Is a software company owned by Miami billionaire’s firm the reason your rent spiked?

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For years, a software company owned by a Miami billionaire’s private equity firm has been helping some of the country’s largest landlords spike their profits by fixing and inflating rents, violating state and federal laws banning collusion among property owners, according to lawsuits filed by tenants and state prosecutors across the U.S.

RealPage, which offers software to suggest the price of rents and draw up leases, is the subject of an antitrust investigation by Florida’s attorney general, one of several digging into the company’s business practices. Dozens of lawsuits — including two in Miami-Dade County — have been filed against RealPage by tenants throughout the country who say their rents have been significantly increased by the company’s clients.

The software — used to to price about half of the 300,000 multifamily rental units in South Florida’s tri-county area, according to one lawsuit — relies in part on private information shared by landlords to recommend the price of rents, which critics say flouts laws meant to stop property managers from colluding. It was banned last month from use in San Francisco’s housing market, and reportedly is under the scrutiny of the U.S. Department of Justice.

“This is price fixing,” Arizona’s attorney general wrote in a lawsuit filed this year against the company. “And it is illegal.”

Among the defendants named in a federal case in Tennessee is private equity firm Thoma Bravo, which purchased RealPage in 2021, months after the firm’s founder, Orlando Bravo, moved to Miami.

Bravo is among a group of wealthy Miamians who have joined together under a new nonprofit to tackle Miami’s problems, including affordable housing. But several tenants at Miami-Dade apartment complexes identified as RealPage clients told the Miami Herald that they were forced to pay escalating rents that jumped as much as 30% from 2021 to 2022. One said he tried to negotiate, and was told there was nothing to be done: his rate had been set by a computer program.

Bravo declined to be interviewed through a Thoma Bravo spokesperson, who told the Miami Herald the firm does not believe RealPage violated any competition laws and that the lawsuit in Tennessee — a consolidation of more than 30 suits — should have never been brought against either company.

“We are proud of our relationship with RealPage and fully support the company, whose innovative solutions benefit residents and housing providers alike,” the Thoma Bravo spokesperson said in an email.

The company attempted unsuccessfully last year to convince the judge assigned to the case to drop several Thoma Bravo entities as defendants. Orlando Bravo is not a defendant in any of the cases filed thus far.

RealPage denies any wrongdoing. The company’s spokesperson, Jennifer Bowcock, told the Herald that “the complaints are based on a fundamental misunderstanding of how revenue management software works and the significant benefits that it offers for residents, property managers, and the rental housing ecosystem as a whole.”

Myriad legal complaints

The controversy around RealPage’s software emerged in 2022 after ProPublica published an exposé detailing how influential and widespread the company’s technology had become in an increasingly expensive U.S. housing market. Two RealPage executives cited in the story said they were seeing rent increases like never before and credited the company’s software, YieldStar, for pushing up rates. One of the software developers was quoted as saying that leasing agents have “too much empathy” compared to computer-generated prices.

Dozens of tenants started filing lawsuits, which were ultimately consolidated as a federal antitrust case in Tennessee last year. A group of U.S. senators opened an investigation into the company in November 2022, and in early 2024 they raised their concerns again to the U.S. Department of Justice.

The company offers several software programs providing different services to clients in property management, but its three revenue management software programs are the subject of the price-fixing allegations in court.

Two of them, YieldStar and its updated version AI Revenue Management, use non-public information such as rent prices, occupancy levels and lease transactions plugged in by landlords. The data is anonymized and aggregated with public information to recommend the price of rents.

The third software, Lease Rent Options, relies solely on information provided by landlords to suggest prices, which can include information from competitors collected by property operators and managers.

Property managers using the three products decide if they want to accept the software’s recommendations, but the plaintiffs in the lawsuit claim that the company discourages changes to the rates given by the software and monitors compliance with the recommendations through advisors who approve any deviation from the suggested rent prices — along with senior management from the property owners.

In the tenant’s consolidated lawsuit, which includes Miami residents, they claim that the widespread adoption of RealPage’s revenue management software “has caused rent to increase explosively in recent years, with Miami renters paying 23% more in rent in 2021 than they paid in 2016.”

“With the assurance that their competitors are respectively setting Miami, Orlando, Jacksonville, and Tampa rental prices using the same algorithm, each Defendant property manager could allow a larger share of their units to remain vacant while maintaining higher rental prices across their properties,” says the Miami-filed lawsuit, among those consolidated in Tennessee. “This increased their revenue at the expense of renters.”

The Miami plaintiffs did not reply to requests for comment, but other tenants whose landlords were identified as RealPage clients in the Miami lawsuit spoke with the Herald and relayed similar stories.

Arianna Bracho, a shipping manager who moved to 7 West near Fontainebleau in 2020, says the rent on the three-bed, two-bath apartment she shared with her husband, aunt and two kids shot up from an affordable $1,946 a month to $2,950 in two years.

At first, she says, the increase was a modest $284 in 2021. But with just a month left to renew her lease in 2022, she received a renewal offer for about $2,950 a month — an increase of 32%.

Her building is owned by Greystar, the largest apartment owner in the U.S. She received the lease contracts from a RealPage email address, according to screenshots reviewed by the Herald.

“We were in shock,” Bracho told the Miami Herald in Spanish. “In 30 days we were not going to solve anything, so we stayed.”

She says she decided to move to a two-bedroom apartment nearby in 2023 after becoming frustrated with crime, maintenance and a third rate increase.

