Maryland
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95-4502084
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification Number)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Page
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Consolidated Balance Sheets as of June 30, 2018, and December 31, 2017
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Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and 2017
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Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017
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Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests for the Six Months Ended June 30, 2018
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Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017
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ASU
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Accounting Standards Update
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ATM
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At the Market
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CIP
|
Construction in Progress
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EPS
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Earnings per Share
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FASB
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Financial Accounting Standards Board
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GAAP
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U.S. Generally Accepted Accounting Principles
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HVAC
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Heating, Ventilation, and Air Conditioning
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JV
|
Joint Venture
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LEED
®
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Leadership in Energy and Environmental Design
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LIBOR
|
London Interbank Offered Rate
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Nareit
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National Association of Real Estate Investment Trusts
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REIT
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Real Estate Investment Trust
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RSF
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Rentable Square Feet/Foot
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SEC
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Securities and Exchange Commission
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SF
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Square Feet/Foot
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SoMa
|
South of Market (submarket of the San Francisco market)
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U.S.
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United States
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VIE
|
Variable Interest Entity
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June 30, 2018
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December 31, 2017
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||||
Assets
|
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||||
Investments in real estate
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$
|
11,190,771
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$
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10,298,019
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Investments in unconsolidated real estate joint ventures
|
192,972
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110,618
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Cash and cash equivalents
|
287,029
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254,381
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Restricted cash
|
34,812
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22,805
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Tenant receivables
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8,704
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10,262
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Deferred rent
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490,428
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434,731
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Deferred leasing costs
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232,964
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221,430
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Investments
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790,753
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523,254
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Other assets
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333,757
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228,453
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Total assets
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$
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13,562,190
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$
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12,103,953
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||||
Liabilities, Noncontrolling Interests, and Equity
|
|
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Secured notes payable
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$
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776,260
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$
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771,061
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Unsecured senior notes payable
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4,289,521
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3,395,804
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Unsecured senior line of credit
|
—
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50,000
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Unsecured senior bank term loans
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548,324
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547,942
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Accounts payable, accrued expenses, and tenant security deposits
|
849,274
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763,832
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Dividends payable
|
98,676
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92,145
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|
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Total liabilities
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6,562,055
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5,620,784
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Commitments and contingencies
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Redeemable noncontrolling interests
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10,861
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11,509
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Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
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||||
7.00% Series D cumulative convertible preferred stock
|
74,386
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74,386
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Common stock
|
1,033
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|
998
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|
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Additional paid-in capital
|
6,387,527
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5,824,258
|
|
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Accumulated other comprehensive (loss) income
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(2,485
|
)
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50,024
|
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Alexandria Real Estate Equities, Inc.’s stockholders’ equity
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6,460,461
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5,949,666
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Noncontrolling interests
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528,813
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521,994
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Total equity
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6,989,274
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6,471,660
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Total liabilities, noncontrolling interests, and equity
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$
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13,562,190
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$
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12,103,953
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2018
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2017
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2018
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2017
|
||||||||
Revenues:
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||||||||
Rental
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$
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250,635
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$
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211,942
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$
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495,120
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$
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419,135
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Tenant recoveries
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72,159
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60,470
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145,329
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121,816
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||||
Other income
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2,240
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|
|
647
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4,724
|
|
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2,985
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|
||||
Total revenues
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325,034
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273,059
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645,173
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543,936
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||||
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||||||||
Expenses:
|
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||||||||
Rental operations
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91,908
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|
76,980
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183,679
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154,067
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||||
General and administrative
|
22,939
|
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19,234
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45,360
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38,463
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||||
Interest
|
38,097
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31,748
|
|
|
75,012
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|
|
61,532
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|
||||
Depreciation and amortization
|
118,852
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|
104,098
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|
233,071
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|
201,281
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|
||||
Impairment of real estate
|
6,311
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|
203
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|
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6,311
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|
|
203
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|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
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|
670
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|
||||
Total expenses
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278,107
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232,263
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543,433
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456,216
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||||
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||||||||
Equity in earnings of unconsolidated real estate joint ventures
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1,090
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589
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2,234
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|
950
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|
||||
Investment income
|
12,530
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|
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—
|
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|
98,091
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|
|
—
|
|
||||
Gain on sales of real estate – rental properties
|
—
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—
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—
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|
|
270
|
|
||||
Gain on sales of real estate – land parcels
|
—
|
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|
111
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|
|
—
|
|
|
111
|
|
||||
Net income
|
60,547
|
|
|
41,496
|
|
|
202,065
|
|
|
89,051
|
|
||||
Net income attributable to noncontrolling interests
|
(5,817
|
)
|
|
(7,275
|
)
|
|
(11,705
|
)
|
|
(13,119
|
)
|
||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
54,730
|
|
|
34,221
|
|
|
190,360
|
|
|
75,932
|
|
||||
Dividends on preferred stock
|
(1,302
|
)
|
|
(1,278
|
)
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|
(2,604
|
)
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|
(5,062
|
)
|
||||
Preferred stock redemption charge
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,279
|
)
|
||||
Net income attributable to unvested restricted stock awards
|
(1,412
|
)
|
|
(1,313
|
)
|
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(2,765
|
)
|
|
(2,300
|
)
|
||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
52,016
|
|
|
$
|
31,630
|
|
|
$
|
184,991
|
|
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$
|
57,291
|
|
|
|
|
|
|
|
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|
||||||||
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
|
|
|
|
|
|
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|
||||||||
Basic
|
$
|
0.51
|
|
|
$
|
0.35
|
|
|
$
|
1.83
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.51
|
|
|
$
|
0.35
|
|
|
$
|
1.83
|
|
|
$
|
0.64
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per share of common stock
|
$
|
0.93
|
|
|
$
|
0.86
|
|
|
$
|
1.83
|
|
|
$
|
1.69
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
60,547
|
|
|
$
|
41,496
|
|
|
$
|
202,065
|
|
|
$
|
89,051
|
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
||||||||
Unrealized (losses) gains on public investments:
|
|
|
|
|
|
|
|
||||||||
Unrealized holding (losses) gains arising during the period
|
—
|
|
|
(4,025
|
)
|
|
—
|
|
|
6,396
|
|
||||
Reclassification adjustment for losses included in net income
|
—
|
|
|
2,349
|
|
|
—
|
|
|
2,482
|
|
||||
Unrealized (losses) gains on public investments, net
|
—
|
|
|
(1,676
|
)
|
|
—
|
|
|
8,878
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Unrealized (losses) gains on interest rate hedge agreements:
|
|
|
|
|
|
|
|
||||||||
Unrealized interest rate hedge gains (losses) arising during the period
|
661
|
|
|
(550
|
)
|
|
2,643
|
|
|
667
|
|
||||
Reclassification adjustment for amortization of interest (income) expense included in net income
|
(1,131
|
)
|
|
707
|
|
|
(1,809
|
)
|
|
1,612
|
|
||||
Unrealized (losses) gains on interest rate hedge agreements, net
|
(470
|
)
|
|
157
|
|
|
834
|
|
|
2,279
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Unrealized (losses) gains on foreign currency translation:
|
|
|
|
|
|
|
|
||||||||
Unrealized foreign currency translation (losses) gains arising during the period
|
(3,243
|
)
|
|
2,744
|
|
|
(3,572
|
)
|
|
3,756
|
|
||||
Reclassification adjustment for cumulative foreign currency translation losses included in net income upon sale or liquidation
|
—
|
|
|
—
|
|
|
—
|
|
|
2,421
|
|
||||
Unrealized (losses) gains on foreign currency translation, net
|
(3,243
|
)
|
|
2,744
|
|
|
(3,572
|
)
|
|
6,177
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total other comprehensive (loss) income
|
(3,713
|
)
|
|
1,225
|
|
|
(2,738
|
)
|
|
17,334
|
|
||||
Comprehensive income
|
56,834
|
|
|
42,721
|
|
|
199,327
|
|
|
106,385
|
|
||||
Less: comprehensive income attributable to noncontrolling interests
|
(5,817
|
)
|
|
(7,283
|
)
|
|
(11,705
|
)
|
|
(13,131
|
)
|
||||
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
$
|
51,017
|
|
|
$
|
35,438
|
|
|
$
|
187,622
|
|
|
$
|
93,254
|
|
|
|
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
7.00% Series D
Cumulative
Convertible
Preferred
Stock
|
|
Number of
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-In Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Income
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|
Redeemable
Noncontrolling
Interests
|
|||||||||||||||||
Balance as of December 31, 2017
|
|
$
|
74,386
|
|
|
99,783,686
|
|
|
$
|
998
|
|
|
$
|
5,824,258
|
|
|
$
|
—
|
|
|
$
|
50,024
|
|
|
$
|
521,994
|
|
|
$
|
6,471,660
|
|
|
$
|
11,509
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
190,360
|
|
|
—
|
|
|
11,280
|
|
|
201,640
|
|
|
425
|
|
||||||||
Total other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,738
|
)
|
|
—
|
|
|
(2,738
|
)
|
|
—
|
|
||||||||
Reclassification of net unrealized gains on non-real estate investments upon adoption of new ASU on financial instruments
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
140,521
|
|
|
(49,771
|
)
|
|
—
|
|
|
90,750
|
|
|
—
|
|
||||||||
Redemption of noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,397
|
)
|
||||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,018
|
)
|
|
(18,018
|
)
|
|
(426
|
)
|
||||||||
Contributions from noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
257
|
|
|
—
|
|
|
—
|
|
|
13,557
|
|
|
13,814
|
|
|
750
|
|
||||||||
Issuance of common stock
|
|
—
|
|
|
3,299,637
|
|
|
33
|
|
|
400,174
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,207
|
|
|
—
|
|
||||||||
Issuance pursuant to stock plan
|
|
—
|
|
|
262,794
|
|
|
2
|
|
|
24,132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,134
|
|
|
—
|
|
||||||||
Dividends declared on common stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(189,571
|
)
|
|
—
|
|
|
—
|
|
|
(189,571
|
)
|
|
—
|
|
||||||||
Dividends declared on preferred stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,604
|
)
|
|
—
|
|
|
—
|
|
|
(2,604
|
)
|
|
—
|
|
||||||||
Reclassification of distributions in excess of earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
138,706
|
|
|
(138,706
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance as of June 30, 2018
|
|
$
|
74,386
|
|
|
103,346,117
|
|
|
$
|
1,033
|
|
|
$
|
6,387,527
|
|
|
$
|
—
|
|
|
$
|
(2,485
|
)
|
|
$
|
528,813
|
|
|
$
|
6,989,274
|
|
|
$
|
10,861
|
|
(1)
|
Adopted on January 1, 2018.
|
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|||||||
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
202,065
|
|
|
$
|
89,051
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
233,071
|
|
|
201,281
|
|
||
Loss on early extinguishment of debt
|
—
|
|
|
670
|
|
||
Gain on sales of real estate – rental properties
|
—
|
|
|
(270
|
)
|
||
Impairment of real estate
|
6,311
|
|
|
203
|
|
||
Gain on sales of real estate – land parcels
|
—
|
|
|
(111
|
)
|
||
Equity in earnings of unconsolidated real estate joint ventures
|
(2,234
|
)
|
|
(950
|
)
|
||
Distributions of earnings from unconsolidated real estate joint ventures
|
287
|
|
|
249
|
|
||
Amortization of loan fees
|
5,136
|
|
|
5,738
|
|
||
Amortization of debt premiums
|
(1,181
|
)
|
|
(1,221
|
)
|
||
Amortization of acquired below-market leases
|
(11,368
|
)
|
|
(10,363
|
)
|
||
Deferred rent
|
(55,890
|
)
|
|
(53,497
|
)
|
||
Stock compensation expense
|
15,223
|
|
|
10,756
|
|
||
Investment income
|
(98,091
|
)
|
|
(962
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Tenant receivables
|
1,552
|
|
|
1,354
|
|
||
Deferred leasing costs
|
(29,705
|
)
|
|
(26,811
|
)
|
||
Other assets
|
(15,055
|
)
|
|
(4,654
|
)
|
||
Accounts payable, accrued expenses, and tenant security deposits
|
8,120
|
|
|
13,283
|
|
||
Net cash provided by operating activities
|
258,241
|
|
|
223,746
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
||||
Proceeds from sales of real estate
|
—
|
|
|
3,528
|
|
||
Additions to real estate
|
(431,225
|
)
|
|
(436,377
|
)
|
||
Purchases of real estate
|
(688,698
|
)
|
|
(480,543
|
)
|
||
Deposits for investing activities
|
5,500
|
|
|
450
|
|
||
Acquisitions of interests in unconsolidated real estate joint ventures
|
(35,922
|
)
|
|
—
|
|
||
Investments in unconsolidated real estate joint ventures
|
(44,486
|
)
|
|
(163
|
)
|
||
Additions to investments
|
(118,775
|
)
|
|
(81,192
|
)
|
||
Sales of investments
|
44,707
|
|
|
12,577
|
|
||
Net cash used in investing activities
|
$
|
(1,268,899
|
)
|
|
$
|
(981,720
|
)
|
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|||||||
|
Six Months Ended June 30,
|
||||||
|
2018
|
|
2017
|
||||
Financing Activities
|
|
|
|
||||
Borrowings from secured notes payable
|
$
|
9,044
|
|
|
$
|
117,666
|
|
Repayments of borrowings from secured notes payable
|
(3,162
|
)
|
|
(1,677
|
)
|
||
Proceeds from issuance of unsecured senior notes payable
|
899,321
|
|
|
424,384
|
|
||
Borrowings from unsecured senior line of credit
|
2,469,000
|
|
|
2,069,000
|
|
||
Repayments of borrowings from unsecured senior line of credit
|
(2,519,000
|
)
|
|
(1,797,000
|
)
|
||
Repayments of borrowings from unsecured senior bank term loans
|
—
|
|
|
(200,000
|
)
|
||
Payment of loan fees
|
(8,003
|
)
|
|
(4,344
|
)
|
||
Repurchase of 7.00% Series D cumulative convertible preferred stock
|
—
|
|
|
(17,934
|
)
|
||
Redemption of 6.45% Series E cumulative redeemable preferred stock
|
—
|
|
|
(130,350
|
)
|
||
Proceeds from the issuance of common stock
|
400,207
|
|
|
459,607
|
|
||
Dividends on common stock
|
(183,040
|
)
|
|
(149,296
|
)
|
||
Dividends on preferred stock
|
(2,604
|
)
|
|
(7,015
|
)
|
||
Contributions from noncontrolling interests
|
14,564
|
|
|
8,505
|
|
||
Distributions to and purchases of noncontrolling interests
|
(19,841
|
)
|
|
(10,791
|
)
|
||
Net cash provided by financing activities
|
1,056,486
|
|
|
760,755
|
|
||
|
|
|
|
||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(1,173
|
)
|
|
732
|
|
||
|
|
|
|
||||
Net increase in cash, cash equivalents, and restricted cash
|
44,655
|
|
|
3,513
|
|
||
Cash, cash equivalents, and restricted cash as of the beginning of period
|
277,186
|
|
|
141,366
|
|
||
Cash, cash equivalents, and restricted cash as of the end of period
|
$
|
321,841
|
|
|
$
|
144,879
|
|
|
|
|
|
||||
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
||||
Cash paid during the period for interest, net of interest capitalized
|
$
|
68,885
|
|
|
$
|
53,810
|
|
|
|
|
|
||||
Non-Cash Investing Activities:
|
|
|
|
||||
Change in accrued construction
|
$
|
48,074
|
|
|
$
|
(25,138
|
)
|
Contribution of real estate to an unconsolidated real estate joint venture
|
$
|
—
|
|
|
$
|
6,998
|
|
1.
|
Organization and basis of presentation
|
2.
|
Summary of significant accounting policies
|
•
|
The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity can be in the form of a partnership, limited liability company, or corporation, among others; and
|
•
|
We have a variable interest in the legal entity – i.e., variable interests that are contractual, such as equity ownership, or other financial interests that change with changes in the fair value of the entity’s net assets.
|
1)
|
The entity does not have sufficient equity to finance its activities without additional subordinated financial support;
|
2)
|
The entity is established with non-substantive voting rights (i.e., where the entity deprives the majority economic interest holder(s) of voting rights); or
|
3)
|
The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion if they lack any of the following:
|
•
|
The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence the entity’s economic performance, as evidenced by:
|
•
|
Substantive participating rights in day-to-day management of the entity’s activities; or
|
•
|
Substantive kick-out rights over the party responsible for significant decisions;
|
•
|
The obligation to absorb the entity’s expected losses; or
|
•
|
The right to receive the entity’s expected residual returns.
|
2.
|
Summary of significant accounting policies (continued)
|
•
|
Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating decisions made in the ordinary course of business that most significantly influence the entity’s economic performance.
|
•
|
Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause.
|
•
|
Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or
|
•
|
The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).
|
2.
|
Summary of significant accounting policies (continued)
|
•
|
The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable, and experienced in performing the process;
|
•
|
The process cannot be replaced without significant cost, effort, or delay; or
|
•
|
The process is considered unique or scarce.
|
2.
|
Summary of significant accounting policies (continued)
|
2.
|
Summary of significant accounting policies (continued)
|
2.
|
Summary of significant accounting policies (continued)
|
•
|
Investments in publicly traded companies are classified as investments with readily determinable fair values. These investments are carried at fair value, with changes in fair value recognized in net income, rather than in accumulated other comprehensive income within total equity. The fair values for our investments in publicly traded companies continue to be determined based on sales prices/quotes available on securities exchanges, or published prices that serve as the basis for current transactions.
|
•
|
Investments in privately held entities without readily determinable fair values fall into two categories:
|
•
|
Investments in privately held entities that report net asset value per share (“NAV”), such as our privately held investments in limited partnerships, are carried at fair value using NAV as a practical expedient with changes in fair value recognized in net income.
|
•
|
Investments in privately held entities that do not report NAV are accounted for using a measurement alternative which allows these investments to be measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income.
|
•
|
For investments in publicly traded companies, reclassification of cumulative unrealized gains as of December 31, 2017, aggregating
$49.8 million
, from accumulated other comprehensive income to retained earnings.
|
•
|
For investments in privately held entities without readily determinable fair values that were previously accounted for under the cost method:
|
•
|
Adjustment to investments for unrealized gains aggregating
$90.8 million
related to investments in privately held entities that report NAV, representing the difference between fair value as of December 31, 2017, using NAV as a practical expedient and the carrying value of the investments as of December 31, 2017, with a corresponding adjustment to retained earnings.
|
•
|
No adjustment was required for investments in privately held entities that do not report NAV. The ASU requires a prospective transition approach for investments in privately held entities that do not report NAV. The FASB clarified that it would be difficult for entities to determine the last observable transaction price existing prior to the adoption of this ASU. Therefore, unlike our investments in privately held entities that report NAV that were adjusted to reflect fair values upon adoption of the new ASU, our investments in privately held entities that do not report NAV were not retrospectively adjusted to fair values upon adoption. As such, any initial valuation adjustments made for investments in privately held entities that do not report NAV subsequent to January 1, 2018, as a result of future observable price changes include recognition of unrealized gains or losses equal to the difference between the carrying basis of the investment and the observable price at the date of remeasurement.
|
2.
|
Summary of significant accounting policies (continued)
|
|
|
Three months ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
|
Subject to the ASU on Recognition of Revenue from Contracts with Customers
|
|
Subject to Other Accounting Guidance
|
|
Total
|
|
Subject to the ASU on Recognition of Revenue from Contracts with Customers
|
|
Subject to Other Accounting Guidance
|
|
Total
|
||||||||||||
Rental
|
|
$
|
12,086
|
|
|
$
|
238,549
|
|
|
$
|
250,635
|
|
|
$
|
22,519
|
|
|
$
|
472,601
|
|
|
$
|
495,120
|
|
Tenant recoveries
|
|
—
|
|
|
72,159
|
|
|
72,159
|
|
|
—
|
|
|
145,329
|
|
|
145,329
|
|
||||||
Other income
|
|
1,496
|
|
|
744
|
|
|
2,240
|
|
|
3,516
|
|
|
1,208
|
|
|
4,724
|
|
||||||
Total revenues
|
|
$
|
13,582
|
|
|
$
|
311,452
|
|
|
$
|
325,034
|
|
|
$
|
26,035
|
|
|
$
|
619,138
|
|
|
$
|
645,173
|
|
2.
|
Summary of significant accounting policies (continued)
|
•
|
Prior to the adoption of this ASU, we did not have material contract assets and contract liabilities related to contracts with customers subject to the new revenue recognition ASU, and no additional contract assets or contract liabilities were necessary subsequent to adoption on January 1, 2018.
|
•
|
Parking and construction management services subject to the new revenue recognition ASU do not normally create obligations for returns, refunds, warranties, and other similar obligations. Therefore, no corresponding disclosures were necessary.
|
2.
|
Summary of significant accounting policies (continued)
|
2.
|
Summary of significant accounting policies (continued)
|
•
|
Under the first option, this ASU requires application of the standard to all leases that exist as of, or commence after, January 1, 2017 (the beginning of the earliest comparative period presented in the 2019 financial statements), with a cumulative adjustment to the opening balance of retained earnings on January 1, 2017, for the effect of applying the standard at the date of initial application, and restatement of the amounts presented prior to January 1, 2019.
|
•
|
Under the second option, an entity may elect a practical expedient package, which allows for the following:
|
•
|
An entity need not reassess whether any expired or existing contracts are or contain leases;
|
•
|
An entity need not reassess the lease classification for any expired or existing leases; and
|
•
|
An entity need not reassess initial direct costs for any existing leases.
|
2.
|
Summary of significant accounting policies (continued)
|
2.
|
Summary of significant accounting policies (continued)
|
2.
|
Summary of significant accounting policies (continued)
|
2.
|
Summary of significant accounting policies (continued)
|
3.
|
Investments in real estate
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Land (related to rental properties)
|
|
$
|
1,442,071
|
|
|
$
|
1,312,072
|
|
Buildings and building improvements
|
|
9,559,442
|
|
|
9,000,626
|
|
||
Other improvements
|
|
880,549
|
|
|
780,117
|
|
||
Rental properties
|
|
11,882,062
|
|
|
11,092,815
|
|
||
Development and redevelopment of new Class A properties:
|
|
|
|
|
||||
Development and redevelopment projects (under construction, marketing, or
pre-construction)
|
|
1,253,419
|
|
|
955,218
|
|
||
Future development projects
|
|
92,473
|
|
|
96,112
|
|
||
Gross investments in real estate
|
|
13,227,954
|
|
|
12,144,145
|
|
||
Less: accumulated depreciation
|
|
(2,066,333
|
)
|
|
(1,875,810
|
)
|
||
Net investments in real estate – North America
|
|
11,161,621
|
|
|
10,268,335
|
|
||
Net investments in real estate – Asia
|
|
29,150
|
|
|
29,684
|
|
||
Investments in real estate
|
|
$
|
11,190,771
|
|
|
$
|
10,298,019
|
|
|
|
Square Footage
|
|
||||||||||
Three Months Ended
|
|
Operating
|
|
Operating with Active or Future Redevelopment
|
|
Active or Future
Development |
|
Purchase Price
|
|||||
March 31, 2018
|
|
487,227
|
|
|
106,733
|
|
|
643,765
|
|
|
$
|
339,400
|
|
June 30, 2018
|
|
782,388
|
|
|
39,505
|
|
|
793,000
|
|
|
405,855
|
|
|
Subsequent acquisitions
|
|
45,626
|
|
|
349,947
|
|
|
217,000
|
|
|
257,000
|
|
|
|
|
1,315,241
|
|
|
496,185
|
|
|
1,653,765
|
|
|
$
|
1,002,255
|
|
3.
|
Investments in real estate (continued)
|
3.
|
Investments in real estate (continued)
|
4.
|
Consolidated and unconsolidated real estate joint ventures
|
|
Property
(1)
|
|
Market
|
|
Submarket
|
|
Our Ownership Interest
|
|
RSF
|
|||||
Consolidated joint ventures:
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
225 Binney Street
|
|
Greater Boston
|
|
Cambridge
|
|
|
30.0
|
%
|
|
|
305,212
|
|
|
|
409 and 499 Illinois Street
|
|
San Francisco
|
|
Mission Bay/SoMa
|
|
|
60.0
|
%
|
|
|
455,069
|
|
|
|
1500 Owens Street
|
|
San Francisco
|
|
Mission Bay/SoMa
|
|
|
50.1
|
%
|
|
|
158,267
|
|
|
|
Campus Pointe by Alexandria
|
|
San Diego
|
|
University Town Center
|
|
|
55.0
|
%
|
|
|
798,799
|
|
|
|
9625 Towne Centre Drive
|
|
San Diego
|
|
University Town Center
|
|
|
50.1
|
%
|
|
|
163,648
|
|
|
Unconsolidated joint ventures:
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Menlo Gateway
|
|
San Francisco
|
|
Greater Stanford
|
|
|
29.4
|
%
|
|
|
772,983
|
|
|
|
1401/1413 Research Boulevard
|
|
Maryland
|
|
Rockville
|
|
|
65.0
|
%
|
(2)
|
|
(3)
|
||
|
360 Longwood Avenue
|
|
Greater Boston
|
|
Longwood Medical Area
|
|
|
27.5
|
%
|
|
|
210,709
|
|
|
|
704 Quince Orchard Road
|
|
Maryland
|
|
Gaithersburg
|
|
|
56.8
|
%
|
(2)
|
|
79,931
|
|
|
|
1655 and 1725 Third Street
|
|
San Francisco
|
|
Mission Bay/SoMa
|
|
|
10.0
|
%
|
|
|
593,765
|
|
|
(1)
|
In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in
four
other properties in North America.
|
(2)
|
Represents our ownership interest; our voting interest is limited to 50%.
|
(3)
|
Joint venture with a distinguished retail real estate developer for the development of a
90,000
RSF retail shopping center.
|
Property
|
|
Consolidation Model
|
|
Voting Interest
|
|
Consolidation Analysis
|
|
Conclusion
|
|
|
|
|
|
|
|
|
|
225 Binney Street
|
|
VIE model
|
|
Not applicable under VIE model
|
|
We have control and benefits that can be significant to the joint venture; therefore, we are the primary beneficiary of each VIE
|
|
Consolidated
|
409 and 499 Illinois Street
|
|
|||||||
1500 Owens Street
|
|
|||||||
Campus Pointe by Alexandria
|
|
|||||||
9625 Towne Centre Drive
|
|
|||||||
Menlo Gateway
|
|
|
We do not control the joint venture and therefore are not the primary beneficiary
|
Equity method of accounting
|
||||
1401/1413 Research Boulevard
|
|
|||||||
360 Longwood Avenue
|
|
Voting model
|
|
Does not exceed 50%
|
Our voting interest is 50% or less
|
|
||
704 Quince Orchard Road
|
|
|||||||
1655 and 1725 Third Street
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Investments in real estate
|
|
$
|
1,097,759
|
|
|
$
|
1,047,472
|
|
Cash and cash equivalents
|
|
40,352
|
|
|
41,112
|
|
||
Other assets
|
|
70,595
|
|
|
68,754
|
|
||
Total assets
|
|
$
|
1,208,706
|
|
|
$
|
1,157,338
|
|
|
|
|
|
|
||||
Secured notes payable
|
|
$
|
—
|
|
|
$
|
—
|
|
Other liabilities
|
|
69,191
|
|
|
52,201
|
|
||
Total liabilities
|
|
69,191
|
|
|
52,201
|
|
||
Redeemable noncontrolling interests
|
|
749
|
|
|
—
|
|
||
Alexandria Real Estate Equities, Inc.’s share of equity
|
|
610,996
|
|
|
584,160
|
|
||
Noncontrolling interests’ share of equity
|
|
527,770
|
|
|
520,977
|
|
||
Total liabilities and equity
|
|
$
|
1,208,706
|
|
|
$
|
1,157,338
|
|
Property
|
|
June 30, 2018
|
||
Menlo Gateway
|
|
$
|
121,785
|
|
1401/1413 Research Boulevard
|
|
7,533
|
|
|
360 Longwood Avenue
|
|
25,538
|
|
|
704 Quince Orchard Road
|
|
4,384
|
|
|
1655 and 1725 Third Street
|
|
33,732
|
|
|
|
|
$
|
192,972
|
|
|
|
|
|
Maturity Date
|
|
Stated Interest Rate
(1)
|
|
Interest Rate
(1)(2)
|
|
100% at Joint Venture Level
|
|
||||||||
Unconsolidated Joint Venture
|
|
Our Share
|
|
|
|
|
Debt Balance
(3)
|
|
Remaining Commitments
|
|
|||||||||
Menlo Gateway, Phase I
|
|
29.4%
|
|
|
3/1/19
|
|
|
L+2.50%
|
|
4.49%
|
|
$
|
134,564
|
|
|
$
|
13,290
|
|
|
1401/1413 Research Boulevard
|
|
65.0%
|
|
|
5/17/20
|
|
|
L+2.50%
|
|
5.39%
|
|
14,682
|
|
|
9,892
|
|
|
||
1655 and 1725 Third Street
|
|
10.0%
|
|
|
6/29/21
|
|
|
L+3.70%
|
|
5.68%
|
|
75,520
|
|
|
299,480
|
|
|
||
360 Longwood Avenue
|
|
27.5%
|
|
|
9/1/22
|
|
|
3.32%
|
|
3.54%
|
|
94,143
|
|
|
17,000
|
|
(4)
|
||
704 Quince Orchard Road
|
|
56.8%
|
|
|
3/16/23
|
|
|
L+1.95%
|
|
4.29%
|
|
1,016
|
|
|
13,809
|
|
|
||
Menlo Gateway, Phase II
|
|
29.4%
|
|
|
5/1/35
|
|
|
4.53%
|
|
4.56%
|
|
—
|
|
|
157,270
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
$
|
319,925
|
|
|
$
|
510,741
|
|
|
(1)
|
For acquired loans, interest rate includes adjustments to reflect the joint venture’s effective borrowing costs at the time of acquisition.
