Condensed consolidating financial information

3 Months Ended

Mar. 31, 2015

Condensed Consolidated Financial Information [Abstract]

Condensed consolidating financial information

Condensed consolidating financial information

Alexandria Real Estate Equities, Inc. (the “Issuer”), has sold certain debt securities registered under the Securities Act of 1933, as amended, that are fully and unconditionally guaranteed by Alexandria Real Estate Equities, L.P. (the “LP” or the “Guarantor Subsidiary”), an indirectly 100% owned subsidiary of the Issuer. The Company’s other subsidiaries, including, but not limited to, the subsidiaries that own substantially all of its real estate (collectively, the “Combined Non-Guarantor Subsidiaries”) will not provide a guarantee of such securities, including the subsidiaries that are partially or 100% owned by the LP. The following condensed consolidating financial information presents the condensed consolidating balance sheets as of March 31, 2015, and December 31, 2014, and the condensed consolidating statements of income, condensed consolidating statements of comprehensive income, and condensed consolidating statements of cash flows for the three months ended March 31, 2015 and 2014, for the Issuer, the Guarantor Subsidiary, and the Combined Non-Guarantor Subsidiaries, as well as the eliminations necessary to arrive at the information for Alexandria Real Estate Equities, Inc., on a consolidated basis, and consolidated amounts. In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) the Issuer’s interests in the Guarantor Subsidiary and the Combined Non-Guarantor Subsidiaries, (ii) the Guarantor Subsidiary’s interests in the Combined Non-Guarantor Subsidiaries, and (iii) the Combined Non-Guarantor Subsidiaries’ interests in the Guarantor Subsidiary, where applicable, even though all such subsidiaries meet the requirements to be consolidated under GAAP. All intercompany balances and transactions between the Issuer, the Guarantor Subsidiary, and the Combined Non-Guarantor Subsidiaries have been eliminated, as shown in the column “Eliminations.” All assets and liabilities have been allocated to the Issuer, the Guarantor Subsidiary, and the Combined Non-Guarantor Subsidiaries generally based on legal entity ownership.

Condensed Consolidating Balance Sheet

as of March 31, 2015

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)		Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)		Combined Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Investments in real estate	$	—	$	—	$	7,388,059	$	—		$	7,388,059
Cash and cash equivalents	60,236		63		30,342		—			90,641
Restricted cash	63		—		56,641		—			56,704
Tenant receivables	—		—		10,627		—			10,627
Deferred rent	—		—		243,459		—			243,459
Deferred leasing and financing costs	33,537		—		166,039		—			199,576
Investments	—		5,204		277,858		—			283,062
Investments in and advances to affiliates	6,971,361		6,344,419		129,930		(13,445,710		)	—
Other assets	21,651		—		111,442		—			133,093
Total assets	$	7,086,848	$	6,349,686	$	8,414,397	$	(13,445,710	)	$	8,405,221
Liabilities, Noncontrolling Interests, and Equity
Secured notes payable	$	—	$	—	$	760,476	$	—		$	760,476
Unsecured senior notes payable	1,747,450		—		—		—			1,747,450
Unsecured senior line of credit	421,000		—		—		—			421,000
Unsecured senior bank term loans	975,000		—		—		—			975,000
Accounts payable, accrued expenses, and tenant security deposits	104,315		—		541,304		—			645,619
Dividends payable	58,535		—		289		—			58,824
Total liabilities	3,306,300		—		1,302,069		—			4,608,369
Redeemable noncontrolling interests	—		—		14,282		—			14,282
Alexandria’s stockholders’ equity	3,780,548		6,349,686		7,096,024		(13,445,710		)	3,780,548
Noncontrolling interests	—		—		2,022		—			2,022
Total equity	3,780,548		6,349,686		7,098,046		(13,445,710		)	3,782,570
Total liabilities, noncontrolling interests, and equity	$	7,086,848	$	6,349,686	$	8,414,397	$	(13,445,710	)	$	8,405,221

