Alexandria Real Estate Equities, Inc.

Good day and welcome to the Alexandria Real Estate equities first quarter 2021 conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing star then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would like now to turn the conference 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 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 reports filed with the Securities and Exchange Commission. And now I'd like to turn the call over to Joel Marcus, Executive Chairman and Founder. Please go ahead, Joel.

Thank you, Paula, and welcome everybody to our first quarter call. And with me today are Dean Chaganaga, Steve Richardson, and Peter Moglia. And we want to wish everybody a safe and healthy go-forward year. We want to welcome all to this first quarter call as well and recognize and thank the entire Alexandria family team. for the operationally excellent and truly stellar first quarter earnings report by all metrics and measures. We collectively continue to operate at an outstandingly high level into this second year of the COVID-19 pandemic. And as I'm often fond of quoting Jim Collins of good to great fame commented on Alexandria's feature in our annual report, Alexandria has achieved the three outputs that define a great company, superior results, And we believe the first quarter is emblematic of that distinctive impact. And we believe that our social responsibility programs have truly made a difference and lasting endurance. And with respect to lasting endurance, we sit here at literally several decades after we were founded in 1994. And I'll talk more about that in a moment. We're particularly proud of the six pillars of our highly impactful and longstanding social responsibility efforts, accelerating groundbreaking medical research to advance lifesaving treatments and cures, harnessing the entire agri-food ecosystem to combat hunger, improve nutrition, and support human health at its most fundamental level. Thirdly, bolstering the resilience of our military, our veterans, and their families. Fourth, conquering the opioid epidemic and revolutionizing addiction treatment. The fifth pillar that we've spent a tremendous amount of time in over the last year and for a good part of the last decade, educationally empowering underserved students to achieve long-term success and reach their potential as important principled leaders in the community. And then finally, building a model for comprehensive, sustainable solution to address homelessness. Alexandria is also proud to be the focus cover story of the January-February 2021 NAREIT Magazine, showcasing that we have pioneered a novel data-driven comprehensive care model to overcome the opioid epidemic launched in Dayton, Ohio. We're now focused on adopting a similar model but in different respects to the homeless problem, which is really become pretty out of control in many urban cities and it is fraught with a lot of complex stratified issues and actually is more of an issue of healthcare than it is simply one of housing. We've been recognized as a leader and continuing and we continue to enhance our leadership in the area of sustainability and we're on pace to achieve our first sorry, net zero energy building in South San Francisco, one of our important submarkets, and only one of 70 of such buildings in the entire world. So we're very proud of that achievement when we finally get the designation. I always try to think about a theme on each quarter, and they are so different given macro and micro circumstances. And I would say the theme for the first quarter has to be exceptional core and internal growth and really stellar value creation and external growth, both of which have driven our continued outstanding earnings results and as the absolute go-to landlord in life science real estate. Leasing demand for Alexandria's owned and operated first-in-class assets is at a historical high. And as I alluded to a moment ago, first quarter of 1994, 27 years ago this quarter, We completed our Series A financing led by Jacobs Engineering for $19 million, and here we sit 27 years later to the quarter with a total market cap of $32.5 billion and among the top 10 of all REITs. I remember attending the first REIT conference, I think it was in New Orleans, in 1994, and I didn't know a single soul, so we've come a long way. And we still are in our fourth consecutive quarter of COVID-19, something none of us will ever forget. The stellar results by any measure metric is we're very proud and we thank each and every one of our great team members. Dean will speak to the outstanding core and internal growth results driven in part by strong rental rate growth and particularly featured this quarter in the San Francisco Bay region among others. one of our highest leasing quarters ever. And Steve and Peter will also speak to our stellar value creation growth, in part driven by our collaborative Fenway Blockbuster transaction, and we greatly appreciate and recognize the team that put that together. A very highly leased valuation creation pipeline, which will provide continuing growth for Alexandria, and so we're very proud of that. Also important to note, and I think Steve, Peter, and Dean will also allude to this, Our partial interest sale this quarter, I think, set a true benchmark valuation for Alexandria-owned and operated first-in-class lab space in the South San Francisco submarket, led by both Steve and Peter. And Peter, in particular, who we brought here in 1998, who had special and unique joint venture talents and a stellar network. And we've been at it under his guidance there for 20 years. So we thank those two very much for that execution and the teams that supported them. We completed our first quarter with a very strong balance sheet. Dean will talk about that, with no debt maturities until 2024. And as some of you are aware, we filed an S-1 with the SEC to raise $250 million for an Alexandria-sponsored SPAC, importantly because we believe there was a real need for this in our core agri-food tech industry. And as we are in a quiet period, we won't be discussing this at all. Moving on to life science industry for a moment, the velocity and continuing demand for Alexandria lab space across our cluster markets is as strong as we've ever experienced. The pace of FDA approvals during the first quarter remained very strong with FDA approving 14 new drugs. 36% of those were Alexandria client tenants. We also note strong bipartisan support and a proposed whopping 20 percent increase for the budgets of NIH, CDC, and HHS. We don't know about FDA at this moment, and hopefully the administration will select, in the not-too-distant future, a true great leader there, and we're hoping for that. Public markets continue their strong pace with $4.5 billion raised in 29 IPOs. this past quarter and $12.6 billion raised in follow-on offerings, truly kind of a stellar capital markets quarter. Biopharma continues to invest heavily in its own R&D, likely north of $225 billion for all of 2021. Let me comment a moment about some proposed corporate tax changes that were announced by the current administration. which if enacted in the law would foolishly and directly hurt U.S. manufacturing, U.S. R&D, and the repatriation of crucial supply chains that became evident in the pandemic that we were really woefully unprepared and relied on 70% of our supply chain efforts outside of the United States. I would say mission-critical sectors, including biopharma, certainly will not be helped. In essence, the threat to the American competitiveness is way bigger and way more important than the everyday life of Americans, and higher rates than higher rates, and a sad commentary on poor public policy. It's interesting to note the paradox of this pandemic moment. Large corporations have oftentimes been politically villainized, derided by the left and the right, yet the main and perhaps only reason COVID-19 scourge is easing is the vaccines that were developed by biopharma and some in connection with the government in a groundbreaking effort with the warp speed effort, and we're very thankful for that. I think to quote Alex Gorski, CEO of J&J, he made a pretty important quote recently and said, we fundamentally believe that having a market-based, innovation-based biopharmaceutical industry, as well as a medical technology environment, is critical long-term to produce the best overall outcomes for healthcare. And I think that absolutely reigns true. So as I do each quarter, let me finish with a... or I did last quarter and will each quarter, a quote, kind of a timely quote. I quoted Confucius last quarter. Let me quote this quarter Steve Prefontaine, one of the world-class runners of his time. To give anything less than your best is to sacrifice the gift. And with that, let me turn it over to Steve Richardson.