-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WYlknG7TVdli8J3bF1jAIdMtVQHMnPM2kC4NdYPEmMoNxp0T2tDWa8LfZEMEFMr+ 05xKUjgwWEKhkGsI/SE6VQ== 0001047469-98-031814.txt : 19980817 0001047469-98-031814.hdr.sgml : 19980817 ACCESSION NUMBER: 0001047469-98-031814 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALEXANDRIA REAL ESTATE EQUITIES INC CENTRAL INDEX KEY: 0001035443 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 954502084 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12993 FILM NUMBER: 98691719 BUSINESS ADDRESS: STREET 1: 135 NORTH LOS ROBLES AVE STREET 2: SUITE 250 CITY: PASEDENA STATE: CA ZIP: 91101 BUSINESS PHONE: 8185780777 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 1-12993 ALEXANDRIA REAL ESTATE EQUITIES, INC. (Exact name of registrant as specified in its charter) Maryland 95-4502084 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 135 North Los Robles Avenue, Suite 250, Pasadena, California 91101 (Address of principal executive offices) (626) 578-0777 (Registrant's telephone number, including area code) N/A ----------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / As of August 13, 1998, 12,564,631 shares of common stock, par value $.01 per share, were outstanding. TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS (UNAUDITED) Condensed Consolidated Balance Sheets of Alexandria Real Estate Equities, Inc. and Subsidiaries as of June 30, 1998 and December 31, 1997 Condensed Consolidated Statements of Operations of Alexandria Real Estate Equities, Inc. and Subsidiaries for the three months ended June 30, 1998 and 1997 and the six months ended June 30, 1998 and 1997 Condensed Consolidated Statement of Stockholders' Equity of Alexandria Real Estate Equities, Inc. and Subsidiaries for the six months ended June 30, 1998 Condensed Consolidated Statements of Cash Flows of Alexandria Real Estate Equities, Inc. and Subsidiaries for the six months ended June 30, 1998 and 1997 Notes to Condensed Consolidated Financial Statements Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS Item 2. CHANGES IN SECURITIES Item 3. DEFAULTS UPON SENIOR SECURITIES Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Item 5. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K 2 Alexandria Real Estate Equities, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JUNE 30, DECEMBER 31, 1998 1997 ----------- ------------ ASSETS Rental properties, net $376,195 $225,551 Land under development 14,281 4,419 Cash and cash equivalents 2,010 2,060 Tenant security deposits and other restricted cash 7,831 6,799 Secured note receivable 6,000 - Tenant receivables and deferred rent 5,751 3,630 Other assets 8,829 5,995 -------- -------- Total assets $420,897 $248,454 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Secured notes payable $ 96,409 $ 47,817 Unsecured line of credit 110,200 23,000 Accounts payable, accrued expenses and tenant security deposits 9,360 6,158 Dividends payable 5,022 4,562 -------- -------- Total liabilities 220,991 81,537 Stockholders' equity: Common stock, $0.01 par value per share, 100,000,000 shares authorized; 12,554,631 and 11,404,631 shares issued and outstanding at June 30, 1998 and December 31, 1997, respectively 126 114 Additional paid-in capital 199,780 173,735 Retained earnings (accumulated deficit) - (6,932) -------- -------- Total stockholders' equity 199,906 166,917 Total liabilities and stockholders' equity $420,897 $248,454 -------- -------- -------- --------
SEE ACCOMPANYING NOTES. 3 Alexandria Real Estate Equities, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1998 1997 1998 1997 ----------- --------- ----------- ---------- Revenues: Rental $ 11,903 $ 5,725 $ 21,043 $ 10,900 Tenant recoveries 2,949 1,806 5,312 3,703 Interest and other income 308 212 501 301 ----------- --------- ----------- ---------- 15,160 7,743 26,856 14,904 Expenses: Rental operations 3,620 2,003 6,124 3,833 General and administrative 882 593 1,633 1,176 Stock compensation - 3,768 - 4,162 Post retirement benefit - - - 632 Special bonus - - - 353 Interest 3,478 2,066 5,563 4,575 Acquisition LLC financing costs - 6,973 - 6,973 Write-off of unamortized loan costs - 2,146 - 2,146 Depreciation and amortization 2,456 1,106 4,177 2,109 ----------- --------- ----------- ---------- 10,436 18,655 17,497 25,959 ----------- --------- ----------- ---------- Net income (loss) $ 4,724 $ (10,912) $ 9,359 $ (11,055) ----------- --------- ----------- ---------- ----------- --------- ----------- ---------- Net income allocated to preferred stockholders $ - 1,459 $ - $ 3,036 ----------- --------- ----------- ---------- ----------- --------- ----------- ---------- Net income (loss) allocated to common stockholders $ 4,724 $ (12,371) $ 9,359 $ (14,091) ----------- --------- ----------- ---------- ----------- --------- ----------- ---------- Net income (loss) per share of common stock (pro forma for 1997): -Basic $ 0.40 $ (1.79) $ 0.81 $ (2.27) ----------- --------- ----------- ---------- ----------- --------- ----------- ---------- -Diluted $ 0.39 $ (1.79) $ 0.79 $ (2.27) ----------- --------- ----------- ---------- ----------- --------- ----------- ---------- Weighted average shares of common stock outstanding (pro forma for 1997): -Basic 11,821,664 6,098,381 11,614,300 4,870,256 ----------- --------- ----------- ---------- ----------- --------- ----------- ---------- -Diluted 12,053,983 6,098,381 11,854,843 4,870,256 ----------- --------- ----------- ---------- ----------- --------- ----------- ----------
SEE ACCOMPANYING NOTES. 4 Alexandria Real Estate Equities, Inc. and Subsidiaries Condensed Consolidated Statement of Stockholders' Equity Six months ended June 30, 1998 (Unaudited) (DOLLARS IN THOUSANDS)
RETAINED NUMBER OF ADDITIONAL EARNINGS COMMON COMMON PAID-IN (ACCUMULATED SHARES STOCK CAPITAL DEFICIT) TOTAL ------------ ------- ---------- ------------- ---------- Balance at December 31, 1997 11,404,631 $114 $173,735 $(6,932) $166,917 Issuance of common stock 1,150,000 12 33,202 - 33,214 Dividends declared on common stock - - (7,157) (2,427) (9,584) Net income - - - 9,359 9,359 ---------- ---- -------- ------- --------- Balance at June 30, 1998 12,554,631 $126 $199,780 $ - $199,906 ---------- ---- -------- ------- --------- ---------- ---- -------- ------- ---------
SEE ACCOMPANYING NOTES. 5 Alexandria Real Estate Equities, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (DOLLARS IN THOUSANDS)
SIX MONTHS ENDED JUNE 30, 1998 1997 --------- -------- Net cash provided by (used in) operating activities $ 10,580 $ (662) INVESTING ACTIVITIES Purchase of rental properties (145,345) (52,102) Additions to rental properties (9,305) (1,720) Additions to land under development (9,862) - Note receivable (6,000) - --------- -------- Net cash used in investing activities (170,512) (53,822) FINANCING ACTIVITIES Proceeds from secured notes payable 49,132 15,360 Net borrowings on unsecured line of credit 87,200 2,500 Proceeds from issuance of common stock 33,214 139,185 Redemption of Series T preferred stock - (1) Decrease in due to Health Science Properties Holding Corporation - (2,525) Principal reductions of secured notes payable (540) (73,391) Common dividends paid (9,124) (2,785) Preferred dividends paid - (1,126) --------- -------- Net cash provided by financing activities 159,882 74,717 Net (decrease) increase in cash and cash equivalents (50) 20,233 Cash and cash equivalents at beginning of period 2,060 1,696 --------- -------- Cash and cash equivalents at end of period $ 2,010 $ 21,929 --------- -------- --------- --------
