Alexandria Real Estate Equities Q1 2023 Earnings Report

Alexandria Real Estate Equities EPS Results

• Actual EPS: $0.44
• Consensus EPS: $2.15
• Beat/Miss: Missed by -$1.71
• One Year Ago EPS: $2.05

Alexandria Real Estate Equities Revenue Results

• Actual Revenue: $700.80 million
• Expected Revenue: $686.70 million
• Beat/Miss: Beat by +$14.10 million
• YoY Revenue Growth: +13.90%

Alexandria Real Estate Equities Announcement Details

• Quarter: Q1 2023
• Date: 4/25/2023
• Time: After Market Closes
• Conference Call Date: Tuesday, April 25, 2023
• Conference Call Time: 3:00PM ET

Alexandria Real Estate Equities (NYSE:ARE) (NYSE: ARE) is a real estate investment trust specializing in the ownership, development and management of collaborative life science and technology campuses. The company’s properties are designed to support research and innovation by providing specialized laboratory, office and manufacturing space tailored to biotechnology, pharmaceutical, academic and related industries.

Since its founding in 1994, Alexandria has cultivated a diversified portfolio of campuses across leading innovation clusters in North America and Europe. Key markets include Boston/Cambridge, the San Francisco Bay Area, San Diego, New York City, Seattle, Maryland’s I-270 corridor, Chicago, Research Triangle Park and London. Through strategic development and acquisition, the company has established long-term relationships with emerging and established life science companies, academic institutions and government agencies.

Over the years, Alexandria has built a reputation for creating integrated communities that blend laboratory facilities with office space, amenity offerings and shared services. These environments are intended to foster collaboration among scientists, entrepreneurs and corporate partners. The company’s leadership has guided its growth from a niche REIT into one of the largest owners and operators of life science real estate, with a management team led by Founder and Executive Chairman Joel S. Marcus and President & CEO Michael J. Wilson.

Alexandria’s business model emphasizes long-term partnerships with tenants and strategic investment in infrastructure that anticipates industry trends, such as advanced therapy manufacturing and data-driven research. The company also pursues sustainability initiatives and smart-building technologies to enhance energy efficiency and reduce environmental impact across its campuses.

Alexandria Real Estate Equities Q1 2023 Earnings Call Transcript

Key Takeaways

• Alexandria delivered a strong Q1 with Funds from Operations per share up 7%, revenues up nearly 14%, and ≈100% rent collections, enabling the company to maintain guidance and reduce 2023 capital uses.
• Despite the SVB collapse, Alexandria’s life science tenants saw minimal disruption as deposits were secured within 72 hours, venture financing continued, and private biotech rent collection reached 99.7%.
• Leasing momentum remained robust with 1.2 million sq ft signed in Q1—the 12th straight quarter above 1 million sq ft—driving a record 48.3% GAAP (24.2% cash) rental rate increase, 85% of which came from existing tenant relationships.
• Development spend for 2023 was strategically cut by $200–$250 million to prioritize high-return projects, leaving a 7.6 million sq ft pipeline that is 74% leased and poised to deliver an initial stabilized yield of 7.3%.
• On the capital recycling front, Alexandria sold 18% of its under-construction 15NECO JV at an implied 5.4% cap rate and has $865 million of asset dispositions or partial-interest sales completed or under LOI, funding pipeline needs while retaining control and fees.

Presentation

[Operator]

Good day, welcome to the Alexandria Real Estate Equities first quarter 2023 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touch-tone phone. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead.

[Paula Schwartz, Managing Director and Investor Relations at Rx Communications Group]

Thank you, 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 report filed with the Securities and Exchange Commission. Now I'd like to turn the call over to Joel Marcus, Executive Chairman and Founder. Please go ahead, Joel.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Thank you, Paula, welcome everybody to Alexandria's first quarter 23 earnings call. With me today are Peter, Dean, Hallie, and Dan. First of all, I wanna send a big thank you to our entire ARE family team for an operationally and financially strong first quarter in a tough, continuing tough macro environment. As you know, Alexandria is truly a one of a kind S&P 500 company, we're very pleased that we just received news one of Newsweek's Most Trusted Company awards. We have no peers. We're kind of a pure play in our field.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

We first identified and pioneered the lab space niche back in 1994, and then through our disciplined execution of our original vision using the strategic architecture of our cluster model, which we customized to the life science industry, we have brought the mission-critical real estate infrastructure of the life science industry and integrated it with an unparalleled and world-class 24/7 operational excellence service component aimed to protect the hundreds of billions of dollars of leading-edge science, which is conducted 24/7 within our asset base. We have brought this to a highly respected and recognized real estate product type today. Alexandria is definitely not a healthcare service facilities company, nor a generic office company. Our discipline core focus is our patented and trademark lab space.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

It's a premium price, non-commodity product, generally characterized by high barrier to entry markets, where we have a dominant franchise and where we exercise pricing power, especially in our highly sought-after Alexandria branded mega campuses. Those markets exhibit deep science base, deep life science talent base, a rich abundance of risk capital, and also are ones that are generally safe and have excellent transportation access. What we saw in 1994 in the embryonic days of the life science industry is multiplied geometrically today, 30 years later. As Steve Jobs said, the 21st century will be the century of the intersection of biology and technology innovation. We have 10,000 known diseases wreaking havoc on human beings each and every day, and the personal and economic cost of sickness, illness, and today, the mental health crisis is continuing to skyrocket.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Continued innovation in medicine is a absolute national priority, and the transformative work of our tenants in the industry is critical to addressing the massive unmet medical need. Literally every day, we hear of great progress, and today, for example, one of our Greater Boston tenants, Morphic Therapeutic, which has an oral drug addressing moderate to severe ulcerative colitis, and if you've ever had it's a tough condition and major GI indication, announced that it hit its phase 2A clinical trial endpoint, and their stock has been up 75% this year. The 10 most prevalent diseases in the U.S., heart disease, cancer, chronic respiratory disease, obesity, Alzheimer's, diabetes, substance abuse, infectious disease, chronic kidney disease, and mental illness, are not being solved to date.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

We have a large mountain to climb. The industry is really in its formative days. Weathering a tough macro environment, ARE posted a very solid first quarter. Our funds FFO per share is up 7% as you see. Revenues, top line revenues up almost 14%. Dean will go into the metrics, but almost 100% collections, which bodes well for our continued strength and stability of the company. We've maintained strong guidance while lowering uses and sources of capital. We've had very solid leasing with the highest ever rental rate increase. We've had continuing strong operating and EBITDA margins.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

All stakeholders should recognize and appreciate this management team took a highly disciplined approach over a multi-year period to create a fortress balance sheet to successfully weather what now is the current self-inflicted economic storm by the various policies that we implemented over the last many years. We have taken judicious measure to cut our CapEx while at the same time making strong progress on our funding plan for 2023, and you'll hear more about that from Peter. Without any further hesitation, let me turn it over to Hallie, who's gonna give you some bird's eye view of our view on the life science industry. Hallie.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

Thank you, Joel, and good afternoon, everyone. This is Hallie Kuhn, Senior Vice President of Science and Technology and Capital Markets. Today, I'm gonna comment on the life science industry following the collapse of Silicon Valley Bank, the health of ARE's best-in-class life science tenant base, and innovation as a long-term driver of life science industry growth. Beginning with SVB, there remains some misperceptions on the long-term impact of its collapse on the life science industry. SVB certainly was a go-to provider for banking needs of many venture-backed companies, particularly in the tech industry. While SVB had created a niche serving this segment, it was also cultural. Early-stage startups work within a very tight-knit community, and many used SVB because that's what everyone else used, not necessarily because there were no other options.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

