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Alexandria (ARE), Eli Lilly to Expand Gateway Labs to San Diego

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Alexandria Real Estate Equities, Inc. (ARE - Free Report) has announced an exclusive partnership with its tenant Eli Lilly and Company (LLY - Free Report) to bring Lilly's innovative Gateway Labs model to the thriving life science cluster in San Diego. This collaboration signals significant potential for both companies and underscores Alexandria's role as a key player in shaping the future of life science innovation.

The partnership builds on a strategic relationship dating back to 2008 between Alexandria and Lilly. The Gateway Labs model, initiated by Lilly in 2019 in the San Francisco Bay Area, serves as a shared innovation accelerator. It provides emerging biotechnology companies with crucial resources, including flexible laboratories, integrated nontechnical space, opportunities for collaboration with Lilly and access to capital through Lilly and its venture network, including Alexandria Venture Investments. This unique platform aims to expedite the development of groundbreaking medicines.

San Diego, a thriving hub for life science, has witnessed an influx of venture capital in the past five years, tripling compared to the previous half-decade. Alexandria has played a pivotal role in this transformation since 1994, leading the development of the city's life science ecosystem.

San Diego boasts world-class research institutions, including UC San Diego, Scripps Research, the Salk Institute for Biological Studies and Sanford Burnham Prebys. With a density of life science talent comparable to Boston and the San Francisco Bay Area, San Diego is an ideal location for Lilly's Gateway Labs expansion.

Daniel Skovronsky, the chief scientific officer and president of Lilly Research Laboratories, expressed excitement about bringing Lilly's scientific expertise to San Diego's biotech community. Alexandria's co-president and regional market director – San Diego, Daniel J. Ryan, emphasized the shared commitment to fostering innovation. The partnership aligns with ARE's mission of providing high-growth life science companies with the necessary space, amenities and network to advance transformative medicines.

Alexandria's senior vice president, Monica Beam, highlighted the company's pride in providing long-term real estate solutions to Lilly for more than a decade. With 14.6 million rentable square feet (RSF) in the San Diego Science Sector, including 7.9 million RSF in operation, Alexandria's footprint supports a range of innovative life science companies. The expansion of Gateway Labs to San Diego reaffirms the strength and depth of the partnership between Alexandria and Lilly.

The Lilly Gateway Labs in San Diego, expected to open in the first half of 2024, will feature state-of-the-art move-in-ready laboratories, integrated nontechnical spaces, open collaboration areas, core equipment and operational support services. This dynamic environment, coupled with access to Alexandria's premier amenities, positions Gateway Labs San Diego as a focal point for fostering innovation and collaboration among the next generation of life science companies.

Investors eyeing the life science and real estate sectors should take note of Alexandria Real Estate Equities' strategic move with Eli Lilly. The expansion of Gateway Labs to San Diego signifies a commitment to advancing innovation and supporting the growth of transformative medicines.

Healthy demand for its assets in a favorable life-science industry is aiding leasing activity and occupancy levels. Moreover, a focus on developing these assets amid the increasing need for drug research and innovation is likely to drive net operating income growth over time. A robust balance sheet augurs well. However, a high interest rate environment remains a concern.

Shares of Alexandria, currently carrying a Zacks Rank #3 (Hold), have soared 16% in the past month, outperforming the industry’s increase of 11.9%.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are Iron Mountain (IRM - Free Report) and STAG Industrial, Inc. (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Iron Mountain’s current-year funds from operations (FFO) per share has moved marginally northward over the past three months to $3.97.

The Zacks Consensus Estimate for STAG Industrial’s 2023 FFO per share has moved 1.3% upward in the past month to $2.28.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.

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