they
should “let auto accept run” such that the landlords “accept all recommendations.”
A RealPage
presentation on pushing landlords to enable auto-accept states: “[n]ot an ask of the client. This is
a command to the client. It isn’t an optional process.”
63. The importance of auto-accept functionality is even reflected in landlords’ contracts
for the RealPage RM Software. For example, Defendant JBG Smith’s original contract for LRO,
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before it was acquired by RealPage, stated that LRO “automates apartment rent pricing on a daily
basis,” thereby leading “properties to perform better than non-LRO peers in terms of pricing.”
64. Even where Participating Landlords do not enable auto-accept, most landlords
cannot, on their own, charge rents other than those generated by RealPage’s RM Software—
landlords can only “propose an override.” The landlord must then provide a written business
justification for why they wish to depart from the RealPage-generated rent. The landlord is also
required to “enter the floorplan rent that [the landlord] is recommending” for the prospective
tenant, in order to “submit an override recommendation.”
65. Proposed overrides often trigger outreach from a RealPage Pricing Advisor—a
RealPage employee charged with directly interacting with clients (sometimes daily) to ensure
landlords impose the RealPage-generated rents. In addition to the content of the communications,
imposing this administrative burden is one way that RealPage works to ensure adoption of the
RealPage-generated prices, as a former RealPage employee explained. If, despite the Pricing
Advisor’s attempts to persuade otherwise, a landlord persists in seeking an override, the Pricing
Advisor can escalate the issue to RealPage management or the landlord’s regional manager.
Regardless, RealPage will not accept landlords’ business justifications for proposed overrides
except in extenuating circumstances such as a natural disaster.
66. RealPage actively polices Participating Landlords’ compliance to ensure overrides
remain rare. When a new landlord joins Defendants’ rent-setting cartel, RealPage conducts “secret
shops” to “confirm successful adoption” of the software. This process tests whether the landlords’
employees are, in fact, offering only RealPage-generated rents even in the event that a prospective
tenant attempts to negotiate. As detailed in the training manual that RealPage prepared for
Defendant Bozutto:
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Within 30 days of Sales Training, YieldStar will telephone shop each site.
Secret shops are utilized to confirm that users of revenue management
throughout the Bozzuto organization are comfortable using YieldStar, and
believe that the system, its pricing, and corresponding business practices are
delivering expected benefits. Results of secret shops will be carefully
evaluated to determine if adjustments may be needed to product
configuration and/or business processes, or if additional training may be
required. Bozzuto will also shop the site using their traditional site shopping
resource (we will provide guidance on how to modify the shopping report
to gauge how effective the team is at selling with the new YieldStar
process). Bozzuto agrees to share phone shop results with the YieldStar
team.
67. RealPage has also designed its RM Software to ensure that landlords monitor their
own compliance—i.e., whether the landlord has imposed the RealPage-generated rent. For
example, AIRM’s New Lease Workflow displays a “Lease Compliance” number where “100%
means no compliance variances.” YieldStar displays a “Lease Compliance” widget to landlords
that indicates whether compliance rates are acceptable and generates “Compliance Reports” for
landlords that present noncompliant rents as losses (in parentheses). Similarly, LRO presents a
“Rent Comparison Graph” to landlords that presents compliance data and generates “Lease Audit
Reports” identifying any differences between RealPage-generated rents and the rents that the
landlord in fact is charging tenants.
68. RealPage also employs Pricing Analysts who create reports analyzing clients’
compliance rates. Pricing Analysts generate “Rate Acceptance and Lease Compliance Analysis”
reports that measure landlords’ compliance and “identify detached potentially at-risk clients,
properties that need additional training, or opportunities for parameter and strategy alignment.” In
other words, RealPage monitors the prices actually imposed by cartel members to identify anyone
departing from the agreed-upon pricing plan, in order to discipline that member into adhering to
the RealPage-generated prices.
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69. According to one former RealPage Pricing Analyst, if these reports indicated poor
compliance—for example, failure to impose RealPage-generated rents at least 75% of the time—
landlords could be expelled from the cartel; “Sometimes we were happy to see customers go.”
This statement indicates that, while RealPage sought to grow the cartel to maximize profits, it also
understood the importance of universal adherence and was willing to expel an occasional cartel
member to demonstrate its commitment to enforcement of the agreed-upon pricing scheme.
70. Adherence to the strictures of the cartel’s agreement has been high. Overrides are
exceedingly rare. According to one former employee of both RealPage and Equity, it was very
rare for Equity to deviate from the RealPage-generated rates for renewals, and compliance for
pricing new leases was absolute. Additionally, multiple industry participants have confirmed
that—consistent with Defendants’ agreement and facilitated by RealPage’s oversight—
Participating Landlords impose RealPage-generated rents in the vast majority (greater than 90%)
of the time. In the rare instance when a landlord does not impose the RealPage-generated rent, the
cartel’s oversight mechanisms ensure that such a decision is not a landlord “cheating” the system,
but rather is accounting for some factor of which the RealPage RM Software was unaware (e.g., a
natural disaster having just occurred which substantially affects the property’s value).