SEE ACCOMPANYING NOTES. 6 Alexandria Real Estate Equities, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) 1. BACKGROUND AND BASIS OF PRESENTATION BACKGROUND Alexandria Real Estate Equities, Inc., a Maryland corporation (the "Company"), was formed in October 1994 to acquire, manage, and selectively develop properties for lease principally to the life science industry ("Life Science Facilities"). As of June 30, 1998 and December 31, 1997, the Company owned 41 and 22 Life Science Facilities, respectively. The accompanying interim financial statements have been prepared by the Company's management in accordance with generally accepted accounting principles and in conformity with the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the interim financial statements presented herein reflect all adjustments of a normal and recurring nature that are necessary to fairly state the interim financial statements. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. These financial statements should be read in conjunction with the financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, which own, directly or indirectly, Life Science Facilities. All significant intercompany balances and transactions have been eliminated. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the current period presentation. 7 2. RENTAL PROPERTIES Rental properties consist of the following:
JUNE 30, DECEMBER 31, 1998 1997 ---------- ------------ (DOLLARS IN THOUSANDS) Land $ 60,854 $ 41,970 Buildings and improvements 315,833 189,518 Tenant and other improvements 12,318 2,867 ---------- -------- 389,005 234,355 Less accumulated depreciation (12,810) (8,804) ---------- -------- $ 376,195 $225,551 ---------- -------- ---------- --------
During the six months ended June 30, 1998, the Company acquired 19 Life Science Facilities from various unrelated third parties for an aggregate purchase price (including closing and transaction costs) of $145,345,000. 3. SECURED NOTE RECEIVABLE In connection with the acquisition of a Life Science Facility in San Diego, California in March 1998, the Company made a $6,000,000 loan to the sole tenant of the property, fully secured by a first deed of trust on certain improvements at the property. The loan bears interest at a rate of 11% per year, payable monthly, and matures in March 2002. The loan is cross-defaulted to the lease with the sole tenant. Under certain circumstances, the Company may obtain title to the improvements that secure the loan, and, in such event, the Company may also require the sole tenant at the property to lease such improvements back from the Company for an additional rental amount. 4. UNSECURED LINE OF CREDIT The Company has an unsecured line of credit providing for borrowings of up to $150,000,000. Borrowings under the line of credit bear interest at a floating rate based on the Company's election of either a LIBOR based rate or the higher of the bank's reference rate and the Federal Funds rate plus 0.5%. For each LIBOR based advance, the Company must elect to fix the rate for a period of one, two, three or six months. 8 4. UNSECURED LINE OF CREDIT (CONTINUED) The line of credit contains financial covenants, including, among other things, maintenance of minimum market net worth, a total liabilities to gross asset value ratio, and a fixed charge coverage ratio. In addition, the terms of the line of credit restrict, among other things, certain investments, indebtedness, distributions and mergers. Borrowings under the line of credit are limited to an amount based on a pool of unencumbered assets. Accordingly, as the Company acquires additional unencumbered properties, borrowings available under the line of credit will increase. As of June 30, 1998, borrowings under the line of credit were limited to approximately $150,000,000, and $110,200,000 was outstanding (leaving $39,800,000 available) at a weighted average interest rate of 7.16%. The line of credit expires May 31, 2000 and provides for annual extensions (provided there is no default) for one-year periods upon notice by the Company and consent of the participating banks. In August 1998, the Company amended its unsecured line of credit to provide for borrowings of up to $250 million. As under the original line, borrowings under the line of credit, as amended, bear interest at a floating rate based on the Company's election of either a LIBOR based rate or the higher of the bank's reference rate and the Federal Funds rate plus 0.5%. However, under the line, as amended, the LIBOR based rate has been reduced, resulting in a rate of 6.91% as of August 5, 1998. Financial covenants for the line of credit, as amended, are substantially similar to those under the original line. The line, as amended, expires May 31, 2000 and provides for annual extensions (provided there is no default) for two additional one-year periods upon notice by the Company and consent of the participating banks. 5. SECURED NOTES PAYABLE As of June 30, 1998, the Company had five notes payable to certain banks and an insurance company, secured by first deeds of trust on eight Life Science Facilities. The notes bear interest at fixed rates ranging from 7.17% to 9.00% and are due at various dates through 2016. 6. STOCKHOLDERS EQUITY On May 29, 1998, the Company sold 1,150,000 shares of common stock to PaineWebber Incorporated for inclusion in the PaineWebber Equity Trust REIT Series I, a unit investment trust. The shares were issued at a price of $30.5625 per share (before discounts and commissions). The aggregate proceeds to the Company, net of offering costs of $1.9 million, were approximately $33.2 million. On June 1, 1998, the Company declared a cash dividend on its common stock of $5,022,000 ($ 0.40 per share) for the calendar quarter ended June 30, 1998. The dividend was paid on July 17, 1998. 9 7. COMMITMENTS The Company is committed to complete the construction of a building and certain improvements thereto in San Diego, California at a remaining cost of approximately $4.8 million under the terms of two leases. In addition, the Company is committed to complete the construction of a building and certain improvements thereto in Gaithersburg, Maryland at a remaining cost of between $9.1 million and $18.1 million (depending on the level of improvements to the facility elected by the tenant) under the terms of a lease. Under the terms of the lease, the tenant's rental rate will be adjusted depending on the ultimate cost of the improvements. The Company is also committed under the terms of various leases to construct improvements for certain tenants totaling approximately $11.9 million. Of this amount, approximately $5.3 million has been set aside in restricted cash accounts to complete the conversion of existing space into higher rent generic laboratory space (as well as certain related improvements to the property) at 1102/1124 Columbia Street and 3000/3018 Western Avenue. 8. NET INCOME (LOSS) PER SHARE The following table sets forth the computation of net income (loss) per pro forma share of common stock outstanding.
