This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk13: 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.
spk12: 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.
spk10: 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.
spk01: Thank you, Joel. And good afternoon, everyone. This is Hallie Kuhn, SVP of Science and Technology and Capital Markets. Alexandria is at the vanguard and heart of the $5 trillion secularly growing life science industry, which translates into numerous demand drivers for Alexandria's mission-critical lab space. And we are the go-to partner for the life science industry. Today, I am going to review these demand drivers and exciting new areas of life science research and development all of which translate into a healthy and expanding tenant base and increasing long-term revenue. So first, what do we mean when we say the life science industry is secularly growing? First, massive unmet medical need with over 90% of known diseases having no available treatments drives the life science industry, providing a tremendous opportunity for innovation, new company formation, and life science industry growth. This opportunity set does not change at the whims of the market. It is non-cyclical and non-discretionary. Second, tenant growth and demand are event and milestone driven. Important milestones include new biological discoveries, successful advancement of experimental therapies into the clinic, and ultimately the demonstration of safety and efficacy of new medicines. Expansion of new therapeutic modalities such as cell, gene, and RNA medicines better diagnostic tools to accurately identify and diagnose patients, and increasingly efficient and predictive clinical trial designs have the potential to increase the number of new medicines over the coming years. Third, multifaceted and differentiated funding sources ensure that life science companies founded on impactful and differentiated technologies with experienced management teams continue to thrive. Altogether, we estimate over $400 billion will be deployed to support life science companies in 2023 across venture funding, biopharma R&D, philanthropy, government grants, and public equity financings. Notably, 2023 has already exceeded the previous 10-year average of $360 billion, and the total market capitalization of public life science companies currently exceeds $5 trillion. Together, the massive unmet medical need, event-driven growth, and robust and diverse funding sources result in secular growth of the life science industry that drive additional demand for Alexandria LabSpace even amid an economic downturn. The output of this significant investment is longer, healthier lives. As Joel commented, 43 new therapies have been approved this year by the FDA, and six novel gene, cell, and RNA-based therapies have been approved. These numbers are on track to meet or exceed the all-time high for annual FDA approvals. That was in 2018 when 59 novel therapies were approved by the FDA. This is extremely positive, above all for the patients that need these medicines. An example of important new therapies on track for approval include the class of GLP-1 medicines for obesity. a disease which accounts for direct costs of over $170 billion in healthcare spending in the U.S. per year and afflicts one in three children and one in five adults. A decade ago, obesity was considered a minefield for drug development, and the industry sentiment was that medicine could not address such a complex disease. Fast forward, and pharma has unlocked an entirely new class of anti-obesity medicines, And analysts estimate upwards of 10% of the US population will have been treated with a GLP-1 by 2030, with an estimated market size of 40 to 50 billion. Another exciting area is artificial intelligence and machine learning tools. As highlighted in our recent press release, AI is not new to the life science industry. In 2021, there were over 100 drug and biologic submissions to the FDA developed using AI components. Nor do AI tools negate the need for lab space. In many cases, AI-focused life science companies require significant lab footprints to generate the immense biological and chemical datasets needed to effectively train AI ML models. To this end, the acceleration of AI may in fact increase the need for laboratory footprints, and we already see this manifesting as an exciting emerging segment of demand. Now moving to the health of our diverse life science tenant base. While some analysts and investors have a misconception that small and mid-cap biotech are a proxy for the entire life science industry and its growth, the reality is broader and far more complex. Starting with multinational pharma, which accounts for 18% of our ARR, companies are leveraging healthy balance sheets to double down on R&D and in-license and acquire innovative products. Biopharma alone invested $278 billion in R&D in 2022, representing a 66% increase compared to 10 years prior. Biopharma also has an estimated $500 million in M&A firepower, to continue to bring external innovation into their portfolios. To that end, M&A has regained momentum with $112 billion in acquisitions in 2023, exceeding the 2021 and 2022 levels. Large Pharma continues to heavily rely on innovation from smaller biotechs to backfill their pipelines. For example, BMS's top five products in 2022 were all derived from acquisitions. For J&J, Merck, and Pfizer, four out of five of the company's top-selling therapies were from licensing or M&A deals. So how does M&A impact net absorption within our clusters? The specific impact of M&A events needs to be looked at on a case-by-case basis, but is broadly positive. Platform companies acquired not just for their clinical assets, but for their R&D platform and scientific talent, tend to land and expand, so to speak. A great example is in San Diego, where the significant presence of large pharma tenants, including BMS, Eli Lilly, Takeda, and Vertex, were all driven by acquisitions of smaller biotech companies. We are also in the process of supporting the significant expansion of a pharma-acquired company in greater Boston. More to come on this at Investor Day. Companies acquired for specific assets may not lead to additional expansion, but we do benefit from an upgrading credit in all cases, as the acquirer will be responsible for each in-place lease. M&A also leads to capital being returned to investors and can drive formation of new companies within our ecosystems as experienced scientists and entrepreneurs start their next new endeavors, which also creates additional demand for Alexandria LabSpace. Critically, For pharma to remain competitive and ensure a steady stream of successful, innovative medicines over the next decade, they need to attract the best talent and have the infrastructure and operational support to accelerate and safeguard their mission critical science. This need is driving several significant requirements in key R&D clusters, and Alexandria is the go-to brand. Transitioning to public biotechnology companies. 