EX-99.1 2 ex991earningssupplemental1.htm EXHIBIT Ex 99.1 Earnings & Supplemental 12.31.13



 
 
 




 
 
 


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Table of Contents
 
Page
EARNINGS PRESS RELEASE
 
Fourth Quarter and Year Ended December 31, 2013, Financial and Operating Results
Guidance
Earnings Call Information and About the Company
Consolidated Statements of Income
Consolidated Balance Sheets
Funds From Operations and Adjusted Funds From Operations
SUPPLEMENTAL INFORMATION
 
Company Profile
Investor Information
Financial and Asset Base Highlights
Operating Metrics
 
Operating Metrics
Same Property Performance
Leasing Activity
Lease Expirations
Top 20 Client Tenants and Client Tenant Mix
Summary of Properties and Occupancy
Value-Creation Projects and External Growth
 
Investments in Real Estate
Projected and Historical Construction Spending
4Q13 Deliveries of Value-Creation Development and Redevelopment Projects in North America
All Current Value-Creation Development and Redevelopment Projects in North America
Near-Term Value-Creation Development Projects and Future Value-Creation Development Projects in North America
Real Estate Investments in Asia
Asset Sales and Other Sources of Capital
Balance Sheet
 
Key Credit Metrics
Summary of Debt
Definitions and Other Information
 
Definitions and Other Information

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Please see page 5 of the earnings release for further information.

This document is not an offer to sell or solicitation to buy securities of Alexandria Real Estate Equities, Inc. Any offers to sell or solicitations to buy our securities shall be made only by means of a prospectus approved for that purpose. Unless otherwise indicated, the “Company,” “Alexandria,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2013
i


Contact:
Joel S. Marcus
 
Chairman, Chief Executive Officer & Founder
 
Alexandria Real Estate Equities, Inc.
 
(626) 578-9693
Alexandria Real Estate Equities, Inc.
Reports

Fourth Quarter and Year Ended December 31, 2013
Financial and Operating Results

EPS – Diluted of $0.51 for 4Q13
FFO Per Share – Diluted, as Adjusted, of $1.16 for 4Q13
Total Revenues of $168.8 Million for 4Q13
NOI of $118.9 Million for 4Q13
Strong Demand in Key Cluster Submarkets Drives Record Leasing Activity

PASADENA, CA. – February 3, 2014 – Alexandria Real Estate Equities, Inc. (NYSE:ARE) today announced financial and operating results for the fourth quarter and year ended December 31, 2013.

“We are very pleased to announce our fourth quarter and year ended December 31, 2013, financial and operating results. Our per share results for the fourth quarter and year ended December 31, 2013, reflected 1) the strength of our core operations, 2) completion of significant high value Class A development projects in AAA locations in urban science and technology cluster markets, and 3) the completion of many significant and important improvements in our long-term capital structure. Monetization of significant non-income-producing land parcels (Alexandria Center™ for Science and Technology located in Mission Bay, Alexandria Center™ at Kendall Square located in Cambridge, and Alexandria Center™ for Life Science located in New York City) through lease-up and development, and through selective sales has generated significant long-term asset value. In 2012 and 2013, we sold certain non-strategic income-producing assets and land for approximately $275 million. Proceeds from these sales, including the $55 million from the sale of a land parcel in late 2013, were invested into high value/low cap rate Class A development projects with an estimated value of approximately $450 million, representing an increase of almost $175 million above the value of the properties sold. We are also pleased with the successful execution of our second 10-year unsecured bond offering in early 2013 at a rate of 3.90%. The capital generated from the sales of properties and issuance of long-term debt and common stock resulted in short-term per share dilution, improved our long-term capital structure and funded our Class A developments, among others, at Alexandria Center™ at Kendall Square located in Cambridge. We are optimistic about our ability to deliver solid and stable per share earnings growth and continue to increase long-term asset value in 2014 and beyond,” said Joel S. Marcus, Chief Executive Officer, and Founder of Alexandria Real Estate Equities, Inc.

Results

Net income attributable to Alexandria Real Estate Equities, Inc.’s (“Alexandria’s”) common stockholders – diluted:
$36.2 million, or $0.51 per share, for 4Q13 compared to $21.0 million, or $0.33 per share, for 4Q12
$108.8 million, or $1.60 per share, for YE 2013 compared to $67.6 million, or $1.09 per share, for YE 2012
Funds from operations (“FFO”) attributable to Alexandria’s common stockholders – diluted, as adjusted:
$82.5 million, or $1.16 per share, for 4Q13 compared to $72.9 million, or $1.16 per share, for 4Q12
$299.1 million, or $4.40 per share, for YE 2013 compared to $272.1 million, or $4.38 per share, for YE 2012

Core operating metrics

Total revenues:
$168.8 million for 4Q13, up 11.6%, compared to $151.3 million for 4Q12
$631.2 million for YE 2013, up 9.9%, compared to $574.5 million for YE 2012
Net operating income (“NOI”):
$118.9 million for 4Q13, up 13.1%, compared to $105.1 million for 4Q12
$442.1 million for YE 2013, up 10.0%, compared to $401.7 million for YE 2012
Same property NOI performance:
4.6% and 1.4% increases on a cash and GAAP basis, respectively, for 4Q13 compared to 4Q12
5.4% and 1.8% increases on a cash and GAAP basis, respectively, for YE 2013 compared to YE 2012
Leasing activity at record levels for 4Q13:
Executed 64 leases for 1,344,687 rentable square feet (“RSF”), including 218,986 RSF of development and redevelopment space
Rental rate increases of 2.6% and 18.2% on a cash and GAAP basis, respectively, on renewed/re-leased space
Leasing activity at record levels for YE 2013:
Executed 212 leases for 3,645,056 RSF, including 1,174,306 RSF of development and redevelopment space
Rental rate increases of 4.0% and 16.2% on a cash and GAAP basis, respectively, on renewed/re-leased space


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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Fourth Quarter and Year Ended December 31, 2013
Financial and Operating Results

Occupancy for properties in North America, as of December 31, 2013:
390 basis points (“bps”) increase in overall occupancy of operating and redevelopment properties from YE 2012 to YE 2013
95.9% for operating properties and 95.5% for operating and redevelopment properties, up 90 bps and 100 bps, respectively, compared to September 30, 2013
Operating margins steady at 70% for 4Q13 and YE 2013
51% of total annualized base rent (“ABR”) from investment-grade client tenants
Key leasing in 4Q13:
Quest Diagnostics Incorporated extended their lease for 248,186 RSF at 14225 Newbrook Drive in the Maryland market
The United States Government (NIH) extended their leases for 114,255 RSF at 9800 Medical Center Drive and 5 Research Court in the Maryland market
Tandem Diabetes Care, Inc. extended their leases for 66,442 RSF at 11025, 11035, and 11045 Roselle Street, and leased an additional 41,163 RSF at 11065 and 11075 Roselle Street in the San Diego market
Google Inc. leased 63,430 RSF at 2400/2450 Bayshore Parkway in the San Francisco Bay Area market
Medivation, Inc. leased 51,632 RSF at 499 Illinois Street in the San Francisco Bay Area market

Other key 2013 highlights

Highest quarter and year of leasing activity in the Company’s history
$612 million decrease in bank facility debt
9.1% average cash yields (estimate) for developments commenced in 2013
600 bps decrease in non-income-producing assets as a percentage of gross investments in real estate from YE 2012 to YE 2013
Seven new LEED Gold certifications

Value-creation projects and external growth

Value-creation development and redevelopment projects delivered in 4Q13

In December 2013, we delivered a significant portion of the second building of our flagship Alexandria CenterTM for Life Science in Manhattan at 430 East 29th Street:
Delivered 189,011 RSF to high-quality tenants, including Roche and New York University
The estimated initial stabilized cash and GAAP yields for the development project are 6.6% and 6.5%, respectively, and the estimated average cash yield is 7.1%
In October 2013, we delivered our redevelopment project at 4757 Nexus Center Drive in the University Town Center submarket of San Diego:
Delivered 57,198 RSF, or 82%, of this project to Genomatica, Inc. The tenant will take occupancy of the remaining 12,475 RSF in 18 to 24 months
The estimated initial stabilized cash and GAAP yields for the entire redevelopment project are 8.1% and 8.0%, respectively, and the estimated average cash yield is 8.7%

Acquisitions
    
On November 12, 2013, we acquired three adjacent buildings aggregating 55,213 RSF at 11055, 11065, and 11075 Roselle Street in the Sorrento Valley submarket of San Diego for a total purchase price of $8.3 million. The buildings are currently undergoing redevelopment and we pre-leased 75% of the space to Tandem Diabetes Care, Inc. The estimated initial stabilized yields for this project are 7.8% and 7.9%, on a cash and GAAP basis, respectively. The estimated average cash yield for the project is 8.0%.

On November 27, 2013, we acquired 150 Second Street, a 123,210 RSF, newly developed Class A property in the Cambridge submarket of Greater Boston for a total purchase price of $94.5 million. The building is 85% leased to two publicly traded life science companies. The estimated initial stabilized yields for this property are 7.3% and 7.5%, on a cash and GAAP basis, respectively. The estimated average cash yield for the project is 8.2%.

In 4Q13 we recognized $1.4 million of expenses in connection with several acquisitions, including costs for deals we ultimately did not acquire. The acquisitions completed in November 2013 and January 2014 were for an aggregate purchase price of $166.8 million. See subsequent events for additional information. The acquisition-related expenses have been classified in general and administrative expenses.

Dispositions

On December 19, 2013, we completed the sale of our final land parcel in the Mission Bay submarket of the San Francisco Bay Area at 1600 Owens Street, along with certain parking spaces, for an aggregate sales price of $55.2 million and a gain of $4.1 million. Ownership of the parcel was strategically important to Kaiser Foundation Health Plan, Inc. and we will earn a fee to manage the construction of a 219,000 RSF medical office building.


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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Fourth Quarter and Year Ended December 31, 2013
Financial and Operating Results

Balance sheet

Liquidity of $1.65 billion, consisting of $1.30 billion available under our unsecured senior line of credit, $295.4 million available under our construction loan commitments, and $57.7 million in cash and cash equivalents as of December 31, 2013
Net debt to adjusted EBITDA of 6.6x for 4Q13 (annualized)
Fixed charge coverage ratio of 3.2x for 4Q13 (annualized)
Executed additional interest rate swap agreements to provide a minimum of hedged variable-rate debt of $750 million in 2014 and $500 million in each of 2015 and 2016.
Non-income-producing assets (CIP and land) at 17% of gross investments in real estate as of YE 2013, down from 23% as of YE 2012, due to deliveries of development and redevelopment projects and completed land sales
Extended the maturity date of a $76.0 million secured note payable from April 20, 2014, to January 20, 2017

LEED certifications

During 2013, we obtained LEED Gold Certifications at seven projects. As of December 31, 2013, our asset base had 25 LEED Certified projects, including two LEED Platinum projects, 16 LEED Gold projects, and seven LEED Silver projects. Upon completion of an additional 21 in-process certifications, 50% of the total RSF (continuing operations) will be LEED Certified.

Subsequent events

Acquisition of 3545 Cray Court

On January 30, 2014, we acquired 3545 Cray Court, a 116,556 RSF laboratory/office property located in the Torrey Pines submarket of San Diego, for a total purchase price of $64.0 million. The property is currently 100% occupied by The Scripps Research Institute. The estimated initial stabilized yields for this property are 7.0% and 7.2%, on a cash and GAAP basis, respectively. In connection with the acquisition, we assumed a $40.7 million non-recourse secured note payable with a contractual interest rate of 4.66% and a maturity date of January 2023.

Repayment of secured note payable

On January 31, 2014, we repaid our $208.7 million secured note payable related to Alexandria Technology Square®. Our joint venture partner funded $20.9 million of the proceeds required to repay the secured note payable.



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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Guidance

Based on our current view of existing market conditions and other assumptions, we have updated guidance for earnings per share – diluted and FFO per share – diluted, both amounts attributable to Alexandria’s common stockholders for the year ended December 31, 2014.  The table below provides a reconciliation of FFO per share – diluted, a non-GAAP measure, from earnings per share – diluted, the most directly comparable GAAP measure, as well as other key assumptions included in our guidance for the year ended December 31, 2014. We expect that our principal liquidity needs for the year ended December 31, 2014, will be satisfied by the following multiple sources of capital as shown in the table below.  There can be no assurance that our sources and uses of capital will not be materially higher or lower than these expectations. The key assumptions behind the sources and uses of capital are a favorable capital market environment and performance of our core operations in areas such as delivery of current and future development and redevelopment projects, leasing activity, and lease renewals.  Our expected sources and uses of capital are subject to a number of variables and uncertainties, including those discussed under the “Forward-looking statements” section under Part I and the “Risk Factors” section under Item 1A of our annual report on Form 10-K for the year ended December 31, 2012, in our subsequent quarterly reports on Form 10-Q, and in our subsequent annual report on Form 10-K for the year ended December 31, 2013.  We expect to update our forecast of sources and uses of capital on a quarterly basis.
 
 
 
2014 Guidance
 
 
EPS and FFO Per Share
 
Low – High
 
 
Earnings per share attributable to Alexandria’s common stockholders – diluted
 
 
$1.75 – $1.95
 
 
 
Add back: depreciation and amortization
 
 
2.87
 
 
 
Other
 
 
(0.02)
 
 
 
FFO per share attributable to Alexandria’s common stockholders – diluted
 
 
$4.60 – $4.80
 
 

Sources and Uses of Capital
(In thousands)
 
Low
 
High
 
Key Assumptions
(Dollars in thousands)
 
Low
 
High
Sources of capital:
 
 
 
 
 
Occupancy percentage for operating properties at December 31, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unsecured senior notes payable
 
$
350,000

 
$
450,000

 
 
 
 
 
 
 
 
 
 
North America
 
 
96.5%

 
 
97.0%

Secured loan additions (construction loans and assumed debt) (1)
 
100,000

 
223,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Secured notes payable repayments (2)
 
(210,000
)
 
(210,000
)
 
Rental rate steps on lease renewals and re-leasing of space:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Activity on our unsecured senior line of credit and senior unsecured term loan
 
80,000

 
(53,000
)
 
 
 
 
 
 
 
 
 
 
Cash basis
 
 
3%

 
 
5%

 
 
 
 
 
 
 
Net sources of debt capital
 
320,000

 
410,000

 
GAAP basis
 
 
8%

 
 
11%

 
 
 
 
 
 
 
Net cash provided by operating activities after dividends
 
100,000

 
120,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same property NOI growth:
 
 
 
 
 
 
Land sales/strategic joint venture capital
 
145,000

 
245,000

 
 
 
 
 
 
 
 
 
 
Cash basis
 
 
4%

 
 
6%

Total sources of capital
 
$
565,000

 
$
775,000

 
 
 
 
 
 
 
 
GAAP basis
 
 
2%

 
 
4%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uses of capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line rents
 
$
42,000

 
$
47,000

Construction
 
$
565,000

 
$
625,000

 
 
 
 
 
 
General and administrative expenses
 
$
48,000

 
$
52,000

Acquisitions
 

 
150,000

 
 
 
 
 
 
Capitalization of interest
 
$
35,000

 
$
45,000

Total uses of capital
 
$
565,000

 
$
775,000

 
 
 
 
 
 
Interest expense, net
 
$
77,000

 
$
93,000

 
 
 
 
 
 
 
 
 

(1)
Includes the assumption of a non-recourse secured note payable of $40.7 million in connection with the acquisition of a property in January 2014.
(2)
Represents the principal amortization payments on all of our secured notes payable, including one secured note payable related to Alexandria Technology Square® which was repaid on January 31, 2014. This amount excludes $20.9 million that was funded by our 10% joint venture partner.


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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Earnings Call Information

We will host a conference call on Tuesday, February 4, 2014, at 3:00 p.m. Eastern Time (“ET”)/12:00 p.m. noon Pacific Time (“PT”) that is open to the general public to discuss our financial and operating results for the fourth quarter and year ended December 31, 2013. To participate in this conference call, dial 877-440-5807 or 719-325-4940 and confirmation code 6656527, shortly before 3:00 p.m. ET/12:00 p.m. noon PT. The audio webcast can be accessed at: www.are.com, in the “For Investors” section. A replay of the call will be available for a limited time from 6:00 p.m. ET/3:00 p.m. PT on Tuesday, February 4, 2014. The replay number is 888-203-1112 or 719-457-0820 and the confirmation code is 6656527.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the fourth quarter and year ended December 31, 2013, is available in the “For Investors” section of our website at www.are.com or by following this link: http://www.are.com/fs/2013q4.pdf.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE), a self-administered and self-managed real estate investment trust (“REIT”), is the largest and leading REIT focused principally on owning, operating, developing, redeveloping, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry. As of December 31, 2013, Alexandria's asset base consisted of 30.9 million RSF, including 17.5 million RSF of operating and current value-creation development/redevelopment assets, as well as an additional 13.4 million RSF in future ground-up development projects. Founded by Jerry M. Sudarsky and Joel S. Marcus in 1994, Alexandria pioneered the laboratory/office niche and has become the leading life science real estate brand and dominant market presence in the top life science clusters, including Greater Boston, the San Francisco Bay Area, San Diego, Greater New York City, Maryland, Seattle, and Research Triangle Park. Alexandria manages its properties through fully integrated regional and life science teams with unparalleled real estate and life science expertise. As the Landlord of Choice to the Life Science Industry®, Alexandria is known for its high-quality and diverse client tenant base, which includes renowned academic and medical institutions, multinational pharmaceutical companies, public and private biotechnology entities, United States government research agencies, medical device companies, industrial biotech companies, venture capital firms, and life science product and service companies. Alexandria has a proven and superior track record developing Class A laboratory/office assets focused primarily in key urban science center campus locations in AAA cluster locations adjacent to leading academic medical research centers, offering highly creative amenities that drive client tenant productivity and foster innovation, and gathering its longstanding and expansive network in the life science community. We believe these advantages result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

***********

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2014 earnings per share attributable to Alexandria’s common stockholders – diluted, 2014 FFO per share attributable to Alexandria’s common stockholders – diluted, NOI, and our projected sources and uses of capital for the year ended December 31, 2014. You can identify the forward-looking statements by their use of forward-looking words, such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” “anticipates,” or “projects,” or the negative of those words or similar words. These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events. These statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development, our failure to successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on, or non-renewal of, leases by client tenants, general and local economic conditions, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”). Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are made as of February 3, 2014, the date this document was first made available on our website, and we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.


