Alexandria Real Estate Equities (ARE) 24 Oct 232023 Q3 Earnings call transcript

Good day, and welcome to the Alexandria Real Estate Equities Third Quarter 2023 Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. forward-looking the contains federal of call laws. securities conference statements meaning within the This results materially might in actual company's The differ statements. the from forward-looking projected those

Additional and contained in results company's periodic cause those that with the the information the filed materially Securities in is differ Commission. from actual statements forward-looking reports concerning factors Exchange to could

ahead, now Chairman and Executive would Joel to Marcus, like I Please to Joel. go over turn the call Founder.

the order Thank will quarter and you, Hallie Paula, conference -- will be to welcome, follow. Marc cleanup. do follow Hallie speaking third our of I'll and everybody, will and off. will then today call kick Peter

be Shigenaga on Marc but our going As today's most will but Q&A to full-time He is Dean the mostly Dean's handle -- will quarter, as call will Chief a the stepped on September know, responsible presentation. on XX. Marc Financial for Officer of call, remain you and and down employee

to I want X quotes. start off with

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company's long-term position the solely science its demand-driven We for team enjoys desirable Alexandria valuation. concerns discounted discounted the REIT, valuation, assembled for tenants a has about believe leading estate management a and distress publicly solid we are geographic and competitive science in in company's the share sufficiently is life portfolio, industry real growth. has markets at expectations life market a of leader, some believe pure-play overblown traded its current supply and

a Alexandria disruptive for REIT, each especially a want of of challenging member strong operationally family very in one macro for to and I every and third quarter, outstanding environment. and So kind continuing team this a thank the

will importance coupled chosen brand with scale size, submarkets, a tenants represents undertake key ever our REITs of and to our XXX Our to our a impact in enjoy. irreplaceable the over other distinctive dominance we've few

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on Couple of quarter. thoughts third the

sheet, We continue fortress to industry. the in maintain REIT a the of balance entire best one

We dividend, with per continue a on and our well the reinvestment. dividend after for by million. fueled third growth track FFO million, $XX approximately onboarding XXXX, approximately a on net consistent, million, fourth increasing cash of and substantial approximately half operating quarter, significant for quarter retaining payment focus X% our for income, the strong $XXX flows We're the share $XX first

A life will industry on more say. few Hallie which FDA is to the and of comments science grail the drug holy approvals, have

which was market XX% the XXXX, were biotech approvals During the bold biotech and XXXX were period, to of almost X/X pharma.

to biotech continues mainstay of the So innovation. be

costs XX% a feet GAAP XX and square industry amazing science of strong while This Hallie life years, an high were and especially very year to the could term lease the XX in basis, with third will XXXX. spreads of leasing XX% on date, rentable all-time generators, approximately it a -- quarter the surpass almost decreasing. demand weighted but address of solid average and was health approvals almost and of XXX,XXX leasing will is very detail a Hallie XX and the basis, on leasing cash

Hallie questions. depth. that of will And Life the most in address again, science health asked tenant frequently is one

We a are and interest recession high rate de and in in facto inflationary self-inflected environment. the

key healthy, needed to are and care for of science the industry life unequivocally thriving the But us. desperately all outcomes caution. driving is health that improved So is which

strong the to, a cash internal growth. same-store he supply as brief each remained year on external much as at give whole. update dynamics. also net our growth course status referred and say I will of about strong of of to and for year-end, a and Peter efforts Peter the for and onboarding solid as income, with self-funding detail on have does he just as Marc will on substantial of Internal also more and steady growth XXXX will quarter's operating X.X%, will NOI the occupancy balance the a XX%-plus update growth for year our

no tough the we the damage new doubting impact substantial to clear market those of the summary, the of of or with a despite their skeptics the filled clear of science Let skeptics. and/or this other so-called elevated causing numerous operating industry know the me Many location science, health and quality, sponsor the to self-funded contrary. contrary, many debacles doubting know life show-me ability operations, despite to overblowing construction say the facts matter by Alexandria, operators business of in to facts the tenants we is of levels

remainder future intend our non-tenants with underwriting meet as we XXXX, quarter, assets thread of of our operational future tenants our continue every all the in scarce XXXX, and execute who perfect Each requirements. of all remain the XXX needle demand. plan and And we to in to of exceptionalism do, of virtually self-funding continue reporting demand for over virtually as we capture as the still intend demand we to all a to the world-class well and excellence our intend and

remembering credo easy it before I would the to then is And only the Seals, day yesterday. turn I the Hallie, over Navy of finally, say,

So it Hallie, away. take

and secularly and for translates into industry. Today, increasing Alexandria's mission base these tenant demand and and Alexandria of of Science science and Labspace, Thank you, Technology all into new the the the heart development, translate healthy and of life revenue. for $X everyone. the which of drivers long-term industry, am areas science This we go-to partner to growing are going review afternoon, and demand numerous I Joel, science and a which vanguard expanding exciting Kuhn, trillion life research life good Markets. drivers is at critical Hallie is Capital SVP and

industry, first, XX% having over drive So of medical growing? life massive science available mean diseases treatments, we opportunity when the new First, opportunity It providing secularly say industry a tremendous at of innovation, do change need, the life industry and known what the science for with whims does we the unmet This noncyclical and life set growth. is company is science market. formation not no nondiscretionary.