Condensed Consolidating Balance Sheet

as of December 31, 2014

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)		Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)		Combined Non- Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Investments in real estate	$	—	$	—	$	7,226,016	$	—		$	7,226,016
Cash and cash equivalents	52,491		63		33,457		—			86,011
Restricted cash	67		—		26,817		—			26,884
Tenant receivables	—		—		10,548		—			10,548
Deferred rent	—		—		234,124		—			234,124
Deferred leasing and financing costs	35,462		—		166,336		—			201,798
Investments	—		5,235		231,154		—			236,389
Investments in and advances to affiliates	6,874,866		6,295,852		128,943		(13,299,661		)	—
Other assets	19,461		—		94,805		—			114,266
Total assets	$	6,982,347	$	6,301,150	$	8,152,200	$	(13,299,661	)	$	8,136,036
Liabilities, Noncontrolling Interests, and Equity
Secured notes payable	$	—	$	—	$	652,209	$	—		$	652,209
Unsecured senior notes payable	1,747,370		—		—		—			1,747,370
Unsecured senior line of credit	304,000		—		—		—			304,000
Unsecured senior bank term loans	975,000		—		—		—			975,000
Accounts payable, accrued expenses, and tenant security deposits	69,013		—		420,072		—			489,085
Dividends payable	58,525		—		289		—			58,814
Total liabilities	3,153,908		—		1,072,570		—			4,226,478
Redeemable noncontrolling interests	—		—		14,315		—			14,315
Alexandria’s stockholders’ equity	3,828,439		6,301,150		6,998,511		(13,299,661		)	3,828,439
Noncontrolling interests	—		—		66,804		—			66,804
Total equity	3,828,439		6,301,150		7,065,315		(13,299,661		)	3,895,243
Total liabilities, noncontrolling interests, and equity	$	6,982,347	$	6,301,150	$	8,152,200	$	(13,299,661	)	$	8,136,036

Condensed Consolidating Statement of Income

for the Three Months Ended March 31, 2015

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Rental	$	—		$	—		$	143,608		$	—		$	143,608
Tenant recoveries	—			—			48,394			—			48,394
Other income	3,026			(41		)	5,564			(3,798		)	4,751
Total revenues	3,026			(41		)	197,566			(3,798		)	196,753
Expenses:
Rental operations	—			—			61,223			—			61,223
General and administrative	12,226			—			5,959			(3,798		)	14,387
Interest	17,157			—			6,079			—			23,236
Depreciation and amortization	1,247			—			57,673			—			58,920
Impairment of real estate	—			—			14,510			—			14,510
Total expenses	30,630			—			145,444			(3,798		)	172,276
Equity in earnings of unconsolidated joint ventures	—			—			574			—			574
Equity in earnings of affiliates	52,120			45,590			917			(98,627		)	—
Income from continuing operations	24,516			45,549			53,613			(98,627		)	25,051
Loss from discontinued operations	—			—			(43		)	—			(43		)
Net income	24,516			45,549			53,570			(98,627		)	25,008
Dividends on preferred stock	(6,247		)	—			—			—			(6,247		)
Net income attributable to noncontrolling interests	—			—			(492		)	—			(492		)
Net income attributable to unvested restricted stock awards	(483		)	—			—			—			(483		)
Net income attributable to Alexandria’s common stockholders	$	17,786		$	45,549		$	53,078		$	(98,627	)	$	17,786