14% ARR is represented by companies with marketed products and 10% ARR by preclinical and clinical companies. For our commercial stage biotech tenants, they notched $108 billion in revenue through the third quarter of 2023, including the likes of Gilead, Vertex, and Amgen. For our precommercial companies, the public market for small and mid-cap biotechs certainly remains challenging. However, companies that meet expected milestones have executed significant follow-on financings, and stock prices have responded positively. Through 3Q, $14 billion has been raised in follow-on offerings, which is on track to beat total 2022 follow-ons of $14.5 billion. This includes Tenant VacSite, which earlier this year netted $545 million in total proceeds to fund their potentially best-in-class pneumonia vaccine, and others including Editas and Atera. There are also some green shoots in the IPO market for companies with the right pedigree, namely deep clinical pipelines with line of sight to important inflection points. In September, San Diego tenant Ray's Bio raised an oversubscribed $358 million IPO, driven by near-term clinical trial data readouts testing their first-in-class radiopharmaceutical therapies for rare forms of cancer. On to private biotech, which makes up 9% ARR. While life science funding has largely reverted to pre-pandemic levels, it remains robust. Annualized projections of life science venture funding for 2023 are trending towards an estimated $27 billion, which exceeds 2019 levels of nearly $24 billion. Further, while a frequent assumption is that many financings are being propped up by current insiders, The data highlights that this is just not true. In a detailed analysis by Oppenheimer of Series A and B financings year to date, nearly 80% of all financings were led or co-led by outside investors, speaking to a healthy appetite from investors to fund new deals. Our new lease with Altos Labs on our one Alexandria Square mega campus in San Diego is one example of a stellar private company. having raised a historic $3 billion to deploy towards cell reprogramming to treat diseases associated with aging. Last, life science products, service, and devices, which represent 22% of our ARR, continue to be the workhorse of the industry, providing the hardware and software, so to speak, that fuels experiments in the lab. There are challenges that exist post-COVID, as some companies ramped up products and services either directly or indirectly driven by COVID-19 and are now resetting strategic priorities. But novel areas of science and successful products are emerging and generating new forms of demand, such as the new obesity drugs, which will require significant CDMO capacity to manufacture, and new forms of drug discovery, such as proteomics, highlighted by the recent acquisition of Olink for $3.1 billion by Thermo Fisher. Altogether, the result of the current market conditions is that companies are highly conscious of every dollar spent. They do not have the luxury of risking their science in unreliable lab space or in locations where they can't recruit the right talent. We continue to see increasing demand by companies for looking for just-in-time availability of high-quality lab space in amenitized campuses in the best locations. with the infrastructure and operations that ensure their mission-critical work is supported 24-7, and that there is a path for future growth needs. And this is what Alexandria's one-of-a-kind lab space within our world-class megacampuses is uniquely positioned to deliver. To end, I want to share some insight from Dr. Robert Langer, an MIT professor, Moderna co-founder, and luminary in the field of drug development. When recently asked what scientific innovations he is most excited about, his answer was simple but profound, the science and medicines that have not yet been discovered. So, as we traverse challenging times, remember that the resilience of this industry is rooted in a truly vast opportunity for new discoveries that will improve the lives of everyone on this call today, the most impactful of which is yet to come. With that, I will pass it to Peter.
spk14: Thanks, Hallie. Before I launch into my commentary, I'd like to acknowledge the great contributions we've received from Dean Shigenaga. Dean is one of the smartest and hardest-working people I've come across in my 33-year career. He's played a huge part in the building of Alexandria and to what it is today, and I wanted to thank him very much for everything he's done for this company. Thanks, Dean. On our fourth quarter 2022 call, I spoke about our optimism for the future of the life science industry, referencing that we are in the early innings of the golden age of biology. And I pointed out that we've only had the blueprint of the human genome for 20 years. And in that time, we've developed more new modalities to attack disease than in the previous 100. On Friday, October 13th, Buried on the third page of Section A in the Wall Street Journal, another scientific revelation was reported, one that scientists likened to the Human Genome Project and that could yield similar results in neuroscience. An international team of scientists unveiled the most comprehensive map of the human brain ever completed, a map that the article stated will set a critical foundation for the understanding and eventually treating brain-related diseases such as Alzheimer's, epilepsy, schizophrenia, autism and depression. As I watch my own mother decline daily due to Alzheimer's and experience the enormous emotional, monetary and time burden it inflicts on our family, I have a full appreciation of what this map may do for mankind. It's yet another example of how important the life science industry is to improving our lives and how it's only going to grow and influence. And that, ladies and gentlemen, is why this $5 trillion secular growth industry is poised to drive our business for decades to come. I'm going to discuss our development pipeline, leasing, supply, and asset sales, and then hand it over to our very capable new CFO, Mark Binda. In the third quarter, we delivered 450,134 square feet and seven projects into our high barrier to entry submarkets, bringing total deliveries year to date to 1,290,721 square feet, covering 10 projects. Annual NOI for this quarter's deliveries totals $39 million, bringing the year to date total incremental additions to NOI to 120 million. The initial weighted average stabilized yield is 6.5%. Six of the 10 projects delivering space this year have initial stabilized yields ranging from 7 to 9.5%. Two are at 6.3% and two are in the mid fives. One of those developments in the mid fives is located in Cambridge and is 99% leased. And the other is in our Shady Grove mega campus and successfully leased 23% of its space in the third quarter. The Cambridge asset is in a prime location, and its yield reflects the cost to acquire it, which was justified because we had commitments to fill 100% of it before closing, making it a build-to-sue core investment that expanded our ACKS mega campus. The Maryland asset's yield has been driven down by complex site conditions, but it has been very well received by the market, and we are bullish on its long-term performance as part of our Shady Grove mega campus. Development and redevelopment leasing activity at approximately 205,000 square feet was higher quarter over quarter for the second quarter in a row, which