In RealPage we Antitrust & When Developers Break

In RealPage We Antitrust

It’s not even been a week since the DoJ hit RealPage with an antitrust lawsuit, painting it as a key enabler of a national rent-fixing conspiracy, and we’re already seeing the defensive & offensive playbooks taking shape. You can judge for yourself how much of a BFD this is – RealPage customers own/manage 20M+ units worldwide, and many of the US’ biggest multifamily landlords and property managers are users. RealPage’s outside counsel said Monday that the firm is willing to tweak its product to address the DoJ’s concerns.

“We believe strongly in the legality of our product,” said the counsel, Stephen Weissman. “But if there are solutions here that allow us to continue innovating and competing in the market, we’re open to those solutions."

It might be too little, too late: The DoJ’s action has already unleashed a wave of attacks on RealPage, with the most intense calling for the firm to be shut down.

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Antitrust (Cont.)

Lindsay Owens, executive director of left-leaning economic advocacy group Groundwork and a former Sen. Elizabeth Warren staffer, broke down the DoJ lawsuit in a viral thread that gives you a sense of the political storm coming RealPage’s way. “This was flagrant, far reaching and deliberate,” Owens wrote – here’s some of what she flagged

• RealPage’s facilitation of “user group” sessions between competitors (“giant corporate landlords,” she wrote)

• RealPage’s “pricing advisors” who may escalate rent-setting disputes to a landlord’s regional manager

• RealPage’s army of staffers that collects proprietary info (concessions, floor plans, occupancy rates) from landlords to feed the data beast

• An “Auto Accept” feature that, if on, would “ensure landlords adopt pricing recommendations,” she wrote

• The use of a “hard floor” for rents

Now, Thoma Bravo-owned RealPage may very well be able to beat back some of these allegations in court, but political trench warfare 🪖 is a whole other matter. Think of the storylines that can & are being weaponized: private equity owner ✅ housing affordability ✅ death by algo ✅ 

And then there’s the radioactive element for customers: large landlords have their own political juice to worry about, and there will be discussions within the Equity Residentials and Greystars and such about whether continuing to use the software is worth the reputational shellacking, FBI raids and class-action lawsuits. Especially if the Dems win.

When Developers Break 🎥 

Brandon Miller was 43 when he took his life. Artem Tepler was 41 when he took his life. Nir Meir was in his late 40s when he allegedly spun a web of fraud that led him to Rikers. Three v different tales, united by the crushing pressures of being a RE developer. Our short film looking at their cases is now live on X. I hope it resonates with you – it’ll also give you a sense of the kind of quality visual storytelling we’ll be doing more of in the coming months. If unfamiliar with the incidents, read our special issue on the topic here.

Bargains by the Bay

Namdar and others are feasting (with mixed results) on the bargains to be had in the New York office market, but who’s playing the same game in San Francisco? The SF Standard answers that Q in a fun feature: wealthy local notables such as billionaire Greg Flynn (megaplayer in restaurant franchises 🍔 🌮 ) and Jim & Melinda Ellis (kids of late RE titan Hal Ellis, founder of Grubb & Ellis). Flynn and the Ellises recently partnered on the purchase of a SoMa office building for $36M - compare that to the $62M seller Invesco paid a decade ago. With debt harder to score for such deals, deep-pocketed buyers are teaming up and going all-cash, Jim Ellis told the publication. Out-of-towners such as LA-based BH Properties are also in the mix: in July, it closed on the $13.5M acquisition of a Mid-Market property – seller ASB had paid $61M a decade ago.

“Most people like to show up to a party late, since they know it’ll be well underway,” said Chad Arkoff, who manages Flynn’s RE book. “But real friends show up early and help set up.” 🤲 

One name that didn’t pop up in the piece is Ian Jacobs, the scion of the Reichmann clan who has declared his intent to buy 3M sf of SF office at a target price of 70% below replacement cost. His plan is dubbed “Project Uris,” an explicit nod to the legendary Manhattan trade made by his forefathers.     

Brooklyn Nine-Nine

We knew that Related (now fully a Jeff Blau production) was making a white knight move at the Brooklyn boondoggle Pacific Yards, looking to step in and resume construction at the megaproject after Greenland USA 🇨🇳 lost the plot. We now learn via WSJ that Related’s partners on the rescue operation will be two players already in the capital stack: Fortress (of course) and Nick Mastroianni’s U.S. Immigration Fund, an EB-5 regional center 🦅 that became one of the most active construction mezz lenders in the mid-2010s. Fortress and USIF have a $300M debt position in the 22-acre project, and plan to foreclose, take ownership in the fall and bring Related on as a JV partner to run the job. In a best-case scenario, we could see shovels back in the ground by the end of next year. 🏗️ 

Bonus: Mastro is a fascinating guy - read more about him here and here 

The Ken of Ken

Some deets on Ken Griffin’s vision for Citadel’s Miami HQ: Phase 1 is a 1,032-foot-tall, 54-story tower w/ 1.3M sf of office space, a 212-key hotel, and fine dining for nearly 1K Wall Street South strivers. Norman Foster 👨‍🦲 is designing the project, where construction is set to kick off in Q3 of next year. Two more phases – a smaller office building and a 100-unit resi tower – to follow. Chicago giant Sterling Bay was initially tapped to co-develop the project w/ Griffin, but was removed last year. Philly developer John Gattuso is now consulting on the project, while ex-Google real estate vet Paul Darrah is running point for Griffin. Griffin’s $670M assemblage in ‘22 of the 4.2-acre waterfront site – which included an astonishing $3,300/foot purchase of a 2.5-acre parcel – is seen as the deal that put Miami into the major leagues. The assemblage falls under a rapid transit Miami-Dade subzone that allows Griffin to (mostly) sidestep the city of Miami wrt permitting. (More on Griffin’s city-shaping ambitions here)

Quickies

• 📽️ Schreiber & Sternlicht’s excellent adventure

• RSVP for our Chicago Happy Hour w/ Iman Jalali on 9/10 🍸️ 

• PE’s PM bet: CVC invests in Odevo at $3B valuation 

• Grant Cardone is on a Broward buying binge  

• Can’t stop, won’t stop: Data center vacancy is at a record low despite a doubling in supply over just 4Y (Download report here)

• Inside PE nepo baby Metropoulos’ $300M+ trophy home portfolio (This kind of ultra-luxe portfolio shopping is exactly what we broke down in detail on Odd Lots - listen here)

• This C-PACE stuff is really heating up- a $190M deal, again by Nuveen, in Vegas 🃏 (will dive deeper soon)

• Yoel Goldman inflated financials at All Year, says restructuring officer (more here – What’s debt between Yeshiva buddies?)

Unquotable Quotes

Programming note: Barring any massive breaking news, The Promote is off Friday and Monday. Have a great Labor Day weekend – we’ll see you here next Wednesday! 🎇 I’ll also be in Chicago then - come say hi at our Happy Hour