ARE
#Thank you.
It was over time, <UNK>.
I don't ---+ it's relatively small.
Yes, pretty much.
A little bit of both.
But, as you know, the valuation of biotech and life science, generally, has been moving around quite a bit.
I would say that it did dip as of March 31st.
It recovered about a month later, and it scaled back a tad.
So, net-net there's been some decent movement, just from a valuation perspective, and it's purely the publicly-traded securities we're discussing.
We did realize about $11 million of proceeds during the quarter, so we did tap some of the gains during the quarter.
But the bulk of it had just to do with changes in stock price.
I would say, as <UNK> had mentioned, there's healthy activity in the market, broadly, some of which includes our underlying investments.
And I would guess that in the near term you'll see some large mark-to-markets coming into the public portfolio, soon.
So, if you look at page 52 of the sup, you get a snapshot of what we have publicly, and at the moment, our net unrealized gains are about 3X of our cost, and then out of the private side, as <UNK> mentioned, we had made an early investment in a company called Stemcentrix, which occupies East <UNK> Court, and that return could be as high as 25X.
Well, I think if you go to page of the sup, we've kind of expanded it, page 41, key future projects and we've tried to give a little bit of context with some renderings, etc.
We don't have any plans at the moment, I think, as I said last quarter, to initiate any new developments.
We did, obviously, move Vertex to active, but at the moment, our pipeline is strong.
It's full.
It's highly leased.
And we don't see any reason to start any new projects.
If you come to Investor Day, I'll tell you.
Of course.
I think in Nautilus, <UNK>, you could give a little color on what's the activity there, it's been very strong.
<UNK>, it's <UNK>.
Yes, we've been really pleased.
We just signed a letter of intent with a major Japanese firm to take roughly 30,000 square feet of our 3565 building.
So, that will only leave about 10,000 square feet there, and we executed a letter of intent on Friday with an existing tenant to expand and take the 25,000 square feet of availability there.
So, we'll be 100% here in the next 30 days or so.
And <UNK>, maybe comment on activity on 100 Binney, which seems to be, these days, pretty extraordinary actually.
We're down to the short strokes on approximately 110,000 square foot lease, with a public biotech company that's in the Cambridge market currently, and has a lease expiration that they need to deal with.
So, that's moving toward completion.
And then we have, on the balance of the space, which is about 110,000 square feet, or 2 1/2 floors, we're starting to see more and more activity, even though the space is not going to be deliverable for ---+ until early, or occupiable until early calendar 2018.
And that's ---+ it's interesting that we're seeing 30,000- and 40,000-square-foot requirements nearly two years out from occupancy date, requesting proposals from us.
So, as I mentioned earlier, we're kind of sorting through and trying to figure out the best prospects to engage with, and that will play out over the next several months.
I would also put a footnote on that.
Bristol-Meyers has half the building.
The other half is still uncommitted in various stages of discussions, etc.
But we've been told that we will have, likely, two credit tenant RFPs for as much space as we can provide them.
So, there's no shortage of demand in the market for that building.
And there's no competitive first-in-class project coming to fruition at the moment.
So, I'm going to maybe give an opening, then I'll ask <UNK> to talk about it.
But I think it's fair to say we did reach a high-water mark when we signed ARIAD back a couple of years ago, and I think today we'll be reaching a new high-water mark with 100 Binney.
But I'll let <UNK> discuss kind of the comparison of both, and some of the construction-cost situations.
Yes, I think, <UNK>, the rents have moved.
I don't have the figure directly in front of me, but about $10 a square foot on a GAAP basis, so the average rent over the term from when we struck a deal with ARIAD to where we are right now.
I would say that we have offered ---+ been able to offer somewhat less dollars in TI allowance for the ---+ in connection with that increased rent.
So, if you adjust it for TI dollar commitment, it's an even better move up.
In terms of the cost, I think some people have ---+ I saw some comment related to the expense, particularly 100 Binney, and one thing to recognize there is in the Bristol-Meyers situation where we have a landlord build, we do have to carry the cost of the tenant's investment over and above the TI allowance as part of the basis in the property.
