EX-99.2 3 a11-28532_1ex99d2.htm EX-99.2

Exhibit 99.2

 

GRAPHIC

 

GRAPHIC

 

 

 

SUPPLEMENTAL FINANCIAL, OPERATING, &
PROPERTY INFORMATION

 

 

 

Third Quarter Ended

September 30, 2011

 

 

 

Conference Call Information:

Wednesday, October 26, 2011

3:00PM Eastern Time/12:00PM Noon Pacific Time

Number: (719) 457-2668

Confirmation Code: 7211433

 

 

 

385 EAST COLORADO BOULEVARD, SUITE 299

PASADENA, CALIFORNIA  91101

(626) 578-9693

www.are.com

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Table of Contents

September 30, 2011

(Unaudited)

 

 

 

Page

Company Profile

 

3

Investor Information

 

4

Equity Research Coverage and Rating Agencies

 

5

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

6

Condensed Consolidated Statements of Income

 

15

Condensed Consolidated Balance Sheets

 

16

Earnings per Share

 

17

Funds from Operations

 

18

Adjusted Funds from Operations

 

19

Financial and Asset Base Highlights

 

20

Summary of Properties

 

23

Summary of Occupancy Percentage

 

24

Property Listing

 

25

Debt Information

 

31

Summary of Same Property Comparisons

 

35

Summary of Leasing Activity

 

36

Summary of Lease Expirations

 

39

20 Largest Client Tenants

 

40

Client Tenant Mix

 

41

Summary of Additions and Dispositions of Properties

 

42

Real Estate and Value-Added Projects

 

43

Summary of Capital Expenditures

 

52

Definitions and Other Information

 

53

 

This Supplemental Financial, Operating, & Property Information package includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  You can identify the forward-looking statements by their use of forward-looking words, such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates,” or the negative of those words or similar words.  Our actual results may differ materially from those projected in such forward-looking statements.  Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development, our failure to successfully operate or lease acquired properties, lower rental rates or higher vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, general and local economic conditions, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”).  All forward-looking statements are made as of October 25, 2011, the date this Supplemental Financial, Operating, & Property Information package was first made available on our website, and we assume no obligation to update this information.  For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.

 

This Supplemental Financial, Operating, & Property Information package is not an offer to sell or solicitation to buy securities of Alexandria Real Estate Equities, Inc.  Any offers to sell or solicitations to buy securities of Alexandria Real Estate Equities, Inc. shall be made only by means of a prospectus approved for that purpose.  Unless otherwise indicated, the “Company,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries.

 

2


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Company Profile

September 30, 2011

 

The Company

 

Alexandria Real Estate Equities, Inc. (the “Company” or “Alexandria”), a self-administered and self-managed real estate investment trust (“REIT”), is the largest owner and preeminent REIT focused principally on science-driven cluster formation.  Our operating platform is based on the principle of “clustering” with high-quality assets and operations located adjacent to life science research and innovation entities driving growth and technological advances.  The Company has significant real estate assets adjacent to these key life science entities which we believe results in higher occupancy levels, longer lease terms, higher rental income, and higher returns.  Our targeted locations are in the best submarkets within each of the top life science cluster destinations, including San Francisco and San Diego, California; Greater Boston; New York City, New Jersey, and Suburban Philadelphia; Research Triangle Park, North Carolina; Suburban Washington, D.C.; Seattle, Washington; and international locations.  Client tenants include institutional (universities and independent non-profit institutions), pharmaceutical, biotechnology, medical device, product, and service entities, and government agencies.  The Company was founded in 1994 by Jerry M. Sudarsky and Joel S. Marcus and the Company executed its initial public offering in 1997.  Alexandria is the leading life science real estate company and is known for its very well located high-quality environmentally sustainable real estate, technical infrastructure, and its long term experience, and the unique expertise it provides to its broad and diverse high-quality life science industry client tenant base.

 

Management

 

Alexandria’s executive and senior management team is highly experienced in the REIT industry (uniquely with both real estate and life science experience and expertise) and is the most accomplished team focused on providing high-quality environmentally sustainable real estate, technical infrastructure, and unique expertise to the broad and diverse life science industry.  Our deep and talented team has decades of real estate and life science industry experience. We believe that our expertise, experience, reputation, and key life science relationships provide Alexandria significant competitive advantages in attracting new business opportunities.  Our management team also includes highly experienced regional market directors averaging over 20 years of real estate experience and almost 10 years with Alexandria.  Our regional market directors have significant experience, expertise, as well as highly valuable relationships and networks that enable Alexandria to develop long-term relationships with preeminent life science entities.

 

Strategy

 

Alexandria’s primary business objective is to maximize stockholder value by providing its stockholders with the greatest possible total return based on a multifaceted platform of internal and external growth.  The key elements to our strategy include our consistent focus on high-quality assets and operations in the top life science cluster destinations with our properties located adjacent to life science entities driving growth and technological advances within each cluster.  These adjacency locations are characterized by high barriers to entry and exit, limited supply of available space, and represent highly desirable locations for tenancy by life science entities.  Alexandria’s strategy also includes leveraging on its deep and broad life science and real estate relationships in order to attract new and leading life science client tenants and value-added real estate opportunities through acquisitions, redevelopment, and development.

 

Summary as of September 30, 2011

 

Corporate headquarters

Pasadena, California

Markets

San Francisco, San Diego, Greater Boston, NYC/New Jersey/Suburban Philadelphia, Research Triangle Park, Suburban Washington, D.C., Seattle, and International

Fiscal year-end

December 31

Total properties

171

Total rentable square feet

14.9 million

Common shares outstanding

61.5 million

Dividend – quarter/annualized

$0.47/$1.88

Closing dividend yield – annualized

3.1%

Total market capitalization

$6.8 billion

 

3


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Investor Information

September 30, 2011

 

 

Executive/Senior Management

 

 

 

 

 

 

 

Joel S. Marcus

 

Chairman, Chief Executive Officer, & Founder

 

Thomas J. Andrews

 

EVP-Regional Market Director-Greater Boston

Dean A. Shigenaga

 

SVP, Chief Financial Officer, & Treasurer

 

John J. Cox

 

SVP-Regional Market Director-Seattle

Jennifer J. Pappas

 

SVP, General Counsel, & Corporate Secretary

 

John H. Cunningham

 

SVP-Regional Market Director-NY & Strategic Operations

Peter M. Moglia

 

Chief Investment Officer

 

Larry J. Diamond

 

SVP-Regional Market Director-Mid Atlantic

Vincent R. Ciruzzi

 

SVP-Construction and Development

 

Stephen A. Richardson

 

EVP-Regional Market Director-San Francisco

 

 

 

 

Daniel J. Ryan

 

SVP-Regional Market Director-San Diego & Strategic Operations

 

 

Company Information

 

 

 

 

 

Corporate Headquarters

 

Trading Symbols

 

Information Requests

385 East Colorado Boulevard, Suite 299

 

New York Stock Exchange (“NYSE”)

 

Phone:  (626) 396-4828

Pasadena, California  91101

 

Common stock:  ARE

 

E-mail: corporateinformation@are.com

 

 

Series C preferred stock:  ARE-C

 

Web:    www.are.com

 

 

Common Stock Data (NYSE: ARE)

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q11

 

2Q11

 

1Q11

 

4Q10

 

3Q10

High trading price

 

$

85.33

 

$

83.08

 

$

80.72

 

$

76.19

 

$

73.89

Low trading price

 

$

59.33

 

$

75.09

 

$

72.99

 

$

65.60

 

$

60.11

Closing stock price, average for period

 

$

72.68

 

$

78.31

 

$

76.79

 

$

71.25

 

$

69.28

Closing stock price, at the end of the quarter

 

$

61.39

 

$

77.42

 

$

77.97

 

$

73.26

 

$

70.00

Dividends per share – annualized

 

$

1.88

 

$

1.80

 

$

1.80

 

$

1.80

 

$

1.40

Closing dividend yield – annualized

 

3.1%

 

2.3%

 

2.3%

 

2.5%

 

2.0%

Common shares outstanding at the end of the quarter

 

61,463,839

 

61,380,268

 

55,049,730

 

54,966,925

 

54,891,638

Closing market value of outstanding common shares (in thousands)

 

$

3,773,265

 

$

4,752,060

 

$

4,292,227

 

$

4,026,877

 

$

3,842,415

 

4


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Equity Research Coverage and Rating Agencies

September 30, 2011

 

Equity Research Coverage

 

 

 

 

Argus Research

 

The Goldman Sachs Group, Inc.

 

Morningstar

William Eddleman, Jr.

(212) 425-7500

 

Jonathan Habermann

(917) 343-4260

 

Phillip Martin

(312) 286-9905

 

 

 

Sloan Bohlen

(212) 902-2796

 

Jason Ren

(312) 244-7008

 

 

 

Conor Fennerty

(212) 902-4227

 

 

 

 

 

 

 

 

 

 

 

Banc of America Securities-Merrill Lynch

 

Green Street Advisors

 

RBC Capital Markets

James Feldman

(646) 855-5808

 

John Stewart

(949) 640-8780

 

Dave Rodgers

(440) 715-2647

Jeffrey Spector

(646) 855-1363

 

Michael Knott

(949) 640-8780

 

Michael Carroll

(440) 715-2649

Ji Zhang

(646) 855-2926

 

Lukas Hartwich

(949) 640-8780

 

 

 

 

 

 

 

 

 

 

 

Barclays Capital

 

International Strategy & Investment Group Inc

 

RW Baird

 

Ross Smotrich

(212) 526-2306

 

Steve Sakwa

(212) 446-9462

 

David AuBuchon

(314) 445-6520

Matthew Rand

(212) 526-0248

 

George Auerbach

(212) 446-9459

 

Justin Webb

(314) 445-6515

 

 

 

Gwen Clark

(212) 446-5611

 

 

 

 

 

 

 

 

 

 

 

Citigroup Global Markets

 

JMP Securities

 

Standard & Poor’s

 

Michael Bilerman

(212) 816-1383

 

William Marks

(415) 835-8944

 

Robert McMillan

(212) 438-9522

Quentin Velleley

(212) 816-6981

 

Rochan Raichura

(415) 835-3909

 

 

 

David Shamis

(212) 816-5186

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cowen and Company

 

JP Morgan Securities

 

UBS

 

James Sullivan

(646) 562-1380

 

Anthony Paolone

(212) 622-6682

 

Ross Nussbaum

(212) 713-2484

Michael Gorman

(646) 562-1381

 

Joseph Dazio

(212) 622-6416

 

Gabriel Hilmoe

(212) 713-3876

 

 

 

 

 

 

Jeremy Woods

(212) 713-1102

 

 

 

 

 

 

 

 

Credit Suisse

 

Keefe, Bruyette & Woods

 

WJB Capital Group

 

Andrew Rosivach

(415) 249-7942

 

Sheila McGrath

(212) 887-7793

 

Jeffrey Langbaum

(646) 344-3310

 

 

 

Kristin Brown

(212) 887-7738

 

 

 

 

 

 

 

 

 

 

 

Rating Agencies

 

 

 

 

 

 

Moody’s Investors Service

 

Standard & Poor’s

 

 

 

Philip Kibel

(212) 553-4569

 

Lisa Sarajian

(212) 438-2597

 

 

 

Maria Maslovsky

(212) 553-4831

 

George Skoufis

(212) 438-2608

 

 

 

 

 

Alexandria Real Estate Equities, Inc. is currently covered by the research analysts listed above.  This list may not be complete and is subject to change as firms initiate or discontinue coverage of our company.  Please note that any opinions, estimates, or forecasts regarding our historical or predicted performance made by these analysts are theirs alone and do not represent opinions, forecasts, or predictions of Alexandria Real Estate Equities, Inc. or its management.  Alexandria Real Estate Equities, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions, or recommendations.  Interested persons may obtain copies of analysts’ reports on their own as we do not distribute these reports.  Several of these firms may from time-to-time own our stock and/or hold other long or short positions in our stock, and may provide compensated services to us.

 

5


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Highlights

 

Three Months Ended September 30, 2011:

·                   Received Baa2/BBB- Stable Outlook Investment Grade Issuer Rating from Two Major Rating Agencies

·                   Three Months Ended September 30, 2011, Funds from Operations (“FFO”) Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $1.11 Before Loss on Early Extinguishment of Debt and Non-Cash Impairment Charge, Compared to Three Months Ended September 30, 2010, FFO Per Share (Diluted) of $1.11 Before Loss on Early Extinguishment of Debt

·                   Three Months Ended September 30, 2011, Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $0.40, Compared to Three Months Ended September 30, 2010, Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $0.45

·                   Executed 56 Leases for 985,000 Rentable Square Feet, Including 458,000 Rentable Square Feet of Redevelopment and Development Space; Second Highest Single Quarter of Leasing Activity in Company History

·                   Cash and GAAP Rental Rate Decrease of 3.0% and Increase of 2.8%, Respectively, on Renewed/Re-leased Space

·                   Cash and GAAP Same Property Net Operating Income Increase of 4.8% and Decrease of 0.2%, Respectively

·                   Occupancy of Operating Properties Increases to 94.6%; Occupancy of Operating and Redevelopment Properties Increases to 89.3%

·                   Repurchased, in Privately Negotiated Transactions, $121.1 Million of 3.70% Unsecured Convertible Notes

·                   Repaid Two Secured Loans Aggregating $11.2 Million

·                   Sold Parcel of Land Located in the San Diego Market for $17.3 Million

·                   Executed Long Term Lease for 307,000 Rentable Square Feet Single Tenant Ground-Up Development at Alexandria Center™ at Kendall Square Located in Cambridge, Massachusetts

·                   Completed Ground-up Development of a 97,000 Rentable Square Feet Single Tenant Building Located in the Research Triangle Park Market; 100% Leased

·                   Completed Redevelopment of 47,500 Rentable Square Feet Located in the Greater Boston Market; 100% Leased

·                   Completed Ground Lease of Land and Improvements in Canada to Tenant for Construction of a 783,255 Rentable Square Foot Laboratory Building

 

Nine Months Ended September 30, 2011:

·                   Nine Months Ended September 30, 2011, FFO Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $3.40 Before Loss on Early Extinguishment of Debt and Non-Cash Impairment Charge, Compared to Nine Months Ended September 30, 2010, FFO Per Share (Diluted) of $3.29 Before Loss on Early Extinguishment of Debt

·                   Nine Months Ended September 30, 2011, Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $1.29, Compared to Nine Months Ended September 30, 2010, Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $0.49

·                   Executed 143 Leases for 2,265,000 Rentable Square Feet, Including 634,000 Rentable Square Feet of Redevelopment and Development Space

·                   Cash and GAAP Rental Rate Decrease of 0.7% and Increase of 2.5%, Respectively, on Renewed/Re-leased Space

·                   Cash and GAAP Same Property Net Operating Income Increases of 5.5% and 0.2%, Respectively

·                   Repurchased, in Privately Negotiated Transactions, $217.1 Million of 3.70% Unsecured Convertible Notes

·                   Closed $750 Million Unsecured Term Loan

·                   Extended Maturity Date and Increased Commitments on Unsecured Line of Credit to $1.5 Billion

·                   Acquired 4755 Nexus Center Drive, a Newly and Partially Completed 41,710 Rentable Square Foot Development Project Located in University Town Center in the San Diego Market

·                   Acquired 409 and 499 Illinois Street, a Newly and Partially Completed 453,256 Rentable Square Foot Development Project Located in Mission Bay, San Francisco

·                   Awarded LEED® Platinum Certification for 10300 Campus Pointe Drive, a Property Located in University Town Center in the San Diego Market

·                   Awarded LEED® Gold Certifications for Alexandria Center™ for Life Science – New York City, 199 E. Blaine Street, a Property Located in the Seattle Market, and 455 Mission Bay Blvd., a Property Located in the San Francisco Market

 

October 2011:

·                   Board of Directors Elects Stephen A. Richardson as Chief Operating Officer and Regional Market Director – San Francisco

·                   Extended 2011 Maturity Date of $76 Million Secured Loan Into 2012 and in Discussions for an Additional 3-5 Year Extension

·                   Sold a 30,000 Rentable Square Foot Property Located in the Suburbs of Boston, for $2.9 Million

·                   Repaid Two Secured Loans Aggregating $32.7 Million

 

6


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Financial Results

 

Revenue Trend – Past

 

For the three months ended September 30, 2011, we reported an increase in total revenues to $143,427,000 from $142,918,000 for the three months ended June 30, 2011.  During the three months ended September 30, 2011, total rental revenue declined approximately $3 million. The decline in rental revenue was primarily due to the transition of three properties. Approximately $2 million of the decline in rental revenue related to 5200 Research Place, a property transitioning from a short term sale lease back with Biogen Idec Inc. to a 20 year triple net lease with Illumina, Inc. The original short-term lease with Biogen Idec Inc. was for an original term of 15 months. Upon execution of a lease with Illumina, Inc., we amended the short term lease with Biogen Idec Inc. in order to deliver space to Illumina, Inc. at an earlier date. The primary reason for the $2 million decline in rental revenue at this property was due to a $1.7 million decline in amortization of below market lease revenue. Annualized base rent per square foot at 5200 Research Place is expected to be approximately $38.26 per rentable square foot in the three months ended December 31, 2011, pursuant to a 20 year lease with Illumina, Inc. An additional $1 million decline in rental revenue from the three months ended June 30, 2011, to the three months ended September 30, 2011, was primarily due to 1) a decline in rental revenue for an office property located in Cambridge that will undergo a conversion into a laboratory building through redevelopment beginning in October 2011, and 2) another property located in the suburbs of Boston, in transition during the quarter from a prior tenant to a new tenant, resulting in a temporary decline in rental revenue. As of October 2011, the new tenant was in full occupancy of this property.

 

Revenue Trend – Future

 

Rental revenue and net operating income are projected to increase significantly quarter to quarter from the three months ended December 31, 2011, to the three months ended December 31, 2012.  Annualized three months ended December 31, 2012, net operating income, when compared to annualized three months ended December 31, 2011, net operating income, is expected to increase by approximately $42 to $47 million primarily related to current and future redevelopment and development projects, a significant amount which is pre-leased.  Additionally, the increase in net operating income is also due to annual contractual steps in cash rents, recent and anticipated leasing, and lease-up of vacant space.

 

Funds from Operations and Net Income Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders

 

For the three months ended September 30, 2011, we reported FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $67,972,000, or $1.11 per share (diluted), before loss on early extinguishment of debt and non-cash impairment charge, compared to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $55,151,000, or $1.11 per share (diluted), before loss on early extinguishment of debt, for the three months ended September 30, 2010.  For the nine months ended September 30, 2011, we reported FFO attributed to Alexandria Real Estate Equities, Inc.’s common stockholders of $198,237,000, or $3.40 per share (diluted), before loss on early extinguishment of debt and non-cash impairment charge, compared to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $163,686,000, or $3.29 per share (diluted), before loss on early extinguishment of debt, for the nine months ended September 30, 2010.  During the nine months ended September 30, 2011, we recognized an aggregate loss on early extinguishment of debt of approximately $6.5 million related to the repurchases, in privately negotiated transactions, of approximately $217.1 million of certain of our 3.70% unsecured convertible notes and the partial and early repayment of our unsecured term loan.  In addition, we recognized a non-cash impairment charge of approximately $1.0 million related to one property during the nine months ended September 30, 2011.  We sold this property to a user in October 2011 for approximately $2.9 million.  Including the aggregate loss on early extinguishment of debt and non-cash impairment charge, FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the three and nine months ended September 30, 2011, was $64,274,000, or $1.05 per share (diluted), and 190,826,000, or $3.27 per share (diluted), respectively.

 

7


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Financial Results (continued)

 

FFO is a non-GAAP measure widely used by real estate investment trusts.  We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its April 2002 White Paper and related implementation guidance.  A reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders in accordance with United States generally accepted accounting principles (“GAAP”) to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders is included in the financial information accompanying this press release.  The primary reconciling items between GAAP net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders are depreciation and amortization expense and gain on sales of property. Depreciation and amortization expense for the three months ended September 30, 2011 and 2010, was $39,990,000 and $32,009,000, respectively.  Depreciation and amortization expense for the nine months ended September 30, 2011 and 2010, was $117,060,000 and $92,089,000, respectively.  Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the three months ended September 30, 2011, was $24,662,000 or $0.40 per share (diluted), compared to net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $22,235,000, or $0.45 per share (diluted), for the three months ended September 30, 2010.  Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the nine months ended September 30, 2011, was $75,013,000, or $1.29 per share (diluted), compared to net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $22,467,000, or $0.49 per share (diluted), for the nine months ended September 30, 2010.