Condensed Consolidating Statement of Income

for the Three Months Ended March 31, 2014

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)		Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues:
Rental	$	—		$	—	$	130,570		$	—		$	130,570
Tenant recoveries	—			—		41,682			—			41,682
Other income	2,919			—		4,633			(3,618		)	3,934
Total revenues	2,919			—		176,885			(3,618		)	176,186
Expenses:
Rental operations	—			—		52,507			—			52,507
General and administrative	10,860			—		5,982			(3,618		)	13,224
Interest	13,539			—		5,584			—			19,123
Depreciation and amortization	1,471			—		48,950			—			50,421
Total expenses	25,870			—		113,023			(3,618		)	135,275
Equity in earnings of affiliates	62,505			58,306		1,148			(121,959		)	—
Income from continuing operations	39,554			58,306		65,010			(121,959		)	40,911
Loss from discontinued operations	—			—		(162		)	—			(162		)
Net income	39,554			58,306		64,848			(121,959		)	40,749
Dividends on preferred stock	(6,471		)	—		—			—			(6,471		)
Net income attributable to noncontrolling interests	—			—		(1,195		)	—			(1,195		)
Net income attributable to unvested restricted stock awards	(374		)	—		—			—			(374		)
Net income attributable to Alexandria’s common stockholders	$	32,709		$	58,306	$	63,653		$	(121,959	)	$	32,709

Condensed Consolidating Statement of Comprehensive Income

for the Three Months Ended March 31, 2015

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net income	$	24,516		$	45,549		$	53,570		$	(98,627	)	$	25,008
Other comprehensive (loss) income:
Unrealized (losses) gains on marketable securities:
Unrealized holding (losses) gains arising during the period	—			(54		)	28,489			—			28,435
Reclassification adjustment for losses included in net income	—			41			1,062			—			1,103
Unrealized (losses) gains on marketable securities	—			(13		)	29,551			—			29,538
Unrealized losses on interest rate swap agreements:
Unrealized interest rate swap losses arising during the period	(3,013		)	—			—			—			(3,013		)
Reclassification adjustment for amortization of interest expense included in net income	505			—			—			—			505
Unrealized losses on interest rate swap agreements	(2,508		)	—			—			—			(2,508		)
Unrealized gains on foreign currency translation:
Unrealized foreign currency translation losses during the period	—			—			(6,271		)	—			(6,271		)
Reclassification adjustment for losses included in net income	—			—			9,236			—			9,236
Unrealized gains on foreign currency translation	—			—			2,965			—			2,965
Total other comprehensive (loss) income	(2,508		)	(13		)	32,516			—			29,995
Comprehensive income	22,008			45,536			86,086			(98,627		)	55,003
Less: comprehensive income attributable to noncontrolling interests	—			—			(646		)	—			(646		)
Comprehensive income attributable to Alexandria’s common stockholders	$	22,008		$	45,536		$	85,440		$	(98,627	)	$	54,357

Condensed Consolidating Statement of Comprehensive Income

for the Three Months Ended March 31, 2014

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)		Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Net income	$	39,554		$	58,306	$	64,848		$	(121,959	)	$	40,749
Other comprehensive income:
Unrealized gains on marketable securities:
Unrealized holding gains arising during the period	—			—		18,779			—			18,779
Reclassification adjustment for losses included in net income	—			—		—			—			—
Unrealized gains on marketable securities	—			—		18,779			—			18,779
Unrealized gains on interest rate swap agreements:
Unrealized interest rate swap gains arising during the period	5,592			—		—			—			5,592
Reclassification adjustment for amortization of interest income included in net income	(3,490		)	—		—			—			(3,490		)
Unrealized gains on interest rate swap agreements	2,102			—		—			—			2,102
Unrealized foreign currency translation losses	—			—		(3,106		)	—			(3,106		)
Total other comprehensive income	2,102			—		15,673			—			17,775
Comprehensive income	41,656			58,306		80,521			(121,959		)	58,524
Less: comprehensive income attributable to noncontrolling interests	—			—		(1,195		)	—			(1,195		)
Comprehensive income attributable to Alexandria’s common stockholders	$	41,656		$	58,306	$	79,326		$	(121,959	)	$	57,329