|
(2)
|
Includes interest expense, amortization of loan fees, and amortization of premiums (discounts)
as of June 30, 2018
.
|
(3)
|
Represents outstanding principal, net of unamortized deferred financing costs and discount/premium.
|
(4)
|
The remaining loan commitment balance excludes an earn-out advance provision that allows for incremental borrowings up to
$48.0 million
, subject to certain conditions.
|
5.
|
Cash, cash equivalents, and restricted cash
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
287,029
|
|
|
$
|
254,381
|
|
Restricted cash:
|
|
|
|
||||
Funds held in trust under the terms of certain secured notes payable
|
14,384
|
|
|
12,301
|
|
||
Funds held in escrow related to construction projects and investing activities
|
16,551
|
|
|
4,546
|
|
||
Other
|
3,877
|
|
|
5,958
|
|
||
|
34,812
|
|
|
22,805
|
|
||
Total
|
$
|
321,841
|
|
|
$
|
277,186
|
|
6.
|
Investments
|
•
|
Investments in publicly traded companies were presented at fair value in the accompanying balance sheet, with changes in fair value recognized in other comprehensive income classified in accumulated other comprehensive income within total equity.
|
•
|
Investments in privately held entities were accounted for under the cost method of accounting.
|
•
|
Gains or losses were recognized in net income upon the sale of an investment.
|
•
|
Investments in privately held entities required accounting under the equity method unless our interest in the entity was deemed to be so minor that we had virtually no influence over the entity’s operating and financial policies. Under the equity method of accounting, we recognized our investment initially at cost and adjusted the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. We had no investments accounted for under the equity method as of December 31, 2017.
|
•
|
Investments were evaluated for impairment, with other-than-temporary impairments recognized in net income.
|
•
|
Investments in publicly traded companies are presented at fair value in the accompanying balance sheet, with changes in fair value recognized in net income.
|
•
|
Investments in privately held entities without readily determinable fair values previously accounted for under the cost method are accounted for as follows:
|
•
|
Investments in privately held entities that report NAV are presented at fair value using NAV as a practical expedient, with changes in fair value recognized in net income.
|
•
|
Investments in privately held entities that do not report NAV are carried at cost, adjusted for observable price changes and impairments, with changes recognized in net income.
|
•
|
One-time adjustments recognized on January 1, 2018:
|
•
|
For investments in publicly traded companies, reclassification of net unrealized gain as of December 31, 2017, aggregating
$49.8 million
, from accumulated other comprehensive income to retained earnings.
|
•
|
For investments in privately held entities without readily determinable fair values that were previously accounted for under the cost method:
|
•
|
Adjustment to investments for unrealized gains aggregating
$90.8 million
related to investments in privately held entities that report NAV, representing the difference between fair value as of December 31, 2017, using NAV as a practical expedient and the carrying value of the investments as of December 31, 2017, with a corresponding adjustment to retained earnings.
|
6.
|
Investments (continued)
|
•
|
No adjustment was required for investments in privately held entities that do not report NAV. The ASU requires a prospective transition approach for investments in privately held entities that do not report NAV. The FASB clarified that it would be difficult for entities to determine the last observable transaction price existing prior to the adoption of this ASU. Therefore, unlike our investments in privately held entities that report NAV that were adjusted to reflect fair values upon adoption of the new ASU, our investments in privately held entities that do not report NAV were not retrospectively adjusted to fair values upon adoption. As such, any initial valuation adjustments made for investments in privately held entities that do not report NAV subsequent to January 1, 2018, as a result of future observable price changes will include recognition of unrealized gains or losses equal to the difference between the carrying basis of the investment and the observable price at the date of remeasurement.
|
•
|
Investments in privately held entities continue to require accounting under the equity method unless our interest in the entity is deemed to be so minor that we have virtually no influence over the entity’s operating and financial policies. Under the equity method of accounting, we recognize our investment initially at cost and adjust the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. We had no investments accounted for under the equity method
as of June 30, 2018
.
|
|
June 30, 2018
|
||||||||||
|
Cost
|
|
Adjustments
|
|
Carrying Amount
|
||||||
Investments at fair value:
|
|
|
|
|
|
||||||
Publicly traded companies
|
$
|
101,603
|
|
|
$
|
97,013
|
|
|
$
|
198,616
|
|
Entities that report NAV
|
173,813
|
|
|
110,843
|
|
|
284,656
|
|
|||
|
|
|
|
|
|
|
|
||||
Entities that do not report NAV:
|
|
|
|
|
|
||||||
Entities with observable price changes since January 1, 2018
|
12,811
|
|
|
10,289
|
|
|
23,100
|
|
|||
Entities without observable price changes
|
284,381
|
|
|
—
|
|
|
284,381
|
|
|||
|
|
|
|
|
|
||||||
Total investments
|
$
|
572,608
|
|
|
$
|
218,145
|
|
|
$
|
790,753
|
|
|
December 31, 2017
|
||||||||||
|
Cost
|
|
Adjustments
|
|
Total
|
||||||
Investments in publicly traded companies
|
$
|
59,740
|
|
|
$
|
49,771
|
|
|
$
|
109,511
|
|
Investments in privately held entities without readily determinable fair values (cost method investments):
|
|
|
|
|
|
||||||
Investments in privately held entities that report NAV
|
148,627
|
|
|
N/A
|
|
|
148,627
|
|
|||
Investments in privately held entities that do not report NAV
|
265,116
|
|
|
N/A
|
|
|
265,116
|
|
|||
Total investments
|
$
|
473,483
|
|
|
$
|
49,771
|
|
|
$
|
523,254
|
|
6.
|
Investments (continued)
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
|
Unrealized Gains (Losses)
|
|
Realized Gains
|
|
Total
|
||||||
Investments at fair value, held at period end:
|
|
|
|
|
|
|
||||||
Publicly traded companies
|
|
$
|
1,138
|
|
|
$
|
—
|
|
|
$
|
1,138
|
|
Entities that report NAV
|
|
4,683
|
|
|
—
|
|
|
4,683
|
|
|||
Entities that do not report NAV with observable price changes since
April 1, 2018, held at period end:
|
|
(754
|
)
|
|
—
|
|
|
(754
|
)
|
|||
Total investments at fair value, held at period end
|
|
5,067
|
|
|
—
|
|
|
5,067
|
|
|||
Investment dispositions during the period:
|
|
|
|
|
|
|
||||||
Recognized in the current period
|
|
—
|
|
|
7,463
|
|
|
7,463
|
|
|||
Previously recognized as unrealized gains
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total investment dispositions during the period
|
|
—
|
|
|
7,463
|
|
|
7,463
|
|
|||
Investment income
|
|
$
|
5,067
|
|
|
$
|
7,463
|
|
|
$
|
12,530
|
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
|
Unrealized Gains (Losses)
|
|
Realized Gains
|
|
Total
|
||||||
Investments at fair value, held at period end:
|
|
|
|
|
|
|
||||||
Publicly traded companies
|
|
$
|
52,026
|
|
|
$
|
—
|
|
|
$
|
52,026
|
|
Entities that report NAV
|
|
19,770
|
|
|
—
|
|
|
19,770
|
|
|||
Entities that do not report NAV with observable price changes since
January 1, 2018, held at period end
|
|
10,289
|
|
|
—
|
|
|
10,289
|
|
|||
Total investments at fair value, held at period end
|
|
82,085
|
|
|
—
|
|
|
82,085
|
|
|||
Investment dispositions during the period:
|
|
|
|
|
|
|
||||||
Recognized in the current period
|
|
—
|
|
|
16,006
|
|
|
16,006
|
|
|||
Previously recognized as unrealized gains
|
|
(4,789
|
)
|
|
4,789
|
|
|
—
|
|
|||
Total investment dispositions during the period
|
|
(4,789
|
)
|
|
20,795
|
|
|
16,006
|
|
|||
Investment income
|
|
$
|
77,296
|
|
|
$
|
20,795
|
|
|
$
|
98,091
|
|
7.
|
Other assets
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Acquired below-market ground leases
|
$
|
17,624
|
|
|
$
|
12,684
|
|
Acquired in-place leases
|
134,809
|
|
|
64,979
|
|
||
Deferred compensation plan
|
19,400
|
|
|
15,534
|
|
||
Deferred financing costs
–
$1.65 billion unsecured senior line of credit
|
8,667
|
|
|
10,525
|
|
||
Deposits
|
5,275
|
|
|
10,576
|
|
||
Furniture, fixtures, and equipment
|
11,538
|
|
|
11,070
|
|
||
Interest rate hedge assets
|
5,991
|
|
|
5,260
|
|
||
Net investment in direct financing lease
|
38,763
|
|
|
38,382
|
|
||
Notes receivable
|
572
|
|
|
614
|
|
||
Prepaid expenses
|
13,097
|
|
|
10,972
|
|
||
Property, plant, and equipment
|
56,841
|
|
|
32,073
|
|
||
Other assets
|
21,180
|
|
|
15,784
|
|
||
Total
|
$
|
333,757
|
|
|
$
|
228,453
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Gross investment in direct financing lease
|
|
$
|
262,918
|
|
|
$
|
263,719
|
|
Less: unearned income
|
|
(224,155
|
)
|
|
(225,337
|
)
|
||
Net investment in direct financing lease
|
|
$
|
38,763
|
|
|
$
|
38,382
|
|
Year
|
|
Total
|
||
2018
|
|
$
|
806
|
|
2019
|
|
1,655
|
|
|
2020
|
|
1,705
|
|
|
2021
|
|
1,756
|
|
|
2022
|
|
1,809
|
|
|
Thereafter
|
|
255,187
|
|
|
Total
|
|
$
|
262,918
|
|
8.
|
Fair value measurements
|
|
|
|
|
June 30, 2018
|
||||||||||||
Description
|
|
Total
|
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Investments in publicly traded companies
|
|
$
|
198,616
|
|
|
$
|
198,616
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate hedge agreements
|
|
$
|
5,991
|
|
|
$
|
—
|
|
|
$
|
5,991
|
|
|
$
|
—
|
|
|
|
|
|
December 31, 2017
|
||||||||||||
Description
|
|
Total
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Investments in publicly traded companies
|
|
$
|
109,511
|
|
|
$
|
109,511
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate hedge agreements
|
|
$
|
5,260
|
|
|
$
|
—
|
|
|
$
|
5,260
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Interest rate hedge agreements
|
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
103
|
|
|
$
|
—
|
|
8.
|
Fair value measurements (continued)
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Book Value
|
|
Fair Value
|
|
Book Value
|
|
Fair Value
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investments in privately held entities that report NAV
|
$
|
284,656
|
|
|
$
|
284,656
|
|
|
N/A
|
|
|
N/A
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Secured notes payable
|
$
|
776,260
|
|
|
$
|
774,955
|
|
|
$
|
771,061
|
|
|
$
|
776,222
|
|
Unsecured senior notes payable
|
$
|
4,289,521
|
|
|
$
|
4,300,275
|
|
|
$
|
3,395,804
|
|
|
$
|
3,529,713
|
|
Unsecured senior line of credit
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
50,000
|
|
|
$
|
49,986
|
|
Unsecured senior bank term loans
|
$
|
548,324
|
|
|
$
|
550,280
|
|
|
$
|
547,942
|
|
|
$
|
549,361
|
|
9.
|
Secured and unsecured senior debt
|
|
Fixed-Rate/Hedged
Variable-Rate Debt
|
|
Unhedged
Variable-Rate Debt
|
|
|
|
|
|
Weighted-Average
|
||||||||||
|
|
|
|
|
|
|
Interest
|
|
Remaining Term
(in years)
|
||||||||||
|
|
|
Total
|
|
Percentage
|
|
Rate
(1)
|
|
|||||||||||
Secured notes payable
|
$
|
491,897
|
|
|
$
|
284,363
|
|
|
$
|
776,260
|
|
|
13.8
|
%
|
|
4.28
|
%
|
|
2.8
|
Unsecured senior notes payable
|
4,289,521
|
|
|
—
|
|
|
4,289,521
|
|
|
76.4
|
|
|
4.15
|
|
|
6.9
|
|||
$1.65 billion unsecured senior line of credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
3.3
|
|||
2019 Unsecured Senior Bank Term Loan
|
199,620
|
|
|
—
|
|
|
199,620
|
|
|
3.6
|
|
|
2.75
|
|
|
0.5
|
|||
2021 Unsecured Senior Bank Term Loan
|
348,704
|
|
|
—
|
|
|
348,704
|
|
|
6.2
|
|
|
2.41
|
|
|
2.5
|
|||
Total/weighted average
|
$
|
5,329,742
|
|
|
$
|
284,363
|
|
|
$
|
5,614,105
|
|
|
100.0
|
%
|
|
4.01
|
%
|
|
5.8
|
Percentage of total debt
|
95
|
%
|
|
5
|
%
|
|
100
|
%
|
|
|
|
|
|
|
(1)
|
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
|
9.
|
Secured and unsecured senior debt (continued)
|
|
|
Stated
Rate
|
|
Interest Rate
(1)
|
|
Maturity Date
(2)
|
|
|
|
|
Unamortized (Deferred Financing Cost), (Discount)/Premium
|
|
|
||||||||
Debt
|
|
|
|
|
|
Principal
|
|
|
Total
|
||||||||||||
Secured notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Greater Boston
|
|
L+1.50
|
%
|
|
3.82
|
%
|
|
1/28/19
|
(3)
|
|
$
|
334,363
|
|
|
$
|
(698
|
)
|
|
$
|
333,665
|
|
Greater Boston, San Diego, Seattle, and Maryland
|
|
7.75
|
%
|
|
8.15
|
|
|
4/1/20
|
|
|
107,499
|
|
|
(585
|
)
|
|
106,914
|
|
|||
San Diego
|
|
4.66
|
%
|
|
4.90
|
|
|
1/1/23
|
|
|
34,175
|
|
|
(296
|
)
|
|
33,879
|
|
|||
Greater Boston
|
|
3.93
|
%
|
|
3.19
|
|
|
3/10/23
|
|
|
81,640
|
|
|
2,566
|
|
|
84,206
|
|
|||
Greater Boston
|
|
4.82
|
%
|
|
3.40
|
|
|
2/6/24
|
|
|
201,986
|
|
|
14,848
|
|
|
216,834
|
|
|||
San Francisco
|
|
6.50
|
%
|
|
6.50
|
|
|
7/1/36
|
|
|
762
|
|
|
—
|
|
|
762
|
|
|||
Secured debt weighted-average interest rate/subtotal
|
|
4.60
|
%
|
|
4.28
|
|
|
|
|
|
760,425
|
|
|
15,835
|
|
|
776,260
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2019 Unsecured Senior Bank Term Loan
|
|
L+1.20
|
%
|
|
2.75
|
|
|
1/3/19
|
|
|
200,000
|
|
|
(380
|
)
|
|
199,620
|
|
|||
2021 Unsecured Senior Bank Term Loan
|
|
L+1.10
|
%
|
|
2.41
|
|
|
1/15/21
|
|
|
350,000
|
|
|
(1,296
|
)
|
|
348,704
|
|
|||
$1.65 billion unsecured senior line of credit
|
|
L+1.00
|
%
|
|
N/A
|
|
|
10/29/21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Unsecured senior notes payable
|
|
2.75
|
%
|
|
2.96
|
|
|
1/15/20
|
|
|
400,000
|
|
|
(1,237
|
)
|
|
398,763
|
|
|||
Unsecured senior notes payable
|
|
4.60
|
%
|
|
4.75
|
|
|
4/1/22
|
|
|
550,000
|
|
|
(2,438
|
)
|
|
547,562
|
|
|||
Unsecured senior notes payable
|
|
3.90
|
%
|
|
4.04
|
|
|
6/15/23
|
|
|
500,000
|
|
|
(2,945
|
)
|
|
497,055
|
|
|||
Unsecured senior notes payable
|
|
4.00
|
%
|
|
4.18
|
|
|
1/15/24
|
|
|
450,000
|
|
|
(4,050
|
)
|
|
445,950
|
|
|||
Unsecured senior notes payable
|
|
3.45
|
%
|
|
3.62
|
|
|
4/30/25
|
|
|
600,000
|
|
|
(5,954
|
)
|
|
594,046
|
|
|||
Unsecured senior notes payable
|
|
4.30
|
%
|
|
4.50
|
|
|
1/15/26
|
|
|
300,000
|
|
|
(3,648
|
)
|
|
296,352
|
|
|||
Unsecured senior notes payable
|
|
3.95
|
%
|
|
4.13
|
|
|
1/15/27
|
|
|
350,000
|
|
|
(4,278
|
)
|
|
345,722
|
|
|||
Unsecured senior notes payable
|
|
3.95
|
%
|
|
4.07
|
|
|
1/15/28
|
|
|
425,000
|
|
|
(4,024
|
)
|
|
420,976
|
|
|||
Unsecured senior notes payable
|
|
4.50
|
%
|
|
4.60
|
|
|
7/30/29
|
|
|
300,000
|
|
|
(2,452
|
)
|
|
297,548
|
|
|||
Unsecured senior notes payable
|
|
4.70
|
%
|
|
4.81
|
|
|
7/1/30
|
|
|
450,000
|
|
|
(4,453
|
)
|
|
445,547
|
|
|||
Unsecured debt weighted average/subtotal
|
|
|
|
3.96
|
|
|
|
|
|
4,875,000
|
|
|
(37,155
|
)
|
|
4,837,845
|
|
||||
Weighted-average interest rate/total
|
|
|
|
4.01
|
%
|
|
|
|
|
$
|
5,635,425
|
|
|
$
|
(21,320
|
)
|
|
$
|
5,614,105
|
|
(1)
|
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
|
(2)
|
Reflects any extension options that we control.
|
(3)
|
Secured construction loan for our property at 50 and 60 Binney Street in our Cambridge submarket with aggregate commitments of
$350.0 million
as of
June 30, 2018
. We have
two
one
-year options to extend the stated maturity date to January 28, 2021, subject to certain conditions. In July 2018, we completed a partial repayment of
$150.0 million
of the outstanding balance and reduced aggregate commitments to
$200.0 million
.
|
9.
|
Secured and unsecured senior debt (continued)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Gross interest
|
$
|
53,624
|
|
|
$
|
46,817
|
|
|
$
|
103,899
|
|
|
$
|
89,765
|
|
Capitalized interest
|
(15,527
|
)
|
|
(15,069
|
)
|
|
(28,887
|
)
|
|
(28,233
|
)
|
||||
Interest expense
|
$
|
38,097
|
|
|
$
|
31,748
|
|
|
$
|
75,012
|
|
|
$
|
61,532
|
|
10.
|
Interest rate hedge agreements
|
10.
|
Interest rate hedge agreements (continued)
|
|
|
|
|
Number of Contracts
|
|
Weighted-Average Interest Pay Rate
(1)
|
|
Fair Value
as of 6/30/18
|
|
Notional Amount in Effect as of
|
||||||||||||
Effective Date
|
|
Maturity Date
|
|
|
|
|
6/30/18
|
|
12/31/18
|
|
12/31/19
|
|||||||||||
March 29, 2018
|
|
March 31, 2019
|
|
8
|
|
1.16%
|
|
$
|
5,142
|
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
$
|
—
|
|
March 29, 2019
|
|
March 31, 2020
|
|
1
|
|
1.89%
|
|
849
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
||||
Total
|
|
|
|
|
|
|
|
$
|
5,991
|
|
|
$
|
600,000
|
|
|
$
|
600,000
|
|
|
$
|
100,000
|
|
(1)
|
In addition to the interest pay rate for each swap agreement, interest is payable at an applicable margin over LIBOR for borrowings outstanding as of
June 30, 2018
, as listed under the column heading “Stated Rate” in our summary table of outstanding indebtedness and respective principal payments under Note 9 – “Secured and Unsecured Senior Debt” to these unaudited consolidated financial statements.
|
11.
|
Accounts payable, accrued expenses, and tenant security deposits
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Accounts payable and accrued expenses
|
$
|
394,435
|
|
|
$
|
349,884
|
|
Acquired below-market leases
|
123,402
|
|
|
88,184
|
|
||
Conditional asset retirement obligations
|
10,519
|
|
|
7,397
|
|
||
Deferred rent liabilities
|
28,367
|
|
|
27,953
|
|
||
Interest rate hedge liabilities
|
—
|
|
|
103
|
|
||
Unearned rent and tenant security deposits
|
248,543
|
|
|
248,924
|
|
||
Other liabilities
|
44,008
|
|
|
41,387
|
|
||
Total
|
$
|
849,274
|
|
|
$
|
763,832
|
|
12.
|
Earnings per share (continued)
|
12.
|
Earnings per share
|
12.
|
Earnings per share (continued)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
60,547
|
|
|
$
|
41,496
|
|
|
$
|
202,065
|
|
|
$
|
89,051
|
|
Net income attributable to noncontrolling interests
|
(5,817
|
)
|
|
(7,275
|
)
|
|
(11,705
|
)
|
|
(13,119
|
)
|
||||
Dividends on preferred stock
|
(1,302
|
)
|
|
(1,278
|
)
|
|
(2,604
|
)
|
|
(5,062
|
)
|
||||
Preferred stock redemption charge
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,279
|
)
|
||||
Net income attributable to unvested restricted stock awards
|
(1,412
|
)
|
|
(1,313
|
)
|
|
(2,765
|
)
|
|
(2,300
|
)
|
||||
Numerator for basic and diluted EPS – net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
52,016
|
|
|
$
|
31,630
|
|
|
$
|
184,991
|
|
|
$
|
57,291
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator for basic EPS – weighted-average shares of common stock outstanding
|
101,881
|
|
|
90,215
|
|
|
100,878
|
|
|
89,186
|
|
||||
Dilutive effect of forward equity sales agreements
|
355
|
|
|
530
|
|
|
313
|
|
|
293
|
|
||||
Denominator for diluted EPS – weighted-average shares of common stock outstanding
|
102,236
|
|
|
90,745
|
|
|
101,191
|
|
|
89,479
|
|
||||
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.51
|
|
|
$
|
0.35
|
|
|
$
|
1.83
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.51
|
|
|
$
|
0.35
|
|
|
$
|
1.83
|
|
|
$
|
0.64
|
|
13.
|
Stockholders’ equity
|
13.
|
Stockholders’ equity (continued)
|
|
|
Net Unrealized Gain (Loss) on:
|
|
|
||||||||||||
|
|
Available-for- Sale Equity Securities
|
|
Interest Rate
Hedge Agreements |
|
Foreign Currency Translation
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
|
$
|
49,771
|
|
|
$
|
5,157
|
|
|
$
|
(4,904
|
)
|
|
$
|
50,024
|
|
Amounts reclassified from other comprehensive income to retained earnings
|
|
(49,771
|
)
|
(1)
|
—
|
|
|
—
|
|
|
(49,771
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
2,643
|
|
|
(3,572
|
)
|
|
(929
|
)
|
||||
Amounts reclassified from other comprehensive income to net income
|
|
—
|
|
|
(1,809
|
)
|
|
—
|
|
|
(1,809
|
)
|
||||
Net other comprehensive income
|
|
—
|
|
|
834
|
|
|
(3,572
|
)
|
|
(2,738
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance as of June 30, 2018
|
|
$
|
—
|
|
|
$
|
5,991
|
|
|
$
|
(8,476
|
)
|
|
$
|
(2,485
|
)
|
(1)
|
Refer to Note 6 – “Investments” to these unaudited consolidated financial statements for additional information.
|
14.
|
Noncontrolling interests
|
15.
|
Assets classified as held for sale
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Total assets
|
$
|
41,934
|
|
|
$
|
31,578
|
|
Total liabilities
|
(1,789
|
)
|
|
(1,809
|
)
|
||
Total accumulated other comprehensive income
|
(436
|
)
|
|
(1,021
|
)
|
||
Net assets classified as held for sale
|
$
|
39,709
|
|
|
$
|
28,748
|
|
16.
