This concludes our question-and-answer session. Rich, it's Dean Shigenaga here. 6.7 million square feet under construction or including 1.2 million to start in the near-term here. Just some new recent starts and one, large one in particular in South San Francisco, you made up most of that change. This individual is not a direct affiliate of the Berkley Center. 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. In the ag business, you mentioned that two or three companies control that business globally. Theyre certainly not overcommitted in any way, and they have several great projects going forward. Executive Chairman and Founder, 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. Marcus says toplife science clusters and the upgraded amenities that Alexandrias buildings offer are a significant advantage for companies in their ability to recruit and retain top talent in a very competitive environment. To see all exchange delays and terms of use please see Barchart's disclaimer. But if it's stable, high-quality assets going to have a five handle on it just like this one did. That has been the secret sauce in trying to get things done. And those, as you go back about $100 million of that was excluded from FFO per share. WebJoel Marcus Senior Partner at Marcus & Pollack LLP - the real estate tax law firm New York, NY. Second, 371,000 rentable square feet of the recent vacancy has significant rental rate growth of 110% on a GAAP basis and 115% on a cash basis; and third, 29% of this 371,000 rentable square feet has already been leased with occupancy of some of the space beginning in the third quarter of '23. Over 80% of that demand comes from our existing 1,000 tenants. So, I think that's one example, yes. Joel Marcus - Berkley Center for Religion, Peace, and World Affairs Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. This time, you've kind of mentioned $850. Alexandria Real Estate "pretty darn cautious" about investments 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. We chose not to win the Britannia assets came for sale quite a number of years ago and in those days, HCP bought that, I think, almost $3 billion, we valued at about $1.7 billion. I mean, the comments I provided on the vacancies that came up just in the first quarter alone with mark-to-market, both GAAP and cash north of 100%. 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. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors. Our focus on advancing human health is made up of fighting disease and it is now increasingly including nutrition. Alexandria Real Estate Equities Q1 2023 Earnings Call Transcript Yes. As you can imagine, the cost of this equipment is reflective of these shortages and paired with high labor cost is making new laboratory office projects more expensive to build than ever before. Alexandria has successfully utilized Harvard Business Professor Michael Porters cluster theory as the foundation for its proven cluster model, which identifies four critical components for life science clusters to thrive: location, innovation, talent, and capital. So you said $7.6 million You use any pipeline place you want. The Academic and medical institutions continue to be highly productive, a key metric being the pace of new intellectual property. I think we feel we're in pretty good shape. That's a hard question to answer because it's pretty -- would be pretty granular for me to understand when I'm looking at leasing reports remembering what is expiring today versus in the future. But directly on transportation, we felt was a huge competitive advantage in landed a world-class tenant to 100% occupy that development. I know people who did diligence and they said they could never look at the Edison machine. Continued innovation in medicine is an absolute Joel S. Marcus: Chief Executive Officer & Director: Lynne Zydowsky: Chief Science Officer: Hallie Kuhn: Vice President-Science & Technology: More about the company. Country of residence : Unknown. Thank you. Joel Marcus Net Worth (2023) | wallmine The company's actual results might differ materially from those projected in forward-looking statements. Launching the niche was the first step. WebJoel Marcus. And Dean will go into the metrics, but almost 100% collections, which is -- bodes well for our continued strength and stability of the company. Thanks, Hallie. Alexandria hopes OneFifteen will encourage similar projects around the country. Nareit serves as the worldwide representative voice for REITs and real estate companies with an interest in U.S. real estate. 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. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. Identify stocks that meet your criteria using seven unique stock screeners. Joel S. Marcus - Foundation for the National Institutes of 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. degrees from the University of California, Los Angeles. Meaning, if we were to mark-to-market the rental rate, Steve, on the whole portfolio? Pasadena REIT Buys Raytheon Campus Outside Boston - The And then clearly, biotechs that whether they be public or private that have got good data coming, I think that's where you see it, but I'm not sure we could give you a numerical characterization of that. 