predictive clinic discoveries, and of the increasingly advancement new RNA the the growth Important tools potential new diagnostic tenant successful and safety trial ultimately, better gene accurately into diagnose efficient Second, modalities identify new demonstration and have the increase and include medicines. Expansion milestone-driven. efficacy demand event experimental clinical of designs new milestones years. coming are cell, and and as of the medicines to therapeutic and number therapies to medicines, patients such and of biological of over

we sources demand in and continue multifaceted sources experienced Altogether, to need, R&D, ensure venture thrive. and companies differentiated Alexandria average for of billion the XX-year economic with $X deployed XXXX differentiated amid grants, trillion. over philanthropy, that exceeded event-driven public the is of technologies XXXX total science will previous $XXX even exceeds funding result science growth life impactful the already medical and management investment Labspace industry financings. Notably, this government an companies public secular in the and currently diverse healthier billion, Third, life life biopharma longer, be unmet to of Together, downturn. The growth teams funding, massive significant funding of $XXX companies drive science founded market and additional output estimate across lives. life robust has on science support equity capitalization and that

the therapies of care novel extremely and XX% cell of for As pharma RNA-based of XX FDA an or estimate exceed entirely U.S. a novel by therapies billion above with XXXX, will Fast with That for afflicts and development. obesity, the the these approved. such was the class address of Joel patients in track size a decade not XXXX And of to has on commented, new These forward, therapies medicines in billion. unlocked the medicine class disease. complex include by adults. A important X approval new the that have spending been upwards sentiment been $XX positive, analysts An year accounts FDA. This and for industry have approvals. treated in of in need market costs direct an have the of medicines $XXX GLP-X per children X U.S. billion minefield XX approved been population in by the for when health all anti-obesity were GLP-X X high $XX estimated new on a numbers could to a drug ago, are considered disease with approved over was gene this therapies and X X and year for all-time medicines. example track which FDA and for annual meet that is obesity

machine and exciting tools. Another intelligence area learning artificial is

fact, industry. As were In press AI-focused highlighted science many FDA is release, AI drug science recent In footprints for Labspace. components. life the in negate immense need and our AI Nor XXXX, submissions developed the cases, new of manifesting end, may, segment of we data laboratory AI the already ML emerging need increase an this chemical the generate needed acceleration models. To this demand. lab in sets significant to require and AI do to biologic there over and tools to AI as using footprints, the not life train exciting biological effectively the see companies XXX to for

base. health to moving of Now diverse tenant life science the our

analysts a biotech misconception reality entire investors complex. its have mid-cap industry the are far and growth, and that more some and life proxy and While broader science a the for small is

years our Starting M&A pipelines. portfolios. To $XXX Large billion M&A XX% also on in-license to in XXXX with with acquisitions products. representing down to innovation estimated continue R&D the momentum on in $XXX and levels. balance alone firepower XX% from XXXX, backfill multinational for of billion XXXX into and XX accounts compared sheets to companies leveraging pharma, continues to their innovation an rely increase Biopharma Biopharma which $XXX bring has heavily external in XXXX, to a are that million biotechs exceeding innovative pharma their acquire regained in ARR, smaller to invested has R&D, double in healthy prior. and end,

BMS' XXXX example, derived top products all For were from in acquisitions. X

J&J, the For Pfizer, top-selling therapies company's and of deals. licensing of Merck X out from X or M&A were

companies basis within does to and clinical our acquired for scientific land Platform clusters? of So net so specific events at talent, assets, is be and M&A broadly not looked their impact M&A their platform to absorption but case-by-case just expand, tend impact R&D, speak. The needs positive. on a but to for how

San large including and were driven companies. is Takeda all presence A Diego, by biotech great where Lilly, of in smaller BMS, the acquisitions of Eli Vertex example significant pharma tenants,

of come on to also more Investor Greater the of are the Boston, supporting a in this significant We pharma expansion process company at in acquired Day.

stream infrastructure significant have upgrading our new investors an the returned the to ensure decade, Labspace. Critically, support successful over need credit represented ARR entrepreneurs to innovative lead specific for and with formation public all not and scientists companies, acquired experienced remain and and be their next for by best the can also Companies accelerate ARR for which products, marketed being steady but to cases attract and lease. a of will their clinical and This in we Alexandria endeavors, creates need companies drive brand. Transitioning leads to XX% and do to as preclinical requirements in they driving from additional and ecosystem in-place Alexandria mission-critical the science. responsible is capital assets operational each competitive medicines M&A to new within safeguard key for the expansion, talent demand may clusters, is also XX% and pharma additional go-to to start several R&D as companies is companies. benefit next of by acquirer biotechnology

notched Gilead, stage XXXX, billion through they our biotech likes $XXX Vertex in the and quarter the commercial For of third Amgen. tenants, of revenue including

precommercial public For certainly small the biotechs for challenging. and remains our mid-cap companies, market

private significant meet stock that executed and vaccine raised namely deep beat and responded also year tenant million green pedigree, shoots netted with San financings Diego billion. right billion this oversubscribed pipelines tenant data their raised up radiopharmaceutical their in biotech, rare in IPO and including Bio best-in-class Natera. There companies total fund XXXX follow-on However, is total some market $XXX on includes trial $XXX offerings proceeds first-in-class This therapies to prices which line to makes have follow-ons clinical of $XX have which positively. Through follow-on expected backside, raised of XQ, in In has been earlier others, near-term and X% $XX.X companies by forms milestones potentially to to an September, sight driven are IPO the readouts, Editas pneumonia track cancer. On for of for testing inflection million clinical points. important with ARR. which the

by has of nearly are Annualized while levels, are XXXX While to science the led investors financings a pre-pandemic Series robust. life B is which of towards $XX speaking a trending In funding healthy all that exceeds highlights assumption projections true. frequent it estimated remains $XX nearly just many investors, not by were for financings or XX% insiders, up billion to life an XXXX is venture appetite co-led financing current Oppenheimer billion. Further, of new data science being that detailed propped this of outside from year-to-date, funding A largely by levels analysis deals. reverted a to fund and

be industry, that with services towards Diego private associated lab. campus are reprogramming companies providing ARR spent. with hardware software, devices, which Our the right post-COVID, speak, our a billion $X.X dollar Fisher. Altogether, Square current acquisition resetting and by now company, locations by Labs unreliable life directly the fuel Alexandria the forms Labspace generating highly of of new of by raised or the is and exist significant up new But for products, either of driven as of $X will and such to XX% to recent and that science the treat areas and workhorse [indiscernible] challenges historic deploy and indirectly in to of ramped every continue one risking the mega science to forms or the as San having on aging. Last, diseases talent. experiments capacity There manufacture emerging a discoveries luxury not successful novel service as that they COVID-XX CDMO in are the products the highlighted their some proteomics, lease One stellar a represent and market science our cell results is can't the Thermo and products companies example so of to priorities. such new are new demand, in drug do which of drugs, conditions conscious Olink They of recruit obesity require are where have strategic billion of

locations. lab to continue for companies the by availability looking see of We increasing best campuses and in just-in-time space amenitized for demand high-quality

work innovation campuses end, To With to within to needs. And is infrastructure and future Professor, from answer the and Co-Founder operations that his uniquely and for is been one-of-a-kind positioned there that Labspace discovered. Moderna not mission-critical luminary of about, Robert is some our XX/X and ensure Dr. When world-class growth Alexandria's supported path the a most recently this insight their share but mega an is field MIT yet is want that have was deliver. development. in what I Langer, science profound, drug he asked what simple the excited scientific medicines

yet of discoveries rooted come. With will as pass to of to we lives on everyone vast So it is the times, challenging most the resilience call that traverse I which impactful is truly the industry for this this in opportunity new remember Peter. of will a today, improve that that,

