EX-99.2 3 a13-11053_1ex99d2.htm EX-99.2

Exhibit 99.2

 

GRAPHIC

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Table of Contents

March 31, 2013

 

 

 

Page

Company Profile

ii

Investor Information

iii

 

 

EARNINGS PRESS RELEASE

 

First Quarter Ended March 31, 2013, Financial and Operating Results

1

Guidance

3

Condensed Consolidated Statements of Income

8

Condensed Consolidated Balance Sheets

9

Funds From Operations and Adjusted Funds From Operations

10

Non-GAAP Measures

11

 

 

SUPPLEMENTAL INFORMATION

 

Financial and Asset Base Highlights

13

 

 

Core Operating Metrics

 

Core Operating Metrics

14

Summary of Same Property Comparisons

15

Same Property Performance Historical Results

16

Summary of Leasing Activity

17

Summary of Lease Expirations

18

Summary of Properties and Occupancy

19

Property Listing

20

Top 20 Client Tenants and Client Tenant Mix

23

 

 

Value-Added Opportunities and External Growth

 

Summary of Investments in Real Estate

24

Summary of Capital Expenditures

25

All Active Development Projects in North America

26

All Active Redevelopment Projects in North America

28

Future Value-Added Projects in North America

32

Summary of Real Estate Investment in Asia

40

 

 

Balance Sheet

 

Credit Metrics

41

Summary of Debt

42

 

 

Definitions and Other Information

 

Definitions and Other Information

44

 

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  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.  These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events.  These statements are subject to risks, uncertainties, assumptions and other important factors that could cause actual results to differ materially from the results discussed in the forward-looking statements.  Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully 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, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by client tenants, general and local economic conditions, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”).  Accordingly, you are cautioned not to place undue reliance on such forward-looking statements.  All forward-looking statements are made as of April 29, 2013, the date this document was first made available on our website, and we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.  For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.  Note that certain figures are rounded throughout this document, which may impact footing and/or crossfooting of totals and subtotals.

 

This document 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,” “Alexandria,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

i

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Company Profile

March 31, 2013

 

The Company

 

Alexandria Real Estate Equities, Inc. (NYSE: ARE), a self-administered and self-managed investment-grade real estate investment trust (“REIT”), is the largest and leading REIT focused principally on owning, operating, developing, redeveloping, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry.  Founded in 1994, Alexandria was the first REIT to identify and pursue the laboratory niche and has since had the first-mover advantage in the core life science cluster locations including Greater Boston, San Francisco Bay Area, San Diego, New York City, Seattle, Suburban Washington, D.C., and Research Triangle Park.  Alexandria’s high-credit client tenants span the life science industry, including renowned academic and medical institutions, multinational pharmaceutical companies, public and private biotechnology entities, United States government research agencies, medical device companies, industrial biotech companies, venture capital firms, and life science product and service companies.  As the recognized real estate partner of the life science industry, Alexandria has a superior track record in driving client tenant productivity, collaboration, and innovation through its best-in-class laboratory and office space adjacent to leading academic medical research centers, unparalleled life science real estate expertise and services, and longstanding and expansive network in the life science community.  We believe these advantages result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.  For additional information on Alexandria Real Estate Equities, Inc., please visit www.are.com.

 

Unique Niche Strategy

 

Alexandria’s primary business objective is to maximize stockholder value by providing its stockholders with the greatest possible total return and long-term asset value 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 locations 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 for new landlords, high barriers to exit for client tenants, and limited supply of available space.  They represent highly desirable locations for tenancy by life science entities because of the close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses.  Alexandria’s strategy also includes drawing upon our 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.  Alexandria was founded in 1994 by Jerry M. Sudarsky and Joel S. Marcus.  Alexandria executed its initial public offering in 1997 and received its investment-grade ratings in 2011.

Management

 

Alexandria’s executive and senior management team is highly experienced in the REIT industry (uniquely with life science and real estate development, construction, operations, ownership, 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 life science industry experience.  Our management team also includes highly experienced regional market directors averaging over 21 years of real estate experience, including approximately 11 years with Alexandria.  We believe that our expertise, experience, reputation, and key life science relationships provide Alexandria significant competitive advantages in attracting new business opportunities.

 

Client Tenant Base

 

The quality, diversity, breadth, and depth of our significant relationships with our life science client tenants provide Alexandria with solid and stable cash flows.  Investment-grade client tenants represented 46% of Alexandria’s total annualized base rent as of March 31, 2013.  Investment-grade client tenants represented 78% of Alexandria’s top 10 client tenants by annualized base rent as of March 31, 2013.  As of March 31, 2013, our multinational pharmaceutical client tenants represented approximately 26.0% of our annualized base rent, led by Bristol-Myers Squibb Company, Eli Lilly and Company, GlaxoSmithKline plc, Novartis AG, Pfizer Inc., and Roche; revenue-producing life science product and service, medical device, and industrial biotech companies represented approximately 22.4%, led by Illumina, Inc., Laboratory Corporation of America Holdings, Monsanto Company, and Quest Diagnostics Incorporated; non-profit, renowned medical and research institutions, and government agencies represented approximately 17.9% and included Fred Hutchinson Cancer Research Center, Massachusetts Institute of Technology, The Regents of the University of California, Sanford-Burnham Medical Research Institute, The Scripps Research Institute, the United States Government, and University of Washington; public biotechnology companies represented approximately 16.9% and included Amgen Inc., Biogen Idec Inc., Celgene Corporation, Gilead Sciences, Inc., and Onyx Pharmaceuticals, Inc.; private biotechnology companies represented approximately 13.1% and included high-quality, leading-edge companies with blue-chip venture and institutional investors, including Constellation Pharmaceuticals, Inc., Epizyme, Inc., FibroGen, Inc., and FORMA Therapeutics, Inc.; and the remaining approximately 3.7% consisted of traditional office client 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 positively distinguish Alexandria from all other publicly traded real estate investment trusts and real estate companies.

 

Company Information

 

Corporate Headquarters

 

Trading Symbols

 

Information Requests

385 East Colorado Boulevard, Suite 299

 

New York Stock Exchange

 

Phone:

(626) 396-4828

Pasadena, California 91101

 

Common stock: ARE

 

E-mail:

corporateinformation@are.com

 

 

Series E preferred stock: ARE–E

 

Web:

www.are.com

 

Summary Data

 

Cluster markets

Greater Boston, San Francisco Bay Area, San Diego, Greater NYC, Suburban Washington, D.C., Seattle, Research Triangle Park, Canada, India, and China

 

 

Fiscal year-end

December 31

 

 

Total properties

173

 

 

Total rentable square feet

16.6 million

 

Common Stock Data

 

 

 

1Q13

 

4Q12

 

3Q12

 

2Q12

 

1Q12

 

High trading price

 

$

 73.51

 

$

 74.59

 

$

 77.10

 

$

 76.50

 

$

 74.45

 

Low trading price

 

$

 69.77

 

$

 64.09

 

$

 70.97

 

$

 67.40

 

$

 66.90

 

Closing stock price, average for period

 

$

 71.98

 

$

 69.88

 

$

 73.65

 

$

 71.67

 

$

 71.70

 

Closing stock price, at the end of the quarter

 

$

 70.98

 

$

 69.32

 

$

 73.52

 

$

 72.72

 

$

 73.13

 

Dividend per share – quarter/annualized

 

$

 0.60/2.40

 

$

 0.56/2.24

 

$

 0.53/2.12

 

$

 0.51/2.04

 

$

 0.49/1.96

 

Closing dividend yield – annualized

 

3.4%

 

3.2%

 

2.9%

 

2.8%

 

2.7%

 

Common shares outstanding at the end of the quarter

 

63,317,296

 

63,244,645

 

63,161,177

 

62,249,973

 

61,634,645

 

Closing market value of outstanding common shares (in thousands)

 

$

 4,494,262

 

$

 4,384,119

 

$

 4,643,610

 

$

 4,526,818

 

$

 4,507,342

 

Total market capitalization (in thousands)

 

$

 8,066,072

 

$

 7,953,348

 

$

 8,064,386

 

$

 7,912,286

 

$

 7,673,553

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

ii

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Investor Information

March 31, 2013

 

Executive/Senior Management

Joel S. Marcus

Chairman, Chief Executive Officer, & Founder

Thomas J. Andrews

EVP – Regional Market Director-Greater Boston

Dean A. Shigenaga

Chief Financial Officer, EVP, & Treasurer

Daniel J. Ryan

EVP – Regional Market Director-San Diego & Strategic  Operations

Stephen A. Richardson

Chief Operating Officer & Regional Market Director-San Francisco Bay Area

John J. Cox

SVP – Regional Market Director-Seattle

Peter M. Moglia

Chief Investment Officer

John H. Cunningham

SVP – Regional Market Director-NY & Strategic Operations

Jennifer J. Pappas

SVP, General Counsel, & Corporate Secretary

Larry J. Diamond

SVP – Regional Market Director-Mid Atlantic

Marc E. Binda

SVP – Finance

Vincent R. Ciruzzi

SVP – Construction & Development

Andres R. Gavinet

Chief Accounting Officer

 

 

 

 

Equity Research Coverage

 

Alexandria Real Estate Equities, Inc. is currently covered by the following research analysts.  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 below 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.

 

Argus Research Group, Inc.

 

 

Evercore Partners

 

 

J.P. Morgan Securities LLC

 

William Eddleman, Jr.

(212) 425-7500

 

Sheila McGrath

(212) 497-0882

 

Anthony Paolone

(212) 622-6682

 

 

 

Nathan Crossett

(212) 497-0870

 

Joseph Dazio

(212) 622-6416

 

 

 

 

 

 

 

 

Banc of America Securities-Merrill Lynch

 

The Goldman Sachs Group, Inc.

 

 

RBC Capital Markets

 

James Feldman

(646) 855-5808

 

Matthew Rand

(212) 902-4227

 

Michael Carroll

(440) 715-2649

Jeffrey Spector

(646) 855-1363

 

Andrew Rosivach

(212) 902-2796

 

Rich Moore

(440) 715-2646

Stephen Sihelnik

(646) 855-1829

 

Caitlin Burrows

(212) 902-4736

 

 

 

 

 

 

 

 

 

 

 

Barclays Capital Inc.

 

 

Green Street Advisors, Inc.

 

 

Robert W. Baird & Company

 

Ross L. Smotrich

(212) 526-2306

 

Jeff Theiler

(949) 640-8780

 

David Rodgers

(216) 737-7341

Michael R. Lewis

(212) 526-3098

 

John Hornbeak

(949) 640-8780

 

Mathew R. Spencer

(414) 298-5053

 

 

 

 

 

 

 

 

Citigroup Global Markets Inc.

 

 

International Strategy & Investment Group Inc.

 

Standard & Poor’s

 

Michael Bilerman

(212) 816-1383

 

George Auerbach

(212) 446-9459

 

Roy Shepard

(212) 438-1947

Quentin Velleley

(212) 816-6981

 

Steve Sakwa

(212) 446-9462

 

 

 

Emmanuel Korchman

(212) 816-1382

 

Gwen Clark

(212) 446-5611

 

 

 

 

 

 

 

 

 

 

 

Cowen and Company, LLC

 

 

JMP Securities – JMP Group, Inc.

 

 

UBS Financial Services Inc.

 

James Sullivan

(646) 562-1380

 

William C. Marks

(415) 835-8944

 

Ross Nussbaum

(212) 713-2484

Michael Gorman

(646) 562-1381

 

Whitney Stevenson

(415) 835-8948

 

Gabriel Hilmoe

(212) 713-3876

 

 

 

 

 

 

Weina Hou

(212) 713-4057

 

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

 

 

 

 

 

Rating

Moody’s Investors Service

 

 

Standard & Poor’s

 

 

 

 

Issuer Rating

Baa2
Stable Outlook

Corporate Credit Rating

BBB-
Stable Outlook

 

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

iii

 

 


 

GRAPHIC

 


 

 

Contact:

Joel S. Marcus

 

Chairman, Chief Executive Officer, & Founder

 

Alexandria Real Estate Equities, Inc.

 

(626) 578-9693

 

Alexandria Real Estate Equities, Inc.

Reports

 

First Quarter Ended March 31, 2013

Financial and Operating Results

 

FFO Per Share – Diluted, of $1.11, Up 3%, for the Three Months Ended 1Q13 Over 1Q12

AFFO Per Share – Diluted of $1.08, Up 6%, for the Three Months Ended 1Q13 Over 1Q12

EPS - Diluted of $0.36, Up 20%, for the Three Months Ended 1Q13 Over 1Q12

Total Revenues of $150.4 Million, Up 11%, for the Three Months Ended 1Q13 Over 1Q12

NOI from Continuing Operations of $105.2 Million, Up 10%, for the Three Months Ended 1Q13 Over 1Q12

 

PASADENA, CA. – April 29, 2013 – Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced financial and operating results for the first quarter ended March 31, 2013.

 

First Quarter Ended March 31, 2013, Highlights

 

Results

 

·                   Funds from operations (“FFO”) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, for the three months ended March 31, 2013, was $1.11 per share, up 3%, compared to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted, for the three months ended March 31, 2012, of $1.08 per share.

·                   Adjusted funds from operations (“AFFO”) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, for the three months ended March 31, 2013, was $1.08 per share, up 6%, compared to AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, for the three months ended March 31, 2012, of $1.02 per share

·                   Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, for the three months ended March 31, 2013, was $0.36 per share, up 20%, compared to net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, for the three months ended March 31, 2012, of $0.30 per share

 

Core Operating Metrics

 

·                   Total revenues were $150.4 million, up 11%, for the three months ended March 31, 2013, compared to total revenues for the three months ended March 31, 2012, of $135.7 million

·                   Net operating income (“NOI”) was $105.2 million, up 10%, for the three months ended March 31, 2013, compared to NOI for the three months ended March 31, 2012, of $95.3 million

·                   Investment-grade client tenants represented 46% of total annualized base rent (“ABR”)

·                   Investment-grade client tenants represented 78% of top 10 client tenants’ ABR

·                   Operating margins remained steady at 70% for the three months ended March 31, 2013

·                   Annual rent escalations in 96% of leases

·                   Same property net operating income increased by 8.8% and 0.4% on a cash and GAAP basis, respectively, for the three months ended March 31, 2013, compared to same property net operating income for the three months ended March 31, 2012

·                   Solid leasing activity during the three months ended March 31, 2013

·                   Executed 44 leases for 703,000 rentable square feet (“RSF”), including 457,000 RSF of development and redevelopment space

·                   RSF of remaining expiring leases in 2013 are modest at 4.1% of total RSF

·                   Rental rate increase of 5.9% and 12.7% on a cash and GAAP basis, respectively, on renewed/re-leased space

·                   Key life science space leasing

·                   ARIAD Pharmaceuticals, Inc. leased 244,000 RSF in the Greater Boston market

·                   Onyx Pharmaceuticals, Inc. leased 107,250 RSF in the San Francisco Bay Area market

·                   Occupancy of 94.2% for North America operating properties as of March 31, 2013, and occupancy of 91.8% for North America operating and redevelopment properties as of March 31, 2013, compared to occupancy of 94.6% for North America operating properties as of December 31, 2012, and occupancy of 91.6% for North America operating and redevelopment properties as of December 31, 2012

 

Value-Added Opportunities and External Growth

 

During the three months ended March 31, 2013, we executed leases aggregating 355,000 and 102,000 RSF, respectively, related to our development and redevelopment projects.

 

Our initial stabilized yield on a cash basis reflects cash rents at date of stabilization and does not reflect contractual rent escalations beyond the stabilization date.  Our cash rents related to our value-added projects are expected to increase over time and our average stabilized cash yields are expected, in general, to be greater than our initial stabilized yields.  Initial stabilized yield is calculated as the quotient of the estimated amounts of NOI and our investment in the property at stabilization (“Initial Stabilized Yield”).

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

1

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

First Quarter Ended March 31, 2013, Financial and Operating Results

(Tabular dollar amounts in thousands, except per square foot amounts)

(Unaudited)

 

Development commencements

 

The following table summarizes the commencement of key development projects:

 

 

 

 

 

 

 

 

 

Investment

 

 

 

Initial

 

 

 

 

Commencement

 

 

 

Pre-Leased

 

at

 

Cost Per

 

Stabilized Yield

 

Key

Address/Market

 

Date

 

RSF

 

%

 

Completion

(1)

RSF

 

Cash

 

GAAP

 

Client Tenant

Development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75/125 Binney Street/Greater Boston

 

January 2013

 

386,275

 

63%

 

$

351,439

 

$

910

 

8.0%

 

8.2%

 

ARIAD Pharmaceuticals, Inc.

269 East Grand Avenue/San Francisco Bay Area

 

March 2013

 

107,250

 

100%

 

$

51,300

 

$

478

 

8.1%

 

9.3%

 

Onyx Pharmaceuticals, Inc.

 

(1)             See page 4 for additional details on current assumptions included in our guidance for funding the cost to complete the development of 75/125 Binney Street.

 

 

Balance Sheet Strategy and Significant Milestones

 

·                   Balance sheet strategy continues to focus on our leverage of net debt to adjusted EBITDA of approximately 6.5x targeted by December 31, 2013, by funding our significant Class A development and redevelopment projects in top life science cluster locations with leverage-neutral sources of capital and with the continuing execution of our asset recycling program.  Our leverage will reflect periodic increases and decreases quarter to quarter as we execute and deliver our construction projects and execute our capital plan, including our asset sales program.  See “Sources and Uses” table on page 4 for additional information.  Our strategy to improve leverage includes:

·                         Growth in annualized EBITDA from the fourth quarter 2012 to the fourth quarter 2013 due primarily to the completion of significant value-added projects; 93% leased

·                         Asset recycling program to monetize non-strategic income-producing and non-income-producing assets will reduce outstanding debt and provide funds for reinvestment into Class A, CBD, and urban locations in close proximity to leading academic medical research centers

·                   Sold $124.3 million of income-producing assets during the three months ended March 31, 2013; assets sold in first quarter of 2013 generated a weighted-average unlevered internal rate of return of 11% during our ownership period

·                   Sales of $209 million to $259 million of non-income-producing assets targeted for remainder of the year ended December 31, 2013

·                   $45 million of non-income-producing asset sales under negotiation

·                   $60 million to $70 million projected partial sale of an interest in the ground-up development of 75/125 Binney Street

·                   $104 million to $144 million to be identified in the near term

·                   Minimizing the issuance of common equity to achieve net debt to adjusted EBITDA of approximately 6.5x targeted by December 31, 2013

·                   Liquidity available under unsecured senior line of credit and from cash and cash equivalents was approximately $1.0 billion as of March 31, 2013

·                   Unhedged variable rate debt as a percentage of total debt of less than 18% targeted by December 31, 2013

 

As of March of 2013, we have completed all significant sales of income-producing assets targeted for 2013.  The following table presents our completed real estate asset sales during the three months ended March 31, 2013:

 

 

 

 

 

 

 

 

 

 

 

 

Annualized

 

 

 

Sales

 

Gain/

 

 

 

 

 

 

 

 

Date

 

 

 

GAAP

 

Sales

 

Price

 

(Loss)

 

Unlevered

Description

 

Date of Purchase

 

Location

 

of Sale

 

RSF

 

NOI (1)

 

Price

 

per RSF

 

on Sale (2)

 

IRR (3)

Sales completed in 1Q13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1124 Columbia Street

 

May 1996

 

Seattle - First Hill

 

January 2013

 

203,817

 

$

6,802

 

$

42,600

 

$

209

 

$

–

 

11.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25/35/45 West Watkins Mill Road

1201 Clopper Road

 

October 1996

May 1998

 

Suburban Washington, D.C. - Gaithersburg

 

February 2013

 

282,523

 

$

7,795

 

41,400

 

$

147

 

$

53

 

11.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

One Innovation Drive

377 Plantation Street

381 Plantation Street

 

January 1999

September 1998

March 1999

 

Greater Boston - Route 495/Worcester

 

February 2013

 

300,313

 

$

6,605

 

40,250

 

$

134

 

$

(392

)

9.6

Total/weighted average

 

 

 

 

 

 

 

 

 

 

 

$

124,250

 

 

 

 

 

11.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales completed in 2Q13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

702 Electronic Drive

 

June 1998

 

Pennsylvania

 

April 2013

 

40,171

 

$

438

 

$

4,362

 

$

109

 

$

268

 

10.0%

Total/weighted average

 

 

 

 

 

 

 

 

 

 

 

$

4,362

 

 

 

 

 

10.0%

 

(1)             Annualized using actual year-to-date results as of the quarter ended prior to date of sale or March 31, 2013.

(2)             Excludes impairment charges aggregating $11.4 million recognized during the year ended December 31, 2012.

(3)             See definition of Unlevered IRR in Non-GAAP Measures section on page 12.

 

In addition to the asset sales completed in the table above, we have targeted the sale of non-income-producing assets ranging from $209 million to $259 million in 2013.  See page 3 for additional information.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

2

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

First Quarter Ended March 31, 2013, Financial and Operating Results

(Unaudited)

 

GUIDANCE

 

Earnings outlook

 

Based on our current view of existing market conditions and certain current assumptions, we have updated guidance for earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted and FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted for the year ended December 31, 2013, as set forth in the table below.  The table below provides a reconciliation of FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, a non-GAAP measure, to earnings per share, the most directly comparable GAAP measure and other key assumptions included in our guidance for the year ended December 31, 2013.

 

Guidance for the Year Ended December 31, 2013

 

Reported on April 29, 2013

 

Reported on February 7, 2013

 

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

 

$1.43 to $1.59

 

$1.41 to $1.61

 

Depreciation and amortization

 

$2.95 to $3.11

 

$2.93 to $3.13

 

Loss on sale of real estate

 

$0.01

 

–

 

Other

 

$(0.01)

 

–

 

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

 

$4.46 to $4.62

 

$4.44 to $4.64

 

 

 

 

 

 

 

Key projection assumptions:

 

 

 

 

 

Same property net operating income growth – cash basis

 

4% to 7%

 

4% to 7%

 

Same property net operating income growth – GAAP basis

 

Up to 3%

 

0% to 3%

 

Rental rate steps on lease renewals and re-leasing of space – cash basis

 

Up to 2%

 

Flat to slightly positive

 

Rental rate steps on lease renewals and re-leasing of space – GAAP basis

 

Up 5% to 10%

 

Up 5% to 10%

 

Occupancy percentage for all operating properties at December 31, 2013

 

93.9% to 94.3%

 

93.9% to 94.3%

 

Straight-line rents

 

$24 to $26 million

 

$24 to $26 million

 

Amortization of above and below market leases

 

$3 to $4 million

 

$3 to $4 million

 

General and administrative expenses

 

$48 to $51 million

 

$48 to $51 million

 

Capitalization of interest

 

$47 to $53 million

 

$47 to $53 million

 

Interest expense, net

 

$74 to $84 million

 

$74 to $84 million

 

Net debt to adjusted EBITDA for the annualized three months ended December 31, 2013

 

6.5x

 

6.5x

 

Fixed charge coverage ratio for the annualized three months ended December 31, 2013

 

2.9x to 3.0x

 

2.9x to 3.0x

 

 

On a short-term basis, our unhedged variable rate debt as a percentage of total debt may range up to 30%. Our strategy is to have unhedged variable rate debt available for repayment as we issue unsecured senior notes payable, extend our maturity profile, transition variable rate debt to fixed rate debt, and enhance our long-term capital structure.  Our unhedged variable rate debt as a percentage of total debt is targeted to decrease to less than 18% by December 31, 2013.

 

Monetization of non-income-producing assets

 

Non-income-producing assets as a percentage of our gross investments in real estate is targeted to decrease to a range of 15% to 17% by December 31, 2013.  As of March 31, 2013, we had approximately $579 million and $141 million of construction in progress related to our five North American development and seven North American redevelopment projects, respectively.  The completion of these projects, along with recently delivered projects, certain future projects, and contributions from same properties, is expected to contribute significant increases in rental income, NOI, and cash flows.  Operating performance assumptions related to the completion of our North American development and redevelopment projects, including the timing of initial occupancy, stabilization dates, and Initial Stabilized Yields, are included on pages 5 and 6.  Certain key assumptions regarding our projections, including the impact of various development and redevelopment projects, are included in the tables above and on the following page.

 

The completion of our development and redevelopment projects will result in increased interest expense and other direct project costs, because these project costs will no longer qualify for capitalization and these costs will be expensed as incurred.  Our projection assumptions for depreciation and amortization, general and administrative expenses, capitalization of interest, interest expense, net, and NOI growth are included in the tables on this page and are subject to a number of variables and uncertainties, including those discussed under the “Forward-looking Statements” section of Part I, the “Risk Factors” section of Item 1A, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section under Item 7, of our annual report on Form 10-K for the year ended December 31, 2012.  To the extent our full year earnings guidance is updated during the year, we will provide additional disclosure supporting reasons for any significant changes to such guidance.  Further, we believe NOI is a key performance indicator and is useful to investors as a performance measure because, when compared across periods, NOI 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.

