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Alexandria Sees Trump Admin Bolstering Biotech, Stays Focused On Megacampus Strategy

Alexandria Real Estate Equities neared its disposition target to end 2024 as part of its effort to focus on its most promising properties as it navigates a sluggish leasing market and supply glut. 

The company sold $1.1B worth of assets in the fourth quarter, just shy of the $1.2B target it sought to streamline its portfolio. ARE has focused on what it calls megacampuses to combat soft market fundamentals, but executives during an earnings call Tuesday sounded hopeful for the future. 

Going forward, ARE is “laser-focused leasing spaces that are coming back to us, and for rollovers this year, making very good progress,” Chairman Joel Marcus said during the call. 

ARE leased 5.1M SF in 2024, including 1.3M SF in Q4. This year presents a challenging environment. Throughout 2025, the firm will contend with 3.7M SF of lease expirations, representing roughly 10% of its occupied inventory and 8.2% of its income. 

In total, 56% of that expiring space hasn’t already been re-leased or is under negotiation to do so. That adds up to just over 2M SF that needs to be leased before factoring in new deliveries. Approximately 4.3M SF will be delivered now through 2028.

Directly after the earnings call, ARE stock closed at $97.25, down nearly 5% for the day.

During the quarterly earnings call and year-end recap, ARE execs pointed out the challenging nature of the leasing market today. Chief Financial Officer Peter Moglia said the total redevelopment and development leasing for Q4, just 13K SF, underscored what he called “lingering conservatism” from life sciences company boards that are prioritizing organic growth and delaying expansion until they have a critical need for more space. 

Marcus also feels buoyed by the incoming administration and policy changes he hopes will bolster biotech and ARE’s bottom line. 

“I would say compared to the last admin, it’s dark of night to light of day,” he said about the changing regulatory regime of the Donald Trump administration. 

Marcus expressed excitement over the change in administration, saying, “The anti-industry idealogues of the last administration are gone.” During a week where anxiety around pauses in National Institutes of Health funding and activity as well as Trump’s shutdown of government grants have dominated the news cycle, Marcus made a case for calm around the implications of a Trump Food and Drug Administration. 

He praised the interim FDA head, acting commissioner Sara Brenner, as well as the nominee for the permanent positions, Marty Makary, and said he expects the new admin to lower interest rates so hopefully the life sciences industry will experience a return to a “normalized bull market.” 

In addition, he knocked the Biden admin HHS head, Xavier Becerra, who “didn’t know what healthcare was,” and feels the NIH nominee, Dr. Jay Bhattacharya, will be good, adding the NIH “lost its way” during the coronavirus pandemic and has a fair amount of work to do to clean house.

Furthering that point, Alexandria Senior Vice President of Science and Technology Hallie Kuhn noted that the FDA was expected to improve its pace of drug approvals, and that, with respect to incoming appointees, they “don’t expect any significant disruptions.” 

Perhaps most beneficial will be the Trump administration’s expected relaxation of merger and acquisition oversight. Kuhn expects M&A to pick up, with a potential for larger deals due to a more lenient regulatory environment. She also predicted strong venture capital funding concentrated in fewer, larger deals. 

“M&A is the lifeblood of this industry,” she said. In recent years, many industry observers predicted M&A funding would help the industry, only to be disappointed when that funding didn't come through.  

Perhaps the changing market, and market oversight, can shift the challenging oversupply situation facing the industry. A much-cited JLL report from September found nearly a third of the nation’s lab space was available, a figure projected to climb throughout 2025 due to the continued delivery of new lab space.

After this year, ARE still faces a tough market. While 2026 deliveries are currently 70% leased, Moglia noted that product set to complete in 2027 or later remains just 15% leased. The market remains focused on the short term and isn’t planning as far ahead as it once did. 

“We have a lot of work to do on those projects,” he said.

Alexandria representatives repeated its consistent refrain that its megacampus strategy will win the day, adding that at a time when tenants are expanding only when needed, ARE’s just-in-time, turnkey, first-class product will be a draw. 

The firm’s asset recycling program lived up to projections, dispensing of a significant $1.1B alone in Q4, just shy of the earlier projection of $1.2B. The goal of increasing megacampus revenue as a percentage of the firm’s total inched forward.

The overall goal, as stated during the Q2 call, was to increase the revenue from these huge projects to 90%, a share that dropped from 76% in Q3 to 77% in Q4. 

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