ARE - Earnings call transcript Q2 2018 | Alexandria Real Estate Equities, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Alexandria Real Estate Equities' Second Quarter 2018 Conference Call. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead.

Paula Schwartz

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

go Additional and contained the Joel in results Joel. company's periodic to cause ahead, those that turn with call the And the information Marcus, the now filed and materially like Securities in is to differ Founder. Commission. Executive from actual statements forward-looking reports concerning factors Exchange over Please to Chairman could I'd

Joel Marcus

thank Thank today Peter tenants our Tom with Shigenaga, the every you, and again, everybody operational quarter second for first-in-class to excellence Ryan, team truly Once in really with Paula, distinct to delivering Life and are welcome outstanding. each superb I pleasure call. And have really, Andrews, Dan Moglia, me bear and and science revenues John clusters Cunningham. our the Richardson, highest our brand in outstanding and in at X-year substantially Alexandria Day honor markets enhance of Steve submarkets pricing the a service one second announced the Dean partnering. double plan statistics qualities collaborative XXXX our best-in-class company. of of best each and We're the reliability, out. our first growth These to recognize quality, power highest for XXXX Investor of we that the the year also and quarter

expect continue into XXXX Steve have had and As and growth visibility we per to great for XXXX. to we've share will talk performance have about, strong have FFO during --

many belief we and that New About a but economist, boost the entitled, promoted on businesses and particular our another a one proximity urban innovation, great by clustering which his chapter Porter. clustering Harvard smart despite As one clusters works, advances forth. and read one typically is like productivity, year a all on and City approach, Clusters together strategy in businesses New know, similar of -- really public San the after of the San concept or based competition his allowing became found clustering Michael we Seattle, operating technological within Diego, operate efficiency, been Competition, in and Francisco, companies that of he are has successful noted And of off to locations a in paid adopted Economics York close clusters so anywhere. Cambridge, that's strategy you from

underpinning said a really think number times as I diagnostics to discovery early the of about addressed treatments. whether or of only be therapeutics that growth, I’ve still the diseases are we're We’ve is innings of cures X% they'd known the in of effective mankind.

Pfizer research operated cluster, Want our lead in launch our companies. also philanthropy did has mind, to its life existed. I And New we’ve industry news. the as is we've I commercial a think medical see there which the an the where National funding tenant more and New at Health, record turn the Life quarter, note an to all their science has of this City keep strong world-class is the We're on leased, seen base. historic proud this and innovative truly Food we spending by than start Alexandria good ever. Administration, And I and in on helped on truly spending Drug stage base and why growth spending, commercial it a five York City to I continue team, talented in that for campus had outstanding good cylinders morning team briefly which over think, Steve has Ian venture it's amazing in experiencing a flagship with capital and science robust right R&D announced working to to comment to increase of biopharma built, fact, for a was key none Institutes we and in Read York a R&D reasons recruit before very life on Center really Science, in fashion, and/or now years tenant as now last create and

With the middle strong a short an in And and what's at lease outstanding of XXnd redevelopment. blocks to $XXX Manhattan's back lab/office of Medical purchase Street, medium-term to the East ACLS acquisition of recently our of announced foot buildings of current we future Pfizer's $XXX a XXX,XXX-square-foot headquarters Grand particularly within interest XXX made Central and current square one -- close a ideal a East us Side of dense ensconced XX campus Corridor, is with Pfizer. yield the to

each by recently Central, So is with proximity Grand I word, medium-term old we accord which difficult really matters Manhattan Alexandria. excellent our is spoke a members in to Business to valued respect And strengths There of display then cost identity all our and is respect, and in behaviors specific leaseback team. or locate to square of equally talents, Corridor foot, which finally Medical study that campus, earned address buildings respect, sense anchor something East recognizes and there think self. has There strong and hearts, our to unique general, what and a Pfizer's that per individuals Harvard proximity member who and want in members, Review and self with employees to yields, here Repsect. was development, convertibility. to qualities I there And own is team all single dear to is about acknowledges that Side at is near a

spiral as So, and work Alexandria respect our that just too respect deeply care about can so of in culture we is why can social media, a as at we life. on witness daily instability

