ProLogis Trust, a Denver-based global distribution facilities REIT, has partnered with Vizional Technologies (formerly GOwarehouse), a global logistics network that allows companies to integrate warehouse management, inventory and order systems.
As a result of the deal, Vizional Technologies customers will have access to a global system of inventory, tracking, sourcing and e-fulfillment capabilities. Customers will be able to better predict demand, turn inventory faster and improve transportation while reducing their cost through the system's entry and end-to-end order tracking system.
Dr. Alice H. Muntz, chairman, founder and chief executive officer of Vizional Technologies, believes the company's system is a comprehensive way of exchanging distribution information. "Currently, most companies try to manage their supply chains either through electronic data interchange, their own Internet offerings or direct integration between their own warehouse management systems and their customers' packages. Vizional Technologies offers a virtual third-party logistics market with real-time inventory visibility to assist in e-commerce order fulfillment."
Under the agreement, ProLogis invested $25 million in Vizional Technologies convertible preferred stock, representing an interest of approximately 15.6 percent. Vizional Technologies also paid ProLogis $30 million in Vizional Technologies stock, representing an additional 18.9 percent ownership interest, for a five-year non-exclusive license of the ProLogis Operating SystemTM, a distribution facility network. Additionally, ProLogis and Vizional Technologies will work jointly to build the Vizional Technologies Global Logistics Network as part of their strategic relationship.
"Many of our customers are seeking ways to make their supply chains more efficient and we want to be able to provide them with leading supply chain technologies to accomplish their objectives," says K. Dane Brooksher, chairman and CEO of ProLogis. "While we will not make investments outside our area of expertise, we do plan to invest in technology that is synergistic with our distribution and logistics businesses and provides value to our customers."
Look Before You Leap
When it comes to investing in technology companies and ventures, most REITs are taking a cautious approach rather than diving in head first, according to a recent report by Banc of America Securities.
The report focused on 34 large apartment, office, industrial and retail companies. The disclosed total investment in technology ventures of the 34 companies was $231 million, but the majority of real estate companies invested less than $10 million. The combined market cap of these companies was $105 billion, indicating that disclosed technology investments represented a mere 0.2 percent of total equity. According to the findings, the biggest technology spenders are Equity Office Properties Trust, ProLogis Trust and Simon Property Group. ProLogis invested $35 million, Simon more than $30 million and Equity Office invested $26 million, a combined one-third of the overall investment total.
Equity Office and Simon took part in founding a real estate technology consortium last May called Project Constellation to sponsor real estate-related Internet, e-commerce and broadband enterprises. Other REIT founders included AMB Property Corporation, Equity Residential Properties Trust and Spieker Properties, Inc. "Each of the companies involved in this effort has long perceived the application of technology as critical to their respective businesses," says David Simon, CEO of Simon Property Group. Collectively, their total capital commitment is $135 million, including capital from investment firms such as CB Richard Ellis Services and Morgan Stanley Dean Witter.
An interesting example of a technology venture was a deal between Simon and Cingular Wireless last holiday season. A mall REIT, Simon launched a Cingular Wireless promotion where shoppers who registered at stores or kiosks for Cingular's wireless phone service received a free Santa photo package valued at $25. Shoppers in some malls had the added benefit of making a free two-minute cellular phone call while waiting in line to have their photo taken with St. Nick.
An assist from Santa notwithstanding, partnering or expanding heavily into technology may not be for every REIT. "Technology has not been a big financial deal for real estate companies," says Lee Schalop, an analyst at Banc of America Securities. "To their credit, most real estate companies avoided the temptation to take the technology leap of faith. Instead, they chose to make small investments and minimize their risk, preferring to focus on their core real estate. This may be one of the reasons why real estate stocks have performed so well as technology stocks imploded."
Storage on Demand
Shurgard Storage Centers Inc. is testing a 24/7 customer service kiosk to address customer storage needs.
The new ATM-like system allows customers to determine what storage unit best suits their needs, instantly purchase self-storage, pay monthly rental charges and communicate with Shurgard's National Sales Center in Seattle. It is currently being tested in 12 facilities in Washington, Arizona and California.
"We are always looking for opportunities to utilize technology in the self storage industry and improve the customer experience," says Richard Robinson, vice president of technology at Shurgard. "The customer service kiosk is an innovative way to take advantage of technology and place Shurgard ahead of the competition."
TouchVision, Inc., a Cypress, CA-based software developer, created the system and will remotely monitor and manage the network of kiosks.
One-Stop Research Shop
Now there is an easier and faster way for investors, consultants, brokers, appraisers and mortgage bankers to purchase current and historical real estate investment information. Real Estate Research Corporation (RERC) has introduced the online RERC DataCenter to expand the accessibility of real estate research.
Available through the company's web site, www.RERC.com, the RERC DataCenterTM offers pre-tax yields, going-in and terminal capitalization rates, overbuilding risk, value and rent growth, economic and demographic trends and renewal probabilities. Performance data also are available for a variety of property types across sectors.
Electronic and hard copy versions of the RERC Real Estate Report, a quarterly publication produced by RERC, can be purchased, along with archived articles. Multiple site licenses to RERC's DataCenter are available at a special rate to companies with multiple users.
RERC CEO Kenneth Riggs says the DataCenter is a timely, convenient and cost-effective source of reliable research. "In this tumultuous economic environment, real estate and its investors are in a much better position than those heavily vested in the volatile [side of the] stock market," he says. "We see our DataCenter as a one-stop shop for current and historical investment criteria, whether you are looking for historical capitalization rates for the CBD office sector, fourth quarter 1999 retail yields, or investment conditions for the past five years for all property types."
Technology Roundup