EX-99.1 2 a2q19ex991supp.htm EXHIBIT 99.1 Exhibit
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Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019
i



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(1)
Refer to the “Annual Rental Revenue,” “Class A Properties and AAA Locations,” and “Investment-Grade or Publicly Traded Large Cap Tenants” sections in “Definitions and Reconciliations” of our Supplemental Information for additional information. As of June 30, 2019, annual rental revenue solely from investment-grade tenants within our overall tenant base and within our top 20 tenants was 45% and 75%, respectively.
(2)
Refer to “Summary of Debt” in the “Key Credit Metrics” section of our Supplemental Information for additional information.

 
 
 
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Table of Contents
June 30, 2019
 
 


EARNINGS PRESS RELEASE
Page
 
 
Page
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL INFORMATION
Page
 
 
Page
 
External Growth / Investments in Real Estate
 
 
 
 
New Class A Development and Redevelopment Properties:
 
 
 
 
Internal Growth
 
 
 
 
Balance Sheet Management
 
 
 
 
 
Definitions and Reconciliations
 
 
 
 
 
 
 

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 refer to page 7 of this Earnings Press Release and our Supplemental Information for further information.
 
This document is not an offer to sell or a 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,” “ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and our consolidated subsidiaries.

 
Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019
iii
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Alexandria Real Estate Equities, Inc.
Reports:
2Q19 Revenues of $373.9 million, up 15.0% over 2Q18;
2Q19 and 1H19 EPS – Diluted of $0.68 and $1.80, respectively;
2Q19 and 1H19 FFO per Share – Diluted, As Adjusted, of $1.73 and $3.44, respectively; and Operational Excellence and Growing Dividends

PASADENA, Calif. – July 29, 2019 – Alexandria Real Estate Equities, Inc. (NYSE:ARE)
announced financial and operating results for the second quarter ended June 30, 2019.

Key highlights
Operating results
2Q19
 
2Q18
 
1H19
 
1H18
Total revenues:
 
 
 
 
 
 
 
In millions
$
373.9

 
$
325.0

 
$
732.7

 
$
645.2

Growth
15.0%

 
 
 
13.6%

 
 
 
 
 
 
 
 
 
 
Net income attributable to Alexandria’s common stockholders – diluted:
In millions
$
76.3

 
$
52.0

 
$
200.2

 
$
185.0

Per share
$
0.68

 
$
0.51

 
$
1.80

 
$
1.83

 
 
 
 
 
 
 
 
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions
$
192.7

 
$
167.9

 
$
382.5

 
$
330.4

Per share
$
1.73

 
$
1.64

 
$
3.44

 
$
3.27


88 Bluxome Street is the first and only project to win full approval in Central SoMa
In July 2019, we, along with TMG Partners, won full project approval to develop a 1.07 million RSF mixed-use campus at 88 Bluxome Street in Central SoMa. Anchored by a 490,000 RSF lease with Pinterest, Inc., the future development, which is the first and only project in Central SoMa to receive full approval and 100% of its Prop M allocation from the San Francisco Planning Commission, is nearly 60% pre-leased. Construction is expected to commence in 2020, and initial delivery is expected in 2022.

Strong internal growth
•
Net operating income (cash basis) of $938.5 million for 2Q19 annualized, up $119.9 million, or 14.6%, compared to 2Q18 annualized
•
Same property net operating income growth:
•
4.3% and 9.5% (cash basis) for 2Q19, compared to 2Q18
•
3.5% and 9.7% (cash basis) for 1H19, compared to 1H18
•
Continued strong leasing activity in light of modest contractual lease expirations at the beginning of 2019 and a highly leased value-creation pipeline; continued rental rate growth in 1H19 over expiring rates on renewed and re-leased space:
 
 
2Q19
 
1H19
Total leasing activity – RSF
 
819,949

 
2,068,921

Lease renewals and re-leasing of space:
 
 
 
 
RSF (included in total leasing activity above)
 
587,930

 
1,097,345

Rental rate increases
 
32.5%

 
32.6%

Rental rate increases (cash basis)
 
17.8%

 
20.1%

 




Strong external growth; disciplined allocation of capital to visible, highly leased
value-creation pipeline
•
Since the beginning of 4Q18, we have placed into service 1.2 million RSF of development and redevelopment projects, including 218,061 RSF in 2Q19.
•
Significant near-term growth in net operating income (cash basis) of $58 million annually upon the burn-off of initial free rent on recently delivered projects.
•
2Q19 commencements of development projects aggregating 841,178 RSF, includes:
•
526,178 RSF at Alexandria District for Science and Technology in our Greater Stanford submarket; and
•
315,000 RSF at 201 Haskins Way in our South San Francisco submarket.
•
Projects with initial occupancy in 2020 have grown to 2.2 million RSF.
•
During 2019, we leased 948,986 RSF of development and redevelopment space, including 196,020 RSF executed in July 2019.

A REIT industry-leading, high-quality tenant roster
•
53% of annual rental revenue from investment-grade or publicly traded large cap tenants.
•
Weighted-average remaining lease terms of 8.4 years.

New issuance of $1.25 billion unsecured senior notes to elongate debt maturities
In July 2019, we opportunistically issued $1.25 billion of unsecured senior notes payable, with a weighted-average interest rate of 3.72% and a weighted-average maturity of 19.5 years. The proceeds were used to refinance $1.125 billion of unsecured senior notes payable and unsecured senior bank term loan, with a weighted-average interest rate of 3.94% and a weighted-average maturity of 2.4 years, with remaining proceeds used to reduce the outstanding balance of our unsecured senior line of credit. Upon completion of the refinancing, the pro forma weighted-average remaining term on our outstanding debt is 10.1 years, with no debt maturing until 2023.

Increased common stock dividend
Common stock dividend declared for 2Q19 of $1.00 per common share, up three cents, or 3.1%, over 1Q19; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

2019 Nareit Investor CARE Gold Award winner
2019 recipient of the Nareit Investor CARE (Communications and Reporting Excellence) Gold Award in the Large Cap Equity REIT category as the best-in-class REIT that delivers transparency, quality, and efficient communications and reporting to the investment community; our fourth Nareit Investor CARE Gold Award over the last five years.

 
 
 
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Second Quarter Ended June 30, 2019, Financial and Operating Results (continued)
June 30, 2019
 
 

Completed acquisitions
During 2Q19, we completed the acquisitions of three properties and a land parcel for an aggregate purchase price of $296.5 million. These acquisitions consisted of:
•
5 and 15 Necco Street, located in our Seaport Innovation District submarket for $252.0 million, which includes a future ground-up development site aggregating 293,000 RSF, and a Class A office building aggregating 87,163 RSF, which is 87% leased for 12 years; and
•
Future development opportunities aggregating 337,400 RSF strategically located in our Sorrento Valley and Lake Union submarkets, including 58,680 RSF currently 100% occupied.

Key items included in operating results
Key items included in net income attributable to Alexandria’s common stockholders:
(In millions, except per share amounts)
Amount
 
Per Share – Diluted
 
Amount
 
Per Share – Diluted
2Q19
 
2Q18
 
2Q19
 
2Q18
 
1H19
 
1H18
 
1H19
 
1H18
Unrealized gains on non-real estate investments(1)
$
11.1

 
$
5.1

 
$
0.10

 
$
0.05

 
$
83.3

 
$
77.3

 
$
0.75

 
$
0.76

Realized gains on non-real estate investments
—

 
—

 
—

 
—

 
—

 
8.3

 
—

 
0.08

Impairment of real estate
—

 
(6.3
)
 
—

 
(0.06
)
 
—

 
(6.3
)
 
—

 
(0.06
)
Loss on early extinguishment of debt
—

 
—

 
—

 
—

 
(7.4
)
 
—

 
(0.07
)
 
—

Preferred stock redemption charge
—

 
—

 
—

 
—

 
(2.6
)
 
—

 
(0.02
)
 
—

Total
$
11.1

 
$
(1.2
)
 
$
0.10

 
$
(0.01
)
 
$
73.3

 
$
79.3

 
$
0.66

 
$
0.78

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding for calculation of earnings
per share – diluted
111.5

 
102.2

 
 
 
 
 
111.3

 
101.2

(1) Refer to “Investments” on page 46 of our Supplemental Information for additional information.

Core operating metrics as of or for the quarter ended June 30, 2019
High-quality revenues and cash flows, and operational excellence
Percentage of annual rental revenue in effect from:
 
 
 
Investment-grade or publicly traded large cap tenants
 
53
%
 
Class A properties in AAA locations
 
77
%
 
Occupancy of operating properties in North America
 
97.4
%
 
Operating margin
 
72
%
 
Adjusted EBITDA margin
 
69
%
 
Weighted-average remaining lease term:
 
 
 
All tenants
 
8.4
 years
 
Top 20 tenants
 
12.0
 years
 
 
 
 
 
Refer to the previous page for information on our total revenues, net operating income, same property net operating income growth, rental rate growth, and leasing activity.
 
Balance sheet management
Key metrics as of June 30, 2019
$15.9 billion of total equity capitalization
•
$22.2 billion of total market capitalization
•
$3.4 billion of liquidity
•
94% of net operating income is unencumbered
 
 
2Q19
 
Goal
 
 
Quarter
 
Trailing 12
 
4Q19
 
 
Annualized
 
Months
 
Annualized
Net debt to Adjusted EBITDA
 
5.8x
 
6.1x
 
Less than or equal to 5.3x
Fixed-charge coverage ratio
 
4.2x
 
4.2x
 
Greater than 4.0x
 
 
Percentage Leased/Negotiating
 
Quarter Annualized
Value-creation pipeline as a percentage of gross investments in real estate:
 
 
2Q19
 
4Q19
Goal
New Class A development and redevelopment projects:
 
 
 
 
 
 
Undergoing construction with initial occupancy targeted for 2019 and 2020 and our pre-leased pre-construction project at 88 Bluxome Street
 
74%
 
5%
 
Less than 15%
Undergoing pre-construction, marketing, and future value-creation projects
 
N/A
 
6%
 

Key capital events
•
During 2Q19, we completed sales and entered into forward equity sales agreement for an aggregate of 8.7 million shares of common stock, including issuances under our ATM program, at a weighted-average price of $144.50 per share, for aggregate net proceeds of approximately $1.2 billion as follows:
•
Issued 602,484 shares of common stock, at a weighted-average price of $145.58 per share, for net proceeds of $86.1 million.
•
Entered into forward equity sales agreements to sell an aggregate 8.1 million shares of common stock, at a weighted-average price of $144.42 per share, for expected net proceeds (net of underwriters’ discounts) aggregating $1.1 billion including:
•
4.4 million shares expiring in June 2020 at a price of $145.00 per share
•
3.7 million shares expiring in July 2020 at a weighted-average price of $143.73 per share
•
We expect to settle these forward equity sales in 2019 and the aggregate net proceeds that will be received upon settlement will be further adjusted as provided in the sales agreements.
•
As of July 29, 2019, the remaining aggregate amount available under our ATM program for future sales of common stock is $22.5 million. We expect to establish a new ATM program during 3Q19.

 
 
 
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Second Quarter Ended June 30, 2019, Financial and Operating Results (continued)
June 30, 2019
 
 

Investments
We carry our investments in publicly traded companies and certain privately held entities at fair value. As of June 30, 2019, cumulative unrealized gains related to changes in fair value aggregated $323.4 million and our adjusted cost basis aggregated $734.4 million. Investment income included the following:
•
Unrealized gains of $11.1 million and $83.3 million recognized during 2Q19 and 1H19, respectively
•
Realized gains of $10.4 million and $21.8 million recognized during 2Q19 and 1H19, respectively

Corporate responsibility, industry leadership, and strategic initiatives
•
In April 2019, we announced the launch of a new strategic agricultural technology (agtech) business initiative and the opening of Phase I of the Alexandria Center® for AgTech – Research Triangle, the first and only fully integrated, amenity-rich, multi-tenant agtech R&D and greenhouse campus, in the heart of Research Triangle, the most important, dense, and diverse agtech cluster in the United States. The campus opened with a 97% leased, 175,000 RSF first phase redevelopment at 5 Laboratory Drive.
•
In June 2019, we announced our partnership with Columbia University to open our second Alexandria LaunchLabs® in New York City in the spring of 2020. The full-service platform will offer member companies 13,298 RSF of highly flexible, turnkey office/laboratory space and feature a high-tech event center to host workshops, networking events, and educational opportunities for the entrepreneurial life science community.
•
In June 2019, we celebrated the opening of the first facilities within a tech-focused opioid rehabilitation campus in Dayton, Ohio. In partnership with Verily Life Sciences, LLC, we are leading the design and development of this 59,000 RSF state-of-the-art campus to provide a comprehensive model of care dedicated to the recovery of people suffering from opioid addiction.

 
Subsequent events
•
In July 2019, we opportunistically issued $1.25 billion of unsecured senior notes payable, with a weighted-average interest rate of 3.72% and a weighted-average maturity of 19.5 years, including $750.0 million of 3.375% unsecured senior notes due 2031 and $500.0 million of 4.00% unsecured senior notes due 2050. The proceeds were used to refinance $1.125 billion of unsecured senior notes payable and unsecured senior bank term loan, with a weighted-average interest rate of 3.94% and a weighted-average maturity of 2.4 years, consisting of the following:
(i)
Refinancing of an aggregate $950.0 million of unsecured senior notes payable comprising $400.0 million of 2.75% unsecured senior notes payable due 2020 and $550.0 million of 4.60% unsecured senior notes payable due 2022, pursuant to a cash tender offer completed on July 17, 2019, and subsequent call for redemption. The redemption is expected to settle on August 16, 2019.
(ii)
Partial repayment of $175.0 million on our unsecured senior bank term loan. The remaining outstanding balance of the term loan will mature on January 2, 2025, if not repaid before maturity.
•
As a result of our refinancing and partial repayment, we expect to recognize a loss, primarily related to the early extinguishment of debt, of $43 million, or $0.38 per share, in 3Q19.
•
The remaining proceeds were used to reduce the outstanding balance of our unsecured senior line of credit.
•
Upon completion of the refinancing, the pro forma weighted-average remaining term on our outstanding debt is 10.1 years, with no debt maturing until 2023.
•
In July 2019, we acquired a 55% interest in 4224 and 4242 Campus Point Court and 10210 Campus Point Drive, located adjacent to our Campus Pointe by Alexandria campus in our University Town Center submarket of San Diego, for $140.3 million. The joint venture will include three operating properties aggregating 314,092 RSF, which are currently 83% occupied by multiple tenants. The properties, which have future value-creation opportunities, will be integrated into the current campus to create a 1.9 million RSF mega campus.

 
 
Acquisitions
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June 30, 2019
(Dollars in thousands)
 
 


Property
 
Submarket/Market
 
Date of Purchase
 
Number of Properties
 
Operating
Occupancy
 
Square Footage
 
Unlevered Yields
 
Purchase Price
 
 
 
 
Future Development
 
Active Redevelopment
 
Operating With Future Development/ Redevelopment
 
Operating
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed 1Q19
 
Various
 
1Q19
 
10
 
100
%
 
 
175,000

 
—

 
129,084

 
247,770

 
(1 
) 
 
 
(1 
) 
 
 
$
447,950

(2 
) 
Completed 2Q19:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 Necco Street
 
Seaport Innovation District/Greater Boston
 
5/9/19(3)
 
1
 
87
%
(3) 
 
—

 
—

 
—

 
87,163

 
5.2
%
 
 
5.1
%
 
 
 
252,000

 
15 Necco Street
 
 
—
 
N/A

 
 
293,000

 
—

 
—

 
—

 
(4 
) 
 
 
(4 
) 
 
 
 
601 Dexter Avenue North
 
Lake Union/Seattle
 
6/18/19
 
1
 
100
%
 
 
188,400

 
—

 
18,680

 
—

 
(4 
) 
 
 
(4 
) 
 
 
 
28,500

 
4075 Sorrento Valley Boulevard
 
Sorrento Valley/
San Diego
 
5/13/19
 
1
 
100
%
 
 
149,000

 
—

 
40,000

 
—

 
(4 
) 
 
 
(4 
) 
 
 
 
16,000

(2 
) 
Completed 1H19
 
 
 
 
 
 
 
 
 
 
805,400

 
—

 
187,764

 
334,933

 
 
 
 
 
 
 
 
744,450

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent to 2Q19:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4224/4242 Campus Point Court and 10210 Campus Point Drive
(55% interest in consolidated JV)
 
University Town Center/San Diego
 
7/9/19
 
3
 
83
%
(5) 
 
—

 
—

 
—

 
314,092

 
6.9
%
 
 
6.0
%
 
 
 
140,250

(2 
) 
Other
 
Various
 
July 2019
 
1
 
100
%
 
 
135,938

 
—

 
—

 
30,680

 
(4 
) 
 
 
(4 
) 
 
 
 
38,200

(2 
) 
Pending
 
San Francisco
Bay Area
 
3Q19
 
1
 
N/A

 
 
—

 
250,000

 
—

 
—

 
(4 
) 
 
 
(4 
) 
 
 
 
179,000

 
Pending
 
San Francisco
Bay Area
 
3Q19
 
1
 
N/A

 
 
700,000

 
—

 
—

 
—

 
(4 
) 
 
 
(4 
) 
 
 
 
120,000

 
Pending
 
San Francisco
Bay Area
 
3Q19
 
1
 
N/A

 
 
—

 
92,000

 
—

 
—

 
(4 
) 
 
 
(4 
) 
 
 
 
26,000

 
Pending
 
San Diego
 
3Q19
 
Various
 
76
%
 
 
700,000

 
—

 
—

 
560,000

 
(4), (6) 

 
 
(4), (6) 

 
 
 
122,500

 
 
 
 
 
 
 
 
 
 
 
 
1,535,938

 
342,000

 
—

 
904,772

 
 
 
 
 
 
 
 
625,950

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional targeted acquisitions
 
 
 
 
 
 
 
 
 
 
854,000

 
—

 
—

 
—

 
 
 
 
 
 
 
 
179,600

 
Total
 
 
 
 
 
 
 
 
 
 
3,195,338

 
342,000

 
187,764

 
1,239,705

 
 
 
 
 
 
 
$
1,550,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Refer to our first quarter ended March 31, 2019, Earnings Press Release and Supplemental Information filed on April 29, 2019, for related yield information.
(2)
Included within our acquisition guidance as of April 20, 2019. On June 20, 2019, we updated our 2019 acquisition guidance. Please see our Current Report on Form 8-K filed on June 20, 2019 for specific details. 
(3)
The seller accepted our offer on April 30, 2019, and we completed the acquisition of 5 and 15 Necco Street on May 9, 2019. The 5 Necco building is 87% leased for 12 years and expected to be occupied later in 2019. The remaining 13% of RSF is targeted for retail space.
(4)
We expect to provide total estimated costs and related yields in the future subsequent to the commencement of development or redevelopment.
(5)
The property is currently 83% occupied and a lease for 10% of the property will commence in 4Q19 upon completion of renovations, increasing occupancy to 93%.
(6)
We expect to provide yields for operating properties subsequent to closing the acquisition.

 
 
Dispositions and Sales of Partial Interests in Core Class A Properties
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June 30, 2019
(Dollars in thousands, except per RSF amounts)
 
 


 
 
 
 
 
 
 
 
 
 
 
Capitalization Rate
(Cash Basis)(1)
 
 
 
 
 
 
 
 
 
Consideration in Excess of Book Value(2)
 
Property
 
Submarket/Market
 
Date of Sale
 
Square Footage
 
Capitalization Rate
 
 
 
Sales Price
 
Sales Price per RSF
 
 
Sales of noncontrolling partial interests in core Class A properties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75/125 Binney Street (sale of 60% noncontrolling interest)
 
Cambridge/Greater Boston
 
2/13/19
 
388,270

 
 
4.2%
 
4.3%
 
 
$
438,000
 
 
 
$
1,880

 
$
202,246

 
Pending(3)
 
San Francisco Bay Area
 
Pending
 
TBD

 
 
TBD
 
TBD
 
 
140,000
 
 
 
TBD

 
TBD

 
Pending(3)
 
San Diego
 
Pending
 
TBD

 
 
TBD
 
TBD
 
 
287,500
 
 
 
TBD

 
TBD

 
 
 
 
 
 
 


 
 
 
 
 
 
 
$
865,500
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 guidance range
 
 
 
 
 
 
 
 
 
 
 
 
$
820,000
 
–
$
920,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Capitalization rates are calculated based upon net operating income (cash basis), annualized for the quarter preceding the date on which the property is sold.
(2)
We retained or expect to retain control over and consolidate these joint ventures. For consolidated joint ventures, we account for the difference between the consideration received and the book value of the interest to be sold as an equity transaction, with no gain or loss recognized in earnings.
(3)
We expect to complete this partial interest sale during 3Q19.

 
 
Guidance
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June 30, 2019
(Dollars in millions, except per share amounts)
 
 
 

On June 20, 2019, we filed a Current Report on Form 8-K with updated guidance for the year ending December 31, 2019. The following further updates guidance based on our current view of existing market conditions and assumptions for the year ending December 31, 2019. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of “forward-looking statements” on page 7 of this Earnings Press Release for additional information.
Summary of Key Changes in Guidance
 
Guidance
 
Summary of Key Changes in Key Sources and Uses of Capital Guidance
 
 
Guidance Midpoint
 
 
 
As of 7/29/19
 
As of 6/20/19
 
 
As of 7/29/19
 
As of 6/20/19
 
EPS, FFO per share, and FFO per share, as adjusted
 
See updates below
 
Issuance of unsecured senior notes payable
 
 
$
2,100

 
 
 
$
850

 
 
Rental rate increases
 
27.0% to 30.0%
 
26.0% to 29.0%
 
Repayments of unsecured senior notes payable
 
 
$
(950
)
 
 
 
$
—

 
 
Rental rate increases (cash basis)
 
14.0% to 17.0%
 
13.0% to 16.0%
 
Repayments of unsecured senior bank term loan
 
 
$
(175
)
 
 
 
$
—

 
 
Projected Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted, as Adjusted
 
 
 
As of 7/29/19
 
As of 6/20/19
 
Earnings per share(1)
 
$2.39 to $2.47
 
$2.65 to $2.75
 
Depreciation and amortization
 
 
4.85
 
 
 
4.85
 
 
Allocation to unvested restricted stock awards
 
 
(0.05)
 
 
 
(0.05)
 
 
Funds from operations per share(2)
 
$7.19 to $7.27
 
$7.45 to $7.55
 
Unrealized gains on non-real estate investment(1)
 
 
(0.75)
 
 
 
(0.65)
 
 
Loss on early extinguishment of debt(3)
 
 
0.45
 
 
 
0.07
 
 
Preferred stock redemption charge
 
 
0.02
 
 
 
0.02
 
 
Allocation to unvested restricted stock awards
 
 
0.01
 
 
 
0.01
 
 
Funds from operations per share, as adjusted
 
$6.92 to $7.00
 
$6.90 to $7.00
 
Midpoint
 
$6.96
 
$6.95
 
Key Assumptions
 
Low
 
High
 
Occupancy percentage in North America as of December 31, 2019(6)
 
97.2%

 
97.8%

 
 
 
 
 
 
 
Lease renewals and re-leasing of space:
 
 
 
 
 
Rental rate increases
 
27.0%

 
30.0%

 
Rental rate increases (cash basis)
 
14.0%

 
17.0%

 
Same property performance:
 
 
 
 
 
Net operating income increase
 
1.0%

 
3.0%

 
Net operating income increase (cash basis)
 
6.0%

 
8.0%

 
 
 
 
 
 
 
Straight-line rent revenue
 
$
95

 
$
105

(7)
General and administrative expenses
 
$
108

 
$
113

 
Capitalization of interest
 
$
79

 
$
89

 
Interest expense
 
$
167

 
$
177

 
 
 
 
 
 
 
 
Key Credit Metrics
 
2019 Guidance
 
 
 
Net debt to Adjusted EBITDA – 4Q19 annualized
 
Less than or equal to 5.3x
 
Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized
 
Less than or equal to 5.4x
 
Fixed-charge coverage ratio – 4Q19 annualized
 
Greater than 4.0x
 
Value-creation pipeline as a percentage of gross real estate as of
December 31, 2019
 
Less than 15%
 
Key Sources and Uses of Capital (in millions)
 
Range
 
Midpoint
 
Certain Completed Items
Sources of capital:
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities after dividends
 
$
170

 
$
210

 
$
190

 
 
 
Incremental debt
 
610

 
570

 
 
590

 
 
 
Real estate dispositions and partial interest sales
 
820

 
920

 
 
870

 
$
438

(4)
Common equity
 
1,150

 
1,250

 
 
1,200

 
$
1,218

(5)
Total sources of capital
 
$
2,750

 
$
2,950

 
$
2,850

 
 
 
Uses of capital:
 
 
 
 
 
 
 
 
 
 
Construction
 
$
1,250

 
$
1,350

 
$
1,300

 
 
 
Acquisitions
 
1,500

 
1,600

 
 
1,550

 
(4)
Total uses of capital
 
$
2,750

 
$
2,950

 
$
2,850

 
 
 
Incremental debt (included above):
 
 
 
 
 
 
 
 
 
 
Issuance of unsecured senior notes payable
 
$
2,100

 
$
2,100

 
$
2,100

 
$
2,100

(3)
Assumption of secured note payable
 
28

 
28

 
 
28

 
$
28

 
Repayments of unsecured senior notes payable
 
(950
)
 
(950
)
 
 
(950
)
 
$
(950
)
(3)
Repayments of secured notes payable
 
(310
)
 
(320
)
 
 
(315
)
 
$
(300
)
 
Repayments of unsecured senior bank term loan
 
(175
)
 
(175
)
 
 
(175
)
 
$
(175
)
(3)
$2.2 billion unsecured senior line of credit/other
 
(83
)
 
(113
)
 
 
(98
)
 
 
 
Incremental debt
 
$
610

 
$
570

 
$
590

 
 
 
(1)
Excludes future unrealized gains or losses after June 30, 2019, that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.
(2)
Calculated in accordance with standards established by the Advisory Board of Governors of the National Association of Real Estate Investment Trusts (the “Nareit Board of Governors”). Refer to the “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” section in “Definitions and Reconciliations” of our Supplemental Information for additional information.
(3)
Refer to the first item under “Subsequent Events” in this Earnings Press Release for additional information.
(4)
Refer to “Acquisitions” and “Dispositions and Sales of Partial Interests in Core Class A Properties” in this Earnings Press Release for additional information.
(5)
Includes 602,484 shares of common stock for net proceeds of $86.1 million issued under our ATM program in 2Q19 and unsettled forward equity sales agreements related to 8.1 million shares of our common stock.
(6)
On June 20, 2019, we updated guidance for occupancy percentage for operating properties in North America as of December 31, 2019, to reflect the pending acquisition of a campus located in our San Diego market that includes multiple operating buildings aggregating 560,000 RSF, which is 76% leased. Additionally, as expected, we will commence renovations on 116,556 RSF at 3545 Cray Court in our Torrey Pines submarket upon expiration of the existing lease in 3Q19. In aggregate for these items, we expect a temporary decline in occupancy percentage in North America of approximately 1% from 2Q19 to 3Q19.
(7)
Approximately 45% of straight-line rent revenue represents initial free rent on recently delivered and expected 2019 deliveries of new Class A properties from our development and redevelopment pipeline.

