Dean Shigenaga, co-president and chief financial officer of Alexandria Real Estate Equities (NYSE: ARE), participated in a video interview at Nareit’s REITweek: 2018 Investor Conference in New York.
Alexandria Real Estate Equities has been known for its deep executive bench, and Shigenaga says it puts the company in a very fortunate spot.
“We’ve got a great executive team that really has worked extremely well together over the years and executed strategic goals really efficiently,” he said. “If you think back over the last couple decades now, we’ve delivered great returns and great execution.”
Shigenaga also said that the company’s fully integrated regional team in each of its markets is “passionate about the quality of the buildings we deliver to our tenants, as well as really helping our client-tenants develop new therapies and technologies.”
With both real estate and life science industry fundamentals strong, Shigenaga said the life science industry is able to invest a tremendous amount of capital—about $280 billion—into innovation every year. He said five fundamental pillars round out the positive attributes that drive demand for real estate today, including strong bipartisan support for significant NIH funding annually. “This recent year it’s up 9 percent, which is actually really significant,” he said.
Other pillars include robust commercial R&D investment into the industry and a favorable regulatory FDA environment with strong leadership focused on quickly and efficiently delivering new drugs to patients.
“We’re fortunate because 53 percent of recent FDA drug approvals have actually been received by our client-tenants,” Shigenaga said.
He said that significant medical research philanthropy today, in the realm of $33 billion, was barely even spoken of 10 years ago. Venture capital investing in the life science industry has also become an important stream of capital.
In June, Nareit included Alexandria Real Estate Equities among the winners of its 2018 Investor CARE Awards, which recognize communications and reporting excellence. Shigenaga noted the importance of the CARE Awards to the industry and said he thinks the “continued excellent execution around communication and reporting by our team has…been outstanding.”
Shigenaga said that when a company’s disclosures get to a strategic level, the dialogue with the investment community improves significantly. When he joined Alexandria in 2000, the company had $800 million in total assets, and as of today it has $18 billion in total market capital.
“We always used to look at the Nareit award winners, which was really neat for us as a small company coming up in the REIT community,” he said. “We were inspired by the disclosures and the winners, and it really pushed our team to strive to become a leader in this area.”