we are pleased to see in an environment where tight financing markets have focused tenant demand on turnkey space. In addition to the increase in development redevelopment leasing during the quarter, we signed LOIs covering nearly 230,000 square feet of space in our pipeline, including one for 185,000 square feet with a high quality credit tenant that may materially expand into the mega campus as they refine their programming, indicating a continuation of positive momentum. During the quarter, we executed a lease termination with a tenant at our 10935 and 10945 Alexandria Way mega campus development in Torrey Pines and leased approximately 89% of the space to a stronger credit tenant. This is a win for Alexandria as we were able to substitute a higher credit tenant into the new development, increase the term for that space by three years, and receive higher rents. We did increase the TI allowance for the new tenant, but the incremental rent, we are receiving yields at 14% return over that incremental TI allowance. All in all, a great outcome. At quarter end, our pipeline of current and near-term projects is 63% leased and 66% leased and negotiating, which includes executed LOIs and is expected to generate $580 million of annual incremental NOI through the third quarter of 2026. The decline from 70% leased last quarter, despite leasing approximately 205,000 square feet, was mainly due to the to the delivery of fully leased projects at 141st Street and 751 Gateway and the addition of 10075 Barnes Canyon Road in Serrano Mesa, which has 17% of its future space under LOI and significant additional activity underway. Transitioning to leasing and supply, Alexandria's pioneering establishment of highly curated mega campuses featuring class AA plus facilities at main and main, and the world's most desirable high barrier to entry life science clusters, provides an enduring foundation for our existing asset base to perform in even the most challenging times. We are executing and winning nearly every high quality leasing opportunity when we have available product. A testament to the daily operational excellence demanded and required by our mission critical tenants. We leased 867,582 square feet in the third quarter of 23, with Maryland significantly supporting the leasing activity led by San Diego and Greater Boston. Leasing activity has come from a broad base of our regions, both this quarter and year to date, in which we have leased a total of 3.41 million square feet, with Seattle, San Francisco, San Diego, Greater Boston, and Maryland all materially contributing to our overall leasing activity. These quarterly and year-to-date leasing volumes are consistent with our pre-COVID levels, as you can see in the company highlights section of the Q3 supplemental on pages Little Roman numeral 19 and 20. Although below our historic average of a million square feet, this leasing volume is strong considering the amount of expiring leases available for lease for the rest of the year is relatively low at approximately 623,000 square feet. Very strong cash rent increases of 19.7% and gap rent increases of 28.8% during the third quarter provide clear evidence of the long-term enduring value of Alexandria's brand and platform and are consistent with our year-to-date stats of 18.1% and 33.9% for cash and gap increases respectively. We'd like to call your attention to the year-to-date weighted average lease term of 11 years. which you can find on page little Roman numeral 22 of the supplemental that significantly exceeds our weighted average lease term since 2014 of 8.7 years. In our first quarter earnings call, we noted that demand had slowed from the rocket ship COVID period of 2020 and 2021. And last quarter, we reported that we were seeing demand increase, especially in our greater Boston San Francisco and San Diego markets. We see demand holding steady today and believe it will trend upward, but are fully aware that the volatile geopolitical environment we are in can create the uncertainty that sometimes slows decision making. As we've discussed in a number of investor meetings since our last earnings call, the demand profile is best described as a barbell. We're seeing most of the requirements in the 5,000 to 30,000 square foot range coming from either emerging stage companies that have achieved milestones and need growth space or large requirements of 100,000 square feet or more from large pharma and biotech looking to grow or establish a footprint in our clusters driven by specific new modalities prevalent in those clusters coupled with the talent available in those locations. Alexander is well positioned to capture this demand because many of these opportunities are coming from existing relationships which typically account for a significant amount of our leasing. Over the past year, 80% of our leasing has been generated from existing tenants. In addition, our mega campus offerings provide the ability to scale and a wide variety of amenities, making them the clear choice for high quality companies. I'm sure you're all interested to hear our analysis of supply, so I'll conclude this section with an update on these statistics. which will include our projected competitive supply additions delivering in 2025. As a reminder, we perform a robust on the ground building by building analysis to identify and track new supply from high quality projects we believe are competitive to ours in our high barrier to entry sub markets. We focus primarily on high barrier to entry markets and our brand mega campus offerings in AAA locations and operational excellence enables us to continually mine our vast, deep, and loyal tenant base to drive our leasing activity, which will likely lessen the impact of generic supply. The slides we provided on pages Roman numeral 8 through Roman numeral 13 of the supplemental illustrate this and are hopefully helpful. In Greater Boston, unleased competitive supply remaining to be delivered in 2023 is estimated to be 1.1% of market inventory, a 0.5% decrease over last quarter. In 2024, the unleased competitive supply will increase market inventory by 6.1%, a 1.1% increase driven by the addition of a new competitive project. In 2025, the unleased competitive supply will increase market inventory by 3.7%, an expected slowdown from 2024 levels. In San Francisco Bay, unleased competitive supply remaining to be delivered in the second quarter of 23 is estimated to be 5% of market inventory, which is a reduction of 1.6% over last quarter, due mainly from deliveries. In 2024, the unleased competitive supply will increase market inventory by 8%, a 0.8% reduction, unfortunately not driven by leasing, but due to a downward revision of estimated square footage to be delivered during the year. In 2025, the unleased competitive supply will increase market inventory by only 1.2%, which is a good indication that developers in this market are beginning to act rationally. In San Diego, unleashed competitive supply remaining to be delivered in the third quarter of 23 is estimated to be 1.9% of market inventory, which is a decrease of 1.6% due mainly to projects being delayed into 2024 or delivered with unleashed space now reflected in direct vacancy and one project developer