Many banks, including G-SIBs, have been working for years to carve out their own share of this market. For our own private biotech tenants, in the days following the collapse, we had conversations with over 100 companies, some of which used SVB, but many of which did not or had multiple banking relationships. Importantly, within approximately 72 hours from the start of the bank run, companies had access to all deposits, and the near-term risks, such as making payroll, were mitigated. As for long-term risk driven by instability of regional banks, unlike some tech companies that maintain significant cash in deposit accounts, our tenants largely rely on safer third-party custodial and sweep accounts to minimize cash deposits.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

Biotech is also not reliant on venture debt to the same extent as the tech industry, for those that do seek venture debt, SVB is by no means the only option. We expect that the life science sector will be minimally affected going forward, as evidenced by venture financing rounds that closed in March as expected and continue to do so in April, which I'll touch on in more detail shortly. Before transitioning to the health of our tenant base, one quick reminder on the differentiation of our life science real estate product from traditional office. Importantly, the office component of our life science buildings directly supports researchers in the lab.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

A scientist does not spend all day at the bench, but spends time moving back and forth between lab and adjacent office in order to, for example, analyze data, plan the next set of experiments, and meet with colleagues. The office component cannot be broken out or compared to traditional office, but is an adjacent, highly integrated, and critical component of laboratory design and workflows. Of course, this is also not work that can be done from home. Transitioning to the health of our world-class, diverse life science tenant base. Perhaps the best way to frame the current environment is the old adage, In God we trust, all else bring data. Starting with pharma, which makes up 18% of our ARR, this segment continues to operate from a position of strength. With strong balance sheets and significant free cash flows, pharma is less sensitive to rising rates.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

In 2022, biopharma deployed an estimated $267 billion into R&D. The result is tenants like Eli Lilly that continue to translate this R&D into transformative medicines. Mounjaro, which aims to treat obesity and type 2 diabetes, is predicted to eclipse $50 billion per year globally in revenue. To put this in perspective, nearly 1 out of every 4 dollars of U.S. healthcare spend is deployed to care for people with diabetes. Obesity is estimated to account for over $480 billion in direct healthcare costs in the U.S., with an additional $1.2 trillion in indirect costs due to lost economic productivity. To that end, therapies such as Mounjaro save and extend lives and have the potential to significantly drive down the cost of healthcare more broadly.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

Transitioning to private venture-backed biotech, which makes up 8% of our total ARR, we continue to see a reset of venture deployment to pre-2020, 2021 levels, which, while down from peak, remains strong by historic standards. Venture capitalists are more discriminate, disciplined, and demanding of current and future investments. The companies with tenured management teams and strong differentiated technologies and near-term value inflection milestones are the ones that rise above the fray. We continue to underwrite and monitor all tenants closely, and our private biotech tenants remain healthy compared to the broader market. In fact, across this tenant base, they have raised over $1.9 billion from VC and pharma partnerships since the beginning of the year, of which $800 million has closed following the collapse of SVB.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

As a testament to this point, with a week remaining in April, private biotech tenant rent collection is at 99.7%. Next to public biotech, our tenants with marketed products make up 14% of our ARR, generated $150 billion in revenue in 2022, and include names such as Amgen, Gilead, Vertex, and Moderna. Moderna continues to highlight the potential of novel platforms to deliver innovative new medicines to patients. This month, the company's personalized mRNA cancer vaccine, in combination with an immunotherapy drug from tenant Merck, demonstrated promising clinical trial results in aggressive forms of skin cancer.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

Companies also continue to set high bars for continued innovation and product launches. For example, Alexandria tenant Gilead has laid out an ambitious plan to achieve 20 new drug approvals by 2030, which will entail advancement of their current pipeline, particularly in oncology, supplemented by additional M&A. For our preclinical and clinical stage public biotechs, comprising 10% of our ARR, compelling clinical data remains king. Tenants such as Zai Lab and Biomea Fusion, for example, have recently raised additional capital off promising clinical data. Prometheus Biosciences, while not a tenant, exemplify how data drives the lifeblood of the industry. The company announced stellar data in December, driving their stock up over 600% in the past 12 months, and culminating in a $10.8 billion acquisition by Merck.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

To be clear, in the process of developing novel medicines, there will always be some that fail, no matter what the market conditions. This is baked into our model. With a deep tenant base, relationships across every facet of the industry, and the highest quality space and operations, we can get ahead of potential tenant challenges to backfill and further optimize our tenant base. Reflecting this, in April, we've collected 100% rent from our preclinical and clinical stage public biotech tenants. Next, transitioning to academic and institutional tenants, which constitute 12% of our ARR. It's an opportunity to remember that the life science industry's cornerstone is innovation, which is not slowing. Bipartisan support for life science research remains strong. At $47.5 billion, the NIH's 2023 budget is a 21% increase over 2019.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

Academic and medical institutions continue to be highly productive, a key metric being the pace of new intellectual property. In 2021, U.S. academic institutions accounted for 20,000 invention disclosures and nearly 1,000 new startups. This activity in return is an important long-term funding mechanism for these institutions. For example, Prometheus Bio was originally spun out of Cedars-Sinai, which is set to receive nearly $800 million from the recently announced M&A. In sum, with the majority of our academic and institutional ARR from investment-grade tenants and funding cycles that are based on multi-year grant funding timelines, this segment continues to be sheltered from larger macroeconomic conditions. Staying on the topic of innovation, a few final data points to orient the growth of the life science industry beyond the next few quarters, but to the decades to come.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

According to the American Society of Gene & Cell Therapy, there are over 3,700 gene, cell, and RNA therapies in preclinical and clinical development. For chronic diseases, which drive the bulk of healthcare spend in the United States, there are over 800 medicines in clinical development. The culmination is continued FDA approvals. 2023 has started out at a fast clip. Year to date, 14 novel therapies have been approved, including a novel therapy for ALS developed by tenant Biogen just announced this morning. Altogether for the year, nearly 60 novel medicines have been scheduled for FDA approval review, which mirrors 2018's record year of 59 novel FDA approvals.

[Hallie Kuhn, VP of Science and Technology at Alexandria Real Estate Equities]

To end, I want to reiterate that we are acutely aware of the years of abundance and easy capital that have passed. That the separation of haves and have-nots will continue to widen as the industry drills down on the technologies and medicines that bring the most value to patients and investors. As Winston Churchill once said, "Never let a good crisis go to waste." While this market is and will continue to warrant extreme prudence, it is an opportunity for the best companies to hone in on their long-term fundamentals and thrive. That's what our tenants and Alexandria exemplify. With that, I'll pass it off to Peter.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Thanks, Hallie. I just had my 25th anniversary with the company. In addition to that milestone reminding me of how fast time moves by, it brought about a nostalgic look back on my time at Alexandria. I recalled my interview with Joel, where I learned about this novel idea of forming a real estate company to serve the life science industry, which made me both nervous, as nobody had ever done it before, and equally inspired to help enable an industry that was hell-bent on changing the world. After serious contemplation, I decided that if I was gonna make a difference in the world, this was a heck of an opportunity to do it. Plus, after having been in real estate for about eight years to that point, I could see a tremendous value in offering mission-critical facilities over commodity product.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

I could not have made a better decision as it all proved out. Alexandria has played a critical role in the evolution of the life science industry over the last three decades by creating and growing the ecosystems and clusters that ignite and accelerate the world's leading innovators in their pursuit to advance human health, which is our solemn mission. In addition, we've built an irreplicable world-class asset base of robust and highly differentiated properties and campuses that attract a diversified, best-in-class tenant base who values our expertise and operational excellence by providing 75%-85% of our leasing quarter to quarter. The result of all this is we have built a brand without peer that puts us in a position where we don't rely on third parties to bring us tenants.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

They come to us directly, as we are a trusted partner with a long, successful track record of developing and operating mission-critical facilities. This is an important distinction in any part of the cycle, but perhaps even more when things have slowed down. Our results prove it out. Thank you for indulging me on that retrospective. I'm gonna go and briefly touch on our development pipeline, construction costs, leasing, and asset sales, and then hand it over to Dean. In the first quarter, we delivered 453,511 sq ft in five projects into our high barrier to entry submarkets. Annual NOI for these deliveries totals $23 million, and the initial stabilized yield is strong at 7.3%.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

