UNITED STATES

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(MarkOne)

[X] **** ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

For thefiscal year ended December 31, 2009

Commissionfile number 1-12993

ALEXANDRIA REAL ESTATE EQUITIES, INC.

(Exact name of registrant as specified in its charter)

Maryland	95-4502084
(State or other<br> jurisdiction of incorporation or organization)	(IRS Employer I.D.<br> Number)

385 East Colorado BoulevardSuite 299Pasadena, California 91101

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (626) 578-0777

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value per share<br><br> <br>(Including related preferred stock purchase rights)<br><br> <br>8.375% Series C<br> Cumulative Redeemable Preferred Stock	New York Stock Exchange<br><br> <br><br><br> <br>New York Stock<br> Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best< font size="1" face="Times New Roman"> of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Act). Large accelerated filer [X] Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The aggregate market value of the shares of Common Stock held by non-affiliates of registrant was approximately $1.4 billion based on the closing price for such shares on the New York Stock Exchange on June 30, 2009.

As of February 24, 2010, the registrant had outstanding 44,286,871 shares of Common Stock.

Documents Incorporated By Reference

Part III of this annual report on Form 10-K incorporates certain information by reference from the registrant’s definitive proxy statement to be filed within 120 days of the end of the fiscal year covered by this annual report on Form 10-K in connection with the registrant’s annual meeting of stockholders to be held on or about May 27, 2010.

INDEX TO FORM 10-KALEXANDRIA REAL ESTATE EQUITIES, INC.

****	PART I	Page
ITEM 1.	BUSINESS	2
ITEM 1A.	RISK FACTORS	5
ITEM 1B.	UNRESOLVED STAFF<br> COMMENTS	21
ITEM 2.	PROPERTIES	22
ITEM 3.	LEGAL PROCEEDINGS	28
ITEM 4.	RESERVED	28
****	PART II
ITEM 5.	MARKET FOR<br> REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES<br> OF EQUITY SECURITIES	29
ITEM 6.	SELECTED FINANCIAL<br> DATA	30
ITEM 7.	MANAGEMENT’S<br> DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32
ITEM 7A.	QUANTITATIVE<br> AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	54
ITEM 8.	FINANCIAL<br> STATEMENTS AND SUPPLEMENTARY DATA	55
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH<br> ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	55
ITEM 9A.	CONTROLS AND<br> PROCEDURES	55
ITEM 9B.	OTHER INFORMATION	58
****	PART III
ITEM 10.	DIRECTORS,<br> EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	58
ITEM 11.	EXECUTIVE<br> COMPENSATION	58
ITEM 12.	SECURITY OWNERSHIP OF<br> CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	58
ITEM 13.	CERTAIN<br> RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	58
ITEM 14.	PRINCIPAL<br> ACCOUNTANT FEES AND SERVICES	58
****	PART IV
ITEM 15.	EXHIBITS AND<br> FINANCIAL STATEMENT SCHEDULES	59

PART I

Certain information and statements included in this annual report on Form 10-K, including, without limitation, statements containing the words “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates,” or the negative of these words or similar words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by the forward-looking statements, including, but not limited to the following:

· negative worldwide economic, financial and banking conditions;

· worldwide economic recession and lack of confidence;

· financial, banking and credit market conditions;

· the seizure or illiquidity of credit markets;

· our inability to obtain capital (debt, construction financing and or equity) or refinance debt maturities;

· increased interest rates and operating costs;

· adverse economic or real estate developments in our markets;

· our failure to successfully complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development;

· significant decreases in our active development, active redevelopment or preconstruction activities resulting in significant increases in our interest, operating and payroll expenses;

· our failure to successfully operate or lease acquired properties;

· the financial condition of our insurance carriers;

· general and local economic conditions;

· decreased rental rates or increased vacancy rates/failure to renew or replace expiring leases;

· defaults on or non-renewal of leases by tenants;

· our failure to comply with laws or changes in law;

· compliance with environmental laws;

· our failure to maintain our status as a real estate investment trust (“REIT”);

· certain ownership interests outside the United States may subject us to different or greater risks than those associated with our domestic operations; and

· fluctuations in foreign currency exchange rates.

This list of risks and uncertainties, however, is only a summary and is not intended to be exhaustive. Additional information regarding risk factors that may affect us is included under the headings “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this annual report on Form 10-K. Readers of our annual report on Form 10-K should also read our Securities and Exchange Commission (“SEC”) and other publicly filed documents for further discussion regarding such factors.

As used in this annual report on Form 10-K, references to the “Company,” “we,” “our,” and “us” refer to Alexandria Real Estate Equities, Inc. and its subsidiaries.

ITEM 1. BUSINESS

General

We are a Maryland corporation formed in October 1994 that has elected to be taxed as a REIT for federal income tax purposes. We are the largest owner and pre-eminent first-in-class REIT focused principally on science-driven cluster formation. We are the leading provider of high-quality environmentally sustainable real estate, technical infrastructure and services to the broad and diverse life science industry. Client tenants include institutional (universities and independent not-for-profit institutions), pharmaceutical, biotechnology, medical device, product, service and translational entities, as well as government agencies. Our operating platform is based on the principle of “clustering,” with assets and operations located in key life science markets. As of December 31, 2009, we had 156 properties (152 properties located in ten states in the United States and four properties located in Canada) containing approximately 12.7 million rentable square feet (including spaces undergoing active redevelopment) and properties undergoing ground-up development of approximately 980,000 rentable square feet.

Businessand strategy

We focus our property operations and investment activities principally in the following life science markets:

· California – San Diego;

· California – San Francisco Bay;

· Eastern Massachusetts;

· New Jersey/Suburban Philadelphia;

· New York City;

· Southeast;

· Suburban Washington, D.C.;

· Washington – Seattle; and

· International.

Our client tenant base is broad and diverse within the life science industry and reflects our focus on regional, national and international tenants with substantial financial and operational resources. For a more detailed description of our properties and tenants, see “Item 2. Properties.” We have an experienced board of directors and are led by a senior management team with extensive experience in both the real estate and life science industries.

2009 demonstrated the strength and durability of our core operations providing office/laboratory space to the broad and diverse life science industry. Our core operating results were relatively steady for the year ended December 31, 2009, during the continuing extraordinary and unprecedented United States and worldwide economic, financial, banking and credit market crises, significant worldwide economic recession and drastic decline in consumer confidence and the consumer driven economy. Financial systems throughout the world have recently experienced significant periods of illiquidity with banks much less willing to lend substantial amounts to other banks and borrowers.

The economic, financial and banking environment and consumer confidence have improved since the depth of the crisis in the fourth quarter of 2008 and first quarter of 2009. Even with the recent improvements, we remain cautious regarding the economic, financial and banking environment. We intend to continue to focus on the completion of our existing active redevelopment projects aggregating approximately 575,152 rentable square feet and our existing active development projects aggregating approximately an additional 980,000 rentable square feet. Additionally, we intend to continue with preconstruction activities for certain land parcels for future ground-up/vertical above ground development in order to preserve and create value for these projects. These important preconstruction activities add significant value to our land for future ground-up development and are required for the ultimate vertical construction of the buildings. We also intend to be very careful and prudent with any future decisions to add new projects to our active ground-up/vertical developments. Future ground-up/vertical development projects will likely require significant pre-leasing from high quality and/or credit entities. We also intend to continue to reduce debt as a percentage of our overall capital structure over a multi-year period. During this period, we may also extend and/or refinance certain debt maturities. We expect the source of funds for construction activities and repayment of outstanding debt to be provided over several years by opportunistic sales of real estate, joint ventures, cash flows from operations, new secured or unsecured debt and the issuance of additional equity securities, as appropriate. As of December 31, 2009, we had identified three assets as “held for sale,” which have been classified in discontinued operations.

We seek to maximize funds from operations (“FFO”), balance sheet liquidity and flexibility and cash available for distribution to our stockholders through the ownership, operation, management and selective redevelopment, development and acquisition of life science properties, as well as management of our balance sheet. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Funds From Operations” for a discussion of how we compute and view FFO, as well as a discussion of other measures of cash flow. In particular, we seek to maximize FFO, balance sheet liquidity and flexibility and cash available for distribution by:

· maintaining a strong, liquid and flexible balance sheet;

· re-tenanting and re-leasing space at higher rental rates while minimizing tenant improvement costs;

· maintaining solid occupancy while also maintaining high lease rental rates;

· realizing contractual rental rate escalations, which are currently provided for in approximately 93% of our leases (on a rentable square footage basis);

· implementing effective cost control measures, including negotiating pass-through provisions in tenant leases for operating expenses and certain capital expenditures;

· improving investment returns through leasing of vacant space and replacement of existing tenants with new tenants at higher rental rates;

· achieving higher rental rates from existing tenants as existing leases expire;

· selectively redeveloping existing office, warehouse, shell space or newly acquired properties into generic laboratory space that can be leased at higher rental rates in our target life science cluster markets; and

· selectively developing properties in our target life science cluster markets.

Redevelopment

A key component of our long term business model is the redevelopment of existing office, warehouse or shell space as generic office/laboratory space, including the conversion of single tenancy space to multi-tenancy spaces or multi-tenancy spaces to single tenancy space that can be leased at higher rates. As of December 31, 2009, we had approximately 575,152 rentable square feet undergoing redevelopment at ten projects. In addition to properties undergoing redevelopment, as of December 31, 2009, our asset base contained embedded opportunities for a future permanent change of use to office/laboratory space through redevelopment aggregating approximately 1.5 million rentable square feet.

Development

Another key component of our long term business model is ground-up development projects. Our development strategy is primarily to pursue selective projects where we expect to achieve appropriate investment returns. We generally have undertaken ground-up development projects only if our investment in infrastructure will be substantially made for generic, rather than tenant specific, improvements. As of December 31, 2009, we had six parcels of land undergoing ground-up development approximating 980,000 rentable square feet of office/laboratory space. We also have an embedded pipeline for future ground-up development approximating 11.1 million developable square feet of office/laboratory space. Future ground-up/vertical development projects will likely require significant pre-leasing from high quality and/or credit entities.

Tenants

Competition

In general, other life science properties are located in close proximity to our properties. The amount of rentable space available in any market could have a material effect on our ability to rent space and on the rents that we can earn. In addition, we compete for investment opportunities with insurance companies, pension and investment funds, private equity entities, partnerships, developers, investment companies, other REITs, and owner/occupants. Many of these entities have substantially greater financial resources than we do and may be able to pay more than us or accept more risk than we are willing to accept. These entities may be less sensitive to risks with respect to the creditworthiness of a tenant or the geographic concentration of their investments. Competition may also reduce the number of suitable investment opportunities available to us or may increase the bargaining power of property owners seeking to sell. Competition in acquiring existing properties and land, both from institutional capital sources and from other REITs, has been very strong over the past several years. We believe we have differentiated ourselves from our competitors, as we are the largest owner, manager and developer of life science properties, in key life science markets.

Financial information about our operating segment

See Note 2 to our consolidated financial statements for information about our operating segment.

Availableinformation

Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including any amendments to the foregoing reports, are available, free of charge, through our corporate website at http://www.labspace.com as soon as is reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”). The current charters of our Board of Director’s Audit, Compensation and Nominating & Governance Committees, along with the Company’s corporate governance guidelines and Business Integrity Policy and Procedures for Reporting Non-compliance (the “Business Integrity Policy”) are available on our corporate website. Additionally, any amendments to, and waivers of, our Business Integrity Policy that apply to our Chief Executive Officer and Chief Financial Officer will be available free of charge on our corporate website in accordance with applicable SEC and New York Stock Exchange (“NYSE”) requirements. Written requests should be sent to Alexandria Real Estate Equities, Inc., 385 East Colorado Boulevard, Suite 299, Pasadena, California 91101, Attention: Investor Relations. Further, a copy of this annual report on Form 10-K is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The public may also download these materials from the SEC’s website at http://www.sec.gov.

Employees

As of December 31, 2009, we had 142 full-time employees. We believe that we have good relations with our employees. We have adopted a Business Integrity Policy that applies to all of our employees. Its receipt and review by each employee is documented and verified annually.

ITEM1A. RISK FACTORS

The global financial crisis,and other events or circumstances beyond the control of the Company, mayadversely affect our industry, business, results of operations, contractualcommitments, and access to capital.

What began initially in 2007 and 2008 as a “subprime” mortgage crisis turned into an extraordinary United States and worldwide structural economic and financial crisis coupled with the rapid decline of the consumer economy. Recently, in 2008 and 2009 significant concerns over energy costs, geopolitical issues, the availability and cost of credit, the United States mortgage market and a declining real estate market in the United States have contributed to increased volatility and diminished expectations for the economy and the markets going forward. These factors, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, have precipitated a steep economic decline and fears of a deep and prolonged recession. Further, severe financial and structural strains on the banking and financial systems have led to significant lack of trust and confidence in the global credit and financial system. Consumers and money managers have and may liquidate equity investments and consumers and banks have and may hold cash and other lower risk investments, resulting in significant and, in some cases, catastrophic declines in the equity capitalization of companies and unusual failures of financial institutions. Additionally, financial systems throughout the world are undergoing severe structural changes with banks much less willing to lend substantial amounts to other banks and borrowers. This extraordinary level of illiquidity has caused a significant decline in available credit from financial institutions and other lenders and the unprecedented declines in the market values of United States and foreign stock exchanges has led to significantly higher cost of debt and equity capital.

The United States and foreign governments have taken extraordinary actions in an attempt to deal with the worldwide financial crisis and the severe decline in the consumer driven economy. These extraordinary actions, including the merger of large financial institutions and significant investment in and control by government bodies, has so far resulted in some relief to the frozen markets. Additionally, extraordinary government controls have been attempted, including a temporary ban of “short sales” on certain publicly traded stocks and guarantees of money market funds, which have also resulted in limited relief, if any, to the credit markets. The resulting and ongoing lack of available credit, lack of lending between financial institutions and other key lending sources (such as life insurance companies and pension funds), lack of lending to borrowers and further failures and consolidation of financial institutions could materially and adversely affect our tenants, key vendors and contractors, financial condition, results of operations, ability to fund our construction activities, ability to refinance debt and other capital needs and our access to capital.

There can be no assurance that actions of the United States Government,Federal Reserve, and other government and regulatory bodies for the purpose ofstabilizing the financial markets will achieve the intended effect.

In an unprecedented response to the financial and economic crises affecting the banking system and financial markets and going concern threats to investment banks and other financial institutions, on October 3, 2008, former President Bush signed the Emergency Economic Stabilization Act of 2008 (“EESA”) into law. Pursuant to the EESA, the United States Treasury has the authority to, among other things, purchase up to $700 billion of mortgage-backed and other securities from financial institutions for the purpose of stabilizing the financial markets. The federal government, the Federal Reserve Board, and other government and regulatory bodies have taken or are considering other actions to address the financial crisis. There can be no assurance as to what impact such actions or future actions will have on the financial markets, including the extreme levels of volatility currently being experienced. Such continued volatility could materially and adversely affect our business, financial condition, and results of operations, or the trading price of our common stock.

Current levels of market volatility are unprecedented.

The capital and credit markets have been experiencing volatility and disruption for more than 12 months. In some cases, the markets have produced downward pressure on stock prices and credit capacity for certain issuers without regard to those issuers’ underlying financial and/or operating strength. If current levels of market disruption and volatility continue or worsen, there can be no assurance that we will not experience an adverse effect, which may be material, on our business, financial condition, and results of operations. Disruptions, uncertainty or volatility in the capital markets may also limit our access to capital from financial institutions on favorable terms, or at all, and our ability to raise capital through the issuance of equity securities could be adversely affected by causes beyond the control of the Company through ongoing extraordinary disruptions in the global economy and financial systems or other events.

We may notbe able to obtain additional capital to further our business objectives.

Our ability to develop, redevelop or acquire properties depends upon our ability to obtain capital. The real estate industry has recently experienced volatile debt and equity capital markets with periods of extreme illiquidity. A prolonged period in which we cannot effectively access the public equity or debt markets may result in heavier reliance on alternative financing sources to undertake new investments. An inability to obtain equity or debt capital on acceptable terms could delay or prevent us from acquiring, financing and completing desirable investments, and which could otherwise adversely affect our business. Also, the issuance of additional shares of capital stock or interests in subsidiaries to fund future operations could dilute the ownership of our then-existing stockholders. Even as liquidity returns to the market, debt and equity capital may be more expensive than in prior years.

Possiblefuture sales of shares of our common stock could adversely affect its marketprice.

We cannot predict the effect, if any, of future sales of shares of our common stock on the market price of our common stock from time to time. Sales of substantial amounts of capital stock (including common stock issued upon the exercise of stock options, the conversion of convertible debt securities or the conversion or redemption of preferred stock), or the perception that such sales may occur, could adversely affect prevailing market prices for our common stock.

We have reserved a number of shares of common stock for issuance to our officers, directors and employees pursuant to our Amended and Restated 1997 Stock Award and Incentive Plan (sometimes referred to herein as our equity incentive plan). As of December 31, 2009, a total of 629,896 shares of our common stock were reserved for issuance under our Amended and Restated 1997 Stock Award and Incentive Plan.

As of December 31, 2009, options to purchase 118,225 shares of our common stock were outstanding, all of which were exercisable. We have filed a registration statement with respect to the issuance of shares of our common stock pursuant to grants under our equity incentive plan. In addition, any shares issued under our equity incentive plan will be available for sale in the public market from time to time without restriction by persons who are not our “affiliates” (as defined in Rule 144 adopted under the Securities Act). Affiliates will be able to sell shares of our common stock subject to restrictions under Rule 144.

The priceper share of our stock may fluctuate significantly.

The market price per share of ourcommon stock may fluctuate significantly in response to many factors,including:

· **** theavailability of debt and/or equity capital;

· **** thecondition of our balance sheet;

· **** thecondition of the financial and banking industries;

· **** actualor anticipated variations in our quarterly operating results or dividends;

· **** theamount and timing of debt maturities and other contractual obligations;

· **** changesin our FFO or earnings estimates;

· **** thepublication of research reports about us, the real estate industry, or the lifescience industry;

· **** thegeneral reputation of REITs and the attractiveness of their equity securitiesin comparison to other debt or equity securities (including securities issuedby other real estate-based companies);

· **** generalstock and bond market conditions, including changes in interest rates on fixedincome securities, that may lead prospective purchasers of our stock to demanda higher annual yield from future dividends;

· **** changesin our analyst ratings;

· **** changesin market valuations of similar companies;

· **** adversemarket reaction to any additional debt we incur in the future;

· **** additionsor departures of key management personnel;

· **** actionsby institutional stockholders;

· **** speculationin the press or investment community;

· **** terroristactivity adversely affecting the markets in which our securities trade,possibly increasing market volatility and causing the further erosion ofbusiness and consumer confidence and spending;

· **** governmentregulatory action and changes in tax laws;

· **** therealization of any of the other risk factors included in this annual report on Form 10-K;and

· **** generalmarket and economic conditions.

Many of the factors listed aboveare beyond our control. These factorsmay cause the market price of shares of our common stock to decline, regardlessof our financial condition, results of operations, business or our prospects.

Our debtservice obligations may have adverse consequences on our business operations.

We use debt to finance our operations, including the development, redevelopment and acquisitions of properties. Our use of debt may have adverse consequences, including the following:

· our cash flow from operations may not be sufficient to meet required payments of principal and interest;

· we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms, to make payments on our debt;

· we may default on our debt obligations, and the lenders or mortgagees may foreclose on our properties that secure those loans;

· a foreclosure on one of our properties could create taxable income without any accompanying cash proceeds to pay the tax;

· a default under a mortgage loan that has cross default provisions may cause us to automatically default on another loan;

· we may not be able to refinance or extend our existing debt;

· the terms of any refinancing or extension may not be as favorable as the terms of our existing debt;

· we may be subject to a significant increase in the variable interest rates on our unsecured line of credit and unsecured term loan and certain other borrowings, which could adversely impact our operations; and

· the terms of our debt obligations may require a reduction in our distributions to stockholders.

As of December 31, 2009, we had outstanding mortgage indebtedness of approximately $937.0 million (net of $2.1 million discount), secured by 57 properties and one land development parcel, and outstanding debt under our unsecured line of credit and unsecured term loan of approximately $1.2 billion. In addition, as of December 31, 2009, we had approximately $368.0 million (net of $16.7 million discount) and $215.9 million (net of $24.1 million discount) of 3.70% and 8.00% unsecured convertible notes outstanding, respectively.

We may notbe able to refinance our debt and/or our debt may not be assumable.

Due to the high volume of real estate debt financing in recent years, the industry may require more funds to refinance debt maturities than the potential funds available from lenders. This potential shortage of available funds from lenders may limit our ability to refinance our debt as it matures, our cash flows, our ability to make distributions to our stockholders or adversely affect our financial condition and results of operations and the market price of our common stock.

We have approximately $1.8 billion in unsecured corporate debt. This debt may be unassumable by a potential purchaser and may be subject to significant prepayment penalties.

We may notbe able to borrow additional amounts under our unsecured line of credit andunsecured term loan.

Aggregate unsecured borrowings under our unsecured line of credit and unsecured term loan is limited to an amount based primarily on the net operating income derived from a pool of unencumbered properties and our cost basis of certain land and construction projects and compliance with certain financial and non-financial covenants. Borrowings under our unsecured line of credit and unsecured term loan are funded by a group of approximately 50 banks. Our ability to borrow additional amounts under our unsecured line of credit and unsecured term loan may be negatively impacted by a decrease in cash flows from our properties, a default or cross default under our unsecured line of credit and unsecured term loan, non-compliance with one or more loan covenants and non-performance or failure of one or more lenders under our unsecured line of credit and unsecured term loan. In addition, we may not be able to refinance or repay outstanding borrowings on our unsecured line of credit or unsecured term loan. Our inability to borrow additional amounts could delay or prevent us from acquiring, financing and completing desirable investments, which could adversely affect our business; and our inability to refinance or repay amounts under our unsecured line of credit or unsecured term loan may adversely affect our cash flows, ability to make distributions to our stockholders, financial condition and results of operations.

Ourunsecured line of credit and unsecured term loan restrict our ability to engagein some business activities.

Our unsecured line of credit and unsecured term loan contain customary negative covenants and other financial and operating covenants that, among other things:

· restrict our ability to incur additional indebtedness;

· restrict our ability to make certain investments;

· restrict our ability to merge with another company;

· restrict our ability to make distributions to stockholders;

· require us to maintain financial coverage ratios; and

· require us to maintain a pool of unencumbered assets approved by the lenders.

These restrictions could cause us to default on our unsecured line of credit and unsecured term loan or negatively affect our operations and our ability to make distributions to our stockholders.

We couldbecome highly leveraged and our debt service obligations could increase.

Our organizational documents do not limit the amount of debt that we may incur. Therefore, we could become highly leveraged. This would result in an increase in our debt service obligations that could adversely affect our cash flow and our ability to make distributions to our stockholders. Higher leverage could also increase the risk of default on our debt obligations.

Ifinterest rates rise, our debt service costs will increase and the value of ourproperties may decrease.

Our unsecured line of credit, unsecured term loan and certain other borrowings bear interest at variable rates, and we may incur additional debt in the future. Increases in market interest rates would increase our interest expense under these debt instruments and would increase the costs of refinancing existing indebtedness or obtaining new debt. Additionally, increases in market interest rates may result in a decrease in the value of our real estate and decrease the market price of our common stock. Accordingly, these increases could adversely affect our financial position and our ability to make distributions to our stockholders.

Failure tohedge effectively against interest rate changes may adversely affect ourresults of operations.

The interest rate hedge agreements we use to manage some of our exposure to interest rate volatility involve risks, such as the risk that counterparties may fail to honor their obligations under these arrangements. In addition, these arrangements may not be effective in reducing our exposure to changes in interest rates. These risk factors may lead to failure to hedge effectively against changes in interest rates and therefore may adversely affect our results of operations.

We are subject to risks andliabilities in connection with properties owned through partnerships, limitedliability companies and joint ventures.

Our organizational documents do not limit the amount of funds that we may invest in non-wholly owned partnerships, limited liability companies or joint ventures. Partnership, limited liability company or joint venture investments involve certain risks, including:

· upon bankruptcy of non-wholly owned partnerships, limited liability companies, or joint venture entities, we may become liable for the partnership’s, limited liability company’s or joint venture’s liabilities;

· we may share certain approval rights over major decisions with third parties;

· we may be required to contribute such capital if our partners fail to fund their share of any required capital contributions;

· our partners, co-members or joint ventures might have economic or other business interests or goals that are inconsistent with our business interests or goals and that could affect our ability to operate the property or our ability to maintain our qualification as a REIT;

· our ability to sell the interest on advantageous terms when we desire may be limited or restricted under the terms of our agreements with our partners; and

· we may not continue to own or operate the interests or assets underlying such relationship or may need to purchase such interests or assets at an above market price to continue ownership.

We generally seek to maintain sufficient control of our partnerships, limited liability companies and joint ventures to permit us to achieve our business objectives. However, we may not be able to do so, and the occurrence of one or more of the events described above could adversely affect our financial condition, results of operations, cash flow, ability to make distributions to our stockholders or the market price of our common stock.

The conversion rights ofour 3.70% unsecured convertible notes may be detrimental to holders of our commonstock.

As ofDecember 31, 2009, we had approximately $368.0 million, net of $16.7 milliondiscount, outstanding on our unsecured convertible notes with a coupon of 3.70%(the “3.70% Unsecured Convertible Notes”).Prior to January 15, 2012, we will not have the right to redeem the 3.70% Unsecured Convertible Notes, except to preserve our qualification as a REIT. On and after that date, we have the right to redeem the 3.70% Unsecured Convertible Notes, in whole or in part, at any time and from time to time, for cash equal to 100% of the principal amount of the 3.70% Unsecured Convertible Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the 3.70% Unsecured Convertible Notes may require us to repurchase their notes, in whole or in part, on January 15, 2012, 2017 and 2022 for cash equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. Holders of the 3.70% Unsecured Convertible Notes may require us to repurchase all or a portion of their notes upon the occurrence of specified corporate transactions, including a change in control, certain merger or consolidation transactions or the liquidation of the Company (each, a “Fundamental Change”), at a repurchase price in cash equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. At issuance, the 3.70% Unsecured Convertible Notes had an initial conversion rate of approximately 8.4774 shares of common stock per $1,000 principal amount of the 3.70% Unsecured Convertible Notes, representing a conversion price of approximately $117.96 per share of our common stock. This initial conversion price represented a premium of 20% based on the last reported sale price of $98.30 per share of our common stock on January 10, 2007. The conversion rate of the 3.70% Unsecured Convertible Notes is subject to adjustments for certain events, including, but not limited to, certain dividends on our common stock in excess of $0.74 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009, the 3.70% Unsecured Convertible Notes had a conversion rate of approximately 8.5207 shares of common stock per $1,000 principal amount of the 3.70% Unsecured Convertible Notes, which is equivalent to a conversion price of approximately $117.36 per share of our common stock. Holders of the 3.70% Unsecured Convertible Notes may convert their notes into cash and, if applicable, shares of our common stock prior to the stated maturity of January 15, 2027 only under the following circumstances: (1) during any calendar quarter after the calendar quarter ending March 31, 2007, if the closing sale price of our common stock for each of 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (the “3.70% Unsecured Convertible Note Measurement Period”) in which the average trading price per $1,000 principal amount of 3.70% Unsecured Convertible Notes was equal to or less than 98% of the average conversion value of the 3.70% Unsecured Convertible Notes during the 3.70% Unsecured Convertible Note Measurement **** Period; (3) upon the occurrence of a Fundamental Change; (4) if we call the 3.70% Unsecured Convertible Notes for redemption; and (5) at any time from, and including, December 15, 2026 until the close of business on the business day immediately preceding January 15, 2027 or earlier redemption or repurchase.

The conversion of the 3.70% Unsecured Convertible Notes into our common stock would dilute stockholder ownership in the Company, and could adversely affect the market price of our common stock or impair our ability to raise capital through the sale of additional equity securities. Any adjustments that increase the conversion rate of the 3.70% Unsecured Convertible Notes would increase their dilutive effect. Further, the 3.70% Unsecured Convertible Notes may be converted into cash at a time when we need to conserve our cash reserves, in which event, such conversion may adversely affect us and our stockholders.

The conversion rights of our 8.00% unsecured convertible notes may bedetrimental to holders of our common stock.

In April 2009, we completed a private offering of $240 million unsecured convertible notes with a coupon of 8.00% (the “8.00% Unsecured Convertible Notes”). As of December 31, 2009, we had approximately $215.9 million, net of $24.1 million discount, outstanding on our 8.00% Unsecured Convertible Notes. Prior to April 20, 2014, we will not have the right to redeem the 8.00% Unsecured Convertible Notes, except to preserve our qualification as a REIT. On and after that date, we have the right to redeem the 8.00% Unsecured Convertible Notes, in whole or in part, at any time and from time to time, for cash equal to 100% of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the 8.00% Unsecured Convertible Notes may require us to repurchase their notes, in whole or in part, on April 15, 2014, 2019 and 2024 for cash equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. Holders of the 8.00% Unsecured Convertible Notes may require us to repurchase all or a portion of their notes upon the occurrence of a Fundamental Change, at a repurchase price in cash equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.**** At issuance, the 8.00% Unsecured Convertible Notes had an initial

conversion rate of approximately 24.1546 shares of common stock per $1,000 principal amount of the 8.00% Unsecured Convertible Notes, representing a conversion price of approximately $41.40 per share of our common stock. This initial conversion price represented a premium of 15% based on the last reported sale price of $36.00 per share of our common stock on April 21, 2009. The conversion rate of the 8.00% Unsecured Convertible Notes is subject to adjustments for certain events, including, but not limited to, certain cash dividends on our common stock in excess of $0.35 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009, there was no change from the initial conversion rate of our 8.00% Unsecured Convertible Notes. Holders of the 8.00% Unsecured Convertible Notes may convert their notes prior to the stated maturity date of April 15, 2029 only under the following circumstances: (1) during any calendar quarter after the calendar quarter ending June 30, 2009, if the closing sale price of our common stock for each of 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds or is equal to 130% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (the “8.00% Unsecured Convertible Note Measurement Period”) in which the average trading price per $1,000 principal amount of the 8.00% Unsecured Convertible Notes was equal to or less than 98% of the average conversion value of the 8.00% Unsecured Convertible Notes during the 8.00% Unsecured Convertible Note Measurement Period; (3) upon the occurrence of a Fundamental Change; (4) if we call the 8.00% Unsecured Convertible Notes for redemption; and (5) at any time from, and including, March 15, 2029 until the close of business on the business day immediately preceding April 15, 2029 or earlier redemption or repurchase. Upon conversion, holders of the 8.00% Unsecured Convertible Notes will receive cash, shares of our common stock, or a combination thereof, as the case may be, at our election.

The conversion of the 8.00% Unsecured Convertible Notes into our common stock would dilute stockholder ownership in the Company, and could adversely affect the market price of our common stock or impair our ability to raise capital through the sale of additional equity securities. Any adjustments that increase the conversion rate of the 8.00% Unsecured Convertible Notes would increase their dilutive effect. Further, the 8.00% Unsecured Convertible Notes may be converted into cash at a time when we need to conserve our cash reserves, in which event, such conversion may adversely affect us and our stockholders.

The conversion rights ofour convertible preferred stock may be detrimental to holders of common stock.

As of December 31, 2009, we had approximately $250 million outstanding of 7.00% series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”). The Series D Convertible Preferred Stock may be converted into shares of our common stock subject to certain conditions. At December 31, 2009, the conversion rate for the Series D Convertible Preferred Stock was 0.2480 shares of our common stock per $25.00 liquidation preference, which was equivalent to a conversion price of approximately $100.81 per share of common stock. The conversion rate for the Series D Convertible Preferred Stock is subject to adjustments for certain events, including, but not limited to certain dividends on our common stock in excess of $0.78 per share per quarter and dividends on our common stock payable in shares of our common stock. In addition, on or after April 20, 2013, we may, at our option, be able to cause some or all of our Series D Convertible Preferred Stock to be automatically converted if the closing sale price per share of our common stock equals or exceeds 150% of the then-applicable conversion price of the Series D Convertible Preferred Stock for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day immediately prior to our issuance of a press release announcing the exercise of our conversion option. Holders of our Series D Convertible Preferred Stock, at their option, may, at any time and from time to time, convert some or all of their outstanding shares.

Theconversion of the Series D Convertible Preferred Stock for our commonstock would dilute stockholder ownership in our company, and could adverselyaffect the market price of our common stock or impair our ability to raisecapital through the sale of additional equity securities. Any adjustments that increase the conversionrate of the Series D Convertible Preferred Stock would increase theirdilutive effect. Further, the conversionrights by the holders of the Series D Convertible Preferred Stock might betriggered in situations where we need to conserve our cash reserves, in whichevent, our election, under certain conditions, to repurchase such Series DConvertible Preferred Stock in lieu of converting them into common stock mightadversely affect us and our stockholders.

We may not be able to sellour properties quickly to raise money.

Investments in real estate are relatively illiquid compared to other investments. Accordingly, we may not be able to sell our properties when we desire or at prices acceptable to us in response to changes in economic or other conditions. In addition, the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) limits our ability to sell properties held for fewer than two years. These limitations on our ability to sell our properties may adversely affect our cash flows, our ability to repay debt and our ability to make distributions to our stockholders.

If our revenues are lessthan our expenses, we may have to borrow additional funds and we may not beable to make distributions to our stockholders.

If our properties do not generate revenues sufficient to meet our operating expenses, including our debt service obligations and capital expenditures, we may have to borrow additional amounts to cover fixed costs and cash flow needs. This could adversely affect our ability to make distributions to our stockholders. Factors that could adversely affect the revenues we generate from, and the values of, our properties include:

· national, local and worldwide economic conditions;

· competition from other life science properties;

· changes in the life science industry;

· real estate conditions in our target markets;

· our ability to collect rent payments;

· the availability of financing;

· changes to the financial and banking industries;

· changes in interest rate levels;

· vacancies at our properties and our ability to re-lease space;

· changes in tax or other regulatory laws;

· the costs of compliance with government regulation;

· the lack of liquidity of real estate investments; and

· increases in operating costs.

In addition, if a lease at a property is not a triple net lease, we will have greater expenses associated with that property and greater exposure to increases in such expenses. Significant expenditures, such as mortgage payments, real estate taxes and insurance and maintenance costs are generally fixed and do not decrease when revenues at the related property decrease.

Our distributions tostockholders may decline at any time.

We may not continue our current level of distributions to our stockholders. Our board of directors will determine future distributions based on a number of factors, including:

· our amount of cash available for distribution;

· our financial condition;

· any decision by our board of directors to reinvest funds rather than to distribute such funds;

· our capital expenditures;

· the annual distribution requirements under the REIT provisions of the Internal Revenue Code;

· restrictions under Maryland law; and

· other factors our board of directors deems relevant.

A reduction in distributions to stockholders may negatively impact our stock price.

Distributionson our common stock may be made in the form of cash, stock, or a combination ofboth .

As a REIT, we are required to distribute at least 90% of our taxable income to our stockholders. Typically, we generate cash for distributions through our operations, the disposition of assets, or the incurrence of additional debt. Our board of directors may determine in the future, to pay dividends on our common stock in cash, shares of common stock or a combination of cash and shares of common stock. The Internal Revenue Service recently issued Revenue Procedure 2010-12, which provides guidance regarding certain dividends payable in cash or stock at the election of stockholders and declared with respect to taxable years ending on or before December 31, 2011. Under Revenue Procedure 2010-12, a distribution of our stock pursuant to such an election will be considered a taxable distribution of property in an amount equal to the amount of cash that could have been received instead if, among other things, 10% or more of the distribution is payable in cash. Any such dividend would be distributed in a manner intended to count toward satisfaction of our annual distribution requirements and to qualify for the dividends paid deduction. A reduction in the cash yield on our common stock may negatively impact our stock price.

We may be unsuccessfulwith our real estate development and redevelopment activities.

