A quarterly overview of what publicly-traded real estate companies are saying about technology and innovation in their businesses.
Each quarter, some of the largest real estate firms in the world tell us about how they’re using technology in their businesses. And we at Thesis Driven listen, translating their quarterly earnings calls into analysis of how the biggest REITs are approaching technology, data, and innovation writ large. (You can read Q4’s roundup here.) To do this, we sampled a representative set of the largest publicly-traded real estate businesses, including REITs and services businesses from the major food groups. Specifically, we covered:
- Essex Property Trust (NYSE: ESS)
- AvalonBay Communities (NYSE: AVB)
- Mid-America Apartment Communities (NYSE: MAA)
- Equity Residential (NYSE: EQR)
- Lennar (NYSE: LEN)
- Simon Property Group (NYSE: SPG)
- SL Green Realty (NYSE: SLG)
- Prologis (NYSE: PLD)
- CBRE (NYSE: CBRE)
- Cushman & Wakefield (NYSE: CWK)
- JLL (NYSE: JLL)
- Boston Properties (NYSE: BXP)
- Blackstone (NYSE: BX)
- Brookfield (NYSE: BN)
- Welltower (NYSE: WELL)
For each, we’ll give a brief overview of how technology was mentioned (if it was) plus a review of key innovation-related themes from this quarter’s earning calls.
Major mentions of tech and innovation
Equity Residential
EQR remains my favorite read among REIT earnings calls due to executives’ willingness to discuss the role of tech at a higher level of detail than most firms. For instance, contrast MAA’s statements later on to this discussion of the role of AI from COO Michael Manelis:
“We are in the process of expanding the deployment of our conversational AI capabilities across the entire leasing journey. This, along with the broader strategic automation initiative, is designed to reduce manual tasks, accelerate leasing cycles, minimise errors, and ultimately improve our overall efficiency and scalability, all while improving the overall prospect experience.”
“By this time next year, we expect the process from the initial inquiry, the lease signing, to be almost entirely automating, giving our customers more self-service and the ability to work with our teams as much or as little as they choose.”
Manelis continued later on, describing the faster reaction time enabled by centralization as well as its impact on the renewal process:
“Our centralised processes and system transparency provides us with a powerful and immediate feedback loop to any potential shifts in conditions on the ground in our markets.”
“We have a pretty robust process that’s centralised right now. So the minute that that notice kind of is going out into our resident portal, we’re having constant communication with those residents trying to see if we can get kind of those early notices done or get a little bit of that kind of confirmation of their intent to renew with us.”
I’ve written a lot about centralisation, but I’ve probably undersold the positive impact it has on reaction time in large operators. It’s just so much easier to see—and quickly react to—what’s happening operationally when functions are centralized.
MAA
MAA continued their recent trend of focusing heavily on tech, kicking off with CEO Brad Hill discussing centralisation:
“We continue to invest in key areas that will support future earnings growth, including various new technology initiatives that enhance efficiencies and support our centralisation and specialisation efforts.”
But they also brought in their ongoing portfolio-wide Wi-Fi rollout. Per EVP Tim Argo:
“We are also now live on the four property-wide Wi-Fi retrofit projects we began in 2024 and are currently in the planning or construction phase for an additional 23 projects that we targeted for 2025.”
“So we have the four that we completed late last year and then the 23 that, as I mentioned, are under construction now… Those 27 in general we expect would contribute close to $6 million once everything gets fully rolled out.”
Finally, Hill made reference to several “leasing and reporting tools” that have been rolled out:
“Supported by our asset management group, the teams are focused on harvesting the benefits of several leasing and reporting tools introduced over the past few years to maximise our operational effectiveness.”
Welltower
Welltower’s earnings call remains the most entertaining listen on here. For instance, CEO Shankh Mitra describes the company’s transition to a “technology-driven operating company” as follows:
“Our successful rollout of a corporate rebranding that reflects Welltower’s transformation from a healthcare real estate deal shop to a data science and technology-driven operating company in a real estate wrapper.”
“We believe that the days of generating returns through financial wizardry and levered beta are over. Instead… the only path to delivering satisfactory returns will be through compounding of cash flow generated by superior operations…”
Mitra as well as the rest of the team spent considerable time discussing the Welltower Business Platform, the company’s licensable “end-to-end operating platform.” Per COO John Burkart:
“Welltower Alpha continues to be driven more so by our best-in-class operating partners and deployment of the Welltower Business System… the inherent operating leverage in our business combined with widening of our moat through the Welltower Business System, positioned us well for substantial margin expansion well into the future.”
“Currently, multiple operators have some portion of their assets on our technology platform and we continue to add assets monthly.”
The company also discussed the role of data in their acquisitions process. I found this discussion quite interesting given my interest in high-throughput data-driven acquisitions. According to CIO Nikhil Chaudhri:
“We were able to invest in a granular manner due to the strength of our data science and machine learning platform… created over the past decade… providing us with a unique view of the terrain, giving us a neighbourhood-level view of 10+ million micro markets in the US.”
Mitra adds:
“This granular machine learning approach enables us to take a neighbourhood-level view… provide initial interest within minutes… definitive terms within two weeks… This has fundamentally upended the status quo in this business.”
Given Welltower’s approach throughout the call, it’s hard to know how literally to take what they’re saying here. Ten million “micro-markets” in the US, for instance, would imply that the average market is 240 acres. In comparison, Chelsea, Manhattan—my home and one of the densest places in the country—is 851 acres. So they have to reach a granularity a third the size of Chelsea across every small town, farm, forest, and desert in the country.
But they’re thinking about this in the right direction, and I appreciate the entertainment.
