And those, as you go back about $100 million of that was excluded from FFO per share. The Alexandria Summit convenes a diverse group of visionary partners and key stakeholders from the biopharma, technology, agribusiness, medical, academic, venture and private equity capital, philanthropy, patient advocacy, and government communities to address the most critical challenges in healthcare. Please go ahead. Continued innovation in medicine is an absolute We have been involved in this sector since 1998, when we had only been a public company for one year. Yeah. Each of the markets is seeing strong demand. Please go ahead. $37.889 million. 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. LEADERS Interview with Joel S. Marcus, Executive Chairman Were almost a $20-billion market cap company, which is hard to imagine since we started with $19 million. Joel Marcus co-founded Alexandria Real Estate Equities, Inc. in 1994 as a garage startup with $19 million in Series A capital. The S&P 500 investment-grade rated REIT boasts an asset base of approximately 74 million square feet. Pasadena, California-based Alexandria is the only publicly traded, pure-play office/laboratory REIT. This is very similar to last quarter, but in response to the uncertainty and volatility in the markets, we have made a strategic decision to reduce 2023 construction spend by $250 million by pausing or delaying projects that had been classified as under construction, so we can focus our capital on the most strategic projects that have the most attractive terms, enabling our highly bedded and vast tenant base. Nareits REITworks, taking place June 28-29 in Las Vegas, is the premier ESG meeting for REIT and CRE professionalsoffering educational sessions, dynamic speakers, and engaging roundtable discussions on the latest ESG trends in the industry. Joel Marcus A lot of people have left these companies and are now starting companies. Additionally, he is a member of the MIT Corporation Visiting Committee for the Department of Biology. So is there a, sort of, a number you can point to that this is how much we can raise from a disposition standpoint, still be in a range where we're comfortable with our ownership position in these fantastic assets longer term. And do we want in the portfolio or not. Joel S. Marcus, Executive Chairman and Founder of In 1996, Marcus founded the companys venture capital arm, Alexandria Venture Investments, to provide strategic investment capital to innovative life science and technology entities developing breakthrough therapies and technologies. It has been in the works for a long time, but it has been catapulted by the M&A activity. Alexandria projects further rental growth of 30% to 35% for full-year 2022. And I think that's probably the best example I could maybe share Peter, but you could give you color. Yeah. Mr. Marcus serves on the boards of directors of Applied Therapeutics, Inc. (NASDAQ: APLT), Frequency Therapeutics, Inc. (NASDAQ: FREQ), Intra-Cellular Therapies, Inc. (NASDAQ: ITCI), and MeiraGTx Holdings plc (NASDAQ: MGTX). Alexandria Were also big thinkers. Now key highlights of our continued strong operating and financial performance Strong growth in revenues, adjusted EBITDA and FFO per share was driven by the continued strength across key areas of our unique and differentiated business. I just want to make clear that there's a line item that adjusts the future pipeline for square footage that's sitting in operations, but those cash flows are in the operating portfolio of, Tony, as you pick up that NOI to value the company. Well, it was a fairly low yield. For Alexandria, these buildings stayed open and operational because its very difficult to do lab work from home.. The 71,000 rentable square foot building is vacant and is classified in operating properties. Alexandria also provides strategic capital to transformative life science, agtech and technology companies through our venture capital platform. They add a lot of value. Moderna continues to highlight the potential of novel platforms to deliver innovative new medicines to patients. Alexandria has filed another claim against Steven Marcus in a California state court. Get daily stock ideas from top-performing Wall Street analysts. And I guess that really just speaks to how are you changing maybe your underwriting in the tenants that you're sort of willing to do business with today versus maybe tenants who were willing to do business with either post-SVB or a couple of years ago? And we have brought this to a highly respected and recognized real estate product type today. We have a very strong balance sheet with $5.3 billion in liquidity, no debt maturities until 2025. When typing in this field, a list of search results will appear and be automatically updated as you type. The younger Marcus also allegedly falsely claimed his startups evolved from Alexandria, according to the suit. And then you look at public, which are preclinical or in the clinic, but don't have near-term milestones. Each of these tenant relationships started literally decades ago, Marcus says. Its a really fabulous benefit for people when theyre