Maryland
|
|
95-4502084
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value per share
|
ARE
|
New York Stock Exchange
|
Large accelerated filer
|
x
|
|
Smaller reporting company
|
o
|
Accelerated filer
|
o
|
|
Emerging growth company
|
o
|
Non-accelerated filer
|
o
|
|
|
|
|
|
Page
|
|
||
|
|
|
|
||
|
|
|
|
Consolidated Balance Sheets as of March 31, 2020, and December 31, 2019
|
|
|
|
|
|
Consolidated Financial Statements for the Three Months Ended March 31, 2020 and 2019:
|
|
|
|
|
|
Consolidated Statements of Operations
|
|
|
|
|
|
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests
|
|
|
|
|
|
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
ATM
|
At the Market
|
CIP
|
Construction in Progress
|
EPS
|
Earnings per Share
|
FASB
|
Financial Accounting Standards Board
|
FFO
|
Funds From Operations
|
GAAP
|
U.S. Generally Accepted Accounting Principles
|
JV
|
Joint Venture
|
LEED®
|
Leadership in Energy and Environmental Design
|
LIBOR
|
London Interbank Offered Rate
|
Nareit
|
National Association of Real Estate Investment Trusts
|
NAV
|
Net Asset Value
|
REIT
|
Real Estate Investment Trust
|
RSF
|
Rentable Square Feet/Foot
|
SEC
|
Securities and Exchange Commission
|
SF
|
Square Feet/Foot
|
SOFR
|
Secured Overnight Financing Rate
|
SoMa
|
South of Market (submarket of the San Francisco market)
|
U.S.
|
United States
|
VIE
|
Variable Interest Entity
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Assets
|
|
|
|
||||
Investments in real estate
|
$
|
15,832,182
|
|
|
$
|
14,844,038
|
|
Investments in unconsolidated real estate joint ventures
|
325,665
|
|
|
346,890
|
|
||
Cash and cash equivalents
|
445,255
|
|
|
189,681
|
|
||
Restricted cash
|
43,116
|
|
|
53,008
|
|
||
Tenant receivables
|
14,976
|
|
|
10,691
|
|
||
Deferred rent
|
663,926
|
|
|
641,844
|
|
||
Deferred leasing costs
|
269,458
|
|
|
270,043
|
|
||
Investments
|
1,123,482
|
|
|
1,140,594
|
|
||
Other assets
|
983,875
|
|
|
893,714
|
|
||
Total assets
|
$
|
19,701,935
|
|
|
$
|
18,390,503
|
|
|
|
|
|
||||
Liabilities, Noncontrolling Interests, and Equity
|
|
|
|
||||
Secured notes payable
|
$
|
347,136
|
|
|
$
|
349,352
|
|
Unsecured senior notes payable
|
6,736,999
|
|
|
6,044,127
|
|
||
Unsecured senior line of credit
|
221,000
|
|
|
384,000
|
|
||
Accounts payable, accrued expenses, and other liabilities
|
1,352,554
|
|
|
1,320,268
|
|
||
Dividends payable
|
129,981
|
|
|
126,278
|
|
||
Total liabilities
|
8,787,670
|
|
|
8,224,025
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||
|
|
|
|
||||
Redeemable noncontrolling interests
|
12,013
|
|
|
12,300
|
|
||
|
|
|
|
||||
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
|
|
|
|
||||
Common stock
|
1,243
|
|
|
1,208
|
|
||
Additional paid-in capital
|
9,336,949
|
|
|
8,874,367
|
|
||
Accumulated other comprehensive loss
|
(15,606
|
)
|
|
(9,749
|
)
|
||
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
|
9,322,586
|
|
|
8,865,826
|
|
||
Noncontrolling interests
|
1,579,666
|
|
|
1,288,352
|
|
||
Total equity
|
10,902,252
|
|
|
10,154,178
|
|
||
Total liabilities, noncontrolling interests, and equity
|
$
|
19,701,935
|
|
|
$
|
18,390,503
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Revenues:
|
|
|
|
||||
Income from rentals
|
$
|
437,605
|
|
|
$
|
354,749
|
|
Other income
|
2,314
|
|
|
4,093
|
|
||
Total revenues
|
439,919
|
|
|
358,842
|
|
||
|
|
|
|
||||
Expenses:
|
|
|
|
||||
Rental operations
|
129,103
|
|
|
101,501
|
|
||
General and administrative
|
31,963
|
|
|
24,677
|
|
||
Interest
|
45,739
|
|
|
39,100
|
|
||
Depreciation and amortization
|
175,496
|
|
|
134,087
|
|
||
Impairment of real estate
|
2,003
|
|
|
—
|
|
||
Loss on early extinguishment of debt
|
—
|
|
|
7,361
|
|
||
Total expenses
|
384,304
|
|
|
306,726
|
|
||
|
|
|
|
||||
Equity in (losses) earnings of unconsolidated real estate joint ventures
|
(3,116
|
)
|
|
1,146
|
|
||
Investment (loss) income
|
(21,821
|
)
|
|
83,556
|
|
||
Net income
|
30,678
|
|
|
136,818
|
|
||
Net income attributable to noncontrolling interests
|
(11,913
|
)
|
|
(7,659
|
)
|
||
Net income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
18,765
|
|
|
129,159
|
|
||
Dividends on preferred stock
|
—
|
|
|
(1,026
|
)
|
||
Preferred stock redemption charge
|
—
|
|
|
(2,580
|
)
|
||
Net income attributable to unvested restricted stock awards
|
(1,925
|
)
|
|
(1,955
|
)
|
||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
16,840
|
|
|
$
|
123,598
|
|
|
|
|
|
||||
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
|
|
|
|
||||
Basic
|
$
|
0.14
|
|
|
$
|
1.11
|
|
Diluted
|
$
|
0.14
|
|
|
$
|
1.11
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net income
|
$
|
30,678
|
|
|
$
|
136,818
|
|
Other comprehensive loss
|
|
|
|
||||
Unrealized losses on interest rate hedge agreements:
|
|
|
|
||||
Unrealized interest rate hedge losses arising during the period
|
—
|
|
|
(558
|
)
|
||
Reclassification adjustment for amortization to interest expense included in net income
|
—
|
|
|
(1,929
|
)
|
||
Unrealized losses on interest rate hedge agreements, net
|
—
|
|
|
(2,487
|
)
|
||
|
|
|
|
||||
Unrealized (losses) gains on foreign currency translation:
|
|
|
|
||||
Unrealized foreign currency translation (losses) gains arising during the period
|
(5,857
|
)
|
|
2,210
|
|
||
Unrealized (losses) gains on foreign currency translation, net
|
(5,857
|
)
|
|
2,210
|
|
||
|
|
|
|
||||
Total other comprehensive loss
|
(5,857
|
)
|
|
(277
|
)
|
||
Comprehensive income
|
24,821
|
|
|
136,541
|
|
||
Less: comprehensive income attributable to noncontrolling interests
|
(11,913
|
)
|
|
(7,659
|
)
|
||
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
|
$
|
12,908
|
|
|
$
|
128,882
|
|
|
|
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Number of
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-In Capital
|
|
Retained
Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|
Redeemable
Noncontrolling
Interests
|
|||||||||||||||
Balance as of December 31, 2019
|
|
120,800,315
|
|
|
$
|
1,208
|
|
|
$
|
8,874,367
|
|
|
$
|
—
|
|
|
$
|
(9,749
|
)
|
|
$
|
1,288,352
|
|
|
$
|
10,154,178
|
|
|
$
|
12,300
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,765
|
|
|
—
|
|
|
11,695
|
|
|
30,460
|
|
|
218
|
|
|||||||
Total other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,857
|
)
|
|
—
|
|
|
(5,857
|
)
|
|
—
|
|
|||||||
Redemption of noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300
|
)
|
|||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,481
|
)
|
|
(16,481
|
)
|
|
(205
|
)
|
|||||||
Contributions from and sales of noncontrolling interests
|
|
—
|
|
|
—
|
|
|
55,856
|
|
|
—
|
|
|
—
|
|
|
296,100
|
|
|
351,956
|
|
|
—
|
|
|||||||
Issuance of common stock
|
|
3,392,622
|
|
|
34
|
|
|
504,304
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
504,338
|
|
|
—
|
|
|||||||
Issuance pursuant to stock plan
|
|
181,928
|
|
|
2
|
|
|
22,986
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,988
|
|
|
—
|
|
|||||||
Taxes related to net settlement of equity awards
|
|
(49,181
|
)
|
|
(1
|
)
|
|
(6,864
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,865
|
)
|
|
—
|
|
|||||||
Dividends declared on common stock ($1.03 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(129,981
|
)
|
|
—
|
|
|
—
|
|
|
(129,981
|
)
|
|
—
|
|
|||||||
Cumulative effect of adjustment upon adoption of new ASU on credit losses on January 1, 2020
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,484
|
)
|
|
—
|
|
|
—
|
|
|
(2,484
|
)
|
|
—
|
|
|||||||
Reclassification of distributions in excess of earnings
|
|
—
|
|
|
—
|
|
|
(113,700
|
)
|
|
113,700
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Balance as of March 31, 2020
|
|
124,325,684
|
|
|
$
|
1,243
|
|
|
$
|
9,336,949
|
|
|
$
|
—
|
|
|
$
|
(15,606
|
)
|
|
$
|
1,579,666
|
|
|
$
|
10,902,252
|
|
|
$
|
12,013
|
|
|
|
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 Loss
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|
Redeemable
Noncontrolling
Interests
|
|||||||||||||||||
Balance as of December 31, 2018
|
|
$
|
64,336
|
|
|
111,011,816
|
|
|
$
|
1,110
|
|
|
$
|
7,286,954
|
|
|
$
|
—
|
|
|
$
|
(10,435
|
)
|
|
$
|
541,963
|
|
|
$
|
7,883,928
|
|
|
$
|
10,786
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
129,159
|
|
|
—
|
|
|
7,442
|
|
|
136,601
|
|
|
217
|
|
||||||||
Total other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(277
|
)
|
|
—
|
|
|
(277
|
)
|
|
—
|
|
||||||||
Distributions to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,501
|
)
|
|
(9,501
|
)
|
|
(208
|
)
|
||||||||
Contributions from and sales of noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
202,246
|
|
|
—
|
|
|
—
|
|
|
237,544
|
|
|
439,790
|
|
|
94
|
|
||||||||
Issuance pursuant to stock plan
|
|
—
|
|
|
195,992
|
|
|
2
|
|
|
16,936
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,938
|
|
|
—
|
|
||||||||
Taxes related to net settlement of equity awards
|
|
—
|
|
|
(27,149
|
)
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(89
|
)
|
|
—
|
|
||||||||
Repurchases of 7.00% Series D preferred stock
|
|
(6,875
|
)
|
|
—
|
|
|
—
|
|
|
215
|
|
|
(2,580
|
)
|
|
—
|
|
|
—
|
|
|
(9,240
|
)
|
|
—
|
|
||||||||
Dividends declared on common stock ($0.97 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109,574
|
)
|
|
—
|
|
|
—
|
|
|
(109,574
|
)
|
|
—
|
|
||||||||
Dividends declared on preferred stock ($0.4375 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,026
|
)
|
|
—
|
|
|
—
|
|
|
(1,026
|
)
|
|
—
|
|
||||||||
Cumulative effect of adjustment upon adoption of new ASU on lease accounting on January 1, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,525
|
)
|
|
—
|
|
|
—
|
|
|
(3,525
|
)
|
|
—
|
|
||||||||
Reclassification of distributions in excess of earnings
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,454
|
|
|
(12,454
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Balance as of March 31, 2019
|
|
$
|
57,461
|
|
|
111,180,659
|
|
|
$
|
1,112
|
|
|
$
|
7,518,716
|
|
|
$
|
—
|
|
|
$
|
(10,712
|
)
|
|
$
|
777,448
|
|
|
$
|
8,344,025
|
|
|
$
|
10,889
|
|
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Operating Activities:
|
|
|
|
||||
Net income
|
$
|
30,678
|
|
|
$
|
136,818
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
175,496
|
|
|
134,087
|
|
||
Impairment of real estate
|
2,003
|
|
|
—
|
|
||
Loss on early extinguishment of debt
|
—
|
|
|
7,361
|
|
||
Equity in losses (earnings) of unconsolidated real estate joint ventures
|
3,116
|
|
|
(1,146
|
)
|
||
Distributions of earnings from unconsolidated real estate joint ventures
|
490
|
|
|
858
|
|
||
Amortization of loan fees
|
2,247
|
|
|
2,233
|
|
||
Amortization of debt premiums
|
(888
|
)
|
|
(801
|
)
|
||
Amortization of acquired below-market leases
|
(15,964
|
)
|
|
(7,148
|
)
|
||
Deferred rent
|
(20,597
|
)
|
|
(26,965
|
)
|
||
Stock compensation expense
|
9,929
|
|
|
11,029
|
|
||
Investment loss (income)
|
21,821
|
|
|
(83,556
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Tenant receivables
|
(4,874
|
)
|
|
167
|
|
||
Deferred leasing costs
|
(9,085
|
)
|
|
(11,279
|
)
|
||
Other assets
|
(10,893
|
)
|
|
(8,684
|
)
|
||
Accounts payable, accrued expenses, and other liabilities
|
7,788
|
|
|
(16,244
|
)
|
||
Net cash provided by operating activities
|
191,267
|
|
|
136,730
|
|
||
|
|
|
|
||||
Investing Activities:
|
|
|
|
||||
Additions to real estate
|
(373,499
|
)
|
|
(241,049
|
)
|
||
Purchases of real estate
|
(482,409
|
)
|
|
(418,358
|
)
|
||
Deposits for investing activities
|
4,834
|
|
|
500
|
|
||
Investments in unconsolidated real estate joint ventures
|
(2,592
|
)
|
|
(52,634
|
)
|
||
Return of capital from unconsolidated real estate joint ventures
|
20,224
|
|
|
—
|
|
||
Additions to non-real estate investments
|
(31,060
|
)
|
|
(48,992
|
)
|
||
Sales of non-real estate investments
|
30,910
|
|
|
26,200
|
|
||
Net cash used in investing activities
|
$
|
(833,592
|
)
|
|
$
|
(734,333
|
)
|
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
|
|||||||
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Financing Activities:
|
|
|
|
||||
Repayments of borrowings from secured notes payable
|
$
|
(1,479
|
)
|
|
$
|
(301,343
|
)
|
Proceeds from issuance of unsecured senior notes payable
|
699,531
|
|
|
854,209
|
|
||
Borrowings from unsecured senior line of credit
|
783,000
|
|
|
1,405,000
|
|
||
Repayments of borrowings from unsecured senior line of credit
|
(946,000
|
)
|
|
(1,613,000
|
)
|
||
Proceeds from issuance of commercial paper
|
2,158,900
|
|
|
—
|
|
||
Repayments of borrowings from commercial paper
|
(2,158,900
|
)
|
|
—
|
|
||
Payments of loan fees
|
(7,954
|
)
|
|
(15,225
|
)
|
||
Taxes paid related to net settlement of equity awards
|
(1,253
|
)
|
|
(89
|
)
|
||
Repurchase of 7.00% Series D cumulative convertible preferred stock
|
—
|
|
|
(9,240
|
)
|
||
Proceeds from issuance of common stock
|
504,338
|
|
|
—
|
|
||
Dividends on common stock
|
(126,278
|
)
|
|
(109,342
|
)
|
||
Dividends on preferred stock
|
—
|
|
|
(1,126
|
)
|
||
Contributions from and sales of noncontrolling interests
|
2,756
|
|
|
440,671
|
|
||
Distributions to and redemption of noncontrolling interests
|
(16,986
|
)
|
|
(9,709
|
)
|
||
Net cash provided by financing activities
|
889,675
|
|
|
640,806
|
|
||
|
|
|
|
||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(1,668
|
)
|
|
472
|
|
||
|
|
|
|
||||
Net increase in cash, cash equivalents, and restricted cash
|
245,682
|
|
|
43,675
|
|
||
Cash, cash equivalents, and restricted cash as of the beginning of period
|
242,689
|
|
|
272,130
|
|
||
Cash, cash equivalents, and restricted cash as of the end of period
|
$
|
488,371
|
|
|
$
|
315,805
|
|
|
|
|
|
||||
Supplemental Disclosures and Non-Cash Investing and Financing Activities:
|
|
|
|
||||
Cash paid during the period for interest, net of interest capitalized
|
$
|
65,500
|
|
|
$
|
49,600
|
|
Accrued construction for current-period additions to real estate
|
$
|
134,414
|
|
|
$
|
133,502
|
|
Assumption of secured notes payable in connection with purchase of properties
|
$
|
—
|
|
|
$
|
(28,200
|
)
|
Right-of-use asset
|
$
|
32,700
|
|
|
$
|
239,653
|
|
Lease liability
|
$
|
(32,700
|
)
|
|
$
|
(245,638
|
)
|
Contribution of assets from real estate joint venture partner
|
$
|
350,000
|
|
|
$
|
—
|
|
Issuance of noncontrolling interest to joint venture partner
|
$
|
(292,930
|
)
|
|
$
|
—
|
|
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., 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).
|
•
|
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)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
•
|
Investments in publicly traded companies are classified as investments with readily determinable fair values and are presented at fair value in our consolidated balance sheets, with changes in fair value recognized in net income. The fair values for our investments in publicly traded companies are determined based on sales prices or quotes available on securities exchanges.
|
•
|
Investments in privately held entities without readily determinable fair values fall into two categories:
|
•
|
Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships, are presented at fair value using NAV as a practical expedient, with changes in fair value recognized in net income. We use NAV per share reported by limited partnerships generally without adjustment, unless we are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the investment at our reporting date. We disclose the timing of liquidation of an investee’s assets and the date when redemption restrictions will lapse (or indicate if this timing is unknown) if the investee has communicated this information to us or has announced it publicly.
|
•
|
Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Income from rentals:
|
|
|
|
|
||||
Revenues subject to the lease accounting standard:
|
|
|
|
|
||||
Operating leases
|
|
$
|
428,742
|
|
|
$
|
343,339
|
|
Direct financing lease
|
|
613
|
|
|
601
|
|
||
Revenues subject to the lease accounting standard
|
|
429,355
|
|
|
343,940
|
|
||
Revenues subject to the revenue recognition accounting standard
|
|
8,250
|
|
|
10,809
|
|
||
Income from rentals
|
|
437,605
|
|
|
354,749
|
|
||
Other income
|
|
2,314
|
|
|
4,093
|
|
||
Total revenues
|
|
$
|
439,919
|
|
|
$
|
358,842
|
|
•
|
Package of practical expedients – required us not to reevaluate our existing or expired leases as of January 1, 2019, under the new lease accounting standard.
|
•
|
Optional transition method practical expedient – required us to apply the new lease accounting standard prospectively from the adoption date of January 1, 2019.
|
•
|
Single component accounting policy – required us to account for lease and nonlease components within a lease under the new lease accounting standard if certain criteria are met.
|
•
|
Land easements practical expedient – required us to continue to account for land easements existing as of January 1, 2019, under the accounting standards applied to them prior to January 1, 2019.
|
•
|
Short-term lease accounting policy – required us not to record the related lease liabilities and right-of-use assets for operating leases in which we are the lessee with a term of 12 months or less.
|
•
|
Whether any contracts effective prior to January 1, 2019, were leases or contained leases. This practical expedient was primarily applicable to entities that had contracts containing embedded leases. As of December 31, 2018, we had no such contracts; therefore, this practical expedient had no effect on us.
|
•
|
The lease classification for any leases that commenced prior to January 1, 2019. Our election of the package of practical expedients required us not to revisit the classification of our leases that commenced prior to January 1, 2019. For example, all of our leases that were classified as operating leases in accordance with the lease accounting standards in effect prior to January 1, 2019, continued to be classified as operating leases after adoption of the new lease standard.
|
•
|
Previously capitalized initial direct costs for any leases that commenced prior to January 1, 2019. Our election of the package of practical expedients and the optional transition method required us not to reassess whether initial direct leasing costs capitalized prior to the adoption of the new lease accounting standard in connection with the leases that commenced prior to January 1, 2019, qualified for capitalization under the new lease accounting standard.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(i)
|
One party (lessor) must hold an identified asset;
|
(ii)
|
The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of the contract; and
|
(iii)
|
The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.
|
(i)
|
Ownership is transferred from lessor to lessee by the end of the lease term;
|
(ii)
|
An option to purchase is reasonably certain to be exercised;
|
(iii)
|
The lease term is for the major part of the underlying asset’s remaining economic life;
|
(iv)
|
The present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset; or
|
(v)
|
The underlying asset is specialized and is expected to have no alternative use at the end of the lease term.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
(i)
|
The timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
|
(ii)
|
The lease component would be classified as an operating lease if it were accounted for separately.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
•
|
The subsidiary issuer or guarantor is a consolidated subsidiary of the parent company, and
|
•
|
The subsidiary issues a registered security that is:
|
•
|
Issued jointly and severally with the parent company, or
|
•
|
Fully and unconditionally guaranteed by the parent company.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
|
3.
|
INVESTMENTS IN REAL ESTATE
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Rental properties:
|
|
|
|
|
||||
Land (related to rental properties)
|
|
$
|
2,426,854
|
|
|
$
|
2,225,785
|
|
Buildings and building improvements
|
|
12,446,556
|
|
|
11,775,132
|
|
||
Other improvements
|
|
1,329,652
|
|
|
1,277,862
|
|
||
Rental properties
|
|
16,203,062
|
|
|
15,278,779
|
|
||
Development and redevelopment of new Class A properties:
|
|
|
|
|
||||
Development and redevelopment projects
|
|
2,245,480
|
|
|
2,057,084
|
|
||
Future development projects
|
|
191,034
|
|
|
182,746
|
|
||
Gross investments in real estate
|
|
18,639,576
|
|
|
17,518,609
|
|
||
Less: accumulated depreciation
|
|
(2,836,981
|
)
|
|
(2,704,657
|
)
|
||
Net investments in real estate – North America
|
|
15,802,595
|
|
|
14,813,952
|
|
||
Net investments in real estate – Asia
|
|
29,587
|
|
|
30,086
|
|
||
Investments in real estate
|
|
$
|
15,832,182
|
|
|
$
|
14,844,038
|
|
|
|
|
|
Square Footage
|
|
|
|
|||||||||
Market
|
|
Number of Properties
|
|
Future Development
|
|
Operating With Future Development/Redevelopment
|
|
Operating
|
|
Purchase Price
|
|
|||||
Greater Boston
|
|
1
|
|
—
|
|
|
—
|
|
|
509,702
|
|
|
$
|
226,512
|
|
|
San Francisco
|
|
5
|
|
260,000
|
|
|
300,010
|
|
|
582,309
|
|
|
105,000
|
|
(1)
|
|
San Diego
|
|
2
|
|
—
|
|
|
—
|
|
|
219,628
|
|
|
102,250
|
|
|
|
Other
|
|
3
|
|
35,000
|
|
|
71,021
|
|
|
180,960
|
|
|
50,817
|
|
|
|
Three months ended March 31, 2020
|
|
11
|
|
295,000
|
|
|
371,031
|
|
|
1,492,599
|
|
|
$
|
484,579
|
|
|
(1)
|
In January 2020, we formed a real estate joint venture with subsidiaries of Boston Properties, Inc. Amount excludes our partner’s contributed real estate assets with a total fair market value of $350.0 million. Refer to Note 4 – “Consolidated and Unconsolidated Real Estate Joint Ventures” to these unaudited consolidated financial statements for additional information.
