Alexandria Real Estate Equities, Inc.

Good afternoon and welcome to the Alexandria Real Estate Equity's first quarter 2019 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please see no conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Paula Schwartz with Investor Relations. Please go ahead.

Thank you, and 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 statement. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statement is contained in the company's periodic reports filed with the SEC. And now I would like to turn the call over to Joel Marcus, Executive Chairman and Founder. Please go ahead, Joel.

Thank you, Paula, and welcome everybody to the first quarter 2019 earnings call. With me today are Steve Richardson, Peter Mowgli, and Dean Shigenaga. First quarter of 2019 was probably as close to a picture-perfect quarter as Alexandria's had in quite a long time, although we have many great quarters. But in addition to stellar earnings results, we have stellar leasing results, which will be talked about, and stellar same-store results. And I want to thank the entire team and make sure we're focused on continuing our relentless passion to further our human health mission each and every day, with operational excellence in an egoless and high-integrity environment. Really important. At the grand opening of one of our latest developments, the West Coast Home of Research for Vertex Pharmaceuticals, Jennifer Ferguson, the mother of two children with cystic fibrosis, noted about Alexandria's unique world-class design of this building and said this building is going to be more than Steel and concrete it is a life-saving cure for my kids It is amazing to think about what is going on or what is going to happen in this building and that's how we feel about everything that we do day to day and how we take our our Charge and our mission very seriously the first quarter was also the 25th anniversary since the start of the company and when we did a Series A round closing, I think, on January 5th, 1994, of $19 million of family and friends. We have grown methodically and steadily and tried to learn every day and every week and every month and every year along the way to become an investment-grade S&P 500 company with the total market cap as of the end of the first quarter approaching $22 billion. We've got one of the strongest client-tenant companies basis in the entire REIT industry with a whopping 50% of annual rental revenue from investment-grade or large-cap publicly traded companies. Our weighted average remaining lease term is approximately eight and a half years. High-quality tenants with long lease duration and strong annual steps is certainly good. I also want to make a couple of comments about, and I think in the press release we've highlighted this, The opioid epidemic and the issue of overdosing. This is the health and safety crisis of our lifetime. We've teamed up 50-50 with Verily, the life science subsidiary of Alphabet, and I'll talk about this in a moment. But 115 deaths per day in the United States, more than have died each year, or more die each year than did in the entire Vietnam War. And I think it's pretty clear that we could not, as a mission-driven company focused on human health, stand idly by and not hear a critically needed call to action. With a heartfelt undertaking, we've pioneered a comprehensive care model with Verily in a safe campus environment, which has rehab, sober living, family reunification, and community transitions. The goal is to help people recover from addiction and live healthier lives while revitalizing the community. We hope the scale of the components of this model will drive superior outcomes and be a model for the rest of the country. And the restoration of the health and well-being of the community is good business for sure. We chose Dayton, Ohio, which has the highest per capita overdose death rate of any US city. Many of you may know, and many of you may not know, more patents per capita in the first half of the 20th century were developed in Dayton, home of the Wright Brothers, among 35 leading industrial cities in America, and was the site for many new companies forming in the first half of the 20th century. It turned out to be a very prosperous transportation hub between or among Indianapolis, Columbus, and Cincinnati. From the late 50s to present, Dayton lost their manufacturing. They closed, GM closed, NCR closed. The number of Fortune 500 companies were reduced down to two, and the population declined to about half. So, we've tried to, our purpose there is to create a tech-enabled recovery ecosystem focused on helping people recover from the opioid addiction and live healthier lives while revitalizing the community. And the team is developing a tech-enabled system of care that will offer treatment center, rehabilitation, housing, wraparound services, all on a state-of-the-art campus. I want to move on to the life science industry for a moment and talk about our five drivers of demand that we track for the life science industry, all continuing strongly positive. NIH funding at an all-time high. FDA regulatory, continuing positive. The new interim commissioner, Ned Sharpless, who comes from the National Cancer Institute and who has a strong background in cancer research, should maintain the pro-innovation environment. Charitable philanthropy is continuing to reach all-time highs. Venture capital flows very strong at approximately $6 billion in the first quarter, and 70% of that has been to ARE clusters. And biopharma R&D investment has been strong in their pipelines. I want to mention one of the topics of the day, which is the Medicare for All fallacy. Interestingly enough, if you look at Bernie Sanders' home state of Vermont, they actually attempted a single-payer system and failed miserably because it would have taken an additional 10% increase for all state income tax in Vermont, plus an additional 12% tax on all payroll for businesses. and turned out to be totally unacceptable. So today we've got about one-third covered by Medicare, two-thirds covered by private insurance, and there's about an eight to 10% uninsured group that we're struggling to figure out how to bring them into the system, and it makes no sense to throw away the baby and not the bathwater, so to speak. So we can't have a government solution that excludes all other insurances, and Medicare may not even be the right agency And in fact, conversations with the people at CMS, they think it's an impossible task. And the Veterans Administration is another very challenging government-run healthcare effort. What is really needed is expanded affordability, expanded access, and portability. Even today, the challenge of having portable electronic medical records is a myth. It just doesn't exist in many cases. Medical costs are actually much higher than pharmacy costs. And these will be increasingly exposed. And oftentimes, pharmacy costs are embedded in hospital costs. And recently, there have been a whole rash of disclosures about drugs being marked up 10x by hospitals and then embedded in overall bills to cover big losses in emergency rooms. So a little bit of a view of what's going on out there. When we talk about future growth of Alexandria, it's fair to say that Alexandria does not see the slowing of its own earnings growth. We've given a five-year framework to double the rental revenues from 2018 through 2022. And you can see from the 2019 pipeline, we have a strong, highly leased, very robust pipeline. In the coming months, we'll unveil details about 2020 and talk about starts and leasing velocity and The team has included on pages 41 and 42 some of the pipeline opportunities for 21, 2021, and 2022. So with that as kind of a background and intro, let me turn it over to Steve for some details on the quarter.