Steve, So away. take it

Stephen Richardson

this I'd profound We of comments covering pleasure world-renowned with the had patients years highlights afternoon. his before to in A XX oncology Several facilities the gateway in the driving the Thank Dana-Farber industry-leading strategy. results who XX% investment top of key you, a These XX% stellar to underscore for I'll universities build and of due for has cap type include: at absolutely have success ARR institutions. to and leading on with Alexandria's listening centers highly research quality survived AAA large mission-critical. construction, strategy. a investment in and Demetri, differentiated class expressing that market ARR and and The of tenant and of that, from an adjacent key George is tenants in be deep is Joel. cap Joel's we like one companies. of the defining We our partnership a and the this comprising But The I the and the shift do is of Doctor country's our sciences markets work the grade of market new for these or with strong Class ARR, a and markets one several cancer his on Cambridge, XX% large tenant's product underpin from compelling the therapies. sophistication operations grade long-term East leasing, and day-in West breakthroughs Coast enthusiasm shift approach. is in design, expertise demand Director locations day-out interview to

feet touch life cutting million science at into and provides the Our science significant through XXXX will call, on underwriting insight clearly XX% companies generating as later great technology expertise is Peter pipeline XXXX edge NAV. teams' totaling industry. square in driving yields the the X.X visible leased and And finally, unique growth unmatched

Let's a seeing market. take and evident across the clusters. of look demand all really We're high-quality robust core at our

early year-to-date is market. As are renewals this leasing from renewals, clearly of the sense the strong quarter supplemental, you and early urgency can see XX% XX% indicating a of in

X.X life stayed to strong Maryland's has started then, market-to-market, at feet Demand important in demand square providing X.X X.X at been than today. from X.X%. at has vacancy but we $XXX million about at a vacancy and to XXXX; months of to past vacancy X.X% vacancy note square Diego it's had a time San of is have now remained and about the Cambridge million XXX,XXX look just 'XX, feet had Day feet during more important that now with about has San doubled Seattle's square X% funding during feet, million then, companies it's demand demand. of rate, diversification feet it's XX solid vacancy rate had demand November remains There XX X%, square rate it's XXX,XXX the Francisco million, a was finally, XXX,XXX square VC at at demand XXX,XXX square our feet rate X%, science NIH-related now Investor we well As todayit's rate increased X.X November at of has from feet. and and feet. X.X X.X%. entities. at million that same X.X have as was and And healthy

the balance of to the feet XXX,XXX negotiating addition of has during we and supplemental, lease demand expect of so leasing of referenced the development spaces half life Fairview XXXX pro the resolve in forma. ahead Our XXXX second well in the active to science substantially

novel of notable lease couple reputation Seattle outcomes turn Fred Cambridge billion notable leases clear waterfront an at a XXXX, Hutch and immunology, Hutch groundbreaking then in licensed I health perfect turn health in infectious Juno virtuous XX% one Fred and Therapeutics. is with a and portion Hutch GAAP Seattle market to longstanding its in disease square to and with increase. the First finally, Gaithersburg, of is breakthroughs a cycle Juno and for research excellent XX,XXX-square-foot one CAR-T of Sarepta huge the research. especially of Street a XXX plant, as immuno-oncology the in this XXX,XXX AstraZeneca, stream this to XX% outcome. $X Celgene and really as referenced A example and in a the above strategy differentiated quarter clinical GAAP increase, in proceeds center clusters. Fred at of in with expanding therapies the key becoming to And sports the at quickly Alexandria. XXX,XXX a was at here at is highlight, indication that innovation noted especially about. with for has leases as Maryland global the Hutch in technology now of feet our a center think, had delivered a shareholder a for particular, flow a efforts Juno square we truly acquired these therapies. of speaks our feet Just with The the the flagship

the our to it are So Peter. in that, I'll strong key very, markets of with clusters. all And turn over very

Peter Moglia

going CapEx to of Thanks, and since my cap as After to it's I'm topic I I'm now going driving our on on rates, are touch on this reason say report right probably XX I'm going and everybody since pipeline. top fundamentals, Street July address the the a near-term then that Those Steve. what outstanding become to update Green subject.