THREE MONTHS ENDED JUNE 30, 1998 1997 ------------------------------------------------ (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net income (loss) $ 4,724 $ (10,912) ----------- ---------- ----------- ---------- Weighted average shares of common stock (pro forma for 1997) - basic 11,821,664 6,098,381 Add: dilutive effect of stock options 232,319 - ----------- ---------- Weighted average shares of common stock (pro forma for 1997) - diluted 12,053,983 6,098,381 ----------- ---------- ----------- ---------- Net income (loss) per share - basic $ 0.40 $ (1.79) ----------- ---------- ----------- ---------- Net income (loss) per share - diluted $ 0.39 $ (1.79) ----------- ---------- ----------- ----------
10 8. NET INCOME (LOSS) PER SHARE (CONTINUED)
SIX MONTHS ENDED JUNE 30, 1998 1997 ------------------------------------------------ (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Net income (loss) $ 9,359 $ (11,055) ----------- ---------- ----------- ---------- Weighted average shares of common stock (pro forma for 1997) - basic 11,614,300 4,870,256 Add: dilutive effect of stock options 240,543 - ----------- ---------- Weighted average shares of common stock (pro forma for 1997) - diluted 11,854,843 4,870,256 ----------- ---------- ----------- ---------- Net income (loss) per share - basic $ 0.81 $ (2.27) ----------- ---------- ----------- ---------- Net income (loss) per share - diluted $ 0.79 $ (2.27) ----------- ---------- ----------- ----------
Historical per share data has not been presented for the three or six months ended June 30, 1997 because it is not meaningful due to the various changes in the Company's capital structure in connection with the Company's initial public offering on June 2, 1997 (the "Offering"). Pro forma shares of common stock outstanding for the three and six months ended June 30, 1997 include all shares of common stock outstanding after giving effect to a 1,765.923 to 1 stock split, the issuance of certain stock grants, the issuance and exercise of substitute stock options and conversions of preferred stock, each of which occurred in connection with the Offering. In addition, shares issued to the public in connection with the Offering have been weighted for the period of time they were outstanding. 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Certain information and statements included in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words "believes," "anticipates," "expects" and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks and uncertainties that could result in actual results of the Company differing materially from expected results expressed or implied by such forward-looking information and statements. In the context of forward-looking information and statements provided in this Form 10-Q and in other reports, please refer to the discussion of risk factors detailed in, as well as the other information contained in, the Company's filings with the Securities and Exchange Commission, including but not limited to, those risk factors set forth under the caption "Risk Factors" in the Company's Registration Statement on Form S-11 (File No. 333-23545) initially filed with the Securities and Exchange Commission on March 18, 1997. The following discussion should be read in conjunction with the financial statements and notes appearing elsewhere in this report. OVERVIEW Since its formation in October 1994, the Company has devoted substantially all of its resources to the acquisition and management of high quality, strategically located Life Science Facilities leased principally to tenants in the life science industry in its target markets. The Company's primary source of income is rental revenue (including tenant recoveries) from its properties (the "Properties"). The Company has acquired its current portfolio since the beginning of 1994, with four of the Properties acquired in calendar year 1994, eight acquired in 1996, three acquired in 1997 in connection with the Offering, seven acquired in 1997 after the Offering (together, the "1997 Acquired Properties") and 19 acquired in 1998 (the "1998 Acquired Properties"). As a result of the Company's acquisition activities in 1997 and 1998, the financial data shows significant increases in total revenue and expenses for the 1998 periods compared to the 1997 periods. 12 RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED JUNE 30, 1998 ("SECOND QUARTER 1998") TO THREE MONTHS ENDED JUNE 30, 1997 ("SECOND QUARTER 1997") Rental revenue increased by $6.2 million, or 109%, to $11.9 million for Second Quarter 1998 compared to $5.7 million for Second Quarter 1997. The increase resulted primarily from rental revenue from the 1997 Acquired Properties purchased after April 1, 1997 and from the 1998 Acquired Properties, which together added an additional $6.2 million of rental revenue. Of this amount, $155,000 represents the receipt of a rental termination payment associated with a lease at one of the Properties. Rental revenue from the Properties acquired before April 1, 1997 (the "Second Quarter Same Properties") increased by $28,000, or 1%, generally due to increases in rental rates. Results for the Second Quarter Same Properties for Second Quarter 1998 were impacted by the vacancy of approximately 68,000 square feet at 1102/1124 Columbia Street beginning May 31, 1998. The Company is currently negotiating with tenants for substantially all of this vacant space. Rental revenue for the Second Quarter Same Properties (excluding 1102/1124 Columbia Street) increased by $85,000, or 2%. Tenant recoveries increased by $1.1 million, or 61%, to $2.9 million for Second Quarter 1998 compared to $1.8 million for Second Quarter 1997. The increase resulted primarily from the 1997 Acquired Properties purchased after April 1, 1997 and the 1998 Acquired Properties, which together added an additional $1.0 million of tenant recoveries. Tenant recoveries from the Second Quarter Same Properties increased by $107,000, or 6%, primarily due to an increase in rental operating expenses, improved identification and recovery of costs at certain properties, and adjustments to tenant recoveries relating to operating expenses for prior periods. Tenant recoveries for the Second Quarter Same Properties (excluding 1102/1124 Columbia Street) increased by $287,000, or 24%. Interest and other income increased by $96,000, or 45%, to $308,000 for Second Quarter 1998 compared to $212,000 for Second Quarter 1997, resulting primarily from interest income from the secured note receivable. Rental operating expenses increased by $1.6 million, or 80%, to $3.6 million for Second Quarter 1998 compared to $2.0 million for Second Quarter 1997. The increase resulted primarily from the 1997 Acquired Properties purchased after April 1, 1997 and the 1998 Acquired Properties, which together added an additional $1.6 million of rental operating expenses. Operating expenses for the Second Quarter Same Properties increased by approximately $55,000, or 3%, primarily due to an increase in utility expenses (due to greater usage) that are passed through to the tenants. Rental operating expenses for the Second Quarter Same Properties (excluding 1102/1124 Columbia Street) increased by $37,000, or 3%. General and administrative expenses increased by $289,000, or 49%, to $882,000 for Second Quarter 1998 compared to $593,000 for Second Quarter 1997, due to the Company's larger scope of operations and increased costs incurred as a result of being a public company in 1998. 13 Stock compensation expense of $3.8 million was recorded for Second Quarter 1997 for the non-recurring, non-cash expense related to the issuance of stock grants and options to officers, directors and certain employees of the Company, principally in connection with the Offering. Interest expense increased by $1.4 million, or 67%, to $3.5 million for Second Quarter 1998 compared to $2.1 million for Second Quarter 1997. The increase resulted primarily from the indebtedness incurred to acquire the 1997 Acquired Properties purchased after April 1, 1997 and the 1998 Acquired Properties, offset by the decrease in interest expense due to the indebtedness related to the Second Quarter Same Properties paid off in June 1997 with proceeds from the Offering. Acquisition LLC financing costs of $6,973,000 were expensed in Second Quarter 1997, representing the portion of the purchase price of ARE Acquisitions, LLC (the "Acquisition LLC") in excess of the cost incurred by it to acquire its three Life Science Facilities. Write-off of unamortized loan costs in Second Quarter 1997 represents the write- off of loan costs associated with $72,698,000 of secured notes repaid with proceeds of the Offering. Depreciation and amortization increased by $1.4 million, or 127%, to $2.5 million for Second Quarter 1998 compared to $1.1 million for Second Quarter 1997. The increase resulted primarily from depreciation associated with the 1997 Acquired Properties purchased after April 1, 1997, and the addition of the 1998 Acquired Properties. As a result of the foregoing, there was net income of $4.7 million for Second Quarter 1998 compared to a net loss of $10.9 million for Second Quarter 1997. COMPARISON OF SIX MONTHS ENDED JUNE 30, 1998 ("SIX MONTHS 1998") TO SIX MONTHS ENDED JUNE 30, 1997 ("SIX MONTHS 1997") Rental revenue increased by $10.1 million, or 93%, to $21.0 million for Six Months 1998 compared to $10.9 million for Six Months 1997. The increase resulted primarily from the 1997 Acquired Properties purchased after January 1, 1997 and the 1998 Acquired Properties, which together added an additional $10.0 million of rental revenue. Of this amount, $277,000 represents the receipt of rental termination payments associated with leases at two of the Properties. Rental revenue from the Properties acquired before January 1, 1997 (the "Same Properties") increased by $115,000, or 1%, generally due to increases in rental rates. Results for the Same Properties for Six Months 1998 were impacted by the vacancy of approximately 68,000 square feet at 1102/1124 Columbia Street beginning May 31, 1998. The Company is currently negotiating with tenants for substantially all of this vacant space. Rental revenue for the Same Properties (excluding 1102/1124 Columbia Street) increased by $165,000, or 2%. 