EX-99.1 2 a4q19ex991supp.htm EXHIBIT 99.1 Exhibit
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Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2020
i



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(1)
Refer to “Annual Rental Revenue,” “Class A Properties and AAA Locations,” and “Investment-Grade or Publicly Traded Large Cap Tenants” in the “Definitions and Reconciliations” of our Supplemental Information for additional details.
(2)
Refer to “Summary of Debt” in the “Key Credit Metrics” of our Supplemental Information for additional details.


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(1)
Upon completion of 26 projects in process targeting either WELL or Fitwel certification.
(2)
Relative to a 2015 baseline. Carbon pollution, energy consumption, and water consumption values are for our directly managed buildings.
(3)
Waste values are for our total portfolio, which includes both indirectly and directly managed buildings.

 
Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2020
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Table of Contents
December 31, 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 8 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. © 2020
iv
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Alexandria Real Estate Equities, Inc.
Reports:
2019 Revenues of $1.5 billion, Up 15.4% Over 2018;
4Q19 and 2019 Net Income per Share – Diluted of $1.74 and $3.12;
4Q19 and 2019 FFO per Share – Diluted, As Adjusted, of $1.77 and $6.96; and
Continued Operational Excellence and Growing Dividends

PASADENA, Calif. – February 3, 2020 – Alexandria Real Estate Equities, Inc. (NYSE:ARE)
announced financial and operating results for the fourth quarter and year ended December 31, 2019.
Key highlights
 
 
 
Operating results
4Q19
 
4Q18
 
2019
 
2018
Total revenues:
 
 
 
 
 
 
 
In millions
$
408.1

 
$
340.5

 
$
1,531.3

 
$
1,327.5

Growth
19.9%

 
 
 
15.4%

 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Alexandria’s common stockholders – diluted:
In millions
$
199.6

 
$
(31.7
)
 
$
351.0

 
$
364.0

Per share
$
1.74

 
$
(0.30
)
 
$
3.12

 
$
3.52

 
 
 
 
 
 
 
 
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions
$
203.4

 
$
178.0

 
$
783.0

 
$
682.0

Per share
$
1.77

 
$
1.68

 
$
6.96

 
$
6.60


Celebrating our 25th Anniversary; an important milestone in company history
Since our initial launch in January 1994 as a garage startup with a strategic business plan, $19 million in Series A capital, and a unique vision to create a new kind of real estate company focused on serving the life science industry, we have grown into an investment-grade rated S&P 500® company, a recognized leader in life science cluster development, and a trusted partner to innovative companies, highly respected cities, and renowned institutions. From our initial public offering in May 1997 through December 31, 2019, we have generated a total shareholder return of 1,714% and a total market capitalization of $26.3 billion as of December 31, 2019.

A REIT industry-leading, high-quality tenant roster
•
50% of annual rental revenue from investment-grade or publicly traded large cap tenants.
•
Weighted-average remaining lease term of 8.1 years.

Continued growth in common stock dividend
Common stock dividend declared for 4Q19 of $1.03 per common share, aggregating $4.00 per common share for the year ended December 31, 2019, up 27 cents, or 7%, over the year ended December 31, 2018; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.





 





Strong internal growth; highest leasing activity in our history and highest annual rental rate increases during the past 10 years
•
Continued strong internal growth; acquired vacancy from recent acquisitions provides opportunity to increase income from rentals and net operating income.
•
Net operating income (cash basis) of $1.0 billion for 4Q19 annualized, up $134.1 million, or 15.3%, compared to 4Q18 annualized.
•
Same property net operating income growth:
•
2.0% and 4.0% (cash basis) for 4Q19, compared to 4Q18
•
3.1% and 7.1% (cash basis) for 2019, compared to 2018
•
Continued strong leasing activity during 2019, representing the highest leasing activity in our history and rental rate growth over expiring rates on renewed and re-leased space during 2019, representing our highest annual rental rate increases during the past 10 years:
 
 
4Q19
 
2019
Total leasing activity – RSF
 
1,752,124

 
5,062,722

Lease renewals and re-leasing of space:
 
 
 
 
RSF (included in total leasing activity above)
 
571,650

 
2,427,108

Rental rate increases
 
37.0%

 
32.2%

Rental rate increases (cash basis)
 
21.7%

 
17.6%


Strong external growth; disciplined allocation of capital to visible, highly leased
value-creation pipeline
•
Since the beginning of 2019, we have placed into service 2.1 million RSF of development and redevelopment projects, with weighted-average initial stabilized yields of 7.4% and 6.9% (cash basis).
•
Significant near-term growth of annual net operating income (cash basis), including our share of unconsolidated real estate joint ventures, of $55 million upon the burn-off of initial free rent on recently delivered projects.
•
We commenced development and redevelopment projects aggregating 1.9 million RSF during 2019.
•
During 2019, we leased 1.4 million RSF of development and redevelopment space.

Completion of acquisitions with significant value-creation opportunities in key submarkets
During 4Q19, we completed the acquisition of 23 properties for an aggregate purchase price of $956.5 million, comprising 3.3 million RSF, including 2.1 million RSF of current and future value-creation opportunities.



 
 
 
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Fourth Quarter Ended December 31, 2019, Financial and Operating Results (continued)
December 31, 2019
 
 

Key items included in operating results
Key items included in net income (loss) attributable to Alexandria’s common stockholders:
(In millions, except per share amounts)
Amount
 
Per Share – Diluted
 
Amount
 
Per Share – Diluted
4Q19
 
4Q18
 
4Q19
 
4Q18
 
2019
 
2018
 
2019
 
2018
Gains (losses) on non-real estate investments(1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized
$
148.3

 
$
(94.9
)
 
$
1.29

 
$
(0.89
)
 
$
161.5

 
$
99.6

 
$
1.44

 
$
0.96

Realized
—

 
6.4

 
—

 
0.06

 
—

 
14.7

 
—

 
0.14

Gain on sales of real estate
0.5

 
8.7

 
—

 
0.08

 
0.5

 
44.4

 
—

 
0.43

Impairment of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate
(12.3
)
(2) 
—

 
(0.11
)
 
—

 
(12.3
)
 
(6.3
)
 
(0.11
)
 
(0.06
)
Non-real estate investments(1)
(10.0
)
 
(5.5
)
 
(0.09
)
 
(0.05
)
 
(17.1
)
 
(5.5
)
 
(0.15
)
 
(0.05
)
Early extinguishment of debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss
—

 
—

 
—

 
—

 
(47.6
)
 
(1.1
)
 
(0.42
)
 
(0.01
)
Our share of gain
—

 
—

 
—

 
—

 
—

 
0.8

 
—

 
0.01

Loss on early termination of interest rate hedge agreements
—

 
—

 
—

 
—

 
(1.7
)
 
—

 
(0.02
)
 
—

Preferred stock redemption charge
—

 
(4.2
)
 
—

 
(0.04
)
 
(2.6
)
 
(4.2
)
 
(0.02
)
 
(0.04
)
Allocation to unvested restricted stock awards
—

 
—

 
—

 
—

 
—

 
(2.2
)
 
—

 
(0.02
)
Total
$
126.5

 
$
(89.5
)
 
$
1.09

 
$
(0.84
)
 
$
80.7

 
$
140.2

 
$
0.72

 
$
1.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding for calculation of earnings
per share – diluted
115.0

 
106.0

 
 
 
 
 
112.5

 
103.3

(1) Refer to “Investments” on page 44 of our Supplemental Information for additional details.
(2) Refer to “Consolidated Statements of Operations” in this Earnings Press Release for additional details.

Core operating metrics as of or for the quarter ended December 31, 2019
High-quality revenues and cash flows, significant improvement in Adjusted EBITDA margin, and operational excellence
Percentage of annual rental revenue in effect from:
 
 
 
 
Investment-grade or publicly traded large cap tenants
 
50
%
 
 
Class A properties in AAA locations
 
76
%
 
 
Occupancy of operating properties in North America
 
96.8
%
(1)
 
Operating margin
 
70
%
 
 
Adjusted EBITDA margin
 
68
%
(2)
 
Weighted-average remaining lease term:
 
 
 
 
All tenants
 
8.1

years
Top 20 tenants
 
11.6

years
 
 
 
 
 
(1)
Includes 259,616 RSF, or 1.0%, of vacancy representing lease-up opportunities at properties recently acquired during 2H19, primarily related to our SD Tech by Alexandria campus. Excluding these vacancies, occupancy of operating properties in North America would have been 97.8% as of December 31, 2019. Refer to “Occupancy” on page 20 of our Supplemental Information for additional details.
(2)
Represents an increase of 400 bps since the beginning of 2013.
 
Balance sheet management

Key metrics as of December 31, 2019
•
$26.3 billion of total market capitalization
•
$19.5 billion of total equity capitalization
•
$2.4 billion of liquidity(1) 

(1)
In January 2020, we entered into $1.0 billion of forward equity sales agreements. Including the outstanding forward equity agreements, we had proforma liquidity of $3.4 billion.
 
 
4Q19
 
Goal
 
 
Quarter
 
Trailing 12
 
4Q20
 
 
Annualized
 
Months
 
Annualized
Net debt and preferred stock to Adjusted EBITDA
 
5.7x
(1)
 
6.1x
 
Less than or equal to 5.2x
Fixed-charge coverage ratio
 
4.2x
 
 
4.2x
 
Greater than 4.5x
 
 
 
 
 
 
 
 
(1)
Due to the timing of two acquisitions that closed in December 2019, we had a temporary 0.4x increase above our projected net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2019, annualized, for December 31, 2019. We remain committed to our guidance for net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2020, annualized, of less than or equal to 5.2x.
Value-creation pipeline of new Class A development and redevelopment projects as a percentage of gross investments in real estate
 
4Q19
 
Under construction and 63% leased/negotiating
 
6%
 
Income-producing/potential cash flows/covered land play(1)
 
5%
 
Land
 
2%
 
 
 
 
 
(1)
Includes projects that have existing buildings which are generating or can generate operating cash flows. Also includes development rights associated with existing operating campuses.

Key capital events
•
During 2019, we opportunistically issued $2.7 billion of unsecured senior notes payable, with a weighted average interest rate of 3.77% and maturity of 16.9 years. Proceeds were primarily used to refinance and repay $1.6 billion of secured notes and unsecured senior debt. As of December 31, 2019, our weighted average remaining term on outstanding debt is 10.4 years, with no debt maturing until 2023.
•
During 2019, we completed dispositions and sales of partial interests for an aggregate sales price of $906.9 million and consideration in excess of book value of $382.5 million, including $900.2 million of dispositions and sales of partial interests completed during the first nine months of 2019. Proceeds were reinvested into our highly leased value-creation pipeline.
•
In January 2020, we entered into forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock (including the exercise of an underwriters’ option) at a public offering price of $155.00 per share, before underwriting discounts. We expect to settle these forward equity sales agreements in 2020, and receive proceeds of approximately $1.0 billion, to be further adjusted as provided in the sales agreements, which will fund pending and recently completed acquisitions and the construction of our highly leased development projects. Refer to “Subsequent Events” on next page.


 
 
 
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Fourth Quarter Ended December 31, 2019, Financial and Operating Results (continued)
December 31, 2019
 
 

Key capital events (continued)
•
During 4Q19, we issued 7.0 million shares of common stock to settle our remaining outstanding forward equity sales agreements that were entered into during 2Q19, and received net proceeds of $981.3 million. The proceeds were used to fund construction projects and to fund 2019 acquisitions completed prior to December 2019.
•
In October 2019, we elected to convert the remaining 2.3 million outstanding shares of our 7.00% Series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”) into shares of our common stock. The Series D Convertible Preferred Stock became eligible for mandatory conversion at our discretion upon our common stock price exceeding $149.46 per share for the specified period of time required to cause the mandatory conversion. We converted the Series D Convertible Preferred Stock into 578 thousand shares of common stock. This conversion was accounted for as an equity transaction, and we did not recognize a gain or loss.

Investments
We carry our investments in publicly traded companies and certain privately held entities at fair value. Investment income included the following:
•
$152.7 million during 4Q19, comprising $14.4 million in realized gains, $10.0 million in impairments related to privately held non-real estate investments, and $148.3 million in unrealized gains.
•
$194.6 million during 2019, comprising $50.3 million in realized gains, $17.1 million in impairments related to privately held non-real estate investments, and $161.5 million in unrealized gains.

Industry leadership, strategic initiatives, and corporate responsibility
•
In October 2019, we accepted the 2019 Developer of the Year Award from NAIOP, the Commercial Real Estate Development Association. This award annually honors the development company that best exemplifies leadership and innovation as demonstrated by the outstanding quality of projects and services, financial consistency and stability, ability to adapt to market conditions, and support for the local community.
•
In November 2019, Alexandria, in collaboration with academic institutions, research hospitals, and life science industry partners, including Harvard University, the Massachusetts Institute of Technology, FUJIFILM Diosynth Biotechnologies, and GE Healthcare Life Sciences, announced the launch of a first-of-its-kind consortium to catalyze advanced biological innovation and manufacturing in Greater Boston with an aim to treat, prevent, and cure diseases.
•
In January 2020, we announced our first national $100,000 AgTech Innovation Prize competition to recognize startup and early-stage agtech and foodtech companies that demonstrate novel approaches to addressing agriculture-, food-, and nutrition-related challenges.
•
In January 2020, Alexandria Venture Investments, the company’s venture capital arm, was recognized for a third consecutive year as the most active biopharma investor by new deal volume by Silicon Valley Bank in its “2020 Annual Report: Healthcare Investments and Exits.” Alexandria’s venture activity provides us with, among other things, mission-critical data and knowledge on innovations and trends.
•
Our philanthropy and volunteerism efforts provide mission-critical support to non-profit organizations doing meaningful work in areas of medical research, STEM education, military support services, and serving local communities. During 2019, our team members volunteered more than 4,500 hours to support over 250 non-profit organizations across the country.
 
Industry leadership, strategic initiatives, and corporate responsibility (continued)
•
We value both the health and wellness of our team members as well as supporting organizations on the leading edge of medical innovation. In November 2019, we were honored to support 59 of our team members who completed the New York City Marathon on behalf of Fred’s Team and raised over $360 thousand to support mission-critical research at Memorial Sloan Kettering Cancer Center.

Subsequent events
•
As of February 3, 2020, we completed acquisitions of four properties in 2020 for an aggregate purchase price of $341.2 million, comprising 800,346 RSF of operating and redevelopment opportunities strategically located across multiple markets.
•
In January 2020, we formed a real estate joint venture with Boston Properties, Inc., in which we are targeting a 51% ownership interest over time. We are the managing member and will consolidate this joint venture pursuant to accounting literature since we have the power to direct the activities that most significantly affect the economic performance of the joint venture. Our partner contributed three office buildings and land supporting 260,000 square feet of future development, and we contributed one office building, one office/laboratory building, one amenity building, at 701, 681, and 685 Gateway Boulevard, respectively, and land supporting 377,000 square feet of future development. This future mega campus in our South San Francisco submarket will aggregate 1.7 million RSF, approximately 50% of which represents future development and redevelopment opportunities.
•
In January 2020, we entered into forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock. Refer to the previous page for additional details.
•
We expect to file a new ATM program in the first quarter of 2020.

 
 
 
 
Select 2019 Highlights
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December 31, 2019
 
 
 


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(1)
Leasing activity aggregating 5.1 million RSF for 2019 represents the highest annual leasing activity in our history.
(2)
Rental rate increases of 32.2% and 17.6% (cash basis) represent our highest annual increase during the past 10 years.

 
 
2019 Acquisitions
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December 31, 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 YTD 3Q19
 
Various
 
 
 
24
 
87
%
 
 
995,338

 
347,912

 
246,578

 
 
822,508

 
 
 
 
 
 
 
$
1,203,680

(1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
Completed 4Q19:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Arsenal on the Charles
 
Cambridge/Inner Suburbs/Greater Boston
 
12/17/19
 
11
 
100
%
 
 
200,000

 
153,157

 
154,855

(2) 
 
528,276

 
(3) 
 
(3) 
 
 
525,500

 
3825 and 3875 Fabian Way
 
Greater Stanford/
San Francisco
 
12/10/19
 
2
 
100
%
 
 
—

 
—

 
478,000

 
 
—

 
8.2
%
(4) 
 
6.9
%
(4) 
 
 
291,000

 
SD Tech by Alexandria (50% interest in consolidated JV)
 
Sorrento Mesa/
San Diego
 
10/30/19
 
10
 
71
%
 
 
720,000

 
—

 
—

 
 
598,316

(5) 
6.6
%
(5) 
 
6.5
%
(5) 
 
 
114,964

 
14200 Shady Grove Road
 
Rockville/Maryland
 
10/31/19
 
—
 
N/A

 
 
435,000

 
—

 
—

 
 
—

 
(3) 
 
(3) 
 
 
25,000

 
 
 
 
 
 
 
23
 
81
%
 
 
1,355,000

 
153,157

 
632,855

 
 
1,126,592

 
 
 
 
 
 
 
 
956,464

 
2019 acquisitions
 
 
 
 
 
47
 
83
%
 
 
2,350,338

 
501,069

 
879,433

 
 
1,949,100

 
 
 
 
 
 
 
$
2,160,144

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Refer to our Form 10-Q for the quarterly period ended September 30, 2019 filed on October 29, 2019, for transactions and related yield information.
(2)
Represents leased square footage with contractual lease expirations in 3Q20 and 1Q21. Upon expiration of the existing leases, we anticipate this RSF will be redeveloped to office/laboratory space.
(3)
We expect to provide total estimated costs and related yields in the future, subsequent to the commencement of development or redevelopment.
(4)
Represents the initial stabilized yields related to the fully occupied operating properties upon closing.
(5)
The campus includes 10 operating buildings, of which we expect to renovate several vacant suites aggregating 182,056 RSF. We expect to achieve unlevered initial stabilized yields of 6.6% and 6.5% (cash basis) for the operating buildings and yields for future development will be disclosed subsequent to the commencement of development.