71. At bottom, the rents RealPage generates are not recommendations. Rather than
competing on price, Participating Landlords agree to and do impose the RealPage-generated rents
nearly all of the time.
B. Defendant Landlords Agree Among Themselves to Forgo Competition and Set
Rents Using RealPage’s RM Software.
72. Defendant Landlords not only agreed with RealPage to impose RealPage-generated
rents, but also agreed with one another to do so.
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73. As Ray Thornton, former Vice President of Information Technology at Colonial
Properties (which was subsequently acquired by Defendant MAA in 2013) admitted, Colonial only
adopted LRO after consulting with “peers that we trusted” who reported “some really good
numbers.”
74. Similarly, a former employee of both RealPage and multiple property management
companies reported numerous in-person meetings among Participating Landlords (including
Defendants Gables and Equity) specifically for the purpose of exchanging pricing data. These
landlords were not acting as true competitors, rather the meetings occurred because, “[w]e didn’t
want to do damage to each other.”
75. And as Keith Oden, Executive Vice Chairman of Defendant Camden stated during
a recent earnings call when he was asked about competition: “[W]e all make the market better.
[Camden’s competitors] all use revenue management. They are all smart. They raised rents when
they should.”
76. Cartel participants likewise further their agreement via communications aimed at
recruiting additional members, exchange proprietary data, and generally reaffirm their
commitment to their agreement.
1. Participating Landlords—Including Defendant Landlords—
Actively Recruit Additional Members to the Cartel.
77. Numerous landlords have provided testimonials in video recordings and in writing
directed towards other landlords, encouraging them to adopt the RealPage RM Software and join
the scheme. For example, Defendant UDR provided a lengthy written testimonial, published on
RealPage’s website, touting the benefits of using YieldStar, in which the company’s Director of
Pricing and Revenue Management praised the “sense of discipline” and that the RealPage RM
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Software enables UDR to “have confidence accepting certain pricing that otherwise would have
made us nervous” about potentially being undercut.
78. Defendant Greystar issued public testimonials to recruit other landlords into the
scheme, touting how “YieldStar delivers a sustained, verifiable revenue premium” and that
“coming up with the right price” is something that “YieldStar handles” through the use of “data
that owners and [managers] are unable to produce on their own”:
79. RealPage also coordinated the production of videotaped landlord testimonials that
it published on its website to bring additional landlords into the cartel. In one such video, a
landlord speaks directly to competitors about how using YieldStar will ensure “you’re getting the
best price for your unit and not leaving any money on the table.” Another touts YieldStar’s
“unparalleled access to market data” to inform decisions based on “what everyone in the industry
is doing.”
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80. Yet another recruitment video proclaims, “The Time for Revenue Management is
Now!” In it, a landlord executive professes the value of having access to competitor data, with
“YieldStar being part of RealPage and RealPage having the largest footprint of any property
operating software provider.” The executive goes on to conclude, “We achieved results that are
beyond anything we could have imagined. . . . Revenue management will become the norm, and I
believe within 2 or 3 years if you are not doing it, you will be in the minority.”
81. Similarly, Rajiv Verma of Defendant AvalonBay issued a statement urging the
adoption of LRO by any “professional who’s procrastinating on using revenue management.”
82. Steve Lamberti, President of Defendant Highmark, highlighted the benefits of
cartel membership as part of a RealPage sponsored webcast: “We’re in a position now where
occupancy is extremely strong and we are pushing rents[.]” RealPage removed the webcast from
its website after the Washington Post accessed the video and sought interviews from participants.
83. In one video created by RealPage, a landlord executive is interviewed by Cameron
Rockwell, a RealPage employee. Mr. Rockwell asks: “[For] any clients or prospects we have in
that area that are currently evaluating revenue management, what would you say to them?” The
landlord executive responds: “It’s successful, it’s proven, it’s an opportunity.”
84. Defendant Camden’s CEO, Ric Campo, admitted at a 2021 industry conference that
Camden wants more landlords using the RealPage RM Software so that the cartel can collectively
raise rents: “we want the smartest owners being our competitors…. We want people
with revenue management. We want people to understand when to raise rents and how to operate
their portfolios at maximum efficiency.”
85. These testimonials support the existence of an unlawful agreement among
Defendant Landlords by reaffirming one another’s continued commitment to the agreement and
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serving as a recruitment tool for additional landlords to join in their agreement to forgo competition
in favor of RealPage’s RM Software.
86. If the RealPage RM Software provided landlords with a competitive edge—that is,
a way to make more money at other landlords’ expense—there would be no reason for them to
actively work to recruit other landlords to join the system. Why provide your competitors with
one of your best tools to increase revenue, if they will just take that revenue from you? The answer
is that the RealPage RM Software does not provide landlords with a competitive edge, but with an
anticompetitive one, where all participants make more money at the expense of renters in the
District.