Thanks, Hallie.

in my to call, XXXX we've pointed optimism I'd across life the And and company. fourth acknowledge the Dean are I've the for we had received much today. Shigenaga. referencing this thank the likened team human age done the my that industry, he's in more foundation that we've wanted for critical like brain a for scientists him epilepsy, a another future in buried was and building unveiled of quarter of that I of blueprint huge most scientists XX in into played Dean. On a XX-year golden to attack innings come biology. disease our the out to only Thanks, on smartest the we've map from Street Section Alzheimer's, comprehensive Wall for of great as is the our about that that and developed for schizophrenia, will very of project modalities He's I one genome early set XX, it of autism results time, everything spoke launch of is human reported, yield stated neuroscience. An the page commentary, and contributions October career. previous eventually similar brain-related in in human depression. article Dean the what part could one working A that Journal, diseases into the years, in the new the to such hardest Alexandria the I treating ever scientific of Friday, completed, third of And genome international than understanding map and the Before the XXX. On people science the revelation

improving mid-Xs. is this ranging XX bringing initial weighted X.X%. to to I X $XXX discuss million. The my incremental and example and at appreciation to lives another is to ladies due quarter, only to then X It's secular why own yields into pipeline, inflicts yet NOI CFO, over hand daily that, monetary decades and space submarkets, going very year-to-date what projects. our NOI have projects our X,XXX,XXX family. entry grow for the do our on I the total projects industry to yield may into development the life average X third this are time the we quarter's to new bringing stabilized declined totaled initial it a $XX delivered of to square X.X% going emotional total feet high industry watch it stabilized Binda. In burden science is X% covering X.X%. are this buried XX As enormous capable for X in it's important and Alzheimer's to full business our map year the experienced poised come. I'm Marc from this and and how XXX,XXX square mother Annual to influence. million, growth of have supply the leasing, of And additions to how mankind. for $X sales is drive deliveries in and trillion asset gentlemen, deliveries our and our feet, delivering year-to-date

One of we approximately prime of Grove driven it by its and making site build-to-suit in to it justified that XXX% complex was space has those and mega acquire see square in but the assets Shady been our is campus the higher environment closing, its it, leasing XX% a on in long-term The which demand reflects to Maryland cost commitments other tight XX% in is at in down yield for developments campus. Development leased and part Cambridge have core feet mega investment quarter. The in market, the and received mega well And yield on are as because where focused of leased. conditions, markets row, it second mid-Xs been its is expanded campus. the tenant in Shady has XXX,XXX are we a fill a performance asset Grove is financing of our the our the redevelopment by located before and pleased activity location to third quarter-over-quarter very ACKS Cambridge turnkey had successfully bullish was which quarter space. we an

in XXX,XXX a credit high-quality the feet in nearly of with redevelopment, our we continuation In expand addition their space as LOIs materially increase a tenant leasing square -- positive may for development, that feet indicating campus momentum. high-quality to into covering of during one the programming, refine mega the including signed tenant they square pipeline, XXX,XXX quarter,

way at the lease Alexandria a with development win XXXXX a development, rents. and receive generate Canyon XX% from expected leased Street were did we and leased termination substitute and existing our of of which but most mainly Alexandria's years the are and TI through despite LOI incremental to quarter, science in due end, to in negotiating, Main, most XXXX. The near-term NOI the incremental leasing tenant. last at new for clusters of A, to Gateway projects XXXXX stronger Torrey significant decline LOIs at at the square an quarter feet, for entry third which X term Main and the Mesa, During Class of tenant, to space This approximately into $XXX that and for of the over and our includes new to executed enduring allowance has mega fully highly is incremental end XXXst able as & million pipeline Alexandria addition supply, and the annual the tenant leasing XX% was higher higher tenant a increase Pines credit desirable and in outcome. At is foundation all, space the featuring XX% challenging TI leased leased underway. Transitioning delivery quarter its rent, base that or we XXXXX Road future return in curated A+ the space of campus in XXX Sorrento establishment facilities approximately Barnes XXX,XXX the the a a and leased through receiving for -- a quarter allowance. projects of is high current activity yields increase we provides by mega and to We times. to executed pioneering under life credit barrier campuses even XX% XX% perform of our All great XX% world's the additional asset

year-to-date our Maryland, Greater million base levels. with quarter pre-COVID our have San Diego, nearly of total mission-critical 'XX, quarterly Greater activity broad Boston with square excellence third has demanded which available Boston. Leasing volumes square both regions, testament a with These are leasing the by overall our from have and a are operational feet supporting daily by and led in in Maryland and San the when all San contributing required high-quality of consistent opportunity and feet We year-to-date to tenants. product, leased Seattle, this leasing and leasing and executing significantly to leasing X.XX quarter leased activity. materially XXX,XXX a our activity come winning every we Diego of we Francisco, the We

little the roman on in As numeral see of can supplemental XX XX. you highlights Pages company section QX and the

