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Alexandria Real Estate Equities Inc (NYSE:ARE)
Q3 2020 Earnings Call
Oct 27, 2020, 3:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Alexandria Real Estate Equities' Third Quarter 2020 Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Paula Schwartz with Investor Relations. Please go ahead.

Paula Schwartz -- Managing Director

Thank you and good afternoon, everyone. This conference call contains forward-looking statements within the meaning of the federal securities laws. The company's actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's periodic reports filed with the Securities and Exchange Commission.

And now, I'd like to turn the call over to Joel Marcus, Executive Chairman and Founder. Please go ahead, Joel.

Joel S. Marcus -- Executive Chairman and Founder

Thank you, Paula. And welcome everybody to Alexandria's third quarter call. With me today are Dean Shigenaga, Steve Richardson, Peter Moglia and Jenna Foger.

I'd like to welcome everybody. And from the Alexandria team and family, wishing -- hoping you're all well, safe and COVID-free. As all of us know, 2020 has been an astounding year of a never imagined confluence of a international pandemic from Wuhan, China, a deep shutdown recession, civil strife, coupled with a heated and complex election upcoming here next week.

2020 started off very sadly with the untimely death of Kobe Bryant, not only a great athlete but a special human being. And I want to make just a brief quote from one of his great sayings. He often said that great things come from hard work and perseverance. And those of you who knew or watched or admired Kobe, always he was the last guy to finish up and the first guy to start. And it was one of the hardest working people anyone could ever imagine. And that really exemplifies our team and want to thank our team from the bottom of our heart -- my heart and our team's heart for doing such a great job.

Alexandria has really uniquely achieved three outputs that are very rare in corporate America today that define the truly great company; continuing superior results, continuing distinctive impact and lasting endurance. And again, we want to thank our entire team for a stellar third quarter as we are all building the future of life-changing innovation literally during COVID-19, one could never imagine that.

So, couple of different comments. I wanted to comment on the recent Blackstone transaction where Blackstone announced the recapitalization of its life science real estate business and it only serves, I think, to reconfirm once again the great vote of confidence in the life science real estate niche we pioneered in 1994.

The transaction implies an approximate $1,070 price per square foot for that $13 million square foot portfolio. And I think compared to where Alexandria trades more or less today at about $950 a square foot, I think, that's I think very good benchmark for us. Blackstone timed its, I think, 2015 purchase really quite ideally as the biotech industry was emerging from about a five or six-year bear market in the 2013 and 2014 time frame. And at that time, when they acquired the assets, they were by and large -- most of the buildings were older than Alexandria's and they were not in as strong locations as we were. They clearly enhanced that portfolio since and kudos to them for doing that.

I want to take particular mention on third quarter activity on our Research Triangle acquisition, which is really of particular note, a large acquisition, about $590 million purchase price, about $265 a square foot, 2.2 million square feet over about 300 acres, 20 buildings with very high-credit tenant but also significant value add. This acquisition substantially increased our footprint in Research Triangle and particularly was motivated by our need to accommodate numerous inbound substantial tenant requirements both who needed existing solutions and build-to-suit capabilities. We now have three mega campuses in the Triangle. This newly branded campus, the Alexandria Center of Life Science Durham, the Alexandria Center for AgTech and the Alexandria Center for Advanced Technologies.

We see continuing strong demand for life science space across our markets, but particularly pointed are the many requirements from our own tenant base within. Also, it's important to remember two key truths have really been revealed by COVID-19. One is the resilience of and the need for domestic medical supply chains to be here based in the United States crucial for national security and for medical supply. And I think it only reinforces that complex medicines are really the future of healthcare. And I guess, the famous COVID-19 antibody cocktails would be a good example of that.

I wanted to mention a little bit about Operation Warp Speed. This was initiated by the Trump administration and supported by more than $10 billion in funding through the CARES Act. Operation Warp Speed led by really a legendary, probably one of the most skilled vaccine developers in the entire world, Moncef Slaoui aims to deliver 300 million doses of a safe and effective COVID-19 vaccine in the first quarter as part of a broader strategy to accelerate the development, manufacturing and distribution of COVID-19 vaccines, therapeutics and diagnostics really all in tandem. Very different than the government has ever operated before and really a great credit to public-private partnerships.

The Warp Speed partnership is between selected biopharma companies and key federal science agencies including BARDA, CDC, DoD, FDA, HHS and the NIH. As of October 21st, the initiative announced funding decisions totaling over $13 billion for 10 companies -- more than 10 companies to support vaccine therapy and manufacturing efforts. These included virtually all of which, may be except one of our tenants of Alexandria, Moderna, GSK Sanofi, Pfizer, Novavax, AstraZeneca, J&J, Merck, Regeneron, Emergent Bio and Fujifilm. So quite a humongous feat, I think, given the onset of this pandemic in a pretty odd fashion. I think to this date, there is certainly speculation that this was not a natural-occurring virus but one that was manmade in a lab in Wuhan.

A couple of comments about the life science industry and again, a real shout-out to the great private public partnerships that have been formed in so many different fashions. The life science fundamentals throughout 2020 have remained fundamentally strong, especially given the critical nature of the fight against COVID-19. This has helped lead to substantial progress and acceleration, including late-stage vaccine trials and therapeutics along with improved and expanded testing. The life science industry has not slowed down its pace. It's important to remember of investment in innovation well beyond COVID-19.

The industry's commitment and investment in innovation along with the FDA's ability to continue to operate at a high level despite the pandemic has led to 40 new drug approvals as of the end of September, which puts us on a pace to meet or exceed the 51 average of the past couple of years. I was on a call last week with Commissioner Hahn and it's a great credit he and the entire professional workforce at the FDA for their really 24/7 effort in this time. Life science venture funding has continued to flow at a strong pace in the third quarter, setting new quarterly records at almost $12 billion with more than $30 billion raised through the first three quarters, really surpassing all previous annual totals.

It's important to remember that most of this investment, 80% comes from Alexandria's core markets and especially Greater Boston and San Francisco which capture about 60%. Capital flows to early stage companies and the public markets continue at a fast pace. There've been 47 pharma and biotech IPOs in the first three quarters of this year or raising almost $9 billion larger than any previous year and the company has been able to access capital markets at historic levels approximating almost $35 billion in follow on offerings surpassing the previous high of about $29 billion in 2015.

So all in all, it's been a pretty -- a pretty strong tailwind for the industry and what we're doing. So with that I'd like to turn it over to Jenna Fogger, our Senior VP of our Science and Tech team. And she's going to talk about the latest developments in the vaccine therapeutic area. So Jenna, please.

Jenna Fogger -- Senior Vice President, Science and Technology

Thank you, Joel. And good afternoon, everyone. So, as this unprecedented pandemic rages on, giving rise to a new record high resurgence in COVID cases across the country and forging an indelible mark on the global economy, society and of course the future of public health. The imminent need for safe and effective treatments of vaccines to combat this coronavirus is paramount. And those skepticism and impatience have set in as each and every one of us navigates this uncomfortably, discomforting human experience of waiting. Never before has the work of our tenants in the life science industry been more important.

The mission critical and absolutely essential efforts of our nearly 100 tenants with meaningful COVID programs represents the beacon of hope for an end to this COVID-19 pandemic. In aggregate, our tenants in the life science industry also represents the solution for the longer-term impacts of human health, which COVID has urged us all to rethink an increased focus on prevention, overdue, innovation and infectious disease and other neglected therapeutic areas and new paradigms for R&D collaboration, next-generation manufacturing, supply chain efficiency and improved distribution and access to new medicines. Clearly, a safe and effective vaccine should help bring about the effective end of the COVID-19 pandemic and that is absolutely requisite to meaningfully reopen to society and restore the global economy.