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. So, like that 4.2 million square feet, there's not an appreciable amount of NOI from that that we would be picking up. Can you talk about the credit watch list today and just what that looks like as a percentage of your revenue versus, say, six months ago, how that number has changed? This is an increase of 3.4% in total availability over last quarter, largely driven by spec building in South San Francisco. 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. Our results prove it out. Joel Marcus - Executive Chairman and Founder Peter Moglia - Chief Executive Officer & Co-Chief Investment Officer Dean Shigenaga - President & Chief Its undoubtedly a differentiator that has borne fruit.. I'll end with some commentary on our value harvesting and recycling progress. Maybe I'll start from the back end of your question. Great. Bayer bought Monsanto, Syngenta got bought by ChemChina, Dow and Dupont merged, and BASF is out there. Next question comes from Jamie Feldman with Wells Fargo. Alexandria Real Estate Equities, key financial backer for So that group of tenants, you're always looking now even much more so for much nearer-term value inflection milestones and really good data and importantly, large unmet medical needs. I think that gives a sense of how were viewing this year, Marcus says. My sense is half of that is, is retail tenants that maybe are leaving for an asset. Alexandria Real Estate Equities - Wikipedia Now we've got continued consistency and growth in dividends from really high quality cash flows we generate in our business. Now our strong occupancy was in line with our expectations. This quarter, it's closer to 22% overall in the whole portfolio. The company had one of the worlds first office/lab projects certified in theU.S. Green Building Council LEED Core and Shell pilot program, and now has over 80 projects that achieved or are pursuing LEED certification. So it made a lot of sense. We dont have an organizational chart. Were also big thinkers. That's why we net down the square footage in that disclosure to $30 million -- roughly $34 million. Joel S. Marcus, founder of Alexandria Real Estate Equities Inc. Pat Greenhouse/Globe Staff/File/2014/Globe Staff. Our industry is very collaborative, and campuses become very important places for people to go, he notes. 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.. Okay, I understand. Should You Be Too? We've had very solid leasing with the highest-ever rental rate increase, and we've had continuing strong operating and EBITDA margins. We focus primarily on high barrier to entry markets and brand mega-campus offerings in those AAA high barrier to entry market locations and operational excellence enables us to continually mine our vast and deep tenant base to drive our leasing activity, which will likely lessen the impact of generic supply. We continued with very strong adjusted EBITDA margin of 69%. So you were referring to the pipeline that's under construction, 5.5 million square feet, plus another $1.2 million near term. This is Hallie Kuhn, Senior Vice President of Science and Technology and Capital Markets. I saw you revised upward the leasing spread guidance. Monitor your investments 24 hours a day, around the clock from around the globe. We look forward to providing you with even more cutting-edge market research, as Topio Networks. And then maybe just on that kind of reduction in development spend. The next question comes from Nick Joseph with Citi. Environmental, Social and Governance (ESG), HVAC (Heating, Ventilation and Air-Conditioning), Machine Tools, Metalworking and Metallurgy, Aboriginal, First Nations & Native American, Alexandria Real Estate Equities, Inc. Reports: 1Q23 Net Income per Share - Diluted of $0.44; and 1Q23 FFO per Share - Diluted, As Adjusted, of $2.19, Alexandria Real Estate Equities, Inc. Named One of Most Trustworthy Companies in America by Newsweek. Yeah. That encompasses everything from school supplies for kids in a local underserved school to homeless shelters. Joel S. Marcus Executive Chairman and Founder at Alexandria Real Estate Equities Well, and also, historically, if you go back to my comments, I said we have tried to shape the Company and allocate our capital as much as possible the high barrier to entry markets and mega campuses. Alexandria boasts more than 1,000 tenants including Moderna, Bristol-Myers Squibb, Sanofi, Illumina, and Takeda. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide its 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. Today, Alexandria, which celebrated its 20th anniversary as an NYSE listed REIT in May 2017, is the only publicly traded pure-play office/laboratory REIT. And do we want in the portfolio or not. He also sued his father and Alexandria in New York state court, alleging that Alexandria owes him more than $12 million for devising a new financing strategy for the company in 2013. 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. Yeah. Nearly 80% of that space is pre-leased or under negotiation, Marcus says. Joel Marcus - Applied Therapeutics Great. There are 330,000 open construction jobs today and the time it takes to train the new entrants to be highly skilled as measured in years. 