A key component of our long term business model consists of the ground-up development and redevelopment of space for lease. Our success with our development and redevelopment projects depends on many risks that may adversely affect our business, including those associated with:

· negative worldwide economic, financial, and banking conditions;

· worldwide economic recession and lack of confidence;

· the seizure or illiquidity of credit markets;

· national, local and worldwide economic conditions;

· delays in construction;

· budget overruns;

· lack of availability and/or increasing costs of materials;

· commodity pricing of building materials and supplies;

· financing availability;

· changes in the life sciences, financial and banking industries;

· volatility in interest rates;

· labor availability and/or strikes;

· uncertainty of leasing;

· timing of the commencement of rental payments;

· changes in local submarket conditions;

· delays or denials of entitlements or permits; and

· other property development uncertainties.

In addition, development and redevelopment activities, regardless of whether they are ultimately successful, typically require a substantial portion of management’s time and attention. This may distract management from focusing on other operational activities. If we are unable to complete development projects successfully, our business may be adversely affected.

We have spaces availablefor redevelopment that may be difficult to redevelop or successfully lease totenants.

A key component of our long term business model is redevelopment of existing office, warehouse or shell space as generic office/laboratory space, including the conversion of single tenancy space to multi-tenancy spaces or multi-tenancy spaces to single tenancy space that can be leased at higher rates. There can be no assurance that we will be able to complete spaces undergoing redevelopment or initiate additional redevelopment projects. Redevelopment activities subject us to many risks, including delays in permitting, financing availability, engaging contractors, the availability and pricing of materials and labor and other redevelopment uncertainties. In addition, there can be no assurance that, upon completion, we will be able to successfully lease the space or lease the space at rental rates at or above the returns on our investment anticipated by our stockholders.

Improvements to lifescience properties are significantly more costly than traditional office space.

Our properties contain infrastructure improvements that are significantly more costly than other property types. Although we have historically been able to recover the additional investment in infrastructure improvements through higher rental rates, there is the risk that we will not be able to continue to do so in the future. Typical improvements include:

· reinforced concrete floors;

· upgraded roof loading capacity;

· increased floor to ceiling heights;

· heavy-duty heating, ventilation and air conditioning (“HVAC”) systems;

· enhanced environmental control technology;

· significantly upgraded electrical, gas and plumbing infrastructure; and

· laboratory benches.

We could default on leasesfor land on which some of our properties are located or held for futuredevelopment.

As of December 31,2009, we held ground lease obligations including leases for 19 of ourproperties and three land development parcels. These lease obligations have remaining lease terms from 23 to 97 years,excluding extension options. If we defaultunder the terms of any particular lease, we may lose the ownership rights tothe property subject to the lease. Uponexpiration of a lease and all of its options, we may not be able to renegotiatea new lease on favorable terms, if at all. The loss of the ownership rights to these properties or an increase ofrental expense could have a material adverse effect on our financial condition,results of operations, cash flow, stock price and ability to satisfy our debtservice obligations and to pay distributions to our stockholders.

We may not be able tooperate properties successfully.

Our success depends in large part upon our ability to operate our properties successfully. If we are unable to do so, our business could be adversely affected. The ownership and operation of real estate is subject to many risks that may adversely affect our business and our ability to make payments to our stockholders, including the risks that:

· our properties may not perform as we expect;

· we may lease space at rates below our expectations;

· we may not be able to obtain financing on acceptable terms; and

· we may underestimate the cost of improvements required to maintain or improve space up to standards established for the market position intended for that property.

If we encounter any of these risks, our business and our ability to make distributions to our stockholders could be adversely affected.

We may experienceincreased operating costs, which may reduce profitability.

Ourproperties are subject to increases in operating expenses including cleaning,electricity, HVAC, administrative costs and other costs associated withsecurity, landscaping and repairs and maintenance of our properties. As of December 31, 2009, approximately 88% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. However, we cannot be certain that our tenants will be able to bear thefull burden of these higher costs, or that such increased costs will not leadthem, or other prospective tenants, to seek space elsewhere. If operating expenses increase, theavailability of other comparable space in the markets we operate in may hinderor limit our ability to increase our rents; if operating expenses increasewithout a corresponding increase in revenues, our profitability could diminishand limit our ability to make distributions to our stockholders.

We face substantialcompetition in our target markets.

The significant competition for business in our target markets could have an adverse effect on our operations. We compete for investment opportunities with:

· insurance companies;

· pension and investment funds;

· private equity entities;

· partnerships;

· developers;

· investment companies;

· other REITs; and

· owners/occupants.

Many of these entities have substantially greater financial resources than we do and may be able to pay more than we can or accept more risk than we are willing to accept. These entities may be less sensitive to risks with respect to the creditworthiness of a tenant or the geographic concentration of their investments. Competition may also reduce the number of suitable investment opportunities available to us or may increase the bargaining power of property owners seeking to sell.

Poor economic conditionsin our markets could adversely affect our business.

Our properties are located in the following markets:

· California – San Diego;

· California – San Francisco Bay;

· Eastern Massachusetts;

· New Jersey/Suburban Philadelphia;

· New York City;

· Southeast;

· Suburban Washington, D.C.;

· Washington – Seattle; and

· International.

As a result of our geographic concentration, we depend upon the local economic conditions in these markets, including local real estate conditions. We are, therefore, subject to increased exposure (positive or negative) to economic, tax, currency fluctuations, and other competitive factors specific to markets in confined geographic areas. Our operations may also be affected if too many competing properties are built in any of these markets. An economic downturn in any of these markets could adversely affect our operations and our ability to make distributions to stockholders. We cannot assure our stockholders that these markets will continue to grow or will remain favorable to the life science industry.

We are largely dependenton the life science industry for revenues from lease payments.

In general, our business and strategy is to invest primarily in properties used by tenants in the life science industry. Our business could be adversely affected if the life science industry is impacted by the current economic, financial and banking crisis or if the life science industry migrates from the United States to other countries. Because of our industry focus, events within the life science industry may have a more pronounced effect on our ability to make distributions to our stockholders than if we had more diversified investments. Also, some of our properties may be better suited for a particular life science industry tenant and could require modification before we are able to re-lease vacant space to another life science industry tenant. Generally, our properties may not be suitable for lease to traditional office tenants without significant expenditures on renovations.

Our ability to negotiate contractual rent escalations on future leases and to achieve increases in rental rates will depend upon market conditions and the demand for life science properties at the time the leases are negotiated and the increases are proposed.

Our tenants may not beable to pay us if they are unsuccessful in discovering, developing, making orselling their products and technologies.

Our life science industry tenants are subject to a number of risks, including the following, any one or more of which may adversely affect their ability to make rental payments to us:

· Some of our tenants developing potential drugs may find that their drugs are not effective, or may even be harmful, when tested in humans.

· Some of our tenants depend on availability of reimbursements from various government entities or private insurance plans and reimbursements may decrease in the future.

· Some of our tenants may not be able to manufacture their drugs economically, even if such drugs are proven through human clinical trials to be safe and effective in humans.

· Drugs that are developed and manufactured by some of our tenants require regulatory approval, including the approval of the United States Food and Drug Administration, prior to being made, marketed, sold and used. The regulatory approval process to manufacture and market drugs is costly, typically takes several years, requires the expenditure of substantial resources and is often unpredictable. A tenant may fail or experience significant delays in obtaining these approvals.

· Some of our tenants and their licensors require patent, copyright or trade secret protection to develop, make, market and sell their products and technologies. A tenant may be unable to commercialize its products or technologies if patents covering such products or technologies do not issue, or are successfully challenged, narrowed, invalidated or circumvented by third parties, or if the tenant fails to obtain licenses to the discoveries of third parties necessary to commercialize its products or technologies.

· A drug made by a tenant may not be well accepted by doctors and patients, may be less effective or accepted than a competitor’s drugs, or may be subsequently recalled from the market, even if it is successfully developed, proven safe and effective in human clinical trials, manufactured and the requisite regulatory approvals are obtained.

· Some of our tenants require significant funding to develop and commercialize their products and technologies, which funding must be obtained from venture capital firms, private investors, the public markets, companies in the life science industry or federal, state and local governments. Such funding may become unavailable or difficult to obtain. The ability of each tenant to raise capital will depend on their financial and operating condition and the overall condition of the financial, banking and economic environment.

· Even with sufficient funding, some of our tenants may not be able to discover or identify potential drug targets in humans, or potential drugs for use in humans, or to create tools or technologies which are commercially useful in the discovery or identification of potential drug targets or drugs.

We cannot assure our stockholders that our tenants will be able to develop, make, market or sell their products and technologies due to the risks inherent in the life science industry. Any tenant that is unable to avoid, or sufficiently mitigate, the risks described above, may have difficulty making rental payments to us.

Our inability to renewleases or re-lease space on favorable terms as leases expire may significantlyaffect our business.

Our revenues are derived primarily from rental payments and reimbursement of operating expenses under our leases. If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely payments under its lease. Also, when our tenants decide not to renew their leases or terminate early, we may not be able to re-lease the space. Even if tenants decide to renew or lease space, the terms of renewals or new leases, including the cost of any tenant improvements, concessions and lease commissions, may be less favorable to us than current lease terms. Consequently, we could generate less cash flow from the affected properties than expected, which could negatively impact our business. We may have to divert cash flow generated by other properties to meet our debt service payments, if any, or to pay other expenses related to owning the affected properties. As of December 31, 2009, leases at our properties representing approximately 8.7% and 15.1% of the aggregate total square footage of our properties, excluding month-to-month leases, were scheduled to expire in 2010 and 2011, respectively.

The inability of a tenantto pay us rent could adversely affect our business.

Our revenues are derived primarily from rental payments and reimbursement of operating expenses under our leases. If our tenants, especially significant tenants, fail to make rental payments under their leases, our financial condition, cash flow and ability to make distributions to our stockholders could be adversely affected.

As of December 31, 2009, we had 417 leases with a total of 342 tenants, and 74 of our 156 properties were single-tenant properties. Our three largest tenants accounted for approximately 17.1% of our aggregate annualized base rent, or approximately 8.0%, 4.7% and 4.4%, respectively. “Annualized base rent” means the annualized fixed base rental amount in effect as of December 31, 2009, using rental revenues calculated on a straight-line basis in accordance with United States generally accepted accounting principles (“GAAP”). Annualized base rent does not include reimbursements for real estate taxes, insurance, utilities, common area and other operating expenses, substantially all of which are borne by the tenants in the case of triple net leases.

The bankruptcy or insolvency of a major tenant may also adversely affect the income produced by a property. If any of our tenants becomes a debtor in a case under the United States Bankruptcy Code, as amended, we cannot evict that tenant solely because of its bankruptcy. The bankruptcy court may authorize the tenant to reject and terminate its lease with us. Our claim against such a tenant for unpaid future rent would be subject to a statutory limitation that might be substantially less than the remaining rent actually owed to us under the tenant’s lease. Any shortfall in rent payments could adversely affect our cash flow and our ability to make distributions to our stockholders.

Our UnitedStates government tenants maynot receive annual budget appropriations, which could adversely affect theirability to pay us.

United States government tenants may be subject to annual budget appropriations. If one of our United States government tenants fails to receive its annual budget appropriation, it might not be able to make its lease payments to us. In addition, defaults under leases with federal government tenants are governed by federal statute and not by state eviction or rent deficiency laws. All of our leases with United States government tenants provide that the government tenant may terminate the lease under certain circumstances. As of December 31, 2009, leases with United States government tenants at our properties accounted for approximately 2.7% of our aggregate annualized base rent.

We could be held liablefor damages resulting from our tenants’ use of hazardous materials.

Many of our life science industry tenants engage in research and development activities that involve controlled use of hazardous materials, chemicals and biological and radioactive compounds. In the event of contamination or injury from the use of these hazardous materials, we could be held liable for damages that result. This liability could exceed our resources and any recovery available through any applicable environmental remediation insurance coverage, and could adversely affect our ability to make distributions to our stockholders.

Together with our tenants, we must comply with federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous materials and waste products. Failure to comply with, or changes in, these laws and regulations could adversely affect our business or our tenants’ businesses and their ability to make rental payments to us.

Our properties may havedefects that are unknown to us.

Although we review the physical condition of our properties before they are acquired, and on a periodic basis after acquisition, any of our properties may have characteristics or deficiencies unknown to us that could adversely affect the property’s value or revenue potential.

We may incur significantcosts complying with the Americans With Disabilities Act and similar laws.

Under the Americans With Disabilities Act, places of public accommodation and/or commercial facilities are required to meet federal requirements related to access and use by disabled persons. We may be required to make substantial capital expenditures at our properties to comply with this law. In addition, non-compliance could result in the imposition of fines or an award of damages to private litigants.

A number of additional federal, state and local laws and regulations exist regarding access by disabled persons. These regulations may require modifications to our properties or may affect future renovations. This may limit the overall returns on our investments.

We may incur significantcosts if we fail to comply with laws or if laws change.

Our properties are subject to many federal, state and local regulatory requirements and to state and local fire, life-safety and other requirements. If we do not comply with all of these requirements, we may have to pay fines to government authorities or damage awards to private litigants. We do not know whether these requirements will change or whether new requirements will be imposed. Changes in these regulatory requirements could require us to make significant unanticipated expenditures. These expenditures could have an adverse effect on us and our ability to make distributions to our stockholders.

We could incur significantcosts complying with environmental laws.

Federal, state and local environmental laws and regulations may require us, as a current or prior owner or operator of real estate, to investigate and clean up hazardous or toxic substances or petroleum products released at or from any of our properties. The cost of investigating and cleaning up contamination could be substantial and could exceed the amount of any environmental remediation insurance coverage available to us. In addition, the presence of contamination, or the failure to properly clean it up, may adversely affect our ability to lease or sell an affected property, or to borrow funds using that property as collateral.

Under environmental laws and regulations, we may have to pay government entities or third parties for property damage and for investigation and clean-up costs incurred by those parties relating to contaminated properties regardless of whether we knew of or caused the contamination. Even if more than one party may have been responsible for the

contamination, we may be held responsible for all of the clean-up costs. In addition, third parties may sue us for damages and costs resulting from environmental contamination or jointly responsible parties may contest their responsibility or be financially unable to pay their share of such costs.

Environmental laws also govern the presence, maintenance and removal of asbestos-containing materials. These laws may impose fines and penalties on us for the release of asbestos-containing materials and may allow third parties to seek recovery from us for personal injury from exposure to asbestos fibers. We have detected asbestos-containing materials at some of our properties, but we do not expect that they will result in material environmental costs or liabilities to us.

Environmental laws and regulations also require the removal or upgrading of certain underground storage tanks and regulate:

· the discharge of storm water, wastewater and any water pollutants;

· the emission of air pollutants;

· the generation, management and disposal of hazardous or toxic chemicals, substances or wastes; and

· workplace health and safety.

Many of our tenants routinely handle hazardous substances and wastes as part of their operations at our properties. Environmental laws and regulations subject our tenants, and potentially us, to liability resulting from these activities. Environmental liabilities could also affect a tenant’s ability to make rental payments to us. We require our tenants to comply with these environmental laws and regulations and to indemnify us for any related liabilities.

Independent environmental consultants have conducted Phase I or similar environmental assessments at all of our properties. We intend to use consultants to conduct similar environmental assessments on our future acquisitions. This type of assessment generally includes a site inspection, interviews and a public records review, but no subsurface sampling. These assessments and certain additional investigations of our properties have not to date revealed any environmental liability that we believe would have a material adverse effect on our business or results of operations.

The additional investigations have included, as appropriate:

· asbestos surveys;

· radon surveys;

· lead surveys;

· mold surveys;

· additional public records review;

· subsurface sampling; and

· other testing.

Nevertheless, it is possible that the assessments on our properties have not revealed, nor that assessments on future acquisitions will reveal, all environmental liabilities. Consequently, there may be material environmental liabilities of which we are unaware that may result in substantial costs to us or our tenants and that could have a material adverse effect on our business.

Our properties may containor develop harmful mold or suffer from other air quality issues, which couldlead to liability for adverse health effects and costs to remedy the problem.

Whenexcessive moisture accumulates in buildings or on building materials, mold maygrow, particularly if the moisture problem remains undiscovered or is notaddressed over a period of time. Somemolds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation,chemical contamination from indoor or outdoor sources and other biologicalcontaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins orirritants above certain levels can be alleged to cause a variety of adversehealth effects and symptoms, including allergic or other reactions. As a result, the presence of significant moldor other airborne contaminants at any of our properties could require us toundertake a costly remediation program to contain or remove the mold or otherairborne contaminants from the affected property or increase indoorventilation. In addition, the presenceof significant mold or other airborne contaminants could expose us to liabilityfrom our tenants, employees of our tenants and others if property damage orhealth concerns arise.

We could incur significant costsdue to the financial condition of our insurance carriers.

We insure our properties with insurance companies that we believe have a good rating at the time our policies are put into effect. The financial condition of one or more of our insurance companies that we hold policies with may be negatively impacted resulting in their inability to pay on future insurance claims. Their inability to pay future claims may have a negative impact on our financial results. In addition, the failure of one or more insurance companies may increase the costs to renew our insurance policies or increase the cost of insuring additional properties and recently developed or redeveloped properties.

Our insurance may notadequately cover all potential losses.

If we experience a loss at any of our properties that is not covered by insurance or that exceeds our insurance policy limits, we could lose the capital invested in the affected property and, possibly, future revenues from that property. In addition, we could continue to be obligated on any mortgage indebtedness or other obligations related to the affected properties. We carry comprehensive liability, fire, extended coverage and rental loss insurance with respect to our properties. We have obtained earthquake insurance for our properties because many of them are located in the vicinity of active earthquake faults. We also carry environmental remediation insurance and have title insurance policies on all of our properties. We obtain our title insurance policies when we acquire the property, with each policy covering an amount equal to the initial purchase price of each property. Accordingly, any of our title insurance policies may be in an amount less than the current value of the related property.

Our tenants are also required to maintain comprehensive insurance, including liability and casualty insurance, that is customarily obtained for similar properties. There are, however, certain types of losses that we and our tenants do not generally insure against because they are uninsurable or because it is not economical to insure against them. The availability of coverage against certain types of losses, such as from terrorism or toxic mold, has become more limited and, when available, is at a significantly higher premium cost. We cannot predict whether insurance coverage against terrorism or toxic mold will remain available for our properties because insurance companies may no longer offer coverage against such losses or, if offered, such coverage may become prohibitively expensive. Many, but not all, of our properties are low-rise buildings. Toxic mold has not presented any material problems at any of our properties.

Terrorist attacks may havean adverse impact on our business and operating results and could decrease thevalue of our assets.

Terrorist attacks such as those that took place on September 11, 2001, could have a material adverse impact on our business and operating results. Future terrorist attacks may result in declining economic activity, which could reduce the demand for and the value of our properties. To the extent that future terrorist attacks impact our tenants, their businesses similarly could be adversely affected, including their ability to continue to honor their lease obligations.

The loss of services ofany of our senior executive officers could adversely affect us.

We depend upon the services of relatively few executive officers. The loss of services of any one of them may adversely affect our business, financial condition and prospects. We use the extensive personal and business relationships that members of our management have developed over time with owners of life science properties and with major life science industry tenants. We cannot assure our stockholders that our senior executive officers will remain employed with us.

If we fail to qualify as aREIT, we would be taxed at corporate rates and would not be able to takecertain deductions when computing our taxable income.

If, in any taxable year, we fail to qualify as a REIT:

· we would be subject to federal income tax on our taxable income at regular corporate rates;

· we would not be allowed a deduction for distributions to our stockholders in computing taxable income;

· unless we were entitled to relief under the Internal Revenue Code, we would also be disqualified from treatment as a REIT for the four taxable years following the year during which we lost qualification; and

· we would no longer be required by the Internal Revenue Code to make any distributions to our stockholders.

As a result of any additional tax liability, we might need to borrow funds or liquidate certain investments in order to pay the applicable tax. Accordingly, funds available for investment or distribution to our stockholders would be reduced for each of the years involved.

Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code to our operations and financial results**,** and the determination of various factual matters and circumstances not entirely within our control. There are only limited judicial or administrative interpretations of these provisions. Although we believe that we have operated in a manner so as to qualify as a REIT, we cannot assure our stockholders that we are or will remain so qualified.

In addition, although we are not aware of any pending tax legislation that would adversely affect our ability to operate as a REIT, new legislation, regulations, administrative interpretations or court decisions could change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax consequences of that qualification, in a manner that is adverse to our stockholders.

We maychange our business policies without stockholder approval.

Our board of directors determines all of our material business policies, with management’s input, including those related to our:

· status as a REIT;

· incurrence of debt and debt management activities;

· selective development, redevelopment and acquisition activities;

· stockholder distributions; and

· other policies, as appropriate.

Our board of directors may amend or revise these policies at any time without a vote of our stockholders. A change in these policies could adversely affect our business and our ability to make distributions to our stockholders.

Failure to maintain effective internal control overfinancial reporting could have a material adverse effect on our business,results of operations, financial condition and stock price.

Pursuantto the Sarbanes-Oxley Act of 2002, we are required to provide a report bymanagement on internal control over financial reporting, including management’sassessment of the effectiveness of internal control. Changes to our business will necessitateongoing changes to our internal control systems and processes. Internal control over financial reporting maynot prevent or detect misstatement because of its inherent limitations,including the possibility of human error, the circumvention or overriding ofcontrols or fraud. Therefore, eveneffective internal controls can provide only reasonable assurance with respectto the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of ourinternal controls, including any failure to implement required new or improvedcontrols, or if we experience difficulties in their implementation, ourbusiness, results of operations and financial condition could be materiallyharmed, and we could fail to meet our reporting obligations and there could bea material adverse effect on our stock price.

Our business and operations would suffer in theevent of system failures.

Despitesystem redundancy, the implementation of security measures and the existence ofa disaster recovery plan for our internal information technology systems, oursystems are vulnerable to damages from any number of sources, includingcomputer viruses, unauthorized access, energy blackouts, natural disasters,terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in ouroperations could result in a material disruption to our business. We may also incur additional significantcosts to remedy damages caused by such disruptions.

There are limits on the ownership of our capital stock underwhich a stockholder may lose beneficial ownership of its shares and which maydelay or prevent transactions that might otherwise be desired by ourstockholders.

In order to qualify as a REIT under the Internal Revenue Code, not more than 50% of the value of our outstanding stock may be owned, directly or constructively, by five or fewer individuals or entities (as set forth in the Internal Revenue Code) during the last half of a taxable year. Furthermore, shares of our outstanding stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year.

In order for us to maintain our qualification as a REIT, among other reasons, our charter provides for an ownership limit, which prohibits, with certain exceptions, direct or constructive ownership of shares of stock representing more than 9.8% of the combined total value of our outstanding shares of stock by any person, as defined in our charter. Our board of directors, in its sole discretion, may or may not waive the ownership limit for any person. However, our board of directors may not grant such waiver if, after giving effect to such waiver, five individuals could beneficially own, in the aggregate, more than 49.9%

of the value of our outstanding stock. As a condition to waiving the ownership limit, our board of directors may require a ruling from the Internal Revenue Service or an opinion of counsel in order to determine our status as a REIT. Notwithstanding the receipt of any such ruling or opinion, our board of directors may impose such conditions or restrictions as it deems appropriate in connection with granting a waiver.

Our charter further prohibits transferring shares of our stock if such transfer would result in us being “closely held” under Section 856(h) of the Internal Revenue Code or would result in shares of our stock being owned by fewer than 100 persons.

The constructive ownership rules are complex and may cause shares of our common stock owned directly or constructively by a group of related individuals or entities to be constructively owned by one individual or entity. A transfer of shares to a person who, as a result of the transfer, violates these limits, shall be void or shall be exchanged for shares of excess stock and transferred to a trust, for the benefit of one or more qualified charitable organizations designated by us. In that case, the intended transferee will have only a right to share, to the extent of the transferee’s original purchase price for such shares, in proceeds from the trust’s sale of those shares and will effectively forfeit its beneficial ownership of the shares. These ownership limits could delay, defer or prevent a transaction or a change in control that might involve a premium price for the holders of our common stock or might otherwise be desired by such holders.

Inaddition to the ownership limit, certain provisions of our charter and bylawsmay delay or prevent transactions that may be deemed to be desirable to ourstockholders.

As authorized by Maryland law, our charter allows our board of directors to cause us to issue additional authorized but unissued shares of our common stock or preferred stock and to classify or reclassify unissued shares of common or preferred stock without any stockholder approval. Our board of directors could establish a series of preferred stock that could delay, defer or prevent a transaction that might involve a premium price for our common stock or for other reasons be desired by our common stockholders or that have a dividend preference which may adversely affect our ability to pay dividends on our common stock.

Our charter permits the removal of a director only upon a two-thirds vote of the votes entitled to be cast generally in the election of directors, and our bylaws require advance notice of a stockholder’s intention to nominate directors or to present business for consideration by stockholders at an annual meeting of our stockholders. Our charter and bylaws also contain other provisions that may delay, defer or prevent a transaction or change in control that involves a premium price for our common stock or that for other reasons may be desired by our stockholders.

Externalfactors may adversely impact the valuation of investments.

We hold equity investments in certain publicly traded companies and privately held entities primarily involved in the life science industry. The valuation of these investments is affected by many external factors beyond our control, including, but not limited to, market prices, market conditions, prospects for favorable or unfavorable clinical trial results, new product initiatives and new collaborative agreements. Unfavorable developments with respect to any of these factors may have an adverse impact on the valuation of our investments.

We face risks associated withshort-term liquid investments.

We have significant cash balances that we invest in a variety of short-term investments that are intended to preserve principal value and maintain a high degree of liquidity while providing current income. From time to time, these investments may include (either directly or indirectly) obligations (including certificates of deposit) of banks, money market funds, Treasury bank securities and other highly rated short-term securities. Investments in these securities and funds are not insured against loss of principal. Under certain circumstances we may be required to redeem all or part of these securities or funds will be redeemable at par value. A decline in the value of our investments or delay or suspension of our right to redeem may have a material adverse effect on our results of operations or financial condition and our ability to pay our obligations as they become due.

We have certain ownershipinterests outside the United States that may subject us to different or greaterrisks than those associated with our domestic operations.

We have four operating properties and one development parcel in Canada and two development parcels in China. International development, ownership and operating activities involve risks that are different from those we face with respect to our domestic properties and operations. These risks include but are not limited to:

· adverse effects of changes in exchange rates for foreign currencies;

· any international currency gain recognized with respect to changes in exchange rates may not qualify under the 75% gross income test or the 95% gross income test that we must satisfy annually in order to qualify and maintain our status as a REIT;

· challenges with respect to the repatriation of foreign earnings;

· changes in foreign political, regulatory and economic conditions, including regionally, nationally, and locally;

· challenges in managing international operations;

· challenges of complying with a wide variety of foreign laws and regulations, including those relating to real estate, corporate governance, operations, taxes, employment and legal proceedings;

· differences in lending practices;

· differences in languages, cultures and time zones; and

· changes in applicable laws and regulations in the United States that affect foreign operations.

Although our international activities currently represent a relatively small portion of our overall business, these risks could increase in significance which, in turn, could have an adverse impact on our results of operations and financial condition.

Weare subject to risks from potential fluctuations in exchange rates between theUnited States dollar and foreign currencies.

We have four operating properties and one development parcel in Canada and two development parcels in China. Investments in countries where the United States dollar is not the local currency are subject to international currency risk from the potential fluctuations in exchange rates between the United States dollar and the local currency. A significant decrease in the value of the Canadian dollar, Chinese Renminbi, or other foreign currencies where we may have a significant investment could materially affect our results of operations. We may attempt to mitigate such effects by borrowing in the local foreign currency in which we invest. Any international currency gain recognized with respect to changes in exchange rates may not qualify under the 75% gross income test or the 95% gross income test that we must satisfy annually in order to qualify and maintain our status as a REIT.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

General

As of December 31, 2009, we had 156 properties containing approximately 11.8 million rentable square feet of office/laboratory space. Excluding properties undergoing redevelopment and properties classified as “held for sale,” our properties were approximately 94.1% leased as of December 31, 2009. The exteriors of our properties typically resemble traditional office properties, but the interior infrastructures are designed to accommodate the needs of life science industry tenants. These improvements typically are generic to life science industry tenants rather than being specific to a particular tenant. As a result, we believe that the improvements have long term value and utility and are usable by a wide range of life science industry tenants. Generic infrastructure improvements to our life science properties typically include:

· reinforced concrete floors;

· upgraded roof loading capacity;

· increased floor to ceiling heights;

· heavy-duty HVAC systems;

· enhanced environmental control technology;

· significantly upgraded electrical, gas and plumbing infrastructure; and

· laboratory benches.

As of December 31, 2009, we held a fee simple interest in each of our properties, except for 19 properties that accounted for approximately 17% of the total rentable square footage of our properties. Of the 19 properties, we held three properties in the San Francisco Bay market, one property in the Southeast market, two properties in the Suburban Washington, D.C. market and 13 properties in the Eastern Massachusetts market pursuant to ground leasehold interests. See further discussion in our consolidated financial statements and notes thereto in “Item 15. Exhibits and Financial Statement Schedules.”

In addition, as of December 31, 2009, our asset base contained land parcels aggregating approximately 1.6 million developable square feet in Canada, New York City and San Francisco Bay markets which we held pursuant to ground leasehold interests and two land parcels aggregating approximately 547,000 rentable square feet in China which we held pursuant to land usage rights.

As of December 31, 2009, we had 417 leases with a total of 342 tenants, and 74 of our 156 properties were single-tenant properties. Leases in our multi-tenant buildings typically have terms of three to seven years, while the single-tenant building leases typically have initial terms of ten to 20 years. As of December 31, 2009:

· approximately 88% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes, insurance, utilities, common area and other operating expenses (including increases thereto) in addition to base rent, and, in addition to our triple net leases, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses;

· approximately 93% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed (generally ranging from 3% to 3.5%) or indexed based on a consumer price index or other index; and

· approximately 91% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing), which we believe would typically be borne by the landlord in traditional office leases.

Our leases also typically give us the right to review and approve tenant alterations to the property. Generally, tenant-installed improvements to the properties are reusable generic office/laboratory improvements and remain our property after termination of the lease at our election. However, we are permitted under the terms of most of our leases to require that the tenant, at its expense, remove certain non-generic improvements and restore the premises to their original condition.

Location of properties

The locations of our properties are diversified among a number of life science cluster submarkets. The following table sets forth, as of December 31, 2009, the total rentable square footage, annualized base rent and encumbrances of our properties in each of our existing markets (dollars in thousands):

Markets	Number of Properties	Total Rentable Square Footage	% of Total Rentable Square Footage		Annualized Base Rent (1)		% of Annualized Base Rent		Encumbrances (2)
California – San Diego	32	1,665,475	14.2	%	$	41,454	13.0	%	$	135,782
California – San<br> Francisco Bay	18	1,580,943	13.5		53,949		17.0		192,953
Eastern Massachusetts	36	3,310,001	28.1		110,973		34.9		276,404
New Jersey/Suburban<br> Philadelphia	8	459,904	3.9		9,601		3.0		15,763
Southeast	13	756,564	6.4		16,364		5.2		-
Suburban Washington,<br> D.C.	30	2,447,603	20.8		47,120		14.8		184,895
Washington – Seattle	12	975,121	8.3		30,044		9.5		84,049
International – Canada	4	342,394	2.9		8,158		2.6		-
Properties –<br> Continuing Operations	153	11,538,005	98.1		$	317,663	100.0	%	$	889,846
Properties –<br> Discontinued Operations	3	221,638	1.9
Properties –<br> Total	156	11,759,643	100.0	%

_________________

(1) Annualized base rent means the annualized fixed base rental amount in effect as of December 31, 2009 (using rental revenue computed on a straight-line basis in accordance with GAAP). Amounts exclude spaces at properties totaling approximately 575,152 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment.

(2) Certain properties are pledged as security under our secured notes payable as of December 31, 2009. See Schedule III – Consolidated Financial Statement Schedule of Rental Properties and Accumulated Depreciation of Alexandria Real Estate Equities, Inc. in “Item 15. Exhibits and Financial Statement Schedules” for additional information on our properties, including encumbered properties. Excludes approximately $47.2 million of encumbrances related to land held for future development and construction in progress.

ValueAdd Activities

The following table summarizes our current and embedded future development and redevelopment square footage including preconstruction projects. Preconstruction projects include significant value add projects undergoing important and substantial activities to bring these assets to their intended use. These critical activities add significant value for future ground-up development (which are projected to yield substantial revenues and cash flows) and are required for the ultimate vertical construction of buildings. Amounts are classified as construction in progress as required under GAAP while construction activities are ongoing to bring the asset to its intended use. When construction activities cease, the asset is transferred out of construction in progress and classified as rental properties, net or land held for future development. Land held for future development includes certain land parcels with improvements to the land, including, grading, piles, foundations and other land improvements.

****	Square Footage
****	Construction in Progress				****	****	****	****	****	****
Markets	Redevelopment	Development	Preconstruction	New Markets and Other Projects	****	Land	****	Future Redevelopment	****	Total Value Add Square Footage
California – San<br> Diego	116,431	–	298,000	–		145,000		178,000		737,431
California – San<br> Francisco Bay/ Mission Bay	–	263,000	2,320,000	–		–		–		2,583,000
California – San<br> Francisco Bay/ So. San Francisco	–	292,000	144,000	–		1,051,000		25,000		1,512,000
Eastern Massachusetts	245,308	–	2,019,000	–		225,000		520,000		3,009,308
Suburban<br> Washington, D.C.	192,222	–	–	–		787,000		415,000		1,394,222
Washington –<br> Seattle	–	115,000	248,000	–		1,049,000		165,000		1,577,000
International –<br> Canada	–	–	–	–		827,000		–		827,000
Other	21,191	310,000	200,000	1,057,000		741,000		222,000		2,551,191
Total	575,152	980,000	5,229,000	1,057,000	(1)	4,825,000	(2)	1,525,000	(3)	14,191,152
(1)	Includes approximately 410,000 rentable square feet related to our<br> project in New York City and approximately 547,000 rentable square feet<br> related to two ground-up development projects in China.
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(2)	Excludes a parcel with approximately 442,000 rentable square feet in<br> New York City that we have an option to ground lease for future development<br> and a 924,000 developable square foot parcel in Edinburgh, Scotland that we<br> have a long-term right to purchase.
(3)	Future redevelopment represents<br> non-laboratory operating assets (office, industrial or warehouse uses) that<br> will undergo conversion to office/laboratory through redevelopment.

Redevelopment

A key component of our business model is redevelopment of existing office, warehouse or shell space as generic office/laboratory space, including the conversion of single tenancy space to multi-tenancy spaces or multi-tenancy spaces to single tenancy space, that can be leased at higher rates. As of December 31, 2009, we had approximately 575,152 rentable square feet undergoing redevelopment at ten projects. In addition to properties undergoing redevelopment, as of December 31, 2009, our asset base contained embedded opportunities for a future permanent change of use to office/laboratory space through redevelopment aggregating approximately 1.5 million rentable square feet.

The following table summarizes total rentable square footage undergoing redevelopment as of December 31, 2009:

Markets/Submarkets	Estimated In-Service Dates	Rentable Square Footage Undergoing Redevelopment/ Total Property
California – San<br> Diego/Torrey Pines	2010	84,504 / 84,504
California – San<br> Diego/Torrey Pines	2010	31,927 / 76,084
Eastern<br> Massachusetts/Cambridge	2010	85,149 / 366,412
Eastern<br> Massachusetts/Cambridge	2011	17,114 / 194,776
Eastern<br> Massachusetts/Suburban	2010	113,045 / 113,045
Eastern<br> Massachusetts/Suburban	2010	30,000 / 30,000
Southeast/Florida	2010	21,191 / 44,855
Suburban<br> Washington, D.C./ Shady Grove	2010	58,632 / 58,632
Suburban Washington,<br> D.C./ Shady Grove	2010	50,633 / 123,501
Suburban<br> Washington, D.C./Shady Grove	2011	82,957 / 157,974
****		575,152 / 1,249,783

As of December 31, 2009, our estimated cost to complete was approximately $93 per rentable square foot for the 575,152 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment. Our final costs for these redevelopment projects will ultimately depend on many factors, including construction requirements for each tenant, final lease negotiations and the amount of costs funded by each tenant.

