Real estate REIT Alexandria Real Estate Equities reported Q1 2016 results showing year-over-year growth in revenues and funds from operations (FFO) driven by strong life sciences activity in the Bay Area.

Shares of the California-based company are up slightly after the announcement.

“We are pleased to start 2016 with a very successful first quarter executed by our best-in-class team,” said Alexandria founder and CEO Joel S. Marcus when discussing the results.

The firm posted FFO per diluted share in line with analyst forecasts. Alexandria’s FFO per share in Q1 was $1.34, or 4.7% higher when compared to the year prior. The measure is unique to assessing the health of REITs and adds depreciation and amortization to net income.

“These results were largely in line with expectations,” RBC Capital Markets analyst Michael Carroll tells Bisnow. (RBC is currently providing Alexandria Real Estate Equities with non-securities services.)

Alexandria called specific attention to Verily’s sublease of approximately 400k RSF in South San Francisco, a key market in the company’s growth strategy. COO Steve Richardson previously told Bisnow robust new company formation and incumbent expansion in the region was expected to provide strong momentum for the foreseeable future.

The life sciences-focused company’s existing pipeline of projects in the Bay Area should ensure sustained growth over the next few years, Michael tells us. Furthermore, Alexandria has additional projects that need entitlement.

Limiting regulation, however, could dampen the company’s prospects. “Prop M is a limiting factor that can cap the amount of activity in San Francisco,” Michael cautions. “[Alexandria is] going to have to work around that somehow.”

Steve acknowledges Prop M is a key issue and says the REIT is “working hard to address that challenge.”