At quarter end, projects under construction and near-term projects expected to commence construction over the next four quarters total 7.6 million sq ft and are 74% leased or under negotiation. This is very similar to last quarter. In response to the uncertainty and volatility in the markets, we have made a strategic decision to reduce 2023 construction spend by $250 million by pausing or delaying projects that had been classified as under construction, so we can focus our capital on the most strategic projects that have the most attractive terms, enabling our highly vetted and vast tenant base. The reduction in spend results in NOI from deliveries primarily commencing from the second quarter of 2023 through the first quarter of 2026 to be approximately $610 million.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

After commenting on construction costs for the past two years, I can still say they remain volatile, but are on their way to stabilizing. The availability and price of commodities, such as steel, copper, aluminum, and concrete, continue to fluctuate due to shortages of raw materials, low yields from mines, high demand from electrification, or low capability utilization rates in the mills and fabrication shops due to labor shortages. Cost of materials and supply chain volatility were the initial drivers of construction inflation, but now the primary driver is labor, with a triple whammy of wage increases, a shortage of workers, and the inefficiency of the remaining labor force due to the retirement of older, more skilled labor.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

There are 330,000 open construction jobs today, and the time it takes to train the new entrants to be highly skilled is measured in years. These inefficiencies will be with us for a while. Specific to life science buildings, the availability of switchgear and equipment such as HVAC units and generators has slightly improved, but their lead times are still extraordinarily long, with custom air handlers taking 27 weeks longer to get than before COVID, and switchgear and generators an astounding 64 weeks longer. Even worse is the availability of large transformers provided by the utility companies, which can take as long as 3 years now to get. What's driving these delays are chip shortages and demand from electrification projects happening all over the world as investors, governments, and end users demand improvement in carbon emissions.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

As you can imagine, the cost of this equipment is reflective of these shortages, and paired with high labor costs, is making new laboratory office projects more expensive to build than ever before. The upside for us is that 84% of our costs for our active development and redevelopment projects are under GMP or other fixed contracts with contingencies behind that, so we are largely locked in. Anyone contemplating a speculative development these days will have to contend with these delays and associated high costs, which will put the feasibility of building and financing the project at considerable risk. One reason we will likely not see the supply many are expecting beyond what is under construction today. Transitioning to leasing, our strong brand loyalty, mega-campus offerings, and operational excellence continue to drive strong leasing numbers in a challenging market.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

The 1.2 million sq ft leased in the 1st quarter is above our 5-year pre-2021 average and is the 12th consecutive quarter with leasing volume above 1 million sq ft. We achieved attractive economics primarily from our vast tenant base, accounting for 85% of the leasing this quarter, resulting in a rental rate increase of 48.3%, which was the highest in company history, and a strong cash rate of 24.2%. As we have noted previously, demand has normalized from the record year of 2021. Depending on who you ask, demand is at, slightly below, or slightly above pre-COVID levels. There are less tenants actively seeking space in the market today, which we believe is being significantly driven by uncertainty in the economy. As Hallie put it, this market is and will continue to warrant extreme prudence.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

However, we're not dependent on at all on broker deal flow. There are pending opportunities from our fast tenant base that the broader market likely does not see due to our direct relationships with company management teams. Such relationships are a huge differentiator for us and will continue to drive solid leasing even in tough environments. Some private and preclinical, clinical stage companies are making do with the space they have today until they can better understand their ability to raise capital and its cost.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Capital is available. As Hallie mentioned, VCs are more discriminant, disciplined, and demanding of future investments, and companies with tenured management teams, strong differentiated technologies, and near-term value inflection milestones are the ones that will rise above the fray. Those are the haves who by and large are Alexandria's tenants, which we have underwritten and placed into our world-class asset base, differentiated from the have-nots tenant base of others who take on any tenant that can fill space with hope as their underwriting strategy. On the supply side, we track high-quality projects we believe are competitive to ours in the high barrier to entry submarkets. Accordingly, we're tracking direct vacancy in Greater Boston to be 2.8%.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Unleased sublease space is at 3.9%, and unleased supply directly competitive with our triple A locations and building quality to be 1.5% to be delivered in 2023, and 5.1% to be delivered in 2024. A 1.3% total increase in availability from last quarter. In San Francisco, direct vacancy is 3.5%. Sublease space is at 5.8%, and unleased supply directly competitive with our assets continues to be the highest in all of our markets at 6.6% and 8.9% to be delivered in 2023 and 2024 respectively. This is an increase of 3.4% in total availability over last quarter, largely driven by spec building in South San Francisco. In San Diego, direct vacancy is at 4.1%.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Sublease space is at 2.3%, and unleased competitive supply is 3.2% in 2023 and 5.4% in 2024, a slight increase of 0.2% over last quarter. Supply in all submarkets is very likely to be muted beyond what is under construction today due to high construction costs that I referenced, higher cost of capital, and the lessening of generic tenant demand. We focus primarily on high barrier to entry markets where supply is inherently limited. We focus primarily on high barrier to entry markets and brand mega-campus offerings in those triple-A high barrier to entry market locations, and operational excellence enables us to continually mine our vast and deep tenant base to drive our leasing activity, which will likely lessen the impact of generic supply. I'll end with some commentary on our value harvesting and recycling progress.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

We all know, the rapid rise in interest rates have not only increased investors' cost of capital, but created a lot of uncertainty, causing a number of investors to remain on the sidelines. Adding to the difficulty to execute in this environment is the increasing desperation of a number of office building owners trying to raise cash to stay afloat by offering quality long-term leased assets with credit tenants at 6.5%-7.5% cap rates. Despite these challenges, the demand for high-quality life science assets, which is vastly different from office assets, continued in the quarter. Noted in our press release, we were pleased to transfer an 18% interest in our current JV at 15 Necco, which we control and owned 90% of prior to the sale.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

The asset is under construction and will not be delivered until the end of this year, with cash flow commencing in mid-2024. The buyer will fund the remaining construction costs to deliver the property to our tenant until they reach a 37% ownership, which is expected to be the remainder of the cost to deliver the project. Given that the receipt of cash flow is over a year away, it's difficult to translate the valuation to an operating cap rate. To give you some color, the parties agreed to a valuation at closing to be $576 million or $1,665 per sq ft, which is an initial yield of 5.25% on their investment based on in-place NOI at closing.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

We also agreed to credit our partner five and a half million in fees payable. Because we sold 33% of the total 37% our partner purchased, those fees equate to approximately $15 million in value. Stripping that $15 million from the purchase price gets you to a total valuation of $561 million, increasing the cap rate to 5.4%. If you wanna tie that to the supplemental, the $66 million price for the 18% and if you add the other $119 million to be funded to completion and divide it by the 33% we sold, you get $561 million.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

This was a great outcome for Alexandria, as we were able to partner with a world-class investor to monetize the value creation and secure the capital for the remaining spend in an accretive manner while retaining control of the asset and all management fees. We have not yet closed on the other transaction we signed an LOI on in the fourth quarter. We expect to do so in the second quarter. In addition to this transaction, we have signed letters of intent or purchase and sale agreements for a number of assets, including the office campus referenced in the press release, aggregating to a total sales price of $799.3 million. These future transactions in 15 Necco account for approximately 57% of the progress needed to meet the midpoint of our disposition guidance. With that, I'm gonna hand it over to Dean.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Thanks, Peter and Dean. Shigenaga here. Good afternoon, everyone. We reported excellent operating and financial results that exceeded consensus with strong core results. Our team is off to a strong start towards a solid growth for 2023. Our client tenants continued very timely payment of rent year to date through April. We have a very strong balance sheet. We have meaningfully reduced uses of capital for 2023, made excellent progress on dispositions and sales of partial interest, have a conservative FFO payout ratio and a growing dividend. We are the go-to brand for life science real estate. We have a very strong balance sheet with $5.3 billion in liquidity, no debt maturities until 2025. Our team made excellent progress on our dispositions and sales of partial interest only 4 months into 2023.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