 

The following table summarizes the significant items that impacted FFO (diluted) during each period presented (dollars in thousands, except per share amounts):

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

9/30/11

 

9/30/10

 

FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for FFO per share (diluted), as reported

 

$

64,274

 

$

65,921

 

$

60,636

 

$

58,474

 

$

53,862

 

$

190,826

 

$

121,292

 

Loss on early extinguishment of debt

 

2,742

 

1,248

 

2,495

 

2,372

 

1,300

 

6,485

 

42,796

 

Non-cash impairment charge

 

994

 

–

 

–

 

–

 

–

 

994

 

–

 

Impact of unvested restricted stock awards

 

(38

)

(11

)

(21

)

(20

)

(11

)

(68

)

(402

)

FFO (diluted), as adjusted

 

$

67,972

 

$

67,158

 

$

63,110

 

$

60,826

 

$

55,151

 

$

198,237

 

$

163,686

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding for calculating FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for FFO per share (diluted), as reported

 

61,310,016

 

58,519,169

 

54,973,802

 

54,893,410

 

49,864,225

 

58,290,792

 

49,745,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share (diluted), as adjusted

 

$

1.11

 

$

1.15

 

$

1.15

 

$

1.11

 

$

1.11

 

$

3.40

 

$

3.29

 

 

8


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Leasing Activity

 

For the three months ended September 30, 2011, we executed a total of 56 leases for approximately 985,000 rentable square feet at 40 different properties (excluding month-to-month leases).  Of this total, approximately 402,000 rentable square feet related to new or renewal leases of previously leased space (renewed/re-leased space) and approximately 583,000 rentable square feet related to developed, redeveloped, or previously vacant space.  Of the 583,000 rentable square feet, approximately 458,000 rentable square feet were related to our development or redevelopment programs, with the remaining approximately 125,000 rentable square feet related to previously vacant space.  Rental rates for these new or renewal leases (renewed/re-leased space) were on average approximately 2.8% higher on a GAAP basis than rental rates for the respective expiring leases.

 

For the nine months ended September 30, 2011, we executed a total of 143 leases for approximately 2,265,000 rentable square feet at 60 different properties (excluding month-to-month leases).  Of this total, approximately 1,171,000 rentable square feet related to new or renewal leases of previously leased space (renewed/re-leased space) and approximately 1,094,000 rentable square feet related to developed, redeveloped, or previously vacant space.  Of the 1,094,000 rentable square feet, approximately 634,000 rentable square feet were related to our development or redevelopment programs, and the remaining approximately 460,000 rentable square feet were related to previously vacant space.  Rental rates for these new or renewal leases (renewed/re-leased space) were on average approximately 2.5% higher on a GAAP basis than rental rates for the respective expiring leases.

 

As of September 30, 2011, approximately 95% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes, insurance, utilities, common area, and other operating expenses (including increases thereto) in addition to base rent.  Additionally, approximately 92% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures, and approximately 94% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.

 

Investment Grade Rating

 

In July 2011, we received a Baa2 (stable outlook) and a BBB- (stable outlook) investment grade rating from two major rating agencies.  Key strengths of our balance sheet and business which highlight our investment grade credit profile include, among others, solid liquidity on balance sheet, diverse and credit worthy tenant base, well located properties proximate to leading research institutions, favorable lease terms, solid and stable occupancy and cash flows, and proven life science and real estate expertise.  This significant milestone broadens our access to another key source of capital and allows us to continue to pursue our long-term capital, investment, and operating strategies.  Issuance of unsecured bonds will allow us to transition bank related debt financing to unsecured bonds, variable rate debt to fixed rate debt, and short tenured debt to long tenured debt.

 

Unsecured Credit Facility

 

In January 2011, we entered into a third amendment (the “Third Amendment”) to our second amended and restated credit agreement dated October 31, 2006, as further amended on December 1, 2006 and May 2, 2007 (the “Prior Credit Agreement,” and as amended by the Third Amendment, the “Amended Credit Agreement”), with Bank of America, N.A., as administrative agent, and certain lenders. The Third Amendment amended the Prior Credit Agreement to, among other things, increase the maximum permitted borrowings under the unsecured line of credit from $1.15 billion to $1.5 billion, plus a $750 million unsecured term loan (the “2012 Unsecured Term Loan” and together with the unsecured line of credit, the “Unsecured Credit Facility”) and provided an accordion option to increase commitments under the Unsecured Credit Facility by up to an additional $300 million.  Borrowings under the Unsecured Credit Facility bear interest at LIBOR or the specified base rate, plus in either case a margin specified in the Amended Credit Agreement (the “Applicable Margin”).  The Applicable Margin for LIBOR borrowings outstanding under the revolving credit facility was 2.3% as of September 30, 2011.  The Applicable Margin for the LIBOR borrowings under the 2012 Unsecured Term Loan was not amended in the Third Amendment.

 

9


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Unsecured Credit Facility (continued)

 

Under the Third Amendment, the maturity date for the unsecured line of credit is January 2015, assuming we exercise our sole right under the amendment to extend this maturity date twice by an additional six months after each exercise.  The maturity date of the 2012 Unsecured Term Loan is October 2012.  The Third Amendment modified certain financial covenants with respect to the Unsecured Credit Facility, including the fixed charge coverage ratio, secured debt ratio, leverage ratio, and minimum book value, and added covenants relating to an unsecured leverage ratio and unsecured debt yield.

 

2016 Unsecured Term Loan

 

In February 2011, we entered into a $250 million unsecured term loan.  In June 2011, we amended this $250 million unsecured term loan (as amended, the “2016 Unsecured Term Loan”) to, among other things, increase the borrowings from $250 million to $750 million and to extend the maturity from January 2015 to June 2016, assuming we exercise our sole right to extend the maturity date by one year.  Borrowings under the 2016 Unsecured Term Loan bear interest at LIBOR or the specified base rate, plus in either case a margin specified in the amended unsecured term loan agreement.  The applicable margin for the LIBOR borrowings under the 2016 Unsecured Term Loan as of September 30, 2011, was 1.65%.  Under the 2016 Unsecured Term Loan agreement, the financial covenants were not amended and are identical to the financial covenants required under our existing Unsecured Credit Facility.  The 2016 Unsecured Term Loan may be repaid at any date prior to maturity without a prepayment penalty.  The net proceeds from this 2016 Unsecured Term Loan were used to reduce outstanding borrowings on the 2012 Unsecured Term Loan from $750 million to $250 million.  As a result of this early repayment, in the three and six months ended June 30, 2011, we recognized a loss on early extinguishment of debt of approximately $1.2 million related to the write-off of unamortized loan fees.

 

3.70% Unsecured Convertible Notes

 

During the three months ended September 30, 2011, we repurchased, in privately negotiated transactions, approximately $121.1 million of certain of our 3.70% unsecured convertible notes at an aggregate cash price of approximately $122.8 million.  As a result of these repurchases, we recognized an aggregate loss on early extinguishment of debt of approximately $2.7 million.  As of September 30, 2011, approximately $84.3 million of our 3.70% unsecured convertible notes was outstanding, net of approximately $0.5 million of unamortized discount.

 

During the three months ended March 31, 2011, we repurchased, in privately negotiated transactions, approximately $96.1 million of certain of our 3.70% unsecured convertible notes at an aggregate cash price of approximately $98.6 million.  As a result of these repurchases, we recognized an aggregate loss on early extinguishment of debt of approximately $2.5 million during the three months ended March 31, 2011.

 

Acquisitions

 

In June 2011, we acquired 285 Bear Hill Road, a 26,270 rentable square foot office property located in the Greater Boston market, for approximately $3.9 million.  We plan to begin the redevelopment of this property into life science laboratory space in the three months ended December 31, 2011.  Based on our view of existing market conditions and certain assumptions at the time of the acquisition, we expect to achieve a stabilized yield on a GAAP and cash basis for this property of approximately 8.6% and 8.0%, respectively.  Stabilized yield on cost is calculated as the quotient of net operating income and our investment in the property at stabilization (“Stabilized Yield”).

 

In April 2011, we acquired 409 and 499 Illinois Street, a newly and partially completed world-class 453,256 rentable square foot laboratory/office development project located on a highly desirable waterfront location in Mission Bay, San Francisco, for approximately $293 million.  409 Illinois Street is a 241,659 rentable square foot tower that is 97% leased to a life science company through November 2023.  499 Illinois Street is a vacant 211,597 rentable square foot tower in shell condition for which we plan to complete the development.  Based on our view of existing market conditions and certain assumptions at the time of the acquisition, we expect to achieve a Stabilized Yield on a GAAP and cash basis for this property in the range of 7.2% to 7.6% and 6.5% to 7.0%, respectively.

 

10


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Dispositions

 

In August 2011, we sold a parcel of land located in San Diego, California for approximately $17.3 million at a gain of $46,000.  The buyer is expected to construct a building with approximately 249,000 rentable square feet, representing a sale price of approximately $70 per rentable square foot.

 

During the three months ended September 30, 2011, 13-15 DeAngelo Drive, a vacant 30,000 rentable square foot property, located in the suburbs of Boston, Massachusetts, met the criteria for classification as “held for sale.”  This property was occupied by a credit life science tenant through June 30, 2011.  Upon move out, a user for the building presented an offer for the purchase of the building in the three months ended September 30, 2011.  As a result, we recognized an impairment charge of approximately $1.0 million in the three months ended September 30, 2011, to adjust the carrying value to the estimated fair value less costs to sell.  In October 2011, we sold 13-15 DeAngelo Drive to that user, for approximately $2.9 million, representing a sale price of approximately $97 per rentable square foot.

 

Development

 

In August 2011, we completed the ground-up development of 7 Triangle Drive, a 97,000 rentable square foot single-tenant building located in the Research Triangle Park market, which is currently 100% leased as of September 30, 2011.  Our Stabilized Yield on a GAAP and cash basis for this property was approximately 9.3% and 8.3%, respectively.

 

In July 2011, we executed a new lease for a 307,000 rentable square feet ground-up development with Biogen Idec, Inc. at Alexandria CenterTM at Kendall Square.  The ground breaking for this project will occur in late October 2011, and we will add the project to our disclosure of active ground-up development for the three months ended December 31, 2011.

 

11


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Earnings Outlook

 

Based on our current view of existing market conditions and certain current assumptions, we expect our FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and earnings per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the years ended December 31, 2011 and 2012 will be as follows:

 

 

 

Year Ended December 31,

 

 

 

2011

 

2012

 

FFO per share (diluted)

 

$4.38

 (1)

$4.50 - $4.54

 

Earnings per share (diluted)

 

$1.72

 (1)

$1.85 - $1.89

 

 

(1)          Includes loss on early extinguishment of debt and non-cash impairment charge of approximately $6.5 million and $1.0 million, respectively, or approximately $0.13 per share in aggregate, for the nine months ended September 30, 2011.

 

The following table provides a reconciliation of our prior FFO per share (diluted) guidance to our current guidance for year ended December 31, 2011:

 

 

 

As Disclosed in
Second Quarter
Earnings

 

Change

 

As Disclosed in
Third Quarter
Earnings

 

 

 

 

 

 

 

 

 

Guidance range as reported on May 4, 2011, in connection with our first quarter 2011 earnings call

 

$4.52 - $4.57

 

 

 

$4.52 - $4.57

 

 

 

 

 

 

 

 

 

Loss on early extinguishment of debt in June 2011

 

(0.02

)

–

 

(0.02

)

Loss on early extinguishment of debt in July 2011

 

(0.04

)

–

 

(0.04

)

Loss on early extinguishment of debt in August and September 2011

 

–

 

(0.01

)

(0.01

)

Refinancing of 2012 Unsecured Term Loan

 

(0.02

)

–

 

(0.02

)

Deferral of unsecured debt financing assumption (previously estimated in 2011)

 

(0.05

)

0.05

 

–

 

Decrease in estimated acquisitions

 

(0.01

)

(0.01

)

(0.02

)

Timing of repurchases of convertible notes and extension of secured notes

 

(0.01

)

(0.01

)

(0.02

)

Non-cash impairment charge

 

–

 

(0.02

)

(0.02

)

Increase in general and administrative expenses

 

–

 

(0.01

)

(0.01

)

Non-recoverable operating expenses

 

–

 

(0.01

)

(0.01

)

 

 

(0.15

)

(0.02

)

(0.17

)

 

 

 

 

 

 

 

 

Guidance, as reported

 

$4.37 - $4.42

 

 

 

$4.38

 

 

Rental revenue and net operating income are projected to increase significantly quarter to quarter from the three months ended December 31, 2011, to the three months ended December 31, 2012.  Annualized three months ended December 31, 2012 net operating income, when compared to annualized three months ended December 31, 2011 net operating income, is expected to increase by approximately $42 to $47 million primarily related to current and future redevelopment and development projects, a significant amount which is pre-leased.  Additionally, the increase in net operating income is also due to annual contractual steps in cash rents, recent and anticipated leasing, and lease-up of vacant space.

 

12


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Sources and Uses of Capital

 

We expect that our principal liquidity needs for the three months ended December 31, 2011, through three months ended December 31, 2012, will be satisfied by the following multiple sources of capital as shown in the table below (amounts in millions). For the three months ended December 31, 2011, and for the year ended December 31, 2012, we expect to have significant capital requirements, including amounts shown in the table below.  There can be no assurance that our sources and uses of capital will not be materially higher or lower than these expectations.

 

Sources of Capital for Fourth Quarter 2011 Through Fourth Quarter 2012

 

4Q11 through 4Q12

 

Cash and cash equivalents as of September 30, 2011

 

$

73

 

Restricted cash as of September 30, 2011

 

28

 

Net cash provided by operating activities

 

310

 (1)

Asset sales

 

112

 (2)

Availability under our $1.5 billion unsecured line of credit as of September 30, 2011

 

686

 

Extended 2011 maturity date of secured loan into 2012

 

76

 (3)

New unsecured term loan (see footnote (4) below)

 

450

 

Unsecured senior notes

 

TBD

 (5)

Total

 

$

1,735

 

 

 

 

Three Months
Ended December 31,

 

Year Ended
December 31,

 

Uses of Capital

 

2011

 

2012

 

Acquisitions

 

$

20

 

$

–

 

Construction:

 

 

 

 

 

Redevelopment projects

 

62

 

148

 

Development projects

 

20

 

147

 

Projects in India and China

 

21

 

62

 

Preconstruction and other projects

 

16

 

16

 

Secured notes payable principal repayments

 

79

 (3)

13

 

Unsecured convertible note principal repayments

 

–

 

85

 

2012 Unsecured Term Loan principal repayment

 

–

 

250

 (4)

Preferred stock dividends

 

7

 

28

 

Common stock dividends

 

29

 

116

 

Total

 

$

254

 (3)

$

865

 (4)

 

(1)    Represents net cash provided by operating activities for the nine months ended September 30, 2011, multiplied by 167.7% in order to estimate net cash provided by operating activities for the fourth quarter 2011 through fourth
quarter 2012.

(2)    In light of current market conditions, we expect to implement a more aggressive asset disposition strategy, beyond estimated asset sales in this table, to provide capital for reinvestment into our business.

(3)    Amount includes a $76 million secured bank loan.  We extended the 2011 maturity date of this loan into 2012 and are in discussions for an additional 3-5 year extension.

(4)    Our 2012 Unsecured Term Loan matures in October 2012.  We are currently negotiating a new unsecured term loan with a target amount between $400 and $500 million.  The proceeds of this new loan will be used initially to
reduce outstanding balances on our unsecured line of credit.  Ultimately, a portion of these proceeds will provide funds to repay our 2012 Unsecured Term Loan.

(5)    Amount and timing of issuance of unsecured bonds will be subject to the debt capital market environment.

 

13


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Third Quarter Ended September 30, 2011 Financial and Operating Results

 

Client Tenant Base

 

The quality, diversity, breadth, and depth of our significant relationships with our life science client tenants provide Alexandria Real Estate Equities, Inc. with solid cash flows. As of September 30, 2011, Alexandria’s multinational pharmaceutical client tenants represented approximately 25% of our annualized base rent, led by Novartis AG, Eli Lilly and Company, Roche Holding Ltd, Bristol-Myers Squibb Company, GlaxoSmithKline plc, and Pfizer Inc.; public biotechnology companies represented approximately 17% and included Amgen Inc., Gilead Sciences, Inc., Biogen Idec Inc., and Celgene Corporation; revenue-producing life science product and service companies represented approximately 22%, led by Illumina, Inc., Quest Diagnostics Incorporated, Qiagen N.V., Laboratory Corporation of America Holdings, and Monsanto Company; government agencies and renowned medical and research institutions represented approximately 16% and included Massachusetts Institute of Technology, The Scripps Research Institute, The Regents of the University of California, Fred Hutchinson Cancer Research Center, University of Washington, Sanford-Burnham Medical Research Institute, and the United States Government; private biotechnology companies represented approximately 15% and included high-quality, leading-edge companies with blue-chip venture and institutional investors, including FibroGen, Inc., Achaogen Inc., Intellikine, Inc., MacroGenics, Inc., and Forma Therapeutics, Inc.; and the remaining approximately 5% consisted of traditional office tenants. Alexandria’s strong life science underwriting skills, long-term life science industry relationships, and sophisticated management with both real estate and life science operating expertise set the Company apart from all other publicly traded REITs and real estate companies.

 

Earnings Call Information

 

We will host a conference call on Wednesday, October 26, 2011, at 3:00 p.m. Eastern Time (“ET”)/12:00 p.m. noon Pacific Time (“PT”) that is open to the general public to discuss our financial and operating results for the three months ended September 30, 2011.  To participate in this conference call, dial (719) 457-2668 and confirmation code 7211433, shortly before 3:00 p.m. ET/12:00 p.m. noon PT.  The audio web cast can be accessed at: www.are.com, in the Corporate Information section.  A replay of the call will be available for a limited time from 6:00 p.m. ET/3:00 p.m. PT on Wednesday, October 26, 2011.  The replay number is (719) 457-0820 and the confirmation code is 7211433.

 

Additionally, a copy of Alexandria Real Estate Equities, Inc.’s Supplemental Financial, Operating, & Property Information for the three months ended September 30, 2011, and this press release are available in the Corporate Information section of our website at www.are.com.

 

About the Company

 

Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life Science Industry®, is the largest owner and preeminent REIT focused principally on cluster development through the ownership, operation, management, and selective acquisition, redevelopment, and development of properties containing life science laboratory space.  Alexandria is the leading provider of high-quality, environmentally sustainable real estate, technical infrastructure, and services to the broad and diverse life science industry.  Client tenants include institutional (universities and independent non-profit institutions), pharmaceutical, biotechnology, medical device, product, and service entities, and government agencies.  Alexandria’s primary business objective is to maximize stockholder value by providing its stockholders with the greatest possible total return based on a multifaceted platform of internal and external growth. Alexandria’s operating platform is based on the principle of “clustering” with assets and operations located adjacent to life science entities driving growth and technological advances within each cluster.

 

As of October 25, 2011, we had 171 properties aggregating 14.9 million rentable square feet comprised of approximately 13.6 million rentable square feet of operating properties, approximately 747,248 rentable square feet undergoing active redevelopment, and approximately 531,486 rentable square feet undergoing active development.  Our asset base will enable us to grow to approximately 33.4 million rentable square feet through additional ground-up development and other projects of approximately 18.5 million rentable square feet.