X% a and activity community with Centre to wonderful Towne is Drive space to space. of finally, of of serious Initial to in addition at Verily Park is prospects Park ahead. all $XXX million the with deliver XX% and to AAA we be publicly negotiation there million stabilized Francisco square leased, well in the and the Yields that of complete retail traded A tenant is it's XXXX. already Research redevelopment various In and under locations be point XXXX, to we're at the Triangle cash X.X% gateway subsequently is is and 'XX, cash the that million quickly in also in feet Class stabilized for Diego before purchased enhancing are 'XX yields leased project GAAP the of quarter to of of half science-related, negotiation which is be billion which paint life X expected San XXX XX% XX% spectacular is under to X.X% to X.X%, should X.X% and subsidiary deliver $XX space we'll the facilities the first XXX of are negotiation. Alto, XX% remaining by clear the cost This including be in University cash a another campus fourth East of and Square deliver Alphabet project in science project this including credit gaining high a Center our Takeda projects NAV driving X.X% least momentum. growth that going XXXX Town well-positioned to Palo are of Kendall this another was fully essentially square on Street excellent investment-grade X.X And Francisco, Alexandria Drive initial in One continue with dry. delivering yield in the Grand that the negotiation giving certainly a GAAP even to With progress expected submarket at that leased is of for The the market investment South cash visibility lease sub-X through company, which leased that in a In GAAP Fairview has million project prospects anchored All or a stages combined projected by X.X the Gateway we'll and our making phase the with another in our was and strong Laboratory feet, engaged. delivered San feet square yields the markets, second or XXX% been X.X X% into leased a tenant actively 'XX Seattle's of Binney and square a significant to of yields. rate feet, both is confirming balance rate. cap in are life cash XX% market becoming basis Cambridge, market. Xs. over AgTech but respectively. a cap value investors X.X% will creation expected of for our XXX,XXX South yield, under on a XXX focal in San and deliver XXXX of Seattle, serious all stabilize

cap rates. Speaking of

bought City that understand last been cap rate. MIT's recall, X% its sizable the Forest XX% University partners we of lab/office was in it's you Park a a Cambridge. in pending deal interest applies We portion described As that out in the purchase and that price East product at on call, Cambridge. earnings disclosed Since time, a low with

wanted $XXX-per-square-foot and that recently XXX,XXX-square-foot investors a the X.X% that is North, building Seattle CapEx add range, North, we To markets Avenue Avenue the healthy office for XXX in XXX to commentary office building we and prices desirable one of Union, at new both are comments, willing core in still gateway cap touch addition, in indeed South Seattle to wrap comps wanted In high institutional rates briefly assets Street's investment markets. country report mentioning by Lake to up illustrating the X our Fairview of on XXX,XXX-square-foot at in pay to the July sold Westlake investors to XX. prices most Green sales

our building reusability of of recall our factors our Those that Investor being analysis attended improvements. end our of CapEx One business Green Day of average of revealed the our office the annual Street's of the differentiating lower half you, model XX%. peers is the of range. may X-year in range who approximately XX% to

on with to ahead Dean. I'm So to and going pass it that, go

Dean Shigenaga

metrics, certifications. growth, results Communications strong internal the our Corporate share overview Good improving I'll impact comments in sheet communities close $X.XX on with value-creation stockholders, issued importantly efforts Jennifer social buildings and building cover leased energy, O'Brien Frankel, Banks, co-CEO and and meaningful growth. and our that just increase per Chief ground thank balance and Director highly and wanted our and right. NAREIT quarter NOI our his I for on tenants, environmental positive Officer, our important first, everyone. All our Thanks, our wellbeing Report and continued provide second health, our our for & which briefly the and guidance, revenue Award report Corporate and Communications significant FFO and team, sustainability Dean Ciruzzi, updated for of afternoon, Corporate of want Ari our waste to of This Responsibility Peter. the credit excellent our growth, captures we inaugural our live a and of here. on to cash High up XXXX our a of Vince out reduction Executive and cover our Counsel, Responsibility healthy Corporate General Report, inaugural environmental, of third Shigenaga time midpoint and the focused matters, Reporting the includes for on Development on of governance Excellence, impact, AVP responsibility, in brief Gold & also safety pipeline, carbon, work. development, employees report work Katie in Sustainability goal their June. our goals making This Performance we and water

investment have very the for Gold panel as category We winner & honored Award for third to again the #X time to are community. the selected independent NAREIT's large Excellence cap been an as in judges the of Reporting by Communications

XXX,XXX Briefly growth strong points fundamentals, by continued Xx life up of of reported space science unique below and our We It capturing is internal basis and our June rentable anticipated Square, XX of our the We million, by was team. feet you, on So and mark-to-market our and Cash reflects of for quarter for had annualized. XX.X% efficient very up lease opportunity a cash of square very we strategy. remains strong. estate One team quarter To-date, Occupancy $XXX at up entire fourth huge for guys. strong quarter our Total for goals. was income and second or per second Thank over the share first 'XX. $XXX execution quarter adjusted XX% quarter team for ahead XX.X%. congrats XX. the real X.X% revenues FFO results that team the to diluted XXXX. on highlight leasing and and Kendall to reported operational industry quarter differentiated annualized that the strength million our our the strategic market operating business as for that renewals million, timing and reported NOI has the second up of excellent well over leases. approximately were net executed releasing originally $XXX over was $X.XX,

