Alexandria Real Estate Equities, Inc.

Good day and welcome to the Alexandria Real Estate Equity's first quarter 2025 conference call. All participants will be in the 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. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the 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 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. With me today are Hallie, Peter, and Mark. And let me begin by a quote from Robert Browning, who once said, great things are made of little things. And needless to say, our profound thank you to the entire Alexandria family team. It is the little things each of us do every day each and every day that create the great things Alexandria is doing day in, day out. We are a unique, one-of-a-kind, mission-driven company. Also, I want to mention our continued thoughts, prayers and assistance go to many of our team members impacted by the LA wildfires in January of 2025, a really shocking start to this year. I want to mention I think something that we probably don't say enough about and that is Alexandria has been and will continue to be one of the most consequential REITs in the sector's history. We have pioneered the life science real estate sector. We are the first and only pure play life science REIT and we have invented the complex principle of clustering for the life science industry. We own and operate The top quality portfolio in life science real estate, almost 40 million rentable square feet with 25 plus mega campus ecosystems in triple A locations with quality, high quality, top quality assets. And now 75% of our annual rental revenues generated by the mega campus platform, which is actually a cluster in itself within the broader ecosystem cluster. Alexandria is the brand of choice to the life science sector and has built brand loyalty with our sector-leading client base and has accomplished that with our deep knowledge of our client base, the medicines, cures, therapies, and technology that continue to save and improve human life. Innovation is speeding to patients. Alexandria has scale, access to capital, low leverage, and the best in-class credit rating. Alexandria is best positioned to continue to reinforce the bedrock of the biotech sector, which actually will celebrate its 50th anniversary next year on the founding of Genentech. This sector is the crown jewel in the broader biomedical sector of life science industry of not only this country, but the world's best. And the underlying science and technology has never been as advanced as it is today. or has ever been held as much promise as it does today. Alexandria's balance sheet is in the top 10% of all REIT credit ratings and never has been as strong. Alexandria has the longest weighted average remaining debt term among all S&P 500 REITs at two times the average. Alexandria is one of the strongest and safest dividends in the REIT sector with a very low payout ratio. Alexandria's world-class development expertise coupled with our best-in-class industry leasing capabilities have enabled our near-term development pipeline for 25 and 26 to report 75% leased or negotiating. Alexandria has an industry-leading client base of over 750 tenants, 89% of which were the source of our first quarter leasing, which came from this cherished tenant base. And our average lease durations, 9.6 years, almost 10 years from our top 20 tenants, and over seven and a half years from all of our tenants. And proudly, in the first quarter, we collected 99% of our tenant rents and receivables. Moving to the macro issues, which have garnered a huge amount of attention, and let me list them and give our take on them. Immigration, very good progress to date. Deregulation, similarly very good progress to date. Tax and budget, based on meetings with key insiders in the Senate and the House recently, I've been told that July 4th is the most likely date for this big bill to emerge. On the international side, tariffs and wars overseas have created chaos and a key focal point for many folks, both domestic and foreign. The Fed and interest rates, the Fed is being stubborn in moving interest rates down when the impact would be very, very helpful to Main Street. Center for Medicare Services, Dr. Oz has recently taken over that and based on insider conversations that we've had, CMS is stable. The NIH, that agency, which is now run by Dr. Bhattacharya, is going to see and is incurring restructuring based on a very inefficient structure of many different institutions, several dozen institutions, which the head of those institutions actually have budget and command and control authority. not the director of the NIH. And this has led to a substantial decentralization of control and certainly got a bit out of control during COVID and funding some of the experiments in the Wuhan lab through a third party. My guess is the private sector will pick up some slack in some of the applied research and the NIH under the new leadership hopefully will emerge leaner, stronger, and focused on its mission with and organizational charge, which will make good sense. On the FDA, which is the crown jewel regulatory agency, both for the United States and the world, and the bedrock of our best-in-class biomedical industry, we've seen a loss of some quality senior people, and we've seen returning. Most staff are in place, and drug reviews are moving forward, and on a personal basis, we have a company that we're deeply involved with that has just got review comments this past week, who has an industry partner, and seeing relatively normality at that level. Dr. McCary, who now heads the FDA, is going to see to it that great science and regulatory skills continue and focused on their mission. Life science industry is delivering innovative products. The demand for innovation is strong. Drug approvals are moving forward. June will be a big month for approvals. There's four big ones coming up, including RSV, hereditary angioedema, COPD, and a rare skin disorder. And that may be a bellwether for the FDA's continued urgency and vitality in approving drugs. But when it comes to the FDA, three things could make a huge difference. One is to curb the burdensome regulations and accelerate development, meaning safety has become so overwhelmingly important that they have, in some cases, lost sight of approving drugs where there are no other choices and choosing a relevant population that may be too large. that could make a big difference if they could improve that. And also on the manufacturing and medical resilience side, things can be done to improve on that level. M&A is ongoing in the industry, and that's been a positive. When it comes to the 15% institutional indirect cost limitation, which was under executive order, that's under judicial stay at the moment. It's causing lots of concerns for institutions. Congress may soften the impact by legislation, but the variance of indirect costs among institutions is huge and a lot of inefficiencies remain. Our history at Alexandria demonstrates that in very tough times like these, the dot-com bubble burst and the great financial crisis, we've emerged better and stronger. Our fortress balance sheet emerged over the last decade out of the lessons of the GFC. And we see this as a time for important strengthening of all of our levers to continue to manage and grow the company. Out of the last two severe market corrections came two of our most important clients, Alnylam in 2003 and Moderna in 2011. And remember, the biggest and most consequential investments and ultimately gains are made when investors and operators do the right thing at the worst time. And these are perceived by many people as the worst of times. And then finally, I just want to say a couple of comments about Alexandria brand is about trust. Our brand is more than a logo on a sign. It's a shorthand for consistency. reliability, and expectations we set every time we deliver space, mission-critical space that performs, endures, and elevates the people in science who use it. And with that, let me turn it over to Hallie Kuhn.