 

14


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

9/30/11

 

9/30/10

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

106,160

 

$

109,149

 

$

105,997

 

$

99,053

 

$

89,567

 

$

321,306

 

$

266,349

 

Tenant recoveries

 

34,792

 

32,843

 

32,627

 

30,211

 

29,179

 

100,262

 

81,655

 

Other income

 

2,475

 

926

 

794

 

1,625

 

1,568

 

4,195

 

3,555

 

Total revenues

 

143,427

 

142,918

 

139,418

 

130,889

 

120,314

 

425,763

 

351,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental operations

 

42,608

 

40,239

 

40,697

 

36,284

 

33,154

 

123,544

 

94,275

 

General and administrative

 

10,297

 

10,758

 

9,497

 

8,601

 

8,042

 

30,552

 

25,777

 

Interest

 

14,273

 

16,567

 

17,810

 

17,158

 

16,078

 

48,650

 

52,351

 

Depreciation and amortization

 

39,652

 

40,069

 

36,468

 

34,289

 

31,758

 

116,189

 

91,334

 

Total expenses

 

106,830

 

107,633

 

104,472

 

96,332

 

89,032

 

318,935

 

263,737

 

Income from continuing operations before loss on early extinguishment of debt

 

36,597

 

35,285

 

34,946

 

34,557

 

31,282

 

106,828

 

87,822

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on early extinguishment of debt

 

(2,742

)

(1,248

)

(2,495

)

(2,372

)

(1,300

)

(6,485

)

(42,796

)

Income from continuing operations

 

33,855

 

34,037

 

32,451

 

32,185

 

29,982

 

100,343

 

45,026

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from discontinued operations, net

 

(906

)

274

 

174

 

373

 

479

 

(458

)

1,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sales of land parcels

 

46

 

–

 

–

 

59,442

 

–

 

46

 

–

 

Net income

 

32,995

 

34,311

 

32,625

 

92,000

 

30,461

 

99,931

 

47,022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

966

 

938

 

929

 

944

 

920

 

2,833

 

2,785

 

Dividends on preferred stock

 

7,089

 

7,089

 

7,089

 

7,089

 

7,089

 

21,267

 

21,268

 

Net income attributable to unvested restricted stock awards

 

278

 

298

 

242

 

726

 

217

 

818

 

502

 

Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

$

24,662

 

$

25,986

 

$

24,365

 

$

83,241

 

$

22,235

 

$

75,013

 

$

22,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common
stockholders – basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.41

 

$

0.44

 

$

0.44

 

$

1.51

 

$

0.44

 

$

1.30

 

$

0.45

 

Discontinued operations, net

 

(0.01

)

–

 

–

 

0.01

 

0.01

 

(0.01

)

0.04

 

Earnings per share – basic

 

$

0.40

 

$

0.44

 

$

0.44

 

$

1.52

 

$

0.45

 

$

1.29

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common
stockholders – diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.41

 

$

0.44

 

$

0.44

 

$

1.51

 

$

0.44

 

$

1.30

 

$

0.45

 

Discontinued operations, net

 

(0.01

)

–

 

–

 

0.01

 

0.01

 

(0.01

)

0.04

 

Earnings per share – diluted

 

$

0.40

 

$

0.44

 

$

0.44

 

$

1.52

 

$

0.45

 

$

1.29

 

$

0.49

 

 

15


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

 

2011

 

2011

 

2011

 

2010

 

2010

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate

 

$

6,635,872

 

$

6,534,433

 

$

6,145,499

 

$

6,060,821

 

$

5,861,816

 

Less: accumulated depreciation

 

(710,580

)

(679,081

)

(647,034

)

(616,007

)

(588,167

)

Investments in real estate, net

 

5,925,292

 

5,855,352

 

5,498,465

 

5,444,814

 

5,273,649

 

Cash and cash equivalents

 

73,056

 

60,925

 

78,196

 

91,232

 

110,811

 

Restricted cash

 

27,929

 

23,432

 

30,513

 

28,354

 

35,295

 

Tenant receivables

 

6,599

 

4,487

 

7,018

 

5,492

 

4,929

 

Deferred rent

 

132,954

 

125,867

 

123,091

 

116,849

 

108,303

 

Investments

 

88,777

 

88,862

 

88,694

 

83,899

 

80,941

 

Other assets

 

200,949

 

184,359

 

157,366

 

135,221

 

134,697

 

Total assets

 

$

6,455,556

 

$

6,343,284

 

$

5,983,343

 

$

5,905,861

 

$

5,748,625

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities, Noncontrolling Interests, and Equity

 

 

 

 

 

 

 

 

 

 

 

Secured notes payable

 

$

760,882

 

$

774,691

 

$

787,945

 

$

790,869

 

$

841,317

 

Unsecured line of credit

 

814,000

 

575,000

 

679,000

 

748,000

 

554,000

 

Unsecured term loans

 

1,000,000

 

1,000,000

 

1,000,000

 

750,000

 

750,000

 

Unsecured convertible notes

 

84,484

 

203,638

 

202,521

 

295,293

 

374,146

 

Accounts payable, accrued expenses, and tenant security deposits

 

330,044

 

300,030

 

283,013

 

304,257

 

294,833

 

Dividends payable

 

35,287

 

34,068

 

31,172

 

31,114

 

25,554

 

Total liabilities

 

3,024,697

 

2,887,427

 

2,983,651

 

2,919,533

 

2,839,850

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

15,931

 

15,899

 

15,915

 

15,920

 

15,945

 

 

 

 

 

 

 

 

 

 

 

 

 

Alexandria Real Estate Equities, Inc.’s stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Series C preferred stock

 

129,638

 

129,638

 

129,638

 

129,638

 

129,638

 

Series D cumulative convertible preferred stock

 

250,000

 

250,000

 

250,000

 

250,000

 

250,000

 

Common stock

 

614

 

614

 

551

 

550

 

549

 

Additional paid-in capital

 

3,025,444

 

3,024,603

 

2,568,976

 

2,566,238

 

2,504,365

 

Retained earnings

 

–

 

–

 

360

 

734

 

–

 

Accumulated other comprehensive loss

 

(32,202

)

(6,272

)

(7,193

)

(18,335

)

(33,348

)

Alexandria Real Estate Equities, Inc.’s stockholders’ equity

 

3,373,494

 

3,398,583

 

2,942,332

 

2,928,825

 

2,851,204

 

Noncontrolling interests

 

41,434

 

41,375

 

41,445

 

41,583

 

41,626

 

Total equity

 

3,414,928

 

3,439,958

 

2,983,777

 

2,970,408

 

2,892,830

 

Total liabilities, noncontrolling interests, and equity

 

$

6,455,556

 

$

6,343,284

 

$

5,983,343

 

$

5,905,861

 

$

5,748,625

 

 

16


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Earnings per Share

(Dollars in thousands, except per share amounts)

 (Unaudited)

 

Earnings per Share

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

9/30/11

 

9/30/10

 

Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for basic earnings per share

 

$

24,662

 

$

25,986

 

$

24,365

 

$

83,241

 

$

22,235

 

$

75,013

 

$

22,467

 

Effect of assumed conversion and dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumed conversion of 8% unsecured convertible notes

 

–

 

–

 

–

 

2

 

–

 

–

 

–

 

Amounts attributable to unvested restricted stock awards

 

–

 

–

 

–

 

–

 

–

 

–

 

–

 

Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for diluted earnings per share

 

$

24,662

 

$

25,986

 

$

24,365

 

$

83,243

 

$

22,235

 

$

75,013

 

$

22,467

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for basic earnings per share

 

61,295,659

 

58,500,055

 

54,948,345

 

54,865,654

 

49,807,241

 

58,271,270

 

46,188,308

 

Effect of assumed conversion and dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumed conversion of 8% unsecured convertible notes

 

–

 

–

 

–

 

6,047

 

–

 

–

 

–

 

Dilutive effect of stock options

 

8,310

 

13,067

 

19,410

 

21,709

 

23,098

 

13,475

 

31,813

 

Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for diluted earnings per share

 

61,303,969

 

58,513,122

 

54,967,755

 

54,893,410

 

49,830,339

 

58,284,745

 

46,220,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.40

 

$

0.44

 

$

0.44

 

$

1.52

 

$

0.45

 

$

1.29

 

$

0.49

 

Diluted

 

$

0.40

 

$

0.44

 

$

0.44

 

$

1.52

 

$

0.45

 

$

1.29

 

$

0.49

 

 

17


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Funds from Operations

(Dollars in thousands, except per share amounts)

(Unaudited)

 

Funds from Operations (“FFO”)

 

The following table presents a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, the most directly comparable financial measure calculated and presented in accordance with United States generally accepted accounting principles (“GAAP”), to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the periods below:

 

 

 

Three Months Ended (1)

 

Nine Months Ended (1)

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

9/30/11

 

9/30/10

 

Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

$

24,662

 

$

25,986

 

$

24,365

 

$

83,241

 

$

22,235

 

$

75,013

 

$

22,467

 

Add: Depreciation and amortization

 

39,990

 

40,363

 

36,707

 

34,551

 

32,009

 

117,060

 

92,089

 

Add: Net income attributable to noncontrolling interests

 

966

 

938

 

929

 

944

 

920

 

2,833

 

2,785

 

Add: Net income attributable to unvested restricted stock awards

 

278

 

298

 

242

 

726

 

217

 

818

 

502

 

Subtract: Gain on sales of property

 

(46

)

–

 

–

 

(59,442

)

–

 

(46

)

(24

)

Subtract: FFO attributable to noncontrolling interests

 

(933

)

(1,033

)

(1,065

)

(1,036

)

(1,053

)

(3,031

)

(3,190

)

Subtract: FFO attributable to unvested restricted stock awards

 

(647

)

(638

)

(547

)

(512

)

(491

)

(1,837

)

(1,090

)

FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for basic FFO per share

 

64,270

 

65,914

 

60,631

 

58,472

 

53,837

 

190,810

 

113,539

 

Effect of assumed conversion and dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumed conversion of 8% unsecured convertible notes

 

4

 

7

 

5

 

2

 

25

 

16

 

7,779

 

Amounts attributable to unvested restricted stock awards

 

–

 

–

 

–

 

–

 

–

 

–

 

(26

)

FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for FFO per share (diluted)

 

$

64,274

 

$

65,921

 

$

60,636

 

$

58,474

 

$

53,862

 

$

190,826

 

$

121,292

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding for calculating FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for basic FFO per share

 

61,295,659

 

58,500,055

 

54,948,345

 

54,865,654

 

49,807,241

 

58,271,270

 

46,188,308

 

Effect of assumed conversion and dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assumed conversion of 8% unsecured convertible notes

 

6,047

 

6,047

 

6,047

 

6,047

 

33,886

 

6,047

 

3,525,528

 

Dilutive effect of stock options

 

8,310

 

13,067

 

19,410

 

21,709

 

23,098

 

13,475

 

31,813

 

Weighted average shares of common stock outstanding for calculating FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for FFO per share (diluted)

 

61,310,016

 

58,519,169

 

54,973,802

 

54,893,410

 

49,864,225

 

58,290,792

 

49,745,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.05

 

$

1.13

 

$

1.10

 

$

1.07

 

$

1.08

 

$

3.27

 

$

2.46

 

Diluted

 

$

1.05

 

$

1.13

 

$

1.10

 

$

1.07

 

$

1.08

 

$

3.27

 

$

2.44

 

 

(1)   See page 8 for additional information on significant items impacting comparability of funds from operations.

 

18


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Adjusted Funds from Operations
(Dollars in thousands)

(Unaudited)

Adjusted Funds from Operations

 

The following table presents a reconciliation of FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders to adjusted funds from operations (“AFFO”) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

9/30/11

 

9/30/10

 

FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

$

64,270

 

$

65,914

 

$

60,631

 

$

58,472

 

$

53,837

 

$

190,810

 

$

113,539

 

Add/(deduct):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Major and recurring capital expenditures (1)

 

(550

)

(698

)

(608

)

(260

)

(329

)

(1,856

)

(1,072

)

Tenant improvements and leasing costs (1)

 

(2,119

)

(1,595

)

(803

)

(2,583

)

(856

)

(4,517

)

(4,142

)

Amortization of loan fees

 

2,144

 

2,327

 

2,278

 

1,999

 

1,795

 

6,749

 

5,893

 

Amortization of debt premiums/discounts

 

750

 

1,169

 

1,335

 

2,032

 

2,092

 

3,254

 

7,967

 

Amortization of acquired above and below market leases

 

(940

)

(2,726

)

(4,854

)

(2,364

)

(1,927

)

(8,520

)

(5,504

)

Deferred rent/straight-line rent

 

(7,647

)

(2,885

)

(6,707

)

(9,092

)

(6,300

)

(17,239

)

(13,740

)

Stock compensation

 

3,344

 

2,749

 

2,356

 

2,767

 

2,660

 

8,449

 

8,049

 

Capitalized income from development projects

 

930

 

1,078

 

1,428

 

1,486

 

1,544

 

3,436

 

4,202

 

Deferred rent/straight-line rent on ground leases

 

1,143

 

1,099

 

1,241

 

1,424

 

1,364

 

3,483

 

3,913

 

Loss on early extinguishment of debt

 

2,742

 

1,248

 

2,495

 

2,372

 

1,300

 

6,485

 

42,796

 

Impairment of real estate

 

994

 

 –

 

 –

 

 –

 

 –

 

994

 

 –

 

Allocation to unvested restricted stock awards

 

(7

)

(14

)

16

 

19

 

(11

)

(6

)

(457

)

AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

$

65,054

 

$

67,666

 

$

58,808

 

$

56,272

 

$

55,169

 

$

191,522

 

$

161,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for basic earnings per share

 

61,295,659

 

58,500,055

 

54,948,345

 

54,865,654

 

49,807,241

 

58,271,270

 

46,188,308

 

Add: Dilutive effect of stock options

 

8,310

 

13,067

 

19,410

 

21,709

 

23,098

 

13,475

 

31,813

 

 

 

61,303,969

 

58,513,122

 

54,967,755

 

54,887,363

 

49,830,339

 

58,284,745

 

46,220,121

 

 

(1)   See page 52 for further information.

 

19


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial and Asset Base Highlights

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate

 

$

6,635,872

 

$

6,534,433

 

$

6,145,499

 

$

6,060,821

 

$

5,861,816

 

Accumulated depreciation

 

$

(710,580

)

$

(679,081

)

$

(647,034

)

$

(616,007

)

$

(588,167

)

Investments in real estate, net

 

$

5,925,292

 

$

5,855,352

 

$

5,498,465

 

$

5,444,814

 

$

5,273,649

 

Tangible non-real estate assets

 

$

237,277

 

$

210,113

 

$

237,805

 

$

240,873

 

$

272,259

 

Total assets

 

$

6,455,556

 

$

6,343,284

 

$

5,983,343

 

$

5,905,861

 

$

5,748,625

 

Gross assets (excluding cash and restricted cash)

 

$

7,065,151

 

$

6,938,008

 

$

6,521,668

 

$

6,402,282

 

$

6,190,686

 

Secured notes payable

 

$

760,882

 

$

774,691

 

$

787,945

 

$

790,869

 

$

841,317

 

Unsecured line of credit

 

$

814,000

 

$

575,000

 

$

679,000

 

$

748,000

 

$

554,000

 

Unsecured term loans

 

$

1,000,000

 

$

1,000,000

 

$

1,000,000

 

$

750,000

 

$

750,000

 

3.7% unsecured convertible notes

 

$

84,250

 

$

203,405

 

$

202,290

 

$

295,063

 

$

373,918

 

8.0% unsecured convertible notes

 

$

234

 

$

233

 

$

231

 

$

230

 

$

228

 

Total unsecured debt

 

$

1,898,484

 

$

1,778,638

 

$

1,881,521

 

$

1,793,293

 

$

1,678,146

 

Total debt

 

$

2,659,366

 

$

2,553,329

 

$

2,669,466

 

$

2,584,162

 

$

2,519,463

 

Net debt

 

$

2,558,381

 

$

2,468,972

 

$

2,560,757

 

$

2,464,576

 

$

2,373,357

 

Total liabilities

 

$

3,024,697

 

$

2,887,427

 

$

2,983,651

 

$

2,919,533

 

$

2,839,850

 

Common shares outstanding

 

61,463,839

 

61,380,268

 

55,049,730

 

54,966,925

 

54,891,638

 

Total market capitalization

 

$

6,815,380

 

$

7,689,383

 

$

7,344,442

 

$

6,994,306

 

$

6,746,649

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

Operating Data

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

143,427

 

$

142,918

 

$

139,418

 

$

130,889

 

$

120,314

 

Deferred rent/straight-line rent

 

$

7,647

 

$

2,885

 

$

6,707

 

$

9,092

 

$

6,300

 

Amortization of acquired above and below market leases

 

$

940

 

$

2,726

 

$

4,854

 

$

2,364

 

$

1,927

 

Non-cash amortization of discount on unsecured convertible notes

 

$

675

 

$

1,117

 

$

1,268

 

$

1,971

 

$

2,000

 

Non-cash amortization of discounts (premiums) on secured notes payable

 

$

75

 

$

52

 

$

67

 

$

61

 

$

92

 

Scheduled debt principal payments

 

$

2,645

 

$

2,886

 

$

2,990

 

$

2,902

 

$

2,911

 

Loss on early extinguishment of debt

 

$

2,742

 

$

1,248

 

$

2,495

 

$

2,372

 

$

1,300

 

Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted

 

$

24,662

 

$

25,986

 

$

24,365

 

$

83,241

 

$

22,235

 

Earnings per share – diluted

 

$

0.40

 

$

0.44

 

$

0.44

 

$

1.52

 

$

0.45

 

FFO attributable to Alexandria Real Estate, Inc.’s common stockholders – diluted

 

$

64,274

 

$

65,921

 

$

60,636

 

$

58,474

 

$

53,862

 

FFO per share – diluted

 

$

1.05

 

$

1.13

 

$

1.10

 

$

1.07

 

$

1.08

 

Weighted average common shares outstanding – EPS – diluted

 

61,303,969

 

58,513,122

 

54,967,755

 

54,893,410

 

49,830,339

 

Weighted average common shares outstanding – FFO – diluted

 

61,310,016

 

58,519,169

 

54,973,802

 

54,893,410

 

49,864,225

 

 

20


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial and Asset Base Highlights (continued)

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

Financial, Debt, and Other Ratios

 

 

 

 

 

 

 

 

 

 

 

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

 

67%

 

64%

 

65%

 

60%

 

58%

 

Unencumbered assets gross book value

 

$

5,496,616

 

$

5,342,433

 

$

4,933,395

 

$

4,825,963

 

$

4,583,045

 

Unencumbered assets gross book value as a percentage of gross assets

 

77%

 

76%

 

74%

 

74%

 

72%

 

Percentage outstanding on unsecured line of credit at end of period

 

54%

 

38%

 

45%

 

50%

 

48%

 

Operating margin

 

70%

 

72%

 

71%

 

72%

 

72%

 

Adjusted EBITDA margin

 

66%

 

67%

 

66%

 

68%

 

69%

 

General and administrative expense as a percentage of total revenues

 

7.2%

 

7.5%

 

6.8%

 

6.6%

 

6.7%

 

EBITDA – trailing 12 months

 

$

409,419

 

$

400,742

 

$

346,393

 

$

335,304

 

$

269,923

 

Adjusted EBITDA – quarter annualized

 

$

377,168

 

$

380,968

 

$

368,100

 

$

357,756

 

$

330,164

 

Adjusted EBITDA – trailing 12 months

 

$

370,998

 

$

359,247

 

$

345,055

 

$

331,822

 

$

323,545

 

Capitalized interest

 

$

16,666

 

$

15,046

 

$

13,193

 

$

14,629

 

$

16,695

 

Weighted average interest rate used for capitalization during period

 

4.54%

 

4.60%

 

4.57%

 

4.67%

 

4.59%

 

Net debt to Gross Assets (excluding cash and restricted cash) at end of period

 

36%

 

36%

 

39%

 

39%

 

38%

 

Secured debt as a percentage of gross assets at end of period

 

11%

 

11%

 

12%

 

12%

 

13%

 

Net debt to Adjusted EBITDA – quarter annualized

 

6.8x

 

6.5x

 

7.0x

 

6.9x

 

7.2x

 

Net debt to Adjusted EBITDA – trailing 12 months

 

6.9x

 

6.9x

 

7.4x

 

7.4x

 

7.3x

 

Fixed charge coverage ratio – quarter annualized

 

2.7x

 

2.7x

 

2.7x

 

2.6x

 

2.3x

 

Fixed charge coverage ratio – trailing 12 months

 

2.7x

 

2.6x

 

2.4x

 

2.2x

 

2.1x

 

Dividends per share on common stock

 

$

0.47

 

$

0.45

 

$

0.45

 

$

0.45

 

$

0.35

 

Dividend payout ratio (common stock)

 

43%

 

41%

 

40%

 

41%

 

35%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q11

 

2Q11

 

1Q11

 

4Q10

 

3Q10

 

Asset Base Statistics

 

 

 

 

 

 

 

 

 

 

 

Number of properties at end of period

 

171

 

171

 

168

 

167

 

165

 

Rentable square feet at end of period

 

14,868,859

 

14,145,604

 

13,700,490

 

13,658,780

 

12,867,728

 

Occupancy of operating properties at end of period

 

94.6%

 

93.8%

 

94.2%

 

94.3%

 

94.0%

 

Occupancy including redevelopment properties at end of period

 

89.3%

 

88.3%

 

88.6%

 

88.9%

 

89.3%

 

Annualized base rent per leased rentable square foot

 

$

34.39

 

$

34.06

 

$

33.90

 

$

33.95

 

$

31.91

 

Leasing activity – YTD rentable square feet

 

2,265,421

 

1,280,084

 

551,622

 

2,744,239

 

1,670,004

 

Leasing activity – Qtr rentable square feet

 

985,337

 

728,462

 

551,622

 

1,074,235

 

639,559

 

Leasing activity – YTD percentage change in rental rates – GAAP basis

 

2.5%

 

2.4%

 

1.6%

 

4.9%

 

5.4%

 

Leasing activity – Qtr percentage change in rental rates – GAAP basis

 

2.8%

 

3.1%

 

1.6%

 

4.3%

 

8.1%

 

Leasing activity – YTD percentage change in rental rates – cash basis

 

(0.7%)

 

1.0%

 

0.8%

 

2.0%

 

0.4%

 

Leasing activity – Qtr percentage change in rental rates – cash basis

 

(3.0%)

 

1.5%

 

0.8%

 

4.2%

 

0.7%

 

Same property YTD percentage change in net operating income – GAAP basis

 

0.2%

 

0.5%

 

0.3%

 

0.4%

 

0.6%

 

Same property Qtr percentage change in net operating income – GAAP basis

 

(0.2%)

 

1.7%

 

0.3%

 

1.3%

 

0.1%

 

Same property YTD percentage change in net operating income – cash basis

 

5.5%

 

6.5%

 

5.8%

 

1.5%

 

1.3%

 

Same property Qtr percentage change in net operating income – cash basis

 

4.8%

 

9.4%

 

5.8%

 

2.0%

 

2.3%

 

 

21


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial and Asset Base Highlights (continued)

(Unaudited)

 

Summary of Occupancy Percentage at End of Period

 

 

 

 

 

 

 

December 31,

 

 

 

Average

 

3Q11

 

2010

 

2009

 

2008

 

2007

 

2006

 

2005

 

2004

 

2003

 

2002

 

2001

 

2000

 

1999

 

1998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating properties

 

95.2%

 

94.6%

 

94.3%

 

94.1%

 

94.8%

 

93.8%

 

93.1%

 

93.2%

 

95.2%

 

93.9%

 

96.3%

 

99.0%

 

98.4%

 

95.7%

 

96.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating and redevelopment properties

 

89.3%

 

89.3%

 

88.9%

 

89.4%

 

90.0%

 

87.8%

 

88.0%

 

87.7%

 

87.0%

 

88.4%

 

89.2%

 

88.6%

 

90.8%

 

91.5%

 

92.9%

 

 

Quarterly Percentage Change Same Property Net Operating Income

 

GRAPHIC

 

Summary of Percentage Change in Rental Rates on Renewed/Re-leased Space

 

GRAPHIC

 

22


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Properties

September 30, 2011

(Dollars in thousands)

(Unaudited)

 

 

 

Rentable Square Feet

 

Number of

 

 

 

 

 

Markets

 

Operating

 

Redevelopment

 

Development

 

Total

 

Properties

 

Annualized Base Rent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Diego

 

2,035,798

 

422,803

 

165,140

 

2,623,741

 

37

 

$

62,924

 

15%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Francisco

 

2,117,728

 

–

 

366,346

 

2,484,074

 

23

 

80,019

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston

 

3,280,873

 

177,662

 

–

 

3,458,535

 

38

 

122,033

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYC/New Jersey/Suburban Philadelphia

 

747,463

 

–

 

–

 

747,463

 

9

 

32,456

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North Carolina – Research Triangle Park

 

809,847

 

30,000

 

–

 

839,847

 

13

 

17,810

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

2,436,597

 

116,783

 

–

 

2,553,380

 

32

 

54,053

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington – Seattle

 

937,205

 

–

 

–

 

937,205

 

11

 

33,620

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic markets

 

12,365,511

 

747,248

 

531,486

 

13,644,245

 

163

 

402,915

 

98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International (1)

 

1,069,651

 

–

 

–

 

1,069,651

 

5

 

8,591

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

13,435,162

 

747,248

 

531,486

 

14,713,896

 

168

 

$

411,506

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations/“Held for Sale”

 

154,963

 

–

 

–

 

154,963

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

13,590,125

 

747,248

 

531,486

 

14,868,859

 

171

 

 

 

 

 

 

(1)          Includes land and improvements subject to a ground lease with a tenant.