|
Condensed consolidating financial information
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria Real Estate Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments in real estate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,190,771
|
|
|
$
|
—
|
|
|
$
|
11,190,771
|
|
Investments in unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
192,972
|
|
|
—
|
|
|
192,972
|
|
|||||
Cash and cash equivalents
|
181,342
|
|
|
—
|
|
|
105,687
|
|
|
—
|
|
|
287,029
|
|
|||||
Restricted cash
|
155
|
|
|
—
|
|
|
34,657
|
|
|
—
|
|
|
34,812
|
|
|||||
Tenant receivables
|
—
|
|
|
—
|
|
|
8,704
|
|
|
—
|
|
|
8,704
|
|
|||||
Deferred rent
|
—
|
|
|
—
|
|
|
490,428
|
|
|
—
|
|
|
490,428
|
|
|||||
Deferred leasing costs
|
—
|
|
|
—
|
|
|
232,964
|
|
|
—
|
|
|
232,964
|
|
|||||
Investments
|
—
|
|
|
1,690
|
|
|
789,063
|
|
|
—
|
|
|
790,753
|
|
|||||
Investments in and advances to affiliates
|
11,253,161
|
|
|
10,066,773
|
|
|
205,029
|
|
|
(21,524,963
|
)
|
|
—
|
|
|||||
Other assets
|
51,551
|
|
|
—
|
|
|
282,206
|
|
|
—
|
|
|
333,757
|
|
|||||
Total assets
|
$
|
11,486,209
|
|
|
$
|
10,068,463
|
|
|
$
|
13,532,481
|
|
|
$
|
(21,524,963
|
)
|
|
$
|
13,562,190
|
|
Liabilities, Noncontrolling Interests, and Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Secured notes payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
776,260
|
|
|
$
|
—
|
|
|
$
|
776,260
|
|
Unsecured senior notes payable
|
4,289,521
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,289,521
|
|
|||||
Unsecured senior line of credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unsecured senior bank term loans
|
548,324
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
548,324
|
|
|||||
Accounts payable, accrued expenses, and tenant security deposits
|
89,227
|
|
|
—
|
|
|
760,047
|
|
|
—
|
|
|
849,274
|
|
|||||
Dividends payable
|
98,676
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
98,676
|
|
|||||
Total liabilities
|
5,025,748
|
|
|
—
|
|
|
1,536,307
|
|
|
—
|
|
|
6,562,055
|
|
|||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
10,861
|
|
|
—
|
|
|
10,861
|
|
|||||
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
|
6,460,461
|
|
|
10,068,463
|
|
|
11,456,500
|
|
|
(21,524,963
|
)
|
|
6,460,461
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
528,813
|
|
|
—
|
|
|
528,813
|
|
|||||
Total equity
|
6,460,461
|
|
|
10,068,463
|
|
|
11,985,313
|
|
|
(21,524,963
|
)
|
|
6,989,274
|
|
|||||
Total liabilities, noncontrolling interests, and equity
|
$
|
11,486,209
|
|
|
$
|
10,068,463
|
|
|
$
|
13,532,481
|
|
|
$
|
(21,524,963
|
)
|
|
$
|
13,562,190
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Investments in real estate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,298,019
|
|
|
$
|
—
|
|
|
$
|
10,298,019
|
|
Investments in unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
110,618
|
|
|
—
|
|
|
110,618
|
|
|||||
Cash and cash equivalents
|
130,364
|
|
|
9
|
|
|
124,008
|
|
|
—
|
|
|
254,381
|
|
|||||
Restricted cash
|
152
|
|
|
—
|
|
|
22,653
|
|
|
—
|
|
|
22,805
|
|
|||||
Tenant receivables
|
—
|
|
|
—
|
|
|
10,262
|
|
|
—
|
|
|
10,262
|
|
|||||
Deferred rent
|
—
|
|
|
—
|
|
|
434,731
|
|
|
—
|
|
|
434,731
|
|
|||||
Deferred leasing costs
|
—
|
|
|
—
|
|
|
221,430
|
|
|
—
|
|
|
221,430
|
|
|||||
Investments
|
—
|
|
|
1,655
|
|
|
521,599
|
|
|
—
|
|
|
523,254
|
|
|||||
Investments in and advances to affiliates
|
9,949,861
|
|
|
9,030,994
|
|
|
183,850
|
|
|
(19,164,705
|
)
|
|
—
|
|
|||||
Other assets
|
45,108
|
|
|
—
|
|
|
183,345
|
|
|
—
|
|
|
228,453
|
|
|||||
Total assets
|
$
|
10,125,485
|
|
|
$
|
9,032,658
|
|
|
$
|
12,110,515
|
|
|
$
|
(19,164,705
|
)
|
|
$
|
12,103,953
|
|
Liabilities, Noncontrolling Interests, and Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Secured notes payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
771,061
|
|
|
$
|
—
|
|
|
$
|
771,061
|
|
Unsecured senior notes payable
|
3,395,804
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,395,804
|
|
|||||
Unsecured senior line of credit
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|||||
Unsecured senior bank term loans
|
547,942
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
547,942
|
|
|||||
Accounts payable, accrued expenses, and tenant security deposits
|
89,928
|
|
|
—
|
|
|
673,904
|
|
|
—
|
|
|
763,832
|
|
|||||
Dividends payable
|
92,145
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
92,145
|
|
|||||
Total liabilities
|
4,175,819
|
|
|
—
|
|
|
1,444,965
|
|
|
—
|
|
|
5,620,784
|
|
|||||
Redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
11,509
|
|
|
—
|
|
|
11,509
|
|
|||||
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
|
5,949,666
|
|
|
9,032,658
|
|
|
10,132,047
|
|
|
(19,164,705
|
)
|
|
5,949,666
|
|
|||||
Noncontrolling interests
|
—
|
|
|
—
|
|
|
521,994
|
|
|
—
|
|
|
521,994
|
|
|||||
Total equity
|
5,949,666
|
|
|
9,032,658
|
|
|
10,654,041
|
|
|
(19,164,705
|
)
|
|
6,471,660
|
|
|||||
Total liabilities, noncontrolling interests, and equity
|
$
|
10,125,485
|
|
|
$
|
9,032,658
|
|
|
$
|
12,110,515
|
|
|
$
|
(19,164,705
|
)
|
|
$
|
12,103,953
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,635
|
|
|
$
|
—
|
|
|
$
|
250,635
|
|
Tenant recoveries
|
—
|
|
|
—
|
|
|
72,159
|
|
|
—
|
|
|
72,159
|
|
|||||
Other income
|
4,965
|
|
|
—
|
|
|
3,112
|
|
|
(5,837
|
)
|
|
2,240
|
|
|||||
Total revenues
|
4,965
|
|
|
—
|
|
|
325,906
|
|
|
(5,837
|
)
|
|
325,034
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental operations
|
—
|
|
|
—
|
|
|
91,908
|
|
|
—
|
|
|
91,908
|
|
|||||
General and administrative
|
23,001
|
|
|
—
|
|
|
5,775
|
|
|
(5,837
|
)
|
|
22,939
|
|
|||||
Interest
|
32,139
|
|
|
—
|
|
|
5,958
|
|
|
—
|
|
|
38,097
|
|
|||||
Depreciation and amortization
|
1,647
|
|
|
—
|
|
|
117,205
|
|
|
—
|
|
|
118,852
|
|
|||||
Impairment on real estate
|
—
|
|
|
—
|
|
|
6,311
|
|
|
—
|
|
|
6,311
|
|
|||||
Total expenses
|
56,787
|
|
|
—
|
|
|
227,157
|
|
|
(5,837
|
)
|
|
278,107
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity in earnings of unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
1,090
|
|
|
—
|
|
|
1,090
|
|
|||||
Equity in earnings of affiliates
|
106,552
|
|
|
98,795
|
|
|
1,943
|
|
|
(207,290
|
)
|
|
—
|
|
|||||
Investment (loss) income
|
—
|
|
|
(97
|
)
|
|
12,627
|
|
|
—
|
|
|
12,530
|
|
|||||
Net income
|
54,730
|
|
|
98,698
|
|
|
114,409
|
|
|
(207,290
|
)
|
|
60,547
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,817
|
)
|
|
—
|
|
|
(5,817
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
54,730
|
|
|
98,698
|
|
|
108,592
|
|
|
(207,290
|
)
|
|
54,730
|
|
|||||
Dividends on preferred stock
|
(1,302
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,302
|
)
|
|||||
Net income attributable to unvested restricted stock awards
|
(1,412
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,412
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
52,016
|
|
|
$
|
98,698
|
|
|
$
|
108,592
|
|
|
$
|
(207,290
|
)
|
|
$
|
52,016
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
211,942
|
|
|
$
|
—
|
|
|
$
|
211,942
|
|
Tenant recoveries
|
—
|
|
|
—
|
|
|
60,470
|
|
|
—
|
|
|
60,470
|
|
|||||
Other income
|
4,124
|
|
|
1
|
|
|
1,482
|
|
|
(4,960
|
)
|
|
647
|
|
|||||
Total revenues
|
4,124
|
|
|
1
|
|
|
273,894
|
|
|
(4,960
|
)
|
|
273,059
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental operations
|
—
|
|
|
—
|
|
|
76,980
|
|
|
—
|
|
|
76,980
|
|
|||||
General and administrative
|
19,428
|
|
|
—
|
|
|
4,766
|
|
|
(4,960
|
)
|
|
19,234
|
|
|||||
Interest
|
21,831
|
|
|
—
|
|
|
9,917
|
|
|
—
|
|
|
31,748
|
|
|||||
Depreciation and amortization
|
1,721
|
|
|
—
|
|
|
102,377
|
|
|
—
|
|
|
104,098
|
|
|||||
Impairment of real estate
|
—
|
|
|
—
|
|
|
203
|
|
|
—
|
|
|
203
|
|
|||||
Total expenses
|
42,980
|
|
|
—
|
|
|
194,243
|
|
|
(4,960
|
)
|
|
232,263
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
589
|
|
|||||
Equity in earnings of affiliates
|
73,077
|
|
|
70,597
|
|
|
1,360
|
|
|
(145,034
|
)
|
|
—
|
|
|||||
Gain on sales of real estate – land parcels
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
|||||
Net income
|
34,221
|
|
|
70,598
|
|
|
81,711
|
|
|
(145,034
|
)
|
|
41,496
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(7,275
|
)
|
|
—
|
|
|
(7,275
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
34,221
|
|
|
70,598
|
|
|
74,436
|
|
|
(145,034
|
)
|
|
34,221
|
|
|||||
Dividends on preferred stock
|
(1,278
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,278
|
)
|
|||||
Net income attributable to unvested restricted stock awards
|
(1,313
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,313
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
31,630
|
|
|
$
|
70,598
|
|
|
$
|
74,436
|
|
|
$
|
(145,034
|
)
|
|
$
|
31,630
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
495,120
|
|
|
$
|
—
|
|
|
$
|
495,120
|
|
Tenant recoveries
|
—
|
|
|
—
|
|
|
145,329
|
|
|
—
|
|
|
145,329
|
|
|||||
Other income
|
9,089
|
|
|
—
|
|
|
6,037
|
|
|
(10,402
|
)
|
|
4,724
|
|
|||||
Total revenues
|
9,089
|
|
|
—
|
|
|
646,486
|
|
|
(10,402
|
)
|
|
645,173
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental operations
|
—
|
|
|
—
|
|
|
183,679
|
|
|
—
|
|
|
183,679
|
|
|||||
General and administrative
|
44,891
|
|
|
—
|
|
|
10,871
|
|
|
(10,402
|
)
|
|
45,360
|
|
|||||
Interest
|
63,234
|
|
|
—
|
|
|
11,778
|
|
|
—
|
|
|
75,012
|
|
|||||
Depreciation and amortization
|
3,324
|
|
|
—
|
|
|
229,747
|
|
|
—
|
|
|
233,071
|
|
|||||
Impairment of real estate
|
—
|
|
|
—
|
|
|
6,311
|
|
|
—
|
|
|
6,311
|
|
|||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total expenses
|
111,449
|
|
|
—
|
|
|
442,386
|
|
|
(10,402
|
)
|
|
543,433
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
2,234
|
|
|
—
|
|
|
2,234
|
|
|||||
Equity in earnings of affiliates
|
292,720
|
|
|
197,677
|
|
|
3,897
|
|
|
(494,294
|
)
|
|
—
|
|
|||||
Investment income
|
—
|
|
|
376
|
|
|
97,715
|
|
|
—
|
|
|
98,091
|
|
|||||
Net income
|
190,360
|
|
|
198,053
|
|
|
307,946
|
|
|
(494,294
|
)
|
|
202,065
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(11,705
|
)
|
|
—
|
|
|
(11,705
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
190,360
|
|
|
198,053
|
|
|
296,241
|
|
|
(494,294
|
)
|
|
190,360
|
|
|||||
Dividends on preferred stock
|
(2,604
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,604
|
)
|
|||||
Net income attributable to unvested restricted stock awards
|
(2,765
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,765
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
184,991
|
|
|
$
|
198,053
|
|
|
$
|
296,241
|
|
|
$
|
(494,294
|
)
|
|
$
|
184,991
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
419,135
|
|
|
$
|
—
|
|
|
$
|
419,135
|
|
Tenant recoveries
|
—
|
|
|
—
|
|
|
121,816
|
|
|
—
|
|
|
121,816
|
|
|||||
Other income
|
8,107
|
|
|
12
|
|
|
4,463
|
|
|
(9,597
|
)
|
|
2,985
|
|
|||||
Total revenues
|
8,107
|
|
|
12
|
|
|
545,414
|
|
|
(9,597
|
)
|
|
543,936
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rental operations
|
—
|
|
|
—
|
|
|
154,067
|
|
|
—
|
|
|
154,067
|
|
|||||
General and administrative
|
38,674
|
|
|
—
|
|
|
9,386
|
|
|
(9,597
|
)
|
|
38,463
|
|
|||||
Interest
|
48,949
|
|
|
—
|
|
|
12,583
|
|
|
—
|
|
|
61,532
|
|
|||||
Depreciation and amortization
|
3,430
|
|
|
—
|
|
|
197,851
|
|
|
—
|
|
|
201,281
|
|
|||||
Impairment of real estate
|
—
|
|
|
—
|
|
|
203
|
|
|
—
|
|
|
203
|
|
|||||
Loss of early extinguishment of debt
|
670
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
670
|
|
|||||
Total expenses
|
91,723
|
|
|
—
|
|
|
374,090
|
|
|
(9,597
|
)
|
|
456,216
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in earnings of unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
950
|
|
|
—
|
|
|
950
|
|
|||||
Equity in earnings of affiliates
|
159,548
|
|
|
153,445
|
|
|
2,992
|
|
|
(315,985
|
)
|
|
—
|
|
|||||
Gain on sales of real estate – rental properties
|
—
|
|
|
—
|
|
|
270
|
|
|
—
|
|
|
270
|
|
|||||
Gain on sales of real estate – land parcels
|
—
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
111
|
|
|||||
Net income
|
75,932
|
|
|
153,457
|
|
|
175,647
|
|
|
(315,985
|
)
|
|
89,051
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(13,119
|
)
|
|
—
|
|
|
(13,119
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
75,932
|
|
|
153,457
|
|
|
162,528
|
|
|
(315,985
|
)
|
|
75,932
|
|
|||||
Dividends on preferred stock
|
(5,062
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,062
|
)
|
|||||
Preferred stock redemption charge
|
(11,279
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,279
|
)
|
|||||
Net income attributable to unvested restricted stock awards
|
(2,300
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,300
|
)
|
|||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
57,291
|
|
|
$
|
153,457
|
|
|
$
|
162,528
|
|
|
$
|
(315,985
|
)
|
|
$
|
57,291
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
54,730
|
|
|
$
|
98,698
|
|
|
$
|
114,409
|
|
|
$
|
(207,290
|
)
|
|
$
|
60,547
|
|
Other comprehensive (loss) income
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized losses on interest rate hedge agreements:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized interest rate hedge gains arising during the period
|
661
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
661
|
|
|||||
Reclassification adjustment for amortization of interest income included in net income
|
(1,131
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,131
|
)
|
|||||
Unrealized losses on interest rate hedge agreements, net
|
(470
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(470
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized losses on foreign currency translation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized foreign currency translation losses arising during the period
|
—
|
|
|
—
|
|
|
(3,243
|
)
|
|
—
|
|
|
(3,243
|
)
|
|||||
Reclassification adjustment for cumulative foreign currency translation losses included in net income upon sale or liquidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unrealized losses on foreign currency translation, net
|
—
|
|
|
—
|
|
|
(3,243
|
)
|
|
—
|
|
|
(3,243
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total other comprehensive loss
|
(470
|
)
|
|
—
|
|
|
(3,243
|
)
|
|
—
|
|
|
(3,713
|
)
|
|||||
Comprehensive income
|
54,260
|
|
|
98,698
|
|
|
111,166
|
|
|
(207,290
|
)
|
|
56,834
|
|
|||||
Less: comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,817
|
)
|
|
—
|
|
|
(5,817
|
)
|
|||||
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
$
|
54,260
|
|
|
$
|
98,698
|
|
|
$
|
105,349
|
|
|
$
|
(207,290
|
)
|
|
$
|
51,017
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
34,221
|
|
|
$
|
70,598
|
|
|
$
|
81,711
|
|
|
$
|
(145,034
|
)
|
|
$
|
41,496
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized losses on available-for-sale equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized holding losses arising during the period
|
—
|
|
|
(1
|
)
|
|
(4,024
|
)
|
|
—
|
|
|
(4,025
|
)
|
|||||
Reclassification adjustment for losses included in net income
|
—
|
|
|
1
|
|
|
2,348
|
|
|
—
|
|
|
2,349
|
|
|||||
Unrealized losses on available-for-sale equity securities, net
|
—
|
|
|
—
|
|
|
(1,676
|
)
|
|
—
|
|
|
(1,676
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized gains (losses) on interest rate hedge agreements:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized interest rate hedge losses arising during the period
|
(411
|
)
|
|
—
|
|
|
(139
|
)
|
|
—
|
|
|
(550
|
)
|
|||||
Reclassification adjustment for amortization of interest expense included in net income
|
705
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
707
|
|
|||||
Unrealized gains (losses) on interest rate hedge agreements, net
|
294
|
|
|
—
|
|
|
(137
|
)
|
|
—
|
|
|
157
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized gains on foreign currency translation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized foreign currency translation gains arising during the period
|
—
|
|
|
—
|
|
|
2,744
|
|
|
—
|
|
|
2,744
|
|
|||||
Reclassification adjustment for cumulative foreign currency translation losses included in net income upon sale or liquidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unrealized gains on foreign currency translation, net
|
—
|
|
|
—
|
|
|
2,744
|
|
|
—
|
|
|
2,744
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total other comprehensive income
|
294
|
|
|
—
|
|
|
931
|
|
|
—
|
|
|
1,225
|
|
|||||
Comprehensive income
|
34,515
|
|
|
70,598
|
|
|
82,642
|
|
|
(145,034
|
)
|
|
42,721
|
|
|||||
Less: comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(7,283
|
)
|
|
—
|
|
|
(7,283
|
)
|
|||||
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
$
|
34,515
|
|
|
$
|
70,598
|
|
|
$
|
75,359
|
|
|
$
|
(145,034
|
)
|
|
$
|
35,438
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
190,360
|
|
|
$
|
198,053
|
|
|
$
|
307,946
|
|
|
$
|
(494,294
|
)
|
|
$
|
202,065
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized gains on interest rate hedge agreements:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized interest rate hedge gains arising during the period
|
2,643
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,643
|
|
|||||
Reclassification adjustment for amortization of interest income included in net income
|
(1,809
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,809
|
)
|
|||||
Unrealized gains on interest rate hedge agreements, net
|
834
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
834
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized losses on foreign currency translation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized foreign currency translation losses arising during the period
|
—
|
|
|
—
|
|
|
(3,572
|
)
|
|
—
|
|
|
(3,572
|
)
|
|||||
Reclassification adjustment for cumulative foreign currency translation losses included in net income upon sale or liquidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Unrealized losses on foreign currency translation, net
|
—
|
|
|
—
|
|
|
(3,572
|
)
|
|
—
|
|
|
(3,572
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total other comprehensive income (loss)
|
834
|
|
|
—
|
|
|
(3,572
|
)
|
|
—
|
|
|
(2,738
|
)
|
|||||
Comprehensive income
|
191,194
|
|
|
198,053
|
|
|
304,374
|
|
|
(494,294
|
)
|
|
199,327
|
|
|||||
Less: comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(11,705
|
)
|
|
—
|
|
|
(11,705
|
)
|
|||||
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
$
|
191,194
|
|
|
$
|
198,053
|
|
|
$
|
292,669
|
|
|
$
|
(494,294
|
)
|
|
$
|
187,622
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria
Real Estate
Equities, Inc.
(Issuer)
|
|
Alexandria
Real Estate
Equities, L.P.
(Guarantor
Subsidiary)
|
|
Combined
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
75,932
|
|
|
$
|
153,457
|
|
|
$
|
175,647
|
|
|
$
|
(315,985
|
)
|
|
$
|
89,051
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized (losses) gains on available-for-sale equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized holding (losses) gains arising during the period
|
—
|
|
|
(45
|
)
|
|
6,441
|
|
|
—
|
|
|
6,396
|
|
|||||
Reclassification adjustment for losses included in net income
|
—
|
|
|
4
|
|
|
2,478
|
|
|
—
|
|
|
2,482
|
|
|||||
Unrealized (losses) gains on available-for-sale equity securities, net
|
—
|
|
|
(41
|
)
|
|
8,919
|
|
|
—
|
|
|
8,878
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized gains (losses) on interest rate hedge agreements:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized interest rate hedge gains (losses) arising during the period
|
888
|
|
|
—
|
|
|
(221
|
)
|
|
—
|
|
|
667
|
|
|||||
Reclassification adjustment for amortization of interest expense included in net income
|
1,609
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
1,612
|
|
|||||
Unrealized gains (losses) on interest rate hedge agreements, net
|
2,497
|
|
|
—
|
|
|
(218
|
)
|
|
—
|
|
|
2,279
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized gains on foreign currency translation:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized foreign currency translation gains arising during the period
|
—
|
|
|
—
|
|
|
3,756
|
|
|
—
|
|
|
3,756
|
|
|||||
Reclassification adjustment for cumulative foreign currency translation losses included in net income upon sale or liquidation
|
—
|
|
|
—
|
|
|
2,421
|
|
|
—
|
|
|
2,421
|
|
|||||
Unrealized gains on foreign currency translation, net
|
—
|
|
|
—
|
|
|
6,177
|
|
|
—
|
|
|
6,177
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total other comprehensive income (loss)
|
2,497
|
|
|
(41
|
)
|
|
14,878
|
|
|
—
|
|
|
17,334
|
|
|||||
Comprehensive income
|
78,429
|
|
|
153,416
|
|
|
190,525
|
|
|
(315,985
|
)
|
|
106,385
|
|
|||||
Less: comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(13,131
|
)
|
|
—
|
|
|
(13,131
|
)
|
|||||
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
$
|
78,429
|
|
|
$
|
153,416
|
|
|
$
|
177,394
|
|
|
$
|
(315,985
|
)
|
|
$
|
93,254
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria Real
Estate Equities,
Inc. (Issuer)
|
|
Alexandria Real
Estate Equities,
L.P. (Guarantor
Subsidiary)
|
|
Combined
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
$
|
190,360
|
|
|
$
|
198,053
|
|
|
$
|
307,946
|
|
|
$
|
(494,294
|
)
|
|
$
|
202,065
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
3,324
|
|
|
—
|
|
|
229,747
|
|
|
—
|
|
|
233,071
|
|
|||||
Impairment of real estate
|
—
|
|
|
—
|
|
|
6,311
|
|
|
—
|
|
|
6,311
|
|
|||||
Equity in earnings of unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
(2,234
|
)
|
|
—
|
|
|
(2,234
|
)
|
|||||
Distributions of earnings from unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
287
|
|
|
—
|
|
|
287
|
|
|||||
Amortization of loan fees
|
4,260
|
|
|
—
|
|
|
876
|
|
|
—
|
|
|
5,136
|
|
|||||
Amortization of debt discounts (premiums)
|
378
|
|
|
—
|
|
|
(1,559
|
)
|
|
—
|
|
|
(1,181
|
)
|
|||||
Amortization of acquired below-market leases
|
—
|
|
|
—
|
|
|
(11,368
|
)
|
|
—
|
|
|
(11,368
|
)
|
|||||
Deferred rent
|
—
|
|
|
—
|
|
|
(55,890
|
)
|
|
—
|
|
|
(55,890
|
)
|
|||||
Stock compensation expense
|
15,223
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,223
|
|
|||||
Equity in earnings of affiliates
|
(292,720
|
)
|
|
(197,677
|
)
|
|
(3,897
|
)
|
|
494,294
|
|
|
—
|
|
|||||
Investment income
|
43
|
|
|
(375
|
)
|
|
(97,759
|
)
|
|
—
|
|
|
(98,091
|
)
|
|||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tenant receivables
|
—
|
|
|
—
|
|
|
1,552
|
|
|
—
|
|
|
1,552
|
|
|||||
Deferred leasing costs
|
—
|
|
|
—
|
|
|
(29,705
|
)
|
|
—
|
|
|
(29,705
|
)
|
|||||
Other assets
|
(10,894
|
)
|
|
—
|
|
|
(4,161
|
)
|
|
—
|
|
|
(15,055
|
)
|
|||||
Accounts payable, accrued expenses, and tenant security deposits
|
(726
|
)
|
|
(2
|
)
|
|
8,848
|
|
|
—
|
|
|
8,120
|
|
|||||
Net cash (used in) provided by operating activities
|
(90,752
|
)
|
|
(1
|
)
|
|
348,994
|
|
|
—
|
|
|
258,241
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Investing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to real estate
|
—
|
|
|
—
|
|
|
(431,225
|
)
|
|
—
|
|
|
(431,225
|
)
|
|||||
Purchases of real estate
|
—
|
|
|
—
|
|
|
(688,698
|
)
|
|
—
|
|
|
(688,698
|
)
|
|||||
Deposits for investing activities
|
—
|
|
|
—
|
|
|
5,500
|
|
|
—
|
|
|
5,500
|
|
|||||
Investments in subsidiaries
|
(1,010,580
|
)
|
|
(838,102
|
)
|
|
(17,282
|
)
|
|
1,865,964
|
|
|
—
|
|
|||||
Acquisitions of interests in unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
(35,922
|
)
|
|
—
|
|
|
(35,922
|
)
|
|||||
Investments in unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
(44,486
|
)
|
|
—
|
|
|
(44,486
|
)
|
|||||
Additions to investments
|
—
|
|
|
—
|
|
|
(118,775
|
)
|
|
—
|
|
|
(118,775
|
)
|
|||||
Sales of investments
|
—
|
|
|
377
|
|
|
44,330
|
|
|
—
|
|
|
44,707
|
|
|||||
Net cash used in investing activities
|
$
|
(1,010,580
|
)
|
|
$
|
(837,725
|
)
|
|
$
|
(1,286,558
|
)
|
|
$
|
1,865,964
|
|
|
$
|
(1,268,899
|
)
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria Real
Estate Equities, Inc. (Issuer) |
|
Alexandria Real
Estate Equities, L.P. (Guarantor Subsidiary) |
|
Combined
Non-Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Borrowings from secured notes payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,044
|
|
|
$
|
—
|
|
|
$
|
9,044
|
|
Repayments of borrowings from secured notes payable
|
—
|
|
|
—
|
|
|
(3,162
|
)
|
|
—
|
|
|
(3,162
|
)
|
|||||
Proceeds from issuance of unsecured senior notes payable
|
899,321
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
899,321
|
|
|||||
Borrowings from unsecured senior line of credit
|
2,469,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,469,000
|
|
|||||
Repayments of borrowings from unsecured senior line of credit
|
(2,519,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,519,000
|
)
|
|||||
Transfers to/from parent company
|
96,432
|
|
|
837,717
|
|
|
931,815
|
|
|
(1,865,964
|
)
|
|
—
|
|
|||||
Payment of loan fees
|
(8,003
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,003
|
)
|
|||||
Proceeds from the issuance of common stock
|
400,207
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,207
|
|
|||||
Dividends on common stock
|
(183,040
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(183,040
|
)
|
|||||
Dividends on preferred stock
|
(2,604
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,604
|
)
|
|||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
14,564
|
|
|
—
|
|
|
14,564
|
|
|||||
Distributions to and purchases of noncontrolling interests
|
—
|
|
|
—
|
|
|
(19,841
|
)
|
|
—
|
|
|
(19,841
|
)
|
|||||
Net cash provided by financing activities
|
1,152,313
|
|
|
837,717
|
|
|
932,420
|
|
|
(1,865,964
|
)
|
|
1,056,486
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(1,173
|
)
|
|
—
|
|
|
(1,173
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
50,981
|
|
|
(9
|
)
|
|
(6,317
|
)
|
|
—
|
|
|
44,655
|
|
|||||
Cash, cash equivalents, and restricted cash as of the beginning of period
|
130,516
|
|
|
9
|
|
|
146,661
|
|
|
—
|
|
|
277,186
|
|
|||||
Cash, cash equivalents, and restricted cash as of the end of period
|
$
|
181,497
|
|
|
$
|
—
|
|
|
$
|
140,344
|
|
|
$
|
—
|
|
|
$
|
321,841
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash paid during the period for interest, net of interest capitalized
|
$
|
56,392
|
|
|
$
|
—
|
|
|
$
|
12,493
|
|
|
$
|
—
|
|
|
$
|
68,885
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-Cash Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in accrued construction
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48,074
|
|
|
$
|
—
|
|
|
$
|
48,074
|
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria Real
Estate Equities,
Inc. (Issuer)
|
|
Alexandria Real
Estate Equities,
L.P. (Guarantor
Subsidiary)
|
|
Combined
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Operating Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income
|
$
|
75,932
|
|
|
$
|
153,457
|
|
|
$
|
175,647
|
|
|
$
|
(315,985
|
)
|
|
$
|
89,051
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
3,430
|
|
|
—
|
|
|
197,851
|
|
|
—
|
|
|
201,281
|
|
|||||
Loss on early extinguishment of debt
|
670
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
670
|
|
|||||
Gain on sales of real estate – rental properties
|
—
|
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
(270
|
)
|
|||||
Impairment of real estate
|
—
|
|
|
—
|
|
|
203
|
|
|
—
|
|
|
203
|
|
|||||
Gain on sales of real estate – land parcels
|
—
|
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
(111
|
)
|
|||||
Equity in losses of unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
(950
|
)
|
|
—
|
|
|
(950
|
)
|
|||||
Distributions of earnings from unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
|||||
Amortization of loan fees
|
3,774
|
|
|
—
|
|
|
1,964
|
|
|
—
|
|
|
5,738
|
|
|||||
Amortization of debt discounts (premiums)
|
290
|
|
|
—
|
|
|
(1,511
|
)
|
|
—
|
|
|
(1,221
|
)
|
|||||
Amortization of acquired below-market leases
|
—
|
|
|
—
|
|
|
(10,363
|
)
|
|
—
|
|
|
(10,363
|
)
|
|||||
Deferred rent
|
—
|
|
|
—
|
|
|
(53,497
|
)
|
|
—
|
|
|
(53,497
|
)
|
|||||
Stock compensation expense
|
10,756
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,756
|
|
|||||
Equity in earnings of affiliates
|
(159,548
|
)
|
|
(153,445
|
)
|
|
(2,992
|
)
|
|
315,985
|
|
|
—
|
|
|||||
Investment income
|
—
|
|
|
(5
|
)
|
|
(957
|
)
|
|
—
|
|
|
(962
|
)
|
|||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Tenant receivables
|
—
|
|
|
—
|
|
|
1,354
|
|
|
—
|
|
|
1,354
|
|
|||||
Deferred leasing costs
|
—
|
|
|
—
|
|
|
(26,811
|
)
|
|
—
|
|
|
(26,811
|
)
|
|||||
Other assets
|
(8,947
|
)
|
|
—
|
|
|
4,293
|
|
|
—
|
|
|
(4,654
|
)
|
|||||
Accounts payable, accrued expenses, and tenant security deposits
|
(7,109
|
)
|
|
(12
|
)
|
|
20,404
|
|
|
—
|
|
|
13,283
|
|
|||||
Net cash (used in) provided by operating activities
|
(80,752
|
)
|
|
(5
|
)
|
|
304,503
|
|
|
—
|
|
|
223,746
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Investing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from sales of real estate
|
—
|
|
|
—
|
|
|
3,528
|
|
|
—
|
|
|
3,528
|
|
|||||
Additions to real estate
|
—
|
|
|
—
|
|
|
(436,377
|
)
|
|
—
|
|
|
(436,377
|
)
|
|||||
Purchases of real estate
|
—
|
|
|
—
|
|
|
(480,543
|
)
|
|
—
|
|
|
(480,543
|
)
|
|||||
Deposits for investing activities
|
—
|
|
|
—
|
|
|
450
|
|
|
—
|
|
|
450
|
|
|||||
Investments in subsidiaries
|
(573,334
|
)
|
|
(464,024
|
)
|
|
(9,565
|
)
|
|
1,046,923
|
|
|
—
|
|
|||||
Investments in unconsolidated real estate JVs
|
—
|
|
|
—
|
|
|
(163
|
)
|
|
—
|
|
|
(163
|
)
|
|||||
Additions to investments
|
—
|
|
|
—
|
|
|
(81,192
|
)
|
|
—
|
|
|
(81,192
|
)
|
|||||
Sales of investments
|
—
|
|
|
204
|
|
|
12,373
|
|
|
—
|
|
|
12,577
|
|
|||||
Net cash used in investing activities
|
$
|
(573,334
|
)
|
|
$
|
(463,820
|
)
|
|
$
|
(991,489
|
)
|
|
$
|
1,046,923
|
|
|
$
|
(981,720
|
)
|
16.