As such, researchers around the world are working with unprecedented speed and collaboration on at least 135 distinct coronavirus vaccine programs, of which nearly 50 vaccine candidates are already in human trials. As Joel mentioned, a cornerstone of the US government's effort to expedite the development, manufacturing and distribution of COVID-19 treatments and vaccines is of course the Operation Warp Speed initiative with the vast majority of its grant recipients being to Alexandria tenants.

So, among these efforts, I want to call your attention to four of the most advanced vaccine programs from Pfizer, Moderna, AstraZeneca and Novavax, each a top tenant for Alexandria in their respective regions and each applying a slightly different underlying technology and approach to vaccine development. Each one of these companies has reported clinical data that suggests initial safety and efficacy, and each are currently conducting major Phase 3 studies with tens of thousands of subjects around the world. Key data readouts from each of these companies are expected in the fourth quarter of this year spanning between now probably November and December. Together, these four companies alone are building capacity to provide over 6 billion doses next year.

So what do we make of all of this amid the constant flow of headlines, it is highly likely that at least one and likely more than one of these initial Phase 3 trials will report interim efficacy results in November and December of this year. If they do, the FDA could grant emergency use authorization by year-end or very early into 2021, which would enable the highest risk populations like healthcare workers and others, to begin to receive the vaccine over the coming months. The FDA has set the minimum standard efficacy threshold for all COVID vaccines at 50%, meaning that a vaccine will have to protect at least 50% of those receiving it to receive emergency use authorization. And based on some of the data that's come out to date and the time that is taken for companies like Pfizer, Moderna, and others to report their data, healthcare analysts have begunto predict efficacy more likely in the range of at least 70%. But all obviously remains to be seen. As more data becomes available and the vaccines begin to be distributed, if safety and efficacy persists, these companies and others could receive FDA approval in the first half of 2021 with widespread distribution of safe and effective vaccine to the public sometime mid next year.

Given the addressable population, pretty much the entire world, this will not be a winner-take-all opportunity and no one company alone will supply the global demand in the near-term. Over time, the most effective vaccines will likely have more upside. Of course, many questions remain and we'll continue to learn more in the coming months as more data rolls out. Just as it remains unclear, how long natural immunity lasts after a person becomes infected with COVID-19. Similarly, the durability of a COVID-19 vaccine is still a wide-open question. Will COVID be a pandemic like SARS or MERS that will subside over time or will it be more endemic or flu-like creating a longer-term market opportunity for the current treatments in development?

In addition to safety and efficacy questions, challenges related to capacity, access, distribution, logistics and early adoption are all being navigated in real time. Meaningful strides are being taken by our tenants and the life science industry to pre-empt as many of these complexities as possible. And of course, in the meantime, new antibody therapies by companies such as Tenet and Vir in collaboration with GSK, Eli Lilly and AstraZeneca could serve as a bridge to a vaccine taken prophylactically and/or to help reduce the severity of COVID-19, especially if taken early in the course of disease, as we see now with Eli Lilly's antibody.

Key data readouts will be forthcoming over the next few months, while Eli Lilly's single-agent antibody and Regeneron's antibody cocktail have filed for emergency use authorization and await approval. Other notable advances in the treatment of COVID-19 include FDA's first COVID-specific approval [Indecipherable] Gilead, the antiviral drug Veklury or remdesivir for the treatment of COVID-19 patients requiring hospitalization. The FDA has also granted emergency use authorization for the use of convalescent plasma in hospitalized patients with severe disease. And the NIH has also included within its guidance the use of dexamethasone or steroids in hospitalized COVID patients requiring supplemental oxygen.

These notable and expedient efforts across our tenant base and the life science industry are in large part to the fact that the coronavirus made itself known to the world almost a year ago now, these companies were already well-equipped with the R&D infrastructure, technology platforms, resources and talent in place such that they were able to mobilize quickly and meaningfully to combat this global health crisis.

It is our honor to continue to serve at the vanguard of this essential life science industry and to support the heroic work of our tenants and campus communities focused on bringing an end to this pandemic, addressing the 10,000-plus diseases already known to us today and innovating the future of drug discovery to solve tomorrow's threats to human health.

And with that, I'll turn it over to Steve. Thank you.

Stephen A. Richardson -- Co-Chief Executive Officer

Thank you, Jenna. Good afternoon, everyone. The very strong results we've achieved during the third quarter are a testament to both the clear vision the company has had since its inception more than 25 years ago and the highly creative and entrepreneurial team that has skillfully adapted to this tumultuous time. Alexandria's mega campuses are now not only essential and mission-critical, but they are also especially desirable in capturing a significant majority of the life science growth in the marketplace.

The Alexandria brand is highly valued across the entire life cycle -- life science ecosystem for its well-earned trusted relationships, impeccable integrity and unparalleled expertise and experience. These timeless elements are the foundation for tenants' decisions to continue to seek out a collaborative and mutually beneficial multi-dimensional platform for their growth with Alexandria. As the challenges only increase for navigating success in the quest to eradicate disease and improve nutrition globally, particularly with a once-in-a-century pandemic upon us, Alexandria stands out and is recognized as an innovative, insightful and unique partner as the following results clearly demonstrate.

In the realm of operational excellence, the company has collected 99.7% of its accounts receivable during the third quarter and 99.7% during October. The 24/7 nature of these labs and the fundamental value they provide to our tenants is clearly evident with these operational statistics. On the leasing front, we have continued outperformance. During the third quarter, we outperformed the second quarter leasing activity with a total of 1.2 million square feet leased, which brings us to nearly 3 million square feet leased year-to-date during 2020, which is pretty impressive considering our 10-year leasing average is 3.9 million square feet. Alexandria's team is fully engaged and our tenant base is thriving and continuing to grow.

To underscore the leasing outperformance, this quarterly run rate, during the time of COVID, is approximately equal to or better than the leasing run rate during the first quarter, the second quarter and the third quarter of 2019. And of particular note is the 80% leased or negotiation status of the development pipeline for the same set of projects detailed in our Q2 supplemental, so very solid progress with our on-balance sheet growth engine, and Peter will provide further details during his remarks.

Our core continues to be strong with rental rate increases of 30.9% cash and 39.9% GAAP for renewals and releases and early renewals for the third quarter are above our historic levels and reached 86%. So the sense of urgency remains strong for our tenant base. Our mark-to-market is at 16.4% cash, a 90 bps increase from the second quarter and 17.1% GAAP, up 120 bps over the second quarter. Occupancy continues to be solid at 94.9% across 31.2 million square feet in the operating portfolio. And after taking into account the recently acquired lease-up opportunities, we would otherwise be at 97.7% occupancy, up 60 bps from the second quarter.

Market health continues to be strong with robust lab demand of 3.2 million square feet in the Bay Area of San Francisco, 2.5 million square feet in the Greater Boston region and 2.1 million square feet in San Diego. But importantly, there is a market acceleration to high-quality COVID-safe campuses and evidenced again by our ability to capture a dominant market share of promising and strong credit life science companies.

So, in conclusion, Alexandria's pioneering efforts have placed the company at the actual and virtual intersection of science and global health. The team is entrepreneurial, creative and fully prepared to meet and decisively capitalize on this opportunity to partner with our tenants for the benefit of health across the globe.

With that, I'll hand it off to Peter.

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Thanks, Steve. I want to briefly update you all on our development pipeline, the impact of Prop 15 on Alexandria and touch on our recent third-party asset sale in one of our submarkets.