reported on significantly period little roman we average can the ship find COVID of slowed exceeds Page during the strong, million considering at volume of numeral XX, XX.X% available of we from lease amount low expiring the is that can for of historic square rent for that the our leases and the quarter Greater and see respectively. We'd square the since were last in will our the approximately like had with of your below seeing XXXX. rest increases is We earnings environment XXXX clear call trend are XX.X% of of attention increase, the volatile -- XXXX relatively holding cash evidence the Although X increases years. In to the Alexandria's of XX.X% Boston, markets. term upward years, that feet, and quarter, and of steady term brand San cash third Very uncertainty today for San demand this and long-term and Diego year-to-date of demand of in first GAAP strong create XXX,XXX noted that geopolitical which to especially feet. are stats X.X weighted our leasing year-to-date platform weighted from believe Francisco slows value supplemental rocket call, And of year are rent lease and that sometimes increases, it average our we you average fully we consistent and provide demand our aware enduring quarter GAAP lease XX decision-making. but XX.X%

either of We're in establish to and from because achieved we've by space, foot coming meetings grow talent clusters, square As footprint requirements which our square seeing most or clusters for in of coming biotech opportunities is range new of this the well in these driven on earnings with are from our the coupled investor XXX,XXX large significant a of existing positioned is modalities of account or capture since amount specific available those prevalent a barbell. typically to emerging XX,XXX call, looking stage and leasing. the best a many relationships our feet X,XXX as more from or locations. Alexandria requirements large in last pharma a the growth need those to milestones demand discussed companies have that number described profile demand

Over existing the of leasing our past been year, has from generated XX% tenants.

campus mega to variety In you're offerings them analysis high-quality of making addition, our clear the interested companies. I'm ability amenities, in our all sure wide of for scale hear a supply. to the choice provide

conclude these our section I'll include with in XXXX. statistics, will this an delivering update competitive which on projected supply So additions

be addition X.X% focus supplemental, leasing ground, to activity, from roman X XXXX, which the We will recycling a inclusion this market X.X% projects be is to inventory of unleased market of laboratory XX% footage are a competitive XXXXX being which estimated downward inventory high-quality Boston, market reflected developer the leasing Francisco that new a inventory will levels. In delivered supply XXXX, unleased and in drivers. in a Mission on increase delivered third our XXXXX, the competitive driven primarily be slightly is offerings competitive in by vacancy inventory XXXX, unfortunately, X.X% and unleased XX to sublease to the drive market market San increase pursue XXXX. In increase estimated In In vacancy San and when supply of of for submarkets driven Greater 'XX XXXX, to provided driven a for operation direct barrier-to-entry and X.X% this and we delayed Sublease reminder, by into is a delivered use. In deliveries. In as competitive remained us X%, thought in inventory impact identify competitive by of updated X.X%, which supply of mine remained base is increase our be and direct market quarter. In last of also expected to increased increase into second one market numeral now markets to decrease mainly the X% brand, reduction, a will projects only a Boston project unleased direct the supply XXXX available reduction available of not previously quarter to and San net estimated the our due and stable XXXX X.X%, new space ours hopefully Way remaining harvesting supply Diego, X% As project. Direct value to Diego quarter-over-quarter. I'll be conclude stable of due the and the at illustrate in with the by competitive San X.X% X.X% X.X%, likely unleased increase new XXXX, at is mainly deep was numeral a X.X%, delivered unleased aforementioned but -- the remaining supply space delivered of over due our of X.X% new high an operational X.X% competitive to perform office high program. of X.X% in to market a of square from over Rock will delivery competitive market of analysis the believe, in supply last the X.X% X.X%, a projects, revision generic deciding XXXX largely by supply pages vacancy and Francisco tenant unleased is and vacancy update by rationally. In decrease inventory inventory, vacancy or Bay, by project. Move-outs are be excellence asset supply. The X.X% to net we developers unleased of indication to in our will unleased from for increased driven to primarily inventory, supply projects slides estimated it on unleased laboratory locations not X.X%, will lessen remaining follows: will to a in X.X% inventory, supply by slowdown project. core in be Alexandria beginning sublease from space a increase which the act an by are competitive Greater loyal and inventory the increase, due mega in roman with XXXXX primarily XXXX, vast, to vacancy submarkets. and X.X%; through as of are helpful. our unleased campus X.X%, vacancy quarter pre-leased to mainly a is the increased building-by-building increase supply 'XX during operation increase leasing, inventory X.X%, vacancy competitive increased quarter robust, market an move-outs. our we And on competitive enables and barrier-to-entry a driven quarter-over-quarter instead increase to on by for and to XXXX, good sublease delivered AAA operation X.X% to track continually delivering direct to year. In X.X% space by be X.X%. of by available market net

continue life considerable be Alexandria's to there for assets demand fortunate a that is We science broadly. assets and

completed XX% completing guidance totaling under As Page our when supplemental, see and needed yet sales approximately executed dispositions on of to closed. you X are we of not through the the can or hit purchase those and midpoint sale LOI, agreements

it's activity, are of transactional identified but all solid some remained tenants to a only we assets. to of mega mega I whole just quarter environment needed they sales combination on on, the will demand dispositions Our pipeline, report expanding volatility for and year unmatched by the are give campuses has for widen reduced development, sales campus color and of overall high-quality can sales amenities after full pending, moat scale in resilient. highly partial mentioned our our compete supply differentiated recycle by asset on serve. to noncore, a spectrum which overall this XXXX full and the on been redevelopment interest assets. highly our strategy closed interest challenging the can't offering capital that but our economic sought These with. We rate will has noncore workhorse Obviously, provide we workhorse And assets of has X execute