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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited) 
 
 
Three Months Ended
 
Year Ended
 
 
12/31/13
 
9/30/13
 
6/30/13
 
3/31/13
 
12/31/12
 
12/31/13
 
12/31/12
Revenues:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Rental
 
$
125,693

 
$
116,052

 
$
114,493

 
$
111,526

 
$
111,798

 
$
467,764

 
$
422,793

Tenant recoveries
 
39,970

 
38,691

 
35,869

 
35,565

 
35,671

 
150,095

 
133,280

Other income
 
3,160

 
3,572

 
3,568

 
2,992

 
3,785

 
13,292

 
18,424

Total revenues
 
168,823

 
158,315

 
153,930

 
150,083

 
151,254

 
631,151

 
574,497

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental operations
 
49,892

 
47,684

 
46,277

 
45,186

 
46,132

 
189,039

 
172,756

General and administrative
 
12,751

 
11,666

 
12,455

 
11,648

 
12,633

 
48,520

 
47,747

Interest
 
17,783

 
16,171

 
15,978

 
18,020

 
17,941

 
67,952

 
69,184

Depreciation and amortization
 
48,084

 
48,866

 
46,344

 
45,829

 
47,280

 
189,123

 
185,687

Impairment of land parcel
 

 

 

 

 
2,050

 

 
2,050

Loss on early extinguishment of debt
 

 
1,432

 
560

 

 

 
1,992

 
2,225

Total expenses
 
128,510

 
125,819

 
121,614

 
120,683

 
126,036

 
496,626

 
479,649

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
 
40,313

 
32,496

 
32,316

 
29,400

 
25,218

 
134,525

 
94,848

(Loss) income from discontinued operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income from discontinued operations before impairment of real estate
 
(143
)
 
(43
)
 
249

 
837

 
5,190

 
900

 
20,216

Impairment of real estate
 

 

 

 

 
(1,601
)
 

 
(11,400
)
(Loss) income from discontinued operations, net
 
(143
)
 
(43
)
 
249

 
837

 
3,589

 
900

 
8,816

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain on sale of land parcel
 
4,052

 

 
772

 

 

 
4,824

 
1,864

Net income
 
44,222

 
32,453

 
33,337

 
30,237

 
28,807

 
140,249

 
105,528

Net income attributable to noncontrolling interests
 
1,110

 
960

 
980

 
982

 
1,012

 
4,032

 
3,402

Dividends on preferred stock
 
6,471

 
6,472

 
6,471

 
6,471

 
6,471

 
25,885

 
27,328

Preferred stock redemption charge
 

 

 

 

 

 

 
5,978

Net income attributable to unvested restricted stock awards
 
394

 
442

 
403

 
342

 
324

 
1,581

 
1,190

Net income attributable to Alexandria’s common stockholders
 
$
36,247

 
$
24,579

 
$
25,483

 
$
22,442

 
$
21,000

 
$
108,751

 
$
67,630

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share attributable to Alexandria’s common stockholders – basic and diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.51

 
$
0.35

 
$
0.38

 
$
0.35

 
$
0.27

 
$
1.59

 
$
0.95

Discontinued operations, net
 

 

 

 
0.01

 
0.06

 
0.01

 
0.14

Earnings per share – basic and diluted
 
$
0.51

 
$
0.35

 
$
0.38

 
$
0.36

 
$
0.33

 
$
1.60

 
$
1.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria’s common stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
– Basic
 
71,000

 
70,900

 
66,973

 
63,161

 
63,092

 
68,038

 
62,160

– Diluted
 
71,000

 
70,900

 
66,973

 
63,161

 
63,092

 
68,038

 
62,160


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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Consolidated Balance Sheets
(In thousands)
(Unaudited) 
 
 
12/31/13
 
9/30/13
 
6/30/13
 
3/31/13
 
12/31/12
Assets
 
 
 
 

 
 

 
 

 
 

Investments in real estate, net
 
$
6,776,914

 
$
6,613,761

 
$
6,453,379

 
$
6,375,182

 
$
6,424,578

Cash and cash equivalents
 
57,696

 
53,839

 
302,205

 
87,001

 
140,971

Restricted cash
 
27,709

 
30,654

 
30,914

 
30,008

 
39,947

Tenant receivables
 
9,918

 
8,671

 
7,577

 
9,261

 
8,449

Deferred rent
 
190,425

 
182,909

 
177,507

 
170,100

 
170,396

Deferred leasing and financing costs, net
 
192,658

 
179,805

 
164,362

 
159,872

 
160,048

Investments
 
140,288

 
129,163

 
122,605

 
123,543

 
115,048

Other assets
 
134,156

 
159,567

 
120,740

 
135,952

 
90,679

Total assets
 
$
7,529,764

 
$
7,358,369

 
$
7,379,289

 
$
7,090,919

 
$
7,150,116

 
 
 
 
 
 
 
 
 
 
 
Liabilities, Noncontrolling Interests, and Equity
 
 
 
 
 
 
 
 
 
 
Secured notes payable
 
$
708,831

 
$
708,653

 
$
711,029

 
$
730,714

 
$
716,144

Unsecured senior notes payable
 
1,048,230

 
1,048,190

 
1,048,395

 
549,816

 
549,805

Unsecured senior line of credit
 
204,000

 
14,000

 

 
554,000

 
566,000

Unsecured senior bank term loans
 
1,100,000

 
1,100,000

 
1,200,000

 
1,350,000

 
1,350,000

Accounts payable, accrued expenses, and tenant security deposits
 
435,342

 
452,139

 
368,249

 
367,153

 
423,708

Dividends payable
 
54,420

 
54,413

 
52,141

 
43,955

 
41,401

Total liabilities
 
3,550,823

 
3,377,395

 
3,379,814

 
3,595,638

 
3,647,058

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
14,444

 
14,475

 
14,505

 
14,534

 
14,564

 
 
 
 
 
 
 
 
 
 
 
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
Series D cumulative convertible preferred stock
 
250,000

 
250,000

 
250,000

 
250,000

 
250,000

Series E cumulative redeemable preferred stock
 
130,000

 
130,000

 
130,000

 
130,000

 
130,000

Common stock
 
712

 
711

 
710

 
633

 
632

Additional paid-in capital
 
3,572,281

 
3,578,343

 
3,596,477

 
3,075,860

 
3,086,052

Accumulated other comprehensive loss
 
(36,204
)
 
(40,026
)
 
(39,565
)
 
(22,890
)
 
(24,833
)
Alexandria’s stockholders’ equity
 
3,916,789

 
3,919,028

 
3,937,622

 
3,433,603

 
3,441,851

Noncontrolling interests
 
47,708

 
47,471

 
47,348

 
47,144

 
46,643

Total equity
 
3,964,497

 
3,966,499

 
3,984,970

 
3,480,747

 
3,488,494

Total liabilities, noncontrolling interests, and equity
 
$
7,529,764

 
$
7,358,369

 
$
7,379,289

 
$
7,090,919

 
$
7,150,116



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
7



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Funds From Operations and Adjusted Funds From Operations
(In thousands, except per share amounts)
(Unaudited)
The following table presents a reconciliation of net income attributable to Alexandria’s common stockholders – basic, the most directly comparable financial measure presented in accordance with GAAP, to FFO attributable to Alexandria’s common stockholders – diluted, FFO attributable to Alexandria’s common stockholders – diluted, as adjusted, and AFFO attributable to Alexandria’s common stockholders – diluted. For the computation of the weighted average shares used to compute the per share information, refer to the “Definitions and Other Information” section in our supplemental information.
 
 
Three Months Ended
 
Year Ended
 
 
12/31/13
 
9/30/13
 
6/30/13
 
3/31/13
 
12/31/12
 
12/31/13
 
12/31/12
Net income attributable to Alexandria’s common stockholders – basic
 
$
36,247

 
$
24,579

 
$
25,483

 
$
22,442

 
$
21,000

 
$
108,751

 
$
67,630

Depreciation and amortization
 
48,101

 
49,102

 
46,580

 
46,995

 
48,072

 
190,778

 
192,005

(Gain) loss on sale of real estate
 

 

 
(219
)
 
340

 

 
121

 
(1,564
)
Impairment of real estate
 

 

 

 

 
1,601

 

 
11,400

Gain on sale of land parcel
 
(4,052
)
 

 
(772
)
 

 

 
(4,824
)
 
(1,864
)
Amount attributable to noncontrolling interests/unvested restricted stock awards:
 
 
 
 

 
 

 
 

 
 

 
 
 
 
Net income
 
1,504

 
1,402

 
1,383

 
1,324

 
1,336

 
5,613

 
4,592

FFO
 
(1,582
)
 
(1,494
)
 
(1,437
)
 
(1,064
)
 
(1,109
)
 
(5,577
)
 
(4,561
)
FFO attributable to Alexandria’s common stockholders – basic
 
80,218

 
73,589

 
71,018

 
70,037

 
70,900

 
294,862

 
267,638

Assumed conversion of 8.00% unsecured senior convertible notes
 

 
5

 
5

 
5

 
5

 
15

 
21

FFO attributable to Alexandria’s common stockholders – diluted
 
80,218

 
73,594

 
71,023

 
70,042

 
70,905

 
294,877

 
267,659

Realized gain on equity investment primarily related to one non-tenant life science entity
 

 

 

 

 

 

 
(5,811
)
Impairment of land parcel
 

 

 

 

 
2,050

 

 
2,050

Impairment of investments
 
853

(1)

 

 

 

 
853

 

Acquisition-related expenses
 
1,446

(2)

 

 

 

 
1,446

 

Loss on early extinguishment of debt
 

 
1,432

 
560

 

 

 
1,992

 
2,225

Preferred stock redemption charge
 

 

 

 

 

 

 
5,978

Allocation to unvested restricted stock awards
 
(12
)
 
(11
)
 
(12
)
 

 
(19
)
 
(35
)
 
(39
)
FFO attributable to Alexandria’s common stockholders – diluted, as adjusted
 
82,505

 
75,015

 
71,571

 
70,042

 
72,936

 
299,133

 
272,062

Non-revenue-enhancing capital expenditures:
 
 

 
 

 
 

 
 

 
 

 
 
 
 
Maintenance building improvements
 
(1,047
)
 
(1,481
)
 
(337
)
 
(596
)
 
(329
)
 
(3,461
)
 
(2,068
)
Tenant improvements and leasing commissions
 
(8,291
)
(3)
(3,739
)
 
(2,990
)
 
(882
)
 
(3,170
)
 
(15,902
)
 
(9,181
)
Straight-line rent revenue
 
(7,928
)
 
(5,570
)
 
(8,239
)
 
(6,198
)
 
(9,240
)
 
(27,935
)
 
(28,456
)
Straight-line rent expense on ground leases
 
445

 
374

 
539

 
538

 
471

 
1,896

 
3,285

Capitalized income from development projects
 
72

 
40

 
9

 
22

 
45

 
143

 
645

Amortization of acquired above and below market leases
 
(826
)
 
(830
)
 
(830
)
 
(830
)
 
(844
)
 
(3,316
)
 
(3,200
)
Amortization of loan fees
 
2,636

 
2,487

 
2,427

 
2,386

 
2,505

 
9,936

 
9,832

Amortization of debt premiums/discounts
 
146

 
153

 
115

 
115

 
110

 
529

 
511

Stock compensation
 
4,011

 
3,729

 
4,463

 
3,349

 
3,748

 
15,552

 
14,160

Allocation to unvested restricted stock awards
 
94

 
28

 
50

 
19

 
63

 
191

 
127

AFFO attributable to Alexandria’s common stockholders – diluted
 
$
71,817

 
$
70,206

 
$
66,778

 
$
67,965

 
$
66,295

 
$
276,766

 
$
257,717

 
 
Three Months Ended
 
Year Ended
 
 
12/31/13
 
9/30/13
 
6/30/13
 
3/31/13
 
12/31/12
 
12/31/13
 
12/31/12
Net income per share attributable to Alexandria’s common stockholders – basic
 
$
0.51

 
$
0.35

 
$
0.38

 
$
0.36

 
$
0.33

 
$
1.60

 
$
1.09

Depreciation and amortization
 
0.68

 
0.69

 
0.69

 
0.74

 
0.76

 
2.80

 
3.10

Loss (gain) on sale of real estate
 

 

 

 
0.01

 

 

 
(0.03
)
Impairment of real estate
 

 

 

 

 
0.03

 

 
0.18

Gain on sale of land parcel
 
(0.06
)
 

 
(0.01
)
 

 

 
(0.07
)
 
(0.03
)
FFO per share attributable to Alexandria’s common stockholders – basic and diluted
 
1.13

 
1.04

 
1.06

 
1.11

 
1.12

 
4.33

 
4.31

Realized gain on equity investment primarily related to one non-tenant life science entity
 

 

 

 

 

 

 
(0.09
)
Impairments
 
0.01

 

 

 

 
0.04

 
0.01

 
0.04

Acquisition-related expenses
 
0.02

 

 

 

 

 
0.02

 

Loss on early extinguishment of debt
 

 
0.02

 
0.01

 

 

 
0.04

 
0.02

Preferred stock redemption charge
 

 

 

 

 

 

 
0.10

FFO per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
1.16

 
1.06

 
1.07

 
1.11

 
1.16

 
4.40

 
4.38

Non-revenue-enhancing capital expenditures
 
(0.13
)
 
(0.07
)
 
(0.05
)
 
(0.02
)
 
(0.06
)
 
(0.28
)
 
(0.18
)
Straight-line rent revenue
 
(0.11
)
 
(0.08
)
 
(0.12
)
 
(0.10
)
 
(0.15
)
 
(0.41
)
 
(0.46
)
Straight-line rent expense on ground leases
 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

 
0.03

 
0.05

Amortization of acquired above and below market leases
 
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.05
)
 
(0.05
)
Amortization of loan fees
 
0.03

 
0.03

 
0.03

 
0.04

 
0.04

 
0.14

 
0.16

Stock compensation
 
0.06

 
0.05

 
0.07

 
0.05

 
0.06

 
0.23

 
0.23

Other
 

 

 

 

 

 
0.01

 
0.02

AFFO per share attributable to Alexandria’s common stockholders – diluted
 
$
1.01

 
$
0.99

 
$
1.00

 
$
1.08

 
$
1.05

 
$
4.07

 
$
4.15


(1)
Represents an impairment recognized in 4Q13 related to our investment in two private life science companies.
(2)
Represents costs classified in general and administrative expenses in connection with several acquisitions, including costs for deals we ultimately did not acquire. The acquisitions completed in November 2013 and January 2014 were for an aggregate purchase price of $166.8 million. See subsequent events for additional information.
(3)
Includes $3.7 million of leasing commissions for two lease renewals aggregating 307,535 RSF, which extended the lease terms for 10 and 15 years, respectively.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
8












SUPPLEMENTAL
INFORMATION







 
 
 


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Company Profile

Alexandria Real Estate Equities, Inc. (NYSE:ARE), a self-administered and self-managed REIT, is the largest and leading REIT focused principally on owning, operating, developing, redeveloping, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry. Founded in 1994, Alexandria pioneered the laboratory/office niche and has become the leading life science real estate brand and dominant market presence in the top life science clusters, including Greater Boston, the San Francisco Bay Area, San Diego, Greater New York City, Maryland, Seattle, and Research Triangle Park. Alexandria manages its properties through fully integrated regional and life science teams with unparalleled real estate and life science expertise. As the Landlord of Choice to the Life Science Industry®, Alexandria is known for its high-quality and diverse client tenant base. Alexandria has a proven and superior track record developing Class A laboratory/office assets in AAA cluster locations adjacent to leading academic medical research centers, offering highly creative amenities that drive client tenant productivity and foster innovation, and gathering its longstanding and expansive network in the life science community. For additional information on Alexandria, please visit www.are.com.

Unique niche strategy

Alexandria’s primary business objective is to maximize stockholder value by providing its stockholders with the greatest possible total return and long-term asset value based on a multifaceted platform of internal and external growth. The key elements of our strategy include:

A consistent focus on Class A laboratory/office assets and operations focused primarily in key urban science center campus locations in AAA life science cluster locations characterized by high barriers to entry for new landlords, high barriers to exit for client tenants, and a limited supply of available space;
Collaborative locations adjacent to leading life science entities and research institutions that drive innovation and growth within each cluster and provide access to dense concentrations of highly educated and skilled people;
Utilizing our deep real estate relationships in order to develop and acquire real estate;
Drawing upon our broad and meaningful life science relationships to attract new and leading life science client tenants; and
Solid and flexible capital structure to enable growth.

Client tenant base

The impressive quality, diversity, breadth, and depth of our significant relationships with our life science client tenants provide Alexandria with solid and stable cash flows. Alexandria’s strong life science underwriting skills and long-term life science industry relationships positively distinguish Alexandria from all other publicly traded REITs and real estate companies.

Investment-grade client tenants represent 51% of total annualized base rent as of December 31, 2013
Investment-grade client tenants represent 82% of Alexandria’s top 20 client tenants by ABR as of December 31, 2013
Our ABR as of December 31, 2013, consisted of the following client tenant mix:
25.3% from multinational pharmaceutical companies
21.5% from revenue producing life science product and service, medical device, and industrial biotech companies
19.1% from public biotechnology companies
19.1% from institutional university, non-profit, and government
11.3% from private biotechnology companies
3.7% from traditional office client tenants

Executive/senior management

Alexandria’s executive and senior management team is highly experienced in the REIT industry and is the most accomplished team focused on providing high-quality, environmentally sustainable real estate; technical infrastructure; and life science and real estate development, construction, operations, and ownership expertise to the broad and diverse life science industry. Our deep and talented team has decades of life science industry experience. Alexandria’s senior management team averages over 23 years of life science and real estate experience, including over 11 years with Alexandria. Our sophisticated management team also includes regional market directors with leading reputations and longstanding relationships with the life science communities in their respective clusters. We believe that our expertise, experience, reputation, and key life science relationships provide Alexandria significant competitive advantages in attracting new business opportunities.

Joel S. Marcus
 
Chairman, Chief Executive Officer & Founder
 
Thomas J. Andrews
 
EVP – Regional Market Director-Greater Boston
Dean A. Shigenaga
 
Chief Financial Officer, EVP & Treasurer
 
Daniel J. Ryan
 
EVP – Regional Market Director-San Diego 
& Strategic Operations
Peter M. Moglia
 
Chief Investment Officer
 
John J. Cox
 
SVP – Regional Market Director-Seattle
Stephen A. Richardson
 
Chief Operating Officer & Regional Market Director-San Francisco Bay Area
 
John H. Cunningham
 
SVP – Regional Market Director-New York City & Strategic Operations
Jennifer J. Banks
 
General Counsel, EVP & Corporate Secretary
 
Larry J. Diamond
 
SVP – Regional Market Director-Maryland
Marc E. Binda
 
SVP – Finance
 
Vincent R. Ciruzzi
 
SVP – Construction & Development
Andres R. Gavinet
 
Chief Accounting Officer
 
Amanda L. Cashin, PhD
 
SVP – Life Science

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
10



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Investor Information
Corporate Headquarters
 
Trading Symbols
 
Information Requests
385 East Colorado Boulevard, Suite 299
 
New York Stock Exchange
 
Phone:
(626) 396-4828
Pasadena, California 91101
 
Common stock: ARE
 
E-mail:
corporateinformation@are.com
 
 
Series E preferred stock: ARE–E
 
Web:
www.are.com

Common stock data
 
 
 
4Q13
 
 
3Q13
 
 
2Q13
 
 
1Q13
 
 
4Q12
High trading price
 
$
67.99

 
$
71.29

 
$
78.43

 
$
73.51

 
$
74.59

Low trading price
 
$
61.08

 
$
60.86

 
$
61.20

 
$
69.77

 
$
64.09

Closing stock price, average for period
 
$
64.22

 
$
65.93

 
$
70.68

 
$
71.98

 
$
69.88

Closing stock price, at the end of the quarter
 
$
63.62

 
$
63.85

 
$
65.72

 
$
70.98

 
$
69.32

Dividend per share – quarter/annualized
 
$
0.68/2.72

 
$
0.68/2.72

 
$
0.65/2.60

 
$
0.60/2.40

 
$
0.56/2.24

Dividend payout ratio
 
 
59%

 
 
65%

 
 
65%

 
 
55%

 
 
49%

Closing dividend yield – annualized
 
 
4.3%

 
 
4.3%

 
 
4.0%

 
 
3.4%

 
 
3.2%

Common shares outstanding, at the end of the quarter (in thousands)
 
 
71,172

 
 
71,081

 
 
70,997

 
 
63,317

 
 
63,245

Closing market value of outstanding common shares (in thousands)
 
$
4,527,975

 
$
4,538,517

 
$
4,665,948

 
$
4,494,262

 
$
4,384,119

Total market capitalization (in thousands)
 
$
7,949,276

 
$
7,780,208

 
$
8,005,581

 
$
8,066,072

 
$
7,953,348


Equity research coverage
    
Alexandria is currently covered by the following research analysts.  This list may not be complete and is subject to change as firms initiate or discontinue coverage of our company.  Please note that any opinions, estimates, or forecasts regarding our historical or predicted performance made by these analysts are theirs alone and do not represent opinions, estimates, or forecasts of Alexandria or its management.  Alexandria does not by its reference or distribution of the information below imply its endorsement of or concurrence with any opinions, estimates, or forecasts of these analysts.  Interested persons may obtain copies of analysts’ reports on their own as we do not distribute these reports.  Several of these firms may from time-to-time own our stock and/or hold other long or short positions in our stock, and may provide compensated services to us.
 