2. Participating Landlords Regularly Communicated in Furtherance
of the Cartel.
87. Participating Landlords—including Defendant Landlords—further effectuated
their cartel via ongoing, direct communications. These communications allowed Participating
Landlords to exchange additional non-public information and reaffirm their continued
commitment to the cartel.
88. LRO users can and do conduct weekly calls with their competitor landlords, and
those competing landlords agree to provide non-public data for input into the LRO software. The
non-public data that competing landlords agree to share in these conversations includes current
occupancy rates, how many prospects visited the competitor each week, and how many new leases
a competitor signed each week.
89. Additionally, Defendant Landlords directly communicate regarding their collective
use of RealPage RM Software in the ongoing 1,000+ member User Group designed specifically
to, “promote communications between users.” RealPage sponsors the Group but it is “governed
by a steering committee of [RealPage’s] clients.” RealPage’s User Group and its subcommittees
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meet regularly: the YieldStar and AI Revenue Management groups typically meet telephonically
once per month, with the LRO User Group generally meeting quarterly. The User Group also has
a digital forum where competitor landlords can communicate with one another about using the
RealPage RM Software outside of their scheduled meetings. The User Group—including at least
Defendants Camden and Greystar—also communicates regularly via e-mail.
90. Participating Landlords also gather regularly, in person, to discuss their delegation
of pricing to RealPage software and work to recruit additional members into the cartel.
91. For example, RealPage hosts the annual “Real World” conference, during which
landlords who use the RealPage RM Software gather in-person to discuss how they are delegating
and will continue to delegate the pricing for their rents. RealPage expressly describes Real World
as an opportunity for landlords to “meet with peers.” And before LRO’s acquisition by RealPage,
landlords who use LRO gathered at the annual LRO User Conference and OPTIMIZE Rainmaker
User Conference.
92. In addition to the conferences hosted by RealPage itself, Defendant Landlords
communicate at numerous other industry conferences and through digital channels which provide
ample opportunities to confer. Examples include:
• The OPTECH Conference held by the National Multifamily Housing Council
(“NMHC”) and sponsored by corporations including RealPage. For example, the
2020 OPTECH Conference was sponsored by RealPage, and included multiple
sessions dedicated to revenue management, including one specifically on
RealPage’s AI Revenue Management, presented by RealPage employees Amy
Dreyfuss and Keth Dunkin. Other conference participants included representatives
from Defendants AvalonBay (including at least Senior Vice President for Strategic
Initiatives Karen Hollinger), Bell Partners (including at least Vice President of
Marketing Laurel Howell), Camden (including at least Vice President of Marketing
Julie Keel), RealPage (including at least Asset Optimization Analyst Adam Couch),
W.C. Smith (including at least Vice President of Marketing Holli Beckman),
Gables (including at least Senior Regional Manager Johanna Nowik), and Greystar
(including at least Managing Directors Greg Benson and Scott Berka).
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Included among the attendees of the 2021 OPTECH Conference were
representatives from Defendants RealPage (which sponsored the event, and sent
representatives including at least Multifamily Development Director Steve Sadler),
AvalonBay (including at least Karen Hollinger), Gables (including at least Senior
Vice President Gigi Giannoni), Greystar (including at least Marti Burrows) and
Camden (including at least Vice President for Strategic Services Kristy Simonette).
The 2022 OPTECH Conference was attended by representatives from, at least,
Defendants RealPage (including, among others, Director of Research & Analytics
Carl Whittaker, and Industry Principal for Asset Optimization Tracy Saffos),
AvalonBay (including, among others, Vice President of Data Analytics Kevin
Geraghty, who presented on “turning [data] into business intelligence”), Bozzuto
(including, among others, Vice President of Digital Marketing Daniel Paulino),
W.C. Smith (including at least Holly Beckman), Camden (including, among others,
Kristy Simonette – who presented at a panel on “centralization” and “unlocking
business intelligence hidden in data”), Greystar (including, among others,
Managing Director of US Property Marketing Greg Benson), and Gables
(including, among others, Vice President of Technology James Hamrick).
• NMHC facilitates the Participating Landlords’ regular communication with one
another about their use of multifamily housing technology, such as the RealPage
RM Software, through NMHC’s Technology and Innovation Committees—which
include, among others, an “Enterprise Technology and Business Intelligence
Committee.” Competitors who meet and communicate directly with one another
through these committees include at least Defendants Avenue5, AvalonBay, Bell,
Bozzuto, Camden, Equity, Gables, and Greystar.
• The National Apartment Association’s (“NAA’s”) 2019 Maximize conference was
held in September 2019 in Atlanta, GA, an “event focusing [on] the intersection of
asset and revenue management.” Participants included some of the same landlords
who have also published testimonials advocating for the use of RealPage RM
Software.