Fenway mentioned, As XXX vertical ownership the science are house submarket is and on XX% project to Children's for dual future facilities. the will discovery rentable health Children's I'm diseases, sale companies anchor in Children's long-term capital institutions, year campus clinical tenant children's key Boston to our serves research bedrock to heavily in strategic Hospital units project. With the long the those collaborate substantial and will whole. Boston The funding fiscal significant invests much in providing it Hospital. The we of September, square both Greater like feet, devastating to life fees U.S. on our track unit in the square Drive, and to in approximately receive to all benefit with purpose in medical partner of to comprising MIT. collaborate new over children closed presence goals. In Cambridge fund of development Alexandria's the development Boston previously a Alexandria, or our as translational research foot XXX,XXX update, XXX,XXX with pass Fenway of the will campuses of for a brings approximately sold looking ahead ground-up basic as attract #X a ranked Boston improve in research treatments the well who the of and world-class help significant Park purpose-built, Marc. of announced sale meet accelerate XXXX. They we hospitals go to looking and to that development to funding from adults. going Their NIH project among Alexandria

was XQ XQ X.X% 'XX, well-located Thank you, NOI up, our campuses Binda, core financial ended the over the excellence. Total operating and to year. quarter and is and X financial also of solid the very scale, the was X.X% results some the Peter. for Hello, operational of Marc prior brand, This I'm and metrics going cover which reported quarter. We strong and the months over and for and results revenues CFO, reflects third up were afternoon. good by on strength XXXX. as $X.XX, track at growth diluted per 'XX, NOI are strong rentable $XXX XQ our service prior quarter in was development, and into million related of million share redevelopment square the X.X X.X% feet annual we of driven per up of by of year-to-date the another commencement of with projects midpoint the performance. FFO guidance property year, coupled share adjusted same 'XX over year through solid for placed to primarily of prior X.X% in FFO generate high-quality key for XQ to driven

appreciate brand, industry. Collections remained one Adjusted team. traded weighted at have the of excellence margins our our to continue lease and client of highest quality tenants. is tenants far ARR approximating a by line was leases period, X.X% The strong X.X% strategy leases EBITDA very XQ and And guidance of basis. outpaced the on publicly mega investment REIT for for escalations XX%. high completed And 'XX remained in we historical average campus large-cap basis. in our and from a at terms cash very XXXX grade up our property averages operational have XX.X%. average. Our rosters our on X%. Same annual and and X.X% in And NOI contain solid XXXX. growth for year-to-date at with XX cash XX% up XX% was years on rent the X.X%

income a new news that growth our quarter early Our San to midpoint have as the results at we solid for Important our and a basis. We and results. to on don't X% The from space be rent square fourth same tenant XXX,XXX by our vacancy, quarter the this outlook termination space expect we for a the at by NOI free to same lease excluded any cash X% since on tenant termination note of do our same-property that somewhat XXXX to same-property remained good is temporary impacted property timing including with as a campus. signed mega that quarter, purposes fourth be are Carlos of some fees December. in expect in LOI fourth take foot potentially property Atreca recognized

XXX,XXX rate feet. was XX.X% leasing. the by at to and Boston. only the and the leasing growth which months, and XXXX projects was quarter for rental Quarterly of Seattle, Maryland at $X.X driven cash after XXXX were beginning can these stripping a an in first redevelopment, spaces which lease X leased feet vary and quarter already renewals results annualized growth XQ re-leasing strong historical by basis. Rental for on driven was low a with markets million XX.X% transactions XQ quarter-to-quarter. rate on of space XXXX. Also, basis And out to Greater of square 'XX the mix square transactions very our in for is the relatively from at in into from in were volume line XXX,XXX going average annual and Turning expirations

very and Our leases base on remained re-leasing of for remains The mark-to-market XX%. outlook for to rates midpoint overall basis. at rental in-place up on for at a XX.X% lease related XX.X% the a entire cash space cash of rate strong and growth run solid renewals asset

buckets. They Turning next to capital expenditures. generally into fall X

on includes and redevelopment. non-Labspace first Labspace focused which through redevelopment, conversion to being category development the time of first The

category is second capital expenditures. The nonrevenue-enhancing

the lower of Our square and that allowances years related has expenditures per nonrevenue-enhancing were with included commissions XXXX. very and trending XX% to over NOI, capital the $XX Tenant nonrevenue-enhancing year in last have expenditures rate averaged last been lease releasing which space renewals improvement of and for low XX% X and is XX% at quarter for leasing foot.

XXXX for prior XX or in in Turning and square ready of properties our number vacancy and the acquired to occupancy This occupancy. basis approximately acquired recently leased from up quarters. the that is occupancy points will of vacancy from XX.X%, quarter. line in was at XQ be included feet expectation X.X% 'XX. with XXX,XXX of XX% next

XQ occupancy Our midpoint which of bridge growth point XX.X%, outlook occupancy occupancy of to spaces reflects increase guidance expected basis is breaks the as The the of down and XXX our leased a to XX% follows. by end The for is year-end. year. XXXX deliver 'XX. by for range the to implies our already About related end by year-end

of under mentioned relates which were which our square at designated like October space feet Carlos to highlight just XXX,XXX related leaves driver leased some The to includes mega I is leasing in in to is occupancy, reconcile doesn't earlier, space XXXX, immediate occupancy. I'd negotiation. previously XX% ramp-up for in to that the the vacancy. This sale which that resolve, to left example. it's given mentioned, about main as delivering Another also San perfect assets activity XX% leasing difficult often that occupancy campus, a that in contained changes I in always result XQ held activity expected to

to the sheet. Turning balance

we by rates achieve of a to remain of have goal annualized maturities balance interest EBITDA strong a very net We until to 'XX. our and on XQ debt debt quarterly fixed subject debt-to-adjusted of track with our liquidity, on basis sheet X.Xx XXXX, no billion XX% $X.X

expected to $XXX XXXX, execution continue which through outstanding. interest for sales, XXXX, strategy equity the still with and from forward the are other common focus million our dispositions self-funding than no on partial agreements We sales equity of of

focus interest. Our to integral of sales with of strategy fewer for our dispositions partial through partial on XXXX our mega no reflects interest longer campus base outright the for enhancement overall properties dispositions of asset sales and of the strategy,

we focused about on be from year, XX% proceeds For the our expect to outright dispositions. of the program

another in outright and is LOI Our or with made expected are fourth closed which be million under comprised to contract, and million primarily dispositions. the $XXX sale progress purchase which team excellent quarter, has completed $XXX of

cap Our capital the targeted require fourth FFO compared lease noncore properties transactions of a we and quarter dispositions include to and have closed which year. to the expected in rate higher land, significant assets are the half to first some

X.X% for increase of XX% XQ X-year which this of rate activities dividends for after common We 'XX, have $X.X from billion. dividends for million We're a operating over in FFO with and ratio a XX cash payout year, over $XXX low the run represents stock conservative flows last net a reinvestment projecting annualized in months.

