Q4 2024 Alexandria Real Estate Equities Inc Earnings Call

January 28, 2025

Followed by zero.

After today's presentation there'll be an opportunity to ask questions.

To ask a question you May press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Please note this event is being recorded.

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

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

The

Information concerning factors that could cause actual results to differ material materially.

Speaker Change: From those in the forward looking statements is contained in the company company's periodic report filed with the SEC.

Speaker Change: Now I would like to turn the call over to Joel Marcus Executive Chairman and founder. Please go ahead Joel.

Joel Marcus: Thank you Paula and welcome everybody with me today are Holly Pieter and Mark and want to welcome you to Alexandria fourth quarter and year.

Speaker Change: Year end 2024 earnings call.

Speaker Change: Our team has been hit pretty hard by the California wildfires. During this month of January but Luckily there primly resilient our profound prayers are with all those impacted as well as our own team.

Speaker Change: And we are by the size of our team each and every step of the way to recovery.

Speaker Change: <unk> and adequate preparation by the local utilities the city the county in the state.

The

Speaker Change: We have had.

Speaker Change: Chile as there were several days of violent women warnings ahead of time largely ignored by those empowered protect us really disheartening start to 2025.

Speaker Change: Let me give a couple of observations.

Speaker Change: Fourth quarter and overall year end on the operating and financial results.

Speaker Change: We're very proud of producing an almost 6% <unk> per share growth in a very tough macro environment.

Speaker Change: They are very solid year of leasing both on a quarterly and yearly basis and Peter will.

Peter: Get into depth on some of that.

Peter: A solid fourth quarter and full year capital recycling program as we shrink our land bank to focus on future Mega campuses.

Peter: And exit non core assets.

Peter: We have continued stability strength and flexibility of our balance sheet, great liquidity, and increasing and well covered dividend.

Peter: Couple of thoughts on the life science industry I'll leave it to <unk> to do more in depth, but I think the three reasons for a go forward 2025 optimistic view are one the anti industry ideologues at Alaska Administration are gone and the FTC is maybe the simple example of that the new administration.

Peter: It was focused on cracking down on the middleman and Pbms, taking 40% to 60% the economic value of <unk>.

Peter: Therapeutics.

Peter: In the.

Peter: In the chain of value and adding very little and so that's going to be a welcome bullseye and then likely there'll be positive reform of the IRA provisions and a repeal of the unconstitutional, 95% excise tax.

Peter: And as the New administration wins, the day versus the fed interest rates are likely to come down in the life science industry will experience.

Peter: A solid return to a hopefully a normalized bull market.

Peter: The quarter ahead.

We're super laser focused.

Peter: You all know on the.

Peter: Redevelopment and development pipeline.

Peter: It is as healthy and Peter will tell you it's a.

Speaker Change: It's been a very diversified demand from leasing actually biotech has been the slowest because theyre really an adjustment time syndrome, given the macro but.

Speaker Change: That's likely to change when we see the fed start to ease up the.

Speaker Change: The vast majority of our leasing has come from other sectors.

Speaker Change: Our pipeline for this year is.

Speaker Change: Most 90% leased or under signed LOI.

<unk> next year is looking very strong the year 2027, and beyond is where we have a lot of work to do we're seeing good activity and actually new activity across some of our Submarkets South San Francisco remains slow as we have predicted for a long time, we're laser focused on leasing space has come.

Speaker Change: <unk> back to us as we noted at Investor Day, obviously on the rollovers for this year.

Speaker Change: And making very good progress. We're also laser focused on capital recycling for this year and also making very good progress as well.

Speaker Change: As I said at Investor Day.

Speaker Change: The critical components of our enduring success had been a preeminent brand superior knowledge of our customer a superior product highly focused niche our industry leadership and.

Speaker Change: We believe we possess all those characteristics.

Speaker Change: And as I said.

Speaker Change: Back on Investor Day on December 4th.

Speaker Change: <unk> been through three major cycles as our collective management team in general and I must say that we have successfully navigate each of these very different market cycles successfully and we've emerged even stronger industry position of leadership and strength.

Speaker Change: And finally, its interesting that like the real World legacy media. There are always a bunch of legacy Pundant, who back in 2009 or just to unload mission Bay and Cambridge land. During the GSC is worthless non income producing assets that weighed on our balance sheet.

Speaker Change: And they turned out to be the growth engines of the next decade.

Speaker Change: Those legacy pundits are here again and got it all wrong, we look forward to our first quarter call, where we'll give you an update on the strong leasing progress we're already seeing during this quarter and some strong new pockets of demand and.

Speaker Change: Give a peek into our 2026 trends transaction plans and then finally, let me wish everyone. We need a new new year since the last one just January alone. We saw the tragedy in New Orleans, and Las Vegas, and obviously the wildfires here in southern Cal.

Speaker Change: <unk>.

Speaker Change: The year of the Dragon starts tomorrow.

Speaker Change: And.

Speaker Change: The key symbols, our wisdom and transformation, which I think epitomize.

Speaker Change: Alexandria, and with that let me turn it over to Holly.

Holly: Thank you Joe and good afternoon.

Harry Kane: This is Harry Kane Senior Vice President of life Science in capital markets.

Harry Kane: To start a brief spotlight on Alexandria, interferon therapeutics with acquisition might change out for $14 6 billion represents the largest announced biotech M&A and over a year and half.

Harry Kane: Our partnership with intracellular it goes back over two decades when the company was founded on research from Nobel Laureate pumping Godslot at Rockefeller University.

Harry Kane: Leveraging breakthrough science, and how brainfart communicate through chemical signals intracellular developing novel medicines for patients with mental illness, including an FDA approved treatment for schizophrenia and bipolar depression.

Harry Kane: With one in five Americans are affected by mental illness intracellular novel medicines have the potential to transform patients' lives.

Harry Kane: Turning to trends across our broad and diverse life science tenant demand continues to be driven by our nearly 800 strong tenants with 84% of leasing from existing relationships and <unk> 24.

Harry Kane: Importantly, leasing also continues to come from each and every segment of the life science industry.

Harry Kane: Over the course of 2024 multinational pharma represented the largest proportion of life science leasing by Orissa at.

Harry Kane: At 28%.

Harry Kane: Followed by life Science product service and devices, 22%.

Harry Kane: Private biotech 21%.

Harry Kane: Medical institution, 15% and segment, which Jeff referred to but public biotech at 14%.

Harry Kane: Now looking towards 2025, a few notable trends on the horizon.

Harry Kane: First the FDA is expected to maintain its healthy pace of novel drug approval.

Harry Kane: In 2020 for the Fda's Center for drug evaluation and research Cedar approved 50 novel therapies.

Harry Kane: While the center for Biologics evaluation and research Steber approved eight novel gene and cell therapy is.

Harry Kane: Notably over the past two decades, the average number of annual approvals has more than doubled a tremendous win for patients.

Harry Kane: With respect to incoming appoint piece, we don't expect significant disruptions at the FDA.

New administrations nominee for FDA Commissioner Dr. Marty Macquarrie is a surgeon in public policy researcher at John Hopkins that is highly respected by the medical community with deep clinical trial experience.

Harry Kane: The interim administration has perhaps Sarah Brenner, our career FDA official as acting commissioner of the agency.

Harry Kane: Second we anticipate life science M&A will continue to pick up.

Harry Kane: Given impending patent cliffs pharma companies are seeking to backfill their pipelines with innovative medicines through private and public biotech acquisition.

Harry Kane: With potential for larger deals given a more lenient FTC environment.

Harry Kane: This M&A cycle is vital as returns to investors are then reinvested in the next generation innovative companies.

Harry Kane: We benefit from M&A across our regions through upgraded tenant credit post acquisition.

Harry Kane: And in some cases expanded footprint from the pharma acquire over time.

Harry Kane: Third we expect strong follow on market performance for public biotech companies with value driving clinical data.

Harry Kane: Fight exemplifies this trend having signed a 250000 square foot expansion at our San Carlos Mega campus in Q4.

The vast majority of our leasing has come from other sectors.

Harry Kane: However, public companies lacking key value inflection points will likely face continued downward pressure, while the IPO window will be limited.

Our pipeline for this year is almost 90% leased or under signed.

Speaker Change: L. O wise next year is looking very strong the year 2027, and beyond is where we have a lot of work to do we're seeing good activity and actually new activity across some of our Submarkets South San Francisco remains slow as we have predicted for a long time.

Harry Kane: These dynamics may contribute to sustained volatility indices like the SDI throughout 2025.

Harry Kane: Fourth debenture financing will remain strong and will be concentrated on fewer but larger life science deals.

Harry Kane: Evidenced by over 120 financings exceeding $100 million in 2024.

Speaker Change: We're laser focused on leasing space is coming back to us as we noted at Investor day, obviously on the rollovers for this year.

Harry Kane: Private biotechs continue to take a conservative approach to space decisions prioritizing just in times of needs that align with their mission critical life science infrastructure requirements.

Speaker Change: And making very good progress. We're also laser focused on capital recycling for this year and also making very good progress as well.

Harry Kane: Our dynamic mega campuses with our unmatched flexibility and scale are ideally positioned to meet this demand.

Speaker Change: As I said at Investor Day.

Speaker Change: The critical components of our enduring success had been a preeminent brand superior and knowledge of our customer a superior product highly focused niche our industry leadership and.

Harry Kane: They will still remain large uncertainty at the macro conditions, such as interest rates way on all industries.

Harry Kane: However, the long term outlook of biotech remains incredibly bright and we are hyper focused on capturing the most promising life science companies today that will drive significant demand in the future.

Speaker Change: We believe we possess all those characteristics.

Speaker Change: And as I said, you know back on Investor Day on December 4th we've been through three major cycles as our collective management team in general and I must say that we've successfully navigate each of these very different market cycles successfully and we've emerged.

Harry Kane: To put it into perspective over the last 30 years the size of the public biotech market has increased 20 acts.

Harry Kane: With only 10% of diseases with approved therapies and innovation accelerating at an exponential pace. The industry continues to have massive growth potential.

Speaker Change: Even stronger industry position of leadership and strength.

Peter: With that I will pass it over to Peter.

And finally, its interesting that like the real World legacy media. There are always a bunch of legacy Pundant, who back in 2000, and benign or just to unload mission Bay and Cambridge land during the G. F C. As worthless non income producing assets that weighed on our balance sheet.

Peter: Thank you Holly.

Joel Marcus: Echo Joel's comments that the resilience of our people.

Joel Marcus: Nothing short of astounding and the support from their colleagues inside and outside of the Los Angeles area.

Joel Marcus: Firms that we have an extraordinary group of individuals who have shown that they're not only exception on what they do for the company and what they do for their friends and neighbors.

Speaker Change: And they turned out to be the growth engines of the next decade.

Joel Marcus: Surprise us it's notoriously tough to get a physician within Alexandria, because Joel famously requires our team members to not only be the best in the world at what they do but they also care about our mission deeply which at its core.

Joel Marcus: Helping humanity.

Joel Marcus: I'm going to discuss our development pipeline leasing supply and value harvesting asset recycling and then hand, it over to Mark <unk>.

Mark: Fourth quarter, we delivered 602593 square feet.

Mark: Into our high barrier to entry sub markets, bringing total deliveries for the year to $2 million 457963 square feet covering 13 projects the annual incremental NOI delivered during the year was approximately $118 million.

Speaker Change: <unk>, yeah, so the year of the Dragon starts tomorrow.

Holly: And the key symbols, our wisdom and transformation, which I think epitomize, our Alexandria, and with that let me turn it over to Holly.

Speaker Change: Yeah.

Mark: <unk> $55 million in the fourth quarter.

Holly: Thank you Jill and good afternoon.

Mark: Another $395 million is expected to deliver beginning in 2025 through the second quarter of 2028.

Holly: This is Holly King senior Vice President of life Science in capital markets.

Holly: To start a brief spotlight on Alexandria tenants intracellular therapeutics.

Mark: The initial weighted average stabilized yield for 2024 deliveries were six 7% supported by solid stabilized yield on cost of seven 1% from our fourth quarter delivery.

Holly: Acquisition by J&J for $14 6 billion represents the largest announced I'll talk M&A and over a year and half.

Holly: Our partnership with intracellular it goes back over two decades when the company was founded on research from Nobel Laureate pumping Godslot at Rockefeller University.

Mark: Development and redevelopment leasing activity for the quarter was low at 13000 square feet due in part to lingering.

Mark: <unk> from life Science company boards Compass.

Holly: Leveraging breakthrough science, and how brain cells communicate your chemical signals.

Mark: Companies are prioritizing organic growth and delaying expansion plans until they have a critical need for this space, which is why just in time inventory that is turnkey and ready to occupy is most attractive to current demand.

Holly: Cellular is developing novel medicines for patients with mental illness.

Holly: <unk> FDA approved treatment for schizophrenia and bipolar depression.

Holly: With one in five Americans are affected by mental illness intracellular novel medicines have the potential to transform patients' lives.

Mark: This trend can be seen in the lease percentages of our pipeline.

Mark: <unk> is expected to fully deliver in 2025, and 2026 or 89% and 70% leased or under negotiations with signed LOI respectively.

Holly: Turning to trends across our broad and diverse life science tenant base demand continues to be driven by our nearly 800 strong tenants with 84% of leasing from existing relationships and <unk> 24.