• NAA’s 2014 and 2015 Maximize conferences similarly included competing
landlords communicating directly with one another about strategies to maximize
revenue using software such as the RealPage RM Software.
C. Market “Plus Factors” Support the Existence of an Agreement Among Defendants
to Use RealPage RM Software.
93. The structure and characteristics of the multifamily housing market in D.C. are
particularly conducive to an unlawful agreement among direct competitors. Such market
conditions are sometimes referred to as “plus factors.” Numerous “plus factors” support the
existence of an unlawful agreement among RealPage and Defendant Landlords.
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94. First, demand in the multifamily housing market is highly inelastic—residents’
demand for housing does not change dramatically in response to pricing increases or decreases.
Housing is a human necessity. Defendant Landlords are thus essentially guaranteed a reliable and
steady supply of customers. Because the demand for multifamily housing is relatively insensitive
to changes in price, it is more susceptible to collusion on price-setting.
95. Second, the market for multifamily housing in the District of Columbia is heavily
concentrated. The Defendant Landlords named in this complaint control more than 58,000 rental
units in the District of Columbia out of approximately 141,000 multifamily units in the District
(per the most recently available 2021 Census data). It therefore takes discussions between only a
small number of landlords to effect and administer the agreement regarding how Defendant
Landlords will use the RealPage RM Software to benefit themselves at the expense of District
renters.
96. Third, the multifamily housing market is characterized by high barriers to entry—
in other words, there are many challenges that would make it difficult for would-be competitors to
enter the market. These barriers are manifold. Entering the multifamily housing market requires
developing a new property or acquiring an existing property—either of which demands investment
of many millions of dollars—as well as resources to ensure compliance with the laws and
regulations that govern multifamily housing. Further, the ability to build new multifamily housing
in the District of Columbia is partially limited by zoning laws that present a legal barrier to entry;
in certain areas of the District, new multifamily housing is simply not allowed. Even where new
building can occur, District regulations of building height constrain the number of additional units
that can be built. There are also inherent geographic constraints to building multifamily housing
in the District: there is only so much physical space available, and the District of Columbia is
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already one of the most densely populated cities in the country with over 11,000 people per square
mile on average. Indeed, one Participating Landlord expressly notes on its website that it “target[s]
U.S. markets with relatively limited supply and high barriers to entry.”
97. Fourth, there are high switching costs for renters in the relevant market. Once a
renter has begun renting in a building, there are substantial costs to switching to a competitor,
making it easier for competitors like Defendant Landlords to effectuate an anticompetitive scheme.
If a renter wants to switch before their lease has expired, they are subject to penalties and potential
double-rent payments. Searching for a new apartment involves a substantial investment of time
and in-person research and potentially application and background-check fees. And the cost of
physically moving all of one’s possessions from one apartment to another can easily reach into the
thousands of dollars and require multiple days of work. The farther a renter moves, the more of
their life they must adjust, and therefore the higher the switching costs and the higher the likelihood
that they will simply absorb a rent increase. Indeed, RealPage itself has recognized the direct
connection between the high cost of moving and landlords’ ability to extract supra-competitive
rents: in a training on “overcoming renewal objections,” RealPage instructs landlords to remind
the tenant of the high cost of moving to force acceptance of the RealPage-generated price.
98. Fifth, product fungibility is conducive to unlawful coordination. The more alike
products are, the easier it is for competitors to agree on how to price them. Defendants have
worked to standardize the products being offered by Defendants (multifamily housing leases)
based on their floorplans. As one internal RealPage document states, “We group units of different
sizes and attributes together in broader YieldStar floor plans, and normalizing allows us to have
one rate to represent the entire grouping despite their varied value.” By standardizing their
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products in this way, Defendants facilitate the anticompetitive agreements by making coordination
more straightforward and enabling easy detection of cheating on the cartel agreement.
99. Finally, Defendants’ substantial motivation to collude (millions of dollars in fees
and increased rents), existence of numerous modes of cartel enforcement, evidence of cartel
recruitment, and substantial opportunity to collude all constitute market “plus factors” that, in
addition to the facts set forth in this complaint, render allegations of collusion plausible.
D. Defendant Landlords Agree to Share Competitively Sensitive Data for the Purpose
of Raising Rents.
100. RealPage’s RM Software is powered by real-time, competitively sensitive, non-
public data supplied by its clients including Defendant Landlords:
• RealPage sources competing landlords’ information from its own platforms,
including OneSite—a widely used Property Management System marketed by
RealPage—including non-public information regarding inventory, prices of actual
leases, concessions offered, and detailed information about amenities and rental
unit value.
• RealPage also sources competitor data from within the RealPage RM Software
ecosystem; for example, RealPage RM Software generates pricing from
information that competing landlords have provided through other RealPage RM
Software products (e.g., YieldStar being fueled by data collected through AIRM
and vice versa).
