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. Concentrating on the fast-growing biotech market in San Diego, Alexandria acquired four buildings. And are the investors that we attracted really like the building, and it was an opportunity to fund something that was near-term dollars. And today, for example, one of our greater Boston tenants, Morphic Therapeutic which has an oral drug addressing moderate to severe ulcerative colitis. Yes. I think the way to think about at a high level is that we just close the conversation about the pipeline. After commenting on construction costs for the past two years, I can still say they remain volatile but are on their way to stabilizing. 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. The under-construction Moderna Science Center, at 325 Binney Street, will house the mRNA pioneers headquarters and research and development operations. In addition to this transaction, we have signed letters of intent or purchase and sale agreements for a number of assets, including the office campus referenced in the press release, aggregating to a total sales price of $799.3 million. 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. So, you're referring to the page 34 for others on the call, which is in the bottom right-hand corner. 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. So we feel good about it, and we'll keep an eye on things as we go through the next two quarters. Theyre embracing it, but theyre not very good at it yet. Nareit's members are REITs and other businesses 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 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. The Academic and medical institutions continue to be highly productive, a key metric being the pace of new intellectual property. So hopefully, that gives you a sense. Pasadena, California-based Alexandria is the only publicly traded, pure-play office/laboratory REIT. He pivoted from developing and acquiring single assets to focusing on highly-amenitized urban cluster campuses in seven key markets: Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle Park near Raleigh, North Carolina. Its part of our DNA. 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%. Well, I think the way -- and I'll have Peter certainly and Dan may want to comment as well. He was named one of Real Estate Forums 2017 Best Bosses in commercial real estate and was previously a recipient of the EY Entrepreneur Of The Year Award (Los Angeles Real Estate). 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. Nearly 80% of that space is pre-leased or under negotiation, Marcus says. I think Hallie indicated, we have a pretty methodical deep and judicious approach that has always been there. Bayer bought Monsanto, Syngenta got bought by ChemChina, Dow and Dupont merged, and BASF is out there. Please go ahead. Should You Be Too? Mr. Marcus also founded and continues to lead Alexandria Venture Investments, the companys strategic venture capital platform. No, that's helpful. Its difficult for other clusters to become mainstream and grow, because its hard to attract the four key elements: location, innovation, talent, and capital, he explains. You guys talked about driving a lot of your leasing from just internal relationships in your existing tenant base. Its a perfect time. I mean, for example, we turned down a lease with Sorrento Therapeutics down in San Diego some years ago, because we -- it was kind of like Elizabeth well, Theranos, forget her last name, but Elizabeth Holmes. How challenging is it to disrupt that model? Before transitioning to the health of our tenant base, one quick reminder on the differentiation of our life science real estate product from traditional office, importantly, the office component of our life science buildings directly supports researchers in the lab. Thanks. 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. 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. In 2022, biopharma deployed an estimated $267 billion into R&D. The next question comes from Anthony Paolone with JPMorgan. 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. Moderna continues to highlight the potential of novel platforms to deliver innovative new medicines to patients. And so, we're pretty aware. That encompasses everything from school supplies for kids in a local underserved school to homeless shelters. And now, I'd like to turn the call over to Joel Marcus, Executive Chairman and Founder. CONTACT: Courtney Mulligan, Senior Director Communications, (646) 939-7471, [emailprotected]. This quarter, it's closer to 22% overall in the whole portfolio. Just following up on Michael's previous question about Boston. In fact, across this tenant base, they have raised over $1.9 billion from BC and pharma partnerships since the beginning of the year, of which $800 million has closed following the collapse of SVB. Clearly, demand is overall down from the peak of 2020 and 2021. Joel Marcus is professor of New Testament and Christian origins at Duke Divinity School. So you will see some of that, but they're fairly small in the scheme of this. What in particular kind of changed on that front, new supply coming online? And that's just how we do things. The result is tenants like Eli Lilly that continue to translate this R&D into transformative medicines. Each of these tenant relationships started literally decades ago, Marcus says. Thank you. And so I was wondering -- if I don't know if there's an Alexandria dashboard, so to speak, or what, but can you maybe give us a sense as to what either like leasing traffic, rate or just the aggregate amount of demand that's coming out of your portfolio today looks like versus, say, now two, three, four quarters ago? And that's what our tenants and Alexandria exemplify. Alexandria Real Estate Equities, key financial backer for But Peter, any comments? 