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Consolidated and unconsolidated real estate joint ventures
 9 Months Ended
Sep. 30, 2021
Equity Method Investments and Joint Ventures [Abstract]  
Consolidated and unconsolidated real estate joint ventures
From time to time, we enter into joint venture agreements through which we own a partial interest in real estate entities that own, develop, and operate real estate properties. As of September 30, 2021, our real estate joint ventures held the following properties:
PropertyMarketSubmarket
Our Ownership Interest(1)
Consolidated joint ventures(2):
75/125 Binney StreetGreater BostonCambridge/Inner Suburbs40.0 %
225 Binney StreetGreater BostonCambridge/Inner Suburbs30.0 %
99 Coolidge AvenueGreater BostonCambridge/Inner Suburbs75.0 %
409 and 499 Illinois StreetSan Francisco Bay AreaMission Bay60.0 %
(3)
1500 Owens StreetSan Francisco Bay AreaMission Bay50.1 %
(3)
Alexandria Technology Center® – Gateway(4)
San Francisco Bay AreaSouth San Francisco48.1 %
213 East Grand AvenueSan Francisco Bay AreaSouth San Francisco30.0 %
500 Forbes BoulevardSan Francisco Bay AreaSouth San Francisco10.0 %
Alexandria Center® for Life Science – Millbrae Station
San Francisco Bay AreaSouth San Francisco37.6 %
Alexandria Point(5)
San DiegoUniversity Town Center55.0 %
5200 Illumina WaySan DiegoUniversity Town Center51.0 %
9625 Towne Centre DriveSan DiegoUniversity Town Center50.1 %
SD Tech by Alexandria(6)
San DiegoSorrento Mesa50.0 %
Pacific Technology ParkSan DiegoSorrento Mesa50.0 %
The Eastlake Life Science Campus by Alexandria(7)
SeattleLake Union30.0 %
400 Dexter Avenue NorthSeattleLake Union30.0 %
Unconsolidated joint ventures(2):
1655 and 1725 Third StreetSan Francisco Bay AreaMission Bay10.0 %
Menlo GatewaySan Francisco Bay AreaGreater Stanford49.0 %
1401/1413 Research BoulevardMarylandRockville65.0 %
(8)
(1)Refer to the table on the next page that shows the categorization of our joint ventures under the consolidation framework.
(2)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in five other consolidated joint ventures in North America and we hold an interest in one other insignificant unconsolidated real estate joint venture in North America.
(3)Refer to the “Formation of consolidated real estate joint ventures and sales of partial interests” section within this Note 4 for additional information.
(4)Includes 601, 611, 651, 681, 685, 701, and 751 Gateway Boulevard in our South San Francisco submarket.
(5)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4161, 4224, and 4242 Campus Point Court in our University Town Center submarket.
(6)Includes 9605, 9645, 9675, 9685, 9725, 9735, 9808, 9855, and 9868 Scranton Road and 10055 and 10065 Barnes Canyon Road in our Sorrento Mesa submarket.
(7)Includes 1201 and 1208 Eastlake Avenue East and 199 East Blaine Street in our Lake Union submarket.
(8)Represents our ownership interest; our voting interest is limited to 50%.

Our consolidation policy is described under the “Consolidation” section in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements. Consolidation accounting is highly technical, but its framework is primarily based on the controlling financial interests and benefits of the joint ventures.

We generally consolidate a joint venture that is a legal entity that we control (i.e., we have the power to direct the activities of the joint venture that most significantly affect its economic performance) through contractual rights, regardless of our ownership interest, and where we determine that we have benefits through the allocation of earnings or losses and fees paid to us that could be significant to the joint venture (the “VIE model”).

We also generally consolidate joint ventures when we have a controlling financial interest through voting rights and where our voting interest is greater than 50% (the “voting model”). Voting interest differs from ownership interest for some joint ventures.

We account for joint ventures that do not meet the consolidation criteria under the equity method of accounting by recognizing our share of income and losses.
The table below shows the categorization of our joint ventures under the consolidation framework:
Property(1)
Consolidation Model Voting InterestConsolidation AnalysisConclusion
75/125 Binney StreetVIE model
Not applicable under VIE modelWe have:Consolidated
225 Binney Street(i)The power to direct the activities of the joint venture that most significantly affect its economic performance; and
99 Coolidge Avenue
409 and 499 Illinois Street
1500 Owens Street
Alexandria Technology Center® – Gateway
213 East Grand Avenue(ii)Benefits that can be significant to the joint venture.
500 Forbes Boulevard
Alexandria Center® for Life Science – Millbrae Station
Alexandria Point
5200 Illumina Way
Therefore, we are the primary beneficiary of each VIE
9625 Towne Centre Drive
SD Tech by Alexandria
Pacific Technology Park
The Eastlake Life Science Campus by Alexandria
400 Dexter Avenue North
Menlo Gateway
We do not control the joint venture and are therefore not the primary beneficiaryEquity method of accounting
1401/1413 Research Boulevard
1655 and 1725 Third StreetVoting modelDoes not exceed 50%Our voting interest is 50% or less

(1)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in five other consolidated joint ventures in North America and we hold an interest in one other insignificant unconsolidated real estate joint venture in North America.