 
 
 
q219logo1.jpg
Earnings Call Information and About the Company
June 30, 2019
 
 


We will host a conference call on Tuesday, July 30, 2019, at 3:00 p.m. Eastern Time (“ET”)/noon Pacific Time (“PT”), which is open to the general public to discuss our financial and operating results for the second quarter ended June 30, 2019. To participate in this conference call, dial (833) 366-1125 or (412) 902-6738 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the call for Alexandria Real Estate Equities, Inc. 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 5:00 p.m. ET/2:00 p.m. PT on Tuesday, July 30, 2019. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10131624.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the second quarter ended June 30, 2019, is available in the “For Investors” section of our website at www.are.com or by following this link: http://www.are.com/fs/2019q2.pdf.

For any questions, please contact Joel S. Marcus, executive chairman and founder; Stephen A. Richardson, co-chief executive officer; Peter M. Moglia, co-chief executive officer and co-chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; or Sara M. Kabakoff, assistant vice president – corporate communications, at (626) 578-0777.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office real estate investment trust (“REIT”), is the first and longest-tenured owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $22.2 billion as of June 30, 2019, and an asset base in North America of 37.1 million square feet (“SF”) as of July 29, 2019, including pending acquisitions. The asset base in North America includes 24.5 million RSF of operating properties and 1.5 million RSF of Class A properties undergoing construction, with projected initial occupancy in 2019, 2.2 million RSF of Class A properties undergoing construction or pre-construction, with projected initial occupancy in 2020, 4.4 million RSF of Class A properties undergoing or nearing pre-construction, with projected initial occupancy in 2021 or 2022, and 4.5 million of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science and technology companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results 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 2019 earnings per share attributable to Alexandria’s common stockholders – diluted, 2019 funds from operations per share attributable to Alexandria’s common stockholders – diluted, net operating income, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of forward-looking words, such as “forecast,” “guidance,” “goals,” “projects,” “estimates,” “anticipates,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” or “will,” 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. There can be no assurance that actual results will not be materially higher or lower than these expectations. 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 place into service and lease any properties undergoing development or redevelopment and our existing space held for future development or redevelopment (including new properties acquired for that purpose), 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 tenants, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, 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 the date of this Earnings Press Release, and unless otherwise stated, 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.

Alexandria®, Lighthouse Design® logo, Building the Future of Life-Changing Innovation™, LaunchLabs®, Alexandria Center®, Alexandria Technology Square®, Alexandria Summit®, Alexandria Technology Center®, Alexandria Innovation Center®, and GradLabs™ are trademarks of Alexandria Real Estate Equities, Inc. All other company names, trademarks, and logos referenced herein are the property of their respective owners.

 
 
Consolidated Statements of Operations
q219logo1.jpg
June 30, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended
 
Six Months Ended
 
 
6/30/19

3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
6/30/19
 
6/30/18
Revenues:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Income from rentals(1)
 
$
371,618

 
$
354,749

 
$
337,785

 
$
336,547

 
$
322,794

 
$
726,367

 
$
640,449

Other income
 
2,238

 
4,093

 
2,678

 
5,276

 
2,240

 
6,331

 
4,724

Total revenues
 
373,856

 
358,842

 
340,463

 
341,823

 
325,034

 
732,698


645,173

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental operations
 
105,689

 
101,501

 
97,682

 
99,759

 
91,908

 
207,190

 
183,679

General and administrative
 
26,434

 
24,677

 
22,385

 
22,660

 
22,939

 
51,111

 
45,360

Interest
 
42,879

 
39,100

 
40,239

 
42,244

 
38,097

 
81,979

 
75,012

Depreciation and amortization
 
134,437

 
134,087

 
124,990

 
119,600

 
118,852

 
268,524

 
233,071

Impairment of real estate
 
—

 
—

 
—

 
—

 
6,311

 
—

 
6,311

Loss on early extinguishment of debt
 
—


7,361

 
—

 
1,122

 
—

 
7,361

 
—

Total expenses
 
309,439

 
306,726

 
285,296

 
285,385

 
278,107

 
616,165

 
543,433

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
1,262

 
1,146

 
1,029

 
40,718

 
1,090

 
2,408

 
2,234

Investment income (loss)
 
21,500

 
83,556

 
(83,531
)
 
122,203

 
12,530

 
105,056

 
98,091

Gain on sales of real estate
 
—

 
—

 
8,704

 
—

 
—

 
—

 
—

Net income (loss)
 
87,179

 
136,818

 
(18,631
)
 
219,359

 
60,547

 
223,997

 
202,065

Net income attributable to noncontrolling interests
 
(8,412
)
 
(7,659
)
 
(6,053
)
 
(5,723
)
 
(5,817
)
 
(16,071
)
 
(11,705
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s stockholders
 
78,767

 
129,159

 
(24,684
)
 
213,636

 
54,730

 
207,926

 
190,360

Dividends on preferred stock
 
(1,005
)
 
(1,026
)
 
(1,155
)
 
(1,301
)
 
(1,302
)
 
(2,031
)
 
(2,604
)
Preferred stock redemption charge
 
—

 
(2,580
)
 
(4,240
)
 
—

 
—

 
(2,580
)
 
—

Net income attributable to unvested restricted stock awards
 
(1,432
)
 
(1,955
)
 
(1,661
)
 
(3,395
)
 
(1,412
)
 
(3,134
)
 
(2,765
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
52,016

 
$
200,181

 
$
184,991

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
2.01

 
$
0.51

 
$
1.80

 
$
1.83

Diluted
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
1.99

 
$
0.51

 
$
1.80

 
$
1.83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
111,433

 
111,054

 
106,033

 
104,179

 
101,881

 
111,245

 
100,878

Diluted
 
111,501

 
111,054

 
106,033

 
105,385

 
102,236

 
111,279

 
101,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
 
$
1.00

 
$
0.97

 
$
0.97

 
$
0.93

 
$
0.93

 
$
1.97

 
$
1.83


(1)
Upon the adoption of new lease accounting standards on January 1, 2019, rental revenues and tenant recoveries are aggregated within income from rentals. Prior periods have been reclassified to conform to new standards. Refer to “Financial and Asset Base Highlights” and the “Lease Accounting” and “Tenant Recoveries” sections in “Definitions and Reconciliations” of our Supplemental Information for additional information.

 
 
Consolidated Balance Sheets
q219logo1.jpg
June 30, 2019
(In thousands)
 
 

 
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Assets
 
 
 
 

 
 

 
 

 
 

Investments in real estate
 
$
12,872,824

 
$
12,410,350

 
$
11,913,693

 
$
11,587,312

 
$
11,190,771

Investments in unconsolidated real estate joint ventures
 
334,162

 
290,405

 
237,507

 
197,970

 
192,972

Cash and cash equivalents
 
198,909

 
261,372

 
234,181

 
204,181

 
287,029

Restricted cash
 
39,316

 
54,433

 
37,949

 
29,699

 
34,812

Tenant receivables
 
9,228

 
9,645

 
9,798

 
11,041

 
8,704

Deferred rent
 
585,082

 
558,103

 
530,237

 
511,680

 
490,428

Deferred leasing costs
 
247,468

 
241,268

 
239,070

 
238,295

 
232,964

Investments
 
1,057,854

 
1,000,904

 
892,264

 
957,356

 
790,753

Other assets
 
694,627

 
653,726

 
370,257

 
368,032

 
333,757

Total assets
 
$
16,039,470

 
$
15,480,206

 
$
14,464,956

 
$
14,105,566

 
$
13,562,190

 
 
 
 
 
 
 
 
 
 
 
Liabilities, Noncontrolling Interests, and Equity
 
 
 
 
 
 
 
 
 
 
Secured notes payable
 
$
354,186

 
$
356,461

 
$
630,547

 
$
632,792

 
$
776,260

Unsecured senior notes payable
 
5,140,914

 
5,139,500

 
4,292,293

 
4,290,906

 
4,289,521

Unsecured senior line of credit
 
514,000

 
—

 
208,000

 
413,000

 
—

Unsecured senior bank term loans
 
347,105

 
347,542

 
347,415

 
347,306

 
548,324

Accounts payable, accrued expenses, and tenant security deposits
 
1,157,417

 
1,171,377

 
981,707

 
907,094

 
849,274

Dividends payable
 
114,379

 
110,412

 
110,280

 
101,084

 
98,676

Total liabilities
 
7,628,001

 
7,125,292

 
6,570,242

 
6,692,182

 
6,562,055

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
10,994

 
10,889

 
10,786

 
10,771

 
10,861

 
 
 
 
 
 
 
 
 
 
 
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
7.00% Series D cumulative convertible preferred stock
 
57,461

 
57,461

 
64,336

 
74,386

 
74,386

Common stock
 
1,120

 
1,112

 
1,110

 
1,058

 
1,033

Additional paid-in capital
 
7,581,573

 
7,518,716

 
7,286,954

 
6,801,150

 
6,387,527

Accumulated other comprehensive loss
 
(11,134
)
 
(10,712
)
 
(10,435
)
 
(3,811
)
 
(2,485
)
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
 
7,629,020

 
7,566,577

 
7,341,965

 
6,872,783

 
6,460,461

Noncontrolling interests
 
771,455

 
777,448

 
541,963

 
529,830

 
528,813

Total equity
 
8,400,475

 
8,344,025

 
7,883,928

 
7,402,613

 
6,989,274

Total liabilities, noncontrolling interests, and equity
 
$
16,039,470

 
$
15,480,206

 
$
14,464,956

 
$
14,105,566

 
$
13,562,190



 
 
Funds From Operations and Funds From Operations per Share
q219logo1.jpg
June 30, 2019
(In thousands)
 
 

The following table presents a reconciliation of net income (loss) attributable to Alexandria’s common stockholders, the most directly comparable financial measure presented in accordance with generally accepted accounting principles (“GAAP”), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria’s common stockholders – diluted, and funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted, for the periods below:
 
 
Three Months Ended
 
Six Months Ended
 
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
6/30/19
 
6/30/18
Net income (loss) attributable to Alexandria’s common stockholders – basic
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
52,016

 
$
200,181

 
$
184,991

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
—

 
—

 
1,301

 
—

 
—

 
—

Net income (loss) attributable to Alexandria’s common stockholders – diluted
 
76,330

 
123,598

 
(31,740
)
 
210,241

 
52,016

 
200,181

 
184,991

Depreciation and amortization
 
134,437

 
134,087

 
124,990

 
119,600

 
118,852

 
268,524

 
233,071

Noncontrolling share of depreciation and amortization from consolidated real estate JVs
 
(6,744
)
 
(5,419
)
 
(4,252
)
 
(4,044
)
 
(3,914
)
 
(12,163
)
 
(7,781
)
Our share of depreciation and amortization from unconsolidated real estate JVs
 
973

 
846

 
719

 
1,011

 
807

 
1,819

 
1,451

Gain on sales of real estate
 
—

 
—

 
(8,704
)
 
—

 
—

 
—

 
—

Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
—

 
(35,678
)
 
—

 
—

 
—

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
1,005

 
1,026

 
—

 
—

 
—

 
2,031

 
2,604

Allocation to unvested restricted stock awards
 
(1,445
)
 
(2,054
)
 
—

 
(1,312
)
 
(1,042
)
 
(3,740
)
 
(3,212
)
Funds from operations attributable to Alexandria’s common stockholders – diluted(2)
 
204,556

 
252,084

 
81,013

 
289,818

 
166,719

 
456,652

 
411,124

Unrealized (gains) losses on non-real estate investments
 
(11,058
)
 
(72,206
)
 
94,850

 
(117,188
)
 
(5,067
)
 
(83,264
)
 
(77,296
)
Realized gains on non-real estate investments
 
—

 
—

 
(6,428
)
 
—

 
—

 
—

 
(8,252
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
—

 
6,311

 
—

 
6,311

Impairment of non-real estate investments
 
—

 
—

 
5,483

 
—

 
—

 
—

 
—

Loss on early extinguishment of debt
 
—

 
7,361

 
—

 
1,122

 
—

 
7,361

 
—

Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
 
—

 
—

 
—

 
(761
)
 
—

 
—

 
—

Preferred stock redemption charge
 
—

 
2,580

 
4,240

 
—

 
—

 
2,580

 
—

Removal of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
(1,005
)
 
(1,026
)
 
—

 
(1,301
)
 
—

 
(2,031
)
 
(2,604
)
Allocation to unvested restricted stock awards
 
179

 
990

 
(1,138
)
 
1,889

 
(18
)
 
1,157

 
1,140

Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
192,672

 
$
189,783

 
$
178,020

 
$
173,579

 
$
167,945

 
$
382,455

 
$
330,423


(1)
Refer to the “Weighted-Average Shares of Common Stock Outstanding – Diluted” section in “Definitions and Reconciliations” of our Supplemental Information for additional information regarding our 7.00% Series D cumulative convertible preferred stock.
(2)
Calculated in accordance with standards established by the Nareit Board of Governors. Refer to the “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” section in “Definitions and Reconciliations” of our Supplemental Information for additional information.

 
 
Funds From Operations and Funds From Operations per Share (continued)
q219logo1.jpg
June 30, 2019
(In thousands, except per share amounts)
 
 


The following table presents a reconciliation of net income (loss) per share attributable to Alexandria’s common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria’s common stockholders – diluted, and funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted, for the periods below. Per share amounts may not add due to rounding.
 
 
Three Months Ended
 
Six Months Ended
 
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
6/30/19
 
6/30/18
 Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
1.99

 
$
0.51

 
$
1.80

 
$
1.83

Depreciation and amortization 
 
1.15

 
1.17

 
1.14

 
1.11

 
1.13

 
2.32

 
2.23

Gain on sale of real estate
 
—

 
—

 
(0.08
)
 
—

 
—

 
—

 
—

Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
—

 
(0.34
)
 
—

 
—

 
—

Allocation to unvested restricted stock awards
 
—

 
(0.02
)
 
—

 
(0.01
)
 
(0.01
)
 
(0.04
)
 
(0.03
)
Funds from operations per share attributable to Alexandria’s common stockholders – diluted(1)
 
1.83

 
2.26

 
0.76

 
2.75

 
1.63

 
4.08


4.03

Unrealized (gains) losses on non-real estate investments
 
(0.10
)
 
(0.65
)
 
0.89

 
(1.11
)
 
(0.05
)
 
(0.75
)
 
(0.76
)
Realized gains on non-real estate investments
 
—

 
—

 
(0.06
)
 
—

 
—

 
—

 
(0.08
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
—

 
0.06

 
—

 
0.06

Impairment of non-real estate investments
 
—

 
—

 
0.05

 
—

 
—

 
—

 
—

Loss on early extinguishment of debt
 
—

 
0.07

 
—

 
0.01

 
—

 
0.07

 
—

Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
 
—

 
—

 
—

 
(0.01
)
 
—

 
—

 
—

Preferred stock redemption charge
 
—

 
0.02

 
0.04

 
—

 
—

 
0.02

 
—

Allocation to unvested restricted stock awards
 
—

 
0.01

 
—

 
0.02

 
—

 
0.02

 
0.02

Funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
1.73

 
$
1.71

 
$
1.68

 
$
1.66

 
$
1.64

 
$
3.44

 
$
3.27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding(2) for calculations of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share – diluted
 
111,501

 
111,054

 
106,033

 
105,385

 
102,236

 
111,279

 
101,191

Funds from operations – diluted, per share
 
112,077

 
111,635

 
106,244

 
105,385

 
102,236

 
111,857

 
101,933

Funds from operations – diluted, as adjusted, per share
 
111,501

 
111,054

 
106,244

 
104,641

 
102,236

 
111,279

 
101,191


(1)
Refer to footnote 2 on the previous page for additional information.
(2)
Refer to footnote 1 on the previous page for additional information.











SUPPLEMENTAL
INFORMATION








 
 
 
q219logo1.jpg
Company Profile
June 30, 2019
 
 

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office REIT, is the first and longest-tenured owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $22.2 billion as of June 30, 2019, and an asset base in North America of 37.1 million SF as of July 29, 2019, including pending acquisitions. The asset base in North America includes 24.5 million RSF of operating properties and 1.5 million RSF of Class A properties undergoing construction, with projected initial occupancy in 2019, 2.2 million RSF of Class A properties undergoing construction or pre-construction, with projected initial occupancy in 2020, 4.4 million RSF of Class A properties undergoing or nearing pre-construction, with projected initial occupancy in 2021 or 2022, and 4.5 million of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, technology, and agtech companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results 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.

Tenant base

Alexandria is known for our high-quality and diverse tenant base, with 53% of our annual rental revenue generated from entities with an investment-grade credit rating or are publicly traded large cap tenants. The quality, diversity, breadth, and depth of our significant relationships with our tenants provide Alexandria with high-quality and stable cash flows. Alexandria’s underwriting team and long-term industry relationships positively distinguish us from all other publicly traded REITs and real estate companies.

Executive and senior management team

Alexandria’s executive and senior management team has unique experience and expertise in creating, owning, and operating highly dynamic and collaborative campuses in key urban life science, technology, and agtech cluster locations that inspire innovation. From the development of high-quality, sustainable real estate, to the ongoing cultivation of collaborative environments with unique amenities and events, the Alexandria team has a first-in-class reputation of excellence in our niche. Alexandria’s highly experienced management team also includes regional market directors with leading reputations and longstanding relationships within the life science, technology, and agtech communities in their respective urban innovation clusters. We believe that our expertise, experience, reputation, and key relationships in the real estate, life science, and technology industries provide Alexandria significant competitive advantages in attracting new business opportunities.
 
Alexandria’s executive and senior management team consists of 42 individuals, averaging 24 years of real estate experience, including 13 years with Alexandria. Our executive management team alone averages 18 years of experience with Alexandria.

EXECUTIVE MANAGEMENT TEAM
Joel S. Marcus
Executive Chairman & Founder
Stephen A. Richardson
Co-Chief Executive Officer
Peter M. Moglia
Co-Chief Executive Officer & Co-Chief Investment Officer
Dean A. Shigenaga
Co-President & Chief Financial Officer
Thomas J. Andrews
Co-President & Regional Market Director – Greater Boston
Daniel J. Ryan
Co-Chief Investment Officer & Regional Market Director – San Diego
Jennifer J. Banks
Co-Chief Operating Officer, General Counsel & Corporate Secretary
Lawrence J. Diamond
Co-Chief Operating Officer & Regional Market Director – Maryland
Vincent R. Ciruzzi
Chief Development Officer
John H. Cunningham
Executive Vice President – Regional Market Director – New York City
Marc E. Binda
Executive Vice President – Finance & Treasurer
Joseph Hakman
Chief Strategic Transactions Officer

 
 
 
q219logo1.jpg
Investor Information
June 30, 2019
 
 

Corporate Headquarters
 
New York Stock Exchange Trading Symbols
 
Information Requests
385 East Colorado Boulevard, Suite 299
 
Common stock: ARE
 
Phone:
(626) 578-0777
Pasadena, California 91101
 
7.00% Series D preferred stock: ARE/PD
 
Email:
corporateinformation@are.com
 
 
 
 
Web:
www.are.com
 
 
 
 
 
 
Equity Research Coverage
Alexandria is currently covered by the following research analysts. This list may be incomplete 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 our management. Alexandria does not by our reference or distribution of the information below imply our 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
 
Citigroup Global Markets Inc.
 
J.P. Morgan Securities LLC
 
RBC Capital Markets
Jamie Feldman / Jeffrey Spector
 
Michael Bilerman / Emmanuel Korchman
 
Anthony Paolone / Patrice Chen
 
Michael Carroll / Jason Idoine
(646) 855-5808 / (646) 855-1363
 
(212) 816-1383 / (212) 816-1382
 
(212) 622-6682 / (212) 622-1893
 
(440) 715-2649 / (440) 715-2651
 
 
 
 
 
 
 
Barclays Capital Inc.
 
Evercore ISI
 
Mitsubishi UFJ Securities (USA), Inc.
 
Robert W. Baird & Co. Incorporated
Ross Smotrich / Dan Occhionero
 
Sheila McGrath / Wendy Ma
 
Karin Ford / Ryan Cybart
 
David Rodgers
(212) 526-2306 / (212) 526-7164
 
(212) 497-0882 / (212) 497-0870
 
(212) 405-7249 / (212) 405-6591
 
(216) 737-7341
 
 
 
 
 
 
 
BTIG, LLC
 
Green Street Advisors, Inc.
 
Mizuho Securities USA Inc.
 
SMBC Nikko Securities America, Inc.
Tom Catherwood / James Sullivan
 
Daniel Ismail / Chris Darling
 
Haendel St. Juste / Zachary Silverberg
 
Richard Anderson / Jay Kornreich
(212) 738-6140 / (212) 738-6139
 
(949) 640-8780 / (949) 640-8780
 
(212) 209-9300 / (212) 205-7855
 
(917) 262-2795 / (646) 424-3202
 
 
 
 
 
 
 
CFRA
 
JMP Securities – JMP Group, Inc.
 
 
 
 
Kenneth Leon
 
Peter Martin
 
 
 
 
(646) 517-2552
 
(415) 835-8904
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Income Coverage
 
Rating Agencies
J.P. Morgan Securities LLC
 
Wells Fargo & Company
 
Moody’s Investors Service
 
S&P Global Ratings
Mark Streeter / Ian Snyder
 
Thierry Perrein / Kevin McClure
 
(212) 553-0376
 
Fernanda Hernandez / Michael Souers
(212) 834-5086 / (212) 834-3798
 
(704) 410-3262 / (704) 410-3252
 
 
 
(212) 438-1347 / (212) 438-2508
 
 
 
 
 
 
 

 
 
 
q219logo1.jpg
Sustainability
June 30, 2019
 
 

q219sustainability.jpg

(1)
Upon completion of 20 projects in process targeting LEED certification.
(2)
Carbon pollution reduction is for directly managed buildings and reflects sum of annual like-for-like progress since 2015.
(3)
Upon completion of three projects in process targeting WELL certification.
(4)
Upon completion of 10 projects in process targeting Fitwel certification.

