Q2 2025 Alexandria Real Estate Equities Inc Earnings Call

July 22, 2025

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

Thank you and good afternoon, everyone.

Speaker Change: 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.

Speaker Change: Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements.

Speaker Change: And in the company's periodic reports filed with the Securities and Exchange Commission and now I'd like to turn the call over to Joel Marcus Executive Chairman and founder of Alexandria. Please go ahead Joel.

Speaker Change: Thank you Paula and welcome everybody to our second quarter earnings call with me today are Holly Pieter and Mark.

Speaker Change: I'd like to start with a quote from Brad Stevens, who coached at Butler and the Celtics as most of you know.

Speaker Change: There is no more important quality and striving for excellence and to true grip.

Speaker Change: Ferocious determination, demonstrating resilience hard work and passion clear direction and mission.

Speaker Change: So aptly describes the Alexandria team in pursuit.

Speaker Change: Provide the best environments for the best scientific minds, which in turn enhance human health and extend the quality of life for.

Speaker Change: <unk> evidence on this planet a profound. Thank you did this one of a kind team for an impactful second quarter disciplined people disciplined thought disciplined action built to last.

Speaker Change: As I opened my first quarter comments.

Speaker Change: Come in that area has been and will continue to be one of the most consequential rights in the sector's history, Steve jobs. Once said a brand is simply trust.

Speaker Change: The recent execution of the largest lease in the company's history.

Speaker Change: As a testament to that and our brand trust, our unique product quality and value to the client Trust is the lifeblood of the Alexandria, one of a kind brand. This 466000 square foot lease represents a seminal moment in the history of Alexandria and demonstrates the.

Speaker Change: <unk> of our sector showing long term commitment long term lease with a high credit tenant.

Speaker Change: Couple of thoughts on the second quarter before I turn it over to Holly then Peter Denmark, Alexandria continues its solid performance across a wide variety of financial and operating metrics in the face of macro and industry headwinds a key focal point for the company is the 2020.

Speaker Change: Seven and beyond stabilization pipeline.

Speaker Change: We're pleased to report that we're making solid progress on 311 Arsenal Sylvan Road asset $14 50, Owens $2 69, East Grand and 701 Dexter.

Speaker Change: Another key focal point as asset sales and Peter will talk about this in our recycling strategy, we have about $1 1 billion.

Speaker Change: To add to our executable sales pipeline for the next two quarters and we feel that it is doable given we completed $1 1 billion of sales in the fourth quarter of 2024.

Speaker Change: So in today's current environment, what are we most focused on beside the operating and financial performance.

Speaker Change: Over the next several quarters, we expect the fed to finally, lower interest rates, which is desperately needed for the capital markets of our industry, we have not seen.

Good day and welcome to the Alexandria real estate Equity. Second quarter, 2025 conference call.

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Speaker Change: Or heard any major if you turn for a moment to the FDA any major issues from our tenants regarding undue delays.

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

Speaker Change: But we're monitoring this item very closely in fact several of our team members on.

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Speaker Change: On July 17th attended a meeting with Commissioner Marty.

Speaker Change: I would now like to turn the conference over to Paula Schwarz with investor relations. Please go ahead.

Speaker Change: But kerry and we're here essentially elucidated. His 100 day agenda that was focused on the impact of better food for children as we know revamping and rethinking how to modernize the FDA to move more efficiently and nimbly and that is something many of us in <unk>.

Thank you 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

Speaker Change: The industry have certainly advocated for a long period of time Macquarrie thoughts were succinct indirect the FDA is a national treasure. The FDA is strong we will meet our targets, we will add more AI efficiencies, we will listen and talk to people externally.

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

Speaker Change: And now I'd like to turn the call over to Joel Marcus executive chairman and founder of Alexandria. Please go ahead, Joel.

Speaker Change: We'll make sure the staff has what they need we have a phenomenal talent coming in which was just announced.

Speaker Change: The appointment of George Tim Marsh to beat the director of the center for drug evaluation and research.

Speaker Change: And we will be making meaning the FDA exciting new amount announcements on talent.

Speaker Change: Who are motivated by the incredible tradition to the FDA, So thats very very helpful.

Speaker Change: Thinking when it comes to tariffs.

Joel Marcus: Uh, thank you Paul and welcome everybody to our second quarter earnings call with me today or Haley Peter and Mark. And I'd like to start with a quote, from be Brad Stevens who coached at Butler. And the Celtics as most of, you know, uh, there is no more important quality in striving for excellence than 2. True Grit, a ferocious determination demonstrating resilience hard work and passion Clare Direction in Mission this. So aptly describes the Alexandria team in pursuit to provide the best environments for the best scientific Minds which in turn enhance human health and extend the quality of life.

Speaker Change: In theory tariffs should not have huge impact on the innovation biopharma ecosystem, mostly because of the low cost of goods sold relative to other industries.

Speaker Change: Like hardcore manufacturing, however, commonly used transfer pricing schemes may more heavily exposed to large pharma companies to tariffs tariff impacts on biopharma may be muted as many levers exists to reduce the impacts.

Joel Marcus: For inhabitants on this planet. A profound thank you to this 1 of A Kind team for an impactful. Second quarter disciplined people disciplined thought disciplined action built to last

Speaker Change: Pharma could end up being exempt IP re shoring trading companies as manufacturing intermediaries of course, moving more manufacturing back to the U S and increased drug pricing.

Joel Marcus: As I opened my first quarter comments, I I comment that are has been and will continue to be 1 of the most consequential REITs in the sector's History. Steve Jobs. Once said a brand is simply Trust.

Joel Marcus: The recent execution of the largest lease in the company's history.

Speaker Change: Issues when it comes to.

Joel Marcus: Is a testament to that and our brand trust our unique product quality and value to the client.

Speaker Change: So we've talked about the FDA a moment tariffs a moment when it comes to drug pricing and most favored nations. The so called MFN. This isn't new was introduced during the first Trump term, but ultimately was rescinded by Biden.

Speaker Change: When he came to office following legal challenges.

Speaker Change: The impact appears constrained based on currently available.

Joel Marcus: Trust is the lifeblood of the Alexandria 1 of A Kind brand. This 466,000 square foot. Lease represents a seminal moment in the history of Alexandria and demonstrates. The resilience of our sector showing long-term commitment. Long-term lease with a high credit tenant.

Speaker Change: Details, we know that some.

Speaker Change: Manufacturers are moving direct sales to <unk> and this would provide commercial tailwind, especially in certain segments, such as obesity drugs and the like key details remain unclear and we know there is negotiations going on being we believe chaired by Dr. Ross.

Speaker Change: CMS and the market reaction so far suggests limited concern.

Speaker Change: I think when we think about.

Speaker Change: This summary, there.

Speaker Change: There are reasons to be optimistic fears of spending cuts and changes at HHS, maybe substantially overblown onshoring of R&D can provide a tailwind for life science sector public markets move in cycles macro events will eventually dissipate and the markets will stabilize and M&A consol.

Speaker Change: <unk> is.

Holly Pieter: Instrumental for a healthy biopharma ecosystem and with that let me turn it over to Holly.

Holly Pieter: Thank you Joe.

Holly Pieter: Good afternoon, everyone Pelikan <unk> of lifestyle from capital market.

Speaker Change: Call it progress on 311 Arsenal, silven Road asset. 1450 Owens 269 East Grand and 7001 Dexter.

Speaker Change: We will provide an update on the strength of our life science industry, an industry that remains critical to the health and safety of the U S.

Another key focal point is asset sales, and Peter will talk about this in our recycling strategy.

Joel Marcus: We have about 1.1 billion.

Speaker Change: To add to our executable sales pipeline for the next 2 quarters, and we feel that it is doable. Given we completed 1.1 billion of sales in the fourth quarter of 2024,

Joel Marcus: So in today's current environment, what are we most focused on beside the operating and financial performance?

Speaker Change: Given by our Riverwalk and got an effort to address from 90% occupancy.

Speaker Change: <unk> remained I'm sure Luke.

Speaker Change: Overall once again the leasing stats, we are about to walk through reflect the importance.

Speaker Change: <unk>.

Speaker Change: Which drove over 80% of our Q2 leasing by volume.

Speaker Change: Starting with private biotechnology companies, which represented 30% of overall leasing for the quarter.

Speaker Change: Life Science venture funding remained steady with nearly 22 billion deployed in the first half of the year.

Speaker Change: Financings were predominantly later stage as seed stage financing took the back burner to burner de risk technology closer are already in human studies.

Speaker Change: The result of fewer albeit larger financings as investors focus on select their minds more certain opportunities.

Speaker Change: Cohort of companies remains highly disciplined with respect to leasing decision.

Speaker Change: However, the companies that are being funded and are expanding our extremely high quality and form a solid foundation for future growth.

Speaker Change: Moving on to publicly traded biotechnology companies.

Speaker Change: This segment represented just under one fourth of our leasing for the quarter.

Speaker Change: Of which over 95% consisted of new leases.

Speaker Change: This cohort continues to be dominated by half and half not with select companies with high quality data and teams driving leasing and demands.

Speaker Change: A broader picture for public biotech equities remains tough with not a single biotech IPO in the second quarter.

Speaker Change: Given the broader risk off environment, we are not likely to see the biotech publicly public equity markets opened meaningfully until interest rates subside.

Speaker Change: Notably biomedical institutions represented 22% of leasing this quarter.

Speaker Change: Leasing was driven by a significant new lease from a well endowed investment grade public institution, demonstrating that lapsed base remains critical to institutions operation.

Speaker Change: Importantly, the budget for the NIH remains the same as last year's level under a continuing resolution and while the white house's proposed significant budget cuts there remains substantial bipartisan support to the current or at least close to current levels of funding.

Speaker Change: For context, approximately 80% of NIH funding is for external institution.

Speaker Change: <unk> work and supporting local economies in all 50 states.

Speaker Change: One additional point of clarification.

Speaker Change: NIH funding is one of several funding sources for biomedical institutions few if any of our private and public biotech tenants rely on NIH funding.

Speaker Change: Last large pharma represented 5% of leasing for the quarter not including our recently announced long term lease with a top 20 pharma for 467000 square feet on our campus Pointe Mega campus in San Diego.

Speaker Change: At the beginning of the third quarter.

Speaker Change: Pharma generally remains buffered from short term volatility given significant cash flows and our long term strategic outlook on generating innovative medicine.

Speaker Change: Their success ultimately comes down to talent and accessing the best innovation.

Speaker Change: At the recently announced lease reflects positioning their R&D and in Alexandria Mega campus is highly strategic to these calls.

Speaker Change: To round out industry stats to tailwind we are monitoring to the second half of the year.

Speaker Change: First is an acceleration of M&A with acquisitions through the first half of this year eclipsing all of M&A in 2024.

M&A is a significant positive for the entire biotech industry recycling and incentivize and capital back into new companies.

Speaker Change: The virtuous cycle, we have seen occur over and over and over again exam.

Speaker Change: Examples include <unk> acquisition of a company called Captain and early clinical stage company developing novel mrna therapies for autoimmune diseases, such as severe lupus.

Speaker Change: Signaling that pharma is ready and willing to buy cutting edge science.

Speaker Change: Second is the abundance of biopharma licensing dollars flowing into private and public biotech.

Speaker Change: These are deals whereby large pharma licenses specific programs from smaller companies as opposed to a full fledged acquisition.

Speaker Change: In the first half of this year of $113 billion in Biopharma licensing deals were announced.

Speaker Change: Which compares to 187 billion for the full year 2024.

Speaker Change: This is an important dynamic to highlight because it enables smaller companies to access additional capital and pharma resources when venture our public equity capital becomes more dilutive or challenging to rate.

Speaker Change: Both the life science sector, and Alexandria remain resilient in the face of an uncertain macroeconomic environment.

Speaker Change: By retaining and securing high quality tenants today, we continue to lay the groundwork for long term growth.

Speaker Change: It will be underpinned by the robust biopharma ecosystem, they're tremendous ingenuity, we are seeing in science technology, and medicine, and the broader need to address the nine out of 10 diseases and conditions that don't have safe and effective treatments today.

Peter Denmark: That I will pass it over to Peter.

Peter Denmark: Thank you Holly I Hope you all saw our recent press releases and I'll discuss the seminal multinational pharma lease set up that I want to first congratulate our team for their superb operational excellence and winning our first international billing building of the year Award for David <unk>.

Peter Denmark: <unk> 150000 square foot Premier Research and development building in the heart of our Alexandria Center for advanced technologies Mega campus in the research triangle. This.

Peter Denmark: This achievement highlights the quality of the workplaces, we deliver to our tenants and while our Mega campus platform is a strategically important strength. It's also important to recognize the high quality buildings that proliferate throughout the core of our asset base and life Science real estate, a flight to quality means of five <unk>.

Unknown Executive: I don't need most.

Operator: Listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead.

Unknown Executive: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two.

Alexander: Alexander yet.

Broader risk-off environment. We are not likely to see the biotech publicly public Equity markets, open meaningfully until interest rates subside.

Alexander: I'm going to discuss our development pipeline leasing and supply and provide an update on the progress of our value harvesting in asset recycling program.

Notably biomedical institutions represented 22% of leasing this quarter?

Unknown Executive: Please note, today's event is being recorded.

Paula Schwartz: I would now like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead. Thank you and good afternoon, everyone.

Alexander: In the first quarter, we delivered approximately 218000 square feet of 90% leased class, a plus laboratory space and to our high barrier to entry Submarkets, which will contribute approximately $15 million in annual incremental net operating income.

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

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

Leasing was driven by a significant new lease from a well-endowed investment grade public institution demonstrating that lab space remains critical to institutions operations.

Unknown Executive: This conference call contains forward-looking statements within the meaning of the federal securities law. The company's actual results might differ materially from those projected in the forward-looking statement. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statement is contained in the company's periodic reports filed with the Securities and Exchange Commission.

Alexander: The initial weighted average stabilized deal for this quarter's deliveries was six 6%, which was driven by a 100 basis point improvement in yield at our one Alexandria square Mega campus in Torrey Pines.

Importantly, the budget for the NIH, Remains the Same as last year's levels under a continuing resolution and while the White House has proposed significant, budget cuts there, remains substantial by bipartisan support to Maine the current, or at least close to current levels of funding.

Joel Marcus: And now I'd like to turn the call over to Joel Marcus, Executive Chairman and Founder of Alexandria. Please go ahead, Joel. Thank you, Paul, and welcome, everybody, to our second quarter earnings call.

Operator: Now I'd like to turn the call over to Joel Marcus, Executive Chairman.

Now I'd like to turn the call over to Joel Marcus, Executive Chairman. Founder of Alexandria. Please go ahead, Joel.

Alexander: Which was the result of achieving higher rental rates than previously underwritten and a four seven.

Hallie Kuhn: Founder of Alexandria.

Operator: Please go ahead, Joel.

For context Approximately 80% of NIH funding is for external institutions funding work and supporting local economies in all 50 states.

Joel Marcus: Thank you, Paula. Welcome everybody to our second quarter earnings call. With me today are Hallie, Peter, and Marc. I'd like to start with a quote from Brad Stevens who coached at Butler and the Celtics. As most of you know, there is no more important quality in striving for excellence than true grit. A ferocious determination demonstrating resilience, hard work, and passion with clear direction and mission. This so aptly describes the Alexandria team in pursuit to provide the best environments for the best scientific minds, which in turn enhance human health and extend the quality of life for inhabitants on this planet. A profound thank you to this one-of-a-kind team for an impactful second quarter. Disciplined people, disciplined thought, disciplined action. Built to last.

1 additional point of clarification.

Alexander: 7% reduction in construction costs.

Joel Marcus: With me today are Hallie, Peter, and Marc, and I'd like to start with a quote from Brad Stevens, who coached at Butler and the Celtics, as most of you know. There is no more important quality in striving for excellence than true grit, a ferocious determination demonstrating resilience, hard work, and passion, clear direction, and mission. This so aptly describes the Alexandria team in pursuit to provide the best environments for the best scientific minds, which in turn enhance human health and extend the quality of life for inhabitants on this planet. A profound thank you to this one-of-a-kind team for an impactful second quarter.

Speaker Change: So you've already heard the big news in the press release and from Joe on Holly before me, but I wanted to talk a little bit about the.

While NIH funding is 1 of several funding sources for biomedical institutions view, if any of our private and public biotech tenants rely on NIH funding.

Speaker Change: The multinational pharmaceutical lease that was the largest in our company's history. What I wanted to point out is that that opportunity really aligns well with the ongoing development, we have going on at the same campus with Bristol Myers and it really illustrates that our Mega campus platform is perfectly.

This so aptly describes the Alexandria team in pursuit to provide the best environments for the best scientific minds, which in turn enhance human health and extend the quality of life for inhabitants on this planet. A profound thank you to this one-of-a-kind team for an impactful second quarter. Disciplined people, disciplined thought, disciplined action. Built to last. As I open my Q1 comments, I comment that ARE has been and will continue to be one of the most consequential REITs in the sector's history. Steve Jobs once said a brand is simply trust.

Last large farmer represented, 5% of leasing for the quarter. Not including our recently. Announced long-term lease with the top 20 Pharma for 467,000 square feet on our campus. Pointe Mega campus in San Diego, signed at the beginning of the third quarter.

Speaker Change: We are positioned to capture these opportunities by offering essential expansion space in premium amenities that support the recruitment and retention of key talent required to drive future scientific advancements.

Pharma generally remains buffered, from short-term. Volatility given significant cash flows and a long-term strategic outlook on generating Innovative medicines.

Joel Marcus: Disciplined people, disciplined thought, disciplined action, built to last.

Their success, ultimately comes down to talent and accessing the best innovation.

Joel Marcus: As I open my first quarter comments, I comment that ARE has been and will continue to be one of the most consequential REITs in the sector's history. Steve Jobs once said, a brand is simply trust. The recent execution of the largest lease in the company's history. is a testament to that and our brand trust, our unique product quality and value to the client. Trust is the lifeblood of the Alexandria one-of-a-kind brand.

Joel Marcus: As I open my Q1 comments, I comment that ARE has been and will continue to be one of the most consequential REITs in the sector's history. Steve Jobs once said a brand is simply trust. The recent execution of the largest lease in the company's history is a testament to that and our brand trust, our unique product quality, and value to the client. Trust is the lifeblood of the Alexandria one of a kind brand. This 466,000sq ft lease represents a seminal moment in the history of Alexandria and demonstrates the resilience of our sector, showing long term commitment, long term lease with a high credit tenant. A couple of thoughts on the Q2 before I turn it over to Hallie, then Peter, then Marc.

Speaker Change: So I'll transition to leasing and supply in the second quarter, we leased approximately 770000 square feet with leasing spreads of five 5% and six 1% on a cash basis. We were very pleased that tenant improvements and leasing commissions on renewals were down 40% compared to pre.

As the recently announced lease reflects positioning their R&D in an Alexandria, Mega campus is highly strategic to these goals.

To round out industry, stats, 2 Tailwind. We are monitoring through the second half of the year.

The recent execution of the largest lease in the company's history is a testament to that and our brand trust, our unique product quality, and value to the client. Trust is the lifeblood of the Alexandria one of a kind brand. This 466,000sq ft lease represents a seminal moment in the history of Alexandria and demonstrates the resilience of our sector, showing long term commitment, long term lease with a high credit tenant. A couple of thoughts on the Q2 before I turn it over to Hallie, then Peter, then Marc. Alexandria continues its solid performance across a wide variety of financial and operating metrics in the face of macro and industry headwinds. A key focal point for the company is the 2027 and beyond stabilization pipeline.

first is an acceleration of m&a, with Acquisitions through the first half of the Year eclipsing, all of m&a in 2024

Speaker Change: These two quarters and although free rent was elevated it enabled us to secure a relatively high average duration of nine four years.

M&a is a significant positive for the entire Biotech Industry, Recycling and incentivizing capital back into new companies.

Joel Marcus: This 466,000-square-foot lease represents a seminal moment in the history of Alexandria and demonstrates the resilience of our sector, showing long-term commitment, long-term lease with a high-credit tenant.

It's a virtuous cycle, we have seen occur over and over and over again.

Speaker Change: The lease duration was also healthy for developed and Redeveloped and previously vacant space at 12 three years.

Speaker Change: One key result in the quarter, we'd like to highlight is that our focused effort on development and redevelopment leasing has started to gain traction.

Examples include az's. Acquisition of a company called capstan and early clinical Stage Company, developing novel, mRNA therapy for autoimmune diseases, such as severe lupus.

Joel Marcus: A couple of thoughts on the second quarter before I turn it over to Hallie, then Peter, then Marc. Alexandria continues its solid performance across a wide variety of financial and operating metrics in the face of macro and industry headwinds.

Signaling that Pharma is ready and willing to buy Cutting Edge science.

Speaker Change: With 131768 square feet leased during the quarter, including the first lease signed at seven O on Dexter in Seattle and continued leasing progress at 99 Coolidge in Watertown.

Joel Marcus: Alexandria continues its solid performance across a wide variety of financial and operating metrics in the face of macro and industry headwinds. A key focal point for the company is the 2027 and beyond stabilization pipeline. We're pleased to report that we're making solid progress on 311 Arsenal, Sylvan Road, Asset, 1450 Owens, 269 East Grand, and 701 Dexter. Another key focal point is asset sales, and Peter will talk about this in our recycling strategy. We have about $1.1 billion to add to our executable sales pipeline for the next two quarters, and we feel that it is doable given we completed $1.1 billion of sales in the fourth quarter of 2024. In today's current environment, what are we most focused on beside the operating and financial performance?

Second is the abundance of biofarma Licensing dollars flowing into private and public biotech.

Joel Marcus: A key focal point for the company is the 2027 and beyond stabilization pipeline. We're pleased to report that we're making solid progress on 311 Arsenal, Sylvan Road Asset, 1450 Owens, 269 East Grand, and 701 Dexter.

These are deals whereby, large Pharma licenses specific programs from smaller companies, as opposed to a full-fledged acquisition.

Speaker Change: Another key leasing item, we'd like to update you on is the progress on the 786000 square feet of lease Rolls, we identified in the third quarter 2020 for supplemental which had a weighted average expiration date of January 21, 2025, we've leased 20% of this space and have serious <unk>.

in the first half of this year, 113 billion, in biofarma licensing deals were announced

We're pleased to report that we're making solid progress on 311 Arsenal, Sylvan Road, Asset, 1450 Owens, 269 East Grand, and 701 Dexter. Another key focal point is asset sales, and Peter will talk about this in our recycling strategy. We have about $1.1 billion to add to our executable sales pipeline for the next two quarters, and we feel that it is doable given we completed $1.1 billion of sales in the fourth quarter of 2024. In today's current environment, what are we most focused on beside the operating and financial performance? Over the next several quarters we expect the Fed to finally lower interest rates, which is desperately needed for the capital markets of our industry. We have not seen or heard any major, if you turn for a moment to the FDA, any major issues from our tenants regarding undue delays, but we're monitoring this item very closely.

Which compares to 187 billion for the full year 2024.

Joel Marcus: Another key focal point is asset sales and Peter will talk about this in our recycling strategy. We have about $1.1 billion to add to our executable sales pipeline for the next two quarters, and we feel that it is doable given we completed $1.1 billion of sales in the fourth quarter of 2024.

Speaker Change: Aspects for another 30% plus that would resolve approximately half of it in the near term when we execute on it and we are confident that we will.

This is an important Dynamic to highlight because it enables smaller companies to access additional capital and farmer resources when venture or public Equity, Capital become more diluted or challenging to raise.

Both the life science sector and Alexandria, remain resilient in the face of an uncertain macroeconomic environment.

Speaker Change: Moving to competitive supply in greater Boston to competitive projects one in the same way and one in Austin totaling approximately 565000 square feet were delivered completely vacant.

By retaining and securing high-quality tenants. Today, we continue to lay the groundwork for long-term growth.

Joel Marcus: So in today's current environment, what are we most focused on beside the operating and financial performance? Over the next several quarters, we expect the Fed to finally lower interest rates, which is desperately needed for the capital markets of our industry.

Speaker Change: This reduced the remaining expected.

Joel Marcus: Over the next several quarters we expect the Fed to finally lower interest rates, which is desperately needed for the capital markets of our industry. We have not seen or heard any major, if you turn for a moment to the FDA, any major issues from our tenants regarding undue delays, but we're monitoring this item very closely. In fact, several of our team members on 17 July attended a meeting with Commissioner Marty Makary where he essentially elucidated his 100-day agenda that was focused on the impact of better food for children. As we know, revamping and rethinking how to modernize the FDA to move more efficiently and nimbly. And that is something many of us in the industry have certainly advocated for a long period of time. Makary's thoughts were succinct and direct. The FDA is a national treasure. The FDA is strong.

Speaker Change: For 2025 delivery to 300.

It will be underpinned by the robust biofarma ecosystem, their tremendous Ingenuity, we are seeing in science technology and medicine and the broader need to address the 9 out of 10 diseases and conditions that don't have safe and effective treatments today.

Speaker Change: <unk> thousand square feet, which is on leased the $2 5 million square feet expected to deliver in 2026 remains two thirds pre leased.

With that, I will pass it over to Peter.

Joel Marcus: We have not seen or heard any major, if you turn for a moment to the FDA, any major issues from our tenants regarding undue delays, but we're monitoring this item very closely. In fact, several of our team members on July 17th attended a meeting with Commissioner Marty McCary, and where he essentially elucidated his 100-day agenda that was focused on the impact of better food for children, as we know, revamping and rethinking how to modernize the FDA to move more efficiently and nimbly. And that is something many of us in the industry have certainly advocated for a long period of time.