Formation of consolidated real estate joint ventures and sales of partial interests

In each of the joint ventures described below, we are contractually responsible for activities that most significantly impact the economic performance of the joint venture. In addition, our joint venture partner in each of the following joint ventures lacks kick-out rights over our role as property manager. Therefore, we determined that our joint venture partner does not have a controlling financial interest, and consequently each joint venture should be accounted for as a VIE. We also determined that we are the primary beneficiary of each joint venture because we are responsible for activities that most significantly impact their economic performance, and also have the obligation to absorb losses of, or the right to receive benefits from, each joint venture that could potentially be significant to the joint venture. Accordingly, we consolidate each joint venture under the variable interest model.

213 East Grand Avenue

In April 2021, we sold a 70% interest in our 213 East Grand Avenue property located in our South San Francisco submarket for a sales price of $301.0 million, or $1,429 per RSF. We retained control over the newly formed real estate joint venture and therefore continued to consolidate this property. Accordingly, we accounted for the $103.7 million difference between the consideration received and the book value of the 70% interest sold as an equity transaction, with no gain or loss recognized in earnings.

400 Dexter Avenue North

In July 2021, we sold a 70% interest in our 400 Dexter Avenue North property located in our Lake Union submarket for a sales price of $254.8 million, or $1,255 per RSF. We retained control over the newly formed real estate joint venture and therefore continued to consolidate this property. Accordingly, we accounted for the $95.5 million difference between the consideration received and the book value of the 70% interest sold as an equity transaction, with no gain or loss recognized in earnings.
9444 Waples Street and Pacific Technology Park

In August 2021, we formed a real estate joint venture in our Sorrento Mesa submarket to own and operate our recently acquired 9444 Waples Street property and a collection of five adjacent properties owned by the joint venture partner also located on Waples Street. We own a 50% interest in this joint venture and our partner owns the remaining 50% interest. Concurrently with the formation of the joint venture:

(i)we sold to our partner a 50% interest in our recently acquired 9444 Waples Street property, aggregating 88,380 RSF, for a sales price of $11.5 million, or $260 per RSF; and
(ii)we acquired from our partner a 50% interest in Pacific Technology Park, aggregating 544,352 RSF, located at 9389, 9393, 9401, 9455, and 9477 Waples Street for a purchase price of $85.8 million.

We control the newly formed real estate joint venture and therefore continue to consolidate 9444 Waples Street and have begun consolidating the Pacific Technology Park properties owned by the joint venture. The sales price we received for our sale of the 50% interest in 9444 Waples Street approximated the value paid for the property when initially acquired during the three months ended June 30, 2021. Therefore, there was no difference between the consideration received and the book value of the 50% interest sold.

409 and 499 Illinois Street

In October 2021, an investor acquired a 75% interest in our consolidated joint venture at 409 and 499 Illinois Street located in our Mission Bay submarket, which consisted of a 35% partial interest sold by us and a 40% interest held by our previous joint venture partner, for an aggregate sales price of $495.6 million. Our portion of the sales price was $231.0 million, representing $92.4 million of consideration in excess of the book value of our 35% interest sold. Upon completion of the sale, our ownership interest in the joint venture is 25%. We retained control over the newly formed real estate joint venture and therefore will continue to consolidate these properties. Accordingly, we accounted for the difference between the consideration received and the book value of our interest sold as an equity transaction, with no gain or loss recognized in earnings.

1500 Owens Street

In October 2021, an investor acquired a 75% interest in our consolidated joint venture at 1500 Owens Street located in our Mission Bay submarket, which consisted of a 25.1% partial interest sold by us and a 49.9% interest held by our previous joint venture partner, for an aggregate sales price of $130.5 million. Our portion of the sales price was $43.7 million, representing $21.3 million of consideration in excess of the book value of our 25.1% interest sold. Upon completion of the sale, our ownership interest in the joint venture is 25%. We retained control over the newly formed real estate joint venture and therefore will continue to consolidate this property. Accordingly, we accounted for the difference between the consideration received and the book value of our interest sold as an equity transaction, with no gain or loss recognized in earnings.