 
 
2020 Acquisitions
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December 31, 2019
(Dollars in thousands)
 
 


Property
 
Submarket/Market
 
Date of
Purchase
 
Number of Properties
 
Operating
Occupancy
 
Square Footage
 
Unlevered Yields
 
Purchase Price
 
 
 
 
Future Development
 
Operating With Future Development/ Redevelopment
 
Operating
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 acquisitions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
275 Grove Street
 
Route 128/
Greater Boston
 
1/10/20
 
1
 
99
%
 
 
—

 
—

 
 
509,702

 
8.0%
 
6.7%
 
$
226,100

 
601, 611, and 651 Gateway Boulevard(1)
 
South San Francisco/
San Francisco
 
1/28/20
 
3
 
73
%
(2) 
 
260,000

 
300,010

 
 
475,607

 
(3) 
 
(3) 
 
 
(1) 
 
9808 and 9868 Scranton Road
 
Sorrento Mesa/
San Diego
 
1/10/20
 
2
 
88
%
 
 
—

 
—

 
 
219,628

 
7.3%
 
6.8%
 
 
102,250

 
Other
 
 
 
1/14/20
 
1
 
—
%
 
 
—

 
71,016

 
 
—

 
N/A
 
N/A
 
 
12,800

 
 
 
 
 
 
 
7
 
80
%
 
 
260,000

 
371,026

 
 
1,204,937

 
 
 
 
 
 
 
 
341,150

 
Pending
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mercer Mega Block
 
Lake Union/Seattle
 
TBD
 
—
 
N/A

 
 
800,000

 
—

 
 
—

 
(3) 
 
(3) 
 
 
143,500

 
Pending
 
San Francisco
 
TBD
 
—
 
N/A

 
 
700,000

 
—

 
 
—

 
(3) 
 
(3) 
 
 
120,000

 
Pending
 
Various
 
TBD
 
5
 
N/A

 
 
500,000

 
—

 
 
423,000

 
N/A
 
N/A
 
 
345,350

 
2020 acquisitions
 
 
 
 
 
12
 
 
 
 
2,260,000

 
371,026

 
 
1,627,937

 
 
 
 
 
 
 
$
950,000

 
2020 guidance range
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$900,000 - $1,000,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
In January 2020, we formed a real estate joint venture with Boston Properties, Inc., through a non-cash contribution, and are targeting a 51% ownership interest over time. Our initial ownership interest in the real estate joint venture was 44%, and we anticipate contributing additional capital over time to accrete to our target ownership interest of 51%. We are the managing member and will consolidate this joint venture pursuant to accounting literature since we have the power to direct the activities that most significantly affect the economic performance of the joint venture. Our partner contributed three office buildings and land supporting 260,000 square feet of future development, and we contributed one office building, one office/laboratory building, one amenity building, at 701, 681, and 685 Gateway Boulevard, respectively, and land supporting 377,000 square feet of future development. This future mega campus in our South San Francisco submarket will aggregate 1.7 million RSF, approximately 50% of which represents future development and redevelopment opportunities. We anticipate providing additional details within our Earnings Press Release and Supplemental Package for the first quarter ending March 31, 2020.
(2)
Includes 211,454 RSF of expected vacancy as of 1Q20. We expect this vacant RSF to result in a decline in our operating occupancy of 0.7% as of 1Q20. Refer to “Occupancy” on page 20 in our Supplemental Information for additional details.
(3)
We expect to provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction.

 
 
Guidance
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December 31, 2019
(Dollars in millions, except per share amounts)
 
 
 

The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2020. 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 8 of this Earnings Press Release for additional details.
Summary of Key Changes in Guidance
 
Guidance
 
 
 
 
 
 
 
 
 
 
 
 
As of 2/3/20
 
As of 1/6/20
 
 
 
 
 
 
 
 
 
 
 
Occupancy percentage in North America as of December 31, 2020(1)
 
95.4% to 96.0%
 
95.7% to 96.3%
 
 
 
 
 
 
 
 
 
 
 
Projected 2020 Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted
 
Earnings per share(2)
 
$2.17 to $2.37
 
Depreciation and amortization of real estate assets
 
 
5.15
 
 
Allocation to unvested restricted stock awards
 
 
(0.04)
 
 
Funds from operations per share(3)
 
$7.28 to $7.48
 
Midpoint
 
$7.38
 
Key Assumptions
 
Low
 
High
 
Occupancy percentage in North America as of December 31, 2020(1)
 
95.4%

 
96.0%

 
Lease renewals and re-leasing of space:
 
 
 
 
 
Rental rate increases
 
28.0%

 
31.0%

 
Rental rate increases (cash basis)
 
14.0%

 
17.0%

 
Same property performance:
 
 
 
 
 
Net operating income increase
 
1.5%

 
3.5%

 
Net operating income increase (cash basis)
 
5.0%

 
7.0%

 
Straight-line rent revenue
 
$
113

 
$
123

 
General and administrative expenses
 
$
121

 
$
126

 
Capitalization of interest
 
$
108

 
$
118

 
Interest expense
 
$
169

 
$
179

 
 
Key Credit Metrics
 
2020 Guidance
 
 
 
Net debt and preferred stock to Adjusted EBITDA – 4Q20 annualized
 
Less than or equal to 5.2x
 
Fixed-charge coverage ratio – 4Q20 annualized
 
Greater than 4.5x
 
Key Sources and Uses of Capital (in millions)
 
Range
 
Midpoint
 
Certain Completed Items
Sources of capital:
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities after dividends
 
$
200

 
$
240

 
$
220

 
 
 
Incremental debt
 
400

 
360

 
 
380

 
 
Real estate dispositions, partial interest sales, and common equity(4)
 
1,850

 
2,050

 
 
1,950

 
$
1,025

(5) 
Total sources of capital
 
$
2,450

 
$
2,650

 
$
2,550

 
 
 
Uses of capital:
 
 
 
 
 
 
 
 
 
 
Construction
 
$
1,550

 
$
1,650

 
$
1,600

 
 
 
Acquisitions(4)
 
900

 
1,000

 
 
950

 
$
341

 
Total uses of capital
 
$
2,450

 
$
2,650

 
$
2,550

 
 
 
Incremental debt (included above):
 
 
 
 
 
 
 
 
 
 
Issuance of unsecured senior notes payable
 
$
550

 
$
650

 
$
600

 
 
 
$2.2 billion unsecured senior line of credit and commercial paper program/other
 
(150
)
 
(290
)
 
 
(220
)
 
 
 
Incremental debt
 
$
400

 
$
360

 
$
380

 
 
 
 
 
 
 
 
 
 
 
 
 
 



(1)
The 0.3% reduction in occupancy guidance is attributable to vacancy aggregating 71,016 RSF representing lease-up opportunities at one acquisition completed in January 2020. Refer to “Occupancy” on page 20 in our Supplemental Information for additional details.
(2)
Excludes unrealized gains or losses after December 31, 2019, that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.
(3)
Refer to “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” in “Definitions and Reconciliations” of our Supplemental Information for additional details.    
(4)
Excludes the formation of a consolidated joint venture with Boston Properties, Inc. through non-cash contributions of real estate. Refer to “2020 Acquisitions” in this Earnings Press Release for additional details.
(5)
In January 2020, we entered into forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock (including the exercise of underwriters’ option) at a public offering price of $155.00 per share, before underwriting discounts. We expect to settle these forward equity sales agreements in 2020 and receive proceeds of approximately $1.0 billion, to be further adjusted as provided in the sales agreements.

 
 
 
q419logo.jpg
Earnings Call Information and About the Company
December 31, 2019
 
 

We will host a conference call on Tuesday, February 4, 2020, 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 fourth quarter and year ended December 31, 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, February 4, 2020. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10136680.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the fourth quarter and year ended December 31, 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/2019q4.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, vice president – corporate communications, at (626) 578-0777; or Paula Schwartz, managing director – Rx Communications Group, at (917) 322-2216.

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 $26.3 billion as of December 31, 2019, and an asset base in North America of 39.2 million square feet (“SF”). The asset base in North America includes 27.0 million RSF of operating properties and 2.1 million RSF of Class A properties undergoing construction, 6.3 million RSF of near-term and intermediate-term development and redevelopment projects, and 3.8 million SF 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.

***********

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 2020 earnings per share attributable to Alexandria’s common stockholders – diluted, 2020 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
q419logo.jpg
December 31, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended
 
Year Ended
 
 
12/31/19

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

 
 

 
 

 
 

 
 

 
 

 
 

Income from rentals
 
$
404,721

 
$
385,776

 
$
371,618

 
$
354,749

 
$
337,785

 
$
1,516,864

 
$
1,314,781

Other income
 
3,393

 
4,708

 
2,238

 
4,093

 
2,678

 
14,432

 
12,678

Total revenues
 
408,114

 
390,484

 
373,856

 
358,842

 
340,463

 
1,531,296


1,327,459

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental operations
 
121,852

 
116,450

 
105,689

 
101,501

 
97,682

 
445,492

 
381,120

General and administrative
 
29,782

 
27,930

 
26,434

 
24,677

 
22,385

 
108,823

 
90,405

Interest
 
45,493

 
46,203

 
42,879

 
39,100

 
40,239

 
173,675

 
157,495

Depreciation and amortization
 
140,518

 
135,570

 
134,437

 
134,087

 
124,990

 
544,612

 
477,661

Impairment of real estate
 
12,334

(1) 
—

 
—

 
—

 
—

 
12,334

(1) 
6,311

Loss on early extinguishment of debt
 
—


40,209

 
—

 
7,361

 
—

 
47,570

 
1,122

Total expenses
 
349,979

 
366,362

 
309,439

 
306,726

 
285,296

 
1,332,506

 
1,114,114

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
4,777

 
2,951

 
1,262

 
1,146

 
1,029

 
10,136

 
43,981

Investment income (loss)
 
152,667

(2) 
(63,076
)
 
21,500

 
83,556

 
(83,531
)
 
194,647

 
136,763

Gain on sales of real estate
 
474

 
—

 
—

 
—

 
8,704

 
474

 
8,704

Net income (loss)
 
216,053

 
(36,003
)
 
87,179

 
136,818

 
(18,631
)
 
404,047

 
402,793

Net income attributable to noncontrolling interests
 
(13,612
)
 
(11,199
)
 
(8,412
)
 
(7,659
)
 
(6,053
)
 
(40,882
)
 
(23,481
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s stockholders
 
202,441

 
(47,202
)
 
78,767

 
129,159

 
(24,684
)
 
363,165

 
379,312

Dividends on preferred stock
 
—

 
(1,173
)
 
(1,005
)
 
(1,026
)
 
(1,155
)
 
(3,204
)
 
(5,060
)
Preferred stock redemption charge
 
—

 
—

 
—

 
(2,580
)
 
(4,240
)
 
(2,580
)
 
(4,240
)
Net income attributable to unvested restricted stock awards
 
(2,823
)
 
(1,398
)
 
(1,432
)
 
(1,955
)
 
(1,661
)
 
(6,386
)
 
(6,029
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
 
$
199,618

 
$
(49,773
)
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
350,995

 
$
363,983

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
1.75

 
$
(0.44
)
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
3.13

 
$
3.53

Diluted
 
$
1.74

 
$
(0.44
)
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
3.12

 
$
3.52

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
114,175

 
112,120

 
111,433

 
111,054

 
106,033

 
112,204

 
103,010

Diluted
 
114,974

 
112,120

 
111,501

 
111,054

 
106,033

 
112,524

 
103,321

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
 
$
1.03

 
$
1.00

 
$
1.00

 
$
0.97

 
$
0.97

 
$
4.00

 
$
3.73


(1)
Represents charges to lower the carrying amount of two investments in real estate that were classified as held for sale during the three months ended December 31, 2019, to their estimated fair value.
(2)
Refer to “Investments” of our Supplemental Information for additional details.

 
 
Consolidated Balance Sheets
q419logo.jpg
December 31, 2019
(In thousands)
 
 

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

 
 

 
 

 
 

Investments in real estate
 
$
14,844,038

 
$
13,618,280

 
$
12,872,824

 
$
12,410,350

 
$
11,913,693

Investments in unconsolidated real estate joint ventures
 
346,890

 
340,190

 
334,162

 
290,405

 
237,507

Cash and cash equivalents
 
189,681

 
410,675

 
198,909

 
261,372

 
234,181

Restricted cash
 
53,008

 
42,295

 
39,316

 
54,433

 
37,949

Tenant receivables
 
10,691

 
10,668

 
9,228

 
9,645

 
9,798

Deferred rent
 
641,844

 
615,817

 
585,082

 
558,103

 
530,237

Deferred leasing costs
 
270,043

 
252,772

 
247,468

 
241,268

 
239,070

Investments
 
1,140,594

 
990,454

 
1,057,854

 
1,000,904

 
892,264

Other assets
 
893,714

 
777,003

 
694,627

 
653,726

 
370,257

Total assets
 
$
18,390,503

 
$
17,058,154

 
$
16,039,470

 
$
15,480,206

 
$
14,464,956

 
 
 
 
 
 
 
 
 
 
 
Liabilities, Noncontrolling Interests, and Equity
 
 
 
 
 
 
 
 
 
 
Secured notes payable
 
$
349,352

 
$
351,852

 
$
354,186

 
$
356,461

 
$
630,547

Unsecured senior notes payable
 
6,044,127

 
6,042,831

 
5,140,914

 
5,139,500

 
4,292,293

Unsecured senior line of credit
 
384,000

 
343,000

 
514,000

 
—

 
208,000

Unsecured senior bank term loan
 
—

 
—

 
347,105

 
347,542

 
347,415

Accounts payable, accrued expenses, and other liabilities
 
1,320,268

 
1,241,276

 
1,157,417

 
1,171,377

 
981,707

Dividends payable
 
126,278

 
115,575

 
114,379

 
110,412

 
110,280

Total liabilities
 
8,224,025

 
8,094,534

 
7,628,001

 
7,125,292

 
6,570,242

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
12,300

 
12,099

 
10,994

 
10,889

 
10,786

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

 
57,461

 
57,461

 
57,461

 
64,336

Common stock
 
1,208

 
1,132

 
1,120

 
1,112

 
1,110

Additional paid-in capital
 
8,874,367

 
7,743,188

 
7,581,573

 
7,518,716

 
7,286,954

Accumulated other comprehensive loss
 
(9,749
)
 
(11,549
)
 
(11,134
)
 
(10,712
)
 
(10,435
)
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
 
8,865,826

 
7,790,232

 
7,629,020

 
7,566,577

 
7,341,965

Noncontrolling interests
 
1,288,352

 
1,161,289

 
771,455

 
777,448

 
541,963

Total equity
 
10,154,178

 
8,951,521

 
8,400,475

 
8,344,025

 
7,883,928

Total liabilities, noncontrolling interests, and equity
 
$
18,390,503

 
$
17,058,154

 
$
16,039,470

 
$
15,480,206

 
$
14,464,956



 
 
Funds From Operations and Funds From Operations per Share
q419logo.jpg
December 31, 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
 
Year Ended
 
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Net income (loss) attributable to Alexandria’s common stockholders
 
$
199,618

 
$
(49,773
)
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
350,995

 
$
363,983

Depreciation and amortization of real estate assets(1)
 
137,761

 
135,570

 
134,437

 
134,087

 
124,990

 
541,855

 
477,661

Noncontrolling share of depreciation and amortization from consolidated real estate JVs
 
(10,176
)
 
(8,621
)
 
(6,744
)
 
(5,419
)
 
(4,252
)
 
(30,960
)
 
(16,077
)
Our share of depreciation and amortization from unconsolidated real estate JVs
 
2,702

 
1,845

 
973

 
846

 
719

 
6,366

 
3,181

Gain on sales of real estate
 
(474
)
 
—

 
—

 
—

 
(8,704
)
 
(474
)
 
(8,704
)
Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
—

 
—

 
—

 
—

 
(35,678
)
Impairment of real estate – rental properties
 
12,334

 
—

 
—

 
—

 
—

 
12,334

 
—

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

 
—

 
1,005

 
1,026

 
—

 
3,204

 
5,060

Allocation to unvested restricted stock awards
 
(1,809
)
 
—

 
(1,445
)
 
(2,054
)
 
—

 
(5,904
)
 
(5,961
)
Funds from operations attributable to Alexandria’s common stockholders – diluted(1)
 
339,956

 
79,021

 
204,556

 
252,084

 
81,013

 
877,416

 
783,465

Unrealized (gains) losses on non-real estate investments
 
(148,268
)
 
70,043

 
(11,058
)
 
(72,206
)
 
94,850

 
(161,489
)
 
(99,634
)
Realized gains on non-real estate investments
 
—

 
—

 
—

 
—

 
(6,428
)
 
—

 
(14,680
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
—

 
—

 
—

 
6,311

Impairment of non-real estate investments
 
9,991

(2) 
7,133

 
—

 
—

 
5,483

 
17,124

 
5,483

Loss on early extinguishment of debt
 
—

 
40,209

 
—

 
7,361

 
—

 
47,570

 
1,122

Loss on early termination of interest rate hedge agreements
 
—

 
1,702

 
—

 
—

 
—

 
1,702

 
—

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

 
4,240

Removal of assumed conversion of 7.00% Series D cumulative convertible preferred stock
 
—

 
—

 
(1,005
)
 
(1,026
)
 
—

 
(3,204
)
 
(5,060
)
Allocation to unvested restricted stock awards
 
1,760

 
(1,002
)
 
179

 
990

 
(1,138
)
 
1,307

 
1,517

Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
203,439

 
$
197,106

 
$
192,672

 
$
189,783

 
$
178,020

 
$
783,006

 
$
682,003


(1)
Calculated in accordance with standards established by the Nareit Board of Governors. Refer to “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” in the “Definitions and Reconciliations” of our Supplemental Information for additional details.
(2)
Relates to two privately held non-real estate investments.