So, as with developments, overall, the leasing activity was very robust. We had over 300,000 square feet of leases completed and approximately 490,000 square feet of space put under LOI in the development/redevelopment pipeline during the quarter. And that was led by significant demand at our two Bay Area projects, 201 Haskins and the Alexandria District project in San Carlos.

There have been a few adjustments to the development/redevelopment pipeline from last quarter. 975 Market Street in SoMa was sold for $198 million as noted in our dispositions disclosure. Accepting the unsolicited offer really made a lot of sense to us as an opportunity to really recycle that capital into our already robust pipeline. 704 Quince Orchard Road in Gaithersburg, Maryland and 9880 Campus Point Drive in San Diego were successfully completed during the quarter and put into operation.

So, as those assets were removed from the pipeline, two new assets have been added, including the Parmer Campus in Research Triangle that Joel referenced. That was acquired in the third quarter and has been rebranded as Alexandria Center for Life Science, Durham. Approximately 650,000 square feet of the 2.2 million square foot campus is slated for redevelopment into research and development lab space for manufacturing space and it has already been 50% pre-leased. The second asset, Alexandria Center for Advanced Technologies, is also in the Triangle and features research and manufacturing space in two buildings that are a combined 40% pre-leased.

We have also disclosed three new pre-leased projects in our San Diego region, 3115 Merryfield Row, also referred to as Spectrum 3, is a 146,456 square foot round of development. That will be the fourth and final phase of our Spectrum 3 -- or our Spectrum campus in Torrey Pines. The project has considerable interest, 80% of the building is already under letter of intent. At Alexandria Pointe, we have pre-leased 100% of a new ground up once ground up 171,102 square foot development on that mega campus. To her credit tenant [Phonetic] and at the San Diego Tech by Alexandria project we've kicked off our first ground up development with a 59% pre-leasing of 176,428 square foot building to an exciting genetic sequencing company, a technology that's really a major strength in the San Diego region.

On the Prop 15, we're sure everybody's aware of the details of California's Proposition 15 ballot measure that would overhaul the state's property tax limitation of 2% increases per year and replace it with market value assessments every three years for commercial properties that have values in excess of $3 million. If Proposition 15 is passed, the property taxes for some of our properties in California could substantially increase. Our current assessment is that we're in pretty good position to absorb the impact of this proposition should it pass as our California asset base is relatively young with approximately 60% of our California properties purchased or developed -- redeveloped over the past 10 years. And our triple net leases allow us to pass through, among other costs, substantially all real estate and rent related taxes to our tenants in the form of additional rent tenant recovery.

Consequently, as a result of having triple net leases and a relatively new asset base, we do not expect potential increases of property taxes resulting from tax reassessments to significantly impact our operating results and they will have almost no impact on NOI.

Moving to the asset sale I mentioned. So over the past two quarters, we've discussed strong interest in lab office assets from a diverse set of investors mentioning Healthpeak's purchase of The Post in Waltham at a 5.1% cap rate and a healthy price per square foot of $751 a foot for a suburban asset. They are purchased at 35 Cambridge Park Drive for almost $1,500 a square foot and a 4.8% cap rate and Beacon's purchase, I think referenced last quarter of 27 Drydock subject to a very onerous ground leasing Seaport Area of Boston at a 4.8% cap rate and $916 per square foot value.

It is still a good time to be in the market with assets in life science markets. During the third quarter, Ventas purchased the Genesis Towers and 4000 Shoreline in South San Francisco for $1.02 billion or $1,301 per square foot and a 4.75% cap rate. We were somewhat surprised by that valuation as the Tower sit oddly and alone on the West Side of the 101 Freeway and the South Tower is an actual converted office building, which, as we've been talking about at a number of recent meetings, can cause less than ideal conditions for tenants.

For instance, the low cleared height of the base building design led to lower finished street, a lower finish ceiling than what you would normally find in a Class A lab building. And since the building had an office tenant in the top floors during its conversion, much of the ducting resides on the exterior of the building making for less than ideal aesthetics. And the freight elevator does not reach the building.

FedEx and the freight elevator does not reach the building's upper floors. All of these things really put the project at a competitive disadvantage to others in the rental market. Look, despite the exuberance of our product type, we are going to continue to maintain our highly disciplined approach to underwriting and know that our deep knowledge and experience will continue to provide us with great opportunities to grow our asset base at reasonable valuations.

And with that, I will pass it over to Dean.

Dean A. Shigenaga -- Co-President and Chief Financial Officer

Hey. Thanks, Peter. Dean Shigenaga here. Good afternoon, everyone. Our central real estate portfolio continues to provide highly innovative entities with mission-critical research facilities really focused on acceleration of innovation to advance human health. We're very proud to be the key partner to leading entities across pharma, biotech and ag tech, and have a highly experienced team delivering operational excellence quarter-to-quarter and year-to-year.

Our high-quality Class A properties and future development sites combined with our stellar tenant roster continues to generate high quality and growing cash flows. Our growth and cash flows from operating activities continue to allow us to increase our common stock dividend, most recently $1.06 per common share or $4.12 per share on an annual basis. And that was up 6% over the previous 12 months. We are on track to retain over $200 million in cash flows from operating activities after dividends in 2020 for reinvestment into our highly leased development pipeline.

Our third quarter results were very solid and 2020 is wrapping up as a strong year for our central real estate business. Total revenues for the third quarter were up almost 17% over the third quarter of '19, excluding the termination payment from Pinterest, really highlighting continued solid execution on both internal and external growth.

Adjusted EBITDA margin was very strong at 67% for the third quarter and remains one of the top stats within the REIT industry. The slight temporary decline in the third quarter was due to two items, about one-third of which was related to temporary vacancy for space that will be delivered for occupancy in the fourth quarter; and about two-thirds of that decline related to seasonal increases in utilities.

Now, the increase in utility expenses are recoverable from our tenants and did not impact net operating income. Importantly, our adjusted EBITDA margin is expected to improve at 68% in the fourth quarter. Rent collections have been very strong, as Steve highlighted, at 99.7% for both 3Q and for October and in line with our expectations for our mission-critical essential real estate.

Now, occupancy has been solid this year at 97.7% before the impact of vacancy from recently acquired properties. Please refer to Page 24 of our supplemental package for a detailed list of vacancy that was acquired recently. Now, the key takeaway is that recently acquired properties vacancy will provide growth in cash flows as our team executes on these lease-up opportunities.

Now, our operating results continue to benefit from contractual annual rent escalations averaging approximately 3% from one of the highest quality tenant rosters in the REIT industry. As highlighted on our second quarter earnings call, tenants took occupancy in the third quarter closing out temporary vacancy as of June 30th and contractual rents commenced in 3Q pushing through third quarter same property results, in line for expectations for 2020. Now, same property NOI growth was 2.9% and 4.9% on a cash basis for the third quarter. We reported continued and very strong rental rate growth and lease renewals and release in the space at almost 40% and almost 31% on a cash basis for the third quarter.

And quick comment on leasing activity for the quarter and for the nine months. Two leases did impact the amount of TIs and leasing commissions related to lease renewals and release in the space, one lease executed in the quarter related to retenanting of an older building that was occupied by a single tenant for 15 to 20 years and the infrastructure was not really our traditional generic lab improvement.

Also, consistent with our assumptions related to the recent acquisition, we successfully released a portion of the property along with the TI allowance to bring the space up to ARE standard really for high-quality facilities. Now these two leases are unusual and did impact our quarterly average for TIs and leasing commissions. Excluding these two leases, our average TIs and LCs for the three months and nine months ended September 30 would have been in line with historical amounts at approximately $17 and $20 per square foot respectively.

