Alexandria Real Estate Equities, Inc. (NYSE:ARE) Q3 2019 Earnings Conference Call - Final Transcript

Oct 29, 2019 • 03:00 pm ET

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Alexandria Real Estate Equities, Inc. (NYSE:ARE) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Alexandria Real Estate Equities Third Quarter 2019 Conference Call. [Operator Instructions]

I would now like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead.

Executive
Paula Schwartz

Thank you, and good afternoon. 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 would like to turn the call over to Joel Marcus, Executive Chairman and Founder. Please go ahead, Joel.

Executive
Joel S. Marcus

Thank you, Paula. And welcome everybody to our third quarter call. And with me are Dean Shigenaga; Steve Richardson; Peter Moglia; and Dan Ryan.

I'd like to start out by highlighting Alexandria's cluster markets remaining strong and vibrant and our first mover advantage is a huge competitive advantage to all the aspects of our business. Our high-quality cash flows are really based on best locations, best assets, best tenants and by far and away the best teams.

When it comes to external growth, our disciplined allocation of capital to a visible highly leased value creation pipeline is highlighted pretty -- in pretty great detail in our supplement, you'll be able to see the pipeline we placed in service, both this quarter and recently. The near-term growth of our annual net operating income, and Dean, will have a little bit of detail, it confuse a couple of people, but we didn't miss NOI -- any NOI numbers this quarter.

We commenced development and redevelopment of a pretty significant pipeline, which is also detailed and we were successful on our leasing of development and redevelopment space, and Steve, and Peter, and Dean will highlight all of that.

When it comes to the Mercer Mega Block, which I think the team will highlight, I just want to say, we won that really irreplaceable development opportunity because there is no other group with 20 years or more experience on the ground with the expertise and the experience we really have in South Lake Union. And I think it's pretty obvious that our team completely understands the integration of that kind of a development with the community today. There is no longer opportunities, just to simply build a great asset, you have to be able to build with not only your tenants in mind but, really, a great impact and integration with the communities in which we work and live and play.

And Steve will talk in some detail about 88 Bluxome. And again, we won that because, and we've gotten approvals because we're a trusted partner with the City of San Francisco. It's important to remember, we have an industry-leading high quality tenant roster, 53% of our annual revenues are investment grade, and our average lease term today is over eight years.

Couple of