Mark: While projects delivering in 2027 or beyond our 15% leased or under negotiation.

Speaker Change: So John's comments, we have a lot of work to do on those projects.

Holly: Importantly, leasing also continues to come from each and every segment of the life science industry.

Speaker Change: Alexandria is pipeline is well positioned to capture future demand when expansion needs arise our dominant existing tenant base allows us to get in front of many requirements before they reach the market and our location scale and sponsorship matter a lot to tenants as we statistically illustrated at Investor Day.

Holly: Over the course of 'twenty 'twenty four multinational pharma represented the largest proportion of life science leasing by Orissa.

Holly: At 28%.

Holly: Followed by life Science product service and devices, 22%.

Holly: Private biotech 21%.

Speaker Change: Transitioning the leasing and supply 553954 square feet was leased during the year, representing a 17, 3% increase from last year.

Holly: Medical institution, 15%.

Gill: Segment, which gill referred to with public biotech at 14%.

Gill: Now looking towards 2025, a few notable trends on the horizon.

Speaker Change: And 1 million 310999 square feet was leased during the quarter, which was a 47, 3% increase compared to the fourth quarter of 'twenty three.

Gill: First the FDA is expected to maintain its healthy pace of novel drug approval.

Gill: In 2020 for the Fda's Center for drug evaluation and research Theater approved 50 novel therapies.

Speaker Change: Rental rate increases for the year were consistent with guidance at 16, 9% and seven 2% on a cash basis and were 18, 1% and three 3% on a cash basis for the quarter.

Gill: Well the center for Biologics evaluation and research Fieber approved eight novel gene and cell therapy is.

Gill: Notably over the past two decades, the average number of annual approved both have more than doubled a tremendous win for patients.

Speaker Change: Net effective rents remain positive despite elevated availability and there was strong early renewal activity, reflecting the tenants appreciation of our location scale and sponsorship.

Gill: With respect to incoming appointees, we don't expect significant disruption at the FDA.

Gill: New administrations nominee for FDA Commissioner Dr. Marty Macquarrie is a surgeon in public policy researcher at John Hopkins.

Speaker Change: With respect to supply statistics, we presented a deep dive into them at Investor day, and not much has changed so in lieu of rehashing that we'd like to highlight a couple of interesting trends observed Ngls recent Boston lab market overview as they validate a lot of what we spoke about at Investor day.

Gill: Highly respected by the medical community with deep clinical trial experience.

Gill: The interim the administration has topped Sarah Brenner, our career Fta's, Michelle as acting Commissioner of the agency.

Gill: Second we anticipate life science emanate will continue to pick up.

Speaker Change: First <unk> indicated that there is a flight to quality for both geography and ownership.

Gill: Given impending patent cliffs pharma companies are seeking to backfill their pipeline with innovative medicines.

Speaker Change: 40% of all urban lab leases signed in 2024 were in Kendall square, 33% were in Watertown, 21% were in Fenway in Seaport Alexandria as urban Submarkets.

Gill: But in public biotech acquisition.

Gill: With potential for larger deals given a more lenient F T C L.

Gill: This M&A cycle is vital and returns to investors are then reinvested in the next generation innovative companies.

Speaker Change: Meaning that only 6% of leases were transacted in other submarkets.

Joel Marcus: According to J O L. One third of the leasing deals were signed by Alexandria, and another experienced owner. This is proof that location and sponsorship really matters.

Gill: We benefit from M&A across our regions through upgraded tenant credit post acquisition and in some cases expanded footprint from biopharma acquire over time.

Gill: Third we expect strong follow on market performance for public biotech companies with value driving clinical data.

Speaker Change: Second <unk> estimate.

Speaker Change: At least one third and probably closer to 40% of today's available lab space is made up of zombie buildings, meaning the building is on leasable because it's either a bad office conversion undesirable undesirable location and or an experienced owner further proof that location quality.

Gill: Right exemplifies the strength, having signed a 250000 square foot expansion at our San Carlos Mega campus in Q4.

Gill: However, public companies lacking key value inflection points will likely face continued downward pressure, while the IPO window will be limited.

Speaker Change: <unk> and sponsorship matters.

Gill: These dynamics may contribute to sustained volatility indices like the <unk> throughout 2025.

Speaker Change: We're very pleased to have executed a strong finish to the year within our value harvesting asset recycling program by closing on over $1 $1 billion of transactions in the fourth quarter, bringing our bringing our total for the year to be approximately $1 4 billion and included in our self funding capital plan.

Gill: Fourth debenture financing will remain strong and will be concentrated on fewer but larger life science deals.

Gill: Evidenced by over 120 financing exceeding 100 million in 2024.

Gill: Private biotechs continue to take a conservative approach to space decision prioritizing just in times of needs that align with their mission critical life science infrastructure requirements.

Speaker Change: As presented at Investor Day, our 2024 strategic dispositions exemplified that we continue to have a very solid portfolio of diversified assets, providing us with strategic optionality.

Gill: Our dynamic mega campuses with unmatched flexibility and scale are ideally positioned to meet this demand.

Speaker Change: Approximately 36% of our sales were two investors, 42% to users and 22% of the transactions where land sales.

Gill: They will still remain large uncertainty at the macro conditions, such as interest rates way on all industries.

The Investor sales end user sales were a combination of stabilized and non stabilized assets with a ladder requiring downtime and significant capital.

Gill: However, the long term outlook of biotech remains incredibly bright and we are hyper focused on capturing the most promising life science companies today that will drive significant demand in the future.

Speaker Change: Capitalized capital to stabilize in all cases, these assets were deemed by executive management and the local teams to no longer fit our core strategy.

Gill: Put it into perspective over the last 30 years the size of the public biotech market has increased 20 acts.

Speaker Change: We have provided cap rates for stabilized transactions that range from six 3% to seven 4% on a cash basis. It should be noted that none of these sales were in the Super core life Science Submarkets covenant by investors.

Gill: With only 10% of diseases with approved therapies and innovation accelerating at an exponential pace. The industry continues to have massive growth potential.

Peter: With that I will pass it over to Peter.

Peter: Thank you Holly.

Speaker Change: The other large sales of note, where the properties with vacancy or near term lease expirations in Cambridge in the UTC Submarket of San Diego.

Peter: I'll Echo Joe's comments that the resilience of our people has been nothing short of astounding and the support from their colleagues inside and outside of the Los Angeles area.

Speaker Change: We are bound by confidentiality agreements, our commentary must be limited here.

Speaker Change: Firms that we have an extraordinary group of individuals who have shown that they're not only exceptional on what they do for the company.

Speaker Change: With respect to the Cambridge assets, the economics were significantly driven by the inclusion of $2 15 first Street a historical building primarily improved as an office building. In addition to current vacancy and significant occupancy loss expected over the next two years the asset will require material capex.

Speaker Change: What they do for their friends and neighbors, it's no surprise, it's notoriously tough to get a physician within Alexandria, because Joel famously requires our team members to not only be the best in the world at what they do with it.

Speaker Change: Also care about our mission deeply which at its core it's about helping humanity.

Speaker Change: Beyond leasing costs to stabilize the building in the future.

Speaker Change: University Town center assets have a similar profile with respect to current vacancy and future occupancy loss.

Speaker Change: I mean, I discussed our development pipeline leasing supply and value harvesting asset recycling and then hand it over to Mark.

Speaker Change: At Cambridge, and UTC asset served as well over time, but they are no longer part of our core Mega campus strategy and the opportunity to monetize the assets by receiving capital today and avoiding capex in the future is a prudent and disciplined strategy.

In the fourth quarter, we delivered 602593 square feet.

Mark: Into our high barrier to entry sub markets, bringing total deliveries for the year to 2 million 457963 square feet covering 13 projects. The annual incremental NOI delivered during the year was approximately $118 million, including $55 million in the fourth quarter.

Speaker Change: As we look to 2025, we are confident we will continue to meet our self funding goal with our value harvesting asset recycling program continuing to drive the transformation of our asset base into the Mega campus strategy that provides for the location scale and sponsorship prioritized by today's high quality.

Mark: Another $395 million is expected to deliver beginning in 2025 through the second quarter of 2028.

Mark: The initial weighted average stabilized yield for 2024 deliveries was six 7% supported by solid stabilized yield on cost of seven 1% from our fourth quarter deliveries.

Speaker Change: Tenant base.

Speaker Change: With approximately $540 million in pending transactions subject to nonrefundable deposits or executed letters of intent and or purchase and sale agreement negotiations we're off to a great start.

Mark: Development and redevelopment leasing activity for the quarter was low at 13000 square feet due in part to lingering conservatism from life Science company boards.

Mark: With that I'll pass it over to Mark.

Mark: You hear me now Mark are you there, yes, yes, yes I'm here can you hear me, yes, we can.

Mark: Okay.

Martin: Apologies. Thank you Peter this is Martin <unk>, CFO, Hello, and good afternoon, everyone.

Martin: First I'd like to pause certain moment to recognize many of our Alexandria team members, who have been personally impacted by the horrible fires that have plagued the Los Angeles area over the last few weeks.

Mark: Trend can be seen in the lease percentages of our pipeline projects expected to fully delivered in 2025, and 2026 or 89% and 70% leased or under negotiations with signed LOI, respectively, while projects delivering in 2027 or beyond our 15% leased or under negotiation.

Martin: Congratulations to the entire Alexandria team for the outstanding execution during the quarter, including the tremendous capital recycling of $1 1 billion completed during the quarter.

Martin: We reported solid operating and financial results for the fourth quarter end of the year.

Mark: Jason.

Speaker Change: Oh Joel's comments, we have a lot of work to do on those projects.

Martin: Total revenues and adjusted EBITDA were up 8% and 11, 6%, respectively over 2023%, primarily driven by solid same property performance and continued execution of our development and redevelopment strategy.

Martin: <unk> per share as adjusted was $9 47.

Martin: Up five 6% over 2023 and up 36% over the last three years, which represents the highest percentage growth amongst the <unk> equity healthcare index over that time.

Speaker Change: Transitioning to leasing and supply 5.053 million 954 square feet was leased during the year, representing a 17, 3% increase from last year.

Martin: On an internal growth our solid operating results for the quarter continued to be driven by our disciplined execution of our Mega campus strategy.

Speaker Change: And 1 million 310999 square feet was leased during the quarter, which was a 47, 3% increase compared to the fourth quarter of 'twenty three.

Martin: Mendes scale advantage longstanding tenant relationships and operational excellence by our team.

Martin: 77% of our annual rental revenue comes from our collaborative Mega campuses and we hope to increase steadily over time.

Speaker Change: Rate increases for the year were consistent with guidance at 16, 9% and seven 2% on a cash basis and were 18, 1% and three 3% on a cash basis for the quarter.

Martin: We have high quality cash flows was 52% of our annual rental revenue from investment grade and publicly traded large cap tenants collections remained very high at 99, 9% and adjusted EBIT margins were strong at 72% for the quarter and represent the second highest quarterly margins reported since 2019.

Martin: On leasing an important takeaway for the quarter is the continued solid leasing volume driving our business.

Martin: Leasing volume for the quarter was $1 3 million square feet, which represents the fourth consecutive quarter over 1 million square feet and creates great momentum as we transition into the new year.

Speaker Change: Validate a lot of what we spoke about at Investor day.

Martin: Quarterly volume also included 273000 square feet of previously vacant space.

Speaker Change: First Jay L. L indicated that there is a flight to quality for both geography and ownership.

Martin: A larger amount in the last five quarters.

Martin: Leasing volume for the full year 'twenty, four was $5 1 million square feet up 17% over the prior year and up 19% compared to the seven year historical period prior to 2020.

Speaker Change: 40% of all urban lab leases signed in 2024 were in Kendall square, 33% were in Watertown, 21% were in Fenway in Seaport, Alexandria, as urban Submarkets, meaning that only 6% of leases were transacted in other submarkets occur.

Martin: We continue to benefit from our tremendous scale high quality tenant roster and brand loyalty with 84% of our leasing activity over the last 12 months coming from our existing deep well of approximately 800 tenant relationships.

Speaker Change: According to J O L. One third of the leasing deals were signed by Alexandria, and another experienced owner. This is proof that location and sponsorship really matters.

Martin: Rental rate growth for lease renewals and releasing of space in 24 was solid at 16, 9% seven 2% on a cash basis.

Speaker Change: Second J O L estimate that.

Martin: For the quarter it was $18, one and three 3% on a cash basis.

Martin: Continue to achieve very healthy lease terms on completed leases with 95 years on average for the quarter, which is above our historical 10 year average.

Martin: Ti and leasing commissions on renewals and releasing space for the quarter was elevated on a per square foot basis due to two large long term leases signed in San Francisco and San Diego, but importantly, these costs were fairly modest for the year when considered as a percentage of the total rent over the lease term, which was eight 4%.

Speaker Change: They're proof that location quality and sponsorship matters.

Speaker Change: We're very pleased to have executed a strong finish to the year within our value harvesting asset recycling program by closing on over $1 $1 billion of transactions in the fourth quarter, bringing our are bringing our total for the year to be approximately $1 4 billion and included in our self funded capital plan.

Martin: For the full year 2004 and ranks as the second lowest percentage over the last five years.