Bank of America Merrill Lynch
 
Evercore Partners
 
 
 
RBC Capital Markets
 
 
Jamie Feldman
 
(646) 855-5808
 
Sheila McGrath
 
(212) 497-0882
 
Michael Carroll
 
(440) 715-2649
Jeffrey Spector
 
(646) 855-1363
 
Nathan Crossett
 
(212) 497-0870
 
Rich Moore
 
(440) 715-2646
Stephen Sihelnik
 
(646) 855-1829
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Barclays Capital Inc.
 
Green Street Advisors, Inc.
 
Robert W. Baird & Company
Ross Smotrich
 
(212) 526-2306
 
Jeff Theiler
 
(949) 640-8780
 
David Rodgers
 
(216) 737-7341
Michael Lewis
 
(212) 526-3098
 
John Hornbeak
 
(949) 640-8780
 
Mathew Spencer
 
(414) 298-5053
 
 
 
 
 
 
 
 
 
 
 
Citigroup Global Markets Inc.
 
International Strategy & Investment Group Inc.
 
Standard & Poor’s
 
 
Michael Bilerman
 
(212) 816-1383
 
George Auerbach
 
(212) 446-9459
 
Roy Shepard
 
(212) 438-1947
Emmanuel Korchman
 
(212) 816-1382
 
Steve Sakwa
 
(212) 446-9462
 
 
 
 
 
 
 
 
Gwen Clark
 
(212) 446-5611
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cowen and Company, LLC
 
JMP Securities – JMP Group, Inc.
 
UBS Financial Services Inc.
James Sullivan
 
(646) 562-1380
 
Peter Martin
 
(415) 835-8904
 
Ross Nussbaum
 
(212) 713-2484
Tom Catherwood
 
(646) 562-1382
 
Aaron Hecht
 
(415) 835-3963
 
Gabriel Hilmoe
 
(212) 713-3876
 
 
 
 
Arthur Kwok
 
(415) 835-8908
 
Frank Lee
 
(212) 713-2384
 
 
 
 
 
 
 
 
 
 
 
 
 
J.P. Morgan Securities LLC
 
 
 
 
 
 
 
 
Anthony Paolone
 
(212) 622-6682
 
 
 
 

Rating agencies
Moody’s Investors Service
 
Rating
 
Standard & Poor’s
 
Rating
Philip Kibel
 
(212) 553-4569
 
Baa2
 
George Skoufis
 
(212) 438-2608
 
BBB-
Merrie Frankel
 
(212) 553-3652
 
Stable Outlook
 
Jaime Gitler
 
(212) 438-5049
 
Stable Outlook

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
11



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Financial and Asset Base Highlights
(Dollars in thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended (unless stated otherwise)
Key credit metrics
 
12/31/13
 
9/30/13
 
6/30/13
 
3/31/13
 
12/31/12
Unencumbered NOI as a percentage of total NOI
 
69%

 
69%

 
70%

 
68%

 
71%

Net debt to Adjusted EBITDA – quarter annualized
 
6.6x

 
6.8x

 
6.6x

 
7.8x

 
7.3x

Net debt to Adjusted EBITDA – trailing 12 months
 
7.2x

 
6.9x

 
6.6x

 
7.7x

 
7.6x

Fixed charge coverage ratio – quarter annualized
 
3.2x

 
2.8x

 
2.8x

 
2.7x

 
2.8x

Fixed charge coverage ratio – trailing 12 months
 
2.9x

 
2.8x

 
2.7x

 
2.7x

 
2.6x

Dividend payout ratio (common stock)
 
59%

 
65%

 
65%

 
55%

 
49%

Non-income-producing assets as a percentage of gross assets
 
17%

 
20%

 
22%

 
22%

 
23%

 
 
 
 
 
 
 
 
 
 
 
Selected balance sheet information – at end of period
 
 
 
 

 
 

 
 

 
 

Gross investments in real estate
 
$
7,729,020

 
$
7,529,255

 
$
7,331,578

 
$
7,225,073

 
$
7,299,613

Total assets
 
$
7,529,764

 
$
7,358,369

 
$
7,379,289

 
$
7,090,919

 
$
7,150,116

Total unsecured debt
 
$
2,352,230

 
$
2,162,190

 
$
2,248,395

 
$
2,453,816

 
$
2,465,805

Total debt
 
$
3,061,061

 
$
2,870,843

 
$
2,959,424

 
$
3,184,530

 
$
3,181,949

Net debt
 
$
2,975,656

 
$
2,786,350

 
$
2,626,305

 
$
3,067,521

 
$
3,001,031

Total liabilities
 
$
3,550,823

 
$
3,377,395

 
$
3,379,814

 
$
3,595,638

 
$
3,647,058

Common shares outstanding (in thousands)
 
71,172

 
71,081

 
70,997

 
63,317

 
63,245

Total market capitalization
 
$
7,949,276

 
$
7,780,208

 
$
8,005,581

 
$
8,066,072

 
$
7,953,348

 
 
 
 
 
 
 
 
 
 
 
Operating data
 
 
 
 

 
 

 
 

 
 

Total revenues
 
$
168,823

 
$
158,315

 
$
153,930

 
$
150,083

 
$
151,254

Rental operations
 
$
49,892

 
$
47,684

 
$
46,277

 
$
45,186

 
$
46,132

Operating margins
 
70%

 
70%

 
70%

 
70%

 
70%

Adjusted EBITDA – quarter annualized
 
$
449,456

 
$
411,548

 
$
399,708

 
$
395,764

 
$
408,876

Adjusted EBITDA – trailing 12 months
 
$
414,119

 
$
403,974

 
$
396,739

 
$
397,606

 
$
393,124

Adjusted EBITDA margins – quarter annualized
 
67%

 
65%

 
65%

 
64%

 
64%

General and administrative expense as a percentage of total assets – quarter annualized
 
0.7%

 
0.6%

 
0.7%

 
0.7%

 
0.7%

General and administrative expense as a percentage of total revenues – quarter annualized
 
7.6%

 
7.4%

 
8.1%

 
7.8%

 
8.4%

Capitalized interest
 
$
14,116

 
$
16,788

 
$
15,690

 
$
14,021

 
$
14,897

Weighted average interest rate used for capitalization during period
 
4.09%

 
4.33%

 
4.13%

 
3.97%

 
4.10%

 
 
 
 
 
 
 
 
 
 
 
Net income, FFO, and AFFO
 
 
 
 

 
 

 
 

 
 

Net income attributable to Alexandria’s common stockholders – diluted
 
$
36,247

 
$
24,579

 
$
25,483

 
$
22,442

 
$
21,000

FFO attributable to Alexandria’s common stockholders – diluted
 
$
80,218

 
$
73,594

 
$
71,023

 
$
70,042

 
$
70,905

FFO attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
82,505

 
$
75,015

 
$
71,571

 
$
70,042

 
$
72,936

AFFO attributable to Alexandria’s common stockholders – diluted
 
$
71,817

 
$
70,206

 
$
66,778

 
$
67,965

 
$
66,295

 
 
 
 
 
 
 
 
 
 
 
Per share data
 
 
 
 

 
 

 
 

 
 

Earnings per share attributable to Alexandria’s common stockholders – diluted
 
$
0.51

 
$
0.35

 
$
0.38

 
$
0.36

 
$
0.33

FFO per share attributable to Alexandria’s common stockholders – diluted
 
$
1.13

 
$
1.04

 
$
1.06

 
$
1.11

 
$
1.12

FFO per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
1.16

 
$
1.06

 
$
1.07

 
$
1.11

 
$
1.16

AFFO per share attributable to Alexandria’s common stockholders – diluted
 
$
1.01

 
$
0.99

 
$
1.00

 
$
1.08

 
$
1.05

 
 
 
 
 
 
 
 
 
 
 
Asset base statistics – at end of period
 
 
 
 

 
 

 
 

 
 

Number of properties at end of period
 
180

 
176

 
173

 
174

 
179

Rentable square feet at end of period
 
17,461,030

 
17,260,189

 
17,062,338

 
17,102,509

 
17,549,013

Occupancy of operating properties – North America at end of period
 
95.9%

 
95.0%

 
94.6%

 
94.2%

 
94.6%

Occupancy of operating and redevelopment properties – North America at end of period
 
95.5%

 
94.5%

 
92.9%

 
91.8%

 
91.6%

Occupancy of operating properties at end of period
 
94.4%

 
93.5%

 
93.3%

 
93.0%

 
93.4%

Occupancy of operating and redevelopment properties at end of period
 
93.8%

 
92.8%

 
91.2%

 
90.1%

 
89.8%

Leasing activity and same property performance
 
 
 
 
 
 
 
 
 
 
Leasing activity – rentable square feet
 
1,344,687

 
829,533

 
767,935

 
702,901

 
677,781

Leasing activity – change in average new rental rates over expiring rates:
 
 
 
 
 
 
 
 
 
 
– Cash basis
 
2.6%

 
4.1%

 
6.7%

 
5.9%

 
(2.9)%

– GAAP basis
 
18.2%

 
16.5%

 
12.7%

 
12.7%

 
2.6 %

Same property – change in NOI over comparable quarter from prior year:
 
 
 
 
 
 
 
 
 
 
– Cash basis
 
4.6%

 
4.7%

 
7.2%

 
8.8%

 
6.3 %

– GAAP basis
 
1.4%

 
1.9%

 
3.2%

 
0.4%

 
0.7 %





ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
12



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Operating Metrics
(Unaudited)
Occupancy of Operating Properties – North America
 
Occupancy of Operating and
Redevelopment Properties – North America
 
Same Property NOI Growth
 
Rental Rates Growth: Renewed/Re-leased Space
 
NOI (In millions)
 
Operating Margin
 
Drivers of Cash NOI Growth
 
December 31, 2013
Percentage of leases containing annual rent escalations
 
95
%
 
Percentage of triple net leases
 
94
%
 
Percentage of leases providing for the recapture of capital expenditures
 
92
%
 


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
13



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Same Property Performance
(Dollars in thousands)
(Unaudited)
Same Property Data
 
Three Months Ended
December 31, 2013
 
Year Ended
December 31, 2013
Percentage change in NOI over comparable period from prior year:
 
 
 
 
Cash basis
 
4.6%
 
5.4%
GAAP basis
 
1.4%
 
1.8%
Operating margin – GAAP basis
 
68%
 
68%
Number of same properties
 
143
 
133
Rentable square feet
 
12,991,459
 
11,781,883
Occupancy – current period
 
94.4%
 
93.5%
Occupancy – same period prior year
 
93.1%
 
92.7%
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2013
 
2012
 
% Change
 
2013
 
2012
 
% Change
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Rental – same properties
 
$
105,812

 
$
103,970

 
1.8
%
 
$
382,083

 
$
373,589

 
2.3
%
Rental – non-same properties
 
19,881

 
7,828

 
154.0

 
85,681

 
49,204

 
74.1

Total rental
 
125,693

 
111,798

 
12.4

 
467,764

 
422,793

 
10.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Tenant recoveries – same properties
 
35,306

 
34,205

 
3.2

 
124,080

 
120,168

 
3.3

Tenant recoveries – non-same properties
 
4,664

 
1,466

 
218.1

 
26,015

 
13,112

 
98.4

Total tenant recoveries
 
39,970

 
35,671

 
12.1

 
150,095

 
133,280

 
12.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Other income – same properties
 
208

 
133

 
56.4

 
342

 
348

 
(1.7
)
Other income – non-same properties
 
2,952

 
3,652

 
(19.2
)
 
12,950

 
18,076

 
(28.4
)
Total other income
 
3,160

 
3,785

 
(16.5
)
 
13,292

 
18,424

 
(27.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues – same properties
 
141,326

 
138,308

 
2.2

 
506,505

 
494,105

 
2.5

Total revenues – non-same properties
 
27,497

 
12,946

 
112.4

 
124,646

 
80,392

 
55.0

Total revenues
 
168,823

 
151,254

 
11.6

 
631,151

 
574,497

 
9.9

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Rental operations – same properties
 
44,837

 
43,120

 
4.0

 
160,358

 
153,961

 
4.2

Rental operations – non-same properties
 
5,055

 
3,012

 
67.8

 
28,681

 
18,795

 
52.6

Total rental operations
 
49,892

 
46,132

 
8.2

 
189,039

 
172,756

 
9.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income:
 
 
 
 
 
 
 
 
 
 
 
 
NOI – same properties
 
96,489

 
95,188

 
1.4

 
346,147

 
340,144

 
1.8

NOI – non-same properties
 
22,442

 
9,934

 
125.9

 
95,965

 
61,597

 
55.8

Total NOI
 
118,931

 
105,122

 
13.1

 
442,112

 
401,741

 
10.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Other expenses:
 
 
 
 
 
 
 
 
 
 
 
 
General and administrative
 
12,751

 
12,633

 
0.9

 
48,520

 
47,747

 
1.6

Interest
 
17,783

 
17,941

 
(0.9
)
 
67,952

 
69,184

 
(1.8
)
Depreciation and amortization
 
48,084

 
47,280

 
1.7

 
189,123

 
185,687

 
1.9

Impairment of land parcel
 

 
2,050

 
(100.0
)
 

 
2,050

 
(100.0
)
Loss on early extinguishment of debt
 

 

 

 
1,992

 
2,225

 
(10.5
)
Total other expenses
 
78,618

 
79,904

 
(1.6
)
 
307,587

 
306,893

 
0.2

Income from continuing operations
 
$
40,313

 
$
25,218

 
59.9
%
 
$
134,525

 
$
94,848

 
41.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
NOI – same properties – GAAP basis
 
$
96,489

 
$
95,188

 
1.4
%
 
$
346,147

 
$
340,144

 
1.8
%
Less: straight-line rent adjustments
 
(3,462
)
 
(6,228
)
 
(44.4
)
 
(5,299
)
 
(16,618
)
 
(68.1
)
NOI – same properties – cash basis
 
$
93,027

 
$
88,960

 
4.6
%
 
$
340,848

 
$
323,526

 
5.4
%

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
14



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Same Property Performance
(Unaudited)

The charts below provide two alternative calculations of same property performance in comparison to our historical same property performance. Our reported same property performance has been based upon a pool of operating assets and completed developed and redeveloped assets to the extent that those assets were operating for the entirety of the comparable same property period presented. The two alternative calculations presented below consist of 1) same property performance for the operating portfolio excluding assets that were recently developed or redeveloped and 2) the same property performance for the operating portfolio including those assets that were either under current redevelopment or previously completed redevelopments. From 2008 through 2012, our same property performance was generally consistent in each of the three calculations. For the year ended December 31, 2013, same property performance including redevelopment properties, as shown in the table, would have been meaningfully higher than our traditional method of reporting same property performance. Same property performance including redevelopment properties will, from time to time, have significant growth in NOI as a result of the completion of the conversion of non-laboratory space (with lower NOI) to laboratory/office space (with higher NOI) through redevelopment.  We believe our traditional method of reporting same property performance is a more useful presentation since it excludes the potential significant increases in performance as a result of completion of significant redevelopment projects.
 
Percentage change in same property NOI over preceding period - cash basis

Percentage change in same property NOI over preceding period - GAAP basis
 
 
 
NOI Included in All Comparative Periods
 
 
 
Operating
Properties
 
Recently Completed
 
Properties Under Current
 
Legend
 
 
Developments
 
Redevelopments
 
Development
 
Redevelopment
 
 
 
 
 
 
 
 
 
 
 
 
 
Same property data as reported
 
Yes
 
Yes (1)
 
Yes (1)
 
No
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
Same property operating portfolio
 
Yes
 
No
 
No
 
No
 
No
 
 
 
 
 
 
 
 
 
 
 
 
 
Same property data including redevelopments
 
Yes
 
No
 
Yes
 
No
 
Yes

(1)
Recently delivered developments and redevelopments are included in the same property data for each of the year-over-year comparison periods only if the property was operating during the entire same property period. For example, projects completed during 2011 are included in 2013 same property performance (as a percentage change over 2012).


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
15



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Leasing Activity
(Unaudited)
 
 
Three Months Ended December 31, 2013
 
Year Ended
December 31, 2013
 
Year Ended
December 31, 2012
Leasing activity:
 
Cash
 
GAAP
 
Cash
 
GAAP
 
Cash
 
GAAP
Renewed/re-leased space (1)
 
 

 
 

 
 

 
 

 
 

 
 

Rental rate changes
 
2.6%

 
18.2%

 
4.0%

 
16.2%

 
(2.0)%

 
5.2%

New rates
 
$
30.03

 
$
31.03

 
$
31.04

 
$
32.00

 
$
29.86

 
$
30.36

Expiring rates
 
$
29.27

 
$
26.25

 
$
29.84

 
$
27.53

 
$
30.47

 
$
28.87

Rentable square footage
 
853,330

 
 
 
1,838,397

 
 
 
1,475,403

 
 

Number of leases
 
44

 
 
 
120

 
 
 
102

 
 

TIs/lease commissions per square foot
 
$
9.70

 
 
 
$
8.65

 
 
 
$
6.22

 
 

Average lease terms
 
6.3 years
 
 
 
5.2 years
 
 
4.7 years
 

Developed/redeveloped/previously vacant space leased
 
 
 
 
 
 
 
 
 
 

 
 

New rates
 
$
23.95

(2) 
$
25.55

(2) 
$
41.86

 
$
44.63

 
$
30.66

 
$
32.56

Rentable square footage
 
491,357

 
 
 
1,806,659

 
 
 
1,805,693

 
 

Number of leases
 
20

 
 
 
92

 
 
 
85

 
 

TIs/lease commissions per square foot
 
$
9.63

 
 
 
$
19.16

 
 
 
$
11.02

 
 

Average lease terms
 
7.9 years
 
 
 
10.0 years
 
 
9.0 years
 

Leasing activity summary:
 
 
 
 
 
 
 
 
 
 

 
 

Totals
 
 
 
 
 
 
 
 
 
 

 
 

New rates
 
$
27.81

(2) 
$
29.03

(2) 
$
36.40

 
$
38.26

 
$
30.30

 
$
31.57

Rentable square footage
 
1,344,687

 
 
 
3,645,056

 
 
 
3,281,096

 
 

Number of leases
 
64

 
 
 
212

 
 
 
187

 
 

TIs/lease commissions per square foot
 
$
9.67

 
 
 
$
13.86

 
 
 
$
8.87

 
 

Average lease terms
 
6.9 years
 
 
 
7.6 years
 
 
7.1 years
 

Lease expirations
 
 
 
 
 
 
 
 
 
 

 
 

Expiring rates
 
$
29.38

 
$
26.37

 
$
30.15

 
$
27.74

 
$
30.03

 
$
27.65

Rentable square footage
 
943,941

 
 
 
2,144,447

 
 
 
2,350,348

 
 

Number of leases
 
64

 
 
 
160

 
 
 
162

 
 


(1)
Excludes 13 month-to-month leases for 22,172 RSF at December 31, 2013.
(2)
Includes a lease in China for 160,253 RSF of newly developed space. Excluding this lease, the rental rates reported above for the three months ended December 31, 2013, were $34.04 on a cash basis and $36.43 on a GAAP basis for developed/redeveloped/previously vacant space leased. Excluding this lease from total leasing activity for the three months ended December 31, 2013, rental rates were $31.15 and $32.54 on a cash basis and GAAP basis, respectively.