Condensed Consolidating Statement of Cash Flows

for the Three Months Ended March 31, 2015

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net income	$	24,516		$	45,549		$	53,570		$	(98,627	)	$	25,008
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	1,247			—			57,673			—			58,920
Impairment of real estate	—			—			14,510			—			14,510
Equity in earnings from unconsolidated joint ventures	—			—			(574		)	—			(574		)
Distributions of earnings from unconsolidated joint ventures	—			—			491			—			491
Amortization of loan fees	1,925			—			909			—			2,834
Amortization of debt discounts (premiums)	80			—			(162		)	—			(82		)
Amortization of acquired below market leases	—			—			(933		)	—			(933		)
Deferred rent	—			—			(9,901		)	—			(9,901		)
Stock compensation expense	3,690			—			—			—			3,690
Equity in earnings of affiliates	(52,120		)	(45,590		)	(917		)	98,627			—
Investment gains	—			—			(5,937		)	—			(5,937		)
Investment losses	—			41			2,184			—			2,225
Changes in operating assets and liabilities:
Restricted cash	4			—			(55		)	—			(51		)
Tenant receivables	—			—			(102		)	—			(102		)
Deferred leasing costs	—			—			(7,131		)	—			(7,131		)
Other assets	(3,437		)	—			190			—			(3,247		)
Accounts payable, accrued expenses, and tenant security deposits	32,795			(23		)	(5,651		)	—			27,121
Net cash provided by (used in) operating activities	8,700			(23		)	98,164			—			106,841
Investing Activities
Proceeds from sale of real estate	—			—			67,616			—			67,616
Additions to real estate	—			—			(104,632		)	—			(104,632		)
Purchase of real estate	—			—			(93,938		)	—			(93,938		)
Deposits for investing activities	—			—			(28,000		)	—			(28,000		)
Investment in unconsolidated real estate entities	—			—			(2,539		)	—			(2,539		)
Investments in subsidiaries	(44,375		)	(2,977		)	(70		)	47,422			—
Additions to investments	—			—			(15,118		)	—			(15,118		)
Sales of investments	—			—			2,345			—			2,345
Repayment of notes receivable	—			—			4,214			—			4,214
Net cash used in investing activities	$	(44,375	)	$	(2,977	)	$	(170,122	)	$	47,422		$	(170,052	)

Condensed Consolidating Statement of Cash Flows (continued)

for the Three Months Ended March 31, 2015

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Financing Activities
Borrowings from secured notes payable	$	—		$	—	$	29,585		$	—		$	29,585
Repayments of borrowings from secured notes payable	—			—		(7,934		)	—			(7,934		)
Principal borrowings from unsecured senior line of credit	167,000			—		—			—			167,000
Repayments of borrowings from unsecured senior line of credit	(50,000		)	—		—			—			(50,000		)
Transfer to/from parent company	(14,038		)	3,000		58,460			(47,422		)	—
Change in restricted cash related to financing activities	—			—		(1,369		)	—			(1,369		)
Loan fees	—			—		(563		)	—			(563		)
Dividends on common stock	(53,295		)	—		—			—			(53,295		)
Dividends on preferred stock	(6,247		)	—		—			—			(6,247		)
Contributions by noncontrolling interests	—			—		340			—			340
Distributions to noncontrolling interests	—			—		(9,846		)	—			(9,846		)
Net cash provided by financing activities	43,420			3,000		68,673			(47,422		)	67,671
Effect of foreign exchange rate changes on cash and cash equivalents	—			—		170			—			170
Net increase (decrease) in cash and cash equivalents	7,745			—		(3,115		)	—			4,630
Cash and cash equivalents as of the beginning of period	52,491			63		33,457			—			86,011
Cash and cash equivalents as of the end of period	$	60,236		$	63	$	30,342		$	—		$	90,641
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest, net of interest capitalized	$	10,412		$	—	$	5,102		$	—		$	15,514
Non-Cash Investing Activities
Change in accrued construction	$	—		$	—	$	7,249		$	—		$	7,249
Assumption of secured notes payable in connection with purchase of properties	$	—		$	—	$	(82,000	)	$	—		$	(82,000	)
Non-Cash Financing Activities
Payable for purchase of noncontrolling interest	$	—		$	—	$	(113,967	)	$	—		$	(113,967	)