deciding not to pursue a laboratory use. In 2024, the unleased competitive supply will increase market inventory by 6.9%, a 1.9% increase driven primarily by the aforementioned projects delivering in 2024 instead of 2023. In 2025, the unleased competitive supply will increase market inventory by 3.3%, driven primarily by our 75% pre-lease 10935, 10945, and 10955 Alexandria Way project. Direct and sublease market vacancy for our core submarkets is updated as follows. Greater Boston direct vacancy increased 1.7% to 4.5%, and sublease vacancy increased slightly to 5.6% for a net increase in available space and operation quarter over quarter of 1.9%. San Francisco direct vacancy increased by 7.4% to 9.7%, driven mainly by the inclusion of the Mission Rock projects into laboratory inventory when it was previously thought to be leasing as an office project. Move outs and delivery of new inventory are also drivers. Sublease vacancy remains stable at 6.2% for a net increase in available space in operation of 7.4%. San Diego direct vacancy increased from 4.8% to 6.8%, largely due to delivered unleased new supply and move outs. And sublease vacancy remained stable at 4.1% for a net increase in available space and operation of 2% quarter over quarter. I'll conclude with an update on our value harvesting asset recycling program. We continue to be fortunate that there is a considerable demand for Alexandria's assets and life science assets broadly. As you can see on page seven of the supplemental, we are approximately 95% through completing dispositions needed to hit the midpoint of our guidance when totaling completed sales and those under LOI or executed purchase and sale agreements not yet closed. Our overall strategy for the full year of 2023 is been to execute on a combination of partial interest sales and sales in whole of non-core workhorse assets. These sales will provide the capital needed to recycle our high-quality development-redevelopment megacampus pipeline, which will widen our moat by expanding our highly differentiated megacampuses, offering unmatched scale and amenities highly sought after by the full spectrum of tenants we serve. and the identified supply I just mentioned can't compete with. We only closed on one asset this quarter we can report on, but to give some color on dispositions that are pending, they are all non-core solid workhorse assets. Obviously, it's a challenging interest rate environment, and economic volatility has reduced overall transactional activity, but demand for our assets has remained resilient As mentioned, we are on track to meet our goals. In September, we closed on the previously announced sale of a vertical ownership unit comprising approximately 268,000 rentable square feet or approximately 44% of Alexandria's 660,034 square foot 421 Park Drive, purpose-built, ground-up life science development in the Fenway Submarket of Greater Boston to Boston Children's Hospital. The unit sold will house Boston Children's Hospital future medical research facilities. The sale serves the dual purpose of providing substantial funding for the significant development project and brings in a key bedrock anchor to the project and our Fenway campus in whole. Austin Children's is a long-term strategic partner of Alexandria who invests heavily in basic clinical and translational research to accelerate the discovery of new treatments for devastating diseases to improve the health of both children and adults. They rank number one in NIH funding among all US children's hospitals in fiscal year 2023. Their presence will help attract tenant companies looking to collaborate with world-class research institutions, much like our campuses in Cambridge, benefit from those looking to collaborate with MIT. Alexandria will receive development fees as well as the significant capital to fund the project. With that long update, I'm going to go ahead and pass it over to Mark.
spk08: Thank you, Peter. Hello and good afternoon. This is Mark Binda, CFO, and I'm going to cover some of the key financial metrics for the quarter. We reported very solid operating and financial results for the third quarter and nine months ended 3Q23, which was driven by strong core results and reflects the strength of our brand, scale, high quality and well located campuses, and operational excellence. Total revenues for 3Q were up 8.2% over the prior year. NOI was also up 8.2% over the prior quarter and the prior year. driven primarily by the commencement of 120 million of annual NOI related to 1.3 million rentable square feet of development redevelopment projects placed into service year to date through 3Q23, coupled with strong same property performance. FFO per share diluted as adjusted was $2.26, up 6.1% over 3Q22, and we are on track to generate another solid year of growth in FFO per share of 6.7% at the midpoint of our guidance for 2023. Our tenants continue to appreciate our brand, mega campus strategy, and operational excellence by our team. 49% of our ARR is from investment grade and publicly traded large cap tenants. And we have one of the highest quality client rosters in the REIT industry. Collections remain very high at 99.9%. Adjusted EBITDA margins remain very strong at 69%. The weighted average lease terms for leases completed in 2023 have far outpaced our historical averages at 11 years on average. And 96% of our leases contain annual rent escalations approximating 3%. Same property NOI growth was solid and in line with guidance for 2023. 3Q23 was up 3.1% and 4.6% on a cash basis and for the year to date period up 3.7% and 5.6% on a cash basis. Our outlook for 2023 same property NOI growth remains solid at a midpoint of 3% and 5% on a cash basis. We do expect our fourth quarter same property results to be somewhat impacted by the timing of free rent and some temporary vacancy, including 100,000 square foot lease termination in the fourth quarter by our tenant Atreca at our San Carlos mega campus. Important to note that we don't expect any income to be recognized on this space for same property purposes in the fourth quarter since termination fees are excluded from our same property results. The good news is that we have a signed LOI with a new tenant to potentially take that space as early as December. Turning to leasing, quarterly leasing volume was 867,000 square feet for the quarter and 3.4 million for the first nine months, which on an annualized basis is in line with our historical annual average from 2013 to 2020. Also, after stripping out spaces already leased and projects going into redevelopment, The 2023 expirations at the beginning of the quarter were relatively low at only 623,000 square feet. 3Q23 rental rate growth for lease renewals and releasing of space was very strong at 28.8% and 19.7% on a cash basis. Rental rate growth in 3Q was driven by transactions in Seattle, Maryland, and Greater Boston. These results were driven by a mix of transactions and markets, which can vary from quarter to quarter. Our outlook for rental rate growth on lease renewals and releasing of space remains solid at a midpoint of 30.5% and 14.5% on a cash basis. The overall mark-to-market for cash rental rates related to in-place leases for the entire asset base remains very strong at up 18%. Turning next to capital expenditures, they generally fall into two buckets. The first category being focused on development and redevelopment, which includes the first time conversion of non-lab space to lab space through redevelopment. The second category is non-revenue enhancing capital expenditures. Our non-revenue enhancing capital expenditures over the last five years have averaged 15% of NOI, and that rate has been trending lower with 13% last year and 12% for 2023. Tenant improvement allowances and leasing commissions related to lease renewals and releasing of space, which is included in non-revenue enhancing expenditures, were very low for the quarter at $19 per square foot. Turning to occupancy, 3Q occupancy was in line with our expectation at 93.7%, up 10 basis points from the prior quarter. This included vacancy of 2.1% or approximately 870,000 square feet from properties acquired in 2021 and 22. 