As Peter highlighted, we've advanced transactions aggregating $865 million. They're either completed or subject to executed LOIs or purchase and sales agreements, including the new JV partner for our build-to-suit project for Eli Lilly. Many of the in-process transactions are targeted to close on or about June thirtieth. We have also identified other dispositions and sales of partial interest to bring our total for the year to $1.5 billion. While the macro environment remains challenging, we are reasonably optimistic that we can execute on our disposition plan for 2023 at attractive values and cap rates. We will provide values and cap rates quarter to quarter as we close transactions, since we're unable to do so sooner while transactions are in process.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

In addition to the $1.5 billion in dispositions and sales of partial interest, new JV capital forecasted for the full year of 2023 will contribute over $300 million towards construction spend this year, including most of the $119 million of contributions from the new partner we just added to our build-to-suit project for Eli Lilly. Now, JV contributions to construction spend, including forecasted joint ventures, were added to our detailed disclosures on page 48 of our supplemental package. Now, turning to outstanding financial and operating results. We had really strong growth of $342.9 million or up 13.9% in total revenues for the first quarter annualized in comparison to the first quarter of 2022. Adjusted EBITDA on a trailing twelve-month basis was up $246.2 million or 15.4%.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Really strong growth of 6.8% in FFO per share for the quarter in comparison to the 1st quarter of 2022. Again, off to a very strong start and on track for 6.4% growth in FFO per share for 2023. Key highlights of our continued strong operating and financial performance. Strong growth in revenues, adjusted EBITDA, and FFO per share was driven by the continued strength across key areas of our unique and differentiated business. We had continued strength in timely payment of rent from our client tenants, 99.9% for the 1st quarter and 99.7% for April. That was through April 21st, only three weeks into this month. Pretty amazing.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Continued strength in same property NOI growth of 3.7%, 9% on a cash basis, really reflects the benefit of strong rental rate growth on leasing in recent quarters, contractual annual escalations in rent, and the burn-off of some free rent. Our outlook, our strong outlook for 2023 same property NOI growth is 3% on a GAAP basis, 5% on a cash basis, generally consistent with our strong 10-year average for same property growth. Turning to record rental rate growth and strong leasing volume. Strong rental rate growth continued into 2023 at 48.3% on GAAP basis, 24.2% on a cash basis from lease renewals and release into space in the first quarter. This was an exceptional rental rate growth.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

GAAP at the highest in the company's history, both GAAP and cash rental rate growth higher than the strong rental rate growth for the full year of 2022 and 2021. Leasing volume for the first quarter was strong at 1.2 million rentable sq ft, slightly ahead of the strong quarterly average of leasing volume prior to the exceptional record level of leasing volume in both 2021 and 2022. The key takeaway is that the scale of our high-quality tenant roster, combined with operational excellence from our team, puts us in an excellent position to benefit from the unique pool of demand from our client tenants, even in this unusual macro environment. Our strong occupancy was in line with our expectations.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Occupancy was 93.6% as of March 31st, really in line with expectations and the comments I provided on our year-end earnings call. There are three key takeaways here. First, occupancy is expected to improve in the back half of the year. Second, 371,000 rentable sq ft of the recent vacancy has significant rental rate growth of 110% on a GAAP basis and 115% on a cash basis. Third, 29% of this 371,000 rentable sq ft has already been leased, with occupancy of some of this space beginning in the third quarter of 2023. Please refer to footnote 1 on page 26 of our supplemental package for more information. We also absorbed 71,000 of vacancy from a building located in Texas.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

This is 1 of 2 buildings that were undergoing redevelopment last quarter. 1 building aggregating 131,000 rentable square feet is currently 36% pre-leased and undergoing redevelopment. We decided to hold on further redevelopment of the 2nd building, aggregating 71,000 rentable square feet, until we lease up the remainder of the 131,000 rentable square foot building. The 71,000 rentable square foot building is vacant and is classified in operating properties. We continued with very strong adjusted EBITDA margin of 69%. Briefly, on our high-quality tenant roster, Alexandria really is the brand for life science real estate. Has built long-term trusted relationships and is a true partner to the life science industry. 90% of our top 20 tenants are investment grade rated or large cap publicly traded companies.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

We highlighted continued strength of timely payments of rent from client tenants at 99.9% of rent that was due in the first quarter, really reflects the strength of our high-quality client tenants, important tenant relationships, and the high-quality underwriting from our research team. Briefly on venture investments. Realized gains from the venture investments included in FFO averaged about $25.8 million per quarter for the last 8 quarters through the end of 2022, in comparison to $20.7 million for the first quarter of 2023. We do expect to realize gains each quarter from our venture investments for the remainder of 2023 to be more consistent to slightly up from the historical quarterly average of $25.8 million that I just highlighted.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Gross unrealized gains in our venture investments as of March 31st were $459 million on a cost basis of $1.2 billion. Now, we've got continued consistency in growth in dividends from really high-quality cash flows that we generate in our business. We've got a very low and conservative FFO payout ratio, 55% for the first quarter annualized, with 5.3% increases in common stock dividends over the last 12 months. We're projecting $375 million in net cash flows from operating activities after dividends for reinvestment. At this rate, this represents over $1.1 billion of capital for reinvestment over the next three years. Briefly on external growth. We have $610 million of incremental net operating income from our pipeline of 6.7 million sq ft that is 74% leased.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Approximately 30% of this NOI will commence in the remaining 3 quarters of 2023. About 40% will commence in 2024, about 26% in 2025, and the remaining 4% thereafter. Turning to guidance. We updated our underlying guidance assumptions for 2023. These assumptions are disclosed on page 4 of our supplemental package. Our per share outlook for 2023 was updated to ±$0.05 of a range from the midpoint of guidance, down from the ±$0.10 range last quarter. Our range of guidance for EPS is $2.21-$2.31, and our range for FFO per share diluted as adjusted is $8.91-$9.01, with no change at the midpoint of $8.96.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

This represents a strong 6.4% growth in FFO per share for 2023, following excellent growth last year of 8.5%. Key updates in the underlying detailed assumptions included the following. A significant reduction of $325 million in both sources and uses of capital, including a $75 million reduction in the midpoint of acquisitions to $225 million, and a $250 million reduction in construction spend to $2.725 billion. We also gave updates on significant dispositions and parcel interest sales aggregating $865 million, including significant transactions that are under executed LOIs and purchase and sale agreements.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Rental rate growth on lease renewals and re-leasing of space was increased 1% for both GAAP and cash to a range of 28%-33% for GAAP and 12%-17% on cash. Occupancy was adjusted 20 basis points to reflect vacancy from a 170,000 rentable sq ft building located in Texas that is on hold while we lease up the adjacent building under redevelopment that is currently 36% leased. Importantly, occupancy is expected to recover in the second half of 2023. With that, let me turn it back to Joel Marcus. Thank you.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Operator, can we go to questions, please?

[Operator]

We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Steve Sakwa with Evercore. Please go ahead.