 
 
Financial and Asset Base Highlights
q219logo1.jpg
June 30, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Selected financial data from consolidated financial statements and related information
 
 
 
 
 
 
 
 
 
 
Rental revenues
 
$
289,625

 
$
274,563

 
$
260,102

 
$
255,496

 
$
250,635

Tenant recoveries
 
$
81,993

 
$
80,186

 
$
77,683

 
$
81,051

 
$
72,159

 
 
 
 
 
 
 
 
 
 
 
Operating margin
 
72%

 
72%

 
71%

 
71%

 
72%

Adjusted EBITDA margin
 
69%

 
70%

 
69%

 
69%

 
69%

Adjusted EBITDA – quarter annualized
 
$
1,063,056

 
$
1,029,944

 
$
968,888

 
$
957,008

 
$
911,284

Adjusted EBITDA – trailing 12 months
 
$
1,004,724

 
$
966,781

 
$
937,906

 
$
900,032

 
$
854,237

 
 
 
 
 
 
 
 
 
 
 
Net debt at end of period
 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

 
$
5,326,039

Net debt to Adjusted EBITDA – quarter annualized
 
5.8x

 
5.4x

 
5.4x

 
5.7x

 
5.8x

Net debt to Adjusted EBITDA – trailing 12 months
 
6.1x

 
5.8x

 
5.6x

 
6.1x

 
6.2x

Net debt and preferred stock to Adjusted EBITDA – quarter annualized
 
5.8x

 
5.5x

 
5.5x

 
5.8x

 
5.9x

Net debt and preferred stock to Adjusted EBITDA – trailing 12 months
 
6.2x

 
5.8x

 
5.7x

 
6.2x

 
6.3x

 
 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio – quarter annualized
 
4.2x

 
4.5x

 
4.1x

 
4.1x

 
4.3x

Fixed-charge coverage ratio – trailing 12 months
 
4.2x

 
4.2x

 
4.2x

 
4.3x

 
4.3x

Unencumbered net operating income as a percentage of total net operating income
 
94%

 
95%

 
88%

 
88%

 
88%

 
 
 
 
 
 
 
 
 
 
 
Closing stock price at end of period
 
$
141.09

 
$
142.56

 
$
115.24

 
$
125.79

 
$
126.17

Common shares outstanding (in thousands) at end of period
 
111,986

 
111,181

 
111,012

 
105,804

 
103,346

Total equity capitalization at end of period
 
$
15,887,660

 
$
15,936,979

 
$
12,879,366

 
$
13,412,222

 
$
13,142,725

Total market capitalization at end of period
 
$
22,243,865

 
$
21,780,482

 
$
18,357,621

 
$
19,096,226

 
$
18,756,830

 
 
 
 
 
 
 
 
 
 
 
Dividend per share – quarter/annualized
 
$1.00/$4.00

 
$0.97/$3.88

 
$0.97/$3.88

 
$0.93/$3.72

 
$0.93/$3.72

Dividend payout ratio for the quarter
 
58%

 
57%

 
60%

 
57%

 
57%

Dividend yield – annualized
 
2.8%

 
2.7%

 
3.4%

 
3.0%

 
2.9%

 
 
 
 
 
 
 
 
 
 
 
Amounts related to operating leases:(1)
 
 
 
 
 
 
 
 
 
 
Operating lease liabilities
 
$
243,585

 
$
244,601

 
$
—

 
$
—

 
$
—

Rent expense
 
$
4,482

 
$
4,492

 
$
4,164

 
$
3,999

 
$
3,916

 
 
 
 
 
 
 
 
 
 
 
General and administrative expenses
 
$
26,434

 
$
24,677

 
$
22,385

 
$
22,660

 
$
22,939

General and administrative expenses as a percentage of net operating income –
trailing 12 months
 
9.5%

 
9.5%

 
9.6%

 
9.5%

 
9.4%

 
 
 
 
 
 
 
 
 
 
 
Capitalized interest
 
$
21,674

 
$
18,509

 
$
19,902

 
$
17,431

 
$
15,527

Weighted-average interest rate for capitalization of interest during the period
 
4.14%

 
3.96%

 
4.01%

 
4.06%

 
3.92%

(1) Refer to the “Lease Accounting” section in “Definitions and Reconciliations” of this Supplemental Information for additional information.

 
 
Financial and Asset Base Highlights (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands, except annual rental revenue per occupied RSF amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Amounts included in funds from operations and non-revenue-enhancing capital expenditures
 
 
 
 
 
 
 
 
 
 
Straight-line rent revenue
 
$
25,476

 
$
26,965

 
$
17,923

 
$
20,070

 
$
23,259

Amortization of acquired below-market leases
 
$
8,054

 
$
7,148

 
$
5,350

 
$
5,220

 
$
5,198

Straight-line rent expense on ground leases
 
$
226

 
$
246

 
$
272

 
$
272

 
$
252

Stock compensation expense
 
$
11,437

 
$
11,029

 
$
9,810

 
$
9,986

 
$
7,975

Amortization of loan fees
 
$
2,380

 
$
2,233

 
$
2,401

 
$
2,734

 
$
2,593

Amortization of debt premiums
 
$
782

 
$
801

 
$
611

 
$
614

 
$
606

Non-revenue-enhancing capital expenditures:
 
 
 
 
 
 
 
 
 
 
Building improvements
 
$
2,876

 
$
2,381

 
$
3,256

 
$
3,032

 
$
2,827

Tenant improvements and leasing commissions
 
$
13,901

 
$
8,709

 
$
11,758

 
$
17,748

 
$
10,686

 
 
 
 
 
 
 
 
 
 
 
Operating statistics and related information (at end of period)
 
 
 
 
 
 
 
 
 
 
Number of properties – North America
 
257

 
250

 
237

 
235

 
234

RSF – North America (including development and redevelopment projects under construction)
 
26,321,122

 
25,323,299

 
24,587,438

 
24,196,505

 
24,007,981

Total square feet – North America
 
37,120,560

(1) 
33,688,294

 
33,097,210

 
32,186,813

 
31,976,194

Annual rental revenue per occupied RSF – North America
 
$
50.27

 
$
49.56

 
$
48.42

 
$
48.36

 
$
48.22

Occupancy of operating properties – North America
 
97.4%

 
97.2%

 
97.3%

 
97.3%

 
97.1%

Occupancy of operating and redevelopment properties – North America
 
96.4%

 
95.5%

 
95.1%

 
94.6%

 
95.0%

Weighted-average remaining lease term (in years)
 
8.4

 
8.4

 
8.6

 
8.6

 
8.6

 
 
 
 
 
 
 
 
 
 
 
Total leasing activity – RSF
 
819,949

 
1,248,972

 
1,558,064

 
696,468

 
985,996

Lease renewals and re-leasing of space – change in average new rental rates over expiring rates:
 
 
 
 
 
 
 
 
 
 
Rental rate increases
 
32.5%

 
32.9%

 
17.4%

 
35.4%

 
24.0%

Rental rate increases (cash basis)
 
17.8%

 
24.3%

 
11.4%

 
16.9%

 
12.8%

RSF (included in total leasing activity above)
 
587,930

 
509,415

 
650,540

 
475,863

 
727,265

 
 
 
 
 
 
 
 
 
 
 
Same property – percentage change over comparable quarter from prior year:
 
 
 
 
 
 
 
 
 
 
Net operating income increase
 
4.3%

 
2.3%

 
3.8%

 
3.4%

 
4.1%

Net operating income increase (cash basis)
 
9.5%

 
10.2%

 
7.6%

 
8.9%

 
6.3%

 
 
 
 
 
 
 
 
 
 
 
(1) Includes acquisitions completed and pending in 3Q19. Refer to “Acquisitions” of our Earnings Press Release for additional information.

 
 
 
q219logo1.jpg
High-Quality, Diverse, and Innovative Tenants
June 30, 2019
 
 



Long-Duration Cash Flows From High-Quality, Diverse, and
Innovative Tenants

Investment-Grade or
Publicly Traded Large Cap Tenants
 
Tenant Mix
 
 
 
 
 
q219clienttenantmix.jpg
 
53%
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Duration Lease Terms
 
 
 
 
 
 
 
8.4 Years
 
 
 
 
 
 
 
 
 
 
Weighted-Average Remaining Term
 
 
 
Percentage of ARE’s Annual Rental Revenue(1)




(1)
Represents annual rental revenue in effect as of June 30, 2019.
(2)
73% of our annual rental revenue for technology tenants is from investment-grade or publicly traded large cap tenants.

 
 
 
q219logo1.jpg
Class A Properties in AAA Locations
June 30, 2019
 
 


High-Quality Cash Flows From Class A Properties in AAA Locations

Class A Properties in
AAA Locations
 
AAA Locations
 
 
 
 
q219realestate.jpg
 
 
 
 
 
 
 
 
77%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s
 
Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of ARE’s Annual Rental Revenue(1)








(1)
Represents annual rental revenue in effect as of June 30, 2019.

 
 
 
q219logo1.jpg
Occupancy
June 30, 2019
 
 



Solid Demand for Class A Properties in AAA Locations
Drives Solid Occupancy

Solid Historical Occupancy(1)
 
Occupancy Across Key Locations
 
 
 
 
q219occupancy.jpg
 
 
 
 
 
 
 
 
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Over 10 Years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








(1)
Average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of June 30, 2019.


 
 
 
q219logo1.jpg
Key Operating Metrics
June 30, 2019
 
 

Same Property Net Operating Income Growth
 
Favorable Lease Structure(1)
 
q219samepropa.jpg
q219samepropb.jpg
 
Strategic Lease Structure by Owner and Operator of Collaborative Life Science, Technology, and AgTech Campuses
 
 
Stable cash flows
 
 
 
 
Percentage of triple
net leases
 
97%
 
 
Increasing cash flows
 
 
 
 
Percentage of leases containing
annual rent escalations
95%
 
 
Lower capex burden
 
 
 
 
Percentage of leases providing for the
recapture of capital expenditures
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Growth:
Renewed/Re-Leased Space
 
Margins(2)
 
q219rentalratea.jpg
q219rentalrateb.jpg
 
 
 
 
 
 
 
 
 
 
Operating
 
 
 
Adjusted EBITDA
 
 
72%
 
 
 
69%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Percentages calculated based on RSF as of June 30, 2019.
(2)
Represents percentages for the three months ended June 30, 2019.

 
 
Same Property Performance
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

 
 
June 30, 2019
 
 
 
June 30, 2019
Same Property Financial Data
 
Three Months Ended
 
Six Months Ended
 
Same Property Statistical Data
 
Three Months Ended
 
Six Months Ended
Percentage change over comparable period from prior year:
 
 
 
 
 
Number of same properties
 
200
 
195
Net operating income increase
 
4.3%
 
3.5%
 
Rentable square feet
 
19,650,971
 
18,901,509
Net operating income increase (cash basis)
 
9.5%
 
9.7%
 
Occupancy – current-period average
 
96.6%
 
96.5%
Operating margin
 
72%
 
72%
 
Occupancy – same-period prior-year average
 
96.2%
 
96.3%
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2019
 
2018
 
$ Change
 
% Change
 
2019
 
2018
 
$ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from rentals:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
$
245,715

 
$
235,576

 
$
10,139

 
4.3
%
 
$
464,450

 
$
447,953

 
$
16,497

 
3.7
%
Non-same properties
 
43,910

 
15,059

 
28,851

 
191.6

 
99,738

 
47,167

 
52,571

 
111.5

Rental revenues
 
289,625

 
250,635

 
38,990

 
15.6

 
564,188

 
495,120

 
69,068

 
13.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
75,783

 
69,693

 
6,090

 
8.7

 
145,512

 
137,079

 
8,433

 
6.2

Non-same properties
 
6,210

 
2,466

 
3,744

 
151.8

 
16,667

 
8,250

 
8,417

 
102.0

Tenant recoveries
 
81,993

 
72,159

 
9,834

 
13.6

 
162,179

 
145,329

 
16,850

 
11.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from rentals
 
371,618

 
322,794

 
48,824

 
15.1

 
726,367

 
640,449

 
85,918

 
13.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
93

 
72

 
21

 
29.2

 
234

 
134

 
100

 
74.6

Non-same properties
 
2,145

 
2,168

 
(23
)
 
(1.1
)
 
6,097

 
4,590

 
1,507

 
32.8

Other income
 
2,238

 
2,240

 
(2
)
 
(0.1
)
 
6,331

 
4,724

 
1,607

 
34.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
321,591

 
305,341

 
16,250

 
5.3

 
610,196

 
585,166

 
25,030

 
4.3

Non-same properties
 
52,265

 
19,693

 
32,572

 
165.4

 
122,502

 
60,007

 
62,495

 
104.1

Total revenues
 
373,856

 
325,034

 
48,822

 
15.0

 
732,698

 
645,173

 
87,525

 
13.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
88,958

 
82,277

 
6,681

 
8.1

 
172,145

 
162,043

 
10,102

 
6.2

Non-same properties
 
16,731

 
9,631

 
7,100

 
73.7

 
35,045

 
21,636

 
13,409

 
62.0

Rental operations
 
105,689

 
91,908

 
13,781

 
15.0

 
207,190

 
183,679

 
23,511

 
12.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
232,633

 
223,064

 
9,569

 
4.3

 
438,051

 
423,123

 
14,928

 
3.5

Non-same properties
 
35,534

 
10,062

 
25,472

 
253.2

 
87,457

 
38,371

 
49,086

 
127.9

Net operating income
 
$
268,167

 
$
233,126

 
$
35,041

 
15.0
%
 
$
525,508

 
$
461,494

 
$
64,014

 
13.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income – same properties
 
$
232,633

 
$
223,064

 
$
9,569

 
4.3
%
 
$
438,051

 
$
423,123

 
$
14,928

 
3.5
%
Straight-line rent revenue
 
(14,664
)
 
(23,294
)
 
8,630

 
(37.0
)
 
(28,935
)
 
(48,429
)
 
19,494

 
(40.3
)
Amortization of acquired below-market leases
 
(2,927
)
 
(3,403
)
 
476

 
(14.0
)
 
(5,972
)
 
(7,162
)
 
1,190

 
(16.6
)
Net operating income – same properties (cash basis)
 
$
215,042

 
$
196,367

 
$
18,675

 
9.5
%
 
$
403,144

 
$
367,532

 
$
35,612

 
9.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Refer to the “Same Property Comparisons” section in “Definitions and Reconciliations” of this Supplemental Information for a reconciliation of same properties to total properties. “Definitions and Reconciliations” also contains definitions of “Tenant Recoveries” and “Net Operating Income” and their respective reconciliations from the most directly comparable financial measures presented in accordance with GAAP.

 
 
Leasing Activity
q219logo1.jpg
June 30, 2019
(Dollars per RSF)
 
 

 
 
 
Three Months Ended
 
 
 
Six Months Ended
 
 
 
Year Ended
 
 
 
 
June 30, 2019
 
 
 
June 30, 2019
 
 
 
December 31, 2018
 
 
 
Including
Straight-Line Rent
 
Cash Basis
 
Including
Straight-Line Rent
 
Cash Basis
 
Including
Straight-Line Rent
 
Cash Basis
Leasing activity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewed/re-leased space(1)
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
Rental rate changes
 
 
32.5%

 
 
 
17.8%

 
 
 
32.6%

 
 
 
20.1%

 
 
 
24.1%

 
 
 
14.1%

 
New rates
 
 

$64.48

 
 
 

$62.11

 
 
 

$54.91

 
 
 

$52.40

 
 
 

$55.05

 
 
 

$52.79

 
Expiring rates
 
 

$48.67

 
 
 

$52.71

 
 
 

$41.40

 
 
 

$43.63

 
 
 

$44.35

 
 
 

$46.25

 
RSF
 
 
587,930

 
 
 
 
 
 
 
1,097,345

 
 
 
 
 
 
 
2,088,216

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$23.25

 
 
 
 
 
 
 

$20.60

 
 
 
 
 
 
 

$20.61

 
 
 
 
 
Weighted-average lease term
 
 
5.3 years

 
 
 
 
 
 
 
5.9 years

 
 
 
 
 
 
 
6.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Developed/redeveloped/previously vacant space leased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$47.12

 
 
 

$44.00

 
 
 

$60.66

 
 
 

$59.41

 
 
 

$58.45

 
 
 

$48.73

 
RSF
 
 
232,019

 
 
 
 
 
 
 
971,576

 
 
 
 
 
 
 
2,633,476

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$5.30

 

 
 
 
 
 

$18.40

 
 
 
 
 
 
 

$12.57

 
 
 
 
 
Weighted-average lease term
 
 
7.8 years

 
 
 
 
 
 
 
10.5 years

 
 
 
 
 
 
 
11.5 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leasing activity summary (totals):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$59.57

 
 
 

$56.99

 
 
 

$57.61

 
 
 

$55.69

 
 
 

$56.94

 
 
 

$50.52

 
RSF
 
 
819,949

 
 
 
 
 
 
 
2,068,921

(2) 
 
 
 
 
 
 
4,721,692

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$18.17

 
 
 
 
 
 
 

$19.57

 
 
 
 
 
 
 

$16.13

 
 
 
 
 
Weighted-average lease term
 
 
6.0 years

 
 
 
 
 
 
 
8.0 years

 
 
 
 
 
 
 
9.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease expirations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiring rates
 
 

$47.19

 
 
 

$51.06

 
 
 

$40.06

 
 
 

$42.30

 
 
 

$42.98

 
 
 

$45.33

 
RSF
 
 
645,350

 
 
 
 
 
 
 
1,293,100

 
 
 
 
 
 
 
2,811,021

 
 
 
 
 


Leasing activity includes 100% of results for each property in which we have an investment in North America.

(1)
Excludes month-to-month leases aggregating 35,476 RSF and 50,548 RSF as of June 30, 2019, and December 31, 2018, respectively.
(2)
During the six months ended June 30, 2019, we granted tenant concessions/free rent averaging 2.0 months with respect to the 2,068,921 RSF leased. Approximately 66% of the leases executed during the six months ended June 30, 2019, did not include concessions for free rent.    

 
 
 
q219logo1.jpg
Contractual Lease Expirations
June 30, 2019
 
 

Year
 
RSF
 
Percentage of
Occupied RSF
 
Annual Rental Revenue
(per RSF)(1)
 
Percentage of Total
Annual Rental Revenue
 
 
2019
(2)
 
 
480,811

 
 
 
2.1
%
 
 
 
$
39.43

 
 
 
1.7
%
 
 
 
2020
 
 
 
1,565,307

 
 
 
6.9
%
 
 
 
$
35.65

 
 
 
5.0
%
 
 
 
2021
 
 
 
1,536,381

 
 
 
6.7
%
 
 
 
$
39.71

 
 
 
5.4
%
 
 
 
2022
 
 
 
1,814,982

 
 
 
8.0
%
 
 
 
$
42.44

 
 
 
6.9
%
 
 
 
2023
 
 
 
2,387,653

 
 
 
10.5
%
 
 
 
$
44.49

 
 
 
9.5
%
 
 
 
2024
 
 
 
2,082,858

 
 
 
9.1
%
 
 
 
$
46.58

 
 
 
8.7
%
 
 
 
2025
 
 
 
1,618,527

 
 
 
7.1
%
 
 
 
$
48.13

 
 
 
7.0
%
 
 
 
2026
 
 
 
1,390,959

 
 
 
6.1
%
 
 
 
$
48.36

 
 
 
6.0
%
 
 
 
2027
 
 
 
2,371,162

 
 
 
10.4
%
 
 
 
$
48.61

 
 
 
10.3
%
 
 
 
2028
 
 
 
1,566,460

 
 
 
6.9
%
 
 
 
$
60.41

 
 
 
8.4
%
 
 
Thereafter
 
 
5,971,491

 
 
 
26.2
%
 
 
 
$
58.50

 
 
 
31.1
%
 
 

Market
 
2019 Contractual Lease Expirations (in RSF)
 
Annual Rental Revenue
(per RSF)(1)
 
2020 Contractual Lease Expirations (in RSF)

Annual Rental Revenue
(per RSF)(1)
 
Leased
 
Negotiating/
Anticipating
 
Targeted for Redevelopment
 
Remaining
Expiring
Leases(3)
 
Total(2)
 
 
Leased

Negotiating/
Anticipating

Targeted for Redevelopment

Remaining
Expiring Leases(4)
 
Total

 
 
 
 
 
 
 



 

Greater Boston
 
39,968

 
1,329

 
—

 
 
25,931

 
 
67,228

 
$
53.50

 
83,680


77,817


—

 

334,821

 
 
496,318


$
46.17

San Francisco
 
1,287

 
—

 
—

 
 
65,195

 
 
66,482

 
41.98

 
21,699


—


—

 

265,276

 
 
286,975


44.16

New York City
 
—

 
—

 
—

 
 
1,787

 
 
1,787

 
N/A

 
—


—


—

 

38,076


 
38,076


N/A

San Diego
 
54,042

 
79,450

(5) 
—

 
 
103,549

(5) 

237,041

 
37.52

 
679


—


—

 
 
293,190

 
 
293,869


27.84

Seattle
 
—

 
18,374

 
—

 
 
23,443

 
 
41,817

 
50.03

 
—


12,727


—

 

32,047


 
44,774


38.65

Maryland
 
—

 
—

 
—

 
 
—

 
 
—

 
—

 
26,370


14,446


—

 

149,288


 
190,104


19.30

Research Triangle
 
—

 
—

 
—

 
 
28,381

 
 
28,381

 
23.49

 
—


29,053


—

 

60,385


 
89,438


16.50

Canada
 
—

 
—

 
—

 
 
—

 
 
—

 
—

 
59,088

 
—

 
—

 
 
35,505

 
 
94,593

 
28.10

Non-cluster markets
 
3,111

 
1,217

 
—

 
 
33,747

 
 
38,075

 
22.26

 
—


—


—

 

31,160


 
31,160


34.53

Total
 
98,408

 
100,370

 
—

 
 
282,033

 
 
480,811

 
$
39.43

 
191,516


134,043


—

 

1,239,748


 
1,565,307


$
35.65

Percentage of expiring leases
 
20
%
 
21
%
 
—
%
 
 
59
%
 
 
100
%
 
 
 
12
%
 
9
%
 
—
%
 
 
79
%

 
100
%


 

(1)
Represents amounts in effect as of June 30, 2019.
(2)
Excludes month-to-month leases aggregating 35,476 RSF as of June 30, 2019.
(3)
After the lease expiration noted in footnote 5 below, the largest remaining contractual lease expiration in 2019 is 50,400 RSF at a Class A office/laboratory building in our South San Francisco submarket.
(4)
The largest remaining contractual lease expiration in 2020 is 72,742 RSF in our South San Francisco submarket.
(5)
Includes 116,556 RSF at 3545 Cray Court in our Torrey Pines submarket, of which 49,506 RSF are under negotiation, and the remaining 67,050 RSF are undergoing marketing. The property will be renovated as a Class A office/laboratory building and will not be classified as a redevelopment. As such, we expect the property will remain in our same property performance pool.

 
 
Top 20 Tenants
q219logo1.jpg
June 30, 2019
(Dollars in thousands, except average market cap amounts)
 
 

84% of Top 20 Annual Rental Revenue From Investment-Grade
or Publicly Traded Large Cap Tenants(1) 

 
 
Tenant
 
Remaining Lease Term in Years(1)
 
Aggregate
RSF
 
Annual Rental Revenue(1)
 
Percentage of Aggregate Annual Rental Revenue(1)
 
Investment-Grade
Credit Ratings
 
Average Market Cap(2)
(in billions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moody’s
 
S&P
 
 
1
 
Takeda Pharmaceutical Company Ltd.
 
 
10.1

 
 
 
606,249

 
 
 
$
39,251

 
 
3.4
%
 
Baa2
 
BBB+
 
$
44.9

 
2
 
Illumina, Inc.
 