30% of that recently acquired vacancy is leased and will be ready for occupancy in the next number of quarters. Our outlook for 2023 reflects occupancy growth by the end of 4Q23. The midpoint of our occupancy guidance is 95.1%. which implies 140 basis point increase by the end of the year. The bridge to our range for year-end occupancy breaks down as follows. About 50% is related to spaces already leased and expected to deliver by year-end. Another 20% relates to assets that were designated as held for sale in October that contained some vacancy. This leaves about 30% left to resolve. which includes the 100,000 square feet space at our San Carlos mega campus, which I mentioned earlier, which is under negotiation. I'd also like to highlight that it's often difficult to reconcile leasing activity to changes in occupancy, given that leasing activity doesn't always result in immediate occupancy. The main driver of the expected ramp up in occupancy related to previously leased space delivering in 4Q2023 I just mentioned is a perfect example. Turning to the balance sheet, we have a very strong balance sheet with $5.9 billion of liquidity, no debt maturities until 2025, 99% of our debt subject to fixed interest rates, and we remain on track to achieve our net debt to adjusted EBITDA goal of 5.1 times on a quarterly annualized basis by 4Q23. We continue to focus on our self-funding strategy through the execution of dispositions and partial interest sales. with no common equity expected for 2023, other than the $100 million of forward equity sales agreements from 2022, which are still outstanding. Our strategy for dispositions and sales of partial interest for 2023 reflects our focus on the enhancement of the overall asset base through outright disposition to properties no longer integral to our mega campus strategy with fewer sales of partial interest. For the year, we expect about 90% of the proceeds from our program to be focused on outright dispositions. Our team has made excellent progress with $875 million completed and another $699 million under LOI or purchase and sale contract, which are expected to be closed in the fourth quarter, which is primarily comprised of outright dispositions. Our targeted fourth quarter dispositions include land, non-core assets, and some properties which require significant capital to lease and are expected to have a higher FFO cap rate compared to the transactions we closed in the first half of the year. We have a low and conservative FFO payout ratio of 55% for 3Q23 annualized with a 5.2% increase 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 for this year, which represents a three-year run rate of over 1.1 billion. Turning to venture gains, realized gains from venture investments included in FFO for 3Q23 was $25 million, which is the same as our eight prior quarter average. Gross unrealized gains in our venture investments as of 3Q23 We're at $311 million on a cost basis of just under $1.2 billion. On external growth, we have $580 million of incremental annual NOI coming online from our pipeline of 6.4 million square feet. In the fourth quarter, we expect to deliver two key projects at 325 Binney and 15 NECO, which will generate a whopping $114 million of incremental annual NOI. We expect to place these projects into service in mid to late November on average, which will drive significant NOI growth in the fourth quarter as well as the first quarter of 2024. For 2024, we expect another 1.8 million square feet, which is 94% leased, to stabilize around mid to late summer on average and generate another 127 million of incremental annual NOI. Additionally, we have another 3.8 million square feet that's expected to reach stabilization after 2024 and will generate another 339 million of incremental annual NOI. With the expected significant deliveries at 325 Binney and 15 Necco in 4Q23, we expect a slight decline in capitalized interest in 4Q2023. Capitalized interest for 3Q was up about $4 million over the prior quarter, which resulted from some shifts in timing on the delivery of our 141st Street redevelopment project and the sale of a portion of our 421 Park project. It's important to note that these changes were slightly diluted to FFO per share results for the quarter, but were offset by strong core operations during the quarter. Turning to guidance. Our detailed updated underlying guidance assumptions are disclosed beginning on page four of our supplemental package. Our per share outlook for 2023 was updated to a range of plus or minus one cent from the midpoint of guidance. Our range of guidance for EPS is $1.36 to $1.38. And our range for FFO per share diluted as adjusted is $8.97 to $8.99, which represents a two cent increase in the midpoint of $8.98. This represents a very strong 6.7% growth in FFO per share, following excellent growth last year of 8.5%. As a reminder, we're about a month away from the issuance of our detailed guidance for 2024, and therefore we're unable to comment on details for 2024. Lastly, just want to extend a special thank you to Dean Shigenaga for all his years of leadership and service to the company, as well as his tremendous mentorship. Next, I'll turn it over to Joel to open it up for questions.
spk10: Yeah, let's go to Q&A. I'm sorry for the long presentation, but important to get all the facts out there.
spk13: All right, thank you. And we will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star and then two. Our first question today will come from Joshua Dennerlein of Bank of America. Please go ahead.
spk05: Hey, guys. Appreciate all the color and the new slides on the supply dynamic across your submarkets. Just kind of curious how we should think about that supply that's coming online and the vacancy you mentioned and just how that will impact market rents and TIs across maybe I guess in particular Cambridge and South San Francisco.
spk10: Yeah, so Peter, thoughts, comments?
spk14: Yeah, certainly it's going to be part of the negotiation with tenants. What we believe is that our mega campus platform and our reliability and brand will you know, gives confidence to the tenants that, you know, they're going to be well taken care of. And so there is a premium to that that will help us, you know, overcome the competitive supply dynamic when it comes to that.