During the year ended December 31, 2013, we granted tenant concessions/free rent averaging approximately 2.5 months with respect to the 3,645,056 RSF leased.

The following chart presents our total RSF leased by renewed/re-leased space and developed/redeveloped/previously vacant space:

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
16



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Lease Expirations
(Unaudited) 
Year of Lease Expiration
 
Number of Leases Expiring
 
RSF of Expiring Leases
 
Percentage of
Aggregate Total RSF
 
Annualized Base Rent of
Expiring Leases (per RSF)
 
2014
 
 
84

(1) 
 
 
868,374

(1) 
 
 
5.9
%
 
 
 
$
29.31

 
 
2015
 
 
86

 
 
 
1,415,550

 
 
 
9.6
%
 
 
 
$
30.74

 
 
2016
 
 
75

 
 
 
1,219,924

 
 
 
8.3
%
 
 
 
$
32.58

 
 
2017
 
 
79

 
 
 
1,627,089

 
 
 
11.0
%
 
 
 
$
28.21

 
 
2018
 
 
48

 
 
 
1,457,228

 
 
 
9.9
%
 
 
 
$
40.12

 
 
2019
 
 
34

 
 
 
1,072,959

 
 
 
7.3
%
 
 
 
$
34.72

 
 
2020
 
 
22

 
 
 
913,293

 
 
 
6.2
%
 
 
 
$
38.49

 
 
2021
 
 
23

 
 
 
897,912

 
 
 
6.1
%
 
 
 
$
37.06

 
 
2022
 
 
16

 
 
 
613,770

 
 
 
4.2
%
 
 
 
$
28.94

 
 
2023
 
 
19

 
 
 
1,031,167

 
 
 
7.0
%
 
 
 
$
34.83

 
 
Thereafter
 
 
28

 
 
 
2,711,173

 
 
 
18.4
%
 
 
 
$
42.48

 
 
 
 
2014 RSF of Expiring Leases
 
Annualized
Base Rent of
Expiring Leases
(per RSF)
 
 
 
Leased
 
Negotiating/
Anticipation
 
Targeted for
Redevelopment
 
Remaining
Expiring Leases
 
Total (1)
 
 
Market
 
 
 
 
 
 
 
Greater Boston
 
13,873

 
64,014

 

 
141,073

 
218,960

 
$
40.28

 
San Francisco Bay Area
 
68,397

 
33,142

 

 
133,051

 
234,590

 
28.77

 
San Diego
 

 

 
67,015

(2) 
50,194

 
117,209

 
12.15

 
Greater New York City
 

 
69,056

 

 
21,712

 
90,768

 
38.65

 
Maryland
 
8,867

 
16,241

 

 
89,950

 
115,058

 
24.22

 
Seattle
 
6,552

 
2,671

 

 
11,444

 
20,667

 
45.24

 
Research Triangle Park
 

 
8,013

 

 
19,714

 
27,727

 
21.66

 
Non-cluster markets
 

 

 

 
15,817

 
15,817

 
19.99

 
Asia
 

 
18,800

 

 
8,778

 
27,578

 
11.41

(3) 
Total
 
97,689

 
211,937

 
67,015

 
491,733

 
868,374

 
$
29.31

 
Percentage of expiring leases
 
11
%
 
24
%
 
8
%
 
57
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2015 RSF of Expiring Leases
 
Annualized
Base Rent of
Expiring Leases
(per RSF)
 
 
 
Leased
 
Negotiating/
Anticipation
 
Targeted for
Redevelopment
 
Remaining
Expiring Leases
 
Total (1)
 
 
Market
 
 
 
 
 
 
 
Greater Boston
 

 
81,441

 

 
425,437

 
506,878

 
$
42.04

 
San Francisco Bay Area
 
71,746

 

 

 
151,169

 
222,915

 
33.19

 
San Diego
 

 

 
48,880

(4) 
172,457

 
221,337

 
22.31

 
Greater New York City
 

 

 

 
9,131

 
9,131

 
N/A

 
Maryland
 

 
35,224

 

 
158,740

 
193,964

 
20.29

 
Seattle
 

 

 

 
40,821

 
40,821

 
27.88

 
Research Triangle Park
 

 
31,776

 

 
184,645

 
216,421

 
20.51

 
Non-cluster markets
 

 

 

 
3,508

 
3,508

 
18.27

 
Asia
 

 

 

 
575

 
575

 
17.43

(3) 
Total
 
71,746

 
148,441

 
48,880

 
1,146,483

 
1,415,550

 
$
30.74

 
Percentage of expiring leases
 
5
%
 
11
%
 
3
%
 
81
%
 
100
%
 
 
 
 

(1)
Excludes 13 month-to-month leases for 22,172 RSF.
(2)
Represents the square footage of 10121 Barnes Canyon Road, which was acquired in 3Q13. Upon rollover in the first quarter of 2014, this property will undergo conversion into high-tech office space through redevelopment. This redevelopment project is 100% pre-leased.
(3)
Expirations relate to two properties with an average investment of $114 per RSF.
(4)
Represents the square footage at 10151 Barnes Canyon Road, which was acquired in 3Q13. This property will undergo conversion into laboratory/office space through redevelopment upon rollover in the fourth quarter of 2015.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
17



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Top 20 Client Tenants and Client Tenant Mix
(Dollars in thousands)
(Unaudited)
Top 20 client tenants
 
 
 
 
Remaining Lease Term in Years (1)
 
Aggregate Rentable Square Feet
 
Percentage of Aggregate Total Square Feet
 
Annualized
Base Rent 
 
Percentage of Aggregate Annualized Base Rent
 
 
 
 
 
 
 
 
 
 
 
Investment-Grade Ratings
 
 
Client Tenant
 
 
 
 
 
 
Fitch
 
Moody’s
 
S&P
1
 
Novartis AG
 
 
3.4

 
 
692,256

 
4.0
%
 
$
33,469

 
6.7
%
 
AA
 
Aa3
 
AA-
2
 
Illumina, Inc.
 
 
17.8

 
 
497,078

 
2.8

 
19,531

 
3.9

 
 
 
3
 
New York University
 
 
16.7

 
 
205,609

 
1.2

 
18,950

 
3.8

 
 
Aa3
 
AA-
4
 
Roche
 
 
6.1

 
 
409,734

 
2.3

 
18,671

 
3.8

 
AA
 
A1
 
AA
5
 
United States Government
 
 
9.5

 
 
399,633

 
2.3

 
17,790

 
3.6

 
AAA
 
Aaa
 
AA+
6
 
Bristol-Myers Squibb Company
 
 
7.0

 
 
419,624

 
2.4

 
15,840

 
3.2

 
A-
 
A2
 
A+
7
 
Biogen Idec Inc.
 
 
14.4

 
 
313,872

 
1.8

 
14,731

 
3.0

 
 
Baa2
 
A-
8
 
Eli Lilly and Company
 
 
9.9

 
 
257,119

 
1.5

 
14,563

 
2.9

 
A
 
A2
 
AA-
9
 
FibroGen, Inc.
 
 
9.9

 
 
234,249

 
1.3

 
14,197

 
2.9

 
 
 
10
 
GlaxoSmithKline plc
 
 
5.6

 
 
208,394

 
1.2

 
10,149

 
2.0

 
A+
 
A1
 
A+
11
 
Amgen Inc.
 
 
9.3

 
 
294,373

 
1.7

 
9,675

 
1.9

 
BBB
 
Baa1
 
A
12
 
Celgene Corporation
 
 
7.5

 
 
250,586

 
1.4

 
9,361

 
1.9

 
 
Baa2
 
BBB+
13
 
Massachusetts Institute of Technology
 
 
3.7

 
 
185,403

 
1.1

 
8,499

 
1.7

 
 
Aaa
 
AAA
14
 
The Regents of the University of California
 
 
7.7

 
 
188,654

 
1.1

 
7,787

 
1.6

 
AA+
 
Aa1
 
AA-
15
 
Alnylam Pharmaceuticals, Inc.
 
 
2.8

 
 
129,424

 
0.7

 
6,081

 
1.2

 
 
 
16
 
Gilead Sciences, Inc.
 
 
6.5

 
 
109,969

 
0.6

 
5,824

 
1.2

 
 
Baa1
 
A-
17
 
Pfizer Inc.
 
 
5.2

 
 
116,518

 
0.7

 
5,502

 
1.1

 
A+
 
A1
 
AA
18
 
Theravance, Inc. (2)
 
 
6.4

 
 
150,256

 
0.9

 
5,494

 
1.1

 
 
 
19
 
Partners HealthCare System, Inc.
 
 
13.4

 
 
101,035

 
0.6

 
5,350

 
1.1

 
AA
 
Aa2
 
AA
20
 
The Scripps Research Institute
 
 
2.9

 
 
101,775

 
0.6

 
5,200

 
1.0

 
AA+
 
Aa3
 
 
 
Total/weighted average
 
 
8.7

 
 
5,265,561

 
30.2
%
 
$
246,664

 
49.6
%
 
 
 
 
 
 

(1)
Represents remaining lease term in years based on percentage of aggregate ABR in effect as of December 31, 2013.
(2)
As of September 30, 2013, GlaxoSmithKline plc owned approximately 27% of the outstanding stock of Theravance, Inc.

Client tenant mix by annualized base rent
Investment-Grade Client Tenants Represent 51% of Alexandria’s
Total Annualized Base Rent at 4Q13

Investment-Grade Client Tenants Represent 82% of ABR from our Top 20 Client Tenants at 4Q13
Multinational Pharmaceutical
 
Institutional University, Non-Profit, and Government
 
Life Science Product and Service,
Medical Device, and Industrial Biotech
 
Biotechnology: Public & Private
• Astellas Pharma Inc.
• AstraZeneca PLC
• Bayer AG
• Bristol-Myers Squibb Company
• Eisai Co., Ltd.
• Eli Lilly and Company
• GlaxoSmithKline plc
• Novartis AG
• Pfizer Inc.
• Roche
• Sanofi
• Shire plc
• UCB S.A.
 
 
• Duke University
• Environmental Protection Agency
• Fred Hutchinson Cancer Research Center
• Massachusetts Institute of Technology
• National Institutes of Health
• New York University
• Sanford-Burnham Medical Research Institute
• Stanford University
• The Regents of the University of California
• The Scripps Research Institute
• UMass Memorial Health Care, Inc.
• University of North Carolina Health Care System
• United States Government
• University of Washington
 
• Aramco Services Company, Inc.
• Canon U.S. Life Sciences, Inc.
• Covance Inc.
• DSM N.V.
• Fluidigm Corporation
• Google Inc.
• Illumina, Inc.
• Laboratory Corporation of America Holdings
• Life Technologies Corporation
• Monsanto Company
• Quest Diagnostics Incorporated
• Thermo Fisher Scientific, Inc.

 
 
• Alnylam Pharmaceuticals, Inc.
• Amgen Inc.
• Biogen Idec Inc.
• Celgene Corporation
• Constellation Pharmaceuticals, Inc.
• Epizyme, Inc.
• Fate Therapeutics, Inc.
• FibroGen, Inc.
• FORMA Therapeutics, Inc.
• Gilead Sciences, Inc.
• Infinity Pharmaceuticals, Inc.
• Kadmon Corporation, LLC
• Medivation, Inc.
• Nektar Therapeutics
• Proteostasis Therapeutics, Inc.
• Quanticel Pharmaceuticals, Inc.
• Theravance, Inc.
• Warp Drive Bio, LLC

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
18



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Summary of Properties and Occupancy
(Unaudited)

Summary of properties
 
 
Rentable Square Feet
 
Number of Properties
 
Annualized Base Rent (Dollars in thousands)
Market
 
Operating
 
Development
 
Redevelopment
 
Total
 
% Total
 
 
Greater Boston
 
3,547,714

 
801,806

 

 
4,349,520

 
25
%
 
38

 
$
145,671

 
29
%
San Francisco Bay Area
 
2,540,731

 
330,030

 

 
2,870,761

 
17

 
26

 
99,723

 
20

San Diego
 
2,727,937

 

 
55,213

 
2,783,150

 
16

 
36

 
88,778

 
18

Greater New York City
 
683,667

 
229,627

 

 
913,294

 
5

 
6

 
47,100

 
10

Maryland
 
2,155,346

 

 

 
2,155,346

 
13

 
29

 
48,816

 
10

Seattle
 
746,516

 

 

 
746,516

 
4

 
10

 
29,438

 
6

Research Triangle Park
 
1,025,786

 

 

 
1,025,786

 
6

 
15

 
21,491

 
4

Canada
 
1,103,507

 

 

 
1,103,507

 
6

 
5

 
9,595

 
2

Non-cluster markets
 
60,178

 

 

 
60,178

 

 
2

 
874

 

North America
 
14,591,382

 
1,361,463

 
55,213

 
16,008,058

 
92

 
167

 
491,486

 
99

Asia
 
858,570

 
465,456

 
44,660

 
1,368,686

 
8

 
9

 
5,719

 
1

Continuing operations
 
15,449,952

 
1,826,919

 
99,873

 
17,376,744

 
100

 
176

 
$
497,205

 
100
%
Properties “held for sale”
 
84,286

 

 

 
84,286

 

 
4

 
 
 
 
Total
 
15,534,238

 
1,826,919

 
99,873

 
17,461,030

 
100
%
 
180

 


 
 

Summary of occupancy percentages
 
 
Operating Properties
 
Operating and Redevelopment Properties
Market
 
12/31/13
 
9/30/13
 
12/31/12
 
12/31/13
 
9/30/13
 
12/31/12
Greater Boston
 
96.8
%
 
96.3
%
 
94.6
%
 
96.8
%
 
96.3
%
 
91.6
%
San Francisco Bay Area
 
97.7

 
96.1

 
97.8

 
97.7

 
96.1

 
95.7

San Diego
 
96.5

 
95.0

 
95.1

 
94.5

 
92.7

 
91.9

Greater New York City
 
98.3

 
98.4

 
95.7

 
98.3

 
98.4

 
95.7

Maryland
 
92.0

 
93.7

 
90.9

 
92.0

 
93.7

 
88.1

Seattle
 
90.7

(1) 
90.1

(1) 
93.9

 
90.7

 
90.1

 
80.1

Research Triangle Park
 
96.6


92.0

 
95.5

 
96.6

 
92.0

 
95.5

Canada
 
96.8

 
96.8

 
98.1

 
96.8

 
96.8

 
98.1

Non-cluster markets
 
91.7

 
91.7

 
51.4

 
91.7

 
91.7

 
51.4

North America
 
95.9

 
95.0

 
94.6

 
95.5

 
94.5

 
91.6

Asia
 
71.2

 
63.9

 
66.2

 
67.7

 
59.8

 
55.3

Continuing operations
 
94.4
%
 
93.5
%
 
93.4
%
 
93.8
%
 
92.8
%
 
89.8
%

(1)
Decrease from 4Q12 primarily attributable to the delivery of 39,661 vacant RSF from our redevelopment project at 1551 Eastlake Avenue in 2Q13 and the delivery of 26,020 vacant RSF from our redevelopment project at 1616 Eastlake Avenue in 3Q13. Excluding these deliveries, the occupancy percentage of Seattle operating properties was 99.4% as of December 31, 2013, and 98.8% as of September 30, 2013.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
19


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Summary of Properties and Occupancy
(Dollars in thousands)
(Unaudited) 

 
 
 
 
 
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
Rentable Square Feet
 
 
Annualized Base Rent
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cambridge/Inner Suburbs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center™ at Kendall Square
 
973,464

 
388,270

 

 
1,361,734

 
6
 
$
42,456

 
97.9
%
 
97.9
%
 
 
Alexandria Technology Square®
 
1,181,635

 

 

 
1,181,635

 
7
 
64,997

 
97.4

 
97.4

 
 
480 Arsenal Street
 
140,744

 

 

 
140,744

 
1
 
4,707

 
100.0

 
100.0

 
 
780/790 Memorial Drive
 
99,350

 

 

 
99,350

 
2
 
6,674

 
100.0

 
100.0

 
 
500 Arsenal Street
 
93,516

 

 

 
93,516

 
1
 
3,402

 
100.0

 
100.0

 
 
167 Sidney Street/99 Erie Street
 
54,549

 

 

 
54,549

 
2
 
2,631

 
100.0

 
100.0

 
 
79/96 Thirteenth Street Charlestown Navy Yard
 
25,309

 

 

 
25,309

 
1
 
620

 
100.0

 
100.0

 
Longwood Medical Area
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
360 Longwood Avenue (Unconsolidated JV)
 

 
413,536

 

 
413,536

 
1
 

 
N/A

 
N/A

 
Route 128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Park at 128
 
343,882

 

 

 
343,882

 
8
 
7,985

 
87.3

 
87.3

 
 
19 Presidential Way
 
128,325

 

 

 
128,325

 
1
 
3,398

 
100.0

 
100.0

 
 
100 Beaver Street
 
82,330

 

 

 
82,330

 
1
 
1,949

 
85.7

 
85.7

 
 
285 Bear Hill Road
 
26,270

 

 

 
26,270

 
1
 
802

 
100.0

 
100.0

 
Rte 495/Worcester
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111/130 Forbes Boulevard
 
155,846

 

 

 
155,846

 
2
 
1,415

 
100.0

 
100.0

 
 
20 Walkup Drive
 
91,045

 

 

 
91,045

 
1
 
649

 
100.0

 
100.0

 
 
306 Belmont Street & 350 Plantation Street
 
90,690

 

 

 
90,690

 
2
 
1,221

 
92.5

 
92.5

 
 
30 Bearfoot Road
 
60,759

 

 

 
60,759

 
1
 
2,765

 
100.0

 
100.0

 
 
Greater Boston
 
3,547,714

 
801,806

 

 
4,349,520

 
38
 
$
145,671

 
96.8
%
 
96.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center™ at Kendall Square: consists of buildings located at 75/125 and 225 Binney Street, 161 and 215 First Street, 150 Second Street, and 300 Third Street
 
 
Alexandria Technology Square®: consists of buildings located at 100, 200, 300, 400, 500, 600, and 700 Technology Square
 
 
Alexandria Park at 128: consists of buildings located at 3, 6, and 8 Preston Court; 29, 35, and 44 Hartwell Avenue; 35, 45, and 47 Wiggins Avenue; and 60 Westview Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mission Bay
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
409/499 Illinois Street
 
234,249

 
222,780

 

 
457,029

 
2
 
$
14,197

 
100.0
%
 
100.0
%
 
 
455 Mission Bay Boulevard South
 
210,398

 

 

 
210,398

 
1
 
9,414

 
100.0

 
100.0

 
 
1500 Owens Street
 
158,267

 

 

 
158,267

 
1
 
7,110

 
100.0

 
100.0

 
 
1700 Owens Street
 
157,340

 

 

 
157,340

 
1
 
9,283

 
100.0

 
100.0

 
South San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center – Gateway
 
448,175

 

 