unfortunately in need of something like that. It's a retail project known as the shops at 10 Fran. Alexandria Real Estate Equities, Inc. | LinkedIn Marcus co-founded it with $19 million in Series A capital. Thank you. So that's really, I think, where the mindset is. We're fortunate we have one project moving that is kind of a good niche for earlier-stage companies, mid-stage companies, so we don't have to go on an elephant hunt to lease some really large project, but there's a lot of folks out there that are going to be in a lot of trouble because of what I would think is fairly reckless investing. However, Alexandria has an immense advantage with its long-term relationships with large, industry-leading companies, many of which are revolutionizing the biotech sector. In-depth profiles and analysis for 20,000 public companies. The culmination is continued FDA approvals and 2023 has started at a fast clip. We couldn't understand the science, not that we had some ability to say, hey, this is going to fail or not fail, but we simply could not understand the science that we passed on the tenancy. The under-construction Moderna Science Center, at 325 Binney Street, will house the mRNA pioneers headquarters and research and development operations. 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. Mr. Marcus was one of the original architects and co-founders of Accelerator Life Science Partners, for which he serves on the board of directors, and AgTech Accelerator Corporation, for which he serves as Chairman of the board. Just some new recent starts and one, large one in particular in South San Francisco, you made up most of that change. Starting with pharma, which makes up 18% of our ARR, this segment continues to operate from a position of strength with strong balance sheet and significant free cash flows, pharma is less sensitive to rising rates. We have taken judicious measure to cut our capex, while at the same time, making strong progress on our funding plan for 2023, and you'll hear more about that from Peter. 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. Specific to life science buildings, the availability of switchgear and equipment such as HVAC units and generators are -- has slightly improved but their lead times are still extraordinarily long with custom air handlers taking 27 weeks longer to get than before COVID and switch gear and generators and astounding 64 weeks longer. 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. At that point in time, the U.S. was Our outlook -- our strong outlook for 2023 same-property NOI growth is 3% on a GAAP basis, 5% on a cash basis and generally consistent with our strong 10-year average for same property growth. Alexandrias already-strong performance was amplified by the pandemic when demand surged from new and existing tenants across its portfolio, as billions of dollars flooded into the research and development of a COVID-19 vaccine and other therapies to combat the virus. We continue to underwrite and monitor all tenants closely, and our private biotech tenants remain compared to the broader market. I recall my interview with Joel, where I learned about this novel idea of forming a real estate company to serve the life science industry, which made me both nervous as nobody had ever done it before and equally inspired to help enable an industry that was hell bent on changing the world. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. Weve done a really good job on our construction/development side in making the most of the demand, he adds. [1], The company also has a venture capital arm, Alexandria Venture Investments, which invests in life sciences firms. I think that's the area that everybody is really focused on, and we have very limited exposure there. Sorry, we could not find any results with the search parameter provided. A quarter century after it began life as a garage start-up, Alexandria Real Estate Equities, Inc.s (NYSE: ARE) decision to focus on the niche segment of life science real estate looks sounder than ever as demand for sophisticated lab space across major U.S. markets sits at an all-time high. I said, Well, in 10 or 15 years, maybe we could be a $1 billion company. And lo and behold, we passed $44 billion in enterprise value at the end of 2021., In May, the company celebrated the 25th anniversary of its IPO. An Interview with Joel S. Marcus, You guys talked about driving a lot of your leasing from just internal relationships in your existing tenant base. Dean Shigenaga here. And then Peter, sticking with you, appreciated your comments on availability rates when including 2023 and 2024 deliveries. We have meaningfully reduced uses of capital for 2023, made excellent progress on dispositions and sales of partial interest, have a conservative FFO payout ratio and a growing dividend and are the go-to brand for life science real estate. 