spk10: Yeah, I would say also important to distinguish, we think in Cambridge the impact would be far less than South San Francisco. South San Francisco, as you can see from the slide, just has too much stupid supply and The good news is a lot of that supply is in an area that people don't want to be in.
spk05: One more question from me on the occupancy front, going from your 3Q 93.7 to just the occupancy guide range of 94.6 to 95.6. What are the kind of moving pieces in there? Is there anything you still have to accomplish or is that kind of all baked in at this point?
spk10: Okay. I think Mark just answered that question, but Mark, do you want to repeat that?
spk08: Yeah, sure. Hi, it's Mark. Yeah. So about going from that 140 basis point increase, about half of it was from leases that we've leased either in the current quarter or prior quarters that's delivering next quarter. So a big chunk of it's in the bag. And then about another 20% was for some assets that were designated as held for sale at the end after the end of the quarter in october that we expect to sell and then that that leaves about 30 and then of that a big chunk of it relates to that space in san carlos that was the former atraca space which we do have a signed loi there um and hope to execute on okay thanks sorry for missing that appreciate the time no problem our pleasure
spk13: Our next question will come from Georgie Denkov of Mizuho. Please go ahead.
spk11: Hi, this is Georgie for Vikram. Can you square your views on not losing more occupancy than the GFC given we have seen several tenant credit issues and lease terminations in the past two quarters? And even though you have limited expirations, could credit issues depress occupancy?
spk10: Well, I think number one, Mark just went through the Details of occupancy and guidance and giving, and he just answered the question from the B of A analyst on what we're thinking about occupancy. And we said, for example, on Atrica, we have assigned LOI and negotiating a lease for all that space. I'm not sure what else you're referring to.
spk11: Okay. And can you just give, I guess, more color on 270 Bio? I believe they're backed by Bluebird. But how would it work if their cash position deteriorates going forward?
spk10: Well, at the moment, they have over $300 million in cash. It gives them a runway out through 2026. As I recall, you have to remember both 270 Bio and Bluebird are both joint and severally liable on the lease. We expect it's a great location, it'll be subleased, and we don't see any challenge to YARC's successful collection of rent over the, you know, coming few years.
spk11: Great. Thank you.
spk10: Yep. Thank you.
spk13: Our next question will come from Michael Griffin of Citi. Please go ahead.
spk04: Great, thanks. Maybe just a question on development starts. You know, kind of how you're thinking about that over the next couple years, the funding needs for it and the potential impact on capitalized interest would be helpful.
spk10: Yeah, so I think, as Mark said, let's wait for Investor Day to do that.
spk04: All right. And then just on the pending asset sales, I know Mark kind of talked about, you know, a higher cap rate than expected. I was wondering if there was any numbers you could maybe associate with that and any color you could give around the buyer pools or interest there would be helpful.
spk10: Yep. We're under confidentiality, so we can't. So stay tuned for investor day or, you know, year end, and we'll give, you know, as much detail as we're able to.
spk04: All right.
spk13: Our next question will come from Rich Anderson of Wedbush. Please go ahead.
spk16: Hey, thanks. Good afternoon. So I was kind of doing some back reading and I looked at the second quarter of 2022 where it was the comment was beyond 2024 and beyond we don't see large disruptive projects well underway in our core markets that are preparing to go vertical. Does that comment – I mean, I guess the question is what changed between that comment a little bit more than a year ago and today? Because the market for developing only has gotten worse with that macro environment and all that. Or do you still – would you still agree that this is not disruptive, you know, relative to that comment that was made, you know, about a year change ago?
spk10: Yep. Peter, do you want to maybe address that?
spk14: Yeah, Rich. I mean – The intent of the comment was to express that 2024 was going to be a peak of supply deliveries, and the numbers that I just went through, I think, illustrated that. There will be some things that we thought would deliver in 2024 that might get pushed into 2025. We're not seeing more than less, probably in total in all of our markets, like a handful of things that have started in recent times, meaning like the last few months. It does appear, and the numbers in San Francisco, I think we're really telling, it does appear that developers are finally understanding that the market has plenty of supply underway. you know, there's not more needed on a speculative basis. And so that's good news for the coming years.
spk16: Okay, fair enough. And then real quick, second question, because I know we're running long here. You know, Joel, you said the word self-funding for this year and for 2024. And anticipating your response, wait till Investor Day, but let me just ask anyway. Is the disposition program kind of, not infinite, but I mean, if you're always selling assets and funding something that's probably a better or newer asset through your development pipeline, is that something that can go on in perpetuity, or is there a ceiling to which you have to sort of cut off the disposition program and reassess?
spk10: yeah i think that's a really good question and that'll be a cornerstone of the investor day presentation but i think it's fair to say rich that the way to think about it is we continue to have you know the company owns and operates 40 million square feet and has the capability to double our size and what we own beyond that so there's a pretty deep pool for partial interest and sales of outright, you know, non-core assets. But we do have an approach to self-funding for next year in addition to that, which I think will be pretty exciting. So let us wait to announce that investor day.
spk16: You got it. Thanks very much, everyone.
spk10: Yep. Thank you, guys.
spk13: And our next question today will come from Tom Catherwood of BTIG. Please go ahead.
spk15: Thanks and good afternoon, everyone. Maybe Joel or Peter, we always think of your team doing such a great job partnering with tenants, understanding their business, helping them solve real estate problems. Peter, I think the examples you talked about in San Diego with the developments really speak to that this quarter. When we think of that partnership, how have you seen the needs and maybe the pain points of your tenants change over the past six to 12 months?
