Are high priced rental apartments the result of criminal violations of our antitrust laws? Why does St. Johns County refuse to take any action to investigate? Can our County Attorney even spell antirust? From Bisnow:
FBI Searches Office Of National Apartment Developer Cortland In Connection With Antitrust Probe.
Molly Armbrister, Bisnow, June 3, 2024
National apartment developer Cortland Management’s Atlanta office was searched by the FBI under a limited search warrant, a representative for Cortland confirmed to Bisnow.
The warrant was connected to an investigation by the Department of Justice into potential antitrust violations in the multifamily housing industry, according to a statement from Cortland.
“We are cooperating fully with that investigation, and we understand that neither Cortland nor any of our employees are ‘targets’ of that investigation,” the statement says. “Due to the ongoing litigation, we cannot comment further at this time.”
The raid took place May 22, according to MLex, which first reported the news.
The FBI’s Atlanta field office didn't immediately respond to a request for comment Monday.
The DOJ is investigating multifamily software company RealPage and some large property owners in connection with allegations of price-fixing. The DOJ in March expanded the probe, opening a criminal investigation in addition to the civil proceedings.
Cortland builds and manages apartment projects in most major markets across the U.S., with a nearly $21B portfolio as of September, according to its website.
The Federal Bureau of Investigation (FBI) conducted an unannounced raid on the Atlanta headquarters of Cortland Management on Wednesday, May 22, marking a significant escalation in a criminal antitrust investigation by the U.S. Department of Justice (DOJ) into allegations of a nationwide conspiracy to artificially inflate apartment rents. The implications of this probe are far-reaching, potentially affecting millions of renters across the United States.
At the center of this investigation is RealPage, a software and consulting firm accused of helping orchestrate price-fixing among large corporate landlords. RealPage’s system, which provides rental price recommendations based on real-time data from landlords, is alleged to be a key tool in manipulating the rental market. The firm’s influence covers 70% of multifamily apartment buildings and impacts 16 million units nationwide.
The scheme purportedly operated by encouraging landlords to adopt RealPage’s pricing recommendations, a practice they follow 80-90% of the time. This coordinated approach reduces the availability of rental units, driving up prices. One of the architects of RealPage’s system reportedly stated that the aim is to prevent landlords from undervaluing their properties, ensuring consistently higher rents across the board.
The impact of such practices is particularly evident in Atlanta, where software-driven pricing affects 81% of multifamily rental units. Since 2016, rents in the city have surged by 80%, despite rising vacancy rates that would typically result in lower rents. The widespread adoption of RealPage’s pricing recommendations by several landlords between 2015 and 2017, followed by RealPage’s acquisition of its main rival, Lease Rent Option, in 2017, has given the company unprecedented control over rental pricing.
For renters, the implications of this investigation are significant. If the allegations are proven true, the artificially inflated rents have placed undue financial burdens on millions of tenants, with the findings of this probe possibly leading to changes in how rents are set and regulated.
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