 
 
Funds From Operations and Funds From Operations per Share (continued)
q419logo.jpg
December 31, 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
 
Year Ended
 
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
 Net income (loss) per share attributable to Alexandria’s common stockholders – diluted
 
$
1.74

 
$
(0.44
)
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
3.12

 
$
3.52

Depreciation and amortization of real estate assets
 
1.13

 
1.14

 
1.15

 
1.17

 
1.14

 
4.60

 
4.50

Gain on sales of real estate
 
—

 
—

 
—

 
—

 
(0.08
)
 
—

 
(0.08
)
Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.35
)
Impairment of real estate – rental properties
 
0.11

 
—

 
—

 
—

 
—

 
0.11

 
—

Allocation to unvested restricted stock awards
 
(0.02
)
 
—

 
—

 
(0.02
)
 
—

 
(0.06
)
 
(0.06
)
Funds from operations per share attributable to Alexandria’s common stockholders – diluted(1)
 
2.96

 
0.70

 
1.83

 
2.26

 
0.76

 
7.77


7.53

Unrealized (gains) losses on non-real estate investments
 
(1.29
)
 
0.62

 
(0.10
)
 
(0.65
)
 
0.89

 
(1.44
)
 
(0.96
)
Realized gains on non-real estate investments
 
—

 
—

 
—

 
—

 
(0.06
)
 
—

 
(0.14
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
—

 
—

 
—

 
0.06

Impairment of non-real estate investments
 
0.09

 
0.06

 
—

 
—

 
0.05

 
0.15

 
0.05

Loss on early extinguishment of debt
 
—

 
0.36

 
—

 
0.07

 
—

 
0.42

 
0.01

Loss on early termination of interest rate hedge agreements
 
—

 
0.02

 
—

 
—

 
—

 
0.02

 
—

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

 
0.04

Allocation to unvested restricted stock awards
 
0.01

 
(0.01
)
 
—

 
0.01

 
—

 
0.02

 
0.02

Funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
1.77

 
$
1.75

 
$
1.73

 
$
1.71

 
$
1.68

 
$
6.96

 
$
6.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding(2) for calculations of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share – diluted
 
114,974

 
112,120

 
111,501

 
111,054

 
106,033

 
112,524

 
103,321

Funds from operations – diluted, per share
 
114,974

 
112,562

 
112,077

 
111,635

 
106,244

 
112,966

 
104,048

Funds from operations – diluted, as adjusted, per share
 
114,974

 
112,562

 
111,501

 
111,054

 
106,244

 
112,524

 
103,321


(1)
Refer to footnotes on previous page for additional details.
(2)
Refer to “Weighted-Average Shares of Common Stock Outstanding – Diluted” in the “Definitions and Reconciliations” of our Supplemental Information for additional details.









SUPPLEMENTAL
INFORMATION








 
 
 
q419logo.jpg
Company Profile
December 31, 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 $26.3 billion as of December 31, 2019, and an asset base in North America of 39.2 million SF. The asset base in North America includes 27.0 million RSF of operating properties and 2.1 million RSF of Class A properties undergoing construction, 6.3 million RSF of near-term and intermediate-term development and redevelopment projects, and 3.8 million SF 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 50% of our annual rental revenue generated from tenants that are investment-grade rated or publicly traded large cap companies. 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, technology, and agtech industries provide Alexandria significant competitive advantages in attracting new business opportunities.
 
Alexandria’s executive and senior management team consists of 44 individuals, averaging 25 years of real estate experience, including 13 years with Alexandria. Our executive management team alone averages 19 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

 
 
 
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Investor Information
December 31, 2019
 
 

Corporate Headquarters
 
New York Stock Exchange Trading Symbol
 
Information Requests
26 North Euclid Avenue
 
Common stock: ARE
 
Phone:
(626) 578-0777
Pasadena, California 91101
 
 
 
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
 
CFRA
 
Green Street Advisors, Inc.
 
RBC Capital Markets
Jamie Feldman / Elvis Rodriguez
 
Kenneth Leon
 
Daniel Ismail / Chris Darling
 
Michael Carroll / Jason Idoine
(646) 855-5808 / (646) 855-1589
 
(646) 517-2552
 
(949) 640-8780 / (949) 640-8780
 
(440) 715-2649 / (440) 715-2651
 
 
 
 
 
 
 
Barclays Capital Inc.
 
Citigroup Global Markets Inc.
 
J.P. Morgan Securities LLC
 
Robert W. Baird & Co. Incorporated
Ross Smotrich / Upal Rana
 
Michael Bilerman / Emmanuel Korchman
 
Anthony Paolone
 
David Rodgers
(212) 526-2306 / (212) 526-4887
 
(212) 816-1383 / (212) 816-1382
 
(212) 622-6682
 
(216) 737-7341
 
 
 
 
 
 
 
BTIG, LLC
 
Evercore ISI
 
Mizuho Securities USA Inc.
 
SMBC Nikko Securities America, Inc.
Tom Catherwood / James Sullivan
 
Sheila McGrath / Wendy Ma
 
Haendel St. Juste / Zachary Silverberg
 
Richard Anderson / Jay Kornreich
(212) 738-6140 / (212) 738-6139
 
(212) 497-0882 / (212) 497-0870
 
(212) 209-9300 / (212) 205-7855
 
(646) 521-2351 / (646) 424-3202
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Income Coverage
 
Rating Agencies
Barclays Capital Inc.
 
Wells Fargo & Company
 
Moody’s Investors Service
 
S&P Global Ratings
Srinjoy Banerjee / Devon Zhou
 
Thierry Perrein / Kevin McClure
 
(212) 553-0376
 
Fernanda Hernandez / Michael Souers
(212) 526-3521 / (212) 526-6961
 
(704) 410-3262 / (704) 410-3252
 
 
 
(212) 438-1347 / (212) 438-2508
 
 
 
 
 
 
 
J.P. Morgan Securities LLC
 
 
 
 
 
 
Mark Streeter / Ian Snyder
 
 
 
 
 
 
(212) 834-5086 / (212) 834-3798
 
 
 
 
 
 

 
 
Financial and Asset Base Highlights
q419logo.jpg
December 31, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Selected financial data from consolidated financial statements and related information
 
 
 
 
 
 
 
 
 
 
Rental revenues
 
$
308,418

 
$
293,182

 
$
289,625

 
$
274,563

 
$
260,102

Tenant recoveries
 
$
96,303

 
$
92,594

 
$
81,993

 
$
80,186

 
$
77,683

General and administrative expenses
 
$
29,782

 
$
27,930

 
$
26,434

 
$
24,677

 
$
22,385

General and administrative expenses as a percentage of net operating income –
trailing 12 months
 
10.0%

 
9.7%

 
9.5%

 
9.5%

 
9.6%

Operating margin
 
70%

 
70%

 
72%

 
72%

 
71%

Adjusted EBITDA margin
 
68%

 
68%

 
69%

 
70%

 
69%

Adjusted EBITDA – quarter annualized
 
$
1,148,620

 
$
1,099,908

 
$
1,063,056

 
$
1,029,944

 
$
968,888

Adjusted EBITDA – trailing 12 months
 
$
1,085,382

 
$
1,040,449

 
$
1,004,724

 
$
966,781

 
$
937,906

 
 
 
 
 
 
 
 
 
 
 
Net debt at end of period
 
$
6,582,089

 
$
6,333,459

 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

Net debt to Adjusted EBITDA – quarter annualized
 
5.7x

(1) 
5.8x

 
5.8x

 
5.4x

 
5.4x

Net debt to Adjusted EBITDA – trailing 12 months
 
6.1x

 
6.1x

 
6.1x

 
5.8x

 
5.6x

Net debt and preferred stock to Adjusted EBITDA – quarter annualized
 
5.7x

 
5.8x

 
5.8x

 
5.5x

 
5.5x

Net debt and preferred stock to Adjusted EBITDA – trailing 12 months
 
6.1x

 
6.1x

 
6.2x

 
5.8x

 
5.7x

 
 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio – quarter annualized
 
4.2x

 
3.9x

 
4.2x

 
4.5x

 
4.1x

Fixed-charge coverage ratio – trailing 12 months
 
4.2x

 
4.1x

 
4.2x

 
4.2x

 
4.2x

Unencumbered net operating income as a percentage of total net operating income
 
95%

 
95%

 
94%

 
95%

 
88%

 
 
 
 
 
 
 
 
 
 
 
Closing stock price at end of period
 
$
161.58

 
$
154.04

 
$
141.09

 
$
142.56

 
$
115.24

Common shares outstanding (in thousands) at end of period
 
120,800

 
113,173

 
111,986

 
111,181

 
111,012

Total equity capitalization at end of period
 
$
19,518,915

 
$
17,522,382

 
$
15,887,660

 
$
15,936,979

 
$
12,879,366

Total market capitalization at end of period
 
$
26,296,394

 
$
24,260,065

 
$
22,243,865

 
$
21,780,482

 
$
18,357,621

 
 
 
 
 
 
 
 
 
 
 
Dividend per share – quarter/annualized
 
$1.03/$4.12

 
$1.00/$4.00

 
$1.00/$4.00

 
$0.97/$3.88

 
$0.97/$3.88

Dividend payout ratio for the quarter
 
61%

 
57%

 
58%

 
57%

 
60%

Dividend yield – annualized
 
2.5%

 
2.6%

 
2.8%

 
2.7%

 
3.4%

 
 
 
 
 
 
 
 
 
 
 
Amounts related to operating leases:
 
 
 
 
 
 
 
 
 
 
Operating lease liabilities
 
$
271,809

 
$
270,614

 
$
243,585

 
$
244,601

 
$
—

Rent expense
 
$
4,609

 
$
4,705

 
$
4,482

 
$
4,492

 
$
4,164

 
 
 
 
 
 
 
 
 
 
 
Capitalized interest
 
$
23,822

 
$
24,558

 
$
21,674

 
$
18,509

 
$
19,902

Weighted-average interest rate for capitalization of interest during the period
 
3.88%

 
4.00%

 
4.14%

 
3.96%

 
4.01%

(1) Due to the timing of two acquisitions that closed in December 2019, we had a temporary 0.4x increase above our projected net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2019, annualized. We remain committed to our guidance for net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2020, annualized, of less than or equal to 5.2x.

 
 
Financial and Asset Base Highlights (continued)
q419logo.jpg
December 31, 2019
(Dollars in thousands, except annual rental revenue per occupied RSF amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Amounts included in funds from operations and non-revenue-enhancing capital expenditures
 
 
 
 
 
 
 
 
 
 
Straight-line rent revenue
 
$
24,400

 
$
27,394

 
$
25,476

 
$
26,965

 
$
17,923

Amortization of acquired below-market leases
 
$
8,837

 
$
5,774

 
$
8,054

 
$
7,148

 
$
5,350

Straight-line rent expense on ground leases
 
$
219

 
$
320

 
$
226

 
$
246

 
$
272

Stock compensation expense
 
$
10,239

 
$
10,935

 
$
11,437

 
$
11,029

 
$
9,810

Amortization of loan fees
 
$
2,241

 
$
2,251

 
$
2,380

 
$
2,233

 
$
2,401

Amortization of debt premiums
 
$
907

 
$
1,287

 
$
782

 
$
801

 
$
611

Non-revenue-enhancing capital expenditures:
 
 
 
 
 
 
 
 
 
 
Building improvements
 
$
3,295

 
$
2,901

 
$
2,876

 
$
2,381

 
$
3,256

Tenant improvements and leasing commissions
 
$
14,648

 
$
11,964

 
$
13,901

 
$
8,709

 
$
11,758

 
 
 
 
 
 
 
 
 
 
 
Operating statistics and related information (at end of period)
 
 
 
 
 
 
 
 
 
 
Number of properties – North America
 
291

 
269

 
257

 
250

 
237

RSF – North America (including development and redevelopment projects under construction)
 
29,098,433

 
27,288,263

 
26,321,122

 
25,323,299

 
24,587,438

Total square feet – North America
 
39,170,786

 
38,496,276

 
37,120,560

 
33,688,294

 
33,097,210

Annual rental revenue per occupied RSF – North America
 
$
51.04

 
$
51.00

 
$
50.27

 
$
49.56

 
$
48.42

Occupancy of operating properties – North America
 
96.8%

(1) 
96.6%

 
97.4%

 
97.2%

 
97.3%

Occupancy of operating and redevelopment properties – North America
 
94.4%

 
94.5%

 
96.4%

 
95.5%

 
95.1%

Weighted-average remaining lease term (in years)
 
8.1

 
8.3

 
8.4

 
8.4

 
8.6

 
 
 
 
 
 
 
 
 
 
 
Total leasing activity – RSF
 
1,752,124

 
1,241,677

 
819,949

 
1,248,972

 
1,558,064

Lease renewals and re-leasing of space – change in average new rental rates over expiring rates:
 
 
 
 
 
 
 
 
 
 
Rental rate increases
 
37.0%

 
27.9%

 
32.5%

 
32.9%

 
17.4%

Rental rate increases (cash basis)
 
21.7%

 
11.2%

 
17.8%

 
24.3%

 
11.4%

RSF (included in total leasing activity above)
 
571,650

 
758,113

 
587,930

 
509,415

 
650,540

 
 
 
 
 
 
 
 
 
 
 
Same property – percentage change over comparable quarter from prior year:
 
 
 
 
 
 
 
 
 
 
Net operating income increase
 
2.0%

 
2.5%

 
4.3%

 
2.3%

 
3.8%

Net operating income increase (cash basis)
 
4.0%

 
5.7%

 
9.5%

 
10.2%

 
7.6%

 
 
 
 
 
 
 
 
 
 
 

(1)
Includes 259,616 RSF, or 1.0%, of vacancy representing lease-up opportunities at properties recently acquired during 2H19, primarily related to our SD Tech by Alexandria campus. Excluding these vacancies, occupancy of operating properties in North America would have been 97.8% as of December 31, 2019. Refer to “Occupancy” in this Supplemental Information for additional details.


 
 
 
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High-Quality, Diverse, and Innovative Tenants
December 31, 2019
 
 



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

Investment-Grade or
Publicly Traded Large Cap Tenants
 
Tenant Mix
 
 
 
 
 
q419clienttenantmix.jpg
 
50%
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Duration Lease Terms
 
 
 
 
 
 
 
8.1 Years
 
 
 
 
 
 
 
 
 
 
Weighted-Average Remaining Term(2)
 
 
 
Percentage of ARE’s Annual Rental Revenue(1)

(1)
Represents annual rental revenue in effect as of December 31, 2019.
(2)
Based on aggregate annual rental revenue in effect as of December 31, 2019. Refer to “Annual Rental Revenue” in the “Definitions and Reconciliations” of this Supplemental Information for additional details on our methodology on annual rental revenue from unconsolidated real estate joint ventures.
(3)
67% of our annual rental revenue for technology tenants is from investment-grade or publicly traded large cap tenants.

 
 
 
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Class A Properties in AAA Locations
December 31, 2019
 
 


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

Class A Properties in
AAA Locations
 
AAA Locations
 
 
 
 
q419realestate.jpg
 
 
 
 
 
 
 
 
76%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s
 
Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of ARE’s Annual Rental Revenue(1)








(1)
Represents annual rental revenue in effect as of December 31, 2019.

 
 
 
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Occupancy
December 31, 2019
 
 



Solid Demand for Class A Properties in AAA Locations
Drives Solid Occupancy
Solid Historical Occupancy(1)
 
Occupancy Across Key Locations(2)
 
 
 
 
q419occupancys.jpg
 
 
 
 
 
 
 
 
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Over 10 Years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents average occupancy of operating properties in North America as of each December 31 for the last 10 years.
(2)
As of December 31, 2019.
(3)
Includes 259,616 RSF, or 1.0%, of vacancy representing lease-up opportunities at properties recently acquired during 2H19, primarily related to our SD Tech by Alexandria campus. Excluding these vacancies, occupancy of operating properties in North America would have been 97.8% as of December 31, 2019. Expected occupancy for 1Q20 includes 689,103 RSF, or 2.4%, of vacancy primarily from three buildings contributed by our partner in a recently formed consolidated real estate joint venture and our acquisition of SD Tech by Alexandria campus. Refer to “Acquisitions” in this Earnings Press Release for additional details.
 
 
 
 
4Q19
 
1Q20 (projected)
Property
 
Submarket/Market
 
 
 
Occupancy Impact
 
 
 
Occupancy Impact
 
 
 
 
RSF
 
Region
 
Consolidated
 
RSF
 
Region
 
Consolidated
SD Tech by Alexandria
 
Sorrento Mesa/San Diego
 
182,056

 
3.2
%
 
0.7
%
 
225,865

 
3.8
%
 
0.8
%
601, 611, and 651 Gateway Boulevard
 
South San Francisco/San Francisco
 
N/A

 
N/A

 
N/A

 
211,454

 
2.7
%
 
0.7
%
Other acquisitions
 
Various
 
77,560

 
N/A

 
0.3

 
251,784

 
N/A

 
0.9
%
 
 
 
 
259,616

 

 
1.0
%
 
689,103

 

 
2.4
%

 
 
 
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Key Operating Metrics
December 31, 2019
 
 

Same Property Net Operating Income Growth
 
Favorable Lease Structure(1)
 
q419samepropa.jpg
q419samepropb.jpg
 
Strategic Lease Structure by Owner and Operator of Collaborative Life Science, Technology, and AgTech Campuses
 
 
Increasing cash flows
 
 
 
 
Percentage of leases containing
annual rent escalations
95%
 
 
Stable cash flows
 
 
 
 
Percentage of triple
net leases
97%
 
 
Lower capex burden
 
 
 
 
Percentage of leases providing for the
recapture of capital expenditures
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Growth:
Renewed/Re-Leased Space
 
Margins(2)
 
q419rentalratea.jpg
q419rentalrateb.jpg
 
 
 
 
 
 
 
 
 
 
Operating
 
 
 
Adjusted EBITDA
 
 
70%
 
 
 
68%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Percentages calculated based on RSF as of December 31, 2019.
(2)
Represents percentages for the three months ended December 31, 2019.

