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Alexandria Real Estate plans to build a 315,000-square-foot office/lab tower on what was once planned to be the site of GE's headquarters. Other development opportunities on the site could double that figure. Image courtesy of Elkus Manfredi.
One of Boston’s biggest life science REITs declared they are pulling back on planned construction spending for the rest of the year.
Alexandria Real Estate Equities said in its quarterly earnings call Tuesday that they plan to pare back their planned spending on projects that hadn’t yet landed a tenant nor started vertical construction.
“Due to the current dislocation of capital and other markets caused by COVID-19, we have reduced our construction spend forecast to focus primarily on projects that are partially or fully leased. We also expect to continue certain future pipeline expenditures to minimize the impact of a temporary pause,” the company’s earnings statement said. “Importantly, upon improvement of market conditions, we have the option, on a project-by-project basis, to address demand for our development and redevelopment projects.”
The overall effect will be a 40 percent drop in planned construction spending in 2020, from $1.6 billion to $960 million across the seven markets in which it operates. The company also plans to shrink forecasted acquisitions this year from $950 million to $650 million nation-wide.
The company owns a range of high-profile assets in Greater Boston, from the newly-acquired Athenahealth campus in Watertown, where it had planned a 1 million-square-foot expansion to the Fort Point site of GE’s now-abandoned headquarters tower. However, several of these projects – most notably, the GE site and a joint venture with Anchor Line Partners at 99 A St. in South Boston – are still in the permitting phase. During the company’s earnings call Tuesday, co-CEO Peter Moglia cited the recent $320 million sale of Waltham’s The Post development at a cap rate of just 5.1 percent as evidence of the strength of life science assets in the region.
Overall, Alexandria reported $439.9 million in revenues, up 22.6 percent year-over-year, only $9.6 million in losses on its real estate investments and rent collection rates of 98.4 percent as of April 24.