|
3.
|
INVESTMENTS IN REAL ESTATE (continued)
|
4.
|
CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES
|
|
Property
|
|
Market
|
|
Submarket
|
|
Our Ownership Interest(1)
|
|||
Consolidated joint ventures(2):
|
|
|
|
|
|
|
|
|
||
|
225 Binney Street
|
|
Greater Boston
|
|
Cambridge
|
|
|
30.0
|
%
|
|
|
75/125 Binney Street
|
|
Greater Boston
|
|
Cambridge
|
|
|
40.0
|
%
|
|
|
409 and 499 Illinois Street
|
|
San Francisco
|
|
Mission Bay/SoMa
|
|
|
60.0
|
%
|
|
|
1500 Owens Street
|
|
San Francisco
|
|
Mission Bay/SoMa
|
|
|
50.1
|
%
|
|
|
Alexandria Technology Center® – Gateway(3)
|
|
San Francisco
|
|
South San Francisco
|
|
|
44.8
|
%
|
|
|
500 Forbes Boulevard
|
|
San Francisco
|
|
South San Francisco
|
|
|
10.0
|
%
|
|
|
Campus Pointe by Alexandria(4)
|
|
San Diego
|
|
University Town Center
|
|
|
55.0
|
%
|
|
|
5200 Illumina Way
|
|
San Diego
|
|
University Town Center
|
|
|
51.0
|
%
|
|
|
9625 Towne Centre Drive
|
|
San Diego
|
|
University Town Center
|
|
|
50.1
|
%
|
|
|
SD Tech by Alexandria
|
|
San Diego
|
|
Sorrento Mesa
|
|
|
50.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated joint ventures(2):
|
|
|
|
|
|
|
|
|
||
|
Menlo Gateway
|
|
San Francisco
|
|
Greater Stanford
|
|
|
49.0
|
%
|
|
|
704 Quince Orchard Road
|
|
Maryland
|
|
Gaithersburg
|
|
|
56.8
|
%
|
(5)
|
|
1655 and 1725 Third Street
|
|
San Francisco
|
|
Mission Bay/SoMa
|
|
|
10.0
|
%
|
|
(1)
|
Refer to the table on the next page that shows our categorization of our existing significant joint ventures under the consolidation framework.
|
(2)
|
In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in six other joint ventures in North America and we hold an interest in two other insignificant unconsolidated real estate joint venture in North America.
|
(3)
|
Includes 601, 611, 651, 681, 685, 701, and 751 Gateway Boulevard and excess land in our South San Francisco submarket.
|
(4)
|
Excludes 9880 Campus Point Drive in our University Town Center submarket.
|
(5)
|
Represents our ownership interest; our voting interest is limited to 50%.
|
Property
|
|
Consolidation Model
|
|
Voting Interest
|
|
Consolidation Analysis
|
|
Conclusion
|
|
|
|
|
|
|
|
|
|
|
|
225 Binney Street
|
|
VIE model
|
|
Not applicable under VIE model
|
|
We have:
|
|
Consolidated
|
|
75/125 Binney Street
|
|
(i)
|
The power to direct the activities of the joint venture that most significantly affect its economic performance; and
|
||||||
409 and 499 Illinois Street
|
|
|
|||||||
1500 Owens Street
|
|
|
|||||||
Alexandria Technology Center® – Gateway
|
|
|
|
||||||
500 Forbes Boulevard
|
|
(ii)
|
Benefits that can be significant to the joint venture.
|
||||||
Campus Pointe by Alexandria
|
|
|
|||||||
5200 Illumina Way
|
|
Therefore, we are the primary beneficiary of each VIE
|
|||||||
9625 Towne Centre Drive
|
|
||||||||
SD Tech by Alexandria
|
|
|
|||||||
Menlo Gateway
|
|
|
We do not control the joint venture and are therefore not the primary beneficiary
|
Equity method of accounting
|
|||||
|
|||||||||
704 Quince Orchard Road
|
|
Voting model
|
|
Does not exceed 50%
|
Our voting interest is 50% or less
|
|
|||
1655 and 1725 Third Street
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Investments in real estate
|
|
$
|
3,155,737
|
|
|
$
|
2,678,476
|
|
Cash and cash equivalents
|
|
83,729
|
|
|
81,021
|
|
||
Other assets
|
|
328,894
|
|
|
280,343
|
|
||
Total assets
|
|
$
|
3,568,360
|
|
|
$
|
3,039,840
|
|
|
|
|
|
|
||||
Secured notes payable
|
|
$
|
—
|
|
|
$
|
—
|
|
Other liabilities
|
|
150,025
|
|
|
149,471
|
|
||
Total liabilities
|
|
150,025
|
|
|
149,471
|
|
||
Redeemable noncontrolling interests
|
|
2,402
|
|
|
2,388
|
|
||
Alexandria Real Estate Equities, Inc.’s share of equity
|
|
1,837,374
|
|
|
1,600,729
|
|
||
Noncontrolling interests’ share of equity
|
|
1,578,559
|
|
|
1,287,252
|
|
||
Total liabilities and equity
|
|
$
|
3,568,360
|
|
|
$
|
3,039,840
|
|
Property
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Menlo Gateway
|
|
$
|
291,997
|
|
|
$
|
288,408
|
|
704 Quince Orchard Road
|
|
4,730
|
|
|
4,748
|
|
||
1655 and 1725 Third Street
|
|
17,371
|
|
|
37,016
|
|
||
Other
|
|
11,567
|
|
|
16,718
|
|
||
|
|
$
|
325,665
|
|
|
$
|
346,890
|
|
|
|
|
|
Maturity Date
|
|
Stated Rate
|
|
Interest Rate(1)
|
|
100% at Joint Venture Level
|
|
||||
Unconsolidated Joint Venture
|
|
Our Share
|
|
|
|
|
Debt Balance(2)
|
|
|||||||
704 Quince Orchard Road
|
|
56.8%
|
|
|
3/16/23
|
|
|
L+1.95%
|
|
2.90%
|
|
$
|
9,954
|
|
|
1655 and 1725 Third Street(3)
|
|
10.0%
|
|
|
3/10/25
|
|
|
4.50%
|
|
4.81%
|
|
590,844
|
|
|
|
Menlo Gateway, Phase II
|
|
49.0%
|
|
|
5/1/35
|
|
|
4.53%
|
|
4.59%
|
|
98,807
|
|
|
|
Menlo Gateway, Phase I
|
|
49.0%
|
|
|
8/10/35
|
|
|
4.15%
|
|
4.18%
|
|
141,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
841,080
|
|
|
(1)
|
Includes interest expense and amortization of loan fees.
|
(2)
|
Represents outstanding principal, net of unamortized deferred financing costs, as of March 31, 2020.
|
(3)
|
In March 2020, we completed the refinancing of a secured construction loan with an outstanding balance of $313.2 million and interest rate of L+3.70% to a fixed-rate loan that bears an interest rate of 4.50%.
|
5.
|
LEASES
|
•
|
A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset;
|
•
|
Tabular presentation of undiscounted cash flows to be received over the next five years and thereafter separately for operating leases and direct financing leases;
|
•
|
The amount of lease income and its location on the statements of operations;
|
•
|
Income classified separately for operating leases and direct financing leases; and
|
•
|
Our risk management strategy to mitigate declines in residual value of the leased assets.
|
•
|
A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset;
|
•
|
The amounts of lease liabilities and corresponding right-of-use assets and their respective locations in the balance sheet;
|
•
|
The weighted-average remaining lease term and weighted-average discount rate of leases;
|
•
|
Tabular presentation of undiscounted cash flows of our remaining lease payment obligations over the next five years and thereafter; and
|
•
|
Total lease costs, including cash paid, amounts expensed, and amounts capitalized.
|
Year
|
|
Amount
|
||
2020
|
|
$
|
861,336
|
|
2021
|
|
1,161,697
|
|
|
2022
|
|
1,139,628
|
|
|
2023
|
|
1,073,318
|
|
|
2024
|
|
989,452
|
|
|
Thereafter
|
|
6,364,760
|
|
|
Total
|
|
$
|
11,590,191
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Gross investment in direct financing lease
|
$
|
260,035
|
|
|
$
|
260,457
|
|
Less: unearned income
|
(219,928
|
)
|
|
(220,541
|
)
|
||
Less: allowance for credit losses(1)
|
(2,839
|
)
|
|
—
|
|
||
Net investment in direct financing lease
|
$
|
37,268
|
|
|
$
|
39,916
|
|
(1)
|
Refer to the “Allowance for Credit Losses” section in Note 2 – “Summary of Significant Accounting Policies” to these unaudited consolidated financial statements for additional information.
|
Year
|
|
Total
|
||
2020
|
|
$
|
1,283
|
|
2021
|
|
1,756
|
|
|
2022
|
|
1,809
|
|
|
2023
|
|
1,863
|
|
|
2024
|
|
1,919
|
|
|
Thereafter
|
|
251,405
|
|
|
Total
|
|
$
|
260,035
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Income from rentals:
|
|
|
|
|
||||
Revenues subject to the lease accounting standard:
|
|
|
|
|
||||
Operating leases
|
|
$
|
428,742
|
|
|
$
|
343,339
|
|
Direct financing lease
|
|
613
|
|
|
601
|
|
||
Revenues subject to the lease accounting standard
|
|
429,355
|
|
|
343,940
|
|
||
Revenues subject to the revenue recognition accounting standard
|
|
8,250
|
|
|
10,809
|
|
||
Income from rentals
|
|
$
|
437,605
|
|
|
$
|
354,749
|
|
Year
|
|
Total
|
||
2020
|
|
$
|
12,534
|
|
2021
|
|
17,294
|
|
|
2022
|
|
17,843
|
|
|
2023
|
|
18,018
|
|
|
2024
|
|
18,262
|
|
|
Thereafter
|
|
654,457
|
|
|
Total future payments under our operating leases in which we are the lessee
|
|
738,408
|
|
|
Effect of discounting
|
|
(445,235
|
)
|
|
Operating lease liability
|
|
$
|
293,173
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Gross operating lease costs
|
|
$
|
5,621
|
|
|
$
|
4,554
|
|
Capitalized lease costs
|
|
(840
|
)
|
|
(62
|
)
|
||
Expenses for operating leases in which we are the lessee
|
|
$
|
4,781
|
|
|
$
|
4,492
|
|
|
|
|
|
|
6.
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Cash and cash equivalents
|
$
|
445,255
|
|
|
$
|
189,681
|
|
Restricted cash:
|
|
|
|
||||
Funds held in trust under the terms of certain secured notes payable
|
26,414
|
|
|
24,331
|
|
||
Funds held in escrow related to construction projects and investing activities
|
11,612
|
|
|
23,252
|
|
||
Other
|
5,090
|
|
|
5,425
|
|
||
|
43,116
|
|
|
53,008
|
|
||
Total
|
$
|
488,371
|
|
|
$
|
242,689
|
|
7.
|
INVESTMENTS
|
(i)
|
a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee,
|
(ii)
|
a significant adverse change in the regulatory, economic, or technological environment of the investee,
|
(iii)
|
a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, and/or
|
(iv)
|
significant concerns about the investee’s ability to continue as a going concern.
|
7.
|
INVESTMENTS (continued)
|
(i)
|
changes in fair value for investments in publicly traded companies,
|
(ii)
|
changes in NAV, as a practical expedient to estimate fair value, for investments in privately held entities that report NAV, and/or
|
(iii)
|
observable price changes of our investments in privately held entities that do not report NAV.
|
|
March 31, 2020
|
||||||||||
|
Cost
|
|
Unrealized
Gains (Losses)
|
|
Carrying Amount
|
||||||
Investments:
|
|
|
|
|
|
||||||
Publicly traded companies
|
$
|
140,762
|
|
|
$
|
146,464
|
|
|
$
|
287,226
|
|
Entities that report NAV
|
285,557
|
|
|
165,617
|
|
|
451,174
|
|
|||
Entities that do not report NAV:
|
|
|
|
|
|
||||||
Entities with observable price changes
|
51,254
|
|
|
72,418
|
|
|
123,672
|
|
|||
Entities without observable price changes
|
261,410
|
|
|
—
|
|
|
261,410
|
|
|||
Total investments
|
$
|
738,983
|
|
|
$
|
384,499
|
|
|
$
|
1,123,482
|
|
|
December 31, 2019
|
||||||||||
|
Cost
|
|
Unrealized
Gains (Losses) |
|
Carrying Amount
|
||||||
Investments:
|
|
|
|
|
|
||||||
Publicly traded companies
|
$
|
148,109
|
|
|
$
|
170,528
|
|
|
$
|
318,637
|
|
Entities that report NAV
|
271,276
|
|
|
162,626
|
|
|
433,902
|
|
|||
Entities that do not report NAV:
|
|
|
|
|
|
||||||
Entities with observable price changes
|
42,045
|
|
|
68,489
|
|
|
110,534
|
|
|||
Entities without observable price changes
|
277,521
|
|
|
—
|
|
|
277,521
|
|
|||
Total investments
|
$
|
738,951
|
|
|
$
|
401,643
|
|
|
$
|
1,140,594
|
|
7.
|
INVESTMENTS (continued)
|
|
|
Three Months Ended March 31, 2020
|
||||||||||
|
|
Unrealized
(Losses) Gains
|
|
Realized (Losses) Gains
|
|
Total
|
||||||
Investments held at March 31, 2020:
|
|
|
|
|
|
|
||||||
Publicly traded companies
|
|
$
|
(11,709
|
)
|
|
$
|
—
|
|
|
$
|
(11,709
|
)
|
Entities that report NAV
|
|
2,991
|
|
|
—
|
|
|
2,991
|
|
|||
Entities that do not report NAV, held at period end
|
|
3,929
|
|
|
(19,780
|
)
|
|
(15,851
|
)
|
|||
Total investments held at March 31, 2020
|
|
(4,789
|
)
|
|
(19,780
|
)
|
|
(24,569
|
)
|
|||
Investment dispositions during the three months ended March 31, 2020:
|
|
|
|
|
|
|
||||||
Recognized in the current period
|
|
—
|
|
|
2,748
|
|
|
2,748
|
|
|||
Previously recognized gains
|
|
(12,355
|
)
|
|
12,355
|
|
|
—
|
|
|||
Total investment dispositions during the three months ended March 31, 2020
|
|
(12,355
|
)
|
|
15,103
|
|
|
2,748
|
|
|||
Investment loss
|
|
$
|
(17,144
|
)
|
|
$
|
(4,677
|
)
|
|
$
|
(21,821
|
)
|
|
|
Three Months Ended March 31, 2019
|
||||||||||
|
|
Unrealized Gains
|
|
Realized Gains
|
|
Total
|
||||||
Investments held at March 31, 2019:
|
|
|
|
|
|
|
||||||
Publicly traded companies
|
|
$
|
43,654
|
|
|
$
|
—
|
|
|
$
|
43,654
|
|
Entities that report NAV
|
|
32,429
|
|
|
—
|
|
|
32,429
|
|
|||
Entities that do not report NAV, held at period end
|
|
5,440
|
|
|
—
|
|
|
5,440
|
|
|||
Total investments held at March 31, 2019
|
|
81,523
|
|
|
—
|
|
|
81,523
|
|
|||
Investment dispositions during the three months ended March 31, 2019:
|
|
|
|
|
|
|
||||||
Recognized in the current period
|
|
—
|
|
|
2,033
|
|
|
2,033
|
|
|||
Previously recognized gains
|
|
(9,317
|
)
|
|
9,317
|
|
|
—
|
|
|||
Total investment dispositions during the three months ended March 31, 2019
|
|
(9,317
|
)
|
|
11,350
|
|
|
2,033
|
|
|||
Investment income
|
|
$
|
72,206
|
|
|
$
|
11,350
|
|
|
$
|
83,556
|
|
8.
|
OTHER ASSETS
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Acquired in-place leases
|
$
|
337,849
|
|
|
$
|
281,650
|
|
Deferred compensation plan
|
22,983
|
|
|
22,225
|
|
||
Deferred financing costs – $2.2 billion unsecured senior line of credit
|
12,264
|
|
|
13,064
|
|
||
Deposits
|
26,340
|
|
|
31,028
|
|
||
Furniture, fixtures, and equipment
|
29,826
|
|
|
23,031
|
|
||
Net investment in direct financing lease
|
37,268
|
|
|
39,916
|
|
||
Notes receivable
|
1,338
|
|
|
435
|
|
||
Operating lease right-of-use asset
|
285,107
|
|
|
264,709
|
|
||
Other assets
|
31,579
|
|
|
32,040
|
|
||
Prepaid expenses
|
29,496
|
|
|
11,324
|
|
||
Property, plant, and equipment
|
169,825
|
|
|
174,292
|
|
||
Total
|
$
|
983,875
|
|
|
$
|
893,714
|
|
9.
|
FAIR VALUE MEASUREMENTS
|
(in thousands)
|
|
|
|
Fair Value Measurement Using
|
||||||||||||
Description
|
|
Total
|
|
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
|
|
Significant
Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Investments in publicly traded companies:
|
|
|
|
|
|
|
|
|
||||||||
As of March 31, 2020
|
|
$
|
287,226
|
|
|
$
|
287,226
|
|
|
$
|
—
|
|
|
$
|
—
|
|
As of December 31, 2019
|
|
$
|
318,637
|
|
|
$
|
318,637
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Fair Value Measurement Using
|
|
||||||||||||
Description
|
|
Total
|
|
Level 1 Inputs
|
|
Level 2 Inputs
|
|
Level 3 Inputs
|
|
||||||||
Investments in privately held entities that do not report NAV
|
|
$
|
137,309
|
|
|
$
|
—
|
|
|
$
|
123,672
|
|
(1)
|
$
|
13,637
|
|
(2)
|
(1)
|
This balance represents the total carrying amount of our equity investments in privately held entities with observable price changes, included in our total investments balance of $1.1 billion in our consolidated balance sheets as of March 31, 2020. For more information, refer to Note 7 – “Investments” to these unaudited consolidated financial statements.
|
(2)
|
This balance is included in the $261.4 million balance related to investments in privately held entities without observable price changes as disclosed in Note 7 – “Investments” to these unaudited consolidated financial statements.
|
9.
|
FAIR VALUE MEASUREMENTS (continued)
|
|
March 31, 2020
|
||||||||||||||||||
|
Book Value
|
|
Fair Value Hierarchy
|
|
Estimated Fair Value
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Secured notes payable
|
$
|
347,136
|
|
|
$
|
—
|
|
|
$
|
373,849
|
|
|
$
|
—
|
|
|
$
|
373,849
|
|
Unsecured senior notes payable
|
$
|
6,736,999
|
|
|
$
|
—
|
|
|
$
|
6,949,103
|
|
|
$
|
—
|
|
|
$
|
6,949,103
|
|
$2.2 billion unsecured senior line of credit
|
$
|
221,000
|
|
|
$
|
—
|
|
|
$
|
220,967
|
|
|
$
|
—
|
|
|
$
|
220,967
|
|
|
December 31, 2019
|
||||||||||||||||||
|
Book Value
|
|
Fair Value Hierarchy
|
|
Estimated Fair Value
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Secured notes payable
|
$
|
349,352
|
|
|
$
|
—
|
|
|
$
|
363,344
|
|
|
$
|
—
|
|
|
$
|
363,344
|
|
Unsecured senior notes payable
|
$
|
6,044,127
|
|
|
$
|
—
|
|
|
$
|
6,571,668
|
|
|
$
|
—
|
|
|
$
|
6,571,668
|
|
$2.2 billion unsecured senior line of credit
|
$
|
384,000
|
|
|
$
|
—
|
|
|
$
|
383,928
|
|
|
$
|
—
|
|
|
$
|
383,928
|
|
10.
|
SECURED AND UNSECURED SENIOR DEBT
|
|
|
Stated
Rate
|
|
Interest Rate (1)
|
|
Maturity Date (2)
|
|
Principal Payments Remaining for the Periods Ending December 31,
|
|
|
|
Unamortized (Deferred Financing Cost), (Discount) Premium
|
|
|
|
||||||||||||||||||||||||||||||
Debt
|
|
|
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Principal
|
|
|
Total
|
|
||||||||||||||||||||||||
Secured notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
San Diego
|
|
4.66
|
%
|
|
4.90
|
%
|
|
1/1/23
|
|
$
|
1,328
|
|
|
$
|
1,852
|
|
|
$
|
1,942
|
|
|
$
|
26,259
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31,381
|
|
|
$
|
(181
|
)
|
|
$
|
31,200
|
|
|
Greater Boston
|
|
3.93
|
%
|
|
3.19
|
|
|
3/10/23
|
|
1,179
|
|
|
1,629
|
|
|
1,693
|
|
|
74,517
|
|
|
—
|
|
|
—
|
|
|
79,018
|
|
|
1,637
|
|
|
80,655
|
|
|
|||||||||
Greater Boston
|
|
4.82
|
%
|
|
3.40
|
|
|
2/6/24
|
|
2,407
|
|
|
3,394
|
|
|
3,564
|
|
|
3,742
|
|
|
183,527
|
|
|
—
|
|
|
196,634
|
|
|
10,336
|
|
|
206,970
|
|
|
|||||||||
San Francisco
|
|
4.14
|
%
|
|
4.42
|
|
|
7/1/26
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,200
|
|
|
28,200
|
|
|
(617
|
)
|
|
27,583
|
|
|
|||||||||
San Francisco
|
|
6.50
|
%
|
|
6.50
|
|
|
7/1/36
|
|
25
|
|
|
26
|
|
|
28
|
|
|
30
|
|
|
32
|
|
|
587
|
|
|
728
|
|
|
—
|
|
|
728
|
|
|
|||||||||
Secured debt weighted-average interest rate/subtotal
|
|
4.55
|
%
|
|
3.57
|
|
|
|
|
4,939
|
|
|
6,901
|
|
|
7,227
|
|
|
104,548
|
|
|
183,559
|
|
|
28,787
|
|
|
335,961
|
|
|
11,175
|
|
|
347,136
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Commercial paper program(3)
|
|
N/A
|
|
|
N/A
|
|
(3)
|
N/A
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||||||
$2.2 billion unsecured senior line of credit
|
|
L+0.825
|
%
|
|
2.12
|
|
|
1/28/24
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
221,000
|
|
|
—
|
|
|
221,000
|
|
|
—
|
|
|
221,000
|
|
|
|||||||||
Unsecured senior notes payable
|
|
3.90
|
%
|
|
4.04
|
|
|
6/15/23
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500,000
|
|
|
—
|
|
|
—
|
|
|
500,000
|
|
|
(1,915
|
)
|
|
498,085
|
|
|
|||||||||
Unsecured senior notes payable – green bond
|
|
4.00
|
%
|
|
4.03
|
|
|
1/15/24
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
650,000
|
|
|
—
|
|
|
650,000
|
|
|
(497
|
)
|
|
649,503
|
|
|
|||||||||
Unsecured senior notes payable
|
|
3.45
|
%
|
|
3.62
|
|
|
4/30/25
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
600,000
|
|
|
600,000
|
|
|
(4,452
|
)
|
|
595,548
|
|
|
|||||||||
Unsecured senior notes payable
|
|
4.30
|
%
|
|
4.50
|
|
|
1/15/26
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
300,000
|
|
|
(2,823
|
)
|
|
297,177
|
|
|
|||||||||
Unsecured senior notes payable – green bond
|
|
3.80
|
%
|
|
3.96
|
|
|
4/15/26
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350,000
|
|
|
350,000
|
|
|
(2,961
|
)
|
|
347,039
|
|
|
|||||||||
Unsecured senior notes payable
|
|
3.95
|
%
|
|
4.13
|
|
|
1/15/27
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350,000
|
|
|
350,000
|
|
|
(3,430
|
)
|
|
346,570
|
|
|
|||||||||
Unsecured senior notes payable
|
|
3.95
|
%
|
|
4.07
|
|
|
1/15/28
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
425,000
|
|
|
425,000
|
|
|
(3,299
|
)
|
|
421,701
|
|
|
|||||||||
Unsecured senior notes payable
|
|
4.50
|
%
|
|
4.60
|
|
|
7/30/29
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
300,000
|
|
|
(2,072
|
)
|
|
297,928
|
|
|
|||||||||
Unsecured senior notes payable
|
|
2.75
|
%
|
|
2.87
|
|
|
12/15/29
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
400,000
|
|
|
400,000
|
|
|
(3,989
|
)
|
|
396,011
|
|
|
|||||||||
Unsecured senior notes payable
|
|
4.70
|
%
|
|
4.81
|
|
|
7/1/30
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
450,000
|
|
|
450,000
|
|
|
(3,811
|
)
|
|
446,189
|
|
|
|||||||||
Unsecured senior notes payable
|
|
4.90
|
%
|
|
5.05
|
|
(4)
|
12/15/30
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
700,000
|
|
|
700,000
|
|
|
(8,423
|
)
|
|
691,577
|
|
|
|||||||||
Unsecured senior notes payable
|
|
3.375
|
%
|
|
3.48
|
|
|
8/15/31
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
750,000
|
|
|
750,000
|
|
|
(7,370
|
)
|
|
742,630
|
|
|
|||||||||
Unsecured senior notes payable
|
|
4.85
|
%
|
|
4.93
|
|
|
4/15/49
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
300,000
|
|
|
(3,418
|
)
|
|
296,582
|
|
|
|||||||||
Unsecured senior notes payable
|
|
4.00
|
%
|
|
3.91
|
|
|
2/1/50
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
700,000
|
|
|
700,000
|
|
|
10,459
|
|
|
710,459
|
|
|
|||||||||
Unsecured debt weighted-average/subtotal
|
|
|
|
4.04
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
500,000
|
|
|
871,000
|
|
|
5,625,000
|
|
|
6,996,000
|
|
|
(38,001
|
)
|
|
6,957,999
|
|
|
||||||||||
Weighted-average interest rate/total
|
|
|
|
4.01
|
%
|
|
|
|
$
|
4,939
|
|
|
$
|
6,901
|
|
|
$
|
7,227
|
|
|
$
|
604,548
|
|
|
$
|
1,054,559
|
|
|
$
|
5,653,787
|
|
|
$
|
7,331,961
|
|
|
$
|
(26,826
|
)
|
|
$
|
7,305,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
|
(2)
|
Reflects any extension options that we control.
