Alexandria Real Estate Equities Inc (ARE) Q4 2020 Earnings Call Transcript

Image source: The Motley Fool.

Alexandria Real Estate Equities Inc (ARE 0.13%)
Q4 2020 Earnings Call
Feb 2, 2021, 3:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Alexandria Real Estate Equities' Fourth Quarter and Year End 2020 Conference Call. [Operator Instructions]

I would now like to turn the conference over to Paula Schwartz. 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. Today with me as usual Jenna Fogger, Steve Richardson, Peter Moglia, and Dean Shigenaga. I want to welcome everybody and extend our thoughts and prayers to each one of you to continue to be well, safe, and stay COVID-free.

Just over one year ago, January 21st of 2020, the United States had its first reported case of COVID-19 in Seattle. And just today, a little more than a year later, we've lost more than 443,000 Americans, a number that's actually quite astounding to imagine. And that does not even count the -- a number of the millions -- probably tens of millions of Americans who have suffered really irreparable personal, mental, and financial harm due to the worldwide pandemic. President Roosevelt on the -- on Pearl Harbor Day referred to that day as a day that would live in infamy, and I think we will all feel that 2020 is a year that will live in infamy in all of our memories.

Talking about the pandemic, there is much work to do to control the virus' spread. We need to enhance manufacturing supply chains, as well as a big effort on distribution, administration of the vaccines, as well as continued testing. And we as a country, I think for decades, have been ill-prepared and behind the curve to respond to a true worldwide and kind of a 100-year pandemic. I think our readiness just has not been there, unfortunately. Much work to do to rebuild businesses and lives so devastatingly impacted, and I would say, it's going to take a good part of this decade to do that for many people who've been really so devastated. We still have not discovered the root cause of the virus, natural or human-made, or brought those responsible to an accounting.

We at Alexandria, at the vanguard and the heart of the life science industry, are honored, proud, and yet humbled to serve this mission-critical industry, which has been on the forefront 24/7 really as the savior of humankind in this pandemic. It really doesn't get more important or impactful than that truly. There are two primary causes behind the COVID vaccine's rescue of humanity from this pandemic, I firmly believe. The first one is our free-market system here in the United States, the economic system that facilitated the innovation, competition, and cooperation between our biotech and pharma industries and government. That literally doesn't happen in other countries around the world.

There would likely be no multiple COVID vaccines today had there not been venture capitalist prepared to invest before product or profit was really visible, and no corporate leadership would be willing to double down other than those in our country with the company's own money in the spring of 2020 to fund a crash effort produces -- to produce a safe and effective vaccine by year-end. Really, truly unheard of.

The revolutionary, I think, cooperation and coordination between government and the private sector, the collaboration, cooperation, and really ingenuity of operation warp speed really led by the world's probably foremost vaccine expert, Moncef Slaoui, who is empowered to allocate billions of dollars outside of the normal government contracting procedures. And he was able to bring forth multiple technology platforms with multiple vaccines in absolute record time. So as Americans, we can now look forward to getting vaccinated and getting our lives back into a somewhat non-pandemic, normal environment during 2021. It probably will never be the same again. And we pause to give thanks to the remarkable group of scientists and entrepreneurs whose free-market drive, passion, and mission truly push them to venture into the unknown.

Our solemn mission with our remarkable life science and life-saving life science industry colleagues has been to do everything in our power to help the industry repatriate mission-critical and novel research, development, and manufacturing capability back to the United States and to control the research, development, and manufacturing in the future of complex medicines. Policymakers and legislatures must absolutely avoid the awful temptation to raise corporate taxes and reverse what is the mission-critical onshoring of our critical R&D and manufacturing in this country and to its citizens.

Let me make a few comments, generally, about the life science industry and particularly the number one cluster in the world and our number one region, Greater Boston. Peter will highlight Alexandria's highly insightful, strategic, and collaborative entry into and our intent to create a new life science cluster in the Fenway submarket of our Greater Boston region.

And contrary to incorrect recent news reports, Alexandria is, in fact, the absolute leading, largest, and most dominant life science owner, operator, and developer of office lab space in our Cambridge submarket with three mega campuses, 33 properties, and approximately 5.2 million square feet including our 325 Binney Street development. We're also the leading, largest, and most dominant life science owner, operator, and developer in our Greater Boston region. Currently, as of this date, February 2nd, Groundhog Day, as all of us know, we have approximately 14.6 million square feet of office laboratory assets including operating properties plus our entire value creation pipeline near term, intermediate, and future which also includes the recent Fenway acquisition.

With respect to the industry, 2020 is the ultimate paradox. The worst year of our lives, yet the greatest year ever for the life science industry. Science won the day in 2020. Our R&D laboratories operated continuously 24/7 and ARE was on the front lines of making that happen. The FDA approved a record-setting second place all-time 53 new medicines in 2020, including a number of breakthrough medicines for pediatric neuroblastoma, spinal muscular atrophy, and thyroid eye disease. Great clinical progress was made for many medicines in 2020 as well.

With this impressive scientific backdrop, it was not a surprise that the capital markets boomed in 2020. Biotech equity markets had the best year ever. Every major Biotech Index hit an all-time high in 2020, biotech IPOs hit their all-time high for both volume and deal activity, and the IPO Class of 2020 had very strong post-IPO performance. Follow-on equity financings in biotech hit their all-time high as well and venture funding in biotech hit an all-time high.

Few other thoughts I'd like to share with everybody, first of all, a truly profound thank you to each and every one of the members of our team whose every day operational excellence during this continuous operation to keep our R&D labs going 24/7 during a horrendous worldwide pandemic really is the testament that -- to their great passion, fortitude, and mission-driven excellence. And thank you to each and everyone who worked collectively and contributed to those -- to our record-setting results for the fourth quarter and for 2020 and wish each of you to stay safe and God bless. And before I turn it over to Jenna, I want to end with a timely quote from Confucius. He once said our greatest glory is not in never failing but in rising up every time we fail, the greater the obstacle, the more the glory in overcoming it.

So with that, I turn it over to Jenna, for a deep dive on vaccines.