Development

Another key component of our business model is ground-up development. Our development strategy is primarily to pursue selective projects where we expect to achieve appropriate investment returns. We generally have undertaken ground-up development projects only if our investment in infrastructure will be substantially made for generic, rather than tenant specific, improvements. As of December 31, 2009, we had six parcels of land undergoing ground-up development in the United States approximating 980,000 rentable square feet of office/laboratory space as summarized in the table below. We also have an embedded pipeline for future ground-up development approximating 11.1 million developable square feet of office/laboratory space. Future ground-up/vertical development projects will likely require significant pre-leasing from high quality and/or credit entities.

Markets/Submarkets	Building Description	Estimated In-Service Dates	Leased/ Committed/ Negotiating	Rentable Square Feet	Leasing Status
California<br> – San Francisco Bay/ Mission Bay	Multi-tenant Bldg. with 3% Retail	2010	98%	158,000	158,000<br> Rentable Square Feet Leased or Committed to UCSF and a Large Cap Life Science<br> Company
California<br> – San Francisco Bay/ Mission Bay	Single or Multi-tenant Bldg. with 4% Retail	2011	65%	105,000	Negotiating<br> Lease for Significant Amount of Space with a Large Cap Life Science Company
California<br> – San Francisco Bay/ So. San Francisco	Two Bldgs., Single or Multi-tenant	2010	0%	162,000	Redesign<br> for Multi-Tenancy at Both Buildings/Marketing
California<br> – San Francisco Bay/ So. San Francisco	Single Tenant Bldg.	2010	55%	130,000	72,000<br> Rentable Square Feet Leased to Exelixis Inc.; Marketing
New<br> York – New York City – East Tower	Multi-tenant Bldg. with 6% Retail	2010/2011	100%	310,000	100,000<br> Rentable Square Feet Leased to Eli Lilly and Company; Leasing 57,000 Rentable<br> Square Feet for Food, Conference and Core Services; Current Office/Laboratory<br> Negotiations for All Remaining Space
Washington<br> – Seattle	Single Tenant Bldg. with 5% Retail	2010	100%	115,000	109,000<br> Rentable Square Feet Leased to Gilead Sciences, Inc.
			74%	980,000

As of December 31, 2009, our estimated cost to complete the approximately 980,000 rentable square feet undergoing ground-up development was approximately $140 per rentable square foot. This estimate includes costs related to tenant infrastructure costs, including requirements for executed leases with Eli Lilly and Company, Gilead Sciences, Inc. and UCSF. This estimate also includes certain costs related to incremental investment by the Company with incremental returns which are beyond the original estimated investment anticipated at the beginning of each project. Our final costs for these projects will ultimately depend on many factors, including construction and infrastructure requirements for each tenant, final lease negotiations and the amount of costs funded by each tenant.

A component of our business model also includes ground-up development projects outside of the United States. We have the ability to develop up to 924,000 rentable square feet in Edinburgh, Scotland. We have a right to purchase the land for this development over the next 13 years. We also have a development site in Toronto, Canada for the ground-up development of a multi-story building aggregating 763,000 rentable square feet. This parcel is subject to a 99-year ground lease. We also have two development parcels in China subject to land use rights. One development parcel is located in South China where a two-building project aggregating 275,000 rentable square feet is under construction. The second development parcel is located in North China where a two-building project aggregating 272,000 rentable square feet is under construction. Our final costs for these projects will ultimately depend on many factors, including construction requirements for each tenant, final lease negotiations and the amount of costs funded by each tenant. Future ground-up/vertical development projects will likely require significant pre-leasing from high quality and/or credit entities.

Tenants

Our life science properties are leased principally to a diverse group of tenants, with no tenant being responsible for more than 8.0% of our annualized base rent. The chart below shows annualized base rent by tenant business type as of December 31, 2009:

The following table sets forth information regarding leases with our 20 largest tenants based upon annualized base rent as of December 31, 2009:

****	Tenant	Number of Leases	Remaining Lease Term in Years (1)	Remaining Lease Term in Years (2)	Approximate Aggregate Rentable Square Feet	Percentage of Aggregate Total Square Feet	Annualized Base Rent (3) (in thousands)		Percentage of Aggregate Annualized Base Rent
1	Novartis AG	5	6.1 (4)	6.5	424,641	3.7%	$	25,390	8.0%
2	Roche Holding Ltd	5	7.8 (5)	8.0	387,813	3.4	14,850		4.7
3	GlaxoSmithKline plc	6	5.4 (6)	6.4	350,278	3.0	14,038		4.4
4	ZymoGenetics, Inc. (7)	2	9.4	9.4	203,369	1.8	8,747		2.8
5	United States Government	6	3.6 (8)	3.6	308,205	2.7	8,495		2.7
6	Massachusetts Institute of Technology	3	2.3 (9)	2.6	178,952	1.6	7,899		2.5
7	Theravance, Inc. (10)	2	2.3	2.3	170,244	1.5	6,136		1.9
8	Pfizer Inc.	2	10.0 (11)	9.9	120,140	1.0	5,647		1.8
9	Amylin Pharmaceuticals, Inc.	3	6.4 (12)	6.6	158,983	1.4	5,467		1.7
10	The Scripps Research Institute	2	6.9 (13)	6.9	96,500	0.8	5,193		1.6
11	Forrester Research, Inc.	1	1.8	1.8	145,551	1.3	4,987		1.6
12	Alnylam Pharmaceuticals, Inc.	1	6.8	6.8	95,410	0.8	4,466		1.4
11	Dyax Corp.	1	2.2	2.2	67,373	0.6	4,361		1.4
14	Quest Diagnostics Incorporated	1	7.0	7.0	248,186	2.2	4,341		1.4
15	Infinity Pharmaceuticals, Inc.	2	3.0	3.0	67,167	0.6	4,302		1.4
16	Johnson & Johnson	2	3.7 (14)	3.2	170,451	1.5	3,917		1.2
17	Monsanto Company	3	9.1 (15)	11.0	120,050	1.0	3,904		1.2
18	Fred Hutchinson Cancer Research Center	2	4.5 (16)	4.6	123,322	1.1	3,853		1.2
18	Merck & Co., Inc.	2	3.4 (17)	4.1	102,196	0.9	3,847		1.2
20	Qiagen N.V.	2	6.2 (18)	6.2	158,879	1.4	3,845		1.2
	Total/Weighted Average:	53	5.6	5.9	3,697,710	32.3%	$	143,685	45.3%
(1)	Represents<br> remaining lease term in years based on percentage of leased square feet.
---	---
(2)	Represents<br> remaining lease term in years based on percentage of annualized base rent.
(3)	Annualized<br> base rent means the annualized fixed base rental amount in effect as of<br> December 31, 2009 (using rental revenue computed on a straight-line<br> basis in accordance with GAAP).

(4)	Amount<br> shown is a weighted average of multiple leases with this tenant for 255,441<br> rentable square feet, 24,386 rentable square feet, 16,188 rentable square<br> feet, 47,185 rentable square feet and 81,441 rentable square feet, with<br> remaining lease terms of 8.3 years, 4.8 years, 4.5 years, 3.8 years and 1.5<br> years, respectively.
(5)	Amount<br> shown is a weighted average of multiple leases with this tenant for 155,685<br> rentable square feet, 126,971 rentable square feet, 66,262 rentable square<br> feet, 16,406 rentable square feet and 22,489 rentable square feet and with<br> remaining lease terms of 9.3 years, 8.8 years, 4.8 years, 3.9 years and 3.8<br> years, respectively.
(6)	Amount<br> shown is a weighted average of multiple leases with this tenant for 128,759<br> rentable square feet (representing two leases at two properties containing<br> 68,000 and 60,759 rentable square feet, respectively), 52,627 rentable square<br> feet, 17,932 rentable square feet and 150,960 rentable square feet with<br> remaining lease terms of 10.3 years, 8.0 years, 1.8 years and 0.9 years,<br> respectively.
(7)	As<br> of September 30, 2009, Novo A/S owned approximately 32% of<br> ZymoGenetics, Inc.
(8)	Amount<br> shown is a weighted average of multiple leases with this tenant for 81,580<br> rentable square feet, 114,568 rentable square feet (representing three leases<br> at three properties containing 50,325 rentable square feet, 9,337 rentable<br> square feet and 54,906 rentable square feet, respectively), 105,000 rentable square<br> feet and 7,057 rentable square feet with remaining lease terms of 5.3 years,<br> 3.8 years, 2.4 years and 0.6 years, respectively.
(9)	Amount<br> shown is a weighted average of multiple leases with this tenant for 86,515<br> rentable square feet, 8,876 rentable square feet and 83,561 rentable square<br> feet with remaining lease terms of 3.5 years, 1.8 years and 1.1 years,<br> respectively.
(10)	As<br> of October 30, 2009, GlaxoSmithKline plc owned 15% of the outstanding<br> stock of Theravance, Inc.
(11)	Amount<br> shown is a weighted average of multiple leases with this tenant for 102,283<br> rentable square feet and 17,857 rentable square feet with remaining lease<br> terms of 10.1 years and 9.3 years, respectively.
(12)	Amount<br> shown is a weighted average of multiple leases with this tenant for 71,510<br> rentable square feet and 87,473 rentable square feet (representing two leases<br> at two properties containing 45,030 rentable square feet and 42,443 rentable<br> square feet, respectively) with remaining lease terms of 8.1 years and 5.1<br> years, respectively.
(13)	Amount<br> shown is a weighted average of multiple leases with this tenant for 19,606<br> rentable square feet and 76,894 rentable square feet with remaining lease<br> terms of 7.8 years and 6.7 years, respectively.
(14)	Amount<br> shown is a weighted average of multiple leases with this tenant for 111,451<br> rentable square feet and 59,000 rentable square feet with remaining lease<br> terms of 4.3 years and 2.7 years, respectively.
(15)	Amount<br> shown is a weighted average of multiple leases with this tenant for 65,719<br> rentable square feet, 22,555 rentable square feet and 31,776 rentable square<br> feet with remaining lease terms of 14.2 years, 5.9 years and 0.8 years,<br> respectively.
(16)	Amount<br> shown is a weighted average of multiple leases with this tenant for 106,425<br> rentable square feet and 16,897 rentable square feet with remaining lease<br> terms of 4.9 years and 2.2 years, respectively.
(17)	Amount<br> shown is a weighted average of multiple leases with this tenant for 67,473<br> rentable square feet and 34,723 rentable square feet with remaining lease<br> terms of 4.8 years and 0.8 years, respectively.
(18)	Amount<br> shown is a weighted average of multiple leases with this tenant for 143,585<br> rentable square feet and 15,294 rentable square feet with remaining lease<br> terms of 6.8 years and 1.2 years, respectively.

ITEM 3. LEGALPROCEEDINGS

To our knowledge, no legal proceedings are pending against us, other than routine actions and administrative proceedings, substantially all of which are expected to be covered by liability insurance and which, in the aggregate, are not expected to have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 4. RESERVED

PART II

ITEM 5. MARKET FORREGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES

Our common stock is traded on the NYSE under the symbol “ARE.” On February 24, 2010, the last reported sales price per share of our common stock was $61.68, and there were approximately 257 holders of record of our common stock (excluding beneficial owners whose shares are held in the name of Cede & Co.). The following table sets forth the quarterly high and low sales prices per share of our common stock as reported on the NYSE and the distributions paid by us with respect to our common stock for each such period:

Period	High	Low	Per Share Distribution
2009
Fourth Quarter	$68.24	$51.35	$0.35
Third Quarter	$62.49	$30.33	$0.35
Second Quarter	$43.76	$30.48	$0.35
First Quarter	$66.69	$31.19	$0.80
2008
Fourth Quarter	$112.72	$33.12	$0.80
Third Quarter	$116.50	$92.55	$0.80
Second Quarter	$107.50	$92.73	$0.80
First Quarter	$104.23	$85.97	$0.78

Future distributions on our common stock will be determined by and at the discretion of our board of directors and will be dependent upon a number of factors, including actual cash available for distribution, our financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code and such other factors as our board of directors deems relevant. To maintain our qualification as a REIT, we must make annual distributions to stockholders of at least 90% of our taxable income for the current taxable year, determined without regard to deductions for dividends paid and excluding any net capital gains. Under certain circumstances, we may be required to make distributions in excess of cash flow available for distributions to meet these distribution requirements. In such a case, we may borrow funds or may raise funds through the issuance of additional debt or equity capital. No dividends can be paid on our common stock unless we have paid full cumulative dividends on our 8.375% series C cumulative redeemable preferred stock (“Series C Preferred Stock”) and Series D Convertible Preferred Stock. From the date of issuance of our preferred stock through December 31, 2009, we have paid full cumulative dividends on our Series C Preferred Stock and Series D Convertible Preferred Stock. We cannot assure our stockholders that we will make any future distributions.

The tax treatment of distributions on common stock paid in 2009 was as follows: (1) 98.8% ordinary dividend and (2) 1.2% return of capital. The tax treatment of distributions on common stock paid in 2008 was as follows: (1) 81.1% ordinary dividend, (2) 6.6% capital gain at 15%, and (3) 12.3% return of capital.

See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for information on securities authorized for issuance under equity compensation plans.

ITEM 6. SELECTEDFINANCIAL DATA

The following table should be read in conjunction with ourconsolidated financial statements and notes thereto appearing elsewhere in thisannual report on Form 10-K. See “Item15. Exhibits and Financial Statement Schedules.” Amounts for the years prior to 2009 presentedin the table below include the retrospective impact of new accounting literatureadopted on January 1, 2009 related to accounting for and disclosure ofconvertible debt, noncontrolling interests and participating securities. Additionally, certain amounts for the yearsprior to 2009 presented in the table below have been reclassified to conform tothe presentation of our consolidated financial statements for the year ended December 31,2009.

****	Year Ended December 31,
****	2009		2008		2007		2006		2005
****	(Dollars in thousands, except per share amounts)
Operating Data:	****		****		****		****		****
Total revenue	$	480,140	$	451,637	$	388,339	$	294,174	$	215,129
Total expenses	354,964		350,577		312,373		228,541		163,350
Gain on early extinguishment of debt	11,254		-		-		-		-
Income from continuing operations	136,430		101,060		75,966		65,633		51,779
Income from discontinued operations, net	5,218		19,037		14,014		10,070		12,288
Net income	141,648		120,097		89,980		75,703		64,067
Net income attributable to noncontrolling interests	7,047		3,799		3,669		2,287		634
Dividends on preferred stock	28,357		24,225		12,020		16,090		16,090
Preferred stock redemption charge	-		-		2,799		-		-
Net income attributable to unvested restricted stock awards	1,270		1,327		1,075		873		540
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders	$	104,974	$	90,746	$	70,417	$	56,453	$	46,803
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic	****		****		****		****		****
Continuing operations	$	2.59	$	2.28	$	1.90	$	1.85	$	1.65
Discontinued operations, net	0.13		0.59		0.47		0.40		0.58
Earnings per share – basic	$	2.72	$	2.87	$	2.37	$	2.25	$	2.23
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted	****		****		****		****		****
Continuing operations	$	2.59	$	2.27	$	1.90	$	1.84	$	1.63
Discontinued operations, net	0.13		0.59		0.46		0.39		0.57
Earnings per share – diluted	$	2.72	$	2.86	$	2.36	$	2.23	$	2.20
Weighted average shares of common stock outstanding	****		****		****		****		****
Basic	38,586,909		31,653,829		29,668,231		25,102,200		20,948,915
Diluted	38,600,069		31,765,055		29,832,013		25,342,048		21,239,080
Cash dividends declared per share of common stock	$	1.85	$	3.18	$	3.04	$	2.86	$	2.72

****	Year Ended December 31,														****
****	2009		****	2008		****	2007		****	2006		****	2005		****
****	(Dollars in thousands)														****
Balance Sheet Data (at year end):	****		****	****		****	****		****	****		****	****		****
Rental properties, net	$	3,383,308	****	$	3,215,723	****	$	3,057,294	****	$	2,663,088	****	$	1,662,905	****
Land held for future development	$	255,025	****	$	109,478	****	$	89,621	****	$	63,163	****	$	12,615	****
Construction in progress	$	1,400,795	****	$	1,398,895	****	$	1,143,314	****	$	596,331	****	$	442,636	****
Total assets	$	5,457,227	****	$	5,132,077	****	$	4,641,245	****	$	3,617,477	****	$	2,362,450	****
Total debt	$	2,746,946	****	$	2,938,108	****	$	2,750,648	****	$	2,024,866	****	$	1,406,666	****
Total liabilities	$	3,051,148	****	$	3,357,014	****	$	3,025,502	****	$	2,208,348	****	$	1,512,535	****
Redeemable noncontrolling interests	$	41,441	****	$	33,963	****	$	35,342	****	$	20,132	****	$	20,115	****
Alexandria Real Estate Equities, Inc.’s stockholders’ equity	$	2,323,408	****	$	1,700,010	****	$	1,540,219	****	$	1,351,652	****	$	829,800	****
Noncontrolling interests	$	41,230	****	$	41,090	****	$	40,182	****	$	37,345	****	$	-	****
Total equity	$	2,364,638	****	$	1,741,100	****	$	1,580,401	****	$	1,388,997	****	$	829,800	****
Reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders to funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders	****		****	****		****	****		****	****		****	****		****
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders	$	104,974	****	$	90,746	****	$	70,417	****	$	56,453	****	$	46,803	****
Add:	****		****	****		****	****		****	****		****	****		****
Depreciation and amortization (1)	118,508		****	108,743		****	97,335		****	74,039		****	55,416		****
Net income attributable to noncontrolling interests	7,047		****	3,799		****	3,669		****	2,287		****	634		****
Net income attributable to unvested restricted stock awards	1,270		****	1,327		****	1,075		****	873		****	540		****
Subtract:	****		****	****		****	****		****	****		****	****		****
Gain on sales of property (2)	(2,627		)	(20,401		)	(7,976		)	(59		)	(36		)
FFO attributable to noncontrolling interests	(3,843		)	(4,108		)	(3,733		)	(1,928		)	(668		)
FFO attributable to unvested restricted stock awards	(2,694		)	(2,596		)	(2,418		)	(2,006		)	(1,171		)
FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders (3)	$	222,635	****	$	177,510	****	$	158,369	****	$	129,659	****	$	101,518	****
Other Data:	****		****	****		****	****		****	****		****	****		****
Cash provided by<br> operating activities	$	205,950	****	$	255,837	****	$	188,031	****	$	125,641	****	$	123,970	****
Cash used in investing activities	$	(409,923	)	$	(494,933	)	$	(949,253	)	$	(961,636	)	$	(433,645	)
Cash provided by financing activities	$	203,440	****	$	302,227	****	$	766,304	****	$	835,032	****	$	310,428	****
Number of properties at year end	156		****	159		****	166		****	158		****	132		****
Rentable square feet of properties at year end	11,759,643		****	11,769,136		****	12,259,416		****	11,338,060		****	8,922,856		****
Occupancy of properties at year end	89%		****	90%		****	88%		****	88%		****	88%		****
Occupancy of properties at year end, excluding properties undergoing redevelopment and properties “held for sale”	94%		****	95%		****	94%		****	93%		****	93%		****
(1)	Includes<br> depreciation and amortization on assets “held for sale” reflected as<br> discontinued operations for the periods prior to when such assets were<br> classified as “held for sale.”
---	---
(2)	Gain<br> on sales of property is included in the consolidated statements of income in<br> income from discontinued operations, net.
(3)	GAAP<br> basis accounting for real estate assets utilizes historical cost accounting<br> and assumes real estate values diminish over time. In an effort to overcome<br> the difference between real estate values and historical cost accounting for<br> real estate assets, the Board of Governors of the National Association of<br> Real Estate Investment Trusts (“NAREIT”) established the measurement tool of<br> Funds from Operations (“FFO”). Since its introduction, FFO has become a widely<br> used non-GAAP financial measure by REITs. We believe that FFO is helpful to<br> investors as an additional measure of the performance of an equity REIT. We<br> compute FFO in accordance with standards established by the Board of<br> Governors of NAREIT in its April 2002 White Paper (the “White Paper”)<br> and related implementation guidance, which may differ from the methodology<br> for calculating FFO utilized by other equity REITs, and, accordingly, may not<br> be comparable to such other REITs. The White Paper defines FFO as net income<br> (loss) (computed in accordance with GAAP), excluding gains (or losses) from<br> sales, plus real estate related depreciation and amortization, and after<br> adjustments for unconsolidated partnerships and joint ventures. While FFO is<br> a relevant and widely used measure of operating performance for REITs, it<br> should not be considered as an alternative to net income (determined in<br> accordance with GAAP) as an indication of financial performance, or to cash<br> flows from operating activities (determined in accordance with GAAP) as a<br> measure of our liquidity, nor is it indicative of funds available to fund our<br> cash needs, including our ability to make distributions. For a more detailed<br> discussion of FFO, see “Item 7. Management’s Discussion and Analysis of Financial<br> Condition and Results of Operations - Funds From Operations.”

ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this annual report on Form 10-K. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions and financial trends that may affect our future plans of operation, business strategy, results of operations and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by such forward-looking statements, including, but not limited to, those described below in this annual report on Form 10-K. We do not undertake any responsibility to update any of these factors or to announce publicly any revisions to any of the forward-looking statements contained in this or any other document, whether as a result of new information, future events or otherwise.

Overview

We are a publicly traded REIT focused principally on science-driven cluster formation. We are the leading provider of high-quality environmentally sustainable real estate, technical infrastructure services and capital to the broad and diverse life science industry. Client tenants include institutional (universities and independent not-for-profit institutions), pharmaceutical, biotechnology, medical device, product, service and translational entities, as well as government agencies. Our operating platform is based on the principle of “clustering,” with assets and operations located in key life science markets.

In 2009, we:

· Executed 142 leases for 1,864,000 rentable square feet.

· Reported occupancy at 94% as of December 31, 2009.

· Entered into a 15-year lease with Eli Lilly and Company as an anchor tenant at the Alexandria CenterTM for Life Science – New York City.

· Leased 310,000 rentable square feet of redevelopment and development space.

· Completed ground-up development of one property at Mission Bay, San Francisco aggregating 102,000 rentable square feet pursuant to a 15-year lease with Pfizer Inc.

· Reduced principal balances of secured notes payable by $267 million.

· Completed redevelopment of multiple spaces at 10 properties aggregating 227,000 rentable square feet of which approximately 72% was leased.

· Closed 10-year secured loan for $120 million.

· Sold four properties for approximately $21 million.

· Closed two follow-on common stock offerings with aggregate net proceeds of $488 million.

· Closed private offering of 8.00% unsecured convertible notes with net proceeds of $233 million.

· Repurchased, in privately negotiated transactions, approximately $75 million (par value) of our 3.70% unsecured convertible notes.

· Received LEED® gold certification for a building in the San Diego market.

2009 demonstrated the strength and durability of our core operations providing office/laboratory space to the broad and diverse life science industry. Our core operating results were relatively steady for the year ended December 31, 2009, during the continuing extraordinary and unprecedented United States and worldwide economic, financial, banking and credit market crisis, significant worldwide economic recession and the drastic decline in consumer confidence and the consumer driven economy. Financial systems throughout the world have recently experienced significant periods of illiquidity with banks much less willing to lend substantial amounts to other banks and borrowers.

order to preserve and create value for these projects. These important preconstruction activities add significant value to our land for future ground-up development and are required for the ultimate vertical construction of the buildings. We also intend to be very careful and prudent with any future decisions to add new projects to our active ground-up/vertical developments. Future ground-up/vertical development projects will likely require significant pre-leasing from high quality and/or credit entities. We also intend to continue to reduce debt as a percentage of our overall capital structure over a multi-year period. During this period, we may also extend and/or refinance certain debt maturities. We expect the source of funds for construction activities and repayment of outstanding debt to be provided over several years by opportunistic sales of real estate, joint ventures, cash flows from operations, new secured or unsecured debt and the issuance of additional equity securities, as appropriate. As of December 31, 2009, we had identified three assets as “held for sale,” which have been classified in discontinued operations.

As of December 31, 2009, we had 156 properties containing approximately 11.8 million rentable square feet of office/laboratory space including approximately 575,152 rentable square feet of space undergoing a permanent change in use to office/laboratory space through redevelopment, including the conversion of single tenancy space to multi-tenancy spaces or multi-tenancy spaces to single tenancy space. As of that date, our properties were approximately 94.1% leased, excluding spaces at properties undergoing redevelopment. In addition, as of December 31, 2009, our asset base contained properties undergoing ground-up development approximating 980,000 rentable square feet.

The following table is a summary of our properties as of December 31, 2009 (dollars in thousands):

****	Number of	Rentable Square Feet			Annualized		Occupancy Percentage
Markets	Properties	Operating	Redevelopment	Total	Base Rent (1)		(1)(2)
California – San<br> Diego	32	1,549,044	116,431	1,665,475	$	41,454	89.2%
California – San<br> Francisco Bay	18	1,580,943	-	1,580,943	53,949		95.4
Eastern<br> Massachusetts	36	3,064,693	245,308	3,310,001	110,973		94.3
New<br> Jersey/Suburban Philadelphia	8	459,904	-	459,904	9,601		88.0
Southeast	13	735,373	21,191	756,564	16,364		93.7
Suburban<br> Washington, D.C.	30	2,255,381	192,222	2,447,603	47,120		94.3
Washington –<br> Seattle	12	975,121	-	975,121	30,044		99.1
International<br> – Canada	4	342,394	-	342,394	8,158		100.0
Properties<br> – Continuing Operations	153	10,962,853	575,152	11,538,005	$	317,663	94.1%
Properties<br> – Discontinued Operations	3	221,638	-	221,638
Properties –<br> Total	156	11,184,491	575,152	11,759,643

(2) Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of December 31, 2009 was approximately 89.4%.

Our primary sources of revenue are rental income and tenant recoveries (consisting of reimbursement of real estate taxes, insurance, utilities, repairs and maintenance, and other operating expenses from certain tenants) from leases of our properties. The comparability of financial data from period to period is affected by the timing of our property development, redevelopment and acquisition activities. Of the 156 properties owned as of December 31, 2008, two were acquired in 2008 (the “2008 Properties”), 15 in 2007, 119 prior to 2007. In addition, we completed the development of one property in 2009, one property in 2007 (together with the 15 properties acquired in 2007, the “2007 Properties”) and 18 properties prior to 2007. As a result of these development and acquisition activities, as well as our ongoing redevelopment and leasing activities, there have been significant increases in total revenues and expenses, including significant increases in total revenues and expenses for 2009 as compared to 2008 as well as 2008 as compared to 2007. Our operating expenses generally consist of real estate taxes, insurance, utilities, common area and other operating expenses.

Leasing

As of December 31, 2009, approximately 88% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. Additionally, approximately 91% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures, and approximately 93% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.

The following table summarizes information with respect to the lease expirations at our properties as of December 31, 2009:

Year of Lease Expiration	Number of Leases Expiring		Rentable Square Footage of Expiring Leases		Percentage of Aggregate Total Rentable Square Feet		Annualized Base Rent of Expiring Leases (per rentable square foot)
2010	78	(1)	1,003,316	(1)	8.7	%	$24.31
2011	79		1,747,901		15.1		28.02
2012	66		1,366,663		11.8		32.82
2013	49		953,388		8.3		29.92
2014	49		1,105,663		9.6		28.31
2015	32		664,559		5.8		26.55
2016	18		1,037,632		9.0		31.65
2017	13		684,973		5.9		34.63
2018	11		737,172		6.4		44.60
2019	6		254,703		2.2		34.64

(1) Excludes three month-to-month leases for approximately 2,000 rentable square feet.

Our revenues are derived primarily from rental payments and reimbursement of operating expenses under our leases. If a tenant experiences a downturn in its business or other types of financial distress, it may be unable to make timely payments under its lease. Also, if tenants decide not to renew their leases or terminate early, we may not be able to re-lease the space. Even if tenants decide to renew or lease space, the terms of renewals or new leases, including the cost of any tenant improvements, concessions and lease commissions, may be less favorable to us than current lease terms. Consequently, we could lose the cash flow from the affected properties, which could negatively impact our business. We may have to divert cash flow generated by other properties to meet our mortgage payments, if any, or to pay other expenses related to owning the affected properties.

Value AddActivities

Construction in progress includes the following value add activities as of December 31, 2009 (in thousands):

Value Add Activities	Amount		Square Feet
Redevelopment<br> projects	$	135,521	575,152
Development<br> projects	407,084		980,000
Preconstruction<br> projects	617,964		5,229,000
New<br> markets and other projects	240,226		1,057,000
Total	$	1,400,795	7,841,152

Amounts are classified as construction in progress as required under GAAP while construction activities are ongoing to bring the asset to its intended use. When construction activities cease, the asset is transferred out of construction in progress and classified as rental properties, net or land held for future development.

A key component of our business model is our value add redevelopment and development programs. These programs are focused on providing high quality generic office/laboratory space to meet the real estate requirements and are reusable by various life science industry tenants. Upon completion, each value add project is expected to generate significant revenues and cash flows. Our redevelopment and development projects are generally in locations highly desirable by life science entities which we believe results in higher occupancy levels, longer lease terms and higher rental income and returns. Redevelopment projects consist of the permanent change in use of office, warehouse and shell space into generic office/ laboratory space, including the conversion of single tenancy space to multi-tenancy spaces or multi-tenancy spaces to single tenancy space. Our investment in redevelopment projects generally range from $75-150 per square foot depending on the nature of the existing building improvement and office/laboratory design. Development projects consist of the ground-up development of generic office/laboratory facilities. We also have certain significant value add projects undergoing important

and substantial preconstruction activities to bring these assets to their intended use. These critical activities add significant value for future ground-up development and are required for the ultimate vertical construction of buildings. Ultimately, these land parcels will provide valuable opportunities for new ground-up construction projects. The projects will provide high quality facilities for the life science industry and will generate significant revenue and cash flows for the Company. See “Item 2. Properties” for additional information and tables summarizing our properties undergoing redevelopment, development and preconstruction activities as of December 31, 2009.

A component of our business model also includes ground-up development projects in new markets and other unique projects. We have two development parcels in China. One development parcel is located in South China where a two-building project aggregating approximately 275,000 rentable square feet is under construction. The second development parcel is located in North China where a two-building project aggregating approximately 272,000 rentable square feet is under construction. Additionally, other projects include construction related to site work, plaza, park and underground parking at the Alexandria CenterTM for Life Science – New York City, a unique one-of-a-kind highly advanced state-of-the-art urban science park in the city and in the adjoining future building approximating 410,000 rentable square feet.

Our success with our redevelopment, development and preconstruction projects depends on many risks that may adversely affect our business, including those associated with:

· negative worldwide economic, financial and banking conditions;

· worldwide economic recession and lack of confidence;

· the seizure or illiquidity of credit markets;

· national, local and worldwide economic conditions;

· delays in construction;

· budget overruns;

· lack of availability and/or increasing costs of materials;

· commodity pricing of building materials and supplies;

· financing availability;

· changes in the life sciences, financial and banking industries;

· volatility in interest rates;

· labor availability and/or strikes;

· uncertainty of leasing;

· timing of the commencement of rental payments;

· changes in local submarket conditions;

· delays or denials of entitlements or permits; and

· other property development uncertainties.

In addition, redevelopment, development and preconstruction activities, regardless of whether they are ultimately successful, typically require a substantial portion of management’s time and attention. This may distract management from focusing on other operational activities. If we are unable to complete redevelopment, development and preconstruction projects successfully, our business may be adversely affected.

Criticalaccounting policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. Our significant accounting policies are described in the notes to our consolidated financial statements appearing elsewhere in this annual report on Form 10-K. The preparation of these financial statements in conformity with GAAP requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates, judgments and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances. Changes in estimates could affect our financial position and specific items in our results of operations that are used by our stockholders, potential investors, industry analysts and lenders in their evaluation of our performance. Actual results may differ from these estimates under different assumptions or conditions.

REIT compliance

We have elected to be taxed as a REIT under the Internal Revenue Code. Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code to our operations and financial results, and the determination of various factual matters and circumstances not entirely within our control. We believe that our current organization and method of operation comply with the rules and regulations promulgated under the Internal Revenue Code to enable us to qualify, and continue to qualify, as a REIT. However, it is possible that we have been organized or have operated in a manner that would not allow us to qualify as a REIT, or that our future operations could cause us to fail to qualify.

If we fail to qualify as a REIT in any taxable year, then we will be required to pay federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. If we lose our REIT status, then our net earnings available for investment or distribution to our stockholders will be significantly reduced for each of the years involved and we will no longer be required to make distributions to our stockholders.

Rentalproperties, net, land held for future development and construction in progress

In December 2007, the Financial Accounting Standards Board (“FASB”) issued new accounting literature with respect to business combinations. We prospectively adopted the new guidance on January 1, 2009. In accordance with the new guidance, we recognize assets acquired (including the intangible value to above or below market leases, acquired in-place leases, tenant relationships and other intangible assets or liabilities), liabilities assumed, and any noncontrolling interest in an acquired entity at their fair value as of the acquisition date. The value of tangible assets acquired is based upon our estimation of value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated carrying costs during the hypothetical lease-up period and other costs that would have been incurred to execute similar leases, considering market conditions at the acquisition date of the acquired in-place lease.**** We assess the fair value of tangible and intangible assets based on numerous factors, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and market/economic conditions that may affect the property. We also recognize the fair values of assets acquired, the liabilities assumed and any noncontrolling interest in acquisitions of less than a 100% interest when the acquisition constitutes a change in control of the acquired entity. In addition, acquisition-related costs and restructuring costs are expensed as incurred. Prior to the adoption of the new guidance related to business combinations, the purchase price was allocated based upon relative fair values and acquisition-related costs on successful acquisitions were capitalized and amortized over the estimated useful lives of the assets acquired.

The values allocated to land improvements, buildings, building improvements, tenant improvements and equipment are depreciated on a straight-line basis using an estimated life of 20 years for land improvements, the shorter of the term of the respective ground lease or 40 years for buildings and building improvements, the respective lease term for tenant improvements and the estimated useful life for equipment. The values of acquired above and below market leases are amortized over the lives of the related leases and recorded as either an increase (for below market leases) or a decrease (for above market leases) to rental income. The values of acquired in-place leases are classified as leasing costs, included in other assets in the accompanying consolidated balance sheets and amortized over the remaining terms of the related leases.

Rental properties, land held for future development, construction in progress and intangibles are individually evaluated for impairment when conditions exist which may indicate that it is probable that the sum of expected future undiscounted cash flows is less than the carrying amount. Impairment indicators for our rental properties, land held for future development and construction in progress are assessed by project and include, but are not limited to, significant fluctuations in estimated net operating income, occupancy changes, construction costs, estimated completion dates, rental rates and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, historical operating results, known trends and market/economic conditions that may affect the property and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recorded to reduce the carrying amount to its estimated fair value.

Capitalizationof costs

We are required to capitalize direct construction and development costs, including predevelopment costs, interest, property taxes, insurance and other costs directly related and essential to the acquisition, development, redevelopment or construction of a project. Capitalization of construction, development and redevelopment costs is required while activities are ongoing to prepare an asset for its intended use. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Should development, redevelopment or construction activity cease, interest, property taxes, insurance and certain other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and maintenance are expensed as incurred.

We also capitalize costs directly related and essential to our leasing activities. These costs are amortized on a straight-line basis over the terms of the related leases. Costs related to unsuccessful leasing opportunities are expensed.

Accounting for investments

Investments in privately held entities are generally accounted for under the cost method when our interest in the entity is so minor that we have virtually no influence over the entities’ operating and financial policies. Certain investments in privately held entities are accounted for under the equity method when our interest in the entity is not deemed so minor that we have virtually no influence over the entities’ operating and financial policies. Under the equity method of accounting, we record our investment initially at cost and adjust the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. Additionally, we limit our ownership percentage in the voting stock of each individual entity to less than 10%.

Individual investments are evaluated for impairment when changes in conditions exist that may indicate an impairment exists. The factors that we consider in making these assessments include, but are not limited to, market prices, market conditions, available financing, prospects for favorable or unfavorable clinical trial results, new product initiatives and new collaborative agreements. If there are no identified events or changes in circumstances that would have an adverse effect on our cost method investments, we do not estimate its fair value. For all of our investments, if a decline in the fair value of an investment below the carrying value is determined to be other-than-temporary, such investment is written down to its estimated fair value with a non-cash charge to current earnings. We use “significant other observable inputs” and “significant unobservable inputs” to determine the fair value of privately held entities.