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). The new company proved that biotech companies were underserved, and that there was strong market demand. As for long-term risk driven by instability of regional banks, unlike some tech companies that maintain significant cash and deposit accounts, our tenants largely rely on safer third-party custodial and sweep accounts to minimize cash deposits. And first of all, I want to send a big thank you to our entire ARE family team for an operationally and financially strong first quarter in a tough -- continuing tough macro environment. So, hopefully, that gives you just some color on how we're thinking more broadly about it. Country of residence : Unknown. 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. We updated our underlying guidance assumptions for 2023. 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. On the supply side, we track high quality projects, we believe, are competitive to ours in the high barrier-to-entry submarkets. Our business is built around four business verticals. Right. We see this as a critical role in helping our mission to advance human health. It is just uncanny that people are still trying to put new products into the queue in a market that has a lot of vacancy. We dont even give it a second thought its part of our culture and DNA. So, we are largely locked in. Alexandria, which celebrated its 20th anniversary as an NYSE listed REIT in May 2017, is the only publicly traded pure-play office/laboratory REIT. We have no peers. WebJoel S. Marcus Executive Chairman & Founder Alexandria Real Estate Equities, Inc./Alexandria Venture Investments Joel S. Marcus is the Executive Chairman and Founder of Alexandria Real Estate Equities, Inc. (NYSE:ARE), an urban office REIT uniquely focused on collaborative life science and technology campuses in AAA The next question comes from Georgi Dinkov with Mizuho. WebJoel Marcus is professor of New Testament and Christian origins at Duke Divinity School. During that time, he acquired an expertise in the biopharmaceutical industry and was one of the principal architects of the Kirin-Amgen EPO joint venture in 1984. 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. That's that we'd be out--. Alexandria Real Estate Equities and the Transformation of Life Companies also continue to set high bars for continued innovation and product launches. However, the elements of the cluster model, such as having access to top talent, are attractive to the industry and they do want to be on our campuses. Yes. That is 1.1 million students every year. It's reflective of where we usually start at the beginning of the year. Expands Its First-in-Class New York City Regional Life Science Cluster Franchise with the Strategic Acquisition of 219 East 42nd Street in Manhattan, Subject to a Leaseback", https://en.wikipedia.org/w/index.php?title=Alexandria_Real_Estate_Equities&oldid=1141941026, Companies listed on the New York Stock Exchange, Financial services companies established in 1994, Real estate companies established in 1994, Real estate investment trusts of the United States, Official website different in Wikidata and Wikipedia, Creative Commons Attribution-ShareAlike License 3.0. Business data for Alexandria Real Estate Equities, Inc.: This page was last edited on 27 February 2023, at 17:43. Ismail agrees: Theres some concern with biotech stocks, but overall, thats more of a potential change in the rate of growth rather than something that appears likely to upset or end the party.. I think there was one project in South San Francisco that has started recently, which is just beyond comprehension. While the macro environment remains challenging, we are reasonably optimistic that we can execute on our disposition plan in 2023 at attractive values and cap rates. 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. 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. The government loves quotas, but thats not a way to operate a business. 