Alexandria Real Estate Equities First Quarter Earnings Call Transcript 2024
Introduction
Alexandria Real Estate Equities, Inc. (NYSE: ARE) hosted its first quarter 2024 earnings call on April 23, 2024. Joel Marcus, Executive Chairman and Founder; Hallie Kuhn, SVP of Life Science and Capital Markets; Peter Moglia, CFO; and Marc Jakal, Chief Investment Officer, were among the company's executives who participated in the conference call. The conference call contains forward-looking statements regarding the company's financial performance and sustained efforts to withstand the macroeconomic climate.
** macro economic environment and alexandria 's performance
Joel Marcus, Executive Chairman and Founder, acknowledged the challenging macro environment with high interest rates and inflationary pressures arising from the federal government's excessive spending in his opening remarks. He emphasized the annual debt service being greater than the defense budget as a shocking reality. Despite this, Alexandria has demonstrated resilience and delivered solid results with 7.6% year-over-year NOI growth, 7.3% year-over-year FFO growth, and a 5% dividend increase. The company has also been recognized as one of the most trustworthy companies in America by Newsweek, cementing its reputation and branding in the life science industry.
** lease expirations and asset sales**
Peter Moglia, CFO, provided an update on the company's capital recycling strategy, stating that approximately $275 million in non-core assets had been sold or were pending sale, which represents approximately 20% of the company's targeted $1.4 billion capital recycling goal for 2024. He emphasized the focus on leasing for the 2025 pipeline and redeveloping space to be delivered in 2025, as well as leasing vacant space in 2025 to grow tenants. The company's lease expirations for 2024 and 2025 are down, as are unresolved expirations for the same period.
** alexandria 's dominant market position and outlook**
Hallie Kuhn, SVP of Life Science and Capital Markets, provided an in-depth analysis of the life science industry, highlighting its impressive growth from $2.5 trillion in 2008 to over $5 trillion today. She noted the increasing deployment of capital into venture investments, record-breaking M&A deals, and the positive impact of the BIOSECURE Act on U.S.-based CDMOs. Additionally, she emphasized the need for lab space and the company's focus on leasing and redevelopment to meet the demands of its tenants.
** tenant retention and outlook**
Marc Jakal, Chief Investment Officer, highlighted the company's focus on tenant retention and the importance of its cluster strategy in the highly specialized life science industry. He discussed the value of the company's campuses in providing collaborative environments for its tenants, and the development pipeline for the coming year.
Conclusion
Alexandria Real Estate Equities, Inc. continues to navigate the macroeconomic environment while maintaining a strong balance sheet and a unique brand in the life science real estate industry. The company reported solid financial performance and sustainable growth driven by its cluster strategy and focus on tenant needs. The company remains committed to fostering innovation in the life sciences while providing essential infrastructure for the development of new medicines.