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RealPage, Apartment Giants Facing New Lawsuit Alleging Collusion In Student Housing Rent Pricing

A lawsuit claims student housing operators' use of a RealPage platform constituted colluding to unjustly increase rents.

RealPage’s proprietary rent-pricing software is giving the multifamily listing firm and its clients another legal headache, this time over student housing.

University of Washington student Gabriel Navarro filed a lawsuit in Seattle federal court alleging that a host of commercial real estate firms, including Greystar Real Estate Partners and Cushman & Wakefield, colluded by using RealPage’s YieldStar algorithm to set the prices for student housing rentals, Multifamily Dive reports.

The platform allows student housing operators to track and collaborate on rents and “artificially inflate the prices of student housing across the United States,” attorneys with the Seattle law firm Hagens Berman Sobol Shapiro wrote in the proposed class-action lawsuit filed last week. The attorneys specifically named student housing projects in Seattle; Eugene, Oregon; Tucson, Arizona; Salt Lake City; Ann Arbor, Michigan; Columbus, Ohio; and Gainesville, Florida. 

Other firms named in the lawsuit include BH Management Services, The Michaels Organization, Campus Advantage, Cardinal Group Holdings, CA Ventures Global Services, D.P. Preiss Co. and GEDR LakeView out of Charleston. 

The lawsuit alleges that the companies acted as a cartel by colluding to raise rents in small increments to increase revenues and concealing the methods by which the firms collaborated to share their internal data.

“Before RealPage facilitated collusion among Lessors, Lessors acting independently tried to maximize occupancy,” attorneys wrote in the suit. “Lessors had only a short time period to set rent prices and ensure ‘heads in beds’ at the beginning of a new school term. Every day a unit was left empty was a lost opportunity to earn revenue for that day, so Lessors offered sufficiently attractive pricing to maintain maximum occupancy.”

Navarro’s lawsuit is the latest in legal wrangling involving RealPage’s YieldStar platform since ProPublica published an investigative report last month on the algorithmic program's impact on nationwide rents. Last month, RealPage, Greystar, Lincoln Property Co., FPI Management, MAA, Equity Residential, Essex Property Trust and Security Properties were sued in the U.S. District Court for the Southern District of California by renters at the firm-operated properties who were also using YieldStar to come up with pricing.

RealPage and Campus Advantage denied the latest lawsuit’s allegations, Multifamily Dive reported.