Jenna Fogger -- Senior Vice President, Science and Technology

Thank you so much, Joel, and good afternoon, everyone. So really echoing Joel here, as the entire world looks to the power of science, the life science industry, and specifically to our tenants who beat us out of this disdain COVID pandemic. 2020 has underscored why Alexandria dedicated our business, our cash, and purpose to help drive this mission-critical industry forward. Without a doubt, biopharma's essential R&D engine has persisted with amazing productivity in its lanes throughout the past year, which has further magnified our tenants' role as the key solution to overcoming today's greatest health challenges, bringing unprecedented positive sentiments to the sector as Joel mentioned.

The achievements in COVID vaccine development from our tenants Pfizer, Moderna, Johnson & Johnson, Novavax, and AstraZeneca, many others in the fourth quarter specifically of 2020 and into the beginning of 2021 have marked the culmination of a full year's worth of tireless, truly collaborative efforts across the industry with a significant need and federal funding.

So where are we now? As Joel mentioned, it's been just over a year since the first U.S. COVID case was reported in January of 2020 with over 26 million confirmed cases in the U.S. and nearly 450,000 deaths in the U.S. alone. So -- but at the same time, this is all transpiring, developed with unprecedented speed, we now have two vaccines from tenants, Moderna and Pfizer, authorized for emergency use with strong safety and efficacy profiles in the 95% range. At least three other vaccines from tenants Johnson & Johnson, Novavax, and AstraZeneca have reported Phase 3 results and similarly, exceeded expectations in their efficacy data in the range of 62% to 96% in various trials, each with strong safety profiles as well.

And to put this in perspective, at the outset of the COVID vaccine development efforts, the FDA had set the minimum standard efficacy thresholds for authorization of COVID vaccines at 50%. So, clearly, each major vaccine program has flown way past its mark. In aggregate, these five companies have capacity now to produce at least 8 billion doses in 2021 with over 700 million doses already procured by our own government.

The national vaccine rollout campaign has begun with nearly 26 million people in the U.S. having already received at least their first dose which includes about 6 million people in this country who have already been fully vaccinated. The distribution has been slower than hoped for. Our tenants are doing really what they can to bring significant manufacturing resources that continue to scale vaccine production. Also not to be under-appreciated, though I want to focus on vaccines for these comments, it's really the role of therapies in this equation, in this fourth quarter, in addition to the full approval of Gilead on remdesivir, the FDA also authorized the emergency use of antibody-based therapies for mild-to-moderate COVID in high-risk individuals from tenant Eli Lilly and Regeneron and another repurposed Lilly arthritis drug in combination with remdesivir for hospitalized patient. Amazing results in those studies as well.

Given that COVID will, unfortunately, but likely remain on the planet indefinitely, therapies are going to continue to be important in mitigating the severity of COVID-19 and also potentially play a role in added prophylaxis as well. So to help further impact the COVID vaccine landscape, we thought we'd do this time is address five pressing questions and help frame what we may look forward in the coming months.

So number 1, what are the major differences between the current vaccines, and how should we think about which might be the best. So we have Pfizer and Moderna, with EUAs, Emergency Use Authorization granted, and J&J, Novavax, AstraZeneca with Phase 3 data for major trials reported. And while other advantages and nuances that I won't go into at this call, and the amount of shots that you get from each one, Pfizer, Moderna, colder chain requirements, etc., all five major programs are showing strong safety and efficacy. And comparing efficacy between trial and companies is really not apples-to-apples. So the differences in efficacy that we're all reading in the headlines, J&J 66% to 72%, and Novavax is 86% to 96%, etc. are referring to prevention against COVID infection of any kind, even the most mild cases. So we really need to focus on when we read headlines is whether these vaccines protect against the severity of the disease, whether they reduce deaths and hospitalizations, and longer-term complications. That's how we're going to get out of this pandemic.

It is important to note that each of these vaccines does very well probably an excess of 85% in protecting against severe disease. A direct comparison between vaccine efficacy can also be misleading because differences in trial populations and the new variant circulating around the world at any given time. So Moderna and Pfizer trials were largely based in the U.S. and were mostly performed prior to the evolution transmission of these new strains that we're hearing about in the U.K., Brazil, South Africa, which Johnson & Johnson and Novavax seem to capture lowering their overall efficacy. And given the addressable population for these vaccines, i.e., the entire world, this will not be a winner-take-all opportunity. No one company alone can possibly supply the global demand, so a diversity of options is important.

Question number 2. Is it worth waiting to get a vaccine until more data becomes available, especially in light of these new variants? While not a position, here is a critical fact. Of the roughly 75,000 people who have received one of these five vaccines in a major research trial, not a single person has died from COVID, and only a few people appear to have been hospitalized in the vaccine group. So none of them, however, remain hospitalized 28 days after receiving a shot from COVID from the vaccine itself or otherwise. If we compare that to COVID exposure in a similar population, we'd likely end up with about 150 deaths and many more hospitalization, so I'd say this is a pretty strong risk-benefit argument.

Of course, unknowns remain regarding the durability of protection from these vaccines, how often we should be getting vaccinated after the initial once we shot, vaccine guidance for pregnant women and children. So we should have more insight into these in the coming year.

Question number 3. So what do we make of all of these new COVID strains, should I wait and get vaccinated against the newer strains instead? While we need to take these new strains seriously, this does not render the vaccines already out there is ineffective. The predominant strains in the U.S. right now are still closer to the original target of Moderna, Pfizer, and other vaccines. What's making headlines right now is particularly that Brazil and South Africa variant that seems to creating several mutations to the spike protein on the virus, basically allowing the virus to partially escape the antibodies produced by current vaccines reducing their overall efficacy.

Until now, most of the mutations that were detected to the original strain were a little consequent. And even in the U.K. variant that seems increased transmission by 50% does not abate the neutralizing antibodies produced by the current vaccines, which allows current vaccines to sell and work well against it. All of this is to say as we continue to vaccinate more of the population with current vaccines, it should still serve as a backstop against the continued threat of these variants and the new ones that will inevitably evolve.

To question number 4 and related to number 3 is, will these new variant strains upend current vaccine development efforts? Quite to the contrary. The more rapidly we vaccinate our population, the more quickly we can stay ahead of and slow down the emergence of new variants. There were always new mutations, this is the nature of viruses and not shocking. Moderna and Pfizer with their mRNA-based platform, particularly well suited to adapt quickly to mutational changes and others are already working on booster shots against new strains that could be available as early as the fall. To understand and maximize efficacy, we do need to sequence COVID patients more to identify the prevalence and emergence of new variants and real-time.