 

Our guidance for 2013 includes the following targeted sales of non-income-producing assets (in millions):

 

 

 

2013 Non-Income-Producing Asset Sales

 

 

 

Identified

 

TBD

 

Total

 

2013 non-income-producing asset sales initially targeted for 4Q12 closing

 

 

 

 

 

 

 

Book value of land subject to sale negotiations

 

$

34

 

$

–

 

$

34

 

Subtotal

 

34

 

–

 

34

 

 

 

 

 

 

 

 

 

2013 non-income-producing asset sales initially projected on December 5, 2012

 

 

 

 

 

 

 

Book value of land subject to sale negotiations

 

11

 

–

 

11

 

Projected proceeds from the partial sale of the 75/125 Binney Street project (1)

 

60 - 70

 

–

 

60 - 70

 

Future non-income-producing asset sales expected to be identified in the next several months

 

–

 

104 - 144

 

104 - 144

 

Subtotal

 

71 - 81

 

104 - 144

 

175 - 225

 

 

 

 

 

 

 

 

 

Total 2013 non-income-producing asset sales target

 

$

105 - 115

 

$

104 - 144

 

$

209 - 259

 

 

(1)             See further details regarding our guidance related to our projected unconsolidated joint venture on page 4.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

3

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

First Quarter Ended March 31, 2013, Financial and Operating Results

(Unaudited)

 

Sources and uses of capital

 

We expect that our principal liquidity needs for the year ended December 31, 2013, will be satisfied by the following multiple sources of capital as 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.  Our liquidity available under our unsecured senior line of credit and from cash and cash equivalents was approximately $1.0 billion as of March 31, 2013.

 

 

 

Reported on
April 29, 2013

 

Reported on
February 7, 2013

 

Sources and Uses of Capital for the Year Ended December 31, 2013 (in millions)

 

Completed

 

Projected

 

Total

 

Total

 

Sources of capital:

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities less dividends (1)

 

$

34

 

$

96 - 116

 

$

130 - 150

 

$

130 - 150

 

2013 asset sales initially targeted for 4Q12 closing

 

43

 

34

(2)

77

 

77

 

2013 asset sales initially projected on December 5, 2012

 

 

 

 

 

 

 

 

 

Non-income-producing

 

–

 

175 - 225

(2)

175 - 225

 

175 - 225

 

Income-producing

 

82

 

0 - 13

 

82 - 95

 

75 - 125

 

Secured construction loan borrowings

 

17

 

3 - 13

 

20 - 30

 

20 - 30

 

Unsecured senior notes payable

 

–

 

350 - 450

 

350 - 450

 

350 - 450

 

Issuances under “at the market” common stock offering program

 

–

 

125 - 175

 

125 - 175

 

125 - 175

 

Total sources of capital

 

$

176

 

$

783 - 1,026

 

$

959 - 1,202

 

$

952 - 1,232

 

 

 

 

 

 

 

 

 

 

 

Uses of capital:

 

 

 

 

 

 

 

 

 

Development, redevelopment, and construction (3)

 

$

104

 

$

466 - 516

 

$

570 - 620

 

$

545 - 595

 

Seller financing of asset sales (4)

 

39

 

–

 

39

 

39

 

Acquisitions (5)

 

–

 

–

 

–

 

–

 

Secured notes payable repayments

 

3

 

34

 

37

 

37

 

Unsecured senior bank term loan repayment

 

–

 

125 - 175

 

125 - 175

 

125 - 175

 

Paydown of unsecured senior line of credit

 

30

 

158 - 301

 

188 - 331

 

206 - 386

 

Total uses of capital

 

$

176

 

$

783 - 1,026

 

$

959 - 1,202

 

$

952 - 1,232

 

 

(1)             See “Key Projection Assumptions” on the previous page.

(2)             See table at bottom of page 3 for further information.

(3)             Total construction spending for 2013 increased approximately $25 million at the mid-point of our guidance since last quarter primarily as a result of our estimated share of capital required for the commencement of two new ground-up development projects during the first quarter of 2013.  Our estimated construction spend for 2013 increased by approximately $13 million as a result of the commencement of our 100% pre-leased development at 269 East Grand Avenue.  The total estimated cost at completion for 75/125 Binney Street has not changed since our estimate as of December 31, 2012; however, the timing of construction and completion of our projected joint venture results in an increase in our estimated share of capital contributions to fund the completion of the project by approximately $10 million.

(4)             Represents a $29.8 million note receivable with an interest rate of 3.25% and a maturity date of January 21, 2015, and a $9.0 million note receivable with an interest rate of 4.00% and a maturity date of March 1, 2019.

(5)             Our guidance has assumed no acquisitions, but we continuously and intensively review a pipeline of opportunistic acquisitions in our key core cluster markets that we would expect to fund on a leverage-neutral basis.

 

The key assumptions behind the sources and uses of capital in the table above are a favorable capital market environment and performance of our core operations in areas such as delivery of current and future development and redevelopment projects, leasing activity, and renewals.  Our expected sources and uses of capital are subject to a number of variables and uncertainties, including those discussed under the “Forward-looking statements” section of Part I, the “Risk Factors” section of Item 1A, and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section under Item 7, of our annual report on Form 10-K for the year ended December 31, 2012.  We expect to update our forecast of sources and uses of capital on a quarterly basis.

 

Projected unconsolidated joint venture

 

Our guidance for the year ended December 31, 2013, assumes a transfer of 50% of our ownership interest in the 75/125 Binney Street project to a new joint venture partner which will be accounted for as a sale of an interest in our investment in the ground-up development, with the resulting entity presented as an unconsolidated joint venture (the “Binney JV”) in our financial statements.  This projected sale of an interest in our investment in the ground-up development is included in our total non-income-producing asset sales target for 2013. We expect the sale proceeds to range from $60 million to $70 million and to exceed our share of the remaining investment of $44 million through the completion of the project.   We also anticipate the unconsolidated Binney JV to obtain a secured construction loan to fund 60% to 70% of the total project costs.

 

The following assumptions are included in our guidance for funding the cost to complete the 75/125 Binney Street project (in millions).

 

 

 

Cost to Complete (1)

 

 

 

Nine Months Ended
December 31, 2013

 

Thereafter

 

Total

 

75/125 Binney Street project – remaining cost to complete

 

$

91

 

$

163

 

$

254

 

 

 

 

 

 

 

 

 

Projected unconsolidated joint venture funding:

 

 

 

 

 

 

 

Binney JV partner capital/Binney JV construction loan

 

(47

)

(163

)

(210

)

ARE investment in Binney JV project

 

$

44

 

$

–

 

$

44

 (2)

 

(1)             Represent the mid points of our guidance assumptions related to estimated funding amounts provided by joint venture partner capital, joint venture construction loan, and Alexandria.

(2)             Represents our share of incremental investment into the Binney JV and is included in our guidance for 2013 development, redevelopment, and construction spending in a range from $570 million to $620 million. Binney JV partner capital and secured construction loan funding for 75/125 Binney Street related to our projected unconsolidated joint venture have been excluded from our construction spend forecast for 2013.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

4

 

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Development Projects in North America
March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

Project RSF (1)

 

Leased Status RSF (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Leased/

 

 

 

Property/Market – Submarket

 

CIP

 

Total

 

Leased

 

Negotiating

 

Marketing

 

Total

 

Negotiating

 

Client Tenants

 

All active development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225 Binney Street/Greater Boston — Cambridge

 

305,212

 

305,212

 

305,212

 

–

 

–

 

305,212

 

100%

 

Biogen Idec Inc.

 

499 Illinois Street/San Francisco Bay Area — Mission Bay

 

222,780

 

222,780

 

–

 

162,549

 

60,231

 

222,780

 

73%

 

TBA

 

269 East Grand Avenue/San Francisco Bay Area — South San Francisco

 

107,250

 

107,250

 

107,250

 

–

 

–

 

107,250

 

100%

 

Onyx Pharmaceuticals, Inc.

 

430 East 29th Street/Greater NYC — Manhattan

 

419,806

 

419,806

 

60,816

 

152,488

(2)

206,502

 

419,806

 

51%

 

Roche/TBA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75/125 Binney Street/Greater Boston — Cambridge

 

386,275

 

386,275

 

244,123

 

–

 

142,152

(3)

386,275

 

63%

 

ARIAD Pharmaceuticals, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

1,441,323

 

1,441,323

 

717,401

 

315,037

 

408,885

 

1,441,323

 

72%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

360 Longwood Avenue/Greater Boston — Longwood

 

413,536

 

413,536

 

154,100

 

–

 

259,436

 

413,536

 

37%

 

Dana-Farber Cancer Institute, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total/weighted average

 

1,854,859

 

1,854,859

 

871,501

 

315,037

 

668,321

 

1,854,859

 

64%

 

 

 

 

 

 

Investment (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected

 

 

 

Cost

 

Initial Stabilized

 

Project

 

Initial

 

 

 

 

 

 

 

Cost To Complete

 

Sale

 

Total at

 

Per

 

Yield (1)

 

Start

 

Occupancy

 

Stabilization

 

Property/Market – Submarket

 

CIP

 

2013

 

Thereafter

 

of Interest

 

Completion

 

RSF

 

Cash

 

GAAP

 

Date (1)

 

Date (1)

 

Date (1)

 

All active development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225 Binney Street/Greater Boston — Cambridge

 

$

118,595

 

$

61,678

 

$

–

 

$

–

 

$

180,273

 

$

591

 

7.5%

 

8.1%

 

4Q11

 

4Q13

 

4Q13

 

499 Illinois Street/San Francisco Bay Area — Mission Bay

 

$

116,110

 

$

14,298

 

$

22,801

 

$

–

 

$

153,209

 

$

688

 

6.4%

 

7.2%

 

2Q11

 

2Q14

 

2014

 

269 East Grand Avenue/San Francisco Bay Area — South San Francisco (4)

 

$

8,037

 

$

13,100

 

$

30,163

 

$

–

 

$

51,300

 

$

478

 

8.1%

 

9.3%

 

1Q13

 

4Q14

 

2014

 

430 East 29th Street/Greater NYC — Manhattan

 

$

239,086

 

$

113,879

 

$

110,280

 

$

–

 

$

463,245

 

$

1,103

 

6.6%

 

6.5%

 

4Q12

 

4Q13

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75/125 Binney Street/Greater Boston — Cambridge (5)

 

$

97,445

 

$

90,871

 

$

163,123

 

$

–

 

$

351,439

 

$

910

 

8.0%

 

8.2%

 

1Q13

 

1Q15

 

2015

 

JV partner capital/JV construction loan

 

$

–

 

$

(47,025

)

$

(163,123

)

$

–

 

$

(210,148

)

 

 

 

 

 

 

 

 

 

 

 

 

Projected sale of interest

 

$

–

 

$

–

 

$

–

 

$

(65,000

)

$

(65,000

)

 

 

 

 

 

 

 

 

 

 

 

 

ARE investment in 75/125 Binney Street project

 

$

97,445

 

$

43,846

 

$

–

 

$

(65,000

)

$

76,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

$

579,273

 

$

246,801

 

$

163,244

 

$

(65,000

)

$

924,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

360 Longwood Avenue/Greater Boston — Longwood

 

$

148,596

 

$

67,744

 

$

133,660

 

$

–

 

$

350,000

 

$

846

 

8.3%

 

8.9%

 

2Q12

 

4Q14

 

2016

 

JV partner capital/JV construction loan

 

$

(123,638

)

$

(51,761

)

$

(133,660

)

$

–

 

$

(309,059

)

 

 

 

 

 

 

 

 

 

 

 

 

ARE investment in 360 Longwood Avenue

 

$

24,958

 

$

15,983

 

$

–

 

$

–

 

$

40,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total/weighted average

 

$

604,231

 

$

262,784

 

$

163,244

 

$

(65,000

)

$

965,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)             All project information, including rentable square feet; investment; Initial Stabilized Yields; and project start, occupancy and stabilization dates, relates to the discrete portion of each property undergoing active development or redevelopment.  A redevelopment project does not necessarily represent the entire property or the entire vacant portion of a property.  Our Initial Stabilized Yield on a cash basis reflects cash rents at date of stabilization and does not reflect contractual rent escalations beyond the stabilization date.  Our cash rents related to our value-added projects are expected to increase over time and our average stabilized cash yields are expected, in general, to be greater than our Initial Stabilized Yields.  Our estimates for initial cash and GAAP yields, and total costs at completion, represent our initial estimates at the commencement of the project.  We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.  As of March 31, 2013, 96% of our leases contained annual rent escalations that were either fixed or based on a consumer price index or another index

(2)             Represents 131,000 rentable square feet subject to an executed letter of intent with the remainder subject to letters of intent or lease negotiations.

(3)             ARIAD Pharmaceuticals, Inc. has potential additional expansion opportunities at 75 Binney Street through June 2014.

(4)            Funding for 70% of the estimated total investment at completion for 269 East Grand Avenue is expected to be provided primarily by a secured construction loan.

(5)             Represent the mid points of our guidance assumptions related to estimated funding amounts provided by joint venture partner capital, joint venture construction loan, and Alexandria.  See page 4 for additional information on our range of guidance for funding on this project.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

5

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Redevelopment Projects in North America
March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

Project RSF (1)

 

Leased Status RSF (1)

 

 

 

 

 

 

 

 

 

In

 

 

 

 

 

 

 

 

 

 

 

 

 

% Leased/

 

Former

 

Use After

 

 

 

Property/Market – Submarket

 

Service

 

CIP

 

Total

 

Leased

 

Negotiating

 

Marketing

 

Total

 

Negotiating

 

Use

 

Conversion

 

Client Tenants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All active redevelopment projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Technology Square/Greater Boston – Cambridge

 

162,153

 

49,971

 

212,124

 

169,939

 

–

 

42,185

 

212,124

 

80%

 

Office

 

Laboratory

 

Ragon Institute of MGH, MIT and Harvard; Epizyme, Inc.; Warp Drive Bio, LLC; Aramco Services Company, Inc.

 

285 Bear Hill Road/Greater Boston – Route 128

 

–

 

26,270

 

26,270

 

26,270

 

–

 

–

 

26,270

 

100%

 

Office/ Manufacturing

 

Laboratory

 

Intelligent Medical Devices, Inc.

 

343 Oyster Point/San Francisco Bay Area – South San Francisco

 

–

 

53,980

 

53,980

 

42,445

 

–

 

11,535

 

53,980

 

79%

 

Office

 

Laboratory

 

Calithera BioSciences, Inc.; CytomX Therapeutics, Inc.

 

4757 Nexus Center Drive/ San Diego – University Town Center

 

–

 

68,423

 

68,423

 

68,423

 

–

 

–

 

68,423

 

100%

 

Manufacturing/ Warehouse/ Office/R&D

 

Laboratory

 

Genomatica, Inc.

 

9800 Medical Center Drive/Suburban Washington, D.C. – Rockville

 

8,001

 

67,055

 

75,056

 

75,056

 

–

 

–

 

75,056

 

100%

 

Office/Laboratory

 

Laboratory

 

National Institutes of Health

 

1551 Eastlake Avenue/Seattle – Lake Union

 

77,821

 

39,661

 

117,482

 

77,821

 

–

 

39,661

 

117,482

 

66%

 

Office

 

Laboratory

 

Puget Sound Blood Center and Program

 

1616 Eastlake Avenue/Seattle – Lake Union

 

40,756

 

26,020

 

66,776

 

40,756

 

–

 

26,020

 

66,776

 

61%

 

Office

 

Laboratory

 

Infectious Disease Research Institute

 

Total/weighted average

 

288,731

 

331,380

 

620,111

 

500,710

 

–

 

119,401

 

620,111

 

81%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment (1)

 

Initial Stabilized

 

Project

 

Initial

 

 

 

 

 

March 31, 2013

 

To Complete

 

 

 

Total at

 

Cost Per

 

Yield (1)

 

Start

 

Occupancy

 

Stabilization

 

Property/Market – Submarket

 

In Service

 

CIP

 

2013

 

Thereafter

 

Completion

 

RSF

 

Cash

 

GAAP

 

Date (1)

 

Date (1)

 

Date (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All active redevelopment projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Technology Square/ Greater Boston – Cambridge

 

$

99,980

 

$

32,212

 

$

9,176

 

$

3,320

 

$

144,688

 

$

682

 

8.1%

 

8.9%

 

4Q11

 

4Q12

 

4Q13

 

285 Bear Hill Road/Greater Boston – Route 128

 

$

–

 

$

4,654

 

$

4,542

 

$

–

 

$

9,196

 

$

350

 

8.4%

 

8.8%

 

4Q11

 

3Q13

 

2013

 

343 Oyster Point/ San Francisco Bay Area – South San Francisco

 

$

–

 

$

10,912

 

$

5,560

 

$

867

 

$

17,339

 

$

321

 

9.6%

 

9.8%

 

1Q12

 

3Q13

 

2014

 

4757 Nexus Center Drive/ San Diego – University Town Center

 

$

–

 

$

5,879

 

$

23,747

 

$

5,203

 

$

34,829

 

$

509

 

7.6%

 

7.8%

 

4Q12

 

4Q13

 

4Q13 (2)

 

9800 Medical Center Drive/ Suburban Washington, D.C. – Rockville

 

$

7,454

 

$

61,251

 

$

11,999

 

$

–

 

$

80,704

 

(3

)

5.4%

 

5.4%

 

3Q09

 

1Q13

 

2013

 

1551 Eastlake Avenue/Seattle – Lake Union

 

$

40,711

 

$

16,841

 

$

6,458

 

$

–

 

$

64,010

 

$

545

 

6.7%

 

6.7%

 

4Q11

 

4Q11

 

4Q13

 

1616 Eastlake Avenue/Seattle – Lake Union

 

$

22,589

 

$

9,721

 

$

853

 

$

4,653

 

$

37,816

 

$

566

 

8.4%

 

8.6%

 

4Q12

 

2Q13

 

2014

 

Total/weighted average

 

$

170,734

 

$

141,470

 

$

62,335

 

$

14,043

 

$

388,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)             All project information, including rentable square feet; investment; Initial Stabilized Yields; and project start, occupancy and stabilization dates, relates to the discrete portion of each property undergoing active development or redevelopment.  A redevelopment project does not necessarily represent the entire property or the entire vacant portion of a property.  Our Initial Stabilized Yield on a cash basis reflects cash rents at date of stabilization and does not reflect contractual rent escalations beyond the stabilization date.  Our cash rents related to our value-added projects are expected to increase over time and our average stabilized cash yields are expected, in general, to be greater than our Initial Stabilized Yields.  Our estimates for initial cash and GAAP yields, and total costs at completion, represent our initial estimates at the commencement of the project.  We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.  As of March 31, 2013, 96% of our leases contained annual rent escalations that were either fixed or based on a consumer price index or another index.

(2)             We expect to deliver 54,102 rentable square feet, or 79% of the total project, to Genomatica, Inc. in the fourth quarter of 2013.  Genomatica, Inc. is contractually required to lease the remaining 14,411 rentable square feet 18 to 24 months following the delivery of the initial 54,102 rentable square foot space.

(3)             Our multi-tenant four building property at 9800 Medical Center Drive contains an aggregate of 281,586 rentable square feet.  Our total cash investment in the entire four building property upon completion of the redevelopment will approximate $580 per square foot.   Our total expected cash investment for the four building property of approximately $580 per square foot includes our expected total investment at completion related to the 75,056 rentable square foot redevelopment of approximately $1,075 per square foot.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

6

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

First Quarter Ended March 31, 2013, Financial and Operating Results

 

EARNINGS CALL INFORMATION

 

We will host a conference call on Tuesday, April 30, 2013, 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 March 31, 2013.  To participate in this conference call, dial (888) 245-0988 or (913) 312-1513 and confirmation code 3766517, 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 “For Investors” section.  A replay of the call will be available for a limited time from 5:30 p.m. ET/2:30 p.m. PT on Tuesday, April 30, 2013.  The replay number is (888) 203-1112 or (719) 457-0820 and the confirmation code is 3766517.

 

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2013, is available in the “For Investors” section of our website at www.are.com.

 

About the Company

 

Alexandria Real Estate Equities, Inc. (NYSE: ARE), a self-administered and self-managed investment-grade REIT, is the largest and leading REIT focused principally on owning, operating, developing, redeveloping, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry.  Founded in 1994, Alexandria was the first REIT to identify and pursue the laboratory niche and has since had the first-mover advantage in the core life science cluster locations including Greater Boston, San Francisco Bay Area, San Diego, New York City, Seattle, Suburban Washington, D.C., and Research Triangle Park.  Alexandria’s high-credit client tenants span the life science industry, including renowned academic and medical institutions, multinational pharmaceutical companies, public and private biotechnology entities, United States government research agencies, medical device companies, industrial biotech companies, venture capital firms, and life science product and service companies.  As the recognized real estate partner of the life science industry, Alexandria has a superior track record in driving client tenant productivity, collaboration, and innovation through its best-in-class laboratory and office space adjacent to leading academic medical research centers, unparalleled life science real estate expertise and services, and longstanding and expansive network in the life science community.  We believe these advantages result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.  For additional information on Alexandria Real Estate Equities, Inc., please visit www.are.com.

 

***********

 

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Such forward-looking statements include, without limitation, statements regarding our 2013 earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, 2013 FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, and NOI for the year ended December 31, 2013, and our projected sources and uses of capital in 2013.  These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events.  These statements are subject to risks, uncertainties, assumptions and other important factors that could cause actual results to differ materially from the results discussed in the forward-looking statements.  Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully 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, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by client tenants, general and local economic conditions, and other risks and uncertainties detailed in our filings with the SEC.  Accordingly, you are cautioned not to place undue reliance on such forward-looking statements.  All forward-looking statements are made as of the date of this press release, and we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.  For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

7

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Rental

 

$

111,776

 

$

112,048

 

$

106,216

 

$

104,329

 

$

101,201

 

Tenant recoveries

 

35,611

 

35,721

 

34,006

 

31,881

 

31,882

 

Other income

 

2,993

 

3,785

 

2,628

 

9,383

 

2,628

 

Total revenues

 

150,380

 

151,554

 

142,850

 

145,593

 

135,711

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

Rental operations

 

45,224

 

46,176

 

44,203

 

42,102

 

40,453

 

General and administrative

 

11,648

 

12,635

 

12,470

 

12,298

 

10,357

 

Interest

 

18,020

 

17,941

 

17,092

 

17,922

 

16,226

 

Depreciation and amortization

 

46,065

 

47,515

 

46,584

 

50,741

 

41,786

 

Impairment of land parcel

 

–

 

2,050

 

–

 

–

 

–

 

Loss on early extinguishment of debt

 

–

 

–

 

–

 

1,602

 

623

 

Total expenses

 

120,957

 

126,317

 

120,349

 

124,665

 

109,445

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

29,423

 

25,237

 

22,501

 

20,928

 

26,266

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations before impairment of real estate

 

814

 

5,171

 

5,603

 

4,713

 

4,645

 

Impairment of real estate

 

–

 

(1,601

)

(9,799

)

–

 

–

 

Income (loss) from discontinued operations, net

 

814

 

3,570

 

(4,196

)

4,713

 

4,645

 

 

 

 

 

 

 

 

 

 

 

 

 

Gain on sale of land parcel

 

–

 

–

 

–

 

–

 

1,864

 

Net income

 

30,237

 

28,807

 

18,305

 

25,641

 

32,775

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

982

 

1,012

 

828

 

851

 

711

 

Dividends on preferred stock

 

6,471

 

6,471

 

6,471

 

6,903

 

7,483

 

Preferred stock redemption charge

 

–

 

–

 

–

 

–

 

5,978

 

Net income attributable to unvested restricted stock awards

 

342

 

324

 

360

 

271

 

235

 

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

 

$

22,442

 

$

21,000

 

$

10,646

 

$

17,616

 

$

18,368

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.35

 

$

0.27

 

$

0.24

 

$

0.21

 

$

0.22

 

Discontinued operations, net

 

0.01

 

0.06

 

(0.07

)

0.08

 

0.08

 

Earnings per share – basic and diluted

 

$

0.36

 

$

0.33

 

$

0.17

 

$

0.29

 

$

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

63,161,319

 

63,091,781

 

62,364,210

 

61,663,367

 

61,507,807

 

Dilutive effect of stock options

 

–

 

–

 

–

 

173

 

1,160

 

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

 

63,161,319

 

63,091,781

 

62,364,210

 

61,663,540

 

61,508,967

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

8

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

 

 

2013

 

2012

 

2012

 

2012

 

2012

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate, net

 

$

6,375,182

 

$

6,424,578

 

$

6,300,027

 

$

6,208,354

 

$

6,113,252

 

Cash and cash equivalents

 

87,001

 

140,971

 

94,904

 

80,937

 

77,361

 

Restricted cash

 

30,008

 

39,947

 

44,863

 

41,897

 

39,803

 

Tenant receivables

 

9,261

 

8,449

 

10,124

 

6,143

 

8,836

 

Deferred rent

 

170,100

 

170,396

 

160,914

 

155,295

 

150,515

 

Deferred leasing and financing costs, net

 

159,872

 

160,048

 

152,021

 

151,355

 

143,754

 

Investments

 

123,543

 

115,048

 

107,808

 

104,454

 

98,152

 

Other assets

 

135,952

 

90,679

 

94,356

 

93,304

 

86,418

 

Total assets

 

$

7,090,919

 

$

7,150,116

 

$

6,965,017

 

$

6,841,739

 

$

6,718,091

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities, Noncontrolling Interests, and Equity

 

 

 

 

 

 

 

 

 

 

 

Secured notes payable

 

$

730,714

 

$

716,144

 

$

719,350

 

$

719,977

 

$

721,715

 

Unsecured senior notes payable

 

549,816

 

549,805

 

549,794

 

549,783

 

550,772

 

Unsecured senior line of credit

 

554,000

 

566,000

 

413,000

 

