Secured and unsecured senior debt (Notes)

12 Months Ended

Dec. 31, 2019

The following table summarizes our secured and unsecured senior debt as of December 31, 2019 (dollars in thousands):



	Fixed Rate Debt			Variable-Rate Debt								Weighted-Average
												Interest Rate⁽¹⁾		Remaining Term (in years)
							Total			Percentage		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 amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.

The following table summarizes our outstanding indebtedness and respective principal payments as of December 31, 2019 (dollars in thousands):



	Stated Rate		Interest Rate ⁽¹⁾			Maturity Date ⁽²⁾	Principal Payments Remaining for the Periods Ending December 31,														Unamortized (Deferred Financing Cost), (Discount) Premium
Debt	Stated Rate		Interest Rate ⁽¹⁾			Maturity Date ⁽²⁾	2020		2021		2022		2023		2024		Thereafter		Principal		Unamortized (Deferred Financing Cost), (Discount) Premium			Total
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 interest rate/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


(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 that has 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 borrowings 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%.

$2.2 billion unsecured senior line of credit

We use our unsecured senior line of credit to fund working capital, construction activities, and, from time to time, acquisition of properties. Borrowings under the unsecured senior line of credit will bear interest at a “Eurocurrency Rate,” a “LIBOR Floating Rate,” or a “Base Rate” specified in the amended unsecured senior line of credit agreement plus, in any case, the Applicable Margin. The Eurocurrency Rate specified in the amended unsecured senior line of credit agreement is, as applicable, the rate per annum equal to either (i) the LIBOR or a successor rate thereto as agreed to by the administrative agent and the Company for loans denominated in a LIBOR quoted currency (i.e., U.S. dollars, euro, sterling, or yen), (ii) the average annual yield rates applicable to Canadian dollar bankers’ acceptances for loans denominated in Canadian dollars, (iii) the Bank Bill Swap Reference Bid rate for loans denominated in Australian dollars, or (iv) the rate designated with respect to the applicable alternative currency for loans denominated in a non-LIBOR quoted currency (other than Canadian or Australian dollars). The LIBOR Floating Rate means, for any day, one month LIBOR, or a successor rate thereto as agreed to by the administrative agent and the Company for loans denominated in U.S. dollars. The Base Rate means, for any day, a fluctuating rate per annum equal to the highest of (i) the federal funds rate plus 1/2 of 1.00%, (ii) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (iii) the Eurocurrency Rate plus 1.00%. Our unsecured senior line of credit contains a feature that allows lenders to competitively bid on the interest rate for borrowings under the facility. This may result in an interest rate that is below the stated rate. In addition to the cost of borrowing, the facility is subject to an annual facility fee of 0.15% based on the aggregate commitments outstanding.

$750.0 million commercial paper program

In September 2019, we established a commercial paper program, which received credit ratings of A-2 from S&P Global Ratings and Prime-2 from Moody’s Investors Service. Under this program, 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. Our commercial paper program is backed by our $2.2 billion unsecured senior line of credit, and at all times we expect to retain a minimum undrawn amount of borrowing capacity under our unsecured senior line of credit equal to any outstanding balance on our commercial paper program. The net proceeds of the issuances of the notes are expected to be used for general working capital and other general corporate purposes. General corporate purposes may include, but are not limited to, the repayment of other debt and selective development, redevelopment, or acquisition of properties. During the year ended December 31, 2019, the commercial paper notes were issued at a yield to maturity of between 1.83% and 2.29%. As of December 31, 2019, we had no outstanding borrowings under our commercial paper program.

Unsecured senior notes payable

As of December 31, 2019, we have unsecured senior notes payable aggregating $6.1 billion, which are unsecured obligations of the Company and are fully and unconditionally guaranteed by Alexandria Real Estate Equities, L.P., a 100% owned subsidiary of the Company. The unsecured senior notes payable rank equally in right of payment with all other senior unsecured indebtedness. However, the unsecured senior notes payable are subordinate to existing and future mortgages and other secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and to all existing and future preferred equity and liabilities, whether secured or unsecured, of the Company’s subsidiaries, other than Alexandria Real Estate Equities, L.P. In addition, the terms of the indentures, among other things, limit the ability of the Company, Alexandria Real Estate Equities, L.P., and the Company’s subsidiaries to (i) consummate a merger, or consolidate or sell all or substantially all of the Company’s assets, and (ii) incur certain secured or unsecured indebtedness.