|
(3)
|
In March 2020, we increased the aggregate amount we may issue from time to time under our commercial paper program from $750.0 million to $1.0 billion. This program provides us with the ability to issue commercial paper notes bearing interest at short-term fixed rates, generally with a maturity of 30 days or less and with a maximum maturity of 397 days from the date of issuance. Borrowings under the program will be used to fund short-term capital needs and are backed by our $2.2 billion unsecured senior line of credit. In the event we are unable to issue commercial paper notes or refinance outstanding borrowings under terms equal to or more favorable than those under the $2.2 billion unsecured senior line of credit, we expect to borrow under the $2.2 billion unsecured senior line of credit at L+0.825%. The commercial paper notes sold during the three months ended March 31, 2020, were issued at a weighted-average yield to maturity of 1.84%.
|
(4)
|
Issued on March 26, 2020.
|
10.
|
SECURED AND UNSECURED SENIOR DEBT (continued)
|
|
Fixed-Rate Debt
|
|
Variable-Rate Debt
|
|
|
|
|
|
Weighted-Average
|
||||||||||
|
|
|
|
|
|
|
Interest
|
|
Remaining Term
(in years)
|
||||||||||
|
|
|
Total
|
|
Percentage
|
|
Rate(1)
|
|
|||||||||||
Secured notes payable
|
$
|
347,136
|
|
|
$
|
—
|
|
|
$
|
347,136
|
|
|
4.8
|
%
|
|
3.57
|
%
|
|
3.8
|
Unsecured senior notes payable
|
6,736,999
|
|
|
—
|
|
|
6,736,999
|
|
|
92.2
|
|
|
4.10
|
|
|
10.9
|
|||
$2.2 billion unsecured senior line of credit(2)
|
—
|
|
|
221,000
|
|
|
221,000
|
|
|
3.0
|
|
|
2.12
|
|
|
3.8
|
|||
Total/weighted average
|
$
|
7,084,135
|
|
|
$
|
221,000
|
|
|
$
|
7,305,135
|
|
|
100.0
|
%
|
|
4.01
|
%
|
|
10.3
|
Percentage of total debt
|
97
|
%
|
|
3
|
%
|
|
100
|
%
|
|
|
|
|
|
|
(1)
|
Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
|
(2)
|
There was no outstanding balance under our commercial paper program as of March 31, 2020.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Gross interest
|
$
|
70,419
|
|
|
$
|
57,609
|
|
Capitalized interest
|
(24,680
|
)
|
|
(18,509
|
)
|
||
Interest expense
|
$
|
45,739
|
|
|
$
|
39,100
|
|
11.
|
ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Accounts payable and accrued expenses
|
$
|
242,994
|
|
|
$
|
198,994
|
|
Accrued construction
|
246,746
|
|
|
275,818
|
|
||
Acquired below-market leases
|
197,815
|
|
|
194,773
|
|
||
Conditional asset retirement obligations
|
15,551
|
|
|
14,037
|
|
||
Deferred rent liabilities
|
3,243
|
|
|
2,897
|
|
||
Operating lease liability
|
293,173
|
|
|
271,808
|
|
||
Unearned rent and tenant security deposits
|
288,073
|
|
|
275,863
|
|
||
Other liabilities
|
64,959
|
|
|
86,078
|
|
||
Total
|
$
|
1,352,554
|
|
|
$
|
1,320,268
|
|
12.
|
EARNINGS PER SHARE
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net income
|
$
|
30,678
|
|
|
$
|
136,818
|
|
Net income attributable to noncontrolling interests
|
(11,913
|
)
|
|
(7,659
|
)
|
||
Dividends on preferred stock
|
—
|
|
|
(1,026
|
)
|
||
Preferred stock redemption charge
|
—
|
|
|
(2,580
|
)
|
||
Net income attributable to unvested restricted stock awards
|
(1,925
|
)
|
|
(1,955
|
)
|
||
Numerator for basic and diluted EPS – net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
$
|
16,840
|
|
|
$
|
123,598
|
|
|
|
|
|
||||
Denominator for basic EPS – weighted-average shares of common stock outstanding
|
121,433
|
|
|
111,054
|
|
||
Dilutive effect of forward equity sales agreements
|
352
|
|
|
—
|
|
||
Denominator for diluted EPS – weighted-average shares of common stock outstanding
|
121,785
|
|
|
111,054
|
|
||
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
|
|
|
|
||||
Basic
|
$
|
0.14
|
|
|
$
|
1.11
|
|
Diluted
|
$
|
0.14
|
|
|
$
|
1.11
|
|
13.
|
STOCKHOLDERS’ EQUITY
|
|
|
Total
|
||
Balance as of December 31, 2019
|
|
$
|
(9,749
|
)
|
|
|
|
|
|
Other comprehensive loss before reclassifications
|
|
(5,857
|
)
|
|
Net other comprehensive loss
|
|
(5,857
|
)
|
|
|
|
|
|
|
Balance as of March 31, 2020
|
|
$
|
(15,606
|
)
|
14.
|
NONCONTROLLING INTERESTS
|
15.
|
ASSETS CLASSIFIED AS HELD FOR SALE
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Total assets
|
$
|
57,720
|
|
|
$
|
59,412
|
|
Total liabilities
|
(2,314
|
)
|
|
(2,860
|
)
|
||
Total accumulated other comprehensive income
|
1,686
|
|
|
536
|
|
||
Net assets classified as held for sale
|
$
|
57,092
|
|
|
$
|
57,088
|
|
16.
|
SUBSEQUENT EVENTS
|
16.
|
SUBSEQUENT EVENTS (continued)
|
•
|
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, technology, and agtech 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.
|
•
|
Uncertain global, national, and local impacts of the ongoing COVID-19 pandemic.
|
•
|
Other factors such as climate change, cyber intrusions, and/or changes in laws, regulations, and financial accounting standards.
|
•
|
A strong and flexible balance sheet:
|
•
|
Investment grade credit rating ranking in the top 10% among all publicly traded REITs (Baa1/stable from Moody’s Investors Service and BBB+/stable from S&P Global Ratings, both as of March 31, 2020).
|
•
|
Weighted average debt maturity of 10.3 years with no debt maturity scheduled until 2023.
|
•
|
Liquidity of $4.0 billion, including:
|
•
|
$750.0 million, additional unsecured senior line of credit completed on April 14, 2020.
|
•
|
$700.0 million, 4.90%, unsecured notes due in 2030 issued on March 23, 2020.
|
•
|
A high-quality, diverse, and innovative tenant base:
|
•
|
51% of our tenants are investment-grade or large publicly traded companies with capitalization in excess of $10 billion.
|
•
|
Our annual rental revenue as of March 31, 2020, consisted of the following:
|
•
|
5% Other (4.2% construction/real estate, finance, professional services and telecommunication, and less than 1.0% of our annual rental revenue from retail-related tenants).
|
•
|
Impact from COVID-19 pandemic on our results of operations:
|
•
|
As of April 24, 2020, our tenant receivables balance was approximately $7.3 million, representing our lowest balance since 2012.
|
•
|
Approximately 1.0% of our total revenues during the three months ended March 31, 2020, was generated from retail, including restaurants and fitness centers, many of which are currently closed due to the “shelter in place” or “stay at home” directives.
|
•
|
Some of our campuses and facilities in the key urban clusters of Cambridge, Mission Bay/SoMa, New York City and Lake Union generate revenue from transient/short-term parking. As a result of the shelter in place orders in each of these submarkets, parking revenue for April 2020 decreased. During the three months ended March 31, 2020, revenue generated from transient/short-term parking accounted for approximately 1% of our total rental revenue.
|
•
|
Our 2020 guidance for EPS and FFO per share - diluted, as adjusted, was impacted by 8 cents primarily as a result of our projected decline in revenue from April 1, 2020 to December 31, 2020, from a portion of our retail tenancy and transient/short-term parking.
|
•
|
During the three months ended March 31, 2020, we recognized a total of $5.0 million in reductions to rental income (related to deferred rents) for specific tenants, including retail tenants, and a general allowance for a pool of tenants, where we concluded that the collection in full of future lease payments is not probable.
|
•
|
Leasing activity:
|
•
|
During the three months ended March 31, 2020, our total leasing activity aggregated 703,355 RSF, of which 557,367 RSF represented lease renewals and re-leasing of space.
|
•
|
Our strong rental rate increases of 46.3% during the three months ended March 31, 2020, represented our highest quarterly rental rate increase over the past 10 years.
|
•
|
Approximately 95% of our leases (based upon RSF) contained effective annual rent escalations of approximately 3.0%.
|
•
|
Due to “shelter in place” and “stay at home” directives in almost every state, including the states in which we own and operate properties, many leasing transactions have paused, we believe temporarily, while companies re-direct their focus on addressing COVID-19 issues with their business, including protecting their employees and managing financial and operating matters. Volume of leasing for the month of April 2020 (through Friday, April 24, 2020) is down significantly. At the same time, we have ongoing interest and lease negotiations with tenants on lease renewals/extensions and expansion of space, including in our redevelopment/ground-up development projects. Additionally, we continue to have ongoing interest and negotiations with prospective tenants on leasing of space, including in our redevelopment/ground-up development projects.
|
•
|
Highly leased value-creation pipeline, including COVID-19 R&D space:
|
•
|
We have 12 current development and redevelopment properties aggregating 2.9 million RSF. These properties are 61% leased and 68% leased/negotiating. The timing of completion of each project may be impacted by COVID-19 and/or related directives to pause construction activity. Refer to the “New Class A development and redevelopment properties: current projects” section within this Item 2 for additional information. Upon completion of construction, these projects will generate significant revenue and cash flows.
|
•
|
Annual net operating income (cash basis), including our share of unconsolidated real estate joint ventures, is expected to increase $37 million upon the burn-off of initial free rent on recently delivered projects.
|
•
|
Significant reduction in 2020 construction spending and equity-type capital:
|
•
|
A significant portion of our historical annual construction spending included amounts related to future development projects with no aboveground vertical construction and were not committed to a specific tenant. Due to the current dislocation of capital and other markets caused by COVID-19, we have reduced our construction spending forecast for 2020 to focus primarily on projects that are partially or fully pre-leased. We also expect to continue certain future pipeline expenditures to minimize the impact of a temporary pause. As a result, we have reduced our construction spending forecast for 2020 from $1.6 billion to $960 million (at the midpoint of guidance). We also reduced our forecasted acquisitions for 2020 from $950 million to $650 million. The aggregate $940 million reduction in uses of capital in 2020 for construction and acquisitions were the primary drivers in the reduction of our remaining 2020 forecast of sources of capital from real estate dispositions, partial interest sales and common equity from $925 million to zero dollars.
|
•
|
Real estate impairment charges in March and April 2020:
|
•
|
In March 2020, we recognized impairment charges aggregating $2.0 million in connection with real estate deal costs incurred primarily related to four potential real estate properties that we ultimately decided not to acquire.
|
•
|
In March 2020, the State of Maryland’s “shelter in place” order led to the closure of the retail center owned by one of our unconsolidated joint ventures. As a result, we evaluated the recoverability of our investment and recognized a $7.6 million impairment charge to lower the carrying amount of our investment balance, which primarily consisted of real estate, to its estimated fair value less costs to sell.
|
•
|
We had a pending acquisition of an operating tech office property for which our revised economic projections declined from our initial underwriting. In April 2020, we recognized an impairment charge of $10 million to reduce the carrying amount of this pre-acquisition deposit to zero dollars, concurrently with submission of our notice to terminate the transaction.
|
•
|
Update on two future development pipeline projects:
|
•
|
88 Bluxome Street located in our Mission Bay/SoMA submarket: In April 2020, the City of San Francisco began discussion on the potential temporary use of the existing building. Their goal is to increase social distancing for residents in existing homeless shelters by relocating some residents on a temporary basis to 88 Bluxome Street. Our existing tenant is carefully considering the request of the city and may enter into a very short-term arrangement for the temporary use of the facility. We expect any arrangement to end before the planned demolition of the building in order to commence construction.
|
•
|
North Tower site located in our New York City submarket: In recent quarters, we have been negotiating a long-term ground lease for the future site of a new building approximating 550,000 RSF. In March 2020, due to the projected impacts of COVID-19 on New York City, the city commenced preparation of the site as a temporary morgue facility. The use of this site by the city has resulted in delays to deadlines for both ground lease negotiations and ultimately the timing to commence and complete key milestone construction dates.
|
•
|
Investment-grade or publicly traded large cap tenants represented 51% of our total annual rental revenue;
|
•
|
Approximately 95% of our leases (on an RSF basis) contained effective annual rent escalations that were either fixed (generally ranging from approximately 3.0% to 3.5%) or indexed based on a consumer price index or other index;
|
•
|
Approximately 93% of our leases (on an RSF basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent; and
|
•
|
Approximately 92% of our leases (on an RSF basis) provided for the recapture of capital expenditures (such as heating, ventilation, and air conditioning 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.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net income attributable to Alexandria’s common stockholders – diluted:
|
|||||||
In millions
|
$
|
16.8
|
|
|
$
|
123.6
|
|
Per share
|
$
|
0.14
|
|
|
$
|
1.11
|
|
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
|
|||||||
In millions
|
$
|
221.4
|
|
|
$
|
189.8
|
|
Per share
|
$
|
1.82
|
|
|
$
|
1.71
|
|
•
|
$3.3 billion of liquidity as of March 31, 2020, which subsequently increased to $4.0 billion upon obtaining an additional $750.0 million unsecured senior line of credit in April 2020.
|
•
|
Zero debt maturing until 2023.
|
•
|
10.3 years weighted-average remaining term of debt as of March 31, 2020.
|
•
|
$1.0 billion issuance of forward equity sales agreements, executed in January 2020, at a public offering price of $155.00 per share, before underwriting discounts, with $500.0 million settled in March 2020.
|
•
|
Investment-grade credit rating ranking in the top 10% among all publicly traded REITs, Baa1/Stable from Moody’s Investors Service and BBB+/Stable from S&P Global Ratings, both as of March 31, 2020.
|
•
|
51% of annual rental revenue from investment-grade or publicly traded large cap tenants.
|
•
|
Weighted-average remaining lease term of 7.8 years.
|
•
|
As of April 24, 2020:
|
•
|
Our tenant receivables balance was $7.3 million, representing our lowest balance since 2012.
|
•
|
We have collected 98.4% of April 2020 rents and tenant recoveries.
|
(1)
|
Includes 686,988 RSF, or 2.4%, of vacancy in our North America markets, representing lease-up opportunities at properties recently acquired, primarily at our SD Tech by Alexandria campus (joint venture), 601, 611, and 651 Gateway Boulevard (joint venture), and 5505 Morehouse Drive. Excluding these vacancies, occupancy of operating properties in North America was 97.5% as of March 31, 2020. Refer to “Summary of Occupancy Percentages in North America” within this Item 2 of this report for additional information.
|
•
|
Total revenues of $439.9 million, up 22.6%, for the three months ended March 31, 2020, compared to $358.8 million for the three months ended March 31, 2019.
|
•
|
Net operating income (cash basis) of $1.1 billion for the three months ended March 31, 2020 annualized, increased by $204.1 million, or 22.9%, compared to the three months ended March 31, 2019 annualized.
|
•
|
95% of our leases contain contractual annual rent escalations approximating 3%.
|
•
|
2.4% and 6.1% (cash basis) same property net operating income growth for the three months ended March 31, 2020 over the three months ended March 31, 2019.
|
•
|
Minimal 2020 contractual lease expirations aggregating 4.0% of annual rental revenue.
|
•
|
Strong rental rate increases of 46.3% for the three months ended March 31, 2020, representing our highest quarterly rental rate increase over the past 10 years.
|
|
|
Three Months Ended March 31, 2020
|
||
Total leasing activity – RSF
|
|
703,355
|
|
|
Lease renewals and re-leasing of space:
|
|
|
|
|
RSF (included in total leasing activity above)
|
|
557,367
|
|
|
Rental rate increases
|
|
46.3%
|
|
|
Rental rate increases (cash basis)
|
|
22.3%
|
|
|
|
Per Share Impact
|
|
|
Reduction in retail and transient/short-term parking revenue 2Q20-4Q20
|
8
|
cents
|
|
Issuance of unsecured senior notes payable and updated timing of development and redevelopment deliveries, offset by improvement in EBITDA from our core operations
|
—
|
|
|
Total
|
8
|
cents
|
|
|
|
|
•
|
Current projects aggregating 2.9 million RSF, including COVID-19-focused R&D spaces, are highly leased at 61% and will generate significant revenue and cash flows.
|
•
|
Annual net operating income (cash basis), including our share of unconsolidated real estate joint ventures, is expected to increase $37 million upon the burn-off of initial free rent on recently delivered projects.
|
•
|
In March 2020, we successfully upzoned the square footage available for the ground-up development of office/laboratory space at 325 Binney Street in our Cambridge submarket to 402,000 SF from 164,000 SF.
|
•
|
In January 2020, we formed a real estate joint venture with subsidiaries of Boston Properties, Inc., in which we are targeting a 51% ownership interest over time. We are the managing member and have consolidated this joint venture. As of March 31, 2020, our ownership interest in the real estate joint venture was 44.8%.
|
•
|
Our partner contributed real estate assets with a total fair market value of $350.0 million, which comprise three office buildings, aggregating 776,003 RSF, at 601, 611, and 651 Gateway Boulevard, and land supporting 260,000 SF of future development.
|
•
|
We contributed real estate assets with a total fair market value of $281.9 million, which comprise three operating properties, aggregating 313,262 RSF, and land supporting 377,000 SF of future development.
|
•
|
$24.3 billion of total market capitalization.
|
•
|
$17.0 billion of total equity capitalization.
|
•
|
$3.3 billion of liquidity as of March 31, 2020, subsequently increased to $4.0 billion upon obtaining an additional $750.0 million unsecured senior line of credit in April 2020.
|
|
|
As of March 31, 2020
|
|
Goal for Fourth Quarter of 2020, Annualized
|
||||
|
|
Quarter Annualized
|
|
Trailing 12 Months
|
|
|||
Net debt and preferred stock to Adjusted EBITDA
|
|
5.5x
|
|
|
6.0x
|
|
Less than or equal to 5.3x
|
|
Fixed-charge coverage ratio
|
|
4.5x
|
|
|
4.2x
|
|
Greater than or equal to 4.4x
|
|
|
|
|
|
|
|
|
|
|
Value-creation pipeline of new Class A development and redevelopment projects as a percentage of gross investments in real estate
|
|
March 31, 2020
|
Current projects 68% leased/negotiating
|
|
6%
|
Income-producing/potential cash flows/covered land play(1)
|
|
5%
|
Land
|
|
2%
|
|
|
|
(1)
|
Includes projects that have existing buildings that are generating or can generate operating cash flows. Also includes development rights associated with existing operating campuses.
|
•
|
In January 2020, we completed $1.0 billion of forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock (including the exercise of an underwriters’ option) at a public offering price of $155.00 per share, before underwriting discounts. In March 2020, we settled 3.4 million shares from our forward equity sales agreements and received proceeds of $500.0 million. As of April 27, 2020, 3.5 million shares of our common stock remain outstanding under forward equity sales agreements, for which we expect to receive proceeds of $524.3 million to be further adjusted as provided in the sales agreements. We expect to settle the remaining outstanding forward equity sales agreements in 2020.
|
•
|
Over the trailing five quarters, we have completed the issuances of $3.4 billion in unsecured senior notes, with a weighted-average interest rate of 3.95% and a weighted-average maturity as of March 31, 2020, of 15.4 years, including our March 2020 offering of $700.0 million of unsecured senior notes payable at an interest rate of 4.90%, due in 2030, for net proceeds of $691.6 million.
|
•
|
In February 2020, we entered into a new ATM common stock offering program, which allows us to sell up to an aggregate of $850.0 million of our common stock. As of March 31, 2020, we have available $843.7 million remaining under our ATM program.
|
100% at Joint Venture Level
|
|
Amended Agreement
|
|
Change
|
Aggregate commitments
|
|
$600.0 million
|
|
Increase of $225.0 million
|
Maturity date
|
|
March 2025
|
|
Extended by 45 months
|
Interest rate
|
|
Fixed at 4.50%
|
|
Previously LIBOR + 3.70%
|
|
|
|
|
|
•
|
In April 2020, we closed an additional unsecured senior line of credit with $750.0 million of available commitments. The new unsecured senior line of credit matures on April 14, 2022, and bears interest at LIBOR + 1.05%. Pursuant to the terms of the agreement, we are required to repay the facility, if applicable, and reduce commitments available upon receiving the net proceeds from certain qualifying events, including new corporate debt and 50% of proceeds from the issuance of common stock, as provided in the credit agreement. Including our existing $2.2 billion unsecured senior line of credit, commitments available under our unsecured credit facilities aggregate $2.95 billion.
