There are three key takeaways here. Thanks for taking the question. Meanwhile, both labor and material costs have increased, Marcus says, but the biggest wildcard has been the supply chains throughout the world. And we have brought this to a highly respected and recognized real estate product type today. Over 80% of that demand comes from our existing 1,000 tenants. It will be ultra-efficient, minimizing its carbon footprint and harnessing geothermal energy and renewable electricity, which is really a game-changer, Marcus says. But as Hallie mentioned, BCs are more discriminate disciplined in demanding of future investments and companies with tenured management teams, strong differentiated technologies and near-term value inflection milestones are the ones that will rise above the fray. The under-construction Moderna Science Center, at 325 Binney Street, will house the mRNA pioneers headquarters and research and development operations. For Alexandria, these buildings stayed open and operational because its very difficult to do lab work from home.. Today, I'm going to comment on the life science industry following the collapse of Silicon Valley Bank. Now we have also identified other dispositions and sales of partial interest to bring our total for the year to $1.5 billion. And let me maybe put a footnote on that, Steve. But new construction and development will be more expensive, and certainly, entitlements around the country are getting tougher to obtain.. But we also agreed to credit our partner $5.5 million in fees payable, because we sold 33% of the total 37% our partner purchased those fees equate to approximately $15 million in value. Given that the receipt of cash flow is over a year away, it's difficult to translate the valuation to an operating cap rate. Thank you for indulging me on that retrospective. WebEditors Note. It has really taken off and become a great model. Alexandria, which celebrates its 25th anniversary as a New York Stock Exchange listed company in May 2022, has a total shareholder return exceeding 2,500% as of December 31, 2021. So, the two are pretty fundamentally different. So you will see some of that, but they're fairly small in the scheme of this. But that's just one example as a historical data point, Jamie, is -- but if you look back for now, I think this would be the third year that we're into this run rate right at about $100 million, $105 million on average, I think, for the last couple of years. They have worked with one or more of our core projects or programs. The next question comes from Nick Joseph with Citi. Each of the markets is seeing strong demand. We just gave -- so you saw there was no changes in capped interest down in the details, obviously, if you -- we did on a number of projects review strategically what we wanted to do and a number of them were put on temporary hold. Alexandria has played a critical role in the evolution of the life science industry over the last three decades by creating and growing the ecosystems and clusters that ignite and accelerate the world's leading innovators in their pursuit to advanced human health, which is our solid mission. 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Transitioning to leasing, our strong brand loyalty, mega campus offerings and operational excellence continue to drive strong leasing numbers in a challenging market. Patrick Gunn, a San Francisco lawyer for Alexandria, said he was disappointed in the ruling but was considering refiling the suit in the United Kingdom or Ireland. And I think in a tougher macro environment, it's kind of thought to prune and rightsize you see what we've done last year would be a good example of -- we sold a set of really good high-quality workhorse assets, but we felt in locations that were not necessarily high barrier to entry markets, but good economics for buyers as well and good economics for us. Nearly 80% of that space is pre-leased or under negotiation, Marcus says. I think kind of Hallie said it all that, when we look at private companies or we look at preclinical public companies or even companies in the clinic that are public. So operator, can we go to questions, please? If you go back to my comments in the fourth quarter, I believe I gave similar comments of pre-leasing on space that had just rolled as well. Its goal is to develop and operate efficient and healthy buildings by reducing carbon emissions and mitigating climate risk. Now our strong occupancy was in line with our expectations. Our mission is to create clusters to ignite and accelerate the worlds leading innovators in their pursuit of advancing human health by curing disease and improving nutrition. Those are the areas we focus on, but we impact those areas in a variety of ways and we try to engage our team members throughout the company. Well, wait a second, the $4.2 million is in rental properties today, it's in operations, Tony. Now we've got continued consistency and growth in dividends from really high quality cash flows we generate in our business. Alexandria hopes OneFifteen will encourage similar projects around the country. No, that's helpful. Next question comes from Jamie Feldman with Wells Fargo. I'll take that. See Joel S Marcus's compensation, career history, education, & memberships. For example, Alexandria signed a massive, 462,000-square-foot lease with vaccine-maker Moderna at its Alexandria Center at One Kendall Square mega campus in Cambridge, Massachusetts. Marcus was one of the original architects and co-founders of Accelerator Life Science Partners, for which he serves on the board of directors. That annual leasing activity is projected to generate more than $6 billion of contractual triple-net base