Now, during the quarter, our General Counsel resigned for family reasons. She really was one of our top leaders in the company. She built a really great team and had an amazing two-decade career at Alexandria. We truly wish her well. In connection with her departure, we recognized a $4.5 million compensation expense in the third quarter.

Now turning briefly to venture investments. Over the past year or so, we have been taking advantage of the strength of the portfolio and overall capital markets. Our net cash flows from -- have been about neutral for the first three quarters of 2020, highlighting that we have been strategically monetizing certain holdings. Unrealized gains have grown significantly to $542 million as of September 30th and realized gains have averaged about $16.1 million per quarter over the last four quarters and was $17.4 million for the third quarter.

Now our team has been working diligently on our active and near-term development and redevelopment projects. Peter touched on a lot of the details, but key highlights included 4.1 million square feet of active and near-term projects that are highly leased or negotiating at 74% that would generate significant cash flows. This consisted of great progress on the active pipeline that we presented last quarter, which is now 80% leased and/or negotiating.

We added over 900,000 square feet to our active pipeline in the quarter, which is now those projects are 54% leased and negotiating. And we also have an additional 500,000 square feet of near-term projects which are 80% leased or negotiating with vertical construction starts ranging from the fourth quarter to the second quarter of 2021. So huge thanks to our entire team for their outstanding execution on our development and redevelopment pipeline.

Moving to our balance sheet, I just want to say thank you to our relationship lenders and our team for completing an amendment to our unsecured senior line of credit providing aggregate commitments of $3 billion, up $800 million and extending the maturity date by two years to early 2026. We completed a record low 12-year bond deal at 1.875% in August of 2020. The all-in rate for 10-year bonds today for Alexandria remains very attractive at approximately 2%.

Now we remain committed to our strong and improving credit profile and are on track to hit our year-end goal for net debt to adjusted EBITDA of 5.3 times. Now we're very proud to highlight one of the strongest balance sheets in the REIT industry ranking in the top 10 among all publicly traded REITs. We have liquidity of about $3.9 billion, reflecting the increase in commitments from our October 2020 amendment to our line of credit and our weighted average remaining term in outstanding debt was very solid at 10.6 years with very minimal debt maturities until 2024.

We updated our 2020 guidance and narrowed the range for EPS diluted from $3 to $3.11 and FFO per share diluted as adjusted from $7.29 to $7.31. Now, our targeted dispositions for the remainder of 2020 include two key transactions both of which are moving along very well with one expected to close real soon. Both of the deals are in process and subject to confidentiality agreements and, therefore, we are unable to comment on either transaction until after closing.

Now, as usual, please refer to detailed underlying assumptions included in our 2020 guidance beginning on Page 10 of our supplemental package. Additionally, consistent with prior years, we plan to provide our detailed guidance assumptions for 2021 later on at our annual Investor Day on December 1 and, therefore, we are unable to comment on 2021 until then.

Let me turn it back over to Joel.

Joel S. Marcus -- Executive Chairman and Founder

Thank you. We'll go to question-and-answer. Operator, please.

Questions and Answers:

Operator

Yes, sir. [Operator Instructions] The first question comes from Anthony Paolone of JPMorgan. Please go ahead.

Anthony Paolone -- JPMorgan -- Analyst

Okay. Thank you. I think, Peter, you'd mentioned some of the challenges with some of the conversions to lab. But with a lot of the capital circling, some conversions, new submarkets and new markets, can you just comment whether you think there's enough demand to go around for everybody?

Stephen A. Richardson -- Co-Chief Executive Officer

Well, yeah, let me jump in before Peter comments, Tony. I think you have to look at where these are happening and where the demand wants to be, and those don't always match up. I mean, I think if you look at Cambridge, the ability to add supply there is pretty, pretty tough. And the demand is strong. Same thing, I think, in different parts of San Francisco. So I think you have to isolate where these either are or might be converted. And you heard a little bit about the downside of conversions. They oftentimes don't work out all that well and where the demand is coming from and where they want to go.

But, Peter, you can comment.

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Yeah. I mean, just yesterday an article came out in the Bisnow website of San Francisco titled Too Low, Too Fragile, Too Short-Term: Life Sciences Conversions Are Popular But Hard To Pull Off by author's name was Dean Boerner. And I think it's just -- it's a pretty summery level article but like we've been talking about for the last couple of quarters, office buildings just don't have the infrastructure needed for a laboratory that will be efficient and flexible at the end of the day.

So, invert one, you can, but the tenants are going to have to make sacrifices in order to occupy that space. And they could be very material as far as like how many chemicals they can store, where they can put equipment. It's very inefficient compared to Alexandria's portfolio which was purpose built for lab. So, we feel like any requirement in any of our submarkets that comes around, we're going to be the first choice. We're going to have a building that's flexible, that works and has a staff that knows how to run it. That's the other thing. There's more than just bricks and mortar here. There is operational expertise and that can get very technical. And these are mission-critical facilities. Can't -- our companies can't really afford to go into a building when somebody doesn't know what they're doing because time is money and especially the life science industry.

Anthony Paolone -- JPMorgan -- Analyst

Okay. Thanks for that. And then, my second question. Joel, I think it was either last quarter or maybe the quarter before. You'd made some comments about the election and it sounded like a blue wave would be bad. Can you give some updated thoughts on if we get a so-called blue wave what the near-term impact might be on the business?

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

I think, first of all, the ideal is always in government that there's a balanced government and balanced between the parties. I think it's hard to speculate on a blue wave and what it means because the Democratic party is really a pretty -- highly, I would say, a party that encompasses pretty broad spectrum of thoughts from socialized medicine to a free market with some guidance. So, it's hard to know what that really means. I think there are two areas that so-called buy-in-the-line group said early on if there were things they could do pretty quickly, what would they do? One might be to try to get Medicare to negotiate for those drugs administered by doctors. That's one that they might likely try to go after pretty quickly and then another one is if they could show that intellectual property was created outside of the company, maybe a more revenue sharing basis with, say, federal lab or a university or whatever. So those are two, once that I've heard that they might go to. But I think it's hard to predict and hard to speculate. And anyway so that's kind of my knee jerk reaction at this point.

Anthony Paolone -- JPMorgan -- Analyst

Do you think in that scenario there's any pause in leasing as tenants try to just figure out what the environment might hold?

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

No.

Anthony Paolone -- JPMorgan -- Analyst

Thank you.

Stephen A. Richardson -- Co-Chief Executive Officer

Yeah. Good to talk to you, Tony.

Operator

The next question comes from James Feldman of Bank of America Merrill Lynch. Please go ahead.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Thank you. I guess just sticking with the supply topic. Are there any markets where you are kind of second guessing or thinking twice about new starts given how much capital is flowing into them?

Joel S. Marcus -- Executive Chairman and Founder

Well, I think -- and maybe I'll have Steve come in. But I think one that we've certainly flagged over the past couple of years, which certainly has turned out to be way better than we thought, we tend to be pretty conservative in our thinking with South San Francisco. When Kilroy announced the Oyster Point and a number of other groups have built there, I think, Healthpeak has done a good job of building and so has Blackstone. And it looked like there might be a tip -- more -- the potential for more oversupply than demand, but it's turned out that the demand has been healthy and the supply issue has been pretty in check.

So we've been pretty careful there over the past couple of years, but we certainly have that very strong position. And I think, either Peter or Steve mentioned, we're making great progress on our 201 Haskins project. But, Steve, you could comment.