Refer to the “Consolidation” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information.

Consolidated VIEs’ balance sheet information

The table below aggregates the balance sheet information of our consolidated VIEs as of September 30, 2021, and December 31, 2020 (in thousands):
September 30, 2021December 31, 2020
Investments in real estate$4,418,245 $3,196,215 
Cash and cash equivalents131,321 95,565 
Other assets433,827 341,524 
Total assets$4,983,393 $3,633,304 
Secured notes payable$— $— 
Other liabilities260,901 183,237 
Total liabilities260,901 183,237 
Redeemable noncontrolling interests2,069 1,731 
Alexandria Real Estate Equities, Inc.’s share of equity2,483,248 1,742,039 
Noncontrolling interests’ share of equity2,237,175 1,706,297 
Total liabilities and equity$4,983,393 $3,633,304 

In determining whether to aggregate the balance sheet information of consolidated VIEs, we considered the similarity of each
VIE, including the primary purpose of these entities to own, manage, operate, and lease real estate properties owned by the VIEs, and the similar nature of our involvement in each VIE as a managing member. Due to the similarity of the characteristics, we present the balance sheet information of these entities on an aggregated basis. None of our consolidated VIEs’ assets have restrictions that limit their use to settle specific obligations of the VIE. There are no creditors or other partners of our consolidated VIEs that have recourse to our general credit. Our maximum exposure to our consolidated VIEs is limited to our variable interests in each VIE.

Unconsolidated real estate joint ventures

Our maximum exposure to our unconsolidated VIEs is limited to our investment in each VIE. Our investments in unconsolidated real estate joint ventures, accounted for under the equity method of accounting presented in our consolidated balance sheets as of September 30, 2021, and December 31, 2020, consisted of the following (in thousands):

PropertySeptember 30, 2021December 31, 2020
Menlo Gateway
$296,086 $300,622 
1655 and 1725 Third Street
14,093 14,939 
Other
11,558 16,788 
$321,737 $332,349 

704 Quince Orchard Road

During the nine months ended September 30, 2021, we acquired our partner’s ownership interest in our unconsolidated real estate joint venture that holds our property located at 704 Quince Orchard Road. For additional information, refer to the “Purchase of partner’s interest in an unconsolidated real estate joint venture in March 2021” section in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements.

1401/1413 Research Boulevard

In January 2015, we formed a joint venture with a local retail developer and operator by contributing a land parcel located in our Rockville submarket of Maryland. The joint venture developed a retail shopping center aggregating approximately 90,000 RSF, which was primarily funded by a construction loan that is non-recourse to us. Since its formation, we accounted for this investment under the equity method of accounting as we do not have a controlling interest.

In March 2020, as a result of the impact of the COVID-19 pandemic, we evaluated the recoverability of our investment and recognized a $7.6 million impairment charge to lower the carrying amount of our investment balance to zero and eliminated this investment from our consolidated balance sheet. We continued to hold our economic interest in this joint venture. However, as the investment balance was carried at zero dollars, we discontinued applying the equity method recognition of losses in excess of our capital commitments to the joint venture.

The equity method continues to remain suspended until a point where either (i) the joint venture accumulates operating profits in excess of losses accumulated or (ii) additional financial support is contributed by us to the joint venture.

In June 2021, as a result of improving economic conditions for this retail center, we contributed capital aggregating $578 thousand to the joint venture to become current with required capital contributions and maintain our 65.0% equity interest in this joint venture. This contribution increased our investment in the joint venture, but this was offset by the recognition of our share of operating losses of the joint venture that occurred while our equity method accounting was suspended. During the nine months ended September 30, 2021, we recognized equity in losses of unconsolidated real estate joint ventures equal to the $578 thousand of additional financial support contributed to the joint venture, resulting in a carrying amount of our investment in the joint venture of zero dollars as of September 30, 2021.
The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of September 30, 2021 (dollars in thousands):
Unconsolidated Joint VentureOur ShareMaturity DateStated Rate
Interest Rate(1)
Debt Balance at 100%(2)
1401/1413 Research Boulevard65.0%5/17/22L+2.50%3.50 %
(3)
$27,145 
1655 and 1725 Third Street10.0%3/10/254.50%4.57 %598,550 
Menlo Gateway, Phase II49.0%5/1/354.53%4.59 %154,992 
Menlo Gateway, Phase I49.0%8/10/354.15%4.18 %137,578 
$918,265 
(1)Includes interest expense and amortization of loan fees.
(2)Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2021.
(3)This loan is subject to a fixed floor rate of 3.50%.