During the year ended December 31, 2019, our issuances of unsecured senior notes payable and repayments of debt included the following (dollars in millions):



	Issuance Date	Stated Interest Rate		Effective Interest Rate		Maturity Date	Principal Amount			Net Proceeds
Issuances
Unsecured senior notes payable – green bond	March	4.00	%	4.03	%	1/15/24	$	200		$	203.0
Unsecured senior notes payable – green bond	March	3.80		3.96		4/15/26	350			346.6
Unsecured senior notes payable	March	4.85		4.93		4/15/49	300			296.5
Unsecured senior notes payable	July	3.375		3.48		8/15/31	750			742.5
Unsecured senior notes payable	July/Sept	4.00		3.91		2/1/50	700			711.1
Unsecured senior notes payable	Sept	2.75		2.87		12/15/29	400			395.8
		3.71	%	3.77	%	16.9 years	$	2,700	⁽¹⁾	$	2,695.5

Repayments of debt
Secured notes payable	Jan	7.75	%	8.15	%	4/1/20	$	107		N/A
Secured construction loan	March	3.29		3.29		1/28/20	193			N/A
Unsecured senior notes payable	July/Aug	2.75		2.96		1/15/20	400			N/A
Unsecured senior notes payable	July/Aug	4.60		4.75		4/1/22	550			N/A
Unsecured senior bank term loan	July/Sept	3.62		3.62		1/2/25	350			N/A
Weighted average/total		3.97	%	4.11	%	2.4 years	$	1,600	⁽¹⁾


(1)	The remaining proceeds received from our debt issuances, after repayments of debt, were used to fund the construction of our value-creation pipeline and acquisitions completed during 2019. Refer to Note 3 – “Investments in Real Estate” to our consolidated financial statements for additional information.

Our $350.0 million of 3.80% unsecured senior notes payable and our $200.0 million of 4.00% unsecured senior notes payable issued in March 2019 were allocated to fund recently completed and future eligible green development and redevelopment projects, and to the repayment of the outstanding balance of $193.1 million under our secured construction loan related to 50/60 Binney Street, a recently completed Class A property, which was awarded LEED^® Gold certification.

The proceeds from our $300.0 million of 4.85% unsecured senior notes payable issued in March 2019 were primarily allocated to fund acquisitions completed during 2019. Refer to Note 3 – “Investments in Real Estate” to our consolidated financial statements for additional information.

The proceeds from our $750.0 million of 3.375% unsecured senior notes payable issued in July 2019 and partial proceeds from our $700.0 million of 4.00% unsecured senior notes payable, which was issued in two tranches of $500.0 million during July 2019 and $200.0 million during September 2019, were primarily used to refinance $400.0 million of 2.75% unsecured senior notes payable due 2020 and $550.0 million of 4.60% unsecured senior notes payable due 2022, pursuant to a partial cash tender offer completed on July 17, 2019, and a subsequent call for redemption for the remaining outstanding amounts. The redemption was settled on August 16, 2019. Additionally, a portion of the proceeds from our $750.0 million of 3.375% unsecured senior notes payable, $700.0 million of 4.00% unsecured senior notes payable, and $400.0 million of 2.75% unsecured senior notes payable issued in September 2019 were used to complete the repayment of the remaining principal balance on our unsecured senior bank term loan of $350.0 million.

As a result of our debt issuances and repayments of debt, we recognized losses of $47.6 million related to the early extinguishment of debt during the year ended December 31, 2019, including $40.2 million related to the refinancing of our 2.75% unsecured senior notes payable due 2020 and 4.60% unsecured senior notes payable and the repayment of our unsecured senior bank term loan.

Repayment of secured notes payable

In January 2019, we repaid early one secured note payable aggregating $106.7 million, which was originally due in 2020 and bore interest at 7.75%, and recognized a loss on early extinguishment of debt of $7.1 million, including the write-off of unamortized loan fees.

In March 2019, we repaid early the remaining outstanding balance of $193.1 million under our secured construction loan related to 50/60 Binney Street, which was due in 2020 and bore interest at LIBOR+1.5%, and recognized a loss on early extinguishment of debt of $269 thousand, including the write-off of unamortized loan fees.

Interest expense

Interest expense for the years ended December 31, 2019, 2018, and 2017, consisted of the following (dollars in thousands):



	Year Ended December 31,
	2019			2018			2017
Interest incurred	$	262,238		$	223,715		$	186,867
Capitalized interest	(88,563		)	(66,220		)	(58,222		)
Interest expense	$	173,675		$	157,495		$	128,645