online of $X.X the million and incremental which projects quarter, our NOI $XXX X will Turning a million included X.X as gains. as billion. On investments $XXX of which XX feet. venture X of In under million just coming key of external fourth our NOI. growth, prior million unrealized cost in on Necco, were venture gains basis investments deliver gains XXX XQ annual Realized whopping pipeline average. expect $XXX a we 'XX of to we same Binney FFO our for Gross XQ 'XX at was is in have annual to of from venture incremental quarter from million, generate $XX the square

drive which fourth quarter, to will We expect in quarter to place service these well first as average growth XXXX. the in November NOI as projects of into significant mid- on late the

expect we million late to of square X.X another $XXX XXXX, For XX% NOI. around on generate average annual incremental to leased, summer mid- which is stabilize and another million feet,

after million square XXXX, of and annual have to will NOI. stabilization we another million feet expected incremental $XXX reach Additionally, X.X another that's generate

in Necco in expect resulted was interest which about up some With delivery Binney interest shifts a $X core the of for project were over in to a XQ deliveries for operations expected, these note of important we decline our of but 'XX, XQ dilutive significant and sale strong the and offset in the that timing from were our Capitalized the quarter, XXX Park XXXX. prior XXX XQ XXXst at slight the on capitalized XX slightly quarter changes Street results per redevelopment It's to portion the quarter. project. FFO by million share during

Turning to guidance.

of assumptions Our disclosed our on package. underlying X guidance Page detailed beginning updated are supplemental

Our per minus $X.XX midpoint share to or outlook from range for a was updated guidance. of XXXX plus the of

$X.XX, our adjusted FFO $X.XX. the growth $X.XX represents in Our per diluted range share, excellent to a FFO X.X%. represents share $X.XX midpoint of is of This guidance growth and for to following last as of increase per for $X.XX, in range $X.XX year strong X.X% a EPS is very which

month to therefore, As reminder, the XXXX a away for detailed details on unable we're our XXXX. for issuance about and a we're of from comment guidance

for Dean I company, mentorship. just extend as years leadership to all of Shigenaga a want and the you to special as his to thank well tremendous service Lastly, his

Next, I'll for turn up questions. to it Joel open to over it

Yes.

and presentation, facts sorry the all to there. the for Let's Q&A go to long get but important out

Bank of Dennerlein Joshua from come will today question first Our Instructions] [Operator of America.

new the on color slides on the all the dynamics submarkets. appreciate across supply our I

GIs how the South Cambridge that about curious particular, maybe will and San rents vacancy -- and supply Francisco? impact that's and just we should online in coming across kind mentioned think you that Just -- market and of how

Yes.

comments? So Peter, thoughts,

to it's care be reliability with campus and tenants. of the negotiation that platform will What certainly, part our Yes, of. mega taken the to we our they're give confidence and to be is going that going tenants believe brand well

when And to that dynamic it help so will overcome competitive the there that. comes a premium to us is supply

Cambridge, to South Yes. less be also, say I in distinguish, than think far the we Francisco. important would San impact would

lot from a in. area can you supply. is in too stupid The slide, is, Francisco, much good people be that an just don't news see San as has to want the South supply of that

one then for And me. more question

to XX.X%. occupancy the front, XX.X% range from On XX.X% going your the to think, of, XQ guide occupancy I just

this of what you there is are in Is -- pieces the -- of Or at moving point? all Just in kind kind there? to anything that have still baked accomplish?

Okay.

do think answered that? I that want to just question. repeat But Marc Marc, you

Yes, Marc. It's Yes. sure.

about about that's next or either from it that delivering was quarter. So half increase, going prior XXX we've leased in quarter leases of from quarters, current basis that the point

big former sale assets October it is were the XX% then some we So of end a the for after of quarter at then held have relates leaves that big of which that signed there another execute we And end designated Carlos, that Atreca on. that, LOI for that to hope in -- as about bag. space expect was it then sell. And chunk And XX%. chunk do to a and in in the space, San the that about was to a the of

Mizuho. Our Georgi next question from will come . of Dinkov

Georgi is expirations, have GFC, tenant past the for limited several on square have depress you not issues, on given even more This the we views occupancy? seen create though could terminations issues lease losing you than Can your Vikram. And in quarters? X occupancy and

not lease for ] occupancy. and [ what a a analyst Well, that And and I just just said, or negotiating on I'm sure have guidance LOI went else referring we and occupancy all for he example, we about -- giving thinking of we're Atreca, on question one, space. through details signed the BofA think, you're the to. the answered what number Marc from

And backed I rates are if they more guess, bio. would going give, their believe Xseventy how by forward? it work you your can Bluebird. cash just on color Okay. I But get position

It are Well, at recall, in bio joint liable on a gives them lease. and both both runway remember, have over XXXX the through cash. to Bluebird million severally you as and Xseventy I out $XXX moment, have the they

will We to subleased coming great don't York's location. rent the any successful and over of we challenge see a expect that's be It few collection years.

will Our next . come of Griffin Michael from question Citi.

needs over potential years, impact -- for funding on Maybe just development couple that on a and next how of capitalized question the be you're kind would interest that thinking of helpful. are the about

Yes.

that. Day Marc wait I do for as said, So to let's Investor think,

associate I that. All wondering than pending right. kind expected. And rate there helpful. or then talked I higher around just asset any buyer could give color know sales, interest you maybe the the numbers be cap would can is pools if any And on with Marc of a was you about there

we We're Yes. so can't. confidentiality under

stay and as we're Day tuned give detail we'll Investor year-end, as much So for able to. or