XX% Square couple in to of One XX% rate vacancy to rebounding at temporary remain activity Kendall about as strong. for continues of to months occupancy Rental on dipping this a However, before XX. June result with leasing growth leasing accelerated did very

rate first has on a for was activity rate growth on basis a Rental basis. ranged XX% from a XX% to in and cash and to quarter year on expirations XX% updated to of line related these rate On basis rental for renewals. half of 'XX this roughly on early X X/X past touched Over of renewals, of lease puts our XX.X% 'XX. second trend and growth. GAAP the in on on the track in Steve full guidance 'XX, leasing renewals releasing lease early to our us XX% with this the years, the growth briefly, but rental on X/X year really and cash XX% related and space

on quarter Now visibility of halfway rate renewals full and we that including through XXXX, about that early renewals, executed have for second better our increased the in we're year guidance really growth. rental the portion have the were

A Gateway XX,XXX synthesis is feet at really XXX with Alphabet venture-backed of feet XXX,XXX Additionally, Francisco, Verily, several with leasing properties a square exciting the really XXX undergoing as rentable San in execution, look by first X truly highlights DNA XX,XXX we at feet Class back at team entities development Grand, Medical our of rentable with company square with amazing Cambridge, half square feet that rentable Drive feet in related very to and and Drive feet Ag Mission Research square in over rentable Lonza 'XX Shady several Center million high-quality new rentable then XXX a redevelopment, Grove. very biotechs square XX,XXX X biotech with square XXXX Bay, in Park, Street Binney and subsidiary at at Uber recently that including with and at Laboratory XXX,XXX Triangle XXX East value-creation

growth our XXXX. strong same-property line of full with half the was in guidance for first very The NOI and year

XXXX. was since second and cash One reflected cash development Square vacancy Street same-property rents but benefit cash at that earlier, project growth solid, Binney completed mentioned recently the we also also at no also reflects our on commenced Our NOI Kendall growth April quarter temporary X, from XX/XXX full

feet brief XX, marketing, same-property behind the both deliver million to for on pipeline generate 'XX in for we XXX,XXX the our X.X% provide targeted X.X XXXX. Importantly, summary. overview X.X targeted of had XX% completion, rentable square billion really that square 'XX and million covered XX And 'XX, time just that, December preconstruction and 'XX. cash strong Peter all with for will 'XX, activities delivery track of very and while we of a reduce performance months leased the at is ending X execute right in basis. remain that a X.X% projects. detail, briefly on feet we these on to about yields to that's have X.X undergoing and

to and or construction redevelopment term Gold that to years. of partially at X.XX% remaining of the a the anticipate Turning notes outstanding our We eligible LEED $XXX proceeds senior this of of certain In million loans. certification. related development later repaid $XXX the a million sheet. unsecured issuance we to to green completed fund loan. X.X projects XXXX sustainability year, or weighted term $XXX also and $XXX were initiatives we July, of Platinum our balance receive expected weighted repaying million outstanding notes average average have either under unsecured our of rate million with And allocated our then

sheet we level So as the XXXX over full have strengthening $XXX you further year variable XXXX, debt and profile. and rate our balance based our will of million of credit look over refinanced including back

increase recently which overall really under term of primarily focused and to credit commenced the on the just loan, to an capacity amendment our slightly have improve an maturity We line our pricing our of to extending with credit. line and XXXX process date opportunity is XXXX

and in more this quarter expect to provide closing. We details amendment after shortly will close the third

quarter our fourth debt net to variable Unhedged targeted achieve We X this for at goals track to XXXX new offering our do key on a next goal estate move remain is XXXX EBITDA some additionally, to X% to end of to improvement capital point annualized to metric in credit over program expect cover remaining from year, to XXXX and sales. to as X and X each year, equity is committed our the we credit than file real remain continued rate our options quarters. metrics are times. the aftermarket less debt-to-adjusted also including be and closer And at we additional for our reviewing

So share This in at $X.XX share $X.XX $X.XX $X.XX. to as adjusted, and increase as $X.XX to to of the of a of on the core increase from the midpoint $X.XX last per our combination, is increase for a adjusted earnings represents we recently closing operations FFO I for and a share continued out to of update guidance guidance, quarter. did per the acquisitions. range drivers per FFO with from really key And announced midpoint should a point strength combined our our growth our $X.XX in follows that increase this range

to We and and basis for XX our cash for points midpoint basis each on occupancy to rental rate GAAP XX.X%, a of up XXX range of points range. XXX the also basis and guidance points basis growth XX.X% of a increased

as have drive by our we So And just XX% increases $X.XX that points. basis reminder range to in rental large income. and a only XX.X%, growth growth XX NOI growth assets for to cash respectively. of everybody, X.X% same-property about bottom now per FFO a growth share XX% GAAP in line same-property operating and is pool net

for occupancy range of as in is growth in really our leasing on improvement our strong for growth it the guidance of outlook the rate and rental same-property strength result XXXX. So activity, of for a a reflected

that, it Joel back close I'll to with turn out So and Marcus. it over

Joel Marcus

please. Q&A, to go we can Operator, Okay.