|
•
|
As of March 31, 2020, the carrying amount of our investments in publicly traded companies and privately held entities aggregated $1.1 billion, including an adjusted cost basis of $739.0 million, and unrealized gains of $384.5 million.
|
•
|
During the three months ended March 31, 2020, we recognized an investment loss of $21.8 million, comprising $17.1 million of unrealized losses, $19.8 million of impairments primarily related to two non-real estate investments in privately held entities, partially offset by $15.1 million in realized gains.
|
•
|
In March 2020, the Navy SEAL Foundation honored Joel S. Marcus, our executive chairman and founder, and the company with the 2020 Navy SEAL Foundation Patriot Award, which highlights our contributions and unwavering support for the Naval Special Warfare community. We have proudly supported the Navy SEAL Foundation in its mission to provide immediate and ongoing support and assistance to the Naval Special Warfare community and their families since 2010.
|
•
|
In January 2020, Alexandria Venture Investments, our strategic venture capital arm, was recognized for a third consecutive year as the most active biopharma investor by new deal volume by Silicon Valley Bank in its “2020 Healthcare Investments and Exits Report.” Alexandria’s venture activity provides us with, among other things, mission-critical data and knowledge on innovations and trends.
|
•
|
In January 2020, we announced our first national $100,000 AgTech Innovation Prize competition to recognize startup and early-stage agtech and foodtech companies that demonstrate innovative approaches to addressing challenges related to agriculture, food, and nutrition.
|
•
|
In February 2020, Alexandria LaunchLabs® at the Alexandria Center® at One Kendall Square earned the Fitwel Impact Award for the highest Fitwel certification of all time, as well as the highest score in 2019 for a commercial interior space, in the Fitwel 2020 Best in Building Health awards program. This marks the second consecutive year Alexandria LaunchLabs – Cambridge has held the record for Fitwel's top certification score. The award recognizes our commitment to supporting high levels of health, wellness, and productivity through the design, construction, and operation of our best-in-class buildings and spaces.
|
•
|
In April 2020, we completed the sale of a 50% interest in properties at 9808 and 9868 Scranton Road in our Sorrento Mesa submarket, aggregating 219,628 RSF, to our partner in the SD Tech by Alexandria consolidated real estate joint venture, of which we own 50%. The gross proceeds received from our partner were $51.1 million. We continue to control and consolidate this joint venture; therefore, we accounted for the proceeds from this transaction as equity financing with no gain or loss recognized in earnings.
|
•
|
We had a pending acquisition of an operating tech office property for which our revised economic projections declined from our initial underwriting. In April 2020, we recognized an impairment charge of $10 million to reduce the carrying amount of this pre-acquisition deposit to zero dollars, concurrently with submission of our notice to terminate the transaction.
|
(1)
|
Represents an illustrative subset of our over 60 tenants focused on COVID-19-related efforts, with some of these companies working on multiple efforts that span testing, treatment, and/or vaccine development.
|
•
|
Abbott Laboratories, Color Genomics, Laboratory Corporation of America Holdings, Roche, Quest Diagnostics, Thermo Fisher Scientific Inc., and others are working tirelessly to expand the capacity to determine who actively has COVID-19, who has been exposed to, and who has developed immunity against the virus. The availability of widespread screening and serological testing of this nature is critical for a safe and healthy return to society.
|
•
|
Over 140 experimental drug treatments and vaccines are being studied in over 250 clinical trials around the world, a substantial number of which are sponsored by our tenants and investment portfolio companies. Headlining efforts across our tenant base include:
|
•
|
Gilead Sciences, Inc.’s remdesivir is in late-stage studies for the treatment of moderate and severe COVID-19 patients. Though variable outcomes have been reported, additional Phase III study results are expected in mid- to late May, which, if positive, will likely form the basis for FDA approval.
|
•
|
Adaptive Biotechnologies Corporation is partnered with Amgen to identify and develop therapeutic antibodies from the blood of patients who are actively fighting or have recently recovered from COVID-19.
|
•
|
Vir Biotechnology, Inc., in collaboration with GlaxoSmithKline, is utilizing its neutralizing antibody platform to identify antibodies that could be used as therapeutic or preventative options to combat COVID-19.
|
•
|
Applied Therapeutics, Inc.’s lead clinical-stage asset is now being studied in COVID-19 patients with acute lung inflammation and cardiomyopathy, two of the predominant causes of COVID-19-associated mortality.
|
•
|
Many other Alexandria tenants, including AbbVie Inc., Amgen Inc., Eli Lilly and Company, Pfizer Inc., Novartis AG, are similarly endeavoring to develop novel therapies and repurpose existing and investigational drugs to provide near-term treatments for moderate and severe COVID-19 patients and those at highest risk.
|
•
|
A prophylactic vaccine represents the effective end of this global COVID-19 pandemic. Our tenant Moderna, Inc., in collaboration with the National Institute of Allergy and Infectious Diseases, has fast-tracked its mRNA-based vaccine into the clinic. The U.S. Biomedical Advanced Research and Development Authority (BARDA) has committed up to $483 million to support the clinical development and manufacturing scale-up of Moderna’s mRNA vaccine candidate, mRNA-1273, to help expedite FDA approval over the next nine to twelve months and facilitate the supply of tens of millions of doses per month thereafter.
|
•
|
Other tenants, including Arcturus Therapeutics, GlaxoSmithKline, Johnson & Johnson, Medicago Inc., Novavax, Inc., Pfizer Inc., and Sanofi, are leveraging their vaccine development expertise and technology platforms to similarly bring vaccine candidates into clinical trials, with the goal of expediting the delivery of a safe and effective vaccine to the public in 2021.
|
•
|
Feeding America – COVID-19 Response Fund: the fund from the nation’s largest hunger-relief organization with a network of 200 member food banks, is supporting the food banks that help people facing hunger during the school closures, job disruptions, and health risks, during the COVID-19 pandemic.
|
•
|
First Responders Children’s Foundation COVID-19 Emergency Response Fund: providing support to first responders on the front lines of the COVID-19 pandemic, and their families who are enduring financial hardship due to the outbreak.
|
•
|
Robin Hood’s COVID-19 Relief Fund from New York City’s largest poverty-fighting organization, is providing immediate, short-term grants to support non-profit organizations that are on the front lines in the fight against COVID-19 so they can move swiftly to serve affected communities.
|
•
|
Relief Opportunities for All Restaurants (ROAR) is providing financial relief directly to employees of restaurants who have lost their jobs as a result of the COVID-19 pandemic.
|
•
|
City of Cambridge Disaster Fund for COVID-19 is providing emergency assistance in partnership with non-profit organizations to individuals and families in Cambridge who are experiencing extreme financial hardship caused by the COVID-19 crisis.
|
Historical Same Property
Net Operating Income
|
|
Favorable Lease Structure(1)
|
|
||||||||
|
|
|
Strategic Lease Structure by Owner and Operator of Collaborative Life Science, Technology, and AgTech Campuses
|
|
|||||||
|
Increasing cash flows
|
|
|
|
|||||||
|
Percentage of leases containing annual rent escalations
|
95
|
%
|
|
|||||||
|
Stable cash flows
|
|
|
|
|||||||
|
Percentage of triple
net leases |
93
|
%
|
(2)
|
|||||||
|
Lower capex burden
|
|
|
|
|||||||
|
Percentage of leases providing for the recapture of capital expenditures
|
92
|
%
|
(2)
|
|||||||
|
|
|
|
||||||||
|
|
|
|
||||||||
Historical Rental Rate:
Renewed/Re-Leased Space |
|
Margins(3)
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
|
Adjusted EBITDA
|
|
|||||
|
71%
|
|
|
|
68%
|
|
|||||
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
(1)
|
Percentages calculated based on RSF as of March 31, 2020.
|
(2)
|
Includes 1.1 million RSF of full service gross leases related to properties that were acquired during the three months ended March 31, 2020. Excluding these leases, the percentage of triple net leases and percentage of leases providing for the recapture of capital expenditures were 97% and 96%, respectively.
|
(3)
|
Represents percentages for the three months ended March 31, 2020.
|
(1)
|
Represents annual rental revenue in effect as of March 31, 2020. Refer to the “Non-GAAP Measures and Definitions” section within this Item 2 for additional information.
|
(2)
|
Based on aggregate annual rental revenue in effect as of March 31, 2020. Refer to definition of “Annual Rental Revenue” in the “Non-GAAP Measures and Definitions” section within this Item 2 for additional information on our methodology on annual rental revenue for unconsolidated real estate joint ventures.
|
(3)
|
66% of our annual rental revenue for technology tenants is from investment-grade or publicly traded large cap tenants.
|
(4)
|
Revenues from our other tenants, aggregating 5.0% of our annual rental revenue, comprise 4.2% of annual rental revenue from Professional Services, Finance, Telecommunications, and Construction/Real Estate companies, and less than 1.0% from retail-related tenants.
|
High-Quality Cash Flows From Class A Properties in AAA Locations
|
|
|
|
Class A Properties in
AAA Locations
|
AAA Locations
|
|
|
74%
|
|
of ARE’s
Annual Rental Revenue(1) |
|
|
Percentage of ARE’s Annual Rental Revenue(1)
|
|
|
|
|
|
|
Solid Historical
Occupancy(2) |
Occupancy Across Key Locations(3)
|
|
|
96%
|
|
Over 10 Years
|
(1)
|
Represents annual rental revenue in effect as of March 31, 2020. Refer to the “Non-GAAP Measures and Definitions” section within this Item 2 for additional information.
|
(2)
|
Represents average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of March 31, 2020.
|
(3)
|
As of March 31, 2020.
|
(4)
|
Refer to the “Summary of Occupancy Percentages in North America” section within this Item 2 for additional information.
|
|
|
Three Months Ended
|
|
Year Ended
|
||||||||||||||
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||
|
|
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
|
|
46.3%
|
|
|
|
22.3%
|
|
|
32.2%
|
|
|
|
17.6%
|
|
||||
New rates
|
|
|
$47.45
|
|
|
|
|
$44.11
|
|
|
|
$58.65
|
|
|
|
|
$56.19
|
|
Expiring rates
|
|
|
$32.44
|
|
|
|
|
$36.08
|
|
|
|
$44.35
|
|
|
|
|
$47.79
|
|
RSF
|
|
557,367
|
|
|
|
|
|
2,427,108
|
|
|
|
|
||||||
Tenant improvements/leasing commissions
|
|
|
$23.19
|
|
|
|
|
|
|
$20.28
|
|
|
|
|
||||
Weighted-average lease term
|
|
5.4 years
|
|
|
|
|
|
5.7 years
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Developed/redeveloped previously vacant space leased
|
|
|
|
|
|
|
|
|
|
|
||||||||
New rates
|
|
|
$50.42
|
|
|
|
|
$50.50
|
|
|
|
$55.95
|
|
|
|
|
$52.19
|
|
RSF
|
|
145,988
|
|
(2)
|
|
|
|
2,635,614
|
|
|
|
|
||||||
Tenant improvements/leasing commissions
|
|
|
$12.80
|
|
|
|
|
|
|
$13.74
|
|
|
|
|
||||
Weighted-average lease term
|
|
5.8 years
|
|
|
|
|
|
9.8 years
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Leasing activity summary (totals):
|
|
|
|
|
|
|
|
|
|
|
||||||||
New rates
|
|
|
$48.07
|
|
|
|
|
$45.43
|
|
|
|
$57.25
|
|
|
|
|
$54.11
|
|
RSF
|
|
703,355
|
|
(3)
|
|
|
|
5,062,722
|
|
|
|
|
||||||
Tenant improvements/leasing commissions
|
|
|
$21.03
|
|
|
|
|
|
|
$16.88
|
|
|
|
|
||||
Weighted-average lease term
|
|
5.5 years
|
|
|
|
|
|
7.8 years
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Lease expirations(1)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Expiring rates
|
|
|
$32.44
|
|
|
|
|
$36.10
|
|
|
|
$43.43
|
|
|
|
|
$46.59
|
|
RSF
|
|
797,851
|
|
|
|
|
|
2,822,434
|
|
|
|
|
(1)
|
Excludes month-to-month leases aggregating 41,107 RSF and 41,809 RSF as of March 31, 2020, and December 31, 2019, respectively.
|
(2)
|
As of the date of this report, our value-creation pipeline was 68% leased or negotiating.
|
(3)
|
During the three months ended March 31, 2020, we granted tenant concessions/free rent averaging one month with respect to the 703,355 RSF leased. Approximately 74% of the leases executed during the three months ended March 31, 2020, did not include concessions for free rent.
|
Year
|
|
RSF
|
|
Percentage of
Occupied RSF |
|
Annual Rental Revenue
(Per RSF)(1) |
|
Percentage of Total
Annual Rental Revenue |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
2020
|
(2)
|
|
|
1,434,876
|
|
|
|
|
5.3
|
%
|
|
|
|
$
|
38.69
|
|
|
|
|
4.0
|
%
|
|
|
2021
|
|
|
|
1,442,812
|
|
|
|
|
5.3
|
%
|
|
|
|
$
|
42.79
|
|
|
|
|
4.5
|
%
|
|
|
2022
|
|
|
|
2,537,835
|
|
|
|
|
9.3
|
%
|
|
|
|
$
|
41.71
|
|
|
|
|
7.7
|
%
|
|
|
2023
|
|
|
|
2,856,125
|
|
|
|
|
10.5
|
%
|
|
|
|
$
|
45.33
|
|
|
|
|
9.4
|
%
|
|
|
2024
|
|
|
|
2,339,722
|
|
|
|
|
8.6
|
%
|
|
|
|
$
|
46.28
|
|
|
|
|
7.9
|
%
|
|
|
2025
|
|
|
|
2,101,406
|
|
|
|
|
7.7
|
%
|
|
|
|
$
|
47.86
|
|
|
|
|
7.3
|
%
|
|
|
2026
|
|
|
|
1,649,262
|
|
|
|
|
6.0
|
%
|
|
|
|
$
|
48.90
|
|
|
|
|
5.9
|
%
|
|
|
2027
|
|
|
|
2,369,275
|
|
|
|
|
8.7
|
%
|
|
|
|
$
|
50.88
|
|
|
|
|
8.8
|
%
|
|
|
2028
|
|
|
|
1,687,790
|
|
|
|
|
6.2
|
%
|
|
|
|
$
|
60.73
|
|
|
|
|
7.4
|
%
|
|
|
2029
|
|
|
|
1,402,104
|
|
|
|
|
5.1
|
%
|
|
|
|
$
|
56.92
|
|
|
|
|
5.8
|
%
|
|
Thereafter
|
|
|
7,501,816
|
|
|
|
|
27.3
|
%
|
|
|
|
$
|
57.68
|
|
|
|
|
31.3
|
%
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents amounts in effect as of March 31, 2020.
|
(2)
|
Excludes month-to-month leases for 41,107 RSF as of March 31, 2020.
|
|
|
2020 Contractual Lease Expirations (in RSF)
|
|
Annual Rental Revenue
(Per RSF)(3) |
|||||||||||||||
Market
|
|
Leased
|
|
Negotiating/
Anticipating |
|
Targeted for
Redevelopment |
|
Remaining
Expiring Leases(1) |
|
Total(2)
|
|
||||||||
|
|
|
|
|
|
||||||||||||||
Greater Boston
|
|
162,968
|
|
|
18,248
|
|
|
75,754
|
|
(4)
|
267,427
|
|
|
524,397
|
|
|
$
|
45.93
|
|
San Francisco
|
|
63,065
|
|
|
—
|
|
|
—
|
|
|
167,148
|
|
|
230,213
|
|
|
44.24
|
|
|
New York City
|
|
19,647
|
|
|
3,407
|
|
|
—
|
|
|
19,000
|
|
|
42,054
|
|
|
91.41
|
|
|
San Diego
|
|
37,201
|
|
|
44,806
|
|
|
—
|
|
|
251,502
|
|
(5)
|
333,509
|
|
|
31.22
|
|
|
Seattle
|
|
12,727
|
|
|
—
|
|
|
—
|
|
|
11,790
|
|
|
24,517
|
|
|
37.56
|
|
|
Maryland
|
|
17,295
|
|
|
8,155
|
|
|
—
|
|
|
76,889
|
|
|
102,339
|
|
|
19.65
|
|
|
Research Triangle
|
|
31,776
|
|
|
3,612
|
|
|
—
|
|
|
50,180
|
|
|
85,568
|
|
|
17.05
|
|
|
Canada
|
|
2,241
|
|
|
—
|
|
|
—
|
|
|
20,953
|
|
|
23,194
|
|
|
12.03
|
|
|
Non-cluster markets
|
|
—
|
|
|
6,285
|
|
|
—
|
|
|
62,800
|
|
|
69,085
|
|
|
32.57
|
|
|
Total
|
|
346,920
|
|
|
84,513
|
|
|
75,754
|
|
|
927,689
|
|
|
1,434,876
|
|
|
$
|
38.69
|
|
Percentage of expiring leases
|
|
24
|
%
|
|
6
|
%
|
|
5
|
%
|
|
65
|
%
|
|
100
|
%
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
2021 Contractual Lease Expirations (in RSF)
|
|
Annual Rental Revenue
(per RSF)(2) |
|||||||||||||||
Market
|
|
Leased
|
|
Negotiating/
Anticipating |
|
Targeted for
Redevelopment |
|
Remaining
Expiring Leases(3) |
|
Total
|
|
||||||||
|
|
|
|
|
|
||||||||||||||
Greater Boston
|
|
—
|
|
|
12,434
|
|
|
79,101
|
|
(4)
|
228,443
|
|
|
319,978
|
|
|
$
|
42.29
|
|
San Francisco
|
|
29,538
|
|
|
12,471
|
|
|
—
|
|
|
411,548
|
|
|
453,557
|
|
|
51.32
|
|
|
New York City
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,416
|
|
|
15,416
|
|
|
116.82
|
|
|
San Diego
|
|
634
|
|
|
74,557
|
|
|
—
|
|
|
217,603
|
|
|
292,794
|
|
|
41.76
|
|
|
Seattle
|
|
—
|
|
|
15,704
|
|
|
—
|
|
|
36,616
|
|
|
52,320
|
|
|
45.46
|
|
|
Maryland
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120,663
|
|
|
120,663
|
|
|
24.85
|
|
|
Research Triangle
|
|
6,493
|
|
|
34,553
|
|
|
—
|
|
|
107,912
|
|
|
148,958
|
|
|
27.47
|
|
|
Canada
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,394
|
|
|
18,394
|
|
|
23.77
|
|
|
Non-cluster markets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,732
|
|
|
20,732
|
|
|
47.14
|
|
|
Total
|
|
36,665
|
|
|
149,719
|
|
|
79,101
|
|
|
1,177,327
|
|
|
1,442,812
|
|
|
$
|
42.79
|
|
Percentage of expiring leases
|
|
3
|
%
|
|
10
|
%
|
|
5
|
%
|
|
82
|
%
|
|
100
|
%
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The largest remaining contractual lease expiration in 2020 is 93,521 RSF related to a recently acquired property in our South San Francisco submarket.
|
(2)
|
Excludes month-to-month leases aggregating 41,107 RSF as of March 31, 2020.
|
(3)
|
Represents amounts in effect as of March 31, 2020.
|
(4)
|
Represents office space aggregating 154,855 RSF at The Arsenal on the Charles, a campus acquired on December 17, 2019, in our Cambridge/Inner Suburbs submarket, that is targeted for redevelopment into office/laboratory space upon expiration of the respective existing leases. We are currently redeveloping 153,157 RSF into laboratory space.
|
(5)
|
Includes 112,012 RSF at 9363, 9373, and 9393 Towne Centre Drive in our University Town Center submarket, a future development site.
|
|
|
|
|
Remaining Lease Term(1)
(in Years)
|
|
|
Aggregate
RSF
|
|
|
Annual
Rental
Revenue(1)
|
|
Percentage of Aggregate Annual Rental Revenue (1)
|
|
Investment-Grade Credit Ratings
|
|
Average Market Cap(1)
(in billions)
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
Tenant
|
|
|
|
|
|
|
|
Moody’s
|
|
S&P
|
|
|||||||||||||||||
1
|
|
|
Bristol-Myers Squibb Company
|
|
|
8.5
|
|
|
|
|
900,050
|
|
|
|
$
|
52,243
|
|
|
|
3.9
|
%
|
|
|
A2
|
|
A+
|
|
$
|
101.8
|
|
2
|
|
|
Takeda Pharmaceutical Company Ltd.
|
|
|
9.4
|
|
|
|
|
606,249
|
|
|
|
|
39,251
|
|
|
|
2.9
|
|
|
|
Baa2
|
|
BBB+
|
|
$
|
57.3
|
|
3
|
|
|
Facebook, Inc.
|
|
|
11.8
|
|
|
|
|
903,786
|
|
|
|
|
38,946
|
|
|
|
2.9
|
|
|
|
—
|
|
—
|
|
$
|
544.4
|
|
4
|
|
|
Illumina, Inc.
|
|
|
10.4
|
|
|
|
|
891,495
|
|
|
|
|
35,907
|
|
|
|
2.7
|
|
|
|
—
|
|
BBB
|
|
$
|
45.2
|
|
5
|
|
|
Sanofi
|
|
|
8.2
|
|
|
|
|
494,693
|
|
|
|
|
33,845
|
|
|
|
2.5
|
|
|
|
A1
|
|
AA
|
|
$
|
113.0
|
|
6
|
|
|
Eli Lilly and Company
|
|
|
9.3
|
|
|
|
|
526,139
|
|
|
|
|
32,905
|
|
|
|
2.4
|
|
|
|
A2
|
|
A+
|
|
$
|
117.0
|
|
7
|
|
|
Novartis AG
|
|
|
8.1
|
|
|
|
|
441,894
|
|
|
|
|
31,302
|
|
|
|
2.3
|
|
|
|
A1
|
|
AA-
|
|
$
|
224.4
|
|
8
|
|
|
Roche
|
|
|
2.5
|
|
(2)
|
|
|
664,800
|
|
|
|
|
29,422
|
|
|
|
2.2
|
|
|
|
Aa3
|
|
AA
|
|
$
|
253.4
|
|
9
|
|
|
Uber Technologies, Inc.
|
|
|
62.7
|
|
(3)
|
|
|
1,009,188
|
|
|
|
|
27,379
|
|
|
|
2.0
|
|
|
|
—
|
|
—
|
|
$
|
59.3
|
|
10
|
|
|
bluebird bio, Inc.
|
|
|
7.2
|
|
|
|
|
312,805
|
|
|
|
|
23,149
|
|
|
|
1.7
|
|
|
|
—
|
|
—
|
|
$
|
5.7
|
|
11
|
|
|
Moderna, Inc.
|
|
|
10.2
|
|
|
|
|
382,388
|
|
|
|
|
22,421
|
|
|
|
1.7
|
|
|
|
—
|
|
—
|
|
$
|
6.4
|
|
12
|
|
|
Maxar Technologies(4)
|
|
|
5.2
|
|
|
|
|
478,000
|
|
|
|
|
21,577
|
|
|
|
1.6
|
|
|
|
—
|
|
—
|
|
$
|
0.6
|
|
13
|
|
|
Massachusetts Institute of Technology
|
|
|
8.7
|
|
|
|
|
257,626
|
|
|
|
|
21,144
|
|
|
|
1.6
|
|
|
|
Aaa
|
|
AAA
|
|
$
|
—
|
|
14
|
|
|
Merck & Co., Inc.