Martin: Our non revenue enhancing expenditures, including Tis and leasing commissions on second generation space have averaged 15% of net operating income over the last five years, including the last three they have all been below the five year average.

Speaker Change: Approximately 36% of our sales were two investors, 42% to users and 22% of the transactions where land sales.

Martin: Looking forward to 'twenty five we do expect this ratio to tick up a bit due to the repositioning activities that technology square and four nine Illinois.

Martin: On same property.

Speaker Change: The Investor sales end user sales were a combination of stabilized and non stabilized assets with a ladder requiring downtime insignificant capital per se.

Martin: Same property NOI growth was solid at one 2% and four 6% on a cash basis and Europe, six and six 3% on a cash basis for 24 in the fourth quarter <unk> 24, respectively.

Speaker Change: Capitalized capital to stabilize.

Speaker Change: All cases these assets were deemed by executive management and the local teams to no longer fit our core strategy.

Martin: Driven by solid rental rate increases the pickup in same property occupancy and some burn off of free rent benefiting the cash numbers.

Martin: Our outlook for full year 2015 property growth is consistent with our prior outlook.

Martin: Down, 2% and flat on a cash basis at the midpoint.

Martin: These projected results for 2025 include the impact of approximately two 6% and three 4% on a cash basis from the 768000 of lease explorations expected to go vacant in <unk> 'twenty five spread across four projects.

Speaker Change: The other large sales of note, where the properties with vacancy or near term lease expirations in Cambridge in the UTC Submarket of San Diego we.

Speaker Change: We are bound by confidentiality agreements, our commentary must be limited here.

Martin: As a reminder, the two largest components of those key <unk> 25 lease explorations that relate to Alexandria technology square with the move out an expansion to another Alexandria property by low Donna.

Martin: And our single tenant building at 490, Illinois.

Martin: In mission Bay.

Martin: Made great progress on these specific upcoming lease explorations with 136000 square feet 40 leased or under negotiation with most of the balance under our ongoing discussions with several prospective tenants.

Speaker Change: Beyond leasing costs to stabilize the building in the future.

University Town center assets have a similar profile with respect to current vacancy and future occupancy loss.

Martin: We expect downtime on these spaces on average to be at least 12 months given time to complete construction.

Speaker Change: The Cambridge and UTC as it served us well over time, but they are no longer part of our core Mega campus strategy and the opportunity to monetize the assets by receiving capital today and avoiding capex in the future is a prudent and disciplined strategy.

Martin: We expect same property results to be impacted starting in <unk> 25, with some offsets to the cash results to the burn off of free rent across the rest of the same property pool over the first half of 'twenty five.

Martin: Turning to occupancy.

As we look to 2025, we are confident we will continue to meet our self funding goal with our value harvesting asset recycling program continuing to drive the transformation of our asset base into the Mega campus strategy that provides the location scale and sponsorship prioritized by today's high quality.

Martin: Occupancy for the quarter was solid at 94, 6%, which is consistent with the steady results over the last five quarters.

Martin: The midpoint of our guidance range for occupancy for year end $25 92, 4%, which includes approximately 2% vacancy coming from the four projects with 125 lease explorations expected to build Bacon that I described earlier and are described on page 24 of our supplemental package.

Speaker Change: Tenant base with.

Speaker Change: Approximately 540 million of pending transactions.

Speaker Change: Subject to nonrefundable deposits or executed letters of intent and or purchase and sale agreement negotiations.

Martin: During the quarter, we continued to execute on our development and redevelopment strategy by delivering 603000 square feet from the pipeline, which will generate $55 million of incremental annual net operating income.

Mark: We're off to a great start so with that I'll pass it over to Mark.

Martin: A $4 4 million rentable square feet of development and redevelopment projects. They are projected to generate $395 million of incremental annual net operating income over the next really half years, including $83 million in 2025 from projects that are leased are negotiating around 89%.

Speaker Change: Mr. Bender. This is the conference operator, perhaps your phone is muted on your end you're open on mine.

Martin: Also expect to see significant growth in incremental annual net operating income on a cash basis, a $70 million from executed leases as the initial free rent from recent deliveries burns off over the next three months on a weighted average basis.

Speaker Change: Again, Mr. <unk>, perhaps your line is muted.

Speaker Change: We'll check in with them.

Martin: Turning to buybacks on December 19th we announced that our board had authorized a common stock purchase program of up to $500 million.

Martin: To date, we've repurchased 200 million under the program, including $50 million in December and $150 million in January at an average price of $98 16.

Speaker Change: Can you hear me now.

Mark: Mark you there, yes, yes.

Martin: Subject to changing market conditions, we will continue to monitor additional share repurchases under the plan and expect to fund any repurchases on a leverage neutral basis through the end of 'twenty five as a reminder, here our guidance range for acquisitions and other opportunistic uses of capital is zero to $200 million, so with the share repurchase.

Speaker Change: Yes, yes, I'm here can you hear me, yes, we can okay.

Mark: Apologies. Thank you Peter this is mark <unk>, CFO, Hello, and good afternoon, everyone.

Mark: First I'd like to pause for a moment to recognize many of our Alexandria team members, who have been personally impacted by the horrible fires that have played the Los Angeles area over the last few weeks.

Martin: Is completed in the first quarter were already on the high end of our guidance range for the year.

Mark: Second our congratulations to the entire Alexandria team for the outstanding execution during the quarter, including the tremendous capital recycling of $1 1 billion completed during the quarter.

Martin: Turning next to the balance sheet, we continue to have one of the strongest balance sheets amongst all publicly traded U S. Reits are corporate credit ratings continue to rank in the top 10% of all publicly traded U S. Reits. We ended the year with low leverage of five two times for net debt to adjusted EBITDA consistent with the average of our year end leverage for the last four.

Mark: We reported solid operating and financial results for the fourth quarter and the year.

Mark: Total revenues and adjusted EBITDA were up 8% and 11, 6% respectively. Over 2023, primarily driven by solid same property performance and continued execution of our development and redevelopment strategy.

Five years, we have tremendous liquidity and we have one of the longest debt maturity profiles amongst all S&P 500, Reits with only 14% of total debt maturing over the next three years.

<unk> per share as adjusted was $9 47.

Mark: Up five 6% over 2023 and up 36% over the last three years, which represents the highest percentage growth amongst the <unk> equity healthcare index over that time.

Martin: <unk> funding, we continue to be focused on our disciplined funding strategy to recycle capital from dispositions into minimize the issuance of common stock, which has been nominal over the last two years huge congratulations to the Alexandria team for their tremendous execution during 'twenty four with $1 4 billion of dispositions completed include.

Mark: On an internal growth our solid operating results for the quarter continued to be driven by our disciplined execution of our Mega campus strategy tremendous scale advantage long standing tenant relationships and operational excellence by our teams.

Martin: $1 1 billion of dispositions completed during the fourth quarter across 12 different transactions was about half of that coming from stabilized dispositions with a weighted average cash capitalization rate of six 9%.

Mark: 57% annual rental revenue comes from our collaborative Mega campuses, and we hope to increase steadily over time.

Martin: Important to note here that the stabilized dispositions completed in the fourth quarter were primarily located in suburban Boston, Northern Virginia, and RT, Submarkets, which comprise a small fraction of our overall asset base.

Mark: We have high quality cash flows was 52% of our annual rental revenue from investment grade and publicly traded large cap tenants collections.

Mark: Collections remained very high at 99, 9% and adjusted EBIT margins were strong at 72% for the quarter and represent the second highest quarterly margins reported since 2019.

Martin: In the fourth quarter, we did recognize impairments aggregating $186 million, which was primarily comprised of the following first 49%.

Mark: On leasing.

Martin: For properties at one would turn away and grew 128.

Mark: Courtney takeaway for the quarter is the continued solid leasing volume driving our business.

Martin: Which was sold to our longstanding tenant for $369 4 million during the quarter and second $102 8 million primarily related to multiple land parcels located in San Diego some of which were sold in the fourth quarter and many of which will close next year.

Mark: Leasing volume for the quarter was $1 3 million square feet, which represents the fourth consecutive quarter over 1 million square feet and creates great momentum as we transition into the new year.

The quarterly volume also included 273000 square feet of previously vacant space.

Martin: The team continues to be laser focused on the execution of our capital plan as Peter mentioned, we're off to a great start we have pending 2025 dispositions subject to non refundable deposits or contract negotiations for $539 5 million of which about half of this represents anticipated sales of land and in total represents about a third.

Mark: The largest amount in the last five quarters.

Mark: Leasing volume for the full year 'twenty, four was $5 1 million square feet up 17% over the prior year and up 19% compared to the seven year historical period prior to 2020.

Mark: We continued to benefit from our tremendous scale high quality tenant roster and brand loyalty with 84% of our leasing activity over the last 12 months coming from our existing deep well of approximately 800 tenant relationships.

Martin: At the midpoint of our guidance for next year.

Martin: Okay.

Martin: In addition to dispositions that sales of partial interest. We also expect to fund a meaningful amount of our equity needs next year with retained cash flows from operating activities after dividends of $475 million at the midpoint of our guidance for next year.

Mark: And our rate growth for lease renewals and releasing of space in 24 was solid at 16, 9% seven 2% on a cash basis for.

Martin: High quality cash flows continue to support the growth in our common stock dividend with an average annual increase in dividends per share of five 4% since 2020, and we continue to have a conservative <unk> payout ratio of 55% for the quarter.

Mark: For the quarter was $18, one and three 3% on a cash basis.

Mark: Continue to achieve very healthy lease terms on completed leases with nine and half years on average for the quarter, which is above our historical 10 year average.

Martin: On venture investments quarterly realized gains from venture investments, including <unk> <unk> per share as adjusted since 2021 have averaged about 25 million a quarter for.

Mark: Ti and leasing commissions on renewals and releasing the space for the quarter was elevated on a per square foot basis due to two large long term leases signed in San Francisco and San Diego.

Martin: For 2020 for realized gains included <unk> <unk> per share were just slightly above our historical rate at about $29 million a quarter on average or $117 million for the full year and $32 million in the fourth quarter. Our outlook for 2025 is consistent with the most recent run rate for the full year 2024.

Mark: Accordingly, these costs were fairly modest for the year when considered as a percentage of the total rent over the lease term, which was eight 4% for the full year 2004 and ranks as the second lowest percentage over the last five years.

Mark: Our non revenue enhancing expenditures, including Ti and leasing commissions on second generation space have averaged 15% of net operating income over the last five years, including the last three they have all been below the five year average.

Martin: Turning to guidance, we reaffirmed our guidance for 2025 with a $150 million change to our 25 sources of capital to reflect the closing of certain dispositions that were originally expected to close in 2024 and are now expected to close in 2025.

Mark: Looking forward to 'twenty five we do expect this ratio to tick up a bit due to the repositioning activities that technology square.

Martin: There were no changes to the midpoint of our guidance ranges for EPS of $2 67.

Mark: We're not in Illinois.

Mark: On same property.

Mark: Same property NOI growth was solid at one 2% and four 6% on a cash basis Europe, 6% six 3% on a cash basis for 24 in the fourth quarter 24, respectively.

Martin: <unk> per share diluted as adjusted of $9 33.

Martin: As a reminder.

Martin: We view, our projected 25 <unk> per share midpoint.

Martin: Flat relative to 2024 after considering the approximate 14 impact from the Alexandria Technology Square ground lease extension completed last year.

Given by solid rental rate increases and pick up in same property occupancy and some burn off of free rent benefiting the cash numbers.

Martin: In closing as we reflect on the fourth quarter and the full year of 2024, we're pleased with the tremendous execution was solid <unk> growth of five 6% due to very tough macroeconomic environment with our tremendous scale high quality cash flows deep industry relationships and our highly experienced management team.

Mark: Outlook for full year 2015 property growth is consistent with our prior outlook of down 2% and flat on a cash basis at the midpoint.

Mark: These projected results for 2025 include the impact of approximately two 6% and three 4% on a cash basis from the 768000 of lease explorations expected to go vacant in <unk> 'twenty five spread across four projects.

Joel Marcus: Well positioned to continue reinforcing our dominant platform and strategically position us for future growth with that I'll turn it back to Joel.

Joel Marcus: Okay, operator, we can open it up for questions.

Mark: As a reminder, the two largest components of those key $102 25 lease explorations relate to Alexandria technology square with the move out an expansion to another Alexandria property by low Donna.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on your telephone keypad.

Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Mark: And our single tenant building at four nine Illinois.

Mark: Mission Bay, we've made great progress on these specific upcoming lease explorations with 136000 square feet 40 leased or under negotiation with most of the balance under our ongoing discussions with several perspective.

Speaker Change: Our first question today is from Anthony <unk> with Jpmorgan. Please go ahead.

Speaker Change: Yes, Thank you and hi, everyone.

Speaker Change: Our first question is Joel I think you alluded to the <unk>.

Mark: We expect downtime on these spaces on average to be at least 12 months given time to complete construction.

Speaker Change: First quarter here going to are trending toward having a really strong leasing picture I was wondering if you could.

Mark: We expect same property results to be impacted starting in <unk> 25, with some offsets to the cash results for the burn off of free rent across the rest of the same property pool over the first half of 'twenty five.

Speaker Change: Give a little bit more color on that in terms of whether that's in the core or with regards to the development pipeline or the types of leases.