 
448,175

 
6
 
16,324

 
97.0

 
97.0

 
 
249/259/269 East Grand Avenue
 
300,119

 
107,250

 

 
407,369

 
3
 
11,473

 
100.0

 
100.0

 
 
400/450 East Jamie Court
 
163,035

 

 

 
163,035

 
2
 
5,538

 
100.0

 
100.0

 
 
500 Forbes Boulevard
 
155,685

 

 

 
155,685

 
1
 
5,540

 
100.0

 
100.0

 
 
7000 Shoreline Court
 
136,395

 

 

 
136,395

 
1
 
4,299

 
99.8

 
99.8

 
 
341/343 Oyster Point Boulevard
 
107,960

 

 

 
107,960

 
2
 
2,895

 
87.1

 
87.1

 
Peninsula
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
849/863 Mitten Road & 866 Malcolm Road
 
103,611

 

 

 
103,611

 
1
 
2,252

 
97.5

 
97.5

 
 
2425 Garcia Avenue & 2400/2450 Bayshore Parkway
 
98,964

 

 

 
98,964

 
1
 
2,658

 
85.0

 
85.0

 
 
3165 Porter Drive
 
91,644

 

 

 
91,644

 
1
 
3,884

 
100.0

 
100.0

 
 
75/125 Shoreway Road
 
82,815

 

 

 
82,815

 
1
 
2,058

 
100.0

 
100.0

 
 
3350 West Bayshore Road
 
60,000

 

 

 
60,000

 
1
 
1,919

 
100.0

 
100.0

 
 
2625/2627/2631 Hanover Street
 
32,074

 

 

 
32,074

 
1
 
879

 
60.6

 
60.6

 
 
San Francisco Bay Area
 
2,540,731

 
330,030

 

 
2,870,761

 
26
 
$
99,723

 
97.7
%
 
97.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center – Gateway: consists of buildings located at 600, 630, 650, 681, 901, and 951 Gateway Boulevard
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
20


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Summary of Properties and Occupancy
(Dollars in thousands)
(Unaudited) 

 
 
 
 
 
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
Rentable Square Feet
 
 
Annualized Base Rent
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Torrey Pines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Nautilus
 
241,191

 

 

 
241,191

 
4
 
$
7,990

 
96.3
%
 
96.3
%
 
 
ARE Sunrise
 
215,931

 

 

 
215,931

 
3
 
7,894

 
98.1

 
98.1

 
 
ARE Spectrum
 
158,645

 

 

 
158,645

 
2
 
7,132

 
100.0

 
100.0

 
 
11119 North Torrey Pines Road
 
72,506

 

 

 
72,506

 
1
 
2,569

 
100.0

 
100.0

 
University Town Center
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5200 Illumina Way
 
497,078

 

 

 
497,078

 
1
 
19,531

 
100.0

 
100.0

 
 
10300 Campus Point Drive
 
449,759

 

 

 
449,759

 
1
 
15,783

 
96.1

 
96.1

 
 
ARE Esplanade
 
180,208

 

 

 
180,208

 
3
 
6,560

 
93.1

 
93.1

 
 
ARE Towne Centre
 
138,578

 

 

 
138,578

 
3
 
3,581

 
95.3

 
95.3

 
 
9880 Campus Point Drive
 
71,510

 

 

 
71,510

 
1
 
2,774

 
100.0

 
100.0

 
Sorrento Mesa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5810/5820/6138/6150 Nancy Ridge Drive
 
143,996

 

 

 
143,996

 
2
 
2,816

 
72.9

 
72.9

 
 
ARE Portola
 
105,812

 

 

 
105,812

 
3
 
1,497

 
92.8

 
92.8

 
 
10121/10151 Barnes Canyon Road (1)
 
115,895

 

 

 
115,895

 
2
 
1,587

 
100.0

 
100.0

 
 
7330 Carroll Road
 
66,244

 

 

 
66,244

 
1
 
2,440

 
100.0

 
100.0

 
 
5871 Oberlin Drive
 
33,817

 

 

 
33,817

 
1
 
973

 
100.0

 
100.0

 
Sorrento Valley
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11025/11035/11045/11055/11065/11075 Roselle Street
 
66,442

 

 
55,213

 
121,655

 
6
 
1,622

 
100.0

 
54.6

 
 
3985 Sorrento Valley Boulevard
 
60,545

 

 

 
60,545

 
1
 
1,534

 
100.0

 
100.0

 
I-15 Corridor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13112 Evening Creek Drive
 
109,780

 

 

 
109,780

 
1
 
2,495

 
100.0

 
100.0

 
 
San Diego
 
2,727,937

 

 
55,213

 
2,783,150

 
36
 
$
88,778

 
96.5
%
 
94.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Nautilus: consists of buildings located at 3530/3550 John Hopkins Court and 3535/3565 General Atomics Court
 
 
ARE Sunrise: consists of buildings located at 10931, 10933, and 10975 North Torrey Pines Road and 3010 Science Park Road
 
 
ARE Spectrum: consists of buildings located at 3115 and 3215 Merryfield Row
 
 
ARE Esplanade: consists of buildings located at 4755, 4757, and 4767 Nexus Center Drive
 
 
ARE Towne Centre: consists of buildings located at 9363, 9373, and 9393 Towne Centre Drive
 
 
ARE Portola: consists of buildings located at 6175, 6255, and 6275 Nancy Ridge Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manhattan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center™ for Life Science
 
498,152

 
229,627

 

 
727,779

 
2
 
$
40,533

 
99.1
%
 
99.1
%
 
Bergen County
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100 Phillips Parkway
 
78,501

 

 

 
78,501

 
1
 
2,213

 
90.8

 
90.8

 
Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
102 Witmer Road
 
50,000

 

 

 
50,000

 
1
 
3,345

 
100.0

 
100.0

 
 
701 Veterans Circle
 
35,155

 

 

 
35,155

 
1
 
735

 
100.0

 
100.0

 
 
5100 Campus Drive
 
21,859

 

 

 
21,859

 
1
 
274

 
100.0

 
100.0

 
 
Greater New York City
 
683,667

 
229,627

 

 
913,294

 
6
 
$
47,100

 
98.3
%
 
98.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center™ for Life Science: consists of buildings located at 430 and 450 East 29th Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We recently acquired these properties and we expect to redevelop these properties once the existing leases expire in 2014 and 2015.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
21


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Summary of Properties and Occupancy
(Dollars in thousands)
(Unaudited) 

 
 
 
 
 
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
Rentable Square Feet
 
 
Annualized Base Rent
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rockville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9800 Medical Center Drive
 
281,586

 

 

 
281,586

 
4
 
$
12,409

 
100.0
%
 
100.0
%
 
 
1330 Piccard Drive
 
131,511

 

 

 
131,511

 
1
 
2,877

 
94.0

 
94.0

 
 
1500/1550 East Gude Drive
 
90,489

 

 

 
90,489

 
2
 
1,524

 
90.5

 
90.5

 
 
14920/15010 Broschart Road
 
86,703

 

 

 
86,703

 
2
 
1,944

 
100.0

 
100.0

 
 
1405 Research Boulevard
 
71,669

 

 

 
71,669

 
1
 
2,102

 
100.0

 
100.0

 
 
5 Research Place
 
63,852

 

 

 
63,852

 
1
 
2,373

 
100.0

 
100.0

 
 
9920 Medical Center Drive
 
58,733

 

 

 
58,733

 
1
 
455

 
100.0

 
100.0

 
 
5 Research Court (1)
 
54,906

 

 

 
54,906

 
1
 
1,598

 
100.0

 
100.0

 
 
12301 Parklawn Drive
 
49,185

 

 

 
49,185

 
1
 
1,169

 
100.0

 
100.0

 
Gaithersburg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center – Gaithersburg I
 
377,401

 

 

 
377,401

 
4
 
6,836

 
83.9

 
83.9

 
 
Alexandria Technology Center – Gaithersburg II
 
237,137

 

 

 
237,137

 
5
 
5,074

 
92.3

 
92.3

 
 
16020 Industrial Drive
 
71,000

 

 

 
71,000

 
1
 
1,048

 
100.0

 
100.0

 
 
401 Professional Drive
 
63,154

 

 

 
63,154

 
1
 
1,104

 
92.1

 
92.1

 
 
950 Wind River Lane
 
50,000

 

 

 
50,000

 
1
 
1,082

 
100.0

 
100.0

 
 
620 Professional Drive
 
27,950

 

 

 
27,950

 
1
 
496

 
100.0

 
100.0

 
Beltsville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8000/9000/10000 Virginia Manor Road
 
191,884

 

 

 
191,884

 
1
 
1,587

 
62.9

 
62.9

 
Northern Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14225 Newbrook Drive
 
248,186

 

 

 
248,186

 
1
 
5,138

 
100.0

 
100.0

 
 
Maryland
 
2,155,346

 

 

 
2,155,346

 
29
 
$
48,816

 
92.0
%
 
92.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center – Gaithersburg I: consists of buildings located at 9 West Watkins Mill Road and 910, 930, and 940 Clopper Road
 
 
Alexandria Technology Center – Gaithersburg II: consists of buildings located at 708 Quince Orchard Road, 1300 Quince Orchard Boulevard and 19, 20, and 22 Firstfield Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1201/1208 Eastlake Avenue
 
203,369

 

 

 
203,369

 
2
 
$
8,748

 
100.0
%
 
100.0
%
 
 
1616 Eastlake Avenue
 
168,708

 

 

 
168,708

 
1
 
6,190

 
82.4

 
82.4

 
 
1551 Eastlake Avenue
 
117,482

 

 

 
117,482

 
1
 
2,453

 
66.2

 
66.2

 
 
199 East Blaine Street
 
115,084

 

 

 
115,084

 
1
 
6,161

 
100.0

 
100.0

 
 
219 Terry Avenue North
 
30,961

 

 

 
30,961

 
1
 
1,490

 
99.2

 
99.2

 
 
1600 Fairview Avenue
 
27,991

 

 

 
27,991

 
1
 
1,517

 
100.0

 
100.0

 
Elliott Bay
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3000/3018 Western Avenue
 
47,746

 

 

 
47,746

 
1
 
1,839

 
100.0

 
100.0

 
 
410 West Harrison/410 Elliott Avenue West
 
35,175

 

 

 
35,175

 
2
 
1,040

 
100.0

 
100.0

 
 
Seattle
 
746,516

 

 

 
746,516

 
10
 
$
29,438

 
90.7
%
 
90.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research Triangle Park
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research Triangle Park
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center – Alston
 
186,870

 

 

 
186,870

 
3
 
$
2,900

 
92.0
%
 
92.0
%
 
 
108/110/112/114 TW Alexander Drive
 
158,417

 

 

 
158,417

 
1
 
4,955

 
100.0

 
100.0

 
 
Alexandria Innovation Center – Research Triangle Park
 
135,677

 

 

 
135,677

 
3
 
2,806

 
99.7

 
99.7

 
 
6 Davis Drive
 
100,000

 

 

 
100,000

 
1
 
1,062

 
100.0

 
100.0

 
 
7 Triangle Drive
 
96,626

 

 

 
96,626

 
1
 
3,157

 
100.0

 
100.0

 
 
407 Davis Drive
 
81,956

 

 

 
81,956

 
1
 
1,644

 
100.0

 
100.0

 
 
2525 East NC Highway 54
 
81,580

 

 

 
81,580

 
1
 
1,686

 
100.0

 
100.0

 
 
601 Keystone Park Drive
 
77,395

 

 

 
77,395

 
1
 
1,308

 
100.0

 
100.0

 
 
5 Triangle Drive
 
32,120

 

 

 
32,120

 
1
 
824

 
100.0

 
100.0

 
 
6101 Quadrangle Drive
 
30,122

 

 

 
30,122

 
1
 
535

 
100.0

 
100.0

 
Palm Beach
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
555 Heritage Drive
 
45,023

 

 

 
45,023

 
1
 
614

 
55.9

 
55.9

 
 
Research Triangle Park
 
1,025,786

 

 

 
1,025,786

 
15
 
$
21,491

 
96.6
%
 
96.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center – Alston: consists of buildings located at 100, 800, and 801 Capitola Drive
 
 
Alexandria Innovation Center – Research Triangle Park: consists of buildings located at 7010, 7020, and 7030 Kit Creek Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The current client tenant may extend the lease beyond the current contractual expiration in 4Q14. Additionally, this property may undergo conversion into laboratory/office space through redevelopment upon rollover.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
22


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Summary of Properties and Occupancy
(Dollars in thousands)
(Unaudited) 

 
 
 
 
 
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
Rentable Square Feet
 
 
Annualized Base Rent
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Canada
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
142,935

 

 

 
142,935

 
1
 
$
3,559

 
92.8
%
 
92.8
%
 
 
Canada
 
68,000

 

 

 
68,000

 
1
 
3,079

 
100.0

 
100.0

 
 
Canada
 
66,000

 

 

 
66,000

 
1
 
1,176

 
100.0

 
100.0

 
 
Canada
 
46,032

 

 

 
46,032

 
1
 
1,781

 
100.0

 
100.0

 
 
Canada (1)
 
780,540

 

 

 
780,540

 
1
 

 
N/A

 
N/A

 
 
Canada
 
1,103,507

 

 

 
1,103,507

 
5
 
$
9,595

 
96.8
%
 
96.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Cluster Markets
 
60,178

 

 

 
60,178

 
2
 
$
874

 
91.7
%
 
91.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
14,591,382

 
1,361,463

 
55,213

 
16,008,058

 
167
 
$
491,486

 
95.9
%
 
95.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asia
 
858,570

 
465,456

 
44,660

 
1,368,686

 
9
 
$
5,719

 
71.2
%
 
67.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing Operations
 
15,449,952

 
1,826,919

 
99,873

 
17,376,744

 
176
 
$
497,205

 
94.4
%
 
93.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties “held for sale”
 
84,286

 

 

 
84,286

 
4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
15,534,238

 
1,826,919

 
99,873

 
17,461,030

 
180
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represents land and improvements subject to a ground lease with a client tenant.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
23



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Investments in Real Estate
(Dollars in thousands, except per square foot amounts)
(Unaudited)
 
December 31, 2013
 
September 30, 2013
 
 
Book Value
 
Square Feet
 
Per SF
 
Book Value
 
Square Feet
 
Per SF
 
Rental properties:
 
 
 
 
 
 
 
 
 
 
 
 
Land (related to rental properties)
$
553,388

 
 
 
 
 
$
542,511

 
 
 
 
 
Buildings and building improvements
5,714,673

 
 
 
 
 
5,315,447

 
 
 
 
 
Other improvements
174,147

 
 
 
 
 
170,078

 
 
 
 
 
Rental properties
6,442,208

 
15,534,238

 
$
415

 
6,028,036

 
14,950,417

 
$
403

 
Less: accumulated depreciation
(952,106
)
 
 
 
 
 
(915,494
)
 
 
 
 
 
Rental properties, net
5,490,102

 
 
 
 
 
5,112,542

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction in progress (“CIP”)/current value-creation projects:
 
 
 
 
 
 
 
 
 
 
 
 
Current development in North America
511,838

 
947,927

 
540

 
594,973

 
1,136,938

 
523

 
Investment in unconsolidated joint venture
46,644

(1) 
413,536

 
N/A

 
42,537


413,536

 
N/A

 
Current redevelopment in North America
8,856

 
55,213

 
160

 
24,960

 
68,423

 
365

 
Current development and redevelopment in Asia
60,928

 
510,116

 
119

 
97,319

 
686,898

 
142

 
Generic infrastructure/building improvement projects in North America

 
 
 
 
 
46,227

(2) 
 
 
 
 
 
628,266

 
1,926,792

 
326

 
806,016

 
2,305,795

 
350

 
Subtotal
6,118,368

 
17,461,030

 
350

 
5,918,558

 
17,256,212

 
343

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Land/future value-creation projects:
 
 
 
 
 
 
 
 
 
 
 
 
Land undergoing predevelopment activities (CIP) in North America
367,225

 
2,691,583

 
136

 
351,062

 
2,287,849

 
153

 
Land held for future development in North America
191,127

 
3,027,431

 
63

 
190,427

 
3,325,577

 
57

 
Land held for future development/undergoing predevelopment activities (CIP) in Asia
77,251

 
6,419,707

 
12

 
77,274

 
6,419,707

 
12

 
Land subject to sale negotiations
22,943

 
200,000

 
115

 
76,440

 
458,724

 
167

 
 
658,546

 
12,338,721

 
53

 
695,203

 
12,491,857

 
56

 
Investments in real estate, net
6,776,914

 
29,799,751

 
$
227

 
6,613,761

 
29,748,069

 
$
222

 
Add: accumulated depreciation
952,106

 
 
 
 
 
915,494

 
 
 
 
 
Gross investments in real estate
$
7,729,020

 
 
 
 
 
$
7,529,255

 
 
 
 
 

(1)
The book value for this unconsolidated joint venture represents our equity investment in the 360 Longwood Avenue project.
(2)
Represents the book value associated with 75,879 square feet at four projects undergoing construction of generic laboratory/office improvements as of September 30, 2013, which were 100% leased or subject to a letter of intent, and delivered during the three months ended December 31, 2013.
Non-Income-Producing Real Estate Assets as a
Percentage of Gross Investments in Real Estate
 
Non-Income-Producing Real Estate at December 31, 2013
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
24



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Projected and Historical Construction Spending
(Dollars in thousands, except per square foot amounts)
(Unaudited)

Projected Construction Spending
 
Year Ended December 31, 2014
Current value-creation projects in North America:
 
 
 
 
 
 
Development
 
$
325,000

 
 
 
 
Redevelopment
 
8,000

 
 
 
 
Developments/redevelopments recently transferred to rental properties
 
50,000

(1) 
 
Generic laboratory infrastructure/building improvement projects
 
45,000

(2) 
 
 
Current value-creation projects in North America
 
 
 
 
428,000

Near-term value-creation projects:
 
 
 
 
 
 
Development
 
62,500

(3) 
 
Redevelopment
 
37,000

(4) 
 
Predevelopment
 
60,000

(5) 
 
 
Near-term value-creation projects
 
 
 
 
159,500

Value-creation projects
 
 
 
 
587,500

 
Non-revenue-enhancing capital expenditures
 
 
 
 
12,500

Total construction spending
 
 
 
$
600,000

 
 
 
 
 
 
 
 
Guidance range
 
 
 
$
565,000 – 625,000


(1)
Developments/redevelopments recently transferred to rental properties include certain vacancy, generally less than 10% of the project, that may require additional construction prior to occupancy. For example, our recently delivered redevelopment projects at 4757 Nexus Center Drive, 400 Technology Square, 343 Oyster Point Boulevard, 1616 Eastlake Avenue, 1551 Eastlake Avenue, and 10300 Campus Point Drive generally have 15,000 to 30,000 RSF of value-creation activities to complete in connection with the lease-up and delivery of the space.
(2)
Includes, among others, generic infrastructure building improvement projects in North America, including 300 Technology Square, 5810/5820 Nancy Ridge Drive, 8000 Virginia Manor Road, and 44 Hartwell Avenue.
(3)  
Near-term value-creation development projects include, among others, 5200 Illumina Way.
(4)
Near-term value-creation redevelopment projects include among others, 3033 Science Park Road and 10121 Barnes Canyon Road. These projects were recently acquired in 2Q12 and 3Q13, respectively.
(5) 
Includes traditional preconstruction costs plus predevelopment costs related to: (i) approximately $17 million of site and infrastructure costs for the 1.2 million RSF related to 50 Binney Street, 60 Binney Street, and 100 Binney Street at the Alexandria Center™ at Kendall Square, including utility access and roads, installation of storm drain systems, infiltration systems, traffic lighting/signals, streets, and sidewalks, and (ii) approximately $4 million related to the design, permitting, and construction drawings related to 50 Binney Street and 60 Binney Street. Site and infrastructure costs related to 75/125 Binney Street are included in our estimate of cost at completion and initial stabilized yields.
Historical Construction Spending
 
Year Ended December 31, 2013
Development – North America
 
$
353,064

Redevelopment – North America
 
112,289

Predevelopment
 
59,657

Generic laboratory infrastructure/building improvement projects in North America (1)
 
46,814

Development and redevelopment – Asia
 
10,107

Total construction spending
 
$
581,931


(1)  
Includes revenue-enhancing projects and amounts shown in the table below related to non-revenue-enhancing capital expenditures.