 

23


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Occupancy Percentage

(Unaudited)

 

Summary of Occupancy Percentage at End of Period

 

 

 

 

 

 

 

December 31,

 

 

 

Average

 

3Q11

 

2010

 

2009

 

2008

 

2007

 

2006

 

2005

 

2004

 

2003

 

2002

 

2001

 

2000

 

1999

 

1998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating properties

 

95.2%

 

94.6%

 

94.3%

 

94.1%

 

94.8%

 

93.8%

 

93.1%

 

93.2%

 

95.2%

 

93.9%

 

96.3%

 

99.0%

 

98.4%

 

95.7%

 

96.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating and redevelopment properties

 

89.3%

 

89.3%

 

88.9%

 

89.4%

 

90.0%

 

87.8%

 

88.0%

 

87.7%

 

87.0%

 

88.4%

 

89.2%

 

88.6%

 

90.8%

 

91.5%

 

92.9%

 

 

 

 

Operating Properties

 

Operating and Redevelopment Properties

 

Markets

 

9/30/11

 

6/30/11

 

3/31/11

 

9/30/11

 

6/30/11

 

3/31/11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Diego

 

93.4

%

 

92.8

%

 

92.6

%

 

77.4

%

 

76.5

%

 

76.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Francisco

 

95.9

 

 

94.5

 

 

96.0

 

 

95.9

 

 

94.5

 

 

96.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston

 

94.2

 

 

91.3

 

 

92.5

 

 

89.3

 

 

86.1

 

 

86.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NYC/New Jersey/Suburban Philadelphia

 

87.7

 

 

88.2

 

 

85.2

 

 

87.7

 

 

88.2

 

 

85.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North Carolina – Research Triangle Park

 

95.7

 

 

96.6

 

 

94.3

 

 

92.3

 

 

92.7

 

 

90.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

96.0

 

 

96.5

 

 

96.3

 

 

91.6

 

 

92.0

 

 

91.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington – Seattle

 

97.1

 

 

99.1

 

 

99.1

 

 

97.1

 

 

99.1

 

 

99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic markets

 

94.6

 

 

93.9

 

 

94.0

 

 

89.2

 

 

88.3

 

 

88.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

91.8

 

 

90.2

 

 

100.0

 

 

91.8

 

 

90.2

 

 

100.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

94.6

%

 

93.8

%

 

94.2

%

 

89.3

%

 

88.3

%

 

88.6

%

 

 

24


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Property Listing
September 30, 2011
(Dollars in thousands)

(Unaudited)

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Address

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

California – San Diego

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10931/10933 North Torrey Pines Road

 

Torrey Pines

 

96,641

 

-

 

-

 

96,641

 

1

 

$

3,134

 

99.5

%

 

99.5

%

 

10975 North Torrey Pines Road

 

Torrey Pines

 

44,733

 

-

 

-

 

44,733

 

1

 

1,700

 

100.0

 

 

100.0

 

 

11119 North Torrey Pines Road

 

Torrey Pines

 

-

 

81,816

 

-

 

81,816

 

1

 

-

 

N/A

 

 

-

 

 

3010 Science Park Road

 

Torrey Pines

 

74,557

 

-

 

-

 

74,557

 

1

 

3,215

 

100.0

 

 

100.0

 

 

3115/3215 Merryfield Row

 

Torrey Pines

 

158,645

 

-

 

-

 

158,645

 

2

 

6,498

 

89.0

 

 

89.0

 

 

3530/3550 John Hopkins Court &
3535/3565 General Atomics Court

 

Torrey Pines

 

117,058

 

89,923

 

-

 

206,981

 

4

 

3,146

 

95.8

 

 

54.2

 

 

10300 Campus Point Drive

 

University Town Center

 

169,353

 

203,717

 

-

 

373,070

 

1

 

6,267

 

100.0

 

 

45.4

 

 

4755/4757/4767 Nexus Center Drive

 

University Town Center

 

132,330

 

-

 

41,710

 

174,040

 

3

 

4,914

 

100.0

 

 

100.0

 

 

5200 Research Place

 

University Town Center

 

346,581

 

-

 

123,430

 

470,011

 

1

 

13,260

 

100.0

 

 

100.0

 

 

9363/9373/9393 Towne Center Drive

 

University Town Center

 

138,578

 

-

 

-

 

138,578

 

3

 

3,408

 

82.2

 

 

82.2

 

 

9880 Campus Point Drive

 

University Town Center

 

71,510

 

-

 

-

 

71,510

 

1

 

2,774

 

100.0

 

 

100.0

 

 

5810-5820 Nancy Ridge Drive

 

Sorrento Mesa

 

87,298

 

-

 

-

 

87,298

 

1

 

1,726

 

100.0

 

 

100.0

 

 

5871 Oberlin Drive

 

Sorrento Mesa

 

33,817

 

-

 

-

 

33,817

 

1

 

856

 

100.0

 

 

100.0

 

 

6138-6150 Nancy Ridge Drive

 

Sorrento Mesa

 

56,698

 

-

 

-

 

56,698

 

1

 

1,586

 

100.0

 

 

100.0

 

 

6146/6166 Nancy Ridge Drive

 

Sorrento Mesa

 

51,273

 

-

 

-

 

51,273

 

2

 

1,008

 

87.4

 

 

87.4

 

 

6175/6225/6275 Nancy Ridge Drive

 

Sorrento Mesa

 

60,232

 

47,347

 

-

 

107,579

 

3

 

419

 

47.2

 

 

26.4

 

 

7330 Carroll Road

 

Sorrento Mesa

 

66,244

 

-

 

-

 

66,244

 

1

 

2,141

 

89.4

 

 

89.4

 

 

10505 Roselle Street & 3770 Tansy Street

 

Sorrento Valley

 

33,013

 

-

 

-

 

33,013

 

2

 

1,001

 

100.0

 

 

100.0

 

 

11025/11035/11045 Roselle Street

 

Sorrento Valley

 

65,910

 

-

 

-

 

65,910

 

3

 

1,035

 

72.4

 

 

72.4

 

 

3985 Sorrento Valley Boulevard

 

Sorrento Valley

 

60,545

 

-

 

-

 

60,545

 

1

 

1,557

 

100.0

 

 

100.0

 

 

13112 Evening Creek Drive

 

I-15 Corridor

 

109,780

 

-

 

-

 

109,780

 

1

 

2,495

 

100.0

 

 

100.0

 

 

129/161/165 North Hill Avenue & 6 Thomas

 

LA Metro

 

61,002

 

-

 

-

 

61,002

 

2

 

784

 

62.2

 

 

62.2

 

 

California – San Diego

 

 

 

2,035,798

 

422,803

 

165,140

 

2,623,741

 

37

 

$

62,924

 

93.4

%

 

77.4

%

 

 

25


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Property Listing
September 30, 2011
(Dollars in thousands)

(Unaudited)

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Address

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

California – San Francisco

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1500 Owens Street

 

Mission Bay

 

158,267

 

-

 

-

 

158,267

 

1

 

$

6,721

 

93.8

%

 

93.8

%

 

1700 Owens Street

 

Mission Bay

 

157,340

 

-

 

-

 

157,340

 

1

 

6,803

 

95.4

 

 

95.4

 

 

455 Mission Bay Boulevard

 

Mission Bay

 

170,058

 

-

 

39,942

 

210,000

 

1

 

7,787

 

100.0

 

 

100.0

 

 

409/499 Illinois Street

 

Mission Bay

 

234,249

 

-

 

219,007

 

453,256

 

2

 

14,318

 

100.0

 

 

100.0

 

 

249 E. Grand Avenue

 

South San Francisco

 

129,501

 

-

 

-

 

129,501

 

1

 

5,084

 

100.0

 

 

100.0

 

 

341/343 Oyster Point Blvd

 

South San Francisco

 

107,960

 

-

 

-

 

107,960

 

2

 

1,956

 

100.0

 

 

100.0

 

 

400/450 East Jamie Court

 

South San Francisco

 

54,603

 

-

 

107,397

 

162,000

 

2

 

1,538

 

100.0

 

 

100.0

 

 

500 Forbes Boulevard

 

South San Francisco

 

155,685

 

-

 

-

 

155,685

 

1

 

5,540

 

100.0

 

 

100.0

 

 

600/630/650 Gateway Boulevard

 

South San Francisco

 

150,960

 

-

 

-

 

150,960

 

3

 

3,490

 

82.6

 

 

82.6

 

 

681 Gateway Boulevard

 

South San Francisco

 

126,971

 

-

 

-

 

126,971

 

1

 

6,161

 

100.0

 

 

100.0

 

 

7000 Shoreline Court

 

South San Francisco

 

136,393

 

-

 

-

 

136,393

 

1

 

3,941

 

100.0

 

 

100.0

 

 

901/951 Gateway Boulevard

 

South San Francisco

 

170,244

 

-

 

-

 

170,244

 

2

 

5,355

 

88.3

 

 

88.3

 

 

2425 Garcia Ave & 2400/2450 Bayshore Pky

 

Peninsula

 

98,964

 

-

 

-

 

98,964

 

1

 

2,750

 

84.0

 

 

84.0

 

 

2625/2627/2631 Hanover Street

 

Peninsula

 

32,074

 

-

 

-

 

32,074

 

1

 

1,335

 

100.0

 

 

100.0

 

 

3165 Porter Drive

 

Peninsula

 

91,644

 

-

 

-

 

91,644

 

1

 

3,878

 

100.0

 

 

100.0

 

 

3350 W. Bayshore Road

 

Peninsula

 

60,000

 

-

 

-

 

60,000

 

1

 

1,526

 

100.0

 

 

100.0

 

 

75 & 125 Shoreway Road

 

Peninsula

 

82,815

 

-

 

-

 

82,815

 

1

 

1,836

 

91.2

 

 

91.2

 

 

California – San Francisco

 

 

 

2,117,728

 

-

 

366,346

 

2,484,074

 

23

 

$

80,019

 

95.9

%

 

95.9

%

 

 

26


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Property Listing
September 30, 2011
(Dollars in thousands)

(Unaudited)

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Address

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

Greater Boston

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Technology Square

 

Cambridge/Inner Suburbs

 

255,441

 

-

 

-

 

255,441

 

1

 

$

17,302

 

100.0

%

 

100.0

%

 

200 Technology Square

 

Cambridge/Inner Suburbs

 

177,101

 

-

 

-

 

177,101

 

1

 

10,263

 

100.0

 

 

100.0

 

 

300 Technology Square

 

Cambridge/Inner Suburbs

 

175,609

 

-

 

-

 

175,609

 

1

 

10,640

 

99.4

 

 

99.4

 

 

400 Technology Square (1)

 

Cambridge/Inner Suburbs

 

145,551

 

49,225

 

-

 

194,776

 

1

 

5,285

 

100.0

 

 

74.7

 

 

500 Technology Square

 

Cambridge/Inner Suburbs

 

184,207

 

-

 

-

 

184,207

 

1

 

10,023

 

98.4

 

 

98.4

 

 

600 Technology Square

 

Cambridge/Inner Suburbs

 

128,224

 

-

 

-

 

128,224

 

1

 

4,366

 

99.6

 

 

99.6

 

 

700 Technology Square

 

Cambridge/Inner Suburbs

 

48,930

 

-

 

-

 

48,930

 

1

 

1,680

 

94.2

 

 

94.2

 

 

161 First Street

 

Cambridge/Inner Suburbs

 

46,356

 

-

 

-

 

46,356

 

1

 

1,812

 

99.5

 

 

99.5

 

 

167 Sidney Street

 

Cambridge/Inner Suburbs

 

26,589

 

-

 

-

 

26,589

 

1

 

1,392

 

100.0

 

 

100.0

 

 

215 First Street (2)

 

Cambridge/Inner Suburbs

 

351,277

 

15,392

 

-

 

366,669

 

1

 

10,180

 

92.4

 

 

88.5

 

 

300 Third Street

 

Cambridge/Inner Suburbs

 

131,639

 

-

 

-

 

131,639

 

1

 

7,100

 

98.3

 

 

98.3

 

 

480 Arsenal

 

Cambridge/Inner Suburbs

 

140,744

 

-

 

-

 

140,744

 

1

 

4,503

 

100.0

 

 

100.0

 

 

500 Arsenal Street

 

Cambridge/Inner Suburbs

 

93,516

 

-

 

-

 

93,516

 

1

 

3,960

 

100.0

 

 

100.0

 

 

780/790 Memorial Drive

 

Cambridge/Inner Suburbs

 

98,497

 

-

 

-

 

98,497

 

2

 

6,023

 

94.2

 

 

94.2

 

 

79/96 Charlestown Navy Yard

 

Cambridge/Inner Suburbs

 

24,940

 

-

 

-

 

24,940

 

1

 

-

 

-

 

 

-

 

 

99 Erie Street

 

Cambridge/Inner Suburbs

 

27,960

 

-

 

-

 

27,960

 

1

 

594

 

42.3

 

 

42.3

 

 

100 Beaver Street

 

Rte 128

 

82,330

 

-

 

-

 

82,330

 

1

 

2,093

 

88.2

 

 

88.2

 

 

285 Bear Hill Road (3)

 

Rte 128

 

26,270

 

-

 

-

 

26,270

 

1

 

447

 

100.0

 

 

100.0

 

 

19 Presidential Way

 

Rte 128

 

128,325

 

-

 

-

 

128,325

 

1

 

3,398

 

100.0

 

 

100.0

 

 

29 Hartwell Avenue

 

Rte 128

 

59,000

 

-

 

-

 

59,000

 

1

 

1,902

 

100.0

 

 

100.0

 

 

3 Preston Court

 

Rte 128

 

30,000

 

-

 

-

 

30,000

 

1

 

-

 

-

 

 

-

 

 

35 Hartwell Avenue

 

Rte 128

 

46,700

 

-

 

-

 

46,700

 

1

 

1,650

 

100.0

 

 

100.0

 

 

35 Wiggins Avenue

 

Rte 128

 

48,640

 

-

 

-

 

48,640

 

1

 

724

 

100.0

 

 

100.0

 

 

44 Hartwell Avenue

 

Rte 128

 

26,828

 

-

 

-

 

26,828

 

1

 

1,105

 

100.0

 

 

100.0

 

 

45-47 Wiggins Avenue

 

Rte 128

 

38,000

 

-

 

-

 

38,000

 

1

 

1,114

 

100.0

 

 

100.0

 

 

60 Westview Street

 

Rte 128

 

40,200

 

-

 

-

 

40,200

 

1

 

1,257

 

100.0

 

 

100.0

 

 

6-8 Preston Court

 

Rte 128

 

54,391

 

-

 

-

 

54,391

 

1

 

553

 

84.0

 

 

84.0

 

 

111 Forbes Boulevard

 

Rte 495/Worcester

 

58,280

 

-

 

-

 

58,280

 

1

 

261

 

28.6

 

 

28.6

 

 

130 Forbes Boulevard

 

Rte 495/Worcester

 

97,566

 

-

 

-

 

97,566

 

1

 

871

 

100.0

 

 

100.0

 

 

155 Fortune Boulevard

 

Rte 495/Worcester

 

36,000

 

-

 

-

 

36,000

 

1

 

806

 

100.0

 

 

100.0

 

 

20 Walkup Drive

 

Rte 495/Worcester

 

-

 

113,045

 

-

 

113,045

 

1

 

-

 

N/A

 

 

-

 

 

30 Bearfoot Road

 

Rte 495/Worcester

 

60,759

 

-

 

-

 

60,759

 

1

 

2,765

 

100.0

 

 

100.0

 

 

306 Belmont Street

 

Rte 495/Worcester

 

78,916

 

-

 

-

 

78,916

 

1

 

1,139

 

100.0

 

 

100.0

 

 

350 Plantation Street

 

Rte 495/Worcester

 

11,774

 

-

 

-

 

11,774

 

1

 

173

 

100.0

 

 

100.0

 

 

377 Plantation Street

 

Rte 495/Worcester

 

92,711

 

-

 

-

 

92,711

 

1

 

2,082

 

85.1

 

 

85.1

 

 

381 Plantation Street

 

Rte 495/Worcester

 

92,423

 

-

 

-

 

92,423

 

1

 

2,146

 

100.0

 

 

100.0

 

 

One Innovation Drive

 

Rte 495/Worcester

 

115,179

 

-

 

-

 

115,179

 

1

 

2,424

 

96.3

 

 

96.3

 

 

Greater Boston

 

 

 

3,280,873

 

177,662

 

-

 

3,458,535

 

38

 

$

122,033

 

94.2

%

 

89.3

%

 

 

(1)             Represents an office building.  The entire building will undergo conversion into laboratory space through redevelopment beginning in October 2011.

(2)             Represents an office building that has undergone a partial conversion of office space into laboratory space through redevelopment.  We expect to convert additional office space aggregating 31,812 rentable square feet into laboratory space in 2012.

(3)             Represents an office building acquired in June 2011 subject to a lease expiring on November 30, 2011.  The entire building will undergo conversion into laboratory space through redevelopment in December 2011.

 

27


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Property Listing
September 30, 2011
(Dollars in thousands)

(Unaudited)

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Address

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

NYC/New Jersey/Suburban Philadelphia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

450 E. 29th Street

 

Midtown Manhattan

 

308,388

 

-

 

-

 

308,388

 

1

 

$

23,726

 

98.5

%

 

98.5

%

 

100 Phillips Parkway

 

Bergen County

 

78,501

 

-

 

-

 

78,501

 

1

 

2,220

 

100.0

 

 

100.0

 

 

102 Witmer Road

 

Pennsylvania

 

50,000

 

-

 

-

 

50,000

 

1

 

3,345

 

100.0

 

 

100.0

 

 

200 Lawrence Road

 

Pennsylvania

 

111,451

 

-

 

-

 

111,451

 

1

 

1,246

 

100.0

 

 

100.0

 

 

210 Welsh Pool Road

 

Pennsylvania

 

59,415

 

-

 

-

 

59,415

 

1

 

946

 

100.0

 

 

100.0

 

 

5100 Campus Drive

 

Pennsylvania

 

21,782

 

-

 

-

 

21,782

 

1

 

-

 

-

 

 

-

 

 

701 Veterans Circle

 

Pennsylvania

 

35,155

 

-

 

-

 

35,155

 

1

 

735

 

100.0

 

 

100.0

 

 

702 Electronic Drive

 

Pennsylvania

 

40,171

 

-

 

-

 

40,171

 

1

 

238

 

42.5

 

 

42.5

 

 

279 Princeton Road

 

Princeton

 

42,600

 

-

 

-

 

42,600

 

1

 

-

 

-

 

 

-

 

 

NYC/New Jersey/Suburban Philadelphia

 

 

 

747,463

 

-

 

-

 

747,463

 

9

 

$

32,456

 

87.7

%

 

87.7

%

 

 

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Address

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

North Carolina – Research Triangle Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Capitola Drive

 

Research Triangle Park

 

65,992

 

-

 

-

 

65,992

 

1

 

$

978

 

95.8

%

 

95.8

%

 

108/110/112/114 Alexander Road

 

Research Triangle Park

 

158,417

 

-

 

-

 

158,417

 

1

 

4,954

 

100.0

 

 

100.0

 

 

2525 E. NC Highway 54

 

Research Triangle Park

 

81,580

 

-

 

-

 

81,580

 

1

 

1,655

 

100.0

 

 

100.0

 

 

5 Triangle Drive

 

Research Triangle Park

 

32,120

 

-

 

-

 

32,120

 

1

 

824

 

100.0

 

 

100.0

 

 

601 Keystone Park Drive

 

Research Triangle Park

 

77,395

 

-

 

-

 

77,395

 

1

 

1,306

 

100.0

 

 

100.0

 

 

6101 Quadrangle Drive

 

Research Triangle Park

 

-

 

30,000

 

-

 

30,000

 

1

 

-

 

N/A

 

 

-

 

 

7 Triangle Drive

 

Research Triangle Park

 

96,626

 

-

 

-

 

96,626

 

1

 

2,874

 

100.0

 

 

100.0

 

 

7010/7020/7030 Kit Creek

 

Research Triangle Park

 

133,654

 

-

 

-

 

133,654

 

3

 

2,622

 

89.3

 

 

89.3

 

 

800/801 Capitola Drive

 

Research Triangle Park

 

119,208

 

-

 

-

 

119,208

 

2

 

2,001

 

92.3

 

 

92.3

 

