Alexandria
completes sale of
non-core Labspace® assets in
Greater Boston market
Alexandria is
at the vanguard and heart of the over $5
trillion life science industry, which is poised for
continued secular growth
Alexandria's
tenants rely on the company's 24/7, high-intensity mission-critical
life science infrastructure, which thrive in densely clustered
campus ecosystems and cannot go remote
PASADENA, Calif., June 20,
2023 /PRNewswire/ -- Alexandria Real Estate Equities,
Inc. (NYSE: ARE), the first, preeminent, longest-tenured and
pioneering owner, operator and developer of collaborative life
science, agtech and advanced technology campuses in AAA innovation
cluster locations, has been at the vanguard and heart of the life
science ecosystem since inventing and creating the novel
Labspace® niche in 1994. Alexandria is a one-of-a-kind company — it is
the only pure-play publicly traded laboratory REIT. Founded on the
belief that life science companies are most successful when
positioned in the epicenter of the world's top innovation
ecosystems in close proximity to world-renowned academic medical
institutions, deep specialized talent and ample risk capital,
Alexandria has applied its cluster
model to the life science industry in a disciplined manner to
execute on its original bold vision to create a new kind of real
estate company uniquely focused on this essential industry and the
highly complex infrastructure needed to support its
mission-critical work to advance human health. Over the past three
decades, Alexandria has
strategically and methodically created the highest-quality life
science assets concentrated in high-barrier-to-entry markets and
built the leading infrastructure platform for the life science
industry. The company's execution of its multifaceted platform of
internal and external growth continues to drive outstanding
long-term total stockholder return (TSR). From its IPO in
May 1997 through March 31, 2023,
Alexandria has generated an
outstanding TSR of 1,444% (assuming reinvestment of dividends),
significantly outperforming major indices over the same period,
including the Nasdaq Composite's TSR of 998%, the MSCI U.S. REIT's
TSR of 706% and the S&P 500's TSR of 683%.
![(PRNewsfoto/Alexandria Real Estate Equities, Inc.) (PRNewsfoto/Alexandria Real Estate Equities, Inc.)](https://mma.prnewswire.com/media/2060728/Alexandria_Real_Estate_Logo.jpg)
Alexandria's strong and timely
execution of its strategic value harvesting and asset recycling
program to raise accretive capital has demonstrated continuing
solid demand for scarce, high-quality life science assets.
Affiliates of Alexandria recently
completed the sale of five non-core, non-mega campus properties
aggregating 428,663 RSF in the Greater
Boston market to affiliates of TPG Real Estate Partners. The
portfolio includes 780 and 790 Memorial Drive in
Cambridgeport, which the company acquired in 2001 and
delivered in 2002 as its first two life science developments in the
Cambridge cluster. It also
consists of three properties in Waltham — 225 Second Avenue, a
laboratory facility acquired in 2014, and 266 and 275 Second
Avenue, which Alexandria purchased
in 2017 and immediately redeveloped into Class A laboratory
facilities. All five facilities were successfully operated and
maintained by Alexandria during
its ownership. Alexandria sold the
portfolio for $365 million, or an
average sales price of $852 per RSF,
and at a weighted-average capitalization rate of 5.2% (based upon
cash net operating income for 2Q23 annualized) that includes
vacancy available for redevelopment, resulting in a gain on sale of
$187.2 million and a value-creation
margin of 80%. Inclusive of this transaction, Alexandria has completed or has signed
letters of intent or purchase and sale agreements for pending
transactions aggregating $884
million, or 58%, of its 2023 capital plan that is
targeting $1.525 billion (at the
midpoint of guidance) of dispositions and sales of partial
interests.
Proceeds from this strategic disposition will be reinvested into
the company's highly leased value-creation pipeline, which consists
of large-scale research and development centers for top life
science companies, including Eli Lilly, Bristol Myers Squibb and
Moderna. As of March 31, 2023, 6.7
million RSF of current and near-term value-creation projects that
are 72% leased are expected to drive over $610 million of annual incremental net operating
income, primarily commencing from 2Q23 through 1Q26. This embedded
growth enabled Alexandria to
reiterate guidance of 6.4% annual growth in funds from operations
(FFO) per share – diluted, as adjusted, for 2023 at the midpoint of
guidance as of April 24, 2023, with a
strong adjusted EBITDA margin of 69% for 1Q23. While these projects
are delivering during a time when supply is elevated above historic
norms in some submarkets, Alexandria's value-creation pipeline is
concentrated in high-value, high-barrier-to-entry submarkets, such
as Cambridge and Watertown in Greater
Boston, Torrey Pines in
San Diego, Lake Union in
Seattle and Shady Grove in
Rockville, Maryland. These Class A
development and redevelopment projects are primarily mega campus
expansions in core markets, where supply is inherently limited due
to a lack of available land and conversion opportunities.
Alexandria's highly differentiated
strategy and preeminent brand afford the company a distinct
competitive advantage against new market supply across most of its
operating asset base of nearly 42 million RSF as of March 31, 2023.
Alexandria's growth is
supported by a strong and flexible balance sheet with no debt
maturities until 2025, 96.1% of fixed-rate debt, credit ratings
among the top 10% of all publicly traded U.S. REITs and
$5.3 billion in liquidity as of
March 31, 2023. Alexandria's cash dividend of $4.84 per common share for the 12 months ending
June 30, 2023, represents an increase
of 24 cents, or 5 percent, over the
12 months ended June 30, 2022. The
dividend allows the company to share its continued high-quality,
strong and increasing net cash provided by operating activities
with its common stockholders while retaining a significant portion
for reinvestment into its highly leased pipeline of new Class A
development and redevelopment projects. Additionally, its FFO
payout ratio (quarterly common stock dividends divided by quarterly
funds from operations) remains favorably low at 55 percent for the
three months ended March 31,
2023.