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. So, like that 4.2 million square feet, there's not an appreciable amount of NOI from that that we would be picking up. And then the second question for me is on the success that you're having from asset sales and partial interest. I think it will get better once there's more certainty in where the terminal rate is going to land and where cost of capital is so people get comfortable in spending their allocations for '23. After commenting on construction costs for the past two years, I can still say they remain volatile but are on their way to stabilizing. It raised an additional $155 million on the public market. 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. Marcus is also personally engaged in numerous mission-critical philanthropic efforts, which include his service as Chair of the Navy SEAL Foundations 2017 New York City Benefit in support of the Naval Special Warfare community and their families. [11], In June 2018, the company acquired an office building leased to Amazon.com in Seattle from The Blackstone Group for $95 million. The REIT owns, operates, develops, and acquires Class A buildings in urban cluster campuses in key markets and offers tenants top-of-the-line amenities and the highest-quality, sustainable building materials. 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. Please go ahead, Joel. Well, yes, I'll let maybe Peter comment on that as well. So, great locations, great facilities, and I think our operational excellence and our brand puts us in a great position to capture mark-to-market on most of these spaces that have come back. So, the two are pretty fundamentally different. That annual leasing activity is projected to generate more than $6 billion of contractual triple-net base rents. Marcus says those four components are necessary for life science companies to flourish. Yeah. For example, Alexandria tenant Gilead has laid out an ambitious plan to achieve 20 new drug approvals by 2030, which will entail advancement of their current pipeline, particularly in oncology, supplemented by additional M&A. SVB certainly was a go-to provider for banking needs of many venture-backed companies, particularly in the tech industry. We have 10,000 known diseases reeking havoc on human beings each and every day and the personal and economic cost of sickness, illness and today, the mental health crisis is continuing to skyrocket. Thanks for taking the question. Mr. Marcus has built Alexandrias unique business model around four business verticals real estate, venture investments, thought leadership, and corporate responsibility. We reported excellent operating and financial results that exceeded consensus with strong core results, and our team is off to a strong start towards a solid growth for 2023. So we in addition to high-barrier to enter, we also really are focused on aggregating into mega emphasis, and the opportunity to do that wasn't attractive enough for us to move forward. But they're all basically shutting down in the near term in the scheme of things, they're relatively small. WebMarcus co-founded Alexandria in 1994 as a garage startup with $19 million in Series A capital and, as Chief Executive Officer from March 1997 to April 2018, has led its growth Hi, everyone. I would now like to turn the conference over to Paula Swartz with Investor Relations. Please go ahead. And then just last, on 15 Necco, what's the reason for selling that specific, I guess, development stake? And how that demand compares to the broader industry? I just had my 25th anniversary with the Company, In addition to that milestone reminding me of how fast time moves by brought about a nostalgic look back at my time at Alexandria. This month, the Company's personalized mRNA cancer vaccine in combination with an immunotherapy drug from tenant Merck, demonstrated promising clinical trial results in aggressive forms of skin cancer. But US District Court Judge Lucy H. Koh, of Californias Northern District, ruled her court has no jurisdiction because Steven Marcuss companies operate strictly in Europe and Steven lives in London. He also serves on the boards of Applied Therapeutics Inc., Atara Biotherapeutics, Inc. (NASDAQ:ATRA), Boragen Inc., Intra-Cellular Therapies, Inc. (NASDAQ:ITCI), MeiraGTx Limited, and Yumanity Therapeutics; Biotechnology Innovation Organization (BIO), the Foundation for the National Institutes of Health (FNIH), Friends of Cancer Research, MassBio, NewYorkBIO, and The Scripps Research Institute; the 9/11 Memorial & Museum, the Navy SEAL Foundation, the Partnership for New York City, and Robin Hood Foundation; as well as on Nareits 2018 Executive Board. I would like to turn the conference back over to Joel Marcus for any closing remarks. Yes, thanks. The company's revenues are derived in the following markets: Properties are generally located near universities to attract tenants. Alexandria - Building the Future of Life Science As noted in our press release, we were pleased to transfer an 18% interest in our current JV at 15 Necco, which we control and owned 90% prior to the sale. Please find specific details in the tabs below. I mean what's the maximum you think you could do on that number, on that line item? There's some more coming in '24, there's more coming. Briefly on external growth, we have $610 million of incremental net operating income from our pipeline