[Steve Sakwa, Senior Managing Director and Senior Equity Research Analyst at Evercore ISI]

Yeah, thanks. Good afternoon. Joel, look, I can appreciate that you still haven't closed a lot of these deals, but I think the market would certainly appreciate just any range of commentary you could provide on sort of how to think about cap rates. I realize, you know, not singling out individual deals, but is there a way to sort of bracket them or bucket them kind of against maybe where your implied cap rate is today or maybe against the deal that Peter discussed?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

I think the way... I'll have Peter certainly, and Dan may wanna come in as well. I think it's fair to think about we were posting low 4% cap rates again on Class A facilities over the last couple of years. Peter just went through, I thought, a pretty clear explanation of the transaction in Greater Boston, which is, you know, essentially a 5.4. You might think about an adjustment of cap rates maybe over this transitioning economic time of maybe 100 basis points. That's maybe a way to frame it. I think you'll be pretty impressed and, you know, I think people will be impressed when we do our second quarter call. Peter, any comments?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Yeah, I agree with that assessment. I would say that, you know, we will see things that are still lower than 5% potentially when, there's a good mark-to-market opportunity that can be.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah, exactly.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

If it's stable, a high-quality asset's, you know, gonna have a 5 handle on it, just like this one did.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Dan, any other comment you would throw out?

[Dan Ryan, Co‑Chief Investment Officer at Alexandria Real Estate Equities]

Yeah. No, I think Peter said it perfectly.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Okay. Steve, hopefully that's helpful.

[Steve Sakwa, Senior Managing Director and Senior Equity Research Analyst at Evercore ISI]

Yeah, no, that's great. Thanks. Then Joel, and maybe you and Hallie could just comment. I saw that, you know, I guess in the last supplemental you talked about sort of dealing with 1,000 tenants. This time you kind of mentioned 850. My sense is half of that is retail tenants that maybe are leaving-

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah

[Steve Sakwa, Senior Managing Director and Senior Equity Research Analyst at Evercore ISI]

for an asset, but I suspect that maybe some of them are not retail. I guess that really just speaks to how are you changing maybe your underwriting and the tenants that you're sort of willing to do business with today versus maybe tenants you were willing to do business with either post SVB or, you know, a couple of years ago?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah, we didn't have 150 failures, but Dean, do you wanna highlight that for a moment?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Steve, the huge majority of the change was really due to a simple future mega campus development project that we acquired. It's a retail project known as The Shops at Ten Franklin. That was almost all of the change in the tenancy from roughly 1,000 to 850. You're right. Beyond that, like we highlighted, not just during this call, but over the last couple quarters, you know, we've had, as you would always expect, some normal lease expirations that occur at the end where the tenant doesn't choose to extend. That's fairly normal activity.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

We've also had a few tenants that have come back, as you guys are well aware, and have come back to end their lease a little bit early. That was really a handful of leases over the last couple quarters. I think the big takeaway though is, look, you know that we do a really good job at selecting really high quality locations in the core of these, you know, life science cluster markets. Great, great locations, great facilities. I think our operational excellence and our brand puts us in a great position to capture mark-to-markets on most of these spaces that have come back.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

I mean, the comments I provided on the vacancies that came up just in the first quarter alone with mark-to-markets, both GAAP and cash, north of 100%, and 29% of that space already been leased. If you go back to my comments in the fourth quarter, I believe I gave similar comments of pre-leasing on space that had just rolled as well. You know, we've got good activity. Again, going back to the crux of your question, Steve, almost all that change in the tenancy was retail related at that shopping mall.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah. Let me maybe put a footnote on that, Steve Sakwa. You asked about, you know, the nature of underwriting. I think kind of Hallie Kuhn said it all, that, you know, when we look at private companies or we look at preclinical public companies or even companies in the clinic that are public, so that group of tenants, you're always looking now even much more so for much nearer term value inflection milestones and really good data, and, importantly, large unmet medical needs. I mean, we've always done that, but I think now it just goes to show that, you know, they're going to be the haves and the others are have-nots. That's really, I think, where the mindset is.

[Steve Sakwa, Senior Managing Director and Senior Equity Research Analyst at Evercore ISI]

Great. Just 1 last question. Dean, do you have, like, an overall mark-to-market on kind of what you think the portfolio kind of lost to leases on the overall assets today?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Meaning if we were to mark-to-market the rental rate, Steve, on the whole portfolio?

[Steve Sakwa, Senior Managing Director and Senior Equity Research Analyst at Evercore ISI]

Yes.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Yeah, I think last quarter it was somewhere around 27%. This quarter it's closer to 22% overall in the whole portfolio.

[Steve Sakwa, Senior Managing Director and Senior Equity Research Analyst at Evercore ISI]

Great. Thanks. That's it for me.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yep. Thanks, Steve.

[Operator]

The next question comes from Anthony Paolone with J.P. Morgan. Please go ahead.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Thank you. You guys talked about driving a lot of your leasing from just internal relationships in your existing tenant base. I was wondering if I don't know if there's an Alexandria dashboard, so to speak, or what, but can you maybe give us a sense as to what either leasing traffic, rate, or just the aggregate amount of demand that's coming out of your portfolio today looks like versus, say, 2, 3, 4 quarters ago?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah, that is almost. That's hard to do generally, and it's so sub-market and building specific, Tony. Clearly demand is overall down from the peak of 2020 and 2021. You see that, you know, just everywhere, and you certainly see it on more of a normalization of our historical leasing, which, you know, has bounced around over the last either 5-year benchmark or 10-year. You know, maybe the thing to say is, companies that are active are, you know, pharma, and I think Peter alluded to this, bigger biotech, product and service companies, that aren't so much focused on the manufacturing side, or the supply side, and then clearly biotechs.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

That, whether they'd be public or private, that have got, you know, good data coming. I think that's where you see it, but I'm not sure we could give you a, you know, a numerical characterization of that.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

I guess maybe a different way to ask it is, you know, if you think about the next couple of years, you see where the growth is within your portfolio, and you also know space that's coming due in your development pipeline. Do you see enough demand today to absorb the space that's coming online the next couple of years? Do you think we should expect, you know, some moderation in occupancy levels as the demand is lower?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah, I'll let maybe Peter come in on that as well. I think it's fair to say if you look at our pipeline, which is pretty highly leased, I think we have a, you know, reasonably high level of confidence that we can, you know, fully lease those projects. You know, there are demand that doesn't even show up today on projects that may be on the future drawing board that we're also comfortable with. I don't think we see demand dropping off a cliff here at all. Peter, you wanna comment? Dan, you could comment as well.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Yeah. The, there's been a slowdown in activity due to the fact that boards and companies are really just trying to figure out where the economy is heading. There's definitely expansion needs. They're just not going forward with some of them, which is contributing to the reduction in demand. I would say that, you know, there's a nice amount of pent-up demand building. I would say, in a couple of years from now, that that's definitely gonna be in the market, if not sooner.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Okay. Just 1 second question, it may be a bit of detail. In the supplemental package on page 34, you break out the portfolio between the operating assets and the various buckets of future opportunities. I guess what I'm trying to just make sure if I'm putting a cap rate on ARE's NOI and getting a value, you know, what from that slide do I need to add to that to kinda capture the totality? I'm just trying to understand if in some of these, you know, future opportunities buckets, if there's some operating assets in those or... I'm just trying to piece that all together, so either we're capturing everything or not double counting something.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Yeah.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Tony, it's Dean here. You're referring to the page 34 for others on the call, which is in the bottom right-hand corner. This page highlights square footage of our operating, but most importantly, the different categories of our pipeline, everything from under construction to the future. There's no significant cash flows from assets that are sitting in the pipeline. I just wanna make clear that there's a line item that adjusts the future pipeline for square footage that's sitting in operations. Those cash flows are in the operating portfolio, Tony, as you would pick up that NOI to value the company. We just don't want you to double count the square footage as you go towards the future pipeline.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

From an NOI perspective, if that's your fundamental question, the future pipeline doesn't have any significant NOI being generated at the moment.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

like that 4.2 million sq ft, there's not an appreciable amount of NOI from that that we would be picking up.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Well, wait a second. The $4.2 million is in rental properties today. It's in operations, Tony. I thought you were asking about the $38 million right above it.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Okay.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

$37.889 million.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Right.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

That's-

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Okay. The $4.2 does have some meaningful NOI associated with it that we'd be counting.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Correct. You don't wanna double count the square footage there.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Okay. Understand. Thank you.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

That's why we net down the square footage in that disclosure to 30, roughly 34 million.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Right. Right. The book value has that $4.2 million in there.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

The book value would only have it to the extent it's not related to the operating component, Tony.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Okay.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

If it's in operations, the book value would be sitting in the operating component.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

I see.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

If a larger campus had two operating buildings and a pad to support two buildings, the pad to support the future buildings would be in the future pipeline, the book basis, but the cost basis related to the operating buildings would be in operations, not in the pipeline.

[Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co]

Okay. I think I understand that, and that's helpful. Thank you.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Okay. Mm-hmm.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yep. Thanks, Tony.

[Operator]

The next question comes from Nick Joseph with Citi. Please go ahead.

[Nick Joseph, Equity Research Analyst at Citigroup]

Thanks. Maybe just on the sources and uses. Obviously, there's dispositions and partial interest sales, you know, that are continuing to come at different points in the cycle right now. As you think about the ability to flex that going forward, if the transaction market stalls even more, you know, how are you thinking about the flexibility on your end and, you know, where could equity play into that?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yep. Dean?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Well, I don't know that... I mean, it's interesting the way you posed the question. Maybe I'll start from the back end of your question. Flexing our capital plan and turning to equity as a solution is not really something we are contemplating.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

I think the way to look at our capital plan is what we are doing internally, like we did in the current quarter for earnings as well as over the last several quarters in prep for initial guidance for investor day this year, was to really challenge the uses of capital. I think one thing to keep in mind is that our pipeline is $610 million of incremental net operating income from projects that are highly leased today. There's so much equity-type capital that's invested in CIP today. There's very little incremental equity needed to fund that pipeline.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

We're looking at spend across other projects as we look forward over into 2024 and beyond to be sure we're prioritizing things that we should be investing into and maybe holding on things that we shouldn't be, just given the macro environment. Hopefully that gives you just some color on how we're thinking more broadly about it. I think as I mentioned on the call earlier, we're mindful of the macro environment. We're also in a position where we know where we are here at the end of April with a lot of good activity on the pipeline. We, you know, we're reasonably comfortable with our outlook into 2023, and we'll obviously provide an update as we go quarter to quarter.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

You know, a bulk of what we have under executed LOI or PSA agreements today is sliding to close here, fairly soon, you know, plus or minus mid-year. We feel good about it. We'll keep an eye on things as we go through the next 2 quarters.

[Nick Joseph, Equity Research Analyst at Citigroup]

Absolutely. That's helpful. Then maybe just on that kind of reduction in development spend, you know, how does that play into capitalized interest and interest expense in 2023?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Well, it's all reflected in our guidance we just gave. You saw there was no changes in capped interest. Down in the details, obviously, if you. We did on a number of projects, review strategically what we wanted to do, and a number of them were put on temporary hold, if you wanna look at it from that perspective. Redevelopments were placed into operations as vacant assets. Development projects for the future, they have been paused on a few circumstances, which basically were left in the future development pipeline. From a capitalization perspective, that operating building, I'm sorry, the redevelopment building that's vacant that went into operations, capitalization ceased immediately.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

The other projects have activities that are winding down as we speak, meaning capitalization will cease over the next month to, you know, number of months going forward. They're all basically shutting down in the near term. In the scheme of things, they're relatively small, so we've been able to absorb that. It sits within our range of guidance. It sits within our range of FFO with other assumptions offsetting those changes. We're able to pick up some improvement to offset those. Hopefully that gives you a sense. I mean, we look at qualifying activities carefully across all of our projects that are undergoing construction activities and capped interest and shut them down accordingly. You will see some of that, but they're fairly small in the scheme of things.

[Nick Joseph, Equity Research Analyst at Citigroup]

Thanks. That's helpful. Just on the transaction market, I know you touched on cap rates maybe up about 100 basis points each asset, very different though. Is there anything you're seeing from a buyer or kind of bidder pool pools, kind of change relative to what you've seen really over the last 12 months, just given kind of where financing costs have moved? Have different institutions either fallen out or have you seen kind of any institutional interest that you hadn't seen before?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Yeah. Hey, it's Peter. I'll take that. You know, we actually have a number of choices still in the market. There are definitely some folks that are on the sidelines that are facing redemptions, they're interested in accumulating more life science product, but they can't necessarily play right now. That's, that's been filled in by some other new folks coming in that want exposure that are also high-quality institutional investors. Yeah, we have liquidity, I'm not too concerned about that at this point. I think it'll get better once there's more certainty in where, you know, the terminal rate's gonna land and where cost of capital is so people get comfortable on, you know, spending their allocations for 23.

[Nick Joseph, Equity Research Analyst at Citigroup]

Thank you very much.

[Operator]

The next question comes from Michael Carroll with RBC Capital Markets. Please go ahead.

[Michael Carroll, Equity Research Analyst at RBC Capital Markets]

Thanks. Peter, can you talk a little bit about the supply comments that you're making in your prepared remarks? I mean, are you seeing developers being more cautious pursuing new projects? I know there's a few data sources out there saying that developers are still pursuing life science projects specifically in Boston. I mean, would you agree with that statement?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Yeah, certainly there are, there has been spec building, especially in Boston. What we are seeing is in areas outside of our core submarkets where we don't own product, there are vacant buildings sitting there. If we're hearing that there's no tours, there's no activity. We don't necessarily think that those buildings are competitive to ours. There are a few projects obviously that we do believe, and that's where those percentages are coming in. Obviously 23, a lot of stuff has already been delivered. There's some more coming in 24, there's more coming. We are seeing very little that is starting new today. I think there was one project in South San Francisco that has started recently, which is just beyond comprehension.

[Paula Schwartz, Managing Director and Investor Relations at Rx Communications Group]

Outside of that, we believe that anything that would compete, in, of our quality, is in our numbers, and that we don't think many, if any, people will, you know, start new projects, from here on out, at least, not in a material manner, but who knows?

[Michael Carroll, Equity Research Analyst at RBC Capital Markets]

Okay, great. Then just last on 15 Necco, what's the reason for selling that specific, I guess, development stake? Is there any something about that building that you didn't like or that was more particularly attractive to certain investors? I guess, why that property?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Well, you know, it was a fairly low yield. We're giving away not too much upside by selling part of it, right? You know, the investor that we attracted really, really liked the building and it was an opportunity to fund something that was, you know, near term dollars. It made a lot of sense.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah. I mean, it's a world-class building with a world-class tenant. It certainly is one of those opportunities that would attract a variety of capital sources. You know, we continue to be the dominant owner as well. It kind of meets all the requirements that we have for monetization.

[Michael Carroll, Equity Research Analyst at RBC Capital Markets]

Okay, great. Thank you.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yep.

[Operator]

The next question comes from Rich Anderson with SMBC. Please go ahead.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Hey, thanks. Good afternoon. On the 7.6 million sq ft pipeline, what does that imply in terms of development spend in 2024? How much of that is potentially someplace where you can sort of tap the brakes like you kinda did this quarter, in deference to the current capital raising marketplace?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Rich, it's Dean Shigenaga here. You said 7.6 million?