Stephen A. Richardson -- Co-Chief Executive Officer

Yeah. I would add, Jamie, that our South San Francisco portfolio for the lab product is essentially 100% leased. At Haskins now, we're at 88% leased in negotiating, so very well-positioned there. The entirety of Phase 1 of Kilroy's project is 100% leased. Blackstone is substantially leased. PEAK is substantially leased. So, we did monitor it, as Joel mentioned a couple of years ago, but there has been very robust demand. You have a combination of big pharma coming into South Francisco that's anchored it with probably four or five global pharma companies coming in that were not there before. You have a second cohort of companies that have matured to commercialization. So, we continue to see that very healthy and do monitor supply certainly very closely, but not overly worried as we might have been a couple of years ago.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Yeah. Steve, maybe mention Stripe moving there to the Kilroy project because that's kind of an interesting trend that we haven't really seen before, a little bit like Mission Bay was in the early days when it was life science and suddenly tech came in, in a big way.

Stephen A. Richardson -- Co-Chief Executive Officer

Right. Yeah. I think that was really a unique situation as the market was extremely tight. When they were making that decision, they were looking for opportunities to have additional buildings for expansion. So they did make the move to South San Francisco. We had a particular tax regime in San Francisco that might have been troublesome as well. So that -- we'll see if that's a harbinger for future tech locations, which will only increase demand in South San Francisco, but it is -- it was an important and kind of unique situation.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. Thank you. And are there any other markets you're thinking about as even monitoring as high risk for supply?

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Well, I think you always think about Research Triangle because there is a lot of land in and around the Triangle. But that's the reason we've gone to a mega campus strategy because people don't want to just be in isolated locations. And many tenants, including one were under LOI with right now in a pretty big expansion, were looking for existing solution. So, I think that's one. We always have historically been watching, but we're pretty comfortable given our recent dollar commitment there.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. Thank you.

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Yeah. Thanks, Jamie.

Operator

The next question comes from Manny Korchman of Citi. Please go ahead.

Manny Korchman -- Citigroup -- Analyst

Hey, guys. Thanks for the comments earlier on the amount of capital looking at the space. Isn't that right you guys have also increased the number of acquisitions you're doing and there's a couple of big deals out there? I know you don't really talk about future deals, but how interested would you be in, in big deals, especially in a market like Cambridge?

Joel S. Marcus -- Executive Chairman and Founder

Yeah. So let me maybe react to that. First of all, it's always hard at the beginning of any year to know, especially this year of 2020, I mean, my gosh, in March and April, we had the cut and we're planning to cut further capex, because no one knew if this was going to be a repeat of '08, '09 in a sense. But by May, it was pretty clear that, that wasn't the case. It was a different kind of market shock. So, nobody knows at the beginning of any year or during the year what assets might come to market for what reasons. So I think it's always hard to speculate on acquisitions. And we're always looking for ones that have an ability to satisfy internal tenant demand that we have. Now, we have hundreds and hundreds of tenants that we know were -- what they want to do going forward. So that gives us a huge competitive advantage.

And I think trying to match that up with solutions that either exist or we can create, I think when it comes to big portfolios, I mentioned Blackstone before. I think their recapitalization and move from one fund to another. And I guess, if there was an offer out there, we know that the base portfolio well back in 2015, I described that there would be -- we didn't have interest then and we wouldn't have interest now.

It doesn't do anything for us particularly. And adding gigantic scale doesn't really make sense. But I think they've done a great job of culling that portfolio and then really adding quality buildings, which weren't there so much many years ago. And I think, on the other big portfolio in Cambridge, we don't have any comment on that. But I would say that's kind of an A-minus, B-plus location. We have three mega campuses in the heart of Kendall Square which are AAA locations. So, I think that gives you some insight on how we think about that.

Manny Korchman -- Citigroup -- Analyst

Great. And Joel, maybe I'll take this one as well. How are you guys thinking about maybe they're not a manufacturing space that's in your portfolio now and how much that might ramp over time? One of the pictures you highlight in the supplemental this time around was a manufacturing facility, which I don't think you've done in the past. Kind of curious, how much of your space might not be labs or office but more manufacturing?

Joel S. Marcus -- Executive Chairman and Founder

Yeah. Well, we have done manufacturing before. We don't do remote manufacturing. If somebody wants to build a plant in Puerto Rico or Iowa or Kansas or West Virginia or someplace, we don't go to locations where we think that there is no long-term inherent value in the real estate, it's just an investment. It's amortized over the term of the lease. And then when it's gone, you've kind of written down your asset. So that's never of interest.

But I think, given today, remember what I said in my comments, there are really two fundamental things going -- things that have been evidenced by COVID-19. One is, and whether it's the Trump administration or Biden's push, he's kind of parroted what Trump has said. Whether he can do it or not, don't know or whether he'll have the chance or not, don't know. But it's pretty critical that we do repatriate as much research, development and manufacturing in the medical -- in the critical medical arena and healthcare arena back to the US for obvious reasons.

And where those become either adjacencies or in close proximity to headquarters and core R&D, then we clearly have interest. If they're in really random remote locations, there would be no interest. You have to also remember, there is a new generation of companies today, particularly in cell and gene therapy. And those manufacturing capabilities, whether they be at the clinical level or at full scale commercial level, are, to a large extent, worth more than the company's research. And so, those become mission-critical. You can think of any number. I mean, Bluebird is a good example, any number of companies that have highly specialized manufacturing for these complex medicines of the future.

So we think it becomes an integral part of RDC and now [Phonetic]. And I think it's a huge opportunity. I think it's a huge opportunity for everybody in the United States because I hope it comes true. I think the one negative thing that sits on the horizon is if Biden happen to win and he happen to be able to increase corporate taxes, he's going to do the very thing that we've sought not to do, which is force companies overseas, move companies' cash overseas. Why would you want to operate in a high cost US environment where you could operate overseas at a reduced price? And so, that would undermine the purpose of bringing back manufacturing. So we hope that doesn't happen.

Michael Bilerman -- Citigroup -- Analyst

Hey, Joel. It's Michael Bilerman here with Manny. Just had one other one for you. As you talked about overseas and you talked about the highly competitive nature for buildings here in the US, either acquisitions, development deals, conversion plays, have you changed your thinking at all about putting incremental dollars outside of the US at all? And I recognize you've had fits and starts on global. And the message pre-COVID was focus on the core markets here in the US. I'm just wondering if the returns have been driven down to such low levels here and there's so much competition whether that you have an advantage of going global given your operational and investment expertise?

Joel S. Marcus -- Executive Chairman and Founder

Yeah. So that's a really good question. And you know a little bit of the history of back in the '05, '06, '07 era pre-crash, we entered both China and India. After getting into India, it became pretty clear the Indian Supreme Court invalidated the Gleevec patent. It was pretty clear that novel research wasn't going to India. And it's a tough place to operate from a Foreign Corrupt Practices Act. So we terminated. We sold our operation there.

China, we have -- we only did two projects. We sold one. We have one remaining. The problem in China is -- and we refused to tie up with the local partner even though that was kind of recommended. But what happens is, the government builds crappy buildings around your nice building. You'd be putting like something like a mini storage unit next to a first class lab and then telling the Chinese to go in there and operate a lab, which they do at free ramp because the government told them to do it. And so that's a hard business model to follow.