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. I just wanted to follow-up on some of those supply comments, particularly the San Francisco supply. I see what number you're referring to. Briefly on venture investments, realized gains from the venture investments included in FFO averaged about $25.8 million per quarter for the last eight quarters through the end of 2022 in comparison to $20.7 million for the first quarter of 2023. [11], In June 2018, the company acquired an office building leased to Amazon.com in Seattle from The Blackstone Group for $95 million. And I think people would be impressed when we do our second quarter call. With its core focus on real estate, Alexandria has a proven track record of developing Class A buildings on urban life science and technology campuses in AAA innovation cluster locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle Park. The U.S. Department of Agriculture and the related departments spend less than $1 billion on ag research. Despite these challenges, the demand for high-quality life science assets which is vastly different from office assets continued in the quarter. Site work shrinks the time to deliver buildings to a tenant, which -- if you looked at us two years ago, we said, let's move that along. 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. 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. To access all the content for free, please sign up by entering your email. Occupancy was 96 -- 93.6% as of March 31 and really in line with expectations and the comments I provided on our year-end earnings call. Marcus co-founded it with $19 million in Series A capital. Yes. I saw that I guess in the last supplemental, you talked about sort of dealing with 1,000 tenants. We've maintained strong guidance while lowering uses and sources of capital. In the first quarter of 2022, the company leased another 2.5 million square feet. The company leased 4.1 million square feet during the fourth quarter alone. Alexandria Real Estate Equities, Inc. pioneered the life science realestate niche and continues to break new ground in the sector. Just simply thank you very much, and we look forward to talking to you on second quarter call. Marcus WebJoel S. Marcus is the executive chairman and founder of Alexandria Real Estate Equities Inc., an urban office REIT uniquely focused on collaborative life science and technology Marcus holds a B.A. But new construction and development will be more expensive, and certainly, entitlements around the country are getting tougher to obtain.. And so, I think, we're going to look hard, as I mentioned earlier, over the next couple of quarters. Please find specific details in the tabs below. Briefly on a high quality tenant roster, Alexandria really is the brand for life science real estate, has built long-term trusted relationships and is a true partner to the life science industry. Focusing on sustainability and philanthropy, Alexandrias corporate responsibility business vertical affirms the companys commitment to making a positive impact on the world. I think the way we're trying to think about it is to -- I mean, we have a very significant position in the Greater Boston market, 14 million, 15 million square feet. Its not hard to do it because were uniquely focused. We participate in corporate giving and were quite philanthropic in that respect, but we have a lot of programs that allow team members to get involved: matching gifts; a volunteer rewards program that rewards those who volunteer on their own time; quarterly engagement opportunities so every office has a volunteer opportunity each quarter at a local charity; and, of course, volunteer time off in the form of two paid days a year for folks to volunteer at a charity of their choice. STEM education is extremely important to us, so we fund a variety of efforts. 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. 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. Or have you seen kind of any institutional interest that you hadn't seen before? Improving nutrition is a newer goal that were just starting to develop. That is an initiative to bring computer modules and computer science education to every single New York City public school student by 2025. I would say that we will see things that are still lower than 5% potentially when there's a good mark-to-market opportunity that can be monetized. Joel S. Marcus; Founder & Executive Chairman; Alexandria Real Estate Equities, Inc. Peter M. Moglia; CEO & Co-CIO; Alexandria Real Estate Equities, Inc. Right, right. Thanks Peter. 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. How does that play into capitalized interest and interest expense in 2023? Joel Marcus is 72, he's been the Executive Chairman of the Board of Alexandria Real Estate Equities since 2018. What Stock Would You Invest $5,000 in Right Now? Thank you. Obviously, there's dispositions and partial interest sales that are continuing to come at different points in the cycle right now. Markets never sleep, and neither does Bloomberg News. Yes, got it. Our business is built around four business verticals. Q1 2023 Alexandria Real Estate Equities Inc Earnings Call SOURCE Alexandria Real Estate Equities, Inc. Cision Distribution 888-776-0942 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. 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 Alexandria Real Estate Equities, Inc. Executive Chairman and 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?
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