Speaker Change: Maybe a little bit more detail there on the comments.

Mark: Turning to occupancy occupancy for the quarter was solid at 94, 6%, which is consistent with the steady results over the last five quarters.

Speaker Change: I prefer to make them on the first quarter.

Speaker Change: I would say.

Speaker Change: Heavily it's kind of spread among the various items you talked about so.

Mark: Point of our guidance range for occupancy for year end 'twenty five is 92, 4%, which includes approximately 2% vacancy coming from the four projects with $1 25 lease explorations expected to build Bacon that I described earlier and are described on page 24 of our supplemental package.

Speaker Change: It's not necessarily one single one.

Speaker Change: Okay.

Speaker Change: And then just if we look at your.

Speaker Change: The development spending guidance for the full year can you remind us.

Speaker Change: Excuse me how much of that is related to projects that are kind of in process versus ones that you might want to start and I guess, where I'm going with the question is given the buyback would you consider.

Mark: During the quarter, we continued to execute on our development and redevelopment strategy by delivering 603000 square feet from the pipeline, which will generate $55 million of incremental annual net operating income we have $4 4 million rentable square feet of development redevelopment projects, they are projected to generate $395 million of incremental.

Speaker Change: Bidder may be moving any capital from that bucket.

Speaker Change: Maybe further buybacks or thoughts there.

Speaker Change: Yeah, So mark you could comment on that.

Mark: Annual net operating income over the next three and half years, including $83 million in 2025 from projects that are leased are negotiating around 89%.

Mark: Yes, yes, we do break that out in the back Tony I'd say, but the lion's share is related to active construction projects $1 2 billion out of the $1 75 billion.

Mark: We also expect to see significant growth in incremental annual net operating income on a cash basis.

Mark: But yet to take care of it take your point there is not there's not a ton of new projects expected to start vertical construction next year.

Mark: $70 million from executed leases as the initial free rent from recent deliveries burns off over the next three months on a weighted average basis.

Mark: But should we take it as you know.

Mark: Turning to buybacks on December 19th we announced that our board had authorized common stock purchase program of up to $500 million.

Mark: It sounded like from your comments.

Hearing it right that the 150 have done on the buyback put you at the high end of your acquisition.

To date, we've repurchased 200 million under the program, including $50 million in December and $150 million in January at an average price of $98 16.

Mark: Opportunistic purchases.

Mark: <unk>, that's kind of about it or is there room for that to further I wouldn't assume that to be the case, but let us.

Subject to changing market conditions, we will continue to monitor additional share repurchases under the plan and expect to fund any repurchases on a leverage neutral basis through the end of 'twenty five as a reminder, here our guidance range for acquisitions and other opportunistic uses of capital is zero to $200 million, so with the share repurchase.

Mark: <unk> that in the first quarter, Tony much like I think the leasing color will give you on rollovers.

Mark: Bacon space coming back to us the development pipeline et cetera, but give us.

Mark: Give us that that room, but.

Mark: That's current guidance, but we will definitely update it and it could change.

Mark: <unk> completed in the first quarter were already on the high end of our guidance range for the year.

Mark: Okay. Thanks.

Mark: Yes. Thank you.

Speaker Change: The next question is from Rich Anderson with Wedbush. Please go ahead.

Mark: Turning next to the balance sheet, we continue to have one of the strongest balance sheets amongst all publicly traded U S. Reits are corporate credit ratings continue to rank in the top 10% of all publicly traded U S. Reits. We ended the year with low leverage of five two times for net debt to adjusted EBITDA consistent with the average of our year end leverage for the last five years.

Rich Anderson: Thanks, Good afternoon.

Speaker Change: Another leasing question and maybe I'm going to shut down again like Tony but.

Speaker Change: On the 768 and $3 36 that you have leased in a lot of it is under discussion would you say youre running at.

Mark: We have tremendous liquidity and we have one of the longest debt maturity profile amongst all S&P 500, Reits with only 14% of total debt maturing over the next three years.

Speaker Change: Where you were at Investor day in terms of plan or do you think Youre running ahead of plan just just any yes.

Speaker Change: Yes.

Speaker Change: I can answer that question ahead of plan.

Speaker Change: Ahead of plan Okay. Good.

Mark: Transitioning next funding we continue to be focused on our disciplined funding strategy to recycle capital from dispositions into minimize the issuance of common stock, which has been nominal over the last two years huge congratulations to the Alexandria team for the tremendous execution during 'twenty four with one.

Speaker Change: And then.

Speaker Change: In terms of the G&A savings for 2025 can you can you talk about that I mean, it's kind of 2% is timing around maintaining some level of reasonable first of all in this case flattish <unk> growth for 2025, where did that come from like where how did that sort of materialize in sort of hit the books in 2025, if you can give.

Mark: $1 4 billion of dispositions completed including $1 1 billion of dispositions completed during the fourth quarter across 12 different transactions with about half of that coming from stabilized dispositions with a weighted average cash capitalization rate of six 9%.

Speaker Change: Some final points so yesterday.

Speaker Change: Mark did make comments, but let me give you kind of a frame. So yesterday, we filed our 10-K. So you can look there in DNA.

Mark: <unk> to note here that the stabilized dispositions completed in the fourth quarter were primarily located in suburban Boston Northern Virginia.

Speaker Change: We've got savings in legal expenses, <unk> expenses payroll and payroll related expenses other G&A expenses and.

Mark: T Submarkets, which comprise a small fraction of our overall asset base.

Speaker Change: Some.

Speaker Change: Benefit programs. So I don't know Mark if you want to make any other comment its pretty broad and also software implementation et cetera.

Mark: In the fourth quarter, we did recognize impairments aggregating $186 million, which was primarily comprised of the following first $49 million for properties at one we turned away and grew 128.

Yes, no nothing to add there Joe.

Mark: Which was sold to our longstanding tenant for $369 4 million during the quarter and second $102 8 million primarily related to multiple land parcels located in San Diego some of which were sold in the fourth quarter and many of which will close next year.

Speaker Change: Okay. Okay, and then lastly for me Joel Big picture question around.

Speaker Change: I guess I could say politics, you Senate like.

Speaker Change: We're really optimistic about 2025.

Speaker Change: With the new administration, although some interesting tactics going on around the HHS.

Speaker Change: The team continues to be laser focused on the execution of our capital plan as Peter mentioned, we're off to a great start we have pending 2025 dispositions subject to non refundable deposits or contract negotiations for $539 5 million of which about half of this represents anticipated sales of land and total represents about a third.

Speaker Change: And I understand that certainly regulatory pauses or par for the course for new administration, but it does feel like maybe more aggressive this time.

Speaker Change: Would you say there is any concern about where things are headed from a policy point of view or are you absolutely confident that.

Mark: At the midpoint of our guidance for next year.

Speaker Change: Despite some of the questions that maybe are in place today that this is a step back in a several step forward type of situation that you are looking at thanks.

Mark: Okay.

Mark: In addition to dispositions and sale of a partial interest. We also expect to fund a meaningful amount of our equity needs next year with retained cash flows from operating activities after dividends of $475 million at the midpoint of our guidance for next year.

Speaker Change: Yes, I would say compared to the last administration, that's like night, the dark Knight and the light of day.

Mark: High quality cash flows continue to support the growth in our common stock dividend with an average annual increase in dividends per share of five 4% since 2020, and we continue to have a conservative <unk> payout ratio of 55% for the quarter.

Speaker Change: Just FTC Commissioner alone is one.

Speaker Change: We've also got I think Kelly.

Speaker Change: Gave you some idea I mean, our industries, primarily governed by the FDA and I think.

Speaker Change: Both the nominees and the interim or both.

Mark: On venture investments quarterly realized gains from venture investments, including <unk> <unk> per share as adjusted since 2021 have averaged about $25 million a quarter for.

Speaker Change: Skilled people. So we feel very good and we don't see any abatement of the pace of approvals both on biologics and non biologics and I think when it comes to HHS as an over arching.

Mark: For 2020 for realized gains included <unk> <unk> per share were just slightly above our historical rate at about $29 million a quarter on average or $117 million for the full year and $32 million in the fourth quarter. Our outlook for 2025 is consistent with the most recent run rate for the full year 2024.

Speaker Change: Area.

Speaker Change: Over the past four years, you had somebody who didn't even know what the health care was.

Speaker Change: Political appointee heavier basara from California, So whether RFK junior.

Mark: Turning to guidance, we reaffirmed our guidance for 2025 with a $150 million change to our 25 sources of capital to reflect the closing of certain dispositions that were originally expected to close in 2024 and are now expected to close in 2025.

Speaker Change: Gets it or not and I know, there's a lot of.

Speaker Change: Controversy about that.

Speaker Change: That probably won't have nearly as much impact as the FDA and also on the NIH, we feel that.

Speaker Change: The nominee there will be a solid nominee the NIH kind of lost its way as you know it lost credibility during COVID-19.

Mark: There were no changes to the midpoint of our guidance ranges for EPS of $2 67.

Mark: <unk> per share diluted as adjusted of $9 33.

Speaker Change: Certainly withheld I think accurate reporting on the cause of Covid out of the Wuhan lab I mean, we we understand BSO.

Mark: As a reminder.

We view, our projected 25 <unk> per share midpoint.

Mark: It's flat relative to 2024 after considering the approximate 14 impact from the Alexandria Technology Square ground lease extension completed last year.

Speaker Change: For labs, and things like that and it's pretty clear that we funded gain of function work there and people were getting sick as early as the summer of 2019.

Mark: In closing as we reflect on the fourth quarter and the full year of 2024, we're pleased with the tremendous execution was solid <unk> growth of five 6% and a very tough macroeconomic environment with our tremendous scale high quality cash flows deep industry relationships and our highly experienced management team.

Speaker Change: That was on the NIH.

Speaker Change: And they went from a merit based award system to a mandated award system and I think in the province of Science, you want Best Science project to win not just somebody who's mandated to win for the sake of it.

Mark: Well positioned to continue reinforcing our dominant platform and strategically position us for future growth with that I'll turn it back to Joel.

Speaker Change: So I think the NIH has a fair amount of work to do to kind of clean house, but it is a fantastic agency overall debt funds. Some of the most important core research the substrate of a lot of ultimately.

Joel: Okay, operator, we can open it up for questions.

Speaker Change: We will now begin the question and answer session.

Joel: To ask a question you May press Star then one on your telephone keypad.

Joel: If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Therapeutic products that come out and we would imagine that that will continue if you look micro to us we don't have a whole lot of exposure to the NIH directly other than a few leases, which are actually long term leases in the Maryland market, but I think I'm pretty optimistic.

Speaker Change: Our first question today is from Anthony <unk> with Jpmorgan. Please go ahead.

Speaker Change: Yes, Thank you and hi, everyone.

Speaker Change: My first question is Joel I think you alluded to the <unk>.

Speaker Change: Awesome, Thanks, very much Joe and thank you.

Speaker Change: First quarter here going to are trending toward having a really strong leasing picture I was wondering if you could.

Speaker Change: The next question is from Wes Golladay with Baird. Please go ahead.

Speaker Change: Give a little bit more color on that in terms of whether that's in the core or with regards to the development pipeline or the types of leases just maybe a little bit more detail there on the comments.

Speaker Change: Hey, everyone I just want to go back to that comment about just in time, we've seen what does that mean for your 2026 developments would that be more back half leasing this year would be all the way until next year that we see at least in there.

Speaker Change: I prefer to make them on the first quarter.

Speaker Change: But I would say.

Speaker Change: So Peter do you want to maybe fair to frame that.

Speaker Change: Heavily it's kind of spread among the various items you talked about so.

Speaker Change: Yeah.

Speaker Change: And certainly things that are delivering in 2020 extra does not top of mind for folks that are.

Speaker Change: It's not necessarily one single one.

Speaker Change: Okay.

Speaker Change: And then just if we look at your.

Speaker Change: Deciding they need space and I go out to the market.

The development spending guidance for the full year can you remind us.

Speaker Change: Identify things within 60 to 90 days. So yes, that's the biotech sector, so keep that in mind.

Speaker Change: Okay.

Speaker Change: We certainly do have our existing tenant base that.

Speaker Change: I just love our platform loves our operations and has been very loyal so.

Speaker Change: Would you consider maybe moving any capital from that bucket to maybe further buybacks or thoughts there.

Speaker Change: We certainly do see ourselves getting things done in 2026, I think I mentioned, we're 70%.

Mark: Yeah, So mark you could comment on that.

Mark: Yes, yes, we do break that out in the back Tony I'd say, but the lion's share is related to active construction projects $1 2 billion out of the $1 75 billion.

Speaker Change: Please or under negotiations, which means we have signed LOI for 70% of that space. So the other 30%.

Speaker Change: Will likely come from our existing tenant base or potentially some some new tenants, but those are in pretty good shape. It's it's getting into 27 words too far out.

Mark: Yes take care of it take your point there is not there's not a ton of new projects expected.

Mark: To start vertical construction next year.

Speaker Change: For folks thinking so we're going to.

Mark: But should we take it as it sounded like from your comments if.

Speaker Change: We're going to do our best to generate some more activity there, but the market is is really just looking at things that.

Mark: Hearing it right that the 150 have done on the buyback you put you at the high end of your acquisition.

Speaker Change: They can get into in a very short time for a relatively short timeframe, but yes.