 

555 Heritage Drive

 

Palm Beach

 

44,855

 

-

 

-

 

44,855

 

1

 

596

 

80.3

 

 

80.3

 

 

North Carolina – Research Triangle Park

 

 

 

809,847

 

30,000

 

-

 

839,847

 

13

 

$

17,810

 

95.7

%

 

92.3

%

 

 

28


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Property Listing
September 30, 2011
(Dollars in thousands)

(Unaudited)

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Address

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

Suburban Washington, D.C.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12301 Parklawn Drive

 

Rockville

 

49,185

 

-

 

-

 

49,185

 

1

 

$

1,024

 

100.0

%

 

100.0

%

 

1330 Piccard Drive

 

Rockville

 

131,415

 

-

 

-

 

131,415

 

1

 

2,962

 

79.8

 

 

79.8

 

 

1405/1413 Research Boulevard

 

Rockville

 

176,669

 

-

 

-

 

176,669

 

2

 

5,049

 

100.0

 

 

100.0

 

 

1500/1550 East Gude Drive

 

Rockville

 

90,489

 

-

 

-

 

90,489

 

2

 

1,937

 

100.0

 

 

100.0

 

 

14920 Broschart Road

 

Rockville

 

48,500

 

-

 

-

 

48,500

 

1

 

961

 

100.0

 

 

100.0

 

 

15010 Broschart Road

 

Rockville

 

27,126

 

11,077

 

-

 

38,203

 

1

 

583

 

100.0

 

 

71.0

 

 

5 Research Court

 

Rockville

 

54,906

 

-

 

-

 

54,906

 

1

 

1,564

 

100.0

 

 

100.0

 

 

5 Research Place

 

Rockville

 

63,852

 

-

 

-

 

63,852

 

1

 

2,341

 

100.0

 

 

100.0

 

 

9800 Medical Center Drive

 

Rockville

 

201,896

 

79,579

 

-

 

281,475

 

4

 

7,348

 

97.2

 

 

69.7

 

 

9920 Medical Center Drive

 

Rockville

 

58,733

 

-

 

-

 

58,733

 

1

 

428

 

100.0

 

 

100.0

 

 

1201 Clopper Road

 

Gaithersburg

 

143,585

 

-

 

-

 

143,585

 

1

 

3,480

 

100.0

 

 

100.0

 

 

1300 Quince Orchard Road

 

Gaithersburg

 

54,874

 

-

 

-

 

54,874

 

1

 

812

 

100.0

 

 

100.0

 

 

16020 Industrial Drive

 

Gaithersburg

 

83,541

 

-

 

-

 

83,541

 

1

 

1,316

 

100.0

 

 

100.0

 

 

19/20/22 Firstfield Road

 

Gaithersburg

 

132,639

 

-

 

-

 

132,639

 

3

 

3,097

 

96.3

 

 

96.3

 

 

25/35/45 West Watkins Mill Road

 

Gaithersburg

 

138,938

 

-

 

-

 

138,938

 

1

 

3,299

 

100.0

 

 

100.0

 

 

401 Professional Drive

 

Gaithersburg

 

63,154

 

-

 

-

 

63,154

 

1

 

876

 

77.9

 

 

77.9

 

 

620 Professional Drive

 

Gaithersburg

 

-

 

26,127

 

-

 

26,127

 

1

 

-

 

N/A

 

 

-

 

 

708 Quince Orchard Road

 

Gaithersburg

 

49,624

 

-

 

-

 

49,624

 

1

 

1,133

 

99.3

 

 

99.3

 

 

9 W. Watkins Mill Road

 

Gaithersburg

 

92,449

 

-

 

-

 

92,449

 

1

 

2,598

 

100.0

 

 

100.0

 

 

910 Clopper Road

 

Gaithersburg

 

180,650

 

-

 

-

 

180,650

 

1

 

3,120

 

85.6

 

 

85.6

 

 

930/940 Clopper Road

 

Gaithersburg

 

104,302

 

-

 

-

 

104,302

 

2

 

1,654

 

93.4

 

 

93.4

 

 

950 Wind River Lane

 

Gaithersburg

 

50,000

 

-

 

-

 

50,000

 

1

 

1,082

 

100.0

 

 

100.0

 

 

8000/9000/10000 Virginia Manor Road (1)

 

Beltsville

 

191,884

 

-

 

-

 

191,884

 

1

 

3,048

 

93.2

 

 

93.2

 

 

14225 Newbrook Drive

 

Northern Virginia

 

248,186

 

-

 

-

 

248,186

 

1

 

4,341

 

100.0

 

 

100.0

 

 

Suburban Washington, D.C.

 

 

 

2,436,597

 

116,783

 

-

 

2,553,380

 

32

 

$

54,053

 

96.0

%

 

91.6

%

 

 

(1)  In 2012, we expect to convert office space aggregating 35,031 rentable square feet through redevelopment into laboratory space.

 

29


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Property Listing
September 30, 2011
(Dollars in thousands)

(Unaudited)

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Address

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

Washington – Seattle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1201 & 1209 Mercer Street

 

Lake Union

 

16,740

 

-

 

-

 

16,740

 

1

 

$

267

 

100.0

%

 

100.0

%

 

1201/1208 Eastlake Avenue

 

Lake Union

 

203,369

 

-

 

-

 

203,369

 

2

 

8,747

 

100.0

 

 

100.0

 

 

1551 Eastlake Avenue (1)

 

Lake Union

 

121,790

 

-

 

-

 

121,790

 

1

 

3,105

 

100.0

 

 

100.0

 

 

1600 Fairview Avenue

 

Lake Union

 

27,991

 

-

 

-

 

27,991

 

1

 

1,294

 

100.0

 

 

100.0

 

 

1616 Eastlake Avenue (2)

 

Lake Union

 

165,493

 

-

 

-

 

165,493

 

1

 

5,096

 

94.7

 

 

94.7

 

 

199 E. Blaine Street

 

Lake Union

 

115,084

 

-

 

-

 

115,084

 

1

 

6,089

 

100.0

 

 

100.0

 

 

1124 Columbia Street

 

First Hill

 

203,817

 

-

 

-

 

203,817

 

1

 

6,433

 

96.3

 

 

96.3

 

 

3000/3018 Western Avenue

 

Elliott Bay

 

47,746

 

-

 

-

 

47,746

 

1

 

1,795

 

100.0

 

 

100.0

 

 

410 W. Harrison/410 Elliott Avenue West

 

Elliott Bay

 

35,175

 

-

 

-

 

35,175

 

2

 

794

 

67.4

 

 

67.4

 

 

Washington – Seattle

 

 

 

937,205

 

-

 

-

 

937,205

 

11

 

$

33,620

 

97.1

%

 

97.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic Properties

 

 

 

12,365,511

 

747,248

 

531,486

 

13,644,245

 

163

 

$

402,915

 

94.6

%

 

89.2

%

 

 

 

 

 

 

Rentable Square Feet

 

 

 

 

 

Occupancy Percentage

 

Country

 

Submarket

 

Operating

 

Redevelopment

 

Development

 

Total

 

Number of
Properties

 

Annualized
Base Rent

 

Operating

 

Operating and
Redevelopment

 

International

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

 

 

46,032

 

-

 

-

 

46,032

 

1

 

$

1,911

 

100.0

%

 

100.0

%

 

Canada

 

 

 

66,000

 

-

 

-

 

66,000

 

1

 

1,239

 

100.0

 

 

100.0

 

 

Canada

 

 

 

106,364

 

-

 

-

 

106,364

 

1

 

2,198

 

78.0

 

 

78.0

 

 

Canada

 

 

 

68,000

 

-

 

-

 

68,000

 

1

 

3,243

 

100.0

 

 

100.0

 

 

Canada (3)

 

 

 

783,255

 

 

 

 

 

783,255

 

1

 

N/A

 

N/A

 

 

N/A

 

 

International

 

 

 

1,069,651

 

-

 

-

 

1,069,651

 

5

 

$

8,591

 

91.8

%

 

91.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

 

13,435,162

 

747,248

 

531,486

 

14,713,896

 

168

 

$

411,506

 

94.6

%

 

89.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties “held for sale”

 

 

 

154,963

 

-

 

-

 

154,963

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

13,590,125

 

747,248

 

531,486

 

14,868,859

 

171

 

 

 

 

 

 

 

 

(1)             Represents an office building that will undergo conversion into laboratory space through redevelopment starting in October 2011.  This redevelopment project is currently 51% pre-leased.

(2)             In 2012, we expect to convert 65,936 rentable square feet of office space through redevelopment into laboratory space.

(3)             Represents land and improvements subject to a ground lease with a tenant.

 

30


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
September 30, 2011
(Dollars in thousands)
(Unaudited)

 

Debt Maturities

 

 

 

Secured Notes Payable

 

Unsecured Debt

 

 

 

Our Share

 

Noncontrolling
Interests’
Share

 

Total
Consolidated Secured
Notes Payable

 

Line of Credit and
Term Loans

 

Unsecured Convertible
Notes

 

2011

 

$

78,678

 

$

88

 

$

78,766

 

$

–

 

$

–

 

2012

 

12,552

 

364

 

12,916

 

250,000

 (1)

84,801

 

2013

 

52,599

 

384

 

52,983

 

–

 

–

 

2014

 

209,508

 

20,868

 

230,376

 

–

 

250

 

2015

 

8,004

 

–

 

8,004

 

814,000

 (2)

–

 

Thereafter

 

378,748

 

–

 

378,748

 

750,000

 (3)

–

 

Subtotal

 

$

740,089

 

$

21,704

 

761,793

 

1,814,000

 

85,051

 

Unamortized discounts

 

 

 

 

 

(911

)

–

 

(567

)

Total

 

 

 

 

 

$

760,882

 

$

1,814,000

 

$

84,484

 

 

Secured Notes Payable and Unsecured Debt Analysis

 

 

 

Outstanding
Balance

 

Percentage of
Outstanding
Balance

 

Weighted Average
Interest Rate at
End of Period (4)

 

Weighted Average
Remaining Term

 

Secured Notes Payable

 

$

760,882

 

28.6

%

 

5.95

%

 

4.8 Years

 

Unsecured Line of Credit

 

814,000

 

30.6

 

 

2.52

 

 

3.3 Years

(2)

2012 Unsecured Term Loan

 

250,000

 

9.4

 

 

5.63

 

 

1.1 Years

(1)

2016 Unsecured Term Loan

 

750,000

 

28.2

 

 

3.11

 

 

4.8 Years

(3)

Unsecured Convertible Notes

 

84,484

 

3.2

 

 

5.97

 

 

0.3 Years

 

Total Debt

 

$

2,659,366

 

100.0

%

 

4.07

%

 

3.9 Years

 

 

(1)

Our 2012 Unsecured Term Loan matures in October 2012.  We are currently negotiating a new unsecured term loan with a target amount between $400 and $500 million.  The proceeds of this new loan will be used initially to reduce outstanding balances on our unsecured line of credit.  Ultimately, a portion of these proceeds will provide funds necessary to repay our 2012 Unsecured Term Loan.

(2)

Our unsecured line of credit matures in January 2015, assuming we exercise our sole right to extend the maturity twice by an additional six months after each exercise. 

(3)

Our 2016 Unsecured Term Loan matures in June 2016, assuming we exercise our sole right to extend the maturity by one year.

(4)

Represents the contractual interest rate as of the end of the period plus the impact of debt premiums/discounts and our interest rate hedge agreements on our secured notes payable, unsecured line of credit, unsecured term loans, and unsecured convertible notes.  The weighted average interest rate excludes bank fees and amortization of loan fees. See also the “Summary of Interest Rate Hedge Agreements” section of this report.

 

31


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Secured Notes Payable Principal Maturities Through 2015
September 30, 2011

(Dollars in thousands)

(Unaudited)

 

Description

 

Maturity Date

 

Type

 

Stated Rate

 

Effective Rate (1)

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

12/22/11

 

Bank

 

3.57

 

 

3.57

 

 

$

76,000

 (2)

Other scheduled principal repayments/amortization

 

 

 

 

 

 

 

 

 

 

 

2,766

 

2011 Total

 

 

 

 

 

 

 

 

 

 

 

$

78,766

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston

 

3/1/12

 

Insurance Co.

 

7.14

%

 

5.83

%

 

$

1,357

 

Other scheduled principal repayments/amortization

 

 

 

 

 

 

 

 

 

 

 

11,559

 

2012 Total

 

 

 

 

 

 

 

 

 

 

 

$

12,916

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Diego

 

3/1/13

 

Insurance Co.

 

6.21

%

 

6.21

%

 

$

7,940

 

Suburban Washington, D.C.

 

9/1/13

 

CMBS

 

6.36

 

 

6.36

 

 

26,093

 

California – San Francisco

 

11/16/13

 

Other

 

6.14

 

 

6.14

 

 

7,527

 

Other scheduled principal repayments/amortization

 

 

 

 

 

 

 

 

 

 

 

11,423

 

2013 Total

 

 

 

 

 

 

 

 

 

 

 

$

52,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston

 

4/1/14

 

Insurance Co.

 

5.26

%

 

5.59

%

 

$

208,683

 

San Diego

 

7/1/14

 

Bank

 

6.05

 

 

4.88

 

 

6,458

 

San Diego

 

11/1/14

 

Bank

 

5.39

 

 

4.00

 

 

7,495

 

Washington – Seattle

 

11/18/14

 

Other

 

5.90

 

 

5.90

 

 

240

 

Other scheduled principal repayments/amortization

 

 

 

 

 

 

 

 

 

 

 

7,500

 

2014 Total

 

 

 

 

 

 

 

 

 

 

 

$

230,376

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other scheduled principal repayments/amortization

 

 

 

 

 

 

 

 

 

 

 

$

8,004

 

2015 Total

 

 

 

 

 

 

 

 

 

 

 

$

8,004

 

 

(1)          Represents the contractual interest rate as of the end of the period plus the impact of debt premiums/discounts. The effective rate excludes bank fees and amortization of loan fees.

(2)          We extended the 2011 maturity date of this loan into 2012 and are in discussions for an additional 3-5 year extension.

 

32


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Fixed/Floating Rate Debt Analysis and Leverage
(Dollars in thousands)
(Unaudited)

 

Fixed/Floating Rate Debt Analysis

 

 

 

September 30, 2011

 

Percentage
of
Balance

 

Weighted Average
Interest Rate at
End of Period (1)

 

Weighted
Average
Maturity

Fixed rate debt

 

$

844,586

 

31.8

%

 

5.96

%

 

4.4 Years

Floating rate debt – hedged

 

450,000

 

16.9

 

 

6.00

 

 

2.7 Years

Floating rate debt – unhedged

 

1,364,780

 

51.3

 

 

2.27

 

 

3.9 Years

Total Debt

 

$

2,659,366

 

100.0

%

 

4.07

%

 

3.9 Years

 

Leverage

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

Total debt

 

$

2,659,366

 

$

2,553,329

 

$

2,669,466

 

$

2,584,162

 

$

2,519,463

 

Less: cash, cash equivalents, and restricted cash

 

(100,985

)

(84,357

)

(108,709

)

(119,586

)

(146,106

)

Net debt

 

$

2,558,381

 

$

2,468,972

 

$

2,560,757

 

$

2,464,576

 

$

2,373,357

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA – quarter annualized

 

$

377,168

 

$

380,968

 

$

368,100

 

$

357,756

 

$

330,164

 

Adjusted EBITDA – trailing 12 months

 

$

370,998

 

$

359,247

 

$

345,055

 

$

331,822

 

$

323,545

 

Gross Assets (excluding cash and restricted cash)

 

$

7,065,151

 

$

6,938,008

 

$

6,521,668

 

$

6,402,282

 

$

6,190,686

 

Net debt to Adjusted EBITDA – quarter annualized

 

6.8x

 

6.5x

 

7.0x

 

6.9x

 

7.2x

 

Net debt to Adjusted EBITDA – trailing 12 months

 

6.9x

 

6.9x

 

7.4x

 

7.4x

 

7.3x

 

Net debt to Gross Assets (excluding cash and restricted cash)

 

36%

 

36%

 

39%

 

39%

 

38%

 

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

 

67%

 

64%

 

65%

 

60%

 

58%

 

Unencumbered assets gross book value as a percentage of gross assets

 

77%

 

76%

 

74%

 

74%

 

72%

 

 

(1)

Represents the contractual interest rate as of the end of the period plus the impact of debt premiums/discounts and our interest rate hedge agreements on our secured notes payable, unsecured line of credit, unsecured term loans, and unsecured convertible notes.  The weighted average interest rate excludes bank fees and amortization of loan fees. See also the “Summary of Interest Rate Hedge Agreements” section of this report.  The weighted average interest rate related to outstanding borrowings for our unhedged floating rate debt is based upon one-month LIBOR.  The interest rate resets periodically and will vary in future periods.

 

33


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Interest Rate Hedge Agreements

September 30, 2011

(Dollars in thousands)

(Unaudited)

 

Transaction 
Date

 

Effective
Date

 

Termination
Date

 

Interest Pay
Rate (1)

 

Notional
Amount

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

December 29, 2006

 

March 31, 2014

 

4.990

%

 

$

50,000

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

October 31, 2007

 

September 30, 2012

 

4.546

 

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

October 31, 2007

 

September 30, 2013

 

4.642

 

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

July 1, 2008

 

March 31, 2013

 

4.622

 

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

July 1, 2008

 

March 31, 2013

 

4.625

 

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

November 30, 2009

 

March 31, 2014

 

5.015

 

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

November 30, 2009

 

March 31, 2014

 

5.023

 

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

December 31, 2010

 

October 31, 2012

 

5.015

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

$

450,000

(2)

 

(1)        Interest pay rate represents the interest rate we will pay for one month LIBOR under the applicable interest rate swap agreement. This rate does not include any spread in addition to one month LIBOR that is due monthly as interest expense.

(2)        We are currently evaluating additional interest rate hedge and/or interest rate cap agreements and expect to further mitigate interest rate risk on LIBOR based debt.

 

34


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Same Property Comparisons

(Dollars in thousands)

(Unaudited)

 

Historical Same Property Performance

 

Quarterly Percentage Change Same Property Net Operating Income

 

GRAPHIC

 

Current Period Same Property Performance

 

 

 

 

Three Months Ended – GAAP Basis

 

Three Months Ended – Cash Basis

 

 

 

 

 

9/30/11

 

9/30/10

 

% Change

 

9/30/11

 

9/30/10

 

% Change

 

 

 

Revenues

 

$

101,141

 

$

100,341

 

0.8

%

 

$

100,140

 

$

95,943

 

4.4

%

 

 

 

Operating expenses

 

29,362

 

28,409

 

3.4

 

 

29,362

 

28,409

 

3.4

 

 

 

 

Net Operating Income

 

$

71,779

 

$

71,932

 

(0.2

%)

(1)

$

70,778

 

$

67,534

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended – GAAP Basis

 

Nine Months Ended – Cash Basis

 

 

 

 

 

9/30/11

 

9/30/10

 

% Change

 

9/30/11

 

9/30/10

 

% Change

 

 

 

Revenues

 

$

296,239

 

$

291,441

 

1.6

%

 

$

298,904

 

$

283,316

 

5.5

%

 

 

 

Operating expenses

 

84,106

 

79,793

 

5.4

 

 

84,106

 

79,793

 

5.4

 

 

 

 

Net Operating Income

 

$

212,133

 

$

211,648

 

0.2

%

(1)

$

214,798

 

$

203,523

 

5.5

%

 

 

 

 

 

 

Same Property Data – September 30, 2011

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

Number of properties

 

130

 

128

 

 

Rentable square footage

 

9,683,228

 

9,523,315

 

 

Occupancy

 

 

 

 

 

 

September 30, 2011

 

93.4%

 

93.7%

 

 

September 30, 2010

 

94.4%

 

94.7%

 

 

 

(1)          During the three months ended September 30, 2011, a property located in the suburbs of Boston underwent a transition from a prior tenant to a new tenant, resulting in a gap in occupancy and a temporary decline in revenues less operating expenses. Excluding this property, the percentage increase in GAAP and cash same property net operating income would have been 0.5% and 5.7%, respectively, for the three months ended September 30, 2011.

 

35


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Leasing Activity

Three Months Ended September 30, 2011

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

TI’s/Lease

 

 

 

 

 

 

Rentable

 

 

 

 

 

Rental

 

Commissions

 

Average

 

 

Number

 

Square

 

Expiring

 

New

 

Rate

 

Per

 

Lease

 

 

of Leases

 

Footage

 

Rates

 

Rates

 

Changes

 

Square Foot

 

Terms

Leasing Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Expirations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

49

 

564,159

 

$33.89

 

–

 

–

 

–

 

–

GAAP Basis

 

49

 

564,159

 

$31.07

 

–

 

–

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewed/Re-leased Space Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

29

 

402,196

 

$37.13

 

$36.00

 

(3.0%

)

$5.30

 

3.6 years

GAAP Basis

 

29

 

402,196

 

$33.49

 

$34.42

 

2.8%

 

$5.30

 

3.6 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed/Redeveloped/Vacant Space Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

27

 

583,141

 

–

 

$34.54

 

–

 

$13.23

 

10.2 years

GAAP Basis

 

27

 

583,141

 

–

 

$36.11

 

–

 

$13.23

 

10.2 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month-to-Month Leases in Effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

2

 

8,864

 

$24.84

 

$24.84

 

–

 

–

 

–

GAAP Basis

 

2

 

8,864

 

$24.84

 

$24.84

 

–

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing Activity Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding Month-to-Month Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

56

 

985,337

 

–

 

$35.14

 

–

 

$9.99

 

7.5 years

GAAP Basis

 

56

 

985,337

 

–

 

$35.42

 

–

 

$9.99

 

7.5 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Including Month-to-Month Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

58

 

994,201

 

–

 

$35.04

 

–

 

–

 

–

GAAP Basis

 

58

 

994,201

 

–

 

$35.33

 

–

 

–

 

–

 

During the three months ended September 30, 2011, we granted tenant concessions/free rent averaging approximately 1.5 months with respect to the 985,337 rentable square feet leased.