Non-revenue-enhancing Capital Expenditures, Tenant Improvements, and Leasing Costs (1)
 
Year Ended December 31, 2013
 
Amount
 
Square Feet
 
Per SF
Non-revenue-enhancing capital expenditures
 
$
3,461

 
13,963,661

 
$
0.25

Tenant improvements and leasing costs:
 
 
 
 
 
 
Re-tenanted space
 
$
6,042

 
401,880

 
$
15.03

Renewal space
 
9,860

 
1,436,517

 
6.86

Total tenant improvements and leasing costs
 
$
15,902

 
1,838,397

 
$
8.65


(1)  
Excluding amounts that are recoverable from client tenants, revenue-enhancing, or related to properties that have undergone redevelopment.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
25



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



4Q13 Deliveries of Value-Creation Development and Redevelopment Projects in North America
(Unaudited)
Property
4757 Nexus Center Drive
430 East 29th Street
Submarket/Market
University Town Center/San Diego
Manhattan/Greater New York City
Photograph/Rendering
Project Summary:

Alexandria delivered this laboratory/office redevelopment project at the end of October 2013. Genomatica, Inc. currently occupies 57,198 RSF, or 82%, of this project and will take occupancy of the remaining 12,475 RSF within 18 to 24 months. The estimated total cost of this property upon completion of the remaining 12,475 RSF is $33.4 million.

At the end of December 2013, Alexandria delivered 189,011 RSF, or 45%, of the total laboratory/office development project aggregating 418,638 RSF. The delivered space is 100% occupied by tenants, including Roche and New York University, with the remaining 229,627 RSF under development with targeted delivery dates through 2015.
Estimated Project Yields:
 
 
Initial Stabilized Cash Yield
8.1%
6.6%
Initial Stabilized GAAP Yield
8.0%
6.5%
Average Cash Yield
8.7%
7.1%



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
26


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



All Current Value-Creation Development and Redevelopment Projects in North America
(Dollars in thousands, except per square foot amounts)
(Unaudited)
 
 
 
 
 
 
 
 
Leased Status
 
Project Start Date
 
Initial Occupancy Date
 
Stabilized Occupancy Date
 
 
Project RSF
 
Leased
 
Negotiating
 
Total Leased/Negotiating
 
 
 
Property/Market – Submarket
 
In Service
 
CIP
 
Total
 
RSF
 
%
 
RSF
 
%
 
RSF
 
%
 
 
 
Consolidated development projects in North America
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75/125 Binney Street/Greater Boston – Cambridge
 

 
388,270

 
388,270

 
386,111

 
99
%
 

 
%
 
386,111

 
99
%
 
1Q13
 
1Q15
 
2015
499 Illinois Street/San Francisco Bay Area – Mission Bay
 

 
222,780

 
222,780

 
191,126

 
86
%
 
22,000

 
10
%
 
213,126

 
96
%
 
2Q11
 
3Q14
 
2014
269 East Grand Avenue/San Francisco Bay Area – So. San Francisco
 

 
107,250

 
107,250

 
107,250

 
100
%
 

 
%
 
107,250

 
100
%
 
1Q13
 
4Q14
 
2014
430 East 29th Street/Greater NYC – Manhattan
 
189,011

 
229,627

 
418,638

 
236,191

 
56
%
 
21,761

 
6
%
 
257,952

 
62
%
 
4Q12
 
4Q13
 
2015
Consolidated development projects in North America
 
189,011

 
947,927

 
1,136,938

 
920,678

 
81
%
 
43,761

 
4
%
 
964,439

 
85
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
360 Longwood Avenue/Greater Boston – Longwood Medical Area (1)
 

 
413,536

 
413,536

 
154,100

 
37
%
 
8,978

 
2
%
 
163,078

 
39
%
 
2Q12
 
4Q14
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated redevelopment projects in North America
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11055/11065/11075 Roselle Street/San Diego – Sorrento Valley
 

 
55,213

 
55,213

 
41,163

 
75
%
 

 
%
 
41,163

 
75
%
 
4Q13
 
2Q14
 
2015
 
 
Investment
 
 
 
 
 
 
 
 
 
 
 
 
Cost to Complete
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2015 and Thereafter
 
 
 
Initial Stabilized Yield (Unlevered)
 
Average Cash Yield
Property/Market – Submarket
 
December 31, 2013
 
Construction
Financing
 
Internal Funding
 
Construction
Financing
 
Internal Funding
 
Total at Completion
 
 
 
In Service
 
CIP
 
 
 
 
 
 
Cash
 
GAAP
 
Consolidated development projects in North America
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75/125 Binney Street/Greater Boston – Cambridge
 
$

 
$
176,974

 
$
137,421

 
$

 
$
37,044

 
$

 
$
351,439

(2) 
8.0%
 
8.2%
 
9.1%
499 Illinois Street/San Francisco Bay Area – Mission Bay
 
$

 
$
122,580

 
$

 
$
80,341

 
$

 
$

 
$
202,921

 
6.4%
 
7.2%
 
7.3%
269 East Grand Avenue/San Francisco Bay Area – So. San Francisco
 
$

 
$
20,076

 
$
31,224

 
$

 
$

 
$

 
$
51,300

 
8.1%
 
9.3%
 
9.3%
430 East 29th Street/Greater NYC – Manhattan
 
$
166,471

 
$
192,208

 
$

 
$
73,925

 
$

 
$
30,641

 
$
463,245

 
6.6%
 
6.5%
 
7.1%
Consolidated development projects in North America
 
$
166,471

 
$
511,838

 
$
168,645

 
$
154,266

 
$
37,044

 
$
30,641

 
$
1,068,905

 
 
 
 
 
 
Unconsolidated joint venture
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100% of JV: 360 Longwood Avenue/Greater Boston – Longwood Medical Area (1)
 
$

 
$
232,156

 
$
67,135

 
$
2,089

 
$
46,760

 
$
1,860

 
$
350,000

 
8.3%
 
8.9%
 
9.3%
Less: Funding from secured construction loans and JV partner capital
 
$

 
$
(185,512
)
 
$
(67,135
)
 
$

 
$
(46,760
)
 
$

 
$
(299,407
)
 
 
 
 
 
 
ARE investment in 360 Longwood Avenue (27.5% interest)
 
$

 
$
46,644

 
$

 
$
2,089

 
$

 
$
1,860

 
$
50,593

 
 
 
 
 
 
Total ARE investment
 
$
166,471

 
$
558,482

 
$
168,645

 
$
156,355

 
$
37,044

 
$
32,501

 
$
1,119,498

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total 2014, 2015 and thereafter
 
 
 
 
 
 
 
$
325,000

 
 
 
$
69,545

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated redevelopment projects in North America
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11055/11065/11075 Roselle Street/San Diego – Sorrento Valley
 
$

 
$
8,856

 
$

 
$
8,000

 
$

 
$
1,494

 
$
18,350

 
7.8%
 
7.9%
 
8.0%

(1)
Our ownership percentage of the unconsolidated joint venture is 27.5%.
(2)
In the third quarter of 2013, we completed the preliminary design and budget for interior improvements for use by Ariad Pharmaceuticals, Inc. (“Ariad”). Based upon our lease with Ariad, we expected an increase in both estimated net operating income and estimated cost at completion; with no significant change in our estimated yields. We expect to finalize the design and budget for the interior improvements in the future and will provide an update on our estimated cost at completion and targeted yields.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
27


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



All Current Value-Creation Development Projects in North America
Property
75/125 Binney Street
499 Illinois Street
269 East Grand Avenue
Submarket/Market
Cambridge/Greater Boston
Mission Bay/San Francisco Bay Area
South San Francisco/San Francisco Bay Area
RSF (in progress)
388,270
222,780
107,250
Project Type
Development
Development
Development
Client Tenants
ARIAD Pharmaceuticals, Inc.
Illumina, Inc./The Regents of the University of California/Medivation, Inc.
Amgen Inc.
Photograph/
Rendering
Property
430 East 29th Street
360 Longwood Avenue
Submarket/Market
Manhattan/Greater New York City
Longwood Medical Area/Greater Boston
RSF (in progress)
229,627
413,536
Project Type
Development
Unconsolidated JV Development
Client Tenants
Roche/New York University/Others
Dana-Farber Cancer Institute, Inc.
Photograph/
Rendering

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
28


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects and
Future Value-Creation Development Projects in North America
(Dollars in thousands, except per square foot amounts)
(Unaudited)
 
 
Land Undergoing Predevelopment Activities (Additional CIP)
 
Land Held for Development
 
Embedded Land (1)
 
Total
Property – Market
 
Book Value
 
Square 
Feet
 
Cost per
Square Foot
 
Book Value
 
Square 
Feet
 
Cost per
Square Foot
 
 
Square Feet
 
 
Book Value
 
Square 
Feet
 
Cost per
Square Foot
Near-term value-creation development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center™ at Kendall Square – Greater Boston:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50, 60, and 100 Binney Street
 
$
280,731

 
1,062,180

 
$
264

 
$
3,941

 
150,000

 
$
26

 
 
 
$
284,672

 
1,212,180

 
$
235

3013/3033 Science Park Road – San Diego
 
21,140

 
176,500

 
120

 

 

 

 
 
 
21,140

 
176,500

 
120

5200 Illumina Way – San Diego
 
15,253

 
392,983

 
39

 

 

 

 
 
 
15,253

 
392,983

 
39

10300 Campus Point – San Diego
 
4,590

 
140,000

 
33

 

 

 

 
 
 
4,590

 
140,000

 
33

9950 Medical Center Drive – Maryland
 
3,046

 
61,000

 
50

 

 

 

 
 
 
3,046

 
61,000

 
50

124 Terry Avenue North – Seattle
 
6,454

 
200,000

 
32

 

 

 

 
 
 
6,454

 
200,000

 
32

400/416/430 Dexter Avenue North – Seattle
 
12,583

 
253,000

 
50

 

 

 

 
 
 
12,583

 
253,000

 
50

1150/1165/1166 Eastlake Avenue – Seattle
 
14,704

 
106,000

 
139

 
15,248

 
160,266

 
95

 
 
 
29,952

 
266,266

 
112

6 Davis Drive – Research Triangle Park
 
4,599

 
250,000

 
18

 

 

 

 
 
 
4,599

 
250,000

 
18

Near-term value-creation development projects
 
363,100

 
2,641,663

 
137

 
19,189

 
310,266

 
62

 
 
 
382,289

 
2,951,929

 
130

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future value-creation development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Square® – Greater Boston
 

 

 

 
7,721

 
100,000

 
77

 
 
 
7,721

 
100,000

 
77

Grand Avenue – San Francisco Bay Area
 

 

 

 
43,267

 
397,132

 
109

 
 
 
43,267

 
397,132

 
109

Rozzi/Eccles – San Francisco Bay Area
 

 

 

 
73,004

 
514,307

 
142

 
 
 
73,004

 
514,307

 
142

Executive Drive/Other – San Diego
 
4,125

 
49,920

 
83

 

 

 

 
279,000
 
 
4,125

 
328,920

 
13

East 29th Street – Greater New York City
 

 

 

 

 

 

 
420,000
 
(2) 

 
420,000

 
N/A

Medical Center Drive – Maryland
 

 

 

 
4,572

 
260,721

 
18

 
 
 
4,572

 
260,721

 
18

Research Boulevard – Maryland
 

 

 

 
7,055

 
347,000

 
20

 
 
 
7,055

 
347,000

 
20

Firstfield Road – Maryland
 

 

 

 
4,056

 
95,000

 
43

 
 
 
4,056

 
95,000

 
43

Other
 

 

 

 
32,263

 
1,003,005

 
32

 
436,000
 
 
32,263

 
1,439,005

 
22

Future value-creation development projects
 
4,125

 
49,920

 
83

 
171,938

 
2,717,165

 
63

 
1,135,000
 
 
176,063

 
3,902,085

 
45

Total value-creation development projects
 
$
367,225

 
2,691,583

 
$
136

 
$
191,127

 
3,027,431

 
$
63

 
1,135,000
 
 
$
558,352

 
6,854,014

 
$
81


(1)
Embedded land generally represents adjacent land acquired in connection with the acquisition of operating properties. As a result, the real estate basis attributable to these land parcels is classified in rental properties, net.
(2)
We hold a right to ground lease a parcel supporting the future ground-up development of approximately 420,000 RSF at the Alexandria Center™ for Life Science pursuant to an option under our ground lease.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
29


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects
Greater Boston
 
 
Operating/Development Project
 
Near-Term Value-Creation Project
 
 
Property
Alexandria Center™ at Kendall Square
Submarket/Market
Cambridge/Greater Boston
Aerial
Background
Alexandria received final approval from the City of Cambridge to develop the Alexandria Center™ at Kendall Square, a fully-integrated campus featuring four world-class laboratory/office and tech office buildings, high-quality amenities, and green space. Alexandria’s entitlement efforts resulted in an increase of 1.1 million developable square feet over the original entitlements in place at acquisition.
Near-Term Opportunity
Ground-up development of laboratory/office and tech office buildings at 50, 60, and 100 Binney Street aggregating approximately 1.0 million RSF plus residential projects aggregating 238,000 RSF. Subject to market conditions, we expect to commence development of these projects over the next one to three years as we have demand from existing tenants and demand from tenants in the market. Additionally, we anticipate financing these projects with joint venture capital. We believe the estimated investment, excluding land, to develop these buildings, with underground parking, will generally range from $650 per square foot and up.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects
San Diego
 
 
Operating
 
Near-Term Value-Creation Project
 
 
Property
ARE Spectrum
Submarket/Market
Torrey Pines/San Diego
Aerial
Background
ARE Spectrum is Alexandria’s 335,145 RSF, multi-tenant laboratory/office campus located in Torrey Pines.  The existing laboratory/office properties at 3115/3215 Merryfield Road are fully leased to The Scripps Research Institute and Sapphire Energy, Inc.
Near-Term Opportunity
Ground-up development of two laboratory/office buildings 3013/3033 Science Park Road aggregating 176,500 RSF for either single or multi-tenancy.  One of the two buildings may be retained and undergo conversion to laboratory/office through redevelopment. Subject to market conditions, we expect to commence ground-up construction and/or redevelopment of these buildings over the next one to three years as we have demand from existing tenants.  We believe the estimated investment, excluding land, for the ground-up development of a building will generally range from $325 per square foot and up.

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ALL RIGHTS RESERVED © 2014
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects
San Diego
 
 
Operating
 
Near-Term Value-Creation Project
 
 
Property
5200 Illumina Way
Submarket/Market
University Town Center/San Diego
Aerial
Background
Alexandria owns and operates the headquarters laboratory/office campus of Illumina, Inc., the leading developer, manufacturer, and marketer of life science tools and integrated systems for large-scale analysis of genetic variation and function with a market capitalization of $14.0 billion as of December 31, 2013.
Near-Term Opportunity
Future ground-up development of two laboratory/office buildings aggregating 392,983 RSF. Subject to market conditions, we expect to commence development of these buildings over the next one to three years as we expect expansion requirements from Illumina, Inc.  We believe the estimated investment, excluding land, to develop these buildings, including aboveground parking, will generally range from $450 per square foot and up.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
32


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects
San Diego
 
 
Operating
 
Near-Term Value-Creation Project
 
 
Property
10300 Campus Point Drive
Submarket/Market
University Town Center/San Diego
Aerial
Background
10300 Campus Point Drive is Alexandria’s flagship 449,759 RSF, multi-tenant laboratory/office campus in University Town Center with additional developable square footage.
Near-Term Opportunity
Ground-up development of two laboratory/office buildings aggregating approximately 140,000 RSF. Subject to market conditions, we expect to commence development of these buildings over the next one to three years as we have demand from existing tenants. We believe the estimated investment, excluding land, to develop these buildings will generally range from $450 per square foot and up.



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ALL RIGHTS RESERVED © 2014
33


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects
Maryland
 
 
Operating
 
Near-Term Value-Creation Project
 
 
Property
9950 Medical Center Drive
Submarket/Market
Rockville/Maryland
Aerial
Background
Alexandria’s 9950 Medical Center Drive laboratory/office development is located adjacent to The Shady Grove Life Sciences Center in Rockville, Maryland, home to the federal government, numerous life science companies, and universities including: the National Institutes of Health, Federal Drug Administration, Medimmune, and Johns Hopkins University.
Near-Term Opportunity

Ground-up development of a laboratory/office building of approximately 61,000 RSF.  Subject to completion of entitlement and market conditions, we expect to commence development of this building over the next one to three years as we have demand from existing tenants and demand from tenants in the market. We believe the estimated investment, excluding land, to develop this building will generally range from $350 per square foot and up. We have on-going entitlement efforts for this project to potentially increase the developable square footage by 115,000 RSF for a future additional laboratory/office building.
 




ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
34


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects
Seattle
 
 
Operating
 
Near-Term Value-Creation Project
 
 
Property
124 Terry Avenue North
Eastlake Avenue
400/416/430 Dexter Avenue North
Submarket/Market
Lake Union/Seattle
Lake Union/Seattle
Lake Union/Seattle
Aerial
Background
Alexandria’s Terry Avenue, Eastlake Avenue, and Dexter Avenue assets are located in Lake Union, home to numerous highly renowned medical research institutions, including the Fred Hutchinson Cancer Research Center and the University of Washington, as well as the corporate headquarters for Amazon.com, Inc.
Near-Term Opportunity
124 Terry Avenue North
Eastlake Avenue
400/416/430 Dexter Avenue North
Ground-up mixed-use development of a laboratory/office or tech office building aggregating approximately 200,000 RSF for either single or multi-tenancy, as well as residential space.  Subject to market conditions, we expect to commence construction of this project over the next one to three years as we have a tenant identified for this project.  We believe the estimated investment, excluding land, to develop this building will generally range from $300 per square foot and up.
Ground-up development of two laboratory/office or tech office buildings aggregating 266,266 RSF for single or multi-tenancy.  Subject to market conditions, we expect to commence construction of the 1165 Eastlake Avenue East parcel over the next one to three years as we have a tenant identified for this project.  We believe the estimated investment, excluding land, to develop these buildings will generally range from $360 per square foot and up.
Ground-up development of a laboratory/office or tech office building aggregating approximately 253,000 RSF for either single or multi-tenancy. Subject to market conditions, we expect to commence construction of this project over the next one to three years as we have a tenant identified for this project. We believe the estimated investment, excluding land, to develop this building will generally range from $275 per square foot and up.