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

You use any pipeline slice you want. I'm curious as to what you've committed to in terms of development spending.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Okay. I see.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Yeah.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

I see what number you're referring to. You were referring to the pipeline that's under construction.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Yeah.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

5.5 million sq ft plus another 1.2 million near term. Those are all 100% pre-leased projects. That ties to the $610 million for others of incremental net operating income. We haven't broken out that number for 2024 to spend just related to that. That's not. Within that bucket, now we've slimmed down the focus of what is continuing to generate the $610 million of NOI. For the most part, Rich, those are either 100% leased projects or multi-tenant projects, most of which have some level of pre-leasing. Some that don't have pre-leasing today are multi-tenant projects, anywhere from a building to multiple buildings. Right size for delivery to requirements in the market.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

They're not lumpy, large build to suit opportunities that could be more specific to larger requirements. I guess, long way of saying, Rich, I think we feel comfortable with what we've right-sized for the pipeline of activity. The construction spend, ±, will play out like a normal curve for spend over that pipeline, roughly, two years from the start of new projects. The active pipeline's partway through that already. What you're really focused on, though, in your question is spend outside of that, which goes to quite a bit of activity, site work, advancing site work as well as entitlements. Entitlements are important. They add a lot of value.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Site work shrinks the time to deliver buildings to a tenant, which, you know, if you looked at us two years ago, we said, Let's move that along. If you looked at us today, we'd say, Well, let's think carefully about site work, given cost of capital, considerations with the macro environment today. Let's just hold on that until the right time. I think we're gonna look hard, as I mentioned earlier, over the next couple quarters as we continue to refine our plan for 2024. As I mentioned earlier, the $610 million of that pipeline does not require much more equity capital at stabilization because we have so much already in CIP.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Gotcha.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

The incremental EBITDA will allow us to debt fund leverage a neutral, the wide majority of the incremental capital for that pipeline.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Gotcha.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

It's more, general TIs, and renovation costs that aren't part of development and redevelopment that we need to scrutinize in our business.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah. That's kind of the critical message.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Yeah. Got it. Thanks. The second question from me is on the, you know, success that you're having from, you know, asset sales and partial interest, you know, it's obviously the best way to... or one of the best ways to raise equity capital right now for you guys today. At what point does it become too much where you're parting ways with your, you know, your preeminent assets? You know, you only wanna do that to a certain degree before, you know, you're giving away stuff you'd rather own 100%.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Is there a sort of a number you can point to that this is how much we can raise from a disposition standpoint, still be in a range where we're comfortable with our ownership position in these fantastic assets longer term?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Yeah, Rich, it's Dean here. I think the way to think about it high level is that we just closed the conversation about the pipeline.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Right.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

6.7 million sq ft under construction or including 1.2 to start in the near term here. That's a lot of product. We just completed a lot of product over the last two or three years. We have added a lot of high quality assets to our portfolio in recent years as well as coming online here over the next two to three years. Pruning off a piece of the portfolio makes sense. We're mindful of your question, but we have so much coming online and that we have completed in recent years, I think we feel we're in pretty good shape.

[Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities]

Okay, great. Thanks very much.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Yep. Thanks, Rich.

[Operator]

The next question comes from Tom Catherwood with BTIG. Please go ahead.

[Tom Catherwood, Equity Research Analyst at BTIG]

Thank you. Good afternoon, everyone. Just following up on Michael's previous question about Boston. Can you provide some more insight on the decision not to redevelop 275 Grove Street? Is there any read-through to other recent acquisitions in Greater Boston, like Gatehouse Drive or Presidential Way?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

I think Peter can come in as well. I think the way we're trying to think about it is, I mean, we have a very significant position in the Greater Boston market, 14, 15 million sq ft. I think in a tougher macro environment, it's kind of a thought to, you know, prune and rightsize. You see what we've done last year would be a good example of, you know, we sold a set of really good high quality workhorse assets, but we felt in locations that were not necessarily high barrier to entry markets, but, you know, good economics for buyers as well, and good economics for us.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

I think, as we think about different assets, we're trying to make sure that we're more focused on the highest barrier to entry markets rather than less. I think, you know, that's probably the best example I could maybe share. Peter, you could give your color.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Yeah, I mean, there was one nuance to kind of focus us on 275 Grove, which was when we acquired that, there was a thought and opportunity to expand our holdings in that neighborhood, in fact, adjacent to it. You know, we in addition to high barrier to enter, we also really are focused on aggregating into mega campuses. The opportunity to do that wasn't attractive enough for us to move forward. We ended up with this kind of standalone asset, which is a really good office asset. You know, you have to start prioritizing, and that one just kind of lost some of its shine when the opportunity to expand kind of went away.

[Tom Catherwood, Equity Research Analyst at BTIG]

Got it. Thank you, guys. Peter, sticking with you, appreciated your comments on availability rates when including 2023 and 2024 deliveries. When it comes to upcoming lease expirations, you know, you're typically in conversations with tenants a year or multiple years in advance. Are you getting any sense that tenants are engaging less on their 2024 expirations or space needs given the large amount of expected deliveries between now and the end of 2024?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

That's a hard question to answer 'cause it's pretty granular for me to understand when I'm looking at leasing reports. Remembering what is expiring today versus in the future. I believe our early renewal statistics have been fairly strong recently. I guess the short answer is I haven't noticed anything. We are constantly in communication with the regions about their upcoming, you know, renewals and, you know, a year to 2 years, even 3 years ahead at times. You know, our... What's the status, you know, of the company and are they expanding and do we want them in the portfolio or not? We're pretty aware. If I think if there was some weakness there, I think I would have probably noticed it by now.

[Tom Catherwood, Equity Research Analyst at BTIG]

Got it. Thanks, everyone.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Thank you, Tom.

[Operator]

The next question comes from Joshua Dennerlein with Bank of America. Please go ahead.

[Joshua Dennerlein, Equity Research Analyst at Bank of America Securities]

Yeah. Hey, guys. I just wanted to follow up on some of those supply comments, particularly the San Francisco supply. Sounds like that's where the biggest incremental change was when you're looking at 2023 and 2024 unleased new supply. What in particular kind of changed on that front? New supply coming online, or was it projects that were previously signed and then kind of the lease went away?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Just some new recent starts and, you know, one large one in particular in South San Francisco, you know, made up most of that change. It is just uncanny that people are still trying to put new projects into the queue in a market that has a lot of vacancy. You know, we're fortunate we have one project moving that is kind of a good niche for earlier stage companies, midstage companies, so we don't have to go on elephant hunt to lease a really large project. There's a lot of folks out there that are gonna be in a lot of trouble because of what I would think is fairly reckless investing.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Well, also historically, if you go back to my comments, I said, you know, we have tried to shape the company and allocate our capital as much as possible to high barrier to entry markets and mega campuses. South San Francisco, we've never had a dominant position. We chose not to when the Britannia assets came for sale quite a number of years ago. In those days, HCP bought that, I think almost $3 billion. We valued at about $1.7 billion. We decided to pass on that. What's changed in South San Francisco is transportation is now a bit of an issue.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Genentech transitioned to Roche, which is a great company, a world-class company, but they're not company creating in that market like Genentech was like a factory for spin-outs, much like MIT is. Some of those aspects of what would otherwise be a high barrier to entry market don't exist there. You saw some of the moves we made last year in South San Francisco, exiting a number of assets, passing on, you know, we passed on an option, we had to do a development. We're being, you know, pretty darn cautious there, and you'll see that continue.

[Joshua Dennerlein, Equity Research Analyst at Bank of America Securities]

Thank you. One other question. I saw you revised upward the leasing spread guidance. What was that a function of? Just market rent growth or just leases you actually signed in 1Q?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

It's reflective of where we usually start at the beginning of the year. If you look back over time, I think we've enjoyed the opportunity to move rental rate growth and same property performance northward as we make our way through the year. A combination of settling in on activity this quarter, as well as our continued outlook for the remainder of the year. Slight improvement overall.

[Joshua Dennerlein, Equity Research Analyst at Bank of America Securities]

Got it. Thanks, everyone.

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Yep. Thank you.

[Operator]

The next question comes from Dylan Burzinski with Green Street. Please go ahead.

[Dylan Burzinski, Equity Research Analyst at Green Street Advisors]

Hi, guys. Thanks for taking the question. You know, appreciate the color that you guys have provided thus far on sort of demand and the normalization on that front. Just curious, from a geographic perspective, are there certain markets or submarkets where the normalization is a little bit more onerous?