 
11.1

 
 
 
891,495

 
 
 
35,907

 
 
3.2

 
—
 
BBB
 
$
44.6

 
3
 
Sanofi
 
 
9.0

 
 
 
494,693

 
 
 
34,219

 
 
3.0

 
A1
 
AA
 
$
107.7

 
4
 
Eli Lilly and Company
 
 
9.9

 
 
 
554,089

 
 
 
34,096

 
 
3.0

 
A2
 
A+
 
$
117.7

 
5
 
Celgene Corporation
 
 
6.9

 
 
 
614,082

 
 
 
28,759

 
 
2.5

(3) 
Baa2
 
BBB+
 
$
60.5

 
6
 
Novartis AG
 
 
8.4

 
 
 
320,606

 
 
 
25,391

 
 
2.2

 
A1
 
AA-
 
$
219.2

 
7
 
Merck & Co., Inc.
 
 
11.9

 
 
 
421,623

 
 
 
24,304

 
 
2.1

 
A1
 
AA
 
$
195.5

 
8
 
Uber Technologies, Inc.
 
 
73.4

(4) 
 
 
422,980

 
 
 
22,216

 
 
2.0

 
—
 
—
 
$
71.7

 
9
 
bluebird bio, Inc.
 
 
7.7

 
 
 
290,617

 
 
 
21,709

 
 
1.9

 
—
 
—
 
$
7.4

 
10
 
Moderna, Inc.
 
 
9.3

 
 
 
373,163

 
 
 
21,186

 
 
1.9

 
—
 
—
 
$
6.4

 
11
 
Bristol-Myers Squibb Company
 
 
13.3

 
 
 
224,182

 
 
 
20,221

 
 
1.8

(3) 
A2
 
A+
 
$
85.5

 
12
 
Roche
 
 
4.3

 
 
 
372,943

 
 
 
19,769

 
 
1.7

 
Aa3
 
AA
 
$
220.4

 
13
 
New York University
 
 
12.2

 
 
 
201,284

 
 
 
19,002

 
 
1.7

 
Aa2
 
AA-
 
N/A

 
14
 
Facebook, Inc.
 
 
11.2

 
 
 
382,798

 
 
 
18,343

 
 
1.6

 
—
 
—
 
$
478.4

 
15
 
Pfizer Inc.
 
 
5.7

 
 
 
416,979

 
 
 
17,754

 
 
1.6

 
A1
 
AA
 
$
241.3

 
16
 
Stripe, Inc.
 
 
8.3

 
 
 
295,333

 
 
 
17,736

 
 
1.6

 
—
 
—
 
N/A

 
17
 
Massachusetts Institute of Technology
 
 
6.0

 
 
 
256,126

 
 
 
16,843

 
 
1.5

 
Aaa
 
AAA
 
N/A

 
18
 
Amgen Inc.
 
 
4.8

 
 
 
407,369

 
 
 
16,838

 
 
1.5

 
Baa1
 
A
 
$
120.7

 
19
 
United States Government
 
 
8.7

 
 
 
264,358

 
 
 
15,472

 
 
1.4

 
Aaa
 
AA+
 
N/A

 
20
 
FibroGen, Inc.
 
 
4.4

 
 
 
234,249

 
 
 
14,198

 
 
1.2

 
—
 
—
 
$
4.3

 
 
 
Total/weighted average
 
 
12.0

(4) 
 
 
8,045,218

 
 
 
$
463,214

 
 
40.8
%
 
 
 
 
 
 
 

(1)
Based on aggregate annual rental revenue in effect as of June 30, 2019. Refer to the “Annual Rental Revenue” section in “Definitions and Reconciliations” of this Supplemental Information for additional information on our methodology on annual rental revenue from unconsolidated real estate joint ventures.
(2)
Average daily market capitalization for the twelve months ended June 30, 2019. Refer to the “Total Market Capitalization” section in “Definitions and Reconciliations” of this Supplemental Information for additional information.
(3)
In April 2019, Bristol-Myers Squibb Company’s stockholders approved the acquisition of Celgene Corporation, with the transaction close expected by Bristol-Myers Squibb Company at the end of 2019 or the beginning of 2020. Proforma for the anticipated acquisition, our annual rental revenue from Bristol-Myers Squibb Company is approximately 4.3% based on leases in effect as of June 30, 2019.
(4)
Represents a ground lease with Uber Technologies, Inc. at 1455 and 1515 Third Street in our Mission Bay/SoMa submarket. Excluding the ground lease, the weighted-average remaining lease term for our top 20 tenants was 8.9 years as of June 30, 2019.

 
 
Summary of Properties and Occupancy
q219logo1.jpg
June 30, 2019
(Dollars in thousands, except per RSF amounts)
 
 

Summary of properties
Market
 
RSF
 
Number of Properties
 
Annual Rental Revenue
 
 
Operating
 
Development
 
Redevelopment
 
Total
 
% of Total
 
 
Total
 
% of Total
 
Per RSF
 
Greater Boston
 
6,459,424

 
40,597

 
19,036

 
6,519,057

 
25
%
 
56

 
$
408,990

 
36
%
 
$
65.05

 
San Francisco
 
5,421,729

 
2,003,130

 
—

 
7,424,859

 
28

 
51

 
287,184

 
25

 
54.98

 
New York City
 
1,127,580

 
—

 
140,098

 
1,267,678

 
5

 
5

 
79,599

 
7

 
72.31

 
San Diego
 
4,809,604

 
98,000

 
—

 
4,907,604

 
18

 
61

 
175,034

 
16

 
38.23

 
Seattle
 
1,374,279

 
80,221

 
—

 
1,454,500

 
6

 
14

 
70,490

 
6

 
52.69

 
Maryland
 
2,524,323

 
258,904

 
41,627

 
2,824,854

 
11

 
39

 
68,601

 
6

 
28.30

 
Research Triangle
 
1,173,672

 
—

 
45,054

 
1,218,726

 
5

 
16

 
30,947

 
3

 
26.94

 
Canada
 
188,967

 
—

 
—

 
188,967

 
1

 
2

 
4,704

 
—

 
26.57

 
Non-cluster markets
 
390,179

 
—

 
—

 
390,179

 
1

 
11

 
11,017

 
1

 
33.28

 
Properties held for sale
 
124,698

 
—

 
—

 
124,698

 
—

 
2

 
2,380

 
—

 
N/A

 
North America
 
23,594,455

 
2,480,852

 
245,815

 
26,321,122

 
100
%
 
257

 
$
1,138,946

 
100
%
 
$
50.27

 
 
 
 
 
2,726,667
 
 
 
 
 
 
 
 
 
 
 
 
 


Summary of occupancy
 
 
Operating Properties
 
Operating and Redevelopment Properties
Market
 
6/30/19
 
3/31/19
 
6/30/18
 
6/30/19
 
3/31/19
 
6/30/18
Greater Boston
 
98.7
%
 
98.2
%
 
97.2
%
 
98.4
%
 
97.7
%
 
96.7
%
San Francisco
 
98.7

 
99.8

 
99.8

 
98.7

 
98.4

 
98.8

New York City
 
98.8

 
98.7

 
100.0

 
87.8

 
87.7

 
100.0

San Diego
 
95.2

 
94.2

 
95.8

 
95.2

 
94.2

 
92.3

Seattle
 
97.3

 
97.7

 
97.2

 
97.3

 
97.7

 
97.2

Maryland
 
96.7

 
97.0

 
95.7

 
95.1

 
95.3

 
91.9

Research Triangle
 
97.9

 
97.3

 
96.5

 
94.2

 
87.8

 
85.3

Subtotal
 
97.6

 
97.6

 
97.4

 
96.6

 
95.8

 
95.2

Canada
 
93.7

 
93.5

 
98.6

 
93.7

 
93.5

 
98.6

Non-cluster markets
 
84.9

 
81.1

 
77.9

 
84.9

 
81.1

 
77.9

North America
 
97.4
%
 
97.2
%
 
97.1
%
 
96.4
%
 
95.5
%
 
95.0
%

Refer to “Definitions and Reconciliations” in this Supplemental Information for additional information.


 
 
Property Listing
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cambridge/Inner Suburbs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at Kendall Square
 
2,365,487

 
—

 
—

 
2,365,487

 
10
 
$
168,011

 
98.9
%
 
 
98.9
%
 
 
 
50, 60, 75/125(1), 100, and 225(1) Binney Street, 161 and 215 First Street, 150 Second Street, 300 Third Street, and 11 Hurley Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Square®
 
1,181,635

 
—

 
—

 
1,181,635

 
7
 
91,070

 
99.9

 
 
99.9

 
 
 
100, 200, 300, 400, 500, 600, and 700 Technology Square

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at One Kendall Square
 
773,108

 
40,597

 
—

 
813,705

 
10
 
66,276

 
98.6

`
 
98.6

 
 
 
One Kendall Square – Buildings 100, 200, 300, 400, 500, 600/700, 1400, 1800, 2000, and 399 Binney Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
480 and 500 Arsenal Street
 
234,260

 
—

 
—

 
234,260

 
2
 
10,647

 
100.0

 
 
100.0

 
 
 
640 Memorial Drive
 
225,504

 
—

 
—

 
225,504

 
1
 
13,815

 
100.0

 
 
100.0

 
 
 
780 and 790 Memorial Drive
 
99,658

 
—

 
—

 
99,658

 
2
 
7,966

 
100.0

 
 
100.0

 
 
 
167 Sidney Street and 99 Erie Street
 
54,549

 
—

 
—

 
54,549

 
2
 
4,016

 
100.0

 
 
100.0

 
 
 
79/96 13th Street (Charlestown Navy Yard)
 
25,309

 
—

 
—

 
25,309

 
1
 
620

 
100.0

 
 
100.0

 
 
 
Cambridge/Inner Suburbs
 
4,959,510

 
40,597

 
—

 
5,000,107

 
35
 
362,421

 
99.3

 
 
99.3

 
 
Seaport Innovation District
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 Necco Street
 
87,163

(2) 
—

 
—

 
87,163

 
1
 
N/A

(2) 
N/A

(2) 
N/A

(2) 
 
 
99 A Street
 
8,715

 
—

 
—

 
8,715

 
1
 
850

 
100.0

 
 
100.0

 
 
 
Seaport Innovation District
 
95,878

 
—

 
—

 
95,878

 
2
 
850

 
100.0

 
 
100.0

 
 
Route 128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Park at 128
 
343,882

 
—

 
—

 
343,882

 
8
 
11,279

 
98.1

 
 
98.1

 
 
 
3 and 6/8 Preston Court, 29, 35, and 44 Hartwell Avenue,
35 and 45/47 Wiggins Avenue, and 60 Westview Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225, 266, and 275 Second Avenue
 
298,581

 
—

 
19,036

 
317,617

 
3
 
12,874

 
100.0

 
 
94.0

 
 
 
100 Tech Drive
 
200,431

 
—

 
—

 
200,431

 
1
 
8,455

 
100.0

 
 
100.0

 
 
 
19 Presidential Way
 
144,892

 
—

 
—

 
144,892

 
1
 
5,134

 
96.8

 
 
96.8

 
 
 
100 Beaver Street
 
82,330

 
—

 
—

 
82,330

 
1
 
1,853

 
54.5

 
 
54.5

 
 
 
285 Bear Hill Road
 
26,270

 
—

 
—

 
26,270

 
1
 
1,167

 
100.0

 
 
100.0

 
 
 
Route 128
 
1,096,386

 
—

 
19,036

 
1,115,422

 
15
 
40,762

 
95.6

 
 
93.9

 
 
Route 495
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111 and 130 Forbes Boulevard
 
155,846

 
—

 
—

 
155,846

 
2
 
1,543

 
100.0

 
 
100.0

 
 
 
20 Walkup Drive
 
91,045

 
—

 
—

 
91,045

 
1
 
649

 
100.0

 
 
100.0

 
 
 
30 Bearfoot Road
 
60,759

 
—

 
—

 
60,759

 
1
 
2,765

 
100.0

 
 
100.0

 
 
 
Route 495
 
307,650

 
—

 
—

 
307,650

 
4
 
4,957

 
100.0

 
 
100.0

 
 
 
Greater Boston
 
6,459,424

 
40,597

 
19,036

 
6,519,057

 
56
 
$
408,990

 
98.7
%
 
 
98.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
(2) We acquired the property in May 2019. The building is 87% leased for 12 years and expected to be occupied later in 2019. Refer to "Acquisitions" of our Earnings Press Release for additional information.

 
 
Property Listing (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mission Bay/SoMa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1655 and 1725 Third Street(1)
 
—

 
593,765

 
—

 
593,765

 
2
 
$
—

 
N/A

 
 
N/A

 
 
 
409 and 499 Illinois Street(1)
 
455,069

 
—

 
—

 
455,069

 
2
 
28,174

 
98.2
%
 
 
98.2
%
 
 
 
1455 and 1515 Third Street
 
422,980

 
—

 
—

 
422,980

 
2
 
22,216

 
100.0

 
 
100.0

 
 
 
510 Townsend Street
 
295,333

 
—

 
—

 
295,333

 
1
 
17,736

 
100.0

 
 
100.0

 
 
 
88 Bluxome Street
 
232,470

 
—

 
—

 
232,470

 
1
 
3,813

 
100.0

 
 
100.0

 
 
 
455 Mission Bay Boulevard South
 
210,398

 
—

 
—

 
210,398

 
1
 
13,030

 
96.2

 
 
96.2

 
 
 
1500 Owens Street(1)
 
158,267

 
—

 
—

 
158,267

 
1
 
7,681

 
100.0

 
 
100.0

 
 
 
1700 Owens Street
 
157,340

 
—

 
—

 
157,340

 
1
 
11,119

 
98.9

 
 
98.9

 
 
 
505 Brannan Street
 
148,146

 
—

 
—

 
148,146

 
1
 
12,126

 
100.0

 
 
100.0

 
 
 
260 Townsend Street
 
66,682

 
—

 
—

 
66,682

 
1
 
5,900

 
100.0

 
 
100.0

 
 
 
Mission Bay/SoMa
 
2,146,685

 
593,765

 
—

 
2,740,450

 
13
 
121,795

 
99.2

 
 
99.2

 
 
South San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
213, 249, 259, 269, and 279 East Grand Avenue
 
872,505

 
47,199

 
—

 
919,704

 
5
 
45,276

 
100.0

 
 
100.0

 
 
 
Alexandria Technology Center® – Gateway
 
634,466

 
—

 
—

 
634,466

 
7
 
31,485

 
97.6

 
 
97.6

 
 
 
600, 630, 650, 681, 701, 901, and 951 Gateway Boulevard
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
201 Haskins Way
 
—

 
315,000

 
—

 
315,000

 
1
 
—

 
N/A

 
 
N/A

 
 
 
400 and 450 East Jamie Court
 
163,035

 
—

 
—

 
163,035

 
2
 
7,546

 
100.0

 
 
100.0

 
 
 
500 Forbes Boulevard
 
155,685

 
—

 
—

 
155,685

 
1
 
6,619

 
100.0

 
 
100.0

 
 
 
7000 Shoreline Court
 
136,395

 
—

 
—

 
136,395

 
1
 
6,065

 
100.0

 
 
100.0

 
 
 
341 and 343 Oyster Point Boulevard
 
107,960

 
—

 
—

 
107,960

 
2
 
5,497

 
100.0

 
 
100.0

 
 
 
849/863 Mitten Road/866 Malcolm Road
 
103,857

 
—

 
—

 
103,857

 
1
 
4,621

 
100.0

 
 
100.0

 
 
 
South San Francisco
 
2,173,903

 
362,199

 
—

 
2,536,102

 
20
 
107,109

 
99.3

 
 
99.3

 
 
Greater Stanford
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
Menlo Gateway(1)
 
251,995

 
520,988

 
—

 
772,983

 
3
 
9,234

 
100.0

 
 
100.0

 
 
 
100 Independence Drive and 125 and 135 Constitution Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria District for Science & Technology
 
—

 
526,178

 
—

 
526,178

 
2
 
—

 
N/A

 
 
N/A

 
 
 
825 and 835 Industrial Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria PARC
 
197,498

 
—

 
—

 
197,498

 
4
 
11,211

 
96.8

 
 
96.8

 
 
 
2100, 2200, 2300, and 2400 Geng Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Stanford Life Science District
 
190,270

 
—

 
—

 
190,270

 
2
 
13,902

 
100.0

 
 
100.0

 
 
 
3165 and 3170 Porter Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
960 Industrial Road
 
110,000

 
—

 
—

 
110,000

 
1
 
2,749

 
100.0

 
 
100.0

 
 
 
2425 Garcia Avenue/2400/2450 Bayshore Parkway
 
99,208

 
—

 
—

 
99,208

 
1
 
4,257

 
100.0

 
 
100.0

 
 
 
Shoreway Science Center
 
82,462

 
—

 
—

 
82,462

 
2
 
5,472

 
100.0

 
 
100.0

 
 
 
75 and 125 Shoreway Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1450 Page Mill Road
 
77,634

 
—

 
—

 
77,634

 
1
 
8,009

 
100.0

 
 
100.0

 
 
 
3350 West Bayshore Road
 
60,000

 
—

 
—

 
60,000

 
1
 
1,650

 
50.0

 
 
50.0

 
 
 
2625/2627/2631 Hanover Street
 
32,074

 
—

 
—

 
32,074

 
1
 
1,796

 
100.0

 
 
100.0

 
 
 
Greater Stanford
 
1,101,141

 
1,047,166

 
—

 
2,148,307

 
18
 
58,280

 
96.7

 
 
96.7

 
 
 
San Francisco
 
5,421,729

 
2,003,130

 
—

 
7,424,859

 
51
 
$
287,184

 
98.7
%
 
 
98.7
%
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.

 
 
Property Listing (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for Life Science – New York City
 
740,972

 
—

 
—

 
740,972

 
3
 
$
64,576

 
98.1
%
 
 
98.1
%
 
 
 
430 and 450 East 29th Street(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
219 East 42nd Street
 
349,947

 
—

 
—

 
349,947

 
1
 
14,006

 
100.0

 
 
100.0

 
 
 
Alexandria Center® – Long Island City
 
36,661

 
—

 
140,098

 
176,759

 
1
 
1,017

 
100.0

 
 
20.7

 
 
 
30-02 48th Avenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York City
 
1,127,580

 
—

 
140,098

 
1,267,678

 
5
 
79,599

 
98.8

 
 
87.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Torrey Pines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Spectrum
 
336,461

 
—

 
—

 
336,461

 
3
 
17,409

 
98.3

 
 
98.3

 
 
 
3215 Merryfield Row and 3013 and 3033 Science Park Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Torrey Ridge
 
294,326

 
—

 
—

 
294,326

 
3
 
13,811

 
96.0

 
 
96.0

 
 
 
10578, 10618, and 10628 Science Center Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Sunrise
 
236,635

 
—

 
—

 
236,635

 
3
 
8,865

 
99.7

 
 
99.7

 
 
 
10931/10933 and 10975 North Torrey Pines Road,
3010 Science Park Road, and 10996 Torreyana Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Nautilus
 
220,651

 
—

 
—

 
220,651

 
4
 
10,613

 
100.0

 
 
100.0

 
 
 
3530 and 3550 John Hopkins Court and 3535 and 3565 General Atomics Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3545 Cray Court
 
116,556

 
—

 
—

 
116,556

 
1
 
4,827

 
100.0

 
 
100.0

 
 
 
11119 North Torrey Pines Road
 
72,506

 
—

 
—

 
72,506

 
1
 
3,664

 
100.0

 
 
100.0

 
 
 
Torrey Pines
 
1,277,135

 
—

 
—

 
1,277,135

 
15
 
59,189

 
98.6

 
 
98.6

 
 
University Town Center
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria
 
1,067,847

 
98,000

 
—

 
1,165,847

 
6
 
36,468

 
94.0

 
 
94.0

 
 
 
9880, 10260, 10290(2), and 10300(2) Campus Point Drive and 4110(2) and 4161 Campus Point Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5200 Illumina Way
 
792,687

 
—

 
—

 
792,687

 
6
 
29,977

 
100.0

 
 
100.0

 
 
 
ARE Towne Centre
 
304,046

 
—

 
—

 
304,046

 
4
 
8,249

 
85.9

 
 
85.9

 
 
 
9363, 9373, 9393, and 9625(2) Towne Centre Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Esplanade
 
241,963

 
—

 
—

 
241,963

 
4
 
9,114

 
87.7

 
 
87.7

 
 
 
4755, 4757, and 4767 Nexus Center Drive and 4796 Executive Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
University Town Center
 
2,406,543

 
98,000

 
—

 
2,504,543

 
20
 
$
83,808

 
94.3
%
 
 
94.3
%
 
 
 

(1) In partnership with Columbia University, we expect to open our second LaunchLabs® site in New York City, a 13,298 RSF space at 3960 Broadway. Due to the small size of this project, it has been excluded from the “External
       Growth/Investments in Real Estate” section of this Supplemental Information. Consistent with our development and redevelopment projects, this project is excluded from our operating occupancy percentage during the period of
       development or redevelopment.
(2) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
 

 
 
Property Listing (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Diego (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sorrento Mesa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summers Ridge Science Park
 
316,531

 
—

 
—

 
316,531

 
4
 
$
10,843

 
100.0
%
 
 
100.0
%
 
 
 
9965, 9975, 9985, and 9995 Summers Ridge Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10121 and 10151 Barnes Canyon Road 
 
102,392

 
—

 
—

 
102,392

 
2
 
2,689

 
100.0

 
 
100.0

 
 
 
ARE Portola
 
101,857

 
—

 
—

 
101,857

 
3
 
3,236

 
100.0

 
 
100.0

 
 
 
6175, 6225, and 6275 Nancy Ridge Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5810/5820 Nancy Ridge Drive
 
82,272

 
—

 
—

 
82,272

 
1
 
2,364

 
100.0

 
 
100.0

 
 
 
7330 Carroll Road
 
66,244

 
—

 
—

 
66,244

 
1
 
2,431

 
100.0

 
 
100.0

 
 
 
5871 Oberlin Drive
 
33,817

 
—

 
—

 
33,817

 
1
 
—

 
—

 
 
—

 
 
 
Sorrento Mesa
 
703,113

 
—

 
—

 
703,113

 
12
 
21,563

 
95.2

 
 
95.2

 
 
Sorrento Valley
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3911, 3931, 3985, 4025, 4031, 4045, and 4075 Sorrento Valley Boulevard
 
191,378

 
—

 
—

 
191,378

 
7
 
5,243

 
94.3

 
 
94.3

 
 
 
11025, 11035, 11045, 11055, 11065, and 11075 Roselle Street
 
121,655

 
—

 
—

 
121,655

 
6
 
2,259

 
74.6

 
 
74.6

 
 
 
Sorrento Valley
 
313,033

 
—

 
—

 
313,033

 
13
 
7,502

 
86.6

 
 
86.6

 
 
I-15 Corridor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13112 Evening Creek Drive
 
109,780

 
—

 
—

 
109,780

 
1
 
2,972

 
100.0

 
 
100.0

 
 
 
San Diego
 
4,809,604

 
98,000

 
—

 
4,907,604

 
61
 
175,034

 
95.2

 
 
95.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Eastlake Life Science Campus by Alexandria – North Campus
 
547,044

 
80,221

 
—

 
627,265

 
5
 
28,273

 
96.7

 
 
96.7

 
 
 
1616 and 1551 Eastlake Avenue East, 188 and 199 East Blaine Street, and 1600 Fairview Avenue East
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Eastlake Life Science Campus by Alexandria – South Campus
 
206,134

 
—

 
—

 
206,134

 
2
 
11,953

 
100.0

 
 
100.0

 
 
 
1201 and 1208 Eastlake Avenue East
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
400 Dexter Avenue North
 
290,111

 
—

 
—

 
290,111

 
1
 
15,236

 
100.0

 
 
100.0

 
 
 
2301 5th Avenue
 
197,135

 
—

 
—

 
197,135

 
1
 
9,895

 
97.4

 
 
97.4

 
 
 
219 Terry Avenue North
 
30,705

 
—

 
—

 
30,705

 
1
 
1,844

 
100.0

 
 
100.0

 
 
 
601 Dexter Avenue North
 
18,680

 
—

 
—

 
18,680

 
1
 
425

 
100.0

 
 
100.0

 
 
 
Lake Union
 
1,289,809

 
80,221

 
—

 
1,370,030

 
11
 
67,626

 
98.2

 
 
98.2

 
 
Elliott Bay
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3000/3018 Western Avenue
 