Interest rate hedge agreements

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of interest rate hedge agreements. Specifically, we enter into interest rate hedge agreements to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our interest rate hedge agreements are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our borrowings based on the London Interbank Offered Rate (“LIBOR”). We do not use derivatives for trading or speculative purposes and currently all of our derivatives are designated as hedges. Our objectives in using interest rate hedge agreements are to add stability to interest expense and to manage our exposure to interest rate movements in accordance with our interest rate risk management strategy. Interest rate swap agreements designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Interest rate cap agreements designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

We record our interest rate hedge agreements on the consolidated balance sheets at their estimated fair values with an offsetting adjustment reflected as unrealized gains/losses in accumulated other comprehensive income in total equity. The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based up on the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. Our interest rate hedge agreements are considered cash flow hedges as they are designated and qualify as hedges of the exposure to variability in expected future cash flows. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the earnings effect of the hedged forecasted transactions in a cash flow hedge. All of our interest rate hedge agreements meet the criteria to be deemed “highly effective” in reducing our exposure to variable interest rates. We formally document all relationships between interest rate hedge agreements and hedged items, including the method for evaluating effectiveness and the risk strategy. We make an assessment at the inception of each interest rate hedge agreement and on an ongoing basis to determine whether these instruments are “highly effective” in offsetting changes in cash flows associated with the hedged items. The ineffective portion of each interest rate hedge agreement is immediately recognized in earnings. While we intend to continue to meet the conditions for such hedge accounting, if hedges did not qualify as “highly effective,” the changes in the fair values of the derivatives used as hedges would be reflected in earnings.

The fair value of our interest rate hedge agreements is determined using widely accepted valuation techniques including discounted cash flow analyses on the expected cash flows of each derivative. These analyses reflect the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities (also referred to as “significant other observable inputs”). The fair values of our interest rate swap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The fair value of our interest rate cap agreement is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the interest rate cap agreement. The variable interest rate used in the calculation of projected receipts on the interest rate cap agreement is based on an expectation of future interest rates derived from observable market interest rate curves and volatilities. The fair value calculation also includes an amount for risk of non-performance using “significant unobservable inputs” such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate hedge agreements. In adjusting the fair value of our interest rate hedge agreements for the effect of non-performance risk, we have considered any applicable credit enhancements such as collateral postings, thresholds, mutual puts and guarantees. These methods of assessing fair value result in a general approximation of value, and such value may never be realized.

Recognition of rental income and tenant recoveries

Rental income from leases with scheduled rent increases, free rent, incentives and other rent adjustments is recognized on a straight-line basis over the respective lease terms. We include amounts currently recognized as income, and expected to be received in later years, in deferred rent in the accompanying consolidated balance sheets. Amounts received currently, but recognized as income in future years, are included as unearned rent in accounts payable, accrued expenses and tenant security deposits in our consolidated balance sheets. We commence recognition of rental income at the date the property is ready for its intended use and the tenant takes possession of or controls the physical use of the property.

Tenant recoveries related to reimbursement of real estate taxes, insurance, utilities, repairs and maintenance and other operating expenses are recognized as revenue in the period the applicable expenses are incurred.

We maintain an allowance for estimated losses that may result from the inability of our tenants to make payments required under the terms of the lease. If a tenant fails to make contractual payments beyond any allowance, we may recognize additional bad debt expense in future periods equal to the amount of unpaid rent and unrealized deferred rent. As of December 31, 2009 and 2008, we had no allowance for doubtful accounts.

Discontinued operations

A property is classified as “held for sale” when all of the following criteria for a plan of sale have been met: (1) management, having the authority to approve the action, commits to a plan to sell the property; (2) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (3) an active program to locate a buyer, and other actions required to complete the plan to sell, have been initiated; (4) the sale of the property is probable and is expected to be completed within one year; (5) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When all of these criteria have been met, the property is classified as “held for sale,” its operations, including any interest expense directly attributable to it, are classified as discontinued operations in our consolidated statements of income and amounts for all prior periods presented are reclassified from continuing operations to discontinued operations. A loss is recognized for any initial adjustment of the asset’s carrying amount to fair value less costs to sell in the period the asset qualifies as “held for sale.”Depreciationof assets ceases upon designation of a property as “held for sale.”

Impact ofrecently issued accounting standards

In January 2010, the FASB issued an Accounting Standard Update (“ASU”) to address implementation issues associated with the accounting for decreases in the ownership of a subsidiary. The new guidance clarified the scope of the entities covered by the guidance related to accounting for decreases in the ownership of a subsidiary and specifically excluded in-substance real estate or conveyances of oil and gas mineral rights from the scope. Additionally, the new guidance expands the disclosures required for a business combination achieved in stages and deconsolidation of a business or nonprofit activity. The new guidance became effective for interim and annual periods ending on or after December 31, 2009 and must be applied on a retrospective basis to the first period that an entity adopted the new guidance related to noncontrolling interests. The adoption of this new guidance did not have an impact on our consolidated financial statements.

In January 2010, the FASB issued an ASU to address diversity in practice related to the accounting for a distribution to shareholders that offers them the ability to elect to receive their entire distribution in cash or shares of equivalent value with a potential limitation on the total amount of cash that shareholders can elect to receive in the aggregate. The new guidance clarifies that the stock portion of a distribution to shareholders that allows them to elect to receive cash or shares with a potential limitation on the total amount of cash that all shareholders can elect to receive in the aggregate is considered a share issuance that is reflected in earnings per share prospectively as opposed to a stock dividend that is retroactively applied by restating shares outstanding and earnings per share for all periods presented. The new guidance became effective for interim and annual periods ending on or after December 31, 2009 and must be applied on a retrospective basis. The adoption of this new guidance did not have an impact on our consolidated financial statements.

In June 2009, the FASB established the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification became effective for interim or annual financial periods ending after September 15, 2009. The adoption of the Codification did not have an impact on our consolidated financial statements.

In June 2009, the FASB issued new accounting literature with respect to the consolidation of variable interest entities (“VIEs”). The new guidance impacts the consolidation guidance applicable to VIEs and among other things require a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE, continuous assessments of whether a company is the primary beneficiary of a VIE and enhanced disclosures about a company’s involvement with a VIE. The new guidance applies to our fiscal year beginning on January 1, 2010 and early adoption is prohibited. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

In May 2009, the FASB issued new accounting literature with respect to subsequent events. The new guidance, among other things, clarifies accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. We adopted the new guidance effective April 1, 2009 and the adoption did not have an impact on our consolidated financial statements.

Results of operations

Comparison of the year ended December 31,2009 to the year ended December 31, 2008

Rental revenues increased by $25.1 million, or 7%, to $366.2 million for the year ended December 31, 2009 compared to $341.1 million for the year ended December 31, 2008. The increase resulted from rental revenue from properties placed in service or redeveloped during the periods after January 1, 2008 and increases in rental rates related to renewed and/or releasable space leased. Additionally, in 2009 and 2008, we recognized additional rental income aggregating $18.5 million and $11.3 million, respectively, primarily related to a modification of a lease for a property in South San Francisco, California.

Tenant recoveries increased by $2.8 million, or 3%, to $102.1 million for the year ended December 31, 2009 compared to $99.4 million for the year ended December 31, 2008. The increase resulted primarily from properties placed in service or redeveloped during the periods after January 1, 2008. As of December 31, 2009 and 2008, approximately 88% and 89%, respectively, of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto.

Other income for the years ended December 31, 2009 and 2008 of $11.8 million and $11.2 million, respectively, represents construction management fees, interest, investment income and storage income. Other income for the year ended December 31, 2009 also includes a $7.2 million cash payment related to real estate acquired in November 2007. Excluding this cash payment, the decrease in other income is primarily due to decreases in investment income for the year ended December 31, 2009 as compared to the year ended December 31, 2008.

Rental operating expenses increased by $8.5 million, or 8%, to $120.5 million for the year ended December 31, 2009 compared to $112.0 million for the year ended December 31, 2008. The increase resulted primarily from increases in rental operating expenses (primarily payroll, property taxes and insurance) from properties placed in service or redeveloped during the periods after January 1, 2008. The majority of the increase in rental operating expenses was recoverable from our tenants.

General and administrative expenses increased by $1.5 million, or 4%, to $36.3 million for the year ended December 31, 2009 compared to $34.8 million for the year ended December 31, 2008. As a percentage of total revenues, general and administrative expenses for 2009 remained consistent with 2008 at approximately 8%.

Interest expense decreased by $2.8 million, or 3%, to $81.3 million for the year ended December 31, 2009 compared to $84.1 million for the year ended December 31, 2008. The decrease resulted from a decrease in LIBOR rates and a decrease in the outstanding balance on our unsecured line of credit partially offset by the issuance of our 8% unsecured convertible notes. The weighted average interest rate on our unsecured line of credit and unsecured term loan, including the impact of our interest rate hedge agreements, decreased from approximately 4.30% as of December 31, 2008 to approximately 4.10% as of December 31, 2009. We have entered into certain interest rate hedge agreements to hedge a portion of our exposure to variable interest rates primarily associated with our unsecured line of credit and unsecured term loan (see “– Liquidity and Capital Resources – Interest Rate Hedge Agreements”).

Depreciation and amortization increased by $10.5 million, or 10%, to $116.9 million for the year ended December 31, 2009 compared to $106.4 million for the year ended December 31, 2008. The increase resulted primarily from depreciation associated with the improvements and properties placed in service or redeveloped during the periods after January 1, 2008.

During 2009, we recognized a gain on early extinguishment of debt of approximately $11.3 million related to the repurchase, in privately negotiated transactions, of approximately $75 million (par value) of certain of our 3.70% Unsecured Convertible Notes.

During 2008, we recognized aggregate non-cash impairment charges of $13.3 million associated with other-than-temporary declines in the value of certain investments below their carrying value.

Income from discontinued operations, net of approximately $5.2 million for the year ended December 31, 2009 reflects the results of operations of three properties that were classified as “held for sale” as of December 31, 2009 and four properties sold during 2009. In connection with the properties sold in 2009, we recorded a gain of approximately $2.6 million. Income from discontinued operations, net of approximately $19.0 million for the year ended December 31, 2008 reflects the results of operations of three properties that were classified as “held for sale” as of December 31, 2009, four properties sold during 2009 and eight properties sold during 2008. In connection with the properties sold in 2008, we recorded a gain of approximately $20.4 million. We also recorded a non-cash impairment charge of $4.7 million in March 2008 related to an industrial building located in a suburban submarket south of Boston and an office building located in the San Diego market which has been included in income from discontinued operations, net. These properties were sold later in 2008.

Comparison of the year ended December 31,2008 to the year ended December 31, 2007

Rental revenues increased by $47.6 million, or 16%, to $341.1 million for the year ended December 31, 2008 compared to $293.4 million for the year ended December 31, 2007. The increase resulted from rental revenue from properties acquired, placed in service or redeveloped during the periods after January 1, 2007 and increases in rental rates related to renewed and/or releasable space leased. Additionally, during the year ended December 31, 2008, we recognized additional rental income aggregating $11.3 million primarily related to a modification of a lease for a property in South San Francisco, California.

Tenant recoveries increased by $19.1 million, or 24%, to $99.4 million for the year ended December 31, 2008 compared to $80.2 million for the year ended December 31, 2007. The increase resulted primarily from properties acquired, placed in service or redeveloped during the periods after January 1, 2007. As of December 31, 2008 and 2007, approximately 89% and 88%, respectively, of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto.

Other income for the years ended December 31, 2008 and 2007 of $11.2 million and $14.7 million, respectively, represents construction management fees, interest, investment income and storage income. As a percentage of total revenues, other income for the years ended December 31, 2008 and 2007 remained relatively consistent at approximately 2% to 4% of total revenues.

Rental operating expenses increased by $17.1 million, or 18%, to $112.0 million for the year ended December 31, 2008 compared to $94.9 million for the year ended December 31, 2007. The increase resulted primarily from increases in rental operating expenses (primarily property taxes and utilities) from properties acquired, placed in service or redeveloped during the periods after January 1, 2007. The majority of the increase in rental operating expenses was recoverable from our tenants.

General and administrative expenses increased by $2.5 million, or 8%, to $34.8 million for the year ended December 31, 2008 compared to $32.3 million for the year ended December 31, 2007, primarily due to the growth in both the depth and breadth of our operations in multiple markets, including internationally. As a percentage of total revenues, general and administrative expenses for the year ended December 31, 2008 remained consistent with the year ended December 31, 2007 at approximately 8%.

Interest expense decreased by $8.2 million, or 9%, to $84.1 million for the year ended December 31, 2008 compared to $92.3 million for the year ended December 31, 2007. The decrease resulted primarily from a decrease in outstanding borrowings on our unsecured line of credit due to the issuance of 10.0 million shares of our Series D Convertible Preferred Stock in March and April 2008. Additionally, the decrease resulted from a decrease in LIBOR rates. These decreases were partially offset by increases in indebtedness on our unsecured line of credit. These borrowings were utilized to finance the development, redevelopment and acquisition of the 2007 Properties and 2008 Properties. The weighted average interest rate

on our unsecured line of credit and unsecured term loan, including the impact of our interest rate hedge agreements, decreased from approximately 5.85% as of December 31, 2007 to approximately 4.30% as of December 31, 2008. We have entered into certain interest rate hedge agreements to hedge a portion of our exposure to variable interest rates primarily associated with our unsecured line of credit and unsecured term loan (see “– Liquidity and Capital Resources – Interest Rate Hedge Agreements”).

Depreciation and amortization increased by $13.5 million, or 15%, to $106.4 million for the year ended December 31, 2008 compared to $92.9 million for the year ended December 31, 2007. The increase resulted primarily from depreciation associated with the improvements and properties acquired, placed in service or redeveloped during the periods after January 1, 2007.

During 2008, we recognized aggregate non-cash impairment charges of $13.3 million associated with other-than-temporary declines in the value of certain investments below their carrying value.

Income from discontinued operations, net of $19.0 million for the year ended December 31, 2008 reflects the results of operations of three properties that were classified as “held for sale” as of December 31, 2009, four properties sold in 2009 and eight properties sold during 2008. In connection with the properties sold in 2008, we recorded a gain of approximately $20.4 million. We also recorded a non-cash impairment charge of $4.7 million in March 2008 related to an industrial building located in a suburban submarket south of Boston and an office building located in the San Diego market, which has been included in income from discontinued operations, net. These properties were sold later in 2008. Income from discontinued operations, net of $14.0 million for the year ended December 31, 2007 reflects the results of operations of three properties that were classified as “held for sale” as of December 31, 2009, four properties sold in 2009, eight properties sold during 2008, and four properties and four land parcels sold during 2007. In connection with the properties sold during the year ended December 31, 2007, we recorded a gain of approximately $8.0 million.

Liquidity and capitalresources

Overview

We expect to continue meeting our short term liquidity and capital requirements generally through our working capital and net cash provided by operating activities. We believe that the net cash provided by operating activities will continue to be sufficient to enable us to make distributions necessary to continue qualifying as a REIT. We also believe that net cash provided by operating activities will be sufficient to fund recurring non-revenue enhancing capital expenditures, tenant improvements and leasing commissions.

We expect to meet certain long term liquidity requirements, such as for property development, redevelopment and other construction projects, scheduled debt maturities and non-recurring capital improvements, through net cash provided by operating activities, periodic asset sales, long term secured and unsecured indebtedness, including borrowings under the unsecured line of credit and unsecured term loan and the issuance of additional debt and/or equity securities.

Notwithstanding our expectations, financial markets have recently experienced unusual volatility and uncertainty. While this condition has occurred initially within the “subprime” mortgage lending sector of the credit market, financial systems throughout the world have recently highlighted significant periods of illiquidity with banks much less willing to lend substantial amounts to other banks and borrowers. Consequently, there is greater uncertainty regarding our ability to access the credit markets in order to attract financing or capital on reasonable terms or at any terms. Our ability to finance our development and redevelopment projects and pending or new acquisitions, as well as our ability to refinance debt maturities, could be adversely affected by our inability to secure capital on reasonable terms, if at all. See “Item 1A. Risk Factors - We May Not Be Able to Obtain Additional Capital to Further Our Business Objectives” and “ - We May Not Be Able to Refinance Our Debt.”

The current economic, financial and banking environment, worldwide economic recession and lack of consumer confidence have improved since the fourth quarter of 2008 and first quarter of 2009. Even with the recent improvements, we remain cautious over the economic, financial and banking environment. We intend to continue to focus on the completion of our existing active redevelopment projects aggregating approximately 575,152 rentable square feet and our existing active development projects aggregating approximately an additional 980,000 rentable square feet. Additionally, we intend to continue with preconstruction activities for certain land parcels for future ground-up/vertical above ground development in order to preserve and create value for these projects. These important preconstruction activities add significant value to our land for future ground-up development and are required for the ultimate vertical construction of the buildings. We also intend to be very careful and prudent with any future decisions to add new projects to our active ground-up/vertical developments. Future ground-up/vertical development projects will likely require significant pre-leasing from high quality and/or credit entities. We also intend to continue to reduce debt as a percentage of our overall capital structure over a multi-year period. During this period, we may also extend and/or refinance certain debt maturities. We expect the source of funds for construction activities and repayment of outstanding debt to be provided over several years by cash flows from operations, opportunistic sales of real estate, joint ventures, new secured or unsecured debt and the issuance of additional equity securities, as appropriate. As of December 31, 2009, we had identified three assets as “held for sale,” that have been classified in discontinued operations.

As further discussed below, our principal liquidity needsare to fund:

· **** normalrecurring expenses;

· **** currentdevelopment and redevelopment costs;

· **** capitalexpenditures, including tenant improvements and leasing costs;

· **** principaland interest payments due under our debt obligations, including balloonpayments of principal; and

· **** dividenddistributions in order to maintain our REIT qualification under the InternalRevenue Code.

We believe that our sources of capital for our principalliquidity needs will be satisfied by:

· **** cashon hand of approximately $70.6 million as of December 31, 2009;

· **** restrictedcash **** of approximately $24.1 million asof December 31, 2009 to fund certain construction costs;

· **** cashflows generated by operating activities (for the year ended December 31,2009, we generated approximately $206.0 million of cash flows from operatingactivities);

· **** availabilityunder our $1.9 billion unsecured line of credit and unsecured term loan(approximately $1.2 billion outstanding as of December 31, 2009);

· **** cashproceeds from new secured or unsecured financings;

· **** cashproceeds generated from potential asset sales including three properties thatwere classified as “held for sale” as of December 31, 2009;

· **** cashproceeds from the issuance of common or preferred equity or debt securities;and

· **** cashproceeds from joint ventures.

Principal liquidity needs

Contractual obligations and commitments

Contractual obligations as of December 31, 2009consisted of the following (in thousands):

****	****		Payments by Period
****	Total		2010		2011-2012		2013-2014		Thereafter
Secured notes payable<br> (1)	$	937,017	$	35,982	$	176,191	$	308,096	$	416,748
Unsecured line of<br> credit (2)	476,000		–		476,000		–		–
Unsecured term loan (2)	750,000		–		750,000		–		–
Unsecured convertible<br> notes	624,700		–		384,700		240,000		–
Estimated interest<br> payments	598,252		120,955		193,638		113,605		170,054
Ground lease<br> obligations	611,440		6,558		15,831		17,079		571,972
Other obligations	3,288		1,357		1,931		–		–
Total	$	4,000,697	$	164,852	$	1,998,291	$	678,780	$	1,158,774

(1) Assumes we exercise our sole right to extend the maturity dates of a secured note payable of approximately $28.5 million from January 1, 2011 to January 1, 2012, and a secured note payable of approximately $38.4 million from January 2, 2012 to April 6, 2013. Amounts include noncontrolling interests’ share of scheduled principal maturities of approximately $39.3 million, of which approximately $17.6 million and $20.8 million mature in 2013 and 2014, respectively. Also, amounts are net of unamortized discounts of approximately $2.1 million.

(2) Assumes we exercise our sole right to extend the maturity date of our unsecured line of credit from October 2010 to October 2011 and our unsecured term loan from October 2011 to October 2012.

Secured notes payable as of December 31, 2009 consisted of 26 notes secured by 57 properties and one land development parcel. Our secured notes payable require monthly payments of principal and interest and had weighted average interest rates of approximately 5.83% at December 31, 2009. Noncontrolling interests’ share of secured notes payable aggregated approximately $39.3 million as of December 31, 2009. The total book values of rental properties, net, land held for future development and construction in progress securing debt were approximately $1.4 billion at December 31, 2009. At December 31, 2009, our secured notes payable were comprised of approximately $831.5 million and $105.5 million of fixed and variable rate debt, respectively.

Our unsecured line of credit matures in October 2010and may be extended at our sole option for an additional one-year period to October 2011.Our unsecured term loan matures in October 2011 and may be extended at oursole option for an additional one-year period to October 2012.

In April 2009, we completed a private offering of $240 million principal amount of 8.00% Unsecured Convertible Notes. In January 2007, we completed a private offering of $460 million principal amount of 3.70% Unsecured Convertible Notes. In April 2009, we repurchased, in privately negotiated transactions, approximately $75 million (par value) of certain of our 3.70% Unsecured Convertible Notes. See additional information under Note 7 to our consolidated financial statements appearing elsewhere in this annual report on Form 10-K regarding our ability to redeem the notes, the ability of the holders to require us to repurchase the notes and circumstances under which the holders may convert the notes.

Estimated interest payments on our fixed rate debt andhedged variable rate debt were calculated based upon contractual interestrates, including the impact of interest rate swap agreements, interest paymentdates and scheduled maturity dates. As of December 31, 2009, approximately83% of our debt was fixed rate debt or variable rate debt subject to interestrate hedge agreements. See additional information regarding our interest ratehedge agreements under “Liquidity and Capital Resources — Interest Rate Hedge Agreements.” The remaining 17% of our debt is unhedgedvariable rate debt based primarily on LIBOR. Interest payments on our unhedgedvariable rate debt have been excluded from the table on the prior page becausewe cannot reasonably determine the future interest obligations on variable ratedebt as we cannot predict the applicable variable interest rates in thefuture. See additional informationregarding our debt under Notes 5, 6, 7 and 8 to our consolidated financialstatements appearing elsewhere in this annual report on Form 10-K.

Ground lease obligations as of December 31, 2009included leases for 19 of our properties and three land developmentparcels. These lease obligations haveremaining lease terms from 23 to 97 years, excluding extension options.

In addition to the above, as of December 31, 2009, remaining aggregate costs under contracts for the construction of properties undergoing development, redevelopment and generic office/laboratory infrastructure improvements under the terms of leases approximated $186.8 million. We expect payments for these obligations to occur over one to three years, subject to capital planning adjustments from time to time. We are also committed to fund approximately $48.3 million for certain investments over the next six years.

Capitalexpenditures, tenant improvements and leasing costs

As of December 31, 2009, we had an aggregate ofapproximately 980,000 rentable square feet undergoing vertical ground-upconstruction and an aggregate of approximately 575,152 rentable square feetundergoing a permanent change in use to office/laboratory space throughredevelopment including the conversion of single tenancy space to multi-tenancyspaces or multi-tenancy spaces to single tenancy space.

For the years ended December 31, 2009, 2008 and 2007, we paid property-related capital expenditures and tenant improvements related to our properties, including expenditures related to our development and redevelopment projects, aggregating approximately $446.1 million, $542.5 million and $589.7 million, respectively. These amounts include payments for property-related capital expenditures and tenant improvements presented in the table below including non-revenue enhancing capital expenditures and tenant improvement and leasing costs related to re-tenanted and renewal space. We expect our future property-related capital expenditures and tenant improvements related to our life science properties to decrease in 2010 as compared to 2009.

The following table shows total and the five-year average per square foot property-related capital expenditures, tenant improvements and leasing costs (excluding capital expenditures and tenant improvements that are recoverable from tenants, revenue-enhancing or related to properties that have undergone redevelopment) for the years ended December 31, 2009, 2008, 2007, 2006 and 2005:

****	Five-Year		Year Ended December 31,
****	Average		2009		2008		2007		2006		2005
Capital expenditures (1):
Major capital<br> expenditures	$	772,000	$	529,000	$	405,000	$	1,379,000	$	575,000	$	972,000
Recurring capital<br> expenditures	$	985,000	$	1,405,000	$	955,000	$	648,000	$	639,000	$	1,278,000
Square feet in<br> portfolio	10,581,399		11,740,993		11,770,769		11,476,217		9,790,326		8,128,690
Per square foot:
Major capital<br> expenditures	$	0.07	$	0.05	$	0.03	$	0.12	$	0.06	$	0.12
Recurring capital<br> expenditures	$	0.09	$	0.12	$	0.08	$	0.06	$	0.07	$	0.16
Tenant improvements and leasing costs:
Re-tenanted space (2)
Tenant<br> improvements and leasing costs	$	1,619,000	$	1,475,000	$	3,481,000	$	1,446,000	$	1,370,000	$	324,000
Re-tenanted<br> square feet	264,382		211,638		505,773		224,767		248,846		130,887
Per square foot	$	6.12	$	6.97	$	6.88	$	6.43	$	5.51	$	2.48
Renewal space
Tenant<br> improvements and leasing costs	$	1,861,000	$	3,263,000	$	2,364,000	$	1,942,000	$	957,000	$	778,000
Renewal square feet	703,645		976,546		748,512		671,127		455,980		666,058
Per square foot	$	2.64	$	3.34	$	3.16	$	2.89	$	2.10	$	1.17

(1)	Property-related<br> capital expenditures include all major capital and recurring capital<br> expenditures except capital expenditures that are recoverable from tenants,<br> revenue-enhancing capital expenditures or costs related to the redevelopment<br> of a property. Major capital expenditures consist of roof replacements and<br> HVAC systems that are typically identified and considered at the time a<br> property is acquired.
(2)	Excludes<br> space that has undergone redevelopment before re-tenanting.

Capital expenditures fluctuate in any given period due to the nature, extent and timing of improvements required and the extent to which they are recoverable from our tenants. As of December 31, 2009 approximately 91% (on a rentable square footage basis) of our leases provide for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing). In addition, we maintain an active preventative maintenance program at each of our properties to minimize capital expenditures.

Tenant improvements and leasing costs also fluctuate in any given year depending upon factors such as the timing and extent of vacancies, property age, location and characteristics, the type of lease (renewal tenant or re-tenanted space) the involvement of external leasing agents and overall competitive market conditions.

We expect our future capital expenditures, tenant improvements and leasing costs (excluding capital expenditures and tenant improvements that are recoverable from tenants, revenue-enhancing or related to properties that have undergone redevelopment) to be approximately in the range as shown in the table immediately above.

Unsecured line of credit and unsecured term loan

We use our unsecured line of credit and unsecured term loan to fund working capital, construction activities and, from time to time, acquisition of properties. Our $1.9 billion unsecured credit facilities consist of a $1.15 billion in unsecured line of credit and a $750 million unsecured term loan. We may in the future elect to increase commitments under our unsecured credit facilities by up to an additional $500 million. As of December 31, 2009, we had borrowings of $476 million and $750 million outstanding under our unsecured line of credit and unsecured term loan, respectively, with a weighted average interest rate, including the impact of our interest rate swap agreements, of approximately 4.10%.

Our unsecured line of credit and unsecured term loan, as amended, bear interest at a floating rate based on our election of either (1) a LIBOR-based rate plus 1.00% to 1.45% depending on our leverage or (2) the higher of a rate based upon Bank of America’s prime rate plus 0.0% to 0.25% depending on our leverage and the Federal Funds rate plus 0.50%. For each LIBOR-based advance, we must elect a LIBOR period of one, two, three or six months. Our unsecured line of credit matures in October 2010 and may be extended at our sole option for an additional one-year period to October 2011. Our unsecured term loan matures in October 2011 and may be extended at our sole option for an additional one-year period to October 2012.

Our unsecured line of credit and unsecured term loan contain financial covenants, including, among others, the following (as defined under the terms of the agreement):

· leverage ratio less than 65.0%;

· fixed charge coverage ratio greater than 1.40;

· minimum book value of $1.6 billion; and

· secured debt ratio less than 55.0%.

As of December 31, 2009, we believe our two most restrictive financial covenants under our unsecured line of credit and unsecured term loan are the leverage and fixed charge ratios. Future changes in interest rates, our outstanding debt balances and other changes in our business, operations or financial statements may result in a default of these and other financial covenants under our unsecured line of credit and unsecured term loan.

In addition, the terms of the unsecured line of credit and unsecured term loan restrict, among other things, certain investments, indebtedness, distributions, mergers, developments, land and borrowings available under our unsecured line of credit and unsecured term loan for developments, land and encumbered assets. As of December 31, 2009 and 2008, we were in compliance with all such covenants. Management continuously monitors the Company’s compliance and projected compliance with the covenants. Our current expectation is that we will continue to meet requirements of our debt covenants in the short and long term. However, in the event of a continued economic slow-down, continued crisis in the credit markets and rising cost of capital, there is no certainty that we will be able to continue to satisfy all of the covenant requirements.

Aggregate unsecured borrowings may be limited to an amount based primarily on the net operating income derived from a pool of unencumbered properties and our cost basis of development assets and land. Aggregate unsecured borrowings may increase as we complete the development, redevelopment, or acquisition of additional unencumbered properties. As of December 31, 2009, aggregate unsecured borrowings were limited to approximately $2.8 billion. If net operating income from properties supporting our borrowing capacity under our unsecured credit facilities decreases, our borrowing capacity under our credit facilities will also decrease. Additionally, we may be required to reduce our outstanding borrowings under our credit facilities in order to maintain compliance with one or more covenants under our credit facilities.

As of December 31, 2009, we had approximately 49 lenders providing commitments under our $1.9 billion unsecured line of credit and unsecured term loan. During 2009, all lenders under our unsecured line of credit and unsecured term loan funded all borrowings requested under these agreements. In the future, if one or more such lenders fail to fund a borrowing request, we may not be able to borrow funds necessary for working capital, construction activities, dividend payments, debt repayment and monthly debt service and other recurring capital requirements. The failure of one or more lenders to fund their share of a borrowing request may have a material impact on our financial statements.

We have risks associated with the maturity of our unsecured line of credit and unsecured term loan. There may be fewer, if any, lenders willing to participate in future unsecured credit facilities and future commitments from lenders may be lower than existing commitments. In addition, key terms and covenants may be less favorable than existing key terms and covenants and we may not be able to raise capital to repay our outstanding balance on our unsecured credit facilities prior to or at maturity.

Interest ratehedge agreements

We utilize interest rate hedge agreements, including interest rate swap and cap agreements, to hedge a portion of our exposure to variable interest rates primarily associated with our unsecured line of credit and unsecured term loan. These agreements involve an exchange of fixed and floating rate interest payments without the exchange of the underlying principal amount (the “notional amount”). Interest received under all of our interest rate hedge agreements is based on the one-month LIBOR rate. The net difference between the interest paid and the interest received is reflected as an adjustment to interest expense.

The following table summarizes our interest rate swap agreements as of December 31, 2009 (dollars in thousands):

Transaction Dates	Effective Dates	Termination Dates	Interest Pay Rates	Notional Amounts		Effective at December 31, 2009		Fair Values		****
December 2006	December 29, 2006	March 31, 2014	4.990%	$	50,000	$	50,000	$	(4,948	)
December 2006	January 2, 2007	January 3, 2011	5.003	28,500		28,500		(1,389		)
October 2007	October 31, 2007	September 30, 2012	4.546	50,000		50,000		(3,733		)
October 2007	October 31, 2007	September 30, 2013	4.642	50,000		50,000		(4,195		)
December 2005	January 2, 2008	December 31, 2010	4.768	50,000		50,000		(2,103		)
June 2006	June 30, 2008	June 30, 2010	5.325	50,000		50,000		(1,255		)
June 2006	June 30, 2008	June 30, 2010	5.325	50,000		50,000		(1,255		)
October 2007	July 1, 2008	March 31, 2013	4.622	25,000		25,000		(2,018		)
October 2007	July 1, 2008	March 31, 2013	4.625	25,000		25,000		(2,020		)
October 2008	October 16, 2008	January 31, 2010	2.755	100,000		100,000		(203		)
June 2006	October 31, 2008	December 31, 2010	5.340	50,000		50,000		(2,391		)
June 2006	October 31, 2008	December 31, 2010	5.347	50,000		50,000		(2,395		)
October 2008	September 30, 2009	January 31, 2011	3.119	100,000		100,000		(2,693		)
December 2006	November 30, 2009	March 31, 2014	5.015	75,000		75,000		(7,496		)
December 2006	November 30, 2009	March 31, 2014	5.023	75,000		75,000		(7,493		)
December 2006	December 31, 2010	October 31, 2012	5.015	100,000		–		(4,359		)
Total						$	828,500	$	(49,946	)

We have entered into master derivative agreements with each counterparty. These master derivative agreements (all of which are adapted from the standard International Swaps & Derivatives Association, Inc. form) define certain terms between the Company and each counterparty to address and minimize certain risks associated with our interest rate hedge agreements. In order to limit our risk of non-performance by an individual counterparty under our interest rate hedge agreements, our interest rate hedge agreements are spread among various counterparties. As of December 31, 2009, the largest aggregate notional amount with an individual counterparty was $175 million. If one or more of our counterparties fail to perform under our interest rate hedge agreements, we may incur higher costs associated with our variable rate LIBOR-based debt than the interest costs we originally anticipated.

As of December 31, 2009, our interest rate swap agreements were classified in accounts payable, accrued expenses and tenant security deposits based upon their respective fair values aggregating a liability balance of approximately $49.9 million with the offsetting adjustment reflected as unrealized losses in accumulated other comprehensive loss in total equity. Balances in accumulated other comprehensive loss are recognized in earnings in the period that the forecasted hedge transactions affect earnings. Also, during the year ended December 31, 2009, we entered into an interest rate cap agreement with a notional amount approximating $38.4 million effective May 15, 2009 and terminating on January 3, 2012. This agreement sets a ceiling on one-month LIBOR at 2.50% related to one secured note. The interest rate cap agreement was classified in other assets based upon its fair value aggregating an asset balance of approximately $189,000. We have not posted any collateral related to our interest rate hedge agreements. For the year ended December 31, 2009, approximately $37.5 million was reclassified from accumulated other comprehensive income to interest expense as an increase to interest expense. During the next twelve months, we expect to reclassify approximately $28.6 million from accumulated other comprehensive loss to interest expense as an increase to interest expense.

Secured notes payable

As of December 31, 2009, we had aggregate secured notes payable of approximately $937.0 million. If we are unable to refinance, extend principal payments due at maturity or pay principal maturities with proceeds from other capital sources, then our cash flows may be insufficient to pay dividends to our stockholders and to repay debt upon maturity. Furthermore, even if we are able to refinance debt prior to maturity, the interest rate, loan to value and other key loan terms may be less favorable than existing loan terms. Less favorable loan terms, assuming we are able to refinance our secured notes payable, may result in higher interest costs, additional required capital as a result of less proceeds or lower loan to value upon refinancing and new or more restrictive covenants or loan terms.

Dividends

We are required to distribute 90% of our REIT taxable income on an annual basis in order to continue to qualify as a REIT for federal income tax purposes. Accordingly, we intend to make, but are not contractually bound to make, regular quarterly distributions to preferred and common stockholders from cash flow from operating activities. All such distributions are at the discretion of our board of directors. We may be required to use borrowings under our unsecured line of credit, if necessary, to meet REIT distribution requirements and maintain our REIT status. We consider market factors and our performance in addition to REIT requirements in determining distribution levels. During the year ended December 31, 2009, we paid dividends on our common stock aggregating approximately $86.7 million. Also, during the year ended December 31, 2009, we paid dividends on our Series C Preferred Stock and Series D Convertible Preferred Stock aggregating approximately $10.9 million and $17.5 million, respectively.

Sources of capital

Cash and cash equivalents

Asof December 31, 2009, we had approximately $70.6 million of cash and cashequivalents.

Tenant securitydeposits and other restricted cash

Tenant security deposits and other restricted cash consisted of the following (in thousands):

****	December 31,
****	2009		2008
Funds held in trust under the terms of certain secured notes payable	$	19,340	$	16,118
Funds held in escrow related to construction projects	24,054		49,499
Other restricted funds	3,897		2,165
Total	$	47,291	$	67,782

Thefunds held in escrow related to construction projects will be used to pay forcertain construction costs.