And last question, when is all of this going to end? On the bright side, the incidence of positive COVID-19 cases has begun to decline in the U.S. The strong efficacy data from these initial vaccines are highly encouraging and particularly their ability to protect against severe disease. The supply outlook for existing vaccines is improving and the makers of these vaccines are already working on boosters to combat new strains that emerge.

And remember, though it would be nice, we do not to completely eradicate COVID from the face of the earth for life to return to normal. Instead, we need to downgrade it from a deadly pandemic to a more mild virus so we could effectively treat, which further underscores the importance of new therapies as I mentioned earlier.

At the same time, we do need to slow transmission, we're still a ways off from herd immunity. Public health officials estimate that between 70% to 85% of the population needs to be vaccinated before people can start moving freely again in society. If the things go well, this could start happening by the summertime, at which point we should have enough vaccine supply for the entire U.S. population, but again, it depends on the uptake of the vaccine and the level of infection in the community. As more people get vaccinated, we should also expect severity of hospitalizations and deaths to drop.

All things considered, if we can continue to improve vaccine distribution and access and encourage enough of the population get vaccinated, we should be able to return to a more normal -- new-normal in early fall and hopefully bring an end to this pandemic by year-end 2021. And despite the incredible fatigue we all feel around social distancing, masks wearing, quarantining, and limited travel, we really didn't need to continue to be vigilant, the more relaxed we get as a society, the more we continue to give the virus opportunity to adapt against natural selection pressures and mutate more efficiently. And for all these reasons, it is our honor to continue to serve at the vanguard, at this is essential life science industry, and the fight against COVID-19, and to support the heroic work of our tenants and campus community is addressing to over 10,000 of users plaguing a plan today and solving tomorrow greatest 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, that was a tremendous deep dive. Good afternoon, everyone. A clear and shared vision fused with undaunted determination during 2020 from the Alexandria team has enabled the Company to thrive during these unprecedented and challenging times. At a high level, consider the truly exceptional growth during the past 12 months.

The operating platform has grown from 26.9 million square feet to 31.8 million square feet, an increase of 18%. The development and redevelopment pipeline has grown from 12.1 million square feet to 17.8 million square feet, an increase of 47%. And it's important to note that this development pipeline has been smartly derisked with 45% of its value and significantly pre-leased projects well under way, 40% in covered land plays, and just 15% of this value in land. The total Alexandria Real Estate platform then has grown during 2020 from 39 million square feet to 49.7 million square feet, an increase of 20.7% [Phonetic]. It's really remarkable achievement.

The company's leadership and central role in the nation's life science ecosystem is clearly evident and only increasing in each of our core clusters. The year 2020 demanded the very best from our teams, from operational excellence to the vision and execution of critical strategic growth initiatives. Alexandria is pleased to present its outperformance highlights for Q4 and 2020.

Operational excellence. The company collected 99.8% of accounts receivable during COVID from April 1st through December 31, 2020, and we're at 99.6% for the month of January. Alexandria's Labs were deemed essential infrastructure and have been operational from day one of the pandemic. Leasing outperformance. During Q4, we leased approximately 1.4 million square feet and a total of 4.35 million square feet during 2020, which was meaningfully above our 10-year average of 4 million square feet and consistent with our 5-year average of 4.4 million square feet. The current and near-term development pipeline is 78% leased for negotiating a significant metric when one considers the active pipeline is now at $4.8 million square feet, up from 4.1 million square feet, just three months ago, at the end of Q3, an exceptionally strong core.

I want to pause for a moment and underscore that during this challenging time, we achieved the highest annual rental rate increases during the past 10 years, with cash increases of 18.3% and GAAP increase of 37.6%. The fourth quarter was also strong with cash increases of 10.7% and GAAP increases of 29.8%. We are honored to work with the most innovative life science companies in the world and believe these metrics further validate the value we are providing to the life-science ecosystem.

Solid occupancy. We are at 94.6% across 31.8 million square feet in the operating portfolio and again context is important here as we've increased the operating portfolio from 26.9 million square feet as mentioned before, providing strategic embedded growth opportunities through lease-up of available suites in the coming quarters. I just want to emphasize this last point, at the recent acquisitions provide very near term increases in cash flows and strategic expansion of our tenant base.

Market health. Demand continues to be broad-based across our innovation clusters as each of the markets have made meaningful contributions to the company's overall growth during 2020 and Alexandria continues to capture a dominant market share in each of these clusters. We have got potential supply in our core clusters the past several quarters and as we highlighted during our Investor Day, the conversion of generic office product into mission-critical last Class A laboratory facilities is brought with significant fault, insufficient clear height in live load, compromise hazardous material storage areas, dysfunctional shipping and receiving areas, impaired HVAC capabilities and performance among others. We continue to monitor all potential supply closely, but do not see a significant-high-quality Class A product being delivered during the near term in our markets.

Also, a note on the San Francisco Bay Area as this has been a focus in the press. As we've stated, the life science market continues to be very healthy with low-single-digit vacancy of 3.4% and demand of 2.6 million square feet, enabling Alexandria to effectively lease up our Haskins and 825,835 project at increasing rental rates, all while the city of San Francisco tech office sector is struggling with direct vacancy now at 12.4% above the 15-year average of 8% and sublease space pushing the availability rate to 20.2%.

In conclusion, the year 2020 accelerated Alexandria's leadership role in the life science ecosystem. Our team is energized and enthusiastic to continue our partnership with world-class enterprises and the fight against COVID-19 and in a broader mission of building the future of life-changing innovation.

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

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

Thanks, Steve. I'm going to follow up on some remarks we made about our valuation on Investor Day, and then I'm going to update you all on our development pipeline and briefly comment on a new acquisition. As the inventor and pioneer of the essential life science real estate asset class, we've created our campuses in clusters in the best locations with the market's best assets. By combining our irreplaceable locations and our world-class campuses and ecosystems with meticulously designed, highly functional buildings, and a world-class tenant base, Alexandria has aggregated the best life science real estate base in the world and it isn't close.

During Investor Day, we highlighted our views that the private market has been sending strong signals that there should be significant upside in our stock price. This included a comparison of Ventas' acquisition of the Genesis property in South San Francisco for $1,260 per square foot, which has since been updated to $1,301 per square foot. And Blackstone's recap of BMR at a value of $1,100 per square foot against a very simple back of the napkin, $767 per square foot, implied value of our operating portfolio, which was based upon the difference between the closing price of our common stock on September 30, 2020, and the book value of other significant assets such as construction in progress, venture investments, and cash divided by our total operating square feet.