Speaker Change: In San Francisco, two competitive projects were delivered one in Menlo Park and one in millbrae, reducing the space expected for 2025 delivery to 700000 square feet, which is 32% pre leased.

In fact, several of our team members on 17 July attended a meeting with Commissioner Marty Makary where he essentially elucidated his 100-day agenda that was focused on the impact of better food for children. As we know, revamping and rethinking how to modernize the FDA to move more efficiently and nimbly. And that is something many of us in the industry have certainly advocated for a long period of time. Makary's thoughts were succinct and direct. The FDA is a national treasure. The FDA is strong.

Thank you, Howie. I hope you all are a recent press releases and I'll discuss the seminal multinational Pharma lease in a bit. But I want to First congratulate our team for their superb, operational excellence and winning our first International building building of the Year award for 8, Davis Drive, 150,000 square foot Premiere, research and development building.

Speaker Change: No additional supply is expected to be delivered after this year.

Speaker Change: And in San Diego, Alexandria delivered 119000 square feet of fully leased space at one Alexandra is square in Torrey Pines, as I mentioned and.

In the heart of our Alexandria Center for Advanced Technologies, Mega campus and the Research Triangle.

Speaker Change: And approximately 120000 square feet of lease competitive space remains to be delivered here in the second half of the year I want you to note that last quarter I mistakenly said 700000 square feet was to be delivered in 2025, but that was actually the total amount to be delivered in 'twenty five 'twenty six.

This achievement highlights, the quality of the workplaces, we deliver to our tenants. And while our Mega campus platform is a strategically important strength. It's also important to recognize the high quality buildings that proliferate throughout the core of our asset base.

Joel Marcus: McCary's thoughts were succinct and direct. The FDA is a national treasure. The FDA is strong. We will meet our PDUFA targets. We will add more AI efficiencies. We will listen and talk to people externally. We'll make sure the staff has what they need.

And life science, real estate a flight to Quality means a flight to Alexandria.

Joel Marcus: We will meet our PDUFA targets. We will add more AI efficiencies. We will listen and talk to people externally. We'll make sure the staff has what they need. We have a phenomenal talent coming in, which was just announced, the appointment of George Tidmarsh to be the director of the Center for Drug Evaluation and Research. We will be making meaningful exciting new announcements on talent who are motivated by the incredible tradition of the FDA. So that's very, very helpful thinking when it comes to tariffs. In theory, tariffs should not have huge impact on the innovative biopharma ecosystem, mostly because of the low cost of goods sold relative to other industries like hardcore manufacturing. However, commonly used transfer pricing schemes may more heavily expose large pharma companies to tariffs. Tariff impacts on biopharma may be muted as many levers exist to reduce the impacts.

We will meet our PDUFA targets. We will add more AI efficiencies. We will listen and talk to people externally. We'll make sure the staff has what they need. We have a phenomenal talent coming in, which was just announced, the appointment of George Tidmarsh to be the director of the Center for Drug Evaluation and Research. We will be making meaningful exciting new announcements on talent who are motivated by the incredible tradition of the FDA.

Speaker Change: Thanks.

I'm going to discuss our development pipeline Leasing and supply and provide an update on the progress of our value harvesting and asset recycling program.

Speaker Change: The 400000 square feet expected to be delivered in 2026 is 100% pre leased.

Joel Marcus: We have a phenomenal talent coming in, which was just announced, the appointment of George Tidmarsh to be the director of the Center for Drug Evaluation and Research. and we will be making, meaning the FDA, exciting new announcements on talent who are motivated by the incredible tradition of the FDA. So that's very, very hopeful thinking.

Speaker Change: I'll conclude with our value harvesting asset recycling program.

Speaker Change: Our dispositions and sales of partial interests will be heavily weighted towards the fourth quarter. We.

Plus laboratory space into our high barrier to entry submarkets which will contribute approximately 15 million dollars in annual incremental, net operating income.

Speaker Change: We closed on approximately $84 million in asset sales in the second quarter included in those sales were $24 25 Garcia Avenue in $2424 50, Bayshore Parkway, a set of vacant buildings and our greater Stanford Submarket that we're primarily improved as offices and had been highly leased from <unk>.

So that's very, very helpful thinking when it comes to tariffs. In theory, tariffs should not have huge impact on the innovative biopharma ecosystem, mostly because of the low cost of goods sold relative to other industries like hardcore manufacturing. However, commonly used transfer pricing schemes may more heavily expose large pharma companies to tariffs. Tariff impacts on biopharma may be muted as many levers exist to reduce the impacts. Pharma could end up being exempt, IP reshoring, trading companies as manufacturing intermediaries, of course, moving more manufacturing back to the US, and increased drug pricing issues when it comes to, so we talked about the FDA a moment, tariffs a moment when it comes to drug pricing in most favored nation. The so-called MFN, this isn't new, was introduced during the first Trump term but ultimately was rescinded by Biden when he came to office following legal challenges.

Joel Marcus: When it comes to tariffs. In theory, tariffs should not have huge impact on the innovation biopharma ecosystem, mostly because of the low cost of goods sold relative to other industries, like hardcore manufacturing. However, commonly used transfer pricing schemes may more heavily expose large pharma companies to tariffs. Tariff impacts on biopharma may be muted as many levers exist to reduce the impacts. Pharma could end up being exempt, IP reshoring trading companies as manufacturing intermediaries, of course, moving more manufacturing back to the U.S. and increased drug pricing issues.

Speaker Change: Several years prior to Covid.

The initial weighted average stabilized deal for this quarter is deliveries with 6.6%, which was driven by 100 basis, point Improvement in yield at our 1, Alexandria Square, Mega campus in Torrey Pines, which was the result of achieving higher rental rates than previously underwritten, and a 4.7% reduction in construction costs.

Speaker Change: In addition, we sold an attracted 65 acre land site in Texas, We did not anticipate developing in the near to medium term.

Speaker Change: To date dispositions and our share of noncore pending dispositions amount to $785 4 million approximately 36% of these dispositions consistent land.

Joel Marcus: Pharma could end up being exempt, IP reshoring, trading companies as manufacturing intermediaries, of course, moving more manufacturing back to the US, and increased drug pricing issues when it comes to, so we talked about the FDA a moment, tariffs a moment when it comes to drug pricing in most favored nation. The so-called MFN, this isn't new, was introduced during the first Trump term but ultimately was rescinded by Biden when he came to office following legal challenges. The impact appears constrained. Based on currently available details, we know that some manufacturers are moving direct sales to consumers, and this would provide commercial tailwinds, especially in certain segments such as obesity drugs and the like. Key details remain unclear, and we know there is negotiations going on, being we believe chaired by Dr. Oz of CMS, and the market reaction so far suggests limited concern.

So you've already heard the big news um in the press release and from Joel on Howley uh before me. But I wanted to talk a little bit uh, about the um, the multinational pharmaceutical lease that was the largest in our company's history. What I wanted to point out

Speaker Change: 52% are on stabilized improve properties and 12% are stabilized improved properties.

Joel Marcus: When it comes to, so we talked about the FDA a moment, tariffs a moment. When it comes to drug pricing in most favored nations, the so-called MFN, this isn't new, was introduced during the first Trump term, but ultimately was rescinded by Biden when he came to office following legal challenges. The impact appears constrained based on currently available details.

Speaker Change: The current identified non core asset pool that is being marketed or will soon be marketed <unk>.

Speaker Change: Comprises 25% land fill.

Speaker Change: 52% on stabilized properties and 24% stabilized properties, we expect to achieve a weighted average cap rate on our non core <unk>.

The impact appears constrained. Based on currently available details, we know that some manufacturers are moving direct sales to consumers, and this would provide commercial tailwinds, especially in certain segments such as obesity drugs and the like. Key details remain unclear, and we know there is negotiations going on, being we believe chaired by Dr. Oz of CMS, and the market reaction so far suggests limited concern. I think when we think about. This. In summary, there are reasons to be optimistic. Fears of spending cuts and changes at HHS may be substantially overblown.

Is that that opportunity really aligns. Well with the ongoing development, we have going on at the same campus with Bristol Myers and it really illustrates that our Mega campus platform is perfectly positioned to capture these opportunities by offering essential expansion space and premium amenities, that support the Recruitment and Retention of key Talent, required to drive future scientific advancements.

Joel Marcus: We know that some... Manufacturers are moving direct sales to consumers, and this would provide commercial tailwinds, especially in certain segments such as obesity, drugs, and the like. Key details remain unclear, and we know there is negotiations going on, being, we believe, chaired by Dr. Oz of CMS. And the market reaction so far suggests limited concern.

Speaker Change: <unk> dispositions and partial interest sales, including non stabilized operating properties in the range of seven five to eight 5%.

So I'll transition to Leasing and Supply. In the second quarter, we least approximately 770,000 square feet, with leasing spreads of 5, and a half percent and 6.1% on a cash basis.

Speaker Change: The buyer pool for our closed and pending dispositions.

Speaker Change: Includes residential developers municipalities.

Speaker Change: A health care system.

We were very pleased that tenant improvements and leasing commissions. On renewals were down 40% compared to previous 2, quarters. And although, free rent was elevated. It enabled us to secure a relatively High average, duration of 9.4 years.

Speaker Change: Local commercial investor operators.

Joel Marcus: I think when we think about.

Joel Marcus: I think when we think about This in summary, there are reasons to be optimistic. Fears of spending cuts and changes at HHS may be substantially overblown. Onshoring of R&D can provide a tailwind for life science sector.

Speaker Change: Domestic and international private equity youth.

Peter F. Wilson: This.

Joel Marcus: In summary, there are reasons to be optimistic. Fears of spending cuts and changes at HHS may be substantially overblown. Onshoring of R and D can provide a tailwind for life science sector. Public markets move in cycles, macro events will eventually dissipate, and the markets will stabilize, and M and A consolidation is instrumental for a healthy biopharma ecosystem. With that, let me turn it over to Hallie.

Speaker Change: Users universities and domestic core funds.

The least duration was also healthy for developed and redeveloped and previously vacant space at 12.3 years.

Speaker Change: Here are the key takeaways first we continue to deliver transformative projects and incremental NOI from our pipeline.

Onshoring of R and D can provide a tailwind for life science sector. Public markets move in cycles, macro events will eventually dissipate, and the markets will stabilize, and M and A consolidation is instrumental for a healthy biopharma ecosystem. With that, let me turn it over to Hallie.

1 key result of the quarter, we'd like to highlight is that our focused effort on development and Redevelopment leasing has started to gain traction.

Speaker Change: Second our focused efforts to catalyze development and redevelopment leasing have gained traction.

Joel Marcus: Public markets move in cycles. Macro events will eventually dissipate and the markets will stabilize.

Speaker Change: Third we are making great progress progress on resolving the 768000 square feet of move outs that rolled at the end of 2024 and in the first quarter of 2005.

Joel Marcus: And M&A consolidation is instrumental for a healthy biopharma ecosystem.

Hallie Kuhn: And with that, let me turn it over to Hallie. Thank you, Joel. And good afternoon, everyone. This is Hallie Kuhn, SVP of Life Science and Capital Markets. Today, we will provide an update on the strength of the life science industry, an industry that remains critical to the health and safety of the U.S., driven by a resilient and dogged effort to address the 90% of diseases that to this day remain untreated by medicine. Overall, once again, the leasing stats we are about to walk through reflect the importance of the diversity of our tenant base, which drove over 80% of our 2Q leasing by volume.

Hallie Kuhn: Thank you, Joel, and good afternoon, everyone. This is Hallie Kuhn, SVP of Life Science and Capital Markets. Today we will provide an update on the strength of the life science industry, an industry that remains critical to the health and safety of the US, driven by a resilient and dogged effort to address the 90% of diseases that to this day remain untreated by medicine. Overall, once again, the leasing stats we are about to walk through reflect the importance of the diversity of our tenant base, which drove over 80% of our Q2 leasing by volume. Starting with private biotechnology companies, which represented 30% of overall leasing for the quarter, life science venture funding remained steady with nearly 22 billion deployed in the first half of the year.

Speaker Change: And fourth further material project progress on our asset recycling program will be heavily weighted towards the end of the year and with that I'll pass it over to Mark.

Mark: Thank you Peter this is Mark <unk>, Chief Financial Officer, Hello, and good afternoon to everyone on this call.

With 131,768 square ft lease during the quarter, including the first lease signed at 7:01 Dexter in Seattle and continued leasing progress at 99 coolage in Watertown, another key leasing item we'd like to update you on is the progress on the 786,000 square feet of lease roles. We identified in the third quarter 2024 supplemental, which had a weighted average expiration date of January 21st 2025, we've least 20% of this space and have serious prospects for another 30%, plus that would resolve approximately half of it in the near term.

Mark: I plan to walk through our performance and outlook and provide greater detail around the disciplined steps, we've taken and will continue to take across the portfolio and the pipeline to bolster our strong balance sheet.

um, when we execute on it, and we are confident that we will,

Mark: We manage through this period in order to emerge in a position of strength to support our future.

Hallie Kuhn: Starting with private biotechnology companies, which represented 30% of overall leasing for the quarter, life science venture funding remains steady, with nearly $22 billion deployed in the first half of the year. Financings were predominantly later stage as seed stage financing took the backburner to more de-risk technologies closer or already in human studies. The result is fewer, albeit larger, financings as investors focus on select, but in their minds, more certain opportunities. This cohort of companies remains highly disciplined with respect to leasing decisions. However, the companies that are being funded and are expanding are extremely high quality and form a solid foundation for future growth.

Moving to competitive Supply in Greater Boston 2 competitive projects, 1 in the Fenway and 1 in Austin totaling approximately 565,000 square feet were delivered, completely vacant.

Mark: First a big congratulations to the entire Alexandria team for outstanding execution during the quarter and for completing the largest lease in the history of the company earlier this month.

This reduced the remaining expected.

Hallie Kuhn: Financings were predominantly later stage as seed stage financings took the back burner to more de-risk technologies closer or already in human studies. The result is fewer, albeit larger financings as investors focus on select but, in their minds, more certain opportunities. This cohort of companies remains highly disciplined with respect to leasing decisions. However, the companies that are being funded and are expanding are extremely high quality and form a solid foundation for future growth. Moving on to publicly traded biotechnology companies, this segment represented just under 1/4 of our leasing for the quarter, of which over 95% consisted of new leases. This cohort continues to be dominated by haves and have-nots, with select companies with high-quality data and teams driving leasing and demand. The broader picture for public biotech equities remains tough with not a single biotech IPO in Q2.

Financings were predominantly later stage as seed stage financings took the back burner to more de-risk technologies closer or already in human studies. The result is fewer, albeit larger financings as investors focus on select but, in their minds, more certain opportunities. This cohort of companies remains highly disciplined with respect to leasing decisions. However, the companies that are being funded and are expanding are extremely high quality and form a solid foundation for future growth. Moving on to publicly traded biotechnology companies, this segment represented just under 1/4 of our leasing for the quarter, of which over 95% consisted of new leases. This cohort continues to be dominated by haves and have-nots, with select companies with high-quality data and teams driving leasing and demand.

Second our team delivered solid per share results for the quarter. Please refer to our earnings release for our EPS results.

Uh, for 2025 delivery to 300, uh, thousand square feet, which is unleashed the 2 and a half million square feet expected to deliver in 2026 remains 2/3. Pre-leased

Mark: <unk> per share diluted as adjusted was $2 33 for <unk> 25 up one 3% compared to the prior quarter and included the positive impact from the recent development deliveries in San Francisco and San Diego.

Mark: Occupancy at the end of the quarter was at 98%, which was down 90 basis points from the prior quarter.

In San Francisco. 2, competitive projects were delivered 1 in Menlo Park and 1 in Millbury. Reducing the space expected for 2025 delivery to 700,000 square feet which is 32% pre-leased, no, additional Supply is expected to be delivered after this year.

Mark: 75% of our annual rental revenue coming from our highly distinguished Mega campus platform. We continue to outperform the rest of the market on occupancy in our biggest three markets.

Hallie Kuhn: Moving on to publicly traded biotechnology companies. This segment represented just under one fourth of our leasing for the quarter. of which over 95% consisted of new leases. This cohort continues to be dominated by have and have nots with select companies with high quality data and teams driving leasing and demand. The broader picture for public biotech equities remains tough, with not a single biotech IPO in the second quarter. Given the broader risk-off environment, we are not likely to see the biotech public equity markets open meaningfully until interest rates subside.

and in San Diego Alexandria, delivered 119,000, square feet of fully leased space at 1, Alexandria Square in Torrey Pines, as I mentioned,

Mark: We are reiterating our prior guidance for year end 2025 occupancy at 99% to 92, 5%.

Mark: And important note about our occupancy guidance is that we have 669000 square feet or about one 7% to occupancy of leased but not yet delivered space, which will positively impact our occupancy in early 2026 on average upon delivery and.

The broader picture for public biotech equities remains tough with not a single biotech IPO in Q2. Given the broader risk-off environment, we are not likely to see the biotech public equity markets open meaningfully until interest rates subside. Notably, biomedical institutions represented 22% of leasing this quarter. Leasing was driven by a significant new lease from a well-endowed investment grade public institution, demonstrating that lab space remains critical to institution's operations. Importantly, the budget for the NIH remains the same as last year's levels under a continuing resolution. And while the White House has proposed significant budget cuts, there remains substantial bipartisan support to maintain the current or at least close to current levels of funding.

And approximately 120,000 square feet of Unleashed competitive. Space remains to be delivered here in the second half of the year. I want you to note that last quarter, I mistakenly said 700,000 square feet was to be delivered in 2025, but that was actually the total amount to be delivered in 25 and 20.

Hallie Kuhn: Given the broader risk-off environment, we are not likely to see the biotech public equity markets open meaningfully until interest rates subside. Notably, biomedical institutions represented 22% of leasing this quarter. Leasing was driven by a significant new lease from a well-endowed investment grade public institution, demonstrating that lab space remains critical to institution's operations. Importantly, the budget for the NIH remains the same as last year's levels under a continuing resolution. And while the White House has proposed significant budget cuts, there remains substantial bipartisan support to maintain the current or at least close to current levels of funding. For context, approximately 80% of NIH funding is for external institutions, funding work and supporting local economies in all 50 states.

The 400,000 square ft expected to be delivered in 2026 is 100% pre-leased.

Mark: In addition, our year end occupancy guidance assumes around a 2% benefit from assets with vacancy which are expected to be sold.

Hallie Kuhn: Notably biomedical institutions represented 22% of leasing this quarter. Leasing was driven by a significant new lease from a well-endowed investment-grade public institution demonstrating that lab space remains critical to institutions operations. Importantly, the budget for the NIH remains the same as last year's levels, under a continuing resolution, and while the White House has proposed significant budget cuts, there remains substantial bipartisan support to maintain the current, or at least close to current, levels of funding. For context, approximately 80% of NIH funding is for external institutions, funding work and supporting local economies in all 50 states.

I'll conclude with our value harvesting asset recycling program.

Our dispositions and sales of partial interests will be heavily weighted towards the fourth quarter.

Mark: Of which about a third of that is subject to a signed purchase and sale agreement.

Mark: Next on same property same property NOI was down five 4% and up 2% on a cash basis for the quarter.

Mark: Included in <unk> 25, same property results is the full impact from the 768000 square feet of leases spread across board projects that expired on average in late January 2025 that are now fully included in the <unk> results. We continue to make good progress with these four projects as Peter just highlighted with.

Stanford submarket that were primarily improved as offices and had been highly least for several years prior to Coe

For context, approximately 80% of NIH funding is for external institutions, funding work and supporting local economies in all 50 states. One additional point of clarification. While NIH funding is one of several funding sources for biomedical institutions, few if any of our private and public biotech tenants rely on NIH funding. Last, large pharma represented 5% of leasing for the quarter, not including our recently announced long-term lease with a top 20 pharma for 467,000sq ft on our Campus Point mega campus in San Diego signed at the beginning of Q3. PhRMA generally remains buffered from short-term volatility, given significant cash flows and a long-term strategic outlook on generating innovative medicines. Their success ultimately comes down to talent and accessing the best innovation.

In addition we sold an attractive 16 1/2 acre land site in Texas. We did not anticipate developing in the near to medium term.

Mark: 20% leased.

Hallie Kuhn: One additional point of clarification. While NIH funding is one of several funding sources for biomedical institutions, few, if any, of our private and public biotech tenants rely on NIH funding. Last, Large Pharma represented 5% of leasing for the quarter, not including our recently announced long-term lease with a top 20 pharma for 467,000 square feet on our Campus Point mega campus in San Diego, signed at the beginning of the third quarter. Pharma generally remains buffered from short-term volatility given significant cash flows and a long-term strategic outlook on generating innovative medicines. Their success ultimately comes down to talent and accessing the best innovation.

Hallie Kuhn: One additional point of clarification. While NIH funding is one of several funding sources for biomedical institutions, few if any of our private and public biotech tenants rely on NIH funding. Last, large pharma represented 5% of leasing for the quarter, not including our recently announced long-term lease with a top 20 pharma for 467,000sq ft on our Campus Point mega campus in San Diego signed at the beginning of Q3. PhRMA generally remains buffered from short-term volatility, given significant cash flows and a long-term strategic outlook on generating innovative medicines. Their success ultimately comes down to talent and accessing the best innovation. As the recently announced lease reflects, positioning their R&D in an Alexandria megacampus is highly strategic to these goals. To round out industry stats, two tailwinds we are monitoring through the second half of the year.

Mark: With some of that expected to be delivered in late 2025, and we haven't used it very focused on another 234000 square feet.

Mark: We are reiterating our prior guidance for same property performance for 2025 three items to note here.

To date dispositions and our share of non-core, pending dispositions amount to 785.4 million approximately 36% of these dispositions consists of land.

Mark: First we expect continued pressure on same property results in the second half of 2025, driven by the recent decline in occupancy.

52% are unstabilized improved properties and 12% are stabilized improved properties.

The current identified, non-core asset pool that is being marketed or will soon be marketed.

Mark: Second we also expect second half 2025 cash same property results to decline from the first half results given the burn off of initial free rent from last year.

Comprises 25% land, 52% unstabilized properties and 24% stabilized properties.

Mark: And third our guidance for the full year 2025 same property results also assumes at the same property pool in the back half of the year will change from the first half 2025 pool as we make progress on our disposition program and those assets subsequently become excluded from the pool later in the.

As the recently announced lease reflects, positioning their R&D in an Alexandria megacampus is highly strategic to these goals. To round out industry stats, two tailwinds we are monitoring through the second half of the year. First is an acceleration of M&A with acquisitions through the first half of this year, eclipsing all of M&A in 2024. M&A is a significant positive for the entire biotech industry, recycling and incentivizing capital back into new companies. It's a virtuous cycle we have seen occur over and over and over again. Examples include AbbVie's acquisition of a company called Capstan, an early clinical stage company developing novel mRNA therapies for autoimmune diseases such as severe lupus, signaling that pharma is ready and willing to buy cutting-edge science. Second is the abundance of biopharma licensing dollars flowing into private and public biotech.

Hallie Kuhn: As the recently announced lease reflects, positioning their R&D in an Alexandria megacampus is highly strategic to these goals.

We expect to achieve a weighted average cap rate on our non-core projected dispositions and partial interest sales, including non-stabilized operating properties in the range of 7 and 1/2 to 8 and 1/2%.

Hallie Kuhn: to round out industry stats to tailwinds we are monitoring through the second half of the year. First is an acceleration of M&A, with acquisitions through the first half of this year eclipsing all of M&A in 2024. M&A is a significant positive for the entire biotech industry, recycling and incentivizing capital back into new companies. It's a virtuous cycle we have seen occur over and over and over again. Examples include Aviv's acquisition of a company called Capstan, an early clinical stage company developing novel mRNA therapies for autoimmune diseases such as severe lupus. signaling that pharma is ready and willing to buy cutting edge science.

the buyer pool for our closed and pending dispositions includes residential developers municipalities

Mark: Year.

Mark: In the meantime, we continue to benefit from a very high quality tenant base with 53% of our IRR coming from investment grade or publicly traded large cap tenants long remaining average lease terms of seven four years.

Hallie Kuhn: First is an acceleration of M&A with acquisitions through the first half of this year, eclipsing all of M&A in 2024. M&A is a significant positive for the entire biotech industry, recycling and incentivizing capital back into new companies. It's a virtuous cycle we have seen occur over and over and over again. Examples include AbbVie's acquisition of a company called Capstan, an early clinical stage company developing novel mRNA therapies for autoimmune diseases such as severe lupus, signaling that pharma is ready and willing to buy cutting-edge science. Second is the abundance of biopharma licensing dollars flowing into private and public biotech. These are deals whereby large pharma licenses specific programs from smaller companies as opposed to a full-fledged acquisition. In the first half of this year, $113 billion in biopharma licensing deals were announced, which compares to $187 billion for the full year 2024.

A Health Care system.

Local commercial investor operators.

Domestic and international private equity.

Users universities and domestic core funds.

Mark: Average rent steps approaching 3% and 97% of our leases and our adjusted EBITDA margins remained strong at 71% for the most recent quarter.

Here are the key. Takeaways first, we continue to deliver transformative projects and incremental noi from our pipeline.

Mark: Consistent with our five year average.

Mark: Turning next to general and administrative expenses, we continue to make great progress toward our goal of annual savings for 2025 of approximately $49 million compared to 2024 through a number of strategic cost savings initiatives.

Second our focused efforts to catalyze development and Redevelopment leasing have gain traction.