Cash flows

Net cash provided by operating activities for the year ended December 31, 2009 decreased by $49.9 million to $206.0 million compared to $255.8 million for the year ended December 31, 2008. The decrease resulted primarily from a decrease in cash flows from overall changes in operating assets and liabilities partially offset by an increase in net income.Cash flows from operations are primarilydependent upon the occupancy level of our portfolio, the net effective rentalrates achieved on our leases, the collectability of rent and operatingescalations and recoveries from our tenants and the level of operating andother costs. We believe our cash flowsfrom operating activities provide a stable source of cash to fund operatingexpenses. In addition, as of December 31,2009, approximately 88% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes, insurance, utilities, common area and other operating expenses, including increases thereto, and approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses.

We are largely dependent on the life science industry for revenues due under lease agreements. Our business could be adversely affected if the life science industry is impacted by the current economic downturn and financial and banking crisis or if the life science industry migrates from the United States to other countries. Our tenants may not be able to pay amounts due under their lease agreements if they are unsuccessful in discovering, developing, making or selling their products or technologies.

The bankruptcy or insolvency of a major tenant may also adversely affect the income produced by a property. If any of our tenants becomes a debtor in a case under the United States Bankruptcy Code, the bankruptcy court must approve any eviction. The bankruptcy court may authorize the tenant to reject and terminate its lease with us. Our claim against such a tenant for unpaid future rent would be subject to a statutory limitation that might be substantially less than the remaining rent actually owed to us under the tenant’s lease. Any shortfall in rent payments could adversely affect our cash flow and our ability to make distributions to our stockholders.

Net cash used in investing activities for the year ended December 31, 2009 was $409.9 million compared to $494.9 million for the year ended December 31, 2008. The decrease in net cash used in investing activities reflects lower proceeds from dispositions as well as lower additions to properties due to our strategy to reduce capital spending in 2009 as compared to 2008.

Net cash provided by financing activities for the year ended December 31, 2009 decreased by $98.8 million to $203.4 million compared to $302.2 million for the year ended December 31, 2008. For the year ended December 31, 2009, proceeds of approximately $1.5 billion from the issuance of common stock, the issuance of our 8.00% Unsecured Convertible Notes and borrowings from secured notes payable and our unsecured line of credit were partially offset by approximately $1.2 billion related to the repurchase of certain of our 3.70% Unsecured Convertible Notes, principal reductions related to repayments of outstanding principal on our secured notes payable and repayments of borrowings from our unsecured line of credit. Additionally, for the year ended December 31, 2009, we paid dividends on our common and preferred stock of approximately $115.0 million. For the year ended December 31, 2008, proceeds of approximately $1.3 billion from the issuance of Series D Convertible Preferred Stock and borrowings from secured notes payable and our unsecured line of credit were partially offset by principal repayments of approximately $0.9 billion related to outstanding amounts an our second notes payable and unsecured line of credit. Additionally, we paid dividends on our common and preferred stock of approximately $122.0 million during the year ended December 31, 2008.

Unsecured line of credit and unsecured term loan

We use our unsecured line of credit and unsecured term loan to fund working capital, construction activities and, from time to time, acquisition of properties. Our $1.9 billion unsecured credit facilities consist of a $1.15 billion unsecured line of credit and a $750 million unsecured term loan. We may in the future elect to increase commitments under our unsecured credit facilities by up to an additional $500 million. As of December 31, 2009, we had borrowings of $476 million and $750 million outstanding under our unsecured line of credit and unsecured term loan, respectively, with a weighted average interest rate, including the impact of our interest rate swap agreements, of approximately 4.10%. See additional information regarding our unsecured line of credit and unsecured term loan on page 47.

Propertydispositions

During the year ended December 31, 2009, we sold four properties at an aggregate contract price of approximately $20.9 million. The net sales proceeds were initially used to repay outstanding secured debt related to the properties sold or outstanding debt on our unsecured line of credit. As of December 31, 2009, we had three properties classified as “held for sale.”

Other resourcesand liquidity requirements

Under our current shelf registration statement filed with the Securities and Exchange Commission, we may offer common stock, preferred stock, debt and other securities. These securities may be issued from time to time at our discretion based on our needs and market conditions.

In September 2009, we sold 4,600,000 shares of our common stock in a follow-on offering (including shares issuedupon full exercise of the underwriters’ over-allotment option). The shares were issued at a price of $53.25 per share, resulting in aggregate proceeds of approximately $233.5 million (after deducting underwriters’ discounts and other offering costs).

In April 2009, we completed a private offering of the 8.00% Unsecured Convertible Notes. The net proceeds from this offering, after initial purchasers’ fees and other offering costs, were approximately $233.0 million. Prior to April 20, 2014, we will not have the right to redeem the 8.00% Unsecured Convertible Notes, except to preserve our qualification as a REIT. On and after that date, we have the right to redeem the 8.00% Unsecured Convertible Notes, in whole or in part, at any time and from time to time, for cash equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the 8.00% Unsecured Convertible Notes may require us to repurchase their notes, in whole or in part, on April 15, 2014, 2019 and 2024 for cash equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date.

Holders of the 8.00% Unsecured Convertible Notes may require us to repurchase all or a portion of their notes upon the occurrence of a Fundamental Change, at a repurchase price in cash equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.**** At issuance, the 8.00% Unsecured Convertible Notes had an initial conversion rate of approximately 24.1546 shares of common stock per $1,000 principal amount of the 8.00% Unsecured Convertible Notes, representing a conversion price of approximately $41.40 per share of our common stock. This initial conversion price represented a premium of 15% based on the last reported sale price of $36.00 per share of our common stock on April 21, 2009. The conversion rate of the 8.00% Unsecured Convertible Notes is subject to adjustments for certain events, including, but not limited to, certain cash dividends on our common stock in excess of $0.35 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009, there was no change from the initial conversion rate of our 8.00% Unsecured Convertible Notes. Holders of the 8.00% Unsecured Convertible Notes may convert their notes prior to the stated maturity date of April 15, 2029 only under the following circumstances: (1) during any calendar quarter after the calendar quarter ending June 30, 2009, if the closing sale price of our common stock for each of 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds or is equal to 130% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (the “8.00% Unsecured Convertible Note Measurement Period”) in which the average trading price per $1,000 principal amount of the 8.00% Unsecured Convertible Notes was equal to or less than 98% of the average conversion value of the 8.00% Unsecured Convertible Notes during the 8.00% Unsecured Convertible Note Measurement Period; (3) upon the occurrence of a Fundamental Change; (4) if we call the 8.00% Unsecured Convertible Notes for redemption; and (5) at any time from, and including, March 15, 2029 until the close of business on the business day immediately preceding April 15, 2029 or earlier redemption or repurchase. Upon conversion, holders of the 8.00% Unsecured Convertible Notes will receive cash, shares of our common stock, or a combination thereof, as the case may be, at our election. Pursuant to the accounting literature related to convertible debt, at issuance of the 8.00% Unsecured Convertible Notes, we determined the effective interest rate of the notes to be 11.0%.

In March 2009, we sold 7,000,000 shares of our common stock in a follow-on offering. The shares were issued at a price of $38.25 per share, resulting in aggregate proceeds of approximately $254.6 million (after deducting underwriters’ discounts and other offering costs).

In March and April 2008, we completed a public offering of 10,000,000 shares of Series D Convertible Preferred Stock. The shares were issued at a price of $25.00 per share, resulting in aggregate proceeds of approximately $242 million (after deducting underwriters’ discounts and other offering costs). The proceeds from this offering were used to pay down outstanding borrowings on our unsecured line of credit. The dividends on our Series D Convertible Preferred Stock are cumulative and accrue from the date of original issuance. We pay dividends quarterly in arrears at an annual rate of $1.75 per share. Our Series D Convertible Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption provisions, and we are not allowed to redeem our Series D Convertible Preferred Stock, except to preserve our status as a REIT. Investors in our Series D Convertible Preferred Stock generally have no voting rights. On or after April 20, 2013, we may, at our option, be able to cause some or all of our Series D Convertible Preferred Stock to be automatically converted if the closing sale price per share of our common stock equals or exceeds 150% of the then-applicable conversion price of the Series D Convertible Preferred Stock for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day immediately prior to our issuance of a press release announcing the exercise of our conversion option. Holders of our Series D Convertible Preferred Stock, at their option, may, at any time and from time to time, convert some or all of their outstanding shares initially at a conversion rate of 0.2477 shares of common stock per $25.00 liquidation preference, which was equivalent to an initial conversion price of approximately $100.93 per share of common stock. The conversion rate for the Series D Convertible Preferred Stock is subject to adjustments for certain events, including, but not limited to, certain dividends on our common stock in excess of $0.78 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009, the Series D Convertible Preferred Stock had a conversion rate of approximately 0.2480 shares of common stock per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $100.81 per share of common stock.

In January 2007, we completed a private offering of the 3.70% Unsecured Convertible Notes. The net proceeds from this offering, after underwriters’ discount, were approximately $450.8 million. Prior to January 15, 2012, we will not have the right to redeem the Notes, except to preserve our qualification as a REIT. On and after that date, we have the right to redeem the Notes, in whole or in part, at any time and from time to time, for cash equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the Notes may require us to repurchase their Notes, in whole or in part, on January 15, 2012, 2017 and 2022 for cash equal to 100% of the principal amount of the Notes to be purchased plus any accrued and unpaid interest to but excluding the repurchase date. Holders of the 3.70% Unsecured Convertible Notes may require us to repurchase all or a portion of their notes upon the

occurrence of a Fundamental Change, at a repurchase price in cash equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. At issuance, the Notes had an initial conversion rate of approximately 8.4774 common shares per $1,000 principal amount of the Notes representing a conversion price of approximately $117.96 per share of our common stock. This initial conversion price represented a premium of 20% based on the last reported sale price of $98.30 per share of our common stock on January 10, 2007. The conversion rate of the Notes is subject to adjustments for certain events, including, but not limited to, certain dividends on our common stock in excess of $0.74 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009, the Notes had a conversion rate of approximately 8.5207 common shares per $1,000 principal amount of the Notes, which is equivalent to a conversion price of approximately $117.36 per share of our common stock. Holders of the Notes may convert their Notes into cash and, if applicable, shares of our common stock prior to the stated maturity of the Notes only under the following circumstances: (1) the Notes will be convertible during any calendar quarter after the calendar quarter ending March 31, 2007, if the closing sale price of our common stock for each of 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) the Notes will be convertible during the five consecutive business days immediately after any five consecutive trading day period (the “Note Measurement Period”) in which the average trading price per $1,000 principal amount of Notes was equal to or less than 98% of the average conversion value of the Notes during the Note Measurement Period; (3) the Notes will be convertible upon the occurrence of specified corporate transactions, including a change in control, certain merger or consolidation transactions or the liquidation of the Company; (4) the Notes will be convertible if we call the Notes for redemption; and (5) the Notes will be convertible at any time from, and including, December 15, 2026 until the close of business on the business day immediately preceding January 15, 2027 or earlier redemption or repurchase. The Note Measurement Period is the five **** consecutive trading day period following a request by a holder of the Notes to convert his Notes. Pursuant to the accounting literature related to convertible debt, at issuance of the 3.70% Unsecured Convertible Notes, we determined the effective interest rate of the notes to be 5.96%.

We hold interests, together with certain third parties, in a limited partnership and in limited liability companies which we consolidate in our financial statements. These third parties may contribute equity into these entities primarily related to their share of funds for construction and financing related activities.

Off-balance sheet arrangements

Asof December 31, 2009, we had no off-balance sheet arrangements.

Exposureto environmental liabilities

In connection with the acquisition of all of our properties, we have obtained Phase I environmental assessments to ascertain the existence of any environmental liabilities or other issues. The Phase I environmental assessments of our properties have not revealed any environmental liabilities that we believe would have a material adverse effect on our financial condition or results of operations taken as a whole, nor are we aware of any material environmental liabilities that have occurred since the Phase I environmental assessments were completed. In addition, we carry a policy of pollution legal liability insurance covering exposure to certain environmental losses at substantially all of our properties.

Inflation

As of December 31, 2009, approximately 88% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes, insurance, utilities, common area and other operating expenses, including increases thereto. In addition, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. Approximately 93% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed (generally ranging from 3.0% to 3.5%) or indexed based on the consumer price index or another index. Accordingly, we do not believe that our earnings or cash flow from real estate operations are subject to any significant risk from inflation. An increase in inflation, however, could result in an increase in the cost of our variable rate borrowings, including borrowings related to our unsecured line of credit and unsecured term loan.

Funds from operations

GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of NAREIT established the measurement tool of FFO. Since its introduction, FFO has become a widely used non-GAAP financial measure among REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the “White Paper”) and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance for REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions (see “– Liquidity and Capital Resources – Cash Flows” above for information regarding these measures of cash flow).

The following table presents a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, the most directly comparable GAAP financial measure to FFO, to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders (in thousands):

****	Year Ended December 31,					****
****	2009		****	2008		****
Net income<br> attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders	$	104,974		$	90,746
Add:
Depreciation and<br> amortization (1)	118,508			108,743
Net income<br> attributable to noncontrolling interests	7,047			3,799
Net income<br> attributable to unvested restricted stock awards	1,270			1,327
Subtract:
Gain<br> on sales of property (2)	(2,627		)	(20,401		)
FFO attributable<br> to noncontrolling interests	(3,843		)	(4,108		)
FFO attributable<br> to unvested restricted stock awards	(2,694		)	(2,596		)
Subtotal	$	222,635		$	177,510
Add:
Assumed<br> conversion of 8.00% Unsecured Convertible Notes	11,943			–
Effect of<br> dilutive securities and assumed conversion attributable to unvested<br> restricted stock	118			9
FFO attributable<br> to Alexandria Real Estate Equities, Inc.’s **** common<br> stockholders assuming effect of dilutive securities and assumed conversion	$	234,696		$	177,519

(1) **** Includesdepreciation and amortization on assets “held for sale” reflected asdiscontinued operations for the periods prior to when such assets wereclassified as “held for sale.”

(2) **** Gainon sales of property relates to four properties sold during 2009 and eightproperties sold during 2008. Gain onsales of property is included in the consolidated statements of income inincome from discontinued operations, net.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in interest rates, equity prices and foreign currency exchange rates.

Interest rate risk

The primary market risk to which we believe we are exposed is interest rate risk, which may result from many factors, including government monetary and tax policies, domestic and international economic and political considerations and other factors that are beyond our control.

In order to modify and manage the interest rate characteristics of our outstanding debt and to limit the effects of interest rate risks on our operations, we may utilize a variety of financial instruments, including interest rate swaps, caps, floors and other interest rate exchange contracts. The use of these types of instruments to hedge a portion of our exposure to changes in interest rates carries additional risks, such as counterparty credit risk and the legal enforceability of hedging contracts.

Our future earnings and fair values relating to financial instruments are primarily dependent upon prevalent market rates of interest, such as LIBOR. However, our interest rate hedge agreements are intended to reduce the effects of interest rate changes. Based on interest rates at, and our interest rate hedge agreements in effect on December 31, 2009 and 2008, we estimate that a 1% increase in interest rates on our variable rate debt, including our unsecured line of credit and unsecured term loan, after considering the effect of our interest rate hedge agreements, would decrease annual future earnings by approximately $2.4 million and $3.6 million, respectively. We further estimate that a 1% decrease in interest rates on our variable rate debt, including our unsecured line of credit and unsecured term loan, after considering the effect of our interest rate hedge agreements in effect on December 31, 2009 and 2008, would increase annual future earnings by approximately $2.4 million and $3.6 million, respectively. A 1% increase in interest rates on our secured debt, unsecured convertible notes and interest rate hedge agreements would decrease their aggregate fair values by approximately $67.8 million and $60.9 million at December 31, 2009 and 2008, respectively. A 1% decrease in interest rates on our secured debt, unsecured convertible notes and interest rate hedge agreements would increase their aggregate fair values by approximately $57.5 million and $63.0 million at December 31, 2009 and 2008, respectively.

These amounts were determined by considering the impact of the hypothetical interest rates on our borrowing cost and our interest rate hedge agreements in effect on December 31, 2009 and 2008. These analyses do not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Further, in the event of a change of such magnitude, we would consider taking actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis assumes no changes in our capital structure.

Equityprice risk

We have exposure to equity price market risk because of our equity investments in certain publicly traded companies and privately held entities. We classify investments in publicly traded companies as “available for sale” and, consequently, record them on our consolidated balance sheets at fair value with unrealized gains or losses reported as a component of accumulated other comprehensive income or loss. Investments in privately held entities are generally accounted for under the cost method because we do not influence any of the operating or financial policies of the entities in which we invest. For all investments, we recognize other-than-temporary declines in value against earnings in the same period the decline in value was deemed to have occurred. There is no assurance that future declines in value will not have a material adverse impact on our future results of operations. By way of example, a 10% decrease in the fair value of our equity investments as of December 31, 2009 and 2008 would decrease their fair values by approximately $7.3 million and $6.2 million, respectively.

Foreigncurrency exchange rate risk

We have exposure to foreign currency exchange rate risk related to our subsidiaries operating in Canada and China. The functional currencies of our foreign subsidiaries operating in Canada and China are the respective local currencies. Gains or losses resulting from the translation of our foreign subsidiaries’ balance sheets and income statements are included in accumulated other comprehensive income as a separate component of total equity. Gains or losses will be reflected in our income statement when there is a sale or partial sale of our investment in these operations or upon a complete or substantially complete liquidation of the investment. Based on our current operating assets outside the United States as of December 31, 2009, we estimate that a 10% increase in foreign currency exchange rates relative to the United States dollar would increase annual future earnings by approximately $746,000. We further estimate that a 10% decrease in foreign currency exchange rates relative to the United States dollar would decrease annual future earnings by approximately $746,000.

ITEM 8. FINANCIALSTATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item is included as a separate section in this annual report on Form 10-K. See “Item 15. Exhibits and Financial Statement Schedules.”

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS ANDPROCEDURES

Changes in internalcontrol over financial reporting

There have been no significant changes in our internal control over financial reporting during the quarter ended December 31, 2009 that could materially affect, or is reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of disclosurecontrols and procedures

As of December 31, 2009, we performed an evaluation, under the supervision of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. These controls and procedures have been designed to ensure that information required for disclosure is recorded, processed, summarized and reported within the requisite time periods. Based on our evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2009.

Management’s annualreport on internal control over financial reporting

The management of Alexandria Real Estate Equities, Inc. and its subsidiaries (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, and is a process designed by, or under the supervision of, the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP. The Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with the authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009. In making its assessment, management has utilized the criteria set forth by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission in “Internal Control – Integrated Framework.” Management concluded that based on its assessment, the Company’s internal control over financial reporting was effective as of December 31, 2009. The effectiveness of our internal control over financial reporting as of December 31, 2009 has been audited by Ernst & Young LLP, an independent registered accounting firm, as stated in their report which is included herein.

Report ofIndependent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Alexandria Real Estate Equities, Inc.

We have audited Alexandria Real Estate Equities, Inc.’s (the “Company”) internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in Management’s annual report on internal control over financial reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria**.**

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying consolidated balance sheets of the Company **** as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in stockholders’ equity and noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 2009 of the Company and our report dated March 1, 2010 an unqualified opinion thereon.

/s/ Ernst & Young LLP

Los Angeles, California

March 1, 2010

ITEM 9B. OTHERINFORMATION

On March1, 2010, the Company entered into an Amended and Restated Executive EmploymentAgreement (the “Agreement”) with Dean A. Shigenaga, the Company’s ChiefFinancial Officer (the “Executive”). TheAgreement amends and restates the Amended and Restated Executive EmploymentAgreement, effective as of January 1, 2007, between the Company and theExecutive, in its entirety. The term ofthe Agreement begins on January 1, 2010 and ends on December 31, 2012, withautomatic one-year extensions thereafter subject to certain conditions.

TheAgreement provides for a base salary of $305,000 per year. The Executive’s base salary is to be increasedin 2010 and each year thereafter by no less than a cost-of-living adjustmentbased on an index published by the U.S. Department of Labor. The Executive will continue to be eligiblefor an annual bonus and periodic equity awards.

TheAgreement provides that if the Executive’s employment terminates due tonon-renewal of the Agreement by the Company on or following a change in controlof the Company, the Executive is entitled to receive severance generally equalto one year of the Executive’s base salary and a bonus equal to the Executive’sbonus for the previous year. Bycontrast, if, upon or within two years following a change in control of theCompany, the Company terminates the Agreement without cause or the Executiveterminates the Agreement for good reason, the Executive is entitled to receiveseverance generally equal to two years of the Executive’s base salary and abonus equal to two times the Executive’s bonus amount for the previousyear. In either situation, all of theExecutive’s unvested shares in the Company will vest on the Executive’s lastday of employment and the Executive will receive a proration of annualperformance-based grants of restricted stock.

TheAgreement also provides that if (a) the Agreement is not renewed by the Companyon or following a change in control of the Company, (b) the Company terminatesthe Agreement without cause or (c) the Executive terminates the Agreement forgood reason, the Company will pay the applicable premiums for the Executive’scontinued coverage under the Company’s health insurance plans for up to twelvemonths after the Executive’s last day of employment with the Company.

PART III

ITEM 10. DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item is incorporated herein by reference from our definitive proxy statement for our 2010 annual meeting of stockholders to be filed pursuant to Regulation 14A within 120 days after the end of our fiscal year (the “2010 Proxy Statement”) under the captions “Board of Directors and Executive Officers,” “Corporate Governance Guidelines and Code of Ethics” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

ITEM 11. EXECUTIVECOMPENSATION

The information required by this Item is incorporated herein by reference from our 2010 Proxy Statement under the caption “Board of Directors and Executive Officers–Executive Compensation Tables and Discussion.”

ITEM 12. SECURITYOWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information on the Company’s equity compensation plan as of December 31, 2009:

EquityCompensation Plan Information

	Number of<br> securities to be<br><br> issued upon exercise of<br><br> outstanding options,<br><br> warrants and rights<br><br> <br>(a)	Weighted-average<br><br> exercise price of<br><br> outstanding options,<br><br> warrants and rights<br><br> <br>(b)	Number of<br> securities<br><br> remaining available for<br><br> future issuance under<br><br> equity compensation plans<br><br> (excluding securities<br><br> reflected in column (a))<br><br> <br>(c)
Equity Compensation<br> Plan Approved by Stockholders - 1997 Incentive Plan	118,225	$43.55	629,896

The other information required by this Item is incorporated herein by reference from our 2010 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

ITEM 13. CERTAINRELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporatedherein by reference from our 2010 Proxy Statement under the captions “CertainRelationships and Related Transactions” and “Director Independence.”

ITEM 14. PRINCIPALACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated herein by reference from our 2010 Proxy Statement under the caption “Fees Billed by Independent Registered Public Accountants.”

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) and(2) Financial Statements and FinancialStatement Schedule

The financial statements and financial statement schedule required by this Item are included as a separate section of this annual report on Form 10-K beginning on page F-1.

****	Page
Report of Independent Registered Public Accounting<br> Firm	F-1
Audited Consolidated<br> Financial Statements:
Consolidated<br> Balance Sheets of Alexandria Real Estate Equities, Inc. as of<br> December 31, 2009 and 2008	F-2
Consolidated Statements of Income of Alexandria Real<br> Estate Equities, Inc. for the Years Ended December 31, 2009, 2008<br> and 2007	F-3
Consolidated Statements of Changes in Stockholders’<br> Equity and Noncontrolling Interests of Alexandria Real Estate<br> Equities, Inc. for the Years Ended December 31, 2009, 2008 and 2007	F-4
Consolidated Statements of Cash Flows of Alexandria<br> Real Estate Equities, Inc. for the Years Ended December 31, 2009,<br> 2008 and 2007	F-6
Notes to Consolidated Financial Statements of<br> Alexandria Real Estate Equities, Inc.	F-7
Schedule III -<br> Consolidated Financial Statement Schedule of Rental Properties and<br> Accumulated Depreciation of Alexandria Real Estate Equities, Inc.	F-33

(a)(3) Exhibits

Exhibit Number	Exhibit Title
3.1 *		Articles of Amendment<br> and Restatement of the Company, filed as an exhibit to the Company’s<br> quarterly report on Form 10-Q filed with the SEC on August 14, 1997
3.2 *		Certificate of<br> Correction of the Company, filed as an exhibit to the Company’s quarterly<br> report on Form 10-Q filed with the SEC on August 14, 1997
3.3*		Bylaws of the Company<br> (as amended February 17, 2009), filed as an exhibit to the Company’s<br> current report on Form 8-K filed with the SEC on February 20, 2009
3.4 *		Articles Supplementary,<br> dated June 9, 1999, relating to the 9.50% Series A Cumulative<br> Redeemable Preferred Stock, filed as an exhibit to the Company’s quarterly<br> report on Form 10-Q filed with the SEC on August 13, 1999

3.5 *	Articles Supplementary,<br> dated February 10, 2000, relating to the election to be subject to<br> Subtitle 8 of Title 3 of the Maryland General Corporation Law, filed as an<br> exhibit to the Company’s current report on Form 8-K filed with the SEC<br> on February 10, 2000
3.6 *	Articles Supplementary,<br> dated February 10, 2000, relating to the Series A Junior<br> Participating Preferred Stock , filed as an exhibit to the Company’s current<br> report on Form 8-K filed with the SEC on February 10, 2000
3.7 *	Articles Supplementary,<br> dated January 18, 2002, relating to the 9.10% Series B Cumulative<br> Redeemable Preferred Stock, filed as an exhibit to the Company’s<br> Form 8-A for registration of certain classes of securities filed with the<br> SEC on January 18, 2002
3.8 *	Articles Supplementary,<br> dated June 22, 2004, relating to the 8.375% Series C Cumulative<br> Redeemable Preferred Stock, filed as an exhibit to the Company’s<br> Form 8-A for registration of certain classes of securities filed with<br> the SEC on June 28, 2004
3.9 *	Articles Supplementary,<br> dated March 25, 2008, relating to the 7.00% Series D Cumulative<br> Convertible Preferred Stock, filed as an exhibit to the Company’s current<br> report on Form 8-K filed with the SEC on March 25, 2008
4.1 *	Rights Agreement, dated<br> as of February 10, 2000, between the Company and American Stock<br> Transfer & Trust Company, as Rights Agent, including the forms of<br> Articles Supplementary setting forth the terms of the Series A Junior<br> Participating Preferred Stock, par value $.01 per share, Rights Certificate<br> and the Summary of Rights to Purchase Preferred Stock attached as exhibits to<br> the Rights Agreement. Pursuant to the Rights Agreement, printed Rights<br> Certificates will not be mailed until after the Distribution Date (as defined<br> in the Rights Agreement), filed as an exhibit to the Company’s current report<br> on Form 8-K filed with the SEC on February 10, 2000
4.2 *	Specimen certificate<br> representing shares of Common Stock, filed as an exhibit to the Company’s<br> Registration Statement on Form S-11 (No. 333-23545) filed with the<br> SEC on May 19, 1997
4.3 *	Specimen certificate<br> representing shares of 9.50% Series A Cumulative Redeemable Preferred<br> Stock, filed as an exhibit to Alexandria’s quarterly report on Form 10-Q<br> filed with the SEC on August 13, 1999
4.4 *	Specimen certificate<br> representing shares of 9.10% Series B Cumulative Redeemable Preferred<br> Stock, filed as an exhibit to the Company’s Form 8-A for registration of<br> certain classes of securities filed with the SEC on January 18, 2002
4.5 *	Specimen certificate<br> representing shares of 8.375% Series C Cumulative Redeemable Preferred<br> Stock, filed as an exhibit to the Company’s Form 8-A for registration of<br> certain classes of securities filed with the SEC on June 28, 2004
4.6 *	Specimen certificate<br> representing shares of 7.00% Series D Cumulative Convertible Preferred<br> Stock, filed as an exhibit to the Company’s current report on Form 8-K<br> filed with the SEC on March 25, 2008
4.7 *	Indenture, dated January 17,<br> 2007, among the Company, Alexandria Real Estate Equities, L.P., as Guarantor,<br> and Wilmington Trust company, as Trustee filed as an exhibit to the Company’s<br> current report on Form 8-K filed with the SEC on January 19, 2007
4.8 *	Registration Rights<br> Agreement, dated as of January 17, 2007, among the Company, Alexandria<br> Real Estate Equities, L.P., UBS Securities LLC., Citigroup Global<br> Markets, Inc. and Merrill Lynch, Pierce, Fenner & Smith<br> Incorporated filed as an exhibit to the Company’s current report on<br> Form 8-K filed with the SEC on January 18, 2007
4.9*	Indenture, dated as of<br> April 27, 2009, among the Company, as Issuer, Alexandria Real Estate<br> Equities, L.P., as Guarantor, and Wilmington Trust Company, as Trustee filed<br> as an exhibit to the Company’s quarterly report on Form 10-Q filed with<br> the SEC on August 10, 2009

10.1 * (1)	Amended and Restated<br> 1997 Stock Award and Incentive Plan of the Company, dated May 22, 2008,<br> filed as an exhibit to the Company’s current report on Form 8-K filed<br> with the SEC on May 28, 2008
10.2 * (1)	Form of<br> Non-Employee Director Stock Option Agreement for use in connection with<br> options issued pursuant to the Amended and Restated 1997 Stock Award and<br> Incentive Plan, filed as an exhibit to the Company’s Registration Statement<br> on Form S-11 (No. 333-23545) filed with the SEC on May 5, 1997
10.3 * (1)	Form of Incentive<br> Stock Option Agreement for use in connection with options issued pursuant to<br> the Amended and Restated 1997 Stock Award and Incentive Plan, filed as an<br> exhibit to the Company’s Registration Statement on Form S-11<br> (No. 333-23545) filed with the SEC on May 5, 1997
10.4 * (1)	Form of<br> Nonqualified Stock Option Agreement for use in connection with options issued<br> pursuant to the Amended and Restated 1997 Stock Award and Incentive Plan,<br> filed as an exhibit to the Company’s Registration Statement on Form S-11<br> (No. 333-23545) filed with the SEC on May 5, 1997
10.5 * (1)	Form of Employee<br> Restricted Stock Agreement for use in connection with shares of restricted<br> stock issued to employees pursuant to the Amended and Restated 1997 Stock<br> Award and Incentive Plan, filed as an exhibit to the Company’s quarterly<br> report on Form 10-Q filed with the SEC on November 15, 1999
10.6 * (1)	Form of<br> Independent Contractor Restricted Stock Agreement for use in connection with<br> shares of restricted stock issued to independent contractors pursuant to the<br> Amended and Restated 1997 Stock Award and Incentive Plan, filed as an exhibit<br> to the Company’s quarterly report on Form 10-Q filed with the SEC on<br> November 15, 1999
10.7 * (1)	The Company’s 2000<br> Deferred Compensation Plan, amended and restated effective as of<br> January 1, 2005, filed as an exhibit to the Company’s annual report on<br> Form 10-K filed with the SEC on February 17, 2009
10.8 * (1)	The Company’s 2000<br> Deferred Compensation Plan for Directors, amended and restated effective as<br> of January 1, 2005, filed as an exhibit to the Company’s annual report<br> on Form 10-K filed with the SEC on February 17, 2009
10.9 * (1)	Consulting Agreement<br> between the Company and James H. Richardson, effective on August 30,<br> 2009, filed as an exhibit to the Company’s quarterly report on Form 10-Q<br> filed with the SEC on November 6, 2009
10.10 * (1)	Amended and Restated<br> Executive Employment Agreement between the Company and Joel S. Marcus,<br> effective as of January 1, 2005, filed as an exhibit to the Company’s<br> annual report on Form 10-K filed with the SEC on February 17, 2009
10.11 * (1)	Amended and Restated<br> Executive Employment Agreement between the Company and Dean A. Shigenaga,<br> effective as of January 1, 2007, filed as an exhibit to the Company’s<br> annual report on Form 10-K filed with the SEC on February 17, 2009
10.12 (1)	Summary of Director<br> Compensation Arrangements
10.13 *	Second Amended and<br> Restated Credit Agreement as of October 31, 2006, among the Company,<br> Alexandria Real Estate Equities, L.P., ARE-QRS Corp., ARE Acquisitions, LLC,<br> and the other subsidiaries parties thereto, Bank of America, N.A. as<br> Administrative Agent, Swing Line Lender and L/C Issuer, Citicorp North<br> America as Syndication Agent, Eurohypo AG, New York Branch, Societe Generale,<br> The Royal Bank of Scotland, PLC, Calyon, The Bank of Nova Scotia, UBS Loan<br> Finance LLC, as Co-Documentation Agents, Banc of America Securities LLC and<br> Citigroup Global Markets, Inc., as Joint Lead Arrangers and Joint<br> Bookrunners filed as an exhibit to the Company’s annual report on Form 10-K<br> filed with the SEC on March 1, 2007

10.14 *	First Amendment to<br> Second Amended and Restated Credit Agreement as of December 1, 2006,<br> among the Company, Alexandria Real Estate Equities, L.P., ARE-QRS Corp., ARE<br> Acquisitions, LLC, and the other subsidiaries parties thereto, Bank of<br> America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer,<br> Citicorp North America as Syndication Agent, Eurohypo AG, New York Branch,<br> Societe Generale, The Royal Bank of Scotland, PLC, Calyon, The Bank of Nova<br> Scotia, UBS Loan Finance LLC, as Co-Documentation Agents, Banc of America<br> Securities LLC and Citigroup Global Markets, Inc., as Joint Lead<br> Arrangers and Joint Bookrunners filed as an exhibit to the Company’s annual<br> report on Form 10-K filed with the SEC on March 1, 2007
10.15 *	Second Amendment to<br> Second Amended and Restated Credit Agreement as of May 2, 2007, among<br> the Company, Alexandria Real Estate Equities, L.P., ARE-QRS Corp., ARE<br> Acquisitions, LLC, and the other subsidiaries party thereto, Bank of America,<br> N.A. as Administrative Agent, Lender, L/C Issuer, and Swing Line Lender,<br> Citicorp North America Inc. as Syndication Agent, The Bank of Nova Scotia,<br> The Royal Bank of Scotland, PLC, Eurohypo AG, New York Branch, and HSH<br> Nordbank AG New York Branch, as Co-Documentation Agents filed as an exhibit<br> to the Company’s quarterly report on Form 10-Q filed with the SEC on<br> August 9, 2007
10.16 *	Indenture, dated as of<br> April 27, 2009, among the Company, as Issuer, Alexandria Real Estate<br> Equities, L.P., as Guarantor, and Wilmington Trust Company, as Trustee, filed<br> as Exhibit 4.9 to Company’s quarterly report on Form 10-Q filed<br> with the SEC on August 10, 2009
11.1	Computation of Per<br> Share Earnings (included in Note 2 to the Consolidated Financial Statements)
12.1	Computation of<br> Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Stock<br> Dividends
14.1	The Company’s Business<br> Integrity Policy and Procedures for Reporting Non-Compliance (code of ethics<br> pursuant to Item 406 Regulation S-K)
21.1	List of Subsidiaries of<br> the Company
23.1	Consent of<br> Ernst & Young LLP
31.1	Certification of CEO<br> pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO<br> pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.0	Certifications of CEO<br> and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to<br> Section 906 of the Sarbanes-Oxley Act of 2002

(*) Incorporated by reference.

(1) Management contract or compensatory arrangement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	ALEXANDRIA REAL ESTATE<br> EQUITIES, INC.
Dated: March 1,<br> 2010	By:	/s/ Joel S. Marcus
		Joel S. Marcus
		Chief Executive Officer

KNOW ALLTHOSE BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Joel S. Marcus, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this annual report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, if any, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent of their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Joel S. Marcus	Chairman of the Board<br> of Directors and Chief Executive
Joel S. Marcus	Officer (Principal<br> Executive Officer)	March 1, 2010
/s/ Dean A. Shigenaga	Chief Financial Officer<br> (Principal Financial and Chief
Dean A. Shigenaga	Accounting Officer)	March 1, 2010
/s/ Richard B. Jennings
Richard B. Jennings	Lead Director	February 26, 2010
/s/ John L.<br> Atkins, III
John L.<br> Atkins, III	Director	February 23, 2010
/s/ Richard H. Klein
Richard H. Klein	Director	February 23, 2010
/s/ James H. Richardson
James H. Richardson	Director	February 24, 2010
/s/ Martin A. Simonetti
Martin A. Simonetti	Director	February 23, 2010
/s/ Alan G. Walton
Alan G. Walton	Director	February 23, 2010

S-1

Report ofIndependent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Alexandria Real Estate Equities, Inc.