Mark: Opportunistic purchases.

Mark: <unk>, that's kind of about it or is there room for that to further I wouldn't assume that to be the case, but let us refresh that in the first quarter Tony much like I think the leasing color will give you on rollovers.

Speaker Change: The 25% 26 deliveries are in pretty good shape.

Speaker Change: Yes, so maybe with respect to that because because I think it's worth noting <unk> do you just want to run through the percentages of leasing of the sectors. Because I think this is where people get 100% focused on biotech and they lose focus of the rest of the industry. So maybe just run through those for a minute sorry to bear with us.

Mark: Bacon space coming back to us the development pipeline et cetera, but give us.

Mark: Give us that that room, but.

Mark: That's current guidance, but we will definitely update it and it could change.

Speaker Change: Yeah, absolutely and as I mentioned in my remarks.

Mark: Okay. Thanks.

Mark: Yes. Thank you.

Speaker Change: This is particular to that to the just in time leasing comment yes that is for more of the earlier stage companies. If you think about privately funded companies and they could be incredibly well funded but are a small portion of our overall IRR.

Speaker Change: The next question is from Rich Anderson with Wedbush. Please go ahead.

Rich Anderson: Thanks, Good afternoon.

Speaker Change: Another leasing question and maybe I'm gonna get shut down again like Tony but on.

Speaker Change: On the 768 would you and the $3 36, a that you have leased in a lot of it is under discussion would you say youre running at.

Speaker Change: And for this past year, they private biotech.

Speaker Change: Reflecting about 21% of our leasing and a good portion of that is as Peter said.

Speaker Change: You know where you were at Investor day in terms of plan or do you think you're running ahead of plan just just any yes.

Speaker Change: We are from existing tenants and then public biotech in particular, right, which has had and certainly the most challenges in terms of access.

Speaker Change: Yes.

Speaker Change: I can answer that question ahead of plan.

Speaker Change: Ahead of plan Okay. Good.

And then.

Speaker Change: Capital.

Speaker Change: In terms of the G&A savings for 2025 can you could you talk about that I mean, it's kind of for two of it is timing around you know maintaining some level of reasonable well in this case flattish <unk> growth for 2025, where did that come from like where how did that sort of materialize in sort of hit the books in 2025, if you can give.

Speaker Change: That you have and have nots represented about 14% of our of our leasing so when we talk about just in time leasing.

Speaker Change: It's very much focused on companies, where it's going to be leasing that say 20000 square foot space, we're not talking about the much larger requirements, where that takes a lot of time from both parties to really find a solution that works both for existing and new tenants.

Speaker Change: So yesterday.

Speaker Change: Mark.

Speaker Change: Okay. Thanks for that and then maybe just one quick follow up any region standing out from a development of a from a demand side from a leasing and is there any I guess non biotech non pharma more and more so the AI connect any of those coming into the portfolio.

Speaker Change: Make comments, but let me give you kind of a frame. So yesterday, we filed our 10-K. So you can look there and M DNA.

Speaker Change: Bob.

Speaker Change: We've got savings in legal expenses, <unk> expenses payroll and payroll related expenses other G&A expenses and.

Speaker Change: Well I think that I don't want to really give competitive.

Speaker Change: Some bench.

Speaker Change: Benefit programs.

Speaker Change: Information out, but I think we see good activity in the key hubs the slow one as I mentioned was south San Francisco.

So I don't know Mark if you want to make any other comment its pretty broad and also software implementation.

Speaker Change: Et cetera.

Speaker Change: But I think the good news is our presence in mission Bay, which we developed after the decade after the great financial crisis Athene, a huge boom in AI anchored by open AI and a number of other AI companies are moving or looking at space and certainly looking at.

Mark: Yes, no nothing to add there Joe.

Okay. Okay, and then lastly for me Joel about the Big picture question around.

Mark: I guess I could say politics, you send it like.

Mark: We're really optimistic about 2025.

Speaker Change: With the new administration, although some interesting tactics going on around the HHS.

Speaker Change: San Francisco is a critical.

Speaker Change: And I understand that certainly regulatory pauses or par for the course for new administration, but it does feel like it's maybe more aggressive this time.

Speaker Change: Linchpin base for that talent, so we're pretty optimistic about that.

Speaker Change: Okay. Thanks for the time.

Speaker Change: Yes. Thank you.

Speaker Change: Would you say there is any concern about where things are headed from a policy point of view or are you absolutely confident that.

Speaker Change: The next question is from Vikram Malhotra with Mizuho. Please go ahead.

Vikram Malhotra: Thanks for taking the questions.

Vikram Malhotra: I guess, Julie just bigger picture leasing velocity at sort of critical.

Speaker Change: Despite some of the questions that maybe are in place today that this is a step back in a several step forward type of situation that you are looking at thanks.

Vikram Malhotra: Now given sort of deliveries hopefully coming in towards the back half but.

Vikram Malhotra: Critical to the industry Credentialing Aerie story as well.

Speaker Change: Yes, I would say compared to the last administration, that's like night, the dark of night in the light of day.

Vikram Malhotra: Can you just I know you're not going to comment on <unk>, but just even bigger picture.

Speaker Change: Just FTC Commissioner alone is one.

Vikram Malhotra: How do you how do you anticipate leaving inflicting.

Speaker Change: We've also got I think Kelly.

Vikram Malhotra: Any numbers you can share like denim is in the market or even just how the pipeline has changed Q over Q just feels like that's the critical piece and I'm wondering if you can just share some statistics out 25 could evolve versus 24.

Speaker Change: Gave you some idea I mean, our industries, primarily governed by the FDA and I think.

Speaker Change: You know both the nominee in the interim or both.

Vikram Malhotra: Yes, I think that's the kind of question that I'd really prefer to leave for first quarter. When we can give you I think more granularity that we feel comfortable with.

Speaker Change: Lee skilled people. So we feel very good and we don't see any abatement of the pace of approvals both on biologics and non biologics and I think when it comes to HHS as an overarching.

Vikram Malhotra: Remember that the bulk of our tenants in the variety of sectors, We service under the life science industry as a whole that hollie mentioned.

Area I mean over the past four years, you had somebody who didn't even know what the health care was.

Vikram Malhotra: Come from our own tenant base. So we have a really really good picture over 800 tenants of each and every market and what the demand is quite apart from.

Speaker Change: In a political.

Speaker Change: Political appointee heavier basara from California So.

Speaker Change: Whether RFK junior.

Speaker Change: <unk> gets it or not and I know, there's a lot of.

Vikram Malhotra: What people that the brokers may represent or what they see they often don't see much of what we see in oftentimes, we may sign leases or LOI.

Speaker Change: Controversy about that.

Speaker Change: That probably won't have nearly as much impact as the FDA and also on the NIH, we feel that.

Vikram Malhotra: Brokers simply arent aware of those things so I don't really want to get into first quarter I want to kind of.

Speaker Change: The nominated there will be a solid nominee the NIH kind of lost its way as you know it lost credibility during COVID-19.

Vikram Malhotra: Get into the details there so I'd ask you just to be patient.

Speaker Change: Certainly withheld.

Speaker Change: I think accurate reporting on the cause of Covid out of the Wuhan lab I mean, we we understand BSO.

Vikram Malhotra: Bear with us, but I think we're going to have some.

Vikram Malhotra: Pretty good news, but I think the key to me is as I said.

Vikram Malhotra: Is the biotech sector apart from the other sectors have been pretty active that's going to take really the.

Speaker Change: For labs, and things like that and it's pretty clear that we funded gain of function work there and people were getting sick as early as the summer of 2019.

Vikram Malhotra: To get there, but in gear and <unk>.

Vikram Malhotra: Hopefully this administration is Ken kind of job bone that to happen that also impacts the servicing of debt it impacts cost of living because people are paying outrageous interest rates on credit cards and loans and things like that seems to me that's the key and Thats whats going to open up.

Speaker Change: And that was on the NIH.

Speaker Change: And they went from a merit based award system to a mandated reward system and.

Speaker Change: I think in the province of Science, you want Best Science project to win not just somebody who's mandated to win for the sake of it.

Vikram Malhotra: The next.

Vikram Malhotra: Biotech bull market.

Vikram Malhotra: Hope, it's not as well as the last one but one that.

Vikram Malhotra: Measured and steady.

Vikram Malhotra: But I think that's that's really the secret there and remember I think pals term comes up early 'twenty six and you can be assured that trumps going to replace them.

Speaker Change: Therapeutic products that come out and we would imagine that that will continue if you look micro to us we don't have a whole lot of exposure to the NIH directly other than a few leases, which are actually long term leases in the Maryland market, but I think I'm pretty optimistic.

Speaker Change: Got it maybe.

Speaker Change: Maybe perhaps if you could give us some relative color across sort of the key three key sub markets and we've been hearing more and more pick up in San Diego, maybe a little bit in south San Francisco, but just like that mix of tenants you gave us overall like how does the relative strength of each of the markets fair today.

Speaker Change: Awesome, Thanks, very much Joe and thank you.

Speaker Change: The next question is from Wes Golladay with Baird. Please go ahead.

Speaker Change: Yes, I think.

Speaker Change: We see strength in mission Bay, not so much in South San Francisco and mission Bay is driven biotech institutional and now artificial intelligence.

Hey, everyone I just want to go back to that comment about just in time, we've seen what does that mean for your 2026 developments would that be more back half leasing this year would be all the way until next year that we see leasing there.

Speaker Change: San Diego has been an overall good market because of the great place to live in.

Speaker Change: It's a much more affordable the Bay area is still has a it's an enormous span of distance and still the highest cost of living.

Peter: So Peter do you want to maybe a fair to frame that.

Speaker Change: Yeah.

Speaker Change: Certainly thank you.

Speaker Change: In the U S as far as biotech markets by and large and I think Boston remains very very steady at least the hard at Cambridge and the Submarkets I think Peter went through.

Speaker Change: That are delivering in 2020 extra does not top of mind for folks that are.

Speaker Change: Deciding they need space and then go out to the market.

Speaker Change: Identify things within 60 to 90 days. So yes, that's the biotech sector, so keep that in mind.

Speaker Change: Some of the leasing there so I think.

Speaker Change: The only sore thumb I would say is south San Francisco again kind of a.

Speaker Change: Okay.

Speaker Change: We certainly do have our existing tenant base that.

Speaker Change: Really.

Speaker Change: Kind of a reckless oversupply there by people, who really didn't know what they were doing and then south San Francisco also suffers from being primarily a biotech market. So you've got those two things that work that really hurt it compared to say mission Bay, which is more institutionally based.

Speaker Change: His loves our platform loves our operations and it's been very loyal so.

Speaker Change: We certainly do see ourselves getting things done in 2026, I think I mentioned, we're 70%.

These are under negotiations, which means we have signed LOI for 70% of that space. So the other 30% will likely come from our existing tenant base or potentially some some.

Speaker Change: And now.

Speaker Change: AI based so that's kind of a little bit of the lay of the land.

Speaker Change: And then just sorry last one to clarify you mentioned you feel pretty good about the lease up of the development.

Speaker Change: Some new tenants, but those are in pretty good shape, it's it's getting into 27 words too far out.

Speaker Change: The 'twenty five 'twenty six.

Speaker Change: Maybe 27 the question starts but would there be factor that caused you to pause any of the developments in either 25 or 26, pushing it out into 'twenty one.

Speaker Change: For folks thinking so we're going to.

Speaker Change: We're going to do our best to.

Speaker Change: Generates more activity there, but the market is is really just looking at things that way.

Speaker Change: No I think what Mark published in the in the press the sub in press release is our best guess of how we think our allocation of capital should match. The demand. We're seeing so I don't expect any material changes certainly to 25% or 26 post. This this print.

Speaker Change: You can get into in a very short time for a relatively short timeframe.

Speaker Change: The 25% 26 deliveries in pretty good shape.

Speaker Change: Thank you.

Speaker Change: Yes. Thank you.

Speaker Change: The next question is from Tom Catherwood with <unk>. Please go ahead.

Speaker Change: Thank you and good afternoon, everybody I mean sticking with leasing for 409, Illinois, and Madonna's previous space at Tech square that.

Speaker Change: Yeah, absolutely and as I mentioned in my remarks.

Speaker Change: Particular to that to the just in time leasing comment, yes that is or more of the earlier stage companies. If you think about privately funded companies and they could be incredibly well funded but are a small portion of our overall <unk>.

Speaker Change: Two questions on that first Mark I think you mentioned 136000 square feet.

Speaker Change: <unk> signed are negotiating leases was that those two buildings or was the four buildings with vacancy and then the second part is on Florida and Illinois.

Speaker Change: <unk>.

Speaker Change: And for this past year, they private biotech they reflected about 21% of our leasing and a good question, Peter and Chris that were.

Speaker Change: So that's that.

Speaker Change: Tech square.

Speaker Change: But I don't want to get any more granular than that.

Speaker Change: The 409, Illinois remember that's a building that sits right next to it has got a water view right.

Speaker Change: We are from existing tenants and then public biotech in particular, right, which has had and certainly the most challenges in terms of access.

Speaker Change: Next UCSF and right next to the Chase Center.

Speaker Change: Capital.

Speaker Change: And one could imagine.