|
Condensed consolidating financial information (continued)
|
|
Alexandria Real
Estate Equities,
Inc. (Issuer)
|
|
Alexandria Real
Estate Equities,
L.P. (Guarantor
Subsidiary)
|
|
Combined
Non-Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Financing Activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Borrowings from secured notes payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
117,666
|
|
|
$
|
—
|
|
|
$
|
117,666
|
|
Repayments of borrowings from secured notes payable
|
—
|
|
|
—
|
|
|
(1,677
|
)
|
|
—
|
|
|
(1,677
|
)
|
|||||
Proceeds from issuance of unsecured senior notes payable
|
424,384
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
424,384
|
|
|||||
Borrowings from unsecured senior line of credit
|
2,069,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,069,000
|
|
|||||
Repayments of borrowings from unsecured senior line of credit
|
(1,797,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,797,000
|
)
|
|||||
Repayments of borrowings from unsecured bank term loans
|
(200,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(200,000
|
)
|
|||||
Transfers to/from parent company
|
21,995
|
|
|
463,825
|
|
|
561,103
|
|
|
(1,046,923
|
)
|
|
—
|
|
|||||
Payment of loan fees
|
(3,957
|
)
|
|
—
|
|
|
(387
|
)
|
|
—
|
|
|
(4,344
|
)
|
|||||
Repurchase of 7.00% Series D cumulative convertible preferred stock
|
(17,934
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17,934
|
)
|
|||||
Redemption of 6.45% Series E cumulative redeemable preferred stock
|
(130,350
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(130,350
|
)
|
|||||
Proceeds from the issuance of common stock
|
459,607
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
459,607
|
|
|||||
Dividends on common stock
|
(149,296
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(149,296
|
)
|
|||||
Dividends on preferred stock
|
(7,015
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,015
|
)
|
|||||
Contributions from noncontrolling interests
|
—
|
|
|
—
|
|
|
8,505
|
|
|
—
|
|
|
8,505
|
|
|||||
Distributions to and purchases of noncontrolling interests
|
—
|
|
|
—
|
|
|
(10,791
|
)
|
|
—
|
|
|
(10,791
|
)
|
|||||
Net cash provided by financing activities
|
669,434
|
|
|
463,825
|
|
|
674,419
|
|
|
(1,046,923
|
)
|
|
760,755
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
732
|
|
|
—
|
|
|
732
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
15,348
|
|
|
—
|
|
|
(11,835
|
)
|
|
—
|
|
|
3,513
|
|
|||||
Cash, cash equivalents, and restricted cash as of the beginning of period
|
30,705
|
|
|
—
|
|
|
110,661
|
|
|
—
|
|
|
141,366
|
|
|||||
Cash, cash equivalents, and restricted cash as of the end of period
|
$
|
46,053
|
|
|
$
|
—
|
|
|
$
|
98,826
|
|
|
$
|
—
|
|
|
$
|
144,879
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash paid during the period for interest, net of interest capitalized
|
$
|
41,598
|
|
|
$
|
—
|
|
|
$
|
12,212
|
|
|
$
|
—
|
|
|
$
|
53,810
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-Cash Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in accrued construction
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(25,138
|
)
|
|
$
|
—
|
|
|
$
|
(25,138
|
)
|
Contribution of real estate to an unconsolidated real estate JV
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,998
|
|
|
$
|
—
|
|
|
$
|
6,998
|
|
•
|
Operating factors such as a failure to operate our business successfully in comparison to market expectations or in comparison to our competitors, our inability to obtain capital when desired or refinance debt maturities when desired, and/or a failure to maintain our status as a REIT for federal tax purposes.
|
•
|
Market and industry factors such as adverse developments concerning the life science and technology industries and/or our tenants.
|
•
|
Government factors such as any unfavorable effects resulting from federal, state, local, and/or foreign government policies, laws, and/or funding levels.
|
•
|
Global factors such as negative economic, political, financial, credit market, and/or banking conditions.
|
•
|
Other factors such as climate change, cyber intrusions, and/or changes in laws, regulations, and financial accounting standards.
|
•
|
Investment-grade or large cap tenants with a market capitalization or private valuation greater than $10 billion represented
55%
of our total annual rental revenue;
|
•
|
Approximately
97%
of our leases (on an RSF basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, repairs and maintenance, utilities, common area expenses, and other operating expenses (including increases thereto) in addition to base rent;
|
•
|
Approximately
96%
of our leases (on an RSF basis) contained effective annual rent escalations that were either fixed (generally ranging from
3%
to
3.5%
)
or indexed based on a consumer price index or other index; and
|
•
|
Approximately
95%
of our leases (on an RSF basis)
provided for the recapture of capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement, and parking lot resurfacing) that we believe would typically be borne by the landlord in traditional office leases.
|
•
|
Total revenues:
|
•
|
$325.0 million
, up
19.0%
, for the
three months ended June 30, 2018
, compared to
$273.1 million
for the
three months ended June 30, 2017
|
•
|
$645.2 million
, up
18.6%
, for the
six months ended June 30, 2018
, compared to
$543.9 million
for the
six months ended June 30, 2017
|
•
|
Net operating income (cash basis) of
$818.7 million
for the
three months ended June 30, 2018
, annualized, up
$60.4 million
, or
8.0%
, compared to the three months ended March 31, 2018, annualized, and up
$125.5 million
, or
18.1%
, compared to the three months ended December 31, 2017, annualized.
|
•
|
Same property net operating income growth:
|
•
|
4.1%
and
6.3%
(cash basis) for the
three months ended June 30, 2018
, compared to the
three months ended June 30, 2017
|
•
|
4.1%
and
10.3%
(cash basis) for the
six months ended June 30, 2018
, compared to the
six months ended June 30, 2017
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||
Total leasing activity – RSF
|
|
985,996
|
|
|
2,467,160
|
|
Lease renewals and re-leasing of space:
|
|
|
|
|
||
Rental rate increases
|
|
24.0%
|
|
|
21.5%
|
|
Rental rate increases (cash basis)
|
|
12.8%
|
|
|
13.8%
|
|
RSF (included in total leasing activity above)
|
|
727,265
|
|
|
961,813
|
|
Property
|
|
Submarket
|
|
RSF
|
|
Tenant
|
|
215 First Street
|
|
Cambridge
|
|
152,157
|
|
(1)
|
Sarepta Therapeutics, Inc.
|
960 Industrial Road
|
|
Greater Stanford
|
|
110,000
|
|
(2)
|
Joby Aero, Inc.
|
1201 Eastlake Avenue East
|
|
Lake Union
|
|
106,106
|
|
(3)
|
Fred Hutchinson Cancer Research Center
|
Alexandria Center
®
at One Kendall Square
|
|
Cambridge
|
|
69,512
|
|
(4)
|
Ipsen Bioscience, Inc.
|
950 Wind River Lane
|
|
Gaithersburg
|
|
50,000
|
|
|
AstraZeneca PLC
|
(
1)
|
Includes
121,476
RSF renewed/re-leased at rental rate increases of
53%
and
36%
(cash basis) and expansion of
30,681
RSF.
88,459
RSF represents early renewal of a lease expiration in January 2021.
|
(2)
|
Represents short-term lease for
110,000
RSF. The property also includes an additional 423,000 RSF undergoing entitlements for future development in one or two phases.
|
(3)
|
Re-leasing of space with a lease expiration in May 2019 at a rental rate increase of
35%
.
|
(4)
|
Re-leasing of space with a lease expiration in June 2019 at rental rate increases of
16%
and
49%
(cash).
|
•
|
Highly leased value-creation pipeline with deliveries targeted for 2018 and 2019:
|
|
|
|
|
|
|
Unlevered Yields
|
|||
Target Delivery
|
|
Property
Leased %
|
|
Initial Stabilized
|
|
Initial Stabilized (Cash)
|
|||
2018
|
|
501,325
|
RSF
|
|
75%
|
|
7.5%
|
|
7.0%
|
2019
|
|
2,110,831
|
RSF
|
|
86%
|
|
7.3%
|
|
6.7%
|
|
|
2,612,156
|
RSF
|
|
84%
|
|
7.3%
|
|
6.8%
|
|
|
|
|
|
|
|
|
|
•
|
Includes the commencement during the
three months ended June 30, 2018
, of vertical construction of a ground-up development project aggregating
205,000
RSF,
12%
leased and
12%
negotiating, at 1818 Fairview Avenue East in our Lake Union submarket.
|
•
|
New Class A development and redevelopment properties recently placed into service:
|
•
|
1.6 million
RSF placed into service during the last 12 months with average yields of
7.6%
and
7.1%
(cash).
|
•
|
Significant near-term contractual growth in annual cash rents of
$44 million
related to initial free rent granted on development and redevelopment projects recently placed into service (and no longer included in our value-creation pipeline) that are currently generating rental revenue.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income attributable to Alexandria’s common stockholders – diluted:
|
|||||||||||||||
In millions
|
$
|
52.0
|
|
|
$
|
31.6
|
|
|
$
|
185.0
|
|
|
$
|
57.3
|
|
Per share
|
$
|
0.51
|
|
|
$
|
0.35
|
|
|
$
|
1.83
|
|
|
$
|
0.64
|
|
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
|
|||||||||||||||
In millions
|
$
|
167.9
|
|
|
$
|
136.2
|
|
|
$
|
330.4
|
|
|
$
|
266.7
|
|
Per share
|
$
|
1.64
|
|
|
$
|
1.50
|
|
|
$
|
3.27
|
|
|
$
|
2.98
|
|
•
|
Percentage of annual rental revenue in effect from:
|
•
|
Investment-grade or large cap tenants:
55%
|
•
|
Class A properties in AAA locations:
78%
|
•
|
Occupancy of operating properties in North America:
97.1%
|
•
|
Operating margin:
72%
|
•
|
Adjusted EBITDA margin:
69%
|
•
|
Weighted-average remaining lease term:
|
•
|
Total tenants:
8.6
years
|
•
|
Top 20 tenants:
12.8
years
|
•
|
See “Strong Internal Growth” in the above section for information on our total revenues, same property net operating income growth, leasing activity, and rental rate growth.
|
•
|
$18.8 billion
of total market capitalization
as of June 30, 2018
|
•
|
$2.9 billion
of liquidity
as of June 30, 2018
|
|
|
Three Months Ended June 30, 2018
|
|
Fourth Quarter of 2018 Goal
|
||
|
|
Quarter Annualized
|
|
Trailing 12 Months
|
|
|
Net debt to Adjusted EBITDA
|
|
5.8x
|
|
6.2x
|
|
Less than 5.5x
|
Fixed-charge coverage ratio
|
|
4.3x
|
|
4.3x
|
|
Greater than 4.0x
|
Unhedged variable-rate debt as a percentage of total debt
|
|
5%
|
|
N/A
|
|
Less than 5%
|
Current and future value-creation pipeline as a percentage of gross investments in real estate in North America
|
|
10%
|
|
N/A
|
|
8% to 12%
|
•
|
In June 2018, we completed an offering of
$900.0 million
of unsecured senior notes for net proceeds of
$891.4 million
. The unsecured senior notes consisted of:
|
•
|
$450.0 million
of
4.00%
unsecured senior notes, due in
2024
. The net proceeds will be used to fund certain eligible green development and redevelopment projects that have received or are expected to receive LEED
®
Gold or Platinum certification.
|
•
|
$450.0 million
of
4.70%
unsecured senior notes, due in
2030
.
|
•
|
During the
three months ended June 30, 2018
, we sold
2.5 million
shares of common stock under our ATM common stock offering program for
$124.46
per share and received net proceeds of
$300.8 million
. In July 2018, we sold
703,625
shares of common stock under our ATM common stock offering program for
$127.91
per share and received net proceeds of
$88.7 million
. As of
July 30, 2018
, we had
$17.7 million
available for future sales under the ATM program. We expect to file a new ATM program in the next few quarters.
|
•
|
In April 2018, our unconsolidated real estate joint venture at Menlo Gateway in our Greater Stanford submarket closed a secured note payable, with commitments available for borrowing of
$157.3 million
for the development of Phase II of the project. The loan matures on
May 1, 2035
, and bears interest at a fixed rate of
4.53%
.
|
•
|
In July 2018, we repaid
$150.0 million
of the outstanding balance of one secured construction loan. In connection with the partial repayment of the secured construction loan, we recognized a loss on early extinguishment of debt of
$299 thousand
related to the write-off of unamortized loan fees.
|
•
|
Nareit CARE Gold Award winner
|
◦
|
2018 recipient of the Nareit Gold Investor CARE (Communications and Reporting Excellence) Award in the Large Cap Equity REIT category as the best-in-class REIT that delivers transparency, quality, and efficient communications and reporting to the investment community, which is our third Nareit Gold Investor CARE Award (2015, 2016, and 2018).
|
•
|
50%
of annual rental revenue is expected from LEED-certified projects upon completion of
10
in-process projects. In April 2018, 100 Binney Street in our Cambridge submarket received LEED Gold
®
certification, demonstrating our commitment to sustainability.
|
•
|
In May 2018, Joel S. Marcus, executive chairman and founder, served as a keynote speaker at the Research Triangle Regional Partnership’s 2018 State of the Region. The event highlighted how the region can facilitate economic growth and infrastructural improvements to prepare for more diversified expansion in the future.
|
•
|
In June 2018, Joel S. Marcus was appointed to the Emily Krzyzewski Center board of directors. The Center serves as a college access hub propelling academically focused, low-income K-12 students and graduates toward success in college.
|
•
|
In June 2018, Circulate San Diego awarded 9880 Campus Point Drive in our University Town Center submarket the Circulate Mobility Certification, formerly known as the MOVE Alliance Certification. The certification is awarded for transit-oriented, smart growth projects in the San Diego region.
|
•
|
In June 2018, we released our inaugural 2017 Corporate Responsibility Report that highlights our continual efforts to make a positive, meaningful and purposeful impact on the health, safety and well-being of our tenants, stockholders and employees, as well as on the communities in which we live and work.
|
Favorable Lease Structure
(1)
|
|
Same Property Net Operating Income Growth
|
|
|||||||
|
|
|
|
|
||||||
Stable cash flows
|
|
|
|
|
||||||
Percentage of triple
net leases
|
97%
|
|
|
|||||||
Increasing cash flows
|
|
|
|
|
||||||
Percentage of leases containing annual rent escalations
|
96%
|
|
|
|||||||
Lower capex burden
|
|
|
|
|
||||||
Percentage of leases providing for the recapture of capital expenditures
|
95%
|
|
|
|||||||
|
|
|
|
|||||||
Margins
(2)
|
|
Rental Rate Growth:
Renewed/Re-Leased Space |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
Operating
|
|
|
||||
69%
|
|
|
|
72%
|
|
|
||||
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
(1)
|
Percentages calculated based on RSF
as of June 30, 2018
.
|
(2)
|
Represents percentages for the
three months ended June 30, 2018
.
|
Cash Flows from High-Quality, Diverse, and Innovative Tenants
|
||||
|
|
|
||
Annual Rental Revenue
(1)
from Investment-Grade or Large Cap Tenants
A REIT Industry-Leading Tenant Roster
|
||||
55
|
%
|
|
|
|
|
||||
Tenant Mix
|
||||
|
||||
Percentage of ARE’s Annual Rental Revenue
(1)
|
(1)
|
Represents annual rental revenue in effect as of
June 30, 2018
.
|
(2)
|
Leading Technology Entities are technology companies with an investment-grade credit rating, or a 12-month average reported market capitalization or private valuation greater than $10 billion.
|
(1)
|
Represents annual rental revenue in effect as of
June 30, 2018
.
|
(2)
|
Average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of
June 30, 2018
.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Year Ended
|
||||||||||||||||||
|
|
June 30, 2018
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||
|
|
Including
Straight-Line Rent
|
|
Cash Basis
|
|
Including
Straight-Line Rent |
|
Cash Basis
|
|
Including
Straight-Line Rent
|
|
Cash Basis
|
||||||||||||
(Dollars per RSF)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Leasing activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Renewed/re-leased space
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Rental rate changes
|
|
24.0%
|
|
|
12.8%
|
|
(2)
|
21.5%
|
|
|
13.8%
|
|
(2)
|
25.1%
|
|
|
12.7%
|
|
||||||
New rates
|
|
$
|
48.88
|
|
|
$
|
47.29
|
|
|
$
|
49.21
|
|
|
$
|
47.64
|
|
|
$
|
51.05
|
|
|
$
|
47.99
|
|
Expiring rates
|
|
$
|
39.43
|
|
|
$
|
41.92
|
|
|
$
|
40.49
|
|
|
$
|
41.85
|
|
|
$
|
40.80
|
|
|
$
|
42.60
|
|
Rentable square footage
|
|
727,265
|
|
|
|
|
961,813
|
|
|
|
|
2,525,099
|
|
|
|
|||||||||
Tenant improvements/leasing commissions
|
|
$
|
13.60
|
|
|
|
|
$
|
14.06
|
|
|
|
|
$
|
18.74
|
|
|
|
||||||
Weighted-average lease term
|
|
5.7 years
|
|
|
|
|
5.3 years
|
|
|
|
|
6.2 years
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed/redeveloped/previously vacant space leased
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
New rates
|
|
$
|
48.48
|
|
|
$
|
46.75
|
|
|
$
|
68.12
|
|
|
$
|
56.69
|
|
|
$
|
47.56
|
|
|
$
|
42.93
|
|
Rentable square footage
|
|
258,731
|
|
|
|
|
1,505,347
|
|
|
|
|
2,044,083
|
|
|
|
|||||||||
Tenant improvements/leasing commissions
|
|
$
|
20.72
|
|
|
|
|
$
|
12.82
|
|
|
|
|
$
|
9.83
|
|
|
|
||||||
Weighted-average lease term
|
|
6.0 years
|
|
|
|
|
13.7 years
|
|
|
|
|
10.1 years
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Leasing activity summary (totals):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
New rates
|
|
$
|
48.78
|
|
|
$
|
47.15
|
|
|
$
|
60.75
|
|
|
$
|
53.16
|
|
|
$
|
49.49
|
|
|
$
|
45.72
|
|
Rentable square footage
|
|
985,996
|
|
|
|
|
2,467,160
|
|
(3)
|
|
|
4,569,182
|
|
|
|
|||||||||
Tenant improvements/leasing commissions
|
|
$
|
15.47
|
|
|
|
|
$
|
13.30
|
|
|
|
|
$
|
14.75
|
|
|
|
||||||
Weighted-average lease term
|
|
5.8 years
|
|
|
|
|
10.4 years
|
|
|
|
|
7.9 years
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Lease expirations:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expiring rates
|
|
$
|
39.73
|
|
|
$
|
42.00
|
|
|
$
|
40.87
|
|
|
$
|
42.69
|
|
|
$
|
39.99
|
|
|
$
|
41.71
|
|
Rentable square footage
|
|
786,580
|
|
|
|
|
1,326,613
|
|
|
|
|
2,919,259
|
|
|
|
(1)
|
Excludes
19
month-to-month leases aggregating
23,830
RSF and
25
month-to-month leases aggregating
37,006
RSF as of
June 30, 2018
and
December 31, 2017
, respectively.
|
(2)
|
Includes rental rate increases related to the early re-leasing and re-tenanting of space subject to significantly below-market leases at our Alexandria Center
®
at One Kendall Square campus in our Cambridge submarket. Since our acquisition of the campus during the three months ended December 31, 2016, we have re-leased and renewed approximately 280,000 RSF of below-market space, or three times the volume we initially forecasted to be executed through the three months ended
June 30, 2018
, at rental rate (cash basis) increases of approximately 26%. In addition, as of
June 30, 2018
, there was approximately 78,586 RSF of temporary vacancy at the campus, of which 68% is committed under a lease, in lease negotiations, or identified as the location for our Alexandria Launchlabs
®
.
|
(3)
|
During the
six months ended June 30, 2018
, we granted tenant concessions/free rent averaging
2.0
months with respect to the
2,467,160
RSF leased. Approximately
61%
of the leases executed during the
six months ended June 30, 2018
, did not include concessions for free rent.
|
Year
|
|
Number of Leases
|
|
RSF
|
|
Percentage of
Occupied RSF |
|
Annual Rental Revenue
(per RSF) (1) |
|
Percentage of Total
Annual Rental Revenue |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
2018
|
(2)
|
|
|
40
|
|
|
|
|
617,160
|
|
|
|
|
3.0
|
%
|
|
|
|
$
|
47.21
|
|
|
|
|
2.9
|
%
|
|
|
2019
|
|
|
|
92
|
|
|
|
|
1,307,904
|
|
|
|
|
6.3
|
%
|
|
|
|
$
|
40.83
|
|
|
|
|
5.4
|
%
|
|
|
2020
|
|
|
|
114
|
|
|
|
|
1,873,964
|
|
|
|
|
9.0
|
%
|
|
|
|
$
|
37.61
|
|
|
|
|
7.1
|
%
|
|
|
2021
|
|
|
|
96
|
|
|
|
|
1,731,707
|
|
|
|
|
8.3
|
%
|
|
|
|
$
|
41.09
|
|
|
|
|
7.2
|
%
|
|
|
2022
|
|
|
|
91
|
|
|
|
|
1,605,142
|
|
|
|
|
7.7
|
%
|
|
|
|
$
|
44.45
|
|
|
|
|
7.2
|
%
|
|
|
2023
|
|
|
|
70
|
|
|
|
|
2,081,217
|
|
|
|
|
10.0
|
%
|
|
|
|
$
|
42.75
|
|
|
|
|
9.0
|
%
|
|
|
2024
|
|
|
|
36
|
|
|
|
|
1,608,601
|
|
|
|
|
7.7
|
%
|
|
|
|
$
|
47.66
|
|
|
|
|
7.7
|
%
|
|
|
2025
|
|
|
|
33
|
|
|
|
|
1,096,663
|
|
|
|
|
5.3
|
%
|
|
|
|
$
|
48.66
|
|
|
|
|
5.4
|
%
|
|
|
2026
|
|
|
|
21
|
|
|
|
|
841,214
|
|
|
|
|
4.0
|
%
|
|
|
|
$
|
44.66
|
|
|
|
|
3.8
|
%
|
|
|
2027
|
|
|
|
26
|
|
|
|
|
1,968,087
|
|
|
|
|
9.4
|
%
|
|
|
|
$
|
44.16
|
|
|
|
|
8.8
|
%
|
|
Thereafter
|
|
|
54
|
|
|
|
|
6,152,830
|
|
|
|
|
29.3
|
%
|
|
|
|
$
|
57.00
|
|
|
|
|
35.5
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents amounts in effect as of
June 30, 2018
.
|
(2)
|
Excludes
19
month-to-month leases for
23,830
RSF as of
June 30, 2018
.
|
|
|
2018 Contractual Lease Expirations
|
|
Annual Rental Revenue
(per RSF) (2) |
|||||||||||||||
|
|
Leased
|
|
Negotiating/
Anticipating |
|
Targeted for
Redevelopment |
|
Remaining
Expiring Leases |
|
Total
(1)
|
|
||||||||
Market
|
|
|
|
|
|
|
|||||||||||||
Greater Boston
|
|
12,839
|
|
|
57,110
|
|
|
—
|
|
|
23,361
|
|
|
93,310
|
|
|
$
|
61.62
|
|
San Francisco
|
|
—
|
|
|
3,412
|
|
|
126,971
|
|
(3)
|
9,122
|
|
|
139,505
|
|
|
48.77
|
|
|
New York City
|
|
11,790
|
|
|
24,443
|
|
|
—
|
|
|
35,985
|
|
|
72,218
|
|
|
108.87
|
|
|
San Diego
|
|
—
|
|
|
17,767
|
|
|
44,034
|
|
(4)
|
122,641
|
|
|
184,442
|
|
|
32.30
|
|
|
Seattle
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Maryland
|
|
—
|
|
|
2,618
|
|
|
—
|
|
|
19,464
|
|
|
22,082
|
|
|
15.70
|
|
|
Research Triangle Park
|
|
—
|
|
|
23,566
|
|
|
—
|
|
|
15,214
|
|
|
38,780
|
|
|
23.45
|
|
|
Canada
|
|
31,006
|
|
|
—
|
|
|
—
|
|
|
23,959
|
|
|
54,965
|
|
|
19.75
|
|
|
Non-cluster markets
|
|
—
|
|
|
7,721
|
|
|
—
|
|
|
4,137
|
|
|
11,858
|
|
|
26.43
|
|
|
Total
|
|
55,635
|
|
|
136,637
|
|
|
171,005
|
|
|
253,883
|
|
|
617,160
|
|
|
$
|
47.21
|
|
Percentage of expiring leases
|
|
9
|
%
|
|
22
|
%
|
|
28
|
%
|
|
41
|
%
|
|
100
|
%
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
2019 Contractual Lease Expirations
|
|
Annual Rental Revenue
(per RSF) (2) |
|||||||||||||||
|
|
Leased
|
|
Negotiating/
Anticipating |
|
Targeted for
Redevelopment |
|
Remaining
Expiring Leases |
|
Total
|
|
||||||||
Market
|
|
|
|
|
|
|
|||||||||||||
Greater Boston
|
|
92,800
|
|
|
4,321
|
|
|
—
|
|
|
249,209
|
|
|
346,330
|
|
|
$
|
51.14
|
|
San Francisco
|
|
15,669
|
|
|
4,111
|
|
|
—
|
|
|
198,784
|
|
|
218,564
|
|
|
42.12
|
|
|
New York City
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,900
|
|
|
7,900
|
|
|
114.95
|
|
|
San Diego
|
|
72,181
|
|
|
—
|
|
|
—
|
|
|
202,302
|
|
|
274,483
|
|
|
33.08
|
|
|
Seattle
|
|
106,003
|
|
|
75,545
|
|
|
—
|
|
|
42,137
|
|
|
223,685
|
|
|
43.88
|
|
|
Maryland
|
|
—
|
|
|
60,710
|
|
|
—
|
|
|
72,606
|
|
|
133,316
|
|
|
28.25
|
|
|
Research Triangle Park
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,448
|
|
|
44,448
|
|
|
21.33
|
|
|
Canada
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Non-cluster markets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59,178
|
|
|
59,178
|
|
|
33.34
|
|
|
Total
|
|
286,653
|
|
|
144,687
|
|
|
—
|
|
|
876,564
|
|
|
1,307,904
|
|
|
$
|
40.83
|
|
Percentage of expiring leases
|
|
22
|
%
|
|
11
|
%
|
|
—
|
%
|
|
67
|
%
|
|
100
|
%
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes
19
month-to-month leases for
23,830
RSF as of
June 30, 2018
.
|
(2)
|
Represents amounts in effect as of
June 30, 2018
.
|
(3)
|
Relates to
126,971
RSF of office space targeted for redevelopment into office/laboratory space upon expiration of the existing lease at the end of the third quarter of 2018, at 681 Gateway Boulevard in our South San Francisco submarket, of which
60,963
RSF, or
48%
, is pre-leased to another tenant. Concurrent with our redevelopment, we anticipate expanding 681 Gateway Boulevard by an additional 15,000 RSF to 30,000 RSF and expect initial occupancy in 2019.
|
(4)
|
Relates to
44,034
RSF at 4110 Campus Point Court in our University Town Center submarket, a property that was acquired during the fourth quarter of 2017.
|
|
|
|
|
Remaining Lease Term in Years
(1)
|
|
|
Aggregate
RSF
|
|
|
|
Annual
Rental
Revenue
(1)
|
|
|
Percentage of Aggregate Annual Rental Revenue
(1)
|
|
Investment-Grade Credit Ratings
|
|
Market Cap
(2)
(in billions)
|
|
Private
Valuation
(2)(3)
(in billions)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Tenant
|
|
|
|
|
|
|
|
|
|
Moody’s
|
|
S&P
|
|
|
|||||||||||||||||
1
|
|
|
Illumina, Inc.
|
|
|
12.1
|
|
|
|
|
891,495
|
|
|
|
|
$
|
34,876
|
|
|
|
3.5%
|
|
—
|
|
BBB
|
|
$
|
32.4
|
|
|
N/A
|
|
|
2
|
|
|
Takeda Pharmaceutical Company Ltd.
|
|
|
11.8
|
|
|
|
|
386,111
|
|
|
|
|
30,614
|
|
|
|
3.1
|
|
A2
|
|
A-
|
|
$
|
39.7
|
|
|
N/A
|
|
||
3
|
|
|
Bristol-Myers Squibb Company
|
|
|
9.6
|
|
|
|
|
475,661
|
|
|
|
|
30,559
|
|
|
|
3.1
|
|
A2
|
|
A+
|
|
$
|
98.0
|
|
|
N/A
|
|
||
4
|
|
|
Sanofi
|
|
|
9.6
|
|
|
|
|
494,693
|
|
|
|
|
29,787
|
|
|
|
3.0
|
|
A1
|
|
AA
|
|
$
|
110.4
|
|
|
N/A
|
|
||
5
|
|
|
Eli Lilly and Company
|
|
|
11.4
|
|
|
|
|
467,521
|
|
|
|
|
29,203
|
|
|
|
2.9
|
|
A2
|
|
AA-
|
|
$
|
91.0
|
|
|
N/A
|
|
||
6
|
|
|
Celgene Corporation
|
|
|
7.9
|
|
|
|
|
614,082
|
|
|
|
|
29,183
|
|
|
|
2.9
|
|
Baa2
|
|
BBB+
|
|
$
|
84.2
|
|
|
N/A
|
|
||
7
|
|
|
Novartis AG
|
|
|
8.6
|
|
|
|
|
361,180
|
|
|
|
|
27,732
|
|
|
|
2.8
|
|
Aa3
|
|
AA-
|
|
$
|
191.2
|
|
|
N/A
|
|
||
8
|
|
|
Uber Technologies, Inc.
|
|
|
74.4
|
|
(4)
|
|
|
422,980
|
|
|
|
|
22,173
|
|
|
|
2.2
|
|
—
|
|
—
|
|
N/A
|
|
|
$
|
67.1
|
|
||
9
|
|
|
New York University
|
|
|
12.2
|
|
|
|
|
209,224
|
|
|
|
|
20,718
|
|
|
|
2.1
|
|
Aa2
|
|
AA-
|
|
N/A
|
|
|
N/A
|
|
|||
10
|
|
|
bluebird bio, Inc.
|
|
|
8.6
|
|
|
|
|
262,261
|
|
|
|
|
20,095
|
|
|
|
2.0
|
|
—
|
|
—
|
|
$
|
7.2
|
|
|
N/A
|
|
||
11
|
|
|
Moderna Therapeutics, Inc.
|
|
|
10.4
|
|
|
|
|
356,975
|
|
|
|
|
19,857
|
|
|
|
2.0
|
|
—
|
|
—
|
|
N/A
|
|
|
$
|
7.9
|
|
||
12
|
|
|
Stripe, Inc.
|
|
|
9.3
|
|
|
|
|
295,333
|
|
|
|
|
17,822
|
|
|
|
1.8
|
|
—
|
|
—
|
|
N/A
|
|
|
$
|
9.2
|
|
||
13
|
|
|
Roche
|
|
|
2.8
|
|
|
|
|
343,861
|
|
|
|
|
17,597
|
|
|
|
1.8
|
|
Aa3
|
|
AA
|
|
$
|
207.2
|
|
|
N/A
|
|
||
14
|
|
|
Amgen Inc.