379,000

 

167,000

 

Unsecured senior bank term loans

 

1,350,000

 

1,350,000

 

1,350,000

 

1,350,000

 

1,350,000

 

Accounts payable, accrued expenses, and tenant security deposits

 

367,153

 

423,708

 

376,785

 

348,037

 

323,002

 

Dividends payable

 

43,955

 

41,401

 

39,468

 

38,357

 

36,962

 

Preferred stock redemption liability

 

–

 

–

 

–

 

–

 

129,638

 

Total liabilities

 

3,595,638

 

3,647,058

 

3,448,397

 

3,385,154

 

3,279,089

 

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

14,534

 

14,564

 

15,610

 

15,817

 

15,819

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Series D Convertible Preferred Stock

 

250,000

 

250,000

 

250,000

 

250,000

 

250,000

 

Series E Preferred Stock

 

130,000

 

130,000

 

130,000

 

130,000

 

130,000

 

Common stock

 

633

 

632

 

632

 

622

 

616

 

Additional paid-in capital

 

3,075,860

 

3,086,052

 

3,094,987

 

3,053,269

 

3,022,242

 

Accumulated other comprehensive loss

 

(22,890

)

(24,833

)

(19,729

)

(37,370

)

(23,088

)

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

 

3,433,603

 

3,441,851

 

3,455,890

 

3,396,521

 

3,379,770

 

Noncontrolling interests

 

47,144

 

46,643

 

45,120

 

44,247

 

43,413

 

Total equity

 

3,480,747

 

3,488,494

 

3,501,010

 

3,440,768

 

3,423,183

 

Total liabilities, noncontrolling interests, and equity

 

$

7,090,919

 

$

7,150,116

 

$

6,965,017

 

$

6,841,739

 

$

6,718,091

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

9

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Funds From Operations and Adjusted Funds From Operations

(Dollars in thousands, except per share amounts)

(Unaudited)

 

The following table presents a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic, the most directly comparable financial measure presented in accordance with GAAP, to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted, and AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, for the periods below:

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

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

 

$

22,442

 

$

21,000

 

$

10,646

 

$

17,616

 

$

18,368

 

Depreciation and amortization

 

46,995

 

48,072

 

48,173

 

52,355

 

43,405

 

Loss (gain) on sale of real estate

 

340

 

–

 

(1,562

)

(2

)

–

 

Impairment of real estate

 

–

 

1,601

 

9,799

 

–

 

–

 

Gain on sale of land parcel

 

–

 

–

 

–

 

–

 

(1,864

)

Amount attributable to noncontrolling interests/unvested stock awards:

 

 

 

 

 

 

 

 

 

 

 

Net income

 

1,324

 

1,336

 

1,188

 

1,122

 

946

 

FFO

 

(1,064

)

(1,109

)

(1,148

)

(1,133

)

(1,156

)

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

 

70,037

 

70,900

 

67,096

 

69,958

 

59,699

 

Assumed conversion of 8.00% Unsecured Senior Convertible Notes

 

5

 

5

 

5

 

6

 

5

 

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

 

70,042

 

70,905

 

67,101

 

69,964

 

59,704

 

Realized gain on equity investment primarily related to one non-tenant life science entity

 

–

 

–

 

–

 

(5,811

)

–

 

Impairment of land parcel

 

–

 

2,050

 

–

 

–

 

–

 

Loss on early extinguishment of debt

 

–

 

–

 

–

 

1,602

 

623

 

Preferred stock redemption charge

 

–

 

–

 

–

 

–

 

5,978

 

Allocation to unvested restricted stock awards

 

–

 

(19

)

–

 

35

 

(53

)

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

 

70,042

 

72,936

 

67,101

 

65,790

 

66,252

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-revenue-enhancing capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Building improvements

 

(596

)

(329

)

(935

)

(594

)

(210

)

Tenant improvements and leasing commissions

 

(882

)

(3,170

)

(1,844

)

(2,148

)

(2,019

)

Straight-line rent

 

(6,198

)

(9,240

)

(5,225

)

(5,195

)

(8,796

)

Straight-line rent on ground leases

 

538

 

471

 

201

 

1,207

 

1,406

 

Capitalized income from development projects

 

22

 

45

 

50

 

72

 

478

 

Amortization of acquired above and below market leases

 

(830

)

(844

)

(778

)

(778

)

(800

)

Amortization of loan fees

 

2,386

 

2,505

 

2,470

 

2,214

 

2,643

 

Amortization of debt premiums/discounts

 

115

 

110

 

112

 

110

 

179

 

Stock compensation

 

3,349

 

3,748

 

3,845

 

3,274

 

3,293

 

Allocation to unvested restricted stock awards

 

19

 

63

 

19

 

15

 

31

 

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

 

$

67,965

 

$

66,295

 

$

65,016

 

$

63,967

 

$

62,457

 

 

The following table presents a reconciliation of net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic, to FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted, and AFFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, for the periods below.  For the computation of the weighted average shares used to compute the per share information, refer to the “Definitions and Other Information” section in our supplemental information:

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

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

 

$

0.36

 

$

0.33

 

$

0.17

 

$

0.29

 

$

0.30

 

Depreciation and amortization

 

0.74

 

0.76

 

0.78

 

0.84

 

0.70

 

Loss (gain) on sale of real estate

 

0.01

 

–

 

(0.03

)

–

 

–

 

Impairment of real estate

 

–

 

0.03

 

0.16

 

–

 

–

 

Gain on sale of land parcel

 

–

 

–

 

–

 

–

 

(0.03

)

Amount attributable to noncontrolling interests/unvested stock awards:

 

 

 

 

 

 

 

 

 

 

 

Net income

 

0.02

 

0.02

 

0.02

 

0.02

 

0.02

 

FFO

 

(0.02

)

(0.02

)

(0.02

)

(0.02

)

(0.02

)

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

 

1.11

 

1.12

 

1.08

 

1.13

 

0.97

 

Assumed conversion of 8.00% Unsecured Senior Convertible Notes

 

–

 

–

 

–

 

–

 

–

 

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

 

1.11

 

1.12

 

1.08

 

1.13

 

0.97

 

Realized gain on equity investment primarily related to one non-tenant life science entity

 

–

 

–

 

–

 

(0.09

)

–

 

Impairment of land parcel

 

–

 

0.04

 

–

 

–

 

–

 

Loss on early extinguishment of debt

 

–

 

–

 

–

 

0.03

 

0.01

 

Preferred stock redemption charge

 

–

 

–

 

–

 

–

 

0.10

 

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

 

1.11

 

1.16

 

1.08

 

1.07

 

1.08

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-revenue-enhancing capital expenditures:

 

 

 

 

 

 

 

 

 

 

 

Building improvements

 

(0.01

)

(0.01

)

(0.01

)

(0.01

)

–

 

Tenant improvements and leasing commissions

 

(0.01

)

(0.05

)

(0.03

)

(0.03

)

(0.03

)

Straight-line rent

 

(0.10

)

(0.15

)

(0.08

)

(0.08

)

(0.14

)

Straight-line rent on ground leases

 

0.01

 

0.01

 

–

 

0.02

 

0.02

 

Capitalized income from development projects

 

–

 

–

 

–

 

–

 

0.01

 

Amortization of acquired above and below market leases

 

(0.01

)

(0.01

)

(0.01

)

(0.01

)

(0.01

)

Amortization of loan fees

 

0.04

 

0.04

 

0.03

 

0.03

 

0.04

 

Amortization of debt premiums/discounts

 

–

 

–

 

–

 

–

 

–

 

Stock compensation

 

0.05

 

0.06

 

0.06

 

0.05

 

0.05

 

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

 

$

1.08

 

$

1.05

 

$

1.04

 

$

1.04

 

$

1.02

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

10

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Non-GAAP Measures

(Unaudited)

 

Funds from operations and funds from operations, as adjusted

 

GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes that real estate values diminish over time.  In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of FFO.  Since its introduction, FFO has become a widely used non-GAAP financial measure among equity REITs.  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  Moreover, we believe that FFO, as adjusted, is also helpful because it allows investors to compare our performance to the performance of other real estate companies between periods, and on a consistent basis, without having to account for differences caused by investment and disposition decisions, financing decisions, terms of securities, capital structures, and capital market transactions.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper and related implementation guidance (“NAREIT White Paper”).  The NAREIT White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciable real estate and land parcels and impairments of depreciable real estate (excluding land parcels), plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  Impairments of real estate relate to decreases in the estimated fair value of real estate due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.  Impairments of real estate represent the non-cash write-down of assets when fair value over the recoverability period is less than the carrying value.  We compute FFO, as adjusted, as FFO calculated in accordance with the NAREIT White Paper, plus losses on early extinguishment of debt, preferred stock redemption charges, and impairments of land parcels, less realized gain on equity investment primarily related to one non-tenant life science entity, and the amount of such items that is allocable to our unvested restricted stock awards.  Our calculations of both FFO and FFO, as adjusted, may differ from those methodologies utilized by other equity REITs for similar performance measurements, and, accordingly, may not be comparable to those of other equity REITs.  Neither FFO nor FFO, as adjusted, should 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 liquidity, nor are they indicative of the availability of funds for our cash needs, including funds available to make distributions.

 

Adjusted funds from operations

 

AFFO is a non-GAAP financial measure that we use as a supplemental measure of our performance.  We compute AFFO by adding to or deducting from FFO, as adjusted: (1) non-revenue-enhancing capital expenditures, tenant improvements, and leasing commissions (excludes development and redevelopment expenditures); (2) effects of straight-line rent and straight-line rent on ground leases; (3) capitalized income from development projects; (4) amortization of acquired above and below market leases, loan fees, and debt premiums/discounts; (5) non-cash compensation expense; and (6) allocation of AFFO attributable to unvested restricted stock awards.

 

We believe that AFFO is a useful supplemental performance measure because it further adjusts to: (1) deduct certain expenditures that, although capitalized and classified in depreciation expense, do not enhance the revenue or cash flows of our properties; (2) eliminate the effect of straight-lining our rental income and capitalizing income from development projects in order to reflect the actual amount of contractual rents due in the period presented; and (3) eliminate the effect of non-cash items that are not indicative of our core operations and do not actually reduce the amount of cash generated by our operations.  We believe that eliminating the effect of non-cash charges related to share-based compensation facilitates a comparison of our operations across periods and among other equity REITs without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use.  We believe that AFFO provides useful information by excluding certain items that are not representative of our core operating results because such items are dependent upon historical costs or subject to judgmental valuation inputs and the timing of our decisions.

 

AFFO is not intended to represent cash flow for the period, and is intended only to provide an additional measure of performance.  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.  We believe that AFFO is a widely recognized measure of the operations of equity REITs, and presenting AFFO will enable investors to assess our performance in comparison to other equity REITs.  However, other equity REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to AFFO calculated by other equity REITs.  AFFO 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.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

11

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Non-GAAP Measures

(Dollars in thousands,)

(Unaudited)

 

NOI

 

NOI is a non-GAAP financial measure equal to income from continuing operations, the most directly comparable GAAP financial measure, plus loss (gain) on early extinguishment of debt, impairment of land parcel, depreciation and amortization, interest expense, and general and administrative expense.  We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects primarily those income and expense items that are incurred at the property level.  Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets.  NOI on a cash basis is NOI on a GAAP basis, adjusted to exclude the effect of straight-line rent adjustments required by GAAP.  We believe that NOI 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 NOI is useful to investors as a performance measure, because when compared across periods, NOI 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.  NOI excludes certain components from income from continuing operations in order to provide results that are more closely related to the results of operations of our properties.  For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level rather than at the property level.  In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level.  Real estate impairments have been excluded in deriving NOI because we do not consider impairment losses to be property level operating expenses.  Real estate impairment losses relate to changes in the values of our assets and do not reflect the current operating performance with respect to related revenues or expenses.  Our real estate impairments represent the write down in the value of the assets to the estimated fair value less cost to sell.  These impairments result from investing decisions and the deterioration in market conditions that adversely impact underlying real estate values.  Our calculation of NOI also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to the timing of corporate strategy.  Property operating expenses that are included in determining NOI consist of costs that are related to our operating properties, such as utilities, repairs and maintenance, rental expense related to ground leases, contracted services, such as janitorial, engineering, and landscaping, property taxes and insurance, and property level salaries.  General and administrative expenses consist primarily of accounting and corporate compensation, corporate insurance, professional fees, office rent, and office supplies that are incurred as part of corporate office management.  NOI presented by us may not be comparable to NOI reported by other equity REITs that define NOI differently.  We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with income from continuing operations as presented in our condensed consolidated statements of income.  NOI 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.  The following table presents a reconciliation of NOI from continuing operations to income from continuing operations, and a reconciliation of NOI from discontinued operations to income from discontinued operations, net:

 

 

 

Three Months Ended

 

Continuing operations

 

March 31, 2013

 

March 31, 2012

 

Total revenues

 

$

150,380

 

$

135,711

 

Rental operations

 

45,224

 

40,453

 

Net operating income

 

105,156

 

95,258

 

Operating margins

 

70%

 

70%

 

General and administrative

 

11,648

 

10,357

 

Interest

 

18,020

 

16,226

 

Depreciation and amortization

 

46,065

 

41,786

 

Loss on early extinguishment of debt

 

–

 

623

 

Income from continuing operations

 

$

29,423

 

$

26,266

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

Total revenues

 

$

3,496

 

$

9,308

 

Rental operations

 

1,412

 

3,043

 

Net operating income (1)

 

2,084

 

6,265

 

Operating margins

 

60%

 

67%

 

Interest

 

–

 

1

 

Depreciation and amortization

 

930

 

1,619

 

Loss on sale of real estate

 

340

 

–

 

Income from discontinued operations, net

 

$

814

 

$

4,645

 

 

(1)             Net operating income from discontinued operations for the three months ended March 31, 2013, is comprised of $0.2 million for the three assets classified as “held for sale” as of March 31, 2013, and $1.9 million for the 6 assets sold during the three months ended March 31, 2013.  Net operating income from discontinued operations for the three months ended March 31, 2012, is comprised of $0.3 million for the three assets classified as “held for sale” as of March 31, 2013, and $6.0 million for the 12 assets sold since January 1, 2012.

 

Unlevered IRR

 

We believe Unlevered IRR is a useful supplemental performance measure used by investors to evaluate the performance of a specific real estate investment.  Unlevered IRR is the annualized implied discount rate calculated from the cash flows of a real estate asset over the holding period for such asset.  Unlevered IRR represents the return that equates the present value of all capital invested in a real estate asset to the present value of all cash flows generated by that real estate asset, or the discount rate that provides a net present value of all cash flows related to a real estate asset to zero. Unlevered IRR is calculated based upon the actual timing of cash flows, including among others i) the initial cash purchase price; ii) cash NOI (GAAP NOI excluding the impact of straight-line rents); iii) capital expenditures; iv) leasing costs, and v) the net sales proceeds of each respective real estate asset.  Losses incurred upon sale or non-cash impairment charges recognized during our ownership period are reflected in the unlevered IRR through the net sales proceeds of each real estate asset.  The calculation of Unlevered IRR does not include general and administrative costs of the Company or interest expense related to the Company’s financing costs, because they are not directly related or attributable to the operations of the real estate asset.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

12

 

 

 


 

GRAPHIC

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial and Asset Base Highlights

(Dollars in thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

Key Credit Metrics

 

 

 

 

 

 

 

 

 

 

 

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

 

68%

 

71%

 

72%

 

72%

 

69%

 

Percentage outstanding on unsecured senior line of credit at end of period

 

37%

 

38%

 

28%

 

25%

 

11%

 

Net debt to gross assets (excluding cash and restricted cash) at end of period

 

39%

 

38%

 

38%

 

38%

 

36%

 

Net debt to Adjusted EBITDA – quarter annualized

 

7.8x

 

7.3x

 

7.6x

 

7.1x

(2)

7.1x

 

Net debt to Adjusted EBITDA – trailing 12 months

 

7.7x

 

7.6x

 

7.5x

 

7.5x

 

7.1x

 

Fixed charge coverage ratio (1)

 

2.7x

 

2.8x

 

2.5x

 

2.6x

 

2.6x

 

Interest coverage ratio (1)

 

3.3x

 

3.4x

 

3.1x

 

3.2x

 

3.3x

 

Dividend payout ratio (common stock)

 

55%

 

49%

 

50%

 

49%

 

46%

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Balance Sheet Information

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate (gross)

 

$

7,225,073

 

$

7,299,613

 

$

7,154,359

 

$

7,030,723

 

$

6,892,429

 

Total assets

 

$

7,090,919

 

$

7,150,116

 

$

6,965,017

 

$

6,841,739

 

$

6,718,091

 

Total unsecured debt

 

$

2,453,816

 

$

2,465,805

 

$

2,312,794

 

$

2,278,783

 

$

2,067,772

 

Total debt

 

$

3,184,530

 

$

3,181,949

 

$

3,032,114

 

$

2,998,760

 

$

2,789,487

 

Net debt

 

$

3,067,521

 

$

3,001,031

 

$

2,892,377

 

$

2,875,926

 

$

2,672,323

 

Total liabilities

 

$

3,595,638

 

$

3,647,058

 

$

3,448,397

 

$

3,385,154

 

$

3,279,089

 

Common shares outstanding

 

63,317,296

 

63,244,645

 

63,161,177

 

62,249,973

 

61,634,645

 

Total market capitalization

 

$

8,066,072

 

$

7,953,348

 

$

8,064,386

 

$

7,912,286

 

$

7,673,553

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Data

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

150,380

 

$

151,554

 

$

142,850

 

$

145,593

 

$

135,711

 

Rental operations

 

$

45,224

 

$

46,176

 

$

44,203

 

$

42,102

 

$

40,453

 

Operating margins

 

70%

 

70%

 

69%

 

71%

 

70%

 

General and administrative expense as a percentage of total revenues

 

7.7%

 

8.3%

 

8.7%

 

8.4%

 

7.6%

 

Capitalized interest

 

$

14,021

 

$

14,897

 

$

16,763

 

$

15,825

 

$

15,266

 

Weighted average interest rate used for capitalization during period

 

3.97%

 

4.10%

 

4.35%

 

4.41%

 

4.29%

 

Adjusted EBITDA – quarter annualized

 

$

395,764

 

$

408,876

 

$

382,616

 

$

403,168

(2)

$

377,836

 

Adjusted EBITDA – trailing 12 months

 

$

397,606

 

$

393,124

 

$

385,396

 

$

384,034

(2)

$

378,484

 

Adjusted EBITDA margins – quarter annualized

 

66%

 

67%

 

67%

 

69%

 

70%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income, FFO, and AFFO

 

 

 

 

 

 

 

 

 

 

 

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

 

$

22,442

 

$

21,000

 

$

10,646

(3)

$

17,616

 

$

18,368

 

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

 

$

70,042

 

$

70,905

 

$

67,101

 

$

69,964

 

$

59,704

 

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

 

$

70,042

 

$

72,936

 

$

67,101

 

$

65,790

 

$

66,252

 

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

 

$

67,965

 

$

66,295

 

$

65,016

 

$

63,967

 

$

62,457

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Share Data

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted

 

$

0.36

 

$

0.33

 

$

0.17

(3)

$

0.29

 

$

0.30

 

FFO per share – diluted

 

$

1.11

 

$

1.12

 

$

1.08

 

$

1.13

 

$

0.97

 

FFO per share – diluted, as adjusted

 

$

1.11

 

$

1.16

 

$

1.08

 

$

1.07

 

$

1.08

 

AFFO per share – diluted

 

$

1.08

 

$

1.05

 

$

1.04

 

$

1.04

 

$

1.02

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Base Statistics

 

 

 

 

 

 

 

 

 

 

 

Number of properties at end of period

 

173

 

178

 

177

 

182

 

174

 

Rentable square feet at end of period

 

16,659,448

 

17,105,952

 

16,686,146

 

16,969,752

 

15,595,451

 

Occupancy of operating properties at end of period

 

93.0%

 

93.4%

 

93.0%

 

92.9%

 

94.2%

 

Occupancy of operating and redevelopment properties at end of period

 

90.1%

 

89.8%

 

88.3%

 

86.9%

 

87.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing Activity and Same Property Performance

 

 

 

 

 

 

 

 

 

 

 

Leasing activity – Qtr rentable square feet

 

702,901

 

677,781

 

732,094

 

959,295

 

911,926

 

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

 

5.9%

 

(2.9%

)

(2.9%

)

(0.8%

)

(2.8%

)

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

 

12.7%

 

2.6%

 

7.6%

 

5.8%

 

3.3%

 

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

 

8.8%

 

6.3%

 

4.3%

 

1.6%

 

1.7%

 

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

 

0.4%

 

0.7%

 

(0.9%

)

(0.2%

)

(0.7%

)

 

(1)                         Represents quarter annualized metrics. We believe key credit metrics for the three months ended March 31, 2013, annualized, reflect the completion of many development and redevelopment projects and are indicative of the Company’s current operating trends.

(2)                         Excluding $5.8 million recognized in the second quarter of 2012 related to a realized gain on an equity investment primarily related to one non-tenant life science entity, net debt to Adjusted EBITDA was 7.6x.

(3)                         Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted excluding $9.8 million, or $0.16 per share, impairment of real estate, was $20.4 million, or $0.33 per share.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

13

 

 


 

GRAPHIC

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Core Operating Metrics

March 31, 2013

(Unaudited)

 

Quarterly percentage change in same property NOI

 

GRAPHIC

 

Percentage change in rental rates on renewed/re-leased space

 

GRAPHIC

 

Occupancy percentage

 

GRAPHIC

 

Solid leasing capabilities – rentable square feet leased

 

GRAPHIC

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

14

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Same Property Comparisons

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Same property data

 

March 31, 2013

 

Percentage change in net operating income – cash basis

 

8.8%

 

Percentage change in net operating income – GAAP basis

 

0.4%

 

 

 

 

 

Number of properties

 

135

 

Rentable square feet

 

10,451,623

 

Occupancy - current period

 

92.5%

 

Occupancy - same period prior year

 

92.3%

 

 

The following table presents a comparison of the components of same property and non-same property NOI for the three months ended March 31, 2013, compared to the three months ended March 31, 2012, and a reconciliation of NOI to income from continuing operations, the most directly comparable GAAP financial measure:

 

 

 

Three Months Ended March 31,

 

Revenues:

 

2013

 

2012

 

% Change

 

Total revenues – same properties

 

$

122,377

 

$

119,996

 

2.0

%

 

Total revenues – non-same properties

 

28,003

 

15,715

 

78.2

 

 

Total revenues – GAAP basis

 

150,380

 

135,711

 

10.8

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

Rental operations – same properties

 

35,824

 

33,748

 

6.2

 

 

Rental operations – non-same properties

 

9,400

 

6,705

 

40.2

 

 

Total rental operations

 

45,224

 

40,453

 

11.8

 

 

 

 

 

 

 

 

 

 

 

Net operating income:

 

 

 

 

 

 

 

 

Net operating income – same properties

 

86,553

 

86,248

 

0.4

 

 

Net operating income – non-same properties

 

18,603

 

9,010

 

106.5

 

 

Total net operating income – GAAP basis

 

105,156

 

95,258

 

10.4

 

 

 

 

 

 

 

 

 

 

 

Other expenses:

 

 

 

 

 

 

 

 

General and administrative

 

11,648

 

10,357

 

12.5

 

 

Interest

 

18,020

 

16,226

 

11.1

 

 

Depreciation and amortization

 

46,065

 

41,786

 

10.2

 

 

Loss on early extinguishment of debt

 

–

 

623

 

(100.0

)

 

Total other expenses

 

75,733

 

68,992

 

9.8

 

 

Income from continuing operations

 

$

29,423

 

$

26,266

 

12.0

%

 

 

 

 

 

 

 

 

 

 

Net operating income – same properties – GAAP basis

 

$

86,553

 

$

86,248

 

0.4

%

 

Less: straight-line rent adjustments

 

(516

)

(7,194

)

(92.8

)

 

Net operating income – same properties – cash basis

 

$

86,037

 

$

79,054

 

8.8

%

 

 

The following table reconciles same properties to total properties for the three months ended March 31, 2013:

 

 

 

Number of
Properties

 

 

 

Number of
Properties

 

 

 

Number of
Properties

 

Development – active

 

 

 

Development – deliveries since January 1, 2012

 

 

 

Development/Redevelopment – Asia

 

7

(1)

225 Binney Street

 

1

 

Canada

 

–

(2)

 

 

 

 

409/499 Illinois Street

 

2

 

4755 Nexus Center Drive

 

1

 

Properties acquired since January 1, 2012

 

 

 

269 East Grand Avenue

 

1

 

5200 Illumina Way

 

1

 

6 Davis Drive

 

1

 

430 East 29th Street

 

1

 

400/450 East Jamie Court

 

2

 

 

 

 

 

75/125 Binney Street

 

1

 

259 East Grand Avenue

 

1

 

 

 

 

 

 

 

6

 

 

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redevelopment – active

 

 

 

Redevelopment – deliveries since January 1, 2012

 

 

 

Properties held for sale

 

3

 

400 Technology Square

 

1

 

3530/3550 John Hopkins Court

 

2

 

Total properties excluded from same properties

 

38

 

4757 Nexus Center Drive

 

1

 

6275 Nancy Ridge Drive

 

1

 

Same properties

 

135

 

1551 Eastlake Avenue

 

1

 

10300 Campus Point Drive

 

1

 

Total properties as of March 31, 2013

 

173

 

1616 Eastlake Avenue

 

1

 

620 Professional Drive

 

1

 

 

 

 

 

285 Bear Hill Road

 

1

 

20 Walkup Drive

 

1

 

 

 

 

 

343 Oyster Point Boulevard

 

1

 

11119 North Torrey Pines Road

 

1

 

 

 

 

 

9800 Medical Center Drive

 

3

 

 

 

7

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

(1)             Property count includes one development delivery, one property acquired since January 1, 2012, and five active development and redevelopment properties.