47,746

 
—

 
—

 
47,746

 
1
 
1,839

 
100.0

 
 
100.0

 
 
 
410 West Harrison Street and 410 Elliott Avenue West
 
36,724

 
—

 
—

 
36,724

 
2
 
1,025

 
63.9

 
 
63.9

 
 
 
Elliott Bay
 
84,470

 
—

 
—

 
84,470

 
3
 
2,864

 
84.3

 
 
84.3

 
 
 
Seattle
 
1,374,279

 
80,221

 
—

 
1,454,500

 
14
 
$
70,490

 
97.3
%
 
 
97.3
%
 
 
 
 
 

 
 
Property Listing (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rockville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9800, 9900, 9920, and 9950 Medical Center Drive
 
383,956

 
258,904

 
—

 
642,860

 
8
 
$
14,278

 
95.6
%
 
 
95.6
%
 
 
 
9704, 9708, 9712, and 9714 Medical Center Drive
 
214,725

 
—

 
—

 
214,725

 
4
 
7,862

 
100.0

 
 
100.0

 
 
 
1330 Piccard Drive
 
131,511

 
—

 
—

 
131,511

 
1
 
3,562

 
100.0

 
 
100.0

 
 
 
1500 and 1550 East Gude Drive
 
90,489

 
—

 
—

 
90,489

 
2
 
1,681

 
100.0

 
 
100.0

 
 
 
14920 and 15010 Broschart Road
 
86,703

 
—

 
—

 
86,703

 
2
 
2,260

 
100.0

 
 
100.0

 
 
 
1405 Research Boulevard
 
72,170

 
—

 
—

 
72,170

 
1
 
2,100

 
87.9

 
 
87.9

 
 
 
5 Research Place
 
63,852

 
—

 
—

 
63,852

 
1
 
2,734

 
100.0

 
 
100.0

 
 
 
5 Research Court
 
51,520

 
—

 
—

 
51,520

 
1
 
1,087

 
65.7

 
 
65.7

 
 
 
9920 Belward Campus Drive
 
51,181

 
—

 
—

 
51,181

 
1
 
1,687

 
100.0

 
 
100.0

 
 
 
12301 Parklawn Drive
 
49,185

 
—

 
—

 
49,185

 
1
 
1,329

 
100.0

 
 
100.0

 
 
 
Rockville
 
1,195,292

 
258,904

 
—

 
1,454,196

 
22
 
38,580

 
96.4

 
 
96.4

 
 
Gaithersburg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg I
 
377,585

 
—

 
—

 
377,585

 
4
 
9,499

 
100.0

 
 
100.0

 
 
 
9 West Watkins Mill Road and 910, 930, and 940 Clopper Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg II
 
273,357

 
—

 
41,627

 
314,984

 
6
 
7,017

 
96.6

 
 
83.8

 
 
 
704 Quince Orchard Road(1), 708 Quince Orchard Road, and
19, 20, 21, and 22 Firstfield Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50 and 55 West Watkins Mill Road
 
96,915

 
—

 
—

 
96,915

 
2
 
2,168

 
79.4

 
 
79.4

 
 
 
401 Professional Drive
 
63,154

 
—

 
—

 
63,154

 
1
 
1,549

 
92.9

 
 
92.9

 
 
 
950 Wind River Lane
 
50,000

 
—

 
—

 
50,000

 
1
 
1,004

 
100.0

 
 
100.0

 
 
 
620 Professional Drive
 
27,950

 
—

 
—

 
27,950

 
1
 
1,191

 
100.0

 
 
100.0

 
 
 
Gaithersburg
 
888,961

 
—

 
41,627

 
930,588

 
15
 
22,428

 
96.2

 
 
91.9

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

 
—

 
—

 
191,884

 
1
 
2,455

 
96.6

 
 
96.6

 
 
Northern Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14225 Newbrook Drive
 
248,186

 
—

 
—

 
248,186

 
1
 
5,138

 
100.0

 
 
100.0

 
 
 
Maryland
 
2,524,323

 
258,904

 
41,627

 
2,824,854

 
39
 
$
68,601

 
96.7
%
 
 
95.1
%
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
 

 
 
Property Listing (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Alston
 
186,870

 
—

 
—

 
186,870

 
3
 
$
3,786

 
95.6
%
 
 
95.6
%
 
 
 
100, 800, and 801 Capitola Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase I – Research Triangle
 
129,946

 
—

 
45,054

 
175,000

 
1
 
3,802

 
100.0

 
 
74.3

 
 
 
5 Laboratory Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
108/110/112/114 TW Alexander Drive
 
158,417

 
—

 
—

 
158,417

 
1
 
4,681

 
100.0

 
 
100.0

 
 
 
Alexandria Innovation Center® – Research Triangle
 
135,677

 
—

 
—

 
135,677

 
3
 
3,717

 
100.0

 
 
100.0

 
 
 
7010, 7020, and 7030 Kit Creek Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 Davis Drive
 
100,000

 
—

 
—

 
100,000

 
1
 
1,964

 
97.8

 
 
97.8

 
 
 
7 Triangle Drive
 
96,626

 
—

 
—

 
96,626

 
1
 
3,156

 
100.0

 
 
100.0

 
 
 
2525 East NC Highway 54
 
82,996

 
—

 
—

 
82,996

 
1
 
3,680

 
100.0

 
 
100.0

 
 
 
407 Davis Drive
 
81,956

 
—

 
—

 
81,956

 
1
 
1,644

 
100.0

 
 
100.0

 
 
 
601 Keystone Park Drive
 
77,395

 
—

 
—

 
77,395

 
1
 
1,350

 
100.0

 
 
100.0

 
 
 
6040 George Watts Hill Drive
 
61,547

 
—

 
—

 
61,547

 
1
 
2,148

 
100.0

 
 
100.0

 
 
 
5 Triangle Drive
 
32,120

 
—

 
—

 
32,120

 
1
 
479

 
54.2

 
 
54.2

 
 
 
6101 Quadrangle Drive
 
30,122

 
—

 
—

 
30,122

 
1
 
540

 
100.0

 
 
100.0

 
 
 
Research Triangle
 
1,173,672

 
—

 
45,054

 
1,218,726

 
16
 
30,947

 
97.9

 
 
94.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
188,967

 
—

 
—

 
188,967

 
2
 
4,704

 
93.7

 
 
93.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-cluster markets
 
390,179

 
—

 
—

 
390,179

 
11
 
11,017

 
84.9

 
 
84.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America, excluding properties held for sale
 
23,469,757

 
2,480,852

 
245,815

 
26,196,424

 
255
 
1,136,566

 
97.4
%
 
 
96.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties held for sale
 
124,698

 
—

 
—

 
124,698

 
2
 
2,380

 
54.5
%
 
 
54.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total – North America
 
23,594,455

 
2,480,852

 
245,815

 
26,321,122

 
257
 
$
1,138,946

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
q219logo1.jpg
Disciplined Management of Ground-Up Developments
June 30, 2019
 
 


q219preleasing.jpg
(1)
Represents developments commenced since January 1, 2008, comprising 33 projects aggregating 8.3 million RSF.
(2)
Represents developments commenced and delivered since January 1, 2008, comprising 23 projects aggregating 5.5 million RSF.

 
 
Investments in Real Estate
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 

 
 
 
 
Development and Redevelopment
 
 
 
 
Operating
 
2019
 
2020
 
2021-2022
 
Future
 
Subtotal
 
Total
Investments in real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value as of June 30, 2019(1)
 
$
13,643,291

 
$
229,511

 
$
475,892

 
$
763,613

 
$
214,338

 
$
1,683,354

 
$
15,326,645

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Square footage(2)(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
 
24,499,227

 
—

 
—

 
—

 
—

 
—

 
24,499,227

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction
 
—

 
1,528,585

 
1,198,082

 
—

 
—

 
2,726,667

 
2,726,667

Pre-construction
 
—

 
—

 
1,010,188

 
1,070,925

 
—

 
2,081,113

 
2,081,113

Future
 
—

 
—

 
—

 
3,646,797

 
5,206,542

 
8,853,339

 
8,853,339

Total square footage
 
24,499,227

 
1,528,585

 
2,208,270

 
4,717,722

 
5,206,542

 
13,661,119

 
38,160,346

Value-creation square feet currently included in rental properties(4)
 
—

 
—

 
—

 
(351,185
)
 
(688,601
)
 
(1,039,786
)
 
(1,039,786
)
 
 
24,499,227

 
1,528,585

 
2,208,270

 
4,366,537

 
4,517,941

 
12,621,333

 
37,120,560

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent acquisitions – pending and completed square feet included in the amounts above(3)
 
904,772

 
—

 
342,000

 
—

 
1,535,938

 
1,877,938

 
2,782,710

    
(1)
Excludes 3Q19 completed and pending acquisitions. In addition, balances exclude our share of the cost basis associated with square footage of our unconsolidated properties, which is classified in investments in unconsolidated real estate joint ventures in our consolidated balance sheets.
(2)
Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.
(3)
Includes 3Q19 completed and pending acquisitions. Refer to “Acquisitions” of our Earnings Press Release for additional information.
(4)
Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.




 
 
 
 
New Class A Development and Redevelopment Properties: Recent Deliveries
q219logo1.jpg
 
 
June 30, 2019
 
 
 






399 Binney Street
 
266 and 275 Second Avenue
 
279 East Grand Avenue
 
681 Gateway Boulevard
Greater Boston/Cambridge
 
Greater Boston/Route 128
 
San Francisco/South San Francisco
 
San Francisco/South San Francisco
164,000 RSF
 
203,757 RSF
 
211,405 RSF
 
142,400 RSF
In Service:
 
In Service:
 
In Service:
 
In Service:
123,403
 RSF
|
100% Occupied
 
40,137
 RSF
|
100% Occupied
 
164,206
 RSF
|
100% Occupied
 
142,400
 RSF
|
89.2% Occupied
q219binney399.jpg
 
q219secondave.jpg
 
q219eastgrand279.jpg
 
q219gateway681.jpg
Alexandria PARC
 
188 East Blaine Street
 
Alexandria Center® for AgTech, Phase I
San Francisco/Greater Stanford
 
Seattle/Lake Union
 
Research Triangle/Research Triangle
197,498 RSF
 
198,000 RSF
 
175,000 RSF
In Service:
 
In Service:
 
In Service:
48,547
 RSF
|
96.8% Occupied
 
117,779
 RSF
|
100% Occupied
 
129,946
 RSF
|
100% Occupied
q219parc.jpg
 
q219eastblaine188.jpg
 
q219laboratory5.jpg

RSF presented represents RSF for the total project, unless otherwise indicated. Refer to “New Class A Development and Redevelopment Properties: Projected 2019-2020 Deliveries and Pre-Construction Projects” of this Supplemental Information for information on the RSF in service and under construction, if applicable.

 
 
New Class A Development and Redevelopment Properties: Recent Deliveries (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 



Property/Market/Submarket
 
Our Ownership Interest
 
Date Delivered
 
RSF Placed Into Service
 
Occupancy Percentage(1)
 
Total Project
 
Unlevered Yields
 
 
 
 
 
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
Prior to 10/1/18
 
4Q18
 
1Q19
 
2Q19
 
Total
 
 
RSF
 
Investment
 
 
Consolidated development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
213 East Grand Avenue/San Francisco/
South San Francisco
 
100%
 
12/31/18
 
—

 
300,930

 
—

 
—

 
300,930

 
100%
 
300,930

 
 
$
256,600

 
 
7.4
%
 
 
 
6.5
%
 
399 Binney Street/Greater Boston/Cambridge
 
100%
 
1/25/19
 
—

 
—

 
123,403

 
—

 
123,403

 
100%
 
164,000

 
 
$
182,000

 
 
7.7
%
 
 
 
7.2
%
 
279 East Grand Avenue/San Francisco/
South San Francisco
 
100%
 
Various
 
—

 
—

 
139,810

 
24,396

 
164,206

 
100%
 
211,405

 
 
$
151,000

 
 
7.8
%
 
 
 
8.1
%
 
188 East Blaine Street/Seattle/Lake Union
 
100%
 
Various
 
—

 
—

 
90,615

 
27,164

 
117,779

 
100%
 
198,000

 
 
$
190,000

 
 
6.7
%
 
 
 
6.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/
Route 128
 
100%
 
Various
 
27,315

 
—

 
—

 
12,822

 
40,137

 
100%
 
203,757

 
 
$
89,000

 
 
8.4
%
 
 
 
7.1
%
 
Alexandria Center® for AgTech, Phase I/
Research Triangle/Research Triangle
 
100%
 
Various
 
45,143

 
8,380

 
2,614

 
73,809

 
129,946

 
100%
 
175,000

 
 
$
77,100

 
 
7.6
%
 
 
 
7.5
%
 
9625 Towne Centre Drive/San Diego/
University Town Center
 
50.1%
 
11/1/18
 
—

 
163,648

 
—

 
—

 
163,648

 
100%
 
163,648

 
 
$
89,000

 
 
7.3
%
 
 
 
7.3
%
 
9900 Medical Center Drive/Maryland/Rockville
 
100%
 
11/19/18
 
—

 
45,039

 
—

 
—

 
45,039

 
60.6%
 
45,039

 
 
$
16,800

 
 
8.6
%
 
 
 
8.4
%
 
681 Gateway Boulevard/San Francisco/
South San Francisco
 
100%
 
Various
 
—

 
—

 
66,000

 
76,400

 
142,400

 
89.2%
 
142,400

 
 
$
116,300

 
 
8.5
%
 
 
 
8.2
%
 
Alexandria PARC/San Francisco/Greater Stanford
 
100%
 
3/29/19
 
—

 
—

 
48,547

 
—

 
48,547

 
96.8%
 
197,498

 
 
$
152,600

 
 
7.3
%
 
 
 
6.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture redevelopment project
(RSF represents 100%; dollars and yields represent our share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
56.8%
 
Various
 
—

 
4,762

 
10,250

 
3,470

 
18,482

 
100%
 
79,931

 
 
$
13,300

 
 
8.9
%
 
 
 
8.8
%
 
Total
 
 
 
 
 
72,458

 
522,759

 
481,239

 
218,061

 
1,294,517

 
 
 
 
 
 
 
 
 
7.6
%
 
 
 
7.1
%
 

(1)
Relates to total operating RSF in service as of June 30, 2019.


 
New Class A Development and Redevelopment Properties: Projected 2019 Deliveries
q219logo1.jpg
 
 
June 30, 2019
 
 
 


399 Binney Street
 
266 and 275 Second Avenue
 
1655 and 1725 Third Street
 
279 East Grand Avenue
Greater Boston/Cambridge
 
Greater Boston/Route 128
 
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
164,000 RSF
 
203,757 RSF
 
593,765 RSF
 
211,405 RSF
q219binney399.jpg
 
q219secondave.jpg
 
q219gsw.jpg
 
q219eastgrand279.jpg

Menlo Gateway
 
Alexandria Center® –
Long Island City
 
188 East Blaine Street
 
704 Quince Orchard Road
 
Alexandria Center® for AgTech, Phase I
San Francisco/Greater Stanford
 
New York City/New York City
 
Seattle/Lake Union
 
Maryland/Gaithersburg
 
Research Triangle/Research Triangle
772,983 RSF
 
176,759 RSF
 
198,000 RSF
 
79,931 RSF
 
175,000 RSF
q219menlogateway.jpg
 
q219bindery.jpg
 
q219eastblaine188.jpg
 
q219quince.jpg
 
q219laboratory5.jpg

Square footage represents development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.

Refer to “New Class A Development and Redevelopment Properties: Recent Deliveries” and “New Class A Development and Redevelopment Properties: Projected 2019-2020 Deliveries and Pre-Construction Projects” of this Supplemental Information for information on the RSF in service and under construction.

 
New Class A Development and Redevelopment Properties: Projected 2020 Deliveries and
Pre-Construction Projects
q219logo1.jpg
 
 
June 30, 2019
 
 
 

88 Bluxome Street
 
201 Haskins Way
 
Alexandria District for Science and Technology(1)
 
3115 Merryfield Row
 
9880 Campus Point Drive and
4150 Campus Point Court
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
 
San Francisco/Greater Stanford
 
San Diego/Torrey Pines
 
San Diego/University Town Center
1,070,925 RSF
 
315,000 RSF
 
526,178 RSF
 
87,000 RSF
 
269,102 RSF
q219bluxome.jpg
 
q219haskinsway.jpg
 
q219industrialroad.jpg
 
q219spectrum.jpg
 
q219campus9880.jpg

1165 Eastlake Avenue East
 
9800 Medical Center Drive
 
9950 Medical Center Drive
 
8 Davis Drive
 
Alexandria Center® for AgTech, Phase II
Seattle/Lake Union
 
Maryland/Rockville
 
Maryland/Rockville
 
Research Triangle/Research Triangle
 
Research Triangle/Research Triangle
100,086 RSF
 
174,640 RSF
 
84,264 RSF
 
150,000 RSF
 
160,000 RSF
q219eastlake1165.jpg
 
q219medical9800.jpg
 
q219medical9950.jpg
 
q219davis8.jpg
 
q219laboratory9.jpg


Square footage represents development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.

(1)
Campus includes 825 and 835 Industrial Road.

 
New Class A Development and Redevelopment Properties: Projected 2019–2020 Deliveries and
Pre-Construction Projects
q219logo1.jpg
 
 
June 30, 2019
 
 
 

 
 
 
 
Square Footage
 
 
 
 
 
 
 
Project Start/Projected Start
 
 
 
 
Property/Market/Submarket
 
Dev/Redev
 
 
 
CIP
 
Total Project
 
Percentage
 
 
Occupancy(1)
 
 
In Service
 
Construction
 
Pre-Construction
 
Total
 
 
Leased
 
Leased/Negotiating
 
 
Initial
 
Stabilized
2019 deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/Route 128
 
Redev
 
184,721

 
19,036

 
—

 
19,036

 
203,757

 
100
%
 
 
100
%
 
 
3Q17
 
1Q18
 
2019
Alexandria Center® for AgTech, Phase I/Research Triangle/
Research Triangle
 
Redev
 
129,946

 
45,054

 
—

 
45,054

 
175,000

 
97

 
 
100

 
 
2Q17
 
2Q18
 
2019
399 Binney Street/Greater Boston/Cambridge
 
Dev
 
123,403

 
40,597

 
—

 
40,597

 
164,000

 
98

 
 
98

 
 
4Q17
 
1Q19
 
2019
279 East Grand Avenue/San Francisco/South San Francisco
 
Dev
 
164,206

 
47,199

 
—

 
47,199

 
211,405

 
100

 
 
100

 
 
4Q17
 
1Q19
 
2020
188 East Blaine Street/Seattle/Lake Union
 
Dev
 
117,779

 
80,221

 
—

 
80,221

 
198,000

 
67

 
 
79

 
 
2Q18
 
1Q19
 
2020
Alexandria Center® – Long Island City/New York City/
New York City
 
Redev
 
36,661

 
140,098

 
—

 
140,098

 
176,759

 
21

 
 
21

 
 
4Q18
 
4Q19
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 deliveries: unconsolidated joint venture projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(amounts represent 100%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
Redev
 
38,304

 
41,627

 
—

 
41,627

 
79,931

 
48

 
 
67

 
 
1Q18
 
4Q18
 
2019
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
Dev
 
—

 
593,765

 
—

 
593,765

 
593,765

 
100

 
 
100

 
 
1Q18
 
3Q19
 
3Q19
Menlo Gateway/San Francisco/Greater Stanford
 
Dev
 
251,995

 
520,988

 
—

 
520,988

 
772,983

 
100

 
 
100

 
 
4Q17
 
4Q19
 
4Q19
2019 deliveries
 
 
 
1,047,015

 
1,528,585

 
—

 
1,528,585

 
2,575,600

 
90

 
 
92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9880 Campus Point Drive and 4150 Campus Point Court/
San Diego/University Town Center(2)
 
Dev
 
—

 
98,000

 
171,102

 
269,102

 
269,102

 
66

 
 
69

 
 
1Q19
 
2020
 
2022
9800 Medical Center Drive/Maryland/Rockville
 
Dev
 
—

 
174,640

 
—

 
174,640

 
174,640

 
82

 
 
82

 
 
1Q19
 
2020
 
2020
9950 Medical Center Drive/Maryland/Rockville
 
Dev
 
—

 
84,264

 
—

 
84,264

 
84,264

 
100

 
 
100

 
 
1Q19
 
2020
 
2020
201 Haskins Way/San Francisco/South San Francisco
 
Dev
 
—

 
315,000

 
—

 
315,000

 
315,000

 
—

 
 
29

 
 
2Q19
 
2020
 
2021
Alexandria District for Science and Technology/San Francisco/
Greater Stanford
 
Dev
 
—

 
526,178

 
—

 
526,178

 
526,178

 
37

 
 
46

 
 
2Q19
 
2020
 
2021
 
 
 
 

 

 

 

 

 
74
%
 
 
79
%
 
 
 
 
 
 
 
2020 projected deliveries: marketing and pre-construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3Q19 acquisitions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pending acquisition/San Francisco Bay Area(3)
 
Redev
 
—

 
—

 
250,000

 
250,000

 
250,000

 
 
 
 
 
 
 
3Q19
 
2020
 
2021/22
Pending acquisition/San Francisco Bay Area(3)
 
Redev
 
—

 
—

 
92,000

 
92,000

 
92,000

 
 
 
 
 
 
 
3Q19
 
2020
 
2021
1165 Eastlake Avenue East/Seattle/Lake Union
 
Dev
 
—

 
—

 
100,086

 
100,086

 
100,086

 
 
 
 
 
 
 
4Q19
 
2020
 
2020
8 Davis Drive/Research Triangle/Research Triangle
 
Dev
 
—

 
—

 
150,000

 
150,000

 
150,000

 
 
 
 
 
 
 
4Q19
 
2020
 
2021
Alexandria Center® for AgTech, Phase II/Research Triangle/
Research Triangle
 
Dev
 
—

 
—

 
160,000

 
160,000

 
160,000

 
 
 
 
 
 
 
4Q19
 
2020
 
2021
3115 Merryfield Row/San Diego/Torrey Pines
 
Dev
 
—

 
—

 
87,000

 
87,000

 
87,000

 
 
 
 
 
 
 
4Q19
 
2020
 
2021
2020 projected deliveries
 
 
 
—

 
1,198,082

 
1,010,188

 
2,208,270

 
2,208,270

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-leased pre-construction project:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88 Bluxome Street/San Francisco/Mission Bay/SoMa
 
Dev
 
—

 
—

 
1,070,925
 
1,070,925
 
1,070,925
 
58
%
 
 
58
%
 
 
2020
 
2022
 
TBD
Total
 
 
 
1,047,015

 
2,726,667

 
2,081,113
 
4,807,780
 
5,854,795
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Initial occupancy dates are subject to leasing and/or market conditions. Multi-tenant projects may have occupancy by tenants over a period of time. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy.
(2)
Refer to footnote 3 on the next page.
(3)
Pending acquisitions anticipated to be undergoing construction in 3Q19. Refer to “Acquisitions” in our Earnings Press Release for additional information.

