Alexandria
successfully completes recapitalization of stand-alone operating
property fully leased to multinational pharmaceutical company
Takeda in San Diego's University
Town Center submarket at $981 per RSF
and a strong cash cap rate of 4.5%
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 22,
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 led the development, expansion and
transformation of the San Diego
life science ecosystem into one of the country's top life science
clusters since inventing and creating the novel
Labspace® niche in 1994 with the acquisition of the
company's first properties in Torrey
Pines as a newly founded startup. Through Alexandria's disciplined focus on creating
highly sought-after mega campuses in high-barrier-to-entry markets,
the company has established a dominant market presence in
San Diego, primarily located in
the highly desirable submarkets of Torrey
Pines and University Town Center (UTC). As of March 31, 2023, its highly impactful footprint in
San Diego consists of 14.5 million
RSF, with 8.1 million RSF of operating properties, which support a
range of high-quality tenants, including multinational
pharmaceutical companies that are among Alexandria's top 20 tenants by annual rental
revenue and currently have an aggregate market capitalization of
over $830 billion: Bristol Myers
Squibb, Eli Lilly, Novartis and Takeda. Takeda's west coast global
research and development site is located at Alexandria's 9625 Towne Centre Drive in the
UTC submarket of San Diego and is
home to four research platform groups — structural biology,
computational biology, early target discovery and biologics — that
enable the discovery and advancement of promising molecules.
Designed to enhance innovation, collaboration and efficiency, the
Class A life science facility comprises 163,648 RSF that
Alexandria redeveloped in 2017 and
delivered to Takeda in 2018. The modern research facility is LEED
Gold and Fitwel certified, and the site can accommodate an
expansion opportunity of 100,000 SF or larger.
Alexandria continued its strong
execution of its successful value harvesting and asset recycling
self-funding strategy with the completion of the recapitalization
of an existing real estate joint venture for 9625 Towne
Centre Drive on June 21,
2023. Alexandria and its former real estate joint venture
partner for this asset completed the sale of a 70% interest in 9625
Towne Centre Drive at a total property valuation of
$160.5 million, or $981 per RSF, and at a strong capitalization
rate of 4.5% (based upon cash net operating income for 2Q23
annualized). As a result of this recapitalization, Alexandria's share of the sales price was
$32.3 million and its ownership
interest in the property decreased from 50.1% to 30%; the company
retains operating control, while the former joint venture
partner exited the investment entirely, reaping a strong return.
This transaction resulted in consideration in excess of book value
of $15.6 million and a value-creation
margin of 88% for Alexandria.
Proceeds from this recapitalization will be reinvested into the
company's highly leased value-creation pipeline. As of March 31, 2023, 6.7 million RSF of current and
near-term projects that are 72% leased are expected to generate
more than $610 million of annual
incremental net operating income, primarily commencing from 2Q23
through 1Q26. This multiyear visibility for future growth enabled
Alexandria to reiterate guidance
of 6.4% annual growth in funds from operations 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.
"Our successful recapitalization of this stand-alone,
single-tenant building showcases the value of and demand for our
scarce, high-quality life science assets," said Daniel J. Ryan, co-chief investment officer and
regional market director at San
Diego of Alexandria Real Estate Equities, Inc.
"Purpose-built for Takeda, the state-of-the-art, mission-critical
facility houses complex, specialized equipment and contiguous,
integrated nontechnical workflow space to support their highly
valuable pipeline of scientific research that cannot be operated
from home. As one of Takeda's three global research and development
centers, this site plays an important role in advancing their
pipeline, particularly for debilitating gastrointestinal and
neurological diseases. Ideally located in our UTC submarket —
at the epicenter of the San Diego Science Sector, which is home to
over 525 life science companies — 9625 Towne Centre Drive provides
Takeda with critical proximity to leading research institutions and
enables their relentless pursuit to bring transformative therapies
to patients worldwide."
"The value and essential nature of laboratory space is based on
the high value of the science that is housed, researched, developed
and commercialized in these mission-critical and often
government-regulated spaces," said Joel S.
Marcus, executive chairman and founder of Alexandria Real
Estate Equities, Inc. and Alexandria Venture Investments.
"Alexandria's one-of-a-kind life
science real estate platform, operational excellence, best-in-class
design and thoughtfully curated placemaking continue to empower the
growth of and accelerate innovation for our tenants in San Diego and across all our innovation
clusters to enable their mission-critical work to improve, extend
and save people's lives."
Alexandria counts 17 of the top
20 pharmaceutical companies by R&D spend, according to data
from Evaluate Pharma, in its REIT industry-leading tenant
base. The life science industry, which has an estimated market
value of over $5 trillion and
aggregate annual research and development funding in the range of
$450 billion to $500 billion, is large, diverse and well
positioned for continued secular growth. Alexandria's client base reflects this
diversity with over 850 tenants that span multinational
pharmaceutical companies; public and private biotechnology
companies; life science product, service and device companies; and
academic/medical institutions. With strong balance sheets and
significant free cash flows to fuel innovation and growth,
Alexandria's multinational
pharmaceutical segment constitutes 18% of its annual rental revenue
as of March 31, 2023. Additionally,
global biopharma companies invested nearly $270 billion into R&D in 2022 in their
efforts to translate discoveries into new, more effective medicines
for patients, reflecting a 57% increase over the past decade. 2023
is on pace to be a record-setting year for new FDA-approved
medicines, with potentially up to 60 new approvals anticipated this
year. Yet, with 10,000 known diseases that affect us all, and only
about 10% addressable with therapies, we are still in the early
innings of a biology revolution that has remarkable growth
potential for the life science industry. Catalyzed by
innovative technologies, massive unmet medical need and strong
fundamentals, this vital life science industry remains uniquely
positioned to tackle and solve society's most persistent and
pervasive healthcare challenges. Alexandria's Labspace infrastructure, which
houses billions of dollars of irreplaceable tenant research and
clinical pipeline assets, remains a key component of this noble
pursuit.
![9625 Towne Centre Drive, University Town Center, San Diego. Courtesy of Alexandria Real Estate Equities, Inc. (PRNewsfoto/Alexandria Real Estate Equities, Inc.) 9625 Towne Centre Drive, University Town Center, San Diego. Courtesy of Alexandria Real Estate Equities, Inc. (PRNewsfoto/Alexandria Real Estate Equities, Inc.)](https://mma.prnewswire.com/media/2108498/6_22_23_9625TowneCenterDr_Takeda.jpg)
![Source: Evaluate Pharma. June 2023. Total corporate R&D spend by global biopharma companies. Top 20 companies ranked by pharma R&D spend in 2022. Courtesy of Alexandria Real Estate Equities, Inc. (PRNewsfoto/Alexandria Real Estate Equities, Inc.) Source: Evaluate Pharma. June 2023. Total corporate R&D spend by global biopharma companies. Top 20 companies ranked by pharma R&D spend in 2022. Courtesy of Alexandria Real Estate Equities, Inc. (PRNewsfoto/Alexandria Real Estate Equities, Inc.)](https://mma.prnewswire.com/media/2108496/6_22_23_PharmaR_Dspendslide.jpg)
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 potential impacts of Alexandria's investment decisions on
Alexandria and its tenants and
their businesses, technologies and therapies, use of proceeds,
market and industry expectations, the effectiveness of Alexandria's strategic value harvesting and
asset recycling program, expectations regarding the impact of
Alexandria's value-creation
pipeline on Alexandria's future
financial performance, expected pace of FDA drug approvals and
expected life science research and 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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