We acknowledge that the implied value of our operating portfolio can vary up or down depending upon the valuation of our other assets and liabilities, as well as adjustments for joint ventures, but we believe the underlying thesis remains true, which is that Alexandria is significantly undervalued.

The Genesis property is vastly inferior to our South San Francisco asset base. It is located on the opposite side of 101 Freeway making it part of the cluster by address only. The original South Tower is an office building conversion, which sat vacant for years and required some jerry-rigging to make it work and will require more work to complete the conversion of the top floors. And the North Tower has relatively small floor plates, which causes it to have a load factor that exceeds what is typically acceptable in the market. Both buildings have relatively low floor-to-floor heights that will dictate a lower-finish ceiling than the market prefers and as a result, the two buildings did not attract a high-quality tenant base.

Blackstone has done well reforming and adding to BMR's original somewhat older, entire asset base but given Alexandria's superior locations, assets, and tenants, our asset base should command a premium valuation on the real estate alone.

Taking all this into account, our assets should be valued significantly higher than what is implied by today's stock price. Since Investor Day, more evidence from the private markets has come to light such as the sale of the 2.3 million square foot former Forest City lab portfolio from Brookfield to Blackstone BMR for $3.45 billion which implied an approximately $1,500 per square foot total valuation according to Green Street. Approximately 90% of the portfolio is concentrated in University Park, which was the original Cambridge development area before the emergence of Kendall Square, and according to CoStar, the allocation to those assets yielded a value of $18 to $100 per square feet and an implied cap rate of 4.2%.

This value and therefore the overall value of the transaction would have likely been materially higher, if not for the fact that those assets are in relatively short-to-medium term ground leases. When comparing this portfolio to Alexandria's primary Cambridge asset base located in the preferred Kendall Square location, it should be apparent that the location of why assets are superior as we are aggregated at the front door of MIT, proximate to the Kendall Square T Stop in the center of gravity of the East Cambridge ecosystem versus being on the western edge of MIT, far from the heart of the campus in the less desirable area of Cambridge Court.

Some sell-side analysts seem to agree with this premise. The five that have NAVs above our current stock price ranging from $175.54 to $184 per share, value our operating portfolio within a range of $824 per square foot to $1,062 per square foot. These same analysts have price targets ranging from $185 per square foot to $206. So they seem to be factoring in the private market activity we are seeing. If you're still not convinced and want to look at it from a different angle, I would encourage you to compare Alexandria's multiple to the sector FFO multiples published in City's weekly REIT and lodging strategy published on January 15th.

Even with all of the momentum in life science real estate, the single-family homes sector's FFO multiple is 1.1 higher than ours. The industrial mixed ratio is 3.9 higher, and the manufactured homes and data center FFO multiple ratios are 3.8 and 5.6 higher than Alexandria's respectively. We are in the early days of the biology revolution with 10,000 known diseases and less than 10% of those are addressable with treatments. COVID-19 has brought unprecedented positive sentiment to the sector as the world recognizes the life science industries' contributions to solving today's greatest health challenges. The five fundamentals that signal strong demand, government funding, medical research philanthropy, FDA regulatory environment, venture capital and public market investors sentiment, and commercial R&D funding continue to have tailwinds and there is no reason to suspect that, that will change anytime soon.

The life science industry is one of the few bright spots in the world today and Alexandria is well-positioned to enable and participate in its outside growth. We invite you to reassess your valuation and future prospects in light of the private market data presented and the significant prospects for growth in our underlying industry.

On to developments. We are pleased to report that we continue to make great progress with our development pipeline. We delivered 177,953 square feet in three projects in the fourth quarter, including a 100% of the 9877 Waples Street project in Sorrento Mesa -- in the Sorrento Mesa submarket of San Diego, which was featured at Investor Day because it illustrated the power of our brand. When an existing tenant needed to expand and we did not have space for them, they found a building and effectuated to say otherwise by telling the owner, they would only lease it from us because of the facility was mission-critical for them and they would not entrust its development and operation with anyone else.

Leasing activity has been robust since the third quarter with over 913,000 square feet of leasing completed and approximately 50,000 square feet of space put under LOI in the development-redevelopment pipeline led by significant leasing at 201 Haskins in South San Francisco, the Alexandria Center for Life Science in San Carlos, 3115 Merryfield in San Diego, and the newly acquired Alexandria Center for Life Science, Durham, which significantly increased their pre-leasing percentages in the range of 27% to 58%.

Overall, with the addition of six new projects, we now have approximately 3.3 million square feet under construction that is 74% pre-leased, an increase of over 1.3 million square feet from last quarter's project degradation which was only 63% pre-leased. And as Joel mentioned, I'd like to conclude by expressing our great pride and enthusiasm with the acquisition just recently closed 401 Park Drive, 201 Brookline, and a continuous development site that will provide Alexandria operating income and an ability to realize upside by marking rents to market, converting certain office and retail space to lab, completing the lease-up of 201 Brookline, and developing the future 400,000 square foot development opportunity into a world-class laboratory office building in the Fenway. We are also pleased to be developing this campus in a collaborative venture with esteemed local developer Samuels & Associates who has been the visionary for the Fenway for more than 20 years.

With that, I'm going to pass it over to Dean.

Dean A. Shigenaga -- President and Chief Financial Officer

Thanks, Peter, Dean Shigenaga here. Good afternoon, everyone. Our team is super passionate about our strategic initiatives to drive unique, disruptive, and highly impactful solutions to tackle society's most complex and pressing challenges. Now, they're also very pleased with continued recognition as a leader in ESG from our OneFifteen project focused on solving the opioid epidemic, combating the COVID-19 pandemic, the GRESB sector leadership, and leadership in health, wellness, and safety, our teams' passion goes well beyond operational excellence and strong financial and operating results from our Real Estate business.

Our fourth quarter and year-end 2020 financial and operating results were outstanding. For 2020, we reported strong growth and total revenues of 23.1%, NOI growth of 24.8%, adjusted EBITDA growth of 17.4%, EPS and FFO as adjusted of $6.01 and $7.70 per share diluted respectively. Now, our high-quality properties and tenant roster combined with our outstanding execution by our best-in-class team continues to generate strong performance, including many results -- result represent some of the top in the REIT industry.