Hallie Kuhn: Second is the abundance of biopharma licensing dollars flowing into private and public biotech. These are deals whereby large pharma licenses specific programs from smaller companies as opposed to a full-fledged acquisition. In the first half of this year, $113 billion in biopharma licensing deals were announced, which compares to $187 billion for the full year 2024. This is an important dynamic to highlight because it enables smaller companies to access additional capital and pharma resources when venture or public equity capital becomes more dilutive or challenging to raise.

third, we are making great progress, progress on resolving the 768,000 square ft of move outs that rolled at the end of 2024 and in the first quarter of 25,

Mark: Our trailing 12 months G&A costs as a percentage of NOI was six 3% and represents our lowest level in the past 10 years, our best estimate at this point is that around half of the 2025 G&A savings for 2025, we will recur into 2026.

These are deals whereby large pharma licenses specific programs from smaller companies as opposed to a full-fledged acquisition. In the first half of this year, $113 billion in biopharma licensing deals were announced, which compares to $187 billion for the full year 2024. This is an important dynamic to highlight because it enables smaller companies to access additional capital and pharma resources when venture or public equity capital becomes more dilutive or challenging to raise. Both the life science sector and Alexandria remain resilient in the face of an uncertain macroeconomic environment by retaining and securing high-quality tenants. Today we continue to lay the groundwork for long-term growth.

And forth. Further material, project progress on our asset recycling program will be heavily weighted towards the end of the year. And with that, I'll pass it over to mark.

Thank you, Peter. This is Mark bhinda, Chief Financial Officer. Hello, and good afternoon to everyone on this call.

Mark: Next on the development pipeline with projects under construction and expected to generate significant NOI over the next few years and other earlier stage projects undergoing important entitlement design and site work necessary to be ready for future ground up development. We are required to capitalize a portion of our growth.

Hallie Kuhn: This is an important dynamic to highlight because it enables smaller companies to access additional capital and pharma resources when venture or public equity capital becomes more dilutive or challenging to raise. Both the life science sector and Alexandria remain resilient in the face of an uncertain macroeconomic environment by retaining and securing high-quality tenants. Today we continue to lay the groundwork for long-term growth. It will be underpinned by the robust biopharma ecosystem, the tremendous ingenuity we are seeing in science, technology, and medicine, and the broader need to address the nine out of 10 diseases and conditions that don't have safe and effective treatments today. With that, I will pass it over to Peter.

Hallie Kuhn: Both the life science sector and Alexandria remain resilient in the face of an uncertain macroeconomic environment. By retaining and securing high quality tenants today, we continue to lay the groundwork for long term growth. It will be underpinned by the robust biopharma ecosystem, the tremendous ingenuity we are seeing in science, technology, and medicine, and the broader need to address the 9 out of 10 diseases and conditions that don't have safe and effective treatments today.

Land. A walk through our performance and Outlook and provide greater detail around the discipline steps. We've taken and will continue to take across the portfolio in the pipeline, to bolster our, our strong balance sheet and manage through this period, in order to emerge in a position of strength to support our future.

Mark: Interest costs.

Mark: 466000 square foot build to suit historical win that was recently announced is a great example of the value created by our important preconstruction activities associated with our future pipeline projects, which allowed us to meet the tenants timeline for delivery in this case.

It will be underpinned by the robust biopharma ecosystem, the tremendous ingenuity we are seeing in science, technology, and medicine, and the broader need to address the nine out of 10 diseases and conditions that don't have safe and effective treatments today. With that, I will pass it over to Peter.

First, a big congratulations to the entire Alexandria team for outstanding execution during the quarter. And for completing the largest lease, in the history of the company, earlier this month,

Second, our team delivered solid per share results for the quarter, please refer to our earnings release for our EPS results.

Mark: We remain focused on continuing these important preconstruction activities for our future pipeline, where it makes good financial sense to continue.

Peter Moglia: With that, I will pass it over to Peter. Thank you, Hallie. I hope you all saw our recent press releases, and I'll discuss the Seminole Multinational Pharma lease in a bit, but I want to first congratulate our team for their superb operational excellence in winning our first International Building of the Year award for A. Davis Drive, 150,000 square foot premier research and development building in the heart of our Alexandria Center for Advanced Technology's mega campus in the Research Triangle. This achievement highlights the quality of the workplaces we deliver to our tenants and while our mega campus platform is a strategically important strength, it's also important to recognize the high quality buildings that proliferate throughout the core of our asset and Life Science Real Estate, a flight to quality means a flight to Alexandria.

Peter F. Wilson: Thank you, Hallie. I hope you all saw our recent press releases, and I'll discuss the significant multinational pharma lease in a bit, but I want to first congratulate our team for their superb operational excellence in winning our first International Building of the Year award for 8 Davis Drive, 150,000sq ft premier research and development building in the heart of our Alexandria Center for Advanced Technologies Mega Campus and the Research Triangle. This achievement highlights the quality of the workplaces we deliver to our tenants, and while our Mega Campus platform is a strategically important strength, it's also important to recognize the high quality buildings that proliferate throughout the core of our asset base in life science real estate. A flight to quality means a flight to Alexandria.

Peter M. Moglia: Thank you, Hallie. I hope you all saw our recent press releases, and I'll discuss the significant multinational pharma lease in a bit, but I want to first congratulate our team for their superb operational excellence in winning our first International Building of the Year award for 8 Davis Drive, 150,000sq ft premier research and development building in the heart of our Alexandria Center for Advanced Technologies Mega Campus and the Research Triangle. This achievement highlights the quality of the workplaces we deliver to our tenants, and while our Mega Campus platform is a strategically important strength, it's also important to recognize the high quality buildings that proliferate throughout the core of our asset base in life science real estate. A flight to quality means a flight to Alexandria.

Ffo per share diluted as adjusted with $2.33 for 2225 up. 1.3% compared to the prior quarter and included the positive impact, from the recent development, deliveries in San Francisco and San Diego.

Mark: On page 45 of our supplemental package, we highlighted that we have a $3 billion investment in various future pipeline projects that required interest to be capitalized in the first half of 2025, while we pursue preconstruction activities, but have future project milestones over the next 18 months.

Occupancy. At the end of the quarter, was at 90.8%, which was down 90 basis points from the prior quarter.

With 75% of our annual rental Revenue coming from our highly. Distinguished Mega campus platform. We continue to outperform the rest of the market on occupancy in our biggest 3 markets.

Mark: Ending in April 2026 on a weighted average basis.

Mark: We will continue to routinely evaluate these projects to determine on a project by project basis, whether it had continued progress beyond the current milestones and those decisions will be subject to future market conditions.

We are reiterating our prior guidance for year-end, 2025, occupancy at 90.9% to 92.5%.

Mark: We decided to pause our project as it reaches the next milestone capitalization of interest and other required cost would seize on that project.

An important note about our occupancy guidance, is that we have 669,000 square feet, or about 1.7% to occupancy, of least, but not yet delivered space, which will positively impact our occupancy in early 2026 on average upon delivery.

Mark: For 2025, we are reiterating our guidance for capitalization of interest. In addition, we expect steady to slightly higher capitalized interest in the back half of the year, mostly driven by spending on the active pipeline coupled with continued high interest rates.

Peter F. Wilson: I'm going to discuss our development pipeline, leasing and supply, and provide an update on the progress of our value harvesting and asset recycling program. In Q1 we delivered approximately 218,000sq ft of 90% leased Class A laboratory space into our high barrier to entry submarkets, which will contribute approximately $15 million in annual incremental net operating income. The initial weighted average stabilized deal for this quarter's deliveries was 6.6%, which was driven by 100-basis-point improvement in yield at our 1 Alexandria Square Mega Campus in Torrey Pines, which was the result of achieving higher rental rates than previously underwritten and a 4.07% reduction in construction costs.

I'm going to discuss our development pipeline, leasing and supply, and provide an update on the progress of our value harvesting and asset recycling program. In Q1 we delivered approximately 218,000sq ft of 90% leased Class A laboratory space into our high barrier to entry submarkets, which will contribute approximately $15 million in annual incremental net operating income. The initial weighted average stabilized deal for this quarter's deliveries was 6.6%, which was driven by 100-basis-point improvement in yield at our 1 Alexandria Square Mega Campus in Torrey Pines, which was the result of achieving higher rental rates than previously underwritten and a 4.07% reduction in construction costs.

Peter Moglia: I'm going to discuss our development pipeline leasing and supply and provide an update on the progress of our value harvesting and asset recycling. In the first quarter, we delivered approximately 218,000 square feet of 90% leased Class A plus laboratory space into our high barrier to entry submarkets, which will contribute approximately $15 million in annual incremental net operating income. The initial weighted average stabilized deal for this quarter's deliveries was 6.6%, which was driven by a 100 basis point improvement in yield at our 1 Alexandria Square megacampus in Torrey Pines, which was the result of achieving higher rental rates than previously underwritten and a 4.7% reduction in construction costs.

In addition, our year-end occupancy guidance assumes around a 2% benefit from assets with vacancy, which are expected to be sold of which about a third of that is subject to assigned purchase and sale agreement.

Mark: Now on to venture investments.

Mark: For the first half of 2025, we realized 60 million of gains from our venture investments, which are included in <unk> per share as adjusted were about $30 million per quarter consistent with our last six quarters our outlook for the full year 2025 remains unchanged with a range of $100 million to $130 million.

Next on the same property, same property, noi was down 5.4% and up, 2% on a cash basis for the quarter.

Mark: Next on other income.

Included in 2q 255, same property, results. Is the full impact from the 7668 ft of leases spread across 4 projects that expired on average. In late, January 2025 that are now fully included in the 2q results.

Mark: This balance primarily includes interest income leasing and other types of management fees fee recognition for example can bounce around from quarter to quarter for.

Mark: For the first half of 2025, other income was $39 7 million or less than 3% of total revenues. This represents a quarterly average of about $20 million per quarter, which is pretty close to the quarterly average over the last six quarters of around $18 million per quarter.

Peter Moglia: So, you've already heard the big news in the press release and from Joel and Hallie before me, but I wanted to talk a little bit about the multinational pharmaceutical lease that was the largest in our company's history. What I wanted to point out is that that opportunity really aligns well with the ongoing development we have going on at the same campus with Bristol Myers. And it really illustrates that our mega campus platform is perfectly positioned to capture these opportunities by offering essential expansion space and premium amenities that support the recruitment and retention of key talent required to drive future scientific advances.

Peter F. Wilson: So you've already heard the big news in the press release and from Joel and Hallie before me, but I wanted to talk a little bit about the multinational pharmaceutical lease that was the largest in our company's history. What I wanted to point out is that that opportunity really aligns well with the ongoing development we have going on at the same campus with Bristol-Myers. And it really illustrates that our Mega Campus platform is perfectly positioned to capture these opportunities by offering essential expansion space and premium amenities that support the recruitment and retention of key talent required to drive future scientific advancements. So I'll transition to Leasing and Supply. In Q2, we leased approximately 770,000 sq ft with leasing spreads of 5.5% and 6.1% on a cash basis.

So you've already heard the big news in the press release and from Joel and Hallie before me, but I wanted to talk a little bit about the multinational pharmaceutical lease that was the largest in our company's history. What I wanted to point out is that that opportunity really aligns well with the ongoing development we have going on at the same campus with Bristol-Myers. And it really illustrates that our Mega Campus platform is perfectly positioned to capture these opportunities by offering essential expansion space and premium amenities that support the recruitment and retention of key talent required to drive future scientific advancements. So I'll transition to Leasing and Supply. In Q2, we leased approximately 770,000 sq ft with leasing spreads of 5.5% and 6.1% on a cash basis.

And we have a user very focused on another 234,000 square feet.

We are reiterating our prior guidance for same property, performance for 2025 3 items to note here.

Mark: Turning next to the balance sheet and funding we continue to stand out as our corporate credit ratings ranked in the top 10% of all publicly traded U S. Reits, we have the longest average remaining debt maturity. Among all S&P 500, Reits at 12 years and tremendous liquidity of $4 6 billion, we remain focused on.

First, we expect continued pressure on same property results in the second half of 2025 driven by the recent decline in occupancy.

Second. We also expect second half, 2025 cash, same property results to decline from the first half results, given the burnoff of initial free rent from last year.

Mark: Achieving our year end leverage target of five two times for net debt to adjusted EBITDA by executing on our disposition program, which Peter recovered.

Peter Moglia: So I'll transition to leasing and supply. In the second quarter, we leased approximately 770,000 square feet with leasing spreads of five and a half percent and 6.1% on a cash base. We were very pleased that tenant improvements and leasing commissions on renewals were down 40% compared to previous two quarters, and although free rent was elevated, it enabled us to secure a relatively high average duration of 9.4 years. The lease duration was also healthy for developed and redeveloped and previously vacant space at 12.3 years. One key result of the quarter we'd like to highlight is that our focused effort on development and redevelopment leasing has started to gain traction.

Mark: In connection with our disposition program, we recognized impairments of real estate of $129 6 million during the quarter with around two thirds of that coming from one land parcel in our non cluster market, which is expected to be sold a residential user and an office property located in northern.

And third, our guidance for the full year, 2025, same property results. Also assumes that the same property pool and the back half of the year will change from the first half 2025 pool, as we make progress on our disposition program and those assets. Subsequently become excluded from the pool later in the year

Peter F. Wilson: We were very pleased that tenant improvements and leasing commissions on renewals were down 40% compared to previous two quarters, and although free rent was elevated, it enabled us to secure a relatively high average duration of 9.4 years. The lease duration was also healthy for developed and redeveloped and previously vacant space at 12.3 years. One key result of the quarter we'd like to highlight is that our focused effort on development and redevelopment leasing has started to gain traction, with 131,768sq ft leased during the quarter, including the first lease signed at 701 Dexter in Seattle and continued leasing progress at 99 Coolidge in Watertown. Another key leasing item we'd like to update you on is the progress on the 786,000sq ft of lease rolls we identified in the Q3 2024 supplemental, which had a weighted average expiration date of 21 January 2025.

We were very pleased that tenant improvements and leasing commissions on renewals were down 40% compared to previous two quarters, and although free rent was elevated, it enabled us to secure a relatively high average duration of 9.4 years. The lease duration was also healthy for developed and redeveloped and previously vacant space at 12.3 years. One key result of the quarter we'd like to highlight is that our focused effort on development and redevelopment leasing has started to gain traction, with 131,768sq ft leased during the quarter, including the first lease signed at 701 Dexter in Seattle and continued leasing progress at 99 Coolidge in Watertown. Another key leasing item we'd like to update you on is the progress on the 786,000sq ft of lease rolls we identified in the Q3 2024 supplemental, which had a weighted average expiration date of 21 January 2025.

Mark: San Diego <unk>.

Mark: Potently. These sales will raise significant equity light capital and continue the trend of enhancing the quality of our asset base with an increased focus on our Mega campus platform.

Mark: We are carefully managing our capital allocation given our high cost of capital environment for construction spending we are evaluating some of our 2027 redevelopment projects for alternative lower cost investment opportunities and hope to have more to report over the coming quarters.

In the meantime, we continue to benefit from a very high quality tenant base with 53% of our ARR coming from investment grade or publicly traded large cap, tenants long remaining average. Lease terms of 7.4 years, average rent steps approaching 3%, on 97% of our leases and are adjusted even to margins remain strong at 71%, for the most recent quarter consistent with our 5-year average,

Mark: We did not execute any common stock buybacks during the quarter and we don't have any current plans as of right now as we remained focused on the execution of our disposition program to fund our existing capital needs.

Peter Moglia: with 131,768 square feet leased during the quarter, including the first lease signed at 701 Dexter in Seattle and continued leasing progress at 99 Coolidge in Watertown. Another key leasing item we'd like to update you on is the progress on the 786,000 square feet of lease rolls we identified in the third quarter 2024 supplemental, which had a weighted average expiration date of January 21st, 2025. We've leased 20% of this space and have serious prospects for another 30% plus that would resolve approximately half of it in the near term when we execute on it and we are confident that we will.

Turning next to General administrative expenses, we continue to make great progress, toward our goal of annual savings for 2025 of approximately 49 million compared to 2024 through a number of strategic costs savings initiatives.

Mark: Next on dividend policy.

Mark: <unk> approach has been to share cash flows from operating activities with investors and to retain a meaningful amount for reinvestment, which has allowed us to redeem $475 million at the midpoint of our guidance for 2025.

Our trailing, 12 months GNA cost is a percentage of noi with 6.3% and represents our lowest level in the past 10 years. Our best estimate at this point, is that around half of the 2025 GNA savings for 2025, will recur into 2026

Peter F. Wilson: We've leased 20% of this space and have serious prospects for another 30% plus that would resolve approximately half of it in the near term when we execute on it, and we are confident that.

We've leased 20% of this space and have serious prospects for another 30% plus that would resolve approximately half of it in the near term when we execute on it, and we are confident that. We will. Moving to competitive supply in Greater Boston, two competitive projects, one in the Fenway and one in Allston, totaling approximately 565,000sq ft, were delivered completely vacant. This reduced the remaining expected for 2025 delivery to 300,000sq ft, which is unleased. The 2.5 million sq ft expected to deliver in 2026 remains 2/3 pre-leased.

Second quarter, our board elected to maintain the dividend at its current level of $1 32 per quarter or a dividend yield of seven 3% as of quarter end.

Mark: Turning next to guidance, we are holding firm on our guidance for <unk> per share diluted for 25 at $9.26 per share at the midpoint of our garden our guidance range next I'll turn it back to Joel.

Joel Marcus: We will.

next on the development Pipeline with projects under construction and expected to generate significant noi over the next few years. And other earlier stage projects undergoing, important entitlement design and site work necessary to be ready for future ground up development. We are required to capitalize a portion of our gross interest costs.

Peter Moglia: Moving to competitive supply. In Greater Boston, two competitive projects, one in the Fenway and one in Alston, totaling approximately 565,000 square feet were delivered completely vacant. This reduced the remaining expected for 2025 delivery to 300 The 2.5 million square feet expected to deliver in 2026 remains two-thirds pre-launched. In San Francisco, two competitive projects were delivered, one in Menlo Park and one in Millbrae, reducing the space expected for 2025 delivery to 700,000 square feet, which is 32% pre-leased. No additional supply is expected to be delivered after this year. And in San Diego, Alexandria delivered 119,000 square feet of fully leased space at 1 Alexandria Square in Torrey Pines, as I mentioned.

Peter F. Wilson: Moving to competitive supply in Greater Boston, two competitive projects, one in the Fenway and one in Allston, totaling approximately 565,000sq ft, were delivered completely vacant. This reduced the remaining expected for 2025 delivery to 300,000sq ft, which is unleased. The 2.5 million sq ft expected to deliver in 2026 remains 2/3 pre-leased. In San Francisco, two competitive projects were delivered, one in Menlo Park and one in Millbrae, reducing the space expected for 2025 delivery and to 700,000sq ft, which is 32% pre-leased. No additional supply is expected to be delivered after this year. And in San Diego, Alexandria delivered 119,000sq ft of fully leased space at 1 Alexandria Square in Torrey Pines, as I mentioned, and approximately 120,000sq ft of unleased competitive space remains to be delivered here in the second half of the year.

Mark: Can we open it up for questions. Please.

Mark: Absolutely.

Speaker Change: Your question. Please press Star then one on the telephone keypad.

The 466,000 square foot build to suit historical wind. That was recently announced is a great example of the value created by our important pre-construction activities associated with our future pipeline projects, which allowed us to meet the tenants timeline for delivery. In this case,

Speaker Change: Yes. My question has already been addressed to remove yourself from you. Please press Star then two.

Speaker Change: Our first question today comes from Federal grants with Bank of America. Please go ahead.

We remain focused on continuing these important pre-construction activities for our future pipeline, where it makes good Financial sense to continue.

Speaker Change: Good afternoon. Thank you for taking my question I first wanted to congratulate you on the California campus point lease.

In San Francisco, two competitive projects were delivered, one in Menlo Park and one in Millbrae, reducing the space expected for 2025 delivery and to 700,000sq ft, which is 32% pre-leased. No additional supply is expected to be delivered after this year. And in San Diego, Alexandria delivered 119,000sq ft of fully leased space at 1 Alexandria Square in Torrey Pines, as I mentioned, and approximately 120,000sq ft of unleased competitive space remains to be delivered here in the second half of the year.

Speaker Change: But also digging in a little bit deeper to that can you share any possible trends or catalyst that.

Speaker Change: Led up to the steel being able to close I'm curious if there is any initiatives on either re shoring or having larger investments state side that would also be a tailwind for further leasing like this.

On page 45 of our supplemental package. We highlighted that we have a 3 billion dollar investment in various future pipeline projects that required interest to be capitalized in the first half of 2025 while we pursue pre-construction activities but have future project Milestones over the next 18 months and ending in April 2026 on a weighted average basis.

Speaker Change: Well first of all thank you for the compliment.

Speaker Change: No that didn't have anything to do with the onshoring issues that are.

Peter Moglia: And approximately 120,000 square feet of unleased competitive space remains to be delivered here in the second half of the year.

We will continue to routinely evaluate these projects to determine on a project by project basis. Whether to continue, progress, beyond the current milestones, and those decisions will be subject to Future market conditions.

Speaker Change: Currently underway with respect to administration policies it was more.

Peter Moglia: And I want you to note that last quarter I mistakenly said 700,000 square feet was to be delivered in 2025, but that was actually the total amount to be delivered in 2025 and 2026. The 400,000 square feet expected to be delivered in 2026 is 100% pre-lease.

Peter F. Wilson: I want you to note that last quarter I mistakenly said 700,000sq ft was to be delivered in 2025, but that was actually the total amount to be delivered in 25 and 26. The 400,000sq ft expected to be delivered in 2026 is 100% pre-leased. I'll conclude with our Value Harvesting Asset Recycling program, our dispositions and sales of partial interest will be heavily weighted towards Q4. We closed on approximately $84 million in asset sales in Q2. Included in those sales were 2425 Garcia Avenue and 2420 Bayshore Parkway, a set of vacant buildings in our Greater Stanford submarket that were primarily improved as offices and had been highly leased for several years prior to COVID. In addition, we sold an attractive 16.5-acre land site in Texas we did not anticipate developing in.

I want you to note that last quarter I mistakenly said 700,000sq ft was to be delivered in 2025, but that was actually the total amount to be delivered in 25 and 26. The 400,000sq ft expected to be delivered in 2026 is 100% pre-leased. I'll conclude with our Value Harvesting Asset Recycling program, our dispositions and sales of partial interest will be heavily weighted towards Q4. We closed on approximately $84 million in asset sales in Q2. Included in those sales were 2425 Garcia Avenue and 2420 Bayshore Parkway, a set of vacant buildings in our Greater Stanford submarket that were primarily improved as offices and had been highly leased for several years prior to COVID. In addition, we sold an attractive 16.5-acre land site in Texas we did not anticipate developing in.

If we decide to pause our project as it reaches, the next Milestone, capitalization of interest and other required costs would seize on that project.

Speaker Change: An effort by a notable big pharma to bring together.

Speaker Change: Yes.

Speaker Change: Core R&D hub on the West coast and put them in a world class location, where they could continue to recruit and retain and retain great talent and much like Bristol Myers, They chose campus Pointe.

For 2025, we are reiterating our guidance for capitalization of interest. In addition we expect steady to slightly higher capitalized, interest in the back half of the Year mostly driven, by spending on the active pipeline coupled with continued, High interest rates.

Now, on to venture Investments.

Peter Moglia: I'll conclude with our Value Harvesting Asset Recycling Program. Our dispositions and sales of partial interest will be heavily weighted towards the fourth quarter. We closed on approximately $84 million in asset sales in the second quarter. Included in those sales were 2425 Garcia Avenue and 2400 and 2450 Bayshore Parkway, a set of vacant buildings in our Greater Stanford Submarket that were primarily improved as offices and had been highly leased for several years prior to COVID. In addition, we sold an attractive 16.5 acre land site in Texas we did not anticipate developing in the near to medium term.

Speaker Change: We said, we had a great team great solution.

Speaker Change: Great execution.

Speaker Change: Okay. Thank you and and also just in terms of free rent I know you made a comment about it.

Speaker Change: Picking lately what are your thoughts around that I guess thinking and going forward. If it is viewed on a trailing basis, where we see that starting to peak anytime soon or any insights.

For the first half of 2025, we realize, 60 million of gains from our Venture Investments, which are included in ffo per share as adjusted or about 30 million per quarter. Consistent with our last 6, quarters, our outlook for the full year. 2025 remains unchanged with a range of 100 to 130 million.

Next on other income.

Speaker Change: Mark.

Speaker Change: Yes.

Speaker Change: Hard to til. Thanks for your question, Yes. It did go up a little bit this quarter that trend has been relatively consistent for the up until this quarter for the last three or four quarters. So.

This balance primarily includes interesting, come Leasing and other types of management fees fee recognition. For example, can bounce around from quarter to quarter,

Marc Binda: The near to medium term to date.

The near to medium term to date. Dispositions and our share of non-core pending dispositions amount to $785.4 million. Approximately 36% of these dispositions consist of land, 52% are unstabilized improved properties, and 12% are stabilized improved properties. The current identified non-core asset pool that is being marketed or will soon be marketed comprises 25% land, 52% unstabilized properties, and 24% stabilized properties. We expect to achieve a weighted average cap rate on our non-core projected dispositions and partial interest sales including non-stabilized operating properties in the range of 7.5% to 8.5%. The buyer pool for our closed and pending dispositions includes residential developers, municipalities, a health care system, local commercial investor operators, domestic and international private equity users, universities, and domestic core funds.

Speaker Change: It did peak this quarter, given one particular lease that had quite a bit of free rent.

Peter Moglia: To date, dispositions and our share of non-core pending dispositions amount to $785.4 million. Approximately 36% of these dispositions consist of land, 52% are unstabilized improved properties, and 12% are stabilized improved properties.