[Peter Moglia, Co‑Chief Investment Officer and CEO at Alexandria Real Estate Equities]

Well, I think maybe South San Francisco might be not so much for us, but maybe others. Yeah, that's a good example. We've tried to minimize, limit our exposure there. A transaction that we did on a build to suit was really a bit. It's in the South San Francisco submarket, but it's a little bit out of there, but directly on transportation, we felt was a huge competitive advantage and landed a world-class, you know, tenant to 100% occupy that development. I think that's one example. Yeah.

[Dylan Burzinski, Equity Research Analyst at Green Street Advisors]

I guess just, you know, on that line of thought, like, you know, are markets like in the non-cluster markets like RTP, suburban Maryland, are those sort of seeing similar kind of normalization demand trends as South San Francisco versus maybe like your core mark submarkets like Cambridge, UTC, Torrey Pines, and San Diego.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

I think we're still seeing decent activity. Maybe RTP, or RT I should say, has slowed maybe a bit more than we would have guessed. Part of that's due to my guess is the mix of tenants down there not so much our tenants per se, but the, you know, the mix of life science, the components of life science tenants in that market. I think we see in Maryland still pretty good, you know, it's slower than it has been because obviously 2020 and 2021 were peak times and obviously COVID dollars were heavily focused on that market. We're still seeing, you know, pretty decent activity that I would say matches our historical numbers. That's just two examples.

[Dylan Burzinski, Equity Research Analyst at Green Street Advisors]

Okay, thanks. Appreciate it.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yep. Mm-hmm.

[Operator]

The next question comes from Georgi Dinkov with Mizuho. Please go ahead.

[Georgi Dinkov, Senior Equity Research Associate at Mizuho Securities USA LLC]

Hi. Thank you for taking my question. Could you please provide more color on the internal leasing pipeline that comes from your existing tenants and how that demand compares to the broader industry?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah, I don't think you can compare that because no one has, you know, the scale and depth of the tenant base that we do, and we know, you know, pretty instantaneously about the needs of those tenants versus if you're just in the market using brokers and you're kinda hearing hearsay or secondhand. The two are pretty fundamentally different.

[Georgi Dinkov, Senior Equity Research Associate at Mizuho Securities USA LLC]

Understood. Apologies if I missed it, but did you have any lease termination fees this quarter? If so, how much?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Dean?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Yeah. Nothing significant in the quarter.

[Georgi Dinkov, Senior Equity Research Associate at Mizuho Securities USA LLC]

Great. Thank you so much. Appreciate it.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yep, thank you.

[Operator]

The next question comes from Jamie Feldman with Wells Fargo. Please go ahead.

[Jamie Feldman, Senior Equity Research Analyst at Wells Fargo Securities]

Great, thanks. Hey, everyone. Can you talk about the credit watch list today and just what that looks like as a % of your revenue versus, say, 6 months ago, and how that number's changed?

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yeah, I don't know that. I mean, we don't call it a credit watch list. I think, you know, Hallie indicated we have a pretty methodical, deep, and judicious approach that has always been there. I mean, you know, if you looked at, say, the Rubius situation, you know, we would say that, you know, if there's a management change that then, you know, you look at or you put that scrutiny at a higher level when it happens. Then as technology developments or lack thereof, you know, take hold that you are informed about. Remember, sometimes when you're dealing with public companies, you know, you have to, sometimes we have confidentiality agreements, sometimes we don't. You know, information comes in different ways, in different fashions.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

We just have a more, much more hands-on work approach with clients. I think the bottom line is, the simple bottom line, if you look at Hallie indicated, if you look at the tenant collections by segment, you know, they're 99% to 100%. We've, I think, done an extraordinary job of managing rent collections and monitoring all of our tenants in a way that I don't think anyone else could even imagine. I don't know if that's a helpful way to characterize it, Jamie.

[Jamie Feldman, Senior Equity Research Analyst at Wells Fargo Securities]

No, that is helpful. I mean, I guess the big picture, it's like, you know, everyone kind of sees the headlines on what's going on in life science. Clearly, you are, you know, flying above the clouds or just have a better portfolio, a better tenant base, but it's so hard to handicap just how bad this cycle could get for you.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Well, I think if you look. Yeah, I mean, if you look at the tenant base and where we, again, Hallie went through each of the segment or a number of the segments. I think you could always say, to me, the privates are in pretty good shape because, you know, they're not exposed to the public markets, and they generally, assuming we've underwritten them well, and we have, they generally have good and deep backers, whether it's venture institutional. Then you look at public, which are preclinical or in the clinic but don't have near-term milestones. I think that's the area that everybody's, you know, really focused on. You know, we have very limited exposure there.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

I mean, for example, you know, we turned down a lease with Sorrento Therapeutics down in San Diego some years ago because we it was kinda like Elizabeth, well, Theranos, forget her last name, but Elizabeth Holmes. You know, I know people who did diligence, and they said they could never look at the Edison machine. Well, if you can't look at the Edison, how it works and so forth, you can't underwrite the tenant. Well, that's kinda how we looked at, you know, Sorrento. We couldn't understand the science, not that we had, you know, some ability to say, "Hey, this is gonna fail or not fail," but we simply could not understand the science, so we passed on the tenancy. You know, that's just how we do things.

[Jamie Feldman, Senior Equity Research Analyst at Wells Fargo Securities]

Okay. No, that's helpful. Then, I guess, Dean, just back to your comment on the $25.8 million of gains you might show, I mean, what's the maximum you think you could do on that number, on that line item?

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

Well, I mean, a couple of years back now, I think it was 2 years ago, Jamie, the market was able to deliver on some unique liquidity events within the portfolio, and we had something just north of $200 million in realized gains. Our policy has been that, you know, these large, significant, unusual items, they're one-off. There aren't events that we control. Those, as you go back, about $100 million of that was excluded from FFO per share. These were individually very significant gains. That's just one example as a historical data point, Jamie.

[Dean Shigenaga, President and CFO at Alexandria Real Estate Equities]

If you look back for now, I think this would be the third year that we're into this run rate right at about $100 million, $105 million on average, I think, for the last couple years. That's kind of the general outlook other than having a slightly lower number for the first quarter.

[Jamie Feldman, Senior Equity Research Analyst at Wells Fargo Securities]

Okay. All right. Thanks for taking the questions.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Yep. Thank you, Jamie.

[Operator]

This concludes our question and answer session. I would like to turn the conference back over to Joel Marcus for any closing remarks.

[Joel Marcus, Executive Chairman and Founder at Alexandria Real Estate Equities]

Just simply thank you very much, and we'll look forward to talking to you on second quarter call.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Dan Ryan, Co‑Chief Investment Officer
• Dean Shigenaga, President and CFO
• Hallie Kuhn, VP of Science and Technology
• Joel Marcus, Executive Chairman and Founder
• Peter Moglia, Co‑Chief Investment Officer and CEO

Analysts

• Anthony Paolone, Equity Research Analyst at JPMorgan Chase & Co
• Dylan Burzinski, Equity Research Analyst at Green Street Advisors
• Georgi Dinkov, Senior Equity Research Associate at Mizuho Securities USA LLC
• Jamie Feldman, Senior Equity Research Analyst at Wells Fargo Securities
• Joshua Dennerlein, Equity Research Analyst at Bank of America Securities
• Michael Carroll, Equity Research Analyst at RBC Capital Markets
• Nick Joseph, Equity Research Analyst at Citigroup
• Paula Schwartz, Managing Director and Investor Relations at Rx Communications Group
• Rich Anderson, Senior Equity Research Analyst at SMBC Nikko Securities
• Steve Sakwa, Senior Managing Director and Senior Equity Research Analyst at Evercore ISI
• Tom Catherwood, Equity Research Analyst at BTIG