Operator

ahead. your Korchman Please be first will of question from Manny Citi. And Instructions] [Operator go

Manny Korchman

there. I and sort the about the markets as cluster in you help per already on of both of afternoon. se. new entry specific everyone. the guess, near the cluster it your New a Hi, that barrier a and then way be projects. I more was call but acquiring East hoping campus, you're building Joel, developments going focus, talking is, the have I cluster call a River with Good York markets your And going you could frame risk on also will near success us you wouldn't opened new are

connect that it your to put sort theory? do So back and all cluster how of you together

Joel Marcus

the established Francisco thanks Boston Manny, really a San Greater took clusters evolved look grow those kind Well, cluster, question. today. become first literally and if the a and to really generation the cluster, the of early Well, leading are 'XXs the in and at cluster of for asking you both and they all, X what late 'XXs Bay

so is decade New And XX-year a of the first York process. really in

clusters, and and we've the the and what East be to if a the in York is Corridor Side limited in won't want to where and somewhat buildings just given ecosystem. good said do Manhattan New going you see density today So you but is evolve other necessarily believe geography and of see its differently, may there people access least a this people long easy to for really relatively at there is time, fairly or Medical such institutions with, thing, access to we the

sweet time, even this it today about I ways Side my and a think home So the Manhattan that see evolve East focus run will think, in that the is actually in spot. the necessarily can't over predict. And we and corridor, bull's-eye you of we market. been our has of how that's kind a shape view, a, But in

Manny Korchman

Joel. or to right at you've and just done that you guidance guiding what accurate? move range, upwards of the is just is difficult Thanks, the Dean, acquisitions number to-date than environment but likely you in acquisition about that more midpoint see only million the to probably is to Is the maybe sort now $XX pipe hit one $XX that have are right end. for your And the million of high left

Dean Shigenaga

give project actually really deal. the need I but perspective of exists and know bit. we nominal we Day, a our a is that on acquisitions, it's with but fact At beginning market, fairly a what on every all, activities sense, the indicative at if makes and Peter really and moment, an it the we and do the the Yes probably of something may team has pulse makes really the little the do sense Manny, that year, of it's to it's sense acquire. to bid Manny, ultimately view also that that We to market, don't into hit think at at outlook as on Investor just different typically put the conclusion. make it, in will winning whole keeps pretty to good

So And we up, keep market informed. but horizon, see come remaining the does, something it on the we'll right if now, lot could Manny. don't a

Manny Korchman

Thanks.

Operator

ahead. The Feldman Bank of be Lynch. go question Merrill of Jamie America next will from Please

Jamie Feldman

Great, thank with you. I guess, Dean here. sticking

those So -- the in the a overall, have the recognized from amount the about you Can you've in for you much how talk about investment you gains your year? much guidance is included think or just decent quarter just Whether included? in year how had you how quarter. of portfolio include the guidance or as you for

Dean Shigenaga

Manny, have sorry, Jamie, it does where may back up I historically I year vary reference may And think have was question look -- that last every quarter just before. that a quarter question my little come or think, bit. the we've that come been,

upper time-to-time in that I the or say of gain path resulted years, IPO being $XX the result to think biotech was a event-driven. of really company, related its was that. range. that acquisition $XX is this of quarter, was the and been an that in get over it's And recognized million I some a event-driven. majority as by a to its' X on company. securities example Currently, the that an X, probably really this public sell much quarter. public end But would a a X, activity reaching as acquired of of It from million second company We the gain do probably of last in to the to our

transaction no had have So particular leading we into idea the occurred. that quarter, would that,

necessarily mind. the think in that gains They great being We realized. don't that's because important do are the occurring occur thing so of control that events keep are And to most I the marketplace. in

Jamie Feldman

But million $XX typically that right Okay. million assumed is you $XX to to about? way per think year the

Dean Shigenaga

correctly, That's last I X, where the recall years, X, it's if for been X Jamie. it

Jamie Feldman

thinking this the Alexandria? older markets, cluster I of then redevelopment forward do as to of clearly, Do building, of And older -- the I your you is kind are an up market. than Pfizer think and a about Greenfield see about acquisition just components and you kind Okay. supposed where mean, ground from going infill more think in market you in these that more you redevelopment. investment guess, rather see with business

Joel Marcus

it number still markets, depends a obviously same along of but the markets, markets even in some and in of all I done market, again other we think we've pipeline. Well, in or on of that have some robust development a those

of So the as looking when you to said one both. I'm over was was an This Pfizer come situation. to on, But to some sure we knew time do Dean market, I -- you'll think things them. react could that something. see early unusual

combination You those don't quarters to or a been on. do necessarily or will That's of a you sometimes year exactly out X But even see us two. think out know our going what's I bread-and-butter.