"A true national treasure, the life science industry has made
incredible progress with over 250 new FDA-approved medicines over
the past five years, and 2023 is on pace to be another near
record-high year with potentially up to 60 new drug approvals. And
still, with over 10,000 diseases known to humankind, 90% of which
remain unaddressed, there is a vast opportunity for the industry to
create new and better treatments and cures," said Joel S. Marcus, executive chairman and founder
of Alexandria Real Estate Equities, Inc. and Alexandria Venture
Investments. "With an estimated market value in excess of
$5 trillion and aggregate annual
research and development funding in the range of $450 billion to $500
billion, the life science industry, which is advancing
innovation at unprecedented rates, is set for remarkable secular
growth."
Alexandria's mission-critical
Labspace assets house billions of dollars of high-intensity
infrastructure, specialized equipment, and irreplaceable tenant
research and clinical pipeline assets, which fuel the large,
diverse and growing life science industry. This scientific research
cannot be performed from home and must be conducted in dedicated
spaces in compliance with stringent laboratory safety requirements
governed by city, state and/or federal regulatory agencies. The
company's Labspace assets often include nontechnical space that is
fully integrated with the laboratories and intentionally designed
to enable seamless workflows. While scientists must conduct
research inside laboratories, they utilize the adjacent
nontechnical space to meaningfully analyze data and make related
business decisions, and hence this space is also critical to their
research efforts overall. Alexandria's proven track record of operating
and safeguarding its tenants' mission-critical research and
development has yielded an incredibly loyal client base with an
average retention rate of over 80% over the past five years.
Alexandria has established a
powerful moat around its novel life science real estate platform,
fueled by its stellar brand reputation; highly sought-after mega
campuses; long-tenured, highly experienced management team; strong
and flexible balance sheet; REIT industry-leading client base of
over 850 tenants that drives stable, resilient and long-duration
cash flows; direct asset management and integrated laboratory
support services; and unmatched life science industry experience
and expertise. In recognition of the company's nearly three-decade
track record, renowned author and business strategist Jim Collins has said, "Alexandria has achieved the three outputs that
define a great company: Superior Results, Distinctive Impact, and
Lasting Endurance."
About Alexandria Real Estate Equities, Inc.
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P
500® company, is a best-in-class, mission-driven
life science REIT making a positive and lasting impact on the
world. As the pioneer of the life science real estate niche since
our founding in 1994, Alexandria
is the preeminent and longest-tenured owner, operator and developer
of collaborative life science, agtech and advanced technology
campuses in AAA innovation cluster locations, including
Greater Boston, the San Francisco Bay Area, New York City, San
Diego, Seattle,
Maryland and Research Triangle.
The trusted partner to over 850 tenants, Alexandria has a total market capitalization
of $33.0 billion and an asset base in
North America of 75.6 million SF
as of March 31, 2023, which includes
41.9 million RSF of operating properties, 5.5 million RSF of Class
A properties undergoing construction and 9.7 million RSF of
near-term and intermediate-term development and redevelopment
projects. Alexandria has a
longstanding and proven track record of developing Class A
properties clustered in life science, agtech and advanced
technology campuses that provide our innovative tenants with highly
dynamic and collaborative environments that enhance their ability
to successfully recruit and retain world-class talent and inspire
productivity, efficiency, creativity and success. Alexandria also provides strategic capital to
transformative life science, agrifoodtech, climate innovation and
technology companies through our venture capital platform. We
believe our unique business model and diligent underwriting ensure
a high-quality and diverse tenant base that results in higher
occupancy levels, longer lease terms, higher rental income, higher
returns and greater long-term asset value. For more information on
Alexandria, please
visit www.are.com.
Forward-Looking Statements
This press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements include, without limitation,
statements regarding the effectiveness of Alexandria's future operating or financial
performance, including our outlook for future growth, the
effectiveness of Alexandria's
strategic value harvesting and asset recycling program, supply and
demand for real estate investment opportunities, use of proceeds,
Alexandria's progress on its 2023
capital plan, Alexandria's ability
to monetize its investments and fund future growth opportunities,
expected pace of FDA drug approvals and expected life science
research and development funding levels. These forward-looking
statements are based on Alexandria's present intent, beliefs or
expectations, but forward-looking statements are not guaranteed to
occur and may not occur. Actual results may differ materially from
those contained in or implied by Alexandria's forward-looking statements as a
result of a variety of factors, including, without limitation, the
risks and uncertainties detailed in its filings with the Securities
and Exchange Commission. All forward-looking statements are made as
of the date of this press release, and Alexandria assumes no obligation to update
this information. For more discussion relating to risks and
uncertainties that could cause actual results to differ materially
from those anticipated in Alexandria's forward-looking statements, and
risks and uncertainties to Alexandria's business in general, please refer
to Alexandria's filings with the
Securities and Exchange Commission, including its most recent
annual report on Form 10-K and any subsequently filed quarterly
reports on Form 10-Q.
CONTACT: Sara
Kabakoff, Vice President – Strategic Communications, (626)
788-5578, skabakoff@are.com
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SOURCE Alexandria Real Estate Equities, Inc.