|
|
|
13.4
|
|
|
|
|
321,063
|
|
|
|
|
20,082
|
|
|
|
1.5
|
|
|
|
A1
|
|
AA-
|
|
$
|
213.1
|
|
15
|
|
|
New York University
|
|
|
11.5
|
|
|
|
|
201,284
|
|
|
|
|
19,011
|
|
|
|
1.4
|
|
|
|
Aa2
|
|
AA-
|
|
$
|
—
|
|
16
|
|
|
Pfizer Inc.
|
|
|
4.9
|
|
|
|
|
416,979
|
|
|
|
|
17,759
|
|
|
|
1.3
|
|
|
|
A1
|
|
AA-
|
|
$
|
213.2
|
|
17
|
|
|
Stripe, Inc.
|
|
|
7.5
|
|
|
|
|
295,333
|
|
|
|
|
17,736
|
|
|
|
1.3
|
|
|
|
—
|
|
—
|
|
$
|
—
|
|
18
|
|
|
athenahealth, Inc.(4)
|
|
|
12.3
|
|
|
|
|
409,710
|
|
|
|
|
17,686
|
|
|
|
1.3
|
|
|
|
—
|
|
—
|
|
$
|
—
|
|
19
|
|
|
Amgen Inc.
|
|
|
4.0
|
|
|
|
|
407,369
|
|
|
|
|
16,838
|
|
|
|
1.2
|
|
|
|
Baa1
|
|
A-
|
|
$
|
121.7
|
|
20
|
|
|
United States Government
|
|
|
7.7
|
|
|
|
|
287,638
|
|
|
|
|
16,512
|
|
|
|
1.2
|
|
|
|
Aaa
|
|
AA+
|
|
$
|
—
|
|
|
|
Total/weighted-average
|
|
|
11.4
|
|
(4)
|
|
|
10,208,489
|
|
|
|
$
|
535,115
|
|
|
|
39.6
|
%
|
|
|
|
|
|
|
|
(1)
|
Based on aggregate annual rental revenue in effect as of March 31, 2020. Refer to the definitions of “Annual Rental Revenue” and “Investment-Grade or Publicly Traded Large Cap Tenants” in the “Non-GAAP Measures and Definitions” section within this Item 2 for our methodologies on annual rental revenue from unconsolidated real estate joint ventures and average daily market capitalization.
|
(2)
|
Includes 197,787 RSF expiring in 2022 at our recently acquired property at 651 Gateway Boulevard in our South San Francisco submarket. Upon expiration of the lease, 651 Gateway Boulevard will be redeveloped into a Class A office/laboratory building.
|
(3)
|
Includes: i) a ground lease for land at 1455 and 1515 Third Street (two buildings aggregating 422,980 RSF), and ii) a lease at 1655 and 1725 Third Street (two buildings aggregating 586,208 RSF) owned by our unconsolidated joint venture in which we have an ownership interest of 10%. Annual rental revenue is presented using 100% of the annual rental revenue of our consolidated properties and our share of annual rental revenue of our unconsolidated real estate joint ventures. Refer to footnote 1 for additional information. Excluding the ground lease, the weighted-average remaining lease term for our top 20 tenants was 8.7 years as of March 31, 2020.
|
(4)
|
Located in properties acquired during the three months ended December 31, 2019.
|
|
|
RSF
|
|
Number of Properties
|
|
Annual Rental Revenue
|
|||||||||||||||||||||||
Market
|
|
Operating
|
|
Development
|
|
Redevelopment
|
|
Total
|
|
% of Total
|
|
|
Total
|
|
% of Total
|
|
Per RSF
|
||||||||||||
Greater Boston
|
|
7,704,626
|
|
|
—
|
|
|
153,157
|
|
|
7,857,783
|
|
|
25
|
%
|
|
67
|
|
|
$
|
482,648
|
|
|
36
|
%
|
|
$
|
63.33
|
|
San Francisco
|
|
7,703,973
|
|
|
841,178
|
|
|
347,912
|
|
|
8,893,063
|
|
|
29
|
|
|
60
|
|
|
366,846
|
|
|
27
|
|
|
57.58
|
|
||
New York City
|
|
1,127,580
|
|
|
—
|
|
|
140,098
|
|
|
1,267,678
|
|
|
4
|
|
|
5
|
|
|
79,277
|
|
|
6
|
|
|
71.70
|
|
||
San Diego
|
|
6,022,510
|
|
|
202,383
|
|
|
—
|
|
|
6,224,893
|
|
|
20
|
|
|
78
|
|
|
215,714
|
|
|
16
|
|
|
39.42
|
|
||
Seattle
|
|
1,458,305
|
|
|
100,086
|
|
|
—
|
|
|
1,558,391
|
|
|
5
|
|
|
15
|
|
|
75,818
|
|
|
6
|
|
|
53.14
|
|
||
Maryland
|
|
2,782,842
|
|
|
261,096
|
|
|
37,838
|
|
|
3,081,776
|
|
|
10
|
|
|
43
|
|
|
77,131
|
|
|
6
|
|
|
29.09
|
|
||
Research Triangle
|
|
1,224,904
|
|
|
—
|
|
|
—
|
|
|
1,224,904
|
|
|
4
|
|
|
16
|
|
|
32,669
|
|
|
2
|
|
|
27.63
|
|
||
Canada
|
|
188,967
|
|
|
—
|
|
|
—
|
|
|
188,967
|
|
|
1
|
|
|
2
|
|
|
4,762
|
|
|
—
|
|
|
26.91
|
|
||
Non-cluster markets
|
|
435,039
|
|
|
—
|
|
|
—
|
|
|
435,039
|
|
|
1
|
|
|
13
|
|
|
10,774
|
|
|
1
|
|
|
37.98
|
|
||
Properties held for sale
|
|
191,862
|
|
|
—
|
|
|
—
|
|
|
191,862
|
|
|
1
|
|
|
3
|
|
|
2,943
|
|
|
—
|
|
|
N/A
|
|
||
North America
|
|
28,840,608
|
|
|
1,404,743
|
|
|
679,005
|
|
|
30,924,356
|
|
|
100
|
%
|
|
302
|
|
|
$
|
1,348,582
|
|
|
100
|
%
|
|
$
|
51.18
|
|
|
|
|
|
2,083,748
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Properties
|
|
Operating and Redevelopment Properties
|
||||||||||||||
Market
|
|
3/31/20
|
|
12/31/19
|
|
3/31/19
|
|
3/31/20
|
|
12/31/19
|
|
3/31/19
|
||||||
Greater Boston
|
|
98.9
|
%
|
|
99.1
|
%
|
|
98.2
|
%
|
|
97.0
|
%
|
|
97.1
|
%
|
|
97.7
|
%
|
San Francisco
|
|
94.7
|
|
(1)
|
98.3
|
|
|
99.8
|
|
|
90.6
|
|
|
93.6
|
|
|
98.4
|
|
New York City
|
|
99.2
|
|
|
99.2
|
|
|
98.7
|
|
|
88.1
|
|
|
88.1
|
|
|
87.7
|
|
San Diego
|
|
90.9
|
|
(1)
|
92.3
|
|
|
94.2
|
|
|
90.9
|
|
|
92.3
|
|
|
94.2
|
|
Seattle
|
|
97.8
|
|
|
98.7
|
|
|
97.7
|
|
|
97.8
|
|
|
98.7
|
|
|
97.7
|
|
Maryland
|
|
95.9
|
|
|
96.7
|
|
|
97.0
|
|
|
94.6
|
|
|
95.2
|
|
|
95.3
|
|
Research Triangle
|
|
96.5
|
|
|
96.5
|
|
|
97.3
|
|
|
96.5
|
|
|
96.5
|
|
|
87.8
|
|
Subtotal
|
|
95.6
|
|
|
97.0
|
|
|
97.6
|
|
|
93.3
|
|
|
94.6
|
|
|
95.8
|
|
Canada
|
|
93.6
|
|
|
93.7
|
|
|
93.5
|
|
|
93.6
|
|
|
93.7
|
|
|
93.5
|
|
Non-cluster markets
|
|
65.2
|
|
|
80.1
|
|
|
81.1
|
|
|
65.2
|
|
|
80.1
|
|
|
81.1
|
|
North America
|
|
95.1
|
%
|
(1)
|
96.8
|
%
|
|
97.2
|
%
|
|
92.9
|
%
|
|
94.4
|
%
|
|
95.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes 686,988 RSF, or 2.4%, of vacancy in our North America markets (noted below), representing lease-up opportunities at properties recently acquired. Excluding these vacancies, occupancy of operating properties in North America was 97.5% as of March 31, 2020. Projected occupancy for the second quarter of 2020 includes 704,351 RSF, or 2.4%, of vacancy from these recently acquired properties. Refer to the “Acquisitions” section within this Item 2 for additional information.
|
|
|
|
|
As of March 31, 2020
|
|
As of June 30, 2020 (projected)
|
||||||||||||||
|
|
|
|
Vacant
|
|
Occupancy Impact
|
|
Vacant
|
|
Occupancy Impact
|
||||||||||
Property
|
|
Submarket/Market
|
|
RSF
|
|
Region
|
|
Consolidated
|
|
RSF
|
|
Region
|
|
Consolidated
|
||||||
601, 611, and 651 Gateway Boulevard
|
|
South San Francisco/San Francisco
|
|
203,492
|
|
|
2.6
|
%
|
|
0.7
|
%
|
|
198,528
|
|
|
2.5
|
%
|
|
0.7
|
%
|
SD Tech by Alexandria
|
|
Sorrento Mesa/San Diego
|
|
221,845
|
|
|
3.7
|
%
|
|
0.8
|
|
|
215,986
|
|
|
3.6
|
%
|
|
0.7
|
|
5505 Morehouse Drive
|
|
Sorrento Mesa/San Diego
|
|
71,016
|
|
|
1.2
|
%
|
|
0.2
|
|
|
71,016
|
|
|
1.2
|
%
|
|
0.2
|
|
Other acquisitions
|
|
Various
|
|
190,635
|
|
|
N/A
|
|
|
0.7
|
|
|
218,821
|
|
|
N/A
|
|
|
0.8
|
|
|
|
|
|
686,988
|
|
|
|
|
2.4
|
%
|
|
704,351
|
|
|
|
|
2.4
|
%
|
|
|
|
|
Development and Redevelopment
|
|
|
||||||||||||||||||||||
|
|
Operating
|
|
Under Construction
|
|
Near
Term
|
|
Intermediate
Term
|
|
Future
|
|
Subtotal
|
|
Total
|
||||||||||||||
Investments in real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Book value as of March 31, 2020(1)
|
|
$
|
16,203,062
|
|
|
$
|
1,096,177
|
|
|
$
|
504,469
|
|
|
$
|
644,834
|
|
|
$
|
191,034
|
|
|
$
|
2,436,514
|
|
|
$
|
18,639,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Square footage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating
|
|
28,840,608
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,840,608
|
|
|||||||
New Class A development and redevelopment properties
|
|
—
|
|
|
2,083,748
|
|
|
2,127,925
|
|
|
5,377,112
|
|
|
4,880,477
|
|
|
14,469,262
|
|
|
14,469,262
|
|
|||||||
Value-creation square feet currently included in rental properties(2)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(973,636
|
)
|
|
(821,860
|
)
|
|
(1,795,496
|
)
|
|
(1,795,496
|
)
|
|||||||
Total square footage
|
|
28,840,608
|
|
|
2,083,748
|
|
|
2,127,925
|
|
|
4,403,476
|
|
|
4,058,617
|
|
|
12,673,766
|
|
|
41,514,374
|
|
(1)
|
Balances exclude our share of the cost basis associated with our unconsolidated properties, which is classified as investments in unconsolidated real estate joint ventures in our consolidated balance sheets.
|
(2)
|
Refer to the definition of “Investments in Real Estate” in the “Non-GAAP Measures and Definitions” section within this Item 2 for additional detail on value-creation square feet currently included in rental properties.
|
Property
|
|
Submarket/Market
|
|
Date of Purchase
|
|
Number of Properties
|
|
Operating
Occupancy
|
|
Square Footage
|
|
Unlevered Yields
|
|
Purchase Price
|
|||||||||||||||||
|
|
|
|
Future Development
|
|
Operating With Future Development/ Redevelopment
|
|
Operating
|
|
Initial Stabilized
|
|
Initial Stabilized (Cash)
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Three months ended March 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
275 Grove Street
|
|
Route 128/Greater Boston
|
|
1/10/20
|
|
1
|
|
99
|
%
|
|
|
—
|
|
|
—
|
|
|
|
509,702
|
|
|
8.0%
|
|
6.7%
|
|
$
|
226,512
|
|
|
||
601, 611, and 651 Gateway Boulevard (51% interest in consolidated JV)(1)
|
|
South San Francisco/
San Francisco
|
|
1/28/20
|
|
3
|
|
73
|
%
|
(2)
|
|
260,000
|
|
|
300,010
|
|
|
|
475,993
|
|
|
(1)
|
|
(1)
|
|
|
(1)
|
|
|||
3330 and 3412 Hillview Avenue
|
|
Greater Stanford/
San Francisco
|
|
2/5/20
|
|
2
|
|
100
|
%
|
|
|
—
|
|
|
—
|
|
|
|
106,316
|
|
|
7.6%
|
|
4.2%
|
|
|
105,000
|
|
|
||
9808 and 9868 Scranton Road(3)
|
|
Sorrento Mesa/San Diego
|
|
1/10/20
|
|
2
|
|
88
|
%
|
|
|
—
|
|
|
—
|
|
|
|
219,628
|
|
|
7.3%
|
|
6.8%
|
|
|
102,250
|
|
(3)
|
||
Other
|
|
Various
|
|
|
|
3
|
|
38
|
%
|
|
|
35,000
|
|
|
71,021
|
|
|
|
180,960
|
|
|
N/A
|
|
N/A
|
|
|
50,817
|
|
|
||
|
|
|
|
|
|
11
|
|
79
|
%
|
|
|
295,000
|
|
|
371,031
|
|
|
|
1,492,599
|
|
|
|
|
|
|
|
|
$
|
484,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to the “Executive Summary” section within this Item 2 of this report for additional details on this transaction.
|
(2)
|
Includes 203,492 RSF of vacancy as of March 31, 2020. Refer to the “Summary of Occupancy Percentages in North America” section earlier within this Item 2 of this report for additional details
|
(3)
|
In April 2020, we completed the sale of a partial interest in properties at 9808 and 9868 Scranton Road to the existing SD Tech by Alexandria consolidated real estate joint venture, of which we own 50.0%. We received proceeds of $51.1 million for the 50% interest in the properties that our joint venture partner acquired through the joint venture. We continue to control and consolidate this joint venture; therefore, we accounted for the sale as an equity transaction with no gain or loss recognized in earnings.
|
(1)
|
Relative to a 2015 baseline for buildings in operation that Alexandria directly manages.
|
(2)
|
Relative to a 2015 baseline for buildings in operation that Alexandria indirectly and directly manages.
|
(3)
|
Upon completion of 16 projects in process targeting LEED certification.
|
(4)
|
Upon completion of 27 projects in process targeting either WELL or Fitwel certification.
|
The Arsenal on the Charles
|
|
945 Market Street
|
|
201 Haskins Way
|
|
Alexandria District for
Science and Technology
|
|
3160 Porter Drive
|
Greater Boston/
Cambridge/Inner Suburbs
|
|
San Francisco/Mission Bay/SoMa
|
|
San Francisco/South San Francisco
|
|
San Francisco/Greater Stanford
|
|
San Francisco/Greater Stanford
|
153,157 RSF
|
|
255,765 RSF
|
|
315,000 RSF
|
|
526,178 RSF
|
|
92,147 RSF
|
|
|
|
|
|
|
|
|
|
Alexandria Center® –
Long Island City |
|
9880 Campus Point Drive and
4150 Campus Point Court |
|
1165 Eastlake Avenue East
|
|
9800 Medical Center Drive
|
|
9950 Medical Center Drive
|
New York City/New York City
|
|
San Diego/University Town Center
|
|
Seattle/Lake Union
|
|
Maryland/Rockville
|
|
Maryland/Rockville
|
140,098 RSF
|
|
202,383 RSF
|
|
100,086 RSF
|
|
176,832 RSF
|
|
84,264 RSF
|
|
|
|
|
|
|
|
|
|
Property/Market/Submarket
|
|
|
|
Square Footage
|
|
Percentage
|
|
Temporary Pause in Construction
|
|
|
|
|||||||||||||
|
Dev/Redev
|
|
In Service
|
|
CIP
|
|
Total
|
|
Leased
|
|
Leased/Negotiating
|
|
|
Initial
Occupancy(1)
|
|
|||||||||
Developments and redevelopments under construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
The Arsenal on the Charles/Greater Boston/Cambridge/Inner Suburbs
|
|
Redev
|
|
683,131
|
|
(2)
|
153,157
|
|
|
836,288
|
|
|
82
|
%
|
|
|
95
|
%
|
|
|
ü
|
|
2021
|
|
945 Market Street/San Francisco/Mission Bay/SoMa
|
|
Redev
|
|
—
|
|
|
255,765
|
|
|
255,765
|
|
|
—
|
|
|
|
—
|
|
|
|
ü
|
|
2020
|
|
201 Haskins Way/San Francisco/South San Francisco
|
|
Dev
|
|
—
|
|
|
315,000
|
|
|
315,000
|
|
|
33
|
|
|
|
33
|
|
|
|
ü
|
|
4Q20-1Q21
|
|
Alexandria District for Science and Technology/San Francisco/Greater Stanford
|
|
Dev
|
|
—
|
|
|
526,178
|
|
|
526,178
|
|
|
56
|
|
|
|
65
|
|
|
|
(3)
|
|
4Q20-1Q21
|
|
3160 Porter Drive/San Francisco/Greater Stanford
|
|
Redev
|
|
—
|
|
|
92,147
|
|
|
92,147
|
|
|
—
|
|
|
|
—
|
|
|
|
ü
|
|
1H21
|
|
Alexandria Center® – Long Island City/New York City/New York City
|
|
Redev
|
|
36,661
|
|
|
140,098
|
|
|
176,759
|
|
|
21
|
|
|
|
28
|
|
|
|
(3)
|
|
4Q20-1Q21
|
|
9880 Campus Point Drive and 4150 Campus Point Court/San Diego/
University Town Center(4)
|
|
Dev
|
|
66,719
|
|
|
202,383
|
|
|
269,102
|
|
|
89
|
|
|
|
95
|
|
|
|
|
|
4Q19
|
|
1165 Eastlake Avenue East/Seattle/Lake Union
|
|
Dev
|
|
—
|
|
|
100,086
|
|
|
100,086
|
|
|
100
|
|
|
|
100
|
|
|
|
(3)
|
|
4Q20-1Q21
|
|
9800 Medical Center Drive/Maryland/Rockville
|
|
Dev
|
|
—
|
|
|
176,832
|
|
|
176,832
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
2H20
|
|
9950 Medical Center Drive/Maryland/Rockville
|
|
Dev
|
|
—
|
|
|
84,264
|
|
|
84,264
|
|
|
100
|
|
|
|
100
|
|
|
|
|
|
2H20
|
|
704 Quince Orchard Road/Maryland/Gaithersburg(5)
|
|
Redev
|
|
42,194
|
|
|
37,838
|
|
|
80,032
|
|
|
70
|
|
|
|
83
|
|
|
|
|
|
4Q18
|
|
Total
|
|
|
|
828,705
|
|
|
2,083,748
|
|
|
2,912,453
|
|
|
61
|
%
|
|
|
68
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ü
|
As of the date of this report, construction at these projects were subject to a directive to temporarily pause all non-essential construction in the city, county, and/or state.
|
(1)
|
Initial occupancy dates are subject to leasing and/or market conditions. Construction disruptions resulting from COVID-19 and various executive orders restricting construction activities may further impact construction and occupancy forecast are reflected and will continue to be monitored closely. Multi-tenant projects may have occupancy by tenants over a period of time. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy.
|
(2)
|
We expect to redevelop 154,855 RSF of occupied space into office/laboratory space upon expiration of the existing leases in the third quarter of 2020 and the first quarter of 2021.
|
(3)
|
Temporary pause in construction was effected in March 2020, with certain COVID-19 related construction activities resuming as of the date of this report.
|
(4)
|
Refer to footnote 2 on the next page.
|
(5)
|
704 Quince Orchard is an unconsolidated real estate joint venture. RSF represent 100%.
|
|
|
Our Ownership Interest
|
|
|
|
|
|
|
|
|
|
|
Unlevered Yields
|
||||||||||||||||
Property/Market/Submarket
|
|
|
In Service
|
|
CIP
|
|
Cost to Complete
|
|
Total at
Completion
|
|
Initial Stabilized
|
|
Initial Stabilized (Cash Basis)
|
||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||
Developments and redevelopments under construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
The Arsenal on the Charles/Greater Boston/Cambridge/Inner Suburbs
|
|
100
|
%
|
|
|
$
|
461,427
|
|
|
$
|
67,084
|
|
|
TBD
|
|||||||||||||||
945 Market Street/San Francisco/Mission Bay/SoMa
|
|
99.5
|
%
|
|
|
—
|
|
|
194,045
|
|
|
||||||||||||||||||
201 Haskins Way/San Francisco/South San Francisco
|
|
100
|
%
|
|
|
—
|
|
|
190,485
|
|
|
123,515
|
|
|
314,000
|
|
|
|
|
6.6
|
%
|
|
|
|
6.5
|
%
|
|
||
Alexandria District for Science and Technology/San Francisco/Greater Stanford
|
|
100
|
%
|
|
|
—
|
|
|
326,674
|
|
|
262,326
|
|
|
589,000
|
|
|
|
|
6.4
|
%
|
|
|
|
6.1
|
%
|
|
||
3160 Porter Drive/San Francisco/Greater Stanford
|
|
100
|
%
|
|
|
—
|
|
|
34,383
|
|
|
TBD
|
|||||||||||||||||
Alexandria Center® – Long Island City/New York City/New York City
|
|
100
|
%
|
|
|
16,195
|
|
|
83,930
|
|
|
84,175
|
|
|
184,300
|
|
|
|
|
5.5
|
%
|
|
|
|
5.6
|
%
|
|
||
9880 Campus Point Drive and 4150 Campus Point Court/San Diego/
University Town Center(1)
|
|
(1
|
)
|
|
|
73,621
|
|
|
60,462
|
|
|
120,917
|
|
|
255,000
|
|
|
|
|
6.3
|
%
|
(2)
|
|
|
6.4
|
%
|
(2)
|
||
1165 Eastlake Avenue East/Seattle/Lake Union
|
|
100
|
%
|
|
|
—
|
|
|
62,181
|
|
|
75,819
|
|
|
138,000
|
|
|
|
|
6.5
|
%
|
(3)
|
|
|
6.3
|
%
|
(3)
|
||
9800 Medical Center Drive/Maryland/Rockville
|
|
100
|
%
|
|
|
—
|
|
|
46,390
|
|
|
49,010
|
|
|
95,400
|
|
|
|
|
7.7
|
%
|
|
|
|
7.2
|
%
|
|
||
9950 Medical Center Drive/Maryland/Rockville
|
|
100
|
%
|
|
|
—
|
|
|
30,542
|
|
|
23,758
|
|
|
54,300
|
|
|
|
|
7.3
|
%
|
|
|
|
6.8
|
%
|
|
||
Consolidated projects
|
|
|
|
|
551,243
|
|
|
1,096,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
704 Quince Orchard Road/Maryland/Gaithersburg(4)
|
|
56.8
|
%
|
|
|
5,740
|
|
|
5,153
|
|
|
2,407
|
|
|
13,300
|
|
|
|
|
8.9
|
%
|
|
|
|
8.8
|
%
|
|
||
Total
|
|
|
|
|
$
|
556,983
|
|
|
$
|
1,101,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to the “Consolidated and Unconsolidated Real Estate Joint Ventures” section under this Item 2 for additional information.