(2)             Represents two buildings included in our property listing as one property.  One of the two buildings represents the ground-up development completed during the year ended December 31, 2012.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

15

 

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Same Property Performance Historical Results

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

The charts below provide two alternative calculations of same property performance in comparison to our historical same property performance. Our reported same property performance has been based upon a pool of operating assets and completed developed and redeveloped assets to the extent that those assets were operating for the entirety of the periods presented. The alternative calculations presented below include 1) same property performance for the operating portfolio excluding assets that were recently developed or redeveloped and 2) the same property performance for the operating portfolio including those assets that were either under active redevelopment or previously completed redevelopments. From 2008 through 2012, our same property performance was generally consistent in each of the three calculations. For the three month ended March 31, 2013, same property performance including redevelopment properties, as shown in the table, would have been meaningfully higher than our traditional method of reporting same property performance. Same property performance including redevelopment properties will, from time to time, have significant growth in net operating income as a result of the completion of the conversion of non-laboratory space (with lower net operating income) to laboratory space (with higher net operating income) through redevelopment.  We believe our traditional method of reporting same property performance is a more useful presentation since it excludes the potential significant increases in performance as a result of completion of significant redevelopment projects.

 

Percentage change in same property NOI over preceeding period - cash basis

 

GRAPHIC

 

Percentage change in same property NOI over preceeding period - GAAP basis

 

GRAPHIC

 

GRAPHIC

 

(1)             Recently delivered developments and redevelopments are included in the same property data in the periods after their completion only if the property was operating during the entire same property periods. For example, projects completed in 2010 are included in 2012 vs. 2011 same property performance. Additionally, projects completed in 2011 are excluded from the 2012 vs. 2011 same property performance but included in the three months ended March 31, 2013 vs. three months ended March 31, 2012 same property performance.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

16

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Leasing Activity

March 31, 2013

(Unaudited)

 

 

 

Three
Months Ended

 

Twelve
Months Ended

 

Year Ended

 

 

 

March 31, 2013

 

March 31, 2013

 

December 31, 2012

 

December 31, 2011

 

December 31, 2010

 

Leasing activity:

 

Cash

 

GAAP

 

Cash

 

GAAP

 

Cash

 

GAAP

 

Cash

 

GAAP

 

Cash

 

GAAP

 

Lease expirations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of leases

 

49

 

49

 

152

 

152

 

162

 

162

 

158

 

158

 

129

 

129

 

Rentable square footage

 

360,956

 

360,956

 

2,183,948

 

2,183,948

 

2,350,348

 

2,350,348

 

2,689,257

 

2,689,257

 

2,416,291

 

2,416,291

 

Expiring rates

 

$32.83

 

$30.21

 

$30.95

 

$28.15

 

$30.03

 

$27.65

 

$29.98

 

$28.42

 

$27.18

 

$28.54

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewed/re-leased space

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of leases

 

19

 

19

 

85

 

85

 

102

 

102

 

109

 

109

 

89

 

89

 

Leased rentable square footage

 

155,881

 

155,881

 

1,356,755

 

1,356,755

 

1,475,403

 

1,475,403

 

1,821,866

 

1,821,866

 

1,777,966

 

1,777,966

 

Expiring rates

 

$29.70

 

$28.12

 

$31.78

 

$30.20

 

$30.47

 

$28.87

 

$30.73

 

$28.79

 

$28.84

 

$30.54

 

New rates

 

$31.45

 

$31.70

 

$31.45

 

$32.08

 

$29.86

 

$30.36

 

$30.16

 

$30.00

 

$29.41

 

$32.04

 

Rental rate changes

 

5.9%

 

12.7%

 

(1.0%

)

6.2%

 

(2.0%

) (1)

5.2%

 (1)

(1.9%

)

4.2%

 

2.0%

 

4.9%

 

TI’s/lease commissions per square foot

 

$5.66

 

$5.66

 

$5.93

 

$5.93

 

$6.22

 

$6.22

 

$5.82

 

$5.82

 

$4.40

 

$4.40

 

Average lease terms

 

2.6 years

 

2.6 years

 

4.7 years

 

4.7 years

 

4.7 years

 

4.7 years

 

4.2 years

 

4.2 years

 

8.1 years

 

8.1 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed/redeveloped/previously vacant space leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of leases

 

25

 

25

 

83

 

83

 

85

 

85

 

81

 

81

 

53

 

53

 

Rentable square footage

 

547,020

 

547,020

 

1,715,316

 

1,715,316

 

1,805,693

 

1,805,693

 

1,585,610

 

1,585,610

 

966,273

 

966,273

 

New rates

 

$50.89

 

$52.54

 

$35.08

 

$36.30

 

$30.66

 

$32.56

 

$33.45

 

$36.00

 

$36.33

 

$39.89

 

TI’s/lease commissions per square foot

 

$7.52

 

$7.52

 

$9.77

 

$9.77

 

$11.02

 

$11.02

 

$12.78

 

$12.78

 

$8.10

 

$8.10

 

Average lease terms

 

10.4 years

 

10.4 years

 

9.2 years

 

9.2 years

 

9.0 years

 

9.0 years

 

8.9 years

 

8.9 years

 

9.7 years

 

9.7 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing activity summary:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of leases

 

44

 

44

 

168

 

168

 

187

 

187

 

190

 

190

 

142

 

142

 

Rentable square footage

 

702,901

 

702,901

 

3,072,071

 

3,072,071

 

3,281,096

 

3,281,096

 

3,407,476

 

3,407,476

 

2,744,239

 

2,744,239

 

New rates

 

$46.58

 

$47.92

 

$33.48

 

$34.44

 

$30.30

 

$31.57

 

$31.69

 

$32.79

 

$31.84

 

$34.80

 

TI’s/lease commissions per square foot

 

$7.11

 

$7.11

 

$8.07

 

$8.07

 

$8.87

 

$8.87

 

$9.06

 

$9.06

 

$5.70

 

$5.70

 

Average lease terms

 

8.7 years

 

8.7 years

 

7.3 years

 

7.3 years

 

7.1 years

 

7.1 years

 

6.4 years

 

6.4 years

 

8.7 years

 

8.7 years

 

 

(1)             Excluding one lease for 48,000 rentable square feet in the Research Triangle Park market, and two leases for 141,000 rentable square feet in the Suburban Washington, D.C., market, rental rates for renewed/re-leased space were, on average, 0.4% higher and 7.1% higher than rental rates for expiring leases on a cash and GAAP basis, respectively.

(2)             Excludes 14 month-to-month leases for approximately 53,946 rentable square feet.

 

During the three months ended March 31, 2013, we granted tenant concessions/free rent averaging approximately 1.2 month with respect to the 702,901 rentable square feet leased.

 

Lease Structure

 

March 31, 2013

 

Percentage of triple net leases

 

94%

 

Percentage of leases containing annual rent escalations

 

96%

 

Percentage of leases providing for the recapture of capital expenditures

 

92%

 

 

The following chart presents our total rentable square feet leased by development/redevelopment space leased and renewed/re-leased/previously vacant space leased:

 

GRAPHIC

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

17

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Lease Expirations

March 31, 2013

(Unaudited)

 

Year of Lease Expiration

 

Number of Leases Expiring

 

RSF of Expiring Leases

 

Percentage of
Aggregate Total RSF

 

Annualized Base Rent of
Expiring Leases (per RSF)

 

2013

 

63

 (1)

 

568,189

 (1)

 

4.1

%

 

$29.30

 

2014

 

93

 

 

1,175,374

 

 

8.6

%

 

$29.20

 

2015

 

75

 

 

1,385,596

 

 

10.1

%

 

$32.75

 

2016

 

57

 

 

1,342,621

 

 

9.8

%

 

$30.20

 

2017

 

63

 

 

1,573,451

 

 

11.5

%

 

$30.58

 

2018

 

28

 

 

1,185,758

 

 

8.6

%

 

$39.80

 

2019

 

22

 

 

680,031

 

 

5.0

%

 

$32.85

 

2020

 

16

 

 

762,229

 

 

5.6

%

 

$40.25

 

2021

 

20

 

 

799,802

 

 

5.8

%

 

$37.12

 

2022

 

15

 

 

551,214

 

 

4.0

%

 

$29.43

 

Thereafter

 

26

 

 

2,278,602

 

 

16.6

%

 

$39.96

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized

 

 

 

 

 

2013 RSF of Expiring Leases

 

Base Rent of

 

 

 

 

 

 

 

Negotiating/

 

Targeted for

 

Remaining

 

 

 

Expiring Leases

 

Market Rent

 

Market

 

Leased

 

Anticipating

 

Redevelopment

 

Expiring Leases

 

Total

 

(per RSF)

 

per RSF (2)

 

Greater Boston

 

4,543

 

31,640

 

–

 

93,642

 

129,825

 

$

38.24

 

$25.00 - $59.00

 

San Francisco Bay Area

 

49,125

 

29,184

 

–

 

49,915

 

128,224

 

24.76

 

$20.00 - $47.00

 

San Diego

 

–

 

–

 

–

 

61,463

 

61,463

 

23.12

 

$16.00 - $36.00

 

Greater NYC

 

–

 

–

 

–

 

–

 

–

 

–

 

N/A

 

Suburban Washington, D.C.

 

–

 

121,068

 (3)

–

 

54,163

 

175,231

 

33.83

 

$15.00 - $32.00

 

Seattle

 

–

 

1,350

 

–

 

5,938

 

7,288

 

17.12

 

$17.00 - $44.00

 

Research Triangle Park

 

1,658

 

10,603

 

–

 

39,044

 

51,305

 

16.46

 

$10.00 - $32.00

 

Canada

 

–

 

–

 

–

 

–

 

–

 

–

 

N/A

 

Non-cluster markets

 

–

 

3,508

 

–

 

1,000

 

4,508

 

12.35

 

$14.00 - $25.00

 

Asia

 

–

 

5,587

 

–

 

4,758

 

10,345

 

13.14

 (4)

$11.00 - $26.00

 

Total

 

55,326

 

202,940

 

–

 

309,923

 

568,189

 (1)

$

29.30

 

 

 

Percentage of expiring leases

 

10

 %

36

 %

–

 %

54

 %

100

 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annualized

 

 

 

 

 

2014 RSF of Expiring Leases

 

Base Rent of

 

 

 

 

 

 

 

Negotiating/

 

Targeted for

 

Remaining

 

 

 

Expiring Leases

 

Market Rent

 

Market

 

Leased

 

Anticipating

 

Redevelopment

 

Expiring Leases

 

Total

 

(per RSF)

 

per RSF (2)

 

Greater Boston

 

–

 

63,360

 

–

 

258,609

 

321,969

 

$

37.97

 

$25.00 - $59.00

 

San Francisco Bay Area

 

19,177

 

31,760

 

–

 

292,842

 

343,779

 

27.22

 

$20.00 - $47.00

 

San Diego

 

–

 

–

 

–

 

42,717

 

42,717

 

24.72

 

$16.00 - $36.00

 

Greater NYC

 

–

 

5,271

 

–

 

85,497

 

90,768

 

38.65

 

$20.00 - $70.00

 

Suburban Washington, D.C.

 

7,638

 

8,319

 

85,297

 (5)

71,474

 

172,728

 

19.36

 

$15.00 - $32.00

 

Seattle

 

–

 

13,935

 

–

 

5,794

 

19,729

 

43.01

 

$17.00 - $44.00

 

Research Triangle Park

 

–

 

10,527

 

–

 

38,721

 

49,248

 

21.96

 

$10.00 - $32.00

 

Canada

 

12,649

 

–

 

–

 

80,008

 

92,657

 

23.29

 

$20.00 - $30.00

 

Non-cluster markets

 

–

 

–

 

–

 

15,817

 

15,817

 

19.99

 

$14.00 - $25.00

 

Asia

 

–

 

15,760

 

–

 

3,862

 

19,622

 

13.43

 (4)

$11.00 - $26.00

 

Total

 

39,464

 

148,932

 

85,297

 

895,341

 

1,169,034

 

$

29.20

 

 

 

Percentage of expiring leases

 

3

 %

13

 %

7

 %

77

 %

100

 %

 

 

 

 

 

(1)             Excludes 14 month-to-month leases for approximately 53,946 rentable square feet.

(2)             Based upon rental rates achieved in recently executed leases over the trailing 12 months and our estimate of market rents.

(3)             Includes 54,906 rentable square feet at 5 Research Court.  We expect the tenant to extend their lease beyond their 2013 lease expiration date.  This property consists of non-laboratory space and upon rollover will undergo conversion into laboratory space through redevelopment.

(4)             Our current investment in this property is approximately $90 per rentable square foot.

(5)             Represents projects containing 60,000 rentable square feet and 25,000 rentable square feet at 930 Clopper Road and 1500 East Gude Drive, respectively, which we expect to convert from non-laboratory space to laboratory space through redevelopment.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

18

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Properties and Occupancy

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

Summary of properties

 

 

 

Rentable Square Feet

 

Number of

 

 

 

 

 

Market

 

Operating

 

Development

 

Redevelopment

 

Total

 

% Total

 

Properties

 

Annualized Base Rent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater Boston

 

3,043,048

 

691,487

 

76,241

 

3,810,776

 

23%

 

36

 

$

118,060

 

27%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

2,486,751

 

330,030

 

53,980

 

2,870,761

 

17

 

26

 

93,816

 

22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Diego

 

2,575,121

 

–

 

68,423

 

2,643,544

 

16

 

33

 

83,636

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater NYC

 

494,656

 

419,806

 

–

 

914,462

 

5

 

6

 

31,844

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

2,086,468

 

–

 

67,055

 

2,153,523

 

13

 

29

 

43,172

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seattle

 

680,835

 

–

 

65,681

 

746,516

 

4

 

10

 

28,346

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research Triangle Park

 

941,807

 

–

 

–

 

941,807

 

6

 

14

 

18,852

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

1,103,507

 

–

 

–

 

1,103,507

 

7

 

5

 

9,258

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cluster markets

 

61,002

 

–

 

–

 

61,002

 

–

 

2

 

611

 

–

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

13,473,195

 

1,441,323

 

331,380

 

15,245,898

 

91

 

161

 

427,595

 

99

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

603,987

 

618,976

 

99,143

 

1,322,106

 

8

 

9

 

4,337

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

14,077,182

 

2,060,299

 

430,523

 

16,568,004

 

99

 

170

 

$

431,932

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

91,444

 

–

 

–

 

91,444

 

1

 

3

 

1,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

14,168,626

 

2,060,299

 

430,523

 

16,659,448

 

100%

 

173

 

$

433,070

 

 

 

 

Summary of occupancy percentages

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Properties

 

Operating and Redevelopment Properties

 

Market

 

March 31, 2013

 

December 31, 2012

 

March 31, 2012

 

March 31, 2013

 

December 31, 2012

 

March 31, 2012

 

Greater Boston

 

95.8

%

 

94.6

%

 

91.7

%

 

93.5

%

 

91.6

%

 

83.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

95.8

 

 

97.8

 

 

96.2

 

 

93.8

 

 

95.7

 

 

93.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Diego

 

93.4

 

 

95.1

 

 

96.1

 

 

91.0

 

 

91.9

 

 

81.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater NYC

 

98.4

 

 

95.7

 

 

93.0

 

 

98.4

 

 

95.7

 

 

93.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

90.8

 

 

90.9

 

 

94.2

 

 

88.0

 

 

88.1

 

 

90.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seattle

 

96.7

 

 

93.9

 

 

96.7

 

 

88.2

 

 

80.1

 

 

91.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research Triangle Park

 

93.6

 

 

95.5

 

 

95.8

 

 

93.6

 

 

95.5

 

 

95.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

94.7

 

 

98.1

 

 

91.8

 

 

94.7

 

 

98.1

 

 

91.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cluster markets

 

54.0

 

 

51.4

 

 

51.4

 

 

54.0

 

 

51.4

 

 

51.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

94.2

 

 

94.6

 

 

94.2

 

 

91.8

 

 

91.6

 

 

87.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

67.1

 

 

66.2

 

 

N/A

 

 

57.7

 

 

55.3

 

 

N/A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

93.0

%

 

93.4

%

 

94.2

%

 

90.1

%

 

89.8

%

 

87.9

%

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

19

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Property Listing

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy Percentage

 

 

 

 

 

Rentable Square Feet

 

Number of

 

Annualized

 

 

 

Operating and

 

Address

 

Submarket

 

Operating

 

Development

 

Redevelopment

 

Total

 

Properties

 

Base Rent

 

Operating

 

Redevelopment

 

Greater Boston

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Technology Square

 

Cambridge/Inner Suburbs

 

255,441

 

–

 

–

 

255,441

 

1

 

$

17,369

 

100.0%

 

100.0%

 

200 Technology Square

 

Cambridge/Inner Suburbs

 

177,101

 

–

 

–

 

177,101

 

1

 

10,585

 

100.0

 

100.0

 

300 Technology Square

 

Cambridge/Inner Suburbs

 

175,609

 

–

 

–

 

175,609

 

1

 

8,082

 

93.2

 

93.2

 

400 Technology Square

 

Cambridge/Inner Suburbs

 

162,153

 

–

 

49,971

 

212,124

 

1

 

8,976

 

100.0

 

76.4

 

500 Technology Square

 

Cambridge/Inner Suburbs

 

184,207

 

–

 

–

 

184,207

 

1

 

10,160

 

100.0

 

100.0

 

600 Technology Square

 

Cambridge/Inner Suburbs

 

128,224

 

–

 

–

 

128,224

 

1

 

4,477

 

99.6

 

99.6

 

700 Technology Square

 

Cambridge/Inner Suburbs

 

48,930

 

–

 

–

 

48,930

 

1

 

1,584

 

82.4

 

82.4

 

161 First Street

 

Cambridge/Inner Suburbs

 

46,356

 

–

 

–

 

46,356

 

1

 

1,564

 

79.7

 

79.7

 

167 Sidney Street

 

Cambridge/Inner Suburbs

 

26,589

 

–

 

–

 

26,589

 

1

 

1,392

 

100.0

 

100.0

 

215 First Street

 

Cambridge/Inner Suburbs

 

366,719

 

–

 

–

 

366,719

 

1

 

10,809

 

87.6

 

87.6

 

225 Binney Street

 

Cambridge/Inner Suburbs

 

–

 

305,212

 

–

 

305,212

 

1

 

–

 

N/A

 

N/A

 

75/125 Binney Street

 

Cambridge/Inner Suburbs

 

–

 

386,275

 

–

 

386,275

 

1

 

–

 

N/A

 

N/A

 

300 Third Street

 

Cambridge/Inner Suburbs

 

131,963

 

–

 

–

 

131,963

 

1

 

6,534

 

100.0

 

100.0

 

480 Arsenal Street

 

Cambridge/Inner Suburbs

 

140,744

 

–

 

–

 

140,744

 

1

 

4,644

 

100.0

 

100.0

 

500 Arsenal Street

 

Cambridge/Inner Suburbs

 

93,516

 

–

 

–

 

93,516

 

1

 

3,402

 

100.0

 

100.0

 

780/790 Memorial Drive

 

Cambridge/Inner Suburbs

 

99,350

 

–

 

–

 

99,350

 

2

 

6,671

 

100.0

 

100.0

 

79/96 Charlestown Navy Yard

 

Cambridge/Inner Suburbs

 

25,309

 

–

 

–

 

25,309

 

1

 

171

 

34.8

 

34.8

 

99 Erie Street

 

Cambridge/Inner Suburbs

 

27,960

 

–

 

–

 

27,960

 

1

 

1,143

 

100.0

 

100.0

 

100 Beaver Street

 

Route 128

 

82,330

 

–

 

–

 

82,330

 

1

 

1,949

 

85.7

 

85.7

 

285 Bear Hill Road

 

Route 128

 

–

 

–

 

26,270

 

26,270

 

1

 

–

 

N/A

 

–

 

19 Presidential Way

 

Route 128

 

128,325

 

–

 

–

 

128,325

 

1

 

3,398

 

100.0

 

100.0

 

29 Hartwell Avenue

 

Route 128

 

59,000

 

–

 

–

 

59,000

 

1

 

2,049

 

100.0

 

100.0

 

3 Preston Court

 

Route 128

 

30,123

 

–

 

–

 

30,123

 

1

 

395

 

44.4

 

44.4

 

35 Hartwell Avenue

 

Route 128

 

46,700

 

–

 

–

 

46,700

 

1

 

1,650

 

100.0

 

100.0

 

35 Wiggins Avenue

 

Route 128

 

48,640

 

–

 

–

 

48,640

 

1

 

878

 

100.0

 

100.0

 

44 Hartwell Avenue

 

Route 128

 

26,828

 

–

 

–

 

26,828

 

1

 

1,105

 

100.0

 

100.0

 

45/47 Wiggins Avenue

 

Route 128

 

38,000

 

–

 

–

 

38,000

 

1

 

1,114

 

100.0

 

100.0

 

60 Westview Street

 

Route 128

 

40,200

 

–

 

–

 

40,200

 

1

 

1,147

 

100.0

 

100.0

 

6/8 Preston Court

 

Route 128

 

54,391

 

–

 

–

 

54,391

 

1

 

752

 

100.0

 

100.0

 

111 Forbes Boulevard

 

Route 495/Worcester

 

58,280

 

–

 

–

 

58,280

 

1

 

544

 

100.0

 

100.0

 

130 Forbes Boulevard

 

Route 495/Worcester

 

97,566

 

–

 

–

 

97,566

 

1

 

871

 

100.0

 

100.0

 

20 Walkup Drive

 

Route 495/Worcester

 

91,045

 

–

 

–

 

91,045

 

1

 

649

 

100.0

 

100.0

 

30 Bearfoot Road

 

Route 495/Worcester

 

60,759

 

–

 

–

 

60,759

 

1

 

2,765

 

100.0

 

100.0

 

306 Belmont Street

 

Route 495/Worcester

 

78,916

 

–

 

–

 

78,916

 

1

 

1,139

 

100.0

 

100.0

 

350 Plantation Street

 

Route 495/Worcester

 

11,774

 

–

 

–

 

11,774

 

1

 

92

 

42.5

 

42.5

 

Greater Boston

 

 

 

3,043,048

 

691,487

 

76,241

 

3,810,776

 

36

 

$

118,060

 

95.8%

 

93.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1500 Owens Street

 

Mission Bay

 

158,267

 

–

 

–

 

158,267

 

1

 

$

7,029

 

97.8%

 

97.8%

 

1700 Owens Street

 

Mission Bay

 

157,340

 

–

 

–

 

157,340

 

1

 

8,220

 

89.5

 

89.5

 

455 Mission Bay Boulevard South

 

Mission Bay

 

210,398

 

–

 

–

 

210,398

 

1

 

8,556

 

97.8

 

97.8

 

409/499 Illinois Street

 

Mission Bay

 

234,249

 

222,780

 

–

 

457,029

 

2

 

14,197

 

100.0

 

100.0

 

249/259 East Grand Avenue

 

South San Francisco

 

300,119

 

–

 

–

 

300,119

 

2

 

11,473

 

100.0

 

100.0

 

269 East Grand Avenue

 

South San Francisco

 

–

 

107,250

 

–

 

107,250

 

1

 

–

 

N/A

 

N/A

 

341/343 Oyster Point Boulevard

 

South San Francisco

 

53,980

 

–

 

53,980

 

107,960

 

2

 

1,190

 

100.0

 

50.0

 

400/450 East Jamie Court

 

South San Francisco

 

163,035

 

–

 

–

 

163,035

 

2

 

4,202

 

81.6

 

81.6

 

500 Forbes Boulevard

 

South San Francisco

 

155,685

 

–

 

–

 

155,685

 

1

 

5,540

 

100.0

 

100.0

 

600/630/650 Gateway Boulevard (1)

 

South San Francisco

 

150,960

 

–

 

–

 

150,960

 

3

 

3,768

 

91.0

 

91.0

 

681 Gateway Boulevard

 

South San Francisco

 

126,971

 

–

 

–

 

126,971

 

1

 

6,161

 

100.0

 

100.0

 

7000 Shoreline Court

 

South San Francisco

 

136,395

 

–

 

–

 

136,395

 

1

 

4,164

 

99.7

 

99.7

 

901/951 Gateway Boulevard (1)

 

South San Francisco

 

170,244

 

–

 

–

 

170,244

 

2

 

5,276

 

88.3

 

88.3

 

2425 Garcia Avenue & 2400/2450 Bayshore Parkway

 

Peninsula

 

98,964

 

–

 

–

 

98,964

 

1

 

3,033

 

87.3

 

87.3

 

2625/2627/2631 Hanover Street

 

Peninsula

 

32,074

 

–

 

–

 

32,074

 

1

 

1,328

 

100.0

 

100.0

 

3165 Porter Drive

 

Peninsula

 

91,644

 

–

 

–

 

91,644

 

1

 

3,884

 

100.0

 

100.0

 

3350 West Bayshore Road

 

Peninsula

 

60,000

 