|
|
|
5.8
|
|
|
|
|
407,369
|
|
|
|
|
16,838
|
|
|
|
1.7
|
|
Baa1
|
|
A
|
|
$
|
124.8
|
|
|
N/A
|
|
||
15
|
|
|
Massachusetts Institute of Technology
|
|
|
7.0
|
|
|
|
|
256,126
|
|
|
|
|
16,729
|
|
|
|
1.7
|
|
Aaa
|
|
AAA
|
|
N/A
|
|
|
N/A
|
|
|||
16
|
|
|
United States Government
|
|
|
7.1
|
|
|
|
|
264,358
|
|
|
|
|
15,073
|
|
|
|
1.5
|
|
Aaa
|
|
AA+
|
|
N/A
|
|
|
N/A
|
|
|||
17
|
|
|
Facebook, Inc.
|
|
|
11.6
|
|
|
|
|
382,883
|
|
|
|
|
14,588
|
|
|
|
1.5
|
|
—
|
|
—
|
|
$
|
494.7
|
|
|
N/A
|
|
||
18
|
|
|
FibroGen, Inc.
|
|
|
5.4
|
|
|
|
|
234,249
|
|
|
|
|
14,198
|
|
|
|
1.4
|
|
—
|
|
—
|
|
$
|
3.9
|
|
|
N/A
|
|
||
19
|
|
|
Biogen Inc.
|
|
|
10.3
|
|
|
|
|
305,212
|
|
|
|
|
13,278
|
|
|
|
1.3
|
|
Baa1
|
|
A-
|
|
$
|
62.1
|
|
|
N/A
|
|
||
20
|
|
|
Pinterest, Inc.
|
|
|
14.7
|
|
|
|
|
148,146
|
|
|
|
|
12,114
|
|
|
|
1.2
|
|
—
|
|
—
|
|
N/A
|
|
|
$
|
11.3
|
|
||
|
|
Total/weighted average
|
|
|
12.8
|
|
(4)
|
|
|
7,579,720
|
|
|
|
|
$
|
433,034
|
|
|
|
43.5%
|
|
|
|
|
|
|
|
|
(1)
|
Based on percentage of aggregate annual rental revenue in effect as of
June 30, 2018
. Refer to the “Non-GAAP Measures” section within this Item 2 for our methodologies on annual rental revenue for unconsolidated properties and investment-grade or large cap tenants, respectively.
|
(2)
|
12-month average reported market capitalization or private valuation as of
June 30, 2018
.
|
(3)
|
Private valuation provided by PitchBook Data, Inc., a comprehensive database that provides data on private capital markets, which represents an estimate of the company’s valuation following its most recently completed equity financing. Uber Technologies, Inc. completed a Series G financing in January 2018, Moderna Therapeutics, Inc. completed a Series H financing in May 2018, Stripe, Inc. completed a Series D financing in November 2016, and Pinterest, Inc. completed a Series H financing in June 2017.
|
(4)
|
Represents a ground lease with Uber Technologies, Inc. at 1455 and 1515 Third Street in our Mission Bay/SoMa submarket. Excluding the ground lease, the weighted-average remaining lease term for our top 20 tenants is
9.5
years
as of June 30, 2018
.
|
|
|
RSF
|
|
Number of Properties
|
|
Annual Rental Revenue
|
|||||||||||||||||||||||
Market
|
|
Operating
|
|
Development
|
|
Redevelopment
|
|
Total
|
|
% of Total
|
|
|
Total
|
|
% of Total
|
|
Per RSF
|
||||||||||||
Greater Boston
|
|
6,438,030
|
|
|
164,000
|
|
|
31,858
|
|
|
6,633,888
|
|
|
28
|
%
|
|
55
|
|
|
$
|
376,114
|
|
|
38
|
%
|
|
$
|
61.38
|
|
San Francisco
|
|
4,644,847
|
|
|
1,627,088
|
|
|
48,547
|
|
|
6,320,482
|
|
|
26
|
|
|
44
|
|
|
226,095
|
|
|
23
|
|
|
50.69
|
|
||
New York City
|
|
727,674
|
|
|
—
|
|
|
—
|
|
|
727,674
|
|
|
3
|
|
|
2
|
|
|
63,380
|
|
|
6
|
|
|
87.10
|
|
||
San Diego
|
|
4,349,106
|
|
|
—
|
|
|
163,648
|
|
|
4,512,754
|
|
|
19
|
|
|
56
|
|
|
161,989
|
|
|
16
|
|
|
38.88
|
|
||
Seattle
|
|
1,235,055
|
|
|
205,000
|
|
|
—
|
|
|
1,440,055
|
|
|
6
|
|
|
13
|
|
|
57,777
|
|
|
6
|
|
|
48.14
|
|
||
Maryland
|
|
2,461,932
|
|
|
—
|
|
|
103,225
|
|
|
2,565,157
|
|
|
11
|
|
|
37
|
|
|
64,884
|
|
|
6
|
|
|
27.64
|
|
||
Research Triangle Park
|
|
1,076,907
|
|
|
—
|
|
|
141,819
|
|
|
1,218,726
|
|
|
5
|
|
|
16
|
|
|
27,056
|
|
|
3
|
|
|
26.04
|
|
||
Canada
|
|
256,967
|
|
|
—
|
|
|
—
|
|
|
256,967
|
|
|
1
|
|
|
3
|
|
|
6,767
|
|
|
1
|
|
|
26.72
|
|
||
Non-cluster markets
|
|
277,404
|
|
|
—
|
|
|
—
|
|
|
277,404
|
|
|
1
|
|
|
7
|
|
|
6,227
|
|
|
1
|
|
|
28.83
|
|
||
Properties held for sale
|
|
54,874
|
|
|
—
|
|
|
—
|
|
|
54,874
|
|
|
—
|
|
|
1
|
|
|
997
|
|
|
—
|
|
|
—
|
|
||
North America
|
|
21,522,796
|
|
|
1,996,088
|
|
|
489,097
|
|
|
24,007,981
|
|
|
100
|
%
|
|
234
|
|
|
$
|
991,286
|
|
|
100
|
%
|
|
$
|
48.22
|
|
|
|
|
|
2,485,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Properties
|
|
Operating and Redevelopment Properties
|
||||||||||||||
Market
|
|
6/30/18
|
|
3/31/18
|
|
6/30/17
|
|
6/30/18
|
|
3/31/18
|
|
6/30/17
|
||||||
Greater Boston
|
|
97.2
|
%
|
|
95.7
|
%
|
|
96.2
|
%
|
|
96.7
|
%
|
|
95.2
|
%
|
|
96.2
|
%
|
San Francisco
|
|
99.8
|
|
|
99.9
|
|
|
99.6
|
|
|
98.8
|
|
|
98.9
|
|
|
99.6
|
|
New York City
|
|
100.0
|
|
|
100.0
|
|
|
99.3
|
|
|
100.0
|
|
|
100.0
|
|
|
99.3
|
|
San Diego
|
|
95.8
|
|
|
95.2
|
|
|
91.7
|
|
|
92.3
|
|
|
91.7
|
|
|
88.0
|
|
Seattle
|
|
97.2
|
|
|
96.6
|
|
|
97.2
|
|
|
97.2
|
|
|
96.6
|
|
|
97.2
|
|
Maryland
|
|
95.7
|
|
|
95.7
|
|
|
93.0
|
|
|
91.9
|
|
|
91.2
|
|
|
93.0
|
|
Research Triangle Park
|
|
96.5
|
|
|
96.8
|
|
|
95.9
|
|
|
85.3
|
|
|
82.9
|
|
|
82.1
|
|
Subtotal
|
|
97.4
|
|
|
96.8
|
|
|
95.7
|
|
|
95.2
|
|
|
94.4
|
|
|
94.0
|
|
Canada
|
|
98.6
|
|
|
99.6
|
|
|
99.2
|
|
|
98.6
|
|
|
99.6
|
|
|
99.2
|
|
Non-cluster markets
|
|
77.9
|
|
|
78.9
|
|
|
88.4
|
|
|
77.9
|
|
|
78.9
|
|
|
88.4
|
|
North America
|
|
97.1
|
%
|
|
96.6
|
%
|
|
95.7
|
%
|
|
95.0
|
%
|
|
94.3
|
%
|
|
94.0
|
%
|
|
|
Investments in Real Estate
|
|
Square Feet
|
|||||||||||||||
|
|
|
Operating
|
|
Construction
|
|
Pre-Construction
|
|
Intermediate-Term & Future Projects
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Investments in real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Rental properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consolidated
|
|
$
|
11,882,062
|
|
|
21,038,347
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,038,347
|
|
Unconsolidated
(1)
|
|
N/A
|
|
|
484,449
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
484,449
|
|
|
|
|
11,882,062
|
|
|
21,522,796
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,522,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
New Class A development and redevelopment properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2018 deliveries
|
|
214,560
|
|
|
—
|
|
|
501,325
|
|
|
—
|
|
|
—
|
|
|
501,325
|
|
|
2019 deliveries
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Consolidated
|
|
352,871
|
|
|
—
|
|
|
810,921
|
|
|
126,971
|
|
|
—
|
|
|
937,892
|
|
|
Unconsolidated
(1)
|
|
N/A
|
|
|
—
|
|
|
1,172,939
|
|
|
—
|
|
|
—
|
|
|
1,172,939
|
|
|
2019 deliveries
|
|
352,871
|
|
|
—
|
|
|
1,983,860
|
|
|
126,971
|
|
|
—
|
|
|
2,110,831
|
|
|
2018 and 2019 deliveries
|
|
567,431
|
|
|
—
|
|
|
2,485,185
|
|
|
126,971
|
|
|
—
|
|
|
2,612,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2020 deliveries
|
|
191,050
|
|
|
—
|
|
|
—
|
|
|
908,000
|
|
|
—
|
|
|
908,000
|
|
|
New Class A development and redevelopment properties undergoing construction and pre-construction
|
|
758,481
|
|
|
—
|
|
|
2,485,185
|
|
|
1,034,971
|
|
|
—
|
|
|
3,520,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Intermediate-term and future development and redevelopment projects:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Intermediate-term
|
|
494,938
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,138,317
|
|
|
4,138,317
|
|
|
Future
|
|
92,473
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,273,081
|
|
|
3,273,081
|
|
|
Portion of development and redevelopment square feet that will replace existing RSF included in rental properties
(2)
|
|
N/A
|
|
|
—
|
|
|
—
|
|
|
(126,971
|
)
|
|
(351,185
|
)
|
|
(478,156
|
)
|
|
Intermediate-term and future development and redevelopment projects, excluding RSF related to rental properties
|
|
587,411
|
|
|
—
|
|
|
—
|
|
|
(126,971
|
)
|
|
7,060,213
|
|
|
6,933,242
|
|
|
Gross investments in real estate
|
|
13,227,954
|
|
|
21,522,796
|
|
|
2,485,185
|
|
|
908,000
|
|
|
7,060,213
|
|
|
31,976,194
|
|
|
|
|
|
|
24,007,981
|
|
|
|
|
|
|
|||||||||
Less: accumulated depreciation
|
|
(2,066,333
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investments in real estate – North America
|
|
11,161,621
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investments in real estate – Asia
|
|
29,150
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investments in real estate
|
|
$
|
11,190,771
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Our share of the cost basis associated with unconsolidated square feet is classified in investments in unconsolidated real estate joint ventures in our unaudited consolidated balance sheets.
|
(2)
|
Refer to footnotes 1, 3, and 4 to the table in the “New Class A Development and Redevelopment Properties: Summary of Pipeline” section within this Item 2 for additional information.
|
Property
|
|
Submarket/Market
|
|
Date of Purchase
|
|
Number of Properties
|
|
Operating
Occupancy
|
|
Square Footage
|
|
Unlevered Yields
|
|
Purchase Price
|
||||||||||||||||
|
|
|
|
Operating
|
|
Operating with Active or Future Redevelopment
|
|
Active or Future
Development
|
|
Initial Stabilized
|
|
Initial Stabilized (Cash)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
||||||||||||||||||||||||
Active or Future Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
701 Dexter Avenue North
|
|
Lake Union/Seattle
|
|
7/20/18
|
|
1
|
|
N/A
|
|
—
|
|
|
—
|
|
|
217,000
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
$
|
33,500
|
|
|
1655 and 1725 Third Street
(10% interest in unconsolidated JV)
|
|
Mission Bay/SoMa/
San Francisco
|
|
3/2/18
|
|
2
|
|
N/A
|
|
—
|
|
|
—
|
|
|
593,765
|
|
|
7.8
|
%
|
|
|
6.0
|
%
|
|
|
|
31,950
|
|
|
Other
|
|
Various
|
|
Various
|
|
—
|
|
N/A
|
|
—
|
|
|
—
|
|
|
493,000
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
|
58,205
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating with Value-Creation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
219 East 42nd Street
|
|
Manhattan/New York City
|
|
7/10/18
|
|
1
|
|
100%
|
|
—
|
|
|
349,947
|
|
(2)
|
—
|
|
|
6.8
|
%
|
(2)
|
|
6.7
|
%
|
(2)
|
|
|
203,000
|
|
|
Summers Ridge Science Park
|
|
Sorrento Mesa/San Diego
|
|
1/5/18
|
|
4
|
|
100%
|
|
316,531
|
|
|
—
|
|
|
50,000
|
|
|
8.2
|
%
|
|
|
6.3
|
%
|
|
|
|
148,650
|
|
|
Alexandria PARC
|
|
Greater Stanford/San Francisco
|
|
1/25/18
|
|
4
|
|
100%
|
|
148,951
|
|
|
48,547
|
|
|
—
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
136,000
|
|
|
100 Tech Drive
|
|
Route 128/Greater Boston
|
|
4/13/18
|
|
1
|
|
100%
|
|
200,431
|
|
|
—
|
|
|
300,000
|
|
|
8.7
|
%
|
|
|
7.3
|
%
|
|
|
|
87,250
|
|
|
704 Quince Orchard Road
(56.8% interest in unconsolidated JV)
|
|
Gaithersburg/Maryland
|
|
3/16/18
|
|
1
|
|
100%
|
|
21,745
|
|
|
58,186
|
|
|
—
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
3,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Maryland Life Science Portfolio
|
|
Rockville/Gaithersburg/Maryland
|
|
5/8/18
|
|
8
|
|
100%
|
|
376,106
|
|
|
39,505
|
|
|
—
|
|
|
9.1
|
%
|
|
|
7.0
|
%
|
(4)
|
|
|
146,500
|
|
|
2301 5th Avenue
|
|
Lake Union/Seattle
|
|
6/1/18
|
|
1
|
|
97%
|
|
197,136
|
|
|
—
|
|
|
—
|
|
|
8.3
|
%
|
|
|
5.1
|
%
|
(4)
|
|
|
95,000
|
|
|
Other
|
|
Various
|
|
Various
|
|
2
|
|
100%
|
|
54,341
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
58,300
|
|
(5)
|
Total
|
|
|
|
|
|
25
|
|
|
|
1,315,241
|
|
|
496,185
|
|
|
1,653,765
|
|
|
|
|
|
|
|
|
$
|
1,002,255
|
|
|
||
2018 guidance midpoint
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,010,000
|
|
|
(1)
|
We expect to provide total estimated costs and related yields of development and redevelopment projects in the future.
|
(2)
|
We acquired a fee simple interest in this office building, which is currently occupied by Pfizer Inc. with a remaining lease term of
six
years. Upon expiration of the lease, we have the opportunity to increase cash flows through the conversion of office space into office/laboratory space through redevelopment. Under the Midtown East Rezoning, this property is currently entitled with an as-of-right density for an additional 230,000 developable square feet. Unlevered initial stabilized yields represent initial returns during the Pfizer, Inc. occupancy prior to any future redevelopment activities. We expect to provide total estimated costs and related yields of the development or redevelopment in the future.
|
(3)
|
Refer to the “New Class A Development and Redevelopment Properties: 2018–2020 Deliveries” section within this Item 2 for additional information.
|
(4)
|
These properties provide an opportunity to increase cash flows through the re-leasing of in-place leases currently
16%
and
25%
below market at the Maryland Life Science Portfolio and 2301 5th Avenue, respectively.
|
(5)
|
Includes, among others, the second and third installments related to our November 2016 acquisition of 1455 and 1515 Third Street of
$18.9 million
per installment, which were paid during the three months ended March 31, 2018 and
June 30, 2018
, respectively.
|
(1)
|
Represents developments commenced since January 1, 2008, comprising
28
projects aggregating
7.1 million
RSF.
|
(2)
|
Represents annual rental revenue on ground-up developments commenced since January 1, 2008, from tenants with investment-grade credit rating, or a 12-month average reported market cap capitalization or private valuation greater than $10 billion
as of June 30, 2018
. Refer to the “Non-GAAP Measures” section within this Item 2 for additional information.
|
(3)
|
Represents developments commenced and delivered since January 1, 2008, comprising
22
projects aggregating
5.2 million
RSF.
|
100 Binney Street
|
|
266 and 275 Second Avenue
|
|
510 Townsend Street
|
Greater Boston/Cambridge
|
|
Greater Boston/Route 128
|
|
San Francisco/Mission Bay/SoMa
|
432,931 RSF
|
|
27,315 RSF
|
|
295,333 RSF
|
Bristol-Myers Squibb Company
Facebook, Inc. |
|
Visterra, Inc.
(1)
|
|
Stripe, Inc.
|
|
|
|
|
|
505 Brannan Street, Phase I
|
|
ARE Spectrum
|
|
400 Dexter Avenue North
|
|
5 Laboratory Drive
|
San Francisco/Mission Bay/SoMa
|
|
San Diego/Torrey Pines
|
|
Seattle/Lake Union
|
|
Research Triangle Park/RTP
|
148,146 RSF
|
|
336,461 RSF
|
|
290,111 RSF
|
|
33,181 RSF
|
Pinterest, Inc.
|
|
Celgene Corporation
Vertex Pharmaceuticals Incorporated The Medicines Company Wellspring Biosciences LLC |
|
Celgene Corporation
ClubCorp Holdings, Inc. |
|
Boragen, Inc.
Elo Life Systems, Inc. Indigo Ag, Inc. |
|
|
|
|
|
|
|
(1)
|
In July 2018, Otsuka Pharmaceutical Co., Ltd. entered into a definitive agreement to acquire Visterra, Inc. The transaction is expected to be completed during the third quarter of 2018. As of July 17, 2018, Otsuka Pharmaceutical Co., Ltd. had a market capitalization of
$25.6 billion
.
|
Property/Market/Submarket
|
|
Our Ownership Interest
|
|
Date Delivered
|
|
RSF Placed into Service
|
|
Operating Property Leased Percentage
|
|
Total Project
|
|
Unlevered Yields
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
Initial Stabilized
|
|
Initial Stabilized (Cash)
|
||||||||||||||||||||||||||||||||
|
|
|
Prior to 7/1/17
|
|
3Q17
|
|
4Q17
|
|
1Q18
|
|
2Q18
|
|
Total
|
|
|
RSF
|
|
Investment
|
|
|
||||||||||||||||||||
Consolidated development projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
100 Binney Street/Greater Boston/Cambridge
|
|
100%
|
|
Various
|
|
—
|
|
|
341,776
|
|
|
—
|
|
|
91,155
|
|
|
—
|
|
|
432,931
|
|
|
100%
|
|
432,931
|
|
$
|
436,000
|
|
|
|
8.2
|
%
|
|
|
|
7.4
|
%
|
|
510 Townsend Street/San Francisco/
Mission Bay/SoMa
|
|
100%
|
|
10/31/17
|
|
—
|
|
|
—
|
|
|
295,333
|
|
|
—
|
|
|
—
|
|
|
295,333
|
|
|
100%
|
|
295,333
|
|
$
|
226,000
|
|
|
|
7.9
|
%
|
|
|
|
7.5
|
%
|
|
505 Brannan Street, Phase I/San Francisco/
Mission Bay/SoMa
|
|
99.7%
|
|
10/10/17
|
|
—
|
|
|
—
|
|
|
148,146
|
|
|
—
|
|
|
—
|
|
|
148,146
|
|
|
100%
|
|
148,146
|
|
$
|
140,000
|
|
|
|
8.5
|
%
|
|
|
|
7.2
|
%
|
|
ARE Spectrum/San Diego/Torrey Pines
|
|
100%
|
|
Various
|
|
165,938
|
|
|
—
|
|
|
170,523
|
|
|
—
|
|
|
—
|
|
|
336,461
|
|
|
98%
|
|
336,461
|
|
$
|
277,000
|
|
|
|
6.4
|
%
|
|
|
|
6.2
|
%
|
|
400 Dexter Avenue North/Seattle/Lake Union
|
|
100%
|
|
Various
|
|
241,276
|
|
|
17,620
|
|
|
31,215
|
|
|
—
|
|
|
—
|
|
|
290,111
|
|
|
100%
|
|
290,111
|
|
$
|
223,000
|
|
|
|
7.0
|
%
|
|
|
|
7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated redevelopment project
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
266 and 275 Second Avenue/Greater Boston/
Route 128
|
|
100%
|
|
3/31/18
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,315
|
|
|
—
|
|
|
27,315
|
|
|
100%
|
|
203,757
|
|
$
|
89,000
|
|
|
|
8.4
|
%
|
|
|
|
7.1
|
%
|
|
5 Laboratory Drive/Research Triangle Park/RTP
|
|
100%
|
|
Various
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,181
|
|
|
33,181
|
|
|
100%
|
|
175,000
|
|
$
|
62,500
|
|
|
|
7.7
|
%
|
|
|
|
7.6
|
%
|
|
Total
|
|
|
|
|
|
407,214
|
|
|
359,396
|
|
|
645,217
|
|
|
118,470
|
|
|
33,181
|
|
|
1,563,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
399 Binney Street
|
|
266 and 275 Second Avenue
|
|
9625 Towne Centre Drive
|
Greater Boston/Cambridge
|
|
Greater Boston/Route 128
|
|
San Diego/University Town Center
|
164,000 RSF
|
|
31,858 RSF
|
|
163,648 RSF
|
Rubius Therapeutics, Inc.
Relay Therapeutics, Inc. Celsius Therapeutics, Inc. |
|
Marketing
|
|
Takeda Pharmaceutical
Company Ltd. |
|
|
|
|
|
|
|
5 Laboratory Drive
|
|
|
Research Triangle Park/RTP
|
|
|
141,819 RSF
|
|
|
Boragen, Inc.
Indigo Ag, Inc. AgTech Accelerator Corporation Multi-Tenant/Marketing |
|
|
|
|
|
|
|
501,325
|
|
RSF
|
|
|
75%
|
|
|
Leased
|
213 East Grand Avenue
|
|
9900 Medical Center Drive
|
|
279 East Grand Avenue
|
|
Alexandria PARC
|
|
1818 Fairview Avenue East
|
San Francisco/South San Francisco
|
|
Maryland/Rockville
|
|
San Francisco/South San Francisco
|
|
San Francisco/Greater Stanford
|
|
Seattle/Lake Union
|
300,930 RSF
|
|
45,039 RSF
|
|
211,405 RSF
|
|
48,547 RSF
|
|
205,000 RSF
|
Merck & Co., Inc.
|
|
Lonza Walkersville, Inc.
Multi-Tenant/Marketing |
|
Verily Life Sciences, LLC
insitro, Inc. Multi-Tenant/Marketing |
|
Adaptive Insights, Inc.
|
|
bluebird bio, Inc.
Multi-Tenant/Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
681 Gateway Boulevard
|
|
704 Quince Orchard Road
|
|
Menlo Gateway
|
|
1655 and 1725 Third Street
|
|
|
San Francisco/South San Francisco
|
|
Maryland/Gaithersburg
|
|
San Francisco/Greater Stanford
|
|
San Francisco/Mission Bay/SoMa
|
|
|
126,971 RSF
|
|
58,186 RSF
|
|
520,988 RSF
|
|
593,765 RSF
|
|
2,110,831 RSF
|
Twist Bioscience Corporation
Multi-Tenant/Marketing
|
|
Multi-Tenant/Marketing
|
|
Facebook, Inc.
|
|
Uber Technologies, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86% Leased
|
825 and 835 Industrial Road
|
|
201 Haskins Way
|
|
San Francisco/Greater Stanford
|
|
San Francisco/South San Francisco
|
|
530,000 RSF
|
|
280,000 RSF
|
|
Multi-Tenant/Marketing
|
|
Multi-Tenant/Marketing
|
|
|
|
|
|
|
|
|
|
9880 Campus Point Drive
|
|
|
|
San Diego/University Town Center
|
|
908,000
|
|
98,000 RSF
|
|
|
|
Multi-Tenant/Marketing
|
|
|
|
|
|
|
|
|
RSF
|
|
|
|
Under
Pre-Construction and Marketing
|
|
|
|
|
Property/Market/Submarket
|
|
Dev/
Redev
|
|
RSF
|
|
|
|
Project
Start
|
|
|
|||||||||||||||||||||
|
|
|
|
CIP
|
|
|
|
Percentage
|
|
|
Occupancy
(1)
|
||||||||||||||||||||
|
|
In Service
|
|
Construction
|
|
Pre-construction
|
|
Total
|
|
Total Project
|
|
Leased
|
|
Leased/Negotiating
|
|
|
Initial
|
|
Stabilized
|
||||||||||||
2018 deliveries:
consolidated projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
266 and 275 Second Avenue/Greater Boston/Route 128
|
|
Redev
|
|
171,899
|
|
|
31,858
|
|
|
—
|
|
|
31,858
|
|
|
203,757
|
|
|
85
|
%
|
|
|
85
|
%
|
|
|
3Q17
|
|
1Q18
|
|
2018
|
5 Laboratory Drive/Research Triangle Park/RTP
|
|
Redev
|
|
33,181
|
|
|
141,819
|
|
|
—
|
|
|
141,819
|
|
|
175,000
|
|
|
38
|
|
|
|
38
|
|
|
|
2Q17
|
|
2Q18
|
|
2019
|
9625 Towne Centre Drive/San Diego/University Town Center
(2)
|
|
Redev
|
|
—
|
|
|
163,648
|
|
|
—
|
|
|
163,648
|
|
|
163,648
|
|
|
100
|
|
|
|
100
|
|
|
|
3Q15
|
|
4Q18
|
|
4Q18
|
399 Binney Street/Greater Boston/Cambridge
|
|
Dev
|
|
—
|
|
|
164,000
|
|
|
—
|
|
|
164,000
|
|
|
164,000
|
|
|
75
|
|
|
|
98
|
|
|
|
4Q17
|
|
4Q18
|
|
2019
|
2018 deliveries
|
|
|
|
205,080
|
|
|
501,325
|
|
|
—
|
|
|
501,325
|
|
|
706,405
|
|
|
75
|
%
|
|
|
80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2019 deliveries:
consolidated projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
213 East Grand Avenue/San Francisco/South San Francisco
|
|
Dev
|
|
—
|
|
|
300,930
|
|
|
—
|
|
|
300,930
|
|
|
300,930
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
2Q17
|
|
1Q19
|
|
1Q19
|
9900 Medical Center Drive/Maryland/Rockville
|
|
Redev
|
|
—
|
|
|
45,039
|
|
|
—
|
|
|
45,039
|
|
|
45,039
|
|
|
58
|
|
|
|
58
|
|
|
|
3Q17
|
|
1Q19
|
|
2019
|
279 East Grand Avenue/San Francisco/South San Francisco
|
|
Dev
|
|
—
|
|
|
211,405
|
|
|
—
|
|
|
211,405
|
|
|
211,405
|
|
|
83
|
|
|
|
83
|
|
|
|
4Q17
|
|
1Q19
|
|
2020
|
Alexandria PARC/San Francisco/Greater Stanford
|
|
Redev
|
|
148,951
|
|
|
48,547
|
|
|
—
|
|
|
48,547
|
|
|
197,498
|
|
|
100
|
|
|
|
100
|
|
|
|
1Q18
|
|
2Q19
|
|
2Q19
|
1818 Fairview Avenue East/Seattle/Lake Union
|
|
Dev
|
|
—
|
|
|
205,000
|
|
|
—
|
|
|
205,000
|
|
|
205,000
|
|
|
12
|
|
|
|
24
|
|
|
|
2Q18
|
|
2Q19
|
|
2020
|
681 Gateway Boulevard/San Francisco/South San Francisco
(3)
|
|
Redev
|
|
—
|
|
|
—
|
|
|
126,971
|
|
|
126,971
|
|
|
126,971
|
|
|
48
|
|
|
|
48
|
|
|
|
4Q18
|
|
2Q19
|
|
2020
|
|
|
|
|
148,951
|
|
|
810,921
|
|
|
126,971
|
|
|
937,892
|
|
|
1,086,843
|
|
|
72
|
|
|
|
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2019 deliveries: unconsolidated joint venture projects
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
704 Quince Orchard Road/Maryland/Gaithersburg
|
|
Redev
|
|
21,745
|
|
|
58,186
|
|
|
—
|
|
|
58,186
|
|
|
79,931
|
|
|
36
|
|
|
|
40
|
|
|
|
1Q18
|
|
1Q19
|
|
2020
|
Menlo Gateway/San Francisco/Greater Stanford
|
|
Dev
|
|
251,995
|
|
|
520,988
|
|
|
—
|
|
|
520,988
|
|
|
772,983
|
|
|
100
|
|
|
|
100
|
|
|
|
4Q17
|
|
4Q19
|
|
4Q19
|
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
|
|
Dev
|
|
—
|
|
|
593,765
|
|
|
—
|
|
|
593,765
|
|
|
593,765
|
|
|
100
|
|
|
|
100
|
|
|
|
1Q18
|
|
4Q19
|
|
4Q19
|
|
|
|
|
273,740
|
|
|
1,172,939
|
|
|
—
|
|
|
1,172,939
|
|
|
1,446,679
|
|
|
96
|
|
|
|
97
|
|
|
|
|
|
|
|
|
2019 deliveries
|
|
|
422,691
|
|
|
1,983,860
|
|
|
126,971
|
|
|
2,110,831
|
|
|
2,533,522
|
|
|
86
|
%
|
|
|
87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2018 and 2019 deliveries
|
|
|
|
627,771
|
|
|
2,485,185
|
|
126,971
|
|
2,612,156
|
|
3,239,927
|
|
84
|
%
|
|
|
86
|
%
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2020 deliveries:
consolidated projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
825 and 835 Industrial Road/San Francisco/Greater Stanford
|
|
Dev
|
|
—
|
|
|
—
|
|
|
530,000
|
|
530,000
|
|
530,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
201 Haskins Way/San Francisco/South San Francisco
|
|
Dev
|
|
—
|
|
|
—
|
|
|
280,000
|
|
280,000
|
|
280,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
9880 Campus Point Drive/San Diego/University Town Center
|
|
Dev
|
|
—
|
|
|
—
|
|
|
98,000
|
|
98,000
|
|
98,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2020 deliveries
|
|
|
|
—
|
|
|
—
|
|
|
908,000
|
|
908,000
|
|
908,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Total
|
|
|
|
627,771
|
|
|
2,485,185
|
|
1,034,971
|
|
3,520,156
|
|
4,147,927
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Initial occupancy dates are subject to leasing and/or market conditions. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy.