We have audited the accompanying consolidated balance sheets of Alexandria Real Estate Equities, Inc. (the “Company”) as of December 31, 2009 and 2008, and the related consolidated statements of income, changes in stockholders’ equity and noncontrolling interests, and cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statement schedule listed in the index at Item 15. These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Alexandria Real Estate Equities, Inc. at December 31, 2009 and 2008, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2009 the Company adopted FASB Staff Position No. APB 14-1 Accounting for ConvertibleDebt Instruments That May Be Settled in Cash upon Conversion (IncludingPartial Cash Settlement) (codified in FASB ASC 470-20 Debt with Conversion and Other Options), FAS 160 Noncontrolling Interest in Consolidated FinancialStatements (codified in FASB ASC 810 Consolidation), and FASB Staff Position No. EITF 03-06-1 Determining Whether Instruments Granted inShare-Based Payment Transactions Are Participating Securities (codified in FASB ASC 260 Earnings Per Share). All years and periods presented have been reclassified to conform to the adopted accounting standards.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2010, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Los Angeles, California

March 1, 2010

F-1

Alexandria Real Estate Equities, Inc.

Consolidated Balance Sheets

(Dollars in thousands, except share and per share information)

****	December 31,					****
****	2009		****	2008		****
Assets	****		****	****		****
Rental<br> properties, net	$	3,383,308		$	3,215,723
Land held for<br> future development	255,025			109,478
Construction in<br> progress	1,400,795			1,398,895
Cash and cash<br> equivalents	70,628			71,161
Tenant security<br> deposits and other restricted cash	47,291			67,782
Tenant<br> receivables	3,902			6,453
Deferred rent	96,700			85,733
Investments	72,882			61,861
Other assets	126,696			114,991
Total assets	$	5,457,227		$	5,132,077
Liabilities and Equity
Secured notes<br> payable	$	937,017		$	1,081,963
Unsecured line<br> of credit and unsecured term loan	1,226,000			1,425,000
Unsecured<br> convertible notes	583,929			431,145
Accounts<br> payable, accrued expenses and tenant security deposits	282,516			386,801
Dividends<br> payable	21,686			32,105
Total<br> liabilities	3,051,148			3,357,014
Commitments and<br> contingencies
Redeemable **** noncontrolling interests	41,441			33,963
Alexandria Real<br> Estate Equities, Inc. stockholders’ equity:
8.375% Series C<br> cumulative redeemable preferred stock, $0.01 par value per share, 5,750,000<br> shares authorized; 5,185,500 shares issued and outstanding at<br> December 31, 2009 and 2008; $25 liquidation value per share	129,638			129,638
7.00%<br> Series D cumulative convertible preferred stock, $0.01 par value per<br> share, 10,000,000 shares authorized; 10,000,000 issued and outstanding at<br> December 31, 2009 and 2008; $25 liquidation value per share	250,000			250,000
Common stock,<br> $0.01 par value per share, 100,000,000 shares authorized; 43,846,050 and<br> 31,899,037 issued and outstanding at December 31, 2009 and 2008,<br> respectively	438			319
Additional<br> paid-in capital	1,977,062			1,407,294
Accumulated<br> other comprehensive loss	(33,730		)	(87,241		)
Total Alexandria<br> Real Estate Equities, Inc. stockholders’ equity	2,323,408			1,700,010
Noncontrolling<br> interests	41,230			41,090
Total equity	2,364,638			1,741,100
Total	$	5,457,227		$	5,132,077

Theaccompanying notes are an integral part of these consolidated financial statements

F-2

Alexandria Real EstateEquities, Inc.

Consolidated Statements ofIncome

(Dollars inthousands, except per share information)

****	Year Ended December 31,
****	2009		2008		2007
Revenues
Rental	$	366,162	$	341,066	$	293,425
Tenant<br> recoveries	102,130		99,372		80,225
Other<br> income	11,848		11,199		14,689
Total<br> revenues	480,140		451,637		388,339
Expenses
Rental<br> operations	120,494		112,035		94,905
General<br> and administrative	36,290		34,789		32,311
Interest	81,271		84,108		92,270
Depreciation<br> and amortization	116,909		106,394		92,887
Non-cash<br> impairment on investments	–		13,251		–
Total<br> expenses	354,964		350,577		312,373
Gain<br> on early extinguishment of debt	11,254		–		–
Income<br> from continuing operations	136,430		101,060		75,966
Income<br> from discontinued operations, net	5,218		19,037		14,014
Net<br> income	141,648		120,097		89,980
Net<br> income attributable to noncontrolling interests	7,047		3,799		3,669
Dividends<br> on preferred stock	28,357		24,225		12,020
Preferred<br> stock redemption charge	–		–		2,799
Net<br> income attributable to unvested restricted stock awards	1,270		1,327		1,075
Net<br> income attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders	$	104,974	$	90,746	$	70,417
Earnings<br> per share attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders – basic
Continuing<br> operations	$	2.59	$	2.28	$	1.90
Discontinued<br> operations, net	0.13		0.59		0.47
Earnings<br> per share – basic	$	2.72	$	2.87	$	2.37
Earnings<br> per share attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders – diluted
Continuing<br> operations	$	2.59	$	2.27	$	1.90
Discontinued<br> operations, net	0.13		0.59		0.46
Earnings<br> per share – diluted	$	2.72	$	2.86	$	2.36

The accompanying notes are anintegral part of these consolidated financial statements

F-3

AlexandriaReal Estate Equities, Inc.

Consolidated Statements ofChanges in Stockholders’ Equity and Noncontrolling Interests

(Dollars in thousands)

****	Alexandria Real Estate Equities, Inc. Stockholders															****		****		****		****
****	Series B Preferred Stock		Series C Preferred Stock		Series D Convertible Preferred<br><br> <br>Stock		Number of Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests		Comprehensive Income
Balance at December 31, 2006	$	57,500	$	129,638	$	-	29,012,135	$	290	$	1,139,629	$	-	$	24,595	$	37,345	$	1,388,997	$	20,132	****
Net income	-		-		-		-	-		-		86,311		-		2,184		88,495		1,485		$	89,980
Unrealized gain on marketable securities	-		-		-		-	-		-		-		833		-		833		-		833
Unrealized loss on interest rate hedge agreements	-		-		-		-	-		-		-		(27,892)		-		(27,892)		-		(27,892)
Foreign currency translation	-		-		-		-	-		-		-		10,539		18		10,557		-		10,557
Comprehensive income	****		****		****		****	****		****		****								****		73,478
Comprehensive income attributable to noncontrolling interests	****		****		****		****	****		****		****								****		3,687
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.	****		****		****		****	****		****		****								****		$	69,791
Contributions by noncontrolling interests	-		-		-		-	-		-		-		-		2,795		2,795		15,298		****
Distributions to noncontrolling interests	-		-		-		-	-		-		-		-		(2,160)		(2,160)		(1,573)		****
Issuance of common stock, net of offering costs	-		-		-		2,300,000	23		215,169		-		-		-		215,192		-		****
Redemption of Series B preferred stock	(57,500)		-		-		-	-		2,799		(2,799)		-		-		(57,500)		-		****
Equity component related to issuance of 3.70% unsecured convertible notes	-		-		-		-	-		43,830		-		-		-		43,830		-		****
Issuances pursuant to stock plan	-		-		-		291,209	3		22,524		-		-		-		22,527		-		****
Dividends declared on preferred stock	-		-		-		-	-		-		(12,020)		-		-		(12,020)		-		****
Dividends declared on common stock	-		-		-		-	-		(21,761)		(71,492)		-		-		(93,253)		-		****
Balance at December 31, 2007	$	-	$	129,638	$	-	31,603,344	$	316	$	1,402,190	$	-	$	8,075	$	40,182	$	1,580,401	$	35,342	****
Net income	-		-		-		-	-		-		116,298		-		2,416		118,714		1,383		$	120,097
Unrealized loss on marketable securities	-		-		-		-	-		-		-		(16,910)		-		(16,910)		-		(16,910)
Unrealized loss on interest rate hedge agreements	-		-		-		-	-		-		-		(53,623)		-		(53,623)		-		(53,623)
Foreign currency translation	-		-		-		-	-		-		-		(24,783)		14		(24,769)		-		(24,769)
Comprehensive income	****		****		****		****	****		****		****								****		24,795
Comprehensive income attributable to noncontrolling interests	****		****		****		****	****		****		****								****		3,813
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.	****		****		****		****	****		****		****								****		$	20,982
Contributions by noncontrolling interests	-		-		-		-	-		-		-		-		1,106		1,106		-		****
Distributions to noncontrolling interests	-		-		-		-	-		-		-		-		(2,628)		(2,628)		(1,480)		****
Redemptions of noncontrolling interests	-		-		-		-	-		-		-		-		-		-		(1,282)		****
Issuance Series D convertible preferred stock	-		-		250,000		-	-		(7,814)		-		-		-		242,186		-		****
Issuances pursuant to stock plan	-		-		-		295,693	3		23,124		-		-		-		23,127		-		****
Dividends declared on preferred stock	-		-		-		-	-		-		(24,225)		-		-		(24,225)		-		****
Dividends declared on common stock	-		-		-		-	-		(10,206)		(92,073)		-		-		(102,279)		-		****
Balance at December 31, 2008	$	-	$	129,638	$	250,000	31,899,037	$	319	$	1,407,294	$	-	$	(87,241)	$	41,090	$	1,741,100	$	33,963	****

The accompanying notes are anintegral part of these consolidated financial statements

F-4

Alexandria Real Estate Equities, Inc.

Consolidated Statements ofChanges in Stockholders’ Equity and Noncontrolling Interests (continued)

(Dollars in thousands)

****	Alexandria Real Estate Equities, Inc. Stockholders															****		****		****		****
****	Series B Preferred Stock		Series C Preferred Stock		Series D Convertible Preferred Stock		Number of Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests		Comprehensive Income
Balance at December 31, 2008 (continued from above)	$	-	$	129,638	$	250,000	31,899,037	$	319	$	1,407,294	$	-	$	(87,241)	$	41,090	$	1,741,100	$	33,963
Net income	-		-		-		-	-		-		134,601		-		2,299		136,900		4,748		$	141,648
Unrealized gain on marketable securities	-		-		-		-	-		-		-		1,620		-		1,620		-		1,620
Unrealized gain (loss) on interest rate hedge agreements	-		-		-		-	-		-		-		30,499		-		30,499		(80)		30,419
Foreign currency translation	-		-		-		-	-		-		-		21,392		(9)		21,383		-		21,383
Comprehensive income	****		****		****		****	****		****		****		****		****						195,070
Comprehensive income attributable to noncontrolling interests	****		****		****		****	****		****		****		****		****						6,958
Comprehensive income attributable to Alexandria Real Estate Equities, Inc.	****		****		****		****	****		****		****		****		****						$	188,112
Contributions by noncontrolling interests	-		-		-		-	-		-		-		-		300		300		5,255
Distributions to noncontrolling interests	-		-		-		-	-		-		-		-		(2,450)		(2,450)		(1,393)
Redemptions of noncontrolling interests	-		-		-		-	-		-		-		-		-		-		(1,052)
Issuance of common stock, net of offering costs	-		-		-		11,600,000	116		488,047		-		-		-		488,163		-
Issuances pursuant to stock plan	-		-		-		347,013	3		25,786		-		-		-		25,789		-
Equity component related to issuance of<br> 8.00% unsecured convertible notes	-		-		-		-	-		26,216		-		-		-		26,216		-
Equity component related to repurchase of<br> 3.70% unsecuredconvertible notes	-		-		-		-	-		(292)		-		-		-		(292)		-
Dividends declared on preferred stock	-		-		-		-	-		-		(28,357)		-		-		(28,357)		-
Dividends declared on common stock	-		-		-		-	-		-		(76,233)		-		-		(76,233)		-
Earnings in excess of distributions	-		-		-		-	-		30,011		(30,011)		-		-		-		-
Balance at December 31, 2009	$	-	$	129,638	$	250,000	43,846,050	$	438	$	1,977,062	$	-	$	(33,730)	$	41,230	$	2,364,638	$	41,441

The accompanying notes are an integral part of theseconsolidated **** financial statements

F-5

AlexandriaReal Estate Equities, Inc.

Consolidated Statements of Cash Flows

(In thousands)

****	Year Ended December 31,								****
****	2009		****	2008		****	2007		****
Operating Activities	****		****	****		****	****		****
Net<br> income	$	141,648		$	120,097		$	89,980
Adjustments<br> to reconcile net income to net cash provided by operating activities:
Depreciation<br> and amortization	118,508			108,743			97,335
Gain<br> on early extinguishment of debt	(11,254		)	–			–
Amortization<br> of loan fees and costs	7,958			6,774			5,988
Amortization<br> of debt premiums/discounts	10,788			7,973			6,955
Amortization<br> of acquired above and below market leases	(9,448		)	(9,509		)	(7,572		)
Deferred<br> rent	(14,379		)	(12,273		)	(15,755		)
Stock<br> compensation expense	14,051			13,677			11,176
Equity<br> in (income) loss related to investments	(39		)	173			330
Gain<br> on sales of investments	(3,442		)	(8,841		)	(12,216		)
Loss<br> on sales of investments	1,342			663			186
Gain/loss<br> on properties “held for sale” and sales of properties	(2,627		)	(15,751		)	(7,976		)
Non-cash<br> impairment on investments	–			13,251			–
Changes<br> in operating assets and liabilities:
Tenant<br> security deposits and other restricted cash	(1,732		)	5,644			744
Tenant<br> receivables	2,551			306			(432		)
Other<br> assets	(28,734		)	(21,842		)	(14,705		)
Accounts<br> payable, accrued expenses and tenant security deposits	(19,241		)	46,752			33,993
Net<br> cash provided by operating activities	205,950			255,837			188,031
Investing Activities	****		****	****		****	****		****
Additions<br> to properties	(446,127		)	(542,460		)	(589,661		)
Purchase<br> of properties	–			(7,915		)	(415,601		)
Proceeds<br> from sales of properties	18,021			80,909			70,889
Change<br> in restricted cash related to construction projects	25,445			(25,772		)	(17,913		)
Additions<br> to investments	(12,895		)	(13,006		)	(16,618		)
Proceeds<br> from investments	5,633			13,311			19,651
Net<br> cash used in investing activities	(409,923		)	(494,933		)	(949,253		)
Financing Activities	****		****	****		****	****		****
Proceeds<br> from secured notes payable	121,960			13,007			240,933
Principal<br> reductions of secured notes payable	(266,875		)	(143,477		)	(261,171		)
Change<br> in restricted cash related to financings	(3,222		)	4,257			(382		)
Principal<br> borrowings from unsecured line of credit and term loan	696,000			1,086,000			1,152,000
Repayments<br> of borrowings from unsecured line of credit	(895,000		)	(776,000		)	(887,000		)
Proceeds<br> from unsecured convertible notes	232,950			–			450,800
Repurchase<br> of 3.70% unsecured convertible notes	(59,204		)	–			–
Redemption<br> of series B preferred stock	–			–			(57,500		)
Proceeds<br> from issuance of common stock	488,163			–			215,192
Proceeds<br> from issuance of series D convertible preferred stock	–			242,186			–
Proceeds<br> from exercise of stock options	3,017			2,509			1,706
Dividends<br> paid on common stock	(86,652		)	(101,393		)	(89,951		)
Dividends<br> paid on preferred stock	(28,357		)	(20,578		)	(12,683		)
Contributions<br> by redeemable noncontrolling interests	5,255			–			15,298
Distributions<br> to redeemable noncontrolling interests	(1,393		)	(1,480		)	(1,573		)
Redemption<br> of redeemable noncontrolling interests	(1,052		)	(1,282		)	–
Contributions<br> by noncontrolling interests	300			1,106			2,795
Distributions<br> to noncontrolling interests	(2,450		)	(2,628		)	(2,160		)
Net<br> cash provided by financing activities	203,440			302,227			766,304
Net<br> (decrease) increase in cash and cash equivalents	(533		)	63,131			5,082
Cash<br> and cash equivalents at beginning of period	71,161			8,030			2,948
Cash and cash<br> equivalents at end of period	$	70,628		$	71,161		$	8,030
Supplemental Disclosure of Cash Flow Information
Cash paid during<br> the year for interest, net of interest capitalized	$	63,247		$	73,910		$	73,467

Theaccompanying notes are an integral part of these consolidated financialstatements

F-6

Alexandria Real EstateEquities, Inc.

Notes to Consolidated Financial Statements

1.Background

References to the “Company,” “we,” “our” and “us” refer to Alexandria Real Estate Equities, Inc. and its subsidiaries.

Alexandria Real Estate Equities, Inc. is a real estate investment trust (“REIT”) formed in 1994. We are focused principally on science-driven cluster formation through the ownership, operation, management and selective redevelopment, development and acquisition of properties containing office/laboratory space. Our properties are designed and improved for lease primarily to institutional (universities and independent not-for-profit institutions), pharmaceutical, biotechnology, medical device, product, service and translational entities, as well as government agencies. As of December 31, 2009, we had 156 properties (152 properties located in ten states in the United States and four properties located in Canada) containing approximately 11.8 million rentable square feet (including spaces undergoing active redevelopment), compared to 159 properties (155 properties located in ten states in the United States and four properties located in Canada) with approximately 11.8 million rentable square feet (including spaces undergoing active redevelopment) as of December 31, 2008.

As of December 31, 2009, approximately 88% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. Additionally, approximately 91% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures and approximately 93% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or based on the consumer price index or another index. Any references to the number of buildings, square footage, number of leases, occupancy and annualized base rent percentages in the notes to consolidated financial statements are unaudited.

2.Basis of presentation and summary of significant accounting policies

Basis of presentation

The accompanying consolidated financial statements include the accounts of Alexandria Real Estate Equities, Inc. and its subsidiaries. All significant intercompany balances and transactions have been eliminated.

We hold interests, together with certain third parties, in a limited partnership and in limited liability companies which we consolidate in our financial statements. We consolidate the limited partnership and limited liability companies because we exercise significant control over major decisions by these entities, such as investment activity and changes in financing.

For entities that are variable interest entities (“VIEs”), we consolidate the entity if it is determined that we are the primary beneficiary at either the creation of the VIE or upon occurrence of a qualifying reconsideration event. A VIE is broadly defined as an entity where either (i) the equity investors as a group, if any, do not have a controlling financial interest, or (ii) the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. Qualifying reconsideration events include, but are not limited to, the modification of contractual agreements that affect the characteristics or adequacy of the entity’s equity investments at risk and the disposal of all or a portion of an interest held by the primary beneficiary. We use qualitative and quantitative approaches when determining whether we are (or are not) the primary beneficiary of a VIE. Consideration of various factors includes, but is not limited to, the form of our ownership interest, our representation of the entity’s governing body, the size and seniority of our investment, various cash flow scenarios related to the VIE, our ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace us as manager and/or liquidate the venture, if applicable. Our ability to correctly assess our influence or control over an entity at inception of our involvement or upon a reconsideration event and determine the primary beneficiary of a VIE affects the presentation of these entities in our consolidated financial statements. If we were to perform a primary beneficiary analysis upon the occurrence of a future reconsideration event, our assumptions may be different, which could result in the identification of a different primary beneficiary. See Note 13, Noncontrolling Interests.

Use of estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity, the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

F-7

2.Basis of presentation and summary of significant accounting policies(continued)

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Retrospective adjustments fromadoption of accounting pronouncements

In June 2008, the FASB issued new accounting literature with respect to determining whether instruments granted in share-based payment transactions are participating securities. The new guidance clarifies that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and should be included in the computation of earnings per share pursuant to the two-class method. The new guidance was adopted on January 1, 2009. As a result, net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and earnings per share (basic and diluted) are adjusted for an allocation of net income to unvested restricted stock awards, including retrospective application to prior periods. For the years ended December 31, 2009, 2008 and 2007, approximately $1.3 million, $1.3 million and $1.1 million, respectively, of net income was attributable to unvested restricted stock awards.

In May 2008, the Financial Accounting Standards Board (the “FASB”) issued new accounting literature with respect to the accounting for convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement. On January 1, 2009, we adopted the new guidance which affect our outstanding 3.70% unsecured convertible notes (“3.70% Unsecured Convertible Notes”), that may be settled wholly or partially in cash. The new guidance, among other things, requires that instruments within its scope be separated into their liability and equity components as of the issuance date of the instrument by recording the liability component at the fair value of a similar liability that does not have an associated equity component and attributing the remaining proceeds from issuance to the equity component. The excess of the principal amount of the liability component over its initial fair value will be amortized to interest expense using the effective interest method over a period of five years through January 2012 (the first date the holders of the 3.70% Unsecured Convertible Notes may require us to repurchase their notes). As of the issuance date of the 3.70% Unsecured Convertible Notes, we determined the effective interest rate of the notes to be 5.96% and approximately $43.8 million of the 3.70% Unsecured Convertible Notes was classified as equity. The new guidance also requires retrospective application to prior periods. For the years ended December 31, 2009, 2008 and 2007, we incurred additional non-cash interest expense related to our 3.70% Unsecured Convertible Notes, net of amounts capitalized, of approximately $3.5 million, $6.6 million and $7.4 million, respectively, as a result of adopting the new guidance.

In December 2007, the FASB issued new accounting literature with respect to the accounting for noncontrolling interests in consolidated financial statements. The new guidance, among other things, requires all entities to report noncontrolling interests in subsidiaries within equity in the consolidated financial statements, but separate from the parent shareholders’ equity. If noncontrolling interests are determined to be redeemable, they are classified as temporary equity and reported at an amount no less than the redemption value at each balance sheet date. The new guidance also requires any acquisitions or dispositions of noncontrolling interests that do not result in a change of control to be accounted for as equity transactions. In addition, the new guidance requires that a parent company recognize a gain or loss in net income when a subsidiary is deconsolidated upon a change in control. Purchases or sales of an interest in an entity that results in a change of control is recognized at fair value with gains or losses included in net income. The new guidance was adopted on January 1, 2009 and applied retrospectively to prior periods. The retrospective application of the presentation and disclosure requirements resulted in a reclassification of noncontrolling interests determined not to be redeemable to a separate component of total equity (including an allocation of accumulated other comprehensive income to noncontrolling interests) and net income attributable to noncontrolling interests is shown as a reduction from net income in calculating net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders. The retrospective application of the presentation and disclosure requirements of the new guidance did not impact net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders or earnings per share for the years ended December 31, 2009, 2008 and 2007.

F-8

2. Basis of presentation and summary of significant accounting policies(continued)

Retrospective adjustments fromadoption of accounting pronouncements (continued)

The following financial statement line items were affected by the adoption of the new accounting literature related to convertible notes, noncontrolling interests and participating securities (in thousands, except for per share data):

	Year Ended				Year Ended
	December 31, 2009				December 31, 2008
	After Adoption		Before Adoption		After Adoption		Before Adoption
Income<br> statement data:
Interest<br> expense	$	81,271	$	77,723	$	84,108	$	77,537
Income<br> from continuing operations	136,430		132,931		101,060		103,832
Net<br> income	141,648		138,149		120,097		122,869
Net<br> income attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders	104,974		109,792		90,746		98,644
Earnings<br> per share attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders:
Basic	2.72		2.85		2.87		3.12
Diluted	2.72		2.84		2.86		3.09
	Year Ended
---	---	---	---	---
	December 31, 2007
	After Adoption		Before Adoption
Income<br> statement data:
Interest<br> expense	$	92,270	$	84,857
Income<br> from continuing operations	75,966		79,710
Net<br> income	89,980		93,724
Net<br> income attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders	70,417		78,905
Earnings<br> per share attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders:
Basic	2.37		2.66
Diluted	2.36		2.63
	December 31, 2009				December 31, 2008
---	---	---	---	---	---	---	---	---
	After Adoption		Before Adoption		After Adoption		Before Adoption
Balance sheet<br> data:
Construction in<br> progress	$	1,400,795	$	1,395,879	$	1,398,895	$	1,397,423
Other assets	126,696		127,053		114,991		115,636
3.70% unsecured<br> convertible notes	368,027		384,700		431,145		460,000
Minority<br> interest	–		82,728		–		75,021
Redeemable<br> noncontrolling interests	41,441		–		33,963		–
Additional<br> paid-in capital	1,977,062		1,954,934		1,407,294		1,377,448
Noncontrolling<br> interests	41,230		–		41,090		–

F-9

2.Basis of presentation and summary of significant accounting policies(continued)

Fair value

We are required to disclose fair value information about all financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. We measure and disclose the estimated fair value of financial assets and liabilities utilizing a fair value hierarchy that distinguishes between data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels as follows: 1) using quoted prices in active markets for identical assets or liabilities, 2) “significant other observable inputs” and 3) “significant unobservable inputs.” “Significant other observable inputs” can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or liability, such as interest rates, foreign exchange rates and yield curves that are observable at commonly quoted intervals. “Significant unobservable inputs” are typically based on an entity’s own assumptions, since there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The carrying amounts of cash and cash equivalents, tenant security deposits and other restricted cash, tenant receivables, other assets, accounts payable and accrued expenses approximate fair value. As described in Note 8, our interest rate hedge agreements have been recorded at fair value. The fair values of our secured notes payable, unsecured line of credit, unsecured term loan and unsecured convertible notes were estimated using “significant other observable inputs” such as available market information and discounted cash flows analyses based on borrowing rates we believe we could obtain with similar terms and maturities. Because the valuations of our financial instruments are based on these types of estimates, the actual fair value of our financial instruments may differ materially if our estimates do not prove to be accurate. Additionally, the use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. As of December 31, 2009 and 2008, the book and fair values of our secured notes payable, unsecured line of credit, unsecured term loan and unsecured convertible notes were as follows (in thousands):

****	December 31,
****	2009				2008
****	Book Value		Fair Value		Book Value		Fair Value
Secured notes<br> payable	$	937,017	$	909,367	$	1,081,963	$	1,050,551
Unsecured line<br> of credit and unsecured term loan	1,226,000		1,175,512		1,425,000		1,333,215
Unsecured convertible<br> notes	583,929		615,572		431,145		312,800

Operating segment

We are engaged in the business of providing office/laboratory space for lease to the life science industry. Our properties are similar in that they provide space for lease to the life science industry, consist of office/laboratory improvements that are generic and reusable for the life science industry, are located in key life science cluster markets and have similar economic characteristics. Our chief operating decision maker, reviews financial information for our entire consolidated operations when making decisions on how to allocate resources and in assessing our operating performance. The financial information disclosed herein represents all of the financial information related to our principal operating segment.

International operations

The functional currency for our subsidiaries operating in the United States is the United States dollar. We have four operating properties and one development parcel in Canada and two development parcels in China. The functional currency for our foreign subsidiaries operating in Canada and China is the local currency. The assets and liabilities of our foreign subsidiaries are translated into United States dollars at the exchange rate in effect as of the financial statement date. Income statement accounts of our foreign subsidiaries are translated using the average exchange rate for the periods presented. Gains or losses resulting from the translation are included in accumulated other comprehensive income (loss) as a separate component of total equity.

F-10

2. Basis of presentation and summary of significantaccounting policies (continued)

Internationaloperations (continued)

The appropriate amounts of foreign exchange rate gains or losses included in accumulated other comprehensive income (loss) will be reflected in income when there is a sale or partial sale of our investment in these operations or upon a complete or substantially complete liquidation of the investment.

Rental properties, net, land heldfor future development, construction in progress and discontinued operations

In December 2007, the FASB issued new accounting literature with respect to business combinations. This new accounting literature was adopted prospectively beginning on January 1, 2009. In accordance with the new guidance, we recognize assets acquired (including the intangible values to above or below market leases, acquired in-place leases, tenant relationships and other intangible assets or liabilities), liabilities assumed and any noncontrolling interest in an acquired entity at their fair value as of the acquisition date. The value of tangible assets acquired is based upon our estimation of value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated carrying costs during the hypothetical lease-up period and other costs that would have been incurred to execute similar leases, considering market conditions at the acquisition date of the acquired in-place lease.**** The values of acquired in-place leases are classified as leasing costs, included in other assets in the accompanying consolidated balance sheets and amortized over the remaining terms of the related leases. We assess the fair value of tangible and intangible assets based on numerous factors, including estimated cash flow projections that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and market/economic conditions that may affect the property. We also recognize the fair values of assets acquired, the liabilities assumed and any noncontrolling interest in acquisitions of less than a 100% interest when the acquisition constitutes a change in control of the acquired entity. In addition, acquisition-related costs and restructuring costs are expensed as incurred. Prior to the adoption of the new guidance related to business combinations, the purchase price was allocated based upon relative fair values and acquisition-related costs on successful acquisitions were capitalized and amortized over the estimated useful lives of the assets acquired.

The values of acquired above and below market leases are amortized over the terms of the related leases and recorded as either an increase (for below market leases) or a decrease (for above market leases) to rental income. For the years ended December 31, 2009, 2008 and 2007, we recognized a net increase in rental income of approximately $9,448,000, $9,509,000 and $7,572,000, respectively, for the amortization of acquired above and below market leases. The value of acquired above and below market leases, less accumulated amortization, was approximately $27,746,000 and $37,194,000 as of December 31, 2009 and 2008, respectively. The weighted average amortization period of acquired leases was approximately 4.0 years as of December 31, 2009. The estimated aggregate annual amortization of acquired leases for each of the five succeeding years is approximately $5,264,000 for 2010, $4,009,000 for 2011, $3,467,000 for 2012, $3,415,000 for 2013 and $3,323,000 for 2014.

During the year ended December 31, 2009, we recognized income of approximately $7,242,000 for a cash payment related to real estate acquired in November 2007. This amount is classified in other income on the accompanying consolidated statements of income.

We are required to capitalize construction, redevelopment and development costs, including predevelopment costs, interest, property taxes, insurance and other costs directly related and essential to the project while activities are ongoing to prepare an asset for its intended use. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Should development, redevelopment or construction activity cease, interest, property taxes, insurance and other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and maintenance are expensed as incurred.

F-11

2. Basis of presentation and summary of significantaccounting policies (continued)

Rental properties, net, land held for future development, constructionin progress and discontinued operations (continued)

We classify a property as “held for sale” when all of the following criteria for a plan of sale have been met: (1) management, having the authority to approve the action, commits to a plan to sell the property; (2) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (3) an active program to locate a buyer and other actions required to complete the plan to sell, have been initiated; (4) the sale of the property is probable and is expected to be completed within one year; (5) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. When all of these criteria have been met, the property is classified as “held for sale,” its operations, including any interest expense directly attributable to it, are classified as discontinued operations in our consolidated statements of income, and amounts for all prior periods presented are reclassified from continuing operations to discontinued operations. A loss is recognized for any initial adjustment of the asset’s carrying amount to fair value less costs to sell in the period the asset qualifies as “held for sale.”Depreciationof assets ceases upon designation of a property as “held for sale.”

Rental properties, net, land held for future development, construction in progress and intangibles are individually evaluated for impairment when conditions exist that may indicate that it is probable that the sum of expected future undiscounted cash flows is less than the carrying amount. Impairment indicators for our rental properties, land held for future development and construction in progress are assessed by project and include, but are not limited to, significant fluctuations in estimated net operating income, occupancy changes, construction costs, estimated completion dates, rental rates and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, historical operating results, known trends and market/economic conditions that may affect the property and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recorded to reduce the carrying amount to its estimated fair value. Based upon our evaluation, we recognized a non-cash impairment charge **** of approximately $4,650,000 during the year ended December 31, 2008 related to an industrial building located in a suburban submarket south of Boston and an office building located in the San Diego market. This non-cash impairment charge is classified in income from discontinued operations, net, in the accompanying consolidated statements of income.

Conditional asset retirement obligations

Some of our properties may contain asbestos which, under certain conditions, requires remediation. Although we believe that the asbestos is appropriately contained in accordance with environmental regulations, our practice is to remediate the asbestos upon the development or redevelopment of the affected property. We recognize a liability for the fair value of a conditional asset retirement obligation (including asbestos) when the fair value of the liability can be reasonably estimated. In addition, for certain properties, we have not recognized an asset retirement obligation when there is an indeterminate settlement date for the obligation because the period in which we may remediate the obligation may not be estimated with any level of precision to provide for a meaningful estimate of the retirement obligation. Conditional asset retirement obligations totaled approximately $10.6 million and $10.9 million as of December 31, 2009 and 2008, respectively, and are included in accounts payable, accrued expenses and tenant security deposits in the accompanying consolidated balance sheets.

Cash and cash equivalents

We consider all highly liquid investments with original maturities of three months or less when purchased to be cash and cash equivalents. The majority of our cash and cash equivalents are held at major commercial banks in accounts that may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) limit of $250,000. We have not experienced any losses to date on our invested cash.

F-12

2. Basis of presentation and summary of significantaccounting policies (continued)

Tenant security deposits andother restricted cash

Tenant security deposits and other restricted cash consisted of the following (in thousands):

****	December 31,
****	2009		2008
Funds held in trust under the terms of certain secured notes payable	$	19,340	$	16,118
Funds held in escrow related to construction projects	24,054		49,499
Other restricted funds	3,897		2,165
Total	$	47,291	$	67,782

Investments

We hold equity investments in certain publicly traded companies and privately held entities primarily involved in the life science industry. All of our investments in publicly traded companies are considered “available for sale” and are recorded at fair value. Fair value has been determined based upon the closing price as of each balance sheet date, with unrealized gains and losses shown as a separate component of total equity. The classification of each investment is determined at the time each investment is made, and such determination is reevaluated at each balance sheet date. The cost of each investment sold is determined by the specific identification method, with net realized gains included in other income. Investments in privately held entities are generally accounted for under the cost method when our interest in the entity is so minor that we have virtually no influence over the entities’ operating and financial policies. Certain investments in privately held entities are accounted for under the equity method when our interest in the entity is not deemed so minor and we are deemed to have influence over the entities’ operating and financial policies. Under the equity method of accounting, we record our investment initially at cost and adjust the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. As of December 31, 2009 and 2008, our ownership percentages in the voting stock of each individual privately held entity were under 10%.

Leasing costs

Costs directly related and essential to our leasing activities are capitalized and amortized on a straight-line basis over the term of the related lease. Costs related to unsuccessful leasing opportunities are expensed. Leasing costs, net of related amortization, totaled approximately $70,209,000 and $60,147,000 as of December 31, 2009 and 2008, respectively, and are included in other assets in the accompanying consolidated balance sheets. The value of acquired in-place leases are included in the amounts immediately above and are classified as leasing costs, included in other assets in the accompanying consolidated balance sheets and amortized over the remaining term of the related lease. The value of acquired in-place leases, net of related amortization, was approximately $8,177,000 and $12,184,000 as of December 31, 2009 and 2008, respectively. The estimated annual amortization of the value **** of acquired in-place leases for each of the five succeeding years is approximately $2,528,000 for 2010, $1,689,000 for 2011, $1,101,000 for 2012, $925,000 for 2013 and $667,000 for 2014.

F-13

2. Basis of presentation and summary of significantaccounting policies (continued)

Loan fees and costs

Fees and costs incurred in obtaining long term financing are amortized over the terms of the related loans and included in interest expense in the accompanying consolidated statements of income. Loan fees and costs, net of related amortization, totaled approximately $23,706,000 and $21,018,000 as of December 31, 2009 and 2008, respectively, and are included in other assets in the accompanying consolidated balance sheets.

Interest rate hedge agreements

We utilize interest rate hedge agreements, including interest rate swap and cap agreements, to hedge a portion of our exposure to variable interest rates primarily associated with our unsecured line of credit and unsecured term loan. We recognize our interest rate hedge agreements as either assets or liabilities on the balance sheet at fair value. The accounting for changes in fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the hedged exposure, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. Our interest rate hedge agreements are considered cash flow hedges as they are designated and qualify as hedges of the exposure to variability in expected future cash flows. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the earnings effect of the hedged forecasted transactions in a cash flow hedge.