|
(2)
|
Represents a two-phase development project as follows:
|
•
|
Initial phase represents 9880 Campus Point Drive, a 98,000 RSF project to develop Alexandria GradLabs™, a highly flexible, first-of-its-kind life science platform designed to provide post-seed-stage life science companies with turnkey, fully furnished office/laboratory suites and an accelerated, scalable path for growth. As of March 31, 2020, 202,383 RSF and 66,719 RSF is classified in construction in process and in-service, respectively. The R&D building located at 9880 Campus Point Drive was demolished and as of March 31, 2020, continues to be included in our same property performance results. Refer to the “Same Properties” subsection of the “Results of Operations” section under this Item 2 for additional information.
|
•
|
Subsequent phase represents 4150 Campus Point Court, a 171,102 RSF, 100% leased project undergoing pre-construction that we expect to commence vertical construction in 1Q21, with occupancy expected in 2022.
|
•
|
Project costs represent development costs for 9880 Campus Point Drive and 4150 Campus Point Court. Unlevered yields represent expected aggregate returns for Campus Pointe by Alexandria, including 9880, 10290, and 10300 Campus Point Drive and 4150 Campus Point Court.
|
(3)
|
Unlevered yields represent anticipated aggregate returns for 1165 Eastlake Avenue, an amenity-rich research headquarter for Adaptive Biotechnologies Corporation, and 1208 Eastlake Avenue, an adjacent multi-tenant office/laboratory building.
|
(4)
|
704 Quince Orchard is an unconsolidated real estate joint venture. Cost and yield amounts represent our share.
|
Property/Submarket
|
|
Our Ownership Interest
|
|
Book Value
|
|
Square Footage
|
|
|||||||||||||||||
|
|
|
Development and Redevelopment
|
|
Total
|
|
||||||||||||||||||
|
|
|
Under Construction
|
|
Near
Term
|
|
Intermediate
Term
|
|
Future
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Maryland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
704 Quince Orchard Road/Gaithersburg
|
|
56.8
|
%
|
|
|
$
|
—
|
|
(1)
|
37,838
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,838
|
|
|
9800 Medical Center Drive/Rockville
|
|
100
|
%
|
|
|
47,641
|
|
|
176,832
|
|
|
—
|
|
|
—
|
|
|
64,000
|
|
|
240,832
|
|
|
|
9950 Medical Center Drive/Rockville
|
|
100
|
%
|
|
|
30,542
|
|
|
84,264
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84,264
|
|
|
|
14200 Shady Grove Road/Rockville
|
|
100
|
%
|
|
|
26,502
|
|
|
—
|
|
|
—
|
|
|
290,000
|
|
|
145,000
|
|
|
435,000
|
|
|
|
|
|
|
|
|
104,685
|
|
|
298,934
|
|
|
—
|
|
|
290,000
|
|
|
209,000
|
|
|
797,934
|
|
|
||
Research Triangle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Alexandria Center® for AgTech, Phase II/Research Triangle
|
|
100
|
%
|
|
|
17,182
|
|
|
—
|
|
|
160,000
|
|
|
—
|
|
|
—
|
|
|
160,000
|
|
|
|
8 Davis Drive/Research Triangle
|
|
100
|
%
|
|
|
8,748
|
|
|
—
|
|
|
150,000
|
|
|
70,000
|
|
|
—
|
|
|
220,000
|
|
|
|
6 Davis Drive/Research Triangle
|
|
100
|
%
|
|
|
15,003
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
800,000
|
|
|
800,000
|
|
|
|
Other value-creation projects
|
|
100
|
%
|
|
|
4,150
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
76,262
|
|
|
76,262
|
|
|
|
|
|
|
|
|
45,083
|
|
|
—
|
|
|
310,000
|
|
|
70,000
|
|
|
876,262
|
|
|
1,256,262
|
|
|
||
Other value-creation projects
|
|
100
|
%
|
|
|
3,842
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122,800
|
|
|
122,800
|
|
|
|
Total
|
|
|
|
|
2,436,513
|
|
|
2,083,748
|
|
|
2,127,925
|
|
|
5,377,112
|
|
|
4,880,477
|
|
|
14,469,262
|
|
(2)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
975-1075 Commercial Street and
915-1063 Old County Road/Greater Stanford |
|
(3
|
)
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
700,000
|
|
|
700,000
|
|
|
|
Mercer Mega Block/Lake Union
|
|
(3
|
)
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
800,000
|
|
|
800,000
|
|
|
|
Key pending acquisitions
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,500,000
|
|
|
1,500,000
|
|
|
||
|
|
|
|
|
$
|
2,436,513
|
|
|
2,083,748
|
|
|
2,127,925
|
|
|
5,377,112
|
|
|
6,380,477
|
|
|
15,969,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This property is held by 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 ownership interest.
|
(2)
|
Total square footage includes 1,795,496 RSF of buildings currently in operation that will be redeveloped or replaced with new development RSF upon commencement of future construction. Refer to the definition of “Investments in Real Estate – Value-Creation Square Footage Currently in Rental Properties” in the “Non-GAAP Measures and Definitions” section within this Item 2 for additional information.
|
(3)
|
Refer to the “Acquisitions” subsection of this “Investments in Real Estate” section within this Item 2 for additional information.
|
Construction Spending
|
|
Three Months Ended March 31, 2020
|
|
||
Additions to real estate – consolidated projects
|
|
$
|
373,499
|
|
|
Investments in unconsolidated real estate joint ventures
|
|
2,592
|
|
|
|
Contributions from noncontrolling interests
|
|
(2,756
|
)
|
|
|
Construction spending (cash basis)(1)
|
|
373,335
|
|
|
|
Change in accrued construction
|
|
(39,061
|
)
|
|
|
Construction spending for the three months ended March 31, 2020
|
|
334,274
|
|
|
|
Projected construction spending for the nine months ending December 31, 2020
|
|
625,726
|
|
|
|
Guidance midpoint
|
|
$
|
960,000
|
|
|
(1)
|
Includes revenue-enhancing projects and non-revenue-enhancing capital expenditures.
|
Projected Construction Spending
|
|
Year Ending December 31, 2020
|
|
||||
Development, redevelopment, and pre-construction projects
|
|
$
|
800,000
|
|
|
||
Contributions from noncontrolling interests (consolidated real estate joint ventures)
|
|
|
(20,000
|
)
|
|
||
Generic laboratory infrastructure
|
|
|
144,000
|
|
|
||
Non-revenue-enhancing capital expenditures
|
|
|
36,000
|
|
|
||
Guidance midpoint
|
|
$
|
960,000
|
|
|
Non-Revenue-Enhancing Capital Expenditures(1)
|
|
Three Months Ended March 31, 2020
|
|
Recent Average
per RSF(2) |
|
|||||||||
|
Amount
|
|
Per RSF
|
|
|
|||||||||
Non-revenue-enhancing capital expenditures
|
|
$
|
3,198
|
|
|
$
|
0.12
|
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Tenant improvements and leasing costs:
|
|
|
|
|
|
|
|
|
||||||
Re-tenanted space
|
|
$
|
3,936
|
|
|
$
|
31.21
|
|
|
|
$
|
25.21
|
|
|
Renewal space
|
|
8,987
|
|
|
20.84
|
|
|
|
16.37
|
|
|
|||
Total tenant improvements and leasing costs/weighted-average
|
|
$
|
12,923
|
|
|
$
|
23.19
|
|
|
|
$
|
19.71
|
|
|
(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 for a five-year period from 2016 through 2019 and three months ended March 31, 2020, annualized.
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2020
|
|
2019
|
|
2020
|
|
2019
|
||||||||
(In millions, except per share amounts)
|
Amount
|
|
Per Share – Diluted
|
||||||||||||
Unrealized (losses) gains on non-real estate investments(1)
|
$
|
(17.1
|
)
|
|
$
|
72.2
|
|
|
$
|
(0.14
|
)
|
|
$
|
0.65
|
|
Impairment of real estate
|
(9.6
|
)
|
(2)
|
—
|
|
|
(0.08
|
)
|
|
—
|
|
||||
Impairment of non-real estate investments(1)
|
(19.8
|
)
|
|
—
|
|
|
(0.16
|
)
|
|
—
|
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
(7.4
|
)
|
|
—
|
|
|
(0.07
|
)
|
||||
Preferred stock redemption charge
|
—
|
|
|
(2.6
|
)
|
|
—
|
|
|
(0.02
|
)
|
||||
Total
|
$
|
(46.5
|
)
|
|
$
|
62.2
|
|
|
$
|
(0.38
|
)
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
(1)
|
Refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report for more information.
|
(2)
|
Includes a $7.6 million impairment on our investment in a recently developed retail property held by our unconsolidated real estate joint venture.
|
Development – under construction
|
|
Properties
|
|
|
9800 Medical Center Drive
|
|
1
|
|
|
9950 Medical Center Drive
|
|
1
|
|
|
Alexandria District for Science and Technology
|
|
2
|
|
|
201 Haskins Way
|
|
1
|
|
|
1165 Eastlake Avenue East
|
|
1
|
|
|
4150 Campus Point Court
|
|
1
|
|
|
|
|
7
|
|
|
Development – placed into service after January 1, 2019
|
|
Properties
|
|
|
399 Binney Street
|
|
1
|
|
|
279 East Grand Avenue
|
|
1
|
|
|
188 East Blaine Street
|
|
1
|
|
|
|
|
3
|
|
|
Redevelopment – under construction
|
|
Properties
|
|
|
Alexandria Center® – Long Island City
|
|
1
|
|
|
945 Market Street
|
|
1
|
|
|
3160 Porter Drive
|
|
1
|
|
|
The Arsenal on the Charles
|
|
4
|
|
|
|
|
7
|
|
|
Redevelopment – placed into service after January 1, 2019
|
|
Properties
|
|
|
Alexandria PARC
|
|
4
|
|
|
681 and 685 Gateway Boulevard
|
|
2
|
|
|
266 and 275 Second Avenue
|
|
2
|
|
|
Alexandria Center® for AgTech, Phase I
|
|
1
|
|
|
|
|
9
|
|
|
|
|
|
|
Acquisitions after January 1, 2019
|
|
Properties
|
|
|
25, 35, and 45 West Watkins Mill Road
|
|
3
|
|
|
3170 Porter Drive
|
|
1
|
|
|
Shoreway Science Center
|
|
2
|
|
|
3911, 3931, and 4075 Sorrento Valley Boulevard
|
|
3
|
|
|
260 Townsend Street
|
|
1
|
|
|
5 Necco Street
|
|
1
|
|
|
601 Dexter Avenue North
|
|
1
|
|
|
4224/4242 Campus Point Court and 10210 Campus Point Drive
|
|
3
|
|
|
3825 and 3875 Fabian Way
|
|
2
|
|
|
SD Tech by Alexandria
|
|
10
|
|
|
The Arsenal on the Charles
|
|
7
|
|
|
275 Grove Street
|
|
1
|
|
|
601, 611, and 651 Gateway Boulevard
|
|
3
|
|
|
3330 and 3412 Hillview Avenue
|
|
2
|
|
|
9808 and 9868 Scranton Road
|
|
2
|
|
|
9605 Medical Center Drive
|
|
1
|
|
|
5505 Morehouse Drive
|
|
1
|
|
|
Other
|
|
9
|
|
|
|
|
53
|
|
|
|
|
|
|
|
Unconsolidated real estate JVs
|
|
6
|
|
|
Properties held for sale
|
|
3
|
|
|
Total properties excluded from Same Properties
|
|
88
|
|
|
Same Properties
|
|
214
|
|
(1)
|
Total properties in North America as of March 31, 2020
|
|
302
|
|
|
|
|
|
|
(1)
|
Includes 9880 Campus Point Drive and 3545 Cray Court. The 9880 Campus Point Drive building was occupied through January 2018 and is currently in active development, and 3545 Cray Court is currently undergoing renovations.
|
|
|
Three Months Ended March 31,
|
|
|||||||||||||
(Dollars in thousands)
|
|
2020
|
|
2019
|
|
$ Change
|
|
% Change
|
|
|||||||
Income from rentals:
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
$
|
266,152
|
|
|
$
|
259,138
|
|
|
$
|
7,014
|
|
|
2.7
|
%
|
|
Non-Same Properties
|
|
71,790
|
|
|
15,425
|
|
|
56,365
|
|
|
365.4
|
|
|
|||
Rental revenues
|
|
337,942
|
|
|
274,563
|
|
|
63,379
|
|
|
23.1
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
83,595
|
|
|
76,844
|
|
|
6,751
|
|
|
8.8
|
|
|
|||
Non-Same Properties
|
|
16,068
|
|
|
3,342
|
|
|
12,726
|
|
|
380.8
|
|
|
|||
Tenant recoveries
|
|
99,663
|
|
|
80,186
|
|
|
19,477
|
|
|
24.3
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Income from rentals
|
|
437,605
|
|
|
354,749
|
|
|
82,856
|
|
|
23.4
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
84
|
|
|
163
|
|
|
(79
|
)
|
|
(48.5
|
)
|
|
|||
Non-Same Properties
|
|
2,230
|
|
|
3,930
|
|
|
(1,700
|
)
|
|
(43.3
|
)
|
|
|||
Other income
|
|
2,314
|
|
|
4,093
|
|
|
(1,779
|
)
|
|
(43.5
|
)
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
349,831
|
|
|
336,145
|
|
|
13,686
|
|
|
4.1
|
|
|
|||
Non-Same Properties
|
|
90,088
|
|
|
22,697
|
|
|
67,391
|
|
|
296.9
|
|
|
|||
Total revenues
|
|
439,919
|
|
|
358,842
|
|
|
81,077
|
|
|
22.6
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
98,550
|
|
|
90,702
|
|
|
7,848
|
|
|
8.7
|
|
|
|||
Non-Same Properties
|
|
30,553
|
|
|
10,799
|
|
|
19,754
|
|
|
182.9
|
|
|
|||
Rental operations
|
|
129,103
|
|
|
101,501
|
|
|
27,602
|
|
|
27.2
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||||
Same Properties
|
|
251,281
|
|
|
245,443
|
|
|
5,838
|
|
|
2.4
|
|
|
|||
Non-Same Properties
|
|
59,535
|
|
|
11,898
|
|
|
47,637
|
|
|
400.4
|
|
|
|||
Net operating income
|
|
$
|
310,816
|
|
|
$
|
257,341
|
|
|
$
|
53,475
|
|
|
20.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net operating income – Same Properties
|
|
$
|
251,281
|
|
|
$
|
245,443
|
|
|
$
|
5,838
|
|
|
2.4
|
%
|
|
Straight-line rent revenue
|
|
(15,146
|
)
|
|
(23,497
|
)
|
|
8,351
|
|
|
(35.5
|
)
|
|
|||
Amortization of acquired below-market leases
|
|
(4,638
|
)
|
|
(3,830
|
)
|
|
(808
|
)
|
|
21.1
|
|
|
|||
Net operating income – Same Properties (cash basis)
|
|
$
|
231,497
|
|
|
$
|
218,116
|
|
|
$
|
13,381
|
|
|
6.1
|
%
|
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
Component
|
|
2020
|
|
2019
|
|
Change
|
||||||
Interest incurred
|
|
$
|
70,419
|
|
|
$
|
57,609
|
|
|
$
|
12,810
|
|
Capitalized interest
|
|
(24,680
|
)
|
|
(18,509
|
)
|
|
(6,171
|
)
|
|||
Interest expense
|
|
$
|
45,739
|
|
|
$
|
39,100
|
|
|
$
|
6,639
|
|
|
|
|
|
|
|
|
||||||
Average debt balance outstanding (1)
|
|
$
|
7,241,621
|
|
|
$
|
5,758,660
|
|
|
$
|
1,482,961
|
|
Weighted-average annual interest rate (2)
|
|
3.9
|
%
|
|
4.0
|
%
|
|
(0.1
|
)%
|
(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:
|
|
|
|
|
|
|
|
|
|
|||
$700 million unsecured senior notes payable
|
|
|
3.91
|
%
|
|
|
July/September 2019
|
|
$
|
6,921
|
|
|
$750 million unsecured senior notes payable
|
|
|
3.48
|
%
|
|
|
July 2019
|
|
6,348
|
|
|
|
$300 million unsecured senior notes payable
|
|
|
4.93
|
%
|
|
|
March 2019
|
|
3,235
|
|
|
|
$350 million unsecured senior notes payable – green bond
|
|
|
3.96
|
%
|
|
|
March 2019
|
|
2,968
|
|
|
|
$400 million unsecured senior notes payable
|
|
|
2.87
|
%
|
|
|
September 2019
|
|
2,765
|
|
|
|
$650 million unsecured senior notes payable – green bond
|
|
|
4.03
|
%
|
|
|
June 2018/
March 2019 |
|
1,800
|
|
|
|
$700 million unsecured senior notes payable
|
|
|
5.05
|
%
|
|
|
March 2020
|
|
477
|
|
|
|
Fluctuations in interest rate and average balance:
|
|
|
|
|
|
|
|
|
|
|||
$1.0 billion commercial paper program
|
|
|
|
|
|
|
|
2,890
|
|
|
||
Interest rate hedge agreement in effect during the three months ended March 31, 2019
|
|
|
|
|
|
|
|
1,929
|
|
|
||
Other increase in interest
|
|
|
|
|
|
|
|
249
|
|
|
||
Total increases
|
|
|
|
|
|
|
|
29,582
|
|
|
||
Decreases in interest incurred due to:
|
|
|
|
|
|
|
|
|
|
|||
Repayments of debt:
|
|
|
|
|
|
|
|
|
|
|||
$550 million unsecured senior notes payable
|
|
|
4.75
|
%
|
|
|
July/August 2019
|
|
(6,339
|
)
|
|
|
$400 million unsecured senior notes payable
|
|
|
2.96
|
%
|
|
|
July/August 2019
|
|
(2,791
|
)
|
|
|
Secured construction loan
|
|
|
3.29
|
%
|
|
|
March 2019
|
|
(1,749
|
)
|
|
|
Unsecured senior bank term loans
|
|
|
Various
|
|
|
|
Various
|
|
(2,886
|
)
|
|
|
$2.2 billion unsecured senior line of credit
|
|
|
|
|
|
|
|
(3,007
|
)
|
|
||
Total decreases
|
|
|
|
|
|
|
|
(16,772
|
)
|
|
||
Change in interest incurred
|
|
|
|
|
|
|
|
12,810
|
|
|
||
Increase in capitalized interest
|
|
|
|
|
|
|
|
(6,171
|
)
|
|
||
Total change in interest expense
|
|
|
|
|
|
|
|
$
|
6,639
|
|
|
(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.
|
•
|
A projected reduction in funds from operations, per share – diluted, as adjusted, primarily consisting of:
|
◦
|
a reduction of eight cents, or one percent, in projected revenues from our retail tenancy and transient/short-term parking over the remaining three quarters of 2020, for which we expect the impact to be weighted toward the second quarter of 2020. As of March 31, 2020, only 0.8% of our annual rental revenue was related to retail tenants; and
|
◦
|
approximately net neutral impact related to (i) higher interest costs related to the issuance of our $700.0 million unsecured senior notes payable in March 2020 and (ii) updated timing of deliveries of our current development and redevelopment projects as a result of COVID-19-related construction disruptions, including various executive orders restricting construction activities, offset by (iii) an improvement in EBITDA from our core operations, including early lease renewals and re-leasing of space.
|
Projected 2020 Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted
|
|
As of 4/27/20
|
|
As of 2/3/20
|
||||
Earnings per share(1)
|
|
$1.69 to $1.79
|
|
$2.17 to $2.37
|
||||
Depreciation and amortization of real estate assets
|
|
|
5.15
|
|
|
|
5.15
|
|
Impairment of real estate – rental properties(2)
|
|
|
0.06
|
|
|
|
—
|
|
Allocation of unvested restricted stock awards
|
|
|
(0.04)
|
|
|
|
(0.04)
|
|
Funds from operations per share(3)
|
|
$6.86 to $6.96
|
|
$7.28 to $7.48
|
||||
Unrealized losses on non-real estate investments
|
|
|
0.14
|
|
|
|
—
|
|
Impairment of non-real estate investments
|
|
|
0.16
|
|
|
|
—
|
|
Impairment of real estate(4)
|
|
|
0.10
|
|
|
|
—
|
|
Allocation to unvested restricted stock awards
|
|
|
(0.01)
|
|
|
|
—
|
|
Funds from operations per share, as adjusted(1)
|
|
$7.25 to $7.35
|
|
$7.28 to $7.48
|
||||
Midpoint
|
|
|
$7.30
|
|
|
|
$7.38
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Excludes unrealized gains or losses after March 31, 2020, that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.
|
(2)
|
Includes a $7.6 million impairment on our investment in a recently developed retail property held by our unconsolidated real estate joint venture.
|
(3)
|
Calculated in accordance with standards established by the Advisory Board of Governors of Nareit (the “Nareit Board of Governors”). Refer to the definition of “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders” in the “Non-GAAP Measures and Definitions” section within this Item 2 for additional information.
|
(4)
|
Includes eight cents related to an impairment charge of $10 million recognized in April 2020, in connection with a pending acquisition of an operating tech office property for which our revised economic projections declined from our initial underwriting. We reduced the carrying amount of this pre-acquisition deposit to zero dollars, concurrently with submission of our notice to terminate the transaction.
|
Key Assumptions(1)
(Dollars in millions)
|
|
As of 4/27/20
|
|
As of 2/3/20
|
||||||||||||
|
Low
|
|
High
|
|
Low
|
|
High
|
|||||||||
Occupancy percentage for operating properties in North America as of December 31, 2020(2)
|
|
94.8%
|
|
|
95.4%
|
|
|
95.4%
|
|
|
96.0%
|
|
||||
Lease renewals and re-leasing of space:
|
|
|
|
|
|
|
|
|
||||||||
Rental rate increases
|
|
28.0%
|
|
|
31.0%
|
|
|
28.0%
|
|
|
31.0%
|
|
||||
Rental rate increases (cash basis)
|
|
14.0%
|
|
|
17.0%
|
|
|
14.0%
|
|
|
17.0%
|
|
||||
Same property performance:
|
|
|
|
|
|
|
|
|
||||||||
Net operating income increase
|
|
1.0%
|
|
|
3.0%
|
|
|
1.5%
|
|
|
3.5%
|
|
||||
Net operating income increase (cash basis)
|
|
4.5%
|
|
|
6.5%
|
|
|
5.0%
|
|
|
7.0%
|
|
||||
Straight-line rent revenue(3)
|
|
$
|
98
|
|
|
$
|
108
|
|
|
$
|
113
|
|
|
$
|
123
|
|
General and administrative expenses
|
|
$
|
121
|
|
|
$
|
126
|
|
|
$
|
121
|
|
|
$
|
126
|
|
Capitalization of interest
|
|
$
|
102
|
|
|
$
|
112
|
|
|
$
|
108
|
|
|
$
|
118
|
|
Interest expense
|
|
$
|
185
|
|
|
$
|
195
|
|
|
$
|
169
|
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Our assumptions presented in the table above 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, 2019, as well as in “Item 1A. Risk Factors” within “Part II - Other Information” of this quarterly report on Form 10-Q.
