Guidance Adjustment
Q: Why adjust FFO guidance early?
A: We narrowed our FFO guidance range, lowering the top and bottom ends but keeping the midpoint unchanged. This is standard as we gain visibility through the year. We still expect solid growth of 5.6% over 2023. Given macroeconomic, geopolitical issues, and the upcoming election, we wanted to be conservative.

Supply Outlook
Q: Are we nearing peak supply?
A: We believe we're approaching peak supply additions in 2024. After 2025, we expect minimal new supply since few projects are starting now. The supply tail depends on demand absorption, which we anticipate to be strong due to increased funding generating demand.

Demand Recovery in 2025
Q: What gives confidence in demand recovery into '25?
A: Across our tenant segments—private biotechs, public biotechs, large pharma—we see strength. Venture capital remains robust with 34 mega rounds this quarter, indicating near-term demand. Public biotech financing is strong, and pharma companies have large space requirements. Despite macro challenges, we expect demand to accelerate from 2024's bottom into 2025.

Development Strategy
Q: Will you slow development starts?
A: We've been disciplined, pausing some projects amid market volatility. Our development decisions are driven by tenant demand, cost of capital, and yields. We focus on meeting growing tenants' needs and are not tied to a specific volume of starts.

Development Yields and Rates
Q: Is 7% yield sufficient in current rates?
A: We assess developments based on long-term internal rate of return (IRR), not just initial yields. Even with a 6–7% yield today, improving fundamentals and adjusting cap rates over time can yield returns above our cost of capital. We take a longer view to pursue strategic, shareholder-beneficial opportunities.

Funding Plans
Q: Will you issue equity to fund development?
A: Our guidance assumes no equity issuance, same as in 2023. We focus on funding through non-core asset dispositions outside our mega campuses. We regularly reevaluate capital sources, as in past practice.

Market Rent Outlook
Q: What's the outlook for market rents?
A: We anticipate a very flat rental environment near term. Alexandria's mega campuses will outperform new supply. While supply pressures rents, we don't expect retrenchment beyond 2017–2019 levels in our submarkets, which we believe will be the bottom, with growth from there.

Impact of New Supply
Q: How does new supply affect expiring leases?
A: New supply isn't competing well with us, as shown by our high occupancy and strong rent spreads. Our mega campuses are highly valued by tenants. Much new supply is in tertiary markets and isn't attracting significant leasing. Tenants prefer our expertise and scalability.

Opportunities from Distress
Q: Will you capitalize on distressed assets?
A: We'll consider opportunities that align with our strategy. Branding a building, even in a new market, can be successful, as with our 201 Brookline acquisition, which went from 17% to fully leased in three quarters. However, many new supply areas lack desired fundamentals. Some unused lab buildings may convert to office use; we'll evaluate carefully.

Short-term Renewals Increase
Q: Why more short-term renewals into 2025?
A: Short-term renewals are common as tenants await key clinical data or business catalysts. They seek flexibility until their future space needs are clear. This practice is typical in our industry over many years.

Leasing Trends and Rates
Q: Do higher rates impact tenants' capital raising?
A: No, leasing decisions are event-driven, not directly tied to interest rates. When tenants hit milestones, they secure financing regardless of rates. Venture firms have significant dry powder ready to deploy, unaffected by rates ,.

Potential Demand Drivers
Q: Will CDMO and AI drive demand soon?
A: These are important but are just parts of our overall demand mix. We have tenants in AI and CDMO sectors with significant lab needs. These drivers impact over years, not months, and aren't currently the main demand push.