 
 
Same Property Performance
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 

 
 
December 31, 2019
 
 
 
December 31, 2019
Same Property Financial Data
 
Three Months Ended
 
Year Ended
 
Same Property Statistical Data
 
Three Months Ended
 
Year Ended
Percentage change over comparable period from prior year:
 
 
 
 
 
Number of same properties
 
209
 
192
Net operating income increase
 
2.0%
 
3.1%
 
Rentable square feet
 
20,477,995
 
18,519,783
Net operating income increase (cash basis)
 
4.0%
 
7.1%
 
Occupancy – current-period average
 
96.9%
 
96.6%
Operating margin
 
71%
 
71%
 
Occupancy – same-period prior-year average
 
97.1%
 
96.3%
 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2019
 
2018
 
$ Change
 
% Change
 
2019
 
2018
 
$ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from rentals:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
$
257,762

 
$
251,375

 
$
6,387

 
2.5
%
 
$
927,077

 
$
897,522

 
$
29,555

 
3.3
%
Non-same properties
 
50,656

 
8,727

 
41,929

 
480.5

 
238,711

 
113,196

 
125,515

 
110.9

Rental revenues
 
308,418

 
260,102

 
48,316

 
18.6

 
1,165,788

 
1,010,718

 
155,070

 
15.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
82,558

 
76,031

 
6,527

 
8.6

 
299,325

 
281,092

 
18,233

 
6.5

Non-same properties
 
13,745

 
1,652

 
12,093

 
732.0

 
51,751

 
22,971

 
28,780

 
125.3

Tenant recoveries
 
96,303

 
77,683

 
18,620

 
24.0

 
351,076

 
304,063

 
47,013

 
15.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from rentals
 
404,721

 
337,785

 
66,936

 
19.8

 
1,516,864

 
1,314,781

 
202,083

 
15.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
107

 
95

 
12

 
12.6

 
448

 
298

 
150

 
50.3

Non-same properties
 
3,286

 
2,583

 
703

 
27.2

 
13,984

 
12,380

 
1,604

 
13.0

Other income
 
3,393

 
2,678

 
715

 
26.7

 
14,432

 
12,678

 
1,754

 
13.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
340,427

 
327,501

 
12,926

 
3.9

 
1,226,850

 
1,178,912

 
47,938

 
4.1

Non-same properties
 
67,687

 
12,962

 
54,725

 
422.2

 
304,446

 
148,547

 
155,899

 
104.9

Total revenues
 
408,114

 
340,463

 
67,651

 
19.9

 
1,531,296

 
1,327,459

 
203,837

 
15.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
98,396

 
90,152

 
8,244

 
9.1

 
353,431

 
332,051

 
21,380

 
6.4

Non-same properties
 
23,456

 
7,530

 
15,926

 
211.5

 
92,061

 
49,069

 
42,992

 
87.6

Rental operations
 
121,852

 
97,682

 
24,170

 
24.7

 
445,492

 
381,120

 
64,372

 
16.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
242,031

 
237,349

 
4,682

 
2.0

 
873,419

 
846,861

 
26,558

 
3.1

Non-same properties
 
44,231

 
5,432

 
38,799

 
714.3

 
212,385

 
99,478

 
112,907

 
113.5

Net operating income
 
$
286,262

 
$
242,781

 
$
43,481

 
17.9
%
 
$
1,085,804

 
$
946,339

 
$
139,465

 
14.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income – same properties
 
$
242,031

 
$
237,349

 
$
4,682

 
2.0
%
 
$
873,419

 
$
846,861

 
$
26,558

 
3.1
%
Straight-line rent revenue
 
(13,578
)
 
(16,809
)
 
3,231

 
(19.2
)
 
(55,393
)
 
(79,475
)
 
24,082

 
(30.3
)
Amortization of acquired below-market leases
 
(3,092
)
 
(3,934
)
 
842

 
(21.4
)
 
(7,249
)
 
(10,196
)
 
2,947

 
(28.9
)
Net operating income – same properties (cash basis)
 
$
225,361

 
$
216,606

 
$
8,755

 
4.0
%
 
$
810,777

 
$
757,190

 
$
53,587

 
7.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Refer to “Same Property Comparisons” in the “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
q419logo.jpg
December 31, 2019
(Dollars per RSF)
 
 

 
 
 
Three Months Ended
 
 
 
Year Ended
 
 
 
Year Ended
 
 
 
 
December 31, 2019
 
 
 
December 31, 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
 
 
37.0%

 
 
 
21.7%

 
 
 
32.2%

 
 
 
17.6%

 
 
 
24.1%

 
 
 
14.1%

 
New rates
 
 

$66.26

 
 
 

$63.30

 
 
 

$58.65

 
 
 

$56.19

 
 
 

$55.05

 
 
 

$52.79

 
Expiring rates
 
 

$48.35

 
 
 

$52.02

 
 
 

$44.35

 
 
 

$47.79

 
 
 

$44.35

 
 
 

$46.25

 
RSF
 
 
571,650

 
 
 
 
 
 
 
2,427,108

 
 
 
 
 
 
 
2,088,216

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$24.20

 
 
 
 
 
 
 

$20.28

 
 
 
 
 
 
 

$20.61

 
 
 
 
 
Weighted-average lease term
 
 
5.9 years

 
 
 
 
 
 
 
5.7 years

 
 
 
 
 
 
 
6.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Developed/redeveloped/previously vacant space leased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$47.76

 
 
 

$41.71

 
 
 

$55.95

 
 
 

$52.19

 
 
 

$58.45

 
 
 

$48.73

 
RSF
 
 
1,180,474

 
 
 
 
 
 
 
2,635,614

 
 
 
 
 
 
 
2,633,476

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$6.23

 

 
 
 
 
 

$13.74

 
 
 
 
 
 
 

$12.57

 
 
 
 
 
Weighted-average lease term
 
 
8.8 years

 
 
 
 
 
 
 
9.8 years

 
 
 
 
 
 
 
11.5 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leasing activity summary (totals):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$53.80

 
 
 

$48.75

 
 
 

$57.25

 
 
 

$54.11

 
 
 

$56.94

 
 
 

$50.52

 
RSF
 
 
1,752,124

 
 
 
 
 
 
 
5,062,722

(2) 
 
 
 
 
 
 
4,721,692

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$12.09

 
 
 
 
 
 
 

$16.88

 
 
 
 
 
 
 

$16.13

 
 
 
 
 
Weighted-average lease term
 
 
7.9 years

 
 
 
 
 
 
 
7.8 years

 
 
 
 
 
 
 
9.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease expirations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiring rates
 
 

$47.40

 
 
 

$50.80

 
 
 

$43.43

 
 
 

$46.59

 
 
 

$42.98

 
 
 

$45.33

 
RSF
 
 
637,540

 
 
 
 
 
 
 
2,822,434

 
 
 
 
 
 
 
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 41,809 RSF and 50,548 RSF as of December 31, 2019 and 2018, respectively.
(2)
During the year ended December 31, 2019, we granted tenant concessions/free rent averaging 2.4 months with respect to the 5,062,722 RSF leased. Approximately 59% of the leases executed during the year ended December 31, 2019, did not include concessions for free rent.

 
 
 
q419logo.jpg
Contractual Lease Expirations
December 31, 2019
 
 

Year
 
RSF
 
Percentage of
Occupied RSF
 
Annual Rental Revenue
(Per RSF)(1)
 
Percentage of Total
Annual Rental Revenue
 
 
2020
(2)
 
 
1,745,030

 
 
 
6.7
%
 
 
 
$
35.27

 
 
 
4.7
%
 
 
 
2021
 
 
 
1,531,070

 
 
 
5.9
%
 
 
 
$
42.09

 
 
 
4.9
%
 
 
 
2022
 
 
 
2,164,448

 
 
 
8.3
%
 
 
 
$
42.07

 
 
 
7.0
%
 
 
 
2023
 
 
 
2,564,766

 
 
 
9.9
%
 
 
 
$
45.66

 
 
 
9.0
%
 
 
 
2024
 
 
 
2,300,974

 
 
 
8.8
%
 
 
 
$
46.33

 
 
 
8.2
%
 
 
 
2025
 
 
 
1,786,892

 
 
 
6.9
%
 
 
 
$
48.78

 
 
 
6.7
%
 
 
 
2026
 
 
 
1,597,511

 
 
 
6.1
%
 
 
 
$
49.33

 
 
 
6.0
%
 
 
 
2027
 
 
 
2,366,266

 
 
 
9.1
%
 
 
 
$
51.72

 
 
 
9.4
%
 
 
 
2028
 
 
 
1,646,032

 
 
 
6.3
%
 
 
 
$
60.18

 
 
 
7.6
%
 
 
 
2029
 
 
 
1,350,014

 
 
 
5.2
%
 
 
 
$
57.24

 
 
 
5.9
%
 
 
Thereafter
 
 
6,954,809

 
 
 
26.8
%
 
 
 
$
57.88

 
 
 
30.6
%
 
 

Market
 
2020 Contractual Lease Expirations (in RSF)
 
Annual Rental Revenue
(Per RSF)(1)
 
2021 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
 
Total

 
 
 
 
 
 
 



 

Greater Boston
 
107,773

 
122,950

 
75,754

(4) 
 
232,547

 
 
539,024

 
$
41.32

 
—


25,970


79,101

(4) 

267,624

 
 
372,695


$
44.10

San Francisco
 
81,493

 
25,569

 
—

 
 
174,380

(5) 
 
281,442

 
44.08

 
24,193


9,628


—

 

364,747

 
 
398,568


52.99

New York City
 
—

 
—

 
—

 
 
20,712

 
 
20,712

 
99.30

 
—


19,647


—

 

15,466


 
35,113


97.45

San Diego
 
37,880

 
—

 
—

 
 
378,021

(6) 

415,901

 
30.85

 
634


74,557


—

 
 
223,991

 
 
299,182


38.81

Seattle
 
12,727

 
—

 
—

 
 
32,047

 
 
44,774

 
38.70

 
—


—


—

 

52,320


 
52,320


45.48

Maryland
 
16,235

 
33,778

 
—

 
 
97,317

 
 
147,330

 
17.40

 
—


—


—

 

160,439


 
160,439


22.51

Research Triangle
 
37,881

 
25,396

 
—

 
 
36,290

 
 
99,567

 
17.74

 
3,724


34,553


—

 

133,592


 
171,869


25.99

Canada
 
72,250

 
—

 
—

 
 
22,343

 
 
94,593

 
28.22

 
—

 
4,345

 
—

 
 
18,612

 
 
22,957

 
27.13

Non-cluster markets
 
—

 
—

 
—

 
 
101,687

 
 
101,687

 
31.29

 
—


—


—

 

17,927


 
17,927


42.50

Total
 
366,239

 
207,693

 
75,754

 
 
1,095,344

 
 
1,745,030

 
$
35.27

 
28,551


168,700


79,101

 

1,254,718


 
1,531,070


$
42.09

Percentage of expiring leases
 
21
%
 
12
%
 
4
%
 
 
63
%
 
 
100
%
 
 
 
2
%
 
11
%
 
5
%
 
 
82
%

 
100
%


 

(1)
Represents amounts in effect as of December 31, 2019.
(2)
Excludes month-to-month leases aggregating 41,809 RSF as of December 31, 2019.
(3)
The largest remaining contractual lease expiration in 2020 is 60,759 RSF in our Greater Boston market.
(4)
Represents office space aggregating 154,855 RSF at The Arsenal on the Charles, a campus acquired on December 17, 2019, in our Cambridge/Inner Suburbs submarket, that is targeted for redevelopment into office/laboratory space upon expiration of existing leases in 3Q20 and 1Q21.
(5)
Includes two leases aggregating 100,560 RSF at 630 and 650 Gateway Boulevard in our South San Francisco submarket that expire in 4Q20. We are considering options to renovate these buildings into Class A office/laboratory properties, which will not be classified as a redevelopment. As such, we expect these properties to remain in our pool of same properties.
(6)
Includes 140,398 RSF at 9363, 9373, and 9393 Towne Centre Drive in our University Town Center submarket, a site that is under evaluation to be developed, subject to future market conditions.

 
 
Top 20 Tenants
q419logo.jpg
December 31, 2019
(Dollars in thousands, except average market cap amounts)
 
 

80% of Top 20 Annual Rental Revenue From Investment-Grade
or Publicly Traded Large Cap Tenants(1)(2) 

 
 
Tenant
 
Remaining Lease Term(1) (in years)
 
Aggregate
RSF
 
Annual Rental Revenue(1)
 
Percentage of Aggregate Annual Rental Revenue(1)
 
Investment-Grade
Credit Ratings
 
Average Market Cap(1)
(in billions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moody’s
 
S&P
 
 
1
 
Bristol-Myers Squibb Company
 
 
8.7

 
 
 
900,050

 
 
 
$
52,174

 
 
4.1
%
 
A2
 
A+
 
$
86.9

 
2
 
Takeda Pharmaceutical Company Ltd.
 
 
9.6

 
 
 
606,249

 
 
 
39,251

 
 
3.1

 
Baa2
 
BBB+
 
$
57.9

 
3
 
Facebook, Inc.
 
 
12.0

 
 
 
903,786

 
 
 
38,873

 
 
3.0

 
—
 
—
 
$
518.1

 
4
 
Illumina, Inc.
 
 
10.6

 
 
 
891,495

 
 
 
35,907

 
 
2.8

 
—
 
BBB
 
$
45.6

 
5
 
Eli Lilly and Company
 
 
9.4

 
 
 
554,089

 
 
 
34,096

 
 
2.7

 
A2
 
A+
 
$
115.9

 
6
 
Sanofi
 
 
8.5

 
 
 
494,693

 
 
 
33,845

 
 
2.6

 
A1
 
AA
 
$
109.7

 
7
 
Novartis AG
 
 
8.3

 
 
 
378,894

 
 
 
27,849

 
 
2.2

 
A1
 
AA-
 
$
224.8

 
8
 
Uber Technologies, Inc.
 
 
62.8

(3) 
 
 
1,016,745

 
 
 
27,445

 
 
2.1

 
—
 
—
 
$
60.3

 
9
 
Merck & Co., Inc.
 
 
11.4

 
 
 
421,623

 
 
 
24,290

 
 
1.9

 
A1
 
AA
 
$
211.4

 
10
 
bluebird bio, Inc.
 
 
7.4

 
 
 
312,805

 
 
 
23,076

 
 
1.8

 
—
 
—
 
$
6.5

 
11
 
Moderna, Inc.
 
 
9.9

 
 
 
382,388

 
 
 
22,665

 
 
1.8

 
—
 
—
 
$
6.0

 
12
 
Maxar Technologies(2)
 
 
5.5

 
 
 
478,000

 
 
 
21,577

 
 
1.7

 
—
 
—
 
$
0.5

 
13
 
New York University
 
 
11.7

 
 
 
201,284

 
 
 
19,011

 
 
1.5

 
Aa2
 
AA-
 
$
—

 
14
 
Roche
 
 
3.5

 
 
 
365,309

 
 
 
18,996

 
 
1.5

 
Aa3
 
AA
 
$
240.2

 
15
 
Pfizer Inc.
 
 
5.2

 
 
 
416,979

 
 
 
17,754

 
 
1.4

 
A1
 
AA-
 
$
223.3

 
16
 
Stripe, Inc.
 
 
7.8

 
 
 
295,333

 
 
 
17,736

 
 
1.4

 
—
 
—
 
$
—

 
17
 
athenahealth, Inc.(2)
 
 
12.5

 
 
 
409,710

 
 
 
17,632

 
 
1.4

 
—
 
—
 
$
5.6

 
18
 
Massachusetts Institute of Technology
 
 
5.7

 
 
 
257,626

 
 
 
17,306

 
 
1.4

 
Aaa
 
AAA
 
$
—

 
19
 
Amgen Inc.
 
 
4.3

 
 
 
407,369

 
 
 
16,838

 
 
1.3

 
Baa1
 
A-
 
$
119.3

 
20
 
United States Government
 
 
8.0

 
 
 
284,998

 
 
 
16,384

 
 
1.3

 
Aaa
 
AA+
 
$
—

 
 
 
Total/weighted-average
 
 
11.6

(3) 
 
 
9,979,425

 
 
 
$
522,705

 
 
41.0
%
 
 
 
 
 
 
 


(1)
Based on aggregate annual rental revenue in effect as of December 31, 2019. Refer to “Annual Rental Revenue” and “Investment-Grade or Publicly Traded Large Cap Tenants” in the “Definitions and Reconciliations” of this Supplemental Information for additional details on our methodology on annual rental revenue from unconsolidated real estate joint ventures and average daily market capitalization.
(2)
Annual rental revenue from investment-grade or publicly traded large cap tenants includes two tenants, Maxar Technologies and athenahealth, Inc., located at properties acquired during 4Q19. Excluding these two tenants, our annual rental revenue from investment-grade or publicly traded large cap tenants within our top 20 tenants was 87%.
(3)
Includes a ground lease for land at 1455 and 1515 Third Street (two buildings aggregating 422,980 RSF) and a lease at 1655 and 1725 Third Street (two buildings aggregating 593,765 RSF) owned by our unconsolidated joint venture in which we have an ownership interest of 10%. 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. Refer to footnote 1 for additional details. Excluding the ground lease, the weighted-average remaining lease term for our top 20 tenants was 8.9 years as of December 31, 2019.


 
 
Summary of Properties and Occupancy
q419logo.jpg
December 31, 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
 
7,195,439

 
—

 
153,157

 
7,348,596

 
25
%
 
66

 
$
453,998

 
36
%
 
$
63.65

 
San Francisco
 
6,829,211

 
841,178

 
347,912

 
8,018,301

 
28

 
55

 
337,801

 
26

 
58.37

 
New York City
 
1,127,580

 
—

 
140,098

 
1,267,678

 
4

 
5

 
80,119

 
6

 
72.49

 
San Diego
 
5,731,061

 
232,818

 
—

 
5,963,879

 
20

 
75

 
204,900

 
16

 
38.75

 
Seattle
 
1,458,305

 
100,086

 
—

 
1,558,391

 
6

 
15

 
75,770

 
6

 
52.65

 
Maryland
 
2,663,891

 
261,096

 
41,098

 
2,966,085

 
10

 
42

 
73,868

 
6

 
28.87

 
Research Triangle
 
1,224,904

 
—

 
—

 
1,224,904

 
4

 
16

 
32,337

 
3

 
27.36

 
Canada
 
188,967

 
—

 
—

 
188,967

 
1

 
2

 
4,793

 
—

 
27.07

 
Non-cluster markets
 
369,770

 
—

 
—

 
369,770

 
1

 
12

 
10,597

 
1

 
35.77

 
Properties held for sale
 
191,862

 
—

 
—

 
191,862

 
1

 
3

 
4,073

 
—

 
N/A

 
North America
 
26,980,990

 
1,435,178

 
682,265

 
29,098,433

 
100
%
 
291

 
$
1,278,256

 
100
%
 
$
51.04

 
 
 
 
 
2,117,443
 
 
 
 
 
 
 
 
 
 
 
 
 


Summary of occupancy
 
 
Operating Properties
 
Operating and Redevelopment Properties
Market
 
12/31/19
 
9/30/19
 
12/31/18
 
12/31/19
 
9/30/19
 
12/31/18
Greater Boston
 
99.1
%
 
98.1
%
 
98.7
%
 
97.1
%
 
97.8
%
 
98.2
%
San Francisco
 
98.3

 
99.0

 
100.0

 
93.6

 
94.0

 
96.2

New York City
 
99.2

 
99.2

 
98.3

 
88.1

 
88.1

 
87.3

San Diego
 
92.3

(1) 
92.8

 
94.7

 
92.3

 
92.8

 
94.7

Seattle
 
98.7

 
97.7

 
97.7

 
98.7

 
97.7

 
97.7

Maryland
 
96.7

 
96.2

 
96.8

 
95.2

 
94.7

 
94.7

Research Triangle
 
96.5

 
97.8

 
95.4

 
96.5

 
96.6

 
85.9

Subtotal
 
97.0

 
97.0

 
97.6

 
94.6

 
94.8

 
95.3

Canada
 
93.7

 
93.7

 
95.2

 
93.7

 
93.7

 
95.2

Non-cluster markets
 
80.1

 
75.6

 
79.0

 
80.1

 
75.6

 
79.0

North America
 
96.8
%
(2) 
96.6
%
 
97.3
%
 
94.4
%
 
94.5
%
 
95.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Decline from 3Q19 primarily related to vacancy at the recently acquired SD Tech by Alexandria, partially offset by lease commencements at our Campus Pointe by Alexandria and University District campuses.
(2)
Includes 259,616 RSF, or 1.0%, of vacancy representing lease-up opportunities at properties recently acquired during 2H19, primarily related to the recently acquired SD Tech by Alexandria. Excluding these vacancies, occupancy of operating properties in North America would have been 97.8% as of December 31, 2019. Refer to “Occupancy” in this Supplemental Information for additional details.