Peter F. Wilson: Dispositions and our share of non-core pending dispositions amount to $785.4 million. Approximately 36% of these dispositions consist of land, 52% are unstabilized improved properties, and 12% are stabilized improved properties. The current identified non-core asset pool that is being marketed or will soon be marketed comprises 25% land, 52% unstabilized properties, and 24% stabilized properties. We expect to achieve a weighted average cap rate on our non-core projected dispositions and partial interest sales including non-stabilized operating properties in the range of 7.5% to 8.5%. The buyer pool for our closed and pending dispositions includes residential developers, municipalities, a health care system, local commercial investor operators, domestic and international private equity users, universities, and domestic core funds. Here are the key takeaways. First, we continue to deliver transformative projects and incremental NOI from our pipeline.

Speaker Change: So, yes, TBD what that was.

For the first half of 2025, other income was 39.7 million or less than 3% of total revenues. This represents a quarterly average of about 20 million per quarter, which is pretty close to the quarterly average over the last 6 quarters of around 18 million per quarter.

Speaker Change: That looks like in the future.

Speaker Change: Okay. Thank you very much yeah. Thank you.

Seth: And our next question today comes from Seth <unk> with Citi. Please go ahead.

Speaker Change: Thanks, It's Nick just here a SaaS just maybe following up on campus point.

Peter Moglia: The current identified non-core asset pool that is being marketed or will soon be marketed. comprises 25% land. 52% on stabilized properties and 24% stabilized properties. We expect to achieve a weighted average cap rate on our non-core projected dispositions and partial interest sales, including non-stabilized operating properties in the range of 7.5% to 8.5%. The buyer pool for our closed and pending dispositions includes residential developers, municipalities a health care system. Local Commercial Investor Operator. Domestic and International Private Equity Users, Universities, and Domestic Core Funds.

Seth: Just curious if you can give a little more detail.

Seth: From a tenant perspective of what can begin to build to suit versus some of the vacant space in that market available today.

Top 10% of all publicly traded us rates. We have the longest average remaining debt maturity among all S&P. 500 rates at 12 years and tremendously liquidity of 4.6 billion. We remain focused on achieving our year-end leverage Target of 5.2 times for net debt to adjusted ibida by executing on our disposition program, which Peter recovered

Seth: Well I think when you are big and powerful.

Seth: You have a very robust.

Seth: D.

Seth: Sure.

Seth: <unk> effort going on you want really a a location that provides you everything rather than just going through a bunch of random buildings in random locations that really are disaggregated. So I think the power of campus point ultimately it'll be almost 3 million square feet. So we kind of think.

In connection with our disposition program, we recognized impairments of real estate of 129.6 million during the quarter with around 2/3 of that coming from 1 land, parcel in a non-clustered market, which is expected to be sold or residential user and an office property lower located in Northern, uh, San Diego.

Importantly, these sales will raise significant Equity like capital and continue. The trend of enhancing the quality of our asset base with an increased focus on our Mega campus platform.

Speaker Change: If it is almost like city like.

Speaker Change: With every possible amenity you could imagine the greatest place to work to retain and recruit people. It was pretty obvious that in fact.

We are carefully managing our Capital allocation given a high cost of capital in environment.

Here are the key takeaways. First, we continue to deliver transformative projects and incremental NOI from our pipeline. Second, our focused efforts to catalyze development and redevelopment leasing have gained traction. Third, we are making great progress on resolving the 768,000sq ft of move-outs that rolled at the end of 2024 and in Q1 2025. Fourth, further material progress on our asset recycling program will be heavily weighted towards the end of the year, and with that I'll pass it over to Marc.

Peter Moglia: Here are the key takeaways. First, we continue to deliver transformative projects and incremental NOI from our pipeline. Second, our focused efforts to catalyze development and redevelopment leasing have gained traction. Third, we are making great progress on resolving the 768,000 square feet of move-outs that rolled at the end of 2024 and in the first quarter of 2025. And fourth, further material progress on our asset recycling program will be heavily weighted towards the end of the year.

Speaker Change: If somebody wants.

Speaker Change: Somebody wants somebody wants.

For construction spending, we are evaluating some of our 2027 Redevelopment projects for alternative, lower cost investment opportunities and hope to have more to report over the coming quarters.

Speaker Change: Okay.

Peter F. Wilson: Second, our focused efforts to catalyze development and redevelopment leasing have gained traction. Third, we are making great progress on resolving the 768,000sq ft of move-outs that rolled at the end of 2024 and in Q1 2025. Fourth, further material progress on our asset recycling program will be heavily weighted towards the end of the year, and with that I'll pass it over to Marc.

Speaker Change: Okay, Yes, operator, youre getting feedback there if somebody wants a world class location and that was the place to be I think that was the driver and I think the unique design place, making and solution clearly made a huge impact on this tenant.

We did not execute any common stock BuyBacks during the quarter and we don't have any current plans as of right now as we remain focused on the execution of our disposition program to fund our existing Capital needs.

Speaker Change: That's very helpful. Thank you.

Speaker Change: Sorry can I just jump in here. This is Holly one additional add there I mean, you will talk about the amenities, but the other really crucial thing is just the robustness of the infrastructure for these buildings. So these types of requirements can't go to just kind of prefab building in an operator, who.

Next on dividend policy. The board's approach has been to share cash flows from operating activities with investors and to retain a meaningful amount for reinvestment, which has allowed us to retain 475 million at the midpoint of our guidance for 2025.

Marc Binda: And with that, I'll pass it over to Marc. Thank you, Peter. This is Marc Binda, Chief Financial Officer.

Marc Binda: Thank you, Peter. This is Marc Binda, Chief Financial Officer. Hello and good afternoon to everyone on this call. I plan to walk through our performance and outlook and provide greater detail around the disciplined steps we've taken and will continue to take across the portfolio and the pipeline to bolster our strong balance sheet and manage through this period in order to emerge in a position of strength to support our future. First, a big congratulations to the entire Alexandria team for outstanding execution during the quarter and for completing the largest lease in the history of the company earlier this month. Second, our team delivered solid per share results for the quarter. Please refer to our earnings release for our EPS results.

Marc Binda: Hello and good afternoon to everyone on this call. I plan to walk through our performance and outlook and provide greater detail around the discipline steps we've taken and will continue to take across the portfolio and the pipeline to bolster our strong balance sheet and manage through this period in order to emerge in a position of strength to support our future.

Speaker Change: It Hasnt been doing this for a long time given the.

The second quarter, our board elected to maintain the dividend at its current level of 1.32 per quarter or a dividend yield of 7.3% as of quarter end.

Speaker Change: Vibration requirements live loads.

Speaker Change: Power capacity.

Speaker Change: These requirements are really built to suit needs.

Turning next to guidance, we are holding firm on our guidance for espo per share diluted for 25. At $9.26 per share at the midpoint of our garden. Our guidance range next. I'll turn it back to Joel.

Speaker Change: Be accommodated by building down the street.

Uh, can we open it up for questions, please?

Speaker Change: Yeah and remember.

Marc Binda: First, a big congratulations to the entire Alexandria team for outstanding execution during the quarter and for completing the largest lease in the history of the company earlier this month. Second, our team delivered solid per share results for the quarter. Please refer to our earnings release for our EPS results. FFO per share diluted as adjusted was $2.33 for 2Q25 up 1.3% compared to the prior quarter and included the positive impact from the recent development deliveries in San Francisco and San Diego. Occupancy at the end of the quarter was at 90.8%, which was down 90 basis points from the prior quarter.

Speaker Change: Got it.

absolutely, if you'd like to ask a question, please press star 1 on your telephone keypad,

Speaker Change: Sizable amounts of their own capital and much like Bristol Myers is as well.

If your question has already been addressed, you'd like to remove yourself from Q. Please. Press star, then 2

Speaker Change: Thanks, and then just as you look at your leasing pipeline today.

Our first question today comes from Federal grant with Bank of America. Please go ahead.

Speaker Change: What trends are you seeing is it larger states takers is smaller.

Marc Binda: FFO per share diluted as adjusted was $2.33 for Q2 2025, up 1.3% compared to the prior quarter and included the positive impact from the recent development deliveries in San Francisco and San Diego. Occupancy at the end of the quarter was at 90.8%, which was down 90 basis points from the prior quarter. With 75% of our annual rental revenue coming from our highly distinguished mega campus platform, we continue to outperform the rest of the market on occupancy in our biggest three markets. We are reiterating our prior guidance for year-end 2025 occupancy at 90.9% to 92.5%. An important note about our occupancy guidance is that we have 669,000sq ft or about 1.7% to occupancy of leased but not yet delivered space, which will positively impact our occupancy in early 2026 on average upon delivery.

FFO per share diluted as adjusted was $2.33 for Q2 2025, up 1.3% compared to the prior quarter and included the positive impact from the recent development deliveries in San Francisco and San Diego. Occupancy at the end of the quarter was at 90.8%, which was down 90 basis points from the prior quarter. With 75% of our annual rental revenue coming from our highly distinguished mega campus platform, we continue to outperform the rest of the market on occupancy in our biggest three markets. We are reiterating our prior guidance for year-end 2025 occupancy at 90.9% to 92.5%. An important note about our occupancy guidance is that we have 669,000sq ft or about 1.7% to occupancy of leased but not yet delivered space, which will positively impact our occupancy in early 2026 on average upon delivery.

Speaker Change: And are there any any kind of.

Speaker Change: Common themes that you're seeing across.

Speaker Change: Current pipeline, yes, I think it's clearly different different situations in each sub market. Each sub market has its own dynamics, whether it's a headwind or tailwind and it's hard to generalize.

Marc Binda: 75% of our annual rental revenue coming from our highly distinguished mega campus platform, we continue to outperform the rest of the market on occupancy in our biggest three markets. We are reiterating our prior guidance for year-end 2025 occupancy at 90.9% to 92.5%. An important note about our occupancy guidance is that we have 669,000 square feet, or about 1.7% of occupancy, of leased but not yet delivered space, which will positively impact our occupancy in early 2026 on average upon delivery. In addition, our year-end occupancy guidance assumes around a 2% benefit from assets with vacancy which are expected to be sold, of which about a third of that is subject to a signed purchase and sale agreement.

Speaker Change: At all.

Good afternoon. Thank you for taking my question. Uh, I first want to congratulate you on the California Campus, Pointe lease. Um, but also digging in a little bit deeper to that. Can you share any, um, possible Trends or Catalyst that, uh, led up to this deal, being able to close? I'm curious if there's any initiatives on uh, either reshoring or having larger Investments State side. That would also be a Tailwind for further lead.

Speaker Change: Thank you.

Speaker Change: Yes. Thank you thank you and our next call.

Speaker Change: And today comes from Anthony Powell with Jpmorgan. Please go ahead.

Anthony Powell: Great. Thanks.

Speaker Change: First question is just wanted to follow up on some of the occupancy comments you made and so I guess, if I'm understanding the dispositions right. If we were to put those aside and think about sort of the remaining portfolio over the course of the year.

Increasing like this. Uh, well first of all, thank you for the compliment. Uh, know that didn't have anything to do with the onshoring issues that are, uh, currently underway with respect to Administration policies. It was more a an effort by a, you know, a notable, big Pharma to bring together. Uh, its um,

Speaker Change: Did you mention that occupancy will be down 2% than in the second half like kind of if you ignore sort of the dispositions.

Marc Binda: In addition, our year-end occupancy guidance assumes around a 2% benefit from assets with vacancy, which are expected to be sold, of which about 1/3 of that is subject to a signed purchase and sale agreement. Next, on Same-Property NOI, Same-Property NOI was down 5.4% and up 2% on a cash basis for the quarter. Included in Q2 2025 Same-Property results is the full impact from the 768,000sq ft of leases spread across four projects that expired on average in late January 2025 that are now fully included in the Q2 results. We continue to make good progress with these four projects as Peter just highlighted, with 20% leased, with some of that expected to be delivered in late 2025, and we have a user very focused on another 234,000sq ft. We are reiterating our prior guidance for Same-Property performance for 2025.

In addition, our year-end occupancy guidance assumes around a 2% benefit from assets with vacancy, which are expected to be sold, of which about 1/3 of that is subject to a signed purchase and sale agreement. Next, on Same-Property NOI, Same-Property NOI was down 5.4% and up 2% on a cash basis for the quarter. Included in Q2 2025 Same-Property results is the full impact from the 768,000sq ft of leases spread across four projects that expired on average in late January 2025 that are now fully included in the Q2 results. We continue to make good progress with these four projects as Peter just highlighted, with 20% leased, with some of that expected to be delivered in late 2025, and we have a user very focused on another 234,000sq ft. We are reiterating our prior guidance for Same-Property performance for 2025.

Speaker Change: Yes, Tony into in terms of kind of the bridge to year end occupancy we're at 98% today, so kind of right at or just below the bottom end of our range, we're expecting a pickup in occupancy given.

Core R&D Hub on the west coast and put them in a world-class location where they could continue to recruit and retain and retain great talent and much like Bristol Myers. They chose compass point. Uh, as I said, we had great team great solution and uh, great execution.

Marc Binda: Next on same property, same property NOI was down 5.4% and up 2% on a cash basis for the quarter. Included in 2Q25 same property results is the full impact from the 768,000 square feet of leases spread across four projects that expired on average in late January 2025 that are now fully included in the 2Q results. We continue to make good progress with these four projects, as Peter just highlighted, with 20 percent leased, with some of that expected to be delivered in late 2025, and we have a use of very focused on another 234,000 square feet.

Speaker Change: Peter said, a big chunk of the assets that we've identified for sale are non stabilized so they have some vacancy.

Okay, thank you and and also just in terms of free rent, I know you made a comment about it. Up ticking, um, slightly, what are your thoughts around that? Um, I guess thinking and going forward if it's viewed on a trailing basis, will we see that starting to Peak anytime soon or any insights? Yeah. So mark,

Speaker Change: So we're expecting some pick up as those assets get sold.

Speaker Change: And then.

Speaker Change: <unk> got the normal kind of <unk>.

Speaker Change: Leasing to do on the back half of the year. So you put all those pieces together, that's how we get to our year end number.

Speaker Change: Okay, and then got it and then because then you mentioned you also have a bunch of signed but not yet commenced stuff that sounds like that kind of picks up a couple of points early next year, and I guess, where I was going with that is you also added this disclosure around the 2026 explorations and it seems like there's a couple of points that might come.

Yeah, hard hard to tell. Um, thanks for your question. Yeah, it it did go up a little bit. This quarter, you know, that trend has been relatively consistent for the up until this quarter for the last 3 or 4 quarters. So, um, you know it it did Peak this quarter given 1 particular lease that had quite a bit of free rent. Um, so yeah. TBD what that, what that looks like in the future?

Okay. Thank you very much. Yep. Thank you.

Marc Binda: We are reiterating our prior guidance for same property performance for 2025. Three items to note here. First, we expect continued pressure on same property results in the second half of 2025 driven by the recent decline in occupancy. Second, we also expect second half 2025 cash same property results to decline from the first half results given the burn off of initial free rent from last year. And third, our guidance for the full year 2025 same property results also assumes that the same property pool in the back half of the year will change from the first half 2025 pool as we make progress on our disposition program and those assets subsequently become excluded from the pool later in the year.

And our next question, today comes from Seth Bergie with City. Please go ahead.

Marc Binda: Three items to note here. First, we expect continued pressure on same property results in H2 2025 driven by the recent decline in occupancy. Second, we also expect H2 2025 cash same property results to decline from the H1 2025 results given the burn off of initial free rent from last year. And third, our guidance for the full year 2025 same property results also assumes that the same property pool in the H2 of the year will change from the H1 2025 pool as we make progress on our disposition program and those assets subsequently become excluded from the pool later in the year.

Three items to note here. First, we expect continued pressure on same property results in H2 2025 driven by the recent decline in occupancy. Second, we also expect H2 2025 cash same property results to decline from the H1 2025 results given the burn off of initial free rent from last year. And third, our guidance for the full year 2025 same property results also assumes that the same property pool in the H2 of the year will change from the H1 2025 pool as we make progress on our disposition program and those assets subsequently become excluded from the pool later in the year.

Speaker Change: Our early next year, there as well and so just trying to get the next few quarters kind of understand the trajectory.

Speaker Change: Because you laid out a lot of good pieces.

Speaker Change: Yes, Theres a lot of moving pieces, we've got.

Speaker Change: 600 and.

Thanks. It's uh, Nick Joseph here with Seth. Um, just maybe following up on Campus Point. Um, you know, just curious if you can give a little more detail, kind of, you know, from the tenant perspective of what drew them to build the suit versus some of the vacant space in that market available today.

Speaker Change: 600, and change or the one 7%.

Speaker Change: Benefit to occupancy and then we've also got some work to do.

Speaker Change: On some of these 26 explorations a little too early to give you clear guidance in terms of what downtime looks like on that.

Speaker Change: We're really still working through the business plans and the re leasing strategy on those things.

Speaker Change: Okay, and then just second one for me.

Marc Binda: In the meantime, we continue to benefit from a very high quality tenant base with 53% of our ARR coming from investment grade or publicly traded, large cap tenants, long remaining average lease terms of 7.4 years, average rent steps approaching 3% on 97% of our leases, and our adjusted EBITDA margins remain strong at 71% for the most recent quarter, consistent with our five-year average. Turning next to General Administrative Expenses, we continue to make great progress toward our goal of annual savings for 2025 of approximately $49 million compared to 2024 through a number of strategic cost savings initiatives.

Marc Binda: In the meantime, we continue to benefit from a very high quality tenant base with 53% of our ARR coming from investment grade or publicly traded large cap tenants, long remaining average lease terms of 7.4 years, average rent steps approaching 3% on 97% of our leases, and our Adjusted EBITDA margins remain strong at 71% for the most recent quarter consistent with our five year average. Turning next to general administrative expenses, we continue to make great progress toward our goal of annual savings for 2025 of approximately $49 million compared to 2024 through a number of strategic cost savings initiatives. Our trailing twelve months G&A cost as a percentage of NOI was 6.3% and represents our lowest level in the past 10 years.

In the meantime, we continue to benefit from a very high quality tenant base with 53% of our ARR coming from investment grade or publicly traded large cap tenants, long remaining average lease terms of 7.4 years, average rent steps approaching 3% on 97% of our leases, and our Adjusted EBITDA margins remain strong at 71% for the most recent quarter consistent with our five year average. Turning next to general administrative expenses, we continue to make great progress toward our goal of annual savings for 2025 of approximately $49 million compared to 2024 through a number of strategic cost savings initiatives. Our trailing twelve months G&A cost as a percentage of NOI was 6.3% and represents our lowest level in the past 10 years.

Speaker Change: I appreciate the added disclosure around the cap interest that's helpful. The one 4 billion I think you mentioned last quarter that you were going to stop on I think later this year.

Speaker Change: I guess, one is that still planned to be the case in two which bucket in your disclosure does that come out of.

A very robust uh, R&D uh, you know, effort going on. You want really a a location that provides you everything, rather than just going to a bunch of random buildings in random locations that really are disaggregated. So, I think the power of compass point, ultimately, it'll be almost 3 million square feet. So we kind of think of it as almost like City like, uh, with, you know, every possible amenity, you could imagine the greatest place to work to retain and recruit people. It was pretty obvious that, uh, that somebody if somebody want. Oh, oh, somebody wants somebody wants.

Anthony Powell: Yes, that's a part of the $3 billion Tony So we.

Speaker Change: We kind of.

Speaker Change: We tried to pull it together really with everything that we're looking at really the entire future land bank and give some sense of the things that were.

A yeah operator, you're getting feedback there. If somebody wants a world class location then that was the place to be. I think that was the driver and I think the unique design placemaking and solution clearly made a huge impact on this tenant.

Speaker Change: Pretty highly confident we will continue through the end of 2006.

Marc Binda: Our trailing 12-months G&A cost as a percentage of NOI was 6.3% and represents our lowest level in the past 10 years. Our best estimate at this point is that around half of the 2025 G&A savings for 2025 will recur into 2026. Next on the development pipeline, with projects under construction and expected to generate significant NOI over the next few years, and other earlier stage projects undergoing important entitlement design and site work necessary to be ready for future ground-up development, we are required to capitalize a portion of our gross interest cost. The 466,000 square foot build-to-suit historical win that was recently announced is a great example of the value created by our important pre-construction activities associated with our future pipeline projects, which allowed us to meet the tenant's timeline for delivery in this case.

Speaker Change: Versus those things that are either known to be stopping or those things that we're evaluating.

Speaker Change: Based upon the milestones that are in place and where that will go project by project based on a project by project basis, Theres, a theres a ton of projects in there, but that April data is kind of the weighted average date of those milestones.

Marc Binda: Our best estimate at this point is that around half of the 2025 GNA savings for 2025 will recur into 2026. Next, on the development pipeline, with projects under construction and expected to generate significant NOI over the next few years, and other earlier stage projects undergoing important entitlement design and site work necessary to be ready for future ground-up development, we are required to capitalize a portion of our gross interest costs. The 466,000sq ft build-to-suit historical win that was recently announced is a great example of the value created by our important pre-construction activities associated with our future pipeline projects, which allowed us to meet the tenant's timeline for delivery. In this case, we remain focused on continuing these important pre-construction activities for our future pipeline where it makes good financial sense to continue.

Our best estimate at this point is that around half of the 2025 GNA savings for 2025 will recur into 2026. Next, on the development pipeline, with projects under construction and expected to generate significant NOI over the next few years, and other earlier stage projects undergoing important entitlement design and site work necessary to be ready for future ground-up development, we are required to capitalize a portion of our gross interest costs. The 466,000sq ft build-to-suit historical win that was recently announced is a great example of the value created by our important pre-construction activities associated with our future pipeline projects, which allowed us to meet the tenant's timeline for delivery. In this case, we remain focused on continuing these important pre-construction activities for our future pipeline where it makes good financial sense to continue.

That's very helpful. Thank you. Sorry, just, can I just jump in here? This, this is hiei. I 1 additional ad there. I mean, Joel talked about the amenities, um, but but the other really crucial thing is just the robustness of the infrastructure for these buildings. So these types of requirements can't go to, you know, just kind of a prefab building and an operator who, you know, hasn't been doing this for a long time, given the, um, you know, vibration requirements live.

Speaker Change: Okay, but as we know right now that 3 billion bucket will be like one six at year end roughly.

Speaker Change: Yeah, I would expect it to burn down for those projects that we already identified the $1 4 billion that is turning off close to the end of the year.

Loads, you know, power capacity. Um, these requirements are really built to suit needs, um, that can't be accommodated by, you know, a building down the street.

Yeah, and remember, too.

Speaker Change: Okay.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Tony.

Sizable amounts of uh, their own capital in much like Bristol Myers is as well.

Speaker Change: Thank you and our next question today comes from Michael Carroll of RBC capital markets. Please go ahead.

Speaker Change: Yes. Thanks, Joel can you provide some color on what tenants are telling you today I mean, how big of an issue is this FDA leadership change in the most favored nations having on their mindset I mean is that sort of holding them back on making decisions or is it really driven by the macro uncertainty in interest rates, I guess, which bucket or is this more.

Marc Binda: We remain focused on continuing these important pre-construction activities for our future pipeline, where it makes good financial sense to continue. On page 45 of our supplemental package, we highlighted that we have a $3 billion investment in various future pipeline projects that required interest to be capitalized in the first half of 2025 while we pursue pre-construction activities, but have future project milestones over the next 18 months, ending in April 2026 on a weighted average basis. We will continue to routinely evaluate these projects to determine, on a project-by-project basis, whether to continue progress beyond the current milestones, and those decisions will be subject to future market conditions.

Thanks and then just as you look at your leasing pipeline today. Yeah. What trends are you seeing? Is it? Larger space takers? Is it smaller, is it? Um you know, are there any uh any kind of

Marc Binda: On page 45 of our supplemental package, we highlighted that we have a $3 billion investment in various future pipeline projects that required interest to be capitalized in H1 2025 while we pursue pre-construction activities, but have future project milestones over the next 18 months ending in April 2026 on a weighted average basis. We will continue to routinely evaluate these projects to determine on a project-by-project basis whether to continue progress beyond the current milestones, and those decisions will be subject to future market conditions. If we decide to pause our project as it reaches the next milestone, capitalization of interest and other required costs would cease on that project. For 2025, we are reiterating our guidance for capitalization of interest.

On page 45 of our supplemental package, we highlighted that we have a $3 billion investment in various future pipeline projects that required interest to be capitalized in H1 2025 while we pursue pre-construction activities, but have future project milestones over the next 18 months ending in April 2026 on a weighted average basis. We will continue to routinely evaluate these projects to determine on a project-by-project basis whether to continue progress beyond the current milestones, and those decisions will be subject to future market conditions. If we decide to pause our project as it reaches the next milestone, capitalization of interest and other required costs would cease on that project. For 2025, we are reiterating our guidance for capitalization of interest.

Speaker Change: Concerning to most tenants right now.

Speaker Change: Well of course, it depends on the nature of the tenant you've got private biotech they have.

Speaker Change: Common threads that you're seeing across, um, the current pipeline. Yeah, I think it's clearly different, uh, different situations in each submarket. Each submarket has its own Dynamics, whether it's a headwind or tailwind and it's hard to generalize, um, at all.

Speaker Change: He has given.

Speaker Change: A bit of chapter and verse on each of the buckets. So each one has its own concerns.

Speaker Change: Thank you.

Speaker Change: Institutional.

Speaker Change: Yep. Thank you. Thank you. And our next question, today comes from Anthony Pelon. With JP Morgan. Please go ahead.

Speaker Change: Folks they are clearly focused on.

Speaker Change: H reimbursement.

Speaker Change: Public biotechs are focused on the health of the market to finance should they hit clinical milestones.

