In this segment from Motley Fool Live, recorded on Jan. 6, Fool contributors Jason Hall and Marc Rapport discuss the strong tailwind pushing Alexandria Real Estate Equities (ARE -2.62%) this year.
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Jason Hall: What is ARE, what do they do?
Marc Rapport: They own and operate in net lease out lab space basically. For instance, they are building right now Moderna's new headquarters in Cambridge, Mass. They have ag-science, technology, and primarily life-sciences campuses.
A really neat way is they show it very graphically on the website. You go to the Maryland section of their website, it looks like a Google Earth map that shows the buildings they own right next to the National Institutes of Health and just nearby is the National Cancer Institute, Johns Hopkins, University of Maryland. These are the places where they set up. These are collaborative life-sciences spaces.
What happens is that you can't develop the stuff at home. This is an office REIT, but you can't do the stuff at home, so they're not in that trouble. They started about 25 years ago. They are one of the largest players in this space. They got 700 clients, almost all the major big pharma, and lots of universities.
If you look at where they are located, it's all the major life sciences centers, Boston, San Diego, San Francisco, New York, D.C. area. They are really concentrated in those areas. I like the moat they have.
Other companies are getting into this. Boston Properties (BXP -2.98%) is a big office REIT that's a major player. But this company has a big head start, there are long-term clients, they have escalation clauses in their rent that keeps the income growing, and they just have a major head start in this.
This is a really good space to be in right now. I don't think the emphasis on life sciences and biotech is going to go away anytime soon.
Hall: The tailwind, that's the key. There's so much concern about office space and the change in the way people work. But when you think about those industries, the tailwinds are enormous and supporting continued expansion of that kind of real estate market.