–

 

–

 

60,000

 

1

 

1,530

 

100.0

 

100.0

 

75/125 Shoreway Road

 

Peninsula

 

82,815

 

–

 

–

 

82,815

 

1

 

2,044

 

100.0

 

100.0

 

849/863 Mitten Road &866 Malcolm Road

 

Peninsula

 

103,611

 

–

 

–

 

103,611

 

1

 

2,221

 

96.8

 

96.8

 

San Francisco Bay Area

 

 

 

2,486,751

 

330,030

 

53,980

 

2,870,761

 

26

 

$

93,816

 

95.8%

 

93.8%

 

 

(1)             The vacancy at these properties was primarily attributed to Onyx Pharmaceuticals, Inc.’s move out in the first quarter of 2013 into newly developed space at 259 East Grand Avenue.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

20

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Property Listing

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy Percentage

 

 

 

 

 

Rentable Square Feet

 

Number of

 

Annualized

 

 

 

Operating and

 

Address

 

Submarket

 

Operating

 

Development

 

Redevelopment

 

Total

 

Properties

 

Base Rent

 

Operating

 

Redevelopment

 

San Diego

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10931/10933 North Torrey Pines Road

 

Torrey Pines

 

96,641

 

—

 

—

 

96,641

 

1

 

$

2,978

 

95.7%

 

95.7%

 

10975 North Torrey Pines Road

 

Torrey Pines

 

44,733

 

—

 

—

 

44,733

 

1

 

1,595

 

100.0

 

100.0

 

11119 North Torrey Pines Road

 

Torrey Pines

 

72,245

 

—

 

—

 

72,245

 

1

 

1,495

 

62.7

 

62.7

 

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

 

7,125

 

100.0

 

100.0

 

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

 

Torrey Pines

 

241,191

 

—

 

—

 

241,191

 

4

 

7,815

 

96.2

 

96.2

 

10300 Campus Point Drive

 

University Town Center

 

449,759

 

—

 

—

 

449,759

 

1

 

15,783

 

96.1

 

96.1

 

4755/4757/4767 Nexus Center Drive

 

University Town Center

 

110,535

 

—

 

68,423

 

178,958

 

3

 

4,252

 

100.0

 

61.8

 

5200 Illumina Way

 

University Town Center

 

497,078

 

—

 

—

 

497,078

 

1

 

19,531

 

100.0

 

100.0

 

9363/9373/9393 Towne Centre Drive

 

University Town Center

 

138,578

 

—

 

—

 

138,578

 

3

 

3,508

 

91.3

 

91.3

 

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

 

940

 

44.0

 

44.0

 

5871 Oberlin Drive

 

Sorrento Mesa

 

33,817

 

—

 

—

 

33,817

 

1

 

832

 

86.8

 

86.8

 

6138/6150 Nancy Ridge Drive

 

Sorrento Mesa

 

56,698

 

—

 

—

 

56,698

 

1

 

1,586

 

100.0

 

100.0

 

6175/6225/6275 Nancy Ridge Drive

 

Sorrento Mesa

 

105,812

 

—

 

—

 

105,812

 

3

 

1,215

 

55.5

 

55.5

 

7330 Carroll Road

 

Sorrento Mesa

 

66,244

 

—

 

—

 

66,244

 

1

 

2,341

 

100.0

 

100.0

 

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

 

66,442

 

—

 

—

 

66,442

 

3

 

1,621

 

100.0

 

100.0

 

3985 Sorrento Valley Boulevard

 

Sorrento Valley

 

60,545

 

—

 

—

 

60,545

 

1

 

1,534

 

100.0

 

100.0

 

13112 Evening Creek Drive

 

I-15 Corridor

 

109,780

 

—

 

—

 

109,780

 

1

 

2,495

 

100.0

 

100.0

 

San Diego

 

 

 

2,575,121

 

—

 

68,423

 

2,643,544

 

33

 

$

83,636

 

93.4%

 

91.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater NYC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

430 East 29th Street

 

Manhattan

 

—

 

419,806

 

—

 

419,806

 

1

 

$

—

 

N/A

 

N/A

 

450 East 29th Street

 

Manhattan

 

309,141

 

—

 

—

 

309,141

 

1

 

25,277

 

99.8%

 

99.8%

 

100 Phillips Parkway

 

Bergen County

 

78,501

 

—

 

—

 

78,501

 

1

 

2,213

 

90.8

 

90.8

 

102 Witmer Road

 

Pennsylvania

 

50,000

 

—

 

—

 

50,000

 

1

 

3,345

 

100.0

 

100.0

 

5100 Campus Drive

 

Pennsylvania

 

21,859

 

—

 

—

 

21,859

 

1

 

274

 

100.0

 

100.0

 

701 Veterans Circle

 

Pennsylvania

 

35,155

 

—

 

—

 

35,155

 

1

 

735

 

100.0

 

100.0

 

Greater NYC

 

 

 

494,656

 

419,806

 

—

 

914,462

 

6

 

$

31,844

 

98.4%

 

98.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12301 Parklawn Drive

 

Rockville

 

49,185

 

—

 

—

 

49,185

 

1

 

$

1,169

 

100.0%

 

100.0%

 

1330 Piccard Drive

 

Rockville

 

131,511

 

—

 

—

 

131,511

 

1

 

2,877

 

94.0

 

94.0

 

1405 Research Boulevard

 

Rockville

 

71,669

 

—

 

—

 

71,669

 

1

 

2,119

 

100.0

 

100.0

 

1500/1550 East Gude Drive (1)

 

Rockville

 

90,489

 

—

 

—

 

90,489

 

2

 

1,511

 

90.5

 

90.5

 

14920 Broschart Road

 

Rockville

 

48,500

 

—

 

—

 

48,500

 

1

 

1,073

 

100.0

 

100.0

 

15010 Broschart Road

 

Rockville

 

38,203

 

—

 

—

 

38,203

 

1

 

741

 

85.8

 

85.8

 

5 Research Court (2)

 

Rockville

 

54,906

 

—

 

—

 

54,906

 

1

 

1,425

 

100.0

 

100.0

 

5 Research Place

 

Rockville

 

63,852

 

—

 

—

 

63,852

 

1

 

2,364

 

100.0

 

100.0

 

9800 Medical Center Drive

 

Rockville

 

214,531

 

—

 

67,055

 

281,586

 

4

 

7,346

 

90.0

 

68.6

 

9920 Medical Center Drive

 

Rockville

 

58,733

 

—

 

—

 

58,733

 

1

 

455

 

100.0

 

100.0

 

1300 Quince Orchard Road

 

Gaithersburg

 

54,874

 

—

 

—

 

54,874

 

1

 

997

 

100.0

 

100.0

 

16020 Industrial Drive

 

Gaithersburg

 

71,000

 

—

 

—

 

71,000

 

1

 

1,052

 

100.0

 

100.0

 

19/20/22 Firstfield Road

 

Gaithersburg

 

132,639

 

—

 

—

 

132,639

 

3

 

3,228

 

95.9

 

95.9

 

401 Professional Drive

 

Gaithersburg

 

63,154

 

—

 

—

 

63,154

 

1

 

1,063

 

88.7

 

88.7

 

620 Professional Drive

 

Gaithersburg

 

26,127

 

—

 

—

 

26,127

 

1

 

—

 

—

 

—

 

708 Quince Orchard Road

 

Gaithersburg

 

49,624

 

—

 

—

 

49,624

 

1

 

1,145

 

99.3

 

99.3

 

9 West Watkins Mill Road

 

Gaithersburg

 

92,449

 

—

 

—

 

92,449

 

1

 

2,766

 

100.0

 

100.0

 

910 Clopper Road

 

Gaithersburg

 

180,650

 

—

 

—

 

180,650

 

1

 

3,305

 

89.8

 

89.8

 

930/940 Clopper Road (3)

 

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

 

Beltsville

 

191,884

 

—

 

—

 

191,884

 

1

 

1,459

 

56.3

 

56.3

 

14225 Newbrook Drive

 

Northern Virginia

 

248,186

 

—

 

—

 

248,186

 

1

 

4,341

 

100.0

 

100.0

 

Suburban Washington, D.C.

 

2,086,468

 

—

 

67,055

 

2,153,523

 

29

 

$

43,172

 

90.8%

 

88.0%

 

 

(1)             Includes 25,000 rentable square feet of non-laboratory space, which we intend to convert into laboratory space through redevelopment.

(2)             Represents a project containing 54,906 rentable square feet at 5 Research Court.  We expect the tenant to extend their lease beyond their 2013 lease expiration date.  This property consists of non-laboratory space and upon rollover will undergo conversion into laboratory space through redevelopment.

(3)             Includes 60,000 rentable square feet of non-laboratory space, which we intend to convert into laboratory space through redevelopment.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

21

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Property Listing

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy Percentage

 

 

 

 

 

Rentable Square Feet

 

Number of

 

Annualized

 

 

 

Operating and

 

Address

 

Submarket

 

Operating

 

Development

 

Redevelopment

 

Total

 

Properties

 

Base Rent

 

Operating

 

Redevelopment

 

Seattle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1201/1208 Eastlake Avenue

 

Lake Union

 

203,369

 

—

 

—

 

203,369

 

2

 

$

8,748

 

100.0%

 

100.0%

 

1551 Eastlake Avenue

 

Lake Union

 

77,821

 

—

 

39,661

 

117,482

 

1

 

2,322

 

100.0

 

66.2

 

1600 Fairview Avenue

 

Lake Union

 

27,991

 

—

 

—

 

27,991

 

1

 

1,281

 

100.0

 

100.0

 

1616 Eastlake Avenue

 

Lake Union

 

142,688

 

—

 

26,020

 

168,708

 

1

 

5,703

 

92.4

 

78.1

 

199 East Blaine Street

 

Lake Union

 

115,084

 

—

 

—

 

115,084

 

1

 

6,184

 

100.0

 

100.0

 

219 Terry Avenue North

 

Lake Union

 

30,961

 

—

 

—

 

30,961

 

1

 

1,490

 

99.2

 

99.2

 

3000/3018 Western Avenue

 

Elliott Bay

 

47,746

 

—

 

—

 

47,746

 

1

 

1,795

 

100.0

 

100.0

 

410 West Harrison Street & 410 Elliott Avenue West

 

Elliott Bay

 

35,175

 

—

 

—

 

35,175

 

2

 

823

 

67.4

 

67.4

 

Seattle

 

 

 

680,835

 

—

 

65,681

 

746,516

 

10

 

$

28,346

 

96.7%

 

88.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research Triangle Park

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100 Capitola Drive

 

Research Triangle Park

 

65,965

 

—

 

—

 

65,965

 

1

 

$

1,065

 

100.0%

 

100.0%

 

108/110/112/114 Alexander Drive

 

Research Triangle Park

 

158,417

 

—

 

—

 

158,417

 

1

 

4,996

 

100.0

 

100.0

 

2525 East NC Highway 54

 

Research Triangle Park

 

81,580

 

—

 

—

 

81,580

 

1

 

1,673

 

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

 

30,122

 

—

 

—

 

30,122

 

1

 

445

 

79.1

 

79.1

 

7 Triangle Drive

 

Research Triangle Park

 

96,626

 

—

 

—

 

96,626

 

1

 

3,157

 

100.0

 

100.0

 

7010/7020/7030 Kit Creek Road

 

Research Triangle Park

 

133,654

 

—

 

—

 

133,654

 

3

 

1,604

 

70.9

 

70.9

 

800/801 Capitola Drive

 

Research Triangle Park

 

120,905

 

—

 

—

 

120,905

 

2

 

1,912

 

87.6

 

87.6

 

6 Davis Drive

 

Research Triangle Park

 

100,000

 

—

 

—

 

100,000

 

1

 

1,062

 

100.0

 

100.0

 

555 Heritage Drive

 

Palm Beach

 

45,023

 

—

 

—

 

45,023

 

1

 

808

 

100.0

 

100.0

 

Research Triangle Park

 

941,807

 

—

 

—

 

941,807

 

14

 

$

18,852

 

93.6%

 

93.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Canada

 

 

 

46,032

 

—

 

—

 

46,032

 

1

 

$

1,837

 

100.0%

 

100.0%

 

Canada

 

 

 

66,000

 

—

 

—

 

66,000

 

1

 

1,202

 

100.0

 

100.0

 

Canada

 

 

 

142,935

 

—

 

—

 

142,935

 

1

 

3,073

 

88.0

 

88.0

 

Canada

 

 

 

68,000

 

—

 

—

 

68,000

 

1

 

3,146

 

100.0

 

100.0

 

Canada (1)

 

 

 

780,540

 

—

 

—

 

780,540

 

1

 

N/A

 

N/A

 

N/A

 

Total Canada

 

 

 

1,103,507

 

—

 

—

 

1,103,507

 

5

 

$

9,258

 

94.7%

 

94.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cluster markets

 

 

 

61,002

 

—

 

—

 

61,002

 

2

 

$

611

 

54.0%

 

54.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

 

 

13,473,195

 

1,441,323

 

331,380

 

15,245,898

 

161

 

$

427,595

 

94.2%

 

91.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asia

 

 

 

603,987

 

618,976

 

99,143

 

1,322,106

 

9

 

$

4,337

 

67.1%

 

57.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

 

 

14,077,182

 

2,060,299

 

430,523

 

16,568,004

 

170

 

$

431,932

 

93.0%

 

90.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Properties “held for sale” (2)

 

91,444

 

—

 

—

 

91,444

 

3

 

$

1,138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

14,168,626

 

2,060,299

 

430,523

 

16,659,448

 

173

 

$

433,070

 

 

 

 

 

 

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

(2)             The following table summarizes properties “held for sale” as of March 31, 2013:

 

 

 

 

 

 

 

 

 

Net Operating Income

 

Address

 

Market - Submarket

 

RSF

 

Occupancy

 

1Q13

 

Estimate 2013

 

6146/6166 Nancy Ridge Drive

 

San Diego - Sorrento Mesa

 

51,273

 

57.2%

 

$

126

 

$

(17

)

702 Electronic Drive

 

Greater NYC - Pennsylvania

 

40,171

 

92.7

 

112

 

432

 

 

 

 

 

91,444

 

72.8%

 

$

238

 

$

415

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

22

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Top 20 Client Tenants and Client Tenant Mix

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

Top 20 client tenants

 

 

 

 

 

 

 

 

Remaining Lease

 

Approximate
Aggregate

 

Percentage
of
Aggregate

 

 

 

Percentage
of
Aggregate

 

Investment-Grade
Client Tenants (3)

 

 

 

 

 

 

 

Number

 

Term in Years

 

Rentable

 

Total

 

Annualized

 

Annualized

 

Fitch

 

Moody’s

 

S&P

 

Education/

 

 

 

Client Tenant

 

of Leases

 

(1)

 

(2)

 

Square Feet

 

Square Feet

 

Base Rent

 

Base Rent

 

Rating

 

Rating

 

Rating

 

Research

 

1

 

Novartis AG

 

11

 

3.8

 

3.9

 

612,424

 

3.7%

 

$

30,515

 

7.1%

 

AA

 

Aa2

 

AA-

 

—

 

2

 

Illumina, Inc.

 

1

 

18.6

 

18.6

 

497,078

 

3.0

 

19,531

 

4.5

 

—

 

—

 

—

 

—

 

3

 

Bristol-Myers Squibb Company

 

6

 

4.6

 

4.9

 

419,624

 

2.5

 

15,840

 

3.7

 

A

 

A2

 

A+

 

—

 

4

 

Eli Lilly and Company

 

5

 

8.3

 

9.9

 

262,182

 

1.6

 

15,068

 

3.5

 

A

 

A2

 

AA-

 

—

 

5

 

FibroGen, Inc.

 

1

 

10.6

 

10.6

 

234,249

 

1.4

 

14,197

 

3.3

 

—

 

—

 

—

 

—

 

6

 

Roche

 

3

 

5.0

 

5.1

 

348,918

 

2.1

 

13,867

 

3.2

 

AA-

 

A1

 

AA

 

—

 

7

 

United States Government

 

9

 

4.0

 

5.0

 

332,578

 

2.0

 

13,103

 

3.0

 

AAA

 

Aaa

 

AA+

 

—

 

8

 

GlaxoSmithKline plc

 

5

 

6.7

 

6.4

 

208,394

 

1.2

 

10,232

 

2.4

 

A+

 

A1

 

A+

 

—

 

9

 

Celgene Corporation

 

3

 

8.4

 

8.3

 

250,586

 

1.5

 

9,340

 

2.2

 

—

 

Baa2

 

BBB+

 

—

 

10

 

Massachusetts Institute of Technology

 

4

 

4.2

 

4.4

 

185,403

 

1.1

 

8,499

 

2.0

 

—

 

Aaa

 

AAA

 

ü

 

11

 

Onyx Pharmaceuticals, Inc.

 

2

 

10.1

 

10.1

 

228,373

 

1.4

 

8,498

 

2.0

 

—

 

—

 

—

 

—

 

12

 

NYU-Neuroscience Translational Research Institute

 

2

 

11.9

 

10.8

 

86,756

 

0.5

 

8,012

 

1.8

 

A-

 

A3

 

AA-

 

ü

 

13

 

The Regents of the University of California

 

3

 

8.4

 

8.4

 

188,654

 

1.1

 

7,787

 

1.8

 

AA

 

Aa1

 

AA

 

ü

 

14

 

Alnylam Pharmaceuticals, Inc.

 

1

 

3.5

 

3.5

 

129,424

 

0.8

 

6,081

 

1.4

 

—

 

—

 

—

 

—

 

15

 

Gilead Sciences, Inc.

 

1

 

7.3

 

7.3

 

109,969

 

0.7

 

5,824

 

1.3

 

—

 

Baa1

 

A-

 

—

 

16

 

Pfizer Inc.

 

2

 

6.2

 

5.9

 

116,518

 

0.7

 

5,502

 

1.3

 

A+

 

A1

 

AA

 

—

 

17

 

The Scripps Research Institute

 

2

 

3.7

 

3.6

 

101,475

 

0.6

 

5,200

 

1.2

 

AA-

 

Aa3

 

—

 

ü

 

18

 

Theravance, Inc. (4)

 

2

 

7.2

 

7.2

 

130,342

 

0.8

 

4,895

 

1.1

 

—

 

—

 

—

 

—

 

19

 

Infinity Pharmaceuticals, Inc.

 

2

 

1.8

 

1.8

 

68,020

 

0.4

 

4,423

 

1.0

 

—

 

—

 

—

 

—

 

20

 

Quest Diagnostics Incorporated

 

1

 

3.8

 

3.8

 

248,186

 

1.5

 

4,341

 

1.0

 

BBB+

 

Baa2

 

BBB+

 

—

 

 

 

Total/weighted average top 20

 

66

 

7.3

 

7.5

 

4,759,153

 

28.6%

 

$

210,755

 

48.8%

 

 

 

 

 

 

 

 

 

 

(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 March 31, 2013.

(3)             Ratings obtained from Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s.

(4)             As of February 14, 2013, GlaxoSmithKline plc owned approximately 27% of the outstanding stock of Theravance, Inc.

 

GRAPHIC

 

 

Multinational Pharmaceutical

 

Institutional: University,
Non-Profit, and Government

 

Life Science Product and Service,
Medical Device, and Industrial Biotech

 

Biotechnology: Public & Private

·      Astellas Pharma Inc.

·      AstraZeneca PLC

·      Bayer AG

·      Bristol-Myers Squibb Company

·      Eisai Co., Ltd.

·      Eli Lilly and Company

·      Genomics Institute of the Novartis Research Foundation

·      GlaxoSmithKline plc

·      Novartis AG

·      Pfizer Inc.

·      Roche

·      Sanofi

·      Shire plc

·      UCB S.A.

 

·      California Institute of Technology

·      Dana-Farber Cancer Institute, Inc.

·      Duke University

·      Environmental Protection Agency

·      Fred Hutchinson Cancer Research    Center

·      Massachusetts Institute of Technology

·      National Institutes of Health

·      NYU-Neuroscience Translational Research Institute

·      Sanford-Burnham Medical Research Institute

·      Stanford University

·      The Regents of the University of          California

·      The Scripps Research Institute

·      UMass Memorial Health Care, Inc.

·      UNC Health Care System

·      United States Government

·      University of Washington

 

·      Aramco Services Company, Inc.

·      Canon U.S. Life Sciences, Inc.

·      Covance Inc.

·      DSM N.V.

·      Fluidigm Corporation

·      Illumina, Inc.

·      Laboratory Corporation of America Holdings

·      Life Technologies Corporation

·      Monsanto Company

·      Qiagen N.V.

·      Quest Diagnostics Incorporated

·      Sapphire Energy, Inc.

·      Thermo Fisher Scientific, Inc.

 

 

·      Alnylam Pharmaceuticals, Inc.

·      Amgen Inc.

·      ARIAD Pharmaceuticals, Inc.

·      Biogen Idec Inc.

·      Celgene Corporation

·      Constellation Pharmaceuticals, Inc.

·      Epizyme, Inc.

·      Fate Therapeutics, Inc.

·      FibroGen, Inc.

·      FORMA Therapeutics, Inc.

·      Gilead Sciences, Inc.

·      Infinity Pharmaceuticals, Inc.

·      Kadmon Corporation, LLC

·      Medicago Inc.

·      Nektar Therapeutics

·      Onyx Pharmaceuticals, Inc.

·      Proteostasis Therapeutics, Inc.

·      Quanticel Pharmaceuticals, Inc.

·      Theravance, Inc.

·      Warp Drive Bio, LLC

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

23

 

 


 

GRAPHIC

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Investments in Real Estate

March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

Summary of investments in real estate

 

 

 

March 31, 2013

 

December 31, 2012

 

 

 

Book Value

 

Square Feet

 

Cost per
Square Foot

 

Book Value

 

Square Feet

 

Cost per
Square Foot

 

Rental properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

Land (related to rental properties)

 

$

516,957

 

 

 

 

 

$

522,664

 

 

 

 

 

Buildings and building improvements

 

4,955,207

 

 

 

 

 

4,933,314

 

 

 

 

 

Other improvements

 

163,864

 

 

 

 

 

189,793

 

 

 

 

 

Rental properties

 

5,636,028

 

14,168,626

 

$

398

 

5,645,771

 

14,953,968

 

$

378

 

Less: accumulated depreciation

 

(849,891

)

 

 

 

 

(875,035

)

 

 

 

 

Rental properties, net

 

4,786,137

 

 

 

 

 

4,770,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Active development in North America

 

579,273

 

1,441,323

 

402

 

431,578

 

947,798

 

455

 

Investment in unconsolidated real estate entity

 

30,730

 

413,536

 

74

 

28,656

 

413,536

 

69

 

Active redevelopment in North America

 

141,470

 

331,380

 

427

 

199,744

 

431,624

 

463

 

Generic infrastructure/building improvement projects in North America

 

62,869

 

 

 

 

 

80,599

 

 

 

 

 

Active development and redevelopment in Asia

 

101,357

 

718,119

 

141

 

101,602

 

734,444

 

138

 

 

 

915,699

 

2,904,358

 

315

 

842,179

 

2,527,402

 

333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

5,701,836

 

17,072,984

 

334

 

5,612,915

 

17,481,370

 

321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land/future value-added projects:

 

 

 

 

 

 

 

 

 

 

 

 

 

Land subject to sale negotiations (1)

 

45,378

 

399,888

 

113

 

–

 

–

 

–

 

Land undergoing preconstruction activities (additional CIP) in North America

 

305,300

 

1,917,667

 

159

 

433,310

 

2,934,000

 

148

 

Land held for future development in North America

 

238,933

 

3,792,181

 

63

 

296,039

 

4,659,000

 

64

 

Land held for future development/land undergoing preconstruction activities (additional CIP) in Asia

 

83,735

 

6,828,864

 

12

 

82,314

 

6,829,000

 

12

 

 

 

673,346

 

12,938,600

 

52

 

811,663

 

14,422,000

 

56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments in real estate, net

 

6,375,182

 

30,011,584

 

$

212

 

6,424,578

 

31,903,370

 

$

201

 

Add: accumulated depreciation

 

849,891

 

 

 

 

 

875,035

 

 

 

 

 

Gross investments in real estate

 

$

7,225,073

 

30,011,584

 

 

 

$

7,299,613

 

31,903,370

 

 

 

 

(1)             See page 3 for additional information on our target non-income-producing asset sales for 2013.

 

Non-income-producing real estate assets as a percentage of gross investments in real estate

 

GRAPHIC

 

As of March 31, 2013, our active development and redevelopment projects represent 13% of gross investments in real estate, a significant amount of which is pre-leased and expected to be primarily delivered over the next one to eight quarters.  Land undergoing preconstruction activities represents 5% of gross investment in real estate.  The largest project included in land undergoing preconstruction consists of primarily all of our 1.2 million developable square feet at Alexandria Center™ at Kendall Square in East Cambridge, Massachusetts.  Land held for future development represent 4% of our non-income-producing assets.  Over the next few years, we may also identify certain land parcels for potential sale.  Non-income-producing assets as a percentage of our gross investments in real estate is targeted to decrease to a range from 15% to 17% by December 31, 2013, and targeted to be 15% or less for the subsequent periods.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

24

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Capital Expenditures

March 31, 2013

(Unaudited)

 

The following assumptions are included in our guidance for funding the cost to complete the 75/125 Binney Street project (in thousands).