 

36


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Leasing Activity

Nine Months Ended September 30, 2011

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

TI’s/Lease

 

 

 

 

 

 

Rentable

 

 

 

 

 

Rental

 

Commissions

 

Average

 

 

Number

 

Square

 

Expiring

 

New

 

Rate

 

Per

 

Lease

 

 

of Leases

 

Footage

 

Rates

 

Rates

 

Changes

 

Square Foot

 

Terms

Leasing Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Expirations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

118

 

1,653,434

 

$29.70

 

–

 

–

 

–

 

–

GAAP Basis

 

118

 

1,653,434

 

$28.88

 

–

 

–

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewed/Re-leased Space Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

84

 

1,171,703

 

$31.19

 

$30.98

 

(0.7%

)

$3.86

 

3.9 years

GAAP Basis

 

84

 

1,171,703

 

$29.88

 

$30.64

 

2.5%

 

$3.86

 

3.9 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed/Redeveloped/Vacant Space Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

59

 

1,093,718

 

–

 

$33.81

 

–

 

$10.97

 

8.8 years

GAAP Basis

 

59

 

1,093,718

 

–

 

$35.61

 

–

 

$10.97

 

8.8 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month-to-Month Leases in Effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

2

 

8,864

 

$24.84

 

$24.84

 

–

 

–

 

–

GAAP Basis

 

2

 

8,864

 

$24.84

 

$24.84

 

–

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing Activity Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding Month-to-Month Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

143

 

2,265,421

 

–

 

$32.35

 

–

 

$7.29

 

6.2 years

GAAP Basis

 

143

 

2,265,421

 

–

 

$33.04

 

–

 

$7.29

 

6.2 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Including Month-to-Month Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

145

 

2,274,285

 

–

 

$32.32

 

–

 

–

 

–

GAAP Basis

 

145

 

2,274,285

 

–

 

$33.01

 

–

 

–

 

–

 

During the nine months ended September 30, 2011, we granted tenant concessions/free rent averaging approximately 1.7 months with respect to the 2,265,421 rentable square feet leased.

 

37


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Leasing Activity

 (Unaudited)

 

 

 

 

September 30, 2011

 

 

Year Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter

 

 

Year-to-Date

 

 

12/31/10

 

 

12/31/09

 

 

12/31/08

 

 

12/31/07

 

 

 

 

GAAP

 

Cash

 

 

GAAP

 

Cash

 

 

GAAP

 

Cash

 

 

GAAP

 

Cash

 

 

GAAP

 

Cash

 

 

GAAP

 

Cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Expirations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rentable Square Footage

 

 

564,159

 

564,159

 

 

1,653,434

 

1,653,434

 

 

2,416,291

 

2,416,291

 

 

1,842,597

 

1,842,597

 

 

1,664,944

 

1,664,944

 

 

1,626,033

 

1,626,033

 

Expiring Rates

 

 

$31.07

 

$33.89

 

 

$28.88

 

$29.70

 

 

$28.54

 

$27.18

 

 

$30.70

 

$30.61

 

 

$25.52

 

$26.88

 

 

$26.97

 

$25.98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewed/Re-leased Space

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased Rentable Square Footage

 

 

402,196

 

402,196

 

 

1,171,703

 

1,171,703

 

 

1,777,966

 

1,777,966

 

 

1,188,184

 

1,188,184

 

 

1,254,285

 

1,254,285

 

 

895,894

 

895,894

 

New Rates

 

 

$34.42

 

$36.00

 

 

$30.64

 

$30.98

 

 

$32.04

 

$29.41

 

 

$27.72

 

$28.11

 

 

$29.34

 

$28.60

 

 

$31.48

 

$31.41

 

Expiring Rates

 

 

$33.49

 

$37.13

 

 

$29.88

 

$31.19

 

 

$30.54

 

$28.84

 

 

$26.78

 

$28.07

 

 

$25.51

 

$27.08

 

 

$28.66

 

$29.38

 

Rental Rate Changes

 

 

2.8%

 

(3.0%)

 

 

2.5%

 

(0.7%)

 

 

4.9%

 

2.0%

 

 

3.5%

 

0.1%

 

 

15.0%

 

5.6%

 

 

9.8%

 

6.9%

 

Average Lease Terms

 

 

3.6 years

 

3.6 years

 

 

3.9 years

 

3.9 years

 

 

8.1 years

 

8.1 years

 

 

3.3 years

 

3.3 years

 

 

4.3 years

 

4.3 years

 

 

4.0 years

 

4.0 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed/Redeveloped/Vacant Space Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rentable Square Footage

 

 

583,141

 

583,141

 

 

1,093,718

 

1,093,718

 

 

966,273

 

966,273

 

 

676,163

 

676,163

 

 

906,859

 

906,859

 

 

686,856

 

686,856

 

New Rates

 

 

$36.11

 

$34.54

 

 

$35.61

 

$33.81

 

 

$39.89

 

$36.33

 

 

$36.00

 

$33.57

 

 

$37.64

 

$35.04

 

 

$33.68

 

$31.59

 

Average Lease Terms

 

 

10.2 years

 

10.2 years

 

 

8.8 years

 

8.8 years

 

 

9.7 years

 

9.7 years

 

 

6.6 years

 

6.6 years

 

 

7.2 years

 

7.2 years

 

 

6.5 years

 

6.5 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rentable Square Footage

 

 

985,337

 

985,337

 

 

2,265,421

 

2,265,421

 

 

2,744,239

 

2,744,239

 

 

1,864,347

 

1,864,347

 

 

2,161,144

 

2,161,144

 

 

1,582,750

 

1,582,750

 

New Rates

 

 

$35.42

 

$35.14

 

 

$33.04

 

$32.35

 

 

$34.80

 

$31.84

 

 

$30.73

 

$30.09

 

 

$32.82

 

$31.30

 

 

$32.44

 

$31.49

 

TI’s/Lease Commissions per Square Foot

 

 

$9.99

 

$9.99

 

 

$7.29

 

$7.29

 

 

$5.70

 

$5.70

 

 

$5.49

 

$5.49

 

 

$7.23

 

$7.23

 

 

$6.95

 

$6.95

 

Average Lease Terms

 

 

7.5 years

 

7.5 years

 

 

6.2 years

 

6.2 years

 

 

8.7 years

 

8.7 years

 

 

4.5 years

 

4.5 years

 

 

5.5 years

 

5.5 years

 

 

5.1 years

 

5.1 years

 

 

38


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Lease Expirations

September 30, 2011

(Unaudited)

 

Year of Lease
Expiration

 

Number of
Leases Expiring

 

Rentable Square
Footage (“RSF”) of
Expiring Leases

 

Percentage of
Aggregate
Total RSF

 

Annualized Base Rent
of Expiring Leases
(per RSF)

2011

 

23

 (1)

 

572,337

 (1)

 

4.3

%

 

$31.18

 

2012

 

87

 

 

1,327,545

 

 

9.9

 

 

28.94

 

2013

 

77

 

 

1,302,557

 

 

9.7

 

 

29.02

 

2014

 

72

 

 

1,349,301

 

 

10.1

 

 

28.69

 

2015

 

53

 

 

1,173,173

 

 

8.8

 

 

32.96

 

2016

 

41

 

 

1,319,780

 

 

9.8

 

 

31.29

 

2017

 

21

 

 

873,749

 

 

6.5

 

 

34.20

 

2018

 

19

 

 

1,097,318

 

 

8.2

 

 

36.49

 

2019

 

8

 

 

399,205

 

 

3.0

 

 

35.60

 

2020

 

14

 

 

703,675

 

 

5.3

 

 

40.64

 

 

 

 

2011 RSF of Expiring Leases

 

Annualized Base Rent of

Markets

 

Leased

 

Negotiating/
Anticipating

 

Targeted for
Redevelopment

 

Remaining
Expiring Leases

 

Total

 

Expiring Leases
(per RSF)

California – San Diego

 

56,489

 

–

 

–

 

39,530

 

96,019

 

$28.77

 

California – San Francisco

 

–

 

–

 

–

 

–

 

–

 

–

 

Greater Boston

 

45,750

 

23,434

 

171,821

 (2)

39,513

 

280,518

 

37.25

 

NYC/New Jersey/Suburban Philadelphia

 

–

 

–

 

–

 

–

 

–

 

–

 

North Carolina – Research Triangle Park

 

–

 

6,376

 

–

 

21,301

 

27,677

 

19.83

 

Suburban Washington, D.C.

 

2,006

 

–

 

–

 

23,852

 

25,858

 

12.74

 

Washington – Seattle

 

16,931

 

–

 

121,790

 (3)

3,544

 

142,265

 

26.39

 

International

 

–

 

–

 

–

 

–

 

–

 

–

 

Total

 

121,176

 

29,810

 

293,611

 

127,740

 

572,337

 (1)

$31.18

 

Percentage of expiring leases

 

21%

 

6%

 

51%

 

22%

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012 RSF of Expiring Leases

 

Annualized Base Rent

Markets

 

Leased

 

Negotiating/
Anticipating

 

Targeted for
Redevelopment

 

Remaining
Expiring Leases

 

Total

 

of Expiring Leases
(per RSF)

California – San Diego

 

13,674

 

35,409

 

–

 

239,901

 

288,984

 

$27.44

 

California – San Francisco

 

19,988

 

46,096

 

–

 

126,071

 

192,155

 

27.50

 

Greater Boston

 

77,893

 

73,713

 

31,812

 

134,946

 

318,364

 

39.41

 

NYC/New Jersey/Suburban Philadelphia

 

–

 

–

 

–

 

7,239

 

7,239

 

13.24

 

North Carolina – Research Triangle Park

 

–

 

15,897

 

–

 

27,540

 

43,437

 

13.24

 

Suburban Washington, D.C.

 

–

 

16,503

 

35,031

 

258,146

 

309,680

 

23.37

 

Washington – Seattle

 

2,468

 

28,849

 

65,936

 

63,597

 

160,850

 

28.38

 

International

 

–

 

–

 

–

 

6,836

 

6,836

 

26.35

 

Total

 

114,023

 

216,467

 

132,779

 

864,276

 

1,327,545

 

$28.94

 

Percentage of expiring leases

 

9%

 

16%

 

10%

 

65%

 

100%

 

 

 

 

(1)

Excludes 2 month-to-month leases for approximately 9,000 rentable square feet.

(2)

Represents 145,551 rentable square feet of office space and a 26,270 rentable square foot office building which will undergo conversion into laboratory space through redevelopment starting in October 2011 and December 2011, respectively.

(3)

Represents a 121,790 rentable square foot office building. This building will undergo conversion into laboratory space through redevelopment starting in October 2011 and is currently 51% pre-leased.

 

39


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

20 Largest Client Tenants

September 30, 2011

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

Remaining Lease

 

Approximate
Aggregate

 

Percentage of
Aggregate

 

 

 

Percentage
of Aggregate

 

Investment Grade Entities (3)

 

 

 

 

 

 

 

Number

 

Term in Years

 

Rentable

 

Total Square

 

Annualized

 

Annualized

 

Fitch

 

Moody’s

 

S&P

 

Education/

 

 

 

Tenant

 

of Leases

 

(1)

 

(2)

 

Square Feet

 

Feet

 

Base Rent

 

Base Rent

 

Rating

 

Rating

 

Rating

 

Research

 

1

 

Novartis AG

 

7

 

5.0

 

 

5.3

 

 

453,000

 

3.4

%

 

$

26,437

 

6.4

%

 

AA

 

Aa2

 

AA-

 

–

 

2

 

Eli Lilly and Company

 

5

 

9.8

 

 

11.4

 

 

261,320

 

2.0

 

 

15,048

 

3.7

 

 

A+

 

A2

 

AA-

 

–

 

3

 

Roche Holding Ltd

 

5

 

6.0

 

 

6.3

 

 

387,813

 

2.9

 

 

14,833

 

3.6

 

 

AA-

 

A1

 

AA-

 

–

 

4

 

FibroGen, Inc.

 

1

 

12.1

 

 

12.1

 

 

234,249

 

1.7

 

 

14,318

 

3.5

 

 

–

 

–

 

–

 

–

 

5

 

Illumina, Inc.

 

1

 

20.1

 

 

20.1

 

 

346,581

 

2.6

 

 

13,260

 

3.2

 

 

–

 

–

 

–

 

–

 

6

 

United States Government

 

8

 

3.3

 

 

3.4

 

 

378,526

 

2.8

 

 

11,641

 

2.8

 

 

AAA

 

Aaa

 

AA+

 

–

 

7

 

Bristol-Myers Squibb Company

 

3

 

7.2

 

 

7.3

 

 

250,454

 

1.9

 

 

10,086

 

2.5

 

 

A+

 

A2

 

A+

 

–

 

8

 

GlaxoSmithKline plc

 

4

 

7.1

 

 

7.3

 

 

199,318

 

1.5

 

 

10,068

 

2.4

 

 

A+

 

A1

 

A+

 

–

 

9

 

Massachusetts Institute of Technology

 

3

 

3.3

 

 

3.0

 

 

178,952

 

1.3

 

 

8,154

 

2.0

 

 

–

 

Aaa

 

AAA

 

ü

 

10

 

NYU-Neuroscience Translational Research Institute

 

2

 

14.1

 

 

13.1

 

 

79,788

 

0.6

 

 

7,224

 

1.8

 

 

–

 

Aa3

 

AA-

 

–

 

11

 

Alnylam Pharmaceuticals, Inc. (4)

 

1

 

5.0

 

 

5.0

 

 

129,424

 

1.0

 

 

6,076

 

1.5

 

 

–

 

–

 

–

 

–

 

12

 

Gilead Sciences, Inc.

 

1

 

8.8

 

 

8.8

 

 

109,969

 

0.8

 

 

5,824

 

1.4

 

 

–

 

Baa1

 

A-

 

–

 

13

 

Amylin Pharmaceuticals, Inc.

 

3

 

4.3

 

 

3.4

 

 

168,308

 

1.3

 

 

5,747

 

1.4

 

 

–

 

–

 

–

 

–

 

14

 

Pfizer Inc.

 

2

 

11.2

 

 

5.7

 

 

115,765

 

0.9

 

 

5,451

 

1.3

 

 

A+

 

A1

 

AA

 

–

 

15

 

Theravance, Inc. (5)

 

2

 

7.6

 

 

8.0

 

 

150,330

 

1.1

 

 

5,355

 

1.3

 

 

–

 

–

 

–

 

–

 

16

 

The Scripps Research Institute

 

2

 

5.2

 

 

5.1

 

 

99,377

 

0.7

 

 

5,193

 

1.3

 

 

AA-

 

Aa3

 

–

 

ü

 

17

 

Quest Diagnostics Incorporated

 

2

 

5.3

 

 

5.3

 

 

280,113

 

2.1

 

 

4,989

 

1.2

 

 

BBB+

 

Baa2

 

BBB+

 

–

 

18

 

Forrester Research, Inc.

 

1

 

–

 (6)

 

–

 (6)

 

145,551

 

1.1

 

 

4,987

 

1.2

 

 

–

 

–

 

–

 

–

 

19

 

Infinity Pharmaceuticals, Inc.

 

2

 

3.3

 

 

3.3

 

 

67,167

 

0.5

 

 

4,382

 

1.1

 

 

–

 

–

 

–

 

–

 

20

 

The Regents of the University of California

 

2

 

9.6

 

 

9.7

 

 

92,666

 

0.7

 

 

4,104

 

1.0

 

 

AA+

 

Aa1

 

AA

 

ü

 

 

 

Total/Weighted Average:

 

57

 

7.4

 

 

7.9

 

 

4,128,671

 

30.9

%

 

$

183,177

 

44.6

%

 

 

 

 

 

 

 

 

 

 

(1)     Represents remaining lease term in years based on percentage of leased square feet.

(2)     Represents remaining lease term in years based on percentage of annualized base rent in effect as of September 30, 2011.

(3)     Ratings obtained from each of the following rating agencies: Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s.

(4)     As of June 30, 2011, Novartis AG owned approximately 13% of the outstanding stock of Alnylam Pharmaceuticals, Inc.

(5)     As of July 27, 2011, GlaxoSmithKline plc owned approximately 18% of the outstanding stock of Theravance, Inc.

(6)     As of October 2011, this office building was undergoing conversion into life science laboratory space through redevelopment.

 

40


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Client Tenant Mix

September 30, 2011

(Unaudited)

 

 

 

Multinational Pharmaceutical

 

Institutional: Independent Non-Profit,
University, and Government

GRAPHIC

 

· Abbott Laboratories

 

· Bill & Melinda Gates Foundation

 

· Astellas Pharma Inc.

 

· California Institute of Technology

 

· AstraZeneca PLC

 

· Duke University

 

· Baxter International Inc.

 

· Environmental Protection Agency

 

· Bayer AG

 

· Fred Hutchinson Cancer Research Center

 

· Bristol-Myers Squibb Company

 

· Massachusetts Institute of Technology

 

· Eisai Co., Ltd.

 

· National Institutes of Health

 

· Eli Lilly and Company

 

· NYU-Neuroscience Translational Research Institute

 

· GlaxoSmithKline plc

 

· Sanford-Burham Medical Research Institute

 

· Johnson & Johnson

 

· Stanford University

 

· Merck & Co., Inc.

 

· The Scripps Research Institute

 

· Novartis AG

 

· The Regents of the University of California

 

· Pfizer Inc.

 

· UMass Memorial Health Care, Inc.

 

· Roche Holding Ltd

 

· UNC Health Care System

 

· Sanofi

 

· University of Washington

 

· Shire plc

 

 

 

· The Genomics Institute of the Novartis Research Foundation

 

 

 

 

 

 

 

 

 

 

 

Biotechnology: Public & Private

 

Medical Device, Life Science

Product, Service, and Biofuels

 

· Achaogen Inc.

 

· Canon U.S. Life Sciences, Inc.

 

· Alnylam Pharmaceuticals, Inc.

 

· Illumina, Inc.

 

· Amgen Inc.

 

· Laboratory Corporation of America Holdings

 

· Amylin Pharmaceuticals, Inc.

 

· Life Technologies Corporation

 

· Avila Therapeutics, Inc.

 

· LS9, Inc.

 

· Biogen Idec Inc.

 

· Monsanto Company

 

· Celgene Corporation

 

· Qiagen N.V.

 

· Fate Therapeutics, Inc

 

· Quest Diagnostics Incorporated

 

· FibroGen, Inc.

 

· Sapphire Energy, Inc.

 

· Forma Therapeutics, Inc.

 

 

 

· Gilead Sciences, Inc.

 

 

Client tenant mix by annualized base rent

 

· Ikaria, Inc.

 

 

 

· Intellikine, Inc.

 

 

 

 

· MacroGenics, Inc.

 

 

 

 

· Medicago Inc.

 

 

 

 

· NGM Biopharmaceuticals, Inc.

 

 

 

 

· Presidio Pharmaceuticals, Inc.

 

 

 

 

· Proteostasis Therapeutics, Inc.

 

 

 

 

· Theravance, Inc.

 

 

 

41


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Additions and Dispositions of Properties

Three Months Ended September 30, 2011

(Dollars in thousands)

(Unaudited)

 

 

 

Acquisition

 

Month of

 

Rentable

 

Market/Property

 

Amount

 

Acquisition

 

Square Feet

 

 

 

 

 

 

 

 

 

Additions to Properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposition

 

Month of

 

 

 

Market/Property

 

Amount

 

Disposition

 

 

 

 

 

 

 

 

 

 

 

Dispositions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

California — San Diego

 

 

 

 

 

 

 

Sorrento View

 

$

17,300,000

 

August 2011

 

 

 

 

42


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Real Estate
(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

September 30, 2011

 

June 30, 2011

 

 

 

Book
Value

 

Square
Footage

 

Cost per
Square
Foot

 

Book
Value

 

Square
Footage

 

Cost per
Square
Foot

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental properties

 

$

5,000,700

 

13,590,125

 

$

368

 

$

4,796,692

 

12,672,852

 

$

379

 

Less: accumulated depreciation

 

(710,580

)

 

 

 

 

(679,081

)

 

 

 

 

Rental properties, net

 

4,290,120

 

 

 

 

 

4,117,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction in progress (“CIP”)/current value-added projects:

 

 

 

 

 

 

 

 

 

 

 

 

 

Active redevelopment

 

300,398

 

747,248

 

402

 

296,225

 

782,258

 

379

 

Active development

 

190,427

 

531,486

 

358

 

238,433

 

690,139

 

345

 

Projects in India and China

 

113,136

 

916,000

 

124

 

107,934

 

916,000

 

118

 

 

 

603,961

 

2,194,734

 

275

 

642,592

 

2,388,397

 

269

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land/future value-added projects (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

Land held for future development

 

452,732

 

11,715,000

 

39

 

534,618

 

12,020,000

 

44

 

Land undergoing preconstruction activities (additional CIP) (2)

 

538,437

 

2,456,000

 

219

 

521,753

 

2,449,000

 

213

 

 

 

991,169

 

14,171,000

 

70

 

1,056,371

 

14,469,000

 

73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in unconsolidated real estate entity

 

40,042

 

428,000

 

94

 

38,778

 

428,000

 

91

 

Real estate, net

 

5,925,292

 

30,383,859

 

$

195

 

5,855,352

 

29,958,249

 

$

195

 

Add: accumulated depreciation

 

710,580

 

 

 

 

 

679,081

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross book value of real estate (1)

 

$

6,635,872

 

30,383,859

 

 

 

$

6,534,433

 

29,958,249

 

 

 

 

(1)                        In addition to assets included in our gross book value of real estate, we also hold options/rights for parcels supporting approximately 3.0 million developable square feet.  These parcels consist of: (a) a parcel supporting the future ground-up development of approximately 385,000 rentable square feet at Alexandria Center™ for Life Science – New York City related to an option under our ground lease; (b) right to acquire land parcels supporting ground-up development of 636,000 rentable square feet in Edinburgh, Scotland; and (c) an option to increase our land use rights by up to approximately 2.0 million additional developable square feet in China.