Investment-grade rated or large-cap publicly traded companies generate 55% of our annual rental revenue consistently high and timely payment of rent and well into the 99% range each month, strong 5.1% cash, same-property NOI growth, strong leasing velocity with record rental rate growth of 37.6% and 18.3% on a cash basis, and adjusted EBITDA margin of 69% highlighting operational excellence, occupancy of 94.6% or 97.7% adjusted for vacancy at recently acquired properties and please see Page 25 of our supplemental package for details on vacancy at these recently acquired properties.

Now, I should briefly mention that our quarterly rental rate growth related to lease renewals and releasing of space does vary occasionally, since it's only one-fourth of our annual leasing volume. For example, in the third quarter of '20, we reported 30.9% cash rental rate growth, and then in the fourth quarter of '20, we reported 10.7% cash rental rate growth. I think the key takeaway is that rental rate growth for 2020 was very strong at 37.6% and 18.3% on a cash basis. And importantly, our outlook for 2021 reflects continued strength in the financial and operating performance, including rental rate growth on lease renewals and releasing of space at 30.5% and 17.5% at the midpoint of our guidance ranges.

Now, our team is executing extremely well. We are projecting strong growth in net operating income and cash flows. We anticipate significant growth in occupancy in 2021 and 2022 as our team executes on lease-up of recently acquired properties with vacancy. Additionally, as Peter highlighted, we have a very highly leased pipeline of projects undergoing construction and a very large volume of deliveries in 2021. Now, it's important to highlight that our Board has been very consistent with our common stock dividend policy given the high amount of operating cash flows after dividends that we generate each year. Now, in 2020, the growth in our annual common stock dividend was 6% and cash flows from operating activities after dividends was projected in 2021 to be approximately $230 million at the midpoint of our guidance.

Now, on Friday, we completed the purchase of what has been rebranded as the Alexandria Center for Life Science, Fenway. It's a campus of 1.8 million square feet upon full build-out. Now, as a result, we expect to settle the $1.1 billion in forward equity sale agreements in March and that was related to our January common stock offering. So huge kudos to our entire team for outstanding execution on this transaction and upon full build-out, this will represent another awesome collaborative campus in our asset base. It's super important to have one of the best teams in the country since real-estate transactions move quickly from selection by the buyer -- excuse me, selection by the seller to closing. And in this case, the seller selected Alexandria as the best party for this transaction on December 9th.

On the real estate disposition front, we provided our initial range of guidance for 2021 at a midpoint of $1.375 billion and we'll provide more information on dispositions quarter to quarter. Our team is really positioned, does very well with our pipeline of redevelopment and development of Class A properties. The key highlights include execution over 1 million rentable square feet of leasing in 2020 related to our development and redevelopment pipeline, projects undergoing construction aggregate 3.2 million rentable square feet or 74% leased. About 2.5 million or plus square feet of this is projected for delivery in 2021, making 2021 the largest year of deliveries for Alexandria and this to generate annual net operating income of about $135 million, which on average commences in the third quarter of '21.

Now, we have a number of well-located near term projects aggregating 4.9 rentable square feet -- 4.9 million rentable square feet, including approximately 348,000 rentable square feet that is 79% leased with vertical construction commencing in the second quarter. And in January, we added two key projects under construction, aggregating 640,000 rentable square feet with pre-leasing in the 20% to 25% range. Now, our venture portfolio continues to perform extremely well. Realized gains on our venture investments included in FFO per share were $21.6 million and $71.6 million for the fourth quarter in 2020 respectively.

Now, as a percentage of adjusted EBITDA, our venture investment gains were approximately 5.5% for 2020, up slightly from approximately the mid-4% range for 2019. As we look forward into 2021, we expect venture investment gains to increase slightly as a percentage of adjusted EBITDA as we look to capture a portion of the unrealized gains in the portfolio. Unrealized gains on venture investments as of December 31st were $776 million on our adjusted cost basis of $835 million.

Now, thank you to our team for hitting our key balance sheet goals into well positioning our balance sheet to support our strategic business initiatives. We are very pleased to have a corporate credit ratings that rank in the top 10% of companies within the REIT industry. Our net debt to adjusted EBITDA was 5.3 times for fourth quarter annualized with slight improvement to 5.2 times by the end of '21. Now, our fixed charge coverage ratio was 4.6 times for the fourth quarter annualized and is also expected to improve by the fourth quarter of '21. Liquidity was very solid at $4.1 billion and we continue to yield on long-term capital to fund growth in our business and are very fortunate to have access to efficient cost of capital.

Now, to put this into perspective, pricing for 10 and 30-year bonds today for Alexandria is extremely attractive at approximately 2% and 3% respectively. Our prior shelf registration expired in December 2020, three years after we filed it. An odd aspect of the ATM program is that each program is associated with a specific shelf registration, for it is a program that can be used as long as you have an effective shelf registration in place. Now, in our case, our ATM program expired in connection with the shelf registration statement that expired in December, and as a result, we expect to file a new ATM program over the next four weeks.

Moving on to guidance, please refer to our detailed underlying assumptions included in our 2021 guidance beginning on Page 12 of our supplemental package. Changes were limited to a breakout of our range of real estate dispositions from the overall equity-type capital guidance. The midpoint of our guidance for dispositions, as I mentioned earlier, is at $1.375 billion and we also provided an update on acquisitions completed in January 2021, most of which was previously disclosed.

Now, there were no changes in our 2021 guidance for EPS diluted of a range from $2.14 to $2.34, and FFO per share diluted of a range from $7.60 to $7.80. Now, embedded in our overall guidance is continued strong growth in cash flows as we execute on the lease-up and occupancy growth in 2021 and 2022 and continued execution on an important year of record deliveries in 2021 of our highly leased redevelopment and development projects

With that, let me turn it back to Joel.

Joel S. Marcus -- Executive Chairman and Founder

Operator, if we could go to questions, please.

Questions and Answers:

Operator

Certainly. [Operator Instructions] And the first question will come from Jamie Feldman with Bank of America Merrill Lynch. Please go ahead.