Jamie Feldman

watch me on any any And one from just you're thoughts tenants right the is, concerned last list. Okay. tenant then there credit Are now? about

Dean Shigenaga

Dean here. it's Jamie,

is that or at either XX got the that all disclosed, XX% tenants you valuation. greater or investment-grade position top list look really billion we XX great If of in top today. $XX they're in

no concerns out really So significant there.

Joel Marcus

I think good today. And our number day Illumina X tenant had a Yes.

or up they so, XX% that's about I good. think very are

of repercussions a months the went because and and that CNBC to sale the ago, business Power And of I very is we this on be frankly, reputationally. interviewed our said, one going thorough, I area, Theranos at underwriting Park feel as for the in very very building. was would tenants. both in-depth moment, ongoing fact, on our can we've with fail, very think Stanford case avoided, decided think from I Lunch not take and So up It the financially I the that to at in comfortable couple belief in the of there Research Bay think was we Dean

just was So was real feel good something pursuing. didn't it estate, we we thought but it in appropriate

we're So what we do. pretty careful about

Jamie Feldman

Okay. Thank you.

Joel Marcus

Thank you, Jim.

Operator

The next question ISI. Evercore Please Sheila be of McGrath go ahead will from

Sheila McGrath

Yes. Hi.

Another New acquisition. Pfizer question on York the

rates rate do is given on Just expect area? excess development changes in kind is And the to returns the clarify, redevelopment? that that and current what X.X%, rezoning there you cap of any on

Joel Marcus

Yes.

So John on. Cunningham is

to depth least in highlight, want at John initially. So much too there. maybe Not

John Cunningham

Yes.

density, bordered that asset at currently additional the about the rate, the as by is at XX thing far X.X As nice FAR. it's we FAR

up then based about changes at the an XX go to on of is XX.X. And given additional could rezoning, the additional XXX,XXX there density additional it Midtowny's So FAR, available. feet -- the square

but have that utilizing FAR our We future. confident this keep not for open level are in the of really we'll that site, options going considered and forward

Peter Moglia

I Sheila, Hey is I rate it's guess, the just cap Peter confirm Moglia. X, X.

So I of the think and to touched think Joel the key I -- on is I this it, $XXX-per-square-foot one think value. things

big for break -- so off able that X the Pfizer leaseback leverage And it essentially to the paid, for if paying we and but getting the value, you and what a land you're value. years, getting land building a going you If we're that you take, of. subtracted leaseback numbers, getting to for from you're just we're we're value I down it okay, from and sit think

which real we the life in Alexandria a have going planning estate. X basis So really start X New we're to years to York the of when redevelopment, great price next-generation for from science to in

Sheila McGrath

Okay, the XXX on great. the and redeveloping Or place X.X leases are yield go Tech I'm wondering X.X. like market? yields the yields and just to Maryland to those And then you life those are on acquisitions, in rolling buildings? I Drive in stabilized up just Peter, science guess, those supplemental portfolio,

Peter Moglia

already Drive Tech is XXX The actually delivered.

XXX% and and that's little to numbers bit so So potentially coming expect better. those There a is reach years, leased be the rollover a fully portfolio. the a of bit we but portfolio. at Maryland of couple set, little is next It's

Sheila McGrath

doesn't like active were And need that you the additional Okay. on you quarter, look question, on capital this ATM last much plan. it based equity

are asset? for do a sale? Is -- what stabilized a look on touch looking you of Or joint could to it are you if non-core? do venture you assets Just

Dean Shigenaga

the Sheila, have of Dean excluding here. the of can million capital for remaining end we forward sought year. the this year, it's equity $XXX the by of rest Yes, that settle we

in some, capital look I goal of I to call is here. be we that do want dispositions. value the a that high assets would attractive and We I we're non-strategic what cost to think, selling. importantly, at as is, my have do look commentary But disposition mentioned So at something of

Joel Marcus

A interest disposition. partial

Dean Shigenaga

more around our maybe call, there. So by of next plans more we'll give we're -- details that, the we'll little working color detail the and next the through over a provide

Sheila McGrath

Okay, great. Thank you.

