Alexandria Real Estate Equities, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Company Overview: Alexandria is a pioneer in life science real estate, owning a top-quality portfolio. It has over 750 tenants, with 89% of Q1 leasing from existing tenants, and 99% rent collection in Q1 2025.
• Macro Issues: Immigration and deregulation progress; tax/budget bill likely in July; Fed stubborn on rate cuts; NIH restructuring; FDA drug reviews ongoing.
• Leasing and Development: Over 1 million sq ft leased in Q1, with 75% of '25-'26 development pipeline leased/negotiating. Competitive supply peaked in 2024, with fewer deliveries expected in 2025-2026.
• Financials: Total revenues up 4%, adjusted EBITDA up 5% in Q1 2025. FFO per share diluted as adjusted was $2.30. G&A costs down 30% over the last two quarters, with 2025 guidance updated for $49M in savings vs 2024.

Segment Performance

• Life Science Real Estate: Alexandria operates nearly 40 million rentable square feet in life science real estate. 75% of annual rental revenues come from its mega campus platform. In Q1 2025, leasing by rentable square feet (RSF) across segments was: biomedical institutions 10%, private biotech 12%, multinational pharma 13%, public biotech 27%, and life science product/service/devices 38%.

Guidance

• FFO: Midpoint of FFO per share diluted as adjusted revised to $9.26, down from initial range.
• G&A: Midpoint of 2025 guidance adjusted to reflect $49M in savings for G&A costs vs 2024.
• Capitalized Interest: Declined to 69% in Q1 2025, with outlook adjusted for future projects where capitalization may pause.

Risks

• Macro Uncertainties: Tariffs, wars, Fed rate policies, NIH restructuring, and FDA regulatory challenges pose risks.
• Leasing Challenges: Conservatism from life science company management teams and boards leads to muted leasing activity for expansion.
• Capital Markets: Uncertainty in capital flows, lack of exits for private capital in ag tech, and dominance of incumbents in certain sectors create risks.

Question and Answer

• Q: Walk us through new guidance and worst-case scenarios? A: Marc Binda states the guidance is the best estimate with current facts, not a best or worst case scenario.
• Q: Sustainability of private biotech leasing? A: Hallie Kuhn notes venture funds have dry capital, but companies/funds are conservative in space decisions.
• Q: Capitalized interest decline? A: Marc Binda explains the decline is a best estimate with visibility for 2025, with some projects potentially pausing capitalization.
• Q: Disposition market and buyer pool? A: Peter Moglia discusses land sales to residential developers, interest from private equity, sovereigns, and industrial users.
• Q: Leasing trends and macro impact? A: Joel Marcus mentions slower decision-making due to macro uncertainty, but positive trends are expected in the coming months.
• Q: Capitalized interest and future projects? A: Marc Binda explains some projects may pause capitalization until ready to resume construction and finish space.
• Q: Occupancy bottom and inflection? A: Marc Binda discusses space-by-space analysis, with some expirations and alternative uses affecting occupancy projections.
• Q: Onshoring and R&D impact? A: Hallie Kuhn notes onshoring affects R&D depending on manufacturing type, with Research Triangle being good for biomanufacturing talent.