Jamie Feldman -- Bank of America -- Analyst

Thank you, and good afternoon. I guess I want to start off with the Fenway acquisition. I'm hoping you can talk a little bit more about what do you like about that submarket, what do you like about those -- the three buildings or properties for the future? And then how should we be thinking about just your Boston strategy going forward, given it just seems that now that you've moved to the mega cluster model, it just seems like there's a lot more submarkets to choose from? The word is Fenway fit into the kind of the larger Alexandria footprint we might see?

Joel S. Marcus -- Executive Chairman and Founder

Yes. So, thanks, Jamie, this is Joel. I'll ask Peter to comment in a minute. We don't want to say too much about Fenway at this point. Peter has given a little bit of detail, he can talk a little more about it. I think it's pretty clear that the location of Fenway, which has good proximity to the other submarkets obviously to Boston itself and Downtown and Cambridge, but it is also pretty proximate to the collection of important Harvard hospitals, etc. and it has been a submarket that has been, I think, quite vital for several decades, and we just think that time is ripe for the kind of change to a more life science orientation there.

And so that's one of the motivations that certainly attracted us. It's pretty clear that the Greater Boston region still is the number one region or I should say the number one cluster market in the world and still the major destination for so many companies because there's such a rich amount of science, talent, capital, and the location is certainly one that's excellent. So, Peter, just general comments?

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

Yes. Thanks, Jamie. Look, the 401 Park asset is a really nice office, R&D building. It has some dry lab in it, it has a great tenant roster. It's got great duration and leases and there's going to be opportunities for us to convert some of that to lab over time. The development on 201 Brookline is doing really well. Ever since we were awarded the transaction, there's been great activity. We'll be reporting on that in future quarters. There's some opportunities at the 401 Park building as well to mark some rents to market. So, overall, this typical Alexandria value-creation play here with combination of using our brand to increase rents to bring new product to market ultimately another building to create a nice urban campus.

Jamie Feldman -- Bank of America -- Analyst

All right, thank you for the thoughts. And then $1.5 billion is obviously a very large transaction. Is this something we should expect to see from Alexandria going forward? It's just...

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

I don't -- yes, I don't think you -- people ask about that all the time about when we acquire something or become involved in a transaction. We never know what is -- and I'm sure Blackstone had the same feeling, you never know until a -- like the University Park assets came forward when or if that will ever happen. So I don't think you can make any general assumptions about things like that. I think they're very opportunistic and they're very dependent upon the time, place, space. So I wouldn't take anything, read anything into it or out of it.

Jamie Feldman -- Bank of America -- Analyst

Okay.

Joel S. Marcus -- Executive Chairman and Founder

They're all -- every one of these is just quite unique on their own.

Jamie Feldman -- Bank of America -- Analyst

Okay, and then my last question is if you look at your TIs in the quarter, definitely above average for the year, is there anything to read into about concessions? Do you have any...

Joel S. Marcus -- Executive Chairman and Founder

Yes. So, Steve and Dean, you guys maybe want to?

Stephen A. Richardson -- Co-Chief Executive Officer

Yes, hi, Jamie, this is Steve. Yes, that was really driven. We had two opportunities in core markets with two very exciting tenants to refresh buildings that were 15 to 20 years old. So we go -- we went ahead and did that. The incremental yield was exceptionally strong, well into the double digits. So when we see opportunities like that we are going to move. So if you excluded those, I think we were in much more of a normal range, but it was opportunistic to go ahead and refresh buildings, secure great tenants, and have exceptionally strong yields as well on the incremental capital.

Jamie Feldman -- Bank of America -- Analyst

Okay, and those are life science projects? Their office...

Stephen A. Richardson -- Co-Chief Executive Officer

Yes. Yes.

Joel S. Marcus -- Executive Chairman and Founder

Well, yes. They...

Jamie Feldman -- Bank of America -- Analyst

Okay, thank you.

Joel S. Marcus -- Executive Chairman and Founder

Yes. Thanks, Jamie.

Operator

And the next question will come from Sheila McGrath with Evercore ISI. Please go ahead.

Sheila McGrath -- Evercore ISI -- Analyst

Yes, Joel, I was wondering your thoughts on the new administration. If you believe they'll be more or less favorable to biotech research and investment and also bringing manufacturing of pharma back to the U.S., just your big picture thoughts there?

Joel S. Marcus -- Executive Chairman and Founder

Yes. So we don't fully know what the health side of the administration is going to look like. We have some indication but I would say it's too early to tell. I think though that when it comes to the enormous substrate which exists in the NIH and in much of the funding that goes on at really the basic research level, that has remained, I think, very favorably by partisan for decades now, and I don't think there'll be any change in the increase, the rate of increase with respect to that. I think the biggest worry would be a knee-jerk reaction by some to raise corporate taxes to try to somewhat either address deficits or just because it seems fair, but the challenge with that and policymakers and lawmakers should really know better and understand that plants can revert back to Ireland or more favorable tax havens and cash can go overseas if the incentives aren't made to do those things in America. So I hope that people take a long-term view of that but at the moment. I think, by and large, it looks, I'd say favorable, but still too early to tell.

Sheila McGrath -- Evercore ISI -- Analyst

Okay, and one other question. The investment portfolio had very strong gains in fourth quarter. Just -- I know Dean touched on it a little bit, but I'm just wondering given where biotech indices are, if your thoughts on taking some more meaningful profits from that -- those investments to invest in the pipeline -- development pipeline.

Joel S. Marcus -- Executive Chairman and Founder

Well, we do, and we've done that from time to time. So the answer is, I'm sure we will. We will review that almost real-time and certainly consider that for sure.

Sheila McGrath -- Evercore ISI -- Analyst

Okay, thank you.

Joel S. Marcus -- Executive Chairman and Founder

Yes. Thanks, Sheila.

Operator

And the next question will come from Emmanuel Korchman with Citi. Please go ahead.

Emmanuel Korchman -- Citi -- Analyst

Hey, good afternoon, everyone. Joel, just wanted to sort of circle back on the earlier remarks you made on the call about scale and especially at scale, you have in your cluster markets. Can you just elaborate on sort of the direct advantages of having the market churn to scale versus an environment where the tenants are growing quickly and at the same time, there is new supply being created, so aren't those kind of going to match up naturally where tenants are just going to slide into space that's available maybe rather than working through relationship they've had with you to build space years from that?