Accounts payable, accruedexpenses and tenant security deposits

As of December 31, 2009, accounts payable, accrued expenses and tenant security deposits included interest rate swap liabilities of approximately $49,946,000, accounts **** payable and accrued expenses of approximately $48,866,000, accrued construction costs of approximately $36,856,000 and acquired below market leases of approximately $27,746,000. As of December 31, 2008, accounts payable, accrued expenses and tenant security deposits included interest rate swap liabilities of approximately $80,542,000, accounts **** payable and accrued expenses of approximately $86,161,000, accrued construction costs of $73,470,000 and acquired below market leases of approximately $37,194,000.

Accumulated other comprehensive (loss) income

Accumulated other comprehensive (loss) income attributable to Alexandria Real Estate Equities, Inc. consists of the following (in thousands):

****	December 31,					****
****	2009		****	2008		****
Unrealized gain on marketable securities	$	7,280	****	$	5,660	****
Unrealized loss on interest rate hedge agreements	(50,043		)	(80,542		)
Unrealized gain (loss) on foreign currency translation	9,033		****	(12,359		)
Total	$	(33,730	)	$	(87,241	)

F-14

2. Basis of presentation and summary of significantaccounting policies (continued)

Rental income and tenantrecoveries

Interestincome

Interest income was approximately $1,503,000, $1,763,000 and $1,916,000 in 2009, 2008 and 2007, respectively, and is included in other income in the accompanying consolidated statements of income.

Income taxes

We are organized and qualify as a REIT pursuant to the Internal Revenue Code of 1986, as amended (the “Code”). Under the Code, a REIT that distributes 100% of its taxable income to its shareholders each year and that meets certain other conditions is not subject to federal income taxes, but could be subject to certain state and local taxes. We generally distribute 100% or more of our taxable income. Therefore, no provision for federal income taxes is required. We file tax returns, including returns for our subsidiaries, with federal, state and local jurisdictions, including jurisdictions located in the United States, Canada, China and other international locations. Our tax returns are subject to examination in various jurisdictions for the calendar years 2005 through 2009.

We recognize tax benefits of uncertain tax positions only if it is more likely than not that the tax position will be sustained, based solely on its technical merits, with the taxing authority having full knowledge of all relevant information. The measurement of a tax benefit for an uncertain tax position that meets the “more likely than not” threshold is based on a cumulative probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority having full knowledge of all the relevant information. As of December 31, 2009, there were no unrecognized tax benefits. We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

Interest expense and penalties, if any, would be recognized in the first period the interest or penalty would begin accruing according to the provisions of the relevant tax law at the applicable statutory rate of interest. We did not incur any tax related interest expense or penalties for the years ended December 31, 2009, 2008 or 2007.

F-15

2. Basis of presentation and summary of significantaccounting policies (continued)

Income taxes (continued)

During the years ended December 31, 2009, 2008 and 2007, we declared dividends on our common stock of $1.85, $3.18 and $3.04 per share, respectively. During the year ended December 31, 2007, we declared dividends on our 9.10% series B cumulative redeemable preferred stock (“Series B Preferred Stock”) of $0.4108 per share. During the years ended December 31, 2009, 2008 and 2007, we declared dividends on our 8.375% series C cumulative redeemable preferred stock (“Series C Preferred Stock”) of $2.09375 per share. During the years ended December 31, 2009 and 2008, we declared dividends on our 7.00% series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”) of $1.75 and $1.409722 per share, respectively. See Note 11, Preferred Stock and Excess Stock.

The tax treatment of distributions on common stock paid in 2009 was as follows: (1) 98.8% ordinary dividend and (2) 1.2% return of capital. Our tax return for 2009 is due on or before September 15, 2010, assuming we file for an extension of the due date. The tax treatment of distributions on common stock paid in 2008 was as follows: (1) 81.1% ordinary dividend; (2) 6.6% capital gain at 15%; and (3) 12.3% return of capital. The taxability information presented for our dividends paid in 2009 is based upon management’s estimate. Our tax returns for previous tax years have not been examined by the Internal Revenue Service. Consequently, the taxability of distributions and dividends is subject to change. The information provided in this paragraph is unaudited.

Netincome attributable to Alexandria Real Estate Equities, Inc.

The following table shows net income attributable to Alexandria Real Estate Equities, Inc. (in thousands):

	Year Ended December 31,
	2009		2008		2007
Income from continuing<br> operations	$	129,383	$	97,261	$	72,297
Income from<br> discontinued operations, net	5,218		19,037		14,014
Net income attributable<br> to Alexandria Real Estate Equities, Inc.	$	134,601	$	116,298	$	86,311

Earnings per share, dividendsdeclared and preferred stock redemption charge

We account for unvested restricted stock awards which contain nonforfeitable rights to dividends as participating securities and include these securities in the computation of earnings per share using the two-class method. Under the two-class method, we allocate net income after preferred stock dividends and amounts attributable to noncontrolling interests to common stockholders and unvested restricted stock awards based on their respective participation rights to dividends declared (or accumulated) and undistributed earnings. Diluted earnings per share is computed using the weighted average shares of common stock outstanding determined for the basic earnings per share computation plus the effect of any dilutive securities, including the dilutive effect of stock options using the treasury stock method.

We applied the if-converted method for our 8.00% unsecured senior convertible notes (“8.00% Unsecured Convertible Notes”). In applying the if-converted method, conversion is assumed for purposes of calculating diluted earnings per share if the effect would be dilutive to earnings per share. If the assumed conversion pursuant to the if-converted method is dilutive, diluted earnings per share would be calculated by adding back interest charges applicable to our 8.00% Unsecured Convertible Notes to the numerator and our 8.00% Unsecured Convertible Notes would be assumed to have been converted at the beginning of the period presented (or from the date of issuance, if occurring on a date later than the date that the period begins) and the resulting incremental shares associated with the assumed conversion would be included in the denominator. For purposes of calculating diluted earnings per share, we did not assume conversion of our 8.00% Unsecured Convertible Notes since they were anti-dilutive to earnings per share for the year ended December 31, 2009.

F-16

2. Basis of presentation and summary of significantaccounting policies (continued)

Earnings per share, dividendsdeclared and preferred stock redemption charge (continued)

The following table shows the computation of earnings per share and dividends declared per common share (dollars in thousands, except per share amounts):

****	Year Ended December 31,
Numerator:	2009		2008		2007
Net<br> income attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders – numerator for basic earnings per share	$	104,974	$	90,746	$	70,417
Assumed<br> conversion of 8.00% Unsecured Convertible Notes	–		–		–
Effect<br> of dilutive securities and assumed conversion attributable to unvested<br> restricted stock awards	–		5		6
Net<br> income attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders – numerator for diluted earnings per share	$	104,974	$	90,751	$	70,423
Denominator:
Weighted<br> average shares of common stock outstanding – basic	38,586,909		31,653,829		29,668,231
Effect<br> of dilutive securities:
Dilutive<br> effect of stock options	13,160		111,226		163,782
Assumed<br> conversion of 8.00% Unsecured Convertible Notes	–		–		–
Weighted<br> average shares of common stock outstanding – diluted	38,600,069		31,765,055		29,832,013
Earnings<br> per share attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders:
Basic	$	2.72	$	2.87	$	2.37
Diluted	$	2.72	$	2.86	$	2.36
Dividends<br> declared per common share	$	1.85	$	3.18	$	3.04

Our calculation of weighted average diluted shares will include additional shares related to our 3.70% Unsecured Convertible Notes when the average market price of our common stock is higher than the conversion price ($117.36 as of December 31, 2009). The number of additional shares that will be included in the weighted average diluted shares is equal to the number of shares that would be issued upon the settlement of the 3.70% Unsecured Convertible Notes assuming the settlement occurred on the end of the reporting period pursuant to the treasury stock method. For the years ended December 31, 2009, 2008 and 2007, the weighted average shares of common stock related to our 3.70% Unsecured Convertible Notes have been excluded from diluted weighted average shares of common stock as the average market price of our common stock was lower than the conversion price of $117.36 as of December 31, 2009 related to our 3.70% Unsecured Convertible Notes and the impact of conversion would have been anti-dilutive.

The dilutive effect of our Series D Convertible Preferred Stock will be reflected in diluted earnings per share by application of the if-converted method. For the years ended December 31, 2009, 2008 and 2007, the weighted average shares of common stock related to our Series D Convertible Preferred Stock have been excluded from diluted weighted average shares of common stock as the impact on diluted earnings per share was anti-dilutive.

During 2007, we recorded a charge of approximately $2,799,000 for costs related to the redemption of our Series B Preferred Stock. This amount represents the excess of the fair value of the consideration transferred to the holders of our Series B Preferred Stock redeemed over the carrying amount of our Series B Preferred Stock and is subtracted from net earnings to determine net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders in the calculation of earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders. The cost to issue our Series B Preferred Stock was recorded as a reduction to additional paid-in capital in the period that the preferred stock was issued. Upon any redemption of our preferred stock, the respective offering costs, representing the excess of the fair value of the consideration transferred to the holders over the carrying amount of the preferred stock, will be recognized as a dividend to preferred stockholders. Additionally, dividends on preferred stock, are deducted from net income to arrive at net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders.

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2. Basis of presentation and summary of significantaccounting policies (continued)

Stock-based compensation expense

We have historically issued two forms of stock-based compensation under our equity incentive plan: options to purchase common stock (“options”) and restricted stock awards. We have not granted any options since 2002. We recognize all stock-based compensation in the income statement based on the grant date fair value. The fair value is recorded based on the market value of the common stock on the grant date and such cost is then recognized on a straight-line basis over the period during which the employee is required to provide services in exchange for the award (the vesting period). We are required to compute stock-based compensation based on awards that are ultimately expected to vest and as a result, future forfeitures of awards are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. No compensation cost is recognized for equity instruments that are forfeited or are anticipated to be forfeited.

Impact ofrecently issued accounting standards

In June 2009, the FASB established the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification became effective for interim or annual financial periods ending after September 15, 2009. The adoption of the Codification did not have a material impact on our consolidated financial statements.

In June 2009, the FASB issued new accounting literature with respect to the consolidation of VIEs. The new guidance impacts the consolidation guidance applicable to VIEs and among other things require a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE, continuous assessments of whether a company is the primary beneficiary of a VIE and enhanced disclosures about a company’s involvement with a VIE. The new guidance applies to our fiscal year beginning on January 1, 2010 and early adoption is prohibited. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

F-18

3. Rentalproperties, net, land held for future development and construction in progress

Our real estate consisted of the following (in thousands):

	December 31,					****
	2009		****	2008		****
Land	$	474,859		$	450,812
Buildings and building<br> improvements	3,249,866			3,013,315
Other improvements	179,230			180,286
Gross book value of<br> real estate – operating properties	3,903,955			3,644,413
Less: accumulated<br> depreciation	(520,647		)	(428,690		)
Rental properties, net	3,383,308			3,215,723
Land held for future<br> development	255,025			109,478
Construction in<br> progress	1,400,795			1,398,895
Real estate<br> investments, net	$	5,039,128		$	4,724,096

As of December 31, 2009 and 2008, certain of our rental properties were encumbered by deeds of trust and assignments of rents and leases associated with the properties. See Note 5, Secured Notes Payable. The net book values of encumbered rental properties, net as of December 31, 2009 and 2008 were approximately $1,304,235,000 and $1,324,011,000, respectively.

We lease space under noncancellable leases with remaining terms of up to 15 years.

As of December 31, 2009 and 2008, we had approximately $3.4 billion and $3.2 billion, respectively, of rental properties, net aggregating 11.2 million and 11.1 million rentable square feet, respectively. Additionally, as of December 31, 2009 and 2008, we had approximately $255.0 million and $109.5 million, respectively, of land held for future development aggregating 4.8 million and 2.9 million rentable square feet, respectively. Land held for future development represents real estate we plan to develop in the future but as of each period presented, no construction activities were ongoing. As a result, interest, property taxes, insurance and other costs are expensed as incurred.

As of December 31, 2009 and 2008, we had approximately $1.4 billion undergoing preconstruction and construction activities, including development and redevelopment. These projects are classified in the accompanying consolidated balance sheets as construction in progress. As of December 31, 2009 and 2008, we had 575,152 and 590,057 rentable square feet, respectively, undergoing active redevelopment through a permanent change in use to office/laboratory space, including conversion of single tenancy to multi-tenancy spaces or multi-tenancy spaces to single tenancy space. In addition, as of December 31, 2009 and 2008, we had 980,000 and 875,000 rentable square feet, respectively, undergoing active ground-up development consisting of vertical above ground construction of office/laboratory properties. Additionally, as of December 31, 2009 and 2008, we had an aggregate of 6.3 million and 7.6 million rentable square feet, respectively, undergoing preconstruction activities (entitlements, permitting, design and site work; activities prior to commencement of vertical construction of above ground shell and core) and new markets and other projects. We are required to capitalize interest during the period an asset is undergoing activities to prepare it for its intended use. Capitalization of interest ceases after a project is substantially complete and ready for its intended use. In addition, should construction activity cease, interest would be expensed as incurred. Total interest capitalized for the years ended December 31, 2009, 2008 and 2007 was approximately $76,884,000, $74,194,000 and $56,057,000, respectively. Total interest incurred for the years ended December 31, 2009, 2008 and 2007 was approximately $148,370,000, $152,765,000 and $144,898,000, respectively.

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3. **** Rental properties, net, land held for futuredevelopment and construction in progress (continued)

Minimum lease payments to be received under the terms of the operating lease agreements, excluding expense reimbursements, as of December 31, 2009 are as follows (in thousands):

Year	Amount
2010	$	319,794
2011	314,394
2012	260,268
2013	226,355
2014	196,786
Thereafter	675,473
	$	1,993,070

4. Investments

We hold equity investments in certain publicly traded companies and privately held entities primarily involved in the life science industry. All of our investments in publicly traded companies are considered “available for sale” and are recorded at fair value. Fair value of our investments in publicly traded companies has been determined based upon the closing price as of the balance sheet date, with unrealized gains and losses shown as a separate component of total equity. The classification of each investment is determined at the time each investment is made, and such determination is reevaluated at each balance sheet date. The cost of each investment sold is determined by the specific identification method, with net realized gains and losses included in other income. Investments in privately held entities are generally accounted for under the cost method when our interest in the entity is so minor that we have virtually no influence over the entities’ operating and financial policies. Additionally, we limit our ownership percentage in the voting stock of each individual entity to less than 10%. As of December 31, 2009 and 2008, our ownership percentage in the voting stock of each individual entity was less than 10%.

The following table summarizes our “available for sale” securities (in thousands):

	December 31,
	2009		****	2008
Adjusted<br> cost of “available for sale” securities	$	1,518		$	699
Gross<br> unrealized gains	7,417			5,660
Gross<br> unrealized losses	(137		)	–
Fair<br> value of “available for sale” securities	$	8,798		$	6,359

Investments in “available for sale” securities with gross unrealized losses as of December 31, 2009 had been in a continuous unrealized loss position for less than twelve months. We have the ability and intent to hold these investments for a reasonable period of time sufficient for a recovery of our investment. We believe that these unrealized losses are temporary and accordingly we have not recognized an other-than-temporary impairment related to “available for sale” securities as of December 31, 2009.

F-20

4. Investments (continued)

Our investments in privately held entities as of December 31, 2009 and 2008 totaled approximately $64,084,000 and $55,502,000, respectively. Of these totals, approximately $64,050,000 and $55,478,000, respectively, are accounted for under the cost method. The remainder (approximately $34,000 and $24,000 as of December 31, 2009 and 2008, respectively) are accounted for under the equity method. As of December 31, 2009 and 2008, there were no unrealized losses in our investments in privately held entities.

Net investment income of approximately $2,139,000, $8,005,000 and $11,700,000 was recognized in 2009, 2008 and 2007, respectively, and is included in other income in the accompanying consolidated statements of income. Net investment income in 2009 consisted of equity in income related to investments in privately held entities accounted for under the equity method of approximately $39,000, gross realized gains of approximately $3,442,000 and gross realized losses of approximately $1,342,000. Net investment income in 2008 consisted of equity in loss related to investments in privately held entities accounted for under the equity method of approximately $173,000, gross realized gains of approximately $8,841,000 and gross realized losses of approximately $663,000. Net investment income in 2007 consisted of equity in loss related to investments in privately held entities accounted for under the equity method of approximately $330,000, gross realized gains of approximately $12,216,000 and gross realized losses of approximately $186,000. For the years ended December 31, 2009, 2008 and 2007, approximately $2,272,000, $10,816,000 and $7,620,000, respectively, was reclassified from accumulated other comprehensive income to realized gains, net and is included in other income.

5. Secured notespayable

Secured notes payable totaled approximately $937.0 million and $1.1 billion as of December 31, 2009 and 2008, respectively. Our secured notes payable had weighted average interest rates of approximately 5.83% and 5.26% at December 31, 2009 and 2008, respectively, with maturity dates ranging from March 2010 to September 2033.

Our secured notes payable generally require monthly payments of principal and interest. The total net book values of rental properties, net, land held for future development and construction in progress representing collateral for secured debt were approximately $1.4 billion and $1.8 billion as of December 31, 2009 and 2008, respectively. At December 31, 2009, our secured notes payable were comprised of approximately $831.5 million and $105.5 million of fixed and variable rate debt, respectively, compared to approximately $785.5 million and $296.4 million of fixed and variable rate debt, respectively, at December 31, 2008.

Future principal payments due on secured notes payable as of December 31, 2009 were as follows (dollars in thousands):

Year	Amount (1)
2010	$	35,982
2011	135,074
2012	41,117
2013	91,144
2014	216,952
Thereafter	416,748
	$	937,017

(1) **** Assumes we exercise our sole right to extend the maturity dates of a secured note payable of approximately $28.5 million from January 1, 2011 to January 1, 2012, and a secured note payable of approximately $38.4 million from January 2, 2012 to April 6, 2013. Amounts include noncontrolling interests’ share of scheduled principal maturities of approximately $39.3 million, of which approximately $17.6 million and $20.8 million mature in 2013 and 2014, respectively. Also, amounts are netof unamortized discounts of approximately $2.1 million.

F-21

6. Unsecuredline of credit and unsecured term loan

Our $1.9 billion in unsecured credit facilities consist of a $1.15 billion unsecured line of credit and a $750 million unsecured term loan. We may in the future elect to increase commitments under our unsecured credit facilities by up to an additional $500 million. As of December 31, 2009, we had borrowings of $476 million and $750 million outstanding under our unsecured line of credit and unsecured term loan, respectively, with a weighted average interest rate, including the impact of our interest rate swap agreements, of approximately 4.10%.

Our unsecured line of credit and unsecured term loan, as amended, bear interest at a floating rate based on our election of either (1) a London Interbank Offered Rate (“LIBOR”) based rate plus 1.00% to 1.45% depending on our leverage or (2) the higher of a rate based upon Bank of America’s prime rate plus 0.0% to 0.25% depending on our leverage and the Federal Funds rate plus 0.50%. For each LIBOR-based borrowing, we must elect a LIBOR period of one, two, three or six months. Our unsecured line of credit matures in October 2010 and may be extended at our sole option for an additional one-year period to October 2011. Our unsecured term loan matures in October 2011 and may be extended at our sole option for an additional one-year period to October 2012.

Our unsecured line of credit and unsecured term loan contain financial covenants, including, among others, the following (as defined under the terms of the agreement):

· leverage ratio less than 65.0%;

· fixed charge coverage ratio greater than 1.40;

· minimum book value of $1.6 billion; and

· secured debt ratio less than 55.0%.

7. Unsecured convertible notes

8.00%Unsecured Convertible Notes

F-22

7. Unsecured convertible notes (continued)

8.00%Unsecured Convertible Notes (continued)

At issuance, the 8.00% Unsecured Convertible Notes had an initial conversion rate of approximately 24.1546 shares of common stock per $1,000 principal amount of the 8.00% Unsecured Convertible Notes, representing a conversion price of approximately $41.40 per share of our common stock. This initial conversion price represented a premium of 15% based on the last reported sale price of $36.00 per share of our common stock on April 21, 2009. The conversion rate of the 8.00% Unsecured Convertible Notes is subject to adjustments for certain events, including, but not limited to, certain cash dividends on our common stock in excess of $0.35 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009, there was no change from the initial conversion rate of our 8.00% Unsecured Convertible Notes. The number of shares on which the aggregate consideration to be delivered upon conversion was approximately 5,797,000 shares as of December 31, 2009.

Holders of the 8.00% Unsecured Convertible Notes may convert their notes prior to the stated maturity date of April 15, 2029 only under the following circumstances: (1) during any calendar quarter after the calendar quarter ending June 30, 2009, if the closing sale price of our common stock for each of 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds or is equal to 130% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (the “8.00% Unsecured Convertible Note Measurement Period”) in which the average trading price per $1,000 principal amount of the 8.00% Unsecured Convertible Notes was equal to or less than 98% of the average conversion value of the 8.00% Unsecured Convertible Notes during the 8.00% Unsecured Convertible Note Measurement Period; (3) upon the occurrence of a Fundamental Change; (4) if we call the 8.00% Unsecured Convertible Notes for redemption; and (5) at any time from, and including, March 15, 2029 until the close of business on the business day immediately preceding April 15, 2029 or earlier redemption or repurchase. Upon conversion, holders of the 8.00% Unsecured Convertible Notes will receive cash, shares of our common stock, or a combination thereof, as the case may be, at our election.

Our 8.00% Unsecured Convertible Notes have been separated into their liability and equity components as of the issuance date by recording the liability component at the fair value of a similar liability that does not have an associated equity component and attributing the remaining proceeds from issuance to the equity component. The excess of the principal amount of the liability component over its initial fair value will be amortized to interest expense using the effective interest method over a period of five years through April 2014 (the first date the holders of the 8.00% Unsecured Convertible Notes may require us to repurchase their notes). As of the issuance date of the 8.00% Unsecured Convertible Notes, we determined the effective interest rate of the notes to be 11.0% and approximately $26.2 million of the 8.00% Unsecured Convertible Notes was classified as equity. As of December 31, 2009, the carrying amount of the equity component was approximately $26.2 million. For the year ended December 31, 2009, the amount of interest cost recognized for the period, before the impact of capitalized interest, relating to the contractual interest coupon and amortization of the discount on the liability component was approximately $13.0 million and $2.9 million, respectively. As of December 31, 2009, the book value of the 8.00% Unsecured Convertible Notes was approximately $215.9 million, net of an unamortized discount of approximately $24.1 million. Based on the December 31, 2009 closing stock price of our common stock and the December 31, 2009 conversion price of the 8.00% Unsecured Convertible Notes, the if-converted value of the notes exceeded the principal amount by approximately $132.7 million as of December 31, 2009.

3.70%Unsecured Convertible Notes

In January 2007, we completed a private offering of $460 million principal amount of 3.70% Unsecured Convertible Notes. The net proceeds from this offering, after initial purchasers’ fees and other offering costs, were approximately $450.8 million. Prior to January 15, 2012, we will not have the right to redeem the 3.70% Unsecured Convertible Notes, except to preserve our qualification as a REIT. On and after that date, we have the right to redeem the 3.70% Unsecured Convertible Notes, in whole or in part, at any time and from time to time, for cash equal to 100% of the principal amount of the 3.70% Unsecured Convertible Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the 3.70% Unsecured Convertible Notes may require us to repurchase their notes, in whole or in part, on January 15, 2012, 2017 and 2022 for cash equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. Holders of the 3.70% Unsecured Convertible Notes may require us to repurchase all or a portion of their notes upon the occurrence of a Fundamental Change, including a change in control, certain merger or consolidation transactions or the liquidation of the Company, at a repurchase price in cash equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

F-23

7. Unsecured convertible notes (continued)

3.70%Unsecured Convertible Notes (continued)

At issuance, the 3.70% Unsecured Convertible Notes had an initial conversion rate of approximately 8.4774 shares of common stock per $1,000 principal amount of the 3.70% Unsecured Convertible Notes, representing a conversion price of approximately $117.96 per share of our common stock. This initial conversion price represented a premium of 20% based on the last reported sale price of $98.30 per share of our common stock on January 10, 2007. The conversion rate of the 3.70% Unsecured Convertible Notes is subject to adjustments for certain events, including, but not limited to, certain cash dividends on our common stock in excess of $0.74 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009, the 3.70% Unsecured Convertible Notes had a conversion rate of approximately 8.5207 shares of common stock per $1,000 principal amount of the 3.70% Unsecured Convertible Notes, which is equivalent to a conversion price of approximately $117.36 per share of our common stock.

Holders of the 3.70% Unsecured Convertible Notes may convert their notes into cash and, if applicable, shares of our common stock prior to the stated maturity of January 15, 2027 only under the following circumstances: (1) during any calendar quarter after the calendar quarter ending March 31, 2007, if the closing sale price of our common stock for each of 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeds 120% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (the “3.70% Unsecured Convertible Note Measurement Period”) in which the average trading price per $1,000 principal amount of 3.70% Unsecured Convertible Notes was equal to or less than 98% of the average conversion value of the 3.70% Unsecured Convertible Notes during the 3.70% Unsecured Convertible Note Measurement Period; (3) upon the occurrence of a Fundamental Change; (4) if we call the 3.70% Unsecured Convertible Notes for redemption; and (5) at any time from, and including, December 15, 2026 until the close of business on the business day immediately preceding January 15, 2027 or earlier redemption or repurchase.

In April 2009, we repurchased, in privately negotiated transactions, certain of our 3.70% Unsecured Convertible Notes aggregating approximately $75 million (par value) at an aggregate cash price of approximately $59.2 million. As a result of the repurchases, we recognized a gain on early extinguishment of debt of approximately $11.3 million, net of approximately $860,000 in unamortized issuance costs. The gain is classified as gain on early extinguishment of debt in the accompanying consolidated income statements. As of December 31, 2009 and 2008, the carrying value of the equity component of the 3.70% Unsecured Convertible Notes was approximately $43.5 million and $43.8 million, respectively.

For the years ended December 31, 2009, 2008 and 2007, the amount of interest cost recognized, before the impact of capitalized interest, relating to the contractual interest coupon of our 3.70% Unsecured Convertible Notes was approximately $15.1 million, $17.0 million and $15.3 million, respectively. Additionally, for the years ended December 31, 2009, 2008 and 2007, the amount of interest cost recognized, before the impact of capitalized interest, relating to the amortization of the discount on the liability component of our 3.70% Unsecured Convertible Notes was approximately $7.9 million, $8.4 million and $7.6 million, respectively. As of December 31, 2009 and 2008, the book value of the 3.70% Unsecured Convertible Notes was approximately $368.0 million and $431.1 million, respectively, net of an unamortized discount of approximately $16.7 million and $28.9 million, respectively. Our 3.70% Unsecured Convertible Notes require that upon conversion, the entire principal amount is to be settled in cash, and any excess value above the principal amount, if applicable, shares of our common stock. Based on the December 31, 2009 closing stock price of our common stock of and the December 31, 2009 conversion price of the 3.70% Unsecured Convertible Notes, the if-converted value of the notes did not exceed the principal amount as of December 31, 2009, and accordingly, no shares of our common stock would be issued if the notes were settled on December 31, 2009.

F-24

8. Interest rate hedge agreements

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources, and duration of our debt funding and the use of interest rate hedge agreements. Specifically, we enter into interest rate hedge agreements to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our interest rate hedge agreements are used to manage differences in the amount, timing, and duration of our known or expected cash payments principally related to our LIBOR-based borrowings. We do not use derivatives for trading or speculative purposes and currently all of our derivatives are designated as hedges. Our objectives in using interest rate hedge agreements are to add stability to interest expense and to manage our exposure to interest rate movements in accordance with our interest rate risk management strategy. Interest rate swap agreements designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty in exchange for the Company making fixed rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Interest rate cap agreements designated as cash flow hedges involve the receipt of variable rate amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an up-front premium.

The effective portion of changes in the fair value of our interest rate hedge agreements designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income. The amount is subsequently reclassified into earnings in the period that the hedged forecasted transactions affect earnings. During the years ended December 31, 2009 and 2008, our interest rate hedge agreements were used to hedge the variable cash flows associated with certain of our existing LIBOR-based variable rate debt, including our unsecured line of credit and unsecured term loan. The ineffective portion of the change in fair value of our interest rate hedge agreements is recognized directly in earnings. During the years December 31, 2009, 2008 and 2007, our interest rate hedge agreements were 100% effective, thus we did not recognize any of the change in fair value of our interest rate hedge agreements directly into earnings.

As of December 31, 2009 and 2008, our interest rate swap agreements were classified in accounts payable, accrued expenses and tenant security deposits based upon their respective fair values aggregating a liability balance of approximately $49.9 million and $80.5 million, respectively, which includes accrued interest and adjustments for non-performance risk, with the offsetting adjustment reflected as unrealized gain (loss) in accumulated other comprehensive loss in total equity. Also, during the year ended December 31, 2009, we entered into an interest rate cap agreement with a notional amount approximating $38.4 million effective May 15, 2009 and terminating on January 3, 2012. This agreement sets a ceiling on one-month LIBOR at 2.50% related to one secured note. The interest rate cap agreement was classified in other assets based upon its fair value aggregating an asset balance of approximately $189,000 as of December 31, 2009. We have not posted any collateral related to our interest rate hedge agreements.

Balances in accumulated other comprehensive income are recognized in earnings in the periods that the forecasted hedge transactions affect earnings. For the years ended December 31 2009 and 2008 approximately $37.5 million and $14.9 million, respectively, was reclassified from accumulated other comprehensive income to interest expense as an increase to interest expense. For the year ended December 31, 2007, approximately $3.6 million was reclassified from accumulated other comprehensive income to interest expense as an decrease to interest expense. During the next 12 months, we expect to reclassify approximately $28.6 million from accumulated other comprehensive income (loss) to interest expense as an increase to interest expense.

F-25

8. Interest rate hedge agreements (continued)

As of December 31, 2009, we had the following outstanding interest rate swap agreements that were designated as cash flow hedges of interest rate risk (dollars in thousands):

Transaction Dates	Effective Dates	Termination Dates	Interest Pay Rates	Notional Amounts		Effective at December 31, 2009		Fair Values		****
December 2006	December 29, 2006	March 31, 2014	4.990%	$	50,000	$	50,000	$	(4,948	)
December 2006	January 2, 2007	January 3, 2011	5.003	28,500		28,500		(1,389		)
October 2007	October 31, 2007	September 30, 2012	4.546	50,000		50,000		(3,733		)
October 2007	October 31, 2007	September 30, 2013	4.642	50,000		50,000		(4,195		)
December 2005	January 2, 2008	December 31, 2010	4.768	50,000		50,000		(2,103		)
June 2006	June 30, 2008	June 30, 2010	5.325	50,000		50,000		(1,255		)
June 2006	June 30, 2008	June 30, 2010	5.325	50,000		50,000		(1,255		)
October 2007	July 1, 2008	March 31, 2013	4.622	25,000		25,000		(2,018		)
October 2007	July 1, 2008	March 31, 2013	4.625	25,000		25,000		(2,020		)
October 2008	October 16, 2008	January 31, 2010	2.755	100,000		100,000		(203		)
June 2006	October 31, 2008	December 31, 2010	5.340	50,000		50,000		(2,391		)
June 2006	October 31, 2008	December 31, 2010	5.347	50,000		50,000		(2,395		)
October 2008	September 30, 2009	January 31, 2011	3.119	100,000		100,000		(2,693		)
December 2006	November 30, 2009	March 31, 2014	5.015	75,000		75,000		(7,496		)
December 2006	November 30, 2009	March 31, 2014	5.023	75,000		75,000		(7,493		)
December 2006	December 31, 2010	October 31, 2012	5.015	100,000		–		(4,359		)
Total						$	828,500	$	(49,946	)

9. Commitments and contingencies

Employee retirement savings plan

We have a retirement savings plan pursuant to Section 401(k) of the Internal Revenue Code whereby our employees may contribute a portion of their compensation to their respective retirement accounts in an amount not to exceed the maximum allowed under the Internal Revenue Code. In addition to employee contributions, we have elected to provide discretionary profit sharing contributions (subject to statutory limitations), which amounted to approximately $809,000, $1,289,000 and $941,000, respectively, for the years ended December 31, 2009, 2008 and 2007. Employees who participate in the plan are immediately vested in their contributions and in the contributions of the Company.

F-26

9. Commitments and contingencies (continued)

Concentration of credit risk

We maintain our cash and cash equivalents at insured financial institutions. The combined account balances at each institution periodically exceed FDIC insurance coverage, and, as a result, there is a concentration of credit risk **** related to amounts in excess of FDIC insurance coverage. We have not experienced any losses to date on our invested cash.

We are dependent on rental income from relatively few tenants in the life science industry. The inability of any single tenant to make its lease payments could adversely affect our operations. As of December 31, 2009, we held 417 leases with a total of 342 tenants and 74 of our 156 properties were each leased to a single tenant. At December 31, 2009, our three largest tenants accounted for approximately 17.1% of our aggregate annualized base rent.

We generally do not require collateral or other security from our tenants, other than security deposits. In addition to security deposits held in cash, we held approximately $40.9 million in irrevocable letters of credit available from certain tenants as security deposits for 156 leases as of December 31, 2009.

Commitments

As of December 31, 2009, remaining aggregate costs under contracts for the construction of properties undergoing development and redevelopment and generic office/laboratory infrastructure improvements under the terms of leases approximated $186.8 million. We expect payments for these obligations to occur over the next one to three years, subject to capital planning adjustments from time to time. We were also committed to fund approximately $48.3 million for certain investments over the next six years.

As of December 31, 2009, we were committed under the terms of ground leases for 19 of our properties and three land development parcels. These lease obligations aggregate approximately $6.6 million in 2010, $7.6 million in 2011, $8.2 million in 2012 and $8.6 million in 2013, $8.4 million in 2014 and $572.0 million thereafter, and have remaining lease terms from 23 to 97 years, exclusive of extension options. In addition, as of December 31, 2009, we were committed under the terms of certain operating leases for our headquarters and field offices. These lease obligations totaling approximately $3.3 million as of December 31, 2009 have remaining lease terms of less than one year up to three years, exclusive of extension options.

10. Issuancesof common stock

In September 2007,we sold 2,300,000 shares of our common stock in a follow-on offering (includingthe shares issued upon exercise of the underwriters’ over-allotmentoption). The shares were issued at aprice of $96.00 per share, resulting in aggregate proceeds of approximately$215 million (after deducting underwriting discounts and other offering costs).

F-27

11. Preferredstock and excess stock

Series BPreferred Stock

In January 2002, we completed a public offering of 2,300,000 shares of our Series B Preferred Stock (including the shares issued upon exercise of the underwriters’ over-allotment option). The shares were issued at a price of $25.00 per share, resulting in aggregate proceeds of approximately $55.1 million (after deducting underwriters’ discounts and other offering costs). The dividends on our Series B Preferred Stock were cumulative and accrue from the date of issuance. We paid dividends quarterly in arrears at an annual rate of $2.275 per share. Our Series B Preferred Stock had no stated maturity, were not subject to any sinking fund or mandatory redemption and were not redeemable prior to January 22, 2007, except in order to preserve our status as a REIT. Investors in our Series B Preferred Stock generally had no voting rights.

In February 2007, we called for redemption of our Series B Preferred Stock. The Series B Preferred Stock was redeemed in March 2007 at a redemption price equal to $25.00 per share plus $0.4107639 per share representing accumulated and unpaid dividends to the redemption date. As discussed in Note 2, we recorded a charge of approximately $2,799,000 for costs related to the redemption of the Series B Preferred Stock.

Series CPreferred Stock

In June 2004, we completed a public offering of 5,185,500 shares of our Series C Preferred Stock (including the shares issued upon exercise of the underwriters’ over-allotment option). The shares were issued at a price of $25.00 per share, resulting in aggregate proceeds of approximately $124.0 million (after deducting underwriters’ discounts and other offering costs). The dividends on our Series C Preferred Stock are cumulative and accrue from the date of original issuance. We pay dividends quarterly in arrears at an annual rate of $2.09375 per share. Our Series C Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and is not redeemable prior to June 29, 2009, except in order to preserve our status as a REIT. Investors in our Series C Preferred Stock generally have no voting rights. On or after June 29, 2009, we may, at our option, redeem our Series C Preferred Stock, in whole or in part, at any time for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends.