• RealPage ingests non-public data from competing property management systems,
including from Yardi, which is OneSite’s leading competitor in the market.
• In addition to its Automated Comps feature—which automatically pulls in
competitor data from RealPage’s systems—LRO also allows landlords to manually
input competitor data. Landlords are instructed by RealPage to gather this non-
public competitor data from direct conversations with their competitors. And the
competing landlords agree to provide this data, to enable the LRO algorithm to
generate above-market rental prices for themselves and other cartel members. A
RealPage LRO user manual states, for example, that “You should gather []
information each week from each competitor” such as “[r]ent charged for each unit
type,” “number of visits to the property that week,” and “occupancy percent for the
property.”
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101. Defendant Landlords expressly agree to share their non-public information with
competitors and know that their competitors’ information is being used to generate the rents they
charge. Defendant Landlords’ “One Master Agreements” with RealPage expressly obligate
Defendant Landlords to provide RealPage with “correct and accurate” data and acknowledge that
RealPage may use that data to operate its products (including the RealPage RM Software).
102. Likewise, Defendant Landlords’ contracts for LRO expressly indicate the usage of
competitor data in the rent-setting tool. And when Defendant Bell Partners provided an
“Introduction to LRO Webinar” for its employees, the first agenda topic after the introduction to
revenue management was “Competitor Rents.”
103. The use of non-public competitor data facilitates Defendants’ agreement to
coordinate pricing and use RealPage’s RM Software for rent setting. For example, Jon Pastor, a
former executive at LRO’s prior owner, Rainmaker, and then Chief Product Officer of RealPage,
described LRO as “a pricing platform that relied on pricing of your competitors to figure out what
your price should be.”
104. In addition to incorporating competitors’ data into its algorithm for generating
rents, RealPage also makes this data available to users of the RealPage RM Software, including
for certain users in specific and non-aggregated form—such as property-specific occupancy and
rent data at the floorplan level for competitor properties. This is consistent with Landlords’
contracts for LRO, which expressly indicate the usage of competitor data in the rent-setting tool.
105. Indeed, RealPage was cognizant of the fact that obtaining a sufficient share of the
market’s data would enable it to ratchet up rents. For example, a 2016 investor presentation
included a slide titled “Strength in Numbers,” touting RealPage’s market penetration and tying it
to RealPage’s ability to raise rents. As one former RealPage Director succinctly explained: “If
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you have the data for the entire market and not enough availability, then everyone’s price went up.
It pushed pricing up across the board. . . . Let’s say you have 50% of the properties in a market
and the market is constrained. The model is going to recommend higher lease rates for every
property.”
106. The exchange of competitively sensitive information can, in and of itself, cause
anticompetitive effects; here those effects were compounded by Defendants’ agreement to use that
competitively sensitive information to fuel RealPage’s RM Software and enable the landlords to
collectively increase rents at the expense of renters in the District.
III. Impact and Damages: Defendants’ Agreement to Set Rents and Information
Sharing Unlawfully Increased Rents, Overcharging Residents Millions.
107. Defendants’ agreement to use RealPage RM products to set rents has reduced
competition in the multifamily housing market, allowing Defendant Landlords to charge higher
rents than they otherwise would have and artificially reducing the supply of housing units in the
District—all to the detriment of District residents.
108. RealPage widely touts the impact of its RM products, advertising revenue lifts of
2-7%.
Those revenue lifts are attributable to the artificially inflated rents that cartel landlords can
extract. Defendant Landlords have been similarly open regarding the direct connection between
their adoption of RealPage’s RM products and increased rents as the countless client testimonials
demonstrate.
109. As Defendant Camden’s then-regional vice president, Laurie Baker, explained,
prior to using YieldStar, “[w]e were raising rents, but we were not aggressive enough in what we
could really be getting[.]”
Likewise, Defendant Equity Residential’s then-CEO, David Neithercut,
crowed that, with LRO, “[w]e’ve raised rents hundreds of dollars in some markets and I don’t
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think the people onsite, given the way we’d trained them to think about pricing, would have had
the courage to push it as aggressively as this program has.”
110. AIRM’s machine learning engine has only increased this impact. According to a
2020 Earnings call, AIRM was “generating as much as 100 basis points of incremental yield over
YieldStar or LRO stand-alone.”
111. Defendants and other users of RealPage’s RM Software receive monthly reports
detailing how much they have been able to increase rents as a result of adopting RM for pricing.
For example, W.C. Smith’s monthly report for October 2022 highlights that the company has
increased revenues per unit 4.6-4.7% and was able to increase revenues and rents despite
occupancy levels decreasing.