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. At that point in time, the U.S. was Yes. Plans call for a net-zero commercial lab, relying on geothermal energy and on- and off-site renewable power. The following interview has been condensed and edited for clarity. There aren't events that we control. Please go ahead. at That is almost -- that's hard to do generally, and it's so submarket and building specific, Tony. When you look at the focus on agtech, was this a natural progression for Alexandria? Continued strength in same-property NOI growth of 3.7%, 9% on a cash basis and really reflects the benefit of strong rental rate growth on leasing in recent quarters, contractual annual escalations in rent and the burn-off of some free rent. The overarching larger vertical is real estate the infrastructure and collaborative campuses that we build to support entities like life science and ag companies. And then maybe just on that kind of reduction in development spend. It sounds like that's where the biggest incremental change was when you're looking at 2023 and 2024 on lease unleased new supply. Yes, it's somewhere around -- I think last quarter, it was somewhere around 27%. Alexandria Real Estate Equities Inc. published this content on 24 April 2023 and is solely responsible for the information contained therein. Many institutions want exposure, especially pension funds, life insurance companies, traditional investors, and even private equity, Marcus says. But that was really a handful of leases over the last couple of quarters. I would like to turn the conference back over to Joel Marcus for any closing remarks. Okay. Next, transitioning to academic and institutional tenants, which constitute 12% of our ARR, it's an opportunity to remember that the life science industry's cornerstone is innovation, which is not slowing. So, Hallie? These assumptions are disclosed on page four of our supplemental package. So, I would say that there's a nice amount of pent-up demand building and I would say a couple of years from now that, that's definitely going to be in the market if not sooner. display: none; So, I don't know if that's a helpful way to characterize it, Jamie. 326 E 8th St #105, Sioux Falls, SD 57103 What has happened because of that is that the larger they get, they cant deal with innovative new technologies so theyre now looking outside to have startups and spinouts help them rethink the entire ecosystem. the mental health crisis is continuing to skyrocket, said Joel Marcus, AREs founder and executive chairman. 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. Joel S. Marcus Magnolia Neurosciences Corporation ", "I am deeply honored and incredibly moved to receive this honor from the 9/11 Memorial & Museum, especially as we commemorate the 20th anniversary of the 9/11 attacks," said Mr. Marcus. We were the first group that identified life science real estate as a niche, which could both garner and deploy capital to an important industry, which really had no major infrastructure capital going into it in the early 1990s, Marcus says. I think we're still seeing decent activity maybe RTP or RT, I should say, has slowed maybe a bit more than we would have guessed, but part of that's due to my guess is the mix of tenants down there in the -- not so much our tenants per se, but the mix of life science, the components of life science tenants in that market. View How to Invest in the Top Grocery Stocks for This Year, View Best Bank Stocks to Invest in Ahead of Rising Interest Rates, View Lucid Group, Inc. (NASDAQ:LCID) Position Increased by Zurcher Kantonalbank Zurich Cantonalbank, View 10 E-commerce Stocks to Consider for Long-Term Buys, View United Parcel Service Delivers A Warning To The Market. It owns and manages more than 22 million square feet of lab and office space across the country, including 4.8 million in Cambridge. Its undoubtedly a differentiator that has borne fruit.. We are seeing very little that is starting new today. And the other -- if you add the other $119 million to be funded to completion and divide it by the 33% we sold, you get $561 million. Our client tenants continued very timely payment of rent year-to-date through April. So I guess, a long way of saying, Rich, I think we feel comfortable with what we've rightsized for the pipeline of activity. The other projects have activities that are winding down as we speak, meaning capitalization will cease over the next month to a number of months going forward. All rights reserved. WebThe Alexandria juggernaut, now with a $44B market capitalization, outperformed its expectations for last year, standing out in a year of superlative performances across the industry. Chairman, Chief Executive Officer, and Founder 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 Jacobs invested in the company with $5 million. Thanks for taking the question. In addition to biomedical research and STEM education, we also do a lot in our local communities the communities in which we live and work and in which our tenants live and work. No, that's great. We have brought the mission-critical real estate infrastructure of the life science industry and integrated it with an unparalleled and world-class 24/7 operational excellence service component aimed to protect the hundreds of billions of dollars of leading-edge science, which is conducted 24/7 within our asset base. During that time, he acquired an expertise in the biopharmaceutical industry and was one of the principal architects of the Kirin-Amgen EPO joint venture in 1984.
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