Secured and unsecured senior debt

The following table summarizes our secured and unsecured senior debts as of December 31, 2013 (dollars in thousands):



	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	$	586,578		$	122,253		$	708,831		23.2	%	5.45	%	2.2
4.60% unsecured senior notes payable	549,603			—			549,603			17.9		4.61		8.3
3.90% unsecured senior notes payable	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 / 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 interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees.

The following table summarizes our outstanding consolidated indebtedness and respective principal maturities as of December 31, 2013 (dollars in thousands):



	Stated Rate			Weighted Average Interest Rate⁽¹⁾		Maturity Date⁽²⁾		Principal Payments for the Period Ending December 31,
Debt	Stated Rate			Weighted Average Interest Rate⁽¹⁾		Maturity Date⁽²⁾		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 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. In February 2014, $2.2 million was drawn on this loan.


(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 the first quarter of 2014.


(7)	In addition to the stated rate, the line of credit is subject to an annual facility fee of 0.20%.

3.90% Unsecured Senior Notes Payable

In June 2013, we completed a $500.0 million public offering of our 3.90% Unsecured Senior Notes. The unsecured senior notes payable were priced at 99.712% of the principal amount with a yield to maturity of 3.94% and are due June 15, 2023. We used the net proceeds of this offering initially to prepay $150.0 million of the outstanding principal balance on our 2016 Unsecured Senior Bank Term Loan, to reduce the outstanding borrowings on our unsecured senior line of credit to zero, and initially held the remaining proceeds in cash and cash equivalents. As a result of the $150.0 million prepayment of our 2016 Unsecured Senior Bank Term Loan, we recognized a loss on early extinguishment of debt related to the write-off of a portion of unamortized loan fees in June 2013, aggregating $560 thousand.

4.60% Unsecured Senior Notes Payable

In February 2012, we completed a $550.0 million public offering of our unsecured senior notes payable at a stated interest rate of 4.60%. The unsecured senior notes payable were priced at 99.915% of the principal amount with a yield to maturity of 4.61% and are due April 1, 2022. We used the net proceeds of this offering to prepay the outstanding principal balance of $250.0 million on our unsecured senior bank term loan and to reduce the outstanding borrowings on our unsecured senior line of credit and recognized a loss on early extinguishment of debt of approximately $2.2 million. See the following page for further discussion.

The unsecured senior notes payable are unsecured obligations of the Company and are fully and unconditionally guaranteed by Alexandria Real Estate Equities, L.P., an indirectly 100% owned subsidiary of the Company. The unsecured senior notes payable rank equally in right of payment with all other senior unsecured indebtedness. However, the unsecured senior notes payable are effectively subordinated to existing and future mortgages and other secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and to all existing and future preferred equity and liabilities, whether secured or unsecured, of the Company’s subsidiaries, other than Alexandria Real Estate Equities, L.P.

The requirements of the key financial covenants under our unsecured senior notes payable as of December 31, 2013, are as follows:



Covenant Ratios ⁽¹⁾		Requirement
Total Debt to Total Assets		Less than or equal to 60%
Consolidated EBITDA to Interest Expense		Greater than or equal to 1.5x
Unencumbered Total Asset Value to Unsecured Debt		Greater than or equal to 150%
Secured Debt to Total Assets		Less than or equal to 40%


(1)	For a definition of the ratios used in the table above, refer to the Indenture dated June 7, 2013, which governs the unsecured senior notes payable, which was filed as an exhibit to the Form 8-K filed with the SEC on June 7, 2013.

Unsecured senior line of credit and unsecured senior bank term loans

On July 26, 2013, we amended our 2016 Unsecured Senior Bank Term Loan to reduce the applicable interest rate margins with respect to the loan thereunder on outstanding borrowings. We extended the maturity of this loan by one month, and we expect to repay the loan over the next few years. In addition, on August 30, 2013, we amended our $1.5 billion unsecured senior line of credit and our 2019 Unsecured Senior Bank Term Loan to reduce the interest rate on outstanding borrowings, extend the maturity dates, and amend certain financial covenants. Also, on August 30, 2013, we amended our 2016 Unsecured Senior Bank Term Loan to conform certain financial covenants to those contained in the amended credit agreement related to our $1.5 billion unsecured senior line of credit and our 2019 Unsecured Senior Bank Term Loan. The maturity dates below reflect any available extension options that we control.

Balance at 12/31/13

Maturity Date

Applicable Rate

Facility Fee

Facility

Prior

Amended

Prior

Amended

Prior

Amended

2016 Unsecured Senior Bank Term Loan

500

million

June 2016

July 2016

L+1.75%

L+1.20%

N/A

2019 Unsecured Senior Bank Term Loan

600

million

January 2017

January 2019

L+1.50%

L+1.20%

N/A

$1.5 billion unsecured senior line of credit

204

million

April 2017

January 2019

L+1.20%

L+1.10%

0.25

0.20

During the year ended December 31, 2013, in conjunction with the refinancing of our unsecured senior bank term loans and the partial repayment of $250.0 million of our 2016 Unsecured Senior Bank Term Loan, we recognized a loss on early extinguishment of debt aggregating $2.0 million, related to the write-off of unamortized loan fees.

During the year ended December 31, 2012, we recognized a loss on early extinguishment of debt of approximately $2.2 million, including $1.6 million related to the write-off of unamortized loan fees upon modification of our unsecured senior line of credit and $0.6 million related to the write-off of unamortized loan fees resulting from the early repayment of $250.0 million of our 2012 Unsecured Senior Bank Term Loan.

During the year ended December 31, 2011, we recognized a loss on early extinguishment of debt of approximately $6.5 million related to the repurchase, in privately negotiated transactions, of approximately $217.1 million principal amount of our 3.70% Unsecured Senior Convertible Notes and the partial and early repayment of our 2012 Unsecured Senior Bank Term Loan.