But I think November 3rd or thereafter, we'll be revealing of the answer to that question. I don't think I could answer it at the moment. But if it turned out there was a blue wave and it turned out that they dramatically increased corporate taxes, then I think the answer is, you'd have to look at the possibility of thinking overseas because the government would have just done the exact opposite of what makes compelling sense to keep companies in this country at competitive tax rates and keep their critical operations here. So, I think November 3rd or thereafter, we'll be revealing of that question.

Michael Bilerman -- Citigroup -- Analyst

Yeah. I was thinking more so Europe, UK, Canada rather than going back to China or India. But we can certainly have the discussion at Investor Day. So, thank you so much.

Joel S. Marcus -- Executive Chairman and Founder

Yeah. And if we go into New Zealand, I'm sure I'll be down there to help start that office.

Operator

Our next question comes from Sheila McGrath of Evercore ISI. Please go ahead.

Sheila McGrath -- Evercore ISI -- Analyst

Yes. Good afternoon. On the acquisition in RTP, that was a market you previously had a smaller presence in. I was wondering if you could talk about the market dynamics there that may have changed you to be more bullish, details on demand drivers and any insights on the embedded growth opportunity at that asset?

Joel S. Marcus -- Executive Chairman and Founder

Yeah. So what -- we've been in the Triangle since 1998. We were early in there. And we've always been attracted because in the early days, North Carolina was very aggressive in providing incentives to companies wanting to move down there for in the biotech space in particular. And we really liked that market anchored by Duke, UNC and NC State. Duke and UNC in the healthcare arena and NC State more in the ag arena. And I think we saw that the market though had pretty slow growth and in fact lost rental rate increased momentum for quite a long time during the -- from like '08 through, say, 2016 or something. So almost a decade, it really struggled.

And when the urban cores were kind of being the most popular people didn't want to go down to kind of sleepy Research Triangle and hang out in a wooded beautiful area by a lake, that is a little bit reversed its course as you could imagine given what's going on in New York and some of these other cities that have seen a lot of both rising crime and obviously the impact of COVID and homelessness and things like that. So we have, as I mentioned in my comments, we have a large number or certainly an important number, large square footage, of existing tenants who've expressed interest in creating either expansion or new space down in Research Triangle. And so that really motivated us in a substantial way. Also, our market share there now has moved to about 40%, which gives us the scale of three mega campuses where we have a lot of existing solutions and a lot of to-be-built solutions. So that's kind of where we wanted to get to.

Sheila McGrath -- Evercore ISI -- Analyst

Okay. Great. And then, could you give us your updated thoughts on the Downtown San Francisco market, the plans for 88 Bluxome and insights on Stripe subleasing its space?

Joel S. Marcus -- Executive Chairman and Founder

Yeah. Steve?

Stephen A. Richardson -- Co-Chief Executive Officer

Yeah. Hi, Sheila. It's Steve here. Yeah, Stripe's plans for subleasing, I think, were always the case with the relocation itself in San Francisco. They haven't done anything official yet. I think they're just putting some feelers out. So that's very much a TBD.

And then, with 88 Bluxome, we have important preconstruction activities that we'll be undertaking in the next several quarters here. When you look at that building, it is a lab-ready shell. So, as Peter was highlighting, the contrast between office product and lab product, we'll have the floor-to-floor, the live load, the capabilities, shipping and receiving. So, when you start looking at a midrise facility, a lot of outdoor space, the capability to go lab, we think it's going to be an extremely desirable product. So, we'll see this time next year where we're at.

Sheila McGrath -- Evercore ISI -- Analyst

Okay. Great. Thank you.

Joel S. Marcus -- Executive Chairman and Founder

Thanks, Sheila.

Operator

The next question comes from Rich Anderson of SMBC Nikko. Please go ahead.

Rich Anderson -- SMBC Nikko -- Analyst

Hey. Thanks. Good afternoon, everyone. Peter, you -- for the Prop 15 and triple net nature of your leases pass-through tenant recovery increases and all that sort of stuff, but someone's going to be left holding the bag if this thing passes. And I'm wondering how you guys might feel about the vulnerability of California in general. It's kind of a complicated state to begin with. If you think that Prop 15 passing ultimately does kind of slow down rent growth or create some sort of motivation for companies to exit at an increasing pace someplace else.

Joel S. Marcus -- Executive Chairman and Founder

Yeah. So let me make a comment before I ask Peter to answer that question, Rich. I think everybody is looking carefully at California. Healthpeak just announced the relocation of their headquarters, I guess, from Long Beach area or wherever it is to, I think, Denver, if I'm not -- my memory serves me. The founding shareholder of our company who put in the principal amount of money when we started Jacobs Engineering left Pasadena for Plano, Texas a couple of years ago. Obviously, tax-motivated.

So there is a historic number of companies and people looking at California today and wondering is the state going to save itself and are the cities going to save themselves. Obviously homelessness has been a big problem in a number of cities. Obviously you've got fires, you've got earthquakes, you've got the natural disasters different than other parts of the country, but everybody has got something. But more importantly is really governance, sensible governance. We're working pretty intensively. In fact, we had a long call internally yesterday on trying to assist the City of San Francisco on homeless solutions, thinking about could we bring the OneFifteen Dayton Solution for opioid addiction to homelessness in San Francisco as a model to try to help solve that problem? The numbers show something like over 70% or 80% of homeless people generally have some kind of addiction or mental health issue. So, just putting them somewhere doesn't work, you've really got to bring intensive services there.

So, I think all companies are really looking at California in fairly realistic and important ways. But with that kind of long-winded intro, Peter, fire away.

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Yeah. Sure, Rich. I mean, it's obviously a great question. Look, would it be much better if this doesn't pass? It would be because it would just maybe give people confidence that California isn't necessarily going to continue to search for revenue sources from business. That said, as I mentioned, we passed through the cost and you inferred, will eventually upper -- your occupancy cost is going to go up. It will, but our analysis is that it would be in the slow or low-single digits overall for a company. And I would take you back to a lot of questions we get about just when rents are rising in a market very quickly people are always like, well, at what point is it going to just get so expensive people will go elsewhere. And the answer is, well, it really won't because these companies need to be anchored where they are because they're typically located where they are because of institutions that they collaborate with.

So, the increase in operating expenses is not something anyone wants to see. Is it going to cause them to move? We would think probably not. And then the overwhelming amount of annual revenue that comes through Alexandria is from very large pharma and biotech where the opex -- that rent and operating expenses in the context of their overall cost structure is like 1% to 3%. So it's not going to move that needle. It's going to be an annoyance. But again, wanting to be near the institutions, which is why work in these markets is going to really win the location selection at the end of the day and the annoyance of a property tax increase will ultimately be absorbed.

Rich Anderson -- SMBC Nikko -- Analyst

Okay. In the interest of time, I just have a real quick yes or one. On the Pinterest building, will that now be redesigned for lab use or how will that be modified since you haven't gone vertical yet?

Stephen A. Richardson -- Co-Chief Executive Officer

Rich, hi. It's Steve. Again, from the very outset, we designed that as a lab-ready shell. So we do not need to make any modifications and we have the ability to both accommodate lab and technology users.

Rich Anderson -- SMBC Nikko -- Analyst

Okay. Thanks very much, Steve. Thanks, everyone.

Stephen A. Richardson -- Co-Chief Executive Officer

Yeah. Thanks Rich.

Operator

The next question comes from Michael Carroll of RBC Capital Markets. Please go ahead.

Michael Carroll -- RBC Capital Markets -- Analyst

Yeah. I just wanted to touch on the Research Triangle acquisition again. I think you actually mentioned a little bit this earlier in the call. But with the Durham site, how different is that from the ag tech site and the advanced technology campus? I mean, I know the Ag Tech buildings have a different build out but are each individual campus that you have down in North Carolina better suited for different tenants or could they -- could they each, they take all types of tenants at either of these campuses?