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ALL RIGHTS RESERVED © 2014
35


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Near-Term Value-Creation Development Projects
Research Triangle Park
 
 
Operating
 
Near-Term Value-Creation Project
 
 
Property
6 Davis Drive
Submarket/Market
Research Triangle Park/Research Triangle Park
Aerial
Background

Alexandria's 6 Davis Drive is very centrally located in the Research Triangle Park among three world class research universities, Duke University, University of North Carolina at Chapel Hill, and North Carolina State University. The Research Triangle Park is home to numerous healthcare, life science, agricultural biotechnology, and biopharmaceutical companies such as BASF Corporation, Bayer CropScience, Biogen Idec, Eisai, Inc., Monsanto Corporation, Novartis Vaccines, and Syngenta Biotechnology, Inc.

Near-Term Opportunity

Ground-up development of laboratory/office buildings at 6 Davis Drive aggregating approximately 250,000 RSF for either single or multi-tenancy. Subject to market conditions, we expect to commence construction of this project in the near-term as we have demand from existing tenants and demand from tenants in the market. We believe the estimated investment, excluding land, to develop a laboratory/office building will generally range from $325 per square foot and up.



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
36


ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Real Estate Investments in Asia
(Unaudited)

Summary of investments in real estate
 
Number of Properties
 
Annualized Base Rent
(in thousands)
 
Occupancy Percentage
 
Book Value
(in thousands)
 
Square Feet
 
Per SF
Rental properties, net, in China
2
 
$
940

(1) 
63.7
%
 
$
57,122

 
471,384

 
$
121

Rental properties, net, in India
5
 
$
4,779

 
80.3
%
 
45,414

 
387,186

 
117

 
 
 
 
 
 
 
102,536

 
858,570

 
119

Construction in progress:
 
 

 
 

 
 

Current development projects in China
 
26,166

 
160,694

 
163

Current development projects in India
 
30,000

 
304,762

 
98

Current redevelopment projects in India
 
4,762

 
44,660

 
107

 
 
 
 
 
 
 
60,928

 
510,116

 
119

Land held for development/land undergoing predevelopment activities (additional CIP) – India
 
77,251

 
6,419,707

 
12

Total investments in real estate, net, in Asia
 
$
240,715

 
7,788,393

 
$
31


(1)
Represents annualized base rent for non-laboratory use.

 


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
37



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Asset Sales and Other Sources of Capital
(Dollars in thousands)
(Unaudited)

Description
 
 
Amount
 
Completed
 
 
 
 
Sale of 1600 Owens Street during 4Q13
 
$
55,200

(1) 
 
 
 
 
 
Projected
 
 
 
 
Land subject to purchase and sale agreement
 
$
19,000

 
Land sales subject to negotiation
 
 
6,000

 
Income-producing assets held for sale (net book value)
 
 
7,600

 
Additional non-income-producing asset sales/strategic joint venture capital (2)
 
 
112,400 – 212,400

 
Total projected asset sales/strategic joint venture capital for 2014
 
$
145,000 – 245,000

 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
 
 
Three Months Ended
December 31, 2013
 
Total revenues
 
$

 
Operating expenses
 
 
126

 
NOI from discontinued operations
 
 
(126
)
 
Depreciation expense
 
 
17

 
Loss from discontinued operations, net
 
$
(143
)
(3) 

(1)
We completed the sale of our final land parcel in the Mission Bay submarket of the San Francisco Bay Area, along with certain parking spaces, resulting in a gain of $4.1 million. Ownership of the parcel was strategically important to Kaiser Foundation Health Plan, Inc. and we will earn a fee to manage the construction of a 219,000 RSF medical office building.
(2)
Projected joint venture of non-income-producing assets.
(3)
Loss from discontinued operations, net, includes the results of operations for four operating properties that were classified as “held for sale” as of December 31, 2013.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
38



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Key Credit Metrics
(Unaudited)
Net Debt to Adjusted EBITDA
 
Fixed Charge Coverage Ratio
 
(1) Fourth quarter annualized; see page 12 for trailing 12 months
 
(1) Fourth quarter annualized; see page 12 for trailing 12 months
Unencumbered NOI as a % of Total NOI
 
Total Liquidity
 
Debt Maturity Schedule
(1)
Secured note payable related to Alexandria Technology Square® was repaid on January 31, 2014.
(2)
As of December 31, 2013, we had $1.1 billion outstanding under our unsecured senior term loans due in 2016 and 2019. Additionally, as of December 31, 2013, we had $950 million of interest rate swaps in effect. See page 41 for additional information on our interest rate swap agreements.



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
39



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Summary of Debt
(Dollars in thousands)
(Unaudited)

 
 
Stated 
Rate
 
Weighted Average
Interest Rate (1)
 
Maturity Date (2)
 
Principal Payments for the Period Ending December 31,
 
 
 
 
Debt
 
 
 
 
2014
 
2015
 
2016
 
2017
 
2018
 
Thereafter
 
Total
Secured notes payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Greater Boston
 
5.26
%
 
5.59

%
 
04/01/14
 
$
208,683

(3) 
$

 
$

 
$

 
$

 
$

 
$
208,683

San Diego
 
6.05
 
 
4.88

 
 
07/01/14
 
6,446

 

 

 

 

 

 
6,446

San Diego
 
5.39
 
 
4.00

 
 
11/01/14
 
7,480

 

 

 

 

 

 
7,480

Seattle
 
6.00
 
 
6.00

 
 
11/18/14
 
240

 

 

 

 

 

 
240

Maryland
 
5.64
 
 
4.50

 
 
06/01/15
 
127

 
5,788

 

 

 

 

 
5,915

San Francisco Bay Area
 
L+1.50
 
 
1.67

 
 
07/01/15
(4) 

 
46,013

 

 

 

 

 
46,013

Greater Boston, San Francisco Bay Area, and San Diego
 
5.73
 
 
5.73

 
 
01/01/16
 
1,713

 
1,816

 
75,501

 

 

 

 
79,030

Greater Boston, San Diego, and Greater New York City
 
5.82
 
 
5.82

 
 
04/01/16
 
931

 
988

 
29,389

 

 

 

 
31,308

San Francisco Bay Area
 
L+1.40
 
 
1.57

 
 
06/01/16
(5) 

 

 

 

 

 

 

San Francisco Bay Area
 
6.35
 
 
6.35

 
 
08/01/16
 
2,487

 
2,652

 
126,715

 

 

 

 
131,854

Maryland
 
2.16
 
 
2.16

 
 
01/20/17
 

 

 

 
76,000

 

 

 
76,000

Greater Boston
 
L+1.35
 
 
1.52

 
 
08/23/17
(6) 

 

 

 

 

 

 

San Diego, Maryland, and Seattle
 
7.75
 
 
7.75

 
 
04/01/20
 
1,453

 
1,570

 
1,696

 
1,832

 
1,979

 
106,491

 
115,021

San Francisco Bay Area
 
6.50
 
 
6.50

 
 
06/01/37
 
17

 
18

 
19

 
20

 
22

 
751

 
847

Average/Total
 
5.39
%
 
5.45

 
 
 
 
229,577

 
58,845

 
233,320

 
77,852

 
2,001

 
107,242

 
708,837

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 Unsecured Senior Bank Term Loan
 
L+1.20
%
 
2.37

 
 
07/31/16
 

 

 
500,000

 

 

 

 
500,000

2019 Unsecured Senior Bank Term Loan
 
L+1.20
%
 
2.85

 
 
01/03/19
 

 

 

 

 

 
600,000

 
600,000

$1.5 billion unsecured senior line of credit
 
L+1.10
%
(7) 
1.27

 
 
01/03/19
 

 

 

 

 

 
204,000

 
204,000

Unsecured senior notes payable
 
4.60
%
 
4.61

 
 
04/01/22
 

 

 

 

 

 
550,000

 
550,000

Unsecured senior notes payable
 
3.90
%
 
3.94

 
 
06/15/23
 

 

 

 

 

 
500,000

 
500,000

Average/Subtotal
 
 
 
 
3.76

 
 
 
 
229,577

 
58,845

 
733,320

 
77,852

 
2,001

 
1,961,242

 
3,062,837

Unamortized discounts
 
 
 
 

 
 
 
 
(199
)
 
(139
)
 
(177
)
 
(184
)
 
(192
)
 
(885
)
 
(1,776
)
Average/Total
 
 
 
 
3.76

%
 
 
 
$
229,378

 
$
58,706

 
$
733,143

 
$
77,668

 
$
1,809

 
$
1,960,357

 
$
3,061,061

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balloon payments
 
 
 
 
 
 
 
 
 
$
221,080

 
$
51,741

 
$
730,029

 
$
76,000

 
$

 
$
1,958,352

 
$
3,037,202

Principal amortization
 
 
 
 
 
 
 
 
 
8,298

 
6,965

 
3,114

 
1,668

 
1,809

 
2,005

 
23,859

Total consolidated debt
 
 
 
 
 
 
 
 
 
$
229,378

 
$
58,706

 
$
733,143

 
$
77,668

 
$
1,809

 
$
1,960,357

 
$
3,061,061

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed rate/hedged variable rate debt
 
 
 
 
 
 
 
 
 
$
229,138

 
$
12,693

 
$
583,143

 
$
1,668

 
$
1,809

 
$
1,756,357

 
$
2,584,808

Unhedged variable rate debt
 
 
 
 
 
 
 
 
 
240

 
46,013

 
150,000

 
76,000

 

 
204,000

 
476,253

Total consolidated debt
 
 
 
 
 
 
 
 
 
$
229,378

 
$
58,706

 
$
733,143

 
$
77,668

 
$
1,809

 
$
1,960,357

 
$
3,061,061


(1)
Represents the weighted average contractual interest rate as of the end of the period plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees.
(2)
Includes any extension options that we control.
(3)
Secured note payable related to Alexandria Technology Square® was repaid on January 31, 2014. Our partner has a 10% interest in this project and provided $20.9 million for the repayment.
(4)
Secured construction loan with aggregate commitments of $55.0 million. We have two, one-year options to extend the stated maturity date to July 1, 2017, subject to certain conditions.
(5)
Secured construction loan with aggregate commitments of $36.0 million. We have two, one-year options to extend the stated maturity date to June 1, 2018, subject to certain conditions. We expect to begin drawing on this loan in 1Q14.
(6)
Secured construction loan with aggregate commitments of $250.4 million. We have a one-year option to extend the stated maturity date to August 23, 2018, subject to certain conditions. We expect to begin drawing on this loan in 1Q14.
(7)
In addition to the stated rate, the line of credit is subject to an annual facility fee of 0.20%.





ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
40



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013



Summary of Debt
(Dollars in thousands)
(Unaudited)

Fixed rate/hedged and unhedged variable rate debt
 
Fixed Rate/Hedged
Variable Rate
 
Unhedged
Variable Rate
 
Total
Consolidated
 
Percentage of
Total
 
Weighted Average
Interest Rate at
End of Period (1)
 
Weighted Average
Remaining Term
(in years)
Secured notes payable, net
$
586,578

 
$
122,253

 
$
708,831

 
23.2
%
 
5.45
%
 
2.2
4.60% unsecured senior notes payable, net
549,603

 

 
549,603

 
17.9

 
4.61

 
8.3
3.90% unsecured senior notes payable, net
498,627

 

 
498,627

 
16.3

 
3.94

 
9.5
$1.5 billion unsecured senior line of credit

 
204,000

 
204,000

 
6.7

 
1.27

 
5.0
2016 Unsecured Senior Bank Term Loan
350,000

 
150,000

 
500,000

 
16.3

 
2.37

 
2.6
2019 Unsecured Senior Bank Term Loan
600,000

 

 
600,000

 
19.6

 
2.85

 
5.0
Total debt / weighted average
$
2,584,808

 
$
476,253

 
$
3,061,061

 
100.0
%
 
3.76
%
 
5.3
Percentage of total debt
84%

 
16%

 
100%

 
 
 
 
 
 
 

(1)
Represents the weighted average contractual interest rate as of the end of the period plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees.

Joint venture debt summary

The following table presents information related to debt held by our consolidated and unconsolidated joint ventures:
 
 
Our JV Ownership Percentage
 
 
 
December 31, 2013
 
 
 
Average Interest Rate
Loan Collateral
 
 
Type
 
Total Outstanding
 
Our Share
 
Third Party Share
 
Maturity Date (1)
 
Alexandria Technology Square®
 
90.0%
 
Consolidated
 
$
208,683

(2) 
$
187,815

 
$
20,868

 
4/1/2014
 
5.59%
360 Longwood Avenue
 
27.5%
 
Unconsolidated
 
$
87,856

(3) 
$
24,160

 
$
63,696

 
4/1/2019
 
5.25%

(1)
Includes any extension options that we control.
(2)
Represents secured note payable that was repaid on January 31, 2014.
(3)
Construction loan with an aggregate commitment of $213.2 million and bears interest at LIBOR+3.75%, with a floor of 5.25%.

Debt covenants
 
 
Unsecured Senior Notes Payable
 
Unsecured Senior Line of Credit and
Unsecured Senior Bank Term Loans
Debt Covenant Ratios
 
Requirement
 
Actual
 
Requirement
 
Actual
Total Debt to Total Assets
≤ 60%
 
36%
 
≤ 60%
 
32%
Secured Debt to Total Assets
≤ 40%
 
8%
 
≤ 45%
 
7%
Consolidated EBITDA to Interest Expense
≥ 1.50x
 
6.03x
 
≥ 1.50x
 
2.67x
Unencumbered Total Asset Value to Unsecured Debt
≥ 150%
 
264%
 
N/A
 
N/A
Unsecured Leverage Ratio
N/A
 
N/A
 
≤ 60%
 
37%
Unsecured Interest Coverage Ratio
N/A
 
N/A
 
≥ 1.50x
 
7.43x

Summary of interest rate swap agreements
Effective
Date
 
Maturity
Date
 
Number of Contracts
 
Interest Pay
Rate (1)
 
Fair Value as of 12/31/13
 
Notional Amount in Effect as of
 
 
 
 
 
12/31/13
 
12/31/14
 
12/31/15
 
12/31/16
December 29, 2006
 
March 31, 2014
 
1
 
4.99%
 
$
(596
)
 
$
50,000

 
$

 
$

 
$

November 30, 2009
 
March 31, 2014
 
2
 
5.02%
 
(1,800
)
 
150,000

 

 

 

December 31, 2013
 
December 31, 2014
 
2
 
0.98%
 
(3,795
)
 
500,000

 

 

 

December 31, 2013
 
March 31, 2015
 
2
 
0.23%
 
66

 
250,000

 
250,000

 

 

December 31, 2014
 
March 31, 2016
 
3
 
0.53%
 
658

 

 
500,000

 
500,000

 

March 31, 2016
 
March 31, 2017
 
3
 
1.40%
 
2,146

 

 

 

 
500,000

Total
 
 
 
 
 
 
 
$
(3,321
)
 
$
950,000

 
$
750,000

 
$
500,000

 
$
500,000


(1)
In addition to the interest pay rate, borrowings outstanding under our unsecured senior bank term loans include an applicable margin of 1.20% as of December 31, 2013.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
41



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Definitions and Other Information
(Unaudited)



This section contains additional information for sections throughout this supplemental information package as well as explanations of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance.  Additional detail can be found in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, as well as other documents filed with or furnished to the SEC from time to time.
 
Adjusted EBITDA
 
EBITDA represents earnings before interest, taxes, depreciation, and amortization (“EBITDA”), a non-GAAP financial measure, and is used by us and others as a supplemental measure of performance.  We use adjusted EBITDA (“Adjusted EBITDA”) to assess the performance of our core operations, for financial and operational decision making, and as a supplemental or additional means of evaluating period-to-period comparisons on a consistent basis.  Adjusted EBITDA is calculated as EBITDA, excluding net stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate and land parcels, deal costs, and impairments. We believe Adjusted EBITDA provides investors relevant and useful information because it permits investors to view income from our operations on an unleveraged basis before the effects of taxes, depreciation and amortization, net stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate and land parcels, deal costs, and impairments.  By excluding interest expense and gains or losses on early extinguishment of debt, EBITDA and Adjusted EBITDA allow investors to measure our performance independent of our capital structure and indebtedness and, therefore, allow for a more meaningful comparison of our performance to that of other companies, both in the real estate industry and in other industries.  We believe that excluding charges related to share-based compensation facilitates a comparison of our operations across periods and among other equity REITs without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use.  We believe that adjusting for the effects of gains or losses on sales of real estate and land parcels, deal costs, and impairments provides useful information by excluding certain items that are not representative of our core operating results.  These items are dependent upon historical costs, and are subject to judgmental inputs and the timing of our decisions.  EBITDA and Adjusted EBITDA have limitations as measures of our performance.  EBITDA and Adjusted EBITDA do not reflect our historical cash expenditures or future cash requirements for capital expenditures or contractual commitments.  While EBITDA and Adjusted EBITDA are relevant and widely used measures of performance, they do not represent net income or cash flows from operations as defined by GAAP, and they should not be considered as alternatives to those indicators in evaluating performance or liquidity.  Further, our computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.
 
The following table reconciles net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to EBITDA and Adjusted EBITDA:
 
Three Months Ended
 
Year Ended
(dollars in thousands)
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
12/31/2013
 
12/31/2012
Net income
$
44,222

 
$
32,453

 
$
33,337

 
$
30,237

 
$
28,807

 
$
140,249

 
$
105,528

Interest expense
17,783

 
16,171

 
15,978

 
18,020

 
17,941

 
67,952

 
69,184

Depreciation and amortization – continuing operations
48,084

 
48,866

 
46,344

 
45,829

 
47,280

 
189,123

 
185,687

Depreciation and amortization – discontinued operations
17

 
236

 
236

 
1,166

 
792

 
1,655

 
6,318

EBITDA
110,106

 
97,726

 
95,895

 
95,252

 
94,820

 
398,979

 
366,717

Stock compensation expense
4,011

 
3,729

 
4,463

 
3,349

 
3,748

 
15,552

 
14,160

Loss on early extinguishment of debt

 
1,432

 
560

 

 

 
1,992

 
2,225

(Gain) loss on sale of real estate

 

 
(219
)
 
340

 

 
121

 
(1,564
)
Gain on sale of land parcel
(4,052
)
 

 
(772
)
 

 

 
(4,824
)
 
(1,864
)
Impairment of real estate

 

 

 

 
1,601

 

 
11,400

Impairment of land parcel

 

 

 

 
2,050

 

 
2,050

Impairment of investments
853

 

 

 

 

 
853

 

Deal costs
1,446

 

 

 

 

 
1,446

 

Adjusted EBITDA
$
112,364

 
$
102,887

 
$
99,927

 
$
98,941

 
$
102,219

 
$
414,119

 
$
393,124


Adjusted EBITDA margins
 
We calculate Adjusted EBITDA margins by dividing Adjusted EBITDA by total revenues. Because our total revenues exclude revenues from discontinued operations, for the purposes of calculating the margin ratio, we exclude the Adjusted EBITDA generated by our discontinued operations for each period presented. We believe excluding Adjusted EBITDA for discontinued operations improves the consistency and comparability of the Adjusted EBITDA margins from period to period. The following table reconciles Adjusted EBITDA to Adjusted EBITDA – excluding discontinued operations:
 
Three Months Ended
 
Year Ended
(dollars in thousands)
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
12/31/2013
 
12/31/2012
Adjusted EBITDA
$
112,364

 
$
102,887

 
$
99,927

 
$
98,941

 
$
102,219

 
$
414,119

 
$
393,124

Less: discontinued operations
126

 
(193
)
 
(266
)
 
(2,343
)
 
(5,982
)
 
(2,676
)
 
(24,970
)
Adjusted EBITDA – excluding discontinued operations
$
112,490

 
$
102,694

 
$
99,661

 
$
96,598

 
$
96,237

 
$
411,443

 
$
368,154

Total revenues
$
168,823

 
$
158,315

 
$
153,930

 
$
150,083

 
$
151,254

 
$
631,151

 
$
574,497

Adjusted EBITDA margins
67%

 
65%

 
65%

 
64%

 
64%

 
65%

 
64%


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
42



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Definitions and Other Information (continued)
(Unaudited)


Adjusted funds from operations
 
Adjusted funds from operations (“AFFO”) is a non-GAAP financial measure that we use as a supplemental measure of our performance.  We compute AFFO by adding to or deducting from FFO, as adjusted: (1) maintenance building improvements, and non-revenue-enhancing tenant improvements and leasing commissions (excludes development and redevelopment expenditures); (2) effects of straight-line rent and straight-line rent on ground leases; (3) capitalized income from development projects; (4) amortization of acquired above and below market leases, loan fees, and debt premiums/discounts; (5) stock compensation expense; and (6) allocation of AFFO attributable to unvested restricted stock awards.

