Alexandria Real Estate Equities, Inc.

Good day and welcome to the Alexandria Real Estate Equity second quarter 2024 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. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn this conference over to Paula Schwartz. 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 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 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. With me today are Hallie, Peter, and Mark, and we welcome you to our second quarter earnings call. And thank you and congratulations to the Alexandria family team for another very solid second quarter operating and financial performance. given the continuing uncertainty of the backdrop as soaring U.S. debt and government spending problems continue pretty much unabated. And in thinking about our daily efforts, we all think about the Navy SEAL credo, the only easy day was yesterday. Also huge congrats to our team on the June 2024 release of our Corporate Responsibility Report, which reinforces our longstanding operational excellence across our one-of-a-kind lab space platform, and to the team for securing 100% of the electricity needs with renewable energy for 100% of our Alexandria paid accounts in our greater Boston cluster market, a phenomenal achievement. Thank you, team. In thinking about long-term strategic thinking since the bull market of the life science industry turned in February of 2021. I would say the market moved from a historical long bull run to a bear market in, as I said, February of 21. And we've worked every single day to re-engineer and fine-tune our long-term competitive advantages of this one-of-a-kind leading lab space platform. Our goal is much like it was, but very different, given the facts, of course. after the 2008-2009 great financial crisis and the bear market aftermath to position ourselves to come out of this sector bear market with the acumen and business strategy really to enable our life science industry and tenant growth much as we led the long historical bull market 2014 to 2021 with record-breaking earnings growth for our sector. So in thinking about our competitive advantages and what we choose to really emphasize, I think most importantly, our first mover advantage in the top life science clusters, we continue to refine and refocus our footprint. And you see that by our actions, you know, quarterly. Our high quality assets aggregated in desirable and well amenitized mega campuses We continue this monumental effort really driven to and by our redevelopment and development efforts in each of our massive mega campuses and our attempt to reduce and hopefully successful strategy, our non-mega campus pipeline, future pipeline, and obviously the sale of most of our non-core assets over time. That's going to be critical to our go forward business plan. high-quality cash flows and substantial embedded future net operating income will be even more secure given that platform focus. Our longstanding tenant relationships that demonstrate stellar brand loyalty continue. Lilly is a great example with multiple strategic relationships there. We continue to be backed by our Fortress balance sheet with significant liquidity, unique and deep life science expertise, which is a hallmark of this company from day one. And we're very proud of our long-tenured and highly experienced management team. And as I move from kind of our strategic thinking about what we need to do to be at the vanguard of the next bull market for the life science industry, I want to take a reflection on my take of the second quarter and our future planning. It goes without saying that we had a very solid FFO per share growth in this quarter, this past quarter, second quarter, of course, of 5.3%. and 6.3% for the six months this year, and especially, I think, positive given the backdrop. An astounding 74% of our ARR comes from the mega campuses, and we hope to push that over 90% in a short handful of years as our major moat, as the major moat of our business. 53% of our ARR is from investment-grade or big cap companies. The strong quality of cash flows and the 96% of our leases having contractual rental rate increases gives us great future protection. We've maintained stable occupancy with a very solid lease and quarter with solid economics, and we continue to have very solid cash same-store NOI growth. Our EBITDA margins are best in class, and we're also working hard to reduce go-forward CAPEX and GNA. We are anchored by our fortress balance sheet, as I've said, with strong liquidity, and almost one-third of our debt expires after 2049 with an average term of 13 years. Over the next few months, we are laser-focused on leasing the remaining 1 million approximately square foot rolling this year and getting a strong jump on the significant 2025 rollovers. Also, over the next few months, we are laser-focused on our 24 and 25 deliveries, and continue to increase our leasing on those well beyond the current 87% to drive NOI growth. We're making significant progress on our recycling of capital for 2024 and beyond. And finally, the life science industry, which Hallie will comment on in depth here, is the crown jewel in the cherished industry of our country and truly the world's leader in innovation in the discovery of new medicines. It is virtually the only industry which fundamentally enables better health, well-being, and longer and happier lives. We have built this one-of-a-kind company to be at the vanguard of this cherished life science industry as it recovers from the aftermath of the COVID rocket ship. And without further ado, let me turn it over to Hallie.