Joel S. Marcus -- Executive Chairman and Founder

Well, the Ag Tech campus will and they're all in pretty close proximity. The Ag Tech campus is really dedicated to Ag Tech. And the Advanced Technology campus will be primarily Life Science. And it also sits next to a building we have that is chock-full of small growing tenants. So there's a natural growth trajectory there. And then, the Durham campus, we just bought and are in the process of doing quite a bit of retrofitting and redeveloping will be primarily Life Science as well.

Michael Carroll -- RBC Capital Markets -- Analyst

Okay. And the demand that you've seen in the Research Triangle market, I mean, is it from the Life Science demand or the Ag Tech demand? And I know you have a lot of space in your construction right now, but is that's enough demand to support another ground-up development, are you complete that you guys have going on today?

Joel S. Marcus -- Executive Chairman and Founder

Well, it's primarily Life Science, although there is Ag Tech activity. It's not quite as broad or as deep obviously because the industry is just a very different structured industry. But we do have two developments on our Advanced Technology Campus going up and we've got pretty robust demand from existing tenants there. And one build-to-suit that we're doing. And then on the Durham Campus, we're accommodating a number of existing tenants or relationships that have expressed they want immediate existing solutions, which we really didn't have. And that was a big motivator for us. So we hope to do both and we think there is good pent-up demand. Hopefully the tax, if there are tax changes, they won't screw it all up because obviously some companies who might expand here in the USA today, maybe next year if things go in a different fashion, they might go overseas and we would be sad to see that happen.

Michael Carroll -- RBC Capital Markets -- Analyst

Okay. Great. Thanks, Joel.

Joel S. Marcus -- Executive Chairman and Founder

Yeah. Thank you.

Operator

The next question comes from Dave Rodgers of Baird. Please go ahead.

Dave Rodgers -- Baird -- Analyst

Yeah. Maybe first question for Peter and Steve just with regard to San Francisco. You talked specifically about 88, but maybe you go back to your comments, Peter, on 975 Market, just with respect to -- you said it made a lot of sense for a lot of reasons to sell that. But it was a pretty quick turnaround for you. And obviously price maybe wasn't the motivation. So if you could talk about why is that and then why that doesn't have an implication on how you think about Bluxome that would be helpful.

Joel S. Marcus -- Executive Chairman and Founder

Steve, do you want to check that?

Stephen A. Richardson -- Co-Chief Executive Officer

Sure. Hey, Dave. It's Steve. When we looked at that asset to receive an unsolicited offer and then also to look at it's locational on Market Street, it was somewhat of a one-off kind of at the edge of the cluster at best of SoMa. It really did make sense to go ahead and exit.

And I just think the scale and the size of 88 Bluxome is much, much different and qualitatively in a different position. You're really at the edge of Mission Bay there. So I do think we have the opportunity at scale to have life science or technology whereas the Market Street location was just a -- ultimately a smaller project there. We weren't really going to build a cluster adjacent to that. And again, as Peter said, receiving an unsolicited offer and recycling that capital with these other opportunities just made great sense.

Dave Rodgers -- Baird -- Analyst

Thanks for that, Steve.

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

And I would just add at 88 Bluxome is a much closer extension of Mission Bay than Market Street. So, it makes a lot more sense to be our next development to build on that cluster than Market Street would.

Dave Rodgers -- Baird -- Analyst

And does that mean the sales just indicative and you have in your mind of maybe -- I don't want to say shrinking San Francisco market, but obviously the lab market is going to be one component of it. But office, maybe in a deterioration mode here, is that indicative of that thinking and in that how we should think about it?

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

I think you just have to look at that in isolation, Dave, and there's the circumstances that led us to make that decision.

Dave Rodgers -- Baird -- Analyst

Okay. Thank you for that. And then, maybe Dean, just on the ARE ventures investments that you guys have of $1.3 billion, including the unrealized gain. Do you just anticipate continuing to want to sell more of that? I mean, do you want to manage that to a certain size of the portfolio and with the gains embedded in there? Do you want to try to get that portfolio size down in any particular way? I guess, maybe not necessarily guidance on quarter-by-quarter 2021, but how you want to kind of manage the gains in there to realize those as quickly as you can.

Dean A. Shigenaga -- Co-President and Chief Financial Officer

Dave, Dean here. Let's say that the overall strategy for the venture portfolios have been to carefully manage that aspect of our business. If you look back over several years now, I think the aggregate dollars invested from a cost perspective has actually declined as a percentage of total assets or assets have grown on the real estate side over time. And like I shared in my commentary, we've -- from a cash flow perspective, the venture portfolio has been about neutral this year. So, still always careful about selecting new investment opportunities. But given what Joel mentioned had mentioned, as you look back over since 2013, there's been a real acceleration of innovation. So we're seeing a lot of exciting opportunities but still being very selective, Dave. I think we've commented that the size of the venture portfolio will always moderate in size somewhere in that 3% to 5% from a cost basis perspective and it's closer to 3.5% today, down from what it was a couple of years ago.

Dave Rodgers -- Baird -- Analyst

Okay. That makes sense. Thanks, Dean. Appreciate it.

Operator

The next question comes from Tom Catherwood of BTIG. Please go ahead.

Tom Catherwood -- BTIG -- Analyst

Great. Thanks. And good afternoon, everyone. Just a quick clarification on the RTP acquisition, I believe that the Parmer Park also had a few office assets and it didn't look like they were part of your acquisition of the 16 buildings. Is that correct?

Joel S. Marcus -- Executive Chairman and Founder

Hey, Peter. Do you want to talk to that?

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Yeah. Now, there are -- I think it's -- I don't have the exact number, but there are few assets that are currently used as office and leased as office that we consider as future upside. There's either one or two story buildings that could be converted the labs. So all of the assets that were on the campus were sold to us and we don't own all of them.

Tom Catherwood -- BTIG -- Analyst

Got it, got it, got it. Okay. Then switching over to Cambridge. Joel, you had mentioned how hard it is to bring supply on in that market and this quarter you moved 325 Binney from the intermediate development bucket into near term and you were able to add another 48,000 square feet of density. How soon do you think you can get to that site and begin that project if you have a tenant? And are there differences between the types of tenants or tenant requirements that are looking at your Cambridge site versus 15 NECO in the Seaport or 57 Coolidge in Watertown?

Joel S. Marcus -- Executive Chairman and Founder

Yeah. So maybe I'll give an intro to that and maybe let Peter talk about it but we got -- we had substantially up zoned, I think, about 2 times from what was the [Indecipherable] square footage. I think the square footage we've got is north of 400,000. We just got design approval just the other night. So we're moving up full steam ahead. We have a handful of existing tenants who are looking for expansion space. So we're likely this building will be a little bit like what we did in Seattle at 188 or 1818 Eastlake, 188 Blaine I forgot the exact address there where we created almost 200,000 square foot building multitenant life science building and accommodated most of our -- many of our existing tenants who needed more space.

I think that's what's going to happen to 325 Binney. I think companies that are in Cambridge would prefer to be in Cambridge. The Seaport, I think, offers some nice opportunities, but I think Cambridge would be first choice. But, Peter, you could comment.