New Class A Development and Redevelopment Properties: Projected 2019–2020 Deliveries and
Pre-Construction Projects (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


 
 
Our Ownership Interest
 
 
 
 
 
Cost to Complete
 
 
 
 
Unlevered Yields
Property/Market/Submarket
 
 
In Service
 
CIP
 
Construction Loan
 
ARE
Funding
 
Total at
Completion
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
 
 
2019 deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/Route 128
 
100
%
 
 
$
79,231

 
$
6,712

 
 
$
—

 
 
$
3,057

 
$
89,000

 
 
 
8.4
%
 
 
 
7.1
%
 
Alexandria Center® for AgTech, Phase I/Research Triangle/Research Triangle(1)
 
100
%
 
 
51,984

 
18,383

 
 
—

 
 
6,733

 
77,100

 
 
 
7.6

 
 
 
7.5

 
399 Binney Street/Greater Boston/Cambridge
 
100
%
 
 
135,088

 
42,258

 
 
—

 
 
4,654

 
182,000

 
 
 
7.7

 
 
 
7.2

 
279 East Grand Avenue/San Francisco/South San Francisco
 
100
%
 
 
85,655

 
42,369

 
 
—

 
 
22,976

 
151,000

 
 
 
7.8

 
 
 
8.1

 
188 East Blaine Street/Seattle/Lake Union
 
100
%
 
 
91,075

 
51,957

 
 
—

 
 
46,968

 
190,000

 
 
 
6.7

 
 
 
6.7

 
Alexandria Center® – Long Island City/New York City/New York City
 
100
%
 
 
16,107

 
67,832

 
 
—

 
 
100,361

 
184,300

 
 
 
5.5

 
 
 
5.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 deliveries: unconsolidated joint venture projects(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(amounts represent our share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
56.8
%
 
 
4,301

 
4,275

 
 
3,952

 
 
772

 
13,300

 
 
 
8.9

 
 
 
8.8

 
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
10.0
%
 
 
—

 
65,482

 
 
11,537

 
 
981

 
78,000

 
 
 
7.8

 
 
 
6.0

 
Menlo Gateway/San Francisco/Greater Stanford
 
48.3
%
 
 
125,779

 
222,228

 
 
74,940

 
 
7,053

 
430,000

 
 
 
6.9

 
 
 
6.3

 
2019 deliveries
 
 
 
 
589,220

 
521,496

 
 
90,429

 
 
193,555

 
1,394,700

 
 
 
7.1

 
 
 
6.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9880 Campus Point Drive and 4150 Campus Point Court/San Diego/
University Town Center(3)
 
100
%
 
 
—

 
98,463

 
 
—

 
 
156,537

 
255,000

 
 
 
6.3

(3) 
 
 
6.4

(3) 
9800 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
—

 
19,997

 
 
—

 
 
75,403

 
95,400

 
 
 
7.7

 
 
 
7.2

 
9950 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
—

 
9,753

 
 
—

 
 
44,547

 
54,300

 
 
 
7.3

 
 
 
6.8

 
201 Haskins Way/San Francisco/South San Francisco
 
100
%
 
 
—

 
91,459

 
 
—

 
 
204,541

 
296,000

 
 
 
6.6

 
 
 
6.6

 
Alexandria District for Science and Technology/San Francisco/Greater Stanford
 
100
%
 
 
—

 
188,255

 
 
—

 
 
388,745

 
577,000

 
 
 
6.5

 
 
 
6.2

 
 
 
 
 
 
—

 
407,927

 
 
—

 

869,773

 
1,277,700

 
 
 
6.6

 
 
 
6.4

 
 
 
 
 
 

 

 
 
$
90,429

 
 
$
1,063,328

 
$
2,672,400

 
 
 
6.9
%
 
 
 
6.6
%
 
2020 projected deliveries: marketing and pre-construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1165 Eastlake Avenue East/Seattle/Lake Union
 
100
%
 
 
—

 
31,115

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8 Davis Drive/Research Triangle/Research Triangle
 
100
%
 
 
—

 
2,880

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase II/Research Triangle/Research Triangle(1)
 
100
%
 
 
—

 
2,774

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3115 Merryfield Row/San Diego/Torrey Pines
 
100
%
 
 
—

 
31,196

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries
 
 
 
 
—

 
475,892

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
$
589,220

 
$
997,388

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
New strategic collaborative campus, Alexandria Center® for AgTech – Research Triangle consists of Phase I at 5 Laboratory Drive, including campus amenities, and Phase II at 9 Laboratory Drive. 5 Laboratory Drive includes the high-quality LaunchLabs and amenities that create a dynamic ecosystem to accelerate discovery and commercialization.
(2)
Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
(3)
Represents a two-phase development project as follows:
•
Initial phase represents 9880 Campus Point Drive, a 98,000 RSF project to development GradLabs™, a highly flexible, first-of-its-kind life science platform designed to provide post-seed-stage life science companies with turnkey, fully furnished office/laboratory suites and an accelerated, scalable path for growth.  As of July 29, 2019, the project is 7% leased and we expect initial occupancy in 2020. The previous R&D building located at 9880 Campus Point Drive was previously demolished and as of June 30, 2019, continues to be included in our same property performance results. Refer to the “Same Property Comparison” section in “Definitions and Reconciliations” of this Supplemental Information for additional information.
•
Subsequent phase represents 4150 Campus Point Court, a 171,102 RSF, 100% leased pre-construction project with occupancy expected in 2022.
•
Project costs represent development costs for 9880 Campus Point Drive and 4150 Campus Point Court. Yields represent expected returns for Campus Pointe by Alexandria including 9880, 10290 and 10300 Campus Point Drive and 4150 Campus Point Court.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 



Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries(1)
 
 
 
 
 
 
 
 
2019
 
2020
 
2021–2022
 
Future
 
 
 
 
 
 
Construction
 
Construction
 
Pre-Construction
 
Pre-Construction
 
Intermediate-Term
 
 
Total
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
399 Binney Street (Alexandria Center® at One Kendall Square)/Cambridge
 
100
%
 
 
$
42,258

 
40,597

 
—

 
—

 
—

 
—

 
—

 
40,597

 
266 and 275 Second Avenue/Route 128
 
100
%
 
 
6,712

 
19,036

 
—

 
—

 
—

 
—

 
—

 
19,036

 
325 Binney Street/Cambridge
 
100
%
 
 
104,421

 
—

 
—

 
—

 
—

 
208,965

(2) 
—

 
208,965

 
15 Necco Street/Seaport Innovation District
 
100
%
 
 
159,242

 
—

 
—

 
—

 
—

 
293,000

 
—

 
293,000

 
99 A Street/Seaport Innovation District
 
96.9
%
 
 
38,681

 
—

 
—

 
—

 
—

 
235,000

(3) 
—

 
235,000

 
Alexandria Technology Square®/Cambridge
 
100
%
 
 
7,787

 
—

 
—

 
—

 
—

 
—

 
100,000

 
100,000

 
100 Tech Drive/Route 128
 
100
%
 
 
—

 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
215 Presidential Way/Route 128
 
100
%
 
 
5,481

 
—

 
—

 
—

 
—

 
—

 
130,000

 
130,000

 
231 Second Avenue/Route 128
 
100
%
 
 
1,251

 
—

 
—

 
—

 
—

 
—

 
32,000

 
32,000

 
10 Necco Street/Seaport Innovation District
 
100
%
 
 
83,425

 
—

 
—

 
—

 
—

 
—

 
175,000

 
175,000

 
Other value-creation projects
 
100
%
 
 
8,592

 
—

 
—

 
—

 
—

 
—

 
41,955

 
41,955

 
 
 
 
 
 
457,850

 
59,633

 
—

 
—

 
—

 
736,965

 
778,955

 
1,575,553

 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1655 and 1725 Third Street/Mission Bay/SoMa
 
10.0
%
 
 
(4)

 
593,765

 
—

 
—

 
—

 
—

 
—

 
593,765

 
279 East Grand Avenue/South San Francisco
 
100
%
 
 
42,369

 
47,199

 
—

 
—

 
—

 
—

 
—

 
47,199

 
Menlo Gateway/Greater Stanford
 
48.3
%
 
 
(4)

 
520,988

 
—

 
—

 
—

 
—

 
—

 
520,988

 
201 Haskins Way/South San Francisco
 
100
%
 
 
91,459

 
—

 
315,000

 
—

 
—

 
—

 
—

 
315,000

 
Alexandria District for Science and Technology/
Greater Stanford
 
100
%
 
 
188,255

 
—

 
526,178

 
—

 
—

 
—

 
—

 
526,178

 
Pending acquisition/San Francisco Bay Area
 
(5
)
 
 
(5)

 
—

 
—

 
250,000

 
—

 
—

 
—

 
250,000

 
Pending acquisition/San Francisco Bay Area
 
(5
)
 
 
(5)

 
—

 
—

 
92,000

 
—

 
—

 
—

 
92,000

 
88 Bluxome Street/Mission Bay/SoMa
 
100
%
 
 
182,805

 
—

 
—

 
—

 
1,070,925

(3) 
—

 
—

 
1,070,925

 
505 Brannan Street, Phase II/Mission Bay/SoMa
 
99.7
%
 
 
17,038

 
—

 
—

 
—

 
—

 
165,000

 
—

 
165,000

 
960 Industrial Road/Greater Stanford
 
100
%
 
 
86,402

 
—

 
—

 
—

 
—

 
533,000

(3) 
—

 
533,000

 
East Grand Avenue/South San Francisco
 
100
%
 
 
6,008

 
—

 
—

 
—

 
—

 
—

 
90,000

 
90,000

 
Pending acquisition/San Francisco Bay Area
 
(5
)
 
 
(5)

 
—

 
—

 
—

 
—

 
—

 
700,000

 
700,000

 
Other value-creation projects
 
100
%
 
 
45,237

 
—

 
—

 
—

 
—

 
418,000

 
25,000

 
443,000

 
 
 
 
 
 
$
659,573

 
1,161,952

 
841,178

 
342,000

 
1,070,925

 
1,116,000

 
815,000

 
5,347,055

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)    Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.
(2)    We are seeking additional entitlements to increase the density of the site from its current 208,965 RSF.
(3)    Represents total square footage upon completion of development of a new Class A property. RSF presented includes rentable square footage of buildings currently in operation at properties that were recently acquired for their inherent future development opportunities, with the intent to demolish the existing property upon expiration of the existing in-place leases and commencement of future construction. Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.
(4)    This property is held by an unconsolidated real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(5)    Refer to “Acquisitions” in our Earnings Press Release for additional information.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries(1)
 
 
 
 
 
 
 
 
2019
 
2020
 
2021–2022
 
Future
 
 
 
 
 
 
Construction
 
Construction
 
Pre-Construction
 
Pre-Construction
 
Intermediate-Term
 
 
Total
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® – Long Island City/New York City
 
100
%
 
 
$
67,832

 
140,098

 
—

 
—

 
—

 
—

 
—

 
140,098

 
Alexandria Center® for Life Science – New York City/New York City
 
100
%
 
 
19,159

 
—

 
—

 
—

 
—

 
550,000

 
—

 
550,000

 
219 East 42nd Street/New York City
 
100
%
 
 
—

 
—

 
—

 
—

 
—

 
—

 
579,947

(2) 
579,947

 
Other value-creation projects
 
(3
)
 
 
(3)

 
—

 
—

 
—

 
—

 
—

 
135,938

 
135,938

 
 
 
 
 
 
86,991

 
140,098

 
—

 
—

 
—

 
550,000

 
715,885

 
1,405,983

 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria/University Town Center
 
(4
)
 
 
140,263

 
—

 
98,000

 
171,102

 
—

 
120,000

 
410,345

(4) 
799,447

 
3115 Merryfield Row/Torrey Pines
 
100
%
 
 
31,196

 
—

 
—

 
87,000

 
—

 
—

 
—

 
87,000

 
5200 Illumina Way/University Town Center
 
100
%
 
 
11,734

 
—

 
—

 
—

 
—

 
451,832

 
—

 
451,832

 
Townsgate by Alexandria/Del Mar Heights
 
100
%
 
 
18,749

 
—

 
—

 
—

 
—

 
125,000

 
—

 
125,000

 
4075 Sorrento Valley Boulevard/Sorrento Valley
 
100
%
 
 
7,545

 
—

 
—

 
—

 
—

 
—

 
149,000

(5) 
149,000

 
Vista Wateridge/Sorrento Mesa
 
100
%
 
 
4,022

 
—

 
—

 
—

 
—

 
—

 
163,000

 
163,000

 
Pending acquisition/San Diego
 
(3
)
 
 
(3)

 
—

 
—

 
—

 
—

 
—

 
700,000

 
700,000

 
Other value-creation projects
 
100
%
 
 
5,931

 
—

 
—

 
—

 
—

 
—

 
222,895

 
222,895

 
 
 
 
 
 
219,440

 
—

 
98,000

 
258,102

 
—

 
696,832

 
1,645,240

 
2,698,174

 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
188 East Blaine Street/Lake Union
 
100
%
 
 
51,957

 
80,221

 
—

 
—

 
—

 
—

 
—

 
80,221

 
1165 Eastlake Avenue East/Lake Union
 
100
%
 
 
31,115

 
—

 
—

 
100,086

 
—

 
—

 
—

 
100,086

 
1150 Eastlake Avenue East/Lake Union
 
100
%
 
 
27,810

 
—

 
—

 
—

 
—

 
260,000

 
—

 
260,000

 
701 Dexter Avenue North/Lake Union
 
100
%
 
 
39,577

 
—

 
—

 
—

 
—

 
217,000

 
—

 
217,000

 
601 Dexter Avenue/Lake Union
 
100
%
 
 
29,837

 
—

 
—

 
—

 
—

 
—

 
188,400

(5) 
188,400

 
 
 
 
 
 
$
180,296

 
80,221

 
—

 
100,086

 
—

 
477,000

 
188,400

 
845,707

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)    Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.
(2)    Includes 349,947 RSF in operation with an opportunity to either convert the existing office space into office/laboratory space through future redevelopment or to expand the building by an additional 230,000 RSF through ground-up development. The building is currently occupied by Pfizer Inc. with a remaining lease term of six years.
(3)     Refer to “Acquisitions” in our Earnings Press Release for additional information.
(4)    RSF consists of our 1Q19 acquisition of 4161 Campus Point Court aggregating 159,884 RSF and 10260 Campus Point Drive aggregating 109,164 RSF. Both of these buildings are currently operating under short-term leases. Upon lease expirations, we expect to demolish 4161 Campus Point Court and combine its RSF with other existing entitlements at this campus to complete a new ground-up development aggregating 301,181 RSF. We also expect to convert 10260 Campus Point Drive to office/laboratory space through redevelopment. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(5)     Represents total square footage upon completion of development of a new Class A property. RSF presented includes rentable square footage of buildings currently in operation at properties that were recently acquired for their inherent future development opportunities, with the intent to demolish the existing property upon expiration of the existing in-place leases and commencement of future construction. Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries(1)
 
 
 
 
 
 
 
 
2019
 
2020
 
2021–2022
 
Future
 
 
 
 
 
 
Construction
 
Construction
 
Pre-Construction
 
Pre-Construction
 
Intermediate-Term
 
 
Total
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Gaithersburg
 
56.8
%
 
 
(2)

 
41,627

 
—

 
—

 
—

 
—

 
—

 
41,627

 
9800 Medical Center Drive/Rockville
 
100
%
 
 
$
21,212

 
—

 
174,640

 
—

 
—

 
—

 
64,000

 
238,640

 
9950 Medical Center Drive/Rockville
 
100
%
 
 
9,753

 
—

 
84,264

 
—

 
—

 
—

 
—

 
84,264

 
 
 
 
 
 
30,965

 
41,627

 
258,904

 
—

 
—

 
—

 
64,000

 
364,531

 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase I/
Research Triangle
 
100
%
 
 
18,383

 
45,054

 
—

 
—

 
—

 
—

 
—

 
45,054

 
Alexandria Center® for AgTech, Phase II/
Research Triangle
 
100
%
 
 
2,774

 
—

 
—

 
160,000

 
—

 
—

 
—

 
160,000

 
8 Davis Drive/Research Triangle
 
100
%
 
 
3,594

 
—

 
—

 
150,000

 
—

 
70,000

 
—

 
220,000

 
6 Davis Drive/Research Triangle
 
100
%
 
 
15,499

 
—

 
—

 
—

 
—

 
—

 
800,000

 
800,000

 
Other value-creation projects
 
100
%
 
 
4,149

 
—

 
—

 
—

 
—

 
—

 
76,262

 
76,262

 
 
 
 
 
 
44,399

 
45,054

 
—

 
310,000

 
—

 
70,000

 
876,262

 
1,301,316

 
Other value-creation projects
 
100
%
 
 
3,840

 
—

 
—

 
—

 
—

 
—

 
122,800

 
122,800

 
 
 
 
 
 
$
1,683,354

 
1,528,585

 
1,198,082

 
1,010,188

 
1,070,925

 
3,646,797

 
5,206,542

 
13,661,119

(3) 
 
 
 
 
 
 
 
2,726,667
 
2,081,113
 
8,853,339
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.
(2)
This property is held by an unconsolidated real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(3)
Total rentable square footage includes 1.0 million RSF of buildings currently in operation that will be redeveloped or replaced with new development RSF upon commencement of future construction. Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.

 
 
Construction Spending
q219logo1.jpg
June 30, 2019
(Dollars in thousands, except per RSF amounts)
 
 


 
 
Six Months Ended
 
Construction Spending
 
June 30, 2019
 
Additions to real estate – consolidated projects
 
$
577,322
 
 
Investments in unconsolidated real estate joint ventures
 
 
95,950
 
 
Contributions from noncontrolling interests
 
 
(5,523
)
 
Construction spending (cash basis)(1)
 
 
667,749
 
 
Change in accrued construction
 
 
5,558
 
 
Construction spending for the six months ended June 30, 2019
 
 
673,307
 
 
Projected construction spending for the six months ending December 31, 2019
 
 
626,693
 
 
Guidance midpoint
 
$
1,300,000
 
 



 
 
 
 
 
 
 
 
Year Ending
 
Projected Construction Spending
 
December 31, 2019
 
Development, redevelopment, and pre-construction projects
 
$
1,041,000
 
 
Investments in unconsolidated real estate joint ventures
 
 
102,000
 
 
Contributions from noncontrolling interests (consolidated real estate joint ventures)
 
 
(22,000
)
 
Generic laboratory infrastructure/building improvement projects
 
 
150,000
 
 
Non-revenue-enhancing capital expenditures and tenant improvements
 
 
29,000
 
 
Guidance midpoint
 
$
1,300,000
 
 
 
 
 
 
 
 
 
Non-Revenue-Enhancing Capital Expenditures(2)
 
Six Months Ended
 
Recent Average
per RSF(3)
 
 
June 30, 2019
 
 
 
Amount
 
Per RSF
 
 
Non-revenue-enhancing capital expenditures
 
$
5,257

 
$
0.23

 
 
$
0.50

 
 
 
 
 
 
 
 
 
 
Tenant improvements and leasing costs:
 
 
 
 
 
 
 
 
Re-tenanted space
 
$
14,425

 
$
26.59

 
 
$
22.26

 
Renewal space
 
8,185

 
14.75

 
 
13.74

 
Total tenant improvements and leasing costs/weighted average
 
$
22,610

 
$
20.60

 
 
$
17.15

 


 


(1)
Includes revenue-enhancing projects and non-revenue-enhancing capital expenditures.
(2)
Excludes amounts that are recoverable from tenants, related to revenue-enhancing capital expenditures, or related to properties that have undergone redevelopment.
(3)
Represents the average of 2015 to 2018 and the six months ended June 30, 2019, annualized.

 
 
Joint Venture Financial Information
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


Consolidated Real Estate Joint Ventures
(controlled by us through contractual rights or majority voting rights)
 
Unconsolidated Real Estate Joint Ventures
(controlled jointly or by our JV partners through contractual rights or majority voting rights)
Property/Market/Submarket
 
Noncontrolling
Interest Share(1)
 
Property/Market/Submarket
 
Our Ownership Share(2)
75/125 Binney Street/Greater Boston/Cambridge
 
 
60.0
%
 
 
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
 
10.0
%
 
225 Binney Street/Greater Boston/Cambridge
 
 
70.0
%
 
 
Menlo Gateway/San Francisco/Greater Stanford
 
 
48.3
%
(3) 
409 and 499 Illinois Street/San Francisco/Mission Bay/SoMa
 
 
40.0
%
 
 
1401/1413 Research Boulevard/Maryland/Rockville
 
 
65.0
%
(4) 
1500 Owens Street/San Francisco/Mission Bay/SoMa
 
 
49.9
%
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
 
56.8
%
(4) 
Campus Pointe by Alexandria/San Diego/University Town Center(5)
 
 
45.0
%
 
 
 
 
 
 
 
9625 Towne Centre Drive/San Diego/University Town Center
 
 
49.9
%
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
As of June 30, 2019
 
 
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
Investments in real estate
$
713,892

 
 
$
444,845

 
 
Cash and cash equivalents
 
21,439

 
 
 
7,350

 
 
Restricted cash
 
—

 
 
 
99

 
 
Other assets
 
70,029

 
 
 
28,881

 
 
Secured notes payable (refer to page 49)
 
—

 
 
 
(117,103
)
 
 
Other liabilities
 
(22,911
)
 
 
 
(29,910
)
 
 
Redeemable noncontrolling interests
 
(10,994
)
 
 
 
—

 
 
 
$
771,455

 
 
$
334,162

 
 
 
 
 
 
 
 
 
 
 
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
June 30, 2019
 
June 30, 2019
 
Three Months Ended
 
Six Months Ended
 
Three Months Ended
 
Six Months Ended
Total revenues
$
20,874

 
 
$
38,679

 
 
$
3,230

 
 
$
6,051

 
Rental operations
 
(5,842
)
 
 
 
(10,752
)
 
 
 
(723
)
 
 
 
(1,290
)
 
 
 
15,032

 
 
 
27,927

 
 
 
2,507

 
 
 
4,761

 
General and administrative
 
(94
)
 
 
 
(128
)
 
 
 
(33
)
 
 
 
(65
)
 
Interest
 
—

 
 
 
—

 
 
 
(239
)
 
 
 
(469
)
 
Depreciation and amortization
 
(6,744
)
 
 
 
(12,163
)
 
 
 
(973
)
 
 
 
(1,819
)
 
Fixed returns allocated to redeemable noncontrolling interests(6)
 
218

 
 
 
435

 
 
 
—

 
 
 
—

 
 
$
8,412

 
 
$
16,071

 
 
$
1,262

 
 
$
2,408

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line rent and below-market lease revenue
$
779

 
 
$
1,801

 
 
$
563

 
 
$
1,016

 
Funds from operations
$
15,156

 
 
$
28,234

 
 
$
2,235

 
 
$
4,227

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in four other joint ventures in North America.
(2)
In addition to the unconsolidated real estate joint ventures listed, we hold one other insignificant unconsolidated real estate joint venture in North America.
(3)
As of June 30, 2019, we had a 48.3% ownership interest in Menlo Gateway and expect our ownership to increase to 49% through future funding of construction costs in 2019.
(4)
Represents our ownership interest; our voting interest is limited to 50%.
(5)
Includes 10290 and 10300 Campus Point Drive and 4110 Campus Point Court in our University Town Center submarket.
(6)
Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These redeemable noncontrolling interests earn a fixed return on their investment rather than participate in the operating results of the property.

 
 
Investments
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


    
We present our equity investments at fair value whenever fair value or net asset value (“NAV”) is readily available. Adjustments for our limited partnership investments represent changes in reported NAV as a practical expedient to estimate fair value. For investments without readily available fair values, we adjust the carrying amount whenever such investments have an observable price change and further adjustments are not made until another price change, if any, is observed. Refer to “Investments” in the “Definitions and Reconciliations” section of this Supplemental Information for additional information.

 
 
June 30, 2019
 
Year Ended December 31, 2018
 
 
Three Months Ended
 
Six Months Ended
 
Realized gains
 
$
10,442

 
 
$
21,792

 
 
$
37,129

(1) 
Unrealized gains
 
11,058

 
 
83,264

 
 
99,634

 
Investment income
 
$
21,500

 
 
$
105,056

 
 
$
136,763

 
 
 
 
 
 
 
 
 
 
 

Investments
 
Cost
 
Adjustments
 
Carrying Amount
Fair value:
 
 
 
 
 
 
 
 
 
Publicly traded companies
 
$
186,688

 
 
$
107,396

 
 
$
294,084

 
Entities that report NAV
 
240,177

 
 
142,448

 
 
382,625

 
 
 
 
 
 
 
 
 
 
 
Entities that do not report NAV:
 
 
 
 
 
 
 
 
 
Entities with observable price changes
 
41,187

 
 
73,575

 
 
114,762

 
Entities without observable price changes
 
266,383

 
 
—

 
 
266,383

 
June 30, 2019
 
$
734,435

 
 
$
323,419

 
 
$
1,057,854

 
 
 
 
 
 
 
 
 
 
 
March 31, 2019
 
$
688,543

 
 
$
312,361

 
 
$
1,000,904

 


(1)
Includes realized gains of $14.7 million related to two publicly traded non-real estate investments and impairment of $5.5 million primarily related to one privately held non-real estate investment. Excluding these gains and impairment, our realized gains on non-real estate investments were $27.9 million for the year ended December 31, 2018.
 