Speaker Change: That you have and have nots represented about 14% of our of our leasing so when we talk about just in time leasing it's very much focused on companies, where it's going to be leasing that a 20000 square foot space, we're not talking about much larger requirements, where that takes a lot of time from both parties.

Speaker Change: The biotech company, they're exited but the demand for that building in South City is really I don't mean south city.

Speaker Change: Mission Bay is heavily institutional and AI related at the moment. So I think we have a fairly good optimism on that.

Speaker Change: To really find a solution that works both for existing and new tenants.

Speaker Change: And the location is superb.

Speaker Change: Got it and is that building competing against I mean that tenants are looking at it as a competing against new construction is it competing against second Gen space and kind of how does it stack up across dialysis dependent it depends upon who depends on who the tenant is.

Speaker Change: Okay. Thanks for that and then maybe just one quick follow up any region standing out from a development of a from a demand side from the leasing and is there any I guess non biotech non pharma more and more so the AI connect any of those coming into the portfolio.

Speaker Change: Well I think that I don't want to really give competitive information out, but I think we see good activity in the key hubs. The slow one as I mentioned was south San Francisco.

Speaker Change: Smaller tenants, probably prefer existing space bigger tenants, probably prefer new space, but its so dependent on you can't generalize it so tenant dependent there Tom.

Speaker Change: But I think the good news is our presence in mission Bay, which we developed.

Speaker Change: Got it I appreciate that Joel and then last one for me.

Speaker Change: <unk>.

Speaker Change: I want to go back to your comments about M&A, specifically the idea that deal activity provides investors with a liquidity event and can lead to reinvestment back in the life science companies.

Speaker Change: The decade after the great financial crisis.

Speaker Change: <unk> seen a huge boom in AI anchored by open AI and a number of other AI companies are moving or looking at space and certainly looking at.

Speaker Change: An increase in M&A alone are enough to boost early stage biotech investment or do we also need kind of sustained rebound in IPO activity to get there.

Speaker Change: San Francisco is a critical.

Speaker Change: Linchpin base for that talent, so we're pretty optimistic about that.

Speaker Change: Okay. Thanks for the time thank you.

Speaker Change: Yes, I think it's a holistic mix.

The next question is from Vikram Malhotra with Mizuho. Please go ahead.

Speaker Change: Ah.

Speaker Change: Across the board, but I would say and we see that historically that there's always this balance between IPO activity and pharma licensing deals and M&A right. It's all about where we're at capital coming from and is there a source of capital and so I think we could see a really strong year for M&A.

Vikram Malhotra: Thanks for taking the questions.

I guess, Julia just bigger picture leasing velocity, it's sort of critical.

Vikram Malhotra: Now given sort of deliveries hopefully coming in towards the back half, but critical for the industry going from the Aerie story as well.

Vikram Malhotra: Can you just I know you're not going to comment on <unk>, but just even bigger picture.

Speaker Change: And continued very healthy investment in private biotech company without the IPO market opening I don't think theyre mutually exclusive.

Vikram Malhotra: How do you how do you anticipate leaving inflicting.

Vikram Malhotra: Any number you can share like denim is in the market or even just how the pipeline has changed Q over Q just feels like that's the critical piece and I'm wondering if you can just share some statistics out 25 could evolve versus 24.

Speaker Change: In M&A at the end of the day is really the lifeblood of this industry. If you look at pharma.

Speaker Change: Across their current revenues around two thirds of that came from acquired products right. They really rests on the innovation coming from prime.

Vikram Malhotra: Yes, I think thats the kind of question that I'd really prefer to leave for first quarter. When we can give you I think more granularity that we feel comfortable with.

Speaker Change: Private and public biotechs, and I think investors get those returns and are going to put them to work.

Speaker Change: Remember that the bulk of our tenants and the variety of sectors, We service under the life science industry as a whole that hollie mentioned.

Speaker Change: So I think yeah.

Speaker Change: We will see what the IPO market does.

Speaker Change: Certainly.

Speaker Change: Apio market opening up as another Avenue for capital, but that also doesn't mean, it's the right choice striping a public company is hard and so I think as we look to M&A, it's very positive overall and it continues to be very significant drivers for pharma looking for that innovation.

Speaker Change: Come from our own tenant base. So we have a really really good picture over 800 tenants of each and every market and what the demand is quite apart from.

Speaker Change: What people that the brokers may represent or what they see they often don't see much of what we see in oftentimes, we may sign leases or LOI.

Speaker Change: Got it I appreciate your thoughts thanks, everyone.

Tom: Thanks, Tom.

Speaker Change: Next question is from Dylan Burzynski with Green Street. Please go ahead.

Dylan Burzynski: Good afternoon, guys. Thanks for taking the question just wanted to touch sort of on leasing economics, I know over the last 18 months or so that new development leasing economics have deteriorated.

Speaker Change: Brokers simply arent aware of those things so I don't really want to get into first quarter I want to kind of.

Speaker Change: You get into the details there so I'd ask you just to be patient.

Dylan Burzynski: On the supply pipeline and drop off in demand. So I'm, just curious sort of as you think about the current environment and expectations moving forward I mean is it your set.

Speaker Change: Bear with us, but I think we're going to have some.

Speaker Change: Pretty good news, but I think the key to me is as I said.

Dylan Burzynski: <unk> that.

Dylan Burzynski: And <unk> has sort of stabilized at these higher levels and sort of expectations for that over the next 12 months.

Speaker Change: Is the biotech sector apart from the other sectors have been pretty active that's going to take really the.

Dylan Burzynski: Peter.

Speaker Change: To get there, but in gear and <unk>.

Dylan Burzynski: Yes.

Speaker Change: Hopefully this administration is Ken kind of job bone that to happen that also impacts the servicing of debt it impacts cost of living because people are paying outrageous interest rates on credit cards and loans and things like that seems to me that's the key and Thats whats going to open up.

Dylan Burzynski: The Ti today for new construction are essentially turnkey, if let's say.

Dylan Burzynski: Our tech type of tenant not so much of I'd say.

Dylan Burzynski: Larger.

Dylan Burzynski: Institutional or pharma type of company that you can still do a traditional deal there where you kind of split between the landlord and tenant.

Speaker Change: The next.

Speaker Change: Biotech Bull market, we hope, it's not as wild as the last one but one that you know.

Dylan Burzynski: But.

Dylan Burzynski: It is still.

Speaker Change: Measured and steady.

Dylan Burzynski: 50% higher than it was pre rocket ship years.

Speaker Change: But I think that's that's really the secret there and remember I think Pallas term comes up early 'twenty six and you can be assured that trumps going to replace them.

Dylan Burzynski: But as far as.

Dylan Burzynski: The demand is looking.

Speaker Change: Got it maybe.

Dylan Burzynski: Outside of the institution on Pharma company. We are demand is looking for turnkey space. That's what the market is providing.

Dylan Burzynski: That's.

Where.

Dylan Burzynski: We understand we need to be in.

Dylan Burzynski: <unk>, our economics accordingly.

Dylan Burzynski: We see that other concession consensus free round are definitely stabilizing I think.

Speaker Change: Yes, I think.

Speaker Change: We see strength in mission Bay, not so much in South San Francisco and mission Bay is driven biotech institutional and now artificial intelligence.

Dylan Burzynski: I think we're reaching the bottom of the fundamental collapse, but.

Dylan Burzynski: Yeah.

Dylan Burzynski: We will see as we report in the next few quarters.

Speaker Change: San Diego has been an overall good market because it's a great place to live in.

Speaker Change: That's helpful. And then maybe just on the disposition side I know you guys talked a little bit about sort of the buyer profile of the <unk> dispositions, but as you guys are sort of continuing to bring assets to market. I mean are you seeing institutional real estate firms come back in and kick the tires in terms of deploying cash.

Speaker Change: It's a much more affordable the Bay area is still has a it's an enormous span of distance and still the highest cost of living.

Speaker Change: In the U S as far as biotech markets by and large and I think Boston remains very very steady at least the heart of Cambridge and the Submarkets I think Peter went through.

<unk> sector or is it still largely one.

Speaker Change: One off family office type money or your your owner users that are mostly in bidding tents today.

Speaker Change: Some of the leasing there so I think.

Speaker Change: The only sore thumb I would say a south San Francisco again kind of a.

Speaker Change: So we haven't had a lot for sale on the institutional quality side.

Speaker Change: Really.

Speaker Change: We had a nice sale last quarter, the Fred Hutchinson Cancer Research Center Institute better user sale.

Speaker Change: Kind of a reckless oversupply there by people, who really didn't know what they were doing and then south San Francisco also suffers from being primarily a biotech market. So you've got those two things at work that really hurt it compared to say mission Bay, which is more institutionally based.

Speaker Change: We haven't tested that market, yet to tell you whether or not there.

Speaker Change: The strength of demand.

Speaker Change: But we do.

Speaker Change: Meet with institutions that are current partners and folks that want to be partners on a fairly regular basis and we keep getting.

Speaker Change: And now.

Speaker Change: AI based so that's kind of a little bit of the lay of the land.

Speaker Change: And then just sorry last one to clarify you mentioned you feel pretty good about the lease up of the development.

Speaker Change: Assurances that life sciences, something that they want to be in at some level and they want to be in it with Alexandria that that's probably I think.

Speaker Change: The 'twenty five 'twenty six maybe 27 of the question and starts but would there be factors that cause you to pause any of the developments in either 25 or 26 push it out into 'twenty no.

Speaker Change: We had a meeting a couple of us at a meeting in San Francisco recently, where one of our partners, which is a very large institution.

No I think what Mark published in the in the press the sub in press release is our best guess of how we think our allocation of capital should match. The demand. We're seeing so I don't expect any material changes certainly to 25% or 26 post. This this print.

Speaker Change: Hey look.

Speaker Change: We've invested in a lot of different folks and one of the lessons. We've learned is we need to focus.

Speaker Change: Our life science investors with you that that was a great meeting a great takeaway, we've been telling people that.

Speaker Change: But I think it's.

Speaker Change: It all ties together with FY.

Speaker Change: Thank you.

Speaker Change: What I talked about in my commentary about supply like these zombie buildings right.

Speaker Change: Yes. Thank you.

Speaker Change: The next question is from Tom Catherwood with <unk>. Please go ahead.

Speaker Change: 40% of the inventory and greater Boston, probably won't lease because it's not good quality there.

Tom Catherwood: Thank you and good afternoon, everybody I mean, sticking with leasing 449, Illinois, and Madonna's previous space at Tech square that.

Speaker Change: Sponsor has no experience.

Speaker Change: And it's in the wrong location.

Speaker Change: Two questions on that first Mark I think you mentioned 136000 square feet.

Speaker Change: And unfortunately, some institutional investors were so hyped up about life Science day.

Speaker Change: <unk> signed are negotiating leases was that those two buildings or was the four buildings with vacancy and then the second part is on four nine Illinois exposure so that that's.

Speaker Change: Funded some of that stuff and they've learned their lesson.

Speaker Change: So.

Speaker Change: I think youre going to see life science, and a lot of institutional real estate portfolios from here on out, but it's going to be with us or it's going to be with somebody else that at least has scale and experience.

Thats Tech square.

Speaker Change: But I don't want to get any more granular than that.

Speaker Change: The 490, <unk>, Illinois remember that's a building that sits right next to it has got a water view.

Speaker Change: A couple of others, but all.

Speaker Change: All of these other <unk>.

Speaker Change: Fly by night I want to be developers that are trying to get in this space are just going to fail.

Speaker Change: Next UCSF and right next to the Chase Center.

Speaker Change: And one could imagine.

Speaker Change: <unk>.

Speaker Change: And some of these institutions, Tom money will be lost but they are not going to be soured on it because they know it's a good business. They know there's a use case for life science real estate and they know we're the ones that they need to be partnered with.

Speaker Change: The biotech company, they're exited but the demand for that building in South City is really I don't mean south city.

Speaker Change: Mission Bay is heavily institutional and AI related at the moment. So I think we have a fairly good optimism on that.

Yes.

Peter: That's helpful commentary Peter appreciate it thanks.

Speaker Change: And the location is superb.

Speaker Change: The next question is from Tayo Okusanya from Deutsche Bank. Please go ahead.

Speaker Change: Got it and is that building competing against I mean, thats tenants are looking at is it competing against new construction is it competing against second Gen space and kind of how does it stack up across I'll, let dependent it depends upon who depends on who the tenant is.

Tayo Okusanya: Hi, yes, good afternoon, everyone.

Speaker Change: Just wanted to focus on.

Tayo Okusanya: Some of the capital allocation as well as cost savings plan.

Tayo Okusanya: Wondering if you could just help us walk through the $32 million in expected savings at the midpoint.

Speaker Change: You know smaller tenants, probably prefer existing space bigger tenants, probably prefer new space, but its so dependent on you can't generalize it so tenant dependent there Tom.

Tayo Okusanya: Quickly that could potentially happen.

Tayo Okusanya: And then also just taking a look at the stock today is trading below.

Speaker Change: Got it I appreciate that Joel and then last one for me.

Tayo Okusanya: Will you be able to do $200 million of buybacks. So just kind of curious.

Speaker Change: Ali.

Speaker Change: I want to go back to your comments about M&A, specifically the idea that the deal activity provides investors with a liquidity event and can lead to reinvestment back in the life science companies.