We believe that AFFO is a useful supplemental performance measure because it further adjusts to: (1) deduct certain expenditures that, although capitalized and classified in depreciation expense, do not enhance the revenue or cash flows of our properties; (2) eliminate the effect of straight-lining our rental income and capitalizing income from development projects in order to reflect the actual amount of contractual rents due in the period presented; and (3) eliminate the effect of items that are not indicative of our core operations and do not actually reduce the amount of cash generated by our operations.  We believe that eliminating the effect of charges related to share-based compensation facilitates a comparison of our operations across periods and among other equity REITs without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use.  We believe that AFFO provides useful information by excluding certain items that are not representative of our core operating results because such items are dependent upon historical costs or subject to judgmental valuation inputs and the timing of our decisions.
 
AFFO is not intended to represent cash flow for the period, and is intended only to provide an additional measure of performance.  We believe that net income attributable to Alexandria’s common stockholders is the most directly comparable GAAP financial measure to AFFO.  We believe that AFFO is a widely recognized measure of the operations of equity REITs, and presenting AFFO will enable investors to assess our performance in comparison to other equity REITs.  However, other equity REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to AFFO calculated by other equity REITs.  AFFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.
 
Annualized base rent
 
Annualized base rent means the annualized fixed base rental amount in effect as of the end of the period, related to our operating rentable square feet (using rental revenue computed on a straight-line basis in accordance with GAAP).
 
Average cash yield
 
See definition of Initial Stabilized Yield (unlevered).
 
Capitalized interest
 
A key component of our business model is our value-creation development and redevelopment projects.  These programs are focused on providing high-quality generic laboratory/office space to meet the real estate requirements of and are reusable by various life science industry client tenants.  Upon completion, each value-creation project is expected to generate significant revenues and cash flows.  Our development and redevelopment projects are generally in locations that are highly desirable to life science entities which we believe results in higher occupancy levels, longer lease terms, and higher rental income and returns.  Development projects consist of the ground-up development of generic laboratory/office facilities.  Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into generic laboratory/office space.  We also have certain significant value-creation projects undergoing important and substantial predevelopment activities to bring these assets to their intended use.  These critical activities add significant value and are required for the construction of buildings.  The projects will provide high-quality facilities for the life science industry and are expected to generate significant revenue and cash flows for the Company.  In accordance with GAAP, we capitalize project costs clearly related to the construction, development, and redevelopment as a cost of the project.  Indirect project costs such as construction administration, legal fees, and office costs that clearly relate to projects under construction, development, and redevelopment are also capitalized as a cost of the project.  We capitalize project costs only during periods in which activities necessary to prepare an asset for its intended use are in progress.  We also capitalize interest cost as a cost of the project only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost is incurred.  Additionally, should activities necessary to prepare an asset for its intended use cease, interest, taxes, insurance, and certain other direct project costs related to these assets would be expensed as incurred.

Cash interest
 
Cash interest is equal to interest expense calculated in accordance with GAAP, plus capitalized interest, less amortization of loan fees, and amortization of debt premiums/discounts.

Construction in progress/current value-creation projects
 
Current value-creation development/current redevelopment projects
 
A key component of our business model is our value-creation development and redevelopment projects.  These programs are focused on providing high-quality, generic, and reusable laboratory/office space to meet the real estate requirements of a wide range of client tenants in the life science industry.  Upon completion, each value-creation project is expected to generate significant revenues and cash flows.  Our development and redevelopment projects are generally in locations that are highly desirable to life science entities, which we believe results in higher occupancy levels, longer lease terms, and higher rental income and returns.  Development projects consist of the ground-up development of generic and reusable laboratory/office facilities.  We generally will not commence new development projects for above-ground vertical construction of new laboratory/office space without first securing pre-leasing for such space except when there is significant market demand for high-quality laboratory/office facilities.  Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into generic laboratory/office space.
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
43



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Definitions and Other Information (continued)
(Unaudited)


Dividend payout ratio
 
Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (shares of common stock outstanding on the respective record date multiplied by the related dividend per share) to FFO attributable to Alexandria’s common stockholders on a diluted basis, as adjusted.
 
Dividend yield
 
Dividend yield for the quarter represents the annualized quarter dividend divided by the closing common stock price at the end of the quarter.

Fixed charge coverage ratio
 
The fixed charge coverage ratio is the ratio of Adjusted EBITDA to fixed charges. This ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing obligations and preferred stock dividends.  The following table presents a reconciliation of interest expense, the most directly comparable GAAP financial measure to cash interest and fixed charges:
 
 
Three Months Ended
(dollars in thousands)
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Adjusted EBITDA
 
$
112,364

 
$
102,887

 
$
99,927

 
$
98,941

 
$
102,219

 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
$
17,783

 
$
16,171

 
$
15,978

 
$
18,020

 
$
17,941

Add: capitalized interest
 
14,116

 
16,788

 
15,690

 
14,021

 
14,897

Less: amortization of loan fees
 
(2,636
)
 
(2,487
)
 
(2,427
)
 
(2,386
)
 
(2,505
)
Less: amortization of debt premium/discounts
 
(146
)
 
(153
)
 
(115
)
 
(115
)
 
(110
)
Cash interest
 
29,117

 
30,319

 
29,126

 
29,540

 
30,223

Dividends on preferred stock
 
6,471

 
6,472

 
6,471

 
6,471

 
6,471

Fixed charges
 
$
35,588

 
$
36,791

 
$
35,597

 
$
36,011

 
$
36,694

Fixed charge coverage ratio – quarter annualized
 
3.2x

 
2.8x

 
2.8x

 
2.7x

 
2.8x

Fixed charge coverage ratio – trailing 12 months
 
2.9x

 
2.8x

 
2.7x

 
2.7x

 
2.6x

 
Funds from operations and funds from operations, as adjusted

GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes that real estate values diminish over time.  In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of funds from operations (“FFO”).  Since its introduction, FFO has become a widely used non-GAAP financial measure among equity REITs.  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  Moreover, we believe that FFO, as adjusted, is also helpful because it allows investors to compare our performance to the performance of other real estate companies between periods, and on a consistent basis, without having to account for differences caused by investment and disposition decisions, financing decisions, terms of securities, capital structures, and capital market transactions.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper and related implementation guidance (“NAREIT White Paper”).  The NAREIT White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciable real estate and land parcels and impairments of depreciable real estate (excluding land parcels), plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  Impairments of real estate relate to decreases in the estimated fair value of real estate due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.  Impairments of real estate represent the write-down of assets when fair value over the recoverability period is less than the carrying value.  We compute FFO, as adjusted, as FFO calculated in accordance with the NAREIT White Paper, plus losses on early extinguishment of debt, preferred stock redemption charges, impairments of land parcels, impairments of investments, and deal costs, less realized gain on equity investment primarily related to one non-tenant life science entity, and the amount of such items that is allocable to our unvested restricted stock awards.  Our calculations of both FFO and FFO, as adjusted, may differ from those methodologies utilized by other equity REITs for similar performance measurements, and, accordingly, may not be comparable to those of other equity REITs.  Neither FFO nor FFO, as adjusted, should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of liquidity, nor are they indicative of the availability of funds for our cash needs, including funds available to make distributions.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
44



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Definitions and Other Information (continued)
(Unaudited)


Future value-creation projects

Land held for future development

All predevelopment efforts have been advanced to appropriate stages and no further predevelopment activities are ongoing and therefore, interest, property taxes, and other costs related to these assets are expensed as incurred.  We generally will not commence new development projects for aboveground vertical construction of new life science laboratory space without first securing pre-leasing for such space, except when there is significant market demand for high-quality laboratory facilities.

Land undergoing predevelopment activities (additional CIP)

Land undergoing predevelopment activities is classified as construction in progress and is undergoing activities prior to commencement of vertical construction of aboveground building improvements.  We generally will not commence ground-up development of any parcels undergoing predevelopment activities without first securing pre-leasing for such space, except when there is significant market demand for high-quality laboratory facilities.  If vertical aboveground construction is not initiated at completion predevelopment activities, the land parcel will be classified as land held for future development.  Our objective with predevelopment is to reduce the time it takes to deliver projects to prospective client tenants.  The largest project included in land undergoing predevelopment consists of our 1.2 million developable square feet at the Alexandria Center™ at Kendall Square in East Cambridge, Massachusetts.

We are required to capitalize project costs, including interest, property taxes, insurance, and other costs directly related and essential to the development or construction of a project during periods when activities necessary to prepare an asset for its intended use are in progress.  Predevelopment costs generally include the following activities prior to commencement of vertical construction:

Ÿ
Traditional preconstruction costs including entitlement, design, construction drawings, Building Information Modeling (3-D virtual modeling), budgeting, sustainability and energy optimization reviews, permitting, and planning for all aspects of the project.
Ÿ
Site and infrastructure construction costs including belowground site work, utility connections, land grading, drainage, egress and regress access points, foundation, and other costs to prepare the site for vertical construction of aboveground building improvements. For example, site and infrastructure costs for the 1.2 million RSF primarily related to 50, 60, and 100 Binney Street of the Alexandria Center™ at Kendall Square are classified as predevelopment prior to commencement of vertical construction.

Gross assets

Gross assets are equal to total assets plus accumulated depreciation, less cash, cash equivalents, and restricted cash.

Initial stabilized yield (unlevered)
 
Initial stabilized yield is calculated as the quotient of the estimated amounts of NOI and our investment in the property.  Our initial stabilized yield excludes the impact of leverage.  Our cash rents related to our value-creation projects are expected to increase over time and our average cash yields are expected, in general, to be greater than our initial stabilized yields on a cash basis.  Our estimates for initial cash and GAAP yields, and total costs at completion, represent our initial estimates at the commencement of the project.  We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.
 
Ÿ
Initial stabilized yield - cash basis: reflects cash rents at the stabilization date after initial rental concessions, if any, have elapsed.
Ÿ
Initial stabilized yield - GAAP basis: reflects cash rents, including contractual rent escalations and any rent concessions over the term(s) of the lease(s), calculated on a straight-line basis.
 
Average cash yield reflects cash rents, including contractual rent escalations after initial rental concessions have elapsed, calculated on a straight-line basis.

Net debt

Net debt is equal to the sum of total consolidated debt less cash, cash equivalents, and restricted cash.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
45



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Definitions and Other Information (continued)
(Unaudited)


NOI
 
NOI is a non-GAAP financial measure equal to income from continuing operations, the most directly comparable GAAP financial measure, excluding loss (gain) on early extinguishment of debt, impairment of land parcel, depreciation and amortization, interest expense, and general and administrative expense.  We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects primarily those income and expense items that are incurred at the property level.  Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets.  NOI on a cash basis is NOI on a GAAP basis, adjusted to exclude the effect of straight-line rent adjustments required by GAAP.  We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent adjustments to rental revenue.
 
Further, we believe NOI is useful to investors as a performance measure, because when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not immediately apparent from income from continuing operations.  NOI excludes certain components from income from continuing operations in order to provide results that are more closely related to the results of operations of our properties.  For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level rather than at the property level.  In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level.  Real estate impairments have been excluded in deriving NOI because we do not consider impairment losses to be property level operating expenses.  Real estate impairment losses relate to changes in the values of our assets and do not reflect the current operating performance with respect to related revenues or expenses.  Our real estate impairments represent the write down in the value of the assets to the estimated fair value less cost to sell.  These impairments result from investing decisions and the deterioration in market conditions that adversely impact underlying real estate values.  Our calculation of NOI also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to the timing of corporate strategy.  Property operating expenses that are included in determining NOI consist of costs that are related to our operating properties, such as utilities, repairs and maintenance, rental expense related to ground leases, contracted services, such as janitorial, engineering, and landscaping, property taxes and insurance, and property level salaries.  General and administrative expenses consist primarily of accounting and corporate compensation, corporate insurance, professional fees, office rent, and office supplies that are incurred as part of corporate office management.  NOI presented by us may not be comparable to NOI reported by other equity REITs that define NOI differently.  We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with income from continuing operations as presented in our condensed consolidated statements of income.  NOI should not be considered as an alternative to income from continuing operations as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions.

Same property comparisons
 
As a result of changes within our total property portfolio during the comparative periods presented, including assets acquired, properties placed into redevelopment and development, and projects delivered into operations from redevelopment and development, the consolidated total rental revenues, tenant recoveries and rental operating expenses in our operating results can show significant changes from period to period. In order to supplement an evaluation of our results of operations over a given period, we analyze the operating performance for all properties that were fully operating for the entirety of the comparative periods presented separate from properties acquired subsequent to the first day in the earliest comparable period presented, properties that underwent development or redevelopment at any time during the comparative periods, and corporate entities (legal entities performing general and administrative functions), which are excluded from same property results. Additionally, rental revenues from lease termination fees, if any, are excluded from the results of the same properties. The following table reconciles same properties to total properties for the year ended December 31, 2013: 
Development – current
 
Properties
 
Redevelopment – current
 
Properties
 
Summary
 
Properties
499 Illinois Street
1

 
11055/11065/11075 Roselle Street
3

 
Development – current
 
5

269 East Grand Avenue
1

 
 
 
 
 
Development – deliveries
 
7

430 East 29th Street
1

 
Redevelopment – deliveries since January 1, 2012
 
 
 
Redevelopment – current
 
3

75/125 Binney Street
1

 
 
Properties
 
Redevelopment – deliveries
 
16

360 Longwood Avenue (unconsolidated JV)
1

 
6275 Nancy Ridge Drive
 
1

 
 
 
 
 
 
 
 
 
 
 
4757 Nexus Center Drive
 
1

 
Development/redevelopment - Asia
 
7

 
5

 
 
 
 
 
 
 
11119 North Torrey Pines Road 
1

 
 
 
 
Development – deliveries since January 1, 2012
 
 
 
620 Professional Drive 
1

 
Acquisitions in North America since January 1, 2012
 
 
 
Properties
 
20 Walkup Drive
1

 
 
 
259 East Grand Avenue
1

 
10300 Campus Point Dr 
1

 
 6 Davis Drive
1

400/450 East Jamie Court
2

 
343 Oyster Point Boulevard
1

 
407 Davis Drive
1

5200 Illumina Way
1

 
1616 Eastlake Avenue
1

 
150 Second Street
1

4755 Nexus Center Drive
1

 
1551 Eastlake Avenue
1

 
10121/10151 Barnes Canyon Road
2

225 Binney Street
1

 
9800 Medical Center Drive
3

 
 
 
 
Canada
1

 
285 Bear Hill Rd
1

 
Properties held for sale
 
4

 
 
7

 
400 Technology Square
1

 
Total properties excluded from same properties
 
47

 
 
 
 
 
 
 
 
 
3530/3550 John Hopkins Court 
2

 
 
 
 
 
 
 
Same properties
 
133

 
 
 
 
 
16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total properties as of December 31, 2013
 
180



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2014
46



ALEXANDRIA REAL ESTATE EQUITIES, INC.
December 31, 2013

Definitions and Other Information (continued)
(Unaudited)


Stabilized occupancy date

The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or greater.
 
Total market capitalization
 
Total market capitalization is equal to the sum of outstanding shares of series E cumulative convertible preferred stock and common stock multiplied by the related closing price of each class at the end of each period presented, the liquidation value of the series D cumulative convertible preferred stock and total debt.

Unencumbered NOI as a percentage of total NOI
 
Unencumbered NOI as a percentage of total NOI is a non-GAAP financial measure that we believe is useful to investors as a performance measure of our results of operations of our unencumbered real estate assets, as it reflects primarily those income and expense items that are incurred at the unencumbered property level.  We use unencumbered NOI as a percentage of total NOI in order to assess our compliance with our financial covenants under our debt obligations because the measure serves as a proxy for a financial measure under such debt obligations.  Unencumbered NOI is derived from assets classified in continuing operations which are not subject to any mortgage, deed of trust, lien, or other security interest as of the period for which income is presented.  Unencumbered NOI for periods prior to the three months ended December 31, 2013, has been reclassified to conform to current period presentation related to discontinued operations.
 
 
Three Months Ended
 
Year Ended
(dollars in thousands)
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
12/31/2013
 
12/31/2012
Unencumbered NOI
 
$
82,267

 
$
76,607

 
$
74,966

 
$
71,143

 
$
74,424

 
$
305,028

 
$
286,224

Encumbered NOI
 
36,664

 
34,024

 
32,687

 
33,754

 
30,698

 
137,084

 
115,517

Total NOI from continuing operations
 
$
118,931

 
$
110,631

 
$
107,653

 
$
104,897

 
$
105,122

 
$
442,112

 
$
401,741

Unencumbered NOI as a percentage of total NOI
 
69%

 
69%

 
70%

 
68%

 
71%

 
69%

 
71%


Weighted average interest rate for capitalization
 
The weighted average interest rate required for calculating capitalization of interest pursuant to GAAP represents a weighted average rate based on the rates applicable to borrowings outstanding during the period and includes the impact of our interest rate swap agreements, amortization of debt discounts/premiums, amortization of loan fees, and other bank fees.  A separate calculation is performed each month to determine our weighted average interest rate for capitalization for the month.  The rate will vary each month due to changes in variable interest rates, outstanding debt balances, the proportion of variable rate debt to fixed rate debt, the amount and terms of effective interest rate swap agreements, and the amount of loan fee amortization.

The following table presents the weighted average interest rate for capitalization:
 
 
Three Months Ended
 
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
Weighted average interest rate for capitalization
 
4.09%
 
4.33%
 
4.13%
 
3.97%
 
4.10%

Weighted average shares for calculating FFO, FFO, as adjusted, and AFFO per share
 
Weighted average shares of common stock outstanding for calculating FFO, FFO, as adjusted, and AFFO per share attributable to Alexandria’s common stockholders represent the weighted average of common shares outstanding during the period, calculated as follows:
 
 
Three Months Ended
 
Year Ended
 
 
12/31/2013
 
9/30/2013
 
6/30/2013
 
3/31/2013
 
12/31/2012
 
12/31/2013
 
12/31/2012
Weighted average shares – basic
 
70,999,987

 
70,900,274

 
66,972,892

 
63,161,319

 
63,091,781

 
68,038,195

 
62,159,913

Effect of assumed conversion and dilutive securities:
 
 
 
 

 
 

 
 

 
 

 
 
 
 
Assumed conversion of 8.00% unsecured senior convertible notes
 

 
5,470

 
6,146

 
6,146

 
6,146

 
4,428

 
6,146

Dilutive effect of stock options
 

 

 

 

 

 

 
331

Weighted average shares – diluted
 
70,999,987

 
70,905,744

 
66,979,038

 
63,167,465

 
63,097,927

 
68,042,623

 
62,166,390


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