Commitments and contingencies

Employee retirement savings plan

We have a retirement savings plan pursuant to Section 401(k) of the Internal Revenue Code whereby our employees may contribute a portion of their compensation to their respective retirement accounts in an amount not to exceed the maximum allowed under the Internal Revenue Code. In addition to employee contributions, we have elected to provide company discretionary profit sharing contributions (subject to statutory limitations), which amounted to approximately $1.6 million, $1.4 million, and $1.3 million, for the years ended December 31, 2013, 2012, and 2011, respectively. Employees who participate in the plan are immediately vested in their contributions and in the contributions made on their behalf by the Company.

Concentration of credit risk

We maintain our cash and cash equivalents at insured financial institutions. The combined account balances at each institution periodically exceed FDIC insurance coverage of $250,000, and, as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. We have not experienced any losses to date on our invested cash.

In order to limit our risk of non-performance by an individual counterparty under our interest rate swap agreements, our interest rate swap agreements are spread among various counterparties. As of December 31, 2013, the largest aggregate notional amount of interest rate swap agreements in effect at any single point in time with an individual counterparty was $250.0 million. If one or more of our counterparties fail to perform under our interest rate swap agreements, we may incur higher costs associated with our variable-rate LIBOR-based debt than the interest costs we originally anticipated.

We are dependent on rental income from relatively few client tenants in the life science industry. The inability of any single client tenant to make its lease payments could adversely affect our operations. As of December 31, 2013, we had 527 leases with a total of 425 client tenants, and 79, or 43.9%, of our 180 properties were each leased to a single client tenant. As of December 31, 2013, our three largest client tenants accounted for approximately 14.4% of our aggregate ABR, or 6.7%, 3.9%, and 3.8%, respectively.

Commitments

As of December 31, 2013, remaining aggregate costs under contract for the construction of properties undergoing development, redevelopment, and generic life science infrastructure improvements under the terms of leases approximated $272.0 million. We expect payments for these obligations to occur over one to three years, subject to capital planning adjustments from time to time. We are also committed to funding approximately $46.7 million for certain investments over the next several years. In addition, we have letters of credit and performance obligations of $13.9 million primarily related to our construction management requirements.

We have minimum development requirements under project development agreements with government entities in some of our future value-creation projects. At December 31, 2013, we have land and land improvements with an aggregate book value of approximately $18.8 million where we have construction commitment obligations aggregating approximately 300,000 RSF that need to be fulfilled by 2016. If we do not meet, extend, or eliminate these commitments, we may default under our existing agreements. The government entities in turn also have certain obligations to us under those project development agreements. We are working with these entities to fulfill or amend certain existing obligations in a mutually beneficial manner.

A 100% owned subsidiary of the Company previously executed a ground lease, as ground lessee, for certain property in New York City. The West Tower of the Alexandria Center™ for Life Science – New York City is being constructed on such ground-leased property. In November 2012, we commenced vertical construction of the West Tower. The ground lease provides that substantial completion of the West Tower occur by October 31, 2015, and requires satisfying conditions that include substantially completed construction in accordance with the plans. The ground lease also provides that by October 31, 2016, the ground lessee shall obtain a temporary or permanent certificate of occupancy for the core and shell of both the East Tower of the Alexandria Center™ for Life Science – New York City and the West Tower. In each case, the target dates above are subject to force majeure, to contractual cure rights, to other legal remedies available to ground lessees generally, and to change for any reason by agreement between the two parties under the ground lease. All of the required milestones have been met.

Rental expense

Our rental expense attributable to continuing operations for the years ended December 31, 2013, 2012, and 2011, was approximately $11.4 million, $10.6 million, and $10.2 million, respectively. These rental expense amounts include certain operating leases for our headquarters and field offices, and ground leases for 29 of our properties and two land development parcels. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Future minimum lease obligations under non-cancelable ground and other operating leases as of December 31, 2013, were as follows (in thousands):



Year	Office Leases		Ground Leases		Total
2014	$	1,324	$	10,520	$	11,844
2015	1,394		9,900		11,294
2016	1,468		10,504		11,972
2017	1,542		10,572		12,114
2018	1,617		10,662		12,279
Thereafter	1,482		635,289		636,771
	$	8,827	$	687,447	$	696,274

Our operating lease obligations related to our office leases have remaining terms of approximately six years, exclusive of extension options. Excluding one ground lease related to one operating property that expires in 2036 with a net book value of approximately $8.9 million as of December 31, 2013, our lease obligations have remaining terms generally ranging from 40 to 100 years, including extension options.