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Yeah. Absolutely. I mean, Cambridge is still the place everybody wants to be. The opportunities there are very limited. We fortunately have one, but we've been very proactive to figure out where people could go that need to be in close proximity. Watertown was one of our strategies. It's working out very well. The demand there has been even stronger than we would have imagined. And it makes a lot of sense that the Seaport would also be as attractive in a way, maybe a bit more, to those that are more Cambridge-centric because it is linked by the red line. You can get from South Station to Kendall Square in about 12 to 15 minutes. And obviously, the amenities in the Fort Point Channel area mimic what you can find in Cambridge as well. So we think it's a good natural extension for those that may not have the ability to be in Cambridge but need to be close by.

Tom Catherwood -- BTIG -- Analyst

Got it. Thanks, everyone.

Joel S. Marcus -- Executive Chairman and Founder

Thanks, Tom.

Operator

The next question comes from Tayo Okusanya from Mizuho. Please go ahead.

Omotayo Okusanya -- Mizuho -- Analyst

Hi. Yes. Good afternoon, everyone. I just wanted to go back to the Durham acquisition. I'm trying to understand a little bit better the tenant base in that building. You made some allusions of the proximity to Duke and UMC as a major reason for holding the asset. And I'm just curious, is this kind of more kind of traditional life sciences or does it have an aspect of kind of a university-based, R&D-based life sciences that you often hear, Ventas and Brandywine talk about in Philadelphia. And if it is, I'm just kind of curious why you not kind of find that type of life sciences attractive one?

Joel S. Marcus -- Executive Chairman and Founder

Okay. I'm not sure I could hear you when you described about Philadelphia. Could you repeat that?

Omotayo Okusanya -- Mizuho -- Analyst

Sure. I think, again, Ventas and Brandywine, I mean, often talk about Philadelphia as university-based life sciences. And again, I think, with some of the comments around Durham about being close to Duke and UNC, I'm just kind of curious. Do you also consider this university-based life sciences? And if it is, are you [Speech Overlap]

Joel S. Marcus -- Executive Chairman and Founder

Oh, yeah. I don't -- yeah, we don't think like that. This is not -- yeah. That's just a different, I don't know, way of thinking. This is a -- this is originally the Glaxo campus that was bought and redeveloped. I think the timing and the job that was done by the seller was really good. We came in. There are strong number of existing credit tenants, among which is Duke. Duke has a important lab presence there that's attractive to us. But that wasn't the major reason for it. The major reason was it had good existing solutions and a number of future solutions that would accommodate existing tenants expansion and growth of ours that we had. And it gave us a three mega campus opportunity down in the Triangle. This is in the park.

The park is not adjacent to Duke. It's not adjacent to UNC. It's some miles away or NC State. So I wouldn't compare it at all to -- it's nothing like Philadelphia, just totally different ball game.

Stephen A. Richardson -- Co-Chief Executive Officer

Yeah. And Joel, Pete, right, I can -- I mean, there's a total of six tenants there. Five of the six are credit tenants. The sixth one is actually probably also a credit tenant now and only Duke is university related. So, I'll echo what Joel said. This is nothing like a university play that Ventas would have done.

Joel S. Marcus -- Executive Chairman and Founder

Yeah. And the challenge, if you do universities is, if you're entirely dependent on the university and universities can be up and down and so forth, and you have no commercial tenant base, you're really at the mercy of the university, which we've never wanted to be. That's why we've never really gone after that business model.

Omotayo Okusanya -- Mizuho -- Analyst

Can you just comment, if not international, would you actually consider any new markets within the US?

Joel S. Marcus -- Executive Chairman and Founder

Yeah. We said we might. I think our hands are full in our existing markets because they're so vibrant and keeping us busy. We have a big budget this year to fulfill. And so, at the moment, we're not focused on -- or ready to announce any expansion markets because we're pretty occupied in where we are. But who knows what the future may have given post-election what may happen there.

Omotayo Okusanya -- Mizuho -- Analyst

Thank you.

Joel S. Marcus -- Executive Chairman and Founder

Yeah. Thank you.

Operator

And the last question today will come from Daniel Ismail of Green Street. Please go ahead.

Daniel Ismail -- Green Street Advisors -- Analyst

Great. Thank you. Just a few quick ones for me, another good quarter of cash releasing spreads. So I'm curious on a portfoliowide basis where in-place rents fit relative to markets.

Joel S. Marcus -- Executive Chairman and Founder

So, Dean, maybe a comment?

Dean A. Shigenaga -- Co-President and Chief Financial Officer

Yeah. So I just want to be sure I was off mute. The overall portfolio I think over the last number of quarters have been in the upper teens on average, both GAAP and cash. So I think the continued overall constraints and supply and good fundamentals in our core markets, I think, has held up some good upside on the overall portfolio.

Daniel Ismail -- Green Street Advisors -- Analyst

Okay. And appreciate the clarity on the concessions and leasing costs. But can you frame how net effective rents have grown, say, year-over-year across your portfolio? Are we talking 5% up, 10% up?

Dean A. Shigenaga -- Co-President and Chief Financial Officer

It turns out -- I don't have that specific analysis for this quarter. But if I think back to the last several quarters, net effective rents have trended nicely. I think the only change that I can see that might make that picture a little bit harder to see as we go forward is, you've got a -- through the acquisitions, we've got a broader mix of assets in the portfolio, including this Research Triangle project as well as the Arsenal and the Charles as a couple examples. But net effective rent generally has been trending very well for the last number of years as well as the last several quarters. I can't tell specifically for this quarter right now though.

Daniel Ismail -- Green Street Advisors -- Analyst

Okay. And just the last one for me, the H1B visa program and potential changes have been more highlighted toward the potential impacts of the tech industry, but can you comment on the potential impacts it might have in life science industry in terms of employment and hiring?

Dean A. Shigenaga -- Co-President and Chief Financial Officer

Yeah, I think I'm not an expert in that, but I think it's pretty clear that there are quite a number of scientists from other countries who have unique skill bases that are here under that visa category or designation. And it would be positive to keep that going for sure. I know there is some sensitivity on -- and there have been a bunch written about people coming over from China, working in universities with professors and maybe there being some national security issues there that I know the government has looked pretty carefully at. But set that aside, I think it's been a very positive program and certainly very helpful to the life science industry.

Daniel Ismail -- Green Street Advisors -- Analyst

Great. Thanks, everyone.

Joel S. Marcus -- Executive Chairman and Founder

Thank you very much.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Joel Marcus for any closing remarks.

Joel S. Marcus -- Executive Chairman and Founder

Okay. Thank you very much. Sorry for a long call during this third quarter COVID. Look forward to talking to you on the fourth quarter and year-end. Thank you. And everybody, please stay safe.

Operator

[Operator Closing Remarks]

Duration: 85 minutes

Call participants:

Paula Schwartz -- Managing Director

Joel S. Marcus -- Executive Chairman and Founder

Jenna Fogger -- Senior Vice President, Science and Technology

Stephen A. Richardson -- Co-Chief Executive Officer

Peter M. Moglia -- Co-Chief Executive Officer and Co-Chief Investment Officer

Dean A. Shigenaga -- Co-President and Chief Financial Officer

Anthony Paolone -- JPMorgan -- Analyst

James Feldman -- Bank of America Merrill Lynch -- Analyst

Manny Korchman -- Citigroup -- Analyst

Michael Bilerman -- Citigroup -- Analyst

Sheila McGrath -- Evercore ISI -- Analyst

Rich Anderson -- SMBC Nikko -- Analyst

Michael Carroll -- RBC Capital Markets -- Analyst

Dave Rodgers -- Baird -- Analyst

Tom Catherwood -- BTIG -- Analyst

Omotayo Okusanya -- Mizuho -- Analyst

Daniel Ismail -- Green Street Advisors -- Analyst

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