 

Construction spending - summary

 

Three Months Ended
March 31, 2013

 

Projected Nine Months
Ended December 31, 2013

 

Projected Year Ended
December 31, 2013

 

Gross construction spending (1)

 

$

115,090

 

$

564,512 - 614,512

 

$

679,602 - 729,602

 

 

 

 

 

 

 

 

 

Unconsolidated joint venture funding:

 

 

 

 

 

 

 

75/125 Binney JV partner capital/JV construction loan (2)

 

–

 

(47,025

)

(47,025

)

360 Longwood Avenue JV partner capital/JV construction loan

 

(10,816

)

(51,761

)

(62,577

)

 

 

(10,816

)

(98,786

)

(109,602

)

ARE share of capital related to funding construction spending

 

$

104,274

 

$

465,726 - 515,726

 

$

570,000 - 620,000

 

 

(1)             Represents 100% of construction spending for consolidated and unconsolidated projects

(2)             Projected joint venture.  See page 4 for further information.

 

Construction spending – actual

 

 

Three Months Ended
March 31, 2013
(in thousands)

 

Development projects in North America

 

$

43,831

 

Redevelopment projects in North America

 

24,562

 

Preconstruction

 

22,138

 

Generic infrastructure/building improvement projects in North America (1)

 

10,811

 

Development and redevelopment projects in Asia

 

2,932

 

Total construction spending

 

$

104,274

 

 

Construction spending – projection

 

 

Nine Months Ended
December 31, 2013
(in thousands)

 

Thereafter
(in thousands)

 

Active development projects in North America (2)

 

$

262,784

 

$

163,244

 

Active redevelopment projects in North America

 

62,335

 

14,043

 

Preconstruction

 

33,760

 

TBD

 (3)

Generic infrastructure/building improvement projects in North America (4)

 

36,728

 

TBD

 (3)

Future projected construction projects (5)

 

42,320 - 92,320

 

TBD

 (3)

Development and redevelopment projects in Asia

 

27,799

 

23,154

 

Total construction spending (2)

 

$

465,726 - 515,726

 

$

200,441

 

 

(1)

Includes revenue-enhancing projects and amounts shown in the table below related to non-revenue-enhancing capital expenditures.

(2)

Total construction spending for 2013 increased approximately $25 million at the mid-point of our guidance since last quarter primarily as a result of our estimated share of capital required for the commencement of two new ground-up development projects during the first quarter of 2013. Our estimated construction spend for 2013 increased by approximately $13 million as a result of the commencement of our 100% pre-leased development at 269 East Grand Avenue. The total estimated cost at completion for 75/125 Binney Street has not changed since our estimate as of December 31, 2012; however, the timing of construction and completion of our projected joint venture results in an increase in our estimated share of capital contributions to fund the completion of the project by approximately $10 million. See additional details on the 269 East Grand Avenue project on page 5 and the 75/125 Binney Street project on page 4.

(3)

Estimated spending beyond 2013 will be determined at a future date and is contingent upon many factors.

(4)

Includes, among others, generic infrastructure building improvement projects in North America, including 215 First Street, 7030 Kit Creek, and 1300 Quince Orchard Boulevard.

(5)

Includes future projected construction projects in North America, including 3013/3033 Science Park Road.

 

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

 

 

 

Three Months Ended

 

Non-revenue-enhancing capital expenditures (1):

 

March 31, 2013

 

Major capital expenditures

 

$

14,279

 

Other building improvements

 

$

581,422

 

Square feet in asset base

 

14,214,400

 

Per square foot:

 

 

 

Major capital expenditures

 

$

–

 

Other building improvements

 

$

0.04

 

Tenant improvements and leasing costs:

 

 

 

Re-tenanted space (2)

 

 

 

Tenant improvements and leasing costs

 

$

766,132

 

Re-tenanted square feet

 

48,484

 

Per square foot

 

$

15.80

 

Renewal space

 

 

 

Tenant improvements and leasing costs

 

$

115,931

 

Renewal square feet

 

107,397

 

Per square foot

 

$

1.08

 

 

(1)

Major capital expenditures typically consist of significant improvements such as roof and HVAC system replacements. Other building improvements exclude major capital expenditures.

(2)

Excludes space that has undergone redevelopment before re-tenanting.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2012

25

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Development Projects in North America
March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

Project RSF (1)

 

Leased Status RSF (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Leased/

 

 

 

Property/Market — Submarket

 

CIP

 

Total

 

Leased

 

Negotiating

 

Marketing

 

Total

 

Negotiating

 

Client Tenants

 

All active development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225 Binney Street/Greater Boston – Cambridge

 

305,212

 

305,212

 

305,212

 

–

 

–

 

305,212

 

100%

 

Biogen Idec Inc.

 

499 Illinois Street/San Francisco Bay Area – Mission Bay

 

222,780

 

222,780

 

–

 

162,549

 

60,231

 

222,780

 

73%

 

TBA

 

269 East Grand Avenue/San Francisco Bay Area – South San Francisco

 

107,250

 

107,250

 

107,250

 

–

 

–

 

107,250

 

100%

 

Onyx Pharmaceuticals, Inc.

 

430 East 29th Street/Greater NYC – Manhattan

 

419,806

 

419,806

 

60,816

 

152,488

 (2)

206,502

 

419,806

 

51%

 

Roche/TBA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75/125 Binney Street/Greater Boston – Cambridge

 

386,275

 

386,275

 

244,123

 

–

 

142,152

 (3)

386,275

 

63%

 

ARIAD Pharmaceuticals, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

1,441,323

 

1,441,323

 

717,401

 

315,037

 

408,885

 

1,441,323

 

72%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

360 Longwood Avenue/Greater Boston – Longwood

 

413,536

 

413,536

 

154,100

 

–

 

259,436

 

413,536

 

37%

 

Dana-Farber Cancer Institute, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total/weighted average

 

1,854,859

 

1,854,859

 

871,501

 

315,037

 

668,321

 

1,854,859

 

64%

 

 

 

 

 

 

Investment (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected

 

 

 

Cost

 

Initial Stabilized

 

Project

 

Initial

 

 

 

 

 

 

 

Cost To Complete

 

Sale

 

Total at

 

Per

 

Yield (1)

 

Start

 

Occupancy

 

Stabilization

 

Property/Market – Submarket

 

CIP

 

2013

 

Thereafter

 

of Interest

 

Completion

 

RSF

 

Cash

 

GAAP

 

Date (1)

 

Date (1)

 

Date (1)

 

All active development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225 Binney Street/Greater Boston – Cambridge

 

$

118,595

 

$

61,678

 

$

–

 

$

–

 

$

180,273

 

$

591

 

7.5%

 

8.1%

 

4Q11

 

4Q13

 

4Q13

 

499 Illinois Street/San Francisco Bay Area – Mission Bay

 

$

116,110

 

$

14,298

 

$

22,801

 

$

–

 

$

153,209

 

$

688

 

6.4%

 

7.2%

 

2Q11

 

2Q14

 

2014

 

269 East Grand Avenue/San Francisco Bay Area – South San Francisco (4)

 

$

8,037

 

$

13,100

 

$

30,163

 

$

–

 

$

51,300

 

$

478

 

8.1%

 

9.3%

 

1Q13

 

4Q14

 

2014

 

430 East 29th Street/Greater NYC – Manhattan

 

$

239,086

 

$

113,879

 

$

110,280

 

$

–

 

$

463,245

 

$

1,103

 

6.6%

 

6.5%

 

4Q12

 

4Q13

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75/125 Binney Street/Greater Boston – Cambridge (5)

 

$

97,445

 

$

90,871

 

$

163,123

 

$

–

 

$

351,439

 

$

910

 

8.0%

 

8.2%

 

1Q13

 

1Q15

 

2015

 

JV partner capital/JV construction loan

 

$

–

 

$

(47,025

)

$

(163,123

)

$

–

 

$

(210,148

)

 

 

 

 

 

 

 

 

 

 

 

 

Projected sale of interest

 

$

–

 

$

–

 

$

–

 

$

(65,000

)

$

(65,000

)

 

 

 

 

 

 

 

 

 

 

 

 

ARE investment in 75/125 Binney Street project

 

$

97,445

 

$

43,846

 

$

–

 

$

(65,000

)

$

76,291

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated development projects in North America

 

$

579,273

 

$

246,801

 

$

163,244

 

$

(65,000

)

$

924,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unconsolidated joint venture

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

360 Longwood Avenue/Greater Boston – Longwood

 

$

148,596

 

$

67,744

 

$

133,660

 

$

–

 

$

350,000

 

$

846

 

8.3%

 

8.9%

 

2Q12

 

4Q14

 

2016

 

JV partner capital/JV construction loan

 

$

(123,638

)

$

(51,761

)

$

(133,660

)

$

–

 

$

(309,059

)

 

 

 

 

 

 

 

 

 

 

 

 

ARE investment in 360 Longwood Avenue

 

$

24,958

 

$

15,983

 

$

–

 

$

–

 

$

40,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total/weighted average

 

$

604,231

 

$

262,784

 

$

163,244

 

$

(65,000

)

$

965,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

All project information, including rentable square feet; investment; Initial Stabilized Yields; and project start, occupancy and stabilization dates, relates to the discrete portion of each property undergoing active development or redevelopment. A redevelopment project does not necessarily represent the entire property or the entire vacant portion of a property. Our Initial Stabilized Yield on a cash basis reflects cash rents at date of stabilization and does not reflect contractual rent escalations beyond the stabilization date. Our cash rents related to our value-added projects are expected to increase over time and our average stabilized cash yields are expected, in general, to be greater than our Initial Stabilized Yields. Our estimates for initial cash and GAAP yields, and total costs at completion, represent our initial estimates at the commencement of the project. We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs. As of March 31, 2013, 96% of our leases contained annual rent escalations that were either fixed or based on a consumer price index or another index

(2)

Represents 131,000 rentable square feet subject to an executed letter of intent with the remainder subject to letters of intent or lease negotiations.

(3)

ARIAD Pharmaceuticals, Inc. has potential additional expansion opportunities at 75 Binney Street through June 2014.

(4)

Funding for 70% of the estimated total investment at completion for 269 East Grand Avenue is expected to be provided primarily by a secured construction loan.

(5)

Represent the mid points of our guidance assumptions related to estimated funding amounts provided by joint venture partner capital, joint venture construction loan, and Alexandria. See page 4 for additional information on our range of guidance for funding on this project.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2012

26

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Development Projects in North America

March 31, 2013

 

Property

225 Binney Street

499 Illinois Street

269 East Grand Avenue

Market/Submarket

Greater Boston/Cambridge

San Francisco Bay Area/Mission Bay

San Francisco Bay Area/South San Francisco

RSF

305,212

222,780

107,250

 

 

 

 

Photograph/Rendering

GRAPHIC

GRAPHIC

GRAPHIC

 

 

 

 

 

 

 

 

Property

430 East 29th Street

75/125 Binney Street

360 Longwood Avenue

Market/Submarket

Greater New York/New York City

Greater Boston/ Cambridge

Greater Boston/Cambridge

RSF

419,806

386,275

413,536

 

 

 

 

Photograph/Rendering

GRAPHIC

GRAPHIC

GRAPHIC

 

 

 

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2012

27

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Redevelopment Projects in North America
March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

Project RSF (1)

 

Leased Status RSF (1)

 

 

 

 

 

 

 

 

 

In

 

 

 

 

 

 

 

 

 

 

 

 

 

% Leased/

 

Former

 

Use After

 

 

 

Property/Market – Submarket

 

Service

 

CIP

 

Total

 

Leased

 

Negotiating

 

Marketing

 

Total

 

Negotiating

 

Use

 

Conversion

 

Client Tenants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All active redevelopment projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Technology Square/Greater Boston – Cambridge

 

162,153

 

49,971

 

212,124

 

169,939

 

–

 

42,185

 

212,124

 

80%

 

Office

 

Laboratory

 

Ragon Institute of MGH, MIT and Harvard; Epizyme, Inc.; Warp Drive Bio, LLC; Aramco Services Company, Inc.

 

285 Bear Hill Road/Greater Boston – Route 128

 

–

 

26,270

 

26,270

 

26,270

 

–

 

–

 

26,270

 

100%

 

Office/ Manufacturing

 

Laboratory

 

Intelligent Medical Devices, Inc.

 

343 Oyster Point/San Francisco Bay Area – South San Francisco

 

–

 

53,980

 

53,980

 

42,445

 

–

 

11,535

 

53,980

 

79%

 

Office

 

Laboratory

 

Calithera BioSciences, Inc.; CytomX Therapeutics, Inc.

 

4757 Nexus Center Drive/San Diego – University Town Center

 

–

 

68,423

 

68,423

 

68,423

 

–

 

–

 

68,423

 

100%

 

Manufacturing/ Warehouse/ Office/R&D

 

Laboratory

 

Genomatica, Inc.

 

9800 Medical Center Drive/Suburban Washington, D.C. – Rockville

 

8,001

 

67,055

 

75,056

 

75,056

 

–

 

–

 

75,056

 

100%

 

Office/Laboratory

 

Laboratory

 

National Institutes of Health

 

1551 Eastlake Avenue/Seattle – Lake Union

 

77,821

 

39,661

 

117,482

 

77,821

 

–

 

39,661

 

117,482

 

66%

 

Office

 

Laboratory

 

Puget Sound Blood Center and Program

 

1616 Eastlake Avenue/Seattle – Lake Union

 

40,756

 

26,020

 

66,776

 

40,756

 

–

 

26,020

 

66,776

 

61%

 

Office

 

Laboratory

 

Infectious Disease Research Institute

 

Total/weighted average

 

288,731

 

331,380

 

620,111

 

500,710

 

–

 

119,401

 

620,111

 

81%

 

 

 

 

 

 

 

 

 

 

Investment (1)

 

Initial Stabilized

 

Project

 

Initial

 

 

 

 

 

March 31, 2013

 

To Complete

 

Total at

 

Cost Per

 

Yield (1)

 

Start

 

Occupancy

 

Stabilization

 

Property/Market – Submarket

 

In Service

 

CIP

 

2013

 

Thereafter

 

Completion

 

RSF

 

Cash

 

GAAP

 

Date (1)

 

Date (1)

 

Date (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All active redevelopment projects in North America

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

400 Technology Square/Greater Boston – Cambridge

 

$

99,980

 

$

32,212

 

$

9,176

 

$

3,320

 

$

144,688

 

$

682

 

8.1%

 

8.9%

 

4Q11

 

4Q12

 

4Q13

 

285 Bear Hill Road/Greater Boston – Route 128

 

$

–

 

$

4,654

 

$

4,542

 

$

–

 

$

9,196

 

$

350

 

8.4%

 

8.8%

 

4Q11

 

3Q13

 

2013

 

343 Oyster Point/San Francisco Bay Area – South San Francisco

 

$

–

 

$

10,912

 

$

5,560

 

$

867

 

$

17,339

 

$

321

 

9.6%

 

9.8%

 

1Q12

 

3Q13

 

2014

 

4757 Nexus Center Drive/San Diego – University Town Center

 

$

–

 

$

5,879

 

$

23,747

 

$

5,203

 

$

34,829

 

$

509

 

7.6%

 

7.8%

 

4Q12

 

4Q13

 

4Q13 (2)

 

9800 Medical Center Drive/Suburban Washington, D.C. – Rockville

 

$

7,454

 

$

61,251

 

$

11,999

 

$

–

 

$

80,704

 

(3)

 

5.4%

 

5.4%

 

3Q09

 

1Q13

 

2013

 

1551 Eastlake Avenue/Seattle – Lake Union

 

$

40,711

 

$

16,841

 

$

6,458

 

$

–

 

$

64,010

 

$

545

 

6.7%

 

6.7%

 

4Q11

 

4Q11

 

4Q13

 

1616 Eastlake Avenue/Seattle – Lake Union

 

$

22,589

 

$

9,721

 

$

853

 

$

4,653

 

$

37,816

 

$

566

 

8.4%

 

8.6%

 

4Q12

 

2Q13

 

2014

 

Total/weighted average

 

$

170,734

 

$

141,470

 

$

62,335

 

$

14,043

 

$

388,582

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

All project information, including rentable square feet; investment; Initial Stabilized Yields; and project start, occupancy and stabilization dates, relates to the discrete portion of each property undergoing active development or redevelopment. A redevelopment project does not necessarily represent the entire property or the entire vacant portion of a property. Our Initial Stabilized Yield on a cash basis reflects cash rents at date of stabilization and does not reflect contractual rent escalations beyond the stabilization date. Our cash rents related to our value-added projects are expected to increase over time and our average stabilized cash yields are expected, in general, to be greater than our Initial Stabilized Yields. Our estimates for initial cash and GAAP yields, and total costs at completion, represent our initial estimates at the commencement of the project. We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs. As of March 31, 2013, 96% of our leases contained annual rent escalations that were either fixed or based on a consumer price index or another index.

(2)

We expect to deliver 54,102 rentable square feet, or 79% of the total project, to Genomatica, Inc. in the fourth quarter of 2013. Genomatica, Inc. is contractually required to lease the remaining 14,411 rentable square feet 18 to 24 months following the delivery of the initial 54,102 rentable square foot space.

(3)

Our multi-tenant four building property at 9800 Medical Center Drive contains an aggregate of 281,586 rentable square feet. Our total cash investment in the entire four building property upon completion of the redevelopment will approximate $580 per square foot.  Our total expected cash investment for the four building property of approximately $580 per square foot includes our expected total investment at completion related to the 75,056 rentable square foot redevelopment of approximately $1,075 per square foot.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

28

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Redevelopment Projects in North America

March 31, 2013

 

Property

 

 

400 Technology Square

 

 

285 Bear Hill Road

 

 

343 Oyster Point Boulevard

Submarket/Market

 

 

Cambridge/Greater Boston

 

 

Route 128/Greater Boston

 

 

South San Francisco/San Francisco Bay Area

RSF

 

 

212,124

 

 

26,270

 

 

53,980

Photograph/ Rendering

 

 

GRAPHIC

 

 

GRAPHIC

 

 

Year Acquired/ Built

 

 

Acquired in 2006

 

 

Acquired in 2011

 

 

Built in 2000

 

 

 

 

 

 

 

 

 

 

Redevelopment Opportunity Identified at Acquisition

 

 

Yes

 

 

Yes

 

 

N/A

 

 

 

 

 

 

 

 

 

 

Former Use

 

 

Office

 

 

Office/Manufacturing

 

 

Office

 

 

 

 

 

 

 

 

 

 

Use After Conversion

 

 

Laboratory

 

 

Laboratory

 

 

Laboratory

 

 

 

 

 

 

 

 

 

 

Projected GAAP NOI PSF

 

 

$61

 

 

$31

 

 

$31

 

 

 

 

 

 

 

 

 

 

Projected Redevelopment Budget PSF

 

 

$407

 

 

$197

 

 

$135

 

 

 

 

 

 

 

 

 

 

Key Tenants

 

 

Ragon Institute of MGH, MIT and Harvard; Epizyme, Inc.; Warp Drive Bio, LLC; Aramco Services Company, Inc.

 

 

Intelligent Medical Devices, Inc.

 

 

Calithera Biosciences, Inc.; CytomX Therapeutics, Inc.

 

 

 

 

 

 

 

 

 

 

Other Key Attributes

 

 

9% increase in RSF through redevelopment; Formerly anchored by Forester Research as office use.

 

 

Conversion of office/manufacturing space through redevelopment. This portion of the building was originally developed by prior owner as office/manufacturing space in 1999.

 

 

Conversion of office space through redevelopment. This portion of the building was originally developed primarily as office in 2000.

 

 

 

 

 

 

 

 

 

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

29

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Redevelopment Projects in North America

March 31, 2013

 

Property

 

 

4757 Nexus Center Drive

 

 

9800 Medical Center Drive

Submarket/Market

 

 

University Town Center/San Diego

 

 

Rockville/Suburban Washington, D.C.

RSF

 

 

68,423

 

 

75,056

Photograph/ Rendering

 

 

GRAPHIC

 

 

GRAPHIC

Year Acquired/ Built

 

 

Acquired in 1998

 

 

Acquired in 2004

 

 

 

 

 

 

 

Redevelopment Opportunity Identified at Acquisition

 

 

Yes

 

 

Yes

 

 

 

 

 

 

 

Former Use

 

 

Manufacturing/Warehouse/Office/R&D

 

 

Office/Laboratory

 

 

 

 

 

 

 

Use After Conversion

 

 

Laboratory

 

 

Laboratory

 

 

 

 

 

 

 

Projected GAAP NOI PSF

 

 

$40

 

 

$58

 

 

 

 

 

 

 

Projected Redevelopment Budget PSF

 

 

$470

 

 

$525

 

 

 

 

 

 

 

Key Tenants

 

 

Genomatica, Inc.

 

 

National Institutes of Health

 

 

 

 

 

 

 

Other Key Attributes

 

 

Campus has approximately 50,000 of additional developable square feet to accommodate growth by Genomatica, Inc. and other client tenants.

 

 

NIH initially leased space at the campus in 2005. Expansion into the redevelopment space extends their tenancy at property to a total term of approximately 23 years.

 

 

 

 

 

 

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

30

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

All Active Redevelopment Projects in North America

March 31, 2013

 

Property

 

 

1551 Eastlake Avenue

 

 

1616 Eastlake Avenue

Submarket/Market

 

 

Lake Union/Seattle

 

 

Lake Union/Seattle

RSF

 

 

117,482

 

 

66,776

Photograph/ Rendering

 

 

GRAPHIC

 

 

GRAPHIC

Year Acquired/ Built

 

 

Acquired in 2004

 

 

Built in 2003

 

 

 

 

 

 

 

Redevelopment Opportunity Identified at Acquisition

 

 

Yes

 

 

N/A

 

 

 

 

 

 

 

Former Use

 

 

Office

 

 

Office

 

 

 

 

 

 

 

Use After Conversion

 

 

Laboratory

 

 

Laboratory

 

 

 

 

 

 

 

Projected GAAP NOI PSF

 

 

$37

 

 

$49

 

 

 

 

 

 

 

Projected Redevelopment Budget PSF

 

 

$284

 

 

$132

 

 

 

 

 

 

 

Key Tenants

 

 

Puget Sound Blood Center and Program

 

 

Infectious Disease Research Institute

 

 

 

 

 

 

 

Other Key Attributes

 

 

Formerly occupied by the Bill & Melinda Gates Foundation as office use.

 

 

Conversion of office space through redevelopment. This portion of the building was originally developed as office space in 2003.

 

 

 

 

 

 

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

31

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Land Undergoing Preconstruction Activities in North America

March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

Land Undergoing Preconstruction Activities
(Additional CIP) (1)

 

Property/Market - Submarket

 

Book Value

 

Square Feet (2)

 

Cost per Square Foot

 

Greater Boston:

 

 

 

 

 

 

 

Alexandria Center at Kendall Square-Residential - Cambridge/Inner Suburbs

 

$

1,582

 

78,000

 

$

20

 

Alexandria Center at Kendall Square-Lab/Office - Cambridge/Inner Suburbs

 

251,874

 

974,264

 

259

 

Subtotal - Alexandria Center at Kendall Square

 

253,456

 

1,052,264

 

241

 

Greater Boston

 

253,456

 

1,052,264

 

241

 

 

 

 

 

 

 

 

 

San Diego:

 

 

 

 

 

 

 

Science Park Road - Torrey Pines

 

16,298

 

176,500

 

92

 

5200 Illumina Way - University Town Center

 

14,298

 

392,983

 

36

 

10300 Campus Point - University Town Center

 

3,857

 

140,000

 

28

 

Executive Drive - University Town Center

 

3,919

 

49,920

 

79

 

San Diego

 

38,372

 

759,403

 

51

 

 

 

 

 

 

 

 

 

Seattle:

 

 

 

 

 

 

 

Eastlake Ave - Lake Union

 

13,472

 

106,000

 

127

 

Seattle

 

13,472

 

106,000

 

127

 

 

 

 

 

 

 

 

 

Total land undergoing preconstruction activities in North America

 

$

305,300

 

1,917,667

 

$

159

 

 

(1)             In addition to assets included in our gross investment in real estate, we hold options/rights for parcels supporting the future ground-up development of approximately 420,000 rentable square feet in Alexandria CenterTM for Life Science - New York City related to an option under our ground lease. Also, our asset base contains additional embedded development opportunities aggregating approximately 644,000 rentable square feet which represents additional development and expansion rights related to existing rental properties. The 644,000 rentable square feet related to these additional development opportunities was previously included in land held for future development.

(3)             Square feet amounts are updated as necessary to reflect refinement of design of each building.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

32

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Land Undergoing Preconstruction Activities in North America

March 31, 2013

 

 

GRAPHIC

 

 

 

Property

 

 

Alexandria Center™ at Kendall Square

 

 

5200 Illumina Way

 

 

Submarket/Market

 

 

Cambridge/Greater Boston

 

 

University Town Center/San Diego

 

 

Aerial

 

 

GRAPHIC

 

 

GRAPHIC

 

 

Background

 

 

In 2Q10, Alexandria received final approval from the City of Cambridge to develop the Alexandria Center™ at Kendall Square, a fully-integrated life science campus featuring four world-class laboratory/office facilities, high-quality amenities, and green space.

 

 

Alexandria owns and operates the headquarters campus of Illumina, Inc., the leading developer, manufacturer, and marketer of life science tools and integrated systems for large-scale analysis of genetic variation and function with a YE12 market capitalization of $6.9 billion.