spk10: Well, I think that the obvious one is one that a number of people mentioned, you know, throughout the commentary, and that is certainly in the small and medium-sized companies that are emerging that are dependent upon whether it be private, you know, financing or public market financing or cash on hand. The fact that we're in this de facto recession, inflation, and high interest rate environment just makes the management of cash, the management of burn, the management of decisions just more methodical and maybe just more methodical. So our job is to understand those needs and work intimately with the client's to make sure that we're doing the best job that we can to meet their needs. And I think we've done a great job of that. And, you know, we have very, very close relationships. These are not ones that you sign a lease and, you know, that's it. These are ongoing, very deep relationships. So we're generally pretty intimately involved in a lot of the decision-making.
spk14: And remember, I mean, This isn't the first time we've hit hard times as a company. We've been around for close to 30 years and we've worked with our tenant base during all of these times and the goodwill that accumulates and how we're able to help them is why 80% of our leasing comes from these existing tenants. We have the size, the ability to work with folks that need assistance and It provides great goodwill for future endeavors for those management teams that are in the buildings that we're helping them out with.
spk15: Got it. Thank you. Thank you for those answers. And then kind of following up on that, maybe if I switch over to Hallie. Hallie. I appreciate it. Hallie. I apologize. Appreciate the detailed market update. was kind of really interested in the comment you made around AI adoption potentially leading to the need for incremental lab space and that you were potentially seeing the early signs of that. Can you provide more kind of color on that comment and maybe what you're seeing in the market in that regard?
spk01: Sure, happy to. A great example, and we had a quote from the CEO, Roger Perlmutter, the former CSO of Merck in our press release, is ICON, which we have a signed lease with property under development in San Francisco. With AI, you have to have data to train the models. And so when folks, you know, kind of there's been commentary thrown out that, oh, AI is going to make it so that you don't have to run experiments. as extensively in labs, what we see is actually the opposite because you need such vast data sets to train the AI ML models in order to optimize and drive towards results that we see really large footprints, whether it's robotic, high throughput, both chemical and biological data that these companies are generating. in order to be able to actually apply AI and ML. It would be like applying generative AI to the internet in 1995, right? You have to have a really vast starting data set in order to get something that's meaningful on the back end. So we're continuing to see that evolve. I think across all of our clusters, there's some really interesting ways that companies are integrating this tool. into their toolkit for developing new medicines. And the end result 10, 20 years from now is hopefully a lot more medicines for patients and additional lab space demand.
spk15: Appreciate that caller. Thanks, everyone. Yep. Thanks, Bill.
spk13: Our next question will come from Connor Saversky of Wells Fargo. Please go ahead.
spk03: Good afternoon. Thanks for having me on the call. I got a question on 2025 deliveries. So correct me if I'm wrong here, but the pre-leasing rate of the 2025 delivery should have a significant impact on how we're looking at capitalized interests in this context. So assuming the pre-lease rate remains stable as it was reported in the supplemental release last night, can you give us an idea of how this would impact the interest expense on the P&L?
spk10: So Mark, you might want to comment on that, but that's kind of
spk08: used in isolation because that's just one piece of the business but mark go ahead and comment yeah hi connor so yeah so capitalized interest is really um determined based upon the size and magnitude of the assets under under construction activities or under broadly all types of activities to get that asset ready for its intended use so um you know to the extent that uh deliveries outpace construction spending in assets that are going through, you know, either redevelopment or development, then capitalized interest would go down. And the opposite's true if construction costs exceed the pace of deliveries. What I'd say on 2025, if you're looking at the leasing percentages is, you know, we've got some time on some of those and we've seen that pre-leasing percentage take up. Definitely if those assets, you know, we get to 25 and those assets cease activities, then, you know, yeah, then capitalized interest would turn off. You know, but we got a long headway there. We got a long time and we've done, you know, we've definitely done studies to look at the timing of pre-leasing and we're not quite in that sweet spot for some of these assets that are out you know, in 25 and beyond in terms of when tenants are ready to make decisions. So I guess stay tuned.
spk03: I appreciate the color there. Is there any way, I mean, let's just say we took the most simplistic form of deliveries in that context, what a kind of break-even pre-lease rate would look like as those projects come online?
spk08: I'm not sure I understand your question, Connor.
spk03: Well, I mean, we can take it offline. What I mean to say is if we use the schedule of deliveries and when those projects are supposed to roll online is what would be the break-even rate between, say, the NOI contribution and the interest expense that would be absorbed on the P&L as those projects roll online and they're moved from capitalized to the P&L on the interest expense?
spk08: Yeah, I guess the way to look at that, Connor, is if you're looking at projects that, you know, have, say, just to make the math easy, 7% yield and capitalization is in the high 3% range. That would kind of tell you that if half the building got delivered and half the building got turned off, you'd be neutral. But that's really not typically the case. I mean, the pre-leasing on all the assets that we have for, for 23 and 24 is extremely high. Um, so I, you know, we'll have, we'll have to wait and see, but, uh, like, as I said before, we've seen the pre-leasing on 25, uh, tick up, um, you know, as we get closer and closer to, to delivery, which is, which is pretty typical for tenants that, um, you know, of smaller size that make decisions much closer to the point at which they can, you know, they can see the building coming out of the ground and can, can visualize it.
spk03: Got it. Understood. Thank you.
spk13: Next question will come from Steve Sacqua of Evercore ISI. Please go ahead.
spk07: Thanks. A lot of my questions have been asked. But I guess, Joel, I'm just curious, given the challenging funding market for maybe many of your private competitors, I'm just wondering, to what extent are you gaining any kind of market share to the extent that you can do fit-outs and build-outs of smaller lab space? And to what extent have your peers maybe not been able to do that? And is that maybe delaying some of the new supply coming to market?
