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Alexandria Real Estate Equities’ cluster markets remain strong and vibrant. That is according to Joel Marcus, executive chairman and founder on the firm’s Q3 earnings call.
“Our first mover advantage is a huge competitive advantage to all the aspects of our business,” he said. “Our high-quality cash flows are really based on best locations, best assets, best tenants in by far and away the best teams.”
According to Marcus, 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 in play.”
What is also important to remember, he said, is that the REIT has a high-quality tenant roster with 53% of the firm’s annual revenues being investment grade with an average lease term of more than eight years.
He also spoke about industry fundamentals, noting that the biggest cost driver of the healthcare system today is chronic disease and there are a bunch of them, he said. “And patients in the categories of chronic disease account for a whopping 85% to 90% of all healthcare spending and collectively those diseases are the leading cause of death and disability in the United States. So this industry the biopharma industry as a huge opportunity to impact and make great cost savings, when it comes to chronic disease.
When it comes to diagnose — diagnosis studies in high-income countries show that treatment costs for early diagnosis of patients generally are two times to four times less expensive than treating those diagnosed with advanced stage cancer is a good example. So again another great opportunity for this industry to impact with the cost of healthcare.”
Venture capital in the industry continues to be robust with over $19 billion raised in the first three quarters and over two thirds of those flowing into Alexandria cluster markets, he added. “Public markets on the other hand are becoming more selective and risk adverse, making it more difficult for both life science and tech companies to go public.”