Speaker Change: How are you kind of think about the remaining 300 million of buybacks and how quickly under what circumstances that can happen. Thank you Yep Yep. Thanks for your question Mark you want to maybe address those.

Speaker Change: Is an increase in M&A alone are enough to boost early stage in biotech investment or do we also need kind of sustained rebound in IPO activity to get there.

Speaker Change: Yes, I can address the first one.

Speaker Change: And a little problems here in the second one but on the first one on the G&A I think the fourth quarter had actually some pretty significant savings relative to the third quarter.

Speaker Change: Yes, I think it is a holistic mix.

Speaker Change: In fact 24 in total.

Speaker Change:

Speaker Change: Across the board, but I would say, we see that historically that there's always this balance between IPO activity and pharma licensing deals and M&A right. It's all about where we're at capital coming from and is there a source of capital and so I think we could see a really strong year for M&A.

Speaker Change: Compared to 23 actually had pretty significant savings if you strip out.

Speaker Change: The acceleration of stock expense from last year. It was still in time talking about 'twenty three it was an $11 million.

Speaker Change: Out of savings to G&A and 24 versus 23. So obviously our guidance assumes that that that trend will accelerate into 25 were expecting 30 plus million dollars of a.

Speaker Change: And continued very healthy investment in private biotech company without the IPO market opening I don't think theyre mutually exclusive.

Speaker Change: A decline, but I think the fourth quarter should be encouraging to give you a sense for what we can accomplish.

Speaker Change: M&A at the end of the day is really the lifeblood of this industry. If you look at pharma.

Speaker Change: You get that run rate that actually.

Speaker Change: Across their current revenues around two thirds of that came from acquired products right. They really rest on the innovation coming from.

Speaker Change: Right around the run rate.

This implied in our guidance for 2025, so I think the fourth quarter is sort.

Speaker Change: Good good evidence that we can we can accomplish what we own.

Speaker Change: And public Biotechs and I think your investors get those returns and are going to put them to work.

Speaker Change: Expect to in terms of G&A savings headed into 'twenty five.

Speaker Change: So I think we.

Speaker Change: And Mark just comment globally on the buyback where we are.

Speaker Change: We will see what the IPO market does.

Speaker Change: Certainly.

Speaker Change: <unk> market opening up as another Avenue for capital, but that also doesn't mean, it's the right choice striping a public company is hard and so I think as we look to M&A, it's very positive overall and it continues to be very significant drivers for pharma looking for that innovation.

Speaker Change: Oh right, yes, so yes, we definitely refer back to Joe's earlier comments we've agreed.

Speaker Change: Got back $200 million.

Speaker Change: 50 last quarter 150 in January.

Speaker Change: Our guidance assumes zero to 200.

Speaker Change: Got it I appreciate your thoughts thanks, everyone.

Speaker Change: So we've already.

Speaker Change: The loan through a 150 of that this year and our 25 guidance.

Tom Catherwood: Thanks, Tom.

Speaker Change: Next question is from Dylan Burzynski with Green Street. Please go ahead.

Speaker Change: So I think stay tuned as Joel said, we will continue to evaluate it but as we stand here today, that's what we've got in guidance is really not much more but.

Speaker Change: We will continue to monitor that as market conditions change.

Speaker Change: Thank you.

Dylan Burzynski: On the supply pipeline and drop off in demand. So I'm, just curious sort of as you think about the current environment and expectations moving forward I mean is it your sir.

Speaker Change: Yes. Thank you.

The next question is from Jim Cameron with Evercore. Please go ahead.

Dylan Burzynski: <unk> that.

Dylan Burzynski: Ti and free rent has sort of stabilized at these higher levels and sort of expectations for that over the next 12 months.

Jim Cameron: Good afternoon, and thank you is there any thematic content to be extracted regarding the lease up of previously vacant space and I'm, suggesting that are these tenants that otherwise might have gone into some of your new developments that are doing sort of tightening over time, you have releases or if theres any I'm curious because it's been picking up quarter over quarter that youre leasing up vacant space.

Dylan Burzynski: Peter.

Dylan Burzynski: Yes.

The Ti today for new construction are essentially termed.

Dylan Burzynski: Let's say biotech type of tenant not so much of I'd say.

Jim Cameron: Well again remember Jim.

Larger.

Jim Cameron: With 800 tenants and.

Dylan Burzynski: Institutional or pharma Tech company that you can still do a traditional deal there where you kind of split between the landlord and tenant.

Jim Cameron: A pretty big stable in each of the core cluster markets, we have pretty good insight.

Jim Cameron: Two.

Jim Cameron: The different sectors and what their needs are so I would say it is it's very case specific and really hard to generalize.

Dylan Burzynski: But it is still.

Dylan Burzynski: 50% higher than it was pre rocket ship years.

Dylan Burzynski:

Speaker Change: Fair enough. Thanks, and then finally I'm.

Dylan Burzynski: But as far as the.

Dylan Burzynski: The demand is looking.

Speaker Change: Looking at page 40, you look at your probable retained cash over the next three years.

Dylan Burzynski: Outside of the institutional and pharma company, where demand is looking for turnkey space. That's what the market is providing.

Speaker Change: Compare that to your remaining commitment to fund new development.

Speaker Change: At least the near term.

Dylan Burzynski: <unk>.

Dylan Burzynski: Where we understand we need to be in order.

Speaker Change: We'll assume that maybe 25 sort of a peak year in terms of absolute dollar dispositions.

Dylan Burzynski: Adjusting our economics accordingly.

Speaker Change: Yes, I think Mark you can comment on that.

Dylan Burzynski: We see that other concerted consensus free round are definitely stabilizing I think.

Mark: Yes, well I would say this we've seen construction.

Dylan Burzynski: I think we're reaching the bottom of the fundamental collapse, but.

Mark: The construction dollars come down the last couple of years.

Dylan Burzynski: Yeah.

Mark: Right.

Dylan Burzynski: While we will see as we report.

Mark: The amount of deliveries has been outpacing the amount of projects that have been going in.

Dylan Burzynski: A few quarters.

Mark: <unk> got we got obviously got pretty good visibility here through the end of 'twenty, five and what that looks like.

Mark: But in 2006 is where it's.

Mark: It's a little far off to for us to kind of give you a sense for where construction dollars might be.

Mark: So I guess I guess stay tuned.

Mark: Alright I appreciate your time thank you.

Dylan Burzynski: <unk> sector or is it still largely one.

Jim Cameron: Yes, Thanks, Jim.

Speaker Change: The next question is from John Keller Husky with Wells Fargo. Please go ahead.

Dylan Burzynski: One off family office type money or your your owner users that are that are mostly in bidding tends today.

Jamie Feldman: Hi, This is Jamie Feldman with John.

Speaker Change: So we're very sorry to hear that the wildfires have had so much impact on your company.

Dylan Burzynski: So we haven't had a lot for sale on the institutional quality side.

Speaker Change: Entergy difficult impact on the team, but to that end I wanted to go back to your comments regarding the handling of them. When you started the call. So youre one of the largest commercial real estate landlords in California.

Dylan Burzynski: We had a nice sale last quarter, the Fred Hutchinson Cancer Research Center.

Dylan Burzynski: To better user sale.

Dylan Burzynski: We haven't tested that market yet.

Speaker Change: Are your initial thoughts on the long term impact to your business to owning commercial real estate in California.

Dylan Burzynski: You whether or not there.

Dylan Burzynski: That demand.

Dylan Burzynski: But we do.

Speaker Change: In terms of political changes any initiatives insurance costs I mean, what do you think the long term implications are here and also for.

Dylan Burzynski: Meet with institutions that are current partners and folks that want to be partners on a fairly regular basis and we keep getting.

Speaker Change: Incremental dollars are you leaning towards investing in California or away from investing in California as a result of all this.

Dylan Burzynski: Assurances that life sciences, something that they want to be in at some level and they want to be in it with Alexandria that that Friday.

Speaker Change: Yes, So let me frame it and then I'll ask Mark to come in I would refer you to the 10-K, which addresses a number of the points of your question.

Dylan Burzynski: We had a meeting a couple of us at a meeting in San Francisco recently, where one of our partners, which is a very large institution.

Speaker Change: But I think if you look at our portfolio.

Speaker Change: San Diego I think is in very good shape and doesn't have particularly a great exposure to.

Speaker Change: Hey look.

Speaker Change: We've invested in a lot of different folks and one of the lessons. We've learned is we need to focus.

Speaker Change: The the wildfires most of which start in.

Speaker Change: Our life science investors with you that that was a great meeting great takeaway, we've been telling people that.

Speaker Change: Hill country.

Speaker Change: South San Francisco I think the same is true there not not particularly exposed so I think overall the bulk of our assets are in really good shape.

But I think it's.

It all ties together with what.

Speaker Change: What I talked about in my commentary about supply like the zombie buildings right.

Speaker Change: Yeah.

Speaker Change: 40% of the inventory and greater Boston, probably won't lease because it's not good quality.

Speaker Change: I think it is possible that.

Speaker Change: Because of the lack of PREPA.

Speaker Change: Preparation, even though it was well known several days ahead of time that we're going to have a 100 mile an hour winds and.

Speaker Change: Sponsor has no experience.

Speaker Change: And it's in the wrong location.

Speaker Change: What that means during a very dry season.

Speaker Change: And unfortunately, some institutional investors were so hyped up about.

Speaker Change: I hope the electric here in California, rethink how they elect.

Speaker Change: About life science.

Speaker Change: Funded some of that stuff and they've learned their lesson.

Speaker Change: Local county, and state officials and think about.

Speaker Change: And so.

Speaker Change: I think youre going to see life science and a lot of institutional.

Speaker Change: The election here.

Speaker Change: Allstate portfolios from here on out, but it's going to be with us or it's going to be with somebody else that at least has scale and experience.

Speaker Change: Of the current mayor versus one that that lost I think he is going to come back Rick Rousseau.

Speaker Change: I have a choice of a political person all their lives versus someone who is a business person who operates real estate, who understood who headed the police commission. So I think.

Speaker Change: A couple of others, but all these other <unk>.

Speaker Change: Fly by night I want to be developers that are trying to get in this space are just going to fail.

Speaker Change: People are going to search for more.

Speaker Change: <unk>.

Speaker Change: And some of these institutional money will be lost but they're there.

Speaker Change: Common sense practical leadership and I think that that is kind of I hope, where California is headed and not take on.

Speaker Change: They are not going to be soured on it because they know it's a good business. They know there is a use case for life science real estate and they know we're the ones that they needed to be partnered with.

Speaker Change: Kind of foolish policies.

Speaker Change: Lived in the Palisades for many years and I was evacuated twice during the time I lived there and finally just gave up in fact in my house overlook the reservoir that was.

That's helpful commentary Peter really appreciate it thanks.

Speaker Change: The next question is from Tayo Okusanya from Deutsche Bank. Please go ahead.

Speaker Change: Dry and during the days when I was there I never sought dry so how could a reservoir and a high fire area B dry during the fire season makes no sense, but anyway. So I think we're well protected in California, but mark do you want to comment anything further.

Tayo Okusanya: Hi, Yes. Good afternoon, everyone just wanted to focus on.

Tayo Okusanya: Some of the capital allocation and as well as cost savings plan.

Speaker Change: Wondering if you could just help us walk through that.

Speaker Change: 2 million in expected savings at the midpoint, how quickly that could potentially happen.

Speaker Change: Yes, no just to say that obviously in California, we've got.

Speaker Change: And then also just taking a look at the stock today is trading below.

Speaker Change: We've got a concentration of assets, mostly in San Francisco, and then and then San Diego San Diego's the region.

Speaker Change: Where you did the $200 million of buybacks.

Speaker Change: Probably got more exposure there to wildfire.

Speaker Change: Curious, how you kind of think about the remaining $300 million of buybacks and how quickly under what circumstances that can happen. Thank you Yep Yep. Thanks for your question Mark you want to maybe address those.

Speaker Change: Obviously really unfortunate what's happened here in Los Angeles, but I can tell you that the.

Speaker Change: The company has taken.

Speaker Change: <unk> resilience across the portfolio very seriously it's been something that we've adopted really as part of our.

Speaker Change: Yes, I can address the first one.

Speaker Change: And a little problems here in the second one but on the first one on the G&A I think the fourth quarter had actually some pretty significant savings relative to the third quarter.

Speaker Change: As part of the design into our buildings as well as operationally doing what we can to harden our facilities and put our put ourselves and our tenants and their science in the best position.

Speaker Change: And in fact 24 in total.

Speaker Change: To deal with a potential buyer.

Speaker Change: Compared to 23 actually had pretty significant savings if you strip out.

Speaker Change: Okay. Thank you for that color and I guess, just if you think about some of the policy initiatives that are even on the table and I know, it's very early I mean is there anything that you think could have a longer term impact on operating expenses or your appetite to be in California, and then similarly on the insurance front.

Speaker Change: The acceleration of stock expense from last year.

Speaker Change: I'm talking about 'twenty three it was an $11 million.

Speaker Change: Amount of savings to G&A and 24 versus 23, so obviously our guidance assumes that that that trend will accelerate into 25, we're expecting about 30 plus million.

Speaker Change: Well I think you have to remember two of the three major clusters are in California. So.

Speaker Change: The decline, but I think the fourth quarter should be encouraging to give you a sense for what we can accomplish.