14 Tenant recoveries increased by $1.6 million, or 43%, to $5.3 million for Six Months 1998 compared to $3.7 for Six Months 1997. The increase resulted primarily from the 1997 Acquired Properties purchased after January 1, 1997 and the 1998 Acquired Properties, which together added an additional $1.5 million of tenant recoveries. Tenant recoveries for the Same Properties increased by $96,000, or 2.6%, generally due to an increase in rental operating expenses, improved identification and recovery of costs at certain properties, and adjustments to tenant recoveries relating to operating expenses for prior periods. Tenant recoveries for the Same Properties (excluding 1102/1124 Columbia Street) increased by $292,000, or 11%. Interest and other income increased by $200,000, or 66%, to $501,000 for Six Months 1998 compared to $301,000 for Six Months 1997, resulting primarily from interest income from the secured note receivable. Rental operating expenses increased by $2.3 million, or 61%, to $6.1 million for Six Months 1998 compared to $3.8 million for Six Months 1997. The increases resulted primarily from the 1997 Acquired Properties purchased after January 1, 1997 and the 1998 Acquired Properties, which together added an additional $2.2 million of rental operating expenses. Operating expenses for the Same Properties increased by $97,000, or 2.6%, primarily due to an increase in utility expenses (due to greater usage) that are passed through to the tenants. Rental operating expenses for the Same Properties (excluding 1102/1124 Columbia Street) increased by $141,000, or 5%. General and administrative expenses increased by $457,000, or 39%, to $1.6 million for Six Months 1998 compared to $1.2 million for Six Months 1997 due to the Company's larger scope of operations and increased costs incurred as a result of being a public company in 1998. The special bonus of $353,000 in Six Months 1997 was awarded to an officer of the Company in connection with the Offering and accrued for the period ended March 31, 1997. Post-retirement benefit expense of $632,000 in Six Months 1997 reflects an adjustment for the non-cash accrual associated with a one-time post retirement benefit for an officer of the Company. Stock compensation expense of $4.2 million was recorded in Six Months 1997 for the non-recurring, non-cash expense related to the issuance of stock grants and options to officers, directors and certain employees of the Company, principally in connection with the Offering. Interest expense increased by $1.0 million, or 22%, to $5.6 million for Six Months 1998 compared to $4.6 million for Six Months 1997. The increase resulted primarily from indebtedness incurred to acquire the 1997 Acquired Properties purchased after January 1, 1997 and the 1998 Acquired Properties. Acquisition LLC financing costs of $6,973,000 were expensed in Six Months 1997, representing the portion of the purchase price of the Acquisition LLC in excess of the cost incurred by it to acquire its three Life Science Facilities. Write-off of unamortized loan costs in Six Months 1997 represents the write-off of loan costs associated with $72,698,000 of secured notes repaid with proceeds of the Offering. 15 Depreciation and amortization increased by $2.1 million, or 100%, to $4.2 million for Six Months 1998 compared to $2.1 million for Six Months 1997. The increase resulted primarily from depreciation associated with the 1997 Acquired Properties purchased after January 1, 1997 and the 1998 Acquired Properties. As a result of the foregoing, there was net income of $9.4 million for Six Months 1998 compared to a net loss of $11.1 million for Six Months 1997. LIQUIDITY AND CAPITAL RESOURCES CASH FLOWS Net cash provided by operating activities for Six Months 1998 increased by $11.2 million to $10.6 million compared to net cash used in operating activities of $662,000 for Six Months 1997. The increase resulted primarily from operating cash flows from the 1997 Acquired Properties purchased after January 1, 1997 and the 1998 Acquired Properties. Net cash used in investing activities increased by $116.7 million to $170.5 million for Six Months 1998 compared to net cash used in investing activities of $53.8 million for Six Months 1997. The increase resulted primarily from the costs associated with the acquisition of the 1998 Acquired Properties. Net cash provided by financing activities increased by $85.2 million to $159.9 million for Six Months 1998 compared to net cash provided by financing activities of $74.7 million for Six Months 1997. The increase resulted primarily from $49.1 million in proceeds from secured debt, $87.2 million in net borrowings under the unsecured line of credit and $33.2 million in net proceeds from the issuance of common stock, partially offset by payments of $9.1 million in dividends payable on common stock. CAPITAL COMMITMENTS The Company is committed to complete the construction of a building and certain improvements thereto in San Diego, California at a remaining cost of approximately $4.8 million under the terms of two leases. In addition, the Company is committed to complete the construction of a building and certain improvements thereto in Gaithersburg, Maryland at a remaining cost of between $9.1 million and $18.1 million (depending on the level of improvements to the facility elected by the tenant) under the terms of a lease. Under the terms of the lease, the tenant's rental rate will be adjusted depending on the ultimate cost of the improvements. 16 The Company is also committed under terms of various leases to construct improvements for tenants totaling approximately $11.9 million. Of this amount, approximately $5.3 million has been set aside in restricted cash accounts to complete the conversion of existing space into higher rent generic laboratory space (as well as certain related improvements to the property) at 1102/1124 Columbia Street and 3000/3018 Western Avenue. RESTRICTED CASH As of June 30, 1998, the Company had $9.8 million in cash and cash equivalents, including $7.8 million in restricted cash accounts. Of the $7.8 million in restricted cash accounts, approximately $5.3 million has been set aside to complete the conversions described under "--Capital Commitments", approximately $1.7 million is held in trust as additional security required under the terms of the Company's secured notes payable, and approximately $850,000 is held in security deposit reserve accounts based on the terms of certain lease agreements. SECURED DEBT As of June 30, 1998, the Company's secured debt is as follows:
PRINCIPAL BALANCE AT INTEREST MATURITY COLLATERAL JUNE 30, 1998 RATE DATE - -------------------------- --------------- --------- -------------- 3535/3565 General Atomics Court, San Diego, CA $17,819,000 9.00% December 2014 1431 Harbor Bay Parkway Alameda, CA 8,500,000 7.17% January 2014 1102/1124 Columbia Street Seattle, WA 21,003,000 7.75% May 2016 100/800/801 Capitola Drive, Durham, NC 12,608,000 8.68% December 2006 14225 Newbrook Drive, Chantilly, VA and 3000/3018 Western Avenue, Seattle, WA 36,479,000 7.22% May 2008 ----------- $96,409,000 ----------- -----------
UNSECURED LINE OF CREDIT The Company has an unsecured line of credit providing for borrowings of up to $150,000,000. Borrowings under the line of credit bear interest at a floating rate based on the Company's election of either a LIBOR based rate or the higher of the bank's reference rate and the Federal Funds rate plus 0.5%. For each LIBOR based advance, the Company must elect to fix the rate for a period of one, two, three or six months. 17 The line of credit contains financial covenants, including, among other things, maintenance of minimum market net worth, a total liabilities to gross asset value ratio, and a fixed charge coverage ratio. In addition, the terms of the line of credit restrict, among other things, certain investments, indebtedness, distributions and mergers. Borrowings under the line of credit are limited to an amount based on a pool of unencumbered assets. Accordingly, as the Company acquires additional unencumbered properties, borrowings available under the line of credit will increase. As of June 30, 1998, borrowings under the line of credit were limited to approximately $150,000,000, and $110,200,000 was outstanding (leaving $39,800,000 available) at a weighted average interest rate of 7.16%. The line of credit expires May 31, 2000 and provides for annual extensions (provided there is no default) for one-year periods upon notice by the Company and consent of the participating banks. In August 1998, the Company amended its unsecured line of credit to provide for borrowings of up to $250 million. As under the original line, borrowings under the line of credit, as amended, bear interest at a floating rate based on the Company's election of either a LIBOR based rate or the higher of the bank's reference rate and the Federal Funds rate plus 0.5%. However, under the line, as amended, the LIBOR based rate has been reduced, resulting in a rate of 6.91% as of August 5, 1998. Financial covenants for the line of credit, as amended, are substantially similar to those under the original line. The line, as amended, expires May 31, 2000 and provides for annual extensions (provided there is no default) for two additional one-year periods upon notice by the Company and consent of the participating bank. LIQUIDITY AND CAPITAL RESOURCES On May 29, 1998, the Company sold 1,150,000 shares of common stock to PaineWebber Incorporated for inclusion in the PaineWebber Equity Trust REIT Shares I, a unit investment trust. The shares were issued at a price of $30.5625 per share (before discounts and commissions). The aggregate proceeds to the Company, net of offering costs of $1.9 million, were approximately $33.2 million. The Company expects to continue meeting its short-term liquidity and capital requirements generally through its working capital and net cash provided by operating activities. The Company believes that the net cash provided by operating activities will continue to be sufficient to pay any distributions necessary to enable the Company to continue qualifying as a real estate investment trust. The Company also believes that net cash provided by operations will be sufficient to fund its recurring non-revenue enhancing capital expenditures, tenant improvements and leasing commissions. The Company expects to meet certain long-term liquidity requirements, such as property acquisitions, property development activities, scheduled debt maturities, renovations, expansions and other non-recurring capital improvements, through long-term secured and unsecured indebtedness, including borrowings under the unsecured line of credit, and the issuance of additional debt and/or equity securities. 