of 6.7 million square feet that is 74% leased, approximately 30% of this NOI will commence in the remaining three quarters of 2023, about 40% will commence in 2024, about 26% in 2025 and the remaining 4% thereafter. Since co-founding the company in 1994 as a garage startup with $19 million in Series A capital and a mission to advance human health, he has led the remarkable growth of Alexandria into an S&P 500 company that, as of December 31, 2021, has a total market capitalization of $44 billion, and a total equity capitalization of $35 million that ranks it among the top 10% of all publicly traded U.S. REITs. He was also a practicing certified public accountant and tax manager with Arthur Young & Co., where he focused on the financing and taxation of REITs. Please refer to Footnote one on page 26 of our supplemental package for more information. Thank you for accessing our content on the Topio Networks Market Intelligence Center. Alexandria Real Estate Equities, Inc. (ARE) Q1 2023 Earnings Theyre incredibly active on the venture capital side of the business, he explains. All stakeholders should recognize and appreciate this management team took a highly disciplined approach over a multi-year period to create a fortress balance sheet to successfully weather what now is the current self-inflected economic storm by the various policies that we implemented over the last many years. 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. That was almost all of the change in the tenancy from roughly 1,000 to 850. Chairman, Chief Executive Officer, and Founder It's obviously the best way to or one of the best ways to raise equity capital right now for you guys today. But Dean, do you want to highlight that for a moment? They asked Marcus, then 47, to lead the company. To see all exchange delays and terms of use please see Barchart's disclaimer. This quarter, it's closer to 22% overall in the whole portfolio. That is almost -- that's hard to do generally, and it's so submarket and building specific, Tony. Great. So, Hallie? View which stocks are hot on social media with MarketBeat's trending stocks report. Joel WebMarcus co-founded Alexandria in 1994 as a garage startup with $19 million in Series A capital and, as Chief Executive Officer from March 1997 to April 2018, has led its growth In the biomedical area, the federal government supports basic research and makes us the leader in the world to the tune of $40 billion from the National Institutes of Health. (844) 978-6257. And today, for example, one of our greater Boston tenants, Morphic Therapeutic which has an oral drug addressing moderate to severe ulcerative colitis. Both facilities will provide many amenities and be highly sustainable, high-performance buildings. Alexandria is designing it to be the most sustainable commercial lab building in Cambridge. contact@marketbeat.com We actually have a number of choices still in the market. Jacobs invested in the company with $5 million. Real estate investor finds earnings success in early days of Steven Marcus v. Alexandria Real Estate Equities, Inc. et al 2:2021cv08088 | US District Court for the Central District of California | Justia Justia Dockets & Filings Ninth Circuit California Steven Marcus v. Alexandria Real Estate Equities, Inc. et al Steven Marcus v. Alexandria Real Estate Equities, Inc. et al RSS Track this Docket WebAlexandria Executive Chairman and Founder, Joel Marcus, opened the 29th Annual Baron Investment Conference, one of the investment communitys most anticipated and highly First, occupancy is expected to improve in the back half of the year. Country of residence : Unknown. Yes, that's a good example. Now leasing volume for the first quarter was strong at 1.2 million rentable square feet, slightly ahead of the strong quarterly average of leasing volume prior to the exceptional record-level leasing volume in both 2021 and 2022. And how much of that is potentially some place where you can sort of tap the brakes like you kind of did this quarter in deference to the current capital raising market, please? Joe, look, I can appreciate that you still haven't closed a lot of these deals, but I think the market would certainly appreciate just any range of commentary you could provide on how to think about cap rates? What Stock Would You Invest $5,000 in Right Now? Alexandria Reports Higher Revenues But Pauses Some Projects The life sciences REIT raised rents 48 percent the highest quarterly rate growth in company history. 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. Mr. Marcus introduced the companys thought leadership platform in 2011, when he co-founded the renowned Alexandria Summit. 