Joel S. Marcus -- Executive Chairman and Founder

Well, you've revealed the office playbook because when you have a generic commodity product, that's true. But I think as Peter indicated or Steve, when you have a mission-critical project much like the Waples in Sorrento Mesa with Cue Health, you don't just turn it over to the cheapest guy on the street or the one who maybe has something available. It's much more careful than that -- office space, that's true but when you have critical R&D and critical next-gen manufacturing, that just doesn't happen that way.

Emmanuel Korchman -- Citi -- Analyst

Great, thanks.

Operator

Next question is from Rich Anderson with SMBC. Please go ahead.

Richard Anderson -- SMBC Nikko Securities America Inc. -- Analyst

Thanks, good afternoon, everyone. So I was looking back in time a little bit about your Moderna exposure, went from about 382,000 square feet in the first quarter to 615,000 square feet in the fourth quarter. I guess, my broader question is can we consider COVID a new line of business, perhaps, as Jenna mentioned, more leaning toward the therapy side once we kind of get beyond this year and now, or is what I see not something I should be reading through to in a broader sense?

Joel S. Marcus -- Executive Chairman and Founder

Well, I think maybe two things, Rich. One is, I think COVID and pandemic virus, we've been through a number of mini ones over the years but certainly, this is one of the biggest ones we've ever seen in our lifetime different than HIV-AIDS which we did turn into a chronic condition. So I think, and Jenna said, it will be with us for a long, long time, and there will be continual efforts not only on the vaccine side and the booster side, the testing side, because testing is going to be critical going forward and then obviously on the therapy side because if you can take a quick -- if you can have access to therapy that's maybe not infusible, but one that a pill like just as you get a sore throat or you get a fever, that would be a whole lot better than trying to -- or being very sick and looking for an infusion side.

So there is a lot to do there and I do think COVID will be a continuous business and these companies will be very busy. But I think one of the things about Moderna in particular, we've bought into the mRNA revolution back almost a decade ago when Moderna was founded and I think, today, if you just separate out the COVID-19 stuff, Moderna represents really one of the most impressive and important platforms for many different -- to address many different illnesses. Imagine if the body could replicate erythropoietin, so you didn't need to have you have constant external injections, etc., where the body itself could address different -- or insulin, where you could do it by regulation and sense. So the opportunity is pretty big and that's what we've looked at when we look at companies like Moderna and there are obviously many more that have enormously big technology platforms. It's not simply a one-product company.

Richard Anderson -- SMBC Nikko Securities America Inc. -- Analyst

Great. And then just one question on Fenway Park, although not specifically since I know you want to kind of keep it a little tight to the vest for the time being, but if memory serves the Longwood Medical Area perhaps did not pan out as well if I'm -- and correct me if I'm wrong on that but it's a further field from Cambridge. If I'm right on my recollection of Longwood -- and I'm not making a judgment about you, I think your peers were invested there, what makes you think Fenway pretty close to Longwood sort of work out this in using that...?

Joel S. Marcus -- Executive Chairman and Founder

Yes. Your recollection is correct. We dipped our toe into the Longwood Medical Area and it turns out, it's a pretty institutional area and one that is not a really vibrant one at night but I think what's happened in Fenway and certainly, our partner has been at the forefront of that is they've really created a 24/7 live, work, play environment. Certainly, the park itself has been a major part of that. So I think it's a totally different submarket and a totally different feeling. So I think we have no qualms at all about the future there.

Richard Anderson -- SMBC Nikko Securities America Inc. -- Analyst

Okay, wonderful. Thanks, everybody. Thanks, Joel.

Joel S. Marcus -- Executive Chairman and Founder

Yes, thanks, Rich.

Operator

The next question is from Michael Carroll with RBC Capital Markets. Please go ahead.

Michael Carroll -- RBC Capital Markets -- Analyst

Yes, thanks, and, Joel, you kind of touched on this a little bit earlier, but can you provide some color on the supply outlook for the space? And I know a few years ago, there were some concerns in South San Francisco, but those seem to have abated, are there specific markets that ARE is tracking that we should kind of look out for?

Joel S. Marcus -- Executive Chairman and Founder

So I think Steve touched on that. Steve, do you want to maybe take the question?

Stephen A. Richardson -- Co-Chief Executive Officer

Sure, yes. Hi, Michael, it's Steve. No, you're right, we were monitoring South San Francisco closely with a combination of Kilroy Peak and Blackstone at the time and those projects have all been substantially leased. And look, we track literally building-by-building, parcel-by-parcel in each of our markets very closely and we just don't see a lot of new Class A high-quality product being delivered. There has been a lot in the press about conversions and I think at Investor Day, we kind of went through that chapter and verse, and I highlighted in the comments today. So we stay very vigilant in our analysis of that but at the current time, we just don't see a significant supply disruptions happening in the market.

Michael Carroll -- RBC Capital Markets -- Analyst

Okay, great. And then I guess, can you talk a little bit about I guess the Mercer Mega Block too? What's the timeline on that potential acquisition and or I guess the development when you do acquire, what's holding it up, and what should we be expecting there?

Joel S. Marcus -- Executive Chairman and Founder

Yes, I think we don't know precisely, but I think sometime over the next six months. Part of it is diligence and part of it, as you know, the city has gone through quite a shock over the last, probably since what, late May, triggered by the death of George Floyd and has had its share of Tom Holt, and obviously, the city, both the mayor and the council had been fighting, obviously, there was a defunct police effort going on there. So I think part of the effort is hopefully for the city, I think there is a Mayoral election coming up I think maybe later this year to get back into a more normal environment. We hope that's true and this certainly, I think you'll see activity on this over the next six months. But I think Seattle certainly South Lake Union remains a very safe and really good area. Seattle's got a strong, obviously on the technology side anchored by the likes of Amazon and Microsoft across the water and the big -- Facebook and Google and the big things are up there other than Netflix, different way. But -- so I think that's been all positive. The life science industry, as you know, Peter, I think, talked about our pricing on the partial interest sale we made in a couple of assets. Seattle has attracted a lot of institutional money and the life science industry certainly is growing well anchored by the Fred Hutch and the University of Washington. So it's a pretty positive outlook there.

Michael Carroll -- RBC Capital Markets -- Analyst

Okay, thank you.

Operator

And our next question will come from Tom Catherwood with BTIG. Please go ahead.