18 EXPOSURE TO ENVIRONMENTAL LIABILITIES In connection with the acquisition of all of the Properties, the Company has obtained Phase I environmental assessments to ascertain the existence of any environmental liabilities or other issues. The Phase I environmental assessments of the properties have not revealed any environmental liabilities that the Company believes would have a material adverse effect on the Company's financial condition or results of operations taken as a whole, nor is the Company aware of any such material environmental liabilities. INFLATION More than 70% of the Company's leases (on a square footage basis) are triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses (including increases thereto). In addition, a majority of the Company's leases (on a square footage basis) contain effective annual rent escalations that are either fixed (ranging from 2.5% to 4.0%) or indexed based on a CPI or other index. Accordingly, the Company does not believe that its earnings or cash flow are subject to any significant risk of inflation. An increase in inflation, however, could result in an increase in the Company's variable rate borrowing cost, including borrowings under the unsecured line of credit. IMPACT OF YEAR 2000 The Year 2000 Issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. Any of the Company's computer programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send tenant invoices, or engage in similar normal business activities. The Company has evaluated the significance of the change from the year 1999 to the year 2000 on its existing computer system and has taken steps to ensure that its computer system will not be adversely affected thereby. The financial impact of steps taken to accommodate the change for the year 2000 to date has not been material, and future impacts are not anticipated to be material. The Company relies in part on the computer systems of its vendors and other companies. If any such company failed to become Year 2000 compliant, the Company could be adversely affected thereby. The Company has surveyed several of its larger vendors, and all have responded that they either are currently Year 2000 compliant, or are actively taking steps to become Year 2000 compliant. FUNDS FROM OPERATIONS Management believes that funds from operations (FFO) is helpful to investors as a measure of the performance of an equity REIT because, along with cash flows from operating activities, financing activities and investing activities, it provides investors with 19 an understanding of the ability of the Company to incur and service debt, to make capital expenditures and to make distributions. The Company computes FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (the "White Paper"), which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. The White Paper defines FFO as net income (loss) (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from debt restructuring, sales of property and unusual items, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company's financial performance or to cash flows from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is it indicative of funds available to fund the Company's cash needs, including its ability to make distributions. The following tables present the Company's FFO on a historical basis (in thousands):
Three Months Ended June 30, 1998 1997 ------------ ------------ (Unaudited) Net income (loss) $4,724 $(10,912) Add: Stock compensation - 3,768 Acquisition LLC financing costs - 6,973 Write off of unamortized loan fees - 2,146 Depreciation and amortization 2,456 1,106 ------ -------- FFO $7,180 $ 3,081 ------ -------- ------ -------- Six Months Ended June 30, 1998 1997 ----------- ----------- (Unaudited) Net income (loss) $ 9,359 $(11,055) Add: Stock compensation - 4,162 Post retirement benefit - 632 Special bonus - 353 Acquisition LLC financing costs - 6,973 Write off of unamortized loan fees - 2,146 Depreciation and amortization 4,177 2,109 ------- -------- FFO $13,536 $ 5,320 ------- -------- ------- --------
20 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Since early 1998, the Company and its President, Alan D. Gold, have engaged in discussions regarding the potential termination of Mr. Gold's full-time employment and his entering into a consulting arrangement with the Company. While these discussions were ongoing, the Company gave Mr. Gold written notice that it did not wish to extend the term of his employment agreement past its December 31, 1998 expiration date. On July 16, 1998, Mr. Gold gave the Company written notice that he intended to terminate his employment agreement, allegedly for "good reason," on or before August 16, 1998. The Company disputes Mr. Gold's contention that he has "good reason" to terminate his employment agreement and has submitted the disputes between the parties to binding arbitration pursuant to the terms of Mr. Gold's employment agreement. Mr. Gold has asserted claims against the Company that also will be considered in the arbitration. The Company currently anticipates that Mr. Gold will leave as of August 16, 1998 and that other executives of the Company will assume Mr. Gold's responsibilities. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On May 27, 1998, the Company privately placed 1,150,000 shares of its common stock, par value $.01 per share (the "Shares"), with PaineWebber Incorporated at a price before discounts and commissions of $30.5625 per Share, resulting in aggregate proceeds to the Company of approximately $33.2 million. Such proceeds were used to repay borrowings under the Company's unesecured line of credit. PaineWebber deposited the Shares with the trustee of PaineWebber Equity Trust REIT Series I (A Unit Investment Trust) (the "Trust"), a registered unit investment trust under the Investment Company Act of 1940, as amended, for which PaineWebber acted as sponsor and depositor, in exchange for units in the Trust. The issuance of the Shares was effected in reliance upon an exemption from registration under Section 4(2) of the Securities Act as a transaction by an issuer not involving a public offering. On June 9, 1998, the Company filed a Registration Statement (File No. 333-56449) on Form S-3 with the Securities and Exchange Commission to register the Shares under the Securities Act of 1933, as amended. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 15, 1998, the Company held its Annual Meeting of Stockholders. At the meeting, eight directors were elected to serve for a one-year term and until their successors are duly elected and qualify. The directors elected were: Jerry M. Sudarsky, Joel S. Marcus, Alan D. Gold, Richard Jennings, Joseph Elmaleh, Viren Mehta, David M. Petrone and Anthony Solomon. There are no other directors of the Company. A total of 10,902,809 shares voted "for" each of the directors, 0 voted "against" and 16,180 shares abstained. 21 In addition, the stockholders voted to ratify the selection of Ernst & Young LLP as the Company's independent public accountants for the fiscal year ending December 31, 1998. A total of 10,906,149 shares voted "for" the ratification, 7,300 voted "against" and 5,540 shares abstained. The stockholders also voted to amend the Company's 1997 Stock Award and Incentive Plan (the "Plan") to increase the number of shares of common stock of the Company available for issuance thereunder from 900,000 shares to that number of shares equal to 10% of the number of shares of common stock outstanding at any time, PROVIDED, that in no event shall the number of shares available for issuance under the Plan exceed 3,000,000 shares of common stock. A total of 6,308,959 shares voted "for" the amendment, 3,803,380 voted "against" and 17,982 shares abstained. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.20 Amended and Restated 1997 Stock Award and Incentive Plan 27.1 Financial Data Schedule (b) Reports on Form 8-K. On April 9, 1998, the Company filed a Current Report on Form 8-K, dated March 26, 1998, to report the acquisition of one Life Science Facility and certain vacant land in San Diego, California. On May 27, 1998, the Company filed a Current Report on Form 8-K, dated May 27, 1998, to report the acquisition of fourteen Life Science Facilities. On June 23, 1998, the Company filed a Current Report on Form 8-K, dated May 27, 1998, to report the sale of 1,150,000 shares of common stock to PaineWebber Incorporated for inclusion in the PaineWebber Equity Trust REIT Series I, a unit investment trust. 22 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 14, 1998. ALEXANDRIA REAL ESTATE EQUITIES, INC. ------------------------------------------------- Joel S. Marcus Chief Executive Officer (Principal Executive Officer) ------------------------------------------------- Peter J. Nelson Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) 23 EX-10.20 2 EXHIBIT 10.20 ALEXANDRIA REAL ESTATE EQUITIES, INC. AMENDED AND RESTATED 1997 STOCK AWARD AND INCENTIVE PLAN As approved by the Stockholders of the Company on May 15, 1998 ALEXANDRIA REAL ESTATE EQUITIES, INC. AMENDED AND RESTATED 1997 STOCK AWARD AND INCENTIVE PLAN Section Page 1. Purpose; Types of Awards; Construction. . . . . . . . . . . . . . . . . 1 2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 5. Stock Subject to the Plan . . . . . . . . . . . . . . . . . . . . . . . 8 6. Specific Terms of Awards. . . . . . . . . . . . . . . . . . . . . . . . 9 7. Change of Control Provisions. . . . . . . . . . . . . . . . . . . . . 