Speaker Change: Venture is looking at.

Marc Binda: If we decide to pause our project as it reaches the next milestone, capitalization of interest and other required costs would cease on that project. For 2025, we are reiterating our guidance for capitalization of interest. In addition, we expect steady to slightly higher capitalized interest in the back half of the year, mostly driven by spending on the active pipeline, coupled with continued high interest rates.

Speaker Change: How do we put together.

Speaker Change: Our company or grow our company and whats our exit is it M&A is it IPO. So everybody is a bit different at this point, but obviously conservation of cash is critical and interest rates are I think overall, a big have been a big negative for this industry and a lot of different.

Anthony Pelon: Uh, great thanks. Um, first question is just want to follow up on some of the occupancy comments you made. And so, I guess if, if from understanding the dispositions right, if we were to put those aside and think about sort of the remaining portfolio over the course of the year, did you mention that occupancy will be down 2% then in the second half?

Speaker Change: like kind of if you ignore sort of the dispositions,

Marc Binda: In addition, we expect steady to slightly higher capitalized interest in the back half of the year, mostly driven by spending on the active pipeline coupled with continued high interest rates. Now on to venture investments. For H1 2025, we realized $60 million of gains from our venture investments, which are included in FFO per share, as adjusted, or about $30 million per quarter. Consistent with our last six quarters. Our outlook for the full year 2025 remains unchanged with a range of $100 to 130 million. Next, on other income, this balance primarily includes interest income, leasing, and other types of management fees. Fee recognition, for example, can bounce around from quarter to quarter. For H1 2025, other income was $39.7 million, but or less than 3% of total revenues.

In addition, we expect steady to slightly higher capitalized interest in the back half of the year, mostly driven by spending on the active pipeline coupled with continued high interest rates. Now on to venture investments. For H1 2025, we realized $60 million of gains from our venture investments, which are included in FFO per share, as adjusted, or about $30 million per quarter. Consistent with our last six quarters. Our outlook for the full year 2025 remains unchanged with a range of $100 to 130 million. Next, on other income, this balance primarily includes interest income, leasing, and other types of management fees. Fee recognition, for example, can bounce around from quarter to quarter. For H1 2025, other income was $39.7 million, but or less than 3% of total revenues.

Speaker Change: Focal points and.

Joel Marcus: Yeah. Tony in, in terms of kind of the the bridge to year-end occupancy where it, you know, 90.8% today. So, kind of right at the or just below the bottom end of our range.

Speaker Change: When you look at the FDA at the moment as I said, we've seen no tangible evidence of delays of <unk>.

Marc Binda: Now on to venture investments. For the first half of 2025, we realized $60 million of gains from our venture investments, which are included in FFO per share as adjusted, or about $30 million per quarter consistent with our last six quarters. Our outlook for the full year 2025 remains unchanged with a range of $100 to $130 million.

Speaker Change: Responses meaningful responses in them.

Speaker Change: Detailed issues with the FDA, but people are always worried that because any delay means you just burning more capital. So that's that's a key issue in People's minds.

Speaker Change: So how long does it take for them to get comfortable with the FDA situation is it just like time like just kind of proving out over the next one to two quarters than having no issues.

Marc Binda: Next, on other income. This balance primarily includes interest income, leasing, and other types of management fees. Fee recognition, for example, can bounce around from quarter to quarter. For the first half of 2025, other income was $39.7 million, or less than 3% of total revenues. This represents a quarterly average of about $20 million per quarter, which is pretty close to the quarterly average over the last six quarters of around $18 million per quarter. Turning next to the balance sheet and funding, we continue to stand out as our corporate credit ratings rank in the top 10% of all publicly traded U.S.

Speaker Change: We're expecting a a pickup in occupancy, given, you know, as Peter said, a big chunk of the, the assets that we've identified for sale are non-stabilized. So they have some vacancy. Um, so we're expecting some pickup as those assets get sold. Um, and then you've, you know, you've got the normal kind of, um, leasing to do on the back half of the year. So you put all those pieces together, that's that's how we get to our our year end number.

Speaker Change: <unk> when you say they you have to be specific if somebody's.

Speaker Change: If somebody is at the or stage they are not so focused on.

Speaker Change: FDA approvals if somebody is in clinical trials that are hyper focused on it so it totally depends on the nature of the.

Marc Binda: This represents a quarterly average of about $20 million per quarter, which is pretty close to the quarterly average over the last six quarters of around $18 million per quarter. Turning next to the balance sheet and funding, we continue to stand out as our corporate credit ratings rank in the top 10% of all publicly traded US REITs. We have the longest average remaining debt maturity among all S&P 500 REITs at 12 years and tremendous liquidity of $4.6 billion. We remain focused on achieving our year-end leverage target of 5.2x net debt to Adjusted EBITDA by executing on our Disposition program, which Peter covered.

This represents a quarterly average of about $20 million per quarter, which is pretty close to the quarterly average over the last six quarters of around $18 million per quarter. Turning next to the balance sheet and funding, we continue to stand out as our corporate credit ratings rank in the top 10% of all publicly traded US REITs. We have the longest average remaining debt maturity among all S&P 500 REITs at 12 years and tremendous liquidity of $4.6 billion. We remain focused on achieving our year-end leverage target of 5.2x net debt to Adjusted EBITDA by executing on our Disposition program, which Peter covered.

Speaker Change: The nature of the entity that's looking that.

Speaker Change: Youre talking about and the nature of their product or technology. So you just can't you just can't globalize that comment.

Speaker Change: Okay, and then got it and then because then you mentioned you also have a bunch of signed but not yet commenced stuff that sounds like that kind of picks up a couple of points early next year. And I guess where I was going with that is you also added this disclosure around the 2026 expirations and it seems like there's a couple points that might come out early next year there as well. And so just trying to get the next few quarters kind of understand the trajectory. And because you laid out a lot of good pieces,

Speaker Change: Okay, and then just lastly on NIH issue I guess with the budget holding steady is there issues with NIH or the ft or.

Marc Binda: REITs. We have the longest average remaining debt maturity among all S&P 500 REITs at 12 years and tremendous liquidity of $4.6 billion. We remain focused on achieving our year-end leverage target of 5.2 times for net debt to adjusted EBITDA by executing on our disposition program, which Peter covered. In connection with our disposition program, we recognized impairments to real estate of $129.6 million during the quarter, with around two-thirds of that coming from one land parcel in a non-cluster market, which is expected to be sold to a residential user, and an office property located in northern San Diego.

Speaker Change: They each age does not doling out the capital.

Speaker Change: Or is that that is behind them that.

Speaker Change: That is I think Kelly mentioned that is a problem, they're worried about will the 15% limitation.

Speaker Change: Yeah, there's there's a lot of moving pieces, we've got, um, the 600 and and um, 600 and change with the the 1.7% uh benefit to occupancy. And then we've also got some work to do on some of these 26 expirations uh, a little too early to

Speaker Change: On indirect costs B b.

Marc Binda: In connection with our Disposition program, we recognized impairments at real estate of $129.6 million during the quarter, with around 2/3 of that coming from one land parcel in a non-cluster market, which is expected to be sold to a residential user, and an office property located in Northern San Diego. Importantly, these sales will raise significant equity-like capital and continue the trend of enhancing the quality of our asset base. With an increased focus on our Mega Campus platform, we are carefully managing our capital allocation given a high cost of capital environment for construction spending. We are evaluating some of our 2027 redevelopment projects for alternative lower cost investment opportunities and hope to have more to report over the coming quarters.

In connection with our Disposition program, we recognized impairments at real estate of $129.6 million during the quarter, with around 2/3 of that coming from one land parcel in a non-cluster market, which is expected to be sold to a residential user, and an office property located in Northern San Diego. Importantly, these sales will raise significant equity-like capital and continue the trend of enhancing the quality of our asset base. With an increased focus on our Mega Campus platform, we are carefully managing our capital allocation given a high cost of capital environment for construction spending. We are evaluating some of our 2027 redevelopment projects for alternative lower cost investment opportunities and hope to have more to report over the coming quarters.

Speaker Change: Be held up and that will be the.

Joel Marcus: Give you clear guidance in terms of what downtime looks like on that, um, as we're, we're really still working through the business plans and the releasing strategy on those things.

Speaker Change: The land going forward. They are also worried about.

Speaker Change: The NIH not issuing grants, which they have cut back a lot of Dave.

Speaker Change: <unk>.

Speaker Change: Capital, but they haven't issued it and so that creates a capital supply to institutions that is disruptive and that we've clearly seen.

Marc Binda: Importantly, these sales will raise significant equity-like capital and continue the trend of enhancing the quality of our asset base with an increased focus on our mega-campus platform. We're carefully managing our capital allocation given a high cost of capital environment. For construction spending, we are evaluating some of our 2027 redevelopment projects for alternative lower cost investment opportunities and hope to have more to report over the coming quarters.

Speaker Change: As.

Speaker Change: Interest. That's helpful. The the 1.4 billion. I think you mentioned last quarter that you were going to stop on I think later this year which I mean I guess 1 is that's still planned to be the case and 2 which bucket and your disclosure does that come out of

Speaker Change: Our force of Holdback from the institutional side, although we are still making some deals.

Speaker Change: As we said.

Speaker Change: Yeah, that's a that's a part of the 3 billion. Tony. So we we we kind of um,

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: Thank you and our next question today comes from Vikram Malhotra with Mizuho. Please go ahead.

Marc Binda: We did not execute any common stock buybacks during the quarter, and we don't have any current plans as of right now as we remain focused on the execution of our disposition program to fund our existing capital needs. Next, on dividend policy, the Board's approach has been to share cash flows from operating activities with investors and to retain a meaningful amount for reinvestment, which has allowed us to retain $475 million at the midpoint of our guidance for 2025. For the second quarter, our board elected to maintain the dividend at its current level of $1.32 per quarter or a dividend yield of 7.3% as of quarter end. Turning next to guidance, we are holding firm on our guidance for FFO per share diluted for 2025 at $9.26 per share at the midpoint of our guidance range. Next, I'll turn it back to Joel.

We did not execute any common stock buybacks during the quarter, and we don't have any current plans as of right now as we remain focused on the execution of our disposition program to fund our existing capital needs. Next, on dividend policy, the Board's approach has been to share cash flows from operating activities with investors and to retain a meaningful amount for reinvestment, which has allowed us to retain $475 million at the midpoint of our guidance for 2025. For the second quarter, our board elected to maintain the dividend at its current level of $1.32 per quarter or a dividend yield of 7.3% as of quarter end. Turning next to guidance, we are holding firm on our guidance for FFO per share diluted for 2025 at $9.26 per share at the midpoint of our guidance range. Next, I'll turn it back to Joel.

Marc Binda: We did not execute any common stock buybacks during the quarter and we don't have any current plans as of right now as we remain focused on the execution of our disposition program to fund our existing capital needs. Next on dividend policy, the board's approach has been to share cash flows from operating activities with investors and to retain a meaningful amount for reinvestment, which has allowed us to retain $475 million at the midpoint of our guidance for 2025. For the second quarter, our board elected to maintain the dividend at its current level of $1.32 per quarter, or a dividend yield of 7.3% as of quarter end.

Speaker Change: Good afternoon, Thanks for taking the question I guess.

Speaker Change: Hum.

Speaker Change: Peter I, just wanted to get a clinical you've got.

Speaker Change: Good build to suit opportunity.

Speaker Change: Hopefully more down the road.

Speaker Change: I'm just wondering if there are some talk about dealing with catheter needs.

Speaker Change: And in a foster a bigger way than sort of.

Speaker Change: Every quarter sort of waiting for transactions and I guess my point being is still a very robust private catheter market you laid out a lot of interested parties. So I'm wondering if there's a bigger JV core assets, our core asset in the offing or that Youre contemplating.

Speaker Change: We tried to pull it together. Really, with everything that we're looking at really the entire future land bank and give some sense of the things that were pretty highly confident. We'll continue through the end of 26, uh, versus those things that are either, you know, known to be stopping or those things that were evaluating, um, you know, based upon the Milestones that are in place. And we're you know, that'll that'll go project by Project B in on a project by project basis. There's a there's a ton of projects in there but that April date is is kind of the weighted average date of those milestones.

Joel Marcus: Okay. But as we know right now that 3 billion bucket will be like 1.68 year end roughly

Speaker Change: Well I'll, let Peter comment, but I think from the top side I think it's important that what we're trying to do as you know is focus our asset base heavily on the Mega campus.

Marc Binda: Turning next to guidance, we are holding firm on our guidance for ESPO per share diluted for $25 at $9.26 per share at the midpoint of our guidance range.

Joel Marcus: Yeah, I would expect it to burn down for those projects that we that we already identified, the 1.4 billion that that is turning off, close to the end of the year.

Joel Marcus: Okay.

Okay, thank you.

Joel Marcus: Yep, thanks dummy.

Speaker Change: Asset base and we've made great progress on that because we think at the end of the day.

Joel Marcus: Next, I'll turn it back to Joel.

Speaker Change: Thank you. And the next question today comes from Michael. Carroll at RBC Capital markets. Please go ahead.

Speaker Change: Those.

Unknown Executive: Can we open it up for questions, please? Absolutely. If you'd like to ask a question, please press star then one on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from the queue, please press star then 2.

Joel Marcus: Can we open it up for questions please?

Holly Pieter: Those destinations for the reasons that we've mentioned Hollie mentioned some of the specific.

Operator: Absolutely. If you'd like to ask a question, please press star then one on your telephone keypad. If your question has already been addressed or you'd like to remove yourself from the queue, please press star then two. Our first question today comes from Farrell Granath with Bank of America. Please go ahead.

Holly Pieter: Attributes of why people would want to do a build to suit versus.

Holly Pieter: Just a an existing building, but clearly if the quality of the asset quality the operation and obviously the quality of the brand and the financial capability.

Farrell Granath: Our first question today comes from Farrell Granath with Bank of America. Please go ahead. Good afternoon, thank you for taking my question.

Hallie Kuhn: Good afternoon. Thank you for taking my question. I first wanted to congratulate you on the California Campus Point lease. Also digging in a little bit deeper to that, can you share any possible trends or catalysts that led up to this deal being able to close? I'm curious if there's any initiatives on either reshoring or having larger investments stateside that would also be a tailwind for further leasing like this.

Farrell Granath: Good afternoon. Thank you for taking my question. I first wanted to congratulate you on the California Campus Point lease. Also digging in a little bit deeper to that, can you share any possible trends or catalysts that led up to this deal being able to close? I'm curious if there's any initiatives on either reshoring or having larger investments stateside that would also be a tailwind for further leasing like this.

Michael Carroll: Yep, thanks. Um, Joel can you provide some color on on what tenants are are telling you today? I mean, how big of an issue is this FDA leadership change in the most Favored Nations having on on their mindset? I mean, is that's what holding them back on on making decisions or is it really driven by the macro on 13 interest rates? I guess which bucket are is more concerning to to most tenants right now.

Joel Marcus: I first wanted to congratulate you on the California Campus Point lease, but also digging in a little bit deeper to that. Can you share any possible trends or catalysts that led up to this deal being able to close? I'm curious if there's any initiatives on either reshoring or having larger investments stateside that would also be a tailwind for further leasing like this?

Holly Pieter: That we have compared to operators who were just have.

Holly Pieter: Maybe a vacant building.

Holly Pieter: Capital challenged I think it's important as we go forward, we're just going to be very careful we think owning more of our Mega campus is actually a good idea as opposed to not.

Michael Carroll: Well, of course it depends on the nature of the tenant, you've got, you know, private biotech. They have and alli's given uh a bit of chapter and verse on each of the buckets. So each 1 has its own concerns uh, institutional. Uh,

Holly Pieter: Not owning as much. So that's why we're continuing to pair our land holdings are not.

Marc Binda: Well, first of all, thank you for the compliment. No, that didn't have anything to do with the on-shoring issues that are currently underway with respect to administration policies. It was more an effort by a, you know, a notable big pharma to bring together its or R&D Hub on the West Coast and put them in a world-class location where they could continue to recruit and retain great talent. And much like Bristol-Myers, they chose Campus Point. As I said, we had a great team, great solution, and great execution.

Joel Marcus: Well, first of all, thank you for the compliment. No, that didn't have anything to do with the onshoring issues that are currently underway with respect to administration policies. It was more an effort by a, you know, a notable big pharma to bring together its core R and D hub on the west coast and put them in a world-class location where they could continue to recruit and retain great talent. And much like Bristol-Myers, they chose Campus Point. As I said, we had great team, great solution, and great execution.

Holly Pieter: Non core assets and even some.

Holly Pieter: Key assets that may not be.

Holly Pieter: Integrated with our Mega campus so at the moment.

Speaker Change: Strategy, we're going to follow but Peter I don't know if you have any comments.

Speaker Change: Yes, I mean I agree with everything you just said I guess I would just let everybody know that we have a tremendous amount of equity and our mega campuses.

Michael Carroll: Folks, they're clearly focused on uh, NIH, uh, reimbursement, um, uh, public biotechs are focused on, you know, the health of the market to finance should they hit clinical Milestones? Um, Ventures. Looking at, you know, how do we put together a, uh, a company or grow a company? And what's our exit is? It m&a, is it IPO? So everybody's a bit different at this point, but obviously conservation of cash is critical.

Speaker Change: And if we had made to make a strategic transaction too.

Speaker Change: Monetize some of it to pay for an opportunity like what we have in front of us in San Diego, we could do so but as Joel said.

Speaker Change: We would prefer to own more of that than less of it. So we are going down the road.

Hallie Kuhn: Okay, thank you. And also just in terms of free rent, I know you made a comment about it upticking slightly. What are your thoughts around that? I guess thinking and going forward, if it's viewed on a trailing basis, will we see that starting to peak anytime soon or any insights?

Farrell Granath: Okay, thank you. And also just in terms of free rent, I know you made a comment about it upticking slightly. What are your thoughts around that? I guess thinking and going forward, if it's viewed on a trailing basis, will we see that starting to peak anytime soon or any insights?

Unknown Executive: Okay, thank you.

Marc Binda: And also, just in terms of free rent, I know you made a comment about it upticking slightly. What are your thoughts around that? I guess thinking and going forward, if it's viewed on a trailing basis, will we see that starting to peak anytime soon? Or any insights? Yeah, so Marc Yeah, hard to tell. Thanks for your question. Yeah, it did go up a little bit this quarter. You know, that trend has been relatively consistent for the up until this quarter for the last three or four quarters. So you know, it did peak this quarter given one particular lease that had quite a bit of free rent.

Speaker Change: Selling things like land and on stabilized properties.

Speaker Change: And then if that isn't enough then we have the backstop of the bigger transaction.

Michael Carroll: And interest rates are I think overall a big have been a big negative for this industry, in a lot of different uh, focal points. And uh, you know, when you look at the FDA at the moment, as I said, we've seen no tangible evidence of delays of, um, responses meaningful responses and, um, uh, detailed issues with the FDA. But people are always wary of that because any delay means you just burning more Capital. So that's, you know, that's a key issue in people's minds.

Speaker Change: Monetizing some of that equity.

Joel Marcus: Yeah, so Marc.

Speaker Change: Okay, and then just second one I guess.

Marc Binda: Yeah, hard to tell. Thanks for your question. Yeah, it did go up a little bit this quarter. You know, that trend has been relatively consistent for the up until this quarter for the last three or four quarters. So you know, it did peak this quarter given one particular lease that had quite a bit of free rent. So yeah, TBD what that looks like in the future.

Speaker Change: You laid out a path about occupancy headwinds near term.

Speaker Change: But maybe if we can step back can you give us a sense of how you see this playing out you know.

Speaker Change: Call. It over the next 18 months or when are we going to cross.

Speaker Change: Where are you specifically.

Speaker Change: Maybe if you can embellish that when there's a bit of like how strong is up potential build to suit pipeline for you guys.

Marc Binda: So yeah, TBD what that what that looks like in the future.

Speaker Change: Okay, well I'll ask mark to maybe comment on occupancy, but let me just give you a couple of thoughts there. There are couple of things you asked one on windows, maybe leasing become more robust.

Hallie Kuhn: Okay, thank you very much.

Farrell Granath: Okay, thank you very much.

Unknown Executive: Okay, thank you very much. Yep, thank you.

Joel Marcus: Yep, thank you.

Michael Carroll: How long does it take for them to get comfortable with the FDA situation? Is it just like time? Like just kind of proving it out over the next 1 to 2 quarters, then having no issues then is then our test. Well, when you say they they you have to be specific if somebody's uh if somebody's at the r stage, they're not so focused on um uh you know, FDA approvals, if somebody's in clinical trials, they're hyper focused on it. So it totally depends on the nature of the, the, the nature of the entity. That's looking, you know, that you're talking about and the nature of their product or technology. So you just can't you, you just can't globalize that comment.

Operator: Our next question today comes from Seth Berge with Citi. Please go ahead.

Nicholas Joseph: And our next question today comes from Seth Berge with Citi. Please go ahead.

Operator: Our next question today comes from Seth Berge with Citi. Please go ahead.

Marc Binda: Thanks. It's Nick Joseph here with Seth. Just maybe following up on Campus Point. You know, just curious if you can give a little more detail kind of, you know, from the tenant perspective of what drew them to build-to-suit versus some of the vacant space in that market available today.

Nick Joseph: Thanks. It's Nick Joseph here with Seth. Just maybe following up on Campus Point. You know, just curious if you can give a little more detail kind of, you know, from the tenant perspective of what drew them to build-to-suit versus some of the vacant space in that market available today.

Joel Marcus: Thanks, it's Nick Joseph here with Seth. Just maybe following up on campus point, you know, just curious if you can give a little more detail kind of, you know, from the tenant perspective of what drew them to build the suit versus some of the vacant space in that market available today. I think when you are big and powerful and you have a very robust R&D, you know, effort going on, you want really a location that provides you everything rather than just going to a bunch of random buildings in random locations that really are disaggregated. So, I think the power of Campus Point, ultimately it will be almost 3 million square feet, so we kind of think of it as almost like city-like with, you know, every possible amenity you could imagine, the greatest place to work, to retain and recruit people.

Speaker Change: Obviously, I think the capital markets are going to have a huge amount to do without.

Speaker Change: And hopefully <unk> got what eight months left on his term he is going it's pretty clear that the fed has got a move in the direction of lowering rates, which is good for everybody, including servicing the national debt.

Joel Marcus: I think when you are big and powerful and you have a very robust R and D effort going on, you want really a location that provides you everything rather than just going to a bunch of random buildings in random locations that really are disaggregated. So I think the power of Campus Point, ultimately it'll be almost 3 million sq ft. So we kind of think of it as almost like city-like with, you know, every possible amenity you could imagine, the greatest place to work to retain and recruit people. It was pretty obvious that if somebody wants. Oh, oh, somebody wants. Somebody wants. Yeah, operator, you're getting feedback there. If somebody wants a world-class location, then that was the place to be.

Speaker Change: And so that's going to be Super helpful and I think as.

Speaker Change: <unk> and.

Speaker Change: Cherry at the NIH and Dr. Ross, who we understand is doing a great job over at CMS as those agencies become.

Michael Carroll: Okay, and then and just lastly, on on the NIH issue, I guess with the budget holding steady is there issues with the NIH? Or, um, the or, um, the Ah, that's not doing out the capital? Um, or is that behind them? Yeah, I mean, that is I think hely mentioned that is a problem. They're worried about, you know, will the 15% limitation, um, on indirect costs be, you know, be held up and, uh, that will be the, you know, the lay of the land going forward. They're also worried about um, the NIH, not issuing, uh grants, which uh, they've cut back a lot of they've

Speaker Change: More stabilized from the transition and really operating at a much more peak performance effort and people get very comfortable with what's going on I think it's moving in that direction.

Speaker Change: Some really good signs about after a lot of turmoil.

Appropriated, uh, Capital. But they have an issued it. And so that, uh, creates a capital Supply to institutions that is disruptive and that we've clearly seen uh, as uh, a force of, um, hold back from the institutional side, although we're still making some deals, you know, as we said

Speaker Change:

Speaker Change: I think youll start to see.

Hallie Kuhn: It was pretty obvious that somebody wants... Yeah, operator, you're getting feedback there. If somebody wants a world class location, then that was the place to be. I think that was the driver. And I think the unique design placemaking and solution clearly made a huge impact on this.

Speaker Change: Thank you. Yep. Thank you.

Speaker Change: Those combinations of both policy and.

Speaker Change: Interest rates impacting the capital markets and I think youll see decisions moving faster than they have and a positive decision, making regarding leasing but mark on occupancy.

Thank you. And our next question. Today comes from Victor up with Mizzou. Please go ahead.

Victor: Uh, good afternoon. Thanks for taking the question, I guess, you know, Joel, um, and Peter, I just wanted to get a sense of you've got

Joel Marcus: I think that was the driver and I think the unique design, place making, and solution clearly made a huge impact on this tenant.

I think that was the driver and I think the unique design, place making, and solution clearly made a huge impact on this tenant.

Speaker Change: Yes.

Speaker Change: We refer you vikram to the discussion we had with Tony.

Speaker Change: Earlier in the call.

Victor: You know, a good bill to food opportunity. Um, hopefully more down the road. Um, I'm just wondering is there a, you know, some thought about dealing with capital needs?

Speaker Change: We held our occupancy guidance, where it was at.

Marc Binda: That's very helpful, thank you.

Nick Joseph: That's very helpful, thank you.

Unknown Executive: That's very helpful. Thank you.

Speaker Change: We're right just below the low end of the guidance range right now at 98%.

Unknown Executive: Sorry, can I just jump in here?