 

 

Update

 

 

·      4Q11: Commenced development of a build-to-suit for Biogen Idec Inc. at 225 Binney Street

·      1Q13: Commenced development of build-to-suit for ARIAD Pharmaceuticals, Inc. at 75/125 Binney Street

 

 

·      4Q10: Acquired world-class campus from Biogen Idec Inc.

·      4Q10: Leased entire 3 building campus to Illumina, Inc.

·      4Q12: Completed development of fourth building with 127,373 rentable square feet for Illumina, Inc.

·      1Q13: Completed development of fifth building with 23,124 rentable square feet for Illumina, Inc.

 

 

Near-Term Opportunity

 

 

Laboratory ground-up development projects at 50 and 100 Binney Street aggregating approximately 1.0 million rentable square feet plus 228,000 rentable square feet of residential; subject to market conditions, we expect to commence development of these opportunities over the next one to three years likely through a joint venture. We believe the estimated investment, excluding land, to develop laboratory buildings, with an underground parking garage, on these parcels ranges from $660 to $825 per square foot.

 

 

Future ground-up development projects for two buildings (building 6 and 7) aggregating 392,983 rentable square feet; subject to market conditions, we expect to commence development of these opportunities over the next one to three years. We believe the estimated investment, excluding land, to develop laboratory buildings on these parcels ranges from $550 to $605 per square foot. Additionally, the site supports an above ground parking garage which Illumina, Inc. may elect to lease at a similar return to the Company as a new building.

 

 

 

 

 

 

 

 

 

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

33

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Land Undergoing Preconstruction Activities in North America

March 31, 2013

 

 

GRAPHIC

 

 

 

 

 

 

 

 

 

 

 

 

 

Property

 

 

10300 Campus Point Drive

 

 

Dexter/Terry Avenue and Eastlake Avenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Submarket/Market

 

 

University Town Center/San Diego

 

 

Lake Union/Seattle

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerial

 

 

GRAPHIC

 

 

GRAPHIC

 

 

Background

 

 

10300 Campus Point Drive is Alexandria’s flagship 449,759 rentable square foot, multi-tenant campus in University Town Center.

 

 

Alexandria’s Dexter/Terry Avenue and Eastlake Avenue assets are located at Lake Union, home to numerous highly renowned medical research institutions, including the Fred Hutchinson Cancer Research Center and the University of Washington.

 

 

Update

 

 

·      4Q10: Acquired the manufacturing facility and began redeveloping it into a state-of-the-art laboratory property

·      3Q12: Completed redevelopment of 10300 Campus Point Drive, a 96% leased project with leading tenants including Eli Lilly and Company, Celgene Corporation, Covance Inc., and the Regents of the University of California

 

 

·      2010: Completed 115,084 rentable square foot build-to-suit for Gilead Sciences, Inc.

·      2011: Commenced redevelopment of 117,482 square foot project at 1551 Eastlake Avenue

·      2012: Commenced redevelopment of 66,776 square foot project at 1616 Eastlake Avenue

·      2012: Sold two assets to residential developers for an average sales price per square foot of approximately $72

·      2013: Sale of 810 Dexter Avenue North which is expected to close in 2013

 

 

Near-Term Opportunity

 

 

Ground-up development projects aggregating approximately 140,000 rentable square feet; subject to market conditions, we expect to commence development of these opportunities over the next one to three years. We believe the estimated investment, excluding land, to develop laboratory buildings on these parcels ranges from $550 to $605 per square foot.

 

 

Build-to suit opportunities, as well as expansion opportunities related to existing client tenants.  Subject to market conditions, we expect to monetize these land sites through dispositions or commencement of development over the next one to three years.  We believe the estimated investment, excluding land, to develop laboratory buildings on these parcels ranges from $375 to $550 per square foot.

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

34

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Land Held for Future Development in North America

March 31, 2013

(Unaudited)

 

 

 

Land Held for Future Development (1)

 

Property/Market - Submarket

 

Book Value

 

Square Feet (2)

 

Cost per Square Foot

 

Greater Boston:

 

 

 

 

 

 

 

Alexandria Center at Kendall Square-Residential - Cambridge/Inner Suburbs

 

$

3,413

 

150,000

 

$

23

 

Subtotal - Alexandria Center at Kendall Square

 

3,413

 

150,000

 

23

 

Technology Square - Cambridge/Inner Suburbs

 

7,803

 

100,000

 

78

 

Greater Boston

 

$

11,216

 

250,000

 

$

45

 

 

 

 

 

 

 

 

 

San Francisco Bay Area:

 

 

 

 

 

 

 

Owens Street - Mission Bay

 

$

27,762

 

290,059

 

$

96

 

Grand Ave - South San Francisco

 

42,853

 

397,132

 

108

 

Rozzi/Eccles - South San Francisco

 

72,879

 

514,307

 

142

 

San Francisco Bay Area

 

$

143,494

 

1,201,498

 

$

119

 

 

 

 

 

 

 

 

 

Suburban Washington D.C.:

 

 

 

 

 

 

 

Medical Center Drive - Rockville

 

$

7,548

 

292,000

 

$

26

 

Research Boulevard - Rockville

 

6,698

 

347,000

 

19

 

Firstfield Road - Gaithersburg

 

4,052

 

95,000

 

43

 

Freedom Center Drive and Pyramid Place - Virginia

 

11,791

 

424,905

 

28

 

Suburban Washington D.C.

 

$

30,089

 

1,158,905

 

$

26

 

 

 

 

 

 

 

 

 

Seattle:

 

 

 

 

 

 

 

Dexter/Terry Ave - Lake Union

 

$

18,747

 

232,300

 

$

81

 

Eastlake Ave - Lake Union

 

15,241

 

160,266

 

95

 

Seattle

 

$

33,988

 

392,566

 

$

87

 

 

 

 

 

 

 

 

 

Other Markets

 

$

20,146

 

789,212

 

$

26

 

 

 

 

 

 

 

 

 

Future value-added projects in North America

 

$

238,933

 

3,792,181

 

$

63

 

 

(1)             In addition to assets included in our gross investment in real estate, we hold options/rights for parcels supporting the future ground-up development of approximately 420,000 rentable square feet in Alexandria CenterTM for Life Science - New York City related to an option under our ground lease. Also, our asset base contains additional embedded development opportunities aggregating approximately 644,000 rentable square feet which represents additional development and expansion rights related to existing rental properties. The 644,000 rentable square feet related to these additional development opportunities was previously included in land held for future development.

(2)             Square feet amounts are updated as necessary to reflect refinement of design of each building.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

35

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Land Held for Future Development in North America

March 31, 2013

 

GRAPHIC

 

Property

Owens Street

Submarket/Market

 

Mission Bay/San Francisco Bay Area

Aerial

 

GRAPHIC

 

 

Background

 

The Alexandria Center™ for Science and Technology is the epicenter of innovation in the San Francisco Bay Area.

Update

 

·              2007: Completed development of 1700 Owens, anchored by the U.S. Government

·              2011: Completed development of 1500 Owens, anchored by Celgene Corporation

·              2011: Completed development of 455 Mission Bay Boulevard, anchored by Bayer AG

·              2011: Acquired 409/499 Illinois Street, anchored by FibroGen, Inc.

 

Future Opportunity

 

Ground-up development projects aggregating 290,059 rentable square feet at 1600 and 1450 Owens Street; subject to market conditions, we expect to monetize or commence development of these future opportunities.  We believe the estimated investment, excluding land, to develop laboratory buildings on these parcels ranges from $360 to $415 per square foot.

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

36

 

 


 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Land Held for Future Development in North America
March 31, 2013

 

GRAPHIC

 

Property

East Grand Avenue

 

 

9800 Medical Center Drive

Submarket/Market

South San Francisco/San Francisco Bay Area

 

 

Rockville/Suburban Washington, D.C.

Aerial

GRAPHIC

 

 

GRAPHIC

Background

 

Alexandria owns and operates the headquarters campus of Onyx Pharmaceuticals, Inc., the cutting-edge global commercial-stage oncology company.

 

 

 

Alexandria’s 9800 Medical Center Drive campus is located in the heart of the Shady Grove Life Sciences Center.

Update

·                 2010: Completed development of 249 East Grand Avenue, 100% pre-leased to Onyx Pharmaceuticals, Inc.

·                 4Q12: Completed development of 259 East Grand Avenue, 100% pre-leased

·                 1Q13: Commenced construction on 269 East Grand Avenue, 100% pre-leased

 

 

 

·            1Q13: Alexandria completed redevelopment of 8,000 rentable square feet for National Institutes of Health

·            2013: Alexandria expects to complete redevelopment of 75,056 rentable square feet; 100% pre-leased to National Institutes of Health for 15 years

·            2013: Upon completion of the redevelopment, the National Institutes of Health will occupy approximately 135,000 rentable square feet, or 48% of the campus

 

Future Opportunity

 

Ground-up development projects aggregating 122,000 rentable square feet on the Onyx campus; subject to market conditions, we expect to commence development of this opportunity over the next one to three years.  We believe the estimated investment, excluding land, to develop a laboratory building on this parcel ranges from $375 to $430 per square foot. This site supports an above ground parking garage which Onyx may elect to lease at a similar return to the Company as a new building. Additionally, we also have approximately 789,000 rentable square feet of future opportunities at other sites in South San Francisco.

 

 

 

Future development projects for expansion opportunities of 260,721 rentable square feet at 9800 Medical Center Drive plus 378,279 rentable square feet at other well-located sites in Rockville.  We are not likely to commence ground-up development in the near-term given current market conditions.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

37

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Future Redevelopment Projects in North America

March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

Land Undergoing Preconstruction Activities
(Additional CIP) (1)

 

Land Held for Future Development (1)

 

Total (1)

 

Property/Market - Submarket

 

Book Value

 

Square Feet (2)

 

Cost per
Square Foot

 

Book Value

 

Square Feet (2)

 

Cost per
Square Foot

 

Book Value

 

Square Feet (2)

 

Cost per
Square Foot

 

Greater Boston:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alexandria Center at Kendall Square-Residential - Cambridge/Inner Suburbs

 

$

1,582

 

78,000

 

$

20

 

$

3,413

 

150,000

 

$

23

 

$

4,995

 

228,000

 

$

22

 

Alexandria Center at Kendall Square-Lab/Office - Cambridge/Inner Suburbs

 

251,874

 

974,264

 

259

 

–

 

–

 

–

 

251,874

 

974,264

 

259

 

Subtotal - Alexandria Center at Kendall Square

 

253,456

 

1,052,264

 

241

 

3,413

 

150,000

 

23

 

256,869

 

1,202,264

 

214

 

Technology Square - Cambridge/Inner Suburbs

 

–

 

–

 

–

 

7,803

 

100,000

 

78

 

7,803

 

100,000

 

78

 

Greater Boston

 

$

253,456

 

1,052,264

 

$

241

 

$

11,216

 

250,000

 

$

45

 

$

264,672

 

1,302,264

 

$

203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Francisco Bay Area:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owens Street - Mission Bay

 

$

–

 

–

 

$

–

 

$

27,762

 

290,059

 

$

96

 

$

27,762

 

290,059

 

$

96

 

Grand Ave - South San Francisco

 

–

 

–

 

–

 

42,853

 

397,132

 

108

 

42,853

 

397,132

 

108

 

Rozzi/Eccles - South San Francisco

 

–

 

–

 

$

–

 

72,879

 

514,307

 

142

 

72,879

 

514,307

 

142

 

San Francisco Bay Area

 

$

–

 

–

 

$

–

 

$

143,494

 

1,201,498

 

$

119

 

$

143,494

 

1,201,498

 

$

119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

San Diego:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Science Park Road - Torrey Pines

 

$

16,298

 

176,500

 

$

92

 

$

–

 

–

 

$

–

 

$

16,298

 

176,500

 

$

92

 

5200 Illumina Way - University Town Center

 

14,298

 

392,983

 

36

 

–

 

–

 

–

 

14,298

 

392,983

 

36

 

10300 Campus Point - University Town Center

 

3,857

 

140,000

 

28

 

–

 

–

 

–

 

3,857

 

140,000

 

28

 

Executive Drive - University Town Center

 

3,919

 

49,920

 

79

 

–

 

–

 

–

 

3,919

 

49,920

 

78

 

San Diego

 

$

38,372

 

759,403

 

$

51

 

$

–

 

–

 

$

–

 

$

38,372

 

759,403

 

$

51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington D.C.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Center Drive - Rockville

 

$

–

 

–

 

$

–

 

$

7,548

 

292,000

 

$

26

 

$

7,548

 

292,000

 

$

26

 

Research Boulevard - Rockville

 

–

 

–

 

–

 

6,698

 

347,000

 

19

 

6,698

 

347,000

 

19

 

Firstfield Road - Gaithersburg

 

–

 

–

 

–

 

4,052

 

95,000

 

43

 

4,052

 

95,000

 

43

 

Freedom Center Drive and Pyramid Place - Virginia

 

–

 

–

 

–

 

11,791

 

424,905

 

28

 

11,791

 

424,905

 

28

 

Suburban Washington D.C.

 

$

–

 

–

 

$

–

 

$

30,089

 

1,158,905

 

$

26

 

$

30,089

 

1,158,905

 

$

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seattle:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dexter/Terry Ave - Lake Union

 

$

–

 

–

 

$

–

 

$

18,747

 

232,300

 

$

81

 

$

18,747

 

232,300

 

$

81

 

Eastlake Ave - Lake Union

 

13,472

 

106,000

 

127

 

15,241

 

160,266

 

95

 

28,713

 

266,266

 

108

 

Seattle

 

$

13,472

 

106,000

 

$

127

 

$

33,988

 

392,566

 

$

87

 

$

47,460

 

498,566

 

$

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Markets

 

$

–

 

–

 

$

–

 

$

20,146

 

789,212

 

$

26

 

$

20,146

 

789,212

 

$

26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Future value-added projects in North America

 

$

305,300

 

1,917,667

 

$

159

 

$

238,933

 

3,792,181

 

$

63

 

$

544,233

 

5,709,848

 

$

95

 

 

 

(1)             In addition to assets included in our gross investment in real estate, we hold options/rights for parcels supporting the future ground-up development of approximately 420,000 rentable square feet in Alexandria CenterTM for Life Science - New York City related to an option under our ground lease. Also, our asset base contains additional embedded development opportunities aggregating approximately 644,000 rentable square feet which represents additional development and expansion rights related to existing rental properties. The 644,000 rentable square feet related to these additional development opportunities was previously included in land held for future development.

(2)             Square feet amounts are updated as necessary to reflect refinement of design of each building.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

38

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Future Value-Added Projects in North America

Future Redevelopment Projects in North America

March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

 

 

Future
Redevelopment (1)

 

Market - Submarket

 

Square Feet

 

 

 

 

 

Greater Boston

 

109,457

 

 

 

 

 

San Francisco Bay Area – South San Francisco

 

40,314

 

 

 

 

 

San Diego

 

87,488

 

 

 

 

 

Suburban Washington, D.C.

 

490,000

 

 

 

 

 

Seattle

 

14,914

 

 

 

 

 

Other markets

 

94,211

 

 

 

 

 

Total future redevelopment in North America

 

836,384

 

 

(1)             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 investments in real estate, net, in the condensed consolidated balance sheets.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

39

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Real Estate Investment in Asia
March 31, 2013

(Dollars in thousands, except per square foot amounts)

(Unaudited)

 

Property listing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Occupancy Percentage

 

 

 

Rentable Square Feet

 

Number of

 

Annualized

 

 

 

Operating and

 

Country

 

Operating

 

Development

 

Redevelopment

 

Total

 

Properties

 

Base Rent

 

Operating

 

Redevelopment

 

China

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

China

 

299,484

 

–

 

–

 

299,484

 

1

 

$

449

 (1)

46.7

%

 

46.7

%

 

China

 

–

 

309,476

 

–

 

309,476

 

1

 

–

 

N/A

 

 

N/A

 

 

Total China

 

299,484

 

309,476

 

–

 

608,960

 

2

 

$

449

 

46.7

%

 

46.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

India

 

33,698

 

–

 

–

 

33,698

 

1

 

$

219

 

41.7

%

 

41.7

%

 

India

 

143,260

 

–

 

–

 

143,260

 

1

 

2,258

 

86.5

 

 

86.5

 

 

India

 

–

 

134,500

 

–

 

134,500

 

1

 

–

 

N/A

 

 

N/A

 

 

India

 

–

 

175,000

 

–

 

175,000

 

1

 

–

 

N/A

 

 

N/A

 

 

India

 

41,345

 

–

 

54,483

 

95,828

 

1

 

500

 

100.0

 

 

43.1

 

 

India

 

–

 

–

 

44,660

 

44,660

 

1

 

–

 

N/A

 

 

–

 

 

India

 

86,200

 

–

 

–

 

86,200

 

1

 

911

 

100.0

 

 

100.0

 

 

Total India

 

304,503

 

309,500

 

99,413

 

713,146

 

7

 

$

3,888

 

87.2

%

 

65.8

%

 

Total Asia

 

603,987

 

618,976

 

99,413

 

1,322,106

 

9

 

$

4,337

 

67.1

%

 

57.7

%

 

 

(1)             Represents annualized base rent for non-laboratory use.

 

Summary of investments in real estate

 

 

March 31, 2013

 

December 31, 2012

 

 

 

Book Value

 

Square Feet

 

Cost per
Square Foot

 

Book Value

 

Square Feet

 

Cost per
Square Foot

 

Rental properties, net, in China

 

$

21,352

 

299,484

 

$

71

 

$

21,456

 

299,484

 

$

72

 

Rental properties, net, in India

 

35,337

 

304,503

 

116

 

32,391

 

288,178

 

112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CIP/current value-added projects:

 

 

 

 

 

 

 

 

 

 

 

 

 

Active development in China

 

58,500

 

309,476

 

189

 

57,305

 

309,476

 

185

 

Active development in India

 

29,713

 

309,500

 

96

 

30,008

 

309,500

 

97

 

Active redevelopment projects in India

 

13,144

 

99,143

 

133

 

14,289

 

115,468

 

124

 

 

 

101,357

 

718,119

 

141

 

101,602

 

734,444

 

138

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Land held for future development/land undergoing preconstruction activities (additional CIP) – India

 

83,735

 

6,829,000

 

12

 

82,314

 

6,829,000

 

12

 

Total investments in real estate, net, in Asia

 

$

241,781

 

8,151,106

 

$

30

 

$

237,763

 

8,151,106

 

$

29

 

 

Active development and redevelopment

 

 

 

Project RSF

 

Leased Status RSF

 

Investment

 

 

 

In

 

 

 

 

 

 

 

 

 

 

 

 

 

Leased/

 

March 31, 2013

 

To Complete

 

Total at

 

Description

 

Service

 

CIP

 

Total

 

Leased

 

Negotiating

 

Marketing

 

Total

 

Negotiating %

 

In Service

 

CIP

 

2013

 

Thereafter

 

Completion (1)

 

China development project

 

–

 

309,476

 

309,476

 

–

 

–

 

309,476

 

309,476

 

–

%

 

$

–

 

$

58,500

 

$

4,016

 

$

19,784

 

$

82,300

 

India development projects

 

–

 

309,500

 

309,500

 

175,000

 

–

 

134,500

 

309,500

 

57

%

 

–

 

29,713

 

18,702

 

3,370

 

51,785

 

India redevelopment projects

 

41,345

 

99,143

 

140,488

 

54,960

 

6,400

 

79,128

 

140,488

 

44

%

 

4,484

 

13,144

 

5,081

 

–

 

22,709

 

Total active development and redevelopment in Asia

 

41,345

 

718,119

 

759,464

 

 

 

 

 

 

 

 

 

 

 

 

$

4,484

 

$

101,357

 

$

27,799

 

$

23,154

 

$

156,794

 

 

(1)             Our estimates for total costs at completion represent our initial estimates at the commencement of the project.  We expect to update this information upon completion of the project, or earlier if there are significant changes to the expected project costs.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

40

 

 

 


 

GRAPHIC

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Credit Metrics

March 31, 2013

(Unaudited)

 

Net Debt/Adjusted EBITDA

 

Fixed Charge Coverage Ratio

 

 

 

 

 

 

GRAPHIC

 

GRAPHIC

 

 

 

Net Debt to Gross Assets (Excluding Cash and Restricted Cash)

 

Interest Coverage Ratio

 

 

 

 

 

 

GRAPHIC

 

GRAPHIC

 

 

 

Unencumbered NOI as a % of Total NOI

 

Unencumbered Assets Gross Book Value as a % of Gross Assets

 

 

 

 

 

 

GRAPHIC

 

GRAPHIC

 

 

 

Liquidity

 

Unhedged Variable Rate Debt as a % of Total Debt

 

 

 

GRAPHIC

 

GRAPHIC

 

(1)             Periods represent quarter annualized metrics.  We believe key credit metrics for the three months ended March 31, 2013, annualized, reflect the completion of many development and redevelopment projects and are indicative of the Company’s current operating trends.

(2)             Lease commencements after October 1, 2012, at our encumbered properties, including 400 Technology Square, 9800 Medical Center Drive, and 259 East Grand Avenue, resulted in a decrease in our ratio of unencumbered NOI as a percentage of total NOI.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

41

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Debt
March 31, 2013
(Dollars in thousands)

(Unaudited)

 

Fixed rate/hedged and unhedged variable rate debt

 

 

 

Fixed Rate/Hedged
Variable Rate

 

Unhedged
Variable Rate

 

Total
Consolidated

 

Percentage of
Total

 

Weighted Average
Interest Rate at
End of Period (1)

 

Weighted Average
Remaining Term
(Years)

 

Secured notes payable (2)

 

$

620,076

 

$

110,638

 

$

730,714

 

22.9%

 

5.56%

 

2.8

 

Unsecured senior notes payable (2)

 

549,816

 

–

 

549,816

 

17.3

 

4.61

 

9.0

 

Unsecured senior line of credit (3)

 

–

 

554,000

 

554,000

 

17.4

 

1.40

 

4.1

 

2016 Unsecured Senior Bank Term Loan (4)

 

750,000

 

–

 

750,000

 

23.6

 

2.39

 

3.3

 

2017 Unsecured Senior Bank Term Loan (5)

 

250,000

 

350,000

 

600,000

 

18.8

 

3.68

 

3.8

 

Total debt

 

$

2,169,892

 

$

1,014,638

 

$

3,184,530

 

100.0%

 

3.57%

 

4.4

 

Percentage of total debt

 

68%

 

32%

 

100%

 

 

 

 

 

 

 

 

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

(2)             Represents amounts net of unamortized premiums/discounts.

(3)             Total commitments available for borrowing aggregate $1.5 billion under our unsecured senior line of credit.  As of March 31, 2013, we had approximately $0.9 billion available for borrowings under our unsecured senior line of credit.  Weighted average remaining term assumes we exercise our sole option to extend the stated maturity date of April 30, 2016, by six months, twice, to April 30, 2017.

(4)             Assumes we exercise our sole option to extend the stated maturity date of June 30, 2015, by one year, to June 30, 2016.

(5)             Assumes we exercise our sole option to extend the stated maturity date of January 31, 2016, by one year, to January 31, 2017.

 

Debt maturities

 

Debt

 

Stated Rate

 

Effective
Interest
Rate (1)

 

Maturity
Date

 

2013

 

2014

 

2015

 

2016

 

2017

 

Thereafter

 

Total

 

Secured notes payable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suburban Washington, D.C.

 

6.36

%

 

6.36%

 

9/1/13

 

$

25,946

 

$

–

 

$

–

 

$

–

 

$

–

 

$

–

 

$

25,946

 

Greater Boston

 

5.26

 

 

5.59

 

4/1/14

 

2,898

 

208,683

 

–

 

–

 

–

 

–

 

211,581

 

Suburban Washington, D.C.

 

2.19

 

 

2.19

 

4/20/14

 

–

 

76,000

 

–

 

–

 

–

 

–

 

76,000

 

San Diego

 

6.05

 

 

4.88

 

7/1/14

 

95

 

6,458

 

–

 

–

 

–

 

–

 

6,553

 

San Diego

 

5.39

 

 

4.00

 

11/1/14

 

119

 

7,495

 

–

 

–

 

–

 

–

 

7,614

 

Seattle

 

6.00

 (2)

 

6.00

 

11/18/14

 

180

 

240

 

–

 

–

 

–

 

–

 

420

 

Suburban Washington, D.C.

