Equity Residential and Essex Property Trust Dragged Into RealPage Scandal. It’s Hardly A Shocker.
A little more than a week ago, an explosive ProPublica investigation revealed the shady business practices of RealPage, a Big Tech firm that sells a software program that helps corporate landlords charge inflated rents. Now it’s been reported that a group of Southern California tenants have slapped an antitrust lawsuit against RealPage and a number of its clients. Guess who’s among them? Equity Residential and Essex Property Trust. It’s hardly a shocker. They’re the same corporate landlords that shelled out millions to kill rent control ballot measures in California and have their own sordid histories.
On October 15, ProPublica published a devastating exposé about RealPage and its highly controversial software program called YieldStar, which is used by many of the top corporate landlords and property managers in the United States.
“The software’s design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation’s largest landlords to indirectly coordinate pricing, potentially in violation of federal law,” wrote ProPublica reporter Heather Vogell.
She added, “At a minimum, critics said, the software’s algorithm may be artificially inflating rents and stifling competition.”
Vogell also noted that “at times [RealPage] has appeared to urge apartment owners and managers to reduce supply while increasing price.” In other words, during the ongoing housing affordability and homelessness crises, RealPage apparently told corporate landlords and property managers to keep units vacant and jack up rents for existing tenants.
RealPage has an enormous, global influence on the rental housing market: the company “serves over 19 million units worldwide from offices in North America, Europe, and Asia,” according to its website.
In the U.S., Realpage has offices in Northport, Alabama; Irvine and San Diego, California; Lombard, Illinois; Boston; New York City; Charlotte and Raleigh, North Carolina; Bend, Oregon; Philadelphia; Greenville and West Columbia, South Carolina; Richardson and Waco, Texas; and South Burlington, Vermont.
Outside the U.S., the Big Tech firm has offices in Barcelona, Spain; Cebu City and Pasig City, Philippines; Hyderabad, India; London; and Medellin, Colombia.
On October 19, Housing Is A Human Right weighed in, revealing in a scoop that RealPage shelled out a whopping total of $1 million to stop Proposition 10 in 2018 and Proposition 21 in 2020. Those ballot measures, which were sponsored by Housing Is A Human Right and its parent organization, AIDS Healthcare Foundation, would have ended statewide rent control restrictions in California. Both initiatives were backed by a broad coalition of housing justice groups, social justice organizations, labor unions, and prominent politicians, including U.S. Sen. Bernie Sanders.
In addition to RealPage’s contributions, Essex Property Trust and Equity Residential were among the leading opponents of Prop 10 and Prop 21, each shelling out tens of millions in campaign cash to keep restrictions on rent control in California.
Essex Property Trust and Equity Residential have now been dragged into the RealPage antitrust lawsuit. They’re charged with taking part in a “cartel to artificially inflate rents in violation of federal law,” ProPublica recently reported. Considering the corporate landlords’ past, it’s not surprising.
Years ago, in 2006, Essex Property Trust bought a 697-unit apartment complex in San Mateo, then aggressively raised rents for longtime tenants. That predatory tactic, the East Bay Times reported, prompted “an exodus that included fixed-income senior citizens who lived there for decades.” Essex Property Trust was also sued by tenants in Fremont, California, for improperly raising rents and allowing bad living conditions. Essex Property Trust eventually agreed to a settlement in 2016.
The corporate landlord also ranked near the bottom of a Wells Fargo study that looked into gender equity in the boardrooms of major real estate investment trusts. Out of the 165 REITs that were examined, Essex Property Trust was found to be the 17th worst for gender equity. While top-rated REITs had female representation of at least 40 percent in their boardrooms, Essex Property Trust had a pitiful 11 percent.
Equity Residential’s track record is no better. The real estate company is run by controversial billionaire Sam Zell, who’s nickname is the “Grave Dancer.” Equity Residential is known for forcing longtime tenants out of rent-controlled apartments so it can dramatically raise rents once they move out, and the corporate landlord has a reputation for forcing tenants to live in substandard living conditions.
Zell also owns Equity LifeStyle Properties, which operates mobile-home communities. In 2013, Manufactured Housing Action, a national advocacy group for mobile-home owners, charged that Zell and Equity LifeStyle practiced vulture capitalism by charging sky-high rents.
“Under [Zell’s) guidance, ELS seems intent on robbing seniors — mostly women — of a secure retirement,” Bobbie Hemmerich, a resident at an Equity LifeStyle Properties community in Lewes, Delaware, said in a Manufactured Housing Action report. “To add salt to the wound, he gives big political contributions to politicians who want to gut Social Security and Medicare.”
Housing activists in Chicago even charged that Zell and Equity LifeStyle were “gouging Grandma.”
By gouging grandmas and other tenants, Zell has amassed a multi-billion-dollar fortune that financed posh homes in Chicago, Sun Valley, New York, and Malibu. He also burns through cash by flying around the world in a private jet, playing big-time poker games, and collecting motorcycles.
While Zell is buzzing around the globe, middle- and working-class tenants in California are struggling to pay unfair, wildly inflated rents fueled by RealPage’s software and corporate landlords’ predatory tactics. In fact, many tenants who can’t keep up are falling into homelessness.
As the antitrust lawsuit against RealPage, Essex Property Trust, and Equity Residential unfolds, it’ll be fascinating — and possibly horrifying — to see what dirt lawyers dig up against them. In the meantime, Housing Is A Human Right demands a thorough federal investigation of RealPage and its corporate clients.
In the end, the RealPage scandal only underscores the need to better regulate corporate landlords and to rein in their ability to charge unfair, excessive rents. It’s why activists in California and across the country are pressing politicians to pass strong rent control laws.
Patrick Range McDonald, the author of this article, is the award-winning advocacy journalist for Housing Is A Human Right.