Thomas Catherwood -- BTIG -- Analyst

Thank you very much, and good afternoon, everyone. So, Steve and Dean, you both kind of alluded to this topic, but I wanted to dive into it a little more. We know that the same-store NOI growth guidance on a GAAP basis is 2% for the year but you've done nearly $6.3 billion of acquisitions over the last 25 months, and I assume most of those, if not all of them, are not in the same-store pool. So how should we think about NOI growth in 2021 from the lease-up and mark-to-market on these non-same-store assets?

Dean A. Shigenaga -- President and Chief Financial Officer

Well as I -- Tom, it's Dean here, just to clarify. As I mentioned in our commentary and you have our guidance for 2021, which -- our guidance for occupancy covers the entire asset base in the operating portfolio. And you've got something in the range of I think 170 basis point growth in occupancy and then that continues into 2022 as well. We're actually likely to pick up something approaching 300 basis points over the two calendar years. So you're going to see occupancy growth from the acquisitions be a key driver and it's not -- we find assets that fit our business profile nicely, and occasionally, they come with some vacancy that we need to manage. But fortunately, we feel comfortable about making the progress on that in 2021. So that's going to be a key driver and you'll see that continue to benefit into 2022 as well. So that's important to note that it's just not a one-year trend, I think '22 will benefit probably as well in the same property pool because some of those property will start to drop into the same property pool over time.

Thomas Catherwood -- BTIG -- Analyst

Got it. That's really helpful, Dean. And then kind of along the same lines, looking at newly acquired assets and all, and development assets as well. So a number of development projects shift between your intermediate classification and your near-term classification, but one that had kind of a real marked jump was the Arsenal on the Charles where 200,000 square feet of future redevelopment moved from the future bucket to near-term. So kind of a two-phase jump and you also picked up an extra 81,000 square feet of potential redevelopment. Can you speak a little bit to the demand that you're seeing in Watertown and how that's driving this acceleration of your redevelopment plans?

Joel S. Marcus -- Executive Chairman and Founder

Yes. So I don't want to get into too much there at the moment because nothing has been formally announced, but one thing that has been announced that you've seen in a lot of the papers is the next-gen innovation technologies in manufacturing consortium with ourselves, FUJIFILM, MIT, Harvard has selected that site as the home of this enterprise. And then there are a host of other, I would say, advanced technology companies, life science companies, and other things that have sought that location as being, I think, very proximate to Cambridge, and transportation being easier to deal with than some of the other submarkets that are I think harder to get in and out, Alewife is a good example. We've stayed out of Alewife because we believe that transportation in and transportation out have been super problematic, and so that's been one of the challenges that when we've looked at acquisitions in that submarket, they've kind of confounded us to figure out how we can solve the transportation problems. But Watertown's, I think, in much better shape. So I'd say stay tuned.

Thomas Catherwood -- BTIG -- Analyst

Got it. Appreciate that. Thanks, everyone.

Joel S. Marcus -- Executive Chairman and Founder

Yes. Thank you.

Operator

The next question is from Tayo Okusanya with Mizuho. Please go ahead.

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

Hi, good afternoon. Most of my questions have been answered, but just quick one. One of your larger tenants, not top 10 but just outside top 10, bluebird bio is doing some type of spin-off of one of those unit...

Joel S. Marcus -- Executive Chairman and Founder

I'm sorry...

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

Just kind of curious if...

Joel S. Marcus -- Executive Chairman and Founder

What tenant?

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

One of your tenants, bluebird bio.

Joel S. Marcus -- Executive Chairman and Founder

Yes.

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

They're doing a spin-off of one of their business units. Just curious if that has any implications for their current lease with you guys.

Joel S. Marcus -- Executive Chairman and Founder

I'm sorry. So the question is what?

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

Them spinning-off one of their business units, does that have any implications for the current lease they have with you?

Joel S. Marcus -- Executive Chairman and Founder

Well, we don't know the answer to that. They may sublease and they may not. Jenna, do you want to maybe just comment on the nature of the...

Jenna Fogger -- Senior Vice President, Science and Technology

Yes, sure...

Joel S. Marcus -- Executive Chairman and Founder

Change...

Jenna Fogger -- Senior Vice President, Science and Technology

Sure, sure, sure. So they -- so bluebird bio basically announced -- they haven't disclosed the details other than that they are basically dividing the company between severe genetic diseases and then an oncology company, and so we basically have exposure to them in Greater Boston, specifically in Cambridge, and then in Seattle. And so basically they're -- everything that they're retaining in place is what they have kind of with us, both in terms of their HQ in Cambridge and manufacturing in Seattle. So we're really not concerned about that at all.

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

Okay, that's helpful. Thank you.

Joel S. Marcus -- Executive Chairman and Founder

Yes. And it would be easy to backfill space if we had it in those locations, I can tell you.

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

Great. Thank you.

Joel S. Marcus -- Executive Chairman and Founder

Yes. Thank you.

Operator

The next question is a follow-up from Jamie Feldman with Bank of America Merrill Lynch. Please go ahead.

Jamie Feldman -- Bank of America -- Analyst

Thank you. Just quickly, I wanted to go back to Dean's comment on -- you said you -- that investment gains as a percentage of EBITDA, you expect to be higher this year than last year? Can you maybe quantify that, how big of a portion of EBITDA do you think it could be?

Dean A. Shigenaga -- President and Chief Financial Officer

It's just -- Jamie, it's Dean here. It's late, I think what my comments were '19 was probably in the 4.5% range, '20 was probably about 5.5% of EBITDA. And just a slight growth anticipated as we look out to '21 on top of that. So it's still staying pretty small as a percentage of overall EBITDA.

Jamie Feldman -- Bank of America -- Analyst

Okay, thank you. That's helpful.

Operator

Ladies and gentlemen, 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

No closing remarks other than to wish everybody, be safe, be healthy, and COVID-free. And we look forward to talking to you on the first quarter call. Thank you, again, everybody.

Operator

[Operator Closing Remarks]

Duration: 70 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 -- President and Chief Financial Officer

Jamie Feldman -- Bank of America -- Analyst

Sheila McGrath -- Evercore ISI -- Analyst

Emmanuel Korchman -- Citi -- Analyst

Richard Anderson -- SMBC Nikko Securities America Inc. -- Analyst

Michael Carroll -- RBC Capital Markets -- Analyst

Thomas Catherwood -- BTIG -- Analyst

Omotayo Okusanya -- Mizuho Financial Group, Inc. -- Analyst

More ARE analysis

All earnings call transcripts