So, I think you see a high number there because of that, more than anything else.
So, though construction costs have been increasing, I would say they certainly have not increased faster than rents have.
We have heard various things.
They are building out nearly ---+ I'd say over 75% of the space that they are leasing and are nearing completion with that buildout, leaving about 25% of their direct space; and this is exclusive of the IBM Watson space, so this is about 215,000 square feet that they have not subleased.
They've been building out that space.
The current information we have from them is that they intend to occupy, but they are ---+ we know that they are entertaining some discussion with subtenant prospects, particularly on the non-built-out portion of the space.
We've seen the flier, and that's all we've seen.
So, we don't know much more than that at the moment.
Thanks, <UNK>.
So, maybe I'll open that and then ask <UNK> to comment.
I think we see that there is still a lot to do, as you can tell by our activity up in Torrey Pines and University Town Center, the Illumina campus, the Campus Pointe campus; so, we have our hands pretty well occupied with a lot of moving parts and trying to capture as much of the quality demand in that market as we see.
I think we've certainly paid attention to what's going on downtown, but I don't think that it is necessarily as ready for prime time as some of the other locations, if you look at the Mission District in San Francisco, or some of the early activities.
I don't think you see them at the same level, but <UNK>, you can comment on the ground.
Hi, <UNK>.
Yes, I think <UNK> had ---+ summarized that pretty well.
We have been looking around down there quite a bit.
I email <UNK> every other week with a new idea, most of which I get a no.
But we think that long-term, there's probably a natural extension for what we're doing.
But it's probably midterm out four or five years before we probably pull the trigger on something like that.
I've never said yes.
Mostly I just get the no back, saying will you lease the Lilly space and quit bothering me.
(Laughter)
I think as <UNK> mentioned, our target has been, and this is also for our desire to upgrade to ---+ get upgraded to a triple-B-plus rating, is somewhere in the 10% to 15% range, and I think, <UNK>, on your end our target is ---+
We're hoping to be closer to that 10% number by the end of this year.
No problem.
Thanks, <UNK>.
Thanks, <UNK>.
I think that, that's true.
I think the US market has come a long way in the decade since we started in Asia and Europe, back in kind of the 2005, 2006 range.
I think there was a feeling that India and China would hold half the world's population, and could be really great markets.
I think some day they will be, but they're still, I think too early for prime time, and you can tell, as <UNK> mentioned, we have almost $50 million in currency losses.
I mean, I think it's hard for companies in the real estate sector to focus heavily on overseas operations.
I think that given our footprint, given our ---+ I think our high-quality, really amazing campus locations and tenants, there's no reason now to think about overseas, whether it be Europe or Asia.
But if you go back pre-crash, those were pretty interesting markets, and I think the markets here in the United States were still in the process of evolving.
But they've come an awfully long way in that decade.
Yes, I think it's completely off the table.
I think that over the next medium to longer term we'd look at newer markets in the United States, because there are markets here that are interesting.
But again, maybe not ready for prime time.
Think about New York, where we won the RFP back in 2005, and here we sit a decade later with a campus.
But these efforts are, literally, a decade-long effort and we've worked hard, not only things you guys see in the supplement, but an amazing amount of work at the cluster level, to really bring those clusters along.
So, I think there's no way that I could see, foresee, going overseas again.
I think it would be expansion in the United States.
Well, I think in Scotland we acquired options on land that we were able to exit that land and recoup our investment, and I think, make some money from that.
In Toronto, we obviously were involved in the MARS project early on and restructured that, and we reported our exit from there and what happened.
I think those two have been fully disclosed.
We haven't really done anything else outside of China and India.
And I think China and India are pretty well documented in the supplement.
There's nothing else out there that I'm aware of.
Okay.
Well, thank you very much.
We closed early and we appreciate your time in a busy earnings season.
We'll talk to you for the second quarter.
Thanks, everybody.