Public/Private
Mix (Cost)
 
Tenant/Non-Tenant
Mix (Cost)
q219pubprimix.jpg
 
q219tenantmix.jpg
 
 
 
$734.4M
Cost
$1.1B
Carrying Amount

 
 
 
q219logo1.jpg
Key Credit Metrics
June 30, 2019
 
 


Net Debt to Adjusted EBITDA(1)
Net Debt and Preferred Stock to Adjusted EBITDA(1)
 
Unsecured Senior Line of Credit Balance
 
 
 
(In millions)
 
q219netdebtpreferred.jpg
 
q219lineofcredit.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-Charge Coverage Ratio(1)
 
Liquidity(2)
 
 
 
 
 
 
q219fixedcharge.jpg
 
$3.4B
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
Availability under our $2.2 billion unsecured senior line of credit
$
1,686

 
 
Outstanding forward equity sales agreements
1,132

 
 
Cash, cash equivalents, and restricted cash
238

 
 
Investments in publicly traded companies
294

 
 
 
$
3,350

 
 
 
 
 
 
 
 
 
 
(1)
Quarter annualized.
(2)
As of June 30, 2019.

 
 
 
q219logo1.jpg
Summary of Debt
June 30, 2019
 
 


Debt maturities chart(1) 
(In millions)

Pro Forma Weighted-Average Remaining Term of 10.1 Years(1) 

q219debtmaturities.jpg

(1)
In July 2019, we opportunistically issued $1.25 billion of unsecured senior notes payable, with a weighted-average interest rate of 3.72% and a weighted-average maturity of 19.5 years, including $750.0 million of 3.375% unsecured senior notes due 2031 and $500.0 million of 4.00% unsecured senior notes due 2050. The proceeds were used to refinance $1.125 billion of unsecured senior notes payable and unsecured senior bank term loan, with a weighted-average interest rate of 3.94% and a weighted-average maturity of 2.4 years, consisting of the following:
(i)
Refinancing of an aggregate $950.0 million of unsecured senior notes payable comprising $400.0 million of 2.75% unsecured senior notes payable due 2020 and $550.0 million of 4.60% unsecured senior notes payable due 2022, pursuant to a cash tender offer completed on July 17, 2019, and subsequent call for redemption. The redemption is expected to settle on August 16, 2019.
(ii)
Partial repayment of $175.0 million on our unsecured senior bank term loan. The remaining outstanding balance of the term loan will mature on January 2, 2025, if not repaid before maturity.
•
As a result of our refinancing and partial repayment, we expect to recognize a loss, primarily related to the early extinguishment of debt, of $43 million in 3Q19.
•
The remaining proceeds were used to reduce the outstanding balance of our unsecured senior line of credit.
•
Upon completion of the refinancing, the pro forma weighted-average remaining term on our outstanding debt is 10.1 years, with no debt maturing until 2023.
(2)
Represents balance outstanding as of June 30, 2019. See footnote 1 for refinancing subsequent to June 30, 2019.
(3)
We generally have limited outstanding borrowings under our $2.2 billion unsecured senior line of credit as of December 31. Our average outstanding balance as of December 31 for the past three years under our unsecured senior line of credit has been approximately $109.3 million. Additionally, we generally amend and extend the maturity date of our unsecured senior line of credit every two to three years.

 
 
Summary of Debt (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


Fixed-rate/hedged and unhedged variable-rate debt
Fixed-Rate/Hedged
Variable-Rate Debt
 
Unhedged
Variable-Rate Debt
 
Total
 
Percentage
 
Weighted-Average
 
 
 
 
 
Interest Rate(1)
 
Remaining Term
(in years)
 
 
 
 
 
 
Secured notes payable
$
354,186

 
$
—

 
$
354,186

 
5.6
%
 
3.58
%
 
4.5
Unsecured senior notes payable
5,140,914

 
—

 
5,140,914

 
80.8

 
4.16

 
7.3
$2.2 billion unsecured senior line of credit
—

 
514,000

 
514,000

 
8.1

 
3.53

 
4.6
Unsecured senior bank term loan
347,105

 
—

 
347,105

 
5.5

 
3.62

 
5.5
Total/weighted-average
$
5,842,205

 
$
514,000

 
$
6,356,205

 
100.0
%
 
4.05
%
 
6.8
Percentage of total debt
92
%
 
8
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.

Interest rate swap agreements
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Date
 
Maturity Date
 
Number of Contracts
 
Weighted-Average Interest Pay Rate(1)
 
Fair Value as of
 
 
Notional Amount in Effect as of
 
 
 
 
 
6/30/19
 
 
6/30/19
 
12/31/19
 
March 29, 2019
 
March 31, 2020
 
1
 
1.89%
 
$
38

 
 
$
100,000

 
$
100,000

 
March 29, 2019
 
March 31, 2020
 
3
 
2.84%
 
 
(1,699
)
 
 
250,000

 
75,000

 
Total
 
 
 
 
 
 
 
$
(1,661
)
 
 
$
350,000

 
$
175,000

(2) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
In addition to the interest pay rate for each swap agreement, interest is payable at an applicable margin over LIBOR for borrowings outstanding as of June 30, 2019, as listed under the column heading “Stated Rate” in our summary table of outstanding indebtedness and respective principal payments on the previous page.
(2)
In July 2019, in conjunction with the $175.0 million partial repayment of our unsecured senior bank term loan, we also terminated two interest rate hedge agreements aggregating $175.0 million with a weighted-average interest pay rate of 2.83% and recognized a loss of $1.1 million related to the early termination of interest rate hedge agreements.

Debt covenants
 
Unsecured Senior Notes Payable
 
$2.2 Billion Unsecured Senior Line of Credit and
Unsecured Senior Bank Term Loan
Debt Covenant Ratios(1)
 
Requirement
 
June 30, 2019
 
Requirement
 
June 30, 2019
Total Debt to Total Assets
 
≤ 60%
 
36%
 
≤ 60.0%
 
30.0%
 
Secured Debt to Total Assets
 
≤ 40%
 
2%
 
≤ 45.0%
 
1.6%
 
Consolidated EBITDA to Interest Expense
 
≥ 1.5x
 
6.5x
 
≥ 1.50x
 
3.92x
 
Unencumbered Total Asset Value to Unsecured Debt
 
≥ 150%
 
258%
 
N/A
 
N/A
 
Unsecured Interest Coverage Ratio
 
N/A
 
N/A
 
≥ 1.75x
 
6.24x
 
 
 
 
 
 
 
 
 
 
 
(1)
All covenant ratio titles utilize terms as defined in the respective debt agreements. EBITDA is not calculated pursuant to the definition set forth by the SEC in Exchange Act Release No. 47226.

Unconsolidated real estate joint ventures’ debt
 
 
 
 
 
 
 
 
 
 
 
 
 
100% at JV Level
 
Unconsolidated Joint Venture
 
Our Share
 
Maturity Date
 
Stated Rate
 
Interest Rate(1)
 
Debt Balance(2)
 
Remaining Commitments
 
1401/1413 Research Boulevard
 
 
65.0
%
 
 
5/17/20
 
L+2.50%
 
 
5.91
%
 
 
$
22,696

 
$
5,997

 
1655 and 1725 Third Street
 
 
10.0
%
 
 
6/29/21
 
L+3.70%
 
 
6.14
%
 
 
253,366

 
121,634

 
704 Quince Orchard Road
 
 
56.8
%
 
 
3/16/23
 
L+1.95%
 
 
4.59
%
 
 
6,997

 
7,865

 
Menlo Gateway, Phase II
 
 
48.3
%
(3) 
 
5/1/35
 
4.53%
 
 
4.59
%
 
 
8,019

 
147,784

 
Menlo Gateway, Phase I
 
 
48.3
%
(3) 
 
8/10/35
 
4.15%
 
 
4.18
%
 
 
143,334

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
434,412

 
$
283,280

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Includes interest expense and amortization of loan fees.
(2)
Represents outstanding principal, net of unamortized deferred financing costs, as of June 30, 2019.
(3)
Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.

 
 
Summary of Debt (continued)
q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


Debt
 
Stated 
Rate
 
Interest
Rate(1)
 
Maturity
Date(2)
 
Principal Payments Remaining for the Periods Ending December 31,
 
Principal
 
Unamortized (Deferred Financing Cost), (Discount)/Premium
 
Total
 
 
 
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
 
 
 
Secured notes payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
4.66
%
 
 
4.90
%
 
1/1/23
 
 
$
851

 
$
1,763

 
$
1,852

 
$
1,942

 
$
26,259

 
$
—

 
$
32,667

 
$
(230
)
 
$
32,437

 
Greater Boston
 
3.93
%
 
 
3.19

 
3/10/23
 
 
760

 
1,566

 
1,628

 
1,693

 
74,517

 
—

 
80,164

 
2,038

 
82,202

 
Greater Boston
 
4.82
%
 
 
3.40

 
2/6/24
 
 
1,545

 
3,206

 
3,395

 
3,564

 
3,742

 
183,527

 
198,979

 
12,300

 
211,279

 
San Francisco
 
4.14
%
 
 
4.42

 
7/1/26
 
 
—

 
—

 
—

 
—

 
—

 
28,200

 
28,200

 
(683
)
 
27,517

 
San Francisco
 
6.50
%
 
 
6.50

 
7/1/36
 
 
23

 
25

 
26

 
28

 
30

 
619

 
751

 
—

 
751

 
Secured debt weighted-average interest rate/subtotal
 
4.55
%
 
 
3.58

 
 
 
 
3,179

 
6,560

 
6,901

 
7,227

 
104,548

 
212,346

 
340,761

 
13,425

 
354,186

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$2.2 billion unsecured senior line of credit
 
L+0.825
%
 
 
3.53

 
1/28/24
 
 
—

 
—

 
—

 
—

 
—

 
514,000

 
514,000

 
—

 
514,000

 
Unsecured senior bank term loan(3)
 
L+0.90
%
 
 
3.62

 
1/2/25
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(2,895
)
 
347,105

 
Unsecured senior notes payable(3)
 
2.75
%
 
 
2.96

 
1/15/20
 
 
—

 
400,000

 
—

 
—

 
—

 
—

 
400,000

 
(453
)
 
399,547

 
Unsecured senior notes payable(3)
 
4.60
%
 
 
4.75

 
4/1/22
 
 
—

 
—

 
—

 
550,000

 
—

 
—

 
550,000

 
(1,791
)
 
548,209

 
Unsecured senior notes payable
 
3.90
%
 
 
4.04

 
6/15/23
 
 
—

 
—

 
—

 
—

 
500,000

 
—

 
500,000

 
(2,360
)
 
497,640

 
Unsecured senior notes payable – green bonds
 
4.00
%
 
 
4.03

 
1/15/24
 
 
—

 
—

 
—

 
—

 
—

 
650,000

 
650,000

 
(655
)
 
649,345

 
Unsecured senior notes payable
 
3.45
%
 
 
3.62

 
4/30/25
 
 
—

 
—

 
—

 
—

 
—

 
600,000

 
600,000

 
(5,097
)
 
594,903

 
Unsecured senior notes payable
 
4.30
%
 
 
4.50

 
1/15/26
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(3,178
)
 
296,822

 
Unsecured senior notes payable – green bonds
 
3.80
%
 
 
3.96

 
4/15/26
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,321
)
 
346,679

 
Unsecured senior notes payable
 
3.95
%
 
 
4.13

 
1/15/27
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,795
)
 
346,205

 
Unsecured senior notes payable
 
3.95
%
 
 
4.07

 
1/15/28
 
 
—

 
—

 
—

 
—

 
—

 
425,000

 
425,000

 
(3,610
)
 
421,390

 
Unsecured senior notes payable
 
4.50
%
 
 
4.60

 
7/30/29
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(2,235
)
 
297,765

 
Unsecured senior notes payable
 
4.70
%
 
 
4.81

 
7/1/30
 
 
—

 
—

 
—

 
—

 
—

 
450,000

 
450,000

 
(4,087
)
 
445,913

 
Unsecured senior notes payable
 
4.85
%
 
 
4.93

 
4/15/49
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(3,504
)
 
296,496

 
Unsecured debt weighted average/subtotal
 
 
 
 
4.08

 
 
 
 
—

 
400,000

 
—

 
550,000

 
500,000

 
4,589,000

 
6,039,000

 
(36,981
)
 
6,002,019

 
Weighted-average interest rate/total
 
 
 
 
4.05
%
 
 
 
 
$
3,179

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,801,346

 
$
6,379,761

 
$
(23,556
)
 
$
6,356,205

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balloon payments
 
 
 
 
 
 
 
 
 
$
—

 
$
400,000

 
$
—

 
$
550,000

 
$
600,487

 
$
4,800,421

 
$
6,350,908

 
$
—

 
$
6,350,908

 
Principal amortization
 
 
 
 
 
 
 
 
 
3,179

 
6,560

 
6,901

 
7,227

 
4,061

 
925

 
28,853

 
(23,556
)
 
5,297

 
Total debt
 
 
 
 
 
 
 
 
 
$
3,179

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,801,346

 
$
6,379,761

 
$
(23,556
)
 
$
6,356,205

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate/hedged variable-rate debt
 
 
 
 
 
 
 
 
 
$
3,179

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,287,346

 
$
5,865,761

 
$
(23,556
)
 
$
5,842,205

 
Unhedged variable-rate debt
 
 
 
 
 
 
 
 
 
—

 
—

 
—

 
—

 
—

 
514,000

 
514,000

 
—

 
514,000

 
Total debt
 
 
 
 
 
 
 
 
 
$
3,179

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,801,346

 
$
6,379,761

 
$
(23,556
)
 
$
6,356,205

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average stated rate on maturing debt
 
 
 
 
 
 
 
 
 
N/A

 
2.75%

 
N/A

 
4.60%

 
3.94%

 
3.98%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
(2)
Reflects any extension options that we control.
(3)
Refer to page 48 for additional information.

 
 
 
q219logo1.jpg
Definitions and Reconciliations
June 30, 2019
 
 



This section contains additional information for sections throughout this Supplemental Information package and the accompanying Earnings Press Release, as well as explanations and reconciliations of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance and believe they provide useful information to investors. 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 and Adjusted EBITDA margin
 
The following table reconciles net income (loss) and revenues, the most directly comparable financial measures calculated and presented in accordance with GAAP, to Adjusted EBITDA and revenues, as adjusted, respectively:
 
Three Months Ended
(Dollars in thousands)
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
Net income (loss)
$
87,179

 
$
136,818

 
$
(18,631
)
 
$
219,359

 
$
60,547

 
Interest expense
42,879

 
39,100

 
40,239

 
42,244

 
38,097

 
Income taxes
890

 
1,297

 
613

 
568

 
1,106

 
Depreciation and amortization
134,437

 
134,087

 
124,990

 
119,600

 
118,852

 
Stock compensation expense
11,437

 
11,029

 
9,810

 
9,986

 
7,975

 
Loss on early extinguishment of debt
—

 
7,361

 
—

 
1,122

 
—

 
Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
—

 
—

 
—

 
(761
)
 
—

 
Gain on sale of real estate
—

 
—

 
(8,704
)
 
—

 
—

 
Our share of gain on sales of real estate from unconsolidated real estate JVs
—

 
—

 
—

 
(35,678
)
 
—

 
Realized gains on non-real estate investments
—

 
—

 
(6,428
)
 
—

 
—

 
Unrealized (gains) losses on non-real estate investments
(11,058
)
 
(72,206
)
 
94,850

 
(117,188
)
 
(5,067
)
 
Impairment of real estate
—

 
—

 
—

 
—

 
6,311

 
Impairment of non-real estate investments
—

 
—

 
5,483

 
—

 
—

 
Adjusted EBITDA
$
265,764

 
$
257,486

 
$
242,222

 
$
239,252

 
$
227,821

 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
373,856

 
$
358,842

 
$
340,463

 
$
341,823

 
$
325,034

 
Non-real estate investments – total realized gains
10,442

 
11,350

 
11,319

 
5,015

 
7,463

 
Realized gains on non-real estate investments
—

 
—

 
(6,428
)
 
—

 
—

 
Impairment of non-real estate investments
—

 
—

 
5,483

 
—

 
—

 
Revenues, as adjusted
$
384,298

 
$
370,192

 
$
350,837

 
$
346,838

 
$
332,497

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
69%

 
70%

 
69%

 
69%

 
69%

 
    
We use Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization (“EBITDA”), excluding stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and impairments of real estate. Adjusted EBITDA also excludes unrealized gains or losses and significant realized gains and impairments that result from our
 
non-real estate investments. These non-real estate investment amounts are classified in our consolidated statements of operations outside of revenues.

We believe Adjusted EBITDA provides investors with relevant and useful information as it allows investors to evaluate the operating performance of our business activities without having to account for differences recognized because of real estate and non-real estate investment and disposition decisions, financing decisions, capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. For example, we exclude gains or losses on the early extinguishment of debt to allow investors to measure our performance independent of our indebtedness and capital structure. We believe that adjusting for the effects of impairments and gains or losses on sales of real estate, and significant impairments and significant gains on the sale of non-real estate investments allows investors to evaluate performance from period to period on a consistent basis without having to account for differences recognized because of real estate and non-real estate investment and disposition decisions. We believe that excluding charges related to stock compensation and unrealized gains or losses facilitates for investors a comparison of our business activities across periods without the volatility resulting from market forces outside of our control. Adjusted EBITDA has limitations as a measure of our performance. Adjusted EBITDA does not reflect our historical expenditures or future requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant measure of performance, it does not represent net income (loss) or cash flows from operations calculated and presented in accordance with GAAP, and it should not be considered as an alternative to those indicators in evaluating performance or liquidity.

Our calculation of Adjusted EBITDA margin divides Adjusted EBITDA by our revenues, as adjusted. We believe that revenues, as adjusted, provides a denominator for Adjusted EBITDA margin that is calculated on a basis more consistent with that of the Adjusted EBITDA numerator. Specifically, revenues, as adjusted, includes the same realized gains on, and impairments of, non-real estate investments that are included in the reconciliation of Adjusted EBITDA. We believe that the consistent application of results from our non-real estate investments to both the numerator and denominator of Adjusted EBITDA margin provides a more useful calculation for the comparison across periods.

Annual rental revenue

Annual rental revenue represents the annualized fixed base rental amount, in effect as of the end of the period, related to our operating RSF. Annual rental revenue is presented using 100% of the annual rental revenue of our consolidated properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Annual rental revenue per RSF is computed by dividing annual rental revenue by the sum of 100% of the RSF of our consolidated properties and our share of the RSF of properties held in unconsolidated real estate joint ventures. As of June 30, 2019, approximately 97% of our leases (on an RSF basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Annual rental revenue excludes these operating expenses recovered from our tenants. Amounts recovered from our tenants related to these operating expenses, along with base rent, are classified in income from rentals in our consolidated statements of operations.


 
 
 
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Definitions and Reconciliations (continued)
June 30, 2019
 
 


Cash interest

Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts). Refer to the definition of fixed-charge coverage ratio for a reconciliation of interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest.

Class A properties and AAA locations

Class A properties are properties clustered in AAA locations that provide innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Class A properties generally command higher annual rental rates than other classes of similar properties.

AAA locations are in close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space.

Development, redevelopment, and pre-construction

A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new Class A properties, and property enhancements identified during the underwriting of certain acquired properties, located in collaborative life science, technology, and agtech campuses in AAA urban innovation clusters. These projects are generally focused on providing high-quality, generic, and reusable spaces that meet the real estate requirements of, and are reusable by, a wide range of tenants. Upon completion, each value-creation project is expected to generate a significant increase in rental income, net operating income, and cash flows. Our development and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

Development projects generally consist of the ground-up development of generic and reusable facilities. Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into office/laboratory, tech office, or agtech space. We generally will not commence new development projects for aboveground construction of new Class A office/laboratory, tech office, and agtech space without first securing significant pre-leasing for such space, except when there is solid market demand for high-quality Class A properties.

Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. Ultimately, these projects will provide high-quality facilities and are expected to generate significant revenue and cash flows.

 
Dividend payout ratio (common stock)

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 dates multiplied by the related dividend per share) to funds from operations attributable to Alexandria’s common stockholders – diluted, 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

Fixed-charge coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to fixed charges. We believe this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing obligations and preferred stock dividends. Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts).

The following table reconciles interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest and fixed charges:
 
Three Months Ended
(Dollars in thousands)
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Adjusted EBITDA
$
265,764

 
$
257,486

 
$
242,222

 
$
239,252

 
$
227,821

 
 
 
 
 
 
 
 
 
 
Interest expense
$
42,879

 
$
39,100

 
$
40,239

 
$
42,244

 
$
38,097

Capitalized interest
21,674

 
18,509

 
19,902

 
17,431

 
15,527

Amortization of loan fees
(2,380
)
 
(2,233
)
 
(2,401
)
 
(2,734
)
 
(2,593
)
Amortization of debt premiums
782

 
801

 
611

 
614

 
606

Cash interest
62,955

 
56,177

 
58,351

 
57,555

 
51,637

Dividends on preferred stock
1,005

 
1,026

 
1,155

 
1,301

 
1,302

Fixed charges
$
63,960

 
$
57,203

 
$
59,506

 
$
58,856

 
$
52,939

 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio:
 
 
 
 
 
 
 
 
 
– quarter annualized
4.2x

 
4.5x

 
4.1x

 
4.1x

 
4.3x

– trailing 12 months
4.2x

 
4.2x

 
4.2x

 
4.3x

 
4.3x

 
 
 
 
 
 
 
 
 
 

 
 
 
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Definitions and Reconciliations (continued)
June 30, 2019
 
 


Funds from operations and funds from operations, as adjusted, attributable to Alexandria’s common stockholders

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 Nareit Board of Governors established funds from operations as an improved measurement tool. Since its introduction, funds from operations has become a widely used non-GAAP financial measure among equity REITs. We believe that funds from operations is helpful to investors as an additional measure of the performance of an equity REIT. Moreover, we believe that funds from operations, as adjusted, allows investors to compare our performance to the performance of other real estate companies on a consistent basis, without having to account for differences recognized because of real estate investment and disposition decisions, financing decisions, capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. On January 1, 2019, we adopted standards established by the Nareit Board of Governors in its November 2018 White Paper (the “Nareit White Paper”) on a prospective basis. The Nareit White Paper defines funds from operations as net income (computed in accordance with GAAP), excluding gains or losses on sales of real estate, and impairments of real estate, plus real estate-related depreciation and amortization, and after adjustments for our share of consolidated and unconsolidated partnerships and real estate joint ventures. Impairments represent the write-down of assets when fair value over the recoverability period is less than the carrying value due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.

We compute funds from operations, as adjusted, as funds from operations calculated in accordance with the Nareit White Paper, excluding significant gains, losses, and impairments realized on non-real estate investments, unrealized gains or losses on non-real estate investments, gains or losses on early extinguishment of debt, preferred stock redemption charges, deal costs, and the amount of such items that is allocable to our unvested restricted stock awards. Neither funds from operations nor funds from operations, as adjusted, should be considered as alternatives to net income (determined in accordance with GAAP) as indications of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as measures of liquidity, nor are they indicative of the availability of funds for our cash needs, including our ability to make distributions.

The following table reconciles net income to funds from operations for the share of consolidated real estate joint ventures attributable to noncontrolling interests and our share of unconsolidated real estate joint ventures:
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
June 30, 2019
 
June 30, 2019
(In thousands)
Three Months Ended
 
Six Months Ended
 
Three Months Ended
 
Six Months Ended
Net income
$
8,412

 
$
16,071

 
$
1,262

 
$
2,408

Depreciation and amortization
6,744

 
12,163

 
973

 
1,819

Funds from operations
$
15,156

 
$
28,234

 
$
2,235

 
$
4,227

 
 
 
 
 
 
 
 

 
Initial stabilized yield (unlevered)
Initial stabilized yield is calculated as the quotient of the estimated amounts of net operating income at stabilization and our investment in the property. Our initial stabilized yield excludes the benefit of leverage. Our cash rents related to our value-creation projects are generally expected to increase over time due to contractual annual rent escalations. Our estimates for initial stabilized yields, initial stabilized yields (cash basis), 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.
•
Initial stabilized yield reflects rental income, including contractual rent escalations and any rent concessions over the term(s) of the lease(s), calculated on a straight-line basis.
•
Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have elapsed and our total cash investment in the property.

Investment-grade or publicly traded large cap tenants

Investment-grade or publicly traded large cap tenants represent tenants that are investment-grade rated or publicly traded companies with an average daily market capitalization greater than $10 billion for the twelve months ended June 30, 2019, as reported by Bloomberg Professional Services. In addition, we monitor the credit quality and related material changes of our tenants. Material changes that cause a tenant’s market capitalization to decline below $10 billion, which are not immediately reflected in the twelve-month average, may result in their exclusion from this measure.