13 8. Loan Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 9. General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 14 i ALEXANDRIA REAL ESTATE EQUITIES, INC. AMENDED AND RESTATED 1997 STOCK AWARD AND INCENTIVE PLAN 1. PURPOSE; TYPES OF AWARDS; CONSTRUCTION. The purpose of the Alexandria Real Estate Equities, Inc. Amended and Restated 1997 Stock Award and Incentive Plan (the "Plan") is to afford an incentive to selected officers, employees and independent contractors (including non-employee directors) of Alexandria Real Estate Equities, Inc. (the "Company"), or any Subsidiary or Affiliate that now exists or hereafter is organized or acquired, to acquire a proprietary interest in the Company, to continue as employees or independent contractors (including non-employee directors), as the case may be, to increase their efforts on behalf of the Company and to promote the success of the Company's business. Pursuant to Section 6 of the Plan, there may be granted Options (including "incentive stock options" and "nonqualified stock options"), Stock Appreciation Rights, Restricted Stock, and Other Stock-Based Awards or Other Cash-Based Awards. The Plan also provides the authority to make loans to purchase shares of Stock. From and after the consummation of the Initial Public Offering, the Plan is designed to comply with the requirements of Regulation G (12 C.F.R. Section 207) regarding the purchase of shares on margin, the requirements for "performance-based compensation" under Section 162(m) of the Code and the conditions for exemption from short-swing profit recovery rules under Rule 16b-3 of the Exchange Act, and shall be interpreted in a manner consistent with the requirements thereof. 2. DEFINITIONS. 2.1 For purposes of the Plan, the following terms shall be defined as set forth below: (a) "Affiliate" means any entity if, at the time of granting of an Award or a Loan, (i) the Company, directly or indirectly, owns at least 20% of the combined voting power of all classes of stock of such entity or at least 20% of the ownership interests in such entity or (ii) such entity, directly or indirectly, owns at least 20% of the combined voting power of all classes of stock of the Company. (b) "Award" means any Option, SAR, Restricted Stock, or Other Stock-Based Award or Other Cash-Based Award granted under the Plan. (c) "Award Agreement" means any written agreement, contract, or other instrument or document evidencing an Award. (d) "Beneficiary" means the person, persons, trust or trusts that have been designated by a Grantee in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under the Plan upon his or her death, or, if there is no designated Beneficiary or surviving designated Beneficiary, then the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits. (e) "Board" means the Board of Directors of the Company. (f) "Change of Control" shall mean the occurrence of any of the following events: (i) Any Person (as such term is used in section 3(a)(9) of the Exchange Act, as modified and used in sections 13(d) and 14(d) thereof, except that such term shall not include (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of such securities, (D) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, or (E) a person or group as used in Rule 13d-1(b) under the Exchange Act) that is or becomes the Beneficial Owner, as such term is defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding securities; or (ii) The following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals 2 who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or (iii) There is consummated a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least seventy-five percent (75%) of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates other than in connection with the acquisition by the Company or its affiliates of a business) representing twenty-five percent (25%) or more of the combined voting power of the Company's then outstanding securities; or (iv) The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets, other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least seventy-five (75%) of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. 3 (g) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (h) "Committee" means the Board or the committee designated or established by the Board to administer the Plan from and after the consummation of the Initial Public Offering, the composition of which shall at all times satisfy the provisions of Rule 16b-3. With respect to the period prior to consummation of the Initial Public Offering, references to the "Committee" shall be deemed to refer to the Board or to the Compensation Committee of the Board. (i) "Company" means Alexandria Real Estate Equities, Inc., a corporation organized under the laws of the State of Maryland, or any successor corporation. (j) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and as now or hereafter construed, interpreted and applied by regulations, rulings and cases. (k) "Fair Market Value" means, with respect to Stock or other property, the fair market value of such Stock or other property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee in good faith, the per share Fair Market Value of Stock as of a particular date shall mean (i) the closing sales price per share of Stock on the national securities exchange on which the Stock is principally traded for the last preceding date on which there was a sale of such Stock on such exchange, or (ii) if the shares of Stock are then traded in an over-the-counter market, the average of the closing bid and ask prices for the shares of Stock in such over-the-counter market for the last preceding date on which there was a sale of such Stock in such market, or (iii) if the shares of Stock are not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee, in its sole discretion, shall determine. (l) "Grantee" means a person who, as an employee or independent contractor of the Company, a Subsidiary or an Affiliate, has been granted an Award or Loan under the Plan. (m) "Initial Public Offering" shall mean the initial public offering of shares of Stock of the Company, as more fully described in the 4 Registration Statement on Form S-11 filed with the Securities and Exchange Commission on March 18, 1997, as such Registration Statement may be amended from time to time. (n) "Incentive Stock Option" or "ISO" means any Option intended to be and designated as an incentive stock option within the meaning of Section 422 of the Code. (o) "Loan" means the proceeds from the Company borrowed by a Plan participant under Section 8 of the Plan. (p) "Non-Employee Director" means any director who is not an employee of the Company or any of its subsidiaries or affiliates. For purposes of this Plan, such non-employee director shall be treated as an independent contractor. (q) "Nonqualified Stock Option" or "NQSO" means any Option that is designated as a nonqualified stock option. (r) "Option" means a right, granted to a Grantee under Section 6.2, to purchase shares of Stock. An Option may be either an ISO or an NQSO; PROVIDED THAT ISOs may be granted only to employees of the Company or of a Subsidiary. (s) "Other Cash-Based Award" means cash awarded to a Grantee under Section 6.6, including cash awarded as a bonus or upon the attainment of specified performance objectives or otherwise as permitted under the Plan. (t) "Other Stock-Based Award" means a right or other interest granted to a Grantee under Section 6.6 that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, including, but not limited to (1) unrestricted Stock awarded as a bonus or upon the attainment of specified performance objectives or otherwise as permitted under the Plan and (2) a right granted to a Grantee to acquire Stock from the Company for cash and/or a promissory note containing terms and conditions prescribed by the Committee. 5 (u) "Plan" means this Alexandria Real Estate Equities, Inc. Amended and Restated 1997 Stock Award and Incentive Plan, as amended from time to time. (v) "Restricted Stock" means an Award of shares of Stock to a Grantee under Section 6.4 that may be subject to certain restrictions and to a risk of forfeiture. (w) "Rule 16b-3" means Rule 16b-3, as from time to time in effect promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act, including any successor to such Rule. (x) "Securities Act" means the Securities Act of 1933, as amended from time to time, and as now or hereafter construed, interpreted and applied by the regulations, rulings and cases. (y) "Stock" means shares of the common stock, par value $.01 per share, of the Company. (z) "Stock Appreciation Right" or "SAR" means the right, granted to a Grantee under Section 6.3, to be paid an amount measured by the appreciation in the Fair Market Value of Stock from the date of grant to the date of exercise of the right, with payment to be made in cash, Stock, or property as specified in the Award or determined by the Committee. (aa) "Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting of an Award, each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. 