(2)                        We generally will not commence ground-up development of any parcels undergoing preconstruction activities without first securing significant pre-leasing for such space.  If vertical aboveground construction is not initiated at completion of preconstruction activities, the land parcel will be classified as land held for future development.  The two largest projects included in preconstruction consist of our 1.9 million developable square feet at Alexandria Center™ at Kendall Square in East Cambridge, Massachusetts and our 407,000 developable square foot site for the second tower at Alexandria Center™ for Life Science – New York City.

 

43


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Real Estate
September 30, 2011

(Unaudited)

 

Construction in Progress (“CIP”)/Current Value-Added Projects

Active Redevelopment/Active Development Projects

A key component of our business model is our value-added redevelopment and development programs. These programs are focused on providing high-quality, generic, and reusable life science laboratory space to meet the real estate requirements of a wide range of clients in the life science industry. Upon completion, each value-added project is expected to generate significant revenues and cash flows. Our redevelopment and development projects are generally in locations that are highly desirable to life science entities, which we believe results in higher occupancy levels, longer lease terms, and higher rental income and returns. Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into generic life science laboratory space, including the conversion of single-tenancy space to multi-tenancy space or vice versa. Our incremental investment in redevelopment projects for the conversion of non-laboratory space to laboratory space generally ranges from $75 to $175 per square foot depending on the nature of the existing building improvements and laboratory design. Development projects consist of the ground-up development of generic and reusable life science laboratory facilities. We generally will not commence new development projects for aboveground vertical construction of new laboratory space without first securing significant pre-leasing for such space.

 

Projects in India and China

Projects in India and China primarily represent development opportunities and projects focused primarily on life science laboratory space for our current client tenants and other life science relationship entities. These projects focus on real estate investments with targeted returns on investment greater than returns expected in the United States.

 

Future Value-Added Projects

Land Held for Future Development

All preconstruction efforts have been advanced to appropriate stages and no further preconstruction activities are ongoing and therefore, interest, property taxes, and other costs related to these assets are expensed as incurred.  We generally will not commence new development projects for aboveground vertical construction of new laboratory space without first securing significant pre-leasing for such space.

 

Land Undergoing Preconstruction Activities (additional CIP)

Preconstruction activities include Building Information Modeling (3-D virtual modeling), design development and construction drawings, sustainability and energy optimization review, budgeting, planning for future site and infrastructure work, and other activities prior to commencement of vertical construction of aboveground shell and core improvements.  Our objective with preconstruction is to reduce the time it takes to deliver projects to prospective tenants.  Project costs are capitalized as a cost of the project during periods activities necessary to prepare an asset for its intended use are in progress.  We generally will not commence ground-up development of any parcels undergoing preconstruction activities without first securing significant pre-leasing for such space.  If vertical aboveground construction is not initiated at completion of preconstruction activities, the land parcel will be classified as land held for future development.  The two largest projects included in preconstruction consist of our 1.9 million developable square feet at Alexandria Center™ at Kendall Square in East Cambridge, Massachusetts and our 407,000 developable square foot site for the second tower at Alexandria Center™ for Life Science – New York City.

 

Investment in Unconsolidated Real Estate Entity

Our investment in unconsolidated real estate entity represents our equity investment in a real estate entity that owns a land parcel supporting the ground-up development of approximately 428,000 rentable square feet in the Longwood Medical Area of Boston.

 

Future Redevelopment

Our asset base also includes non-laboratory space (office, warehouse, and industrial space) identified for future conversion into life science laboratory space through redevelopment aggregating approximately 1.4 million rentable square feet. These spaces are currently classified in rental properties, net.

 

Capitalization Policy

In accordance with GAAP, we capitalize project costs clearly related to construction, redevelopment, and development as a cost of the project. Indirect project costs such as construction administration, legal fees, and office costs that clearly relate to projects under construction, redevelopment, and development are also capitalized as a cost of the project. We capitalize project costs only during periods in which activities necessary to prepare an asset for its intended use are in progress.  We also capitalize interest cost as a cost of the project only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost is being incurred.  Additionally, should activities necessary to prepare an asset for its intended use cease, interest, taxes, insurance, and certain other indirect project costs related to these assets would be expensed as incurred.  Expenditures for repair and maintenance are expensed as incurred and are not included in capital expenditures.

 

44


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Value-Added Projects
September 30, 2011

(Dollars in thousands)

(Unaudited)

 

The following table summarizes our estimated capital expenditures, excluding capitalized interest, for the three months ended December 31, 2011, and for the year ended December 31, 2012.  Our actual capital expenditures will ultimately depend on many factors, including construction and infrastructure requirements for each tenant and final lease negotiations, and may materially differ from these estimates.

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31, 2011

 

December 31, 2012

 

Redevelopment

 

$

62,000

 

$

148,000

 

 

 

 

 

 

 

Development

 

20,000

 

147,000

 

 

 

 

 

 

 

Projects in India and China

 

21,000

 

62,000

 

 

 

 

 

 

 

Current Value-Added Projects

 

103,000

 

357,000

 

 

 

 

 

 

 

Future Value-Added Projects - Preconstruction

 

7,000

 

7,000

 

 

 

 

 

 

 

Other

 

9,000

 

9,000

 

 

 

 

 

 

 

 

 

16,000

 

16,000

 

 

 

 

 

 

 

Total

 

$

119,000

 

$

373,000

 

 

Current Value-Added Projects

Redevelopment capital expenditures represent estimated capital expenditures related to the rentable square feet undergoing active redevelopment as well as capital expenditures related to future redevelopment projects.

 

Development capital expenditures primarily represent estimated capital expenditures related to rentable square feet undergoing active development as well as capital expenditures related to other development projects.

 

Capital expenditures related to projects in India and China represent estimated capital expenditures related to development opportunities and projects primarily focused on life science laboratory space for our current client tenants and other life science relationship entities in India and China.

 

Future Value-Added Projects – Preconstruction

We continue to advance various important preconstruction activities for development sites, including Building Information Modeling (3-D virtual modeling), design development and construction drawings (required for each of the five new buildings), sustainability and energy optimization review, budgeting, planning for future site and infrastructure work, and other activities prior to commencement of vertical construction of aboveground shell and core improvements.  We generally will not commence ground-up development of any parcels undergoing preconstruction activities without first securing significant pre-leasing for such space.  In July 2011, we executed a new lease for a 307,000 rentable square feet ground-up development to Biogen Idec, Inc. at Alexandria CenterTM at Kendall Square. We plan to commence ground-up development in October 2011.

 

Other

Other capital expenditures represent property-related tenant improvements, recurring capital expenditures, and other project costs (excluding costs related to the redevelopment and development of a property).  These amounts include payments for property-related capital expenditures and tenant improvements that are recoverable from our tenants.  As of September 30, 2011, approximately 92% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures (such as heavy-duty heating, ventilation, and air conditioning systems maintenance and/or replacement, roof replacement, and parking lot resurfacing).  Capital expenditures fluctuate in any given period due to the nature, extent, and timing of improvements required and the extent to which they are recoverable from our tenants.  In addition, we maintain an active preventive maintenance program at each of our properties to minimize capital expenditures.

 

45


ALEXANDRIA REAL ESTATE EQUITIES, INC.
Current Value-Added Projects – Redevelopment
September 30, 2011

(Unaudited)

 

The following table summarizes our properties undergoing redevelopment:

 

 

Redevelopment

 

Total
Property

 

 

 

 

 

Percentage (1)

 

 

 

 

 

Estimated

 

 

 

 

 

 

 

 

 

Negotiating/

 

 

 

 

 

Placed into

 

In-Service

 

 

 

Market/Property

 

RSF

 

Leased

 

Committed

 

Mktg

 

Status

 

Redevelopment

 

Dates

 

RSF (2)

 

San Diego – Torrey Pines

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11119 North Torrey Pines Road

 

81,816

 

20

%

 

–

 

80

%

 

Construction

 

2010

 

2012

 

81,816

 

3530/3350 John Hopkins Court

 

89,923

 

100

%

 

–

 

–

 

 

Construction

 

2010

 

2012

 

206,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Diego – University Town Center

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10300 Campus Point Drive

 

203,717

 

43

%

 

47%

 

10

%

 

Design/Construction

 

2011

 

2012/2013

 

373,070

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Diego – Sorrento Mesa

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6275 Nancy Ridge Drive

 

47,347

 

31

%

 

32%

 

37

%

 

Design

 

2011

 

2012/2013

 

107,759

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston – Cambridge/Inner Sub.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Technology Square (3)

 

49,225

 

–

 

 

100%

 

–

 

 

Design/Permitting

 

2009

 

2012/2013

 

194,776

 

215 First Street (3)

 

15,392

 

100

%

 

–

 

–

 

 

Construction

 

(4)

 

2011

 

366,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston – Rte 495/Worcester

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20 Walkup Drive

 

113,045

 

–

 

 

–

 

100

%

 

Construction

 

(5)

 

2011

 

113,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research Triangle Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6101 Quadrangle Drive

 

30,000

 

74

%

 

–

 

26

%

 

Construction

 

2010

 

2011

 

30,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub. Washington, D.C. – Rockville

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15010 Broschart Road

 

11,077

 

37

%

 

–

 

63

%

 

Construction

 

2010

 

2011

 

38,203

 

9800 Medical Center Drive

 

79,579

 

–

 

 

97%

 

3

%

 

Design/Permitting

 

2009

 

2012

 

281,475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sub. Washington, D.C. – Gaithersburg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

620 Professional Drive

 

26,127

 

–

 

 

–

 

100

%

 

Design

 

2011

 

2012

 

26,127

 

Total

 

747,248

 

33

%

 

32%

 

35

%

 

 

 

 

 

 

 

1,819,921

 

 

(1)                        The leased percentages represent the percentages of redevelopment rentable square feet and exclude both the occupied and vacant rentable square feet related to the operating portion of each building.

(2)                        The operating portion of the properties aggregating 1,072,673 rentable square feet, including vacancy aggregating approximately 69,197 rentable square feet, is included in rental properties, net and occupancy statistics for our operating properties.  See Summary of Properties on page 23.

(3)                        Represents redevelopment projects with projected total investment greater than the average total investment for our redevelopment projects. The higher total investment is primarily due to the contiguousness of a project to Alexandria Center™ at Kendall Square (part of the assemblage) as well as another mid-rise building and its structure.

(4)                        Represents historical office building acquired with parcel included in overall Alexandria Center™ at Kendall Square.  Remaining rentable square footage is undergoing conversion from office space to laboratory space.

(5)                        Represents a former single-tenant building undergoing redevelopment and repositioning for multi-tenant research and development use.

 

As of September 30, 2011, our estimated cost to complete was approximately $187 per rentable square foot, or $139.4 million in aggregate, for the 747,248 rentable square feet undergoing a permanent change in use to life science laboratory space through redevelopment.

 

46


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Current Value-Added Projects – Development
September 30, 2011

 (Unaudited)

 

The following table summarizes our properties undergoing ground-up development:

 

 

 

Development

 

Operating

 

Total
Property

 

 

 

 

 

 

 

Negotiating/

 

 

 

 

 

 

 

Estimated

 

Leased/

 

 

 

 

 

 

 

Total

 

Leased

 

Committed

 

Marketing

 

 

 

Building

 

In-Service

 

Occupied

 

 

 

 

 

Market/Property

 

RSF

 

RSF

 

%

 

RSF

 

%

 

RSF

 

%

 

Leasing Status

 

Description

 

Dates

 

RSF

 

RSF

 

Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Diego – University Town Center

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4755 Nexus Center Drive

 

41,710

 

–

 

–    

 

–

 

–    

 

41,710

 

100%

 

Marketing

 

Single or Multi-Tenant Bldg.

 

2013

 

–

 

41,710

 

–%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5200 Research Place

 

123,430

 

123,430

 

100%

 

–

 

–    

 

–

 

–    

 

100% Leased to Illumina, Inc.

 

Single-Tenant Bldg.

 

2012

 

–

 

123,430

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco – Mission Bay

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

455 Mission Bay Boulevard

 

39,942

 

–

 

–    

 

30,252

 

76%

 

9,690

 

24%

 

Leased, Negotiating, and Marketing

 

Multi-Tenant Bldg. with 4% Retail

 

2011

 

170,058

 

210,000

 

81%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

409/499 Illinois Street

 

219,007

 

–

 

–    

 

–

 

–    

 

219,007

 

100%

 

Marketing

 

Multi-Tenant Bldg. with 4% Retail

 

2012

 

234,249

 

453,256

 

52%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco – South SF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400/450 East Jamie Court

 

107,397

 

17,358

 

16%

 

–

 

–    

 

90,039

 

84%

 

Leased/Marketing

 

Multi-Tenant Bldgs.

 

2011

 

54,603

 

162,000

 

44%

 

Total

 

531,486

 

140,788

 

26%

 

30,252

 

6%

 

360,446

 

68%

 

 

 

 

 

 

 

458,910

 

990,396

 

61%

 

 

As of September 30, 2011, our estimated cost to complete was approximately $170 per rentable square foot, or $90.3 million in aggregate, for the 531,486 rentable square feet undergoing ground-up development.  We generally will not commence new development projects for aboveground vertical construction of new laboratory space without first securing significant pre-leasing for such space.  In July 2011, we executed a new lease for a 307,000 rentable square feet ground-up development to Biogen Idec, Inc. at Alexandria CenterTM at Kendall Square. We plan to commence ground-up development in October 2011.

 

47


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Future Value-Added Projects
September 30, 2011

(Unaudited)

 

The following table summarizes the components of our future value-added square footage as of September 30, 2011:

 

Markets

 

Land Held for
Future
Development

 

Land Undergoing
Preconstruction
Activities
(additional CIP)

 

Total
Land (1)

 

Investment in
Unconsolidated Real
Estate Entity

 

Future
Redevelopment (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Diego

 

878,000

 

–

 

878,000

 

–

 

134,000

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Francisco/Mission Bay

 

290,000

 

–

 

290,000

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

California – San Francisco/So. San Francisco

 

1,195,000

 

–

 

1,195,000

 

–

 

65,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston

 

225,000

 

1,889,000

 

2,114,000

 

428,000

 

324,000

 

 

 

 

 

 

 

 

 

 

 

 

 

New York City

 

–

 

407,000

 

407,000

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

1,096,000

 

–

 

1,096,000

 

–

 

466,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Washington – Seattle

 

1,146,000

 

160,000

 

1,306,000

 

–

 

150,000

 

 

 

 

 

 

 

 

 

 

 

 

 

International

 

6,222,000

 

–

 

6,222,000

 

–

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

663,000

 

–

 

663,000

 

–

 

258,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

11,715,000

 

2,456,000

 

14,171,000

 

428,000

 

1,397,000

 

 

(1)     In addition to assets included in our gross book value of real estate, we also hold options/rights for parcels supporting approximately 3.0 million developable square feet.  These parcels consist of: (a) a parcel supporting the future ground-up development of approximately 385,000 rentable square feet in Alexandria Center™ for Life Science — New York City related to an option under our ground lease; (b) right to acquire land parcels supporting ground-up development of 636,000 rentable square feet in Edinburgh, Scotland; and (c) an option to increase our land use rights by up to approximately 2.0 million additional developable square feet in China.

(2)     Our asset base also includes non-laboratory space (office, warehouse, and industrial space) identified for future conversion into life science laboratory space through redevelopment.  These spaces are classified in rental properties, net.

 

48


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Value-Added Projects

Rendering of Alexandria CenterTM at Kendall Square, East Cambridge Massachusetts
September 30, 2011

(continued)

 

 

Buildings in the white outline below represent renderings of five future ground-up life science laboratory developments aggregating 1.9 million rentable square feet.  We continue to advance various important preconstruction activities for this development site, including Building Information Modeling (3-D virtual modeling), design development, construction drawings (required for each of the five new buildings), sustainability and energy optimization review, budgeting, planning for future site and infrastructure work, and other activities prior to commencement of vertical construction of aboveground shell and core improvements. Our objective is to advance preconstruction activities in order to reduce the time to deliver a new ground-up development to a prospective tenant.

 

 

 

 

 

 

 

49


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Value-Added Projects

Site Plan of Alexandria CenterTM for Life Science – New York City

September 30, 2011

(continued)

 

 

The Alexandria CenterTM for Life Science – New York City (“ACNYC”) will consist of three buildings aggregating approximately 1.1 million rentable square feet.  The east tower consists of 308,000 rentable square feet and is approximately 99% occupied as of September 30, 2011. The ACNYC campus also includes 407,000 developable square feet, site of the future west tower, as well as a parcel supporting the future ground-up development of approximately 385,000 rentable square feet on the north end of the campus.

 

 

 

 

 

GRAPHIC

 

 

50


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Value-Added Projects

Map and Rendering of Mission Bay, San Francisco, California
September 30, 2011

(continued)

 

 

The Alexandria CenterTM for Science and Technology at Mission Bay will consist of up to seven high-quality facilities aggregating approximately 1,269,000 rentable square feet.  We currently have five buildings aggregating approximately 720,000 rentable square feet leased to FibroGen, Inc., Merck & Co., Inc., Pfizer Inc., Bayer AG, and UCSF as well as other top tier life science entities, 259,000 square feet undergoing development, and future potential buildings aggregating approximately 290,000 rentable square feet.

 

 

 

 

 

 

 

51


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Expenditures

(Dollars in thousands, except for per square foot amounts)

(Unaudited)

 

 

 

Nine Months Ended
September 30,

 

 

 

2011

 

2010

 

Capital expenditures (1):

 

 

 

 

 

 

 

 

 

 

 

Major capital expenditures

 

$

461

 

$

215

 

 

 

 

 

 

 

Recurring capital expenditures

 

$

1,395

 

$

857

 

 

 

 

 

 

 

Square feet in asset base

 

13,251,608

 

11,849,832

 

 

 

 

 

 

 

Per square foot:

 

 

 

 

 

 

 

 

 

 

 

Major capital expenditures

 

$

0.03

 

$

0.02

 

 

 

 

 

 

 

Recurring capital expenditures

 

$

0.11

 

$

0.07

 

 

 

 

 

 

 

Tenant improvements and leasing costs:

 

 

 

 

 

 

 

 

 

 

 

Re-tenanted space (2)

 

 

 

 

 

 

 

 

 

 

 

Tenant improvements and leasing costs

 

$

1,351

 

$

1,346

 

 

 

 

 

 

 

Re-tenanted square feet

 

299,430

 

251,955

 

 

 

 

 

 

 

Per square foot

 

$

4.51

 

$

5.34

 

 

 

 

 

 

 

Renewal space

 

 

 

 

 

 

 

 

 

 

 

Tenant improvements and leasing costs

 

$

3,166

 

$

2,796

 

 

 

 

 

 

 

Renewal square feet

 

866,285

 

767,667

 

 

 

 

 

 

 

Per square foot

 

$

3.66

 

$

3.64

 

 

 

 

 

 

 

The table above shows the average per square foot property-related capital expenditures, tenant improvements, and leasing costs (excluding capital expenditures and tenant improvements that are recoverable from tenants, revenue-enhancing, or related to properties that have undergone redevelopment).

 

 

 

 

 

 

(1)

Property-related capital expenditures include all major capital and recurring capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures, or costs related to the redevelopment of a property.  Major capital expenditures consist of roof replacements and heavy-duty heating, ventilation, and air conditioning systems that are typically identified and considered at the time a property is acquired.

(2)

Excludes space that has undergone redevelopment before re-tenanting.

 

 

 

 

 

 

52


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information

September 30, 2011

(Unaudited)

 

This section contains additional information for sections throughout this supplemental information package as well as explanations of certain non-GAAP financial measures in sections of this document and the reasons why management believes these measures provide useful information to investors about our financial condition, results of operations, or liquidity.  Additional detail can be found in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, as well as other documents filed with or furnished to the SEC from time to time.