Dean Shigenaga

Sheila. Thanks,

Operator

The Please next BTIG. Catherwood question ahead. will Tom be of from go

Tom Catherwood

Thank you. And everybody. good afternoon,

think, recognize has on the the mentioned just that mechanics are mentioned, 'XX, you Dean, Does been on in 'XX, roughly that What lease your kick as I leasing extends? far forward. natural does of of growth blends those the X/X expires? and Of same-store when leasing term kind growth, of forward to and Steve once you 'XX. leases How as the NOI that are leases earnings? you So that, kind the is X/X flow-through

Dean Shigenaga

example, at one expiration expansion. an in of The steps as that I in transaction, It straight opposed here. all the And Dean the forward. of is on to early frequently revenue. lining trigger it's Tom, the the depend lease commencement an this the think will is the Cambridge to date cash the case, environment in bringing part on rents, way which X was depends So usually to about initial will as actual extension probably GAAP generally that other negotiation, of and were more occurs then an the think renewals connected thing upward,

component delivery together. and early an have upon of all you expansion the renewal space. And the expansion and So commence would combined expansion

a So expect. you to what hopefully sense that for gives

Stephen Richardson

lock urgency for to to implies happening coming concession, not of rates early you Tom, that's is X%, these absolutely type be aware in space. of X%, that, sense Maybe this X%, the the of When us is are renewals to Steve. look people here. the to with acutely a are at very clear, space. just some are add market of vacancy competition tenants blend These down extend and what and

Tom Catherwood

it. Got

first GAAP NOI an exploration natural that whenever kind the then Dean, years of laid change to store it's cash be just So clarify, out extension, the was, recognized so you later if now, in same-store it scenario, would kick and where would the just correct? the was that

Dean Shigenaga

Correct. say One of these I renewals And then shouldn't Kendall early it's to remind, some Square. releasing. also is of some early,

us So was, expiration cash to one much sooner. capture with the of to tenant, allows re-tenanting XXXX which believe, the expirations related I new the rents

Tom Catherwood

of development lists Got it. to developments, feet that you you quarter. over square XXX,XXX And acquired rights guys Page this switching X,

to you projects. opportunities? they like back amongst looks And came San through spread development If bucket go and Can this other of quarter? additional Stanford, these kind these Diego, it walk kind RTP an of to undisclosed are of you fruition your landholdings, rates Greater value-creation how

Joel Marcus

some assemblage some get strategy. we key don't into, and think I other want to there because are

of say, we'll that Tom, couple and So for out. question hold a of I'd quarters, kind your lay

Tom Catherwood

you development to Alexandria can City Then that jump fair. seem is the third on. try something maybe hopefully one development, New the for that The did Very I'll one you about? could York up of rates talk talk phase center,

Joel Marcus

Right.

the So working signed city. XX we are intent -- a and have letter lease working John the May of negotiations. ground We're on on with the team

have I say announcement shortly. in the a to forthcoming be we believe, will size expect We be building stay but would enhanced tuned, fairly from that will what

Tom Catherwood

Got Joel. it. Thanks,

Joel Marcus

Thank you.

Operator

ahead. The Please will Securities. Rich be go Mizuho Anderson next question of from

Rich Anderson

ATM quicker was least comment kind assuming assumed Pfizer that deal? be a we by fast-track may chunky that the of of our the to than quarter? be Was Is model? in back kind Getting Thanks. earlier. at to this to you issuance were that to fair Or say driven always

Dean Shigenaga

circumstances, price did. program. The think matched flow, broadly, the it we perfectly not the be by broadly, And we timing attractive quarter was all in I'd to at the the this driven in did go was contract, forward we point quarter, I was say, ATM ATM we that second Rich. did may so the under when do raised into see at fairly that deal usage time acquisitions capital, the the but

Rich Anderson

spend, today, news a may peg XX list, on be that reading within information but going you that certain of at they they Pfizer things if do you mentioned, a because with your moments similar day where Joel Biogen, R&D looking a are Alzheimer's space? any XX I'm we're suppose, be your then are good company-specific, of could Illumina having there I you or know, expressing with tenants top from quieter indicating top don't good And that there as their are you to Okay. good the activity. organizations? -- need I having but are the that that regular could you kind more getting flow more of