Investments

We hold investments in publicly traded companies and privately held entities primarily involved in the life science and technology industries. We recognize, measure, present, and disclose these investments as follows:
 
 
 
 
Statements of Operations
 
 
Balance Sheet
 
Gains and Losses
 
 
Carrying Amount
 
Unrealized
 
Realized
 
 
 
 
 
 
 
 
 
 
 
 
 
Difference between proceeds received upon disposition and historical cost
Publicly traded companies
 
Fair value
 
Changes in fair value
 
Privately held entities without readily determinable fair values that:
 
 
 
 
 
Report NAV
 
Fair value, using NAV as a practical expedient
 
Changes in NAV, as a practical expedient to fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Do not report NAV
 
Cost, adjusted for observable price changes and impairments
 
Observable price changes
 
Impairments to reduce costs to fair value, which result in an adjusted cost basis and the differences between proceeds received upon disposition and adjusted or historical cost


 
 
 
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Definitions and Reconciliations (continued)
June 30, 2019
 
 


For investments in privately held entities that do not report NAV per share, an observable price is a price observed in an orderly transaction for an identical or similar investment of the same issuer. Observable price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. For these transactions to be considered observable price changes of the same issuer, we evaluate whether these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold.

Investments in real estate

The following table reconciles our investments in real estate as of June 30, 2019:
(In thousands)
 
Investments in real estate
 
Gross investments in real estate
 
$
15,326,645

 
 
 
 
 
Less: accumulated depreciation
 
(2,484,176
)
 
Net investments in real estate – North America
 
12,842,469

 
Net investments in real estate – Asia
 
30,355

 
Investments in real estate
 
$
12,872,824

 

The following table represents RSF of buildings in operation as of June 30, 2019, that will be redeveloped or replaced with new development RSF upon commencement of future construction:
Property/Submarket
 
RSF
 
2021-2022 Pre-construction and future:
 
 
 
Pre-construction
 
 
 
88 Bluxome Street/Mission Bay/SoMa
 
232,470

 
Future
 
 
 
960 Industrial Road/Greater Stanford
 
110,000

 
99 A Street/Seaport Innovation District
 
8,715

 
 
 
118,715

 
 
 
351,185

 
Future:
 
 
 
219 East 42nd Street/New York City
 
349,947

 
4161 Campus Point Court/University Town Center
 
159,884

 
10260 Campus Point Drive/University Town Center
 
109,164

 
4045 Sorrento Valley Boulevard/Sorrento Valley
 
10,926

 
4075 Sorrento Valley Boulevard/Sorrento Valley
 
40,000

 
601 Dexter Avenue North/Lake Union
 
18,680

 
 
 
688,601

 
Total value-creation RSF currently included in rental properties
 
1,039,786

 

 
Joint venture financial information

We present components of balance sheet and operating results information related to our joint ventures, which are not presented in accordance with, or intended to be presented in accordance with, GAAP. We present the proportionate share of certain financial line items as follows: (i) for each real estate joint venture that we consolidate in our financial statements, but of which we own less than 100%, we apply the noncontrolling interest economic ownership percentage to each financial item to arrive at the amount of such cumulative noncontrolling interest share of each component presented; and (ii) for each real estate joint venture that we do not control, and do not consolidate, we apply our economic ownership percentage to each financial item to arrive at our proportionate share of each component presented.

The components of balance sheet and operating results information related to joint ventures do not represent our legal claim to those items. For each entity that we do not wholly own, the joint venture agreement generally determines what equity holders can receive upon capital events, such as sales or refinancing, or in the event of a liquidation. Equity holders are normally entitled to their respective legal ownership of any residual cash from a joint venture only after all liabilities, priority distributions, and claims have been repaid or satisfied.

We believe this information can help investors estimate the balance sheet and operating results information related to our partially owned entities. Presenting this information provides a perspective not immediately available from consolidated financial statements and one that can supplement an understanding of the joint venture assets, liabilities, revenues, and expenses included in our consolidated results.

The components of balance sheet and operating results information related to joint ventures are limited as an analytical tool as the overall economic ownership interest does not represent our legal claim to each of our joint ventures’ assets, liabilities, or results of operations. In addition, joint venture financial information may include financial information related to the unconsolidated real estate joint ventures that we do not control. We believe that in order to facilitate for investors a clear understanding of our operating results and our total assets and liabilities, joint venture financial information should be examined in conjunction with our consolidated statements of operations and balance sheets. Joint venture financial information should not be considered an alternative to our consolidated financial statements, which are prepared in accordance with GAAP.

Key items included in net income attributable to Alexandria’s common stockholders

We present a tabular comparison of items, whether gain or loss, that may facilitate a high-level understanding of our results and provide context for the disclosures included in this Supplemental Information, our most recent annual report on Form 10-K for the year ended December 31, 2018, and our subsequent quarterly reports on Form 10-Q. We believe such tabular presentation promotes a better understanding for investors of the corporate-level decisions made and activities performed that significantly affect comparison of our operating results from period to period. We also believe this tabular presentation will supplement for investors an understanding of our disclosures and real estate operating results. Gains or losses on sales of real estate and impairments of held for sale assets are related to corporate-level decisions to dispose of real estate. Gains or losses on early extinguishment of debt and preferred stock redemption charges are related to corporate-level financing decisions focused on our capital structure strategy. Significant realized and unrealized gains or losses on non-real estate investments and impairments of real estate and non-real estate investments are not related to the operating performance of our real estate assets as they result from strategic, corporate-level non-real estate investment decisions and external market conditions. Impairments of non-real estate investments are not related to the operating performance of our real estate as they represent the write-down of a non-real estate investment when its fair value declines below its carrying value due to changes in general market or other conditions outside of our control. Significant items, whether a gain or loss, included in the tabular disclosure for current periods are described in further detail in this Supplemental Information.

 
 
 
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Definitions and Reconciliations (continued)
June 30, 2019
 
 


Lease accounting

On January 1, 2019, we adopted new lease accounting standards that set out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). The new lease accounting standards did not result in material changes in the amount nor the timing of lease-related revenues that we recognized from our tenants. However, the new standards affected our financial statement presentation primarily in three specific areas.

Key differences between the prior accounting standard and the new lease accounting standards:

Prior to January 1, 2019, we classified rental revenues and tenant recoveries as separate line items on our consolidated statements of operations. Effective January 1, 2019, based on our election of a practical expedient, we are required to disclose the combined components of rental revenues and tenant recoveries as a single lease component, which is classified on our consolidated statements of operations as income from rentals. As a result, we do not disclose tenant recoveries as a separate GAAP revenue measure. Refer to “Tenant Recoveries” below for additional information on our definition of tenant recoveries revenue and its usefulness to investors.

The new lease accounting standard requires that lessors and lessees capitalize, as initial direct costs, only incremental costs of a lease that would not have been incurred if the lease had not been obtained. Effective January 1, 2019, costs that we incur to negotiate or arrange a lease, regardless of its outcome, such as for fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs, are expensed as incurred.

Under the package of practical expedients and optional transition method that we elected on January 1, 2019, we are not required to reassess whether initial direct leasing costs capitalized prior to the adoption of the new lease accounting standard in connection with the leases that commenced prior to January 1, 2019, qualify for capitalization under the new lease accounting standard. Therefore, we continue to amortize these initial direct leasing costs over the respective lease term.

In addition, the new lease accounting standards require companies to recognize a lease liability and a corresponding right-of-use asset on the consolidated balance sheets, and to represent the net present value of future rental payments related to operating leases in which we are the lessee. As a result, on January 1, 2019, we recognized a lease liability classified in accounts payable, accrued expenses, and tenant security deposits on our consolidated balance sheets, and a corresponding right‑of‑use asset included in other assets on our consolidated balance sheets, related to our ground leases existing as of January 1, 2019, for which we are the lessee. The net present value of the remaining future rental payments of our ground leases was calculated for each operating lease using the respective remaining lease term and a corresponding estimated incremental borrowing rate, which is the estimated interest rate that we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Net cash provided by operating activities after dividends

Net cash provided by operating activities after dividends includes the deduction for distributions to noncontrolling interests. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences.

 
Net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA

Net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA are non-GAAP financial measures that we believe are useful to investors as supplemental measures in evaluating our balance sheet leverage. Net debt is equal to the sum of total consolidated debt less cash, cash equivalents, and restricted cash. Net debt and preferred stock is equal to the sum of net debt, as discussed above, plus preferred stock outstanding as of the end of the period. Refer to the definition of Adjusted EBITDA and Adjusted EBITDA margin for further information on the calculation of Adjusted EBITDA.

The following table reconciles debt to net debt, and to net debt and preferred stock, and computes the ratio of each to Adjusted EBITDA:
(Dollars in thousands)
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Secured notes payable
 
$
354,186

 
$
356,461

 
$
630,547

 
$
632,792

 
$
776,260

Unsecured senior notes payable
 
5,140,914

 
5,139,500

 
4,292,293

 
4,290,906

 
4,289,521

Unsecured senior line of credit
 
514,000

 
—

 
208,000

 
413,000

 
—

Unsecured senior bank term loans
 
347,105

 
347,542

 
347,415

 
347,306

 
548,324

Unamortized deferred financing costs
 
36,905

 
37,925

 
31,413

 
33,008

 
33,775

Cash and cash equivalents
 
(198,909
)
 
(261,372
)
 
(234,181
)
 
(204,181
)
 
(287,029
)
Restricted cash
 
(39,316
)
 
(54,433
)
 
(37,949
)
 
(29,699
)
 
(34,812
)
Net debt
 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

 
$
5,326,039

 
 
 
 
 
 
 
 
 
 
 
Net debt
 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

 
$
5,326,039

7.00% Series D convertible preferred stock
 
57,461

 
57,461

 
64,336

 
74,386

 
74,386

Net debt and preferred stock
 
$
6,212,346

 
$
5,623,084

 
$
5,301,874

 
$
5,557,518

 
$
5,400,425

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
$
1,063,056

 
$
1,029,944

 
$
968,888

 
$
957,008

 
$
911,284

– trailing 12 months
 
$
1,004,724

 
$
966,781

 
$
937,906

 
$
900,032

 
$
854,237

Net debt to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
5.8
x
 
5.4
x
 
5.4
x
 
5.7
x
 
5.8
x
– trailing 12 months
 
6.1
x
 
5.8
x
 
5.6
x
 
6.1
x
 
6.2
x
Net debt and preferred stock to Adjusted EBITDA:
 
 
 
 
 
 
 
 
– quarter annualized
 
5.8
x
 
5.5
x
 
5.5
x
 
5.8
x
 
5.9
x
– trailing 12 months
 
6.2
x
 
5.8
x
 
5.7
x
 
6.2
x
 
6.3
x


 
 
 
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Definitions and Reconciliations (continued)
June 30, 2019
 
 


Net operating income, net operating income (cash basis), and operating margin

The following table reconciles net income to net operating income, and to net operating income (cash basis):
 
 
Three Months Ended
 
Six Months Ended
(Dollars in thousands)
 
6/30/19
 
6/30/18
 
6/30/19
 
6/30/18
Net income
 
$
87,179

 
$
60,547

 
$
223,997

 
$
202,065

 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
(1,262
)
 
(1,090
)
 
(2,408
)
 
(2,234
)
General and administrative expenses
 
26,434

 
22,939

 
51,111

 
45,360

Interest expense
 
42,879

 
38,097

 
81,979

 
75,012

Depreciation and amortization
 
134,437

 
118,852

 
268,524

 
233,071

Impairment of real estate
 
—

 
6,311

 
—

 
6,311

Loss on early extinguishment of debt
 
—

 
—

 
7,361

 
—

Investment income
 
(21,500
)
 
(12,530
)
 
(105,056
)
 
(98,091
)
Net operating income
 
268,167

 
233,126

 
525,508

 
461,494

Straight-line rent revenue
 
(25,476
)
 
(23,259
)
 
(52,441
)
 
(55,890
)
Amortization of acquired below-market leases
 
(8,054
)
 
(5,198
)
 
(15,202
)
 
(11,368
)
Net operating income (cash basis)
 
$
234,637

 
$
204,669

 
$
457,865

 
$
394,236

 
 
 
 
 
 
 
 
 
Net operating income (cash basis) – annualized
 
$
938,548

 
$
818,676

 
$
915,730

 
$
788,472

 
 
 
 
 
 
 
 
 
Net operating income (from above)
 
$
268,167

 
$
233,126

 
$
525,508

 
$
461,494

Total revenues
 
$
373,856

 
$
325,034

 
$
732,698

 
$
645,173

Operating margin
 
72%
 
72%
 
72%
 
72%

Net operating income is a non-GAAP financial measure calculated as net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our unconsolidated real estate joint ventures, general and administrative expenses, interest expense, depreciation and amortization, impairment of real estate, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and investment income or loss. We believe net operating income provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe net operating income is a useful measure for investors to evaluate the operating performance of our consolidated real estate assets. Net operating income on a cash basis is net operating income adjusted to exclude the effect of straight-line rent and amortization of acquired above- and below-market lease revenue adjustments required by GAAP. We believe that net operating income on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent revenue and the amortization of acquired above- and below-market leases.

Furthermore, we believe net operating income is useful to investors as a performance measure for our consolidated properties because, when compared across periods, net operating income reflects trends in occupancy rates, rental rates, and operating costs, which provide a perspective not immediately apparent from net income or loss. Net operating income can be used to measure the initial stabilized yields of our properties by calculating the quotient of net operating income generated by a property and our investment in the property. Net operating income excludes certain components from net income 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 comparability of operating performance at the property level. Impairments of real estate have been excluded in deriving net operating income because we do not consider impairments of real estate to be property-level operating expenses. Impairments of real estate 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 impairments of real estate 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 or a deterioration in market conditions. We also exclude realized and unrealized investment income or loss calculated under a new ASU effective January 1, 2018, which results from investment decisions that occur at the corporate level related to non-real estate investments in publicly traded companies and certain privately held entities. Therefore, we do not consider these activities to be an indication of operating performance of our real estate assets at the property level. Our calculation of net operating income also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to corporate strategy. Property operating expenses included in determining net operating income primarily 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. We calculate operating margin as net operating income divided by total revenues.

We believe that in order to facilitate for investors a clear understanding of our operating results, net operating income should be examined in conjunction with net income or loss as presented in our consolidated statements of operations. Net operating income should not be considered as an alternative to net income or loss as an indication of our performance, nor as an alternative to cash flows as a measure of our liquidity or our ability to make distributions.

Operating statistics

We present certain operating statistics related to our properties, including number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations as of the end of the period. We believe these measures are useful to investors because they facilitate an understanding of certain trends for our properties. We compute the number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations at 100% for all properties in which we have an investment, including properties owned by our consolidated and unconsolidated real estate joint ventures. For operating metrics based on annual rental revenue, refer to our discussion of annual rental revenue herein.

Same property comparisons

As a result of changes within our total property portfolio during the comparative periods presented, including changes from assets acquired or sold, properties placed into development or redevelopment, and development or redevelopment properties recently placed into service, the consolidated total income from rentals, 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 quarterly or annual period, we analyze the operating performance for all consolidated properties that were fully operating for the entirety of the comparative periods presented, referred to as same properties. We separately present quarterly and year-to-date same property results to align with the interim financial information required by the SEC in our management’s discussion and analysis of our financial condition and results of operations. These same properties are analyzed separately from properties acquired subsequent to the first day in the earliest comparable quarterly or year-to-date period presented, properties that underwent development or redevelopment at any time during the comparative periods, unconsolidated real estate joint ventures, properties classified as held for sale, and corporate entities (legal entities

 
 
 
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Definitions and Reconciliations (continued)
June 30, 2019
 
 


performing general and administrative functions), which are excluded from same property results. Additionally, lease termination fees, if any, are excluded from the results of same properties.

The following table reconciles the number of same properties to total properties for the six months ended June 30, 2019:
Development –
under construction
 
Properties
 
399 Binney Street
 
1

 
279 East Grand Avenue
 
1

 
188 East Blaine Street
 
1

 
9800 Medical Center Drive
 
1

 
9950 Medical Center Drive
 
1

 
Alexandria District for Science and Technology
 
2

 
201 Haskins Way
 
1

 
 
 
8

 
 
 
 
 
Development – placed into service after January 1, 2018
 
Properties
 
100 Binney Street
 
1

 
213 East Grand Avenue
 
1

 
 
 
2

 
 
 
 
 
Redevelopment –
under construction
 
Properties
 
Alexandria Center® for AgTech, Phase I
 
1

 
266 and 275 Second Avenue
 
2

 
Alexandria Center® – Long Island City
 
1

 
 
 
4

 
 
 
 
 
Redevelopment – placed into service after January 1, 2018
 
Properties
 
9625 Towne Centre Drive
 
1

 
Alexandria PARC
 
4

 
681 Gateway Boulevard
 
1

 
9900 Medical Center Drive
 
1

 
 
 
7

 
 
 
 
 
Acquisitions after
January 1, 2018
 
Properties
 
100 Tech Drive
 
1

 
219 East 42nd Street
 
1

 
Summers Ridge Science Park
 
4

 
2301 5th Avenue
 
1

 
9704, 9708, 9712, and 9714 Medical Center Drive
 
4

 
9920 Belward Campus Drive
 
1

 
21 Firstfield Road
 
1

 
50 and 55 West Watkins Mill Road
 
2

 
10260 Campus Point Drive and 4161 Campus Point Court
 
2

 
99 A Street
 
1

 
3170 Porter Drive
 
1

 
Shoreway Science Center
 
2

 
3911, 3931, and 4075 Sorrento Valley Boulevard
 
3

 
260 Townsend Street
 
1

 
5 Necco Street
 
1

 
601 Dexter Avenue North
 
1

 
Other
 
6

 
 
 
33

 
 
 
 
 
Unconsolidated real estate JVs
 
6

 
Properties held for sale
 
2

 
Total properties excluded from same properties
 
62

 
Same properties
 
195

(1) 
Total properties in North America as of June 30, 2019
 
257

 
 
 
 
 
(1)
Includes 9880 Campus Point Drive, a building we acquired in 2001. The building was occupied through January 2018 and subsequently demolished. The 98,000 RSF project is currently in active development.

Stabilized occupancy date

The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or greater.

Tenant recoveries

Tenant recoveries represent revenues comprised of reimbursement of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses and earned in the period during which the applicable expenses are incurred and the tenant’s obligation to reimburse us arises.

 
On January 1, 2019, we adopted a new lease accounting standard and, among other practical expedients and policies, we elected the single component accounting policy. As a result of our election of the single component accounting policy, we account for rental revenues and tenant recoveries generated through the leasing of real estate assets that qualify for this policy as a single component, and classify associated revenue in income from rentals in our consolidated statements of operations. Prior to the adoption of the new lease accounting standard, we presented rental revenues and tenant recoveries separately in our consolidated statements of operations. We continue to provide investors with a separate presentation of rental revenues and tenant recoveries in the “Same Property Performance” section of this Supplemental Information because we believe it promotes investors’ understanding of the changes in our operating results. We believe that presentation of tenant recoveries is useful to investors as a supplemental measure of our ability to recover operating expenses under our triple net leases, including recoveries of utilities, repairs and maintenance, insurance, property taxes, common area expenses, and other operating expenses, and of our ability to mitigate the effect to net income for any significant variability to components of our operating expenses.

The following table reconciles income from rentals to tenant recoveries:
 
Three Months Ended
 
Six Months Ended
(In thousands)
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
6/30/19
 
6/30/18
Income from rentals
$
371,618

 
$
354,749

 
$
337,785

 
$
336,547

 
$
322,794

 
$
726,367

 
$
640,449

Rental revenues
(289,625
)
 
(274,563
)
 
(260,102
)
 
(255,496
)
 
(250,635
)
 
(564,188
)
 
(495,120
)
Tenant recoveries
$
81,993

 
$
80,186

 
$
77,683

 
$
81,051

 
$
72,159

 
$
162,179

 
$
145,329

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total equity market capitalization

Total equity market capitalization is equal to the sum of outstanding shares of 7.00% Series D cumulative convertible preferred stock and common stock multiplied by the related closing price of each class of security at the end of each period presented.

Total market capitalization

Total market capitalization is equal to the sum of total equity market capitalization and total debt.


 
 
 
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Definitions and Reconciliations (continued)
June 30, 2019
 
 


Unencumbered net operating income as a percentage of total net operating income

Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income 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.

The following table summarizes unencumbered net operating income as a percentage of total net operating income:
 
Three Months Ended
(Dollars in thousands)
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Unencumbered net operating income
$
251,397

 
$
243,191

 
$
213,285

 
$
213,107

 
$
204,843

Encumbered net operating income
16,770

 
14,150

 
29,496

 
28,957

 
28,283

Total net operating income
$
268,167

 
$
257,341

 
$
242,781

 
$
242,064

 
$
233,126

Unencumbered net operating income as a percentage of total net operating income
94%

 
95%

 
88%

 
88%

 
88%


Weighted-average interest rate for capitalization of interest

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, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees. A separate calculation is performed to determine our weighted-average interest rate for capitalization for each 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 interest rate hedge agreements, and the amount of loan fee and premium (discount) amortization.

The following table presents the weighted-average interest rate for capitalization of interest:
 
Three Months Ended
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Weighted-average interest rate for capitalization of interest
4.14%
 
3.96%
 
4.01%
 
4.06%
 
3.92%
 
Weighted-average shares of common stock outstanding – diluted

From time to time, we enter into capital market transactions, including forward equity sales agreements (“Forward Agreements”), to fund acquisitions, fund construction of our highly leased development and redevelopment projects, and for general working capital purposes. We are required to consider the potential dilutive effect of our forward equity sales agreements under the treasury stock method while the forward equity sales agreements are outstanding. As of June 30, 2019, we had Forward Agreements outstanding to sell an aggregate 8.1 million shares of common stock, including 4.4 million shares expiring in June 2020 and 3.7 million shares expiring in July 2020.

We also consider the effect of assumed conversion of our outstanding 7.00% Series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”) when determining potentially dilutive incremental shares to our common stock. When calculating the assumed conversion, we add back to net income or loss the dividends paid on our Series D Convertible Preferred Stock to the numerator and then include additional common shares assumed to have been issued (as displayed in the table below) to the denominator of the per share calculation. The effect of the assumed conversion is considered separately for our per share calculations of net income or loss; funds from operations, computed in accordance with the definition in the Nareit White Paper; and funds from operations, as adjusted. Our Series D Convertible Preferred Stock is dilutive and assumed to be converted when quarterly and annual basic EPS, funds from operations, or funds from operations, as adjusted, exceed approximately $1.75 and $7.00 per share, respectively, subject to conversion ratio adjustments and the impact of repurchases of our Series D Convertible Preferred Stock. The effect of the assumed conversion is included when it is dilutive on a per share basis. The dilutive effect to both numerator and denominator may result in a per share effect of less than a half cent, which would appear as zero in our per share calculation, even when the dilutive effect to the numerator alone appears in our reconciliation.

The weighted-average shares of common stock outstanding used in calculating EPS – diluted, FFO per share – diluted, and FFO per share – diluted, as adjusted, during each period are calculated as follows:
 
Three Months Ended
 
Six Months Ended
(In thousands)
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
6/30/19
 
6/30/18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
111,433

 
111,054

 
106,033

 
104,179

 
101,881

 
111,245

 
100,878

Forward Agreements
68

 
—

 
—

 
462

 
355

 
34

 
313

Series D Convertible Preferred Stock
—

 
—

 
—

 
744

 
—

 
—

 
—

Diluted shares for EPS
111,501

 
111,054

 
106,033

 
105,385

 
102,236

 
111,279

 
101,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
111,433

 
111,054

 
106,033

 
104,179

 
101,881

 
111,245

 
100,878

Forward Agreements
68

 
—

 
211

 
462

 
355

 
34

 
313

Series D Convertible Preferred Stock
576

 
581

 
—

 
744

 
—

 
578

 
742

Diluted shares for FFO
112,077

 
111,635

 
106,244

 
105,385

 
102,236

 
111,857

 
101,933

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
111,433

 
111,054

 
106,033

 
104,179

 
101,881

 
111,245

 
100,878

Forward Agreements
68

 
—

 
211

 
462

 
355

 
34

 
313

Series D Convertible Preferred Stock
—

 
—

 
—

 
—

 
—

 
—

 
—

Diluted shares for FFO, as adjusted
111,501

 
111,054

 
106,244

 
104,641

 
102,236

 
111,279

 
101,191