rents. Alexandria Real Estate Equities (are.com) is an urban office REIT uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations. Now, our policy has been these large significant unusual items. The company, led by founder and Executive Chairman Joel Marcus, focuses exclusively on highly specialized lab space used for research and development in the booming life science industry. Yes, that's a good example. And so we ended up with this kind of standalone asset, which is a really good office asset. Thanks. And we've tried to minimize limit our exposure there and transaction that we build to suit was really a bit -- it's in the South San Francisco submarket, but it's a little bit out of there. Okay, I understand. So, the $4.2 million does have some meaningful NOI associated with it. But as you think about the ability to flex that going forward, if the transaction market stalls even more, how are you thinking about the flexibility on your end? And then one other question. This conference call contains forward-looking statements within the meaning of the federal securities laws. With the deep tenant base, relationships across every facet of the industry, and the highest quality space in operations, we can get ahead of potential tenant challenges to backfill and further optimize our tenant base. China is the dominant force they bought a number of large companies and theyre tying up all kinds of agricultural sites around the world. Bipartisan support for life science research remains strong. Dan, any other comment you would throw out? Understood. Tony, it's Dean here. So I guess, a long way of saying, Rich, I think we feel comfortable with what we've rightsized for the pipeline of activity. So rightsized for delivery to requirements in the market, they're not lumpy, large build-to-suit opportunities that could be more specific to larger requirements. There are 2 older and 29 younger Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools: Good day, and welcome to the Alexandria Real Estate Equities First Quarter 2023 Conference Call. [4], In 1997, it became a public company via an initial public offering, raising $155 million. And that's kind of the general outlook other than having a slightly lower number for the first quarter. The cluster model has worked well for life science companies because they innovate together and theyre purpose-driven around therapies there are 10,000 diseases that have been identified and only 500 therapies to date, so were in the early innings. Yeah, Rich, it's Dean here. Joel Marcus co-founded Alexandria Real Estate Equities, Inc. in 1994 as a garage startup with $19 million in Series A capital. I think we feel we're in pretty good shape. In addition to the $1.5 billion in dispositions and sales of partial interest, New JV capital forecasted for the full year of 2023 will contribute over $300 million towards construction spend this year, including most of the $119 million of contributions from the new partner we just added to our build-to-suit project for Eli Lilly. This is an increase of 3.4% in total availability over last quarter, largely driven by spec building in South San Francisco. They own a billion-dollar venture capital portfolio and have invested in startups and established technology companies., This is relatively unique to Alexandria within the public REIT world, he says. Yeah. I don't know that -- I mean, we don't call it a credit watch list. Yes. We expect that the life science sector will be minimally affected going forward as evidenced by venture financing rounds that closed in March is expected and continue to do so in April, which I'll touch on in more detail shortly. REITs invest in the majority of real estate property types, including offices, apartment buildings, warehouses, retail centers, medical facilities, data centers, cell towers, infrastructure and hotels. But you have to start prioritizing and that one just kind of lost some of it shine when the opportunity to expand kind of went away. For Alexandria to own big concentrations of campuses where they can provide the amenity base, as well as the opportunity to expand and move into different facilities and have them run incredibly professionally by one of the most experienced teams in the industry, is a real competitive advantage for Alexandrias tenants.. So it kind of meets all the requirements that we have for monetization. Mr. Some private and preclinical clinical stage companies are making do with the space they have today until they can better understand their ability to raise capital on its cost. Alexandria paid $81 million to buy a 600,000 square-foot property at 421 Park Drive in the Fenway neighborhood of Boston for a mixed-use Landmark Center redevelopment project. Good afternoon, everyone. Mr. Marcus is also personally engaged in numerous mission-critical philanthropic efforts, including through his service as Chair of the Navy SEAL Foundations 2017 New York City Benefit, which raised $12.8 million to help support the Naval Special Warfare community and their families. Alexandria Real Estate Equities, Inc. pioneered the life science realestate niche and continues to break new ground in the sector. National Association of Real Estate Investment Trusts and Nareit are registered trademarks of the National Association of Real Estate Investment Trusts (Nareit). For instance, in New York City, were a founding supporter of Computer Science for All. Thank you. [1], The company's largest tenants are as follows:[1]. Year-to-date, 14 novel therapies have been approved including a novel therapy for ALS developed by Tenant Biogen just announced this morning. The asset base in North America includes 36.7 million RSF of operating properties and 