 

5.64

 

 

4.50

 

6/1/15

 

87

 

138

 

5,788

 

–

 

–

 

–

 

6,013

 

San Francisco Bay Area

 

LIBOR+1.50

 

1.74

 

7/1/15

 (3)

–

 

–

 

34,218

 

–

 

–

 

–

 

34,218

 

Greater Boston, San Francisco Bay Area, and San Diego

 

5.73

 

 

5.73

 

1/1/16

 

1,205

 

1,713

 

1,816

 

75,501

 

–

 

–

 

80,235

 

Greater Boston, San Diego, and Greater NYC

 

5.82

 

 

5.82

 

4/1/16

 

657

 

931

 

988

 

29,389

 

–

 

–

 

31,965

 

San Francisco Bay Area

 

6.35

 

 

6.35

 

8/1/16

 

1,734

 

2,487

 

2,652

 

126,715

 

–

 

–

 

133,588

 

San Diego, Suburban Washington, D.C., and Seattle

 

7.75

 

 

7.75

 

4/1/20

 

1,018

 

1,453

 

1,570

 

1,696

 

1,832

 

108,469

 

116,038

 

San Francisco Bay Area

 

6.50

 

 

6.50

 

6/1/37

 

16

 

17

 

18

 

19

 

20

 

773

 

863

 

Average/Total

 

5.50

%

 

5.56

 

 

 

33,955

 

305,615

 

47,050

 

233,320

 

1,852

 

109,242

 

731,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1.5 billion unsecured senior line of credit

 

LIBOR+1.20% (4)

 

1.40

 

4/30/17

 (5)

–

 

–

 

–

 

–

 

554,000

 

–

 

554,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2016 Unsecured Senior Bank Term Loan

 

LIBOR+1.75%

 

2.39

 

6/30/16

 (6)

–

 

–

 

–

 

750,000

 

–

 

–

 

750,000

 

2017 Unsecured Senior Bank Term Loan

 

LIBOR+1.50%

 

3.68

 

1/31/17

 (7)

–

 

–

 

–

 

–

 

600,000

 

–

 

600,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured senior notes payable (8)

 

4.60

%

 

4.61

 

4/1/22

 

–

 

250

 

–

 

–

 

–

 

550,000

 

550,250

 

Average/Subtotal

 

 

 

 

3.57

 

 

 

33,955

 

305,865

 

47,050

 

983,320

 

1,155,852

 

659,242

 

3,185,284

 

Unamortized discounts

 

 

 

 

–

 

 

 

(350

)

(78

)

(12

)

(44

)

(47

)

(223

)

(754

)

Average/Total

 

 

 

 

3.57%

 

 

 

$

33,605

 

$

305,787

 

$

47,038

 

$

983,276

 

$

1,155,805

 

$

659,019

 

$

3,184,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balloon payments

 

 

 

 

 

 

 

 

$

25,757

 

$

297,330

 

$

39,946

 

$

980,029

 

$

1,154,000

 

$

653,791

 

$

3,150,853

 

Principal amortization

 

 

 

 

 

 

 

 

7,848

 

8,457

 

7,092

 

3,247

 

1,805

 

5,228

 

33,677

 

Total consolidated debt

 

 

 

 

 

 

 

 

$

33,605

 

$

305,787

 

$

47,038

 

$

983,276

 

$

1,155,805

 

$

659,019

 

$

3,184,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed rate/hedged variable rate debt

 

 

 

 

 

 

 

 

$

33,425

 

$

229,547

 

$

12,820

 

$

983,276

 

$

251,805

 

$

659,019

 

$

2,169,892

 

Unhedged variable rate debt

 

 

 

 

 

 

 

 

180

 

76,240

 

34,218

 

–

 

904,000

 

–

 

1,014,638

 

Total consolidated debt

 

 

 

 

 

 

 

 

$

33,605

 

$

305,787

 

$

47,038

 

$

983,276

 

$

1,155,805

 

$

659,019

 

$

3,184,530

 

 

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

(2)             Represents a loan assumed with the acquisition of a property.  The interest rate is based upon 10-year U.S. treasury bills plus 3%, with a floor of 6% and a ceiling of 8.5%.

(3)             We have two, one year options to extend the stated maturity date of July 1, 2015, to July 1, 2017.

(4)             In addition to the stated rate, we are subject to an annual facility fee of 0.25%.

(5)             Assumes we exercise our sole option to extend the stated maturity date of April 30, 2016, by six months, twice, to April 30, 2017.

(6)             Assumes we exercise our sole option to extend the stated maturity date of June 30, 2015, by one year, to June 30, 2016.

(7)             Assumes we exercise our sole option to extend the stated maturity date of January 31, 2016, by one year, to January 31, 2017.

(8)             Includes $550.0 million of our 4.60% unsecured senior notes payable due in April 2022, and $250,000 of our 8.00% unsecured senior convertible notes payable with a maturity date of April 15, 2014.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

42

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Debt
March 31, 2013
(Dollars in thousands)

(Unaudited)

 

Debt covenants

 

 

 

Unsecured Senior Notes Payable

 

Unsecured Senior Line of Credit and
Unsecured Senior Bank Term Loans

 

Debt Covenant Ratios

 

Requirement

 

Actual (1)

 

Requirement

 

Actual (1)

 

Total Debt to Total Assets (2)

 

< 60%

 

40%

 

< 60.0% (3)

 

38%

 

 

 

 

 

 

 

 

 

 

 

Consolidated EBITDA to Interest Expense (4)

 

> 1.5x

 

5.6x

 

> 1.50x

 

2.5x

 

 

 

 

 

 

 

 

 

 

 

Unencumbered Total Asset Value to Unsecured Debt

 

> 150%

 

246%

 

N/A

 

N/A

 

 

 

 

 

 

 

 

 

 

 

Secured Debt to Total Assets (5)

 

< 40%

 

9%

 

< 40.0% (3)

 

9%

 

 

 

 

 

 

 

 

 

 

 

Unsecured Leverage Ratio

 

N/A

 

N/A

 

< 60.0% (3)

 

44%

 

 

 

 

 

 

 

 

 

 

 

Unsecured Interest Coverage Ratio

 

N/A

 

N/A

 

> 1.75x

 

6.8x

 

 

(1)             Actual covenants are calculated pursuant to the specific terms of each agreement.

(2)             Under the unsecured senior line of credit and unsecured senior bank term loans, this ratio is referred to as the Leverage Ratio.

(3)             These ratios may increase by an additional 5% in connection with a Material Acquisition, as defined, for up to four quarters.

(4)             Under the unsecured senior line of credit and unsecured senior bank term loans, this ratio is referred to as the Fixed Charge Coverage Ratio.

(5)             Under the unsecured senior line of credit and unsecured senior bank term loans, this ratio is referred to as the Secured Debt Ratio.

 

Summary of interest rate swap agreements

 

 

 

 

 

 

 

Interest Pay

 

Fair Value as of

 

Notional Amount in Effect as of

 

Transaction Date

 

Effective Date

 

Termination Date

 

Rate (1)

 

March 31, 2013 (2)

 

March 31, 2013

 

December 31, 2013

 

December 2006

 

December 29, 2006

 

March 31, 2014

 

4.990%

 

$

(2,398

)

$

50,000

 

$

50,000

 

October 2007

 

October 31, 2007

 

September 30, 2013

 

4.642%

 

(1,120

)

50,000

 

–

 

December 2006

 

November 30, 2009

 

March 31, 2014

 

5.015%

 

(3,616

)

75,000

 

75,000

 

December 2006

 

November 30, 2009

 

March 31, 2014

 

5.023%

 

(3,622

)

75,000

 

75,000

 

December 2011

 

December 31, 2012

 

December 31, 2013

 

0.640%

 

(791

)

250,000

 

–

 

December 2011

 

December 31, 2012

 

December 31, 2013

 

0.640%

 

(791

)

250,000

 

–

 

December 2011

 

December 31, 2012

 

December 31, 2013

 

0.644%

 

(399

)

125,000

 

–

 

December 2011

 

December 31, 2012

 

December 31, 2013

 

0.644%

 

(399

)

125,000

 

–

 

December 2011

 

December 31, 2013

 

December 31, 2014

 

0.977%

 

(1,676

)

–

 

250,000

 

December 2011

 

December 31, 2013

 

December 31, 2014

 

0.976%

 

(1,674

)

–

 

250,000

 

Total

 

 

 

 

 

 

 

$

(16,486

)

$

1,000,000

 

$

700,000

 

 

(1)             In addition to the interest pay rate, borrowings outstanding under our unsecured senior line of credit and unsecured senior bank term loans include an applicable margin currently ranging from 1.20% to 1.75%.

(2)             Includes accrued interest and credit valuation adjustment.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
ALL RIGHTS RESERVED © 2013

43

 

 

 


 

GRAPHIC

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Definitions and Other Information

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

This section contains additional information for sections throughout this supplemental information package as well as explanations of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance.  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 margins

 

EBITDA represents earnings before interest, taxes, depreciation, and amortization (“EBITDA”), a non-GAAP financial measure, and is used by us and others as a supplemental measure of performance.  We use adjusted EBITDA (“Adjusted EBITDA”) and Adjusted EBITDA margins to assess the performance of our core operations, for financial and operational decision making, and as a supplemental or additional means of evaluating period-to-period comparisons on a consistent basis.  Adjusted EBITDA also serves as a proxy for a component of a financial covenant under certain of our debt obligations.  Adjusted EBITDA is calculated as EBITDA excluding net stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, gains or losses on sales of land parcels, impairments of real estate, and impairments of land parcels.  We believe Adjusted EBITDA and Adjusted EBITDA margins provide investors relevant and useful information because they permit investors to view income from our operations on an unleveraged basis before the effects of taxes, non-cash depreciation and amortization, net stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, gains or losses on sales of land parcels, impairments of real estate, and impairments of land parcels.  By excluding interest expense and gains or losses on early extinguishment of debt, EBITDA, Adjusted EBITDA, and Adjusted EBITDA margins allow investors to measure our performance independent of our capital structure and indebtedness and, therefore, allow for a more meaningful comparison of our performance to that of other companies, both in the real estate industry and in other industries.  We believe that excluding non-cash charges related to share -based compensation facilitates a comparison of our operations across periods and among other equity REITs without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use.  We believe that adjusting for the effects of gains or losses on sales of real estate, gains or losses on sales of land parcels, impairments of real estate, and impairments of land parcels provides useful information by excluding certain items that are not representative of our core operating results.  These items are dependent upon historical costs, and are subject to judgmental inputs and the timing of our decisions.  EBITDA, Adjusted EBITDA, and Adjusted EBITDA margins have limitations as measures of our performance.  EBITDA, Adjusted EBITDA, and Adjusted EBITDA margins do not reflect our historical cash expenditures or future cash requirements for capital expenditures or contractual commitments.  While EBITDA, Adjusted EBITDA, and Adjusted EBITDA margins are relevant and widely used measures of performance, they do not represent net income or cash flows from operations as defined by GAAP, and they should not be considered as alternatives to those indicators in evaluating performance or liquidity.  Further, our computation of EBITDA, Adjusted EBITDA, and Adjusted EBITDA margins may not be comparable to similar measures reported by other companies.

 

The following table reconciles net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to EBITDA, Adjusted EBITDA, and Adjusted EBITDA margins:

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

Net income

 

$

30,237

 

$

28,807

 

$

18,305

 

$

25,641

 

$

32,775

 

Interest expense – continuing operations

 

18,020

 

17,941

 

17,092

 

17,922

 

16,226

 

Interest expense – discontinued operations

 

–

 

–

 

2

 

–

 

1

 

Depreciation and amortization – continuing operations

 

46,065

 

47,515

 

46,584

 

50,741

 

41,786

 

Depreciation and amortization – discontinued operations

 

930

 

557

 

1,589

 

1,614

 

1,619

 

EBITDA

 

95,252

 

94,820

 

83,572

 

95,918

 

92,407

 

Stock compensation expense

 

3,349

 

3,748

 

3,845

 

3,274

 

3,293

 

Loss on early extinguishment of debt

 

–

 

–

 

–

 

1,602

 

623

 

Loss (gain) on sale of real estate

 

340

 

–

 

(1,562

)

(2

)

–

 

Gain on sale of land parcel

 

–

 

–

 

–

 

–

 

(1,864

)

Impairment of real estate

 

–

 

1,601

 

9,799

 

–

 

–

 

Impairment of land parcel

 

–

 

2,050

 

–

 

–

 

–

 

Adjusted EBITDA

 

$

98,941

 

$

102,219

 

$

95,654

 

$

100,792

 

$

94,459

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

150,380

 

$

151,554

 

$

142,850

 

$

145,593

 

$

135,711

 

Adjusted EBITDA margins

 

66%

 

67%

 

67%

 

69%

 

70%

 

 

Adjusted funds from operations

 

AFFO is a non-GAAP financial measure that we use as a supplemental measure of our performance.  We compute AFFO by adding to or deducting from FFO, as adjusted: (1) non-revenue-enhancing capital expenditures, tenant improvements, and leasing commissions (excludes development and redevelopment expenditures); (2) effects of straight-line rent and straight-line rent on ground leases; (3) capitalized income from development projects; (4) amortization of acquired above and below market leases, loan fees, and debt premiums/discounts; (5) non-cash compensation expense; and (6) allocation of AFFO attributable to unvested restricted stock awards.

 

We believe that AFFO is a useful supplemental performance measure because it further adjusts to: (1) deduct certain expenditures that, although capitalized and classified in depreciation expense, do not enhance the revenue or cash flows of our properties; (2) eliminate the effect of straight-lining our rental income and capitalizing income from development projects in order to reflect the actual amount of contractual rents due in the period presented; and (3) eliminate the effect of non-cash items that are not indicative of our core operations and do not actually reduce the amount of cash generated by our operations.  We believe that eliminating the effect of non-cash charges related to share -based compensation facilitates a comparison of our operations across periods and among other equity REITs without the variances caused by different valuation methodologies, the volatility of the expense (which depends on market forces outside our control), and the assumptions and the variety of award types that a company can use.  We believe that AFFO provides useful information by excluding certain items that are not representative of our core operating results because such items are dependent upon historical costs or subject to judgmental valuation inputs and the timing of our decisions.

 

AFFO is not intended to represent cash flow for the period, and is intended only to provide an additional measure of performance.  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.  We believe that AFFO is a widely recognized measure of the operations of equity REITs, and presenting AFFO will enable investors to assess our performance in comparison to other equity REITs.  However, other equity REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to AFFO calculated by other equity REITs.  AFFO 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.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

44

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Definitions and Other Information

March 31, 2013

(Unaudited)

 

Annualized base rent

 

Annualized base rent means the annualized fixed base rental amount in effect as of the end of the period, 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 development and redevelopment projects.  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 client tenants.  Upon completion, each value-added project is expected to generate significant revenues and cash flows.  Our development and redevelopment 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.  Development projects consist of the ground-up development of generic life science laboratory facilities.  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.  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 are expected to generate significant revenue and cash flows for the Company.  In accordance with GAAP, we capitalize project costs clearly related to the construction, development, and redevelopment 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, development, and redevelopment 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 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.

 

Cash interest

 

Cash interest is equal to interest expense calculated in accordance with GAAP, plus capitalized interest, less amortization of loan fees, and amortization of debt premiums/discounts.

 

Construction in progress/current value-added projects

 

Active development/active redevelopment projects

 

A key component of our business model is our value-added development and redevelopment projects.  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 development and redevelopment 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.  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 life science laboratory space without first securing pre-leasing for such space except when there is significant market demand for high-quality laboratory facilities.  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.

 

Generic infrastructure/building improvement projects

 

Generic infrastructure/building improvement projects include revenue-enhancing capital spending, non-revenue-enhancing capital expenditures, and tenant improvements.

 

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, as adjusted.

 

Dividend yield

 

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

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

45

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Definitions and Other Information

March 31, 2013

(Dollars in thousands)

(Unaudited)

EBITDA

 

See Adjusted EBITDA and Adjusted EBITDA margins

 

Fixed charge coverage ratio

 

The fixed charge coverage ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing obligations and dividends on preferred stock.  The following table presents a reconciliation of interest expense, the most directly comparable GAAP financial measure to cash interest and fixed charges:

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

Adjusted EBITDA

 

$

98,941

 

$

102,219

 

$

95,654

 

$

100,792

 

$

94,459

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense – continuing operations

 

18,020

 

17,941

 

17,092

 

17,922

 

16,226

 

Interest expense – discontinued operations

 

–

 

–

 

2

 

–

 

1

 

Add: capitalized interest

 

14,021

 

14,897

 

16,763

 

15,825

 

15,266

 

Less: amortized loan fees

 

(2,386

)

(2,505

)

(2,470

)

(2,214

)

(2,643

)

Less: amortization of debt premium/discounts

 

(115

)

(110

)

(112

)

(110

)

(179

)

Cash interest

 

29,540

 

30,223

 

31,275

 

31,423

 

28,671

 

Dividends on preferred stock

 

6,471

 

6,471

 

6,471

 

6,903

 

7,483

 

Fixed charges

 

$

36,011

 

$

36,694

 

$

37,746

 

$

38,326

 

$

36,154

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed charge coverage ratio – quarter annualized

 

2.7x

 

2.8x

 

2.5x

 

2.6x

 

2.6x

 

Fixed charge coverage ratio – trailing 12 months

 

2.7x

 

2.6x

 

2.6x

 

2.7x

 

2.7x

 

 

Funds from operations and funds from operations, as adjusted

 

GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes that real estate values diminish over time.  In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of FFO.  Since its introduction, FFO has become a widely used non-GAAP financial measure among equity REITs.  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  Moreover, we believe that FFO, as adjusted, is also helpful because it allows investors to compare our performance to the performance of other real estate companies between periods, and on a consistent basis, without having to account for differences caused by investment and disposition decisions, financing decisions, terms of securities, capital structures, and capital market transactions.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper and related implementation guidance (“NAREIT White Paper”).  The NAREIT White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains (losses) from sales of depreciable real estate and land parcels and impairments of depreciable real estate (excluding land parcels), plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  Impairments of real estate relate to decreases in the estimated fair value of real estate due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.  Impairments of real estate represent the non-cash write-down of assets when fair value over the recoverability period is less than the carrying value.  We compute FFO, as adjusted, as FFO calculated in accordance with the NAREIT White Paper, plus losses on early extinguishment of debt, preferred stock redemption charges, and impairments of land parcels, less realized gain on equity investment primarily related to one non-tenant life science entity, and the amount of such items that is allocable to our unvested restricted stock awards.  Our calculations of both FFO and FFO, as adjusted, may differ from those methodologies utilized by other equity REITs for similar performance measurements, and, accordingly, may not be comparable to those of other equity REITs.  Neither FFO nor FFO, as adjusted, should 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 liquidity, nor are they indicative of the availability of funds for our cash needs, including funds available to make distributions.

 

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 life science laboratory space without first securing 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 client tenants.  Project costs are capitalized as a cost of the project during periods when 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 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 largest project included in land undergoing preconstruction consists of substantially all of our 1.2 million developable square feet at Alexandria Center™ at Kendall Square in East Cambridge, Massachusetts.

 

Future redevelopment

 

Our asset base also includes non-laboratory space (office, warehouse, and industrial space), classified as rental properties, representing square feet for future conversion into life science laboratory space through redevelopment.  These spaces are currently classified in investments in real estate, net, in the condensed consolidated balance sheets.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

46

 

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Definitions and Other Information

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

Gross assets (excluding cash and restricted cash)

 

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

 

Initial stabilized yield - cash

 

Initial Stabilized Yield is calculated as the quotient of the estimated amounts of NOI and our investment in the property at stabilization.  Our Initial Stabilized Yield on a cash basis reflects cash rents at date of stabilization and does not reflect contractual rent escalations beyond the stabilization date.  Our cash rents related to our value-added projects are expected to increase over time and our average stabilized cash yields are expected, in general, to be greater than our Initial Stabilized Yields.  Our Initial Stabilized Yield excludes the impact of leverage.

 

Interest coverage ratio

 

Interest coverage ratio is the ratio of Adjusted EBITDA to cash interest.  This ratio is useful to investors as an indicator of our ability to service our cash interest obligations.  See fixed charge coverage ratio for calculation of cash interest.  The following table summarizes the calculation of the interest coverage ratio:

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

Adjusted EBITDA

 

$

98,941

 

$

102,219

 

$

95,654

 

$

100,792

 

$

94,459

 

Cash interest

 

29,540

 

30,223

 

31,275

 

31,423

 

28,671

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest coverage ratio – quarter annualized

 

3.3x

 

3.4x

 

3.1x

 

3.2x

 

3.3x

 

Interest coverage ratio – trailing 12 months

 

3.2x

 

3.2x

 

3.2x

 

3.3x

 

3.4x

 

 

Net debt

 

Net debt is equal to the sum of total debt less cash, cash equivalents, and restricted cash.

 

NOI

 

NOI is a non-GAAP financial measure equal to income from continuing operations, the most directly comparable GAAP financial measure, plus loss (gain) on early extinguishment of debt, impairment of land parcel, depreciation and amortization, interest expense, and general and administrative expense.  We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects primarily those income and expense items that are incurred at the property level.  Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets.  NOI on a cash basis is NOI on a GAAP basis, adjusted to exclude the effect of straight-line rent adjustments required by GAAP.  We believe that NOI 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 NOI is useful to investors as a performance measure, because when compared across periods, NOI 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.  NOI excludes certain components from income from continuing operations in order to provide results that are more closely related to the results of operations of our properties.  For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level rather than at the property level.  In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level.  Real estate impairments have been excluded in deriving NOI because we do not consider impairment losses to be property level operating expenses.  Real estate impairment losses relate to changes in the values of our assets and do not reflect the current operating performance with respect to related revenues or expenses.  Our real estate impairments represent the write down in the value of the assets to the estimated fair value less cost to sell.  These impairments result from investing decisions and the deterioration in market conditions that adversely impact underlying real estate values.  Our calculation of NOI also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to the timing of corporate strategy.  Property operating expenses that are included in determining NOI consist of costs that are related to our operating properties, such as utilities, repairs and maintenance, rental expense related to ground leases, contracted services, such as janitorial, engineering, and landscaping, property taxes and insurance, and property level salaries.  General and administrative expenses consist primarily of accounting and corporate compensation, corporate insurance, professional fees, office rent, and office supplies that are incurred as part of corporate office management.  NOI presented by us may not be comparable to NOI reported by other equity REITs that define NOI differently.  We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with income from continuing operations as presented in our condensed consolidated statements of income.  NOI 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.

 

Same property comparisons

 

As a result of changes within our total property portfolio, the financial data presented in the Summary of Same Property Comparisons 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 day in the first period presented, properties undergoing active development and active redevelopment, 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.

 

Total market capitalization

 

Total market capitalization is equal to the sum of outstanding shares of Series E Preferred Stock and common stock multiplied by the related closing price of each class at the end of each period presented, the liquidation value of the series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”), and total debt.

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

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ALEXANDRIA REAL ESTATE EQUITIES, INC.

Definitions and Other Information

March 31, 2013

(Dollars in thousands)

(Unaudited)

 

Unencumbered NOI as a percentage of total NOI

 

Unencumbered NOI as a percentage of total NOI is a non-GAAP financial measure that we believe is useful to investors as a performance measure of our results of operations of our unencumbered real estate assets, as it reflects primarily those income and expense items that are incurred at the unencumbered property level.  We use unencumbered NOI as a percentage of total NOI in order to assess our compliance with our financial covenants under our debt obligations because the measure serves as a proxy for a financial measure under such debt obligations.  Unencumbered NOI is derived from assets classified in continuing operations which are not subject to any mortgage, deed of trust, lien, or other security interest as of the period for which income is presented.  Unencumbered NOI for periods prior to the three months ended March 31, 2013, has been reclassified to conform to current period presentation related to discontinued operations.

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

Unencumbered net operating income

 

$

71,402

 

$

74,680

 

$

71,349

 

$

74,823

 

$

66,199

 

Encumbered net operating income

 

33,754

 

30,698

 

27,298

 

28,668

 

29,059

 

Total net operating income

 

$

105,156

 

$

105,378

 

$

98,647

 

$

103,491

 

$

95,258

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

68%

 

71%

 

72%

 

72%

 

69%

 

 

Unlevered IRR

 

We believe Unlevered IRR is a useful supplemental performance measure used by investors to evaluate the performance of a specific real estate investment.  Unlevered IRR is the annualized implied discount rate calculated from the cash flows of a real estate asset over the holding period for such asset.  Unlevered IRR represents the return that equates the present value of all capital invested in a real estate asset to the present value of all cash flows generated by that real estate asset, or the discount rate that provides a net present value of all cash flows related to a real estate asset to zero. Unlevered IRR is calculated based upon the actual timing of cash flows, including among others i) the initial cash purchase price; ii) cash NOI (GAAP NOI excluding the impact of straight-line rents); iii) capital expenditures; iv) leasing costs, and v) the net sales proceeds of each respective real estate asset.  Losses incurred upon sale or non-cash impairment charges recognized during our ownership period are reflected in the unlevered IRR through the net sales proceeds of each real estate asset.  The calculation of Unlevered IRR does not include general and administrative costs of the Company or interest expense related to the Company’s financing costs, because they are not directly related or attributable to the operations of the real estate asset.

 

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 swap agreements, amortization of debt discounts/premiums, amortization of loan fees, and other bank 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, outstanding debt balances, the proportion of variable rate debt to fixed rate debt, the amount and terms of effective interest rate swap agreements, and the amount of loan fee amortization.

 

Weighted average shares for calculating FFO, FFO, as adjusted, and AFFO per share

 

Weighted average shares represent the weighted average of common shares outstanding during the period.  The following calculation of weighted average shares was applied to arrive at FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, as adjusted, and AFFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:

 

 

 

Three Months Ended

 

 

 

3/31/13

 

12/31/12

 

9/30/12

 

6/30/12

 

3/31/12

 

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

 

63,161,319

 

63,091,781

 

62,364,210

 

61,663,367

 

61,507,807

 

Effect of assumed conversion and dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

Assumed conversion of 8.00% Unsecured Senior Convertible Notes

 

6,146

 

6,146

 

6,087

 

6,087

 

6,087

 

Dilutive effect of stock options

 

–

 

–

 

–

 

173

 

1,160

 

Weighted average shares of common stock outstanding for calculating FFO, FFO, as adjusted, and AFFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted

 

63,167,465

 

63,097,927

 

62,370,297

 

61,669,627

 

61,515,054

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

ALL RIGHTS RESERVED © 2013

48