|
(2)
|
Refer to the “Consolidated and Unconsolidated Real Estate Joint Ventures” section within this Item 2 for additional information.
|
(3)
|
The building is 100% occupied through the end of the third quarter of 2018, after which we expect to redevelop the building from office space to office/laboratory space and expand it by an additional 15,000 RSF to 30,000 RSF. We have executed a lease for
60,963
RSF, or
48%
of the existing building’s RSF.
|
|
|
Our Ownership Interest
|
|
|
|
|
|
Cost to Complete
|
|
|
|
|
Unlevered Yields
|
|||||||||||||||||||
Property/Market/Submarket
|
|
|
In Service
|
|
CIP
|
|
Construction Loan
|
|
ARE
Funding
|
|
Total at
Completion
|
|
Initial Stabilized
|
|
Initial Stabilized (Cash)
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
2018 deliveries:
consolidated projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
266 and 275 Second Avenue/Greater Boston/Route 128
|
|
100
|
%
|
|
|
$
|
73,527
|
|
|
$
|
9,970
|
|
|
$
|
—
|
|
|
$
|
5,503
|
|
|
$
|
89,000
|
|
|
|
8.4%
|
|
|
|
7.1%
|
|
5 Laboratory Drive/Research Triangle Park/RTP
|
|
100
|
%
|
|
|
4,771
|
|
|
21,239
|
|
|
|
—
|
|
|
|
36,490
|
|
|
|
62,500
|
|
|
|
7.7%
|
|
|
|
7.6%
|
|
||
9625 Towne Centre Drive/San Diego/University Town Center
(1)
|
|
50.1
|
%
|
|
|
—
|
|
|
65,517
|
|
|
|
—
|
|
|
|
27,483
|
|
|
|
93,000
|
|
|
|
7.0%
|
|
|
|
7.0%
|
|
||
399 Binney Street/Greater Boston/Cambridge
|
|
100
|
%
|
|
|
—
|
|
|
117,834
|
|
|
|
—
|
|
|
|
56,166
|
|
|
|
174,000
|
|
|
|
7.3%
|
|
|
|
6.7%
|
|
||
2018 deliveries undergoing construction
|
|
|
|
|
78,298
|
|
|
214,560
|
|
|
|
—
|
|
|
|
125,642
|
|
|
|
418,500
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2019 deliveries:
consolidated projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
213 East Grand Avenue/San Francisco/South San Francisco
|
|
100
|
%
|
|
|
—
|
|
|
173,962
|
|
|
|
—
|
|
|
|
86,038
|
|
|
|
260,000
|
|
|
|
7.2%
|
|
|
|
6.4%
|
|
||
9900 Medical Center Drive/Maryland/Rockville
|
|
100
|
%
|
|
|
—
|
|
|
8,370
|
|
|
|
—
|
|
|
|
5,930
|
|
|
|
14,300
|
|
|
|
8.4%
|
|
|
|
8.4%
|
|
||
279 East Grand Avenue/San Francisco/South San Francisco
|
|
100
|
%
|
|
|
—
|
|
|
79,924
|
|
|
|
—
|
|
|
|
71,076
|
|
|
|
151,000
|
|
|
|
7.8%
|
|
|
|
8.1%
|
|
||
Alexandria PARC/San Francisco/Greater Stanford
|
|
100
|
%
|
|
|
95,085
|
|
|
32,402
|
|
|
|
—
|
|
|
|
22,513
|
|
|
|
150,000
|
|
|
|
7.3%
|
|
|
|
6.1%
|
|
||
1818 Fairview Avenue East/Seattle/Lake Union
|
|
100
|
%
|
|
|
—
|
|
|
58,213
|
|
|
|
—
|
|
|
|
131,787
|
|
|
|
190,000
|
|
|
|
6.7%
|
|
|
|
6.7%
|
|
||
681 Gateway Boulevard/San Francisco/South San Francisco
|
|
100
|
%
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
108,000
|
|
|
|
108,000
|
|
|
|
8.5%
|
|
|
|
7.9%
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
95,085
|
|
|
352,871
|
|
|
|
—
|
|
|
|
425,344
|
|
|
|
873,300
|
|
|
|
|
|
|
|
|
|
|||
2019 deliveries: unconsolidated joint venture projects
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(amounts represent our share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
704 Quince Orchard Road/Maryland/Gaithersburg
|
|
56.8
|
%
|
|
|
1,207
|
|
|
3,838
|
|
|
|
7,274
|
|
|
|
981
|
|
|
|
13,300
|
|
|
|
8.9%
|
|
|
|
8.8%
|
|
||
Menlo Gateway/San Francisco/Greater Stanford
|
|
29.4
|
%
|
|
|
76,490
|
|
|
79,436
|
|
|
|
109,240
|
|
|
|
164,834
|
|
|
|
430,000
|
|
|
|
6.9%
|
|
|
|
6.3%
|
|
||
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
|
|
10.0
|
%
|
|
|
—
|
|
|
43,078
|
|
|
|
29,948
|
|
|
|
4,974
|
|
|
|
78,000
|
|
|
|
7.8%
|
|
|
|
6.0%
|
|
||
|
|
|
|
|
77,697
|
|
|
126,352
|
|
|
|
146,462
|
|
|
|
170,789
|
|
|
|
521,300
|
|
|
|
|
|
|
|
|
|
|||
2019 deliveries
|
|
|
|
|
172,782
|
|
|
479,223
|
|
|
|
146,462
|
|
|
|
596,133
|
|
|
|
1,394,600
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2018 and 2019 deliveries
|
|
|
|
|
251,080
|
|
|
693,783
|
|
|
$
|
146,462
|
|
|
$
|
721,775
|
|
|
$
|
1,813,100
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2020 deliveries:
consolidated projects
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
825 and 835 Industrial Road/San Francisco/Greater Stanford
|
|
100
|
%
|
|
|
—
|
|
|
105,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
201 Haskins Way/San Francisco/South San Francisco
|
|
100
|
%
|
|
|
—
|
|
|
42,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
9880 Campus Point Drive/San Diego/University Town Center
|
|
100
|
%
|
|
|
—
|
|
|
43,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2020 deliveries
|
|
|
|
|
—
|
|
|
191,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total
|
|
|
|
|
$
|
251,080
|
|
|
$
|
884,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to the “Consolidated and Unconsolidated Real Estate Joint Ventures” section within this Item 2 for additional information.
|
325 Binney Street
|
|
88 Bluxome Street
|
|
505 Brannan Street, Phase II
|
|
960 Industrial Road
|
|
Alexandria Center
®
for Life Science
|
Greater Boston/Cambridge
|
|
San Francisco/Mission Bay/SoMa
|
|
San Francisco/Mission Bay/SoMa
|
|
San Francisco/Greater Stanford
|
|
New York City/Manhattan
|
208,965 RSF
|
|
1,070,925 RSF
|
|
165,000 RSF
|
|
533,000 RSF
|
|
550,000 RSF
|
|
|
|
|
|
|
|
|
|
5200 Illumina Way
|
|
Campus Pointe by Alexandria
|
|
1150 Eastlake Avenue East
|
|
1165/1166 Eastlake Avenue East
|
|
9800 Medical Center Drive
|
San Diego/University Town Center
|
|
San Diego/University Town Center
|
|
Seattle/Lake Union
|
|
Seattle/Lake Union
|
|
Maryland/Rockville
|
386,044 RSF
|
|
318,383 RSF
|
|
260,000 RSF
|
|
106,000 RSF
|
|
180,000 RSF
|
|
|
|
|
|
|
|
|
|
Property/Submarket
|
|
Our Ownership Interest
|
|
Book Value
|
|
Square Footage
|
|
||||||||||||||||||||||||||
|
|
|
Projected Deliveries
|
|
Intermediate-Term Development
|
|
Future Development/Redevelopment
|
|
Total
(1)
|
|
|||||||||||||||||||||||
|
|
|
2018
|
|
2019
|
|
2020
|
|
|
|
|
||||||||||||||||||||||
San Diego
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Undergoing construction or pre-construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
9625 Towne Centre Drive/University Town Center
|
|
50.1
|
%
|
|
|
|
$
|
65,517
|
|
|
|
163,648
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
163,648
|
|
|
|
9880 Campus Point Drive/University Town Center
|
|
100
|
%
|
|
|
|
43,532
|
|
|
|
—
|
|
|
—
|
|
|
|
98,000
|
|
|
—
|
|
|
|
—
|
|
|
|
98,000
|
|
|
||
Intermediate-term development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
5200 Illumina Way/University Town Center
|
|
100
|
%
|
|
|
|
11,814
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
386,044
|
|
|
|
—
|
|
|
|
386,044
|
|
|
||
Campus Point Drive/University Town Center
|
|
55.0
|
%
|
|
|
|
16,377
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
318,383
|
|
|
|
—
|
|
|
|
318,383
|
|
|
||
Future development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Vista Wateridge/Sorrento Mesa
|
|
100
|
%
|
|
|
|
4,022
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
163,000
|
|
|
|
163,000
|
|
|
||
Other value-creation projects
|
|
100
|
%
|
|
|
|
48,050
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
125,000
|
|
|
|
309,895
|
|
|
|
434,895
|
|
|
||
|
|
|
|
|
|
189,312
|
|
|
|
163,648
|
|
|
—
|
|
|
|
98,000
|
|
|
829,427
|
|
|
|
472,895
|
|
|
|
1,563,970
|
|
|
|||
Seattle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Undergoing construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1818 Fairview Avenue East/Lake Union
|
|
100
|
%
|
|
|
|
58,213
|
|
|
|
—
|
|
|
205,000
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
205,000
|
|
|
||
Intermediate-term development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
1150 Eastlake Avenue East/Lake Union
|
|
100
|
%
|
|
|
|
20,884
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
260,000
|
|
|
|
—
|
|
|
|
260,000
|
|
|
||
1165/1166 Eastlake Avenue East/Lake Union
|
|
100
|
%
|
|
|
|
15,830
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
106,000
|
|
|
—
|
|
—
|
|
|
|
106,000
|
|
|
|
|
|
|
|
|
|
94,927
|
|
|
|
—
|
|
|
205,000
|
|
|
|
—
|
|
|
366,000
|
|
|
|
—
|
|
|
|
571,000
|
|
|
|||
Maryland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Undergoing construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
9900 Medical Center Drive/Rockville
|
|
100
|
%
|
|
|
|
8,370
|
|
|
|
—
|
|
|
45,039
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
45,039
|
|
|
||
704 Quince Orchard Road/Gaithersburg
|
|
56.8
|
%
|
|
|
|
—
|
|
(2)
|
|
—
|
|
|
58,186
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
58,186
|
|
|
||
Intermediate-term development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
9800 Medical Center Drive/Rockville
|
|
100
|
%
|
|
|
|
11,680
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
180,000
|
|
|
|
—
|
|
|
|
180,000
|
|
|
||
Future development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other value-creation projects
|
|
100
|
%
|
|
|
|
4,037
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
61,000
|
|
|
|
61,000
|
|
|
||
|
|
|
|
|
|
24,087
|
|
|
|
—
|
|
|
103,225
|
|
|
|
—
|
|
|
180,000
|
|
|
|
61,000
|
|
|
|
344,225
|
|
|
|||
Research Triangle Park
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Undergoing construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
5 Laboratory Drive/Research Triangle Park
|
|
100
|
%
|
|
|
|
21,239
|
|
|
|
141,819
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
141,819
|
|
|
||
Future development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
6 Davis Drive/Research Triangle Park
|
|
100
|
%
|
|
|
|
16,952
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
||
Other value-creation projects
|
|
100
|
%
|
|
|
|
5,053
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
176,262
|
|
|
|
176,262
|
|
|
||
|
|
|
|
|
|
43,244
|
|
|
|
141,819
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
1,176,262
|
|
|
|
1,318,081
|
|
|
|||
Other value-creation projects
|
|
Various
|
|
|
|
|
41,436
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
235,000
|
|
(1)
|
|
571,705
|
|
|
|
806,705
|
|
|
||
|
|
|
|
|
|
$
|
1,345,892
|
|
|
|
501,325
|
|
|
2,110,831
|
|
|
|
908,000
|
|
|
4,138,317
|
|
|
|
3,273,081
|
|
|
|
10,931,554
|
|
|
(1)
|
Represents total square footage upon completion of development of a new Class A property.
|
(2)
|
This property is an unconsolidated real estate joint venture. Refer to the “Consolidated and Unconsolidated Real Estate Joint Ventures” section within this Item 2 for additional information on our share of investment in real estate.
|
|
|
Six Months Ended
|
|
||
Construction Spending
|
|
June 30, 2018
|
|
||
Additions to real estate –
consolidated projects
|
|
$
|
431,225
|
|
|
Investments in unconsolidated real estate joint ventures
|
|
44,486
|
|
|
|
Construction spending (cash basis)
(1)
|
|
475,711
|
|
|
|
Increase in accrued construction
|
|
48,074
|
|
|
|
Construction spending
|
|
$
|
523,785
|
|
|
(1)
|
Includes revenue-enhancing projects and non-revenue-enhancing capital expenditures.
|
Projected Construction Spending
|
|
Year Ending
December 31, 2018 |
|
|||||||
Development and redevelopment projects
|
|
$
|
414,000
|
|
|
|||||
Investments in unconsolidated real estate joint ventures
|
|
|
69,000
|
|
|
|||||
Contributions from noncontrolling interests (consolidated real estate joint ventures)
|
|
|
(21,000
|
)
|
|
|||||
Generic laboratory infrastructure/building improvement projects
|
|
|
102,000
|
|
|
|||||
Non-revenue-enhancing capital expenditures and tenant improvements
|
|
|
12,000
|
|
|
|||||
Projected construction spending for six months ending December 31, 2018
|
|
|
576,000
|
|
|
|||||
Actual construction spending for six months ended June 30, 2018
|
|
|
523,785
|
|
|
|||||
Guidance range
|
|
$
|
1,050,000
|
|
–
|
1,150,000
|
|
|
Non-Revenue-Enhancing Capital Expenditures, Tenant Improvements, and Leasing Costs
(1)
|
|
Six Months Ended June 30, 2018
|
|
Recent Average
per RSF (2) |
||||||||
|
Amount
|
|
Per RSF
|
|
||||||||
Non-revenue-enhancing capital expenditures
|
|
$
|
5,452
|
|
|
$
|
0.27
|
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
||||||
Tenant improvements and leasing costs:
|
|
|
|
|
|
|
||||||
Re-tenanted space
|
|
$
|
11,533
|
|
|
$
|
21.97
|
|
|
$
|
19.81
|
|
Renewal space
|
|
1,989
|
|
|
4.55
|
|
|
10.93
|
|
|||
Total tenant improvements and leasing costs/weighted average
|
|
$
|
13,522
|
|
|
$
|
14.06
|
|
|
$
|
14.18
|
|
(1)
|
Excludes amounts that are recoverable from tenants, related to revenue-enhancing capital expenditures, or related to properties that have undergone redevelopment.
|
(2)
|
Represents the average of 2014 through 2017 and the
six months ended June 30, 2018
, annualized.
|
(1)
|
Refer to Note 6 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report for more information.
|
(2)
|
Refer to Note 3 – “Investments in Real Estate” to our unaudited consolidated financial statements under Item 1 of this report for more information.
|
(3)
|
Refer to Note 13 – “Stockholders’ Equity” to our unaudited consolidated financial statements under Item 1 of this report for more information.
|
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
|
||
Percentage change in net operating income over comparable period from prior year
|
|
4.1%
|
|
|
4.1%
|
|
|
Percentage change in net operating income (cash basis) over comparable period from prior year
|
|
6.3%
|
|
|
10.3%
|
|
|
Operating margin
|
|
72%
|
|
|
72%
|
|
|
Number of Same Properties
|
|
187
|
|
|
186
|
|
|
RSF
|
|
17,585,507
|
|
|
17,353,037
|
|
|
Occupancy – current-period average
|
|
96.4%
|
|
96.4%
|
|
||
Occupancy – same-period prior-year average
|
|
95.8%
|
|
96.2%
|
|
Development – under construction
|
|
Properties
|
|
|
213 East Grand Avenue
|
|
1
|
|
|
399 Binney Street
|
|
1
|
|
|
279 East Grand Avenue
|
|
1
|
|
|
1818 Fairview Avenue East
|
|
1
|
|
|
Menlo Gateway
(unconsolidated real estate JV) |
|
3
|
|
|
1655 and 1725 Third Street
(unconsolidated real estate JV) |
|
2
|
|
|
|
|
9
|
|
|
Development – placed into service after January 1, 2017
|
|
Properties
|
|
|
505 Brannan Street
|
|
1
|
|
|
510 Townsend Street
|
|
1
|
|
|
ARE Spectrum
|
|
3
|
|
|
400 Dexter Avenue North
|
|
1
|
|
|
100 Binney Street
|
|
1
|
|
|
|
|
7
|
|
|
Redevelopment – under construction
|
|
Properties
|
|
|
9625 Towne Centre Drive
|
|
1
|
|
|
5 Laboratory Drive
|
|
1
|
|
|
9900 Medical Center Drive
|
|
1
|
|
|
266 and 275 Second Avenue
|
|
2
|
|
|
Alexandria PARC
|
|
4
|
|
|
704 Quince Orchard Road
(unconsolidated real estate JV) |
|
1
|
|
|
|
|
10
|
|
|
|
|
|
|
Acquisitions after January 1, 2017
|
|
Properties
|
|
|
40 West Third Street
|
|
1
|
|
|
100 Tech Drive
|
|
1
|
|
|
88 Bluxome Street
|
|
1
|
|
|
701 Gateway Boulevard
|
|
1
|
|
|
960 Industrial Road
|
|
1
|
|
|
1450 Page Mill Road
|
|
1
|
|
|
4110 Campus Point Court
|
|
1
|
|
|
Summers Ridge Science Park
|
|
4
|
|
|
2301 5th Avenue
|
|
1
|
|
|
9704, 9708, 9712, and 9714 Medical Center Drive
|
|
4
|
|
|
9920 Belward Campus Drive
|
|
1
|
|
|
21 Firstfield Road
|
|
1
|
|
|
50 and 55 West Watkins Mill Road
|
|
2
|
|
|
|
|
20
|
|
|
|
|
|
|
|
Unconsolidated real estate JVs
|
|
1
|
|
|
|
|
|
|
|
Properties held for sale
|
|
1
|
|
|
Total properties excluded from Same Properties
|
|
48
|
|
|
Same Properties
|
|
186
|
|
(1)
|
Total properties in North America as of
June 30, 2018
|
|
234
|
|
|
|
|
(1)
|
Includes 9880 Campus Point Drive, a building we acquired in 2001, occupied through January 2018 and subsequently demolished in anticipation of developing a
98,000
RSF Class A office/laboratory property.
|
|
|
Three Months Ended June 30,
|
|
|||||||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
|||||||
Same Properties
|
|
$
|
205,719
|
|
|
$
|
197,769
|
|
|
$
|
7,950
|
|
|
4.0
|
%
|
|
Non-Same Properties
|
|
44,916
|
|
|
14,173
|
|
|
30,743
|
|
|
216.9
|
|
|
|||
Total rental
|
|
250,635
|
|
|
211,942
|
|
|
38,693
|
|
|
18.3
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
64,253
|
|
|
58,999
|
|
|
5,254
|
|
|
8.9
|
|
|
|||
Non-Same Properties
|
|
7,906
|
|
|
1,471
|
|
|
6,435
|
|
|
437.5
|
|
|
|||
Total tenant recoveries
|
|
72,159
|
|
|
60,470
|
|
|
11,689
|
|
|
19.3
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
72
|
|
|
50
|
|
|
22
|
|
|
44.0
|
|
|
|||
Non-Same Properties
|
|
2,168
|
|
|
597
|
|
|
1,571
|
|
|
263.1
|
|
|
|||
Total other income
|
|
2,240
|
|
|
647
|
|
|
1,593
|
|
|
246.2
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
270,044
|
|
|
256,818
|
|
|
13,226
|
|
|
5.1
|
|
|
|||
Non-Same Properties
|
|
54,990
|
|
|
16,241
|
|
|
38,749
|
|
|
238.6
|
|
|
|||
Total revenues
|
|
325,034
|
|
|
273,059
|
|
|
51,975
|
|
|
19.0
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
75,989
|
|
|
70,356
|
|
|
5,633
|
|
|
8.0
|
|
|
|||
Non-Same Properties
|
|
15,919
|
|
|
6,624
|
|
|
9,295
|
|
|
140.3
|
|
|
|||
Total rental operations
|
|
91,908
|
|
|
76,980
|
|
|
14,928
|
|
|
19.4
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
194,055
|
|
|
186,462
|
|
|
7,593
|
|
|
4.1
|
|
|
|||
Non-Same Properties
|
|
39,071
|
|
|
9,617
|
|
|
29,454
|
|
|
306.3
|
|
|
|||
Net operating income
|
|
$
|
233,126
|
|
|
$
|
196,079
|
|
|
$
|
37,047
|
|
|
18.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net operating income – Same Properties
|
|
$
|
194,055
|
|
|
$
|
186,462
|
|
|
$
|
7,593
|
|
|
4.1
|
%
|
|
Straight-line rent revenue and amortization of acquired below-market leases
|
|
(16,751
|
)
|
|
(19,604
|
)
|
|
2,853
|
|
|
(14.6
|
)
|
|
|||
Net operating income – Same Properties (cash basis)
|
|
$
|
177,304
|
|
|
$
|
166,858
|
|
|
$
|
10,446
|
|
|
6.3
|
%
|
|
|
|
Three Months Ended June 30,
|
|
|
||||||||
Component
|
|
2018
|
|
2017
|
|
Change
|
||||||
Interest incurred
|
|
$
|
53,624
|
|
|
$
|
46,817
|
|
|
$
|
6,807
|
|
Capitalized interest
|
|
(15,527
|
)
|
|
(15,069
|
)
|
|
(458
|
)
|
|||
Interest expense
|
|
$
|
38,097
|
|
|
$
|
31,748
|
|
|
$
|
6,349
|
|
|
|
|
|
|
|
|
||||||
Average debt balance outstanding
(1)
|
|
$
|
5,406,946
|
|
|
$
|
4,714,000
|
|
|
$
|
692,946
|
|
Weighted-average annual interest rate
(2)
|
|
4.0
|
%
|
|
4.0
|
%
|
|
—
|
%
|
(1)
|
Represents the average debt balance outstanding during the respective periods.
|
(2)
|
Represents annualized total interest incurred divided by the average debt balance outstanding in the respective periods.
|
Component
|
|
Interest Rate
(1)
|
|
Effective Date
|
|
Change
|
||||
Increases in interest incurred due to:
|
|
|
|
|
|
|
|
|
||
Issuances of debt:
|
|
|
|
|
|
|
|
|
||
$600 million unsecured senior notes payable
|
|
|
3.62%
|
|
|
November 2017
|
|
$
|
5,210
|
|
$450 million unsecured senior notes payable
|
|
|
4.81%
|
|
|
June 2018
|
|
590
|
|
|
$450 million unsecured senior notes payable
|
|
|
4.18%
|
|
|
June 2018
|
|
500
|
|
|
Fluctuations in interest rate and average balance:
|
|
|
|
|
|
|
|
|
||
$1.65 billion unsecured senior line of credit and senior bank term loans
|
|
|
|
|
|
|
|
4,055
|
|
|
Secured note payable
|
|
|
|
|
|
|
|
1,030
|
|
|
Other increase in interest
|
|
|
|
|
|
|
|
152
|
|
|
Total increases
|
|
|
|
|
|
|
|
11,537
|
|
|
Decreases in interest incurred due to:
|
|
|
|
|
|
|
|
|
||
Repayments of debt:
|
|
|
|
|
|
|
|
|
||
Secured construction loans
|
|
|
Various
|
|
|
November 2017
|
|
(2,890
|
)
|
|
Lower average notional amounts of and rates for interest rate hedge agreements in effect
|
|
|
|
|
|
|
|
(1,840
|
)
|
|
Total decreases
|
|
|
|
|
|
|
|
(4,730
|
)
|
|
Change in interest incurred
|
|
|
|
|
|
|
|
6,807
|
|
|
Increase in capitalized interest
|
|
|
|
|
|
|
|
(458
|
)
|
|
Total change in interest expense
|
|
|
|
|
|
|
|
$
|
6,349
|
|
(1)
|
Represents the interest rate as of the end of the applicable period, plus the effect of debt premiums/discounts, interest rate hedge agreements, and deferred financing costs.
|
|
|
Six Months Ended June 30,
|
|
|||||||||||||
(Dollars in thousands)
|
|
2018
|
|
2017
|
|
$ Change
|
|
% Change
|
|
|||||||
Same Properties
|
|
$
|
408,894
|
|
|
$
|
392,684
|
|
|
$
|
16,210
|
|
|
4.1
|
%
|
|
Non-Same Properties
|
|
86,226
|
|
|
26,451
|
|
|
59,775
|
|
|
226.0
|
|
|
|||
Total rental
|
|
495,120
|
|
|
419,135
|
|
|
75,985
|
|
|
18.1
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
129,485
|
|
|
119,119
|
|
|
10,366
|
|
|
8.7
|
|
|
|||
Non-Same Properties
|
|
15,844
|
|
|
2,697
|
|
|
13,147
|
|
|
487.5
|
|
|
|||
Total tenant recoveries
|
|
145,329
|
|
|
121,816
|
|
|
23,513
|
|
|
19.3
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
140
|
|
|
107
|
|
|
33
|
|
|
30.8
|
|
|
|||
Non-Same Properties
|
|
4,584
|
|
|
2,878
|
|
|
1,706
|
|
|
59.3
|
|
|
|||
Total other income
|
|
4,724
|
|
|
2,985
|
|
|
1,739
|
|
|
58.3
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
538,519
|
|
|
511,910
|
|
|
26,609
|
|
|
5.2
|
|
|
|||
Non-Same Properties
|
|
106,654
|
|
|
32,026
|
|
|
74,628
|
|
|
233.0
|
|
|
|||
Total revenues
|
|
645,173
|
|
|
543,936
|
|
|
101,237
|
|
|
18.6
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
153,155
|
|
|
141,790
|
|
|
11,365
|
|
|
8.0
|
|
|
|||
Non-Same Properties
|
|
30,524
|
|
|
12,277
|
|
|
18,247
|
|
|
148.6
|
|
|
|||
Total rental operations
|
|
183,679
|
|
|
154,067
|
|
|
29,612
|
|
|
19.2
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
385,364
|
|
|
370,120
|
|
|
15,244
|
|
|
4.1
|
|
|
|||
Non-Same Properties
|
|
76,130
|
|
|
19,749
|
|
|
56,381
|
|
|
285.5
|
|
|
|||
Net operating income
|
|
$
|
461,494
|
|
|
$
|
389,869
|
|
|
$
|
71,625
|
|
|
18.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net operating income – Same Properties
|
|
$
|
385,364
|
|
|
$
|
370,120
|
|
|
$
|
15,244
|
|
|
4.1
|
%
|
|
Straight-line rent revenue and amortization of acquired below-market leases
|
|
(33,892
|
)
|
|
(51,596
|
)
|
|
17,704
|
|
|
(34.3
|
)
|
|
|||
Net operating income – Same Properties (cash basis)
|
|
$
|
351,472
|
|
|
$
|
318,524
|
|
|
$
|
32,948
|
|
|
10.3
|
%
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||
Component
|
|
2018
|
|
2017
|
|
Change
|
||||||
Interest incurred
|
|
$
|
103,899
|
|
|
$
|
89,765
|
|
|
$
|
14,134
|
|
Capitalized interest
|
|
(28,887
|
)
|
|
(28,233
|
)
|
|
(654
|
)
|
|||
Interest expense
|
|
$
|
75,012
|
|
|
$
|
61,532
|
|
|
$
|
13,480
|
|
|
|
|
|
|
|
|
||||||
Average debt balance outstanding
(1)
|
|
$
|
5,251,827
|
|
|
$
|
4,569,298
|
|
|
$
|
682,529
|
|
Weighted-average annual interest rate
(2)
|
|
4.0
|
%
|
|
3.9
|
%
|
|
0.1
|
%
|
(1)
|
Represents the average total debt balance outstanding during the
six months ended June 30, 2018
and
2017
.
|
(2)
|
Represents annualized total interest incurred divided by the average debt balance outstanding in the respective periods.