The Miami Herald reached out to Greystar for comment but received no response.

Miami renters feeling the spikes

Bracho is just one of many tenants who have faced spiking rents in recent years. By 2022, rents were high across the state of Florida and were rising at a fast level, with Miami seeing a 31% year-over-year growth, according to data from online real estate broker Zillow.

Between 2019 and 2023, rents jumped 30.4% nationwide, while wages struggled to keep up, according to an analysis from Zillow and StreetEasy. Since the pandemic, rent growth has far outpaced wage growth in 44 out of the 50 largest metro areas, the analysis says.

RealPage argues that rent increases at client properties in past years were consistent with the national market, and blames rent spikes on the lack of affordable housing.

“It’s the lack of supply of housing that is creating an imbalance of supply and demand,” said RealPage’s outside counsel, Stephen Weissman. “But for political purposes, it’s easier to point the blame at things like software and the landlords who are using the software because it scapegoats them and makes them look like they’re the bad actors.”

The company also says its critics, including the many people who have sued them, misunderstand what its software does and are repeating wildly inaccurate information about how closely its clients follow its recommendations.

“To be clear, customers always have 100% discretion to accept or reject software price recommendations and are never punished for declining recommendations,” the company’s spokesperson, Bowcock, told the Herald.

But in Coral Gables, Frank Andreu says he was told otherwise when he tried to negotiate down a rent increase in 2023 at Gables Grand Plaza — a building owned by Highmark Residential, a named defendant in lawsuits for allegedly using RealPage’s revenue management software. He says the office manager at the property told him that the computer system spits out the rate and they couldn’t battle it.

Highmark Residential did not respond to requests for comment from the Herald.

Andreu, a business owner who told the Herald he lived with his wife and three kids in the building between 2017 and 2023, says his rent jumped $1,500 from 2020 to 2022, going from $2,965 a month to $4,474. He says he got out when the rent increased for the third time in 2023, which he describes as salt on a wound created by an apathetic management and a litany of problems with broken elevators, pool closures and packages stolen off doorsteps.

“At that point I said, wait a minute, this is disgusting, what they’re doing to us,” he said. “They know that we don’t have anywhere to go, so they basically raise the rent because they don’t care.”

The Herald spoke with three other former residents and reviewed a database compiled by more than 20 tenants from the Gables Grand Plaza building that detailed their maintenance concerns and rent increases. The rent spikes range from nearly $350 to $1,200 between 2020 and 2022.

Andreu’s apartment is one of thousands of units whose prices are set with input by RealPage’s revenue management software.

In court documents, the plaintiffs say that the YieldStar, its updated version AI Revenue Management and a third software, Lease Rent Options, are used by over 52% of the 300,000 multifamily rental units in South Florida. They say that the use of the three revenue management software services are the “linchpin” of the anti-competitive scheme.

RealPage’s spokesperson, however, said the use of its software is less widespread than alleged in lawsuits, with only 23% of South Florida rentals made up of five units or more actually using the technology. In a public statement issued in June, the company said “the actual data shows that RealPage revenue management software has low penetration rates that cannot possibly support a conspiracy to fix prices or collude through the software.”

RealPage also notes that its purchase of Lease Rent Options received antitrust clearance from the Department of Justice in 2017. The company’s announcement of the purchase of its competitor stated that the software would be integrated into YieldStar, but that never happened, according to Weissman, the attorney representing RealPage.

The company also says its critics — who say that landlords agree up to 90% of the time to implement the company’s lease recommendations — are vastly overstating how often its suggestions are adopted.

In Miami, the price acceptance rate for new leases between January 2020 through June 2023 was 47.8% for YieldStar and AI Revenue Management, which is similar to the national acceptance rate, Bowcock said. Any changes to the suggested price include discounts or concessions that benefit renters, she said.

“A single customer that owns or manages multiple properties often accepts our rental price recommendations at widely varying rates even among its own properties,” she said.

Local leaders outside Miami take action

RealPage is now arguing its case in court and in public, as cities, state attorneys general and, reportedly, the U.S. Department of Justice scrutinize its business practices.

Attorneys general from the District of Columbia and Arizona have filed lawsuits. Their counterpart in North Carolina announced an investigation earlier this year, and Florida’s attorney general confirmed to the Herald that they have opened their own antitrust investigation.

The Justice Department has said in a legal filing that the allegations against the company should play out in court, urging a judge to shoot down efforts to dismiss the consolidated case in Tennessee. Politico has reported that Justice, which declined to comment for this story, is preparing a lawsuit against RealPage.

Last month, the city of San Francisco approved legislation prohibiting the use of algorithms that set multifamily rents and manage occupancy levels.

Housing affordability has been a major concern in Miami, where renters are among the most cost-burdened in the country. But it’s unclear if the controversy involving RealPage is on the radar for city or county governments.

Bravo, whose firm purchased RealPage in 2021 for $10.2 billion, has financially supported Miami Mayor Francis Suarez’s political career, making two $500,000 donations to the mayor’s short-lived presidential bid and $100,000 to his 2021 mayoral campaign. Suarez has championed technology as an economic driver and potential equalizer for Miami residents.

Bravo sits on the board of Partnership for Miami, a nonprofit organization of business leaders working on solutions for the most pressing issues in the area, including a lack of affordable housing.

Representatives for Suarez did not respond to requests for comment from the Herald about RealPage. Likewise, Miami-Dade County Mayor Daniella Levine Cava’s office did not reply to requests for comment.