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


 
 
Property Listing
q419logo.jpg
December 31, 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
 
$
168,387

 
 
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
 
98,283

 
 
99.9

 
 
99.9

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Arsenal on the Charles
 
683,131

 
 
—

 
153,157

 
836,288

 
11
 
26,431

 
 
100.0

 
 
81.7

 
 
 
311, 321, and 343 Arsenal Street, 300 and 400 North Beacon Street, 1, 2, and 3 Kingsbury Avenue, and 100, 200, and 400 Talcott Avenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at One Kendall Square
 
815,671

 
 
—

 
—

 
815,671

 
10
 
70,531

 
 
99.1

`
 
99.1

 
 
 
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
 
7,990

 
 
100.0

 
 
100.0

 
 
 
167 Sidney Street and 99 Erie Street
 
54,549

 
 
—

 
—

 
54,549

 
2
 
4,023

 
 
100.0

 
 
100.0

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

 
 
—

 
—

 
25,309

 
1
 
620

 
 
100.0

 
 
100.0

 
 
 
Cambridge/Inner Suburbs
 
5,685,204

 
 
—

 
153,157

 
5,838,361

 
46
 
400,727

 
 
99.4

 
 
96.8

 
 
Seaport Innovation District
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 Necco Street
 
87,163

 
 
—

 
—

 
87,163

 
1
 
4,646

 
 
86.6

 
 
86.6

 
 
Route 128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Park at 128
 
343,882

 
 
—

 
—

 
343,882

 
8
 
11,876

 
 
100.0

 
 
100.0

 
 
 
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
 
317,617

 
 
—

 
—

 
317,617

 
3
 
13,847

 
 
100.0

 
 
100.0

 
 
 
100 Tech Drive
 
200,431

 
 
—

 
—

 
200,431

 
1
 
8,455

 
 
100.0

 
 
100.0

 
 
 
19 Presidential Way
 
144,892

 
 
—

 
—

 
144,892

 
1
 
5,171

 
 
99.4

 
 
99.4

 
 
 
100 Beaver Street
 
82,330

 
 
—

 
—

 
82,330

 
1
 
3,152

 
 
80.0

 
 
80.0

 
 
 
285 Bear Hill Road
 
26,270

 
 
—

 
—

 
26,270

 
1
 
1,167

 
 
100.0

 
 
100.0

 
 
 
Route 128
 
1,115,422

 
 
—

 
—

 
1,115,422

 
15
 
43,668

 
 
98.5

 
 
98.5

 
 
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
 
7,195,439

 
 
—

 
153,157

 
7,348,596

 
66
 
$
453,998

 
 
99.1
%
 
 
97.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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 details.

 
 
Property Listing (continued)
q419logo.jpg
December 31, 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for Science and Technology – Mission Bay
 
1,997,819

 
 
—

 
—

 
1,997,819

 
9
 
$
88,933

 
 
99.8
%
 
 
99.8
%
 
 
 
1455, 1515, 1655(1), and 1725(1) Third Street, 409 and 499 Illinois Street(1), 1500(1) and 1700 Owens Street, and 455 Mission Bay Boulevard South
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
510 Townsend Street
 
295,333

 
 
—

 
—

 
295,333

 
1
 
17,736

 
 
100.0

 
 
100.0

 
 
 
945 Market Street
 
—

 
 
—

 
255,765

 
255,765

 
1
 
—

 
 
N/A

 
 
—

 
 
 
505 Brannan Street
 
148,146

 
 
—

 
—

 
148,146

 
1
 
12,129

 
 
100.0

 
 
100.0

 
 
 
260 Townsend Street
 
66,682

 
 
—

 
—

 
66,682

 
1
 
5,741

 
 
100.0

 
 
100.0

 
 
 
Mission Bay/SoMa
 
2,507,980

 
 
—

 
255,765

 
2,763,745

 
13
 
124,539

 
 
99.9

 
 
90.6

 
 
South San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
213, 249, 259, 269, and 279 East Grand Avenue
 
919,704

 
 
—

 
—

 
919,704

 
5
 
48,394

 
 
99.4

 
 
99.4

 
 
 
Alexandria Technology Center® – Gateway
 
634,466

 
 
—

 
—

 
634,466

 
8
 
31,537

 
 
89.6

 
 
89.6

 
 
 
600, 630, 650, 681, 685, 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
 
9,436

 
 
100.0

 
 
100.0

 
 
 
500 Forbes Boulevard(1)
 
155,685

 
 
—

 
—

 
155,685

 
1
 
6,619

 
 
100.0

 
 
100.0

 
 
 
7000 Shoreline Court
 
136,395

 
 
—

 
—

 
136,395

 
1
 
6,618

 
 
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
 
4,169

 
 
90.8

 
 
90.8

 
 
 
South San Francisco
 
2,221,102

 
 
315,000

 
—

 
2,536,102

 
21
 
112,270

 
 
96.4

 
 
96.4

 
 
Greater Stanford
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
Menlo Gateway(1)
 
772,983

 
 
—

 
—

 
772,983

 
3
 
29,765

 
 
100.0

 
 
100.0

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

 
 
526,178

 
—

 
526,178

 
2
 
—

 
 
N/A

 
 
N/A

 
 
 
825 and 835 Industrial Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3825 and 3875 Fabian Way
 
478,000

 
 
—

 
—

 
478,000

 
2
 
21,577

 
 
100.0

 
 
100.0

 
 
 
Alexandria Stanford Life Science District
 
190,270

 
 
—

 
92,147

 
282,417

 
3
 
13,902

 
 
100.0

 
 
67.4

 
 
 
3160, 3165, and 3170 Porter Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria PARC
 
197,498

 
 
—

 
—

 
197,498

 
4
 
11,274

 
 
96.9

 
 
96.9

 
 
 
2100, 2200, 2300, and 2400 Geng Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
2,191

 
 
62.3

 
 
62.3

 
 
 
2625/2627/2631 Hanover Street
 
32,074

 
 
—

 
—

 
32,074

 
1
 
1,796

 
 
100.0

 
 
100.0

 
 
 
Greater Stanford
 
2,100,129

 
 
526,178

 
92,147

 
2,718,454

 
21
 
100,992

 
 
98.6

 
 
94.5

 
 
 
San Francisco
 
6,829,211

 
 
841,178

 
347,912

 
8,018,301

 
55
 
$
337,801

 
 
98.3
%
 
 
93.6
%
 
 
 
(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 details.

 
 
Property Listing (continued)
q419logo.jpg
December 31, 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
 
$
65,096

 
 
98.8
%
 
 
98.8
%
 
 
 
430 and 450 East 29th Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
80,119

 
 
99.2

 
 
88.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Torrey Pines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Spectrum
 
336,461

 
 
—

 
—

 
336,461

 
3
 
17,760

 
 
100.0

 
 
100.0

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

 
 
—

 
—

 
294,326

 
3
 
11,697

 
 
83.8

 
 
83.8

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

 
 
—

 
—

 
236,635

 
3
 
8,901

 
 
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
 
—

 
 
—

 
 
—

 
 
 
11119 North Torrey Pines Road
 
72,506

 
 
—

 
—

 
72,506

 
1
 
3,676

 
 
100.0

 
 
100.0

 
 
 
Torrey Pines
 
1,277,135

 
 
—

 
—

 
1,277,135

 
15
 
52,647

 
 
87.1

 
 
87.1

 
 
University Town Center
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria
 
1,389,867

 
 
232,818

 
—

 
1,622,685

 
10
 
55,873

 
 
99.9

 
 
99.9

 
 
 
9880, 10210(1),10260(1), 10290(1), and 10300(1) Campus Point Drive and 4110(1), 4150(1), 4161(1), 4224(1), and 4242(1) Campus Point Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5200 Illumina Way(1)
 
792,687

 
 
—

 
—

 
792,687

 
6
 
29,977

 
 
100.0

 
 
100.0

 
 
 
University District
 
547,130

 
 
—

 
—

 
547,130

 
8
 
18,047

 
 
94.4

 
 
94.4

 
 
 
9363, 9373, 9393, and 9625(1) Towne Centre Drive, 4755, 4757, and 4767 Nexus Center Drive and 4796 Executive Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
University Town Center
 
2,729,684

 
 
232,818

 
—

 
2,962,502

 
24
 
$
103,897

 
 
98.8
%
 
 
98.8
%
 
 
 


(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 details.
 

 
 
Property Listing (continued)
q419logo.jpg
December 31, 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
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
SD Tech by Alexandria(1)
 
598,316

 
 
—

 
—

 
598,316

 
10
 
$
14,916

 
 
69.6
%
 
 
69.6
%
 
 
 
9605, 9645, 9675, 9685, 9725, 9735, 9805, and 9855 Scranton Road and 10055 and 10075 Barnes Canyon
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summers Ridge Science Park
 
316,531

 
 
—

 
—

 
316,531

 
4
 
11,077

 
 
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
 
3,603

 
 
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
 
1,301,429

 
 
—

 
—

 
1,301,429

 
22
 
37,080

 
 
83.4

 
 
83.4

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

 
 
—

 
—

 
191,378

 
7
 
5,587

 
 
94.3

 
 
94.3

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

 
 
—

 
—

 
121,655

 
6
 
2,717

 
 
84.6

 
 
84.6

 
 
 
Sorrento Valley
 
313,033

 
 
—

 
—

 
313,033

 
13
 
8,304

 
 
90.5

 
 
90.5

 
 
I-15 Corridor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13112 Evening Creek Drive
 
109,780

 
 
—

 
—

 
109,780

 
1
 
2,972

 
 
100.0

 
 
100.0

 
 
 
San Diego
 
5,731,061

 
 
232,818

 
—

 
5,963,879

 
75
 
204,900

 
 
92.3

 
 
92.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Eastlake Life Science Campus by Alexandria – North Campus
 
631,070

 
 
—

 
—

 
631,070

 
5
 
33,818

 
 
99.3

 
 
99.3

 
 
 
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

 
 
100,086

 
—

 
306,220

 
3
 
11,702

 
 
100.0

 
 
100.0

 
 
 
1165, 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
 
9,890

 
 
99.1

 
 
99.1

 
 
 
219 Terry Avenue North
 
30,705

 
 
—

 
—

 
30,705

 
1
 
1,835

 
 
100.0

 
 
100.0

 
 
 
601 Dexter Avenue North
 
18,680

 
 
—

 
—

 
18,680

 
1
 
425

 
 
100.0

 
 
100.0

 
 
 
Lake Union
 
1,373,835

 
 
100,086

 
—

 
1,473,921

 
12
 
72,906

 
 
99.6

 
 
99.6

 
 
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
 
1,458,305

 
 
100,086

 
—

 
1,558,391

 
15
 
$
75,770

 
 
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 details.
 

 
 
Property Listing (continued)
q419logo.jpg
December 31, 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

 
 
261,096

 
—

 
645,052

 
8
 
$
13,864

 
 
89.5
%
 
 
89.5
%
 
 
 
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
 
1,804

 
 
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
 
2,419

 
 
100.0

 
 
100.0

 
 
 
5 Research Place
 
63,852

 
 
—

 
—

 
63,852

 
1
 
2,734

 
 
100.0

 
 
100.0

 
 
 
5 Research Court
 
51,520

 
 
—

 
—

 
51,520

 
1
 
1,812

 
 
100.0

 
 
100.0

 
 
 
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

 
 
261,096

 
—

 
1,456,388

 
22
 
39,333

 
 
96.6

 
 
96.6

 
 
Gaithersburg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg I
 
613,438

 
 
—

 
—

 
613,438

 
9
 
15,821

 
 
94.8

 
 
94.8

 
 
 
9, 25, 35, 45, 50, and 55 West Watkins Mill Road and 910, 930, and 940 Clopper Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg II
 
273,987

 
 
—

 
41,098

 
315,085

 
6
 
7,253

 
 
98.7

 
 
85.8

 
 
 
704 Quince Orchard Road(1), 708 Quince Orchard Road, and
19, 20, 21, and 22 Firstfield Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
401 Professional Drive
 
63,154

 
 
—

 
—

 
63,154

 
1
 
1,595

 
 
91.2

 
 
91.2

 
 
 
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
 
1,028,529

 
 
—

 
41,098

 
1,069,627

 
18
 
26,864

 
 
96.0

 
 
92.3

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

 
 
—

 
—

 
191,884

 
1
 
2,533

 
 
96.6

 
 
96.6

 
 
Northern Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14225 Newbrook Drive
 
248,186

 
 
—

 
—

 
248,186

 
1
 
5,138

 
 
100.0

 
 
100.0

 
 
 
Maryland
 
2,663,891

 
 
261,096

 
41,098

 
2,966,085

 
42
 
$
73,868

 
 
96.7
%
 
 
95.2
%
 
 
 
(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 details.
 

 
 
Property Listing (continued)
q419logo.jpg
December 31, 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
 
$
3,855

 
 
95.0
%
 
 
95.0
%
 
 
 
100, 800, and 801 Capitola Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase I – Research Triangle
 
180,400

 
 
—

 
—

 
180,400

 
1
 
5,241

 
 
95.3

 
 
95.3

 
 
 
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
 
136,455

 
 
—

 
—

 
136,455

 
3
 
3,683

 
 
98.1

 
 
98.1

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

 
 
—

 
—

 
100,000

 
1
 
1,909

 
 
92.4

 
 
92.4

 
 
 
7 Triangle Drive
 
96,626

 
 
—

 
—

 
96,626

 
1
 
3,156

 
 
100.0

 
 
100.0

 
 
 
2525 East NC Highway 54
 
82,996

 
 
—

 
—

 
82,996

 
1
 
3,651

 
 
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
 
1,224,904

 
 
—

 
—

 
1,224,904

 
16
 
32,337

 
 
96.5

 
 
96.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
188,967

 
 
—

 
—

 
188,967

 
2
 
4,793

 
 
93.7

 
 
93.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-cluster markets
 
369,770

 
 
—

 
—

 
369,770

 
12
 
10,597

 
 
80.1

 
 
80.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America, excluding properties held for sale
 
26,789,128

 
 
1,435,178

 
682,265

 
28,906,571

 
288
 
1,274,183

 
 
96.8
%
 
 
94.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties held for sale
 
191,862

 
 
—

 
—

 
191,862

 
3
 
4,073

 
 
71.4
%
 
 
71.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total – North America
 
26,980,990

 
 
1,435,178

 
682,265

 
29,098,433

 
291
 
$
1,278,256

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Investments in Real Estate
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 


 
 
 
 
Development and Redevelopment
 
 
 
 
Operating
 
Under Construction
 
Near-Term
 
Intermediate-Term
 
Future
 
Subtotal
 
Total
Investments in real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value as of December 31, 2019(1)
 
$
15,278,779

 
$
991,007

 
$
447,798

 
$
618,279

 
$
182,746

 
$
2,239,830

 
$
17,518,609

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Square footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
 
26,980,990

 
—

 
—

 
—

 
—

 
—

 
26,980,990

New Class A development and redevelopment properties
 
—

 
2,117,443

 
2,127,925

 
4,884,067

 
4,585,477

 
13,714,912

 
13,714,912

Value-creation square feet currently included in rental properties(2)
 
—

 
—

 
—

 
(702,012
)
 
(823,104
)
 
(1,525,116
)
 
(1,525,116
)
Total square footage
 
26,980,990

 
2,117,443

 
2,127,925

 
4,182,055

 
3,762,373

 
12,189,796

 
39,170,786

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
(1)
Balances exclude our share of the cost basis associated with our unconsolidated properties, which is classified as investments in unconsolidated real estate joint ventures in our consolidated balance sheets.
(2)
Refer to the definition of “Investment in Real Estate” in “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
q419logo.jpg
 
 
December 31, 2019
 
 
 







399 Binney Street
 
266 and 275 Second Avenue
 
1655 and 1725 Third Street
 
279 East Grand Avenue
 
681 and 685 Gateway Boulevard
Greater Boston/Cambridge
 
Greater Boston/Route 128
 
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
 
San Francisco/South San Francisco
164,000 RSF
 
203,757 RSF
 
593,765 RSF
 
211,405 RSF
 
142,400 RSF
98.3% Occupied
 
100% Occupied
 
100% Occupied
 
97.5% Occupied
 
100% Occupied
q419binney399.jpg
 
q419secondave.jpg
 
q419gsw.jpg
 
q419eastgrand279.jpg
 
q419gateway681.jpg

Menlo Gateway
 
Alexandria PARC
 
9880 Campus Point Drive
 
188 East Blaine Street
 
Alexandria Center® for AgTech, Phase I
San Francisco/Greater Stanford
 
San Francisco/Greater Stanford
 
San Diego/University Town Center
 
Seattle/Lake Union
 
Research Triangle/Research Triangle
772,983 RSF
 
197,498 RSF
 
98,000 RSF
 
201,805 RSF
 
180,400 RSF
100% Occupied
 
96.8% Occupied
 
100% Occupied
 
98.0% Occupied
 
95.3% Occupied
q419menlogateway.jpg
 
q419parc.jpg
 
q419campus9880.jpg
 
q419eastblaine188.jpg
 
q419laboratory5.jpg


Refer to “New Class A Development and Redevelopment Properties: Projects Under Construction” 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)
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 



Property/Market/Submarket
 
Our Ownership Interest
 
Dev/Redev
 
RSF Placed Into Service
 
Occupancy Percentage(1)
 
Total Project
 
Unlevered Yields
 
 
 
 
 
 
Initial Stabilized
 
Initial Stabilized (Cash Basis)
 
 
 
1Q19
 
2Q19
 
3Q19
 
4Q19
 
Total
 
 
RSF
 
Investment
 
 
399 Binney Street/Greater Boston/Cambridge
 
100%
 
Dev
 
123,403

 
—

 
40,597

 
—

 
164,000

 
 
98.3%
 
 
164,000

 
 
$
185,000

 
 
7.9
%
 
 
 
7.3
%
 
266 and 275 Second Avenue/Greater Boston/
Route 128
 
100%
 
Redev
 
—

 
12,822

 
—

 
19,036

 
31,858

 
 