Rich Wedbush. Our next of from question Anderson . come will

disruptive XXXX kind and of question the beyond, this that that. and well of go our core is because and a to still what today, beyond changed I than doing back large So don't I I about between vertical. Does was not was that that we with second the for and guess you comment relative looked some ago disruptive gotten markets I in a reading, market see comment more and agree that comment, are do you underway -- made year has macro was where projects at bit the is, ago? XXXX, change worse -- year little only to developing was, quarter a -- the would mean, still that that environment comment Or preparing it -- all that

address you Yes. that? do want maybe Peter, to

that comment I mean, I that a supply Rich. -- of went peak was be through. going express deliveries. the Yes, intent to was just comment the the the numbers of XXXX that's And to

would that. we're that in a probably -- not illustrated But 'XX. few Francisco, on our market has thus, meaning of less of times, in finally things get some underway It, in in appear all not the of developers that last 'XX are and handful needed recent There and total more more things the started understanding pushed will deliver basis. seeing that think, into we were might think numbers like I appear that be really than not that in thought supply markets, a like the San speculative I does there's months. It plenty telling. -- -- have

coming And so the that's for good years. news

is for Day, you Joel, enough. your to Okay. program but second the me perpetuity? through assets that and something question can ceiling here. always word I wait just anticipating Investor year I and infinite, development which Or And off for real something a is disposition mean quick the self-funding that's disposition better anyway. we're know cut long selling in go program not pipeline, response, newer the to a funding sort if probably And Fair said a XXXX. because and reassess? you're your Is have let asset you there this kind running ask but that of till of on and then

Day Yes, question, and that's have to will Rich, what on Investor beyond our be think a to is, of that. to we the XX to that continue and that we really think square presentation. fair I I good operates the capability feet -- think cornerstone But double say, owns it's the about a the way own size and million company has it

partial will interest self-funding be next to assets. of for sales I think So do an addition there's year a exciting. pretty But that, outright deep which we in have pool noncore for approach pretty and to

to Investor that Day. us let at announce wait So

from come of And our today BTIG. question next Catherwood will Tom

past them the quarter. When needs we problems. job XX Peter, the the think I with over or think Diego your San in to tenants the Joel developments pain doing examples Maybe understanding talked your always how we you have estate real with X seen and to this partnering maybe Peter, speak of months? team points of a the great tenants, that think business, you that partnership, their solve of helping really about such changed

makes cash more methodical. management financing upon the just the we're that throughout and inflation dependent high one are the burn, emerging, the in one just public of think this yes on just decisions small or of interest a facto commentary medium-sized that and environment is number de and of I the methodical the financing be certainly in obvious -- that is, -- or private recession, management management hand. The companies market Well, rate people cash, it are that more and that whether maybe of mentioned that fact

can and ongoing we're work those think the understand of And have very So we've And sure make best a These that relationships. we to ones that's our needs. with we relationships. and the are job is intimately These very sign not that. meet great a to needs job I done very, that are their you lease doing clients to job close that it. deep

decision-making. a involved pretty imminently So we're of lot in generally the

the comes teams And we we've goodwill that base our these mean, times And how of that with folks tenant remember, hard I those of mean, years. been the And this for during to a that for we're as assistance. our isn't have and these worked the we've the time helping is to existing around company, close and need out endeavors leasing to why we're XX first goodwill able hit that we've all help times them accumulates XX% in management for tenants. are work size, buildings I of with. those ability from great it -- with future the provides them

appreciate on switch up if maybe it. following I Hallie. Got of to And then that, over kind the... I

Hallie.

comment potentially really are the that adoption need AI made Labspace detailed that of in update. around interested I to Can market that. the you appreciate I incremental apologize. -- and of leading early kind and seeing was the in the I maybe regard? on Hallie, in potentially you're signs market you what that comment more the of color kind you seeing provide for

have a development Sure. release, you a had CSO have in CEO, Perlmutter, our to from Happy to. AI, models. A great to signed we train iCON, the under which with lease property a the Francisco. With San in we of data quote Merck example, and press is have Roger former the

What to ML. It to the that have extensively you robotic, need vast applying we of make meaningful experiments set really starting right? so AI to have labs. the and we high whether back AI have in biological both you apply companies something it would run be sets folks see actually generating are to in You don't and that's a been able ML in -- vast is as that that AI to is when because out optimize in And kind order results there's the data such commentary models train going that opposite, it's data in throughput, large order be AI order actually really footprints, on to so the see data drive to thrown generative towards and XXXX, like these chemical Internet to get to end.

to see So that evolve. continuing we're

some medicines all toolkit our I their And a integrating hopefully really think the now companies end into more clusters. XX, Labspace and of ways lot for across interesting XX additional are medicines. There's that patients this tool from years new for is demand. developing results

will next from come Our Connor Fargo. Siversky Wells of question

I on got a question deliveries. XXXX

how wrong I'm interests capitalized we're So of looking the a correct the have context. at me this if pre-leasing in delivery impact but significant on should here, rate XXXX

this So last as how give reported the assuming night, interest the us P&L? of an was impact you supplemental the release the on can pre-lease remains it expense stable in rate would idea

comment. Marc, might used So that's because want isolation to But one of comment Marc, and on you ahead that's But that. business. go just in the kind of piece

interest ready really under, that intended to the under and yes, broadly, activities magnitude asset of types upon construction Connor, all so the assets get activities of are capitalized its for determined use. based Yes. size is

interest and and capitalized headway when say redevelopment or got the Definitely, But down. 'XX So to to and are assets we get we going interest spot exceed we're long for done timing to is, off. extent some construction not studies spending the tick out then that outpace at I'd cease these opposite if development, and percentage are in and assets got -- to of of And assets construction deliveries costs pace go is that in true on then the that through the are either would -- capitalized pre-leasing percentages if some assets on leasing up. time if deliveries. What we've of those looking in we've got definitely XXXX, and seen those, that the pre-leasing, beyond we've there. those a time, long would make turn We've look 'XX tenants some yes, that at of activities in sweet we're quite of terms ready decisions. a you're

stay So I guess tuned.

would say just I deliveries like, those online? breakeven way simplistic what any pre-leased context, kind there. of come -- appreciate let's color Is mean, in as form look of that the took most we I projects rate there

I sure understand question, your not Connor. I'm

online NOI P&L mean absorbed to on offline. say, can schedule it is What online rate expense? those to take be from and P&L on those as and expense I breakeven Well, the what projects is, if projects of contribution use are capitalized say mean the moved would the we interest and between, they're we the deliveries as the be I roll when to roll that the the interest would -- that supposed

if high. building have high and neutral. make it's half the turn all turned look in looking pre-leasing the I you're -- just mean capitalization easy, guess and X% for got and X% yield at that have delivered Connor, that is But would be on off, the got the the building -- I extremely way that the you to kind that, at range, half of the math a that projects to really case. 'XX not 'XX assets you'd is typically tell we Yes. the if is

wait So size much typical which the we've ground said the closer to as the before, 'XX smaller coming that that it. at pretty get on seen and we'll as and can which to a for building out point can of the have tenants pre-leasing and we closer to they I delivery, is like see visualize see. But closer tick make decisions up

Next come from of question Sakwa Evercore ISI. will Steve

just maybe asked. of given just questions my any supply to gaining market new you to have of your Joel, are of extent coming smaller private to I'm and share, lot the not that A competitors. what that? curious, And what guess, delaying can for many build-outs funding kind maybe I'm been wondering to I able challenging some been But the market to of outs that fit is of maybe your extent have peers extent And Labspace. the do you do market?