112. The cartel (and resulting diminution of competition) has allowed Defendant
Landlords to price units higher than they, themselves, previously believed the market could
sustain. For example, the Director of Pricing at Defendant MAA, Chris Lynn, explained to an
industry publication that when MAA started testing revenue management products, some company
employees expressed skepticism. One property manager reached out to Lynn with serious doubts
about the $50 rent increase the software provided. According to Lynn, “she called me up on a
Friday afternoon and told me, ‘Listen, Chris. I’m sorry. But there’s no way anyone is going to
pay that much for that apartment’ . . . Then, on Monday morning, she called me back and said she
had to eat her words. Somebody actually came in over the weekend and leased the unit at the new
price.”
113. RealPage’s RM products have also allowed Defendant Landlords to maintain
artificially high rents even in difficult macroeconomic conditions. Accordingly, even in the rare
instances in which RealPage RM Software might decrease the asking rent for a particular unit,
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Defendants’ coordinated use of the pricing software renders rent decreases smaller than they would
have been in competitive market conditions. Indeed, RealPage advertises that, with its RealPage
RM Software, clients have “achieved revenue lift between 3% to 7% in challenging cycles” —
including revenue increases “at the height of the recession in 2009.”
114. Defendants’ anticompetitive agreement to use RealPage’s RM products to set rents
artificially limited the supply of multifamily housing units. RealPage’s RM products facilitated—
indeed, encouraged—this practice by having users set “sustainable occupancy” rates for their
properties. RealPage’s RM products’ “sustainable occupancy” setting allows users to identify
target occupancy levels to maximize rent—even if it means keeping some units vacant rather than
lowering prices. As Defendant Camden’s CEO, Rick Campo, bluntly put it, with YieldStar, “[t]he
net effect of driving revenue and pushing people out was $10 million in income . . . I think that
shows keeping the heads in the beds above all else is not always the best strategy.” Importantly,
the increased revenue obtained by Defendants and other RealPage RM users stems directly from
their collective ability to increase rents; higher revenues are not the result of reduced costs or other
realized efficiencies. As Bryan Pierce, former employee of Defendant Gables, explained, “We’ve
squeezed expenses to the point where the only ability to capture more revenue was going to be on
the income side rather than trying to reduce expenses.”
115. Finally, where RealPage’s RM market penetration increases, price effects tend to
extend beyond just the users of the RM Software itself. Academics studying RM effects in
multifamily housing markets find that once market adoption crosses a threshold—25% of
buildings or 30% of units—market impacts such as increased rent and lower occupancy can be
observed across market participants.
This illustrates the significant, widespread effects of collusive
adoption of RealPage’s algorithmic pricing models.
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116. With more than 50,000 units impacted, District residents have overpaid millions in
rent as a result of Defendants’ unlawful conduct.
IV. Defendants Have Market Power in the Relevant Market.
117. One relevant product market is the market for leases in multifamily residential
buildings (i.e., buildings with at least five units). Nearly all buildings in which RealPage’s RM
Software is used are large multifamily buildings (i.e., buildings with at least fifty units). Smaller,
properly defined relevant product markets, such as a market for leases in large multifamily
residential buildings, may exist.
118. The multifamily residential real estate lease market satisfies the “hypothetical
monopolist” or “SSNIP” test that economists and federal antitrust enforcement agencies use to
define relevant antitrust markets. That test asks whether a hypothetical monopolist or cartel in a
posited market could profitably charge prices that are significantly higher than the prices that
would prevail if the market were competitive. If a hypothetical monopolist could do so, then the
test is passed, meaning that the posited market is sufficiently broad (i.e., includes a sufficient
number of substitutes) to be useful in economic analysis. If the test is failed, the posited market is
too narrow (i.e., includes an insufficient number of substitutes) to be useful in economic analysis.
The posited market should then be expanded to include the next closest substitute, and the
hypothetical monopolist test should be repeated to see whether the slightly broader market is
sufficiently broad.
119. The multifamily residential real estate lease market is properly defined because it
satisfies the SSNIP test. Landlords can make rate improvements “year over year, between 5% and
12% in every market,” without driving enough renters out of the market to make the price increase
ineffective or unprofitable. Because landlords can significantly increase prices without losing
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sufficient sales to render the increase unprofitable, the multifamily residential real estate lease
market is properly defined.
120. For consumers, apartments for purchase, condominiums for purchase, or homes for
purchase are not economic substitutes for multifamily rental units. Among other reasons,
purchasing real estate requires the ability and willingness to make a substantial down payment and
to obtain financing. In addition, purchasing real estate involves substantial transaction costs (e.g.,
broker fees, inspections costs, taxes, and closing costs) that make purchasing impractical absent a
long-term commitment to a particular home.
121. Single-family real estate is also not an economic substitute for multifamily
residential real estate, including because single-family properties typically do not offer the same
amenities and security.
122. Industry participants in the multifamily residential real estate market typically
distinguish between multifamily and single-family real estate. Defendant Avenue5, for instance,
describes itself as a “multifamily property management company.”
Defendant Bell Partners
likewise advertises itself as a “top multifamily asset management firm.”