3.4 million RSF of Class A properties undergoing construction, 7.7 million RSF of near-term and intermediate-term development and redevelopment projects and 10.3 million SF of future development projects. But this is baked into our mall. The new company proved that biotech companies were underserved, and that there was strong market demand. But that was really a handful of leases over the last couple of quarters. Some of which use SVB, but many of which did not or had multiple banking relationships. That is an initiative to bring computer modules and computer science education to every single New York City public school student by 2025. And where could equity play into that? Prior to co-founding Alexandria, he had an extensive legal career specializing in corporate finance and capital markets, venture capital, and mergers and acquisitions. And I guess just on that line of thought, like our markets like in the non-cluster markets, like RTP, suburban Maryland, are those sort of seeing similar kind of normalization demand trends as San Francisco versus maybe like your core mark submarkets like Cambridge, BTC, Torrey Pines in San Diego. This quarter, it's closer to 22% overall in the whole portfolio. On lease sublease space is at 3.9% and unleased directly competitive with our AAA locations and building quality to be 1.5% to be delivered in 2023 and 5.1% to be delivered in 2024, a 1.3% total increase in availability from last quarter. Joel Marcus co-founded Alexandria Real Estate Equities, Inc. in 1994 as a garage startup with $19 million in Series A capital. And is there any read-through to other recent acquisitions, Greater Boston like Gatehouse Drive or presidential way? Before joining Duke in 2001 he held teaching positions at Boston University School of Theology, the University of Glasgow, and Princeton Theological Seminary, as well as visiting appointments at Hebrew University and University of Oslo. As CEO from March 1997 to April Early-stage start-ups work within a very tightened community and many used SVB because that's what everyone else used, not necessarily because there were no other options. The asset is under construction and will not be delivered until the end of this year with cash flow commencing in mid-2024. But that's been filled in by some other new folks coming in that want exposure that are also high-quality institutional investors. at REITs historically have delivered competitive total returns, based on high, steady dividend income and long-term capital appreciation. Cost of materials and supply chain volatility were the initial drivers of construction inflation, but now the primary driver is labor with a triple whammy of wage increases, shortage of workers and the inefficiency of the remaining labor force due to the retirement of older, more skilled labor. We were ahead of that curve because, historically, life science companies did not want to collaborate with institutions and other companies either. Yeah. [Operator Instructions] [Operator Instructions]. Mr. Marcus earned his undergraduate and Juris Doctor degrees from the University of California, Los Angeles. Peter, can you talk a little bit about the supply comments that you're making in your remarks. But at what point does it become too much? Alexandria Real Estate Equities, Inc. (NYSE:ARE) Q1 2023 Results Conference Call April 25, 2023 3:00 PM ETCompany Participants. So you said $7.6 million You use any pipeline place you want. Yes, there's been a slowdown in activity due to the fact that boards and companies are really just trying to figure out where the economy is heading. The other three verticals are corporate responsibility where we focus on sustainability, philanthropy and volunteerism; thought leadership we recently hosted our second agriculture-focused Alexandria Summit; and venture investments where we invest in and support start-up to early-stage life science and technology companies building the next generation of therapies. from 8 AM - 9 PM ET. And I mean it's a world-class building with a world-class tenant. Very few people in that industry would not want to be in a cluster; the same is true of the agtech world. Alexandria Real Estate Equities, Inc. is a real estate investment trust based in Pasadena, California that invests in office buildings and laboratories leased to tenants in the life science and technology industries. Sorry, we could not find any results with the search parameter provided. And so, we're reasonably comfortable with our outlook into 2023 and we'll obviously provide an update as we go quarter-to-quarter, but a bulk of what we have under executed LOI or PSA agreements today is sliding to close here fairly soon, plus or minus mid-year. I think it's fair to think about we were posting low 4% cap rates, again, on Class A facilities over the last couple of years, and Peter just went through, I thought, a pretty clear explanation of the transaction in Greater Boston, which is essentially a 5.4%. Get short term trading ideas from the MarketBeat Idea Engine. Should You Be Too? Beginning with SVB, there remains some misperceptions on the long-term impact of its collapse on the life science industry. See what's happening in the market right now with MarketBeat's real-time news feed. Real-time analyst ratings, insider transactions, earnings data, and more. [9] The company stopped construction during the financial crisis of 2007-08, and in 2014, it sold its interest to the Government of Ontario for $65 million. The annual event supports the 9/11 Memorial & Museum's critical efforts to respect and preserve a place made sacred through tragic loss and serve as a refuge of remembrance for the family members of the victims, as well as for all