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%. Marcus followed Harvard Business Professor Michael Porterstheory of cluster development and began operating under an urban cluster model, where a world-class location, technology and innovation, a talent pool of scientists and professional managers, and ample risk capital all merged. No, that's helpful. CONTACT: Courtney Mulligan, Senior Director Communications, (646) 939-7471, [emailprotected]. However, Marcus says existing assets will become more valuable as a result. Do you see enough demand today to absorb the space that's coming online in the next couple of years? Or I'm just trying to piece that all together, so either we're capturing everything or not double-counting something? The health of ARE's best-in-class life science tenant base and innovation is a long-term driver of life science industry growth. Lang. Age : 74. [8], In 2007, the company began development of the West Tower of the MaRS Discovery District in Toronto. At $47.5 billion, the NIH's 2023 budget is a 21% increase over 2019. So it made a lot of sense. 2023 Mass General Brigham Incorporated. My sense is half of that is, is retail tenants that maybe are leaving for an asset. The human body must have adequate healthy food, so we focus on serving the life science and technology industries, as well as the agtech area how the technologies relating to the agricultural industry are driving fundamentally disruptive changes in our whole farm-to-table ecosystem. Additionally, high-level interest rates always have an impact on real estate, but thats where Alexandrias strong balance sheet comes in, Rodgers continues. We updated our underlying guidance assumptions for 2023. [3], As of December 31, 2022, the company owned or had investments in 41.7 million square feet of operating properties in addition to properties under construction. So information comes in different ways in different fashions. And 29% of that space has already been leased. I don't think we see demand dropping off a cliff here at all. But the book value has that $4.2 million in there? Now our strong occupancy was in line with our expectations. Alexandrias top-line revenue is up almost 14 percent, funds from operations per share are also up 7 percent, and the company executed strong leasing performance. Alexandria is definitely not a health care service facilities company, nor a generic office company. Well, it's all reflected in our guidance. Inspired by the OneFifteen platform, Alexandria is developing a new model in Seattle to combat the home- lessness crisis. We continue to refine our plan for 2024 because as I mentioned earlier, the $610 million of pipe, that pipeline does not require much more equity capital at stabilization because we have so much already in CIP, which the incremental EBITDA will allow us to debt fund leverage neutral, the wide majority of the incremental capital for that pipeline. And many banks, including G-SIBs have been working for years to carve out their own share of this market. As we all know, the rapid rise in interest rates have not only increased investors' cost of capital, but created a lot of uncertainty causing a number of investors to remain on the sidelines. We've had very solid leasing with the highest-ever rental rate increase, and we've had continuing strong operating and EBITDA margins. It will be ultra-efficient, minimizing its carbon footprint and harnessing geothermal energy and renewable electricity, which is really a game-changer, Marcus says. Mr. Marcus founded Alexandria Real Estate Equities, Inc., or Alexandria Real Estate, a Joel S. Marcus. And are the investors that we attracted really like the building, and it was an opportunity to fund something that was near-term dollars. The overarching larger vertical is real estate the infrastructure and collaborative campuses that we build to support entities like life science and ag companies. We haven't broken out that number for '24 to spend just related to that, but that's not -- within that bucket now we've slimmed down the focus of what is continuing to generate the $610 million of NOI. In San Francisco, direct vacancy is 3.5% and sublease space is at 5.8% and unleased supply directly competitive with our assets continues to be the highest in all of our markets at 6.6% and 8.9% to be delivered in '23 and '24, respectively. Joel S. Marcus We have a large mountain decline, and the industry is really in its formative days. Anyone contemplating a speculative development these days will have to contend with these delays and associated high costs, which will put the feasibility of building and financing the project at considerable risk. Depending on who you ask, demand is at slightly below or slightly above pre-COVID levels. After over 25 years in the industry, our various executives have an amazing network, which we have developed through our summits and our real estate, as well as through our venture investments. Now, our policy has been these large significant unusual items. In sum, with the majority of our academic and institutional ARR from investment-grade tenants and funding cycles that are based on multiyear grant funding time lines, this segment continues to be sheltered from larger macroeconomic conditions. See what's happening in the market right now with MarketBeat's real-time news feed. For example, for Prometheus Bio was originally spun out of Cedars-Sinai, which is set to receive nearly $800 million from the recently announced M&A. Alexandria Real Estate Equities, Inc. (NYSE:ARE) Q4 2021 Results Conference Call February 1, 2022 3:00 PM ETCompany Participants.