100%
 
 
203,757

 
 
$
91,000

 
 
8.5

 
 
 
7.1

 
1655 and 1725 Third Street/San Francisco/
Mission Bay/SoMa(2)
 
10%
 
Dev
 
—

 
—

 
593,765

 
—

 
593,765

 
 
100%
 
 
593,765

 
 
$
77,500

 
 
7.8

 
 
 
6.1

 
279 East Grand Avenue/San Francisco/
South San Francisco
 
100%
 
Dev
 
139,810

 
24,396

 
35,797

 
11,402

 
211,405

 
 
97.5%
 
 
211,405

 
 
$
145,000

(3) 
 
8.4

(3) 
 
 
8.6

(3) 
681 and 685 Gateway Boulevard/San Francisco/
South San Francisco
 
100%
 
Redev
 
66,000

 
76,400

 
—

 
—

 
142,400

 
 
100%
(4) 
 
142,400

 
 
$
116,300

 
 
8.5

 
 
 
8.2

 
Menlo Gateway/San Francisco/Greater Stanford(2)
 
49%
 
Dev
 
—

 
—

 
520,988

 
—

 
520,988

 
 
100%
 
 
772,983

 
 
$
415,000

 
 
7.1

 
 
 
6.4

 
Alexandria PARC/San Francisco/Greater Stanford
 
100%
 
Redev
 
48,547

 
—

 
—

 
—

 
48,547

 
 
96.8%
 
 
197,498

 
 
$
152,600

 
 
7.3

 
 
 
6.2

 
9880 Campus Point Drive/San Diego/
University Town Center
 
100%
 
Dev
 
—

 
—

 
—

 
36,284

 
36,284

 
 
100%
 
 
98,000

 
 
$
255,000

(5) 
 
6.3

(5) 
 
 
6.4

(5) 
188 East Blaine Street/Seattle/Lake Union
 
100%
 
Dev
 
90,615

 
27,164

 
39,372

 
44,654

 
201,805

 
 
98.0%
 
 
201,805

 
 
$
183,000

 
 
6.7

 
 
 
6.7

 
704 Quince Orchard Road/Maryland/Gaithersburg(2)
 
56.8%
 
Redev
 
10,250

 
3,470

 
—

 
—

 
13,720

 
 
100%
 
 
80,032

 
 
$
13,300

 
 
8.9

 
 
 
8.8

 
Alexandria Center® for AgTech, Phase I/Research Triangle/Research Triangle
 
100%
 
Redev
 
2,614

 
73,809

 
30,900

 
19,554

 
126,877

 
 
95.3%
 
 
180,400

 
 
$
88,700

 
 
7.5

(6) 
 
 
7.6

(6) 
Total
 
 
 
 
 
481,239

 
218,061

 
1,261,419

 
130,930

 
2,091,649

 
 
 
 
 
 
 
 
 
 
 
7.4
%
 
 
 
6.9
%
 

(1)
Relates to total operating RSF placed in service as of the most recent delivery.
(2)
This property is an unconsolidated real estate joint venture. RSF represents 100% and cost and yields amounts represent our share.
(3)
Improvements in initial stabilized yields of 60 bps and 50 bps (cash basis), are due to reduction in costs of $6 million primarily from core and shell cost savings.
(4)
Excludes 685 Gateway Boulevard, a 15,437 RSF amenity building.
(5)
Project costs represent aggregate development costs for 9880 Campus Point Drive and 4150 Campus Point Court. Yields represent expected aggregate returns for Campus Pointe by Alexandria, including 9880, 10290, and 10300 Campus Point Drive and 4150 Campus Point Court.
(6)
Yields represent aggregate returns for Alexandria Center® for AgTech – Research Triangle which consists of Phase I at 5 Laboratory Drive and Phase II at 9 Laboratory Drive.


 
 
 
 
New Class A Development and Redevelopment Properties: Projects Under Construction
q419logo.jpg
 
 
December 31, 2019
 
 
 



The Arsenal on the Charles
 
945 Market Street
 
201 Haskins Way
 
Alexandria District for
 Science and Technology
 
3160 Porter Drive
Greater Boston/
Cambridge/Inner Suburbs
 
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
 
San Francisco/Greater Stanford
 
San Francisco/Greater Stanford
153,157 RSF
 
255,765 RSF
 
315,000 RSF
 
526,178 RSF
 
92,147 RSF
q419arsenal.jpg
 
q419market945.jpg
 
q419haskins.jpg
 
q419industrialroad.jpg
 
q419porterdrive.jpg

Alexandria Center® –
Long Island City
 
9880 Campus Point Drive and
4150 Campus Point Court
 
1165 Eastlake Avenue East
 
9800 Medical Center Drive
 
9950 Medical Center Drive
New York City/New York City
 
San Diego/University Town Center
 
Seattle/Lake Union
 
Maryland/Rockville
 
Maryland/Rockville
140,098 RSF
 
232,818 RSF
 
100,086 RSF
 
176,832 RSF
 
84,264 RSF
q419bindery.jpg
 
q419campuspointe.jpg
 
q419eastlake1165.jpg
 
q419medical9800.jpg
 
q419medical9950.jpg







 
 
 
 
New Class A Development and Redevelopment Properties: Projects Under Construction (continued)
q419logo.jpg
 
 
December 31, 2019
 
 
 

Property/Market/Submarket
 
 
 
Square Footage
 
Percentage
 
Occupancy(1)
 
Dev/Redev
 
In Service
 
CIP
 
Total
 
Leased
 
Leased/Negotiating
 
Initial
 
Stabilized
Developments and redevelopments under construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Arsenal on the Charles/Greater Boston/Cambridge/Inner Suburbs
 
Redev
 
683,131

(2) 
153,157

 
836,288

 
82
%
 
 
82
%
 
 
2021
 
2022
945 Market Street/San Francisco/Mission Bay/SoMa
 
Redev
 
—

 
255,765

 
255,765

 
—

 
 
—

 
 
4Q20
 
2021/22
201 Haskins Way/San Francisco/South San Francisco
 
Dev
 
—

 
315,000

 
315,000

 
33

 
 
33

 
 
3Q20
 
2021
Alexandria District for Science and Technology/San Francisco/Greater Stanford
 
Dev
 
—

 
526,178

 
526,178

 
56

 
 
65

 
 
4Q20
 
2021
3160 Porter Drive/San Francisco/Greater Stanford
 
Redev
 
—

 
92,147

 
92,147

 
—

 
 
—

 
 
4Q20
 
2021
Alexandria Center® – Long Island City/New York City/New York City
 
Redev
 
36,661

 
140,098

 
176,759

 
21

 
 
21

 
 
3Q20
 
2020
9880 Campus Point Drive and 4150 Campus Point Court/San Diego/
University Town Center(3)
 
Dev
 
36,284

 
232,818

 
269,102

 
87

 
 
89

 
 
4Q19
 
2022
1165 Eastlake Avenue East/Seattle/Lake Union
 
Dev
 
—

 
100,086

 
100,086

 
100

 
 
100

 
 
4Q20
 
4Q20
9800 Medical Center Drive/Maryland/Rockville
 
Dev
 
—

 
176,832

 
176,832

 
100

 
 
100

 
 
3Q20
 
3Q20
9950 Medical Center Drive/Maryland/Rockville
 
Dev
 
—

 
84,264

 
84,264

 
100

 
 
100

 
 
3Q20
 
3Q20
704 Quince Orchard Road/Maryland/Gaithersburg(4)
 
Redev
 
38,934

 
41,098

 
80,032

 
70

 
 
70

 
 
4Q18
 
2020
Total
 
 
 
795,010

 
2,117,443

 
2,912,453

 
61
%
 
 
63
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(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)
We expect to redevelop 154,855 RSF of occupied space into office/laboratory space upon expiration of the existing leases in 3Q20 and 1Q21.
(3)
Refer to footnote 2 on the next page.
(4)
704 Quince Orchard is an unconsolidated real estate joint venture. RSF represents 100%.

New Class A Development and Redevelopment Properties: Projects Under Construction (continued)
 
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 


 
 
Our Ownership Interest
 
 
 
 
 
 
 
 
 
 
Unlevered Yields
Property/Market/Submarket
 
 
In Service
 
CIP
 
Cost to Complete
 
Total at
Completion
 
Initial Stabilized
 
Initial Stabilized (Cash Basis)
 
 
 
 
 
 
 
Developments and redevelopments under construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Arsenal on the Charles/Greater Boston/Cambridge/Inner Suburbs
 
100
%
 
 
$
440,047

 
$
62,561

 
TBD
945 Market Street/San Francisco/Mission Bay/SoMa
 
99.5
%
 
 
—

 
191,424

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

 
152,333

 
143,667

 
296,000

 
 
 
6.6
%
 
 
 
6.6
%
 
Alexandria District for Science and Technology/San Francisco/Greater Stanford
 
100
%
 
 
—

 
278,448

 
298,552

 
577,000

 
 
 
6.5
%
 
 
 
6.2
%
 
3160 Porter Drive/San Francisco/Greater Stanford
 
100
%
 
 
—

 
28,759

 
TBD
Alexandria Center® – Long Island City/New York City/New York City
 
100
%
 
 
16,159

 
72,962

 
95,179

 
184,300

 
 
 
5.5
%
 
 
 
5.6
%
 
9880 Campus Point Drive and 4150 Campus Point Court/San Diego/
University Town Center(1)
 
(1 
) 
 
 
40,397

 
90,301

 
124,302

 
255,000

 
 
 
6.3
%
(2) 
 
 
6.4
%
(2) 
1165 Eastlake Avenue East/Seattle/Lake Union
 
100
%
 
 
—

 
53,931

 
84,069

 
138,000

 
 
 
6.5
%
(3) 
 
 
6.3
%
(3) 
9800 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
—

 
33,159

 
62,241

 
95,400

 
 
 
7.7
%
 
 
 
7.2
%
 
9950 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
—

 
27,129

 
27,171

 
54,300

 
 
 
7.3
%
 
 
 
6.8
%
 
Consolidated projects
 
 
 
 
496,603

 
991,007

 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg(4)
 
56.8
%
 
 
4,400

 
5,574

 
3,326

 
13,300

 
 
 
8.9
%
 
 
 
8.8
%
 
Total
 
 
 
 
$
501,003

 
$
996,581

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Refer to “Joint Venture Financial Information” and “Definitions and Reconciliations” of this Supplemental Information for additional details.
(2)
Represents a two-phase development project as follows:
•
Initial phase represents 9880 Campus Point Drive, a 98,000 RSF project to develop Alexandria 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. The R&D building located at 9880 Campus Point Drive was demolished and as of December 31, 2019, continues to be included in our same property performance results. Refer to “Same Property Comparison” in the “Definitions and Reconciliations” of this Supplemental Information for additional details.
•
Subsequent phase represents 4150 Campus Point Court, a 171,102 RSF, 100% leased project with occupancy expected in 2022.
•
Project costs represent development costs for 9880 Campus Point Drive and 4150 Campus Point Court. Unlevered yields represent expected aggregate returns for Campus Pointe by Alexandria, including 9880, 10290, and 10300 Campus Point Drive and 4150 Campus Point Court.
(3)
Unlevered yields represent anticipated aggregate returns for 1165 Eastlake Avenue, an amenity-rich research headquarter for Adaptive Biotechnologies Corporation, and 1208 Eastlake Avenue, an adjacent multi-tenant office/laboratory building.
(4)
704 Quince Orchard is an unconsolidated real estate joint venture. Cost and yields amounts represent our share.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 



Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Development and Redevelopment
 
 
 
 
 
 
Under Construction
 
Near-Term
 
Intermediate-Term
 
Future
 
Total
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Arsenal on the Charles/Cambridge/Inner Suburbs
 
100
%
 
 
$
97,825

 
153,157

 
—

 
—

 
200,000

 
353,157

 
15 Necco Street/Seaport Innovation District
 
99.3
%
 
 
172,114

 
—

 
293,000

 
—

 
—

 
293,000

 
215 Presidential Way/Route 128
 
100
%
 
 
6,185

 
—

 
112,000

 
—

 
—

 
112,000

 
325 Binney Street/Cambridge
 
100
%
 
 
108,157

 
—

 
—

 
208,965

(1) 
—

 
208,965

 
99 A Street/Seaport Innovation District
 
96.2
%
 
 
40,965

 
—

 
—

 
235,000

 
—

 
235,000

 
10 Necco Street/Seaport Innovation District
 
100
%
 
 
85,302

 
—

 
—

 
175,000

 
—

 
175,000

 
Alexandria Technology Square®/Cambridge
 
100
%
 
 
7,787

 
—

 
—

 
—

 
100,000

 
100,000

 
100 Tech Drive/Route 128
 
100
%
 
 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
231 Second Avenue/Route 128
 
100
%
 
 
1,251

 
—

 
—

 
—

 
32,000

 
32,000

 
Other value-creation projects
 
100
%
 
 
9,198

 
—

 
—

 
—

 
41,955

 
41,955

 
 
 
 
 
 
528,784

 
153,157

 
405,000

 
618,965


673,955

 
1,851,077

 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
201 Haskins Way/South San Francisco
 
100
%
 
 
152,333

 
315,000

 
—

 
—

 
—

 
315,000

 
Alexandria District for Science and Technology/Greater Stanford
 
100
%
 
 
278,448

 
526,178

 
—

 
—

 
—

 
526,178

 
945 Market Street/Mission Bay/SoMa
 
99.5
%
 
 
191,424

 
255,765

 
—

 
—

 
—

 
255,765

 
3160 Porter Drive/Greater Stanford
 
100
%
 
 
28,759

 
92,147

 
—

 
—

 
—

 
92,147

 
88 Bluxome Street/Mission Bay/SoMa
 
100
%
 
 
199,286

 
—

 
1,070,925

(2) 
—

 
—

 
1,070,925

 
751 Gateway Boulevard/South San Francisco
 
100
%
 
 
16,777

 
—

 
217,000

 
—

 
—

 
217,000

 
505 Brannan Street, Phase II/Mission Bay/SoMa
 
99.7
%
 
 
18,124

 
—

 
—

 
165,000

 
—

 
165,000

 
960 Industrial Road/Greater Stanford
 
100
%
 
 
105,116

 
—

 
—

 
587,000

(3) 
—

 
587,000

 
3825 and 3875 Fabian Way/Greater Stanford
 
100
%
 
 
—

 
 
 
—

 
250,000

(3) 
228,000

(3) 
478,000

 
East Grand Avenue/South San Francisco
 
100
%
 
 
5,995

 
—

 
—

 
—

 
90,000

 
90,000

 
Gateway Boulevard/Greater Stanford
 
100
%
 
 
1,744

 
—

 
—

 
—

 
31,000

 
31,000

 
Other value-creation projects
 
100
%
 
 
40,465

 
—

 
—

 
191,000

 
25,000

 
216,000

 
 
 
 
 
 
$
1,038,471

 
1,189,090

 
1,287,925

 
1,193,000

 
374,000

 
4,044,015

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)    We are seeking additional entitlements to increase the density of the site from its current 208,965 RSF.
(2)    Includes a 488,899 RSF lease with Pinterest, Inc. which construction is expected to commence in 2020.
(3)    Represents total square footage upon completion of development or redevelopment of a new Class A property. RSF presented includes rentable square footage of buildings currently in operation at properties 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)
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 


Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Development and Redevelopment
 
 
 
 
 
 
Under Construction
 
Near-Term
 
Intermediate-Term
 
Future
 
Total
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® – Long Island City/New York City
 
100
%
 
 
$
72,962

 
140,098

 
—

 
—

 
—

 
140,098

 
Alexandria Center® for Life Science – New York City/New York City
 
100
%
 
 
28,262

 
—

 
—

 
550,000

 
—

 
550,000

 
47-50 30th Street/New York City
 
100
%
 
 
27,120

 
—

 
—

 
135,938

 
—

 
135,938

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

 
—

 
—

 
—

 
579,947

(1) 
579,947

 
 
 
 
 
 
128,344

 
140,098

 
—

 
685,938

 
579,947

 
1,405,983

 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria/University Town Center
 
(2
)
 
 
142,176

 
232,818

 
—

 
390,164

 
359,281

(3) 
982,263

 
3115 Merryfield Row/Torrey Pines
 
100
%
 
 
38,942

 
—

 
125,000

 
—

 
—

 
125,000

 
10931 and 10933 Torrey Pines Road/Torrey Pines
 
100
%
 
 
—

 
—

 
—

 
242,000

(3) 
—

 
242,000

 
University District/University Town Center
 
100
%
 
 
—

 
—

 
—

 
400,000

(3)(4) 
—

 
400,000

 
SD Tech by Alexandria/Sorrento Mesa
 
50
%
 
 
30,435

 
—

 
—

 
332,000

 
388,000

 
720,000

 
Townsgate by Alexandria/Del Mar Heights
 
100
%
 
 
20,036

 
—

 
—

 
185,000

 
—

 
185,000

 
5200 Illumina Way/University Town Center
 
51
%
 
 
11,772

 
—

 
—

 
—

 
451,832

 
451,832

 
Vista Wateridge/Sorrento Mesa
 
100
%
 
 
4,022

 
—

 
—

 
—

 
163,000

 
163,000

 
4045 and 4075 Sorrento Valley Boulevard/Sorrento Valley
 
100
%
 
 
7,554

 
—

 
—

 
—

 
149,000

(3) 
149,000

 
Other value-creation projects
 
100
%
 
 
—

 
—

 
—

 
—

 
50,000

 
50,000

 
 
 
 
 
 
254,937

 
232,818

 
125,000

 
1,549,164

 
1,561,113

 
3,468,095

 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1165 Eastlake Avenue East/Lake Union
 
100
%
 
 
53,931

 
100,086

 
—

 
—

 
—

 
100,086

 
1150 Eastlake Avenue East/Lake Union
 
100
%
 
 
35,916

 
—

 
—

 
260,000

 
—

 
260,000

 
701 Dexter Avenue North/Lake Union
 
100
%
 
 
42,185

 
—

 
—

 
217,000

 
—

 
217,000

 
601 Dexter Avenue North/Lake Union
 
100
%
 
 
30,946

 
—

 
—

 
—

 
188,400

(3) 
188,400

 
 
 
 
 
 
$
162,978

 
100,086

 
—

 
477,000

 
188,400

 
765,486

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)    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 approximately five years.
(2)    Refer to “Joint Venture Financial Information” of this Supplemental Information for additional details on our ownership interest.
(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 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)    Includes 140,398 RSF at the University District project in our University Town Center submarket, which is currently under evaluation for development, subject to future market conditions.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline (continued)
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 


Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Development and Redevelopment
 
 
 
 
 
 
Under Construction
 
Near-Term
 
Intermediate-Term
 
Future
 
Total
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Gaithersburg
 
56.8
%
 
 
$
—

(1)
41,098

 
—

 
—

 
—

 
41,098

 
9800 Medical Center Drive/Rockville
 
100
%
 
 
34,390

 
176,832

 
—

 
—

 
64,000

 
240,832

 
9950 Medical Center Drive/Rockville
 
100
%
 
 
27,129

 
84,264

 
—

 
—

 
—

 
84,264

 
14200 Shady Grove Road/Rockville
 
100
%
 
 
25,902

 
—

 
—

 
290,000

 
145,000

 
435,000

 
 
 
 
 
 
87,421

 
302,194

 
—

 
290,000

 
209,000

 
801,194

 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase II/Research Triangle
 
100
%
 
 
10,464

 
—

 
160,000

 
—

 
—

 
160,000

 
8 Davis Drive/Research Triangle
 
100
%
 
 
4,751

 
—

 
150,000

 
70,000

 
—

 
220,000

 
6 Davis Drive/Research Triangle
 
100
%
 
 
15,688

 
—

 
—

 
—

 
800,000

 
800,000

 
Other value-creation projects
 
100
%
 
 
4,150

 
—

 
—

 
—

 
76,262

 
76,262

 
 
 
 
 
 
35,053

 
—

 
310,000

 
70,000

 
876,262

 
1,256,262

 
Other value-creation projects
 
100
%
 
 
3,842

 
—

 
—

 
—

 
122,800

 
122,800

 
Total
 
 
 
 
2,239,830

 
2,117,443

 
2,127,925

 
4,884,067

 
4,585,477

 
13,714,912

(2) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pending acquisition/San Francisco
 
(3
)
 
 
(3)

 
—

 
—

 
—

 
700,000

 
700,000

 
Mercer Mega Block/Lake Union
 
(3
)
 
 
(3)

 
—

 
—

 
—

 
800,000

 
800,000

 
Key 2020 pending acquisitions
 
 
 
 
—

 
—

 
—

 
—

 
1,500,000

 
1,500,000

 
 
 
 
 
 
$
2,239,830

 
2,117,443

 
2,127,925

 
4,884,067

 
6,085,477

 
15,214,912

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
This property is held by an unconsolidated real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional details on our ownership interest.
(2)
Total rentable square footage includes 1,525,116 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.
(3)
Refer to “Acquisitions” in our Earnings Press Release for additional details.