Joel Marcus

a to for kind while; quarter. want positive leasing. don't still say strong had -- would of Celgene's a in bluebird pipeline doing that certainly But had better, the position, had same lagged a the very thing. stock I their on Lilly broadcast I doing Yes, is of turnaround it but

of these, say So general, almost for I general, all some that is have from at I necessarily all tenants in these positive of sure. it's this any but point, there but say, been they on to businesses strengths of in these I hard some not given mean, think have, absorption slow, I would -- think of quarter,

Rich Anderson

them, also And fit like -- or they're when MIT them do look others at I kind as too I competitors MIT, you at say shouldn't of like a say any but that should is all?Or generally is there mold -- lassies? competitor,

Joel Marcus

strategy, Well, I they're unique that they have pretty think and huge endowment because gigantic MIT has a regard. estate pretty real a in

Rich Anderson

thinking land deal, But may as this about basis. square it you just when an about of talk and be is about NOI value and we'll type Pfizer hear think next soon that going worry the of on too you on now? to Or a in as back I that lastly could in. couple acquisition years be investment? be of redevelopment, from and itself seeing foot in what we then a a -- And years, terms the per a is about X Okay. pound lot of over this of should getting $XXX that

Peter Moglia

to at an to we get through market of can are very the existing we'll and Peter think of replacement I it's from cost. to and it going But we latter. costs, one space there. it's building is Tom, rent see for say for way, X Yes where We're years, goes us ways below this that of replacement efficient most it Moglia. redevelopment below the provide the I'd collect

in competitive should be if a new pound very comes that per we'll extremely to not market. So competitive, when that versus price the be product

Rich Anderson

so? redevelopment, as mean this chance the know it building, need just to would it -- asset? And exist could absolutely Or be that I I no Okay. it don't

Peter Moglia

it's It would -- absolutely expired.

I way is think lot I But just some we take it of it value. to and lease to decided if would running be the think, a opportunity we're now. it missed add a yes, going keep

Rich Anderson

Thanks. good. sounds Okay,

Peter Moglia

Thank you.

Operator

The be go Michael from will Carroll question Capital RBC Markets. Please ahead. next of

Michael Carroll

do specifically. little bit go of soon? guys on you acquisitions, you particularly Dexter at there ground sites, Dexter, ground breaking start you off Rich's do A out you'll think thanks. some guess, and acquire question, those And these How the land and projects? kind underwrite I breaking sometime XXX of you on long Yeah, looking I'm of will before start

Peter Moglia

submarket mine, fire been there quite gaining very steam. now. is market on science the bit. his Peter I it's and market tech in of the There life comments as hot has Moglia. Well, That momentum in a right out the And for Steve is doubt is there laid no that

towards that. life doing a still with is that We're product there for focus the XXXX we're given other we're need able be after projects side, East ours to now like follow to right but soon up to going going science at we're So what confident there. pretty great

that intent quickly. designing bought So the we with and it entitling of fairly

Michael Carroll

something Is great. And long start? like it does then process take? that XXXX how entitlement Okay,

Peter Moglia

the constrained Master We're Use process. city's by Permit

we I was month ever about in quickest the think got X months.

for XX. wouldn't we in position it So a even be to another probably call a permit pull

that. could we sometime would 'XX yes, that earliest would So at be so be in end the the of address even

of the Steve, expectations San great. And what's on allocation give us Okay, the Times market? a can side? any update your quick receiving Square (inaudible) with then And Francisco you

Stephen Richardson

There extremely science Mission space no is The life we've is in about of availability Bay. market as healthy. talked

very X%, a they Mission one They is of SoMa the filings on The in received the They've You and They've August. kind plan. the have against passed few Bay a recess small comments. have X%, process. do adoption, moving have central a of forward. rate, number political X% city a the stage tech SoMa Therefore, vacancy in of side. do

come they on for and we September, as those move in understanding quarters Our expeditiously. a that that city providing front-loaded. benefits they back all thereby are community each the the basis phase on And will actively I so projects that being with they several to when the think receiving can allocation worked is thought And an is forward going be resolved. are maintain the of move now of

the end the So the will that, expect we be by outcome that year. of

Peter Moglia

Okay. Thank you.

Operator

conclude will session. to hand that back gentlemen, would and over conference remarks. our I closing like Marcus the ladies Joel to question-and-answer And his for

Joel Marcus

everybody, forward for call. to Thank you to quarter listening. Thank third on We you, you look the talking everybody.

Operator

has today's the concluded. conference presentation. gentlemen, you and for Ladies sir. Thank you, Thank attending

You may now your disconnect lines.

Alexandria Real Estate Equities (ARE) 31 Jul 182018 Q2 Earnings call transcript