123. Hotel rooms are also outside the relevant market, as they have lower square footage
for the same occupancy, are priced at substantially higher rates than multifamily residential leases,
typically lack facilities which are standard in multifamily units (e.g., kitchens and windows that
open), and limit guests’ control over the rooms in ways that multifamily units do not.
124. Short-term rental units are also outside the relevant market, as they too have
substantially higher rates than multifamily residential real estate leases, by regulation require
occupants to stay no longer than 30 days, and, like hotels, do not provide renters with control over
the property akin to that available to purchasers of multifamily residential leases.
125. RealPage itself differentiates the multifamily residential real estate market as a
separate and distinct market from other residential markets. RealPage’s contracts with Defendants
describe its services as “for use in the management and operation of multifamily properties.”
RealPage also describes its revenue management software as “developed solely for multifamily.”
And RealPage includes among its core beliefs: “we believe we should know the multifamily
business, not just revenue management.”
126. Housing markets are local, including because commuting distance to a place of
work or school is a significant geographic constraint on where a person chooses to live. The U.S.
Census Bureau and Office of Management and Budget establishes a Metropolitan Statistical Area
(“MSA”) for each major metropolitan area in the country. The Census Bureau defines an MSA as
a geographic entity associated with at least one core urbanized area of 50,000 or more population,
plus adjacent territory that has a high degree of social and economic integration with the core as
measured by commuting ties.
127. Renters in any given MSA do not consider multifamily residential leases in other
MSAs as adequate substitutes for multifamily residential leases in their own MSA. Leases outside
a MSA are not substitutable for leases inside a MSA, including because they would leave renters
with impractical commutes to schools or jobs. As a result, multifamily residential real estate
outside the MSA are not within the relevant geographic markets for antitrust purposes.
128. One relevant geographic market for the provision of multifamily residential leases
is the Washington-Arlington-Alexandria MSA, which includes the District of Columbia and parts
of Virginia, West Virginia, and Maryland. Renters in the Washington-Arlington-Alexandria MSA
consider multifamily residential leases within the MSA as adequate substitutes. This is consistent
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39
with RealPage’s public statements and internal documents, which refer to the Washington-
Arlington-Alexandria MSA as its own “Market.”
129. Through its suite of business products, including revenue management software,
RealPage collects and shares among competitors pricing, occupancy, and other information for a
substantial portion of the multifamily residential apartment units within the Washington-
Arlington-Alexandria MSA.
130. Defendants have market power in the relevant product and geographic markets.
131. One former employee of RealPage described the company as the “Amazon” of
property management software, saying that they “monopolize the industry.” RealPage’s marketing
pitches have likewise sought to leverage RealPage’s dominant market share and resulting control
over vast troves of data emphasizing, for example, that YieldStar was used by over 85% of the
Top 50 apartment managers in the NMHC rankings.
132. Well over 30% of the multifamily units in the District are priced using the RealPage
RM Software (and nearly 60% of multifamily units in large buildings).
The share is even greater
in the Washington-Arlington-Alexandria MSA: close to 50% of all multifamily units in the greater
metropolitan area are priced using the RealPage RM Software (and indeed, over 90% of units in
large buildings). Additionally, smaller neighborhoods have an even higher share of units priced
using the RealPage RM Software.
133. Defendants know that smaller, properly defined relevant geographic markets may
exist, and the anticompetitive effects of their scheme may be even greater in such smaller markets.
Indeed, RealPage’s public statements and internal documents organize properties into geographic
“Submarkets” within the greater Washington-Arlington-Alexandria MSA, and the share of
multifamily units using RealPage’s RM Software in some MSA neighborhoods reaches around
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90%. The increased concentration of RealPage RM usage in particular neighborhoods is clear in
the below map which identifies multifamily housing buildings in the District which use RealPage
RM software. While there are buildings that use RealPage RM products throughout the District,
it is easy to see increased concentration of such buildings along Connecticut Avenue in the upper
Northwest, along 14th Street from Columbia Heights down through Shaw, in the NoMa area, and
in the Navy Yard.
134. Market power can also be shown through direct evidence of anticompetitive effects.
Landlords using RealPage’s RM software have touted their ability to raise rents by 20% or more,
while RealPage itself represents that landlords who use its RM Software can increase revenue by
at least 2-7%.
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COUNT ONE
(Violation of the D.C. Antitrust Act)
135. Plaintiff hereby incorporates and re-alleges each allegation in each of the preceding
paragraphs as though fully set forth herein, and further alleges as follows:
136. By entering an agreement providing for the use of RealPage’s RM software and
related services, as well as the exchange of sensitive non-public information with competitors
through RealPage, Defendant Landlords and Defendant RealPage have entered into contracts,
combinations in the form of a trust or otherwise, or conspiracies in restraint of trade or commerce
all or any part of which is within the District of Columbia, in violation of the D.C. Antitrust Act,
D.C. Code § 28-4502. Defendant Landlords have agreed with RealPage to delegate rent price-
setting responsibility to RealPage for multifamily housing units in the District, rather than
competing with other landlords on the basis of price.