 
 
Construction Spending
q419logo.jpg
December 31, 2019
(Dollars in thousands, except per RSF amounts)
 
 


 
 
Year Ended
 
Construction Spending
 
December 31, 2019
 
Additions to real estate – consolidated projects
 
$
1,224,541
 
 
Investments in unconsolidated real estate joint ventures
 
 
102,081
 
 
Contributions from noncontrolling interests
 
 
(9,156
)
 
Construction spending (cash basis)(1)
 
 
1,317,466
 
 
Change in accrued construction
 
 
(24
)
 
Construction spending
 
$
1,317,442
 
 



 
 
 
 
 
 
 
 
Year Ending
 
Projected Construction Spending
 
December 31, 2020
 
Development, redevelopment, and pre-construction projects
 
$
1,414,000
 
 
Contributions from noncontrolling interests (consolidated real estate joint ventures)
 
 
(24,000
)
 
Generic laboratory infrastructure
 
 
166,000
 
 
Non-revenue-enhancing capital expenditures
 
 
44,000
 
 
Guidance midpoint
 
 
1,600,000
 
 
Guidance range
 
$
1,550,000
–
1,650,000

 
 
 
 
 
 
 
 
Non-Revenue-Enhancing Capital Expenditures(2)
 
Year Ended
 
Recent Average
Per RSF(3)
 
 
December 31, 2019
 
 
 
Amount
 
Per RSF
 
 
Building improvements
 
$
11,453

 
$
0.47

 
 
$
0.50

 
 
 
 
 
 
 
 
 
 
Tenant improvements and leasing costs:
 
 
 
 
 
 
 
 
Re-tenanted space
 
$
32,912

 
$
28.20

 
 
$
22.74

 
Renewal space
 
16,310

 
12.95

 
 
13.43

 
Total tenant improvements and leasing costs/weighted-average
 
$
49,222

 
$
20.28

 
 
$
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 for a five-year period from 2015 through 2019.

 
 
Joint Venture Financial Information
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 


Consolidated Real Estate Joint Ventures
 
Unconsolidated Real Estate Joint Ventures
Property/Market/Submarket
 
Noncontrolling
Interest Share(1)
 
Property/Market/Submarket
 
Our Ownership Share(2)
225 Binney Street/Greater Boston/Cambridge
 
 
70.0
%
 
 
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
 
10.0
%
 
75/125 Binney Street/Greater Boston/Cambridge
 
 
60.0
%
 
 
Menlo Gateway/San Francisco/Greater Stanford
 
 
49.0
%
 
409 and 499 Illinois Street/San Francisco/Mission Bay/SoMa
 
 
40.0
%
 
 
1401/1413 Research Boulevard/Maryland/Rockville
 
 
65.0
%
(3)
1500 Owens Street/San Francisco/Mission Bay/SoMa
 
 
49.9
%
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
 
56.8
%
(3)
500 Forbes Boulevard/San Francisco/South San Francisco
 
 
90.0
%
 
 
 
 
 
 
 
Campus Pointe by Alexandria/San Diego/University Town Center(4)
 
 
45.0
%
 
 
 
 
 
 
 
5200 Illumina Way/San Diego/University Town Center
 
 
49.0
%
 
 
 
 
 
 
 
9625 Towne Centre Drive/San Diego/University Town Center
 
 
49.9
%
 
 
 
 
 
 
 
SD Tech by Alexandria/San Diego/Sorrento Mesa
 
 
50.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in six other joint ventures in North America.
(2)
In addition to the unconsolidated real estate joint ventures listed, we hold an interest in one other insignificant unconsolidated real estate joint venture in North America.
(3)
Represents our ownership interest; our voting interest is limited to 50%.
(4)
Excludes 9880 Campus Point Drive in our University Town Center submarket.
 
 
As of December 31, 2019
 
 
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
Investments in real estate
$
1,186,585

 
 
$
466,334

 
 
Cash, cash equivalents, and restricted cash
 
40,128

 
 
 
7,865

 
 
Other assets
 
142,669

 
 
 
41,741

 
 
Secured notes payable (refer to page 47)
 
—

 
 
 
(149,240
)
 
 
Other liabilities
 
(68,730
)
 
 
 
(19,810
)
 
 
Redeemable noncontrolling interests
 
(12,300
)
 
 
 
—

 
 
 
$
1,288,352

 
 
$
346,890

 
 
 
Noncontrolling Interest Share of
Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
December 31, 2019
 
December 31, 2019
 
Three Months Ended
 
Year Ended
 
Three Months Ended
 
Year Ended
Total revenues
$
32,629

 
 
$
97,989

 
 
$
10,388

 
 
$
22,710

 
Rental operations
 
(8,935
)
 
 
 
(26,675
)
 
 
 
(1,174
)
 
 
 
(3,070
)
 
 
 
23,694

 
 
 
71,314

 
 
 
9,214

 
 
 
19,640

 
General and administrative
 
(127
)
 
 
 
(347
)
 
 
 
(67
)
 
 
 
(158
)
 
Interest
 
—

 
 
 
—

 
 
 
(1,668
)
 
 
 
(2,980
)
 
Depreciation and amortization
 
(10,176
)
 
 
 
(30,960
)
 
 
 
(2,702
)
 
 
 
(6,366
)
 
Fixed returns allocated to redeemable noncontrolling interests(1)
 
221

 
 
 
875

 
 
 
—

 
 
 
—

 
 
$
13,612

 
 
$
40,882

 
 
$
4,777

 
 
$
10,136

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line rent and below-market lease revenue
$
1,948

 
 
$
5,347

 
 
$
5,843

 
 
$
10,172

 
Funds from operations(2)
$
23,788

 
 
$
71,842

 
 
$
7,479

 
 
$
16,502

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
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.
(2)
Refer to “Funds from Operations and Funds from Operations Per Share” in our Earnings Press Release and “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” in the “Definitions and Reconciliations” in this Supplemental Information for the definition and reconciliation from the most directly comparable GAAP measure.

 
 
Investments
q419logo.jpg
December 31, 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” of this Supplemental Information for additional details.

 
 
December 31, 2019
 
Year Ended December 31, 2018
 
 
Three Months Ended
 
Year Ended
 
Realized gains
 
$
4,399

(1) 
 
$
33,158

(1) 
 
$
37,129

(2) 
Unrealized gains
 
148,268

 
 
161,489

 
 
99,634

 
Investment income
 
$
152,667

 
 
$
194,647

 
 
$
136,763

 
 
 
 
 
 
 
 
 
 
 

Investments
 
Cost
 
Adjustments
 
Carrying Amount
Fair value:
 
 
 
 
 
 
 
 
 
Publicly traded companies
 
$
148,109

 
 
$
170,528

(3) 
 
$
318,637

 
Entities that report NAV
 
271,276

 
 
162,626

 
 
433,902

 
 
 
 
 
 
 
 
 
 
 
Entities that do not report NAV:
 
 
 
 
 
 
 
 
 
Entities with observable price changes
 
42,045

 
 
68,489

 
 
110,534

 
Entities without observable price changes
 
277,521

 
 
—

 
 
277,521

 
December 31, 2019
 
$
738,951

 
 
$
401,643

 
 
$
1,140,594

 
 
 
 
 
 
 
 
 
 
 
September 30, 2019
 
$
737,078

 
 
$
253,376

 
 
$
990,454

 

(1)
Includes realized gains for the three months and year ended December 31, 2019, of $14.4 million and $50.3 million, respectively, and impairments related to privately held non-real estate investments of $10.0 million and $17.1 million, respectively.
(2)
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.
(3)
Includes gross unrealized gains and losses of $197.3 million and $26.8 million, respectively.

 

 
Public/Private
Mix (Cost)
 
 
q419pubprivmix.jpg
 
 
 
 
 
Tenant/Non-Tenant
Mix (Cost)
 
 
q419tenantmix.jpg
 

 
 
 
q419logo.jpg
Key Credit Metrics
December 31, 2019
 
 


Net Debt and Preferred Stock to Adjusted EBITDA(1)
 
Significant Availability on Unsecured Senior Line of Credit
 
 
(in millions)
 
q419netdebtpreferred.jpg
 
q419lineofcredit.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-Charge Coverage Ratio(1)
 
Liquidity(3)
 
 
 
 
 
 
q419fixedcharge.jpg
 
$2.4B
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
Availability under our $2.2 billion unsecured senior line of credit
 
$
1,816

 
 
Cash, cash equivalents, and restricted cash
 
243

 
 
Investments in publicly traded companies
 
319

 
 
 
 
$
2,378

(4) 
 
 
 
 
 
(1)
Quarter annualized.
(2)
Due to the timing of two acquisitions that closed in December 2019, we had a temporary 0.4x increase above our projected net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2019, annualized, for December 31, 2019. We remain committed to our guidance for net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2020, annualized, of less than or equal to 5.2x.
(3)
As of December 31, 2019.
(4)
In January 2020, we entered into $1.0 billion of forward equity sales agreements. Including the outstanding forward equity agreements, we had proforma liquidity of $3.4 billion.

 
 
 
q419logo.jpg
Summary of Debt
December 31, 2019
 
 


Debt maturities chart
(In millions)


Weighted-Average Remaining Term of 10.4 Years

q419debtmaturities.jpg

 
 
Summary of Debt (continued)
q419logo.jpg
December 31, 2019
(Dollars in thousands)
 
 



Fixed-rate and variable-rate debt
Fixed-Rate
Debt
 
Variable-Rate Debt
 
Total
 
Percentage
 
Weighted-Average
 
 
 
 
 
 
Interest Rate(1)
 
Remaining Term
(in years)
 
 
 
 
 
 
 
 
Secured notes payable
$
349,352

 
$
—

 
$
349,352

 
5.2
%
 
3.57
%
 
4.0
 
Unsecured senior notes payable
6,044,127

 
—

 
6,044,127

 
89.1

 
3.99

 
11.2
 
Commercial paper program
—

 
—

 
—

 
—

 
N/A

 
N/A
 
$2.2 billion unsecured senior line of credit
—

 
384,000

 
384,000

 
5.7

 
2.89

 
4.1
 
Total/weighted average
$
6,393,479

 
$
384,000

 
$
6,777,479

 
100.0
%
 
3.91
%
 
10.4
 
Percentage of total debt
94
%
 
6
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to the amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.


Debt covenants
 
Unsecured Senior Notes Payable
 
$2.2 Billion Unsecured Senior Line of Credit
Debt Covenant Ratios(1)
 
Requirement
 
December 31, 2019
 
Requirement
 
December 31, 2019
Total Debt to Total Assets
 
≤ 60%
 
34%
 
≤ 60.0%
 
29.7%
 
Secured Debt to Total Assets
 
≤ 40%
 
2%
 
≤ 45.0%
 
1.5%
 
Consolidated EBITDA to Interest Expense
 
≥ 1.5x
 
7.0x
 
≥ 1.50x
 
3.85x
 
Unencumbered Total Asset Value to Unsecured Debt
 
≥ 150%
 
277%
 
N/A
 
N/A
 
Unsecured Interest Coverage Ratio
 
N/A
 
N/A
 
≥ 1.75x
 
5.99x
 
 
 
 
 
 
 
 
 
 
 
(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%
 
 
5.18
%
 
 
$
26,158

 
$
2,619

 
1655 and 1725 Third Street(3)
 
 
10.0
%
 
 
6/29/21
 
L+3.70%
 
 
5.41
%
 
 
309,275

 
65,725

 
704 Quince Orchard Road
 
 
56.8
%
 
 
3/16/23
 
L+1.95%
 
 
3.94
%
 
 
9,172

 
5,709

 
Menlo Gateway, Phase II
 
 
49.0
%
 
 
5/1/35
 
4.53%
 
 
4.59
%
 
 
56,321

 
99,529

 
Menlo Gateway, Phase I
 
 
49.0
%
 
 
8/10/35
 
4.15%
 
 
4.18
%
 
 
142,101

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
543,027

 
$
173,582

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Includes interest expense and amortization of loan fees.
(2)
Represents outstanding principal, net of unamortized deferred financing costs, as of December 31, 2019.
(3)
This unconsolidated joint venture is in the process of refinancing this loan to, among other changes, extend the maturity date and fix the interest rate. We expect to complete the refinancing next quarter.

 
 
Summary of Debt (continued)
q419logo.jpg
December 31, 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
 
 
 
 
 
2020
 
2021
 
2022
 
2023
 
2024
 
Thereafter
 
 
 
 
Secured notes payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
4.66
%
 
4.90
%
 
 
1/1/23
 
$
1,621

 
$
1,852

 
$
1,942

 
$
26,259

 
$
—

 
$
—

 
$
31,674

 
$
(198
)
 
$
31,476

 
Greater Boston
 
3.93
%
 
3.19

 
 
3/10/23
 
1,565

 
1,629

 
1,693

 
74,517

 
—

 
—

 
79,404

 
1,771

 
81,175

 
Greater Boston
 
4.82
%
 
3.40

 
 
2/6/24
 
3,207

 
3,394

 
3,564

 
3,742

 
183,527

 
—

 
197,434

 
10,978

 
208,412

 
San Francisco
 
4.14
%
 
4.42

 
 
7/1/26
 
—

 
—

 
—

 
—

 
—

 
28,200

 
28,200

 
(639
)
 
27,561

 
San Francisco
 
6.50
%
 
6.50

 
 
7/1/36
 
25

 
26

 
28

 
30

 
32

 
587

 
728

 
—

 
728

 
Secured debt weighted-average interest rate/subtotal
 
4.55
%
 
3.57

 
 
 
 
6,418

 
6,901

 
7,227

 
104,548

 
183,559

 
28,787

 
337,440

 
11,912

 
349,352

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial paper program(3)
 
N/A

 
N/A

(3) 
 
N/A
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
$2.2 billion unsecured senior line of credit
 
L+0.825
%
 
2.89

 
 
1/28/24
 
—

 
—

 
—

 
—

 
384,000

 
—

 
384,000

 
—

 
384,000

 
Unsecured senior notes payable
 
3.90
%
 
4.04

 
 
6/15/23
 
—

 
—

 
—

 
500,000

 
—

 
—

 
500,000

 
(2,065
)
 
497,935

 
Unsecured senior notes payable – green bond
 
4.00
%
 
4.03

 
 
1/15/24
 
—

 
—

 
—

 
—

 
650,000

 
—

 
650,000

 
(548
)
 
649,452

 
Unsecured senior notes payable
 
3.45
%
 
3.62

 
 
4/30/25
 
—

 
—

 
—

 
—

 
—

 
600,000

 
600,000

 
(4,667
)
 
595,333

 
Unsecured senior notes payable
 
4.30
%
 
4.50

 
 
1/15/26
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(2,942
)
 
297,058

 
Unsecured senior notes payable – green bond
 
3.80
%
 
3.96

 
 
4/15/26
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,081
)
 
346,919

 
Unsecured senior notes payable
 
3.95
%
 
4.13

 
 
1/15/27
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,552
)
 
346,448

 
Unsecured senior notes payable
 
3.95
%
 
4.07

 
 
1/15/28
 
—

 
—

 
—

 
—

 
—

 
425,000

 
425,000

 
(3,403
)
 
421,597

 
Unsecured senior notes payable
 
4.50
%
 
4.60

 
 
7/30/29
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(2,126
)
 
297,874

 
Unsecured senior notes payable
 
2.75
%
 
2.87

 
 
12/15/29
 
—

 
—

 
—

 
—

 
—

 
400,000

 
400,000

 
(4,089
)
 
395,911

 
Unsecured senior notes payable
 
4.70
%
 
4.81

 
 
7/1/30
 
—

 
—

 
—

 
—

 
—

 
450,000

 
450,000

 
(3,903
)
 
446,097

 
Unsecured senior notes payable
 
3.375
%
 
3.48

 
 
8/15/31
 
—

 
—

 
—

 
—

 
—

 
750,000

 
750,000

 
(7,527
)
 
742,473

 
Unsecured senior notes payable
 
4.85
%
 
4.93

 
 
4/15/49
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(3,446
)
 
296,554

 
Unsecured senior notes payable
 
4.00
%
 
3.91

 
 
2/1/50
 
—

 
—

 
—

 
—

 
—

 
700,000

 
700,000

 
10,476

 
710,476

 
Unsecured debt weighted-average/subtotal
 
 
 
3.93

 
 
 
 
—

 
—

 
—

 
500,000

 
1,034,000

 
4,925,000

 
6,459,000

 
(30,873
)
 
6,428,127

 
Weighted-average interest rate/total
 
 
 
3.91
%
 
 
 
 
$
6,418

 
$
6,901

 
$
7,227

 
$
604,548

 
$
1,217,559

 
$
4,953,787

 
$
6,796,440

 
$
(18,961
)
 
$
6,777,479

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balloon payments
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
600,487

 
$
1,217,221

 
$
4,953,200

 
$
6,770,908

 
$
—

 
$
6,770,908

 
Principal amortization
 
 
 
 
 
 
 
 
6,418

 
6,901

 
7,227

 
4,061

 
338

 
587

 
25,532

 
(18,961
)
 
6,571

 
Total debt
 
 
 
 
 
 
 
 
$
6,418

 
$
6,901

 
$
7,227

 
$
604,548

 
$
1,217,559

 
$
4,953,787

 
$
6,796,440

 
$
(18,961
)
 
$
6,777,479

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate/hedged variable-rate debt
 
 
 
 
 
 
 
 
$
6,418

 
$
6,901

 
$
7,227

 
$
604,548

 
$
833,559

 
$
4,953,787

 
$
6,412,440

 
$
(18,961
)
 
$
6,393,479

 
Unhedged variable-rate debt
 
 
 
 
 
 
 
 
—

 
—

 
—

 
—

 
384,000

 
—

 
384,000

 
—

 
384,000

 
Total debt
 
 
 
 
 
 
 
 
$
6,418

 
$
6,901

 
$
7,227

 
$
604,548

 
$
1,217,559

 
$
4,953,787

 
$
6,796,440

 
$
(18,961
)
 
$
6,777,479

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average stated rate on maturing debt
 
 
 
 
 
 
 
 
N/A

 
N/A

 
N/A

 
3.94%

 
3.69%

 
3.88%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
(2)
Reflects any extension options that we control.
(3)
In September 2019, we established a commercial paper program under which we have the ability to issue up to $750.0 million of commercial paper notes with a maximum maturity of 397 days from the date of issuance. Borrowings under the program will be used to fund short-term capital needs and are backed by our $2.2 billion unsecured senior line of credit. In the event we are unable to refinance outstanding commercial paper notes under terms equal to or more favorable than those under the unsecured senior line of credit, we expect to borrow under the unsecured senior line of credit at L+0.825%. The commercial paper notes sold during the year ended December 31, 2019, were issued at a yield to maturity of between 1.83% and 2.29%.