Hallie Kuhn: Sorry, can I just jump in here? This is Hallie. One additional add there. I mean, Joel talked about the amenities, but the other really crucial thing is just the robustness of the infrastructure for these buildings. So these types of requirements can't be met by, you know, just kind of prefab building and an operator who, you know, hasn't been doing this for a long time given the, you know, vibration requirements, live loads, you know, power capacity. These requirements are really build-to-suit needs that can't be accommodated by, you know, a building down the street.

Hallie Kuhn: This is Hallie. One additional add there. I mean, Joel talked about the amenities. But the other really crucial thing is just the robustness of the infrastructure for these buildings. So these types of requirements can't go to, you know, just kind of prefab building and an operator who, you know, hasn't been doing this for a long time, given the, you know, vibration requirements, live loads, you know, power capacity. These requirements are really built to suit needs that can't be accommodated by, you know, a building down the street. Yeah, and remember to remember to put in and put sizable amounts of their own capital in much like Bristol-Myers.

Speaker Change: <unk> got a good.

Speaker Change: A good head start in terms of what that looks like for next year with the with the space. That's leased that is going to be delivering but at the same time, we've got the the lease rolls that we highlighted that we need to deal with as well and we will have.

Victor: You know, in in a faster bigger way than sort of, um, you know, every quarter sort of waiting for transactions and I guess my point being there's still a very robust private Capital Market. You laid out a lot of interested parties, so I'm wondering if there's a, you know, a bigger JV of a core asset or a core asset in the offing that you're contemplating.

Speaker Change: More to come on those as we flesh out the the re leasing strategies.

Speaker Change: Hopefully in the coming quarters.

Speaker Change: Thank you.

Speaker Change: Next question is what I heard from homes held for wood with BTG. Please go ahead.

Marc Binda: Yeah.

Joel Marcus: Yeah.

Joel Marcus: Remember too, sizable amounts of their own capital in much like Bristol-Myers is as well.

Remember too, sizable amounts of their own capital in much like Bristol-Myers is as well.

Speaker Change: Well I'll let Peter, you know, comment but I think from the top side I think it's important that what we're trying to do is you know is focus our asset base heavily on the mega campus um asset base. And uh you know we've made great progress on that because we think at the end of the day it's those um those destinations for the reasons that we've mentioned, how he mentioned some of the specific

Speaker Change: Thank you and good afternoon, everybody Joe you mentioned in the prepared remarks, five developments, where you are making progress in some of these saw a boost in <unk> leasing like 701, Dexter and the Sylvan road buildings, but.

Marc Binda: Thanks. Then just as you look at your leasing pipeline today, what trends are you seeing? Is it larger space takers, is it smaller? Is it, you know, are there any kind of common threads that you're seeing across the current pipeline?

Nick Joseph: Thanks. Then just as you look at your leasing pipeline today, what trends are you seeing? Is it larger space takers, is it smaller? Is it, you know, are there any kind of common threads that you're seeing across the current pipeline?

Unknown Executive: Thanks.

Unknown Executive: And then just as you look at your leasing pipeline today, what trends are you seeing? Is it larger space takers? Is it smaller? Is it, you know, are there any, any kind of Common threads that you're seeing across the current pipeline. Yeah, I think it's clearly different situations in each sub-market. Each sub-market has its own dynamics, whether it's a headwind or tailwind, and it's hard to generalize at all.

Speaker Change: Others like 269 East Grand didn't show a change or are you seeing an uplift in prospects for space, but they havent reached the in negotiation stage, yet and if so what's driving that range.

Joel Marcus: Yeah, I think it's clearly different situations in each submarket. Each submarket has its own dynamics, whether it's a headwind or tailwind, and it's hard to generalize at all.

Speaker Change: Correct.

Speaker Change: Again.

Speaker Change: You asked that question before it really is submarket and building or campus specific.

Speaker Change: As to why a particular space.

Unknown Executive: Thank you. Yep, thank you.

Marc Binda: Thank you.

Nick Joseph: Thank you.

Speaker Change: Space or location as is being looked at it just it's hard to generalize beyond a building a campus submarket. It just you just can't do that so they are very very case specific.

Joel Marcus: Yep, thank you.

Operator: Thank you. And our next question today comes from Anthony Paolone with JPMorgan. Please go ahead.

Anthony Paolone: Thank you. And our next question today comes from Anthony Paolone with J.P. Morgan. Please go ahead. Great, thanks. First question is just want to follow up on some of the occupancy comments you made.

Peter F. Wilson: Great, thanks. First question is just want to follow up on some of the occupancy comments you made. And so I guess if from understanding the dispositions. Right. If we were to put those aside and think about sort of the remaining.

Anthony Paolone: Great, thanks. First question is just want to follow up on some of the occupancy comments you made. And so I guess if from understanding the dispositions. Right. If we were to put those aside and think about sort of the remaining. Portfolio over the course of the year. Did you mention that occupancy will be down 2% then in the second half, like kind of if you ignore sort of the dispositions?

You know, attributes of why people would want to, you know, do a build a suit versus, you know, just a, uh, an existing building. But clearly it's the quality of the asset, the quality of the operation, and obviously the quality of the brand and the, uh, Financial capability, uh, that we have compared to operators who are just have, you know, maybe a vacant building and are, you know, Capital challenge, I think it's important. Um, as we go forward, we're just going to be very careful, we think, owning more of our Mega campus is actually a good idea as opposed to, uh, not owning as much. So that's why we're continuing to prepare our land Holdings, uh our uh, non-core assets, and even some uh, key assets that may not be, um, integrated with our Mega campus. So at the moment that that's the strategy we're going to follow, but Peter, I don't know if you have any comments.

Marc Binda: And so I guess if, if I'm understanding the dispositions, right, if we were to put those aside and think about sort of the remaining portfolio over the course of the year, did you mention that occupancy will be down 2% then in the second half, like kind of if you ignore sort of the dispositions? Yeah, Tony, in terms of kind of the bridge to year end occupancy, we're at, you know, 90.8% today. So kind of right at the or just below the bottom end of our range. We're expecting a pickup in occupancy given, you know, as Peter said, a big chunk of the assets that we've identified for sale are non-stabilized, so they have some vacancy.

Speaker Change: And remember the majority of our leases come from existing tenants. So we have a line of sight that most people don't have.

Yeah, I mean, I agree with everything you just said, I, I, I guess I would just let everybody know that, you know, we have a tremendous amount of equity in our Mega campuses.

Joel Marcus: Portfolio over the course of the year.

Peter F. Wilson: Did you mention that occupancy will be down 2% then in the second half, like kind of if you ignore sort of the dispositions?

Speaker Change: On.

Speaker Change: and if we hadn't made it make a strategic transaction to

Speaker Change: On future tendencies.

Speaker Change: Just.

Speaker Change: A lot of people would be flying blind just waiting for brokers to bring people buy on tours, but I think we have a much more in depth.

Marc Binda: Yeah, Tony, in terms of kind of the bridge to year-end occupancy, we're at, you know, 90.8% today. So kind of right at or just below the bottom end of our range, we're expecting a pickup in occupancy given, you know, as Peter said, a big chunk of the assets that we've identified for sale are non-stabilized. So we're expecting some pickup as those assets get sold and then you've, you know, you've got the normal kind of leasing to do on the back half of the year. So you put all those pieces together. That's how we get to our year-end number. Okay.

Speaker Change: Pipeline opportunity with existing clients, who are looking for expansion et cetera.

Speaker Change: Got you so just to clarify so the that pipeline of prospects than is larger and kind of increasing compared to what it would have been a quarter or a year ago is that how we should read through on that.

Speaker Change: Uh, monetize some of it to pay for an opportunity. Like what we have in front of us in San Diego, we could do so. But as Joel said, um, we would prefer to own more of that than less of it. So we are going down the road of uh, selling things like land and unstabilized properties. Uh, and then if that, uh isn't enough, then we have the back stop of uh of a bigger transaction um monetizing some of that equity.

Marc Binda: So we're expecting some pickup as those assets get sold. And then, you know, you've got the normal kind of leasing to do on the back half of the year. So you put all those pieces together, that's how we get to our year-end number. Okay, and then got it.

Speaker Change: Okay, and then just second 1, I guess.

Speaker Change: Joe.

Speaker Change: Yes go ahead.

Speaker Change: I can I can verify that.

Speaker Change: I track.

Speaker Change: Along with the regions coming.

Speaker Change: Company by company prospects and it has.

Anthony Paolone: Okay. Got it. And then, because then you mentioned you also have a bunch of signed but not yet commenced stuff that sounds like. That kind of picks up a couple. Of points early next year. I guess where I was going with that is you also added this disclosure around the 2026 expirations. It seems like there's a couple points that might come out early next year there as well. So just trying to get the next few quarters, kind of understand the trajectory, and because you laid out a lot of good pieces.

Peter F. Wilson: Got it. And then, because then you mentioned you also have a bunch of signed but not yet commenced stuff that sounds like.

Marc Binda: And then because then you mentioned you also have a bunch of signed but not yet commenced stuff that sounds like that kind of picks up a couple of points early next year. And I guess where I was going with that is you also added this disclosure around the 2026 expirations, and it seems like there's a couple points that might come out early next year there as well. And so just trying to get the next few quarters kind of understand the trajectory, and because you laid out a lot of good pieces. Yeah, there's there's a lot of moving pieces.

Speaker Change: It has.

Speaker Change: Grown as we have put significant effort into focusing on this leasing as I mentioned in my comments. So I can tell you. It has gotten it has increased the pool of prospects has increased now the time to make decisions remains elongated.

Marc Binda: That kind of picks up a couple.

Peter F. Wilson: Of points early next year. I guess where I was going with that is you also added this disclosure around the 2026 expirations. It seems like there's a couple points that might come out early next year there as well. So just trying to get the next few quarters, kind of understand the trajectory, and because you laid out a lot of good pieces.

Speaker Change: You can't translate that comment too we're going to have more leasing next quarter.

Speaker Change: Um, you need a part about occupancy, uh, headwinds near them. Um, but maybe if we can step back, can you give us a sense of how you see this playing out, you know, call it over the next 18 months and when are we going to cross? Uh, for are specifically. And maybe if you can embellish that with a little bit of like how strong is a potential build to suit pipeline for you guys. Thanks. Okay. Well, I'll ask Mark to maybe comment on occupancy, but let me just give you a couple of thoughts. There, there are a couple of things you asked, 1 on, you know, when does um, maybe leasing become more robust. Uh, obviously I think the capital markets are going to have a huge amount to do with that.

Speaker Change: But we are pleased with the amount of prospects, we're seeing for these development.

Marc Binda: Yeah, there's a lot of moving pieces. We've got the 600 and 600 and change or the 1.7% benefit to occupancy. And then we've also got some work to do on some of these 26 expirations. A little too early to give you clear guidance in terms of what downtime looks like on that as we're really still working through the business plans and the releasing strategy on those things.

Speaker Change: For our development pipeline.

Marc Binda: We've got the 600 and 600 and change or the 1.7% benefit to occupancy. And then we've also got some work to do on some of these 26 expirations, a little too early to give you clear guidance in terms of what downtime looks like on that, as we're really still working through the business plans, and the releasing strategy on those things.

Speaker Change: But remember too I think if you take what Peter just said so many specific these are very case specific.

Speaker Change: A new initiative new partnership.

Speaker Change: Financing a milestone those are things that drive decisions beyond just.

Speaker Change: People, who are in the market.

Speaker Change: Um, and hopefully, you know, Pal's got what, 8 months left on his term. He's going, it's pretty clear that the FED has got to move in the direction of lowering rates, which is good for everybody, including servicing the national debt. Um, and so that's going to be super helpful. And I think as, um, McCary and, um, about a chariot the NIH, and Dr. Oz, who we, uh, understand is doing a great job over at CMS as those agencies become.

Speaker Change: Compared one quarter to another year to year and Thats, what makes the big difference and that's that's a very hard to generalize.

Peter F. Wilson: Okay. And then just second one for me. Appreciate the added disclosure around the cap interest.

Anthony Paolone: Okay. And then just second one for me. Appreciate the added disclosure around the cap interest. That's helpful. The $1.4 billion I think you mentioned last quarter that you were going to stop on, I think later this year, which, I mean, I guess one is, that's still planned to be the case. And two, which bucket in your disclosure does that come out of?

Marc Binda: Okay, and then just second one for me. Appreciate the added disclosure around the cap interest that's helpful. The 1.4 billion I think you mentioned last quarter that you were going to stop on I think later this year, which I mean, I guess one is that's still planned to be the case? And two, which bucket in your disclosure does that come out of? Yeah, that's a that's a part of the three billion, Tony. So we we we kind of We tried to pool it together really with everything that we're looking at, really the entire future land bank, and give some sense of the things that we're pretty highly confident will continue through the end of 26 versus those things that are either, you know, known to be stopping or those things that we're evaluating, you know, based upon the milestones that are in place, and we're, you know, that'll go project by project, you know, on a project by project basis.

Speaker Change: <unk> to quarter.

Speaker Change: Got it really appreciate all that color.

Joel Marcus: That's helpful.

Peter F. Wilson: The $1.4 billion I think you mentioned last quarter that you were going to stop on, I think later this year, which, I mean, I guess one is, that's still planned to be the case. And two, which bucket in your disclosure does that come out of?

Speaker Change: And then Peter just a small one here just wanted to understand how you classify certain leasing.

Peter Denmark: In the quarter, you did roughly 286000 square feet of development redevelopment and kind of previously vacant space leasing and you mentioned 131000 square feet of development and redevelopment leasing.

Marc Binda: Yeah, that's a part of the $3 billion, Tony. So we kind of, we tried to pull it together really with everything that we're looking at, really the entire future land bank and give some sense of the things that we're pretty highly confident will continue through the end of 2026 versus those things that are either, you know, known to be stopping or those things that we're evaluating, you know, based upon the milestones that are in place. And we're, you know, that'll go project by project, you know, on a project by project basis. There's a ton of projects in there. But that April date is kind of the weighted average date of those milestones. Okay.

Peter Denmark: On the gap between those two roughly 155000 square feet I assume thats previously vacant space is that first gen space that was previously delivered vacant or is that second gen space. That's just been vacant over a set period of time, how do we think about the classification of that.

Speaker Change: More stabilized from the transition and really operating at a much more Peak Performance effort, and people get very comfortable with what's going on. I think it's moving in that direction. Uh, there's some really good signs of that. After a lot of turmoil. Um, I think you'll start to see, uh, those combinations of both policy and, uh, uh, uh, interest rates, impacting the capital markets. And I think you'll see decisions moving faster than they have and, uh, positive decision-making regarding leasing, but Mark on occupancy.

Peter Denmark: Mark you can tell you can correct me, if I'm wrong, but that is the vacant space the existing properties.

Peter Denmark: That's right that's right Peter.

Peter Denmark: So that goes right into signed not commenced leases that's not part of the development pipeline Redeveloped pipeline nothing like that correct correct.

Marc Binda: There's a ton of projects in there, but that April date is kind of the weighted average date of those milestones. Okay, but as we know right now, that three billion bucket will be like 1.6 a year end, roughly. Yeah, I would expect it to burn down for those projects that we that we already identified the 1.4 billion that is turning off close to the end of the year. Okay, thank you. Yep. Thanks. Thank you.

Anthony Paolone: Okay. But as we know right now, that $3 billion bucket will be like $1.68 year end roughly.

Peter Denmark: It's just our general operating portfolio vacancy.

Peter F. Wilson: But as we know right now, that $3 billion bucket will be like $1.68 year end roughly.

Peter Denmark: Perfect. That's it for me thanks, everyone. Okay, yes, thanks, Tom.

Speaker Change: You know, we're we, we held our occupancy guidance where it was at. Um, we're right, you know, just below the low end of the guidance range right now at 90.8%. Um, we've got a good, you know, a good Head Start in terms of what that looks like for next year with the, um, with the space. That's least that is going to be delivering, but at the same time, we've got the, um, the lease roles that we highlighted, uh, that we need to deal with as well, and we'll have, uh, you know, kind of more to come on those as we flush out the the uh, releasing strategies, um, hopefully, in the coming quarters.

Marc Binda: I would expect it to burn down for those projects that we already identified. The $1.4 billion that is turning off close to the end of the year.

Speaker Change: Our next question today comes from OMA to Arkansas.

Speaker Change: I can start with Deutsche Bank. Please go ahead.

Speaker Change: Yes.

Speaker Change: Thank you. Have a question from. Would would be please go ahead.

Peter F. Wilson: Okay. Okay, thank you. Yep.

Anthony Paolone: Okay. Okay, thank you.

Speaker Change: Good afternoon.

Peter M. Moglia: Yep. Thanks, Dunny.

Joel Marcus: Thanks, Dunny.

Speaker Change: Joe again.

Operator: Thank you. Our next question today comes from Michael Carroll at RBC Capital Markets. Please go ahead.

Speaker Change: Wanted to add my congrats on the large build to suit lease.

Michael Carroll: And our next question today comes from Michael Carroll at RBC Capital Markets. Please go ahead. Yeah, thanks, Joel. Can you provide some color on on what tenants are telling you today? I mean, how big of an issue is this FDA leadership change in the most favored nations having on on their mindset? I mean, is that's what holding them back on making decisions? Or is it really driven by the macro uncertainty and interest rates? I guess which bucket is more concerning to most tenants right now?

Speaker Change: It's great to see that.

Speaker Change: Have a nice proof of concept there.

Joel Marcus: Yep.

Michael Carroll: Yep. Thanks. Joel, can you provide some color on what tenants are telling you today? I mean, how big of an issue is this FDA leadership change in the Most Favored Nation having on their mindset? I mean, that's what's holding them back on making decisions, or is it really driven by the macro uncertainty and interest rates? I guess, which bucket is more concerning. To most tenants right now?

Marc Binda: Thanks. Joel, can you provide some color on what tenants are telling you today? I mean, how big of an issue is this FDA leadership change in the Most Favored Nation having on their mindset? I mean, that's what's holding them back on making decisions, or is it really driven by the macro uncertainty and interest rates?

Speaker Change: In terms of that project.

Speaker Change: First of all what Youre doing cost would look like and what potentially could look like.

Speaker Change: Stay tuned on those we haven't we haven't really.

Speaker Change: Put those into the sub at this point, but there'll be forthcoming.

Speaker Change: Thank you and good afternoon, everybody. Uh, Joel, you mentioned in the prepared marks, 5 developments where you're making progress and some of these saw a boost in 2culi sing like 701 Dexter. And and the silvin road buildings uh but a few others like 269 East Grand didn't show a change. Are are you seeing an uplift in prospects for space? But they haven't reached the in negotiation stage yet. And and if that. What's driving? That change? Correct.

Joel Marcus: I guess, which bucket is more concerning.

Speaker Change: That's correct. Um, I again

Speaker Change: And then the 2021 redevelopment project.

Marc Binda: To most tenants right now?

Joel Marcus: Well, of course, it depends on the nature of the tenant. You've got, you know, private biotech; they have, and Hallie's given a bit of chapter and verse on each of the buckets. So each one has its own concerns. Institutional folks, they're clearly focused on NIH reimbursement. Public biotechs are focused on, you know, the health of the market to finance should they hit clinical milestones; ventures, looking at how do we put together a company or grow a company and what's our exit? Is it M&A? Is it IPO? So everybody's a bit different at this point, but obviously conservation of cash is critical, and interest rates are, I think overall, a big. Have been a big negative for this industry in a lot of different focal points.

Joel Marcus: Well, of course, it depends on the nature of the tenant, you've got, you know, private biotech, they have, and Hallie's given a bit of chapter and verse on each of the buckets. So each one has its own concerns, institutional, Folks, they're clearly focused on NIH reimbursement. Public biotechs are focused on, you know, the health of the market to finance should they hit clinical milestones. Ventures looking at, you know, how do we put together a company or grow a company and what's our exit? Is it M&A, is it IPO? So everybody's a bit different at this point, but obviously conservation of cash is critical and interest rates are, I think, overall a big, have been a big negative for this industry in a lot of different focal points.

Speaker Change: Just wanted to visit some of the comments are really around looking at alternatives around some of those projects whether you could give a couple of examples of kind of what else you're kind of considering at this point to kind of create shareholder value from them.

Speaker Change: Well I mean, it's obvious in today's market and some of these locations and we've seen.

Somebody asked that question before, it really is submarket and building or campus specific um as to why a particular, you know, space or location is uh is being looked at it. Just it's hard to generalize Beyond a building, a campus a submarket, it just, you know, you just can't do that. So they are very, very case specific

Speaker Change: This phenomena happen before and that kind of a different era, where you.

Speaker Change: 2015 to 2020, we were inundated by Big Tech and large tech users wanting to come into our campuses and even into lab buildings for their own use for security purposes or quality of buildings.

Speaker Change: And remember the majority of our leases come from existing tenants. So we have a line of sight that most people don't have um,

you know on uh on future tenies uh that you know, just

So everybody's a bit different at this point, but obviously conservation of cash is critical, and interest rates are, I think overall, a big. Have been a big negative for this industry in a lot of different focal points. When you look at the FDA at the moment, as I said, we've seen no tangible evidence of delays of responses, meaningful responses, and detailed issues with the FDA. People are always wary of that because any delay means you're just burning more capital. That's a key issue in people's minds.

Speaker Change: Quality of sponsorship of course, and we're seeing some of that in some of our locations now with the new generation of <unk>.

Speaker Change: Tech companies.

Joel Marcus: And, you know, when you look at the FDA at the moment, as I said, we've seen no tangible evidence of delays of responses, meaningful responses, and detailed issues with the FDA, but people are always wary of that because any delay means you're just burning more capital. So that's, you know, that's a key issue. So how long did it take for them to get comfortable with the FDA situation? Is it just like time, like just kind of proving it out over the next one to two quarters, then having no issues, then our team will be comfortable with that?

Joel Marcus: When you look at the FDA at the moment, as I said, we've seen no tangible evidence of delays of responses, meaningful responses, and detailed issues with the FDA. People are always wary of that because any delay means you're just burning more capital. That's a key issue in people's minds.

You a lot of people would be Flying Blind just waiting for Brokers to, you know, bring people buy on tours but I think we have a much more in-depth, uh, pipeline opportunity, with existing clients, who are looking for expansion Etc.

Speaker Change: And I think Peter and others have mentioned.

Speaker Change: Mission Bay is a great example, where AI has been on a tear and gobbling up space Some bill.

Speaker Change: Buildings that were destined to be lab buildings and others that were office. So I think we're seeing some of that in some of our submarkets.

Yeah just so just to to clarify. So the that pipeline of prospects then is larger and kind of increasing compared to what it would have been a quarter or a year ago. Is that how we should read through on that?

Speaker Change: Well, I would, yeah, go ahead.

Speaker Change: Helpful. Thank you.

Marc Binda: So how long did it take for them to get comfortable with the FDA situation? Is it just like time just kind.

Michael Carroll: So how long did it take for them to get comfortable with the FDA situation? Is it just like time just kind. Of proving out over the next one. To two quarters having no issues, then R10?

Joe, I I can I I can verify that. I mean I I I track

Speaker Change: Along with the regions.

Speaker Change: Thank you and our next question today comes from Peter Abramowitz with Jefferies. Please go ahead.

Joel Marcus: Of proving out over the next one.

Peter F. Wilson: To two quarters having no issues, then R10?

Speaker Change: Company by company prospects. And it has we, it has

Speaker Change: Yes. Thank you.

Joel Marcus: Well, when you say they, you have to be specific. If somebody's at the R stage, they're not so focused on, you know, FDA approvals. If somebody's in clinical trials, they're hyper focused on it. So it totally depends on the nature of the nature of the entity that's looking, you know, that you're talking about and the nature of their product or technology. So you just can't, you just can't globalize that comment.

Joel Marcus: Well, when you say they, you have to be specific. If somebody's, if somebody's at the R stage, they're not so focused on, you know, FDA approvals. If somebody's in clinical trials, they're hyper-focused on it. So it totally depends on the nature of the, the nature of the entity that's looking, you know, that you're talking about and the nature of their product or technology. So you just can't, you just can't globalize that conversation. Okay.

Speaker Change: Just wanted to dig in a little bit more on the 26.

Speaker Change: Known Vacates.

Speaker Change: Any sense of kind of timing and how long you would expect it will take to release those.

Speaker Change: grown as we have put significant effort into focusing on, uh, this leasing as I mentioned in my comments so I can tell you it has gotten uh,

Speaker Change: Yes, I think I'll, let mark comment, but on our assumptions, but.

Speaker Change: Again, theyre very very like I've said, a couple of times on the call Peter.

Speaker Change: It hasn't created the pool of prospects as increased now. The time did make decisions remains elongated so you can't translate that comment to we're going to have more leasing next quarter.

Speaker Change: Very case specific to buildings to campus and things like that but Mark you can comment on our assumptions.

Marc Binda: Okay. Then just lastly on the NIH issue, I guess with the budget holding steady, are there issues with NIH or the HHS just not doling out the capital or is that behind them?

Michael Carroll: Okay. Then just lastly on the NIH issue, I guess with the budget holding steady, are there issues with NIH or the HHS just not doling out the capital or is that behind them?

Speaker Change: But we are pleased with the amount of prospects we're seeing for these development. Uh,

Joel Marcus: And then just lastly, on the NIH issue, I guess, with the budget holding steady, is there issues with the NIH or the AHH that's not doling out the capital? Or is that behind them? Yeah, I mean, that is, I think Hallie mentioned, that is a problem. They're worried about, you know, will the 15% limitation on indirect costs be, you know, be held up and that will be the, you know, the lay of the land going forward. They're also worried about the NIH not issuing grants, which they've cut back a lot of, they've Appropriated Capital, but they haven't issued it, and so that creates a capital supply to institutions that is disruptive.