spk10: Well, yeah. Hey, Steve. So I think the way to think about that is other landlords who may have laboratory assets If you're in Cambridge or you're in other key markets that are directly competitive of ours, it always depends on their financial capability and also the needs of the tenant. It's really hard to say. I think at the moment, We feel very good about our positioning because if you're a tenant and you need, especially now, just in time space, and you need a path for future growth, you hit a valuation milestone, value inflection milestone, which is very typical today. A one-off building, no matter whether it's fitted out or not fitted out, doesn't really offer you that opportunity. You need a campus. You need a a campus and generally you want one run by Alexandria because you want the best operator because a one-off building may get you some space, but oftentimes there's no path to future growth or expansion. And so that's how we kind of see things. So we think we have an enormous competitive advantage in moat against one-off buildings by whether they be landlords who know what they're doing or landlords who have no idea what they're doing.
spk14: Hey, to dive a little, this is Peter, to dive a little bit deeper into that, you'll notice the big increase in vacancy in San Francisco of buildings, you know, essentially that delivered, and they delivered in shell condition. You know, I took a deep dive with the team. I was like, guys, what does this product look like? And a lot of it is just are buildings that are basically waiting to see whether they should be office or lab. They were built with an ability to be lab, and so we're counting them in our supply numbers, but they could very well go office because nobody's super committed. But you're also right in that those developers are not able to go ahead and just build out TIs because their financing isn't there for that. But I wanted to bring attention to that because you reminded me of it. You're seeing vacancy numbers. You're seeing supply numbers. A lot of these projects are agnostic about whether or not they're going to be office or lab, especially in the larger markets. But we're counting them in our competitive supply because they could be. But they may very well not be. And they very well may fail. if they don't have financing to provide TIs.
spk07: Great. Thanks, guys. That's it for me.
spk10: Okay. Thanks, Steve.
spk13: Next question will come from Dylan Brzezinski of Green Street. Please go ahead.
spk06: Hi, guys. Thanks for taking the question this afternoon. Just curious, you know, I know you guys touched a little bit on the development pipeline, but just wondering if there's any sort of interesting opportunities that you guys are witnessing or seeing on the acquisitions front? And if not today, do you expect to sort of see any interesting opportunities come to fruition over the next 12 to 18 months?
spk10: Yeah, so first of all, I think you noted we had a slow quarter. I don't think any quarter is slow, so you might rethink about that commentary. Second, yes. Just remember the quote that I gave regarding Warren Buffett. So we think there may be some opportunities, but we certainly won't comment on them. Thanks.
spk06: That's all I have.
spk13: Our final question today will come from Aditi Balachandran of RBC Capital Markets. Please go ahead.
spk09: Just a quick one from me. I know Hallie mentioned that M&A is an overall positive. So do you have an idea of how much incremental demands could possibly drive? And I guess how much of that would be for pure lab space versus the product or drug manufacturing space?
spk10: Oh, most of it, Hallie can comment. We see as a big, big opportunity as If you look at the schedules of drugs coming off patent for the balance of the decade, it's pretty large. And virtually the only way to fill pipeline in that short a time is to acquire technologies and pipelines that are available. And so we see it as a big opportunity, number one. And by and large, most of that is R&D related. We're not so focused. Sometimes you have the new modalities that you've got you know, intimate manufacturing with the new modalities as part of the R&D center, but kind of classic manufacturing. You know, we don't really deal with that, and we don't see that as an opportunity for us. But, Allie, I don't know if you have any other comments.
spk01: Yeah, with M&A, as I mentioned, you really have to look at it on a case-by-case basis for specific M&A. I think that the better way to look at it is and as Joel mentioned, M&A and licensing is a huge component of large pharma strategy for the next decade, and that will likely continue beyond that. They're looking to recoup something on the order of over $130 billion in revenue that will be lost due to patent expirations. And so when you look at that acquisition activity on a whole, the net positive is certainly going to lead to additional R&D needs, and it's also, you know, a benefit from the perspective of upgrades and credit, given that, you know, when a acquirer comes in and, you know, buys a smaller company, we get the upgrade on the credit from the in-place lease.
spk13: Great.
spk09: That's really helpful.
spk13: Thank you.
spk10: Yep. Thank you.
spk13: And we did have an additional question come in from Wes Goloday of Baird. Please go ahead.
spk02: Hey, everyone. Thanks for sticking around for the final question. I just had a quick question on the development pipeline. It looks like the 23 and the 24 pipeline as well, at least. Do you have any, I guess, plans to change any more of those tenants out like you did this quarter, or is it pretty much locked in at this point?
spk10: Yeah, that's kind of an unusual circumstance where we felt we had a – you know, a robust client that needed space even a little more quickly than we anticipated. We had another client we saw that maybe had taken on too much space, so it was actually an ideal mix and marriage of putting the two together. You know, they come up from time to time. I'm not sure I'd read anything into that, that that's kind of normal, but that's how it happened.
spk02: Fantastic. And a quick follow-up. Are you seeing any, I guess, pent-up demand to get into some of these mega campuses where they've been fully occupied for years and you do have a little bit of tenant churn? Do you have any situations where multiple tenants are going through the space?
spk10: The answer to that is yes, but that tends to be more like Cambridge-centric, maybe our San Carlos campus not quite a mega campus yet, it's about 600,000 feet, but to grow much larger. So, you know, Alexandria Center for Life Science, New York City is another example. So, yeah, some places we see that there are multiple tenants we're having to kind of juggle. Potential tenants. Yep.
spk13: This will conclude our question and answer session. At this time, I'd like to turn the conference back over to Mr. Marcus for any closing remarks.
spk10: Okay. Thank you very much for taking time to listen and God bless everybody.
spk13: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Disclaimer