Steve. yes, Well,

needs you're -- that in markets if So key directly of is, to really hard about competitive have who think say. that they're are or the you're also landlords other in It in if financial always assets, think the their laboratory of it's mean I the on ours. tenant. way depends I and may other capability Cambridge to

and very and moment, you're now the a need about if feel path future growth. at tenant time, our just need, for in we you positioning good because think especially -- space, a you I

milestone, whether very really doesn't valuation a is out building, not fitted opportunity. offer or out, which it's hit that fitted You one-off value inflection milestone, no you typical today, a matter

a generally, get to or there's building may operator, want but no the you you Alexandria because You space, best a one-off by want oftentimes, because need campus. some you expansion. a one future growth path campus, need And you run

And so of that's things. see kind how we

idea they So what landlords by know who they're they're who no we -- think and enormous be buildings doing. have landlords doing whether we or advantage what one-off against an moat have competitive

And to dive a dive bit Peter. a little little -- this into deeper that. To is

with the in essentially product in notice San You'll increase like, like?" shell the delivered I what delivered team. dive I "Guys, and vacancy big deep Buildings in does look a they Francisco. condition. that -- this was took

office to lab, lab. they of to that their be bring And that or go to numbers. just I our reminded we're very of TIs right see super are and well not just They buildings whether built that it. you're waiting isn't lot them also a out counting because in should were are could But But they is committed. developers ahead be ability to those with there able go an financing basically because for is -- it so in are wanted build to that. But and office nobody because me supply you attention

don't markets. you're about going whether to they supply supply office well they not seeing be, and or numbers, projects to very they these in if be could well in they numbers. lab, them competitive especially are be because vacancy very seeing But A the financing lot of provide they're may TIs. may You're agnostic not counting fail or but our we're larger have

Dylan Your from next question Burzinski Green will come of Street.

call I -- see And the guys bit curious, interesting if of the opportunities to just any to today, Just pipeline, next, any sort on it, acquisitions you but of or do wondering guys seeing over are on the you months? expect little -- are sort know front. interesting witnessing XX fruition a opportunities there's touched you XX development come if to not, that

Yes.

you is rethink had you slow, we I think a So all, I don't that about noted commentary. quarter. so slow might first of quarter any think

Second, Warren I regarding remember the that yes, gave Buffett. just quote

on won't So some opportunities, them. comment we think be there may certainly but we

come Balachandran our Aditi Capital today And RBC question final will of Markets. from

is for one Hallie mentioned know positive. an me. quick a Just I that M&A overall

I have an versus So or how the do for incremental pure that And product possibly you could how -- guess, demand Labspace space? much manufacturing much drive. of idea drug of would be

Most of of And at see big, the for balance pretty Hallie, large. fill and it's if is are to look in pipeline patent a the acquire virtually, short to opportunity it, pipelines the only can of drugs the as schedules that technologies comment. off as We you way time coming of big available. that decade,

And and R&D see related. We're it by opportunity, big that so of we a as one. And so is number large, most focused. not

R&D you but Sometimes got that, -- comments. We as you us. But and that an we modalities kind I new don't new are really as classic have with that don't deal don't see manufacturing. you've manufacturing opportunity part of the know modalities Hallie, center, if the other any of have with for intimate the

mentioned, specific you Yes. case-by-case look With as on it basis a to at M&A, for have I really M&A.

licensing for looking mentioned, as a strategy beyond likely be of in the pharma I think component M&A expirations. way at is will decade, to and continue that Joel that better it the recoup billion is to They're that. of huge and over look revenue something large will patent next holistically and the $XXX due on to order lost

is a And buys certainly going so benefit credit, company, a it's the -- comes positive to of the look acquirer that also a credit upgrades R&D at the we the in when from to you whole, the net in lease. from given when activity acquisition and that on an on get in-place lead And perspective smaller needs. upgrade additional

we have Wes Golladay additional of coming did from Baird. an question And

you 'XX like of this to you in like locked is any pipeline the and more the quick quarter? point? looks development this pipeline. the It have question at those leased. did a had just pretty 'XX out Or it well Do guess, change plans is tenants much I on I any,

where had maybe we space. Yes. that felt We client a That's much unusual kind we an anticipated. too we more little space circumstance a another client that of on saw had robust than we even quickly had taken needed

come time. an that's up and anything read actually into of that, together. ideal was kind that it So that's from time sure marriage but to happened. I'm X how putting They the of normal, not mix it I'd

years have do bit Are follow-up. quick have to any, any going the been you for a where occupied multiple churn. And these some into are of get demand you tenant seeing they've fully little of I where and Fantastic. mega you pent-up guess, campuses situations tenants space? Do through a

-- that not but our The a XXX,XXX campus, quite yes much It's like Carlos answer feet, be centric, to that larger. grow maybe is mega campus but and about San tends to more Cambridge to yet.

Science Center in Alexandria So New another Life example. City for is York

multiple juggle. see are of to So yes, that places having kind some tenants there we we're

back our to Mr. conclude this I'd Marcus remarks. time, closing turn any over like At session. for conference question-and-answer will the to This

Okay. everybody. you and to much listen bless God for taking Thank time very

conference The presentation. Thank you now today's has attending for concluded.

disconnect. now may You