Speaker Change: For our development pipeline.

Mark: Yes, it will really depend Peter on on the amount of capital that we put into those sites. The biggest one is a project in greater Stanford that.

Speaker Change: Yeah, but remember too, I think if you take what Peter just said

Joel Marcus: Yeah, I mean, that is, I think Hallie mentioned that is a problem they're worried about. You know, will the 15% limitation on indirect costs be, you know, be held up, and that will be the, you know, the lay of the land going forward. They're also worried about the NIH not issuing grants which they've cut back a lot of. They've appropriated capital but they haven't issued it. And so that creates a capital supply to institutions that is disruptive, and that we've clearly seen as a force of holdback from the institutional side. Although we're still making some deals, you know, as we said.

Mark: We acquired with the intent to redevelop a number of years ago and as at least is starting to burn off.

Mark: We are evaluating other opportunities whether it.

Mark: Whether it should go to lab or.

Mark: At market.

Mark: Has had interest from other types of advanced technology users. So there may be opportunities to do other things there. So really hard to kind of give you a sense for where we're going to end up in terms of downtime, but theres a good chance that those properties will require some capital to lease.

Speaker Change: So many specific, these are very case specific um a new initiative, a new partnership. Uh, a financing a milestone. Those are things that drive decisions, Beyond just, you know, people who are in the market uh compared to 1 quarter to another a year to year. And that's what makes the big difference. And that's, that's a very hard to generalize uh quarter to quarter.

Unknown Executive: And that we've clearly seen as a force of holdback from the institutional side, although we're still making some deals, you know, as we said. Okay, thank you. Yep, thank you. Thank you.

Speaker Change: Alright. Thank you and then my other question you called out specifically yields coming in above your underwriting at some of the deliveries in Torrey pines.

Marc Binda: Okay, thank you.

Michael Carroll: Okay, thank you.

Speaker Change: What did you say those those improvements on rents are kind of specific to those projects for that sub market.

Joel Marcus: Yep, thank you.

Marc Binda: Thank you.

Operator: Thank you. Our next question today comes from Vikram Malhotra with Mizuho. Please go ahead.

Operator: Our next question today comes from Vikram Malhotra with Mizuho. Please go ahead.

Vikram Malhotra: And our next question today comes from Vikram Malhotra with Mizzou Hill. Please go ahead. Good afternoon. Thanks for taking the question. I guess, you know, Joel, and Peter, I just wanted to get a sense of you've got, you know, good built to food opportunity, hopefully more down the road. I'm just wondering, is there a, you know, some thought about dealing with capital needs You know, in a faster, bigger way than sort of, you know, every quarter sort of waiting for transactions. And I guess my point being, there's still a very robust private capital market, you laid out a lot of interested parties.

Speaker Change: Or generally is there a sense that things are accelerating in the market overall, yes Peter.

Joel Marcus: Good afternoon.

Vikram Malhotra: Good afternoon.Thanks King.The question, I guess, you know, Joel. Peter, I just wanted to get a sense of you've got a good build-to-suit opportunity, hopefully more down the road. I'm just wondering, is there some thought? About dealing with capital needs in a.Faster, bigger way than sort of every. Quarter sort of waiting for transactions? And I guess my point being there's still a very robust private capital market. You laid out a lot of interested parties. I'm wondering if there's a bigger. JV of a core asset, or a core asset, in the offering that you're contemplating.

Marc Binda: Thanks King.

Peter F. Wilson: The question, I guess, you know, Joel.

Marc Binda: Peter, I just wanted to get a sense of you've got a good build-to-suit opportunity, hopefully more down the road.

Speaker Change: That particular project is just very high quality and once it opened in the first tenant started moving in.

Speaker Change: Got it really appreciate all that color. Um and then Peter just a a small 1 here. Just wanted to understand how you classify certain leasing. So in in the quarter you did roughly 286,000 square feet of development Redevelopment and kind of previously vacant space leasing. Then you mentioned 131,000 square feet of development and Redevelopment leasing on on the gap between those 2, roughly 155,000 square feet. I assume that's previously vacant space is that firstg space that was previously, delivered vacant, or is that second gen space that's just been vacant over a set period of Time. How do we think about the classification of that?

Peter F. Wilson: I'm just wondering, is there some thought?

Speaker Change: Um Mark you can tell you can correct me if I'm wrong but that is vacant space of existing properties.

Marc Binda: About dealing with capital needs in a.

Speaker Change: Right.

Speaker Change: That's right, that's right. Peter

Speaker Change: There was a lot of buzz in the market, we've just been able to push so it's specific to the project, but it's also.

Peter F. Wilson: Faster, bigger way than sort of every.

Marc Binda: Quarter sort of waiting for transactions? And I guess my point being there's still a very robust private capital market. You laid out a lot of interested parties.

Speaker Change: I guess something that you were not surprised because we do play in the high quality asset game.

Speaker Change: Plan Redevelopment pipeline. Nothing like that correct.

Joel Marcus: So I'm wondering if there's a, you know, a bigger JV of a core asset or a core asset in the offering that you're contemplating? Well, I'll let Peter, you know, comment. But I think from the top side, I think it's important that what we're trying to do, as you know, is focus our asset base heavily on the mega campus asset base. And, you know, we've made great progress on that, because we think at the end of the day, it's those, those destinations for the reasons that we've mentioned, Hallie mentioned some of the specific, you know, attributes of why people would want to, you know, do a build a suit versus, you know, just a, an existing building.

Peter F. Wilson: I'm wondering if there's a bigger.

Speaker Change: Correct. It it it's it's just our general operating portfolio, vacancy.

Marc Binda: JV of a core asset, or a core asset, in the offering that you're contemplating.

Speaker Change: Tenants are willing to pay for value.

Perfect. That's it for me. Thanks everyone. Okay. Yeah, thanks Tom.

Speaker Change: So I think it's a good takeaway.

Joel Marcus: Well, I'll let Peter comment, but I think from the top side I think it's important that what we're trying to do, as you know, is focus our asset base heavily on the mega campus asset base. We've made great progress on that because we think at the end of the day it's those destinations for the reasons that we've mentioned. Hallie mentioned some of the specific, you know, attributes of why people would want to, you know, do a build-to-suit versus you know, just an existing building. But clearly it's the quality of the asset, the quality of the operation, and obviously the quality of the brand and the financial capability that we have compared to operators who are just have maybe a vacant building and are capital challenged. Think it's important as we go forward we're just going to be very careful.

Speaker Change: That happened that.

Speaker Change: There is certainly still supply.

Speaker Change: Next question. Today comes from omato ausa with Deutsche Bank, please go ahead.

Speaker Change: On a supply overall.

Speaker Change: Overlap in the markets, but.

Speaker Change: With the build to suit lease we signed in with the above.

Speaker Change: Underwriting rents we achieved at.

Speaker Change: One Alexandra is square I think it proves that tenants are willing to pay for quality.

Speaker Change: Alright. Thank.

Speaker Change: Thank you, yes, and remember just one kind of footnote. The reconciliation bill provided a variety of incentives, including things like permanent expensing for domestic RMB bonus depreciation expensing of qualified production properties, all of which bode well for onshoring supply line kinds of issues.

Joel Marcus: But clearly, it's the quality of the asset, the quality of the operation, and obviously, the quality of the brand and the financial capability that we have compared to operators who are just have, you know, maybe a vacant building and are, you know, capital challenged, think it's important. As we go forward, we're just going to be very careful, we think owning more of our mega campus is actually a good idea, as opposed to, not owning as much. So that's why we're continuing to pair our land holdings, our non core assets, and even some key assets that may not be integrated with our mega campus.

Joel Marcus: Uh, yes, um, good. Uh, good afternoon. Uh, Joel again, uh, wanted to add my own, congrats on the large, uh, Bill to see lead. It's just good to see that as a, as a nice proof of concept there. Uh, in terms of that project have you discussed at all, what the building costs could look like. And what potential deals could look like? Yeah, stay tuned on those. We haven't, uh, we haven't really, uh, you know, put those into the sub at this point, but they'll they'll be forthcoming.

Speaker Change: Yeah. Sounds good. And then the 2027, we development project.

Speaker Change: There's a lot of thinking that's going on with the bunch of different users as to when how and what they may do with the with space that were.

Joel Marcus: We think owning more of our Mega Campus is actually a good idea as opposed to not owning as much. So that's why we're continuing to pair our land holdings, our non-core assets, and even some key assets that may not be integrated with our Mega Campus. So at the moment that that's the strategy we're going to follow. But Peter, I don't know if you have any comments.

We think owning more of our Mega Campus is actually a good idea as opposed to not owning as much. So that's why we're continuing to pair our land holdings, our non-core assets, and even some key assets that may not be integrated with our Mega Campus. So at the moment that that's the strategy we're going to follow. But Peter, I don't know if you have any comments.

Speaker Change: Having conversations about.

Speaker Change: I just wanted to visit some of the comments area around, you know. We cannot Alternatives around some of those projects whether, you know, you could give a couple of examples of kind of what also kind of considering at this point, to kind of create your hold of value from them.

Speaker Change: Okay.

Speaker Change: Thank you and our next question today comes from Bill and Brzezinski with Green Street. Please go ahead.

Peter Moglia: So at the moment, that that's the strategy we're going to follow. But Peter, I don't know if you have anything to add to that. Yeah, I mean, I agree with everything you just said, I guess I would just let everybody know that, you know, we have a tremendous amount of equity in our mega campuses. And if we had to make a strategic transaction to monetize some of it to pay for an opportunity like what we have in front of us in San Diego, we could do so. But as Joel said, we would prefer to own more of that than less of it.

Speaker Change: Yeah.

Speaker Change: Hi, guys. Thanks for taking the question most of mine have been asked but I just wanted to sort of.

Speaker Change: If you can discuss sort of the reasoning why you guys raised cap rates on the dispositions is that more representative of change in cap rates across the property sector or more so related to just the types of assets you guys are selling and that means that a noncore potentially with near term lease roll hair on it.

Peter F. Wilson: Yeah, I mean I agree with everything you just said. I guess I would just let everybody know that, you know, we have a tremendous amount of equity in our mega campuses. And if we had to make a strategic transaction to monetize some of it to pay for an opportunity like what we have in front of us in San Diego, we could do so. But as Joel said, we would prefer to own more of that than less of it. So we are going down the road of selling things like land and unstabilized properties. And then if that isn't enough, then we have the backstop of a bigger transaction monetizing some of that equity.

Peter M. Moglia: Yeah, I mean I agree with everything you just said. I guess I would just let everybody know that, you know, we have a tremendous amount of equity in our mega campuses. And if we had to make a strategic transaction to monetize some of it to pay for an opportunity like what we have in front of us in San Diego, we could do so. But as Joel said, we would prefer to own more of that than less of it. So we are going down the road of selling things like land and unstabilized properties. And then if that isn't enough, then we have the backstop of a bigger transaction monetizing some of that equity.

Speaker Change: Peter.

Speaker Change: Yes.

Speaker Change: It is just reflective of the fact that a lot of these.

Speaker Change: Assets are in transition so.

Speaker Change: We're always trying to be very measured on even commenting on cap rates for these sales because they don't really represent the core of what Alexandria is going to look like in the future. So a lot of these assets have a little bit of Walt so the cap rate gets increased because.

Peter Moglia: So we are going down the road of selling things like land and unstabilized properties. And then if that isn't enough, then we have the backstop of a bigger transaction, monetizing some of that equity.

Speaker Change: Well, I mean, it it's obvious in today's market and some of these locations. And we've seen, uh, this phenomena happen before in a kind of a different era where, you know, 2015 to 2020 we were inundated by big Tech and large Tech users wanting to come into our campuses and even in the lab buildings for, you know, their own use for security purposes or quality of buildings, uh, quality of sponsorship of course, and we're seeing some of that in some of our locations. Now with the new generation of um tech companies. Uh, and I think Peter and others have mentioned. Um, you know, Mission Bay is a great example, where AI has been on a tear in, you know, gobbling up space. Some you know buildings that were destined to be lab buildings and others that were office. So I think we're seeing some of that, uh, in some of our submarkets.

Helpful. Thank you.

Peter Bravo: And another question today, comes from Peter Bravo. With with Jeffrey's, please go ahead

Speaker Change: <unk>.

Marc Binda: Okay, and then just second one, I guess you laid out a part about occupancy headwinds near term, but maybe if.

Vikram Malhotra: Okay, and then just second one, I guess you laid out a part about occupancy headwinds near term, but maybe if. We can step back and you give. Us a sense of how you see. This playing out, you know, call it over the next 18 months, and when are we going to trough for ARE. Specifically, and maybe if you can embellish that a little bit of like how? Strong is a potential build-to-suit. Pipeline for you guys. Thanks.

Marc Binda: Okay, and then just second one, I guess, you laid out a part about occupancy headwinds near term. But maybe if we can step back and you give us a sense of how you see this playing out, you know, call it over the next 18 months, or when are we going to cross for AREs specifically? And maybe if you can embellish that with a little bit of like, how strong is a potential built to suit pipeline for you guys? Okay, well, I'll ask Marc to maybe comment on occupancy, but let me just give you a couple of thoughts there.

Speaker Change: The buyers taking a chance on the renewals so it's really asset specific.

Speaker Change: And we just have a lot of assets in transition and what we're trying to sell in one of the reasons that they are non core.

Peter F. Wilson: We can step back and you give.

Marc Binda: Us a sense of how you see.

Peter F. Wilson: This playing out, you know, call it over the next 18 months, and when are we going to trough for ARE.

Peter Bravo: Yeah, thank you. Um, just wanted to uh, to dig in a little bit more on the the 26th, uh, known vacate. Um, any any sense of kind of timing and how long you would expect it'll take to release those.

Marc Binda: Specifically, and maybe if you can embellish that a little bit of like how?

Speaker Change: Theyre not on Mega campuses.

Peter F. Wilson: Strong is a potential build-to-suit.

Speaker Change: Alright Thats helpful. Thank you guys.

Marc Binda: Pipeline for you guys. Thanks.

Joel Marcus: Okay, well, I'll ask Marc to maybe comment on occupancy. But let me just give you a couple of thoughts there. There are a couple of things you asked. One on, you know, when does maybe leasing become more robust? Obviously, I think the capital markets are going to have a huge amount to do with that. And hopefully, you know, Powell's got what, eight months left on his term. He's going to. It's pretty clear that the Fed has got to move in the direction of lowering rates, which is good for everybody, including servicing the national debt. And so that's going to be super helpful. And I think as Makary and Bhattacharya at the NIH and Dr.

Speaker Change: Thank you and our final question today comes from Tim.

Ken: Ken <unk> with Evercore. Please go ahead.

Joel Marcus: There are a couple of things you asked. One on, you know, when does maybe leasing become more robust? Obviously, I think the capital markets are going to have a huge amount to do with that. And hopefully, you know, Paol's got, what, eight months left on his term. He's going. It's pretty clear that the Fed has got to move in the direction of lowering rates, which is good for everybody, including servicing the national debt. And so that's going to be super helpful. And I think as McCary and Botticelli at the NIH and Dr. Oz, who we understand is doing a great job over at CMS, as those agencies become more stabilized from the transition and really operating at a much more peak performance effort, and people get very comfortable with what's going on, I think it's moving in that direction.

Speaker Change: Good afternoon, Thank you thinking.

Peter Bravo: Yeah, I think I'll let Mark comment but on our assumptions but uh again they're very very like I've said a couple times on the call Peter it's a very case specific to buildings to campus and things like that. But Mark you can comment on our assumptions

Ken: Thinking about the $3 billion.

Ken: Actually go or no go projects and on page 45.

Ken: The interest expense.

Ken: The order of magnitude.

Ken: Overhead and other pre development cost in dollar terms are you capitalizing on that.

Ken: Cohort.

Ken: Yes, hi, Jim its mark.

Ken: If you if you look at our 10-Q, we do disclose.

Ken: Capitalized operating expenses really property taxes insurance and other direct costs as well as overhead that number if you do the math is around 3%.

Joel Marcus: Oz, who we understand is doing a great job over at CMS as those agencies become more stabilized from the transition and really operating at a much more peaceful performance effort and people get very comfortable with what's going on, I think it's moving in that direction. There's some really good signs of that. After a lot of turmoil, I think you'll start to see those combinations of both policy and interest rates impacting the capital markets. I think you'll see decisions moving faster than they have and positive decision making regarding leasing. Marc, on occupancy.

Oz, who we understand is doing a great job over at CMS as those agencies become more stabilized from the transition and really operating at a much more peaceful performance effort and people get very comfortable with what's going on, I think it's moving in that direction. There's some really good signs of that. After a lot of turmoil, I think you'll start to see those combinations of both policy and interest rates impacting the capital markets. I think you'll see decisions moving faster than they have and positive decision making regarding leasing. Marc, on occupancy.

Ken: So that should give you a sense for.

Ken: What could come with that if some of that stuff.

Ken: Turns off capitalization.

Ken: You mentioned, the 3% actually at a run rate.

Mark: Yeah. It it'll really depend Peter on on the amount of capital that we that we put into those sites. The the biggest 1 is a project in Greater Stanford that you know, we acquired with the intent to redevelop a number of years ago and as that lease is starting to to burn off, um, we're evaluating other opportunities whether you know, whether it should go to lab or, you know, that market, um, has had, uh, interests from other types of advanced, um, technology users. So there may be opportunities to do other things there. Um, so really hard to kind of give you a sense for where we're going to end up in terms of downtime. But, um, there's a good chance that those properties will require some Capital to lease.

Ken: Ounces are basis is a good guesstimate.

Ken: That's right based upon if you just look at the six months. The first six months, that's what it translates to as a percentage of the the basis being capitalized perfect. Thank you and then second related question.

Marc Binda: There's some really good signs of that after a lot of turmoil. I think you'll start to see those combinations of both policy and interest rates impacting the capital markets. And I think you'll see decisions moving faster than they have and positive decision-making regarding leasing.

Ken: Not a fair percentage of those 3 billion or is that $3 billion of assets. If that's a new.

Ken: No go decision would they not likely be sales mean, alexanders, probably not going to hold onto them and at this time or do you think.

Mark: All right, thank you. Uh, and my other question you called out specifically uh yields coming in above your underwriting at some of the deliveries in in Torrey Pines. Um, would you say those those improvements on rents are kind of specific to those projects or that submarket. Um, or generally is, is, is there a sense that that things are accelerating in in the market overall? Yeah. Peter

Marc Binda: But Marc, on occupancy. Yeah, I would just refer you, Vikram, to the discussion we had with Tony earlier in the call, you know, where we held our occupancy guidance where it was at. We're right, you know, just below the low end of the guidance range right now at 90.8%. We've got a good, you know, a good head start in terms of what that looks like for next year with the space that's leased that is going to be delivering, but at the same time, we've got the lease rules that we highlighted that we need to deal with as well.

Ken: He bought the wrong way.

Ken: Yes.

Ken: For sure.

Operator: Yeah.

Marc Binda: Yeah. I would just refer you, Vikram, to the discussion we had with Tony earlier in the call. You know, we held our occupancy guidance where it was at. We're right, you know, just below the low end of the guidance range right now at 90.8%. We've got a good, you know, head start in terms of what that looks like for next year with the space that's leased that is going to be delivering. But at the same time we've got the lease rolls that we highlighted that we need to deal with as well. And we'll have kind of more to come on those as we flesh out the releasing strategies hopefully in the coming quarters.

Marc Binda: I would just refer you, Vikram, to the discussion we had with Tony earlier in the call. You know, we held our occupancy guidance where it was at. We're right, you know, just below the low end of the guidance range right now at 90.8%. We've got a good, you know, head start in terms of what that looks like for next year with the space that's leased that is going to be delivering. But at the same time we've got the lease rolls that we highlighted that we need to deal with as well. And we'll have kind of more to come on those as we flesh out the releasing strategies hopefully in the coming quarters.

Speaker Change: There is a chunk of the $3 billion that we are evaluating for sale.

well that that particular project is just very high quality and once it opened and first tenants started moving in um,

Ken: We've got I think Peter highlighted.

Mark: There was a lot of buzz in the market and we've just been able to push.

Ken: It's in the sub 20% to 25% of our 20% to 30% of our our sales for the year expected to come from land. So.

Mark: so, it's specific to the project but it's also

Ken: Part of that 3 billion.

Ken: We'll be from things that we expect to execute on that will we will naturally roll off of capitalization, if we sell the asset.

Ken: Thank you. Thank you very much.

Marc Binda: And we'll have, you know, kind of more to come on those as we flesh out the releasing strategies, hopefully in the coming quarters. Thank you.

Jim: Yes, Thanks, Jim.

Speaker Change: Thank you and this concludes our question and answer session I would like to turn the conference back over to Mr. Martin for any closing remarks.

was signed and with the above,

Jim: Thank you everybody.

Jim: Have a very safe and in good summer. Thank you.

Operator: Thank you. And the next question from Tom Catherwood with BTIG, please go ahead.

Speaker Change: Thank you Sir.

Tom Catherwood: And our next question today comes from Tom Catherwood with BTIG. Please go ahead. Thank you, and good afternoon, everybody. Joel, you mentioned in a pair of remarks, five developments where you're making progress, and some of these saw a boost in 2Q leasing like 701 Dexter and the Sylvan Road buildings, but a few others, like 269 East Grand didn't show a change. Are you seeing an uplift in prospects for space, but they haven't reached the in negotiation stage yet? And if so, what's driving that change? That's correct. I again, somebody asked that question before, it really is sub market and building or campus specific as to why a particular, you know, space or location is, is being looked at.

Underwriting rents, we achieved at Al 1, Alexandria Square. I think it proves that the tenants are willing to pay for quality.

Speaker Change: Today's conference call. Thank you all for.

Speaker Change: You may now disconnect.

Marc Binda: Thank you and good afternoon, everybody. Joel, you mentioned in the prepared remarks five developments where you're making progress. Some of these saw a boost in Q2 leasing like 701 Dexter and the Sylvan Road buildings. A few others like 269 East Grand didn't show a change. Are you seeing an uplift in prospects?

Tom Catherwood: Thank you and good afternoon, everybody. Joel, you mentioned in the prepared remarks five developments where you're making progress. Some of these saw a boost in Q2 leasing like 701 Dexter and the Sylvan Road buildings. A few others like 269 East Grand didn't show a change. Are you seeing an uplift in prospects? For space, but they haven't reached the. In negotiation stage yet, and if so, what's driving that change?

Speaker Change: And have a wonderful day.

Peter F. Wilson: For space, but they haven't reached the.

Marc Binda: In negotiation stage yet, and if so, what's driving that change?

Peter F. Wilson: That's correct.

Joel Marcus: That's correct. Again, somebody asked that question before. It really is submarket and building or campus specific as to why a particular, you know, space or location is being looked at. It just, it's hard to generalize beyond a building, a campus, a submarket. It just, you know, you just can't do that. So they are very, very case specific.

Joel Marcus: Again, somebody asked that question before. It really is submarket and building or campus specific as to why a particular, you know, space or location is being looked at. It just, it's hard to generalize beyond a building, a campus, a submarket. It just, you know, you just can't do that. So they are very, very case specific. And remember, the majority of our leases come from existing tenants. So we have a line of sight that most people don't have, you know, on future tenancies that, you know, just a lot of people would be flying blind just waiting for brokers to, you know, bring people by on tours. But I think we have a much more in-depth pipeline opportunity with existing clients who are looking for expansion, et cetera.

All right, that's all for me. Thank you. Yeah, and remember just 1 kind of footnote the reconciliation Bill provided a variety of incentives, including things like uh permanent expensing for domestic R&D, bonus depreciation, expensing of qualified production properties, all of which bode well for onshoring, supply line, kinds of issues. So there's a lot of thinking that's going on with a bunch of different, um, users as to when how and what they may do with the with space that we're uh, you know, having conversations about

Thank you. And our next question. Today, comes from Dillon, berzinski with Green Street. Please go ahead.

Joel Marcus: It just it's hard to generalize beyond a building, a campus, a sub market, it just, you know, you just can't do that. So they are very, very case And remember, the majority of our leases come from existing tenants. So we have a line of sight that most people don't have. you know, on on future tenancies that, you know, just you a lot of people would be flying blind just waiting for brokers to, you know, bring people by on tours. But I think we have a much more in depth pipeline opportunity with existing clients who are looking for expansion.

And remember, the majority of our leases come from existing tenants. So we have a line of sight that most people don't have, you know, on future tenancies that, you know, just a lot of people would be flying blind just waiting for brokers to, you know, bring people by on tours. But I think we have a much more in-depth pipeline opportunity with existing clients who are looking for expansion, et cetera.

Dillon Berzinski: Hi guys. Thanks for taking the question. Uh, most of mine have been asked, but just wanted to sort of, if you can discuss sort of the reasoning, why you guys raised cap rates on the dispositions? Is that more representative of, you know, changing cap rates, across the property sector or more. So related to just the types of of of assets, you guys are selling and that being sort of non-core, potentially with some near-term lease for all hair on it.

Peter Bravo: yeah, Peter

Yeah. I mean it I think it's just reflective of the fact that a lot of these, uh,

Marc Binda: Got you. So just to clarify, so that pipeline of prospects then is larger and kind of increasing compared to what it would have been a quarter or a year ago. Is that how we should read through on that?

Tom Catherwood: Got you. So just to clarify, so that pipeline of prospects then is larger and kind of increasing compared to what it would have been a quarter or a year ago. Is that how we should read through on that?