Borrowings under the unsecured senior line of credit will bear interest at a “Eurocurrency Rate” or a “Base Rate” specified in the amended unsecured line of credit agreement, plus, in either case, the Applicable Margin. The “Eurocurrency Rate” specified in the amended unsecured line of credit agreement is, as applicable, the rate per annum equal to (i) the LIBOR or a successor rate thereto as approved by the administrative agent for loans denominated in a LIBOR quoted currency (i.e., U.S. Dollars, Euro, Sterling, or Yen), (ii) the average annual yield rates applicable to Canadian dollar banker’s acceptances for loans denominated in Canadian dollars, (iii) the Bank Bill Swap Reference Bid rate for loans denominated in Australian dollars, or (iv) the rate designated with respect to the applicable alternative currency for loans denominated in a non-LIBOR quoted currency (other than Canadian or Australian dollars). The Base Rate specified in the amended unsecured line of credit agreement means for any day a fluctuating rate per annum equal to the highest of (a) the federal funds rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Eurocurrency Rate plus 1.00%. The Applicable Margin for LIBOR borrowings under the unsecured senior line of credit as of December 31, 2013, was 1.10%, which is based on our existing credit rating as set by certain rating agencies. As of December 31, 2013, we had $204 million in borrowings outstanding on our $1.5 billion unsecured senior line of credit. Our unsecured senior line of credit is subject to an annual facility fee of 0.20% based on the aggregate commitments outstanding.

The requirements of the key financial covenants under our unsecured senior line of credit and unsecured senior bank term loans as of December 31, 2013, are as follows:



Covenant Ratios ⁽¹⁾		Requirement
Leverage Ratio		Less than or equal to 60.0%
Fixed Charge Coverage Ratio		Greater than or equal to 1.50x
Secured Debt Ratio		Less than or equal to 45.0%
Unsecured Leverage Ratio		Less than or equal to 60.0%
Unsecured Interest Coverage Ratio		Greater than or equal to 1.50x


(1)	For a definition of the ratios, refer to the amended unsecured senior line of credit and unsecured senior bank term loan agreements, each dated as of August 30, 2013 and July 26, 2013, which are filed as exhibits to our Quarterly Report on Form 10-Q filed with the SEC on November 7, 2013.

In addition, the terms of the unsecured senior line of credit and unsecured senior bank term loan agreements, among other things, limit the ability of the Company, Alexandria Real Estate Equities, L.P., and the Company’s subsidiaries to (i) consummate a merger, or consolidate or sell all or substantially all of the Company’s assets, and (ii) incur certain secured or unsecured indebtedness. Additionally, the terms of the unsecured senior line of credit and unsecured senior bank term loan agreements include a restriction that may limit our ability to pay dividends, including distributions with respect to common stock or other equity interests, during any time a default is continuing, except to enable us to continue to qualify as a REIT for federal income tax purposes. As of December 31, 2013, we were in compliance with all such covenants.

The following table summarizes interest expense for the years ended December 31, 2013, 2012, and 2011 (in thousands):



	Year Ended December 31,
	2013			2012			2011
Gross interest	$	128,567		$	131,935		$	124,429
Capitalized interest	(60,615		)	(62,751		)	(61,056		)
Interest expense ⁽¹⁾	$	67,952		$	69,184		$	63,373

(1) Includes interest expense related to and classified in income from discontinued operations in the accompanying consolidated statements of income.

Secured construction loans

In May 2013, we closed a secured construction loan with aggregate commitments of $36.0 million for our 100% pre-leased development project at 269 East Grand Avenue in the San Francisco Bay Area market. The construction loan matures in June 2016, and we have an option to extend the stated maturity date of June 1, 2016, by one year, twice, to June 1, 2018, subject to certain conditions. The construction loan bears interest at the LIBOR or the Base Rate specified in the construction loan agreement, defined as the higher of either the prime rate being offered by our lender or the Base Rate, plus in either case a specified margin of 1.40% for LIBOR borrowings or 0.25% for Base Rate borrowings. As of December 31, 2013, commitments of $36.0 million were available under this loan.

In August 2013, we closed a secured construction loan for our development project at 75/125 Binney Street in the Greater Boston market. The construction loan matures in August 2017, and we have an option to extend the stated maturity date of August 23, 2017, by one year, to August 23, 2018, subject to certain conditions. The construction loan bears interest at the LIBOR or the Base Rate specified in the construction loan agreement, plus in either case a specified margin of 1.35% for LIBOR borrowings or 0.35% for Base Rate borrowings. As of December 31, 2013, 100% of commitments aggregating $250.4 million were available under this loan.

In June 2012, we closed a secured construction loan with aggregate commitments of $55.0 million. The construction loan matures in July 2015, and we have an option to extend the stated maturity date of July 1, 2015, by one year, twice, to July 1, 2017, subject to certain conditions. The construction loan bears interest at the LIBOR or the Base Rate specified in the construction loan agreement, defined as the higher of either the prime rate being offered by our lender or the Base Rate, plus in either case a specified margin of 1.50% for LIBOR borrowings or 0.25% for Base Rate borrowings. As of December 31, 2013, the outstanding loan balance was $46.0 million and commitments of $9.0 million were available under this loan.

Secured construction loan of unconsolidated joint venture

We have a 27.5% interest in an unconsolidated joint venture that is currently developing a building in the Longwood Medical Area of the Greater Boston market. The remaining construction costs will be funded primarily from a non-recourse secured construction loan with aggregate commitments of $213.2 million and an outstanding balance of $87.9 million as of December 31, 2013. See Note 3 for further information.