Alexandria
announces sale to Boston Children's Hospital of property that
will constitute 268,000 RSF in 421 Park Drive for estimated initial
proceeds of $155 million
PASADENA, Calif., June 28,
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 of
Greater Boston's thriving life
science ecosystem since 1997. As the pioneer of mission-critical
Labspace® real estate, Alexandria has a dominant market presence in
Greater Boston — the world's top
life science cluster — consisting of 19.6 million RSF, with 11.2
million RSF of operating properties as of March 31, 2023. Its
Greater Boston asset base is home
to over 10 multinational pharmaceutical companies, such as Eli
Lilly and Novartis; innovative public biotechnology companies, such
as Moderna and Alnylam; and top-tier, investment-grade
institutions, such as MIT and Boston
Children's Hospital. Alexandria's
most prominent market presence is in Cambridge's Kendall
Square, which features three of the country's foremost,
in-demand Alexandria mega
campuses. From this base of Greater
Boston mega campuses, the company expanded into the adjacent
high-value, high-barrier-to-entry submarkets of Watertown and Fenway. In Fenway, Alexandria pioneered a new life science
submarket in 2021 with the creation of the Alexandria
Center® for Life Science – Fenway mega campus. This
foundational campus, developed in partnership with Samuels &
Associates, boasts a wealth of amenities, critical proximity to
both Cambridge and the Longwood
Medical Area, and their world-renowned medical research
institutions, as well as convenient transportation access to help
the campus's tenants attract and retain top talent.
Among the tenants at the Alexandria Center for Life Science –
Fenway is the company's long-term strategic partner Boston
Children's Hospital, which invests heavily in basic, clinical and
translational research to accelerate the discovery of new
treatments for devastating diseases and to improve the health of
both children and adults. In fiscal year 2022, Boston Children's
was #1 in National Institutes of Health (NIH) funding among all
U.S. children's hospitals. Government support for life science
research remains strong with an NIH budget of $47.5 billion for fiscal year 2023. Academic and
medical research institutions, which represent a key bedrock sector
of Alexandria's high-quality and
diverse client base of over 850 tenants, compose 12% of the
company's annual rental revenue as of March
31, 2023. Additionally, 49% of Alexandria's total annual rental revenue as of
March 31, 2023 is from
investment-grade or publicly traded large cap tenants.
Alexandria continues its strong
and timely execution of its successful value harvesting and asset
recycling self-funding strategy with a signed purchase and sale
agreement for the disposition of property that will constitute
268,000 RSF in 421 Park Drive, a 660,034 RSF Class A development,
to an affiliate of Boston Children's Hospital. 421 Park Drive
is a highly sustainable state-of-the-art laboratory development
that has been designed to significantly enhance the foundational
campus and surrounding neighborhood through the addition of new
open space, direct connections to the MBTA Fenway station, bicycle
and pedestrian paths, and retail destinations on the building's
ground floor. Alexandria will
develop the facility, operate the entire building and manage the
more than 2 million RSF highly amenitized life science mega campus.
This transaction results in 48.5% of the building being committed,
including ground-floor retail. Initial proceeds at closing are
estimated at $155 million, along with
development fees to be earned by Alexandria over the next three years. Boston
Children's will continue to fund its pro rata share of the costs to
develop 421 Park Drive, which is expected to commence vertical
construction later this year and be substantially complete in 2026.
Initial proceeds from this transaction 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 embedded 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.
"This creative, strategic sale of 268,000 RSF of cutting-edge
research space within our 421 Park life science development further
illustrates the demand for our unique, mission-critical mega campus
assets in high-barrier-to-entry markets and is a testament to the
collaborative vibrancy of our Fenway mega campus," said
Hunter L. Kass, executive vice
president and regional market director of Greater Boston at Alexandria Real Estate
Equities, Inc. "We value our longstanding trusted relationship with
Boston Children's and proudly recognize their legacy of scientific
discovery and innovation as a distinguished healthcare
institution."
Innovation in medicine is a national imperative, and the
opportunity to improve human health and save lives remains vast,
with 10,000 diseases known to humankind, nearly 90% of which have
no viable treatments. The life science industry has aggregate
annual research and development funding in the range of
$450 billion to $500 billion and is well positioned for continued
secular growth. Alexandria's
mission-critical Labspace assets, which house billions of dollars
of irreplaceable tenant research and 24/7 high-intensity equipment,
remain integral to supporting the advancement of life-changing and
lifesaving treatments and cures.
![421 Park Drive (pictured above left) at the Alexandria Center® for Life Science – Fenway mega campus. Courtesy of Alexandria Real Estate Equities, Inc. (PRNewsfoto/Alexandria Real Estate Equities, Inc.) 421 Park Drive (pictured above left) at the Alexandria Center® for Life Science – Fenway mega campus. Courtesy of Alexandria Real Estate Equities, Inc. (PRNewsfoto/Alexandria Real Estate Equities, Inc.)](https://mma.prnewswire.com/media/2142583/Alexandria_Center_for_Life_Science__Fenway_mega_campus.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, their
businesses and the advancement of treatment and cures, use of
proceeds, market and industry expectations, the effectiveness of
Alexandria's strategic value
harvesting and asset recycling program, expectations, including
timing and proceeds, relating to 421 Park Drive 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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SOURCE Alexandria Real Estate Equities, Inc.