|
Component
|
|
Interest Rate
(1)
|
|
Effective Date
|
|
Change
|
||||
Increases in interest incurred due to:
|
|
|
|
|
|
|
|
|
||
Issuances of debt:
|
|
|
|
|
|
|
|
|
||
$600 million unsecured senior notes payable
|
|
|
3.62%
|
|
|
November 2017
|
|
$
|
10,420
|
|
$425 million unsecured senior notes payable
|
|
|
4.07%
|
|
|
March 2017
|
|
2,900
|
|
|
$450 million unsecured senior notes payable
|
|
|
4.81%
|
|
|
June 2018
|
|
590
|
|
|
$450 million unsecured senior notes payable
|
|
|
4.18%
|
|
|
June 2018
|
|
500
|
|
|
Fluctuations in interest rate and average balance:
|
|
|
|
|
|
|
|
|
||
$1.65 billion unsecured senior line of credit and senior bank term loans
|
|
|
|
|
|
|
|
6,250
|
|
|
Secured note payable
|
|
|
|
|
|
|
|
2,000
|
|
|
Other increase in interest
|
|
|
|
|
|
|
|
309
|
|
|
Total increases
|
|
|
|
|
|
|
|
22,969
|
|
|
Decreases in interest incurred due to:
|
|
|
|
|
|
|
|
|
||
Repayments of debt:
|
|
|
|
|
|
|
|
|
||
Secured construction loans
|
|
|
Various
|
|
|
November 2017
|
|
(5,410
|
)
|
|
Lower average notional amounts of and rates for interest rate hedge agreements in effect
|
|
|
|
|
|
|
|
(3,425
|
)
|
|
Total decreases
|
|
|
|
|
|
|
|
(8,835
|
)
|
|
Change in interest incurred
|
|
|
|
|
|
|
|
14,134
|
|
|
Increase in capitalized interest
|
|
|
|
|
|
|
|
(654
|
)
|
|
Total change in interest expense
|
|
|
|
|
|
|
|
$
|
13,480
|
|
(1)
|
Represents the interest rate as of the end of the applicable period, plus the effect of debt premiums/discounts, interest rate hedge agreements, and deferred financing costs.
|
|
|
Guidance
|
||
Summary of Key Changes in Guidance
|
|
As of 7/30/18
|
|
As of 4/30/18
|
EPS, FFO per share, and FFO per share, as adjusted
|
|
See updates below
(1)
|
||
Occupancy percentage in North America as of December 31, 2018
|
|
97.1% to 97.7%
|
|
96.9% to 97.5%
|
Rental rate increases
|
|
17.0% to 20.0%
|
|
13.0% to 16.0%
|
Rental rate increases (cash basis)
|
|
9.5% to 12.5%
|
|
7.5% to 10.5%
|
(1)
|
Midpoint of FFO per share, as adjusted guidance increased by $0.03 from $6.57 to $6.60 primarily due to incremental acquisitions and the continued strength of our core and the related increases in projected occupancy and rental rate growth on leasing activity.
|
(2)
|
Per share amounts of unrealized gains on non-real estate investments may be different for the full year ending
December 31, 2018
, depending on the weighted-average shares outstanding for the year ending
December 31, 2018
. Excludes future unrealized gains or losses that could be recognized in earnings from changes in fair value of equity investments after June 30, 2018. Refer to the “Investments” section within Note 2 – “Summary of Significant Accounting Policies” to our unaudited consolidated financial statements under Item 1 for additional information.
|
(3)
|
Impairment of real estate aggregating
$6.3 million
recognized during the
three months ended June 30, 2018
, related to one land parcel located in Northern Virginia that was subsequently sold in July 2018 with no gain or loss.
|
Key Assumptions
(1)
(Dollars in millions)
|
|
2018 Guidance
|
|
||||||
|
Low
|
|
High
|
|
|||||
Occupancy percentage for operating properties in North America as of December 31, 2018
|
|
97.1%
|
|
|
97.7%
|
|
|
||
|
|
|
|
|
|
||||
Lease renewals and re-leasing of space:
|
|
|
|
|
|
||||
Rental rate increases
|
|
17.0%
|
|
|
20.0%
|
|
|
||
Rental rate increases (cash basis)
|
|
9.5%
|
|
|
12.5%
|
|
|
||
|
|
|
|
|
|
||||
Same property performance:
|
|
|
|
|
|
||||
Net operating income increase
|
|
2.5%
|
|
|
4.5%
|
|
|
||
Net operating income increase (cash basis)
|
|
9.0%
|
|
|
11.0%
|
|
|
||
|
|
|
|
|
|
||||
Straight-line rent revenue
|
|
$
|
92
|
|
|
$
|
102
|
|
(2)
|
General and administrative expenses
|
|
$
|
85
|
|
|
$
|
90
|
|
|
Capitalization of interest
|
|
$
|
55
|
|
|
$
|
65
|
|
|
Interest expense
|
|
$
|
155
|
|
|
$
|
165
|
|
|
(1)
|
The completion of our development and redevelopment projects will result in an increase in interest expense and other project costs because these project costs will no longer qualify for capitalization and will therefore be expensed as incurred. Our assumptions for occupancy, rental rate growth, same property net operating income growth, straight-line rent revenue, general and administrative expenses, capitalization of interest, and interest expense are included in the tables above and are subject to a number of variables and uncertainties, including those discussed as “Forward-Looking Statements” under Part I; “Item 1A. Risk Factors”; and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10‑K for the year ended
December 31, 2017
. 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.
|
(2)
|
Approximately 50% of straight-line rent revenue represents initial free rent on recently delivered and expected 2018 deliveries of new Class A properties from our development and redevelopment pipeline.
|
Key Credit Metrics
|
|
Guidance
as of 7/30/18 |
|
Net debt to Adjusted EBITDA – fourth quarter of 2018, annualized
|
|
Less than 5.5x
|
|
Net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2018, annualized
|
|
Less than 5.5x
|
|
Fixed-charge coverage ratio – fourth quarter of 2018, annualized
|
|
Greater than 4.0x
|
|
Unhedged variable-rate debt as a percentage of total debt
|
|
Less than 5%
|
|
Value-creation pipeline as a percentage of gross investments in real estate as of December 31, 2018
|
|
8% to 12%
|
|
(1)
|
In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in
four
other properties in North America.
|
(2)
|
As of
June 30, 2018
, we have an ownership interest in Menlo Gateway of
29.4%
and expect our ownership to increase to
49%
through future funding of construction costs by the first quarter of 2019.
|
(3)
|
Represents our ownership interest; our voting interest is limited to 50%.
|
|
|
|
|
Maturity Date
|
|
Stated Interest Rate
(1)
|
|
Interest Rate
(1)(2)
|
|
100% at Joint Venture Level
|
|
||||||||
Unconsolidated Joint Venture
|
|
Our Share
|
|
|
|
|
Debt Balance
(3)
|
|
Remaining Commitments
|
|
|||||||||
Menlo Gateway, Phase I
|
|
29.4%
|
|
|
3/1/19
|
|
|
L+2.50%
|
|
4.49%
|
|
$
|
134,564
|
|
|
$
|
13,290
|
|
|
1401/1413 Research Boulevard
|
|
65.0%
|
|
|
5/17/20
|
|
|
L+2.50%
|
|
5.39%
|
|
14,682
|
|
|
9,892
|
|
|
||
1655 and 1725 Third Street
|
|
10.0%
|
|
|
6/29/21
|
|
|
L+3.70%
|
|
5.68%
|
|
75,520
|
|
|
299,480
|
|
|
||
360 Longwood Avenue
|
|
27.5%
|
|
|
9/1/22
|
|
|
3.32%
|
|
3.54%
|
|
94,143
|
|
|
17,000
|
|
(4)
|
||
704 Quince Orchard Road
|
|
56.8%
|
|
|
3/16/23
|
|
|
L+1.95%
|
|
4.29%
|
|
1,016
|
|
|
13,809
|
|
|
||
Menlo Gateway, Phase II
|
|
29.4%
|
|
|
5/1/35
|
|
|
4.53%
|
|
4.56%
|
|
—
|
|
|
157,270
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
$
|
319,925
|
|
|
$
|
510,741
|
|
|
(1)
|
For acquired loans, interest rate includes adjustments to reflect the joint venture’s effective borrowing costs at the time of acquisition.
|
(2)
|
Includes interest expense, amortization of loan fees, and amortization of premiums (discounts)
as of June 30, 2018
.
|
(3)
|
Represents outstanding principal, net of unamortized deferred financing costs and discount/premium.
|
(4)
|
The remaining loan commitment balance excludes an earn-out advance provision that allows for incremental borrowings up to
$48.0 million
, subject to certain conditions.
|
|
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures
|
|
Our Share of Unconsolidated
Real Estate Joint Ventures |
||||||||||||
|
June 30, 2018
|
|
June 30, 2018
|
||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
Total revenues
|
$
|
13,883
|
|
|
$
|
27,374
|
|
|
$
|
3,066
|
|
|
$
|
5,527
|
|
Rental operations
|
(4,279
|
)
|
|
(8,182
|
)
|
|
(910
|
)
|
|
(1,326
|
)
|
||||
|
9,604
|
|
|
19,192
|
|
|
2,156
|
|
|
4,201
|
|
||||
General and administrative
|
(85
|
)
|
|
(132
|
)
|
|
(22
|
)
|
|
(47
|
)
|
||||
Interest
|
—
|
|
|
—
|
|
|
(237
|
)
|
|
(469
|
)
|
||||
Depreciation and amortization
|
(3,914
|
)
|
|
(7,781
|
)
|
|
(807
|
)
|
|
(1,451
|
)
|
||||
|
$
|
5,605
|
|
|
$
|
11,279
|
|
|
$
|
1,090
|
|
|
$
|
2,234
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
||||||
|
Noncontrolling Interest Share of Consolidated
Real Estate Joint Ventures
|
|
Our Share of Unconsolidated
Real Estate Joint Ventures |
||||
Investments in real estate
|
$
|
519,351
|
|
|
$
|
271,000
|
|
Cash and cash equivalents
|
18,749
|
|
|
2,807
|
|
||
Restricted cash
|
—
|
|
|
533
|
|
||
Other assets
|
32,730
|
|
|
23,043
|
|
||
Secured notes payable
|
—
|
|
|
(82,671
|
)
|
||
Other liabilities
|
(31,156
|
)
|
|
(21,740
|
)
|
||
Redeemable noncontrolling interests
|
(10,861
|
)
|
|
—
|
|
||
|
$
|
528,813
|
|
|
$
|
192,972
|
|
|
|
June 30, 2018
|
||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||
Realized gains
|
|
$
|
7,463
|
|
|
|
$
|
20,795
|
|
|
Unrealized gains
|
|
5,067
|
|
|
|
77,296
|
|
|
||
Investment income
|
|
$
|
12,530
|
|
|
|
$
|
98,091
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
Adjustments
|
|
Carrying Amount
|
|||||||||
Investments at fair value:
|
|
|
|
|
|
|
|
|
|
||||||
Publicly traded companies
|
|
$
|
101,603
|
|
|
|
$
|
97,013
|
|
|
|
$
|
198,616
|
|
|
Entities that report NAV
|
|
173,813
|
|
|
|
110,843
|
|
(1)
|
|
284,656
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Entities that do not report NAV:
|
|
|
|
|
|
|
|
|
|
||||||
Entities with observable price changes since 1/1/18
|
|
12,811
|
|
|
|
10,289
|
|
|
|
23,100
|
|
|
|||
Entities without observable price changes
|
|
284,381
|
|
|
|
—
|
|
|
|
284,381
|
|
|
|||
June 30, 2018
|
|
$
|
572,608
|
|
|
|
$
|
218,145
|
|
(2)
|
|
$
|
790,753
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
March 31, 2018
|
|
$
|
511,162
|
|
|
|
$
|
213,148
|
|
|
|
$
|
724,310
|
|
|
(1)
|
Represents adjustments, using reported NAV as a practical expedient to estimate fair value, for our limited partnership investments.
|
(2)
|
Comprises (i)
$50 million
of unrealized gains recognized prior to adoption of the new accounting standard, (ii)
$91 million
of unrealized gains recognized upon adoption of the new accounting standard, and (iii)
$77 million
of unrealized gains recognized subsequent to adoption of the new accounting standard.
|
|
Public/Private Mix (Cost)
|
|
|
|
|
|
|
|
Tenant/Non-Tenant Mix (Cost)
|
|
|
|
|
|
|
|
287
|
$2.0M
|
|
|
Holdings
|
Average Cost
of Investment |
|
(1)
|
Quarter annualized.
|
(2)
|
As of
June 30, 2018
.
|
•
|
Retain positive cash flows from operating activities after payment of dividends and distributions to noncontrolling interests for investment in development and redevelopment projects and/or acquisitions;
|
•
|
Improve credit profile and relative long-term cost of capital;
|
•
|
Maintain diverse sources of capital, including sources from net cash provided by operating activities, unsecured debt, secured debt, selective asset sales, partial interests sales, preferred stock, and common stock;
|
•
|
Maintain commitment to long-term capital to fund growth;
|
•
|
Maintain prudent laddering of debt maturities;
|
•
|
Maintain solid credit metrics;
|
•
|
Maintain significant balance sheet liquidity;
|
•
|
Mitigate unhedged variable-rate debt exposure through the reduction of short-term and medium-term variable-rate bank debt;
|
•
|
Maintain a large unencumbered asset pool to provide financial flexibility;
|
•
|
Fund preferred stock and common stock dividends and distributions to noncontrolling interests from net cash provided by operating activities;
|
•
|
Manage a disciplined level of value-creation projects as a percentage of our gross investments in real estate; and
|
•
|
Maintain high levels of pre-leasing and percentage leased in value-creation projects.
|
Description
|
|
Stated Rate
|
|
Aggregate
Commitments
|
|
Outstanding
Balance
|
|
Remaining Commitments/Liquidity
|
||||||
$1.65 billion unsecured senior line of credit
|
|
L+1.00%
|
|
$
|
1,650,000
|
|
|
$
|
—
|
|
|
$
|
1,650,000
|
|
50 and 60 Binney Street secured construction loan
|
|
L+1.50%
|
|
350,000
|
|
|
334,363
|
|
|
15,637
|
|
|||
|
|
|
|
$
|
2,000,000
|
|
|
$
|
334,363
|
|
|
1,665,637
|
|
|
Outstanding forward equity sales agreements
|
|
|
|
|
|
|
|
709,888
|
|
|||||
Cash, cash equivalents, and restricted cash
|
|
|
|
|
|
|
|
321,841
|
|
|||||
Investments in publicly traded companies
|
|
|
|
|
|
|
|
198,616
|
|
|||||
Total liquidity
|
|
|
|
|
|
|
|
$
|
2,895,982
|
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Net cash provided by operating activities
|
$
|
258,241
|
|
|
$
|
223,746
|
|
|
$
|
34,495
|
|
Net cash used in investing activities
|
$
|
(1,268,899
|
)
|
|
$
|
(981,720
|
)
|
|
$
|
(287,179
|
)
|
Net cash provided by financing activities
|
$
|
1,056,486
|
|
|
$
|
760,755
|
|
|
$
|
295,731
|
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
|
||||||
Sources of cash from investing activities:
|
|
|
|
|
Increase/(Decrease)
|
|
|||||
Sales of investments
|
44,707
|
|
|
12,577
|
|
|
32,130
|
|
|||
Deposits for investing activities
|
5,500
|
|
|
450
|
|
|
5,050
|
|
|||
Proceeds from sales of real estate
|
—
|
|
|
3,528
|
|
|
(3,528
|
)
|
|||
|
50,207
|
|
|
16,555
|
|
|
33,652
|
|
|||
Uses of cash for investing activities:
|
|
|
|
|
(Increase)/Decrease
|
|
|||||
Purchases of real estate
|
(688,698
|
)
|
|
(480,543
|
)
|
|
(208,155
|
)
|
|||
Investments in unconsolidated real estate joint ventures
|
(44,486
|
)
|
|
(163
|
)
|
|
(44,323
|
)
|
|||
Additions to investments
|
(118,775
|
)
|
|
(81,192
|
)
|
|
(37,583
|
)
|
|||
Acquisitions of interests in unconsolidated real estate joint ventures
|
(35,922
|
)
|
|
—
|
|
|
(35,922
|
)
|
|||
Additions to real estate
|
(431,225
|
)
|
|
(436,377
|
)
|
|
5,152
|
|
|||
|
(1,319,106
|
)
|
|
(998,275
|
)
|
|
(320,831
|
)
|
|||
|
|
|
|
|
|
||||||
Net cash used in investing activities
|
$
|
(1,268,899
|
)
|
|
$
|
(981,720
|
)
|
|
$
|
(287,179
|
)
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Borrowings from secured notes payable
|
$
|
9,044
|
|
|
$
|
117,666
|
|
|
$
|
(108,622
|
)
|
Repayments of borrowings from secured notes payable
|
(3,162
|
)
|
|
(1,677
|
)
|
|
(1,485
|
)
|
|||
Proceeds from issuance of unsecured senior notes payable
|
899,321
|
|
|
424,384
|
|
|
474,937
|
|
|||
Borrowings from unsecured senior line of credit
|
2,469,000
|
|
|
2,069,000
|
|
|
400,000
|
|
|||
Repayments of borrowings from unsecured senior line of credit
|
(2,519,000
|
)
|
|
(1,797,000
|
)
|
|
(722,000
|
)
|
|||
Repayments of borrowings from unsecured senior bank term loans
|
—
|
|
|
(200,000
|
)
|
|
200,000
|
|
|||
Changes related to debt
|
855,203
|
|
|
612,373
|
|
|
242,830
|
|
|||
|
|
|
|
|
|
||||||
Repurchase of 7.00% Series D cumulative convertible preferred stock
|
—
|
|
|
(17,934
|
)
|
|
17,934
|
|
|||
Redemption of 6.45% Series E cumulative redeemable preferred stock
|
—
|
|
|
(130,350
|
)
|
|
130,350
|
|
|||
Proceeds from the issuance of common stock
|
400,207
|
|
|
459,607
|
|
|
(59,400
|
)
|
|||
Dividend payments
|
(185,644
|
)
|
|
(156,311
|
)
|
|
(29,333
|
)
|
|||
Contributions from noncontrolling interests
|
14,564
|
|
|
8,505
|
|
|
6,059
|
|
|||
Distributions to and purchase of noncontrolling interests
|
(19,841
|
)
|
|
(10,791
|
)
|
|
(9,050
|
)
|
|||
Other
|
(8,003
|
)
|
|
(4,344
|
)
|
|
(3,659
|
)
|
|||
Net cash provided by financing activities
|
$
|
1,056,486
|
|
|
$
|
760,755
|
|
|
$
|
295,731
|
|
Key Sources and Uses of Capital
(In millions)
|
|
2018 Guidance
|
|
Certain Completed Items through 7/30/18
|
|||||||||||||
|
Range
|
|
Midpoint
|
|
|||||||||||||
Sources of capital:
|
|
|
|
|
|
|
|
|
|
||||||||
Net cash provided by operating activities after dividends
|
|
$
|
140
|
|
|
$
|
180
|
|
|
$
|
160
|
|
|
|
|
||
Incremental debt
|
|
540
|
|
|
500
|
|
|
520
|
|
|
|
|
|||||
Real estate dispositions, partial interest sales, and common equity
|
|
1,330
|
|
|
1,530
|
|
|
1,430
|
|
|
$
|
1,200
|
|
(1)
|
|||
Total sources of capital
|
|
$
|
2,010
|
|
|
$
|
2,210
|
|
|
$
|
2,110
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||||
Uses of capital:
|
|
|
|
|
|
|
|
|
|
||||||||
Construction
|
|
$
|
1,050
|
|
|
$
|
1,150
|
|
|
$
|
1,100
|
|
|
|
|
||
Acquisitions
|
|
960
|
|
|
1,060
|
|
|
1,010
|
|
|
(2)
|
|
|||||
Total uses of capital
|
|
$
|
2,010
|
|
|
$
|
2,210
|
|
|
$
|
2,110
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||||
Incremental debt (included above):
|
|
|
|
|
|
|
|
|
|
||||||||
Issuance of unsecured senior notes payable
|
|
$
|
900
|
|
|
$
|
900
|
|
|
$
|
900
|
|
|
$
|
900
|
|
|
Repayments of secured notes payable
|
|
(160
|
)
|
|
(165
|
)
|
|
(163
|
)
|
|
$
|
(150
|
)
|
|
|||
Repayment of unsecured senior term loan
|
|
(200
|
)
|
|
(200
|
)
|
|
(200
|
)
|
|
|
|
|||||
$1.65 billion unsecured senior line of credit/other
|
|
—
|
|
|
(35
|
)
|
|
(17
|
)
|
|
|
|
|||||
Incremental debt
|
|
$
|
540
|
|
|
$
|
500
|
|
|
$
|
520
|
|
|
|
|
(1)
|
We have completed transactions aggregating
$1.2 billion
through July 2018. This includes completed and projected settlement of our forward equity sales agreements and completed sales under our ATM program. In January 2018, we executed forward equity sales agreements for
6.9 million
shares of our common stock. In March 2018, we settled
843,600
shares from the forward equity sales agreements and received proceeds of
$100.2 million
, net of underwriting discounts and adjustments provided in the forward equity sales agreements. We expect to receive proceeds of
$709.9 million
upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, in 2018. During the
three months ended June 30, 2018
, we sold
2.5 million
shares of common stock under our ATM program at
$124.46
per share, with net proceeds of
$300.8 million
. In July 2018, we sold
703,625
shares of common stock under our ATM common stock offering program for
$127.91
per share and received net proceeds of
$88.7 million
.
|
(2)
|
Refer to “Acquisitions” within the “Investments in Real Estate” section within this Item 2 for additional information.
|
|
|
As of June 30, 2018
|
||||||||
Facility
|
|
Balance
|
|
Maturity Date
(1)
|
|
Applicable Margin
|
|
Facility Fee
|
||
$1.65 billion unsecured senior line of credit
|
|
$
|
—
|
|
|
October 2021
|
|
L+1.00%
|
|
0.20%
|
2019 Unsecured Senior Bank Term Loan
|
|
$
|
199,620
|
|
|
January 2019
|
|
L+1.20%
|
|
N/A
|
2021 Unsecured Senior Bank Term Loan
|
|
$
|
348,704
|
|
|
January 2021
|
|
L+1.10%
|
|
N/A
|
(1)
|
Includes any extension options that we control.
|
•
|
2.1 million
shares issued at closing in March 2017 with net proceeds of
$217.8 million
; and
|
•
|
4.8 million
shares issued in December 2017 with net proceeds of
$484.6 million
.
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Common stock dividends
|
$
|
183,040
|
|
|
$
|
149,296
|
|
|
$
|
33,744
|
|
7.00% Series D cumulative convertible preferred stock dividends
|
2,604
|
|
|
2,823
|
|
|
(219
|
)
|
|||
6.45% Series E cumulative redeemable preferred stock dividends
|
—
|
|
|
4,192
|
|
|
(4,192
|
)
|
|||
|
$
|
185,644
|
|
|
$
|
156,311
|
|
|
$
|
29,333
|
|
|
|
|
Payments by Period
|
||||||||||||||||
|
Total
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
Thereafter
|
||||||||||
Secured and unsecured debt
(1) (2)
|
$
|
5,635,425
|
|
|
$
|
3,895
|
|
|
$
|
1,053,702
|
|
|
$
|
914,122
|
|
|
$
|
3,663,706
|
|
Estimated interest payments on fixed-rate and hedged variable-rate debt
(3)
|
1,377,156
|
|
|
85,319
|
|
|
401,291
|
|
|
338,069
|
|
|
552,477
|
|
|||||
Estimated interest payments on unhedged variable-rate debt
(4)
|
5,119
|
|
|
5,119
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Ground lease obligations
|
607,486
|
|
|
6,339
|
|
|
25,436
|
|
|
24,519
|
|
|
551,192
|
|
|||||
Other obligations
|
3,295
|
|
|
921
|
|
|
2,104
|
|
|
270
|
|
|
—
|
|
|||||
Total
|
$
|
7,628,481
|
|
|
$
|
101,593
|
|
|
$
|
1,482,533
|
|
|
$
|
1,276,980
|
|
|
$
|
4,767,375
|
|
(1)
|
Amounts represent principal amounts due and exclude unamortized premiums/discounts and deferred financing costs reflected on the consolidated balance sheets.
|
(2)
|
Payment dates reflect any extension options that we control.
|
(3)
|
Amounts are based upon contractual interest rates, including expenses related to our interest rate hedge agreements, interest payment dates, and scheduled maturity dates.
|
(4)
|
Interest payments on unhedged variable-rate debt are based on the interest rates in effect as of
June 30, 2018
.
|
Covenant Ratios
(1)
|
|
Requirement
|
|
June 30, 2018
|
Total Debt to Total Assets
|
Less than or equal to 60%
|
|
37%
|
|
Secured Debt to Total Assets
|
Less than or equal to 40%
|
|
5%
|
|
Consolidated EBITDA
(2)
to Interest Expense
|
Greater than or equal to 1.5x
|
|
5.2x
|
|
Unencumbered Total Asset Value to Unsecured Debt
|
Greater than or equal to 150%
|
|
258%
|
(1)
|
For definitions of the ratios, refer to the indenture at Exhibits 4.3, 4.13, and 4.18 hereto and the related supplemental indentures at Exhibits 4.4, 4.7, 4.9, 4.11, 4.14, 4.16, 4.19, 4.21, 4.23, and 4.25 hereto, which are each listed under Item 6 of this report.
|
(2)
|
The calculation of consolidated EBITDA is based on the definitions contained in our loan agreements and is not directly comparable to the computation of EBITDA as described in Exchange Act Release No. 47226.
|
Covenant Ratios
(1)
|
|
Requirement
|
|
June 30, 2018
|
Leverage Ratio
|
|
Less than or equal to 60.0%
|
|
30.0%
|
Secured Debt Ratio
|
|
Less than or equal to 45.0%
|
|
4.1%
|
Fixed-Charge Coverage Ratio
|
|
Greater than or equal to 1.50x
|
|
4.01x
|
Unsecured Leverage Ratio
|
|
Less than or equal to 60.0%
|
|
33.3%
|
Unsecured Interest Coverage Ratio
|
|
Greater than or equal to 1.50x
|
|
6.64x
|
(1)
|
For definitions of the ratios, refer to the amended $1.65 billion unsecured senior line of credit and unsecured senior bank term loan agreements filed as Exhibits 10.1, 10.2, and 10.3, which are listed under Item 15 of our annual report on Form 10-K for the year ended
December 31, 2017
.
|
|
|
Net Unrealized Gain (Loss) on:
|
|
|
||||||||||||
|
|
Available-for-Sale Equity Securities
|
|
Interest Rate
Hedge Agreements |
|
Foreign Currency Translation
|
|
Total
|
||||||||
Balance as of December 31, 2017
|
|
$
|
49,771
|
|
|
$
|
5,157
|
|
|
$
|
(4,904
|
)
|
|
$
|
50,024
|
|
Amounts reclassified from other comprehensive income to retained earnings
|
|
(49,771
|
)
|
(1)
|
—
|
|
|
—
|
|
|
(49,771
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss) before reclassifications
|
|
—
|
|
|
2,643
|
|
|
(3,572
|
)
|
|
(929
|
)
|
||||
Amounts reclassified from other comprehensive income to net income
|
|
—
|
|
|
(1,809
|
)
|
|
—
|
|
|
(1,809
|
)
|
||||
Net other comprehensive income
|
|
—
|
|
|
834
|
|
|
(3,572
|
)
|
|
(2,738
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Balance as of June 30, 2018
|
|
$
|
—
|
|
|
$
|
5,991
|
|
|
$
|
(8,476
|
)
|
|
$
|
(2,485
|
)
|
(1)
|
Refer to Note 6 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report for additional information.
|
•
|
Investments in publicly traded companies are classified as investments with readily determinable fair values. These investments are carried at fair value, with changes in fair value recognized through earnings, rather than in accumulated other comprehensive income within total equity. The fair values for our investments in publicly traded companies continue to be determined based on sales prices/quotes available on securities exchanges, or published prices that serve as the basis for current transactions.
|
•
|
Investments in privately held entities without readily determinable fair values fall into two categories:
|
•
|
Investments in privately held entities that report NAV, such as our privately held investments in limited partnerships, are carried at fair value using NAV as a practical expedient with changes in fair value recognized in net income.
|
•
|
Investments in privately held entities that do not report NAV are accounted for using a measurement alternative that allows these investments to be measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income.
|
•
|
For investments in publicly traded companies, reclassification of unrealized gains and losses as of December 31, 2017, aggregating
$49.8 million
, from accumulated other comprehensive income to retained earnings.
|
•
|
For investments in privately held entities without readily determinable fair values that were previously accounted for under the cost method:
|
•
|
Adjustment to investments for unrealized gains aggregating
$90.8 million
related to investments in privately held entities that report NAV, representing the difference between fair value as of December 31, 2017, using NAV as a practical expedient and the carrying value of the investments as of December 31, 2017, with a corresponding adjustment to retained earnings.