137. Additionally, through numerous means of communication, including writings,
videos, and in-person meetings, Defendant Landlords have entered with each other into horizontal
contracts, combinations in the form of a trust or otherwise, or conspiracies in restraint of trade or
commerce all or any part of which is within the District of Columbia, in violation of the D.C.
Antitrust Act, D.C. Code § 28-4502. Specifically, Defendant Landlords have recruited one another
into an agreement to exchange sensitive non-public data among competitors and delegate to
RealPage price-setting responsibility for multifamily housing units in the District, instead of
competing on the basis of price.
138. By delegating a substantial majority of price-setting authority to a centralized
entity, RealPage, Defendants have conspired to reduce the supply of multifamily housing units in
the form of limited target occupancy rates, and to fix and increase the price of leases for
multifamily housing units in the District of Columbia. Defendants further advanced the
42
anticompetitive scheme by agreeing to share and in fact sharing competitively sensitive, non-
public information with their competitors, through RealPage.
139. Defendants’ anticompetitive misconduct is unlawful per se under the D.C. Antitrust
Act. Even if the misconduct were not found to be unlawful per se—and it should be—the
misconduct is additionally unlawful under the rule of reason. There are no procompetitive
justifications sufficient to outweigh the anticompetitive effects of the misconduct.
140. The result of Defendants’ anticompetitive conspiracy has been to limit competition
in the market for leases of multifamily housing units in the District of Columbia, forcing D.C.
renters to pay illegal, supra-competitive rents and incur substantial damages.
PRAYER FOR RELIEF
141. The District of Columbia respectfully requests that this Court, as authorized by
statute and its own equitable powers, enter final judgment against Defendants and:
a. Adjudge and decree that Defendants’ actions constitute unreasonable and unlawful
restraints of trade in violation of the District of Columbia Antitrust Act, D.C. Code
§ 28-4502;
b. Enjoin and restrain Defendants, their affiliates, assignees, subsidiaries, successors,
and transferees, and their officers, directors, partners, agents and employees, and
all other persons acting or claiming to act on Defendants’ behalf or in concert with
them, from continuing to engage in any anticompetitive conduct and from adopting
in the future any practice, plan, program, or device having a similar purpose or
effect to the anticompetitive actions set forth above;
c. As needed, enter such relief to remove any ability of Defendants to harm
competition by the anticompetitive actions set forth above, including but not limited
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to structural relief as well as effective, monitorable, and measurable conduct
remedies that eliminate the ability of Defendants to continue to reap benefits from
their pattern of competitive harm;
d. Appoint a corporate monitor to ensure implementation of all structural or practice
remedies ordered by the Court, as well as to ensure that Defendants do not engage
in further anticompetitive conduct, at Defendants’ expense;
e. Award to Plaintiff any other equitable relief as the Court finds appropriate to redress
Defendants’ violations of the laws specified above and to restore competitive
conditions in the markets affected by Defendants’ unlawful conduct and deprive
Defendants of any advantages from their unlawful acts;
f. Award to Plaintiff the maximum civil penalties as provided by the D.C. Antitrust
Act;
g. Award to Plaintiff actual damages, statutory damages, punitive damages, treble
damages, and such other relief as provided by the D.C. Antitrust Act;
h. Award pre-judgment and post-judgment interest on such monetary relief;
i. Award to Plaintiff statutory or equitable disgorgement, or any other equitable relief
for the benefit of the District consumers as appropriate under the D.C. Antitrust
Act;
j. Award to the District of Columbia its costs, including reasonable attorneys’ fees;
and
k. Order any additional relief that this Court deems just and proper.
DEMAND FOR JURY TRIAL
Plaintiff hereby demands a jury trial on all issues so triable.
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November 1, 2023
Respectfully submitted,
BRIAN L. SCHWALB
Attorney General for the District of Columbia
JENNIFER C. JONES
Deputy Attorney General
Public Advocacy Division
/s/ Adam Gitlin
Adam Gitlin (D.C. Bar 90004308)
Amanda Hamilton (D.C. Bar
499646)
Public Advocacy Division
Office of the Attorney General for the Distri
ct of
Columbia
400 6th St. NW, 10th Floor
Washington, D.C. 20001
(202) 442
-9853
/s/ Emmy L. Levens
Emmy L. Levens (D.C Bar 997826)
elevens@cohenmilstein.com
Robert A. Braun (D.C. Bar 1023352)
Cohen Milstein Sellers & Toll PLLC
1100 New York Ave. NW, Fifth Floor
Washington, DC 20005
(202) 408
-4600
Aaron J. Marks (
pro hac vice forthcoming)
amarks@cohenmilstein.com
Cohen Milstein Sellers & Toll PLLC
88 Pine St., 14th
floor
New York, NY 10005
(212) 838
-7797
Attorneys for Plaintiff District of Columbia