|
(2)
|
Occupancy guidance has been reduced by 60 bps at the midpoint of the range and includes approximately 50% of our RSF related to our leased retail space as of March 31, 2020.
|
(3)
|
The projected reduction in straight-line rent revenue comprises: (i) about half related to the updated timing of deliveries of our current development and redevelopment projects, as a result of COVID-19-related construction disruptions, including various executive orders restricting construction activities; (ii) roughly one-third from reductions to rental income (related to deferred rents) for specific tenants, including retail tenants, and a general allowance for a pool of deferred rent balances which we do not expect to collect in full; and (iii) the remaining change is related to a reduction in projected acquisitions, including the termination of an operating tech office property acquisition in April 2020.
|
Key Credit Metrics
|
|
As of 4/27/20
|
|
As of 2/3/20
|
Net debt and preferred stock to Adjusted EBITDA –
fourth quarter of 2020, annualized
|
|
Less than or equal to 5.3x
|
|
Less than or equal to 5.2x
|
Fixed-charge coverage ratio – fourth quarter of 2020, annualized
|
|
Greater than or equal to 4.4x
|
|
Greater than 4.5x
|
|
|
|
|
|
Consolidated Real Estate Joint Ventures
|
|
|
||||
Property/Market/Submarket
|
|
Noncontrolling(1)
Interest Share
|
|
|||
225 Binney Street/Greater Boston/Cambridge
|
|
|
70.0
|
%
|
|
|
75/125 Binney Street/Greater Boston/Cambridge
|
|
|
60.0
|
%
|
|
|
409 and 499 Illinois Street/San Francisco/Mission Bay/SoMa
|
|
|
40.0
|
%
|
|
|
1500 Owens Street/San Francisco/Mission Bay/SoMa
|
|
|
49.9
|
%
|
|
|
Alexandria Technology Center® – Gateway/San Francisco/South San Francisco(2)
|
|
|
55.2
|
%
|
|
|
500 Forbes Boulevard/San Francisco/South San Francisco
|
|
|
90.0
|
%
|
|
|
Campus Pointe by Alexandria/San Diego/University Town Center(3)
|
|
|
45.0
|
%
|
|
|
5200 Illumina Way/San Diego/University Town Center
|
|
|
49.0
|
%
|
|
|
9625 Towne Centre Drive/San Diego/University Town Center
|
|
|
49.9
|
%
|
|
|
SD Tech by Alexandria/San Diego/Sorrento Mesa
|
|
|
50.0
|
%
|
|
|
|
|
|
|
|
|
|
Unconsolidated Real Estate Joint Ventures
|
|
|
||||
Property/Market/Submarket
|
|
Our Ownership Share(4)
|
|
|||
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
|
|
|
10.0
|
%
|
|
|
Menlo Gateway/San Francisco/Greater Stanford
|
|
|
49.0
|
%
|
|
|
704 Quince Orchard Road/Maryland/Gaithersburg
|
|
|
56.8
|
%
|
(5)
|
|
(1)
|
In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in six other joint ventures in North America.
|
(2)
|
Includes 601, 611, 651, 681, 685, 701, and 751 Gateway Boulevard and excess land in our South San Francisco submarket. Noncontrolling interest share is anticipated to be 49% as we make further contributions over time.
|
(3)
|
Excludes 9880 Campus Point Drive in our University Town Center submarket.
|
(4)
|
In addition to the unconsolidated real estate joint ventures listed, we hold an interest in two other insignificant unconsolidated real estate joint venture in North America.
|
(5)
|
Represents our ownership interest; our voting interest is limited to 50%.
|
|
|
|
|
Maturity Date
|
|
Stated Rate
|
|
Interest Rate(1)
|
|
100% at Joint Venture Level
|
|
||||
Unconsolidated Joint Venture
|
|
Our Share
|
|
|
|
|
Debt Balance(2)
|
|
|||||||
704 Quince Orchard Road
|
|
56.8%
|
|
|
3/16/23
|
|
|
L+1.95%
|
|
2.90%
|
|
$
|
9,954
|
|
|
1655 and 1725 Third Street(3)
|
|
10.0%
|
|
|
3/10/25
|
|
|
4.50%
|
|
4.81%
|
|
590,844
|
|
|
|
Menlo Gateway, Phase II
|
|
49.0%
|
|
|
5/1/35
|
|
|
4.53%
|
|
4.59%
|
|
98,807
|
|
|
|
Menlo Gateway, Phase I
|
|
49.0%
|
|
|
8/10/35
|
|
|
4.15%
|
|
4.18%
|
|
141,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
841,080
|
|
|
(1)
|
Includes interest expense and amortization of loan fees.
|
(2)
|
Represents outstanding principal, net of unamortized deferred financing costs, as of March 31, 2020.
|
(3)
|
In March 2020, we completed the refinancing of a secured construction loan with an outstanding balance of $313.2 million and interest rate of L+3.70% to a fixed-rate loan that bears an interest rate of 4.50%.
|
|
Three Months Ended March 31, 2020
|
|||||||
|
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures
|
|
|
Our Share of Unconsolidated
Real Estate Joint Ventures |
||||
Total revenues
|
$
|
37,777
|
|
|
|
$
|
10,644
|
|
Rental operations
|
(10,095
|
)
|
|
|
(1,418
|
)
|
||
|
27,682
|
|
|
|
9,226
|
|
||
General and administrative
|
(117
|
)
|
|
|
(84
|
)
|
||
Interest
|
—
|
|
|
|
(1,971
|
)
|
||
Depreciation and amortization
|
(15,870
|
)
|
|
|
(2,643
|
)
|
||
Impairment of real estate
|
—
|
|
|
|
(7,644
|
)
|
||
Fixed returns allocated to redeemable noncontrolling interests(1)
|
218
|
|
|
|
—
|
|
||
|
$
|
11,913
|
|
|
|
$
|
(3,116
|
)
|
|
|
|
|
|
||||
Straight-line rent and below-market lease revenue
|
$
|
1,962
|
|
|
|
$
|
5,853
|
|
Funds from operations(2)
|
$
|
27,783
|
|
|
|
$
|
7,171
|
|
(1)
|
Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These redeemable noncontrolling interests earn a fixed return on their investment rather than participate in the operating results of the property.
|
(2)
|
Refer to the definition of “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders” in the “Non-GAAP Measures and Definitions” section within this Item 2 for the definition and the reconciliation from the most directly comparable GAAP measure.
|
|
As of March 31, 2020
|
||||||
|
Noncontrolling Interest Share of Consolidated
Real Estate Joint Ventures
|
|
Our Share of Unconsolidated
Real Estate Joint Ventures |
||||
Investments in real estate
|
$
|
1,449,462
|
|
|
$
|
460,425
|
|
Cash, cash equivalents, and restricted cash
|
42,788
|
|
|
18,711
|
|
||
Other assets
|
169,291
|
|
|
46,579
|
|
||
Secured notes payable
|
—
|
|
|
(181,129
|
)
|
||
Other liabilities
|
(69,862
|
)
|
|
(18,921
|
)
|
||
Redeemable noncontrolling interests
|
(12,013
|
)
|
|
—
|
|
||
|
$
|
1,579,666
|
|
|
$
|
325,665
|
|
(In thousands)
|
|
Three Months Ended March 31, 2020
|
|
Year Ended December 31, 2019
|
||||||
Realized (losses) gains
|
|
$
|
(4,677
|
)
|
(1)
|
|
$
|
33,158
|
|
(2)
|
Unrealized (losses) gains
|
|
(17,144
|
)
|
|
|
161,489
|
|
|
||
Investment (loss) income
|
|
$
|
(21,821
|
)
|
|
|
$
|
194,647
|
|
|
|
|
|
|
|
|
|
Investments
(In thousands)
|
|
Cost
|
|
Adjustments
|
|
Carrying Amount
|
|||||||||
Fair value:
|
|
|
|
|
|
|
|
|
|
||||||
Publicly traded companies
|
|
$
|
140,762
|
|
|
|
$
|
146,464
|
|
(3)
|
|
$
|
287,226
|
|
|
Entities that report NAV
|
|
285,557
|
|
|
|
165,617
|
|
|
|
451,174
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
||||||
Entities that do not report NAV:
|
|
|
|
|
|
|
|
|
|
||||||
Entities with observable price changes
|
|
51,254
|
|
|
|
72,418
|
|
|
|
123,672
|
|
|
|||
Entities without observable price changes
|
|
261,410
|
|
|
|
—
|
|
|
|
261,410
|
|
|
|||
March 31, 2020
|
|
$
|
738,983
|
|
|
|
$
|
384,499
|
|
|
|
$
|
1,123,482
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2019
|
|
$
|
738,951
|
|
|
|
$
|
401,643
|
|
|
|
$
|
1,140,594
|
|
|
(1)
|
Includes realized gains of $15.1 million and impairments primarily related to two privately held non-real estate investments of $19.8 million for the three months ended March 31, 2020.
|
(2)
|
Includes realized gains of $50.3 million and impairments related to privately held non-real estate investments of $17.1 million for the year ended December 31, 2019.
|
(3)
|
Includes gross unrealized gains and losses of $175.6 million and $29.1 million, respectively.
|
|
Public/Private
Mix (Cost) |
|
|
|
|
|
|
|
|
Tenant/Non-Tenant
Mix (Cost) |
|
|
|
|
Liquidity
|
|
Debt Issuances Over the
Trailing Five Quarters
|
|
||||
|
|
|
|
|
|||
$4.0B
|
|
|
|
|
|||
|
Issuances of
Unsecured Senior
Notes Payable
|
$3.4B
|
|||||
|
|||||||
|
|||||||
|
|
|
|
||||
|
Weighted-Average
Interest Rate
|
3.95%
|
|||||
(In millions)
|
|
|
|||||
$2.2 billion unsecured senior line of credit
|
$
|
1,979
|
|
|
|
|
|
Outstanding forward equity sales agreements
|
524
|
|
|
Weighted-Average
Remaining Term as of
March 31, 2020
|
15.4 years
|
||
Cash, cash equivalents, and restricted cash
|
488
|
|
|
||||
Investments in publicly traded companies
|
287
|
|
|
||||
Liquidity as of March 31, 2020
|
3,278
|
|
|
||||
$750.0 million unsecured senior line of credit completed in April 2020
|
750
|
|
|
|
|
|
|
Total
|
$
|
4,028
|
|
|
|
|
|
|
|
|
|
|
|
||
Net Debt to Adjusted EBITDA(1)
|
|
Fixed-Charge Coverage Ratio(1)
|
|||||
|
|
|
|||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|
|
|
|
|
(1)
|
Quarter annualized.
|
•
|
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 real estate asset sales, partial interest sales, non-real estate investment 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 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 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
|
|||||||
Availability under our $2.2 billion unsecured senior line of credit
|
|
L+0.825
|
%
|
|
$
|
2,200,000
|
|
|
$
|
221,000
|
|
|
$
|
1,979,000
|
|
Outstanding forward equity sales agreements
|
|
|
|
|
|
|
|
524,297
|
|
||||||
Cash, cash equivalents, and restricted cash
|
|
|
|
|
|
|
|
488,371
|
|
||||||
Investments in publicly traded companies
|
|
|
|
|
|
|
|
287,226
|
|
||||||
Liquidity as of March 31, 2020
|
|
|
|
|
|
|
|
3,278,894
|
|
||||||
$750.0 million unsecured senior line of credit(1)
|
|
|
|
|
|
|
|
750,000
|
|
||||||
Total
|
|
|
|
|
|
|
|
$
|
4,028,894
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2020
|
|
2019
|
|
Change
|
||||||
Net cash provided by operating activities
|
$
|
191,267
|
|
|
$
|
136,730
|
|
|
$
|
54,537
|
|
Net cash used in investing activities
|
$
|
(833,592
|
)
|
|
$
|
(734,333
|
)
|
|
$
|
(99,259
|
)
|
Net cash provided by financing activities
|
$
|
889,675
|
|
|
$
|
640,806
|
|
|
$
|
248,869
|
|
|
Three Months Ended March 31,
|
|
Increase (Decrease)
|
||||||||
|
2020
|
|
2019
|
|
|||||||
Sources of cash from investing activities:
|
|
|
|
|
|
||||||
Sales of non-real estate investments
|
$
|
30,910
|
|
|
$
|
26,200
|
|
|
$
|
4,710
|
|
Return of capital from unconsolidated real estate joint ventures
|
20,224
|
|
|
—
|
|
|
20,224
|
|
|||
Deposits for investing activities
|
4,834
|
|
|
500
|
|
|
4,334
|
|
|||
|
55,968
|
|
|
26,700
|
|
|
29,268
|
|
|||
Uses of cash for investing activities:
|
|
|
|
|
|
||||||
Purchases of real estate
|
482,409
|
|
|
418,358
|
|
|
64,051
|
|
|||
Additions to real estate
|
373,499
|
|
|
241,049
|
|
|
132,450
|
|
|||
Investments in unconsolidated real estate joint ventures
|
2,592
|
|
|
52,634
|
|
|
(50,042
|
)
|
|||
Additions to non-real estate investments
|
31,060
|
|
|
48,992
|
|
|
(17,932
|
)
|
|||
|
889,560
|
|
|
761,033
|
|
|
128,527
|
|
|||
|
|
|
|
|
|
||||||
Net cash used in investing activities
|
$
|
833,592
|
|
|
$
|
734,333
|
|
|
$
|
99,259
|
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2020
|
|
2019
|
|
Change
|
||||||
Proceeds from issuance of unsecured senior notes payable
|
$
|
699,531
|
|
|
$
|
854,209
|
|
|
$
|
(154,678
|
)
|
Repayments of borrowings from secured notes payable
|
(1,479
|
)
|
|
(301,343
|
)
|
|
299,864
|
|
|||
Borrowings from unsecured senior line of credit
|
783,000
|
|
|
1,405,000
|
|
|
(622,000
|
)
|
|||
Repayments of borrowings from unsecured senior line of credit
|
(946,000
|
)
|
|
(1,613,000
|
)
|
|
667,000
|
|
|||
Proceeds from issuance of commercial paper program
|
2,158,900
|
|
|
—
|
|
|
2,158,900
|
|
|||
Repayments of borrowings from commercial paper program
|
(2,158,900
|
)
|
|
—
|
|
|
(2,158,900
|
)
|
|||
Payments of loan fees
|
(7,954
|
)
|
|
(15,225
|
)
|
|
7,271
|
|
|||
Changes related to debt
|
527,098
|
|
|
329,641
|
|
|
197,457
|
|
|||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Contributions from and sales of noncontrolling interests
|
2,756
|
|
|
440,671
|
|
|
(437,915
|
)
|
|||
Distributions to and purchases of noncontrolling interests
|
(16,986
|
)
|
|
(9,709
|
)
|
|
(7,277
|
)
|
|||
Proceeds from issuance of common stock
|
504,338
|
|
|
—
|
|
|
504,338
|
|
|||
Dividend payments
|
(126,278
|
)
|
|
(110,468
|
)
|
|
(15,810
|
)
|
|||
Taxes paid related to net settlement of equity awards
|
(1,253
|
)
|
|
(89
|
)
|
|
(1,164
|
)
|
|||
Repurchase of 7.00% Series D cumulative convertible preferred stock
|
—
|
|
|
(9,240
|
)
|
|
9,240
|
|
|||
Net cash provided by financing activities
|
$
|
889,675
|
|
|
$
|
640,806
|
|
|
$
|
248,869
|
|
(1)
|
In January 2020, we completed $1.0 billion of forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock (including the exercise of an underwriters’ option) at a public offering price of $155.00 per share, before underwriting discounts. In March 2020, we settled 3.4 million shares from our forward equity sales agreements and received proceeds of $500.0 million. As of April 27, 2020, 3.5 million shares of our common stock remain outstanding under forward equity sales agreements, for which we expect to receive proceeds of $524.3 million to be further adjusted as provided in the sales agreements. We expect to settle the remaining outstanding forward equity sales agreements in 2020. In April 2020, we completed a sale a partial interest in properties at 9808 and 9868 Scranton Road in our Sorrento Mesa submarket to the existing SD Tech by Alexandria consolidated real estate joint venture, of which we own 50%. We received proceeds of $51.1 million for the 50% interest in the properties that our joint venture partner acquired through the joint venture.
|
(2)
|
Excludes the formation of a consolidated joint venture with Boston Properties, Inc. through non-cash contributions of real estate. Refer to Note 4 – “Consolidated and Unconsolidated Real Estate Joint Ventures” to these unaudited consolidated financial statements under Item 1 of this report for additional details on this transaction.
|
•
|
We have proactively reduced outstanding LIBOR-based borrowings under our unsecured senior bank term loans and secured construction loans through repayments. From January 2017 to March 2020, we retired approximately $1.5 billion of such debt.
|
•
|
During 2020, we increased the aggregate amount of our commercial paper program to $1.0 billion from $750.0 million. This program provides us with ability to issue commercial paper notes bearing interest at short-term fixed rates, generally with a maturity of 30 days or less and with a maximum maturity of 397 days from the date of issuance. Our commercial paper program is not subjected to LIBOR and is used for funding short-term working capital needs. As of March 31, 2020, we had no borrowings outstanding under our commercial paper program.
|
•
|
We continue to prudently manage outstanding borrowings under our $2.2 billion unsecured senior line of credit, which represented less than 3% of our total debt balance outstanding as of March 31, 2020. Excluding LIBOR-based debt held by our unconsolidated joint ventures, borrowings under our $2.2 billion unsecured senior line of credit represented our only LIBOR-based debt outstanding as of March 31, 2020.
|
•
|
Our $2.2 billion unsecured senior line of credit contains fallback language generally consistent with the ARRC’s Amendment Approach, which provides a streamlined amendment approach for negotiating a benchmark replacement and introduces clarity with respect to the fallback trigger events and an adjustment to be applied to the successor rate.
|
•
|
We continue to monitor developments by the ARRC and other governing bodies involved in LIBOR transition.
|
|
Three Months Ended March 31,
|
|
|
||||||||
|
2020
|
|
2019
|
|
Change
|
||||||
Common stock
|
$
|
126,278
|
|
|
$
|
109,342
|
|
|
$
|
16,936
|
|
Series D Convertible Preferred Stock
|
—
|
|
|
1,126
|
|
|
(1,126
|
)
|
|||
|
$
|
126,278
|
|
|
$
|
110,468
|
|
|
$
|
15,810
|
|
|
|
|
Payments by Period
|
||||||||||||||||
|
Total
|
|
2020
|
|
2021–2022
|
|
2023–2024
|
|
Thereafter
|
||||||||||
Secured and unsecured debt(1)(2)
|
$
|
7,331,961
|
|
|
$
|
4,939
|
|
|
$
|
14,128
|
|
|
$
|
1,659,107
|
|
|
$
|
5,653,787
|
|
Estimated interest payments on fixed-rate debt(3)
|
3,097,918
|
|
|
196,012
|
|
|
569,201
|
|
|
511,055
|
|
|
1,821,650
|
|
|||||
Ground lease obligations – operating leases
|
710,160
|
|
|
11,036
|
|
|
30,242
|
|
|
30,811
|
|
|
638,071
|
|
|||||
Ground lease obligations – finance lease
|
36,177
|
|
|
310
|
|
|
832
|
|
|
840
|
|
|
34,195
|
|
|||||
Other obligations
|
28,248
|
|
|
1,498
|
|
|
4,895
|
|
|
5,469
|
|
|
16,386
|
|
|||||
Total
|
$
|
11,204,464
|
|
|
$
|
213,795
|
|
|
$
|
619,298
|
|
|
$
|
2,207,282
|
|
|
$
|
8,164,089
|
|
(1)
|
Amounts represent principal amounts due and exclude unamortized premiums (discounts) and deferred financing costs reflected in the consolidated balance sheets under Item 1 of this report.
|
(2)
|
Payment dates reflect any extension options that we control.
|
(3)
|
Amounts are based upon contractual interest rates, including interest payment dates and scheduled maturity dates.
|
Covenant Ratios(1)
|
|
Requirement
|
|
March 31, 2020
|
Total Debt to Total Assets
|
|
Less than or equal to 60%
|
|
34%
|
Secured Debt to Total Assets
|
|
Less than or equal to 40%
|
|
2%
|
Consolidated EBITDA(2) to Interest Expense
|
|
Greater than or equal to 1.5x
|
|
6.4x
|
Unencumbered Total Asset Value to Unsecured Debt
|
|
Greater than or equal to 150%
|
|
277%
|
(1)
|
All covenant ratio titles utilize terms as defined in the respective debt agreements.
|
(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
|
|
March 31, 2020
|
|
Leverage Ratio
|
|
Less than or equal to 60.0%
|
|
30.1%
|
|
Secured Debt Ratio
|
|
Less than or equal to 45.0%
|
|
1.4%
|
|
Fixed-Charge Coverage Ratio
|
|
Greater than or equal to 1.50x
|
|
3.81x
|
|
Unsecured Interest Coverage Ratio
|
|
Greater than or equal to 1.75x
|
|
5.89x
|
|
(1)
|
All covenant ratio titles utilize terms as defined in the credit agreement.