|
•
|
No adjustment was required for investments in privately held entities that do not report NAV. The ASU requires a prospective transition approach for investments in privately held entities that do not report NAV. The FASB clarified that it would be difficult for entities to determine the last observable transaction price existing prior to the adoption of this ASU. Therefore, unlike our investments in privately held entities that report NAV that were adjusted to reflect fair values upon adoption of the new ASU, our investments in privately held entities that do not report NAV were not retrospectively adjusted to fair values upon adoption. As such, any initial valuation adjustments made for investments in privately held entities that do not report NAV subsequent to January 1, 2018, as a result of future observable price changes will include recognition of unrealized gains or losses equal to the difference between the carrying basis of the investment and the observable price at the date of measurement.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(In thousands)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
|
$
|
52,016
|
|
|
$
|
31,630
|
|
|
$
|
184,991
|
|
|
$
|
57,291
|
|
Depreciation and amortization
|
|
118,852
|
|
|
104,098
|
|
|
233,071
|
|
|
201,281
|
|
||||
Noncontrolling share of depreciation and amortization from consolidated real estate JVs
|
|
(3,914
|
)
|
|
(3,735
|
)
|
|
(7,781
|
)
|
|
(7,377
|
)
|
||||
Our share of depreciation and amortization from unconsolidated real estate JVs
|
|
807
|
|
|
324
|
|
|
1,451
|
|
|
736
|
|
||||
Gain on sales of real estate – rental properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(270
|
)
|
||||
Gain on sales of real estate – land parcels
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
(111
|
)
|
||||
Impairment of real estate – rental properties
|
|
—
|
|
|
203
|
|
|
—
|
|
|
203
|
|
||||
Allocation to unvested restricted stock awards
|
|
(1,042
|
)
|
|
(685
|
)
|
|
(3,212
|
)
|
|
(1,245
|
)
|
||||
Dilutive effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock
(1)
|
|
—
|
|
|
—
|
|
|
2,604
|
|
|
—
|
|
||||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted
(2)
|
|
166,719
|
|
|
131,724
|
|
|
411,124
|
|
|
250,508
|
|
||||
Unrealized gains on non-real estate investments
(1)
|
|
(5,067
|
)
|
|
—
|
|
|
(77,296
|
)
|
|
—
|
|
||||
Realized gain on non-real estate investment
|
|
—
|
|
|
—
|
|
|
(8,252
|
)
|
|
—
|
|
||||
Removal of dilutive effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock included in funds from operations above
(1)
|
|
—
|
|
|
—
|
|
|
(2,604
|
)
|
|
—
|
|
||||
Impairment of land parcels and non-real estate investments
|
|
6,311
|
|
(3)
|
4,491
|
|
|
6,311
|
|
(3)
|
4,491
|
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
670
|
|
||||
Preferred stock redemption charge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,279
|
|
||||
Allocation to unvested restricted stock awards
|
|
(18
|
)
|
|
(58
|
)
|
|
1,140
|
|
|
(209
|
)
|
||||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted
|
|
$
|
167,945
|
|
|
$
|
136,157
|
|
|
$
|
330,423
|
|
|
$
|
266,739
|
|
(1)
|
On January 1, 2018, we adopted an ASU that requires changes in the fair value of our non-real estate investments to be recognized in net income. During the three months ended March 31, 2018, we recognized unrealized gains of $72.2 million. These unrealized gains are included in our net income and funds from operations as defined by Nareit (“Nareit FFO”). For net income per share purposes, our Series D Convertible Preferred Stock was not assumed to be converted for the three months ended March 31, 2018, as its assumed conversion was anti-dilutive. However, for Nareit FFO per share, we assumed the conversion of the Series D Convertible Preferred Stock because its effect was dilutive on a per share basis.
|
(2)
|
Calculated in accordance with standards established by the Advisory Board of Governors of Nareit (the “Nareit Board of Governors”) in its April 2002 White Paper and related implementation guidance.
|
(3)
|
Impairment of real estate recognized during the three months ended
June 30, 2018
, related to one land parcel located in Northern Virginia that was subsequently sold in July 2018 with no gain or loss.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Per share)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
|
$
|
0.51
|
|
|
$
|
0.35
|
|
|
$
|
1.83
|
|
|
$
|
0.64
|
|
Depreciation and amortization
|
|
1.13
|
|
|
1.10
|
|
|
2.23
|
|
|
2.16
|
|
||||
Allocation to unvested restricted stock awards
|
|
(0.01
|
)
|
|
—
|
|
|
(0.03
|
)
|
|
—
|
|
||||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted
(1)
|
|
1.63
|
|
|
1.45
|
|
|
4.03
|
|
|
2.80
|
|
||||
Unrealized gains on non-real estate investments
(2)
|
|
(0.05
|
)
|
|
—
|
|
|
(0.76
|
)
|
|
—
|
|
||||
Realized gain on non-real estate investment
|
|
—
|
|
|
—
|
|
|
(0.08
|
)
|
|
—
|
|
||||
Impairment of land parcels and non-real estate investments
|
|
0.06
|
|
(3)
|
0.05
|
|
|
0.06
|
|
(3)
|
0.05
|
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
Preferred stock redemption charge
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.12
|
|
||||
Allocation to unvested restricted stock awards
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
||||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted
|
|
$
|
1.64
|
|
|
$
|
1.50
|
|
|
$
|
3.27
|
|
|
$
|
2.98
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares of common stock outstanding
(2)
for calculations
of:
|
|
|
|
|
|
|
|
|
||||||||
EPS – diluted and funds from operations – diluted, as adjusted, per share
|
|
102,236
|
|
|
90,745
|
|
|
101,191
|
|
|
89,479
|
|
||||
Funds from operations – diluted, per share
|
|
102,236
|
|
|
90,745
|
|
|
101,933
|
|
|
89,479
|
|
(1)
|
Calculated in accordance with standards established by the Nareit Board of Governors in its April 2002 White Paper and related implementation guidance.
|
(2)
|
Refer to footnote 1 on prior page for additional information.
|
(3)
|
See footnote 3 on prior page for additional information.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
60,547
|
|
|
$
|
41,496
|
|
|
$
|
202,065
|
|
|
$
|
89,051
|
|
Interest expense
|
38,097
|
|
|
31,748
|
|
|
75,012
|
|
|
61,532
|
|
||||
Income taxes
|
1,106
|
|
|
1,333
|
|
|
2,046
|
|
|
2,100
|
|
||||
Depreciation and amortization
|
118,852
|
|
|
104,098
|
|
|
233,071
|
|
|
201,281
|
|
||||
Stock compensation expense
|
7,975
|
|
|
5,504
|
|
|
15,223
|
|
|
10,756
|
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
670
|
|
||||
Gain on sales of real estate – rental properties
|
—
|
|
|
—
|
|
|
—
|
|
|
(270
|
)
|
||||
Gain on sales of real estate – land parcels
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
(111
|
)
|
||||
Unrealized gains on non-real estate investments
|
(5,067
|
)
|
|
—
|
|
|
(77,296
|
)
|
|
—
|
|
||||
Impairment of real estate and non-real estate investments
|
6,311
|
|
|
4,694
|
|
|
6,311
|
|
|
4,694
|
|
||||
Adjusted EBITDA
|
$
|
227,821
|
|
|
$
|
188,762
|
|
|
$
|
456,432
|
|
|
$
|
369,703
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
325,034
|
|
|
$
|
273,059
|
|
|
$
|
645,173
|
|
|
$
|
543,936
|
|
Realized gains on non-real estate investments
|
7,463
|
|
|
—
|
|
|
20,795
|
|
|
—
|
|
||||
Impairment of non-real estate investments
|
—
|
|
|
4,491
|
|
|
—
|
|
|
4,491
|
|
||||
Revenues, as adjusted
(1)
|
$
|
332,497
|
|
|
$
|
277,550
|
|
|
$
|
665,968
|
|
|
$
|
548,427
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA margins
|
69%
|
|
|
68%
|
|
|
69%
|
|
|
67%
|
|
(1)
|
Revenues, as adjusted, include realized gains or losses on non-real estate investments. We use revenues, as adjusted, in our calculation of Adjusted EBITDA margin. We believe using revenues, as adjusted, provides a more accurate Adjusted EBITDA margin calculation.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Adjusted EBITDA
|
|
$
|
227,821
|
|
|
$
|
188,762
|
|
|
$
|
456,432
|
|
|
$
|
369,703
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
$
|
38,097
|
|
|
$
|
31,748
|
|
|
75,012
|
|
|
61,532
|
|
||
Capitalized interest
|
|
15,527
|
|
|
15,069
|
|
|
28,887
|
|
|
28,233
|
|
||||
Amortization of loan fees
|
|
(2,593
|
)
|
|
(2,843
|
)
|
|
(5,136
|
)
|
|
(5,738
|
)
|
||||
Amortization of debt premiums
|
|
606
|
|
|
625
|
|
|
1,181
|
|
|
1,221
|
|
||||
Cash interest
|
|
51,637
|
|
|
44,599
|
|
|
99,944
|
|
|
85,248
|
|
||||
Dividends on preferred stock
|
|
1,302
|
|
|
1,278
|
|
|
2,604
|
|
|
5,062
|
|
||||
Fixed charges
|
|
$
|
52,939
|
|
|
$
|
45,877
|
|
|
$
|
102,548
|
|
|
$
|
90,310
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fixed-charge coverage ratio:
|
|
|
|
|
|
|
|
|
||||||||
– period annualized
|
|
4.3x
|
|
|
4.1x
|
|
|
4.5x
|
|
|
4.1x
|
|
||||
– trailing 12 months
|
|
4.3x
|
|
|
3.9x
|
|
|
4.3x
|
|
|
3.9x
|
|
•
|
Initial stabilized yield reflects rental income, including contractual rent escalations and any rent concessions over the term(s) of the lease(s), calculated on a straight-line basis.
|
•
|
Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have elapsed and our total cash investment in the property.
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Secured notes payable
|
$
|
776,260
|
|
|
$
|
771,061
|
|
Unsecured senior notes payable
|
4,289,521
|
|
|
3,395,804
|
|
||
Unsecured senior line of credit
|
—
|
|
|
50,000
|
|
||
Unsecured senior bank term loans
|
548,324
|
|
|
547,942
|
|
||
Unamortized deferred financing costs
|
33,775
|
|
|
29,051
|
|
||
Cash and cash equivalents
|
(287,029
|
)
|
|
(254,381
|
)
|
||
Restricted cash
|
(34,812
|
)
|
|
(22,805
|
)
|
||
Net debt
|
$
|
5,326,039
|
|
|
$
|
4,516,672
|
|
|
|
|
|
||||
Net debt
|
$
|
5,326,039
|
|
|
$
|
4,516,672
|
|
7.00% Series D cumulative convertible preferred stock
|
74,386
|
|
|
74,386
|
|
||
Net debt and preferred stock
|
$
|
5,400,425
|
|
|
$
|
4,591,058
|
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
|
|
||||
– quarter annualized
|
$
|
911,284
|
|
|
$
|
817,392
|
|
– trailing 12 months
|
$
|
854,237
|
|
|
$
|
767,508
|
|
|
|
|
|
||||
Net debt to Adjusted EBITDA:
|
|
|
|
||||
– quarter annualized
|
5.8
|
x
|
|
5.5
|
x
|
||
– trailing 12 months
|
6.2
|
x
|
|
5.9
|
x
|
||
Net debt and preferred stock to Adjusted EBITDA:
|
|
|
|
||||
– quarter annualized
|
5.9
|
x
|
|
5.6
|
x
|
||
– trailing 12 months
|
6.3
|
x
|
|
6.0
|
x
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||
|
|
6/30/18
|
|
3/31/18
|
|
12/31/17
|
|
6/30/17
|
|
6/30/18
|
|
6/30/17
|
||||||||||||
Net income
|
|
$
|
60,547
|
|
|
$
|
141,518
|
|
|
$
|
45,607
|
|
|
$
|
41,496
|
|
|
$
|
202,065
|
|
|
$
|
89,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Equity in earnings of unconsolidated real estate joint ventures
|
|
(1,090
|
)
|
|
(1,144
|
)
|
|
(376
|
)
|
|
(589
|
)
|
|
(2,234
|
)
|
|
(950
|
)
|
||||||
General and administrative expenses
|
|
22,939
|
|
|
22,421
|
|
|
18,910
|
|
|
19,234
|
|
|
45,360
|
|
|
38,463
|
|
||||||
Interest expense
|
|
38,097
|
|
|
36,915
|
|
|
36,082
|
|
|
31,748
|
|
|
75,012
|
|
|
61,532
|
|
||||||
Depreciation and amortization
|
|
118,852
|
|
|
114,219
|
|
|
107,714
|
|
|
104,098
|
|
|
233,071
|
|
|
201,281
|
|
||||||
Impairment of real estate
|
|
6,311
|
|
|
—
|
|
|
—
|
|
|
203
|
|
|
6,311
|
|
|
203
|
|
||||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
2,781
|
|
|
—
|
|
|
—
|
|
|
670
|
|
||||||
Gain on sales of real estate – rental properties
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(270
|
)
|
||||||
Gain on sales of real estate – land parcels
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
(111
|
)
|
||||||
Investment income
|
|
(12,530
|
)
|
|
(85,561
|
)
|
|
—
|
|
|
—
|
|
|
(98,091
|
)
|
|
—
|
|
||||||
Net operating income
|
|
233,126
|
|
|
228,368
|
|
|
210,718
|
|
|
196,079
|
|
|
461,494
|
|
|
389,869
|
|
||||||
Straight-line rent revenue and amortization of acquired below-market leases
|
|
(28,457
|
)
|
|
(38,801
|
)
|
|
(37,428
|
)
|
|
(22,909
|
)
|
|
(67,258
|
)
|
|
(63,860
|
)
|
||||||
Net operating income (cash basis)
|
|
$
|
204,669
|
|
|
$
|
189,567
|
|
|
$
|
173,290
|
|
|
$
|
173,170
|
|
|
$
|
394,236
|
|
|
$
|
326,009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net operating income (cash basis) – annualized
|
|
$
|
818,676
|
|
|
$
|
758,268
|
|
|
$
|
693,160
|
|
|
$
|
692,680
|
|
|
$
|
788,472
|
|
|
$
|
652,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues
|
|
$
|
325,034
|
|
|
$
|
320,139
|
|
|
$
|
298,791
|
|
|
$
|
273,059
|
|
|
$
|
645,173
|
|
|
$
|
543,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating margin
|
|
72%
|
|
71%
|
|
71%
|
|
72%
|
|
72%
|
|
72%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Unencumbered net operating income
|
$
|
204,843
|
|
|
$
|
158,072
|
|
|
$
|
403,442
|
|
|
$
|
315,463
|
|
Encumbered net operating income
|
28,283
|
|
|
38,007
|
|
|
58,052
|
|
|
74,406
|
|
||||
Total net operating income
|
$
|
233,126
|
|
|
$
|
196,079
|
|
|
$
|
461,494
|
|
|
$
|
389,869
|
|
Unencumbered net operating income as a percentage of total net operating income
|
88%
|
|
|
81%
|
|
|
87%
|
|
|
81%
|
|
|
June 30, 2018
|
|
June 30, 2017
|
||
Potential additional shares upon settlement/conversion:
|
|
|
|
||
Outstanding forward equity sales agreements
|
6,056
|
|
|
4,755
|
|
7.00% Series D Convertible Preferred Stock
|
2,975
|
|
|
2,975
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Incremental dilutive common shares:
|
|
|
|
|
|
|
|
||||
Outstanding forward equity sales agreement
|
355
|
|
|
530
|
|
|
313
|
|
|
293
|
|
|
|
|
|
|
|
|
|
||||
EPS – diluted and funds from operations, – diluted, as adjusted
|
355
|
|
|
530
|
|
|
313
|
|
|
293
|
|
Assumed conversion of Series D Convertible Preferred Stock
|
—
|
|
|
—
|
|
|
742
|
|
|
—
|
|
Funds from operations – diluted
|
355
|
|
|
530
|
|
|
1,055
|
|
|
293
|
|
Annualized effect on future earnings due to variable-rate debt:
|
|
||
Rate increase of 1%
|
$
|
(2,545
|
)
|
Rate decrease of 1%
|
$
|
2,545
|
|
|
|
||
Effect on fair value of total consolidated debt and interest rate hedge agreements:
|
|
||
Rate increase of 1%
|
$
|
(258,216
|
)
|
Rate decrease of 1%
|
$
|
278,146
|
|
Equity price risk:
|
|
||
Fair value increase of 10%
|
$
|
79,075
|
|
Fair value decrease of 10%
|
$
|
(79,075
|
)
|
Effect of potential future earnings due to foreign currency exchange rate:
|
|
||
Rate increase of 10%
|
$
|
117
|
|
Rate decrease of 10%
|
$
|
(117
|
)
|
|
|
||
Effect on the fair value of net investment in foreign subsidiaries due to foreign currency exchange rate:
|
|
||
Rate increase of 10%
|
$
|
10,333
|
|
Rate decrease of 10%
|
$
|
(10,333
|
)
|
Exhibit
Number
|
|
Exhibit Title
|
|
Incorporated by Reference to:
|
|
Date Filed
|
3.1*
|
|
|
Form 10-Q
|
|
August 14, 1997
|
|
3.2*
|
|
|
Form 10-Q
|
|
August 14, 1997
|
|
3.3*
|
|
|
Form 8-K
|
|
May 12, 2017
|
|
3.4*
|
|
|
Form 8-K
|
|
January 9, 2018
|
|
3.5*
|
|
|
Form 10-Q
|
|
August 13, 1999
|
|
3.6*
|
|
|
Form 8-K
|
|
February 10, 2000
|
|
3.7*
|
|
|
Form 8-K
|
|
February 10, 2000
|
|
3.8*
|
|
|
Form 8-A
|
|
January 18, 2002
|
|
3.9*
|
|
|
Form 8-A
|
|
June 28, 2004
|
|
3.10*
|
|
|
Form 8-K
|
|
March 25, 2008
|
|
3.11*
|
|
|
Form 8-K
|
|
March 14, 2012
|
|
3.12*
|
|
|
Form 8-K
|
|
May 12, 2017
|
|
4.1*
|
|
|
Form 10-Q
|
|
May 5, 2011
|
|
4.2*
|
|
|
Form 8-K
|
|
March 25, 2008
|
|
4.3*
|
|
|
Form 8-K
|
|
February 29, 2012
|
|
4.4*
|
|
|
Form 8-K
|
|
February 29, 2012
|
|
4.5*
|
|
|
Form 8-K
|
|
February 29, 2012
|
|
4.6*
|
|
|
Form 8-A
|
|
March 12, 2012
|
|
4.7*
|
|
|
Form 8-K
|
|
June 7, 2013
|
|
4.8*
|
|
|
Form 8-K
|
|
June 7, 2013
|
|
4.9*
|
|
|
Form 8-K
|
|
July 18, 2014
|
|
4.10*
|
|
|
Form 8-K
|
|
July 18, 2014
|
|
4.11*
|
|
|
Form 8-K
|
|
July 18, 2014
|
|
4.12*
|
|
|
Form 8-K
|
|
July 18, 2014
|
|
4.13*
|
|
|
Form 8-K
|
|
November 17, 2015
|
Exhibit
Number
|
|
Exhibit Title
|
|
Incorporated by Reference to:
|
|
Date Filed
|
4.14*
|
|
|
Form 8-K
|
|
November 17, 2015
|
|
4.15*
|
|
|
Form 8-K
|
|
November 17, 2015
|
|
4.16*
|
|
|
Form 8-K
|
|
June 10, 2016
|
|
4.17*
|
|
|
Form 8-K
|
|
June 10, 2016
|
|
4.18*
|
|
|
Form 8-K
|
|
March 3, 2017
|
|
4.19*
|
|
|
Form 8-K
|
|
March 3, 2017
|
|
4.20*
|
|
|
Form 8-K
|
|
March 3, 2017
|
|
4.21*
|
|
|
Form 8-K
|
|
November 20, 2017
|
|
4.22*
|
|
|
Form 8-K
|
|
November 20, 2017
|
|
4.23*
|
|
|
Form 8-K
|
|
June 21, 2018
|
|
4.24*
|
|
|
Form 8-K
|
|
June 21, 2018
|
|
4.25*
|
|
|
Form 8-K
|
|
June 21, 2018
|
|
4.26*
|
|
|
Form 8-K
|
|
June 21, 2018
|
|
10.1*
|
(1)
|
|
Form 10-Q
|
|
May 1, 2018
|
|
10.2*
|
(1)
|
|
Form 10-Q
|
|
May 1, 2018
|
|
10.3*
|
(1)
|
|
Form 10-Q
|
|
May 1, 2018
|
|
10.4*
|
(1)
|
|
Form 10-Q
|
|
May 1, 2018
|
|
10.5*
|
(1)
|
|
Form 10-Q
|
|
May 1, 2018
|
|
10.6*
|
(1)
|
|
Form 10-Q
|
|
May 1, 2018
|
|
10.7*
|
(1)
|
|
Form 10-Q
|
|
May 1, 2018
|
|
10.8
|
(1)
|
|
N/A
|
|
Filed herewith
|
|
10.9
|
(1)
|
|
N/A
|
|
Filed herewith
|
Exhibit
Number
|
|
Exhibit Title
|
|
Incorporated by Reference to:
|
|
Date Filed
|
12.1
|
|
|
N/A
|
|
Filed herewith
|
|
31.1
|
|
|
N/A
|
|
Filed herewith
|
|
31.2
|
|
|
N/A
|
|
Filed herewith
|
|
31.3
|
|
|
N/A
|
|
Filed herewith
|
|
31.4
|
|
|
N/A
|
|
Filed herewith
|
|
32.0
|
|
|
N/A
|
|
Filed herewith
|
|
101
|
|
The following materials from the Company’s quarterly report on Form 10-Q for the quarterly period ended June 30, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 (unaudited), (ii) Consolidated Statements of Income for the three and six months ended June 30, 2018 and 2017 (unaudited), (iii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2018 and 2017 (unaudited), (iv) Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests for the six months ended June 30, 2018 (unaudited), (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017 (unaudited), and (vi) Notes to Consolidated Financial Statements (unaudited)
|
|
N/A
|
|
Filed herewith
|
|
ALEXANDRIA REAL ESTATE EQUITIES, INC.
|
|
|
|
|
|
/s/ Joel S. Marcus
|
|
Joel S. Marcus
Executive Chairman
(Principal Executive Officer) |
|
|
|
|
|
/s/ Stephen A. Richardson
|
|
Stephen A. Richardson
Co-Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Peter M. Moglia
|
|
Peter M. Moglia
Co-Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Dean A. Shigenaga
|
|
Dean A. Shigenaga
Chief Financial Officer
(Principal Financial Officer)
|
SECTION 1.
|
POSITION; DUTIES; LOCATION.
|
SECTION 2.
|
COMPENSATION AND OTHER BENEFITS.
|
SECTION 3.
|
TERMINATION; SEVERANCE.
|
SECTION 4.
|
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT.
|
SECTION 5.
|
COMPANY POLICIES.
|
SECTION 6.
|
ASSIGNABILITY.
|
SECTION 7.
|
NOTICES.
|
SECTION 8.
|
ARBITRATION.
|
SECTION 9.
|
MISCELLANEOUS.
|
SECTION 1.
|
POSITION; DUTIES; LOCATION.
|
SECTION 2.
|
COMPENSATION AND OTHER BENEFITS.
|
SECTION 3.
|
TERMINATION; SEVERANCE.
|
SECTION 4.
|
PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT.
|
SECTION 5.
|
COMPANY POLICIES.
|
SECTION 6.
|
ASSIGNABILITY.
|
SECTION 7.
|
NOTICES.
|
SECTION 8.
|
ARBITRATION.
|
SECTION 9.
|
MISCELLANEOUS.
|
Balance Sheet Goals
|
Weighting
|
Liquidity
|
25%
|
Net debt to adjusted EBITDA (the lower of 4Q18 annualized or trailing 12 mos.)
|
25%
|
Fixed charge coverage ratio (the greater of 4Q18 annualized or trailing 12 mos.)
|
25%
|
Appropriate balance of capital options (pricing, tenure, mix of capital structure, long-term capital alternatives, maturity profile)
|
25%
|
Profitability and NAV Related Goals
|
Weighting
|
Percentage of Annual Rental Revenue from investment grade or large cap (public or private) tenants
|
20%
|
Net operating income growth
|
20%
|
Same property NOI growth:
GAAP basis
Cash basis
|
20% Total
10%
10%
|
Amount of RSF leased
|
20%
|
Adjusted EBITDA margin
|
20%
|
|
|
|
|
Years Ended December 31,
|
|
||||||||||||||||||||
|
|
Six Months Ended June 30, 2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations before noncontrolling interests
(a)
|
|
$
|
199,831
|
|
|
$
|
178,778
|
|
|
$
|
(49,615
|
)
|
|
$
|
144,506
|
|
|
$
|
104,991
|
|
|
$
|
139,349
|
|
|
Add: interest expense
|
|
75,012
|
|
|
128,645
|
|
|
106,953
|
|
|
105,813
|
|
|
79,299
|
|
|
67,952
|
|
|
||||||
Subtract: noncontrolling interests in income of subsidiaries that have not incurred fixed charges
|
|
(11,705
|
)
|
|
(25,111
|
)
|
|
(16,102
|
)
|
|
(1,897
|
)
|
|
(4,856
|
)
|
|
(954
|
)
|
|
||||||
Earnings available for fixed charges
(b)
|
|
$
|
263,138
|
|
|
$
|
282,312
|
|
|
$
|
41,236
|
|
|
$
|
248,422
|
|
|
$
|
179,434
|
|
|
$
|
206,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest incurred
|
|
$
|
103,899
|
|
|
$
|
186,867
|
|
|
$
|
159,403
|
|
|
$
|
142,353
|
|
|
$
|
126,287
|
|
|
$
|
128,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Preferred stock dividends
|
|
2,604
|
|
|
7,666
|
|
|
20,223
|
|
|
24,986
|
|
|
25,698
|
|
|
25,885
|
|
|
||||||
Preferred stock redemption charge
|
|
—
|
|
|
11,279
|
|
|
61,267
|
|
|
—
|
|
|
1,989
|
|
|
—
|
|
|
||||||
Total combined fixed charges and preferred stock dividends
|
|
$
|
106,503
|
|
|
$
|
205,812
|
|
|
$
|
240,893
|
|
|
$
|
167,339
|
|
|
$
|
153,974
|
|
|
$
|
153,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated ratio of earnings to fixed charges
|
|
2.53
|
|
(c)
|
1.51
|
|
(d)
|
0.26
|
|
(e)
|
1.75
|
|
(f)
|
1.42
|
|
(g)
|
1.61
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consolidated ratio of earnings to combined fixed charges and preferred stock dividends
|
|
2.47
|
|
(c)
|
1.37
|
|
(d)
|
0.17
|
|
(e)
|
1.48
|
|
(f)
|
1.17
|
|
(g)
|
1.34
|
|
|
(a)
|
Includes gains on sales of land parcels that are not attributable to discontinued operations and excludes equity in earnings from unconsolidated real estate joint ventures.
|
(b)
|
For purposes of calculating the consolidated ratio of earnings to fixed charges and consolidated ratio of earnings to combined fixed charges and preferred stock dividends, earnings consist of income from continuing operations before noncontrolling interests and interest expense less noncontrolling interests in income of subsidiaries that have not incurred fixed charges. Fixed charges consist of interest incurred (including amortization of deferred financing costs and capitalized interest).
|
(c)
|
Ratios for the
six months ended June 30, 2018
, include the effect of impairment of real estate aggregating
$6.3 million
and unrealized gains aggregating
$77.3 million
classified within investment income in our consolidated statements of income. Excluding the impact of impairment of real estate and the unrealized gains, the consolidated ratio of earnings to fixed charges and the consolidated ratio of earnings to combined fixed charges and preferred stock dividends for the
six months ended June 30, 2018
, were
1.85
and
1.80
, respectively.
|
(d)
|
Ratios for the year ended December 31, 2017, include the effect of losses on early extinguishment of debt aggregating $3.5 million, a preferred stock redemption charge of $11.3 million, and impairment of real estate of $203 thousand. Excluding the impact of losses on early extinguishment of debt, the preferred stock redemption charge, and the impairment of real estate, the consolidated ratio of earnings to fixed charges and the consolidated ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2017, were 1.53 and 1.47, respectively.
|
(e)
|
Fixed charges and combined fixed charges and preferred stock dividends exceeded earnings by $118.2 million and $199.7 million, respectively, for the year ended December 31, 2016. Ratios for the year ended December 31, 2016, include the effect of losses on early extinguishment of debt aggregating $3.2 million, a preferred stock redemption charge of $61.3 million, and impairment of real estate of $209.3 million. Excluding the impact of losses on early extinguishment of debt, the preferred stock redemption charge, and the impairment of real estate, the consolidated ratio of earnings to fixed charges and the consolidated ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2016, were 1.59 and 1.41, respectively.
|
(f)
|
Ratios for the year ended December 31, 2015, include the effect of losses on early extinguishment of debt of $189 thousand and impairment of real estate of $23.3 million. Excluding the impact of losses on early extinguishment of debt and the impairment of real estate, the consolidated ratio of earnings to fixed charges and the consolidated ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2015, were 1.91 and 1.62, respectively.
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(g)
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Ratios for the year ended December 31, 2014, include the effect of losses on early extinguishment of debt aggregating $525 thousand, a preferred stock redemption charge of $2.0 million, impairment of land parcel of $24.7 million, and impairment of real estate of $27.0 million. Excluding the impact of losses on early extinguishment of debt, the preferred stock redemption charge, the impairment of land parcel, and the impairment of real estate, the consolidated ratio of earnings to fixed charges and the consolidated ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2014, were 1.83 and 1.52, respectively.
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/s/ Joel S. Marcus
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Joel S. Marcus
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Executive Chairman
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/s/ Stephen A. Richardson
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Stephen A. Richardson
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Co-Chief Executive Officer
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/s/ Peter M. Moglia
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Peter M. Moglia
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Co-Chief Executive Officer
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/s/ Dean A. Shigenaga
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Dean A. Shigenaga
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Chief Financial Officer
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/s/ Joel S. Marcus
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Joel S. Marcus
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Executive Chairman
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/s/ Stephen A. Richardson
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Stephen A. Richardson
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Co-Chief Executive Officer
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/s/ Peter M. Moglia
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Peter M. Moglia
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Co-Chief Executive Officer
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/s/ Dean A. Shigenaga
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Dean A. Shigenaga
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Chief Financial Officer
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