 

Adjusted EBITDA and Adjusted EBITDA Margin

EBITDA represents earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, and is used as a supplemental measure of operating performance.  Adjusted EBITDA is calculated as EBITDA excluding impairments, gains or losses from sales of real estate, gains or losses on early extinguishment of debt, and net stock compensation expenses.  We use EBITDA and Adjusted EBITDA as a supplemental measure of our operating performance.  We consider Adjusted EBITDA to provide investors relevant and useful information because it permits investors to view income from our operations on an unleveraged basis before the effects of taxes, non-cash depreciation and amortization, impairments, gains or losses from sales of real estate, gains or losses on early extinguishment of debt, and net stock compensation expenses.  By excluding interest expense, EBITDA and Adjusted EBITDA allow investors to measure our operating performance independent of our capital structure and indebtedness and, therefore, allow for a more meaningful comparison of our operating performance to that of other companies, both in the real estate industry and in other industries.  We believe investors should consider EBITDA and Adjusted EBITDA, in conjunction with net income (the primary measure of our performance) and the other required United States generally accepted accounting principles (“GAAP”) measures of our performance, to improve their understanding of our operating results, and to make more meaningful comparisons of our performance between periods and against other companies.  EBITDA and Adjusted EBITDA have limitations as analytical tools and should be used in conjunction with our required GAAP presentations. EBITDA and Adjusted EBITDA do not reflect our historical cash expenditures or future cash requirements for capital expenditures or contractual commitments.  While EBITDA and Adjusted EBITDA are relevant and widely used measures of operating performance, it does not represent net income or cash flow from operations as defined by GAAP, and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity.  Further, our computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.

 

53


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information

September 30, 2011

(Unaudited)

 

Adjusted EBITDA and Adjusted EBITDA Margin (continued)

The following table reconciles net income to EBITDA and Adjusted EBITDA (dollars in thousands):

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

9/30/11

 

9/30/10

 

Net income

 

$

32,995

 

$

34,311

 

$

32,625

 

$

92,000

 

$

30,461

 

$

99,931

 

$

47,022

 

Interest expense (1)

 

14,273

 

16,571

 

17,842

 

17,191

 

16,111

 

48,686

 

52,451

 

Depreciation and amortization (2)

 

39,990

 

40,363

 

36,707

 

34,551

 

32,009

 

117,060

 

92,089

 

EBITDA

 

87,258

 

91,245

 

87,174

 

143,742

 

78,581

 

265,677

 

191,562

 

Stock compensation expense

 

3,344

 

2,749

 

2,356

 

2,767

 

2,660

 

8,449

 

8,049

 

Impairment of real estate

 

994

 

–

 

–

 

–

 

–

 

994

 

–

 

Gain on sales of property

 

(46

)

–

 

–

 

(59,442

)

–

 

(46

)

(24

)

Loss on early extinguishment of debt

 

2,742

 

1,248

 

2,495

 

2,372

 

1,300

 

6,485

 

42,796

 

Adjusted EBITDA

 

$

94,292

 

$

95,242

 

$

92,025

 

$

89,439

 

$

82,541

 

$

281,559

 

$

242,383

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

143,427

 

$

142,918

 

$

139,418

 

$

130,889

 

$

120,314

 

$

425,763

 

$

351,559

 

Adjusted EBITDA margin

 

66%

 

67%

 

66%

 

68%

 

69%

 

66%

 

69%

 

 

(1)      Includes amount classified in discontinued operations and directly attributable to assets “held for sale.”

(2)      Includes amount classified in discontinued operations related to assets “held for sale” (for the periods prior to when such assets were designated as “held for sale”).

 

Adjusted Funds from Operations

Adjusted Funds from Operations (“AFFO”) is a non-GAAP financial measure we believe is a useful supplemental measure of our performance.  We compute AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders by adding to or deducting from FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders (1) recurring and non-recurring capital expenditures required to maintain and re-tenant our properties, (2) second generation tenant improvements and leasing costs on re-tenanted and renewal space (excludes redevelopment expenditures), (3) capitalized income from development projects, (4) gains or losses on early extinguishment of debt, (5) amortization of loan fees, debt premiums/discounts and acquired above and below market leases, (6) effects of deferred rent/straight-line rent and deferred rent/straight-line rent on ground leases, (7) non-cash compensation expense related to restricted stock awards, and (8) other non-cash income or charges, including impairment charges.  AFFO is not intended to represent cash flow for the period, and is only intended to provide an additional measure of performance by adjusting the effect of certain items noted above included in FFO, as well as recurring capital expenditures and leasing costs.  We believe that net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders is the most directly comparable GAAP financial measure to AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders.  We also believe that AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders provides useful performance information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs.  However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

 

54


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

 

Annualized Base Rent

Annualized base rent means the annualized fixed base rental amount in effect as of September 30, 2011 related to our operating rentable square feet (using rental revenue computed on a straight-line basis in accordance with GAAP).

 

Capitalized Interest

A key component of our business model is our value-added redevelopment and development programs.  These programs are focused on providing high-quality generic life science laboratory space to meet the real estate requirements of and are reusable by various life science industry tenants.  Upon completion, each value-added project is expected to generate significant revenues and cash flows.  Our redevelopment and development projects are generally in locations that are highly desirable to life science entities which we believe results in higher occupancy levels, longer lease terms, and higher rental income and returns.  Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into generic life science laboratory space, including the conversion of single-tenancy space to multi-tenancy space or multi-tenancy space to single-tenancy space. Development projects consist of the ground-up development of generic life science laboratory facilities. We also have certain significant value-added projects undergoing important and substantial preconstruction activities to bring these assets to their intended use. These critical activities add significant value and are required for the construction of buildings. The projects will provide high-quality facilities for the life science industry and will generate significant revenue and cash flows for the Company.  In accordance with GAAP, we capitalize project costs clearly related to the construction, redevelopment, and development as a cost of the project. Indirect project costs such as construction administration, legal fees, and office costs that clearly relate to projects under construction, redevelopment, and development are also capitalized as a cost of the project. We capitalize project costs only during periods in which activities necessary to prepare an asset for its intended use are in progress.  We also capitalize interest cost as a cost of the project only during the period for which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost is being incurred.  Additionally, should activities necessary to prepare an asset for its intended use cease, interest, taxes, insurance, and certain other direct project costs related to these assets would be expensed as incurred.

 

55


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

 

Dividend Payout Ratio

Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (shares of common stock outstanding on the respective record date multiplied by the related dividend per share) to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders on a diluted basis.  The dividend payout ratios for the three months ended September 30, 2011, June 30, 2011, March 31, 2011, and December 31, 2010 are based upon FFO attributable to Alexandria Real Estate Equities, Inc’s common stockholders on a diluted basis, excluding loss on early extinguishment of debt.

 

Dividend Yield

Dividend yield for the quarter represents the annualized quarter dividend divided by the closing common stock price at the end of the quarter.

 

Earnings per Share

We use income from continuing operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders as the “control number” in determining whether potential common shares, including potential common shares issuable upon conversion of our 8% unsecured convertible notes, are dilutive or antidilutive to earnings per share.  Pursuant to the presentation and disclosure literature on gains/losses on sales or disposals by REITs and earnings per share required by the SEC and the Financial Accounting Standards Board, gains or losses on sales or disposals by a REIT that do not qualify as discontinued operations are classified below income from discontinued operations in the income statement and included in the numerator for the computation of earnings per share for income from continuing operations.  The land parcels we sold during the three months ended December 31, 2010, and three months ended September 30, 2011, did not meet the criteria for discontinued operations since these parcels did not have any significant operations prior to disposition.  Accordingly, for the three months ended December 31, 2010, and three and nine months ended September 30, 2011, we classified the $59.4 million and $46,000, respectively, gain on sales of land parcels below income from discontinued operations, net in the consolidated income statements, and included the gain in income from continuing operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, the “control number,” or numerator for the computation of earnings per share.

 

We account for unvested restricted stock awards which contain nonforfeitable rights to dividends as participating securities and include these securities in the computation of earnings per share using the two-class method.  Under the two-class method, we allocate net income after preferred stock dividends and amounts attributable to noncontrolling interests to (1) common stockholders and (2) unvested restricted stock awards based on their respective participation rights to dividends declared (or accumulated) and undistributed earnings.  Diluted earnings per share is computed using the weighted average shares of common stock outstanding determined for the basic earnings per share computation plus the effect of any dilutive securities, including the dilutive effect of stock options using the treasury stock method.  For all periods except for the three months ended June 30, 2010, the effect of stock options using the treasury stock method was dilutive to income from continuing operations per share and as such, was included in the computation of diluted earnings per share.

 

We applied the if-converted method of accounting for our 8% unsecured senior convertible notes (“8% Unsecured Convertible Notes”).  In applying the if-converted method of accounting, conversion is assumed for purposes of calculating diluted earnings per share if the effect would be dilutive to earnings per share.  If the assumed conversion pursuant to the if-converted method is dilutive, diluted earnings per share would be calculated by adding back interest charges applicable to our 8% Unsecured Convertible Notes to the numerator and our 8% Unsecured Convertible Notes would be assumed to have been converted at the beginning of the period presented (or from the date of issuance, if occurring on a date later than the date that the period begins) and the resulting incremental shares associated with the assumed conversion would be included in the denominator.  Furthermore, we assume that our 8% Unsecured Convertible Notes are converted for the period prior to any retirement or actual conversion if the effect of such assumed retirement or conversion would be dilutive, and any shares of common stock issued upon actual conversion are included in the denominator for the period after the date of retirement or conversion.  For all periods except the three months ended December 31, 2010, potential common shares issuable upon conversion of our 8% unsecured convertible notes were antidilutive to income from continuing operations per share and as such, were excluded from the computation of diluted earnings per share.

 

56


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

Earnings per Share (continued)

The table below is a reconciliation of the numerators and denominators of the basic and diluted per share computations for income from continuing operations (dollars in thousands, except per share amounts):

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

Earnings per share – basic

 

2011

 

2010

 

2011

 

2010

 

Income from continuing operations

 

$

 

33,855

 

$

 

29,982

 

$

 

100,343

 

$

 

45,026

 

Gain on sale of land parcels

 

46

 

–

 

46

 

–

 

Net income attributable to noncontrolling interests

 

(966

)

(920

)

(2,833

)

(2,785

)

Dividends on preferred stock

 

(7,089

)

(7,089

)

(21,267

)

(21,268

)

Net income attributable to unvested restricted stock awards

 

(278

)

(217

)

(818

)

(502

)

Income from continuing operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

25,568

 

21,756

 

75,471

 

20,471

 

(Loss) income from discontinued operations

 

(906

)

479

 

(458

)

1,996

 

Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

$

 

24,662

 

$

 

22,235

 

$

 

75,013

 

$

 

22,467

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding – basic

 

61,295,659

 

49,807,241

 

58,271,270

 

46,188,308

 

Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

 

0.41

 

$

 

0.44

 

$

 

1.30

 

$

 

0.45

 

Discontinued operations, net

 

(0.01

)

0.01

 

(0.01

)

0.04

 

Earnings per share – basic

 

$

 

0.40

 

$

 

0.45

 

$

 

1.29

 

$

 

0.49

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

 

33,855

 

$

 

29,982

 

$

 

100,343

 

$

 

45,026

 

Gain on sale of land parcels

 

46

 

–

 

46

 

–

 

Net income attributable to noncontrolling interests

 

(966

)

(920

)

(2,833

)

(2,785

)

Dividends on preferred stock

 

(7,089

)

(7,089

)

(21,267

)

(21,268

)

Net income attributable to unvested restricted stock awards

 

(278

)

(217

)

(818

)

(502

)

Effect of assumed conversion and dilutive securities:

 

 

 

 

 

 

 

 

 

Assumed conversion of 8.00% Unsecured Convertible Notes

 

–

 

–

 

–

 

–

 

Amounts attributable to unvested restricted stock awards

 

–

 

–

 

–

 

–

 

Income from continuing operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders - diluted

 

25,568

 

21,756

 

75,471

 

20,471

 

(Loss) income from discontinued operations

 

(906

)

479

 

(458

)

1,996

 

Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

 

$

 

24,662

 

$

 

22,235

 

$

 

75,013

 

$

 

22,467

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

61,295,659

 

49,807,241

 

58,271,270

 

46,188,308

 

Dilutive effect of stock options

 

8,310

 

23,098

 

13,475

 

31,813

 

Weighted average shares of common stock outstanding – diluted

 

61,303,969

 

49,830,339

 

58,284,745

 

46,220,121

 

Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

 

0.41

 

$

 

0.44

 

$

 

1.30

 

$

 

0.45

 

Discontinued operations, net

 

(0.01

)

0.01

 

(0.01

)

0.04

 

Earnings per share – diluted

 

$

 

0.40

 

$

 

0.45

 

$

 

1.29

 

$

 

0.49

 

 

57


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

 

EBITDA

See Adjusted EBITDA.

 

Fixed Charge Coverage Ratio

The fixed charge coverage ratio is primarily used as a supplemental measure of the Company’s ability to satisfy fixed financing obligations.  We calculate the fixed charge coverage ratio as our ability to satisfy current cash interest expense and preferred dividends from adjusted EBITDA.  The following table outlines our calculation of our fixed charge coverage ratios (dollars in thousands):

 

 

 

Three Months Ended

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

Adjusted EBITDA

 

$

94,292

 

$

95,242

 

$

92,025

 

$

89,439

 

$

82,541

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense (1)

 

$

14,273

 

$

16,571

 

$

17,842

 

$

17,191

 

$

16,111

 

Add: capitalized interest

 

16,666

 

15,046

 

13,193

 

14,629

 

16,695

 

Less: amortized loan fees

 

(2,144

)

(2,327

)

(2,278

)

(1,999

)

(1,795

)

Less: amortization of debt premium/discounts

 

(750

)

(1,169

)

(1,335

)

(2,032

)

(2,092

)

Cash interest

 

28,045

 

28,121

 

27,422

 

27,789

 

28,919

 

Preferred dividends

 

7,089

 

7,089

 

7,089

 

7,089

 

7,089

 

Fixed charges

 

$

35,134

 

$

35,210

 

$

34,511

 

$

34,878

 

$

36,008

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed charge coverage ratio – quarter annualized

 

2.7x

 

2.7x

 

2.7x

 

2.6x

 

2.3x

 

Fixed charge coverage ratio – trailing 12 months

 

2.7x

 

2.6x

 

2.4x

 

2.2x

 

2.1x

 

 

(1)    Includes amounts classified in discontinued operations and directly attributable to assets “held for sale.”

 

Funds from Operations

GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time.  In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of NAREIT established the measurement tool of Funds from Operations (“FFO”).  Since its introduction, FFO has become a widely used non-GAAP financial measure among real estate investment trusts (“REITs”).  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the “White Paper”) and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs.  The White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains from sales, 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 financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.

 

58


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

 

FFO per Share

FFO per share (diluted) is computed using the weighted average shares of common stock outstanding determined for the basic FFO per share computation plus the effect of any dilutive securities, including the dilutive effect of stock options using the treasury stock method.  Additionally, we applied the if-converted method for our 8% Unsecured Convertible Notes for FFO per share separately from the if-converted analysis for earnings per share.  In applying the if-converted method, conversion is assumed for purposes of calculating FFO per share (diluted) if the effect would be dilutive to FFO per share.  If the assumed conversion pursuant to the if-converted method is dilutive, FFO per share (diluted) would be calculated by adding back interest charges applicable to our 8% Unsecured Convertible Notes to the numerator and our 8% Unsecured Convertible Notes would be assumed to have been converted at the beginning of the period presented (or from the date of issuance, if occurring on a date later than the date that the period begins) and the resulting incremental shares associated with the assumed conversion would be included in the denominator.  Furthermore, we assume that our 8% Unsecured Convertible Notes are converted for the period prior to any retirement or actual conversion if the effect of such assumed retirement or conversion would be dilutive, and any shares of common stock issued upon actual retirement or conversion are included in the denominator for the period after the date of retirement or conversion.  For purposes of calculating FFO per share (diluted), the if-converted method was dilutive to FFO per share (diluted) for all periods presented.

 

Gross Assets (Excluding Cash and Restricted Cash)

Gross assets (excluding cash and restricted cash) is equal to total assets plus accumulated depreciation, less cash, cash equivalents, and restricted cash.

 

Net Debt

Net debt is equal to the sum of secured notes payable, unsecured line of credit, unsecured term loans, and unsecured convertible notes, less cash, cash equivalents, and restricted cash.

 

59


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

 

Same Property Comparisons and Net Operating Income

As of September 30, 2011 and 2010, we owned 171 and 165 properties, respectively (the “Total Property Portfolio”). As a result of changes within our Total Property Portfolio, the financial data presented in the table on the following page shows significant changes in revenue and expenses from period to period.  In order to supplement an evaluation of our results of operations over a given period, we analyze the operating performance for all properties that were fully operating for the entire periods presented for the quarter periods (herein referred to as “Same Properties”) separate from properties acquired subsequent to the first period presented, properties undergoing active redevelopment and active development, and corporate entities (legal entities performing general and administrative functions), which are excluded from same property results (herein referred to as “Non-Same Properties”).  Additionally, rental revenues from lease termination fees, if any, are excluded from the results of the Same Properties.

 

Net operating income is a non-GAAP financial measure equal to income from continuing operations, the most directly comparable GAAP financial measure, plus loss from early extinguishment of debt, depreciation and amortization, interest expense, and general and administrative expense. We believe net operating income provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe net operating income is a useful measure for evaluating the operating performance of our real estate assets.  Net operating income on a cash basis is net operating income on a GAAP basis, adjusted to exclude the effect of straight-line rent adjustments required by GAAP.  We believe that net operating income on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent adjustments to rental revenue.

 

Further, we believe net operating income is useful to investors as a performance measure because, when compared across periods, net operating income reflects the impact on operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not immediately apparent from income from continuing operations.  Net operating income excludes certain components from income from continuing operations in order to provide results that are more closely related to our results of operations from our properties. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level rather than at the property level.  In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level.  Net operating income presented by us may not be comparable to net operating income reported by other REITs that define net operating income differently.  We believe that in order to facilitate a clear understanding of our operating results, net operating income should be examined in conjunction with income from continuing operations as presented in our condensed consolidated statements of income.  Net operating income should not be considered as an alternative to income from continuing operations as an indication of our performance or as an alternative to cash flows as a measure of liquidity or our ability to make distributions.

 

60


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

 

Same Property Comparisons and Net Operating Income (continued)

The following table presents a comparison of the components of same property and non-same property net operating income for the three and nine months ended September 30, 2011, compared to the three and nine months ended September 30, 2010, and a reconciliation of net operating income to income from continuing operations, the most directly comparable GAAP financial measure (dollars in thousands):

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended,
September 30,

 

Revenues:

 

2011

 

2010

 

% Change

 

2011

 

2010

 

% Change

 

Total revenues – Same Properties

 

$

101,141

 

$

100,341

 

1

%

$

296,239

 

$

291,441

 

2

%

Total revenues – Non-Same Properties

 

42,286

 

19,973

 

112

 

129,524

 

60,118

 

115

 

Total revenues

 

143,427

 

120,314

 

19

 

425,763

 

351,559

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental operations – Same Properties

 

29,362

 

28,409

 

3

 

84,106

 

79,793

 

5

 

Rental operations – Non-Same Properties

 

13,246

 

4,745

 

179

 

39,438

 

14,482

 

172

 

Total rental operations

 

42,608

 

33,154

 

29

 

123,544

 

94,275

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating income – Same Properties

 

71,779

 

71,932

 

–

 

212,133

 

211,648

 

–

 

Net operating income – Non-Same Properties

 

29,040

 

15,228

 

91

 

90,086

 

45,636

 

97

 

Total net operating income

 

100,819

 

87,160

 

16

 

302,219

 

257,284

 

17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

10,297

 

8,042

 

28

 

30,552

 

25,777

 

19

 

Interest

 

14,273

 

16,078

 

(11

)

48,650

 

52,351

 

(7

)

Depreciation and amortization

 

39,652

 

31,758

 

25

 

116,189

 

91,334

 

27

 

Loss on early extinguishment of debt

 

2,742

 

1,300

 

111

 

6,485

 

42,796

 

(85

)

Total other expenses

 

66,964

 

57,178

 

17

 

201,876

 

212,258

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

33,855

 

$

29,982

 

13

%

$

100,343

 

$

45,026

 

123

%

 

61


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)

September 30, 2011

(Unaudited)

 

Tangible Non-Real Estate Assets

Tangible non-real estate assets include the following as of each date presented (in thousands):

 

 

 

9/30/11

 

6/30/11

 

3/31/11

 

12/31/10

 

9/30/10

 

Cash and cash equivalents

 

$

73,056

 

$

60,925

 

$

78,196

 

$

91,232

 

$

110,811

 

Restricted cash

 

27,929

 

23,432

 

30,513

 

28,354

 

35,295

 

Tenant receivables

 

6,599

 

4,487

 

7,018

 

5,492

 

4,929

 

Investments

 

88,777

 

88,862

 

88,694

 

83,899

 

80,941

 

Other tangible non-real estate assets

 

40,916

 

32,407

 

33,384

 

31,896

 

40,283

 

Total tangible non-real estate assets

 

$

237,277

 

$

210,113

 

$

237,805

 

$

240,873

 

$

272,259

 

 

Total Market Capitalization

Total market capitalization is equal to the sum of outstanding shares of series C preferred stock and common stock multiplied by the related closing price at the end of each period presented, the liquidation value of the series D cumulative convertible preferred stock, and total debt (secured notes payable, unsecured line of credit, unsecured term loans, and unsecured convertible notes).

 

Weighted Average Interest Rate for Capitalization

The weighted average interest rate for calculating capitalization of interest required pursuant to GAAP represents a weighted average rate based on the rates applicable to borrowings outstanding during the period and includes the impact of our interest rate hedge agreements, amortization of debt discounts/premiums, and amortization of loan fees.  A separate calculation is performed each month to determine our weighted average interest rate for capitalization for the month.  The rate will vary each month due to changes in variable interest rates, the outstanding debt balances, the proportion of variable rate debt to fixed rate debt, the amount and terms of effective interest rate hedge agreements, and the amount of loan fee amortization.

 

62