 
 
 
q419logo.jpg
Definitions and Reconciliations
December 31, 2019
 
 



This section contains additional details 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)
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Net income (loss)
$
216,053

 
$
(36,003
)
 
$
87,179

 
$
136,818

 
$
(18,631
)
Interest expense
45,493

 
46,203

 
42,879

 
39,100

 
40,239

Income taxes
1,269

 
887

 
890

 
1,297

 
613

Depreciation and amortization
140,518

 
135,570

 
134,437

 
134,087

 
124,990

Stock compensation expense
10,239

 
10,935

 
11,437

 
11,029

 
9,810

Loss on early extinguishment of debt
—

 
40,209

 
—

 
7,361

 
—

Gain on sales of real estate
(474
)
 
—

 
—

 
—

 
(8,704
)
Significant realized gains on non-real estate investments
—

 
—

 
—

 
—

 
(6,428
)
Unrealized (gains) losses on non-real estate investments
(148,268
)
 
70,043

 
(11,058
)
 
(72,206
)
 
94,850

Impairment of real estate
12,334

 
—

 
—

 
—

 
—

Impairment of non-real estate investments
9,991

 
7,133

 
—

 
—

 
5,483

Adjusted EBITDA
$
287,155

 
$
274,977

 
$
265,764

 
$
257,486

 
$
242,222

 
 
 
 
 
 
 
 
 
 
Revenues
$
408,114

 
$
390,484

 
$
373,856

 
$
358,842

 
$
340,463

Non-real estate investments – total realized gains
4,399

 
6,967

 
10,442

 
11,350

 
11,319

Significant realized gains on non-real estate investments
—

 
—

 
—

 
—

 
(6,428
)
Impairment of non-real estate investments
9,991

 
7,133

 
—

 
—

 
5,483

Revenues, as adjusted
$
422,504

 
$
404,584

 
$
384,298

 
$
370,192

 
$
350,837

 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
68%

 
68%

 
69%

 
70%

 
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 December 31, 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)
December 31, 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)
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Adjusted EBITDA
$
287,155

 
$
274,977

 
$
265,764

 
$
257,486

 
$
242,222

 
 
 
 
 
 
 
 
 
 
Interest expense
$
45,493

 
$
46,203

 
$
42,879

 
$
39,100

 
$
40,239

Capitalized interest
23,822

 
24,558

 
21,674

 
18,509

 
19,902

Amortization of loan fees
(2,241
)
 
(2,251
)
 
(2,380
)
 
(2,233
)
 
(2,401
)
Amortization of debt premiums
907

 
1,287

 
782

 
801

 
611

Cash interest
67,981

 
69,797

 
62,955

 
56,177

 
58,351

Dividends on preferred stock
—

 
1,173

 
1,005

 
1,026

 
1,155

Fixed charges
$
67,981

 
$
70,970

 
$
63,960

 
$
57,203

 
$
59,506

 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio:
 
 
 
 
 
 
 
 
 
– quarter annualized
4.2x

 
3.9x

 
4.2x

 
4.5x

 
4.1x

– trailing 12 months
4.2x

 
4.1x

 
4.2x

 
4.2x

 
4.2x

 
 
 
 
 
 
 
 
 
 

 
 
 
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Definitions and Reconciliations (continued)
December 31, 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 depreciation and amortization of operating real estate assets, 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, gains or losses on early termination of interest rate hedge agreements, preferred stock redemption charges, deal costs, the income tax effect related to such items, 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
 
December 31, 2019
 
December 31, 2019
(In thousands)
Three Months Ended
 
Year Ended
 
Three Months Ended
 
Year Ended
Net income
$
13,612

 
$
40,882

 
$
4,777

 
$
10,136

Depreciation and amortization
10,176

 
30,960

 
2,702

 
6,366

Funds from operations
$
23,788

 
$
71,842

 
$
7,479

 
$
16,502

    
 
Initial stabilized yield (unlevered)
Initial stabilized yield is calculated as the estimated amounts of net operating income at stabilization divided by 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 December 31, 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, technology, and agtech 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


 
 
 
q419logo.jpg
Definitions and Reconciliations (continued)
December 31, 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 December 31, 2019:
(In thousands)
 
Investments in Real Estate
 
Gross investments in real estate
 
$
17,518,609

 
 
 
 
 
Less: accumulated depreciation
 
(2,704,657
)
 
Net investments in real estate – North America
 
14,813,952

 
Net investments in real estate – Asia
 
30,086

 
Investments in real estate
 
$
14,844,038

 

    
The following table represents RSF of buildings in operation as of December 31, 2019, that will be redeveloped or replaced with new development RSF upon commencement of future construction:
Property/Submarket
 
RSF
 
Intermediate-term projects:
 
 
 
3825 Fabian Way/Greater Stanford
 
250,000

 
960 Industrial Road/Greater Stanford
 
110,000

 
9363, 9373, and 9393 Towne Centre Drive/University Town Center
 
140,398

 
10260 Campus Point Drive/University Town Center
 
109,164

 
10931 and 10933 North Torrey Pines Road/Torrey Pines
 
92,450

 
 
 
702,012

 
Future projects:
 
 
 
3875 Fabian Way/Greater Stanford
 
228,000

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

 
4161 Campus Point Court/University Town Center
 
159,884

 
4110 Campus Point Court/University Town Center
 
15,667

 
4045 Sorrento Valley Boulevard/Sorrento Valley
 
10,926

 
4075 Sorrento Valley Boulevard/Sorrento Valley
 
40,000

 
601 Dexter Avenue North/Lake Union
 
18,680

 
 
 
823,104

 
Total value-creation RSF currently included in rental properties
 
1,525,116

 

 
Joint venture financial information

We present components of balance sheet and operating results information related to our joint ventures, which are not presented, 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, which are controlled by us through contractual rights or majority voting rights, 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, and are instead controlled jointly or by our joint venture partners through contractual rights or majority voting rights, 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, 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, gains or losses on early termination of interest rate hedge agreements, 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 non-

 
 
 
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Definitions and Reconciliations (continued)
December 31, 2019
 
 


real estate investments when their fair values decline below their respective carrying values 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.

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 neither 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 the definition of tenant recoveries below for additional details on 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 other liabilities 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)
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Secured notes payable
 
$
349,352

 
$
351,852

 
$
354,186

 
$
356,461

 
$
630,547

Unsecured senior notes payable
 
6,044,127

 
6,042,831

 
5,140,914

 
5,139,500

 
4,292,293

Unsecured senior line of credit
 
384,000

 
343,000

 
514,000

 
—

 
208,000

Unsecured senior bank term loan
 
—

 
—

 
347,105

 
347,542

 
347,415

Unamortized deferred financing costs
 
47,299

 
48,746

 
36,905

 
37,925

 
31,413

Cash and cash equivalents
 
(189,681
)
 
(410,675
)
 
(198,909
)
 
(261,372
)
 
(234,181
)
Restricted cash
 
(53,008
)
 
(42,295
)
 
(39,316
)
 
(54,433
)
 
(37,949
)
Net debt
 
$
6,582,089

 
$
6,333,459

 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

 
 
 
 
 
 
 
 
 
 
 
Net debt
 
$
6,582,089

 
$
6,333,459

 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

7.00% Series D Convertible Preferred Stock
 
—

(1) 
57,461

 
57,461

 
57,461

 
64,336

Net debt and preferred stock
 
$
6,582,089

 
$
6,390,920

 
$
6,212,346

 
$
5,623,084

 
$
5,301,874

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
$
1,148,620

 
$
1,099,908

 
$
1,063,056

 
$
1,029,944

 
$
968,888

– trailing 12 months
 
$
1,085,382

 
$
1,040,449

 
$
1,004,724

 
$
966,781

 
$
937,906

Net debt to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
5.7
x
 
5.8
x
 
5.8
x
 
5.4
x
 
5.4
x
– trailing 12 months
 
6.1
x
 
6.1
x
 
6.1
x
 
5.8
x
 
5.6
x
Net debt and preferred stock to Adjusted EBITDA:
 
 
 
 
 
 
 
 
– quarter annualized
 
5.7
x
 
5.8
x
 
5.8
x
 
5.5
x
 
5.5
x
– trailing 12 months
 
6.1
x
 
6.1
x
 
6.2
x
 
5.8
x
 
5.7
x
 
 
 
 
 
 
 
 
 
 
 
(1)
In October 2019, we completed the conversion of all 2.3 million outstanding shares of our Series D Convertible Preferred Stock into shares of our common stock.

 
 
 
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Definitions and Reconciliations (continued)
December 31, 2019
 
 


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

The following table reconciles net income (loss) to net operating income, and to net operating income (cash basis):
 
 
Three Months Ended
 
Year Ended
(Dollars in thousands)
 
12/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Net income (loss)
 
$
216,053

 
$
(18,631
)
 
$
404,047

 
$
402,793

 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
(4,777
)
 
(1,029
)
 
(10,136
)
 
(43,981
)
General and administrative expenses
 
29,782

 
22,385

 
108,823

 
90,405

Interest expense
 
45,493

 
40,239

 
173,675

 
157,495

Depreciation and amortization
 
140,518

 
124,990

 
544,612

 
477,661

Impairment of real estate
 
12,334

 
—

 
12,334

 
6,311

Loss on early extinguishment of debt
 
—

 
—

 
47,570

 
1,122

Gain on sales of real estate
 
(474
)
 
(8,704
)
 
(474
)
 
(8,704
)
Investment (income) loss
 
(152,667
)
 
83,531

 
(194,647
)
 
(136,763
)
Net operating income
 
286,262

 
242,781

 
1,085,804

 
946,339

Straight-line rent revenue
 
(24,400
)
 
(17,923
)
 
(104,235
)
 
(93,883
)
Amortization of acquired below-market leases
 
(8,837
)
 
(5,350
)
 
(29,813
)
 
(21,938
)
Net operating income (cash basis)
 
$
253,025

 
$
219,508

 
$
951,756

 
$
830,518

 
 
 
 
 
 
 
 
 
Net operating income (cash basis) – annualized
 
$
1,012,100

 
$
878,032

 
$
951,756

 
$
830,518

 
 
 
 
 
 
 
 
 
Net operating income (from above)
 
$
286,262

 
$
242,781

 
$
1,085,804

 
$
946,339

Total revenues
 
$
408,114

 
$
340,463

 
$
1,531,296

 
$
1,327,459

Operating margin
 
70%
 
71%
 
71%
 
71%

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, impairments 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 net operating income generated by a property divided by 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, 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, as well as 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

 
 
 
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Definitions and Reconciliations (continued)
December 31, 2019
 
 


real estate joint ventures, properties classified as held for sale, and corporate entities (legal entities 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 year ended December 31, 2019:
Development –
under construction
 
Properties
 
9800 Medical Center Drive
 
1

 
9950 Medical Center Drive
 
1

 
Alexandria District for Science and Technology
 
2

 
201 Haskins Way
 
1

 
1165 Eastlake Avenue East
 
1

 
4150 Campus Point Court
 
1

 
 
 
7

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

 
399 Binney Street
 
1

 
213 East Grand Avenue
 
1

 
279 East Grand Avenue
 
1

 
188 East Blaine Street
 
1

 
 
 
5

 
 
 
 
 
Redevelopment –
under construction
 
Properties
 
Alexandria Center® – Long Island City
 
1

 
945 Market Street
 
1

 
3160 Porter Drive
 
1

 
The Arsenal on the Charles
 
4

 
 
 
7

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

 
Alexandria PARC
 
4

 
681 and 685 Gateway Boulevard
 
2

 
9900 Medical Center Drive
 
1

 
266 and 275 Second Avenue
 
2

 
Alexandria Center® for AgTech, Phase I
 
1

 
 
 
11

 
 
 
 
 
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

 
25, 35, 45, 50, and 55 West Watkins Mill Road
 
5

 
10260 Campus Point Drive and 4161 Campus Point Court
 
2

 
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

 
4224/4242 Campus Point Court and 10210 Campus Point Drive
 
3

 
3825 and 3875 Fabian Way
 
2

 
SD Tech by Alexandria
 
10

 
The Arsenal on the Charles
 
7

 
Other
 
9

 
 
 
60

 
 
 
 
 
Unconsolidated real estate JVs
 
6

 
Properties held for sale
 
3

 
Total properties excluded from same properties
 
99

 
Same properties
 
192

(1) 
Total properties in North America as of December 31, 2019
 
291

 
 
 
 
 
(1)
Includes 9880 Campus Point Drive and 3545 Cray Court. The 9880 Campus Point Drive building was occupied through January 2018 and is currently in active development, and 3545 Cray Court is currently undergoing renovations.
 
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 comprising 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, among other practical expedients and policies, and 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 “Same Property Performance” of this Supplemental Information because we believe it promotes investors’ understanding of the changes in our operating results. We believe that the 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
 
Year Ended
(In thousands)
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
Income from rentals
$
404,721

 
$
385,776

 
$
371,618

 
$
354,749

 
$
337,785

 
$
1,516,864

 
$
1,314,781

Rental revenues
(308,418
)
 
(293,182
)
 
(289,625
)
 
(274,563
)
 
(260,102
)
 
(1,165,788
)
 
(1,010,718
)
Tenant recoveries
$
96,303

 
$
92,594

 
$
81,993

 
$
80,186

 
$
77,683

 
$
351,076

 
$
304,063

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total equity capitalization

Total equity capitalization is equal to the sum of outstanding shares of 7.00% Series D cumulative convertible preferred stock (“Series D 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 capitalization and total debt.


 
 
 
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Definitions and Reconciliations (continued)
December 31, 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)
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Unencumbered net operating income
$
270,903

 
$
259,128

 
$
251,397

 
$
243,191

 
$
213,285

Encumbered net operating income
15,359

 
14,906

 
16,770

 
14,150

 
29,496

Total net operating income
$
286,262

 
$
274,034

 
$
268,167

 
$
257,341

 
$
242,781

Unencumbered net operating income as a percentage of total net operating income
95%

 
95%

 
94%

 
95%

 
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
 
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
Weighted-average interest rate for capitalization of interest
3.88%
 
4.00%
 
4.14%
 
3.96%
 
4.01%
 
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, to 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 December 31, 2019, we had no Forward Agreements outstanding.

Prior to the conversion of our remaining outstanding shares in October 2019, we considered the effect of assumed conversion of our outstanding 7.00% 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. Prior to the conversion of our remaining outstanding shares in October 2019, our Series D Convertible Preferred Stock was dilutive and assumed to be converted when quarterly and annual basic EPS, funds from operations, or funds from operations, as adjusted, exceeded 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 was included when it was 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
 
Year Ended
(In thousands)
12/31/19
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
12/31/19
 
12/31/18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
114,175

 
112,120

 
111,433

 
111,054

 
106,033

 
112,204

 
103,010

Forward Agreements
761

 
—

 
68

 
—

 
—

 
320

 
311

Series D Convertible Preferred Stock
38

 
—

 
—

 
—

 
—

 
—

 
—

Diluted shares for EPS
114,974

 
112,120

 
111,501

 
111,054

 
106,033

 
112,524

 
103,321

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
114,175

 
112,120

 
111,433

 
111,054

 
106,033

 
112,204

 
103,010

Forward Agreements
761

 
442

 
68

 
—

 
211

 
320

 
311

Series D Convertible Preferred Stock
38

 
—

 
576

 
581

 
—

 
442

 
727

Diluted shares for FFO
114,974

 
112,562

 
112,077

 
111,635

 
106,244

 
112,966

 
104,048

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
114,175

 
112,120

 
111,433

 
111,054

 
106,033

 
112,204

 
103,010

Forward Agreements
761

 
442

 
68

 
—

 
211

 
320

 
311

Series D Convertible Preferred Stock
38

 
—

 
—

 
—

 
—

 
—

 
—

Diluted shares for FFO, as adjusted
114,974

 
112,562

 
111,501

 
111,054

 
106,244

 
112,524

 
103,321