Speaker Change: This is an industry, that's a knowledge based industry and intellectual industry.

Speaker Change: You get that run rate that actually.

Speaker Change: Right around the run rate.

Speaker Change: And so you have to be where that tenant base or where.

Speaker Change: This implied in our guidance for 2025, so I think the fourth quarter is sort.

Speaker Change: That knowledge basis, because thats, where.

Speaker Change: Tenants cluster and hire from and as I say I think San Francisco our assets there in the nature of San Francisco is in good shape for a fires I think the same thing in San Diego.

Speaker Change: Good good evidence that we can we can accomplish what we.

Speaker Change: Expect to in terms of G&A savings headed into 'twenty five.

Speaker Change: And Mark just comment globally on the buyback where we are.

Speaker Change: Insurance is a big issue.

Speaker Change: The state has made it much harder for insurance companies to operate here and make a profit here and do right by.

Mark: Oh right, yes, so yes, we definitely refer back to Joe's earlier comments, we bought back $200 million.

Mark: 50 last quarter 150 in January.

Speaker Change: Their policy holders here and I would hope that.

Speaker Change: That changes whether by.

Mark: Our guidance.

Mark: <unk> assumes zero to 200.

Speaker Change: Whether by the ballot or whether by.

Mark: So we've already gone through 150 of that this year and our 25 guidance.

Speaker Change: Maybe current.

Speaker Change: People, just getting a lot smarter and acting more prudently but.

Mark: So I think stay tuned as Joel said, we will continue to evaluate it but as we stand here today, that's what we've got in guidance is really not much more but.

Speaker Change: We don't tend to exit, California, when it comes to our holdings in the Bay area of San Diego.

Mark: As Mark said, we've taken extraordinary.

Mark: We will continue to monitor that as market conditions change.

Mark: Steps from or whether it would be fire.

Speaker Change: Thank you.

Mark: Yes. Thank you.

Water any kinds of other <unk>.

Speaker Change: The next question is from Jim Cameron with Evercore. Please go ahead.

Mark: Natural disaster hazards earthquakes, as well and I think our insurances, well insured and I think we've done a really good job of risk management, and we report to our board quarterly on that issue.

Jim Cameron: Good afternoon, and thank you is there any thematic content to be extracted regarding lease up of previously vacant space and I'm, suggesting that are these tenants that otherwise might have gone into some of your new developments and are doing sort of tightening over time you have releases.

Speaker Change: Okay. Thank you for your thoughts on this I know, it's a sensitive topic and our thoughts are with with your team.

Jim Cameron: If theres any I'm curious because it's been picking up quarter over quarter that youre leasing up vacant space.

Speaker Change: Yes, it's amazing number of people who've been dislocated. Unfortunately, thank you Jamie very much.

Jim Cameron: Well again remember Jim.

With 800 tenants and.

Speaker Change: The last question today is from Michael Griffin with Citi. Please go ahead.

Jim Cameron: A pretty big stable in each of the core cluster markets, we have pretty good insight into.

Michael Griffin: Great. Thanks.

Maybe going back to some of your comments on the VC funding environment and capital flowing some more established firms with with marketed product I realized after a funding round.

Jim Cameron: The different sectors and what their needs are so I would say it is.

Jim Cameron: Very case specific and really hard to generalize.

Michael Griffin: These type of tenants might expand their space, but you need to see a greater increase in capital flows to the more startup type tenants that could go from 5000 to 50000 square feet in order to see the cadence of leasing pickup.

Speaker Change: Fair enough. Thanks, and then finally.

Speaker Change: Looking at page 40, and you look at your probable retained cash over the next three years.

Speaker Change: With that to your remaining commitment to fund new development.

Speaker Change: The near term.

Speaker Change: Visuals, and maybe 25 sort of a peak year in terms of absolute dollar dispositions.

Michael Griffin: Yes.

Speaker Change: The previous question when that came up you have to keep it in context of what proportion of our overall.

Speaker Change: Yes, I think Mark you can comment on that.

Speaker Change: Yes.

Speaker Change: I would say this we've seen construction.

Speaker Change: <unk> is coming from that that portion for 9% of our overall IRR comes from private biotech.

Speaker Change: The construction dollars come down the last couple of years.

Speaker Change: Right.

Speaker Change: So while certainly that contingent is important and as a driver.

Speaker Change: The amount of deliveries has been outpacing the amount of projects that have been going in.

Speaker Change: Lease up right, it's not it's a.

Speaker Change: <unk> got we got obviously got pretty good visibility here through the end of 'twenty five on what that looks like.

Speaker Change: Reflective of our entire portfolio right, we've really built a very diverse set of.

Speaker Change: But in 2006.

Speaker Change: A little far off to Preston.

Tenants to help enable Brian kind of broad demand as the market conditions change.

Speaker Change: Kind of give you a sense for where construction dollars might be.

Speaker Change: So I guess I guess stay tuned.

Speaker Change: And I would say from a funding perspective.

Speaker Change: Alright I appreciate your time thank you.

Speaker Change: Has come down off the peak of 21, and we're looking at I would say a pretty strong funding environment going into 25. There is a lot of dry capital that venture investors have on hand to deploy.

Jim Cameron: Yes, Thanks, Jim.

Speaker Change: The next question is from John <unk> with Wells Fargo. Please go ahead.

Jamie Feldman: Hi, This is Jamie Feldman with John.

Jamie Feldman: Joe we're very sorry to hear that the wildfires have had so much impact on your company.

Speaker Change: So it remains to be seen throughout the year, how that evolves as Joel mentioned there are still a lot of macro factors that are dampening great activity and just an EMR risk off environment.

Jamie Feldman: So just difficult impact in the team, but to that end I wanted to go back to your comments regarding the handling of them. When you started the call. So youre one of the largest commercial real estate landlords in California what are.

Speaker Change: Certainly tracking it closely and we'll provide an update at that time.

Speaker Change: Are your initial thoughts on the long term impact to your business to owning commercial real estate in California.

Speaker Change: Thanks.

Speaker Change: That's helpful. And then just maybe one on sort of the transaction market and activity. There you called out kind of expectations for cap rates at your investor day or below to mid sevens, but given the move we've seen in the 10 year and I guess.

Speaker Change: In terms of political changes any initiatives insurance costs I mean, what do you think the long term implications are here and also for.

Speaker Change: Incremental dollars are you leaning towards investing in California or away from investing in California as a result of all of this.

Speaker Change: It's anybody's guess, whether or not the new administrations policies will be inflationary or are you taking into account if yields your return hurdles might be higher for prospective buyers given the current interest rate environment.

Speaker Change: Yes, So let me frame it and then I'll ask mark to come in and I would refer you to the 10-K, which addresses a number of the points of your question.

Speaker Change: But I think if you look at our portfolio.

Speaker Change: Yes, Peter.

Speaker Change: San Diego I think is in very good shape and doesn't have particularly a great exposure to.

Speaker Change: Yes, yes, we have.

Speaker Change: I think we've taken into account, what we have to sell and the quality of it.

The the wildfires most of which start in.

Speaker Change: And then just the average yet.

Hill country.

Speaker Change: South San Francisco I think the same is true there not not particularly exposed so I think overall the bulk of our assets are in really good shape.

Speaker Change: To give you the numbers we gave you at the Investor day So.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Comfortable at this point that we can.

Speaker Change: Achieve those numbers.

Speaker Change: Yeah.

Speaker Change: Great. That's it for me thanks for the time.

I think it is possible that.

Speaker Change: Thank you.

Speaker Change: Because of the lack of PREPA.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Joel Marcus for any closing remarks.

Speaker Change: Preparation, even though it was well known several days ahead of time that we're going to have a 100 mile an hour winds and what that means during a very dry season.

Speaker Change: Just thank you everybody and we'll look forward to talking to you on the first quarter call. Thank you.

Speaker Change: I hope the electric here in California, rethink how they elect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Local county, and state officials and think about.

Speaker Change: The election here.

Speaker Change: Of the current mayor versus one that that lost I think he is going to come back Rick Rousseau.

Speaker Change: Think people are going to search for more.

Speaker Change: Common sense practical leadership and I think that that is kind of I hope, where California is headed and not take on.

Speaker Change: Kind of foolish policies.

Speaker Change: Lived in the Palisades for many years and I was evacuated twice during the time I lived there and finally just gave up in fact in my house overlook the reservoir that was.

Speaker Change: Dry and during the days when I was there I never saw it dry so how could a reservoir and a high fire area B dry during the fire season makes no sense, but anyway. So I think we're well protected in California, but mark do you want to comment anything further.

Speaker Change: Yes, no just to say that obviously in California, we've got.

Speaker Change: Got it concentration of assets, mostly in San Francisco, and then and then San Diego San Diego's the region.

Speaker Change: Probably got more exposure there to wildfire.

Speaker Change: Obviously really unfortunate what's happened here in Los Angeles, but I can tell you that.

Speaker Change: The company has taken climb.

Speaker Change: Climate resilience across the portfolio very seriously it's been something that we've adopted really as part of that.

Speaker Change: Yes.

Okay. Thank you for that color and I guess, just if you think about some of the policy initiatives that are even on the table and I know, it's very early I mean is there anything that you think could have a longer term impact on operating expenses or your appetite to be in California, and then similarly on the insurance front.

Speaker Change: Well I think you have to remember two of the three major clusters are in California. So.

Speaker Change: This is an industry, that's a knowledge based industry and intellectual industry.

Speaker Change: And so you have to be where that tenant base.

Speaker Change: Where that knowledge basis, because thats, where.

Tenants cluster and hire from and as I say I think San Francisco our assets there in the nature of San Francisco is in good shape for a fires I think same thing in San Diego.

Speaker Change: I think insurance is a big issue.

Speaker Change: The state has made it much harder for insurance companies to operate here and make a profit here and do right by.

Speaker Change: Their policy holders here and I would hope that.

Speaker Change: That changes whether by.

Speaker Change: Whether by the ballot or whether by.

Speaker Change: Maybe current.

Speaker Change: People, just getting a lot smarter and acting more prudently but.

Speaker Change: We don't tend to exit, California, when it comes to our holdings in the Bay area of San Diego.

Speaker Change: As Mark said, we've taken extraordinary.

Speaker Change: Steps from our whether it be fire.

Speaker Change: Water any kinds of other <unk>.

Speaker Change: Natural disaster hazards earthquakes, as well and I think our insurances, well insured and I think we've done a really good job of risk management, and we report to our board quarterly on that issue.

Speaker Change: Okay. Thank you for your thoughts on this I know, it's a sensitive topic and our thoughts are with with your team.

Yes, it's amazing number of people who've been dislocated. Unfortunately, thank you Jamie very much.

Speaker Change: The last question today is from Michael Griffin with Citi. Please go ahead.

Michael Griffin: Great. Thanks.

Michael Griffin: Maybe going back to some of your comments on the VC funding environment and capital flowing to more established firms with marketed product I realized after a funding round.

Michael Griffin: These type of tenants might expand their space, but do you need to see a greater increase in capital flows to the more startup type tenant that could go from 5000 50000 square feet in order to see the cadence of leasing pickup.

Michael Griffin: Yes.

Michael Griffin: The previous question when that came out you have to keep it in context of what proportion of our overall.

Michael Griffin: <unk> is coming from that that portions of 9% of our overall <unk> come.

Michael Griffin: <unk> private biotech.

Michael Griffin: So while certainly that contingent is important and as a driver.

Michael Griffin: Lisa.

Michael Griffin: It's not.

Speaker Change: Reflective of our entire portfolio right, we've really built a very diverse SaaS.

Speaker Change: Tenants to help enable Brian kind of broad demand as the market conditions change.

Speaker Change: And I would say from a funding perspective, you know it has come down off the peak of 21, and we're looking at I would say a pretty strong funding environment going into 25. There is a lot of dry capital that venture investors have on hand to deploy.

Speaker Change: So it remains to be seen throughout the year, how that evolves as Joe mentioned, there are still a lot of macro factors that are dampening great activity and just an EMR risk off environment.

Speaker Change: Certainly tracking it closely and we'll provide an update of the year.

Speaker Change: Thanks, Doug.

Speaker Change: That's helpful. And then just maybe one on sort of the transaction market and activity there.

Speaker Change: Called out kind of expectations for cap rates at your Investor day or below to mid sevens, but given the move we've seen in the 10 year and I guess.

Speaker Change: It's anybody's guess, whether or not the new administrations policies will be inflationary or are you taking into account yield your return hurdles might be higher for prospective buyers given the current interest rate environment.

Speaker Change: Yes, Peter.

Speaker Change: Yes, yes, we have.

Speaker Change: I think we've taken into account, what we have to sell and the quality of it.

Speaker Change: And then just the average yet.

Speaker Change: To give you the numbers, we gave you at Investor day So.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Comfortable at this point that we can.

Speaker Change: Achieve those numbers.

Speaker Change: Great. That's it for me thanks for the time.

Speaker Change: Yes. Thank you.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Joel Marcus for any closing remarks.

Speaker Change: Just thank you everybody and we'll look forward to talking to you on the first quarter call. Thank you.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

[music].

Q4 2024 Alexandria Real Estate Equities Inc Earnings Call

Request a DemoDemo

ARE

Alexandria Real Estate Equities

Earnings