Condensed Consolidating Statement of Cash Flows

for the Three Months Ended March 31, 2014

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Operating Activities
Net income	$	39,554		$	58,306		$	64,848		$	(121,959	)	$	40,749
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	1,471			—			48,950			—			50,421
Amortization of loan fees	1,770			—			791			—			2,561
Amortization of debt discounts	40			—			165			—			205
Amortization of acquired below market leases	—			—			(816		)	—			(816		)
Deferred rent	—			—			(11,882		)	—			(11,882		)
Stock compensation expense	3,228			—			—			—			3,228
Equity in earnings of affiliates	(62,505		)	(58,306		)	(1,148		)	121,959			—
Investment gains	—			—			(4,040		)	—			(4,040		)
Investment losses	—			—			1,694			—			1,694
Changes in operating assets and liabilities:
Tenant receivables	—			—			(690		)	—			(690		)
Deferred leasing costs	—			—			(7,572		)	—			(7,572		)
Other assets	(748		)	—			(16,567		)	—			(17,315		)
Accounts payable, accrued expenses, and tenant security deposits	13,478			—			3,238			—			16,716
Net cash (used in) provided by operating activities	(3,712		)	—			76,971			—			73,259
Investing Activities
Additions to real estate	—			—			(111,587		)	—			(111,587		)
Purchase of real estate	—			—			(42,338		)	—			(42,338		)
Change in restricted cash related to construction projects	—			—			(140		)	—			(140		)
Investment in unconsolidated joint venture	—			—			(747		)	—			(747		)
Investments in subsidiaries	(221,513		)	(193,863		)	(6,338		)	421,714			—
Additions to investments	—			—			(11,905		)	—			(11,905		)
Sales of investments	—			—			3,998			—			3,998
Net cash used in investing activities	$	(221,513	)	$	(193,863	)	$	(169,057	)	$	421,714		$	(162,719	)

Condensed Consolidating Statement of Cash Flows (continued)

for the Three Months Ended March 31, 2014

(In thousands)

(Unaudited)

	Alexandria Real Estate Equities, Inc. (Issuer)			Alexandria Real Estate Equities, L.P. (Guarantor Subsidiary)		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Financing Activities
Borrowings from secured notes payable	$	—		$	—	$	51,030		$	—		$	51,030
Repayments of borrowings from secured notes payable	—			—		(210,844		)	—			(210,844		)
Principal borrowings from unsecured senior line of credit	360,000			—		—			—			360,000
Repayments of borrowings from unsecured senior line of credit	(58,000		)	—		—			—			(58,000		)
Transfer to/from parent company	—			193,863		227,851			(421,714		)	—
Change in restricted cash related to financing activities	—			—		1,059			—			1,059
Loan fees	—			—		(8		)	—			(8		)
Dividends on common stock	(48,715		)	—		1			—			(48,714		)
Dividends on preferred stock	(6,471		)	—		—			—			(6,471		)
Contributions by noncontrolling interests	—			—		19,410			—			19,410
Distributions to noncontrolling interests	—			—		(988		)	—			(988		)
Net cash provided by financing activities	246,814			193,863		87,511			(421,714		)	106,474
Effect of foreign exchange rate changes on cash and cash equivalents	—			—		260			—			260
Net increase (decrease) in cash and cash equivalents	21,589			—		(4,315		)	—			17,274
Cash and cash equivalents as of the beginning of period	14,790			—		42,906			—			57,696
Cash and cash equivalents as of the end of period	$	36,379		$	—	$	38,591		$	—		$	74,970
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest, net of interest capitalized	$	347		$	—	$	5,746		$	—		$	6,093
Non-Cash Investing Activities
Change in accrued construction	$	—		$	—	$	(6,028	)	$	—		$	(6,028	)
Assumption of secured notes payable in connection with purchase of properties	$	—		$	—	$	(48,329	)	$	—		$	(48,329	)