Hallie Kuhn: Gotcha. So just to clarify, so the that pipeline of prospects then is larger and kind of increasing compared to what it would have been a quarter or a year ago. Is that how we should read through on that? Well, I would go I yeah, go ahead. Joe, I can I can verify that. I mean, I track along with the region. company by company prospects. And it has we it has grown as we have put significant effort into focusing on this leasing, as I mentioned in my comments. So I can tell you it has gotten, it has increased, the pool of prospects has increased.

Peter Bravo: Assets are in transition. So you know we're always trying to to be very measured on even commenting on cap rates for these sales because they don't really represent the core of what, you know, Alexandria is going to look like in the future. Um, so you know, a lot of these assets have a little bit of Walt, so the cap rate gets increased because

Joel Marcus: Well, I would say yeah, go ahead Joe.

Joel Marcus: Well, I would say yeah, go ahead

Peter M. Moglia: Joe. I can verify that. I mean, I track along with the regions, company by company, prospects and It. Has grown as we have put significant effort into focusing on this leasing, as I mentioned in my comments. So I can tell you it has gotten, it has increased. The pool of prospects has increased. Now the time to make decisions remains elongated. So you can't translate that comment to we're going to have more leasing next quarter, but we are pleased with the amount of prospects we're seeing for these development, for our development pipeline.

Peter F. Wilson: I can verify that. I mean, I track along with the regions, company by company, prospects and.

Peter Bravo: The buyers taking the chance on the renewals. Um, so it's really asset specific. Um and we just have a lot of Assets in transition in what we're trying to sell and, you know, 1 of the reasons that they're non-core and and they're, you know, they're not on Mega campuses.

Marc Binda: It.

Peter F. Wilson: Has grown as we have put significant effort into focusing on this leasing, as I mentioned in my comments. So I can tell you it has gotten, it has increased. The pool of prospects has increased. Now the time to make decisions remains elongated. So you can't translate that comment to we're going to have more leasing next quarter, but we are pleased with the amount of prospects we're seeing for these development, for our development pipeline.

Peter Bravo: Right. That's helpful. Thank you guys.

Thank you. Have a final question today is from Jim Kimmer with evercore. Please go ahead.

Hallie Kuhn: Now the time to make decisions remains elongated. So you can't translate that comment to we're going to have more leasing next quarter. But we are pleased with the amount of prospects we're seeing for these development, for our development pipeline. But remember too, I think if you take what Peter just said, so many specific, these are very case specific, a new initiative, a new partnership, a financing, a milestone, those are things that drive decisions beyond just, you know, people who are in the market compared one quarter to another year to year. And that's what makes the big difference.

Jim Kimmer: Good afternoon. Thank you uh, thinking about the 3 billion dollars of potentially go or no-go projects on page 45 in addition to interest expense. What, uh, would be the order of magnitude is it overhead? And other, you know, pre-development costs and dollar terms are your capitalizing on that.

Peter Bravo: Cohort.

Joel Marcus: But remember too, I think if you take what Peter just said, so many specific, these are very case specific. A new initiative, a new partnership, a financing, a Milestone. Those are things that drive decisions beyond just people who are in the market compared one quarter to another, year to year. And that's what makes the big difference. And that's very hard to generalize.

Peter Bravo: Yeah, hi Jim, it's Mark. Um, if you if you look at our 10 Q, we do disclose. Um, you know, capitalize, you know, operating expenses really property, taxes insurance, and other direct costs, as well as overhead that number. If you do the math is around, 3%. Um,

So, that, that should give you a sense for, um, what could come with that? If some of that stuff, uh, turns off capitalization,

Unknown Executive: And that's a very hard to generalize quarter. Got it. Really appreciate all that color.

Speaker Change: Thank you, Marcus 3%. Basically a run rate,

Marc Binda: Quarter to quarter. Got it. Really appreciate all that color. And then, Peter, just a small one here, just wanted to understand how you classify certain leasing. So in the quarter you did roughly 286,000sq ft of development, redevelopment, and kind of previously vacant space leasing. You mentioned 131,000sq ft of development and redevelopment leasing. On the gap between those two, roughly 155,000sq ft. I assume that's previously vacant space.

Tom Catherwood: Got it. Really appreciate all that color. And then, Peter, just a small one here, just wanted to understand how you classify certain leasing. So in the quarter you did roughly 286,000sq ft of development, redevelopment, and kind of previously vacant space leasing. You mentioned 131,000sq ft of development and redevelopment leasing. On the gap between those two, roughly 155,000sq ft. I assume that's previously vacant space. Is that first-gen space that was?

Peter Bravo: Balances or or basis is a good Testament.

Marc Binda: And then, Peter, just a small one here. Just wanted to understand how you classify certain leasing. So, in the quarter, you did roughly 286,000 square feet of development, redevelopment, and kind of previously vacant space leasing. And you mentioned 131,000 square feet of development and redevelopment leasing. On the gap between those two, roughly 155,000 square feet, I assume that's previously vacant space. Is that first-gen space that was previously delivered vacant, or is that second-gen space that's just been vacant over a set period of time? How do we think about the classification of that? Marc, you can tell, you can correct me if I'm wrong, but that is vacant space of existing property.

That's right. Based upon, if you just look at the 6, the first 6 months, that's what it translates to as a percentage of the the basis being capitalized. Perfect. Thank you. And then second related question, would not a fair percentage of those 3 billion or that 3 billion of assets? If it's a no-go decision, would they not likely be sales? I mean Alexander's probably not going to hold on to them for the indefinite time or even thinking about the wrong way.

Peter F. Wilson: Is that first-gen space that was?

Marc Binda: Previously delivered vacant or is that second gen space that's just been vacant over a set period of time? How do we think about the classification of that?

Previously delivered vacant or is that second gen space that's just been vacant over a set period of time? How do we think about the classification of that?

Peter Bravo: No for for sure. Um there is a chunk of the 3 billion that we are evaluating for sale. Um we've got I think Peter highlighted you know or it's in the sub 20 to 25% of our our sorry 20 to 30% of our

Peter F. Wilson: Mark? You can tell, you can correct me if I'm wrong, but that is vacant space of existing properties.

Peter M. Moglia: Mark? You can tell, you can correct me if I'm wrong, but that is vacant space of existing properties.

Marc Binda: That's right. That's right, Peter. So that goes right into signed, not commenced leases. That's not part of the development pipeline. Redevelopment pipeline, nothing like that.

Marc Binda: That's right. That's right, Peter.

Omotayo Okusanya: That's right. That's right, Peter. So that goes right into sign not commenced leases. That's not part of the development pipeline, redevelopment pipeline, nothing like that. Correct. It's just our general operating portfolio. Perfect. That's it for me. Thanks, everyone. Okay. Yeah, thanks.

Tom Catherwood: So that goes right into signed, not commenced leases. That's not part of the development pipeline. Redevelopment pipeline, nothing like that.

Peter Bravo: Our sales for the year expected to come from land. So um part of that 3 billion um you know will be from things that we expect to execute on that will will naturally roll off a capitalization if we sell the asset.

Peter Bravo: Thank you. Thanks very much.

Peter F. Wilson: Correct, correct. It's just our general operating portfolio vacancy.

Peter M. Moglia: Correct, correct. It's just our general operating portfolio vacancy.

Jim Kimmer: Yeah, thanks. Jim.

Speaker Change: Thank you. And this concludes our question and answer session. I'd like to turn the conference back over to Mr. Marcus for any closing remarks

Joel Marcus: Perfect.

Tom Catherwood: Perfect. That's it for me. Thanks, everyone.

Marc Binda: That's it for me. Thanks, everyone. Okay.

Peter M. Moglia: Okay. Yeah, thanks, Tom.

Joel Marcus: Yeah, thanks, Tom.

Operator: Our next question today comes from Omotayo Okusanya with Deutsche Bank. Please go ahead.

Joel Marcus: Our question today comes from Omotayo Okusanya with Deutsche Bank. Please go ahead. Yes, good afternoon.

Speaker Change: Uh, thank you everybody and uh, have a very safe and uh and good summer. Thank you.

Marc Binda: Yes, good afternoon, Joel. Again, wanted to add my own congrats.

Omotayo Okusanya: Yes, good afternoon, Joel. Again, wanted to add my own congrats. On the large build-to-suit lease. It's just great to see that as. A nice proof of concept there. In terms of that project. Have you discussed at all what building? Costs could look like, and what potential yields could look like?

Joel Marcus: Joel, again, wanted to add my own congrats on the large build to suit lead. It's just great to see that as a nice proof of concept there. In terms of that project, have you discussed at all what building costs could look like and what potential yields could look like? Yeah, stay tuned on those. We haven't really put those into the SUP at this point, but they'll be forthcoming.

Thank you. Thank you, sir. This is today's conference call. We thank you all for coming today. Have a patient. You may notice like you and have a wonderful day.

Peter F. Wilson: On the large build-to-suit lease.

Marc Binda: It's just great to see that as.

Peter F. Wilson: A nice proof of concept there.

Operator: In terms of that project.

Marc Binda: Have you discussed at all what building?

Peter F. Wilson: Costs could look like, and what potential yields could look like?

Joel Marcus: Yep, stay tuned on those. We haven't really, you know, put those into the SUP at this point, but they'll be forthcoming.

Peter F. Wilson: Sounds good. And then the 2027 redevelopment project, just wanted to visit some of the commentary.

Omotayo Okusanya: Sounds good. And then the 2027 redevelopment project, just wanted to visit some of the commentary. Around, you know, looking at alternatives around. Some of those projects. Whether you could give a couple of. Examples of kind of what else you're. Kind of considering at this point to. Kind of create shareholder value from them?

Joel Marcus: And then the 2027 redevelopment project, I just wanted to visit some of the commentary around, you know, looking at alternatives around some of those projects, whether you could give a couple of examples of kind of what else you're kind of considering at this point to kind of create shareholder value from them. Well, I mean, it's obvious in today's market in some of these locations, and we've seen this phenomena happen before in a kind of a different era where, you know, 2015 to 2020, we were inundated by big tech and large tech users wanting to come into our campuses, and even into lab buildings for, you know, their own use for security purposes or quality of buildings, quality of sponsorship, of course.

Marc Binda: Around, you know, looking at alternatives around.

Peter F. Wilson: Some of those projects.

Marc Binda: Whether you could give a couple of.

Peter F. Wilson: Examples of kind of what else you're.

Marc Binda: Kind of considering at this point to.

Peter F. Wilson: Kind of create shareholder value from them?

Joel Marcus: Well, I mean, it's obvious in today's market in some of these locations. We've seen this phenomenon happened before in a kind of a different era where, you know, 2015 to 2020, we were inundated by big tech and large tech users wanting to come into our campuses and even into lab buildings for, you know, their own use for security purposes or quality of buildings, quality of sponsorship, of course. We're seeing some of that in some of our locations now with the new generation of tech companies. I think, Peter and others have mentioned, you know, Mission Bay is a great example where AI has been on a tear in, you know, gobbling up space, some, you know, buildings that were destined to be lab buildings and others that were office. So I think we're seeing some of that in some of our submarkets. Helpful.

Joel Marcus: And we're seeing some of that in some of our locations now with the new generation of tech companies. And I think Peter and others have mentioned, you know, Mission Bay is a great example where AI has been on a tear in, you know, gobbling up space, some, you know, buildings that were destined to be lab buildings and others that were office. So I think we're seeing some of that in some of our sub So I think we're seeing some of that in some of our sub Helpful.

Omotayo Okusanya: Helpful. Thank you.

Unknown Executive: Thank you.

Peter F. Wilson: Thank you.

Operator: Thank you. Our next question today comes from Peter Abramowitz with Jefferies. Please go ahead.

Peter Abramowitz: And our next question today comes from Peter Abramowitz with Jeffries. Please go ahead. Yeah, thank you. Just wanted to dig in a little bit more on the 26 known vacates. Any sense of kind of timing and how long you would expect it'll take to release those?

Peter F. Wilson: Yeah, thank you. Just wanted to dig in a little bit more on the 26 known vacates. Any sense of kind of timing and how long you would expect it'll take to re-lease those.

Peter Abramowitz: Yeah, thank you. Just wanted to dig in a little bit more on the 26 known vacates. Any sense of kind of timing and how long you would expect it'll take to re-lease those.

Joel Marcus: Yeah, I think I'll let Marc comment, but on our assumptions. But again, they're very, very, like I've said a couple times on the call, Peter, it's very case specific to buildings, to campuses, and things like that. But, Marc, you can comment on our assumptions.

Marc Binda: Yeah, I think I'll let Marc comment but on our assumptions, but again, they're very, very, like I've said a couple times on the call, Peter, it's very case specific to buildings, to campuses and things like that. But Marc, you can comment on our assumptions. Yeah, it'll really depend Peter on the amount of capital that we put into those sites. The biggest one is a project in Greater Stanford that we acquired with the intent to redevelop a number of years ago. And as that lease is starting to burn off, we're evaluating other opportunities, whether, you know, whether it should go to lab or, you know, that market has had interest from other types of advanced technology users.

Marc Binda: Yeah, it'll really depend, Peter, on the amount of capital that we put into those sites. The biggest one is a project in Greater Stanford that, you know, we acquired with the intent to redevelop a number of years ago. And as that lease is starting to burn off, we're evaluating other opportunities, whether, you know, whether it should go to lab or, you know, that market has had interest from other types of advanced technology users, so there may be opportunities to do other things there. So really hard to kind of give you a sense for where we're going to end up in terms of downtime, but there's a good chance that those properties will require some capital to lease.

Marc Binda: So there may be opportunities to do other things there.

Marc Binda: So really hard to kind of give you a sense for where we're going to end up in terms of downtime, but there's a good chance that those properties will require some capital to lease.

Marc Binda: All right, thank you. And my other question, you called out specifically, yields coming in above your underwriting at some of the deliveries in Torrey Pines. Would you say those those improvements on rents are kind of specific to those projects or that sub market? Or generally, is there a sense that things are accelerating in the market overall? Yeah, Peter. Well, that particular project is just very high quality. And once it opened and first tenants started moving in, There was a lot of buzz in the market, and we've just been able to push. So it's specific to the project, but it's also...

Peter F. Wilson: All right, thank you. And then my other question: you called out specifically yields coming in above your underwriting at some of the deliveries in Torrey Pines. Would you say those improvements on rents are kind of specific to those projects, or that submarket, or generally? Is there a sense that things are accelerating in that market overall?

Peter Abramowitz: All right, thank you. And then my other question: you called out specifically yields coming in above your underwriting at some of the deliveries in Torrey Pines. Would you say those improvements on rents are kind of specific to those projects, or that submarket, or generally? Is there a sense that things are accelerating in that market overall?

Joel Marcus: Yeah, Peter.

Peter F. Wilson: Well, that particular project is just very high quality. Once it opened and first tenants started moving in.

Peter M. Moglia: Well, that particular project is just very high quality. Once it opened and first tenants started moving in. There was a lot. Of buzz in the market and we've just been able to push. So it's specific to the project, but it's also, you know, I guess something that you were not surprised because we do play in the high quality asset game and tenants are willing to pay for value. So I think it's a good takeaway that that happened, that, you know, there's certainly still supply overhang, you know, in the markets.

Joel Marcus: There was a lot.

Peter F. Wilson: Of buzz in the market and we've just been able to push. So it's specific to the project, but it's also, you know, I guess something that you were not surprised because we do play in the high quality asset game and tenants are willing to pay for value. So I think it's a good takeaway that that happened, that, you know, there's certainly still supply overhang, you know, in the markets. But with the build-to-suit lease we signed and with the above underwriting rents we achieved at 1 Alexandria Square, I think it proves that tenants are.

Marc Binda: You know, I guess something that you were not surprised because we do play in the high quality asset game and tenants are willing to pay for value. So, I think it's a good takeaway that that happened that, you know, there's certainly still supply and supply over, you know, overlap in the markets.

Marc Binda: But with the bill to suit lease we signed and with the above underwriting rents we achieved at 1 Alexandria Square, I think it proves that tenants are willing to pay for quality.

But with the build-to-suit lease we signed and with the above underwriting rents we achieved at 1 Alexandria Square, I think it proves that tenants are. Willing to pay for quality.

Joel Marcus: Willing to pay for quality. All right, that's all for me. Thank you.

Peter Abramowitz: All right, that's all for me. Thank you.

Unknown Executive: All right, that's all.

Marc Binda: Yeah.

Joel Marcus: Yeah. And remember, just one kind of footnote, the reconciliation bill provided a variety of incentives, including things like permanent expensing for domestic R&D, bonus depreciation, expensing of qualified production properties, all of which bode well for onshoring, supply chain kinds of issues. So there's a lot of thinking that's going on with a bunch of different users as to when, how, and what they may do with space that we're having conversations about.

Unknown Executive: Yeah, and remember, just one kind of footnote, the reconciliation bill provided a variety of incentives, including things like permanent expensing for domestic R&D, bonus depreciation, expensing of qualified production properties, all of which bode well for onshoring supply line kinds of issues. So there's a lot of thinking that's going on with a bunch of different users as to when, how, and what they may do with space that we're having conversations.

Joel Marcus: And remember, just one kind of footnote, the reconciliation bill provided a variety of incentives, including things like permanent expensing for domestic R&D, bonus depreciation, expensing of qualified production properties, all of which bode well for onshoring, supply chain kinds of issues. So there's a lot of thinking that's going on with a bunch of different users as to when, how, and what they may do with space that we're having conversations about.

Operator: Thank you. And our next question today comes from Dylan Burzinski with Green Street. Please go ahead.

Dylan Burzinski: Thank you.

Dylan Burzinski: And our next question today comes from Dylan Burzinski with Green Street. Please go ahead. Hi, guys. Thanks for taking the question.

Marc Binda: Hi guys, thanks for taking the question. Most of mine have been asked but.

Dylan Burzinski: Hi guys, thanks for taking the question. Most of mine have been asked but. Just wanted to sort of, if you. Can discuss sort of the reasoning why? You guys raised cap rates on the dispositions. Is that more representative of changing cap rates across the property sector or more so related to just the types of assets you guys are selling and that? Being sort of non-core potentially with. Some near term lease roll hair on it?

Peter Moglia: Most of mine have been asked, but just wanted to sort of, if you can discuss sort of the reasoning why you guys raise cap rates on the dispositions, is that more representative of, you know, changing cap rates across the property sector or more so related to just the types of assets you guys are selling and that being sort of non core, potentially with some near term lease roll hair on it? Yeah, Peter. Yeah, I mean, I think it's just reflective of the fact that a lot of these Assets are in transition. So, you know, we're always trying to be very measured on even commenting on cap rates for these sales because they don't really represent the core of what, you know, Alexandria is going to look like in the future.

Peter F. Wilson: Just wanted to sort of, if you.

Marc Binda: Can discuss sort of the reasoning why?

Peter F. Wilson: You guys raised cap rates on the dispositions.

Marc Binda: Is that more representative of changing cap rates across the property sector or more so related to just the types of assets you guys are selling and that?

Peter F. Wilson: Being sort of non-core potentially with.

Marc Binda: Some near term lease roll hair on it?

Joel Marcus: Yeah, Peter.

Peter F. Wilson: Yeah, I mean I think it's just reflective of the fact that a lot of these assets are in transition. So you know, we're always trying to be very measured on even commenting on cap rates for these sales because they don't really represent the core of what, you know, Alexandria is going to look like in the future. So you know, a lot of these assets have a little bit of WALT, so the cap rate gets increased because the buyers taking the chance on the renewals. So it's really asset specific and we just have a lot of assets in transition in what we're trying to sell. And you know, one of the reasons that they're non-core and they're, you know, they're not on mega campuses.

Peter M. Moglia: Yeah, I mean I think it's just reflective of the fact that a lot of these assets are in transition. So you know, we're always trying to be very measured on even commenting on cap rates for these sales because they don't really represent the core of what, you know, Alexandria is going to look like in the future. So you know, a lot of these assets have a little bit of WALT, so the cap rate gets increased because the buyers taking the chance on the renewals. So it's really asset specific and we just have a lot of assets in transition in what we're trying to sell. And you know, one of the reasons that they're non-core and they're, you know, they're not on mega campuses.

Peter Moglia: So, you know, a lot of these assets have a little bit of waltz. So the cap rate gets increased because The buyers taking the chance on the renewals. So it's really asset specific. And we just have a lot of assets in transition in what we're trying to sell. And, you know, one of the reasons that they're non core and they're, you know, they're not on mega campuses. All right, that's helpful. Thank you, guys. Thank you.

Marc Binda: All right, that's helpful. Thank you guys. Thank you.

Dylan Burzinski: All right, that's helpful. Thank you guys.

Operator: Thank you. Our final question today comes from Jim Kammert with Evercore. Please go ahead.

Operator: Our final question today comes from Jim Kammert with Evercore. Please go ahead.

James Kammert: And our final question for today comes from Jim Kammert with Evercore. Please go ahead. Good afternoon. Thank you. Thinking about the $3 billion of potentially go or no go projects on page 45, in addition to interest expense, what would be your magnitude to overhead and other pre-development costs in dollar terms that you're capitalizing on that? Toward. Yeah.

Marc Binda: Good afternoon. Thank you. Thinking about the $3 billion of potentially go or no-go projects on page 45, in addition to interest expense, what would the order of magnitude sort of overhead and other pre-development costs in dollar terms? Are you capitalizing on that cohort? Yeah. Hi Jim, it's Marc. If you look at our 10-Q, we do disclose, you know, capitalize, you know, operating expenses, really property taxes, insurance, and other direct costs as well as overhead. That number, if you do the math, is around 3%. So that that should give you a sense for what could come with that if some of that stuff turns off capitalization. Thank you, Marcus. 3% basically at a run rate balances or basis is a good estimate. That's right.

Jim Kammert: Good afternoon. Thank you. Thinking about the $3 billion of potentially go or no-go projects on page 45, in addition to interest expense, what would the order of magnitude sort of overhead and other pre-development costs in dollar terms? Are you capitalizing on that cohort?

Marc Binda: Yeah. Hi Jim, it's Marc. If you look at our 10-Q, we do disclose, you know, capitalize, you know, operating expenses, really property taxes, insurance, and other direct costs as well as overhead. That number, if you do the math, is around 3%. So that that should give you a sense for what could come with that if some of that stuff turns off capitalization.

Marc Binda: Hi, Jim. It's Marc. If you look at our 10-Q, we do disclose, you know, capitalized, you know, operating expenses, really property taxes, insurance, and other direct costs, as well as overhead. That number, if you do the math, is around 3%. So that should give you a sense for what could come with that if some of that stuff turns off capitalization.

Jim Kammert: Thank you, Marcus. 3% basically at a run rate balances or basis is a good estimate.

Marc Binda: Thank you, Marc. So 3%, basically, at a run rate balances or basis is a good guess. That's right. Based upon if you just look at the six, the first six months, that's what it translates to the percentage of the basis being capitalized. Perfect. Thank you.

Marc Binda: That's right. Based upon if you just look at the first six months, that's what it translates to as a percentage of the basis being capitalized.

Marc Binda: Based upon if you just look at the first six months, that's what it translates to as a percentage of the basis being capitalized. Perfect. Thank you. And then second related question. Would not a fair percentage of those 3 billion or that 3 billion of assets if it's a no go decision, would they not likely be sales meaning Alexandria is probably not going to hold onto them for the indefinite time. Or maybe I'm thinking about it the wrong way. No, for sure. There is a chunk of the 3 billion that we are evaluating for sale. We've got, I think Peter highlighted, you know, or it's in the supplemental 20% to 25% of our, or sorry, 20% to 30% of our sales for the year expected to come from land.

Jim Kammert: Perfect. Thank you. And then second related question. Would not a fair percentage of those 3 billion or that 3 billion of assets if it's a no go decision, would they not likely be sales meaning Alexandria is probably not going to hold onto them for the indefinite time. Or maybe I'm thinking about it the wrong way.

Marc Binda: And then second related question, would not a fair percentage of those 3 billion or that 3 billion of assets, if it's a no go decision, would they not likely be sales? I mean, Alexander is probably not going to hold on to them for the indefinite time or you're thinking about the wrong way. No, for sure. There is a chunk of the $3 billion that we are evaluating for sale. We've got, I think Peter highlighted, you know, or it's in the SUP, 20 to 25% of our, or sorry, 20 to 30% of our sales for the year expected to come from land.

Marc Binda: No, for sure. There is a chunk of the 3 billion that we are evaluating for sale. We've got, I think Peter highlighted, you know, or it's in the supplemental 20% to 25% of our, or sorry, 20% to 30% of our sales for the year expected to come from land. So, part of that $3 billion, you know, will be from things that we expect to execute on that will naturally roll off a capitalization if we assess it.

Marc Binda: So part of that $3 billion, you know, will be from things that we expect to execute on that will naturally roll off of capitalization if we sell the asset. Thanks very much. Yeah, thanks. Thank you.

Marc Binda: So, part of that $3 billion, you know, will be from things that we expect to execute on that will naturally roll off a capitalization if we assess it.

Peter F. Wilson: Thank you.

Jim Kammert: Thank you. Thanks very much.

Marc Binda: Thanks very much.

Joel Marcus: Yeah, thanks Jim.

Hallie Kuhn: Thank you.

Operator: Thank you. This concludes our question and answer session. I'd like to turn the conference back over to Mr. Marcus for any closing remarks.

Operator: This concludes our question and answer session. I'd like to turn the conference back over to Mr. Marcus for any closing remarks.

Unknown Executive: And this concludes our question and answer session.

Joel Marcus: I'd like to turn the conference back over to Mr. Marcus for any closing remarks. Thank you, everybody, and have a very safe and good summer. Thank you, sir.

Joel Marcus: Thank you everybody and have a very safe and good summer.

Marc Binda: Thank you.

Operator: Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Unknown Executive: This concludes today's conference call. We thank you all for your patience. You may now disconnect your lines and have a wonderful day.

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