BioCloud SalesI believe in a previous post I disclosed that I own 6 Commercial buildings in Waterloo directly across from the University of Waterloo. We have 350,000 sq ft of high-tech space with a few large tenants like Google, Ford, PTC.
As one can imagine the covid-19 pandemic has had a impact on our portfolio with several leases maturing but tenants reluctant to renew due to the uncertainty of the pandemic and being in the tech sector, most can operate from home. Our parking lots that hold 1,000 cars seldom have more than 50-60 cars on a daily basis. Our vacant space continues to climb but we have not had one single tour for vacant space since March 2020.
In commercial real estate it is all about location, location and we are located directly across from the University of Waterloo and conveniently located between two new Light Rail Stops, hence why we have big established tenants like Google and Ford who continue to recruit computer engineering graduates from U of W. As time progresses, I am confident that tenants will return to their space and new tenants will lease space due to our prime location but there is a lot of competition out there now to compete with the flood of vacant space being dumped on the local markets.
As a owner/landlord we must be proactive and find ways to make our space more attractive to potential new clients and to our existing tenants coming up for renewal.
I have a substantial position in Kontrol Energy solutions and believe in their core business model of making commercial buildings more efficient which makes as portfolio attractive to potential tenants if you can manage and reduce your operating expenses but more importantly the Biocloud Air Analyzer is a game changer and I decided to reach out to Kontrol about quoting Biocloud units for some of my buildings. I believe that Biocloud will make my vacant space stand. Out from other vacant space on the market from a safety point of view, it may permit me to negotiate higher lease rates because of the safety aspects plus it will encourage existing tenants to return to their office space. I also feel in the future it may assist with reducing our building insurance premiums which have increased dramatically because of vacancy.
So, I thought I would outline my communication with KNR about obtaining a quote for their Biocloud units.
I initially went to KNR website and completed the contact form. I was shortly contacted by the CEO in an email reply. See below:
From: Paul Ghezzi <paul@kontrolenergy.com>
Date: Friday, December 4, 2020 at 3:31 PM
To: Mark Arbour <marka@waterlooinnovation.com>
Cc: Olsi Hoxha <olsi@kontrolenergy.com>
Subject: Follow up
Hi Mark thanks for the email and interest in BioCloud. I have CC our sales manager Olsi to assist with your questions and follow up.
As you can imagine the demand has been very high and we are prioritizing orders with deposits.
Best Regards,
Paul Ghezzi
CEO
Kontrol
As you can see, they are very efficient in responding with in about 2 hours of my initial contact. They clearly are prepared to take orders, and which are prioritized with a deposit. This suggests to me they have lots of people contacting them
In the email above it was indicated the sales manager would be in contact with me.
A short time later I receive the following email from the sales manager below:
From: Olsi Hoxha Sent: Friday, December 4, 2020 3:50 PM
To: Mark Arbour;
Paul Ghezzi Subject: RE: Follow up | Waterloo Innovation Network
Hi Mark,
If you have 15min this afternoon, I’d be happy to answer any questions you have. Does a call at 4/4:30 p.m. today work?
Sincerely,
Olsi Hoxha Director of Sales
Kontrol BioCloud Inc.
Vaughan, ON L4K 1X8
C: 647.865.8550
O: 905.766.0400 ext. 2
E:
Olsi@kontrolenergy.com Stock:
CSE:KNR OTCQB: KNRLF 
So, we agreed to a call for 4 pm. I will outline the jest of our conversation below:
I provided a brief outline of our portfolio and that we had 6 buildings and that I saw an immediate use in three of our multi storey buildings where we could install units in the lobby areas before entering the elevators. So, in essence I was initially looking at 3 units for our common area lobbies but the other 3 buildings were not configured in common areas so units would need to be installed each tenant’s unit but that would be at the tenant’s expense if they decided to move forward but I suspect several would.
So here is what I learned.
I was looking at 3 units.
· $15,000 Canadian per unit
· Installation is included
· Discounts applicable on orders over 100 units
· Warranty 1 year
· 30% deposit required to secure units
· Units being manufactured as we speak but demand is high
· Priority given to certain users
· Delivery/Installation 7-8 weeks out
In conclusion I will be discussing the Biocloud units with my business partner and our tenants. I feel it is a game changer and I am ready to move forward. My 3 units are a spit in the bucket, and we could need additional 20 units if tenants wanted them in their units, even that was a relatively small number to them. I also have contacts that own in the 5 million sq ft range in their portfolios who I will be sending contact info out.
I just want to demonstrate how powerful selling 3 units in our common areas of our portfolio could be assuming that a majority of our tenants would welcome units being installed in their personal units. WE have approximately 20 tenants and as previously mentioned we have several large tenants: Google, Ford, PTC and Nuance.
Potentially the sale of 3 units to us for our common areas could expand to an additional 20 units to our tenants. Now let’s take a step closer in what that could mean if Google, Ford, PTC and Nuance installed locally but the corporate offices of each company decided to roll it out world-wide:
· Google has 69 locations world-wide which would consist of number buildings inside each campus. They occupy more than 20 million sq feet of space world-wide.
· Ford has 1469 Locations world-wide and occupy 220 Million sq feet
· PTC occupies 80 Locations world-wide
· Nuance occupies 30 locations world-wide
This one sale of 3 units to my portfolio could result into an additional 20 units inside of the portfolio plus if the big tenants rolled out world-wide it would result into an additional 1648 units but considering many locations consists of multiple buildings that number would be at minimum 3 times higher and most likely higher when key areas like lunchrooms, staff rooms, lounge area are taken into consideration.
I will be informing my tenants of our intentions of installing the 3 units plus providing them information to send upper management, health and safety, and HR departments
Use this information as you please, I just get exhausted reading the doom and gloom on this site. KNR in my opinion has sales and most likely many. They are not going to news release every sale maybe the real big ones or government contracts, if secured.
I still believe the demand outstrips the supply in my opinion.
I do not know the details of the exclusive distribution agreement awarded this week, but my guess is there was a substantial deposit, milestones that must be achieved. I do not believe we will ever see any news release around numbers sold from this agreement unless they sell out the 5,000 units before the contract matures and I believe I read we will see numbers in the financials as they are reported.
Sorry for the lengthy email and Best of luck to all the longs!