|
|
|
Total
|
||
Balance as of December 31, 2019
|
|
$
|
(9,749
|
)
|
|
|
|
||
Other comprehensive loss before reclassifications
|
|
(5,857
|
)
|
|
Net other comprehensive loss
|
|
(5,857
|
)
|
|
|
|
|
||
Balance as of March 31, 2020
|
|
$
|
(15,606
|
)
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
||||
Assets:
|
|
|
|
|
|
||||
Cash, cash equivalents, and restricted cash
|
|
$
|
283,570
|
|
|
$
|
4,432
|
|
|
Other assets
|
|
78,337
|
|
|
71,036
|
|
|
||
Total assets
|
|
$
|
361,907
|
|
|
$
|
75,468
|
|
|
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
|
||||
Unsecured senior notes payable
|
|
$
|
6,736,999
|
|
|
$
|
6,044,127
|
|
|
Unsecured senior line of credit
|
|
221,000
|
|
|
384,000
|
|
|
||
Other liabilities
|
|
293,159
|
|
|
278,858
|
|
|
||
Total liabilities
|
|
$
|
7,251,158
|
|
|
$
|
6,706,985
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2020
|
|
Year Ended December 31, 2019
|
|
||||
Total revenues
|
|
$
|
5,468
|
|
|
$
|
22,731
|
|
|
Total expenses
|
|
(77,126
|
)
|
|
(317,896
|
)
|
|
||
Net loss
|
|
(71,658
|
)
|
|
(295,165
|
)
|
|
||
Net income attributable to unvested restricted stock awards and preferred stock
|
|
(1,925
|
)
|
|
(12,170
|
)
|
|
||
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
|
|
$
|
(73,583
|
)
|
|
$
|
(307,335
|
)
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2020
|
||||||
|
Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures
|
|
Our Share of Unconsolidated
Real Estate Joint Ventures |
||||
Net income (loss)
|
$
|
11,913
|
|
|
$
|
(3,116
|
)
|
Depreciation and amortization
|
15,870
|
|
|
2,643
|
|
||
Impairment of real estate
|
—
|
|
|
7,644
|
|
||
Funds from operations
|
$
|
27,783
|
|
|
$
|
7,171
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
(In thousands)
|
|
2020
|
|
2019
|
||||
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic and diluted
|
|
$
|
16,840
|
|
|
$
|
123,598
|
|
Depreciation and amortization of real estate assets(1)
|
|
172,628
|
|
|
134,087
|
|
||
Noncontrolling share of depreciation and amortization from consolidated real estate JVs
|
|
(15,870
|
)
|
|
(5,419
|
)
|
||
Our share of depreciation and amortization from unconsolidated real estate JVs
|
|
2,643
|
|
|
846
|
|
||
Impairment of real estate – rental properties
|
|
7,644
|
|
(2)
|
—
|
|
||
Assumed conversion of 7.00% Series D cumulative convertible preferred stock
|
|
—
|
|
|
1,026
|
|
||
Allocation to unvested restricted stock awards
|
|
(847
|
)
|
|
(2,054
|
)
|
||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(1)
|
|
183,038
|
|
|
252,084
|
|
||
Unrealized losses (gains) on non-real estate investments
|
|
17,144
|
|
|
(72,206
|
)
|
||
Impairment of non-real estate investments
|
|
19,780
|
|
(3)
|
—
|
|
||
Impairment of real estate
|
|
2,003
|
|
|
—
|
|
||
Loss on early extinguishment of debt
|
|
—
|
|
|
7,361
|
|
||
Preferred stock redemption charge
|
|
—
|
|
|
2,580
|
|
||
Removal of assumed conversion of 7.00% Series D cumulative convertible preferred stock
|
|
—
|
|
|
(1,026
|
)
|
||
Allocation to unvested restricted stock awards
|
|
(591
|
)
|
|
990
|
|
||
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted
|
|
$
|
221,374
|
|
|
$
|
189,783
|
|
(1)
|
Calculated in accordance with standards established by the Nareit Board of Governors.
|
(2)
|
Relates to our investment in a recently developed retail property held by our unconsolidated real estate joint venture. Refer to the “Sales of Partial Interests, Formation of a Consolidated Joint Venture and Impairment of an Unconsolidated Joint Venture” section of Note 4 – “Consolidated and Unconsolidated Real Estate Joint Ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional information.
|
(3)
|
Primarily relates to two privately held non-real estate investments.
|
|
|
Three Months Ended March 31,
|
||||||
(Per share)
|
|
2020
|
|
2019
|
||||
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted
|
|
$
|
0.14
|
|
|
$
|
1.11
|
|
Depreciation and amortization of real estate assets(1)
|
|
1.31
|
|
|
1.17
|
|
||
Impairment of real estate – rental properties
|
|
0.06
|
|
(2)
|
—
|
|
||
Allocation to unvested restricted stock awards
|
|
(0.01
|
)
|
|
(0.02
|
)
|
||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(1)
|
|
1.50
|
|
|
2.26
|
|
||
Unrealized losses (gains) on non-real estate investments
|
|
0.14
|
|
|
(0.65
|
)
|
||
Impairment of non-real estate investments
|
|
0.16
|
|
|
—
|
|
||
Impairment of real estate
|
|
0.02
|
|
(2)
|
—
|
|
||
Loss on early extinguishment of debt
|
|
—
|
|
|
0.07
|
|
||
Preferred stock redemption charge
|
|
—
|
|
|
0.02
|
|
||
Allocation to unvested restricted stock awards
|
|
—
|
|
|
0.01
|
|
||
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted
|
|
$
|
1.82
|
|
|
$
|
1.71
|
|
|
|
|
|
|
||||
Weighted-average shares of common stock outstanding(3) for calculations of:
|
|
|
|
|
||||
EPS – diluted
|
|
121,785
|
|
|
111,054
|
|
||
Funds from operations – diluted, per share
|
|
121,785
|
|
|
111,635
|
|
||
Funds from operations – diluted, as adjusted, per share
|
|
121,785
|
|
|
111,054
|
|
(1)
|
Calculated in accordance with standards established by the Nareit Board of Governors.
|
(2)
|
Refer to footnotes on the previous page for additional information.
|
(3)
|
Refer to the definition of “Weighted-Average Shares of Common Stock Outstanding – Diluted” within this section of this Item 2 for additional information.
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Net income
|
$
|
30,678
|
|
|
$
|
136,818
|
|
Interest expense
|
45,739
|
|
|
39,100
|
|
||
Income taxes
|
1,341
|
|
|
1,297
|
|
||
Depreciation and amortization
|
175,496
|
|
|
134,087
|
|
||
Stock compensation expense
|
9,929
|
|
|
11,029
|
|
||
Loss on early extinguishment of debt
|
—
|
|
|
7,361
|
|
||
Unrealized losses (gains) on non-real estate investments
|
17,144
|
|
|
(72,206
|
)
|
||
Impairment of real estate
|
9,647
|
|
|
—
|
|
||
Impairment of non-real estate investments
|
19,780
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
309,754
|
|
|
$
|
257,486
|
|
|
|
|
|
||||
Revenues
|
$
|
439,919
|
|
|
$
|
358,842
|
|
Non-real estate investments – total realized (losses) gains
|
(4,677
|
)
|
|
11,350
|
|
||
Impairment of non-real estate investments
|
19,780
|
|
|
—
|
|
||
Revenues, as adjusted
|
$
|
455,022
|
|
|
$
|
370,192
|
|
|
|
|
|
||||
Adjusted EBITDA margin
|
68%
|
|
|
70%
|
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Adjusted EBITDA
|
|
$
|
309,754
|
|
|
$
|
257,486
|
|
|
|
|
|
|
||||
Interest expense
|
|
$
|
45,739
|
|
|
$
|
39,100
|
|
Capitalized interest
|
|
24,680
|
|
|
18,509
|
|
||
Amortization of loan fees
|
|
(2,247
|
)
|
|
(2,233
|
)
|
||
Amortization of debt premiums
|
|
888
|
|
|
801
|
|
||
Cash interest
|
|
69,060
|
|
|
56,177
|
|
||
Dividends on preferred stock
|
|
—
|
|
|
1,026
|
|
||
Fixed charges
|
|
$
|
69,060
|
|
|
$
|
57,203
|
|
|
|
|
|
|
||||
Fixed-charge coverage ratio:
|
|
|
|
|
||||
– period annualized
|
|
4.5x
|
|
|
4.5x
|
|
||
– trailing 12 months
|
|
4.2x
|
|
|
4.2x
|
|
•
|
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.
|
Property/Submarket
|
|
RSF
|
|
Intermediate-term projects:
|
|
|
|
651 Gateway Boulevard/South San Francisco
|
|
300,010
|
|
3825 Fabian Way/Greater Stanford
|
|
250,000
|
|
960 Industrial Road/Greater Stanford
|
|
110,000
|
|
9363, 9373, and 9393 Towne Centre Drive/University Town Center
|
|
112,012
|
|
10260 Campus Point Drive/University Town Center
|
|
109,164
|
|
10931 and 10933 North Torrey Pines Road/Torrey Pines
|
|
92,450
|
|
|
|
973,636
|
|
Future projects:
|
|
|
|
3875 Fabian Way/Greater Stanford
|
|
228,000
|
|
219 East 42nd Street/New York City
|
|
349,947
|
|
4161 Campus Point Court/University Town Center
|
|
159,884
|
|
4110 Campus Point Court/University Town Center
|
|
14,423
|
|
4045 Sorrento Valley Boulevard/Sorrento Valley
|
|
10,926
|
|
4075 Sorrento Valley Boulevard/Sorrento Valley
|
|
40,000
|
|
601 Dexter Avenue North/Lake Union
|
|
18,680
|
|
|
|
821,860
|
|
Total value-creation RSF currently included in rental properties
|
|
1,795,496
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Secured notes payable
|
$
|
347,136
|
|
|
$
|
349,352
|
|
Unsecured senior notes payable
|
6,736,999
|
|
|
6,044,127
|
|
||
Unsecured senior line of credit
|
221,000
|
|
|
384,000
|
|
||
Unamortized deferred financing costs
|
53,807
|
|
|
47,299
|
|
||
Cash and cash equivalents
|
(445,255
|
)
|
|
(189,681
|
)
|
||
Restricted cash
|
(43,116
|
)
|
|
(53,008
|
)
|
||
Net debt
|
$
|
6,870,571
|
|
|
$
|
6,582,089
|
|
|
|
|
|
||||
Adjusted EBITDA:
|
|
|
|
||||
– quarter annualized
|
$
|
1,239,016
|
|
|
$
|
1,148,620
|
|
– trailing 12 months
|
$
|
1,137,650
|
|
|
$
|
1,085,382
|
|
|
|
|
|
||||
Net debt to Adjusted EBITDA:
|
|
|
|
||||
– quarter annualized
|
5.5
|
x
|
|
5.7
|
x
|
||
– trailing 12 months
|
6.0
|
x
|
|
6.1
|
x
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Net income
|
|
$
|
30,678
|
|
|
$
|
136,818
|
|
|
|
|
|
|
||||
Equity in losses (earnings) of unconsolidated real estate joint ventures
|
|
3,116
|
|
|
(1,146
|
)
|
||
General and administrative expenses
|
|
31,963
|
|
|
24,677
|
|
||
Interest expense
|
|
45,739
|
|
|
39,100
|
|
||
Depreciation and amortization
|
|
175,496
|
|
|
134,087
|
|
||
Impairment of real estate
|
|
2,003
|
|
|
—
|
|
||
Loss on early extinguishment of debt
|
|
—
|
|
|
7,361
|
|
||
Investment loss (income)
|
|
21,821
|
|
|
(83,556
|
)
|
||
Net operating income
|
|
310,816
|
|
|
257,341
|
|
||
Straight-line rent revenue
|
|
(20,597
|
)
|
|
(26,965
|
)
|
||
Amortization of acquired below-market leases
|
|
(15,964
|
)
|
|
(7,148
|
)
|
||
Net operating income (cash basis)
|
|
$
|
274,255
|
|
|
$
|
223,228
|
|
|
|
|
|
|
||||
Net operating income (cash basis) – annualized
|
|
$
|
1,097,020
|
|
|
$
|
892,912
|
|
|
|
|
|
|
||||
Net operating income (from above)
|
|
$
|
310,816
|
|
|
$
|
257,341
|
|
Total revenues
|
|
$
|
439,919
|
|
|
$
|
358,842
|
|
Operating margin
|
|
71%
|
|
72%
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2020
|
|
2019
|
||||
Income from rentals
|
|
$
|
437,605
|
|
|
$
|
354,749
|
|
Rental revenues
|
|
(337,942
|
)
|
|
(274,563
|
)
|
||
Tenant recoveries
|
|
$
|
99,663
|
|
|
$
|
80,186
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2020
|
|
2019
|
||||
Unencumbered net operating income
|
$
|
295,001
|
|
|
$
|
243,191
|
|
Encumbered net operating income
|
15,815
|
|
|
14,150
|
|
||
Total net operating income
|
$
|
310,816
|
|
|
$
|
257,341
|
|
Unencumbered net operating income as a percentage of total net operating income
|
95%
|
|
|
95%
|
|
|
Three Months Ended March 31,
|
||||
|
2020
|
|
2019
|
||
Weighted-average shares of common stock outstanding:
|
|
|
|
||
Basic shares for EPS
|
121,433
|
|
|
111,054
|
|
Outstanding forward equity sales agreements
|
352
|
|
|
—
|
|
Series D Convertible Preferred Stock
|
—
|
|
|
—
|
|
Diluted shares for EPS
|
121,785
|
|
|
111,054
|
|
|
|
|
|
||
Basic shares for EPS
|
121,433
|
|
|
111,054
|
|
Outstanding forward equity sales agreements
|
352
|
|
|
—
|
|
Series D Convertible Preferred Stock
|
—
|
|
|
581
|
|
Diluted shares for FFO
|
121,785
|
|
|
111,635
|
|
|
|
|
|
||
Basic shares for EPS
|
121,433
|
|
|
111,054
|
|
Outstanding forward equity sales agreements
|
352
|
|
|
—
|
|
Series D Convertible Preferred Stock
|
—
|
|
|
—
|
|
Diluted shares for FFO, as adjusted
|
121,785
|
|
|
111,054
|
|
Equity price risk:
|
|
||
Fair value increase of 10%
|
$
|
112,348
|
|
Fair value decrease of 10%
|
$
|
(112,348
|
)
|
Effect on potential future earnings due to foreign currency exchange rate:
|
|
||
Rate increase of 10%
|
$
|
207
|
|
Rate decrease of 10%
|
$
|
(207
|
)
|
|
|
||
Effect on the fair value of net investment in foreign subsidiaries due to foreign currency exchange rate:
|
|
||
Rate increase of 10%
|
$
|
9,145
|
|
Rate decrease of 10%
|
$
|
(9,145
|
)
|
•
|
The continued service and availability of personnel, including our executive officers and other leaders that are part of our management team, and our ability to recruit, attract, and retain skilled personnel. To the extent our management or personnel are impacted in significant numbers by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work, our business and operating results may be negatively impacted;
|
•
|
Our (or our tenants’) ability to operate, generally or in affected areas, or delays in the supply of products or services from our vendors that are necessary for us to operate effectively;
|
•
|
Our tenants’ ability to pay rent on their leases in full and timely and, to the extent necessary, our inability to restructure our tenants’ long-term rent obligations on terms favorable to us or timely recapture the space for re-leasing (Refer to the risk factor on the next page within this Item 1A of this report);
|
•
|
Difficulty in our accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which may affect our (or our tenants’) ability to access capital necessary to fund business operations or replace or renew maturing liabilities on a timely basis and may adversely affect the valuation of financial assets and liabilities, any of which could affect our (or our tenants’) ability to meet liquidity and capital expenditure requirements or have a material adverse effect on our business, financial condition, results of operations, and cash flows;
|
•
|
Complete or partial closures of, or other operational issues at, one or more of our offices or properties resulting from government action or directives;
|
•
|
Our (or our tenants’) ability to continue or complete construction as planned for our tenants’ operations, or delays in the supply of materials or labor necessary for construction, which may affect our (or our tenants’) ability to complete construction or to complete it timely, our ability to prevent a lease termination, and our ability to collect rent, which may have a material adverse effect on our business, financial condition, result of operations and cash flows;
|
•
|
The cost of implementing precautionary measures against COVID-19, including, but not limited to, potential additional health insurance and labor-related costs;
|
•
|
Governmental efforts (such as moratorium on or suspension of eviction proceedings) that may affect our ability to collect rent or enforce remedies for the failure of our tenants to pay rent;
|
•
|
Deterioration of global economic conditions and job losses, which may decrease demand for and occupancy levels of our rental properties, and may cause our rental rates and property values to be negatively impacted;
|
•
|
Our dependence on short-term and long-term debt sources, including our unsecured senior lines of credit, commercial paper program, and senior notes, which may affect our ability to continue our investing activities and pay distributions to our stockholders;
|
•
|
Declines in the valuation of our properties which may affect our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of debt funding;
|
•
|
Refusal or failure by one or more of our lenders under our credit facilities to fund their financing commitment to us, which we may not be able to replace on favorable terms, or at all;
|
•
|
To the extent we enter into derivative financial instruments, one or more counterparties to our derivative financial instruments could default on their obligations to us or could fail, increasing the risk that we may not realize the benefits of utilizing these instruments;
|
•
|
Any possession taken of our properties, in whole or in part, by governmental authorities for public purposes in eminent domain proceedings;
|
•
|
Our level of insurance coverage and recovery we receive under any insurance we maintain, which may be delayed by, or insufficient to fully offset potential/actual losses caused by, COVID-19;
|
•
|
Any increase in insurance premiums and imposition of large deductibles;
|
•
|
Our level of dependence on the Internet, stemming from employees working remotely, and increases in malware campaigns and phishing attacks preying on the uncertainties surrounding COVID-19, which may increase our vulnerability to cyber attacks;
|
•
|
Our ability to ensure business continuity in the event our continuity of operations plan is not effective or is improperly implemented or deployed during a disruption; and
|
•
|
Our ability to operate, which may cause our business and operating results to decline or impact our ability to comply with regulatory obligations leading to reputational harm and regulatory issues or fines.
|
•
|
Delays or difficulties in enrolling patients or maintaining scheduled study visits in clinical trials;
|
•
|
Delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
|
•
|
Diversion of healthcare resources away from clinical trials, including the diversion of hospitals serving as our tenants’ clinical trial sites and hospital staff supporting the conduct of our tenants’ clinical trials;
|
•
|
Interruption of key clinical trial or other research activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers, and others;
|
•
|
Limitations in employee resources that would otherwise be focused on our tenants’ research, business, or clinical trials, including because of sickness of employees or their families, the desire of employees to avoid contact with large groups of people, or as a result of the governmental imposition of shelter-in-place or similar working restrictions;
|
•
|
Interruptions in supply chain, manufacturing and global shipping or other delays that may affect the transport of materials necessary for our tenants’ research, clinical trials, or manufacturing activities;
|
•
|
Reduction in revenue projections for our tenants’ products due to the prioritization of the treatment of COVID-19 patients over other treatments, such as specialty and elective procedures and non COVID‐19 diagnostics;
|
•
|
Delays in necessary interactions with ethics committees, regulators, and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees;
|
•
|
Delays in receiving approval from regulatory authorities to initiate planned clinical trials or research activities;
|
•
|
Delays in commercialization of our tenants’ products and approval by governmental authorities (such as the U.S. Food and Drug Administration and the federal and state Emergency Management Agencies) of our tenants’ products caused by disruptions, funding shortages, or health concerns, as well as by the prioritization by the FDA of the review and approvals of diagnostics, therapeutics and vaccines that are related to COVID-19;
|
•
|
Difficulty in retaining staff or rehiring staff in connection with layoffs caused by deteriorating global market conditions;
|
•
|
Changes in local regulations as part of a response to the COVID-19 outbreak that may require our tenants to change the ways in which their clinical trials are conducted, which may result in unexpected costs or the discontinuation of the clinical trials altogether;
|
•
|
Refusal or reluctance of the FDA to accept data from clinical trials in affected geographies outside the U.S.;
|
•
|
Diminishing public trust in healthcare facilities or other facilities, such as medical office buildings, that are treating (or have treated) patients affected by contagious diseases, including COVID-19; and
|
•
|
Inability to access capital on terms favorable to our tenants because of changes in company valuation and investor appetite due to the general downturn of economic and financial conditions and the volatility of the market.
|
•
|
Reduction in staff productivity due to business closures, alternative working arrangements, or illness of staff and/or illness in the family;
|
•
|
Reductions in sales of our tenants’ services and products, longer sales cycles, reductions in subscription duration and value, slower adoption of new technologies, and increased price competition due to economic uncertainties and downturns;
|
•
|
Disruptions to our tenants’ supply chain, manufacturing vendors, or logistics providers to deliver products or perform services;
|
•
|
Limitations on business and marketing activities due to travel restrictions and virtualization, or cancellation of customer and employee events;
|
•
|
Adverse impact on customer relationships and our ability to recognize revenues due to our tenants’ inability to access their clients’ sites for implementation and on-site consulting services;
|
•
|
Inability to recruit and develop highly skilled employees with appropriate qualifications, to conduct background checks on potential employees, and to provide necessary equipment and training to new and existing employees;
|
•
|
Network infrastructure and technology systems failures of our tenants, or of third-party services used by our tenants, which may result in system interruptions, reputational harm, loss of intellectual property, delays in product development, lengthy interruptions in services, breaches of data security, and loss of critical data;
|
•
|
Higher employment compensation costs that may not be offset by improved productivity or increased sales; and
|
•
|
Inability to access capital on terms favorable to our tenants because of changes in company valuation and/or investor appetite due to general downturns of economic and financial conditions and the volatility of the market.
|
•
|
Reduction in productive capacity and profitability because of decreased labor availability due, for example, to government restrictions, the inability of employees to report to work, or collective bargaining efforts;
|
•
|
Potential contract cancellations, project reductions, and reduction in demand for our tenants’ products due to the adverse effect on business confidence and consumer sentiments and the general downturn in economic conditions;
|
•
|
Disruption of the logistics necessary to import, export, and deliver products to target companies and their customers, as ports and other channels of entry may be closed or may operate at only a portion of capacity;
|
•
|
Disruptions to manufacturing facilities and supply lines; and
|
•
|
Inability to access capital on terms favorable to our tenants because of changes in company valuation and investor appetite due to the general downturn of economic and financial conditions and the volatility of the market.
|
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 10-Q
|
|
August 13, 1999
|
|
3.5*
|
|
|
Form 8-K
|
|
February 10, 2000
|
|
3.6*
|
|
|
Form 8-K
|
|
February 10, 2000
|
|
3.7*
|
|
|
Form 8-A
|
|
January 18, 2002
|
|
3.8*
|
|
|
Form 8-A
|
|
June 28, 2004
|
|
3.9*
|
|
|
Form 8-K
|
|
March 25, 2008
|
|
3.10*
|
|
|
Form 8-K
|
|
March 14, 2012
|
|
3.11*
|
|
|
Form 8-K
|
|
May 12, 2017
|
|
3.12*
|
|
|
Form 8-K
|
|
August 2, 2018
|
|
4.1*
|
|
|
Form 8-K
|
|
March 3, 2017
|
|
4.2*
|
|
|
Form 8-K
|
|
March 26, 2020
|
|
4.3*
|
|
|
Form 8-K
|
|
March 26, 2020
|
|
22.0
|
|
|
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
|
|
101.1
|
|
The following materials from the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of March 31, 2020, and December 31, 2019 (unaudited), (ii) Consolidated Statements of Operations for the three months ended March 31, 2020 and 2019 (unaudited), (iii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 (unaudited), (iv) Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests for the three months ended March 31, 2020 and 2019 (unaudited), (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited), and (vi) Notes to Consolidated Financial Statements (unaudited)
|
|
N/A
|
|
Filed herewith
|
104
|
|
Cover Page Interactive Data File – the cover page from this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, is formatted in Inline XBRL and contained in Exhibit 101.1
|
|
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 and Co-Chief Investment Officer
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Dean A. Shigenaga
|
|
Dean A. Shigenaga
Co-President and Chief Financial Officer
(Principal Financial Officer)
|
Name of Subsidiary
|
|
Jurisdiction of Organization
|
|
Alexandria Real Estate Equities, L.P.
|
|
Delaware
|
|
|
|
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Joel S. Marcus
|
|
Joel S. Marcus
|
|
Executive Chairman
|
1.
|
I have reviewed this Quarterly Report on Form 10‑Q of Alexandria Real Estate Equities, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Stephen A. Richardson
|
|
Stephen A. Richardson
|
|
Co-Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10‑Q of Alexandria Real Estate Equities, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Peter M. Moglia
|
|
Peter M. Moglia
|
|
Co-Chief Executive Officer and Co-Chief Investment Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10‑Q of Alexandria Real Estate Equities, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Dean A. Shigenaga
|
|
Dean A. Shigenaga
|
|
Co-President and Chief Financial Officer
|
|
/s/ Joel S. Marcus
|
|
Joel S. Marcus
|
|
Executive Chairman
|
|
/s/ Stephen A. Richardson
|
|
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 and Co-Chief Investment Officer
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/s/ Dean A. Shigenaga
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Dean A. Shigenaga
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Co-President and Chief Financial Officer
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