Alexandria Real Estate Equities, Inc.

Good day and welcome to the Alexandria Real Estate Equity's third quarter 2023 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. 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.

Thank you, and good afternoon, everyone. This conference call contains forward-looking statements within the meaning of the federal securities law. 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 It's 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 third quarter conference call. And the order of speaking today will be all kickoff. Hallie will follow. Peter will follow Hallie. And then Mark will do cleanup. As most of you know, Dean Shigenaga, step down as Chief Financial Officer on September 15th. He'll remain full-time employee and will be on our Q&A call, but Mark is going to, and Dean's mostly responsible for the quarter, but Mark will handle today's call on the presentation. I want to start off with two quotes, first by one of the most legendary, by two legendary investors. First one is Warren Buffett, who has said, and many know this quote, be fearful when others are greedy and opportunistic when others are fearful, and so we are. And a quote from one of the most legendary institutional investors on Alexandria. Alexandria is a life science industry leader, solely publicly traded pure play REIT. At its current discounted valuation, we believe concerns about competitive supply and distress for some of the companies Life science tenants are overblown and sufficiently discounted in the company's valuation. We believe the management team has assembled a desirable real estate portfolio, enjoys a leading market share position in its geographic markets, and has solid expectations for long-term demand-driven growth. So I want to thank each and every member of the Alexandria family team for a strong and operationally outstanding third quarter. for this one-of-a-kind REIT, especially in a very challenging and continuing disruptive macro environment. Our size, scale, and the dominance we've chosen to undertake in our key submarkets coupled with our irreplaceable brand of importance to our over 800 tenants represents a distinctive impact few other REITs will ever enjoy. We continue to dominate those of our key submarkets where we have created a leading position and continue to maintain pricing power for our highly desirable mega campuses, which enable life science entities to meet their mission critical needs and also a path for future growth. Couple of thoughts on the third quarter. We continue to maintain a Fortress balance sheet, one of the best in the entire REIT industry. We continue our consistent, strong, and increasing dividend with a focus on retaining significant cash flows after dividend payment for reinvestment. We're well on track for a 7% FFO per share growth for 2023, fueled by our onboarding of substantial net operating income. The first half, approximately 81 million. The third quarter, approximately 39 million, and the fourth quarter, approximately 114 million. A few comments on FDA drug approvals, which is the holy grail of the life science industry, and Hallie will have more to say. During the period which was the bull biotech market, 2015 to 2021, almost three-quarters of approvals were biotech and 25% were pharma. So biotech continues to be the mainstay of innovation. This year, as Hallie will detail, 45 approvals to date, and it could surpass the all-time high of 59 in 2018. Hallie will address the health of the life science industry and the demand generators, but third quarter leasing of approximately 870,000 runnable square feet was very solid, and especially with the weighted average lease term of an amazing 13 years and very strong leasing spreads, almost 20% on a cash basis. and almost 29% on a gap basis while leasing costs were decreasing. Life science tenant health is one of the most frequently asked questions. And again, Hallie will address that in depth. We are in a de facto recession and in a self-inflicted inflationary and high interest rate environment. So that is driving caution. But the life science industry is unequivocally healthy, thriving, and the key to improved healthcare outcomes which are desperately needed for all of us. Internal growth remains steady and solid with same store cash NOI growth for the year at a strong 5.6% occupancy on course for about 95% plus as of year end and Mark will have much more to say on internal growth. Peter will detail external growth and our strong efforts of onboarding this substantial net operating income, as I just referred to, and he will also update, as he does, each quarter's supply dynamics. Peter will also give a brief update on the status of our self-funding for the balance of 2023 and the year as a whole. Let me say, in summary, we know this is a tough show-me market filled with many skeptics. Many of those skeptics doubting the health of the life science industry despite clear facts to the contrary, overblowing the impact of the elevated levels of new construction no matter the quality, location, and or sponsor or operations. And we know of numerous operating debacles causing substantial damage to tenants by so-called other operators to their science. Doubting the ability of Alexandria to self-fund its business despite clear facts to the contrary. Each and every reporting quarter, we intend to continue our world-class operational excellence with exceptionalism in all we do, and we intend to capture virtually all of the future demand of our over 800 tenants and virtually all of the future demand of non-tenants who meet our underwriting requirements. And we intend to execute a perfect thread-the-needle self-funding plan for the remainder of 2023, as well as 2024, as our assets continue to remain scarce and still in demand. And then finally, before I turn it over to Hallie, I would say, remembering the credo of the Navy SEALs, the only easy day is yesterday. So, Hallie, take it away.