Minor mentions of tech and innovation
AvalonBay
As usual, AvalonBay made high-level reference to the importance of technology and centralization in CEO Ben Schall’s opener. COO Sean Breslin did make one notable comment on the centralised team’s work on renewals:
“…our centralised renewal team… it’s a pretty strict discipline as it relates to negotiating guardrails… more strict now than it’s been in the past because of the focus of the centralized team on just that activity.”
Notable to see two mentions of centralised renewals (EQR + AVB) this quarter.
Invitation Homes
COO Charles Young referred to the positive impact of smart home technology and bundled internet:
“Other sources of property income such as value add services like smart home and bundled Internet, continued to enhance our overall revenue performance while also providing desirable offerings to our residents.”
Lennar
Lennar once again focused on the role of “the machine”—the firm’s digital marketing software—in driving performance. Per co-CEO Jon Jaffe:
“Our marketing and sales teams engaged with our machine to turn digital leads into appointments and then convert appointments into sales. […] We focus on improving the experience for our customers to achieve higher conversion rates versus the alternative of chasing more top-of-funnel leads, which increases marketing spend.”
“We utilised our machine along with our dynamic pricing model to identify unsold homes nearing completion. Appointments are set for those homes and prices are established to achieve sales, preventing the buildup of inventory.”
JLL
While JLL brought up technology a lot—mostly as something (a) their clients expect them to have and (b) they’re spending a lot of money on—they didn’t have much to say about what they’re doing with it.
For instance, CEO Christian Ulbrich:
“We believe many geographies and industries have significant untapped potential for […] advancements in technology, including in artificial intelligence, which will further transform how we serve clients in the future.”
And CFO Karen Brennan:
“Our first quarter reflects… the impact of our ongoing investments to unify our data, technology, and people that enhance the outcomes we deliver to clients.”
“The investments in our technology platform, including artificial intelligence and project management workflow tools… weighed on the segment-adjusted EBITDA performance.”
“We’re making… investments in our technology platform, which includes both client-facing tools, utilizing AI, as well as internal workflow tools for our teams.”
Blackstone
While Blackstone didn’t spend much time discussing technology, they did raise the recent sale of Blackstone software platform Bistro to Clearwater Analytics for $560 million. From CFO Michael Che:
“Principal investment income increased significantly due to the sale of Bistro, a portfolio visualization software platform developed in-house at Blackstone to Clearwater Analytics.”
“Blackstone’s culture of innovation is usually associated with new investment strategies… [but] the monetisation of Bistro reflects how that culture of innovation pervades the firm, including with respect to our internal technology capabilities.”
Genuinely impressive for an asset manager to sell their homegrown software platform for half a billion dollars.
The rest
Essex Property Trust, Simon Property Group, SL Green, Cushman & Wakefield, and Boston Properties did not mention technology or innovation at all.
While CBRE made no specific mentions of in-house technology, they did discuss the outperformance of their business providing technical services to data center clients.
And Prologis CFO Tim March made an interesting comment about the rollout of their solar generation and power storage business:
“At quarter end, we have over 900 megawatts of solar and storage capacity either in operation or under development… advancing us closer to our one gigawatt goal for the year.”
For comparison, a nuclear power plant will typically generate 900 megawatts of power per year.
Brookfield Asset Management President Connor Teske also mentioned a major AI infrastructure bet:
“This quarter, we announced a €20 billion AI infrastructure commitment alongside the French government”.
As we’ll discuss, infrastructure was a recurring theme across this quarter’s calls.
Trends and takeaways
- An ‘infrastructure’ boom
I try hard to keep this letter focused on the real estate industry’s use of technology rather than the technology industry’s impact on real estate writ large. Boston Properties’ quarterly updates on office leasing demand from the tech industry, for instance, isn’t particularly relevant to what we cover in this series.
But the increasing relevance of technology infrastructure is blurring those lines. I made the decision last year to no longer cover regular data center business updates in this letter, as data centers had become a fully-formed real estate asset class and were no longer some innovative experiment—even for the biggest REITs.
As AI booms, so does the infrastructure and services ecosystem around it. Now, it seems half the REITs want to be “infrastructure companies,” which can mean anything from technical services data centers (CBRE) to payments infrastructure (Brookfield) to renewable energy (Prologis) to operating technology (Welltower).
While it’s hard to know how real this “infrastructure” rebrand is, it certainly makes it a challenge to define the line between where technology ends and real estate begins.
- Centralisation reigns
It is no longer tenable to be a large multifamily owner-operator without a centralisation strategy, particularly if you must answer to public markets investors.
Equity Residential—which was been doing centralisation before it was cool—remains the market leader here, both in terms of implementation as well as how thoughtfully they discuss centralization and technology on their quarterly call. But other operators are increasingly giving it the time and attention it deserves. (We’ve written about centralisation a lot, most notably in the context of EliseAI here.)
Notably, multiple groups (AVB and EQR) specifically discussed centralisation as it applies to renewal management. In an environment with declining rents in many markets, ensuring existing tenants stick around is all the more important.
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While these trends may seem unrelated at first glance, tension is building between them. For many firms, being an “infrastructure company” requires building first-party software—a stand-alone, proprietary technology stack that you can monetize a la Blackstone (Bistro) or Welltower.
But keeping up with peers in the centralisation and automation race requires buying, not building, best-in-class software. AI is evolving so quickly that even the most agile real estate operators will struggle to staff the quantity—let alone quality—of technical talent they need to keep pace with a million point-solution companies laser-focused on solving one specific problem with tech. And being a “platform” company is pointless if the platform being built is going to be obsolete on day one.
Regardless, it will be fascinating to watch this play out on earnings calls in the quarters to come.
—Brad Hargreaves
This article was originally published by Thesis Driven.