3. ADMINISTRATION. The Plan shall be administered by the Committee. The Committee shall have the authority in its discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan including, without limitation, the 6 authority to grant Awards and make Loans; to determine the persons to whom and the time or times at which Awards shall be granted and Loans shall be made; to determine the type and number of Awards to be granted and the amount of any Loan, the number of shares of Stock to which an Award may relate and the terms, conditions, restrictions and performance criteria relating to any Award or Loan; and to determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered; to make adjustments in the terms and conditions of, and the criteria and performance objectives (if any) included in, Awards and Loans in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, or in response to changes in applicable laws, regulations, or accounting principles; to designate Affiliates; to construe and interpret the Plan and any Award or Loan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the Award Agreements and any promissory note or agreement related to any Loan (which need not be identical for each Grantee); and to make all other determinations deemed necessary or advisable for the administration of the Plan. The Committee may appoint a chairperson and a secretary and may make such rules and regulations for the conduct of its business as it shall deem advisable, and shall keep minutes of its meetings. All determinations of the Committee shall be made by a majority of its members either present in person or participating by conference telephone at a meeting or by written consent. The Committee may delegate to one or more of its members or to one or more agents such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. All decisions, determinations and interpretations of the Committee shall be final and binding on all persons, including the Company, and any Subsidiary, Affiliate or Grantee (or any person claiming any rights under the Plan from or through any Grantee) and any stockholder. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award granted or Loan made hereunder. 7 4. ELIGIBILITY. Subject to the provisions set forth below, Awards and Loans may be granted to selected employees, officers and independent contractors (including Non-Employee Directors) of the Company and its present or future Subsidiaries and Affiliates, in the discretion of the Committee; PROVIDED THAT ISOs may be granted only to employees of the Company or of a Subsidiary. In determining the persons to whom Awards and Loans shall be granted and the type (including the number of shares to be covered) of any Award or the amount of any Loan, the Committee shall take into account such factors as the Committee shall deem relevant in connection with accomplishing the purposes of the Plan. 5. STOCK SUBJECT TO THE PLAN. The maximum number of shares of Stock reserved for the grant of Awards under the Plan shall be, subject to adjustment as provided herein, that number of shares equal to 10% of the number of shares of Stock outstanding at any time, PROVIDED THAT in no event shall the number of shares available for issuance under the Plan exceed 3,000,000 shares of Stock at any time. No more than 100% of the total shares available for grant may be awarded to a single individual in a single year. Such shares may, in whole or in part, be authorized but unissued shares or shares that shall have been or may be reacquired by the Company in the open market, in private transactions or otherwise. If any shares subject to an Award are forfeited, cancelled, exchanged or surrendered, or if an Award otherwise terminates or expires without a distribution of shares to the Grantee, the shares of stock with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for Awards under the Plan; PROVIDED THAT, in the case of forfeiture, cancellation, exchange or surrender of shares of Restricted Stock with respect to which dividends have been paid or accrued, the number of shares with respect to such Awards shall not be available for Awards hereunder unless, in the case of shares with respect to which dividends were accrued but unpaid, such dividends are also forfeited, cancelled, exchanged or surrendered. Upon the exercise of any Award granted in tandem with any other Awards or awards, such related Awards or awards shall be cancelled to the extent of the number of shares of Stock as to which the Award is exercised and, notwithstanding the foregoing, such number of shares shall no longer be available for Awards under the Plan. 8 In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Stock, or other property), recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects the Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Grantees under the Plan, then the Committee shall make such equitable changes or adjustments as it deems necessary or appropriate to any or all of (a) the number and kind of shares of Stock which may thereafter be issued in connection with Awards, (b) the number and kind of shares of Stock issued or issuable in respect of outstanding Awards, and (c) the exercise price, grant price, or purchase price relating to any Award; PROVIDED THAT, with respect to ISOs, such adjustment shall be made in accordance with Section 424(h) of the Code. 6. SPECIFIC TERMS OF AWARDS. 6.1 GENERAL. The term of each Award shall be for such period as may be determined by the Committee. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Stock, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. The Committee may make rules relating to installment or deferred payments with respect to Awards, including the rate of interest to be credited with respect to such payments. In addition to the foregoing, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter, such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine . 6.2 OPTIONS. The Committee is authorized to grant Options to Grantees on the following terms and conditions: (a) TYPE OF AWARD. The Award Agreement evidencing the grant of an Option under the Plan shall designate the Option as an ISO or an NQSO. (b) EXERCISE PRICE. The exercise price per share of Stock purchasable under an Option shall be determined by the Committee; PRO- 9 VIDED THAT, in the case of an ISO, such exercise price shall be not less than the Fair Market Value of a share on the date of grant of such Option, and in no event shall the exercise price for the purchase of shares be less than par value. The exercise price for Stock subject to an Option may be paid in cash or subject to the approval of the Committee, by an exchange of Stock previously owned by the Grantee, or a combination of both, in an amount having a combined value equal to such exercise price. Subject to the approval of the Committee, a Grantee may pay all or a portion of the aggregate exercise price by having shares of Stock with a Fair Market Value on the date of exercise equal to the aggregate exercise price withheld by the Company or sold by a broker-dealer under circumstances meeting the requirements of 12 C.F.R. Section 220 or any successor thereof. (c) TERM AND EXERCISABILITY OF OPTIONS. The date on which the Committee adopts a resolution expressly granting an Option shall be considered the day on which such Option is granted. Options shall be exercisable over the exercise period (which shall not exceed ten years from the date of grant), at such times and upon such conditions as the Committee may determine, as reflected in the Award Agreement; PROVIDED THAT, the Committee shall have the authority to accelerate the exercisability of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. An Option may be exercised to the extent of any or all full shares of Stock as to which the Option has become exercisable, by giving written notice of such exercise to the Committee or its designated agent. (d) TERMINATION OF EMPLOYMENT, ETC. An Option may not be exercised unless the Grantee is then in the employ of, or then maintains an independent contractor relationship with, the Company or a Subsidiary or an Affiliate (or a company or a parent or Subsidiary company of such company issuing or assuming the Option in a transaction to which Section 424(a) of the Code applies); PROVIDED THAT ISOs may be granted only to employees of the Company or of a Subsidiary, and may not be exercised unless the Grantee has remained continuously so employed, or has continuously maintained such relationship, since the date of grant of the Option; PROVIDED THAT, the Award Agreement may contain provisions extending the exercisability of Options, in the event of specified terminations, to a date not later than the expiration date of such Option. (e) OTHER PROVISIONS. Options may be subject to such other conditions including, but not limited to, restrictions on transferability of the shares acquired upon exercise of such Options, as the Committee may pre- 10 scribe in its discretion or as may be required by applicable law, including but not limited to the requirements respecting ISOs set forth in Section 422 of the Code. 6.3 SARS. The Committee is authorized to grant SARs to Grantees on the following terms and conditions: (a) IN GENERAL. Unless the Committee determines otherwise, (i) an SAR granted in tandem with an NQSO may be granted at the time of grant of the related NQSO or at any time thereafter or (ii) an SAR granted in tandem with an ISO may only be granted at the time of grant of the related ISO. An SAR granted in tandem with an Option shall be exercisable only to the extent the underlying Option is exercisable. (b) SARS. An SAR shall confer on the Grantee a right to receive an amount with respect to each share subject thereto, upon exercise thereof, equal to the excess of (i) the Fair Market Value of one share of Stock on the date of exercise over (ii) the grant price of the SAR (which in the case of an SAR granted in tandem with an Option shall be equal to the exercise price of one share of Stock underlying the Option, and which in the case of any other SAR shall be such price as the Committee may determine). 6.4 RESTRICTED STOCK. The Committee is authorized to grant Restricted Stock to Grantees on the following terms and conditions: (a) ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such restrictions on transferability and other restrictions, if any, as the Committee may impose at the date of grant or thereafter, which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments, or otherwise, as the Committee may determine. Such restrictions may include factors relating to the increase in the value of the Stock or to individual or Company performance such as the attainment of certain specified individual or Company-wide performance goals or earnings per share. Except to the extent restricted under the Award Agreement relating to the Restricted Stock, a Grantee granted Restricted Stock shall have all of the rights of a stockholder including, without limitation, the right to vote Restricted Stock and the right to receive dividends thereon. (b) FORFEITURE. Upon termination of employment with or service to the Company and any Subsidiary, or upon termination of the 11 independent contractor relationship, as the case may be, during the applicable restriction period, Restricted Stock and any accrued but unpaid dividends that are at that time subject to restrictions shall be forfeited; PROVIDED THAT, the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Stock. (c) CERTIFICATES FOR STOCK. Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Grantee, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company shall retain physical possession of the certificate. (d) DIVIDENDS. Dividends paid on Restricted Stock shall either be paid at the dividend payment date, or be deferred for payment to such date as determined by the Committee, in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends. Stock distributed in connection with a stock split or stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed. 6.5 STOCK AWARDS IN LIEU OF CASH AWARDS. The Committee is authorized to grant Stock to Grantees as a bonus, or to grant other Awards, in lieu of Company commitments to pay cash under other plans or compensatory arrangements. Stock or Awards granted hereunder shall have such other terms as shall be determined by the Committee. 6.6 OTHER STOCK-BASED OR CASH-BASED AWARDS. The Committee is authorized to grant to Grantees Other Stock-Based Awards or Other Cash-Based Awards alone or in addition to any other Award under the Plan, as deemed by the Committee to be consistent with the purposes of the Plan. Such Awards may be granted with value and payment contingent upon performance of the Company or any other factors designated by the Committee, or valued by reference to the performance of specified Subsidiaries or Affiliates. 12 The Committee shall determine the terms and conditions of such Awards at the date of grant or thereafter; PROVIDED, THAT performance objectives for each year shall be established by the Committee not later than the latest date permissible under Section 162(m) of the Code. Such performance objectives may be expressed in terms of one or more financial or other objective goals. Financial goals may be expressed, for example, in terms of earnings per share, stock price, return on equity, net earnings growth, net earnings, related return ratios, cash flow, earnings before interest, taxes, depreciation and amortization (EBITDA), return on assets or total stockholder return. Other objective goals may include the attainment of various productivity and long-term growth objectives. Any criteria may be measured in absolute terms or as compared to another corporation or corporations. To the extent applicable, any such performance objective shall be determined (a) in accordance with the Company's audited financial statements and generally accepted accounting principles and reported upon by the Company's independent accountants or (b) so that a third party having knowledge of the relevant facts could determine whether such performance objective is met. Performance objectives shall include a threshold level of performance below which no Award payment shall be made, levels of performance above which specified percentages of target Awards shall be paid, and a maximum level of performance above which no additional Award shall be paid. Performance objectives established by the Committee may be (but need not be) different from year-to-year and different performance objectives may be applicable to different Grantees. 7. CHANGE OF CONTROL PROVISIONS. The following provisions shall apply in the event of a Change of Control, unless otherwise determined by the Committee or the Board in writing at or after grant (including under any individual agreement), but prior to the occurrence of such Change of Control: 7.1 any Award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested; 7.2 the restrictions, deferral limitations, payment conditions, and forfeiture conditions applicable to any other Award granted under the Plan shall lapse and such Awards shall be deemed fully vested, and any performance conditions imposed with respect to Awards shall be deemed to be fully achieved; and 13 7.3 any indebtedness incurred pursuant to Section 8 of this Plan shall be forgiven and the collateral pledged in connection with any such Loan shall be released. 8. LOAN PROVISIONS. Subject to the provisions of the Plan and all applicable federal and state laws, rules and regulations (including the requirements of Regulation G (12 C.F.R. Section 207)), the Committee shall have the authority to make Loans to Grantees (on such terms and conditions as the Committee shall determine), to enable such Grantees to purchase shares in connection with the Initial Public Offering or otherwise in connection with the realization of Awards under the Plan. Loans shall be evidenced by a promissory note or other agreement, signed by the borrower, which shall contain provisions for repayment and such other terms and conditions as the Committee shall determine. 9. GENERAL PROVISIONS. 9.1 EFFECTIVE DATE; APPROVAL BY STOCKHOLDERS. The Plan shall take effect upon its adoption by the Board (the "Effective Date"), but the Plan (and any grants of Awards made prior to the stockholder approval mentioned herein), shall be subject to the approval of the holder(s) of a majority of the issued and outstanding shares of voting securities of the Company entitled to vote, which approval must occur within twelve (12) months of the date the Plan is adopted by the Board. In the absence of such approval, such Awards shall be null and void. Notwithstanding the foregoing, the effectiveness of the Plan is conditioned upon the consummation of the Initial Public Offering, and shall be of no force and effect if the Initial Public Offering is not consummated. 9.2 NONTRANSFERABILITY. Awards shall not be transferable by a Grantee except by will or the laws of descent and distribution or, if then permitted under Rule 16b-3, pursuant to a qualified domestic relations order as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder, and shall be exercisable during the lifetime of a Grantee only by such Grantee or his guardian or legal representative. 9.3 NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in the Plan or in any Award or Loan granted or any Award Agreement, promissory note or other agreement entered into pursuant hereto shall confer upon any Grantee the right to continue in the employ of or to continue as an independent contractor of the Company, any Subsidiary or any Affiliate, or to be entitled to any remunera- 14 tion or benefits not set forth in the Plan or such Award Agreement, promissory note, or other agreement or to interfere with or limit in any way the right of the Company or any such Subsidiary or Affiliate to terminate such Grantee's employment or independent contractor relationship. 9.4 TAXES. The Company or any Subsidiary or Affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Stock, or any other payment to a Grantee, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Grantees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority includes the authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Grantee's tax obligations. 9.5 AMENDMENT AND TERMINATION OF THE PLAN. The Board may at any time and from time to time alter, amend, suspend, or terminate the Plan in whole or in part; PROVIDED THAT, if the Committee determines that stockholder approval of an amendment is necessary and desirable in order for the Plan to comply or continue to comply with any applicable law, such amendment shall not be effective unless the same shall be approved by the requisite vote of the stockholders of the Company entitled to vote thereon. Notwithstanding the foregoing, no amendment shall affect adversely any of the rights of any Grantee, without such Grantee's consent, under any Award or Loan theretofore granted under the Plan. 9.6 NO RIGHTS TO AWARDS OR LOANS; NO STOCKHOLDER RIGHTS. No Grantee shall have any claim to be granted any Award or Loan under the Plan, and there is no obligation for uniformity of treatment of Grantees. Except as provided specifically herein, a Grantee or a transferee of an Award shall have no rights as a stockholder with respect to any shares covered by the Award until the date of the issuance of a stock certificate to him for such shares. 9.7 UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments not yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any Award shall give any such Grantee any rights that are greater than those of a general creditor of the Company. 15 9.8 NO FRACTIONAL SHARES. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. 9.9 REGULATIONS AND OTHER APPROVALS. (a) The obligation of the Company to sell or deliver Stock with respect to any Award granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Committee. (b) Each Award is subject to the requirement that, if at any time the Committee determines, in its absolute discretion, that the listing, registration or qualification of Stock issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Stock, no such Award shall be granted or payment made or Stock issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Committee. (c) In the event that the disposition of Stock acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act and is not otherwise exempt from such registration, such Stock shall be restricted against transfer to the extent required by the Securities Act or regulations thereunder, and the Committee may require a Grantee receiving Stock pursuant to the Plan, as a condition precedent to receipt of such Stock, to represent to the Company in writing that the Stock acquired by such Grantee is acquired for investment only and not with a view to distribution. 9.10 GOVERNING LAW. The Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Maryland without giving effect to the conflict of laws principles thereof. 16 EX-27.1 3 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 6/30/98 10Q OF ALEXANDRIA REAL ESTATE EQUITIES, INC. 1,000 3-MOS DEC-31-1998 APR-01-1998 JUN-30-1998 2,010 0 8,308 0 0 0 389,005 (12,810) 420,897 14,382 206,609 0 0 126 199,780 420,897 0 15,160 0 3,620 3,338 0 3,478 4,724 0 4,724 0 0 0 4,724 0.40 0.39
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