survivors, first responders, and recovery and relief workers, and as a place for the thousands of visitors from across the nation and around the world to pay their respects and learn about the attacks and the extraordinary, heroic efforts that followed. There's no significant cash flows from assets that are sitting in the pipeline. We've got a very low and conservative FFO payout ratio, 55% for the first quarter annualized with 5.3% increases in common stock dividends over the last 12 months. Jacobs approached Joel S. Marcus, a lawyer and CPA, with the idea of representing their interests in this company to oversee the management team who intended to provide laboratories and office space to biotech firms. And again, going back to the crux of your question, Steve, almost all that change in the tenancy was retail related at that shopping mall. Mr. Marcusand Alexandria virtually joined thousands of patriots, partners, colleagues and friends to remember those that the nation lost in the attacks and honor the courage of everyday heroes in the aftermath. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, agtech and technology campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity and success. So you saw some of the moves we made last year in South San Francisco, exiting a number of assets, passing on -- we passed on an option we had to do a development. Now turning to guidance. With that, let me turn it back to Joel Marcus. Theyre certainly not overcommitted in any way, and they have several great projects going forward. Mr. Marcus also founded and continues to lead Alexandria Venture Investments, the companys strategic venture capital platform. We beat guidance and we raised guidance. Adding to the difficulty to execute in this environment is the increasing desperation of a number of office building owners, trying to raise cash to stay afloat by offering quality long-term leased assets with credit tenants at 6.5% to 7.5% cap rates. Supply in all submarkets is very likely to be muted beyond what is under construction today due to high construction costs that I referenced, higher cost of capital and the lessening of generic tenant demand. In Alexandrias fourth-quarter 2021 earnings call, Marcus said, Literally, [theres] no real presence of commercial life science [in Texas] today, but our intent is to create a market and really bring early-stage commercial life science to Texas, much like we did in New York.. While this market is and will continue to warrant extreme prudence, it is an opportunity for the best companies to hone in on their long-term fundamentals and thrive. Our disciplined core focus is our patented and trademark lab space. So, I don't know if that's a helpful way to characterize it, Jamie. Compare your portfolio performance to leading indices and get personalized stock ideas based on your portfolio. This demonstration of collective remembrance brings awareness to The Never Forget Fund, launched by the 9/11 Memorial & Museum to ensure the next generation continues to learn the lessons of hope, resilience and unity from that day. But the book value has that $4.2 million in there? I see what number you're referring to. Weve got a built-in demand driver by our own clients, which is very unusual.. Copyright Nareit 2023. Marcus earned his undergraduate and J.D. Theres a ton of demand for life science real estate, says Daniel Ismail,lead analyst forGreen Streetsoffice team. So it made a lot of sense. But I suspect that maybe some of them are not retail. Alexandria sued Steven Marcus in US District Court in December. Many traditional offices during the pandemic were completely empty. Theyre embracing it, but theyre not very good at it yet. Absolutely, that's helpful. I'll end with some commentary on our value harvesting and recycling progress. Where you're parting ways with your preeminent assets, you only want to do that to a certain degree before -- you're giving away stuff you'd rather own 100%. We are deeply honored to partner with Joel and the Alexandria team to ensure that this and future generations understand the significance of the events and legacies of 9/11, so they have the tools and perspective to navigate the challenges ahead. About Alexandria Real Estate Equities, Inc. Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500 urban office REIT, is the first, longest-tenured and pioneering owner, operator and developer uniquely focused on collaborative life science, agtech and technology campuses in AAA innovation cluster locations, with a total market capitalization of $36.3 billion as of June 30, 2021, and an asset base in North America of 58.1 million SF. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland and Research Triangle. 2023 Mass General Brigham Incorporated. Joel Marcus co-founded Alexandria Real Estate Equities, Inc. in 1994 as a garage startup with $19 million in Series A capital. Now turning to outstanding financial and operating results, we had really strong growth of $342.9 million or up 13.9% in total revenues for the first quarter annualized in comparison to the first quarter of 2022. Yes. And we're mindful of your question, but we have so much coming online and that we have completed in recent years. And so, we're pretty aware. Nareits members are REITs and other real estate companies throughout the world that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses. Continued innovation in medicine is an absolute national priority and the transformative work of our tenants in the industry is critical to addressing the massive unmet medical need. Alexandria, which celebrated its 20th anniversary as an NYSE listed REIT in May 2017, is the only publicly traded pure-play office/laboratory REIT.