Series DConvertible Preferred Stock

In March and April 2008, we completed a public offering of 10,000,000 shares of Series D Convertible Preferred Stock. The shares were issued at a price of $25.00 per share, resulting in aggregate proceeds of approximately $242 million (after deducting underwriters’ discounts and other offering costs). The proceeds from this offering were used to pay down outstanding borrowings on our unsecured line of credit. The dividends on our Series D Convertible Preferred Stock are cumulative and accrue from the date of original issuance. We pay dividends quarterly in arrears at an annual rate of $1.75 per share. Our Series D Convertible Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption provisions and we are not allowed to redeem our Series D Convertible Preferred Stock, except to preserve our status as a REIT. Investors in our Series D Convertible Preferred Stock generally have no voting rights. On or after April 20, 2013, we may, at our option, be able to cause some or all of our Series D Convertible Preferred Stock to be automatically converted if the closing sale price per share of our common stock equals or exceeds 150% of the then-applicable conversion price of the Series D Convertible Preferred Stock for at least 20 trading days in a period of 30 consecutive trading days ending on the trading day immediately prior to our issuance of a press release announcing the exercise of our conversion option. Holders of our Series D Convertible Preferred Stock, at their option, may, at any time and from time to time, convert some or all of their outstanding shares initially at a conversion rate of 0.2477 shares of common stock per $25.00 liquidation preference, which was equivalent to an initial conversion price of approximately $100.93 per share of common stock. The conversion rate for the Series D Convertible Preferred Stock is subject to adjustments for certain events, including, but not limited to certain dividends on our common stock in excess of $0.78 per share per quarter and dividends on our common stock payable in shares of our common stock. As of December 31, 2009 the Series D Convertible Preferred Stock had a conversion rate of approximately 0.2480 shares of common stock per $25.00 liquidation preference, which is equivalent to a conversion price of approximately $100.81 per share of common stock.

F-28

11. Preferredstock and excess stock (continued)

Preferred stock and excess stockauthorizations

Our charter authorizes the issuance of up to 100,000,000 shares of preferred stock, of which 15,185,500 shares were issued and outstanding as of December 31, 2009. In addition, 200,000,000 shares of “excess stock” (as defined) are authorized, none of which were issued and outstanding at December 31, 2009.

12. Stock plan

1997 Stock plan

In 1997, we adopted a stock option and incentive plan for the purpose of attracting and retaining the highest quality personnel, providing for additional incentives and promoting the success of the Company by providing employees the opportunity to acquire common stock pursuant to (1) options to purchase common stock and (2) share awards. In May 2008, we amended and restated the 1997 stock option and incentive plan (the “Restated 1997 Stock Plan”) to increase the number of shares reserved for the grant of awards and extend the term of the Restated 1997 Stock Plan to May 2018, among other amendments. As of December 31, 2009, a total of 629,896 shares were reserved for the granting of future options and share awards under the Restated 1997 Stock Plan.

Options under our plan have been granted at prices that are equal to the market value of the stock on the date of grant and expire ten years after the date of grant. The options outstanding under the Restated 1997 Stock Plan expire at various dates through October 2012. We have not granted any stock options since 2002.

A summary of the stock option activity under our Restated 1997 Stock Plan and related information for the years ended December 31, 2009, 2008 and 2007 follows:

****	2009				2008				2007
****	Stock Options	****	Weighted Average Exercise Price		Stock Options	****	Weighted Average Exercise Price		Stock Options	****	Weighted Average Exercise Price
Outstanding<br> at beginning of year	186,054		$	43.88	255,345		$	41.80	338,680		$	38.20
Granted	–		–		–		–		–		–
Exercised	(67,829	)	44.46		(69,291	)	36.22		(83,335	)	27.16
Forfeited	–		–		–		–		–		–
Outstanding<br> at end of year	118,225		$	43.55	186,054		$	43.88	255,345		$	41.80
Exercisable<br> at end of year	118,225		$	43.55	186,054		$	43.88	255,345		$	41.80
Weighted<br> average fair value of options granted			$	–			$	–			$	–

F-29

12. Stock plan (continued)

1997 Stock plan (continued)

The following table summarizes information about stock options outstanding and exercisable at December 31, 2009:

Range of Exercise Prices	Weighted Average Exercise Price		Number of Options	Weighted Average Remaining Contractual Life
$31.88 - $42.40	$	38.55	40,725	1.4
$42.74 - $43.50	43.43		27,500	2.3
$47.69 - $47.69	47.69		50,000	2.5
$31.88 - $47.69	$	43.55	118,225	2.1

The aggregate intrinsic value of options outstanding as of December 31, 2009 was approximately $2.5 million.

In addition, the Restated 1997 Stock Plan permits us to issue share awards to our employees and non-employee directors. A share award is an award of common stock, that (i) may be fully vested upon issuance or (ii) may be subject to the risk of forfeiture under Section 83 of the Internal Revenue Code. Shares issued generally vest over a three-year period from the date of issuance and the sale of the shares is restricted prior to the date of vesting. The unearned portion of these awards is amortized as stock compensation expense on a straight-line basis over the vesting period.

As of December 31, 2009 and 2008 there were 455,182 and 475,421 shares, respectively, of nonvested awards outstanding. During 2009, we granted 312,661 shares of common stock, 331,650 share awards vested and 1,250 shares were forfeited. During 2008, we granted 230,663 shares of common stock, 209,523 share awards vested and 3,675 shares were forfeited. During 2007, we granted 294,376 shares of common stock, 275,487 share awards vested and 5,282 shares were forfeited. The weighted average grant-date fair value of share awards g ranted during 2009 was approximately $53.14 per share, and the total fair value of share awards vested, based on the market price on the vesting date, was approximately $16.4 million. As of December 31, 2009, there was $26.7 million of unrecognized compensation related to nonvested share awards under the Restated 1997 Stock Plan, which is expected to be recognized over the next three years and has a weighted average period of approximately twelve months. Capitalized stock compensation was approximately $8,774,000, $7,019,000 and $8,677,000 in 2009, 2008 and 2007, respectively, and is included as a reduction of general and administrative costs in the accompanying consolidated statements of income.

13. Noncontrolling interests

Noncontrolling interests represent the third party interests in certain entities in which we have a controlling interest and a third party interest in a variable interest entity in which we are the primary beneficiary. These entities own eight properties and three development parcels and are included in our consolidated financial statements. Noncontrolling interests is adjusted for additional contributions and distributions, the proportionate share of the net earnings or losses and other comprehensive income or loss. Distributions, profits and losses related to these entities are allocated in accordance with the respective operating agreements.

Certain of our noncontrolling interests have the right to require us to redeem their ownership interests in the respective entities. We classify these ownership interests in the entities as redeemable noncontrolling interests outside of total equity in the accompanying consolidated balance sheets. Redeemable noncontrolling interests is adjusted for additional contributions and distributions, the proportionate share of the net earnings or losses and other comprehensive income or loss. Distributions, profits and losses related to these entities are allocated in accordance with the respective operating agreements. If the carrying amount of redeemable noncontrolling interests is less than the maximum redemption value at the balance sheet date, such amount is adjusted to the maximum redemption value. Subsequent declines in the redemption value are recognized only to the extent previously recorded increases have been recorded pursuant to the preceding sentence. As of December 31, 2009 and 2008, the redeemable noncontrolling interest balances were approximately $41.4 million and $34.0 million, respectively. The remaining noncontrolling interests aggregating approximately $41.2 million and $41.1 million as of and December 31, 2009 and 2008, respectively, do not have rights to require us to purchase their ownership interests and are classified in total equity in the accompanying consolidated balance sheets.

F-30

13. Noncontrolling interests (continued)

As of December 31, 2009 and 2008, we were the primary beneficiary of a VIE that owns a development parcel with a carrying value of approximately $92.3 million and $88.0 million, respectively. The development parcel serves as collateral for a non-recourse secured loan that had balances of approximately $38.4 million and $50.7 million at December 31, 2009 and 2008, respectively, and matures in April 2013, assuming we exercise our sole right to extend the maturity date from the original maturity date of January 2012. We may, in certain circumstances, be obligated to provide additional capital to the VIE in accordance with the operating agreement. As of December 31, 2009 and 2008, the noncontrolling interest balance related to this entity was approximately $23.9 million and $15.3 million, respectively, and is reflected in redeemable noncontrolling interests in the accompanying consolidated balance sheets.

14. **** Non-cashtransactions

During the year ended December 31, 2008, building improvements and equipment aggregating $13,407,000 were transferred to the Company in a non-cash transaction. The amount of building improvements and equipment recognized in this transaction were determined based upon the estimated fair value of the improvements received. This amount is also recognized as additional rental income amortized over the remaining term of the applicable lease.

During the year ended December 31, 2007, our non-cash transaction related to the acquisition of one property located in the Eastern Massachusetts market. We paid approximately $92.1 million for the property which comprised of an aggregate purchase price of approximately $150.0 million less the assumption of a secured note payable of approximately $57.9 million.

15. Discontinued operations

The following is a summary of income from discontinued operations, net and net assets (liabilities) of discontinued operations (in thousands):

****	Year Ended December 31,
****	2009		2008		2007
Total<br> revenue	$	7,892	$	11,347	$	19,711
Operating<br> expenses	2,700		3,273		5,695
Revenue<br> less operating expenses	5,192		8,074		14,016
Interest<br> expense	1,002		2,439		3,530
Depreciation<br> expense	1,599		2,349		4,448
Subtotal	2,591		3,286		6,038
Gain/loss<br> on properties “held for sale” and sales of property, net	2,627		15,751		7,976
Income<br> from discontinued operations, net	$	5,218	$	19,037	$	14,014
	December 31,				****
---	---	---	---	---	---
	2009		2008		****
Properties<br> “held for sale,” net	$	30,583	$	9,189
Other<br> assets	1,591		54
Total<br> assets	$	32,174	$	9,243
Total<br> liabilities	1,596		13,966
Net<br> assets (liabilities) of discontinued operations	$	30,578	$	(4,723	)

Incomefrom discontinued operations, net for 2009 includes the results of operations of three properties that were classified as “held for sale” as of December 31, 2009 and four properties sold during 2009. Income fromdiscontinued operations, net for 2008 includes the results of operations of three properties that were classified as “held for sale” as of December 31, 2009, four properties sold during 2009 and eight properties sold during 2008.During 2008,we recorded a non-cash impairment charge of $4,650,000 related to an industrialbuilding located in a suburban submarket south of Boston and an office buildinglocated in the San Diego market that has been included in the gain/loss onproperties “held for sale” and sales of property, net above. We sold the industrial building located in asuburban submarket south of Boston and the office building located in the SanDiego market in 2008. Income fromdiscontinued operations, net for 2007 includes the results of operations of three properties that were classified as “held for sale” as of December 31, 2009, four properties sold during 2009, eight properties sold during 2008 and four properties and four land parcels sold during 2007.

F-31

16. Quarterlyfinancial data (unaudited)

The following is a summary of consolidated financial information on a quarterly basis for 2009 and 2008 (in thousands, except per share amounts):

	Quarter
	First		Second		Third		Fourth
2009
Revenues<br> (1)	$	130,760	$	120,406	$	114,605	$	114,369
Net<br> income attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders	$	32,768	$	32,298	$	18,203	$	21,650
Earnings<br> per share attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders:
Basic<br> (2)	$	1.01	$	0.83	$	0.47	$	0.50
Diluted<br> (2)	$	1.01	$	0.82	$	0.47	$	0.49
	Quarter
---	---	---	---	---	---	---	---	---
	First		Second		Third		Fourth
2008 (3)
Revenues<br> (1)	$	107,251	$	107,351	$	112,531	$	124,504
Net<br> income attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders	$	32,769	$	19,420	$	19,318	$	19,224
Earnings<br> per share attributable to Alexandria Real Estate Equities, Inc.’s common<br> stockholders:
Basic<br> (2)	$	1.04	$	0.61	$	0.61	$	0.61
Diluted<br> (2)	$	1.03	$	0.61	$	0.61	$	0.60

(1) **** Allperiods have been adjusted from amounts previously disclosed in our quarterlyfilings on Form 10-Q’s to reclassify amounts related to discontinuedoperations. See Note 15, DiscontinuedOperations.

(2) **** Quarterlyearnings per common share amounts may not total to the annual amounts due torounding and due to the change in the number of common shares outstanding.

(3) **** Allperiods include the retrospective impact of new accounting literature adoptedon January 1, 2009 related to accounting for and disclosure of convertibledebt, noncontrolling interests and participating securities. See Note 2, Basis of Presentation and Summaryof Significant Accounting Policies.

F-32

AlexandriaReal Estate Equities, Inc.

Schedule III

ConsolidatedFinancial Statement Schedule of Rental Properties and Accumulated Depreciation

December 31,2009

(Dollarsin thousands)

****	****		****		Costs		****		****		****		****		****		****	****
****	****		****		Capitalized		****		****		****		****		****		****	****
****	****		****		Subsequent		****		****		****		****		****		****	****
****	Initial Costs				to Acquisition		Total Costs						****		****		****	****
****	****		Buildings &		Buildings &		****		Buildings &		****		Accumulated		****		****	Year Built/
Property Name	Land		Improvements		Improvements		Land		Improvements		Total (19)		Depreciation (1)		Encumbrances (20)		****	Renovated
California - San Diego	$	3,091	$	5,546	$	14,462	$	3,091	$	20,008	$	23,099	$	(3,931)	$	-		1940’s/2002
California - San Diego	1,321		5,960		7,989		1,321		13,949		15,270		(4,199)		-			1971/2003
California - San Diego	1,013		-		16,978		1,013		16,978		17,991		(7,963)		-		(17)	2000
California - San Diego	620		9,531		9,717		620		19,248		19,868		(3,154)		-			1962/2005
California - San Diego	1,101		7,496		1,849		1,101		9,345		10,446		(8,238)		-			1986/2000
California - San Diego	1,137		8,850		8,596		1,137		17,446		18,583		(4,196)		-			1991
California - San Diego	463		1,840		2,857		463		4,697		5,160		(1,676)		-		(3)	1983/1998
California - San Diego	2,548		13,638		328		2,548		13,966		16,514		(5,608)		8,800			1989
California - San Diego	2,248		10,952		15,075		2,248		26,027		28,275		(3,136)		-		(17)	1998/2006
California - San Diego	1,122		-		3,908		1,122		3,908		5,030		(957)		-			2000
California - San Diego	1,683		-		5,751		1,683		5,751		7,434		(1,785)		-			1999
California - San Diego	733		2,273		1,878		733		4,151		4,884		(2,551)		-			1997
California - San Diego	444		1,699		1,924		444		3,623		4,067		(1,407)		-			late 1970’s/1999
California - San Diego	651		1,375		1,935		651		3,310		3,961		(1,681)		-			1978/1999
California - San Diego	275		8,621		3,679		275		12,300		12,575		(3,028)		84,958		(2)	1987/2003
California - San Diego	320		10,070		2,979		320		13,049		13,369		(4,035)		-		(2)	1987/2000
California - San Diego	258		8,170		9,674		258		17,844		18,102		(4,357)		-		(2)	1987/2000
California - San Diego	455		2,581		2,394		455		4,975		5,430		(685)		8,419		(3)	1981
California - San Diego	754		4,288		4,109		754		8,397		9,151		(876)		-		(3)	1981/1998
California - San Diego	515		1,566		2,575		515		4,141		4,656		(1,176)		-			early 1980’s/2001
California - San Diego	4,246		16,165		19,991		4,246		36,156		40,402		(3,917)		9,002			1986/1998
California - San Diego	1,984		10,397		238		1,984		10,635		12,619		(1,581)		-		(2)	1987/2001
California - San Diego	3,492		18,285		270		3,492		18,555		22,047		(2,408)		13,678		(4)	1999/2000
California - San Diego	7,393		27,950		39		7,393		27,989		35,382		(1,825)		-		(17)	1990/2007
California - San Diego	9,967		37,000		2,941		9,967		39,941		49,908		(2,513)		-			2001
California - San Diego	9,609		41,438		11		9,609		41,449		51,058		(2,558)		-			2001
California - San Diego	9,994		37,099		54		9,994		37,153		47,147		(2,503)		-			1985/2005
California - San Diego	6,991		25,243		99		6,991		25,342		32,333		(1,879)		-			1986
California - San<br> Francisco Bay	3,211		8,665		11,994		3,211		20,659		23,870		(5,274)		-			1962/2002
California - San<br> Francisco Bay	-		6,628		8,450		-		15,078		15,078		(5,674)		-			1968/2000
California - San<br> Francisco Bay	-		21,323		22,356		-		43,679		43,679		(10,793)		-			1980/2003
California - San<br> Francisco Bay	3,519		-		14,872		3,519		14,872		18,391		(8,131)		30,186		(5)	2001
California - San<br> Francisco Bay	3,519		-		7,715		3,519		7,715		11,234		(2,735)		-		(5)	2001
California - San<br> Francisco Bay	7,730		24,397		35		7,730		24,432		32,162		(4,789)		140,328		(6)	2000
California - San<br> Francisco Bay	4,187		14,020		36		4,187		14,056		18,243		(4,192)		-		(6)	2002
California - San<br> Francisco Bay	8,250		33,846		4,265		8,250		38,111		46,361		(3,962)		-		(6)	2006
California - San<br> Francisco Bay	-		19,154		1,274		-		20,428		20,428		(3,050)		-		(2)	1962/2002
California - San<br> Francisco Bay	12,279		-		93,480		12,279		93,480		105,759		(954)		-			2007
California - San Francisco<br> Bay	9,313		-		104,028		9,313		104,028		113,341		(5,332)		-			2007
California - San<br> Francisco Bay	7,038		39,704		3,815		7,038		43,519		50,557		(6,082)		-		(6)	2001
California - San<br> Francisco Bay	4,800		6,693		9,350		4,800		16,043		20,843		(1,327)		-			1982
California - San<br> Francisco Bay	5,802		6,218		8,318		5,802		14,536		20,338		(961)		-			early 1980’s
California - San<br> Francisco Bay	25,258		48,796		3,881		25,258		52,677		77,935		(4,076)		-			1999
California - San<br> Francisco Bay	38,911		75,337		13,572		38,911		88,909		127,820		(5,396)		-			2001
Eastern Massachusetts	-		6,247		2,349		-		8,596		8,596		(1,942)		-		(7)	1880/1991
Eastern Massachusetts	960		3,032		9,210		960		12,242		13,202		(2,109)		-			1975

F-33

AlexandriaReal Estate Equities, Inc.

ScheduleIII (continued)

ConsolidatedFinancial Statement Schedule of Rental Properties and Accumulated Depreciation

December 31,2009

(Dollarsin thousands)

****	****	****	Costs	****	****	****	****	****	****	****
****	****	****	Capitalized	****	****	****	****	****	****	****
****	****	****	Subsequent	****	****	****	****	****	****	****
****	Initial Costs		to Acquisition	Total Costs			****	****	****	****
****	****	Buildings &	Buildings &	****	Buildings &	****	Accumulated	****	****	Year Built/
Property Name	Land	Improvements	Improvements	Land	Improvements	Total (19)	Depreciation (1)	Encumbrances (20)	****	Renovated
Eastern Massachusetts	2,734	14,567	5,601	2,734	20,168	22,902	(5,833)	-		1991
Eastern Massachusetts	2,352	14,173	2,961	2,352	17,134	19,486	(5,291)	-		1993
Eastern Massachusetts	651	-	20,937	651	20,937	21,588	(8,923)	-		2000
Eastern Massachusetts	3,360	7,316	14,758	3,360	22,074	25,434	(9,879)	-		1978/2001
Eastern Massachusetts	1,475	7,194	11,429	1,475	18,623	20,098	(6,846)	34,526	(7)	1972/2002
Eastern Massachusetts	-	-	21,801	-	21,801	21,801	(7,362)	-		2002
Eastern Massachusetts	-	-	21,586	-	21,586	21,586	(4,012)	-		2002
Eastern Massachusetts	6,047	5,146	40,705	6,047	45,851	51,898	(6,597)	-		1980/2003
Eastern Massachusetts	2,567	4,522	9,764	2,567	14,286	16,853	(2,566)	-	(2)	1972
Eastern Massachusetts	1,578	10,195	1,037	1,578	11,232	12,810	(1,563)	8,680	(8)	1929/2003
Eastern Massachusetts	228	1,501	327	228	1,828	2,056	(302)	-	(8)	1940/2003
Eastern Massachusetts	876	5,033	92	876	5,125	6,001	(660)	-		1975/1997
Eastern Massachusetts	1,220	22,375	44	1,220	22,419	23,639	(2,709)	-		1977
Eastern Massachusetts	1,466	9,046	8,525	1,466	17,571	19,037	(1,714)	7,175		1982/1997
Eastern Massachusetts	1,341	8,448	659	1,341	9,107	10,448	(1,013)	5,237	(9)	1975/2000
Eastern Massachusetts	12,833	27,333	55	12,833	27,388	40,221	(3,196)	-		1999
Eastern Massachusetts	750	3,312	37	750	3,349	4,099	(390)	2,349	(10)	1972/2001
Eastern Massachusetts	2,749	7,679	7,507	2,749	15,186	17,935	(1,324)	-		1907/1982
Eastern Massachusetts	1,440	5,238	15	1,440	5,253	6,693	(591)	-		1985/1996
Eastern Massachusetts	893	4,000	6,582	893	10,582	11,475	(638)	1,563	(11)	1975/2004
Eastern Massachusetts	-	3,554	7,114	-	10,668	10,668	(687)	-		1920
Eastern Massachusetts	1,278	7,057	488	1,278	7,545	8,823	(779)	-		1973/2000
Eastern Massachusetts	2,261	61,580	25,624	2,261	87,204	89,465	(7,639)	-		2001
Eastern Massachusetts	2,342	9,890	41	2,342	9,931	12,273	(1,288)	-		2006
Eastern Massachusetts	-	619,658	59,413	-	679,071	679,071	(52,773)	220,166	(12)	2006
Eastern Massachusetts	-	9,059	171	-	9,230	9,230	(806)	-		1920’s/1998
Eastern Massachusetts	804	5,835	-	804	5,835	6,639	(509)	-		1970/2006
Eastern Massachusetts	29,004	35,713	3,642	29,004	39,355	68,359	(2,821)	-		1895/2000
International - Canada	3,234	20,616	109	3,234	20,725	23,959	(2,500)	-		2004
International - Canada	7,722	23,280	97	7,722	23,377	31,099	(2,384)	-		1999
International - Canada	2,517	9,362	336	2,517	9,698	12,215	(969)	-		1969/2003
International - Canada	2,277	4,676	9,395	2,277	14,071	16,348	(663)	-		2007
New Jersey/Suburban<br> Philadelphia	654	4,234	773	654	5,007	5,661	(1,583)	-	(7)	1989
New Jersey/Suburban<br> Philadelphia	600	3,110	3,851	600	6,961	7,561	(4,092)	-		1983/1998
New Jersey/Suburban<br> Philadelphia	621	4,258	2,971	621	7,229	7,850	(636)	-		1968
New Jersey/Suburban<br> Philadelphia	1,289	12,039	70	1,289	12,109	13,398	(1,809)	-		1997/2004
New Jersey/Suburban<br> Philadelphia	1,625	19,715	5,647	1,625	25,362	26,987	(2,541)	-		1975/1996/2002
New Jersey/Suburban<br> Philadelphia	1,468	7,885	7	1,468	7,892	9,360	(448)	-		2007
New Jersey/Suburban<br> Philadelphia	1,840	2,298	14,577	1,840	16,875	18,715	(6,020)	-	(7)	late 1960’s/1999
New Jersey/Suburban<br> Philadelphia	1,075	1,438	4,647	1,075	6,085	7,160	(2,741)	-		1984/1999
Southeast	214	3,802	39	214	3,841	4,055	(1,082)	-		1976/1993
Southeast	337	5,794	3,090	337	8,884	9,221	(2,342)	-		1986
Southeast	288	5,789	6,074	288	11,863	12,151	(6,252)	-		1985
Southeast	288	5,899	9,885	288	15,784	16,072	(3,998)	-		1985
Southeast	161	3,409	2,726	161	6,135	6,296	(1,274)	-		1981
Southeast	-	376	41,296	-	41,672	41,672	(4,202)	-		2000

F-34

AlexandriaReal Estate Equities, Inc.

ScheduleIII (continued)

ConsolidatedFinancial Statement Schedule of Rental Properties and Accumulated Depreciation

December 31,2009

(Dollarsin thousands)

****	****		****		Costs		****		****		****		****		****		****	****
****	****		****		Capitalized		****		****		****		****		****		****	****
****	****		****		Subsequent		****		****		****		****		****		****	****
****	Initial Costs				to Acquisition		Total Costs						****		****		****	****
****	****		Buildings &		Buildings &		****		Buildings &		****		Accumulated		****		****	Year Built/
Property Name	Land		Improvements		Improvements		Land		Improvements		Total (19)		Depreciation (1)		Encumbrances (20)		****	Renovated
Southeast	339		3,383		9,209		339		12,592		12,931		(2,661)		-			1995/2003
Southeast	363		9,101		8,886		363		17,987		18,350		(2,250)		-			2000
Southeast	363		8,734		47		363		8,781		9,144		(946)		-			2005
Southeast	713		12,827		611		713		13,438		14,151		(1,845)		7,911			1995
Southeast	785		11,546		4,952		785		16,498		17,283		(1,003)		-			2002
Southeast	951		3,982		581		951		4,563		5,514		(170)		-			1986/1996
Southeast	2,919		5,311		11,181		2,919		16,492		19,411		(333)		-			2003
Suburban Washington,<br> D.C.	1,733		9,611		4,289		1,733		13,900		15,633		(5,407)		-			1967/2000
Suburban Washington,<br> D.C.	1,129		6,941		2,428		1,129		9,369		10,498		(2,587)		-			1987
Suburban Washington,<br> D.C.	3,281		14,416		1,581		3,281		15,997		19,278		(4,943)		22,545		(13)	1989/1997
Suburban Washington,<br> D.C.	775		4,122		1,127		775		5,249		6,024		(1,453)		-		(14)	1981/1995
Suburban Washington,<br> D.C.	2,672		11,007		21,879		2,672		32,886		35,558		(7,089)		-			1994/2005
Suburban Washington,<br> D.C.	1,267		3,031		6,262		1,267		9,293		10,560		(6,234)		-		(13)	1982/1997
Suburban Washington,<br> D.C.	900		2,732		3,663		900		6,395		7,295		(2,159)		-		(15)	1989
Suburban Washington,<br> D.C.	2,117		21,946		12,660		2,117		34,606		36,723		(4,790)		-			2006
Suburban Washington,<br> D.C.	748		3,609		1,701		748		5,310		6,058		(2,028)		-		(14)	1981/2003
Suburban Washington,<br> D.C.	-		13,679		2,270		-		15,949		15,949		(5,321)		27,613		(14)	1990/2003
Suburban Washington,<br> D.C.	2,463		493		23,593		2,463		24,086		26,549		(9,807)		25,807		(15)	2000
Suburban Washington,<br> D.C.	376		3,192		2,503		376		5,695		6,071		(1,517)		-			1974/2000
Suburban Washington,<br> D.C.	971		5,141		7,036		971		12,177		13,148		(3,656)		-			1980/2001
Suburban Washington,<br> D.C.	947		5,092		5,423		947		10,515		11,462		(2,161)		-			1980/2003
Suburban Washington,<br> D.C.	970		5,138		231		970		5,369		6,339		(1,335)		-			1981/2003
Suburban Washington,<br> D.C.	983		6,638		300		983		6,938		7,921		(1,883)		-		(15)	1989/1992
Suburban Washington,<br> D.C.	2,773		23,906		5,358		2,773		29,264		32,037		(3,296)		-			1999
Suburban Washington,<br> D.C.	1,476		7,267		98		1,476		7,365		8,841		(977)		-			1963/1979
Suburban Washington,<br> D.C.	1,812		3,982		298		1,812		4,280		6,092		(969)		-			1999
Suburban Washington,<br> D.C.	5,607		63,291		18,560		5,607		81,851		87,458		(20,232)		76,000			1996/1998/2002
Suburban Washington,<br> D.C.	1,647		13,258		4,699		1,647		17,957		19,604		(3,515)		-			1970/1992
Suburban Washington,<br> D.C.	5,527		26,365		7,220		5,527		33,585		39,112		(4,424)		-			1982
Suburban Washington,<br> D.C.	784		4,705		93		784		4,798		5,582		(579)		3,072		(16)	2000/2003
Suburban Washington,<br> D.C.	2,924		19,664		523		2,924		20,187		23,111		(2,137)		-			1972/1983
Suburban Washington,<br> D.C.	4,800		27,639		390		4,800		28,029		32,829		(8,972)		-		(17)	1992
Washington - Seattle	2,767		22,916		25,649		2,767		48,565		51,332		(15,008)		-			1975/1997
Washington - Seattle	2,119		11,275		3,228		2,119		14,503		16,622		(6,362)		-			1980/2000
Washington - Seattle	1,432		7,497		12,652		1,432		20,149		21,581		(4,701)		-			1929/2000
Washington - Seattle	4,240		31,232		26		4,240		31,258		35,498		(5,665)		119,830		(17)	1997
Washington - Seattle	1,570		15,917		14,929		1,570		30,846		32,416		(5,256)		-		(17)	1997
Washington - Seattle	6,940		-		62,567		6,940		62,567		69,507		(8,961)		-			2004
Washington - Seattle	2,157		1,645		9,079		2,157		10,724		12,881		(884)		-			1962
Washington - Seattle	1,700		344		251		1,700		595		2,295		(59)		-			1951
Washington - Seattle	8,525		20,064		406		8,525		20,470		28,995		(2,542)		28,500			1962/2000
Washington - Seattle	2,212		6,788		5,849		2,212		12,637		14,849		(877)		3,501		(18)	1998
Washington - Seattle	4,295		3,914		174		4,295		4,088		8,383		(319)		-			1927/1996
Washington - Seattle	10,997		7,901		348		10,997		8,249		19,246		(682)		-			1920/1996
Various	55,126		12,861		102,881		55,126		115,742		170,868		(7,803)		-
	$	474,859	$	2,183,600	$	1,245,496	$	474,859	$	3,429,096	$	3,903,955	$	(520,647)	$	889,846

F-35

AlexandriaReal Estate Equities, Inc.

ScheduleIII (continued)

ConsolidatedFinancial Statement Schedule of Rental Properties and Accumulated Depreciation

December 31,2009

(Dollarsin thousands)

(1)	The depreciable life<br> for buildings and improvements ranges from 30 to 40 years, 20 for land<br> improvements, and the term of the respective lease for tenant improvement.
(2)	Loan of $84,958 secured<br> by six properties identified by this reference.
(3)	Loan of $8,419 secured<br> by three properties identified by this reference.
(4)	The balance shown<br> includes an unamortized premium of $255.
(5)	Loan of $30,186 secured<br> by two properties identified by this reference.
(6)	Loan of $140,328<br> secured by four properties identified by this reference.
(7)	Loan of $34,526 secured<br> by four properties identified by this reference.
(8)	Loan of $8,680 secured<br> by two properties identified by this reference.
(9)	The balance shown<br> includes an unamortized premium of $97.
(10)	The balance shown<br> includes an unamortized premium of $92.
(11)	The balance shown<br> includes an unamortized premium of $37.
(12)	The balance shown<br> includes an unamortized discount of $2,736.
(13)	Loan of $22,545 secured<br> by two properties identified by this reference.
(14)	Loan of $27,613 secured<br> by three properties identified by this reference.
(15)	Loan of $25,807 secured<br> by three properties identified by this reference.
(16)	The balance shown<br> includes an unamortized premium of $78.
(17)	Loan of $119,830<br> secured by six properties identified by this reference.
(18)	The balance shown<br> includes an unamortized premium of $38.
(19)	The aggregate cost of<br> real estate for federal income tax purposes is not materially different from<br> the cost basis under GAAP (unaudited).
(20)	Excludes $47,171 of encumbrances<br> primarily related to two assets included in construction in progress and one<br> asset included in land held for future development.

F-36

AlexandriaReal Estate Equities, Inc.

ScheduleIII (continued)

ConsolidatedFinancial Statement Schedule of Rental Properties and Accumulated Depreciation

December31, 2009

(Dollarsin thousands)

A summary of activity of consolidated rental properties and accumulated depreciation is as follows (in thousands):

****	Rental Properties December 31,								****
****	2009		****	2008		****	2007		****
Balance at beginning of period	$	3,644,413		$	3,413,314		$	2,943,530
Purchase of rental properties	-			8,409			466,096
Sale of properties	(20,842		)	(84,886		)	(56,543		)
Additions and net transfers from land held for future development and<br> construction in progress	280,384			307,576			60,231
Balance at end of period	$	3,903,955		$	3,644,413		$	3,413,314
****	Accumulated Depreciation December 31,								****
---	---	---	---	---	---	---	---	---	---
****	2009		****	2008		****	2007		****
Balance at beginning of period	$	428,690		$	356,018		$	280,442
Depreciation expense on rental properties	98,351			89,506			82,496
Sale of properties	(6,394		)	(16,834		)	(6,920		)
Balance at end of period	$	520,647		$	428,690		$	356,018

F-37

EXHIBIT 10.12

SUMMARYOF DIRECTOR COMPENSATION ARRANGEMENTS

Independent non-employee directors of Alexandria Real Estate Equities, Inc. (the “Company”) will receive the following compensation in 2010:

· An annual retainer fee of $100,000;

· The committee chairpersons will receive additional annual fees as follows:

Lead<br> Independent Director	$	35,000
Audit<br> Committee Chairperson	$	30,000
Compensation<br> Committee Chairperson	$	20,000
Nominating &<br> Governance Committee Chairperson	$	15,000

· The committee members, other than the chairpersons, will receive additional annual fees as follows:

Audit<br> Committee	$	12,000
Compensation<br> Committee	$	8,000
Nominating &<br> Governance Committee	$	6,000
Pricing<br> Committee	$	6,000

· Reimbursement of out-of-pocket expenses incurred to attend such meetings;

· A restricted stock grant of 1,574 shares of common stock on January 4, 2010 under the Company’s Amended and Restated 1997 Stock Award and Incentive Plan, such shares vesting as follows: 394 shares on January 4, 2010, 394 shares on January 4, 2011, 393 shares on January 4, 2012 and 393 shares on January 1, 2013.

The Company’s independent non-employee directors may elect to defer all or any portion of the fees above in accordance with the Company’s deferred compensation plan for its directors.

Directors who are also employees of the Company will not receive any compensation for their services as directors of the Company.

EXHIBIT 12.1

ALEXANDRIA REAL ESTATE EQUITIES, INC.

COMPUTATION OF CONSOLIDATED RATIO OFEARNINGS TO COMBINED FIXED

CHARGES AND PREFERRED STOCK DIVIDENDS

(inthousands, except ratios)

	Year Ended December 31, (a)
	2009		****	2008		****	2007		****	2006		****	2005
Income<br> from continuing operations before noncontrolling interests	$	136,430		$	101,060		$	75,966		$	65,633		$	51,779
Add:<br> Interest expense	81,271			84,108			92,270			67,804			45,496
Subtract:<br> Noncontrolling interests in income of subsidiaries which have not incurred<br> fixed charges	(1,217		)	(1,304		)	(1,407		)	(1,404		)	(571		)
Earnings<br> available for fixed charges	$	216,484		$	183,864		$	166,829		$	132,033		$	96,704
Combined<br> fixed charges and preferred stock dividends:
Interest<br> incurred	$	147,367		$	150,329		$	141,372		$	104,076		$	74,075
Preferred<br> stock dividends	28,357			24,225			12,020			16,090			16,090
Preferred<br> stock redemption charge	–			–			2,799			–			–
Total<br> combined fixed charges and preferred stock dividends	$	175,724		$	174,554		$	156,191		$	120,166		$	90,165
Ratio of earnings to<br> combined fixed charges and preferred stock dividends (b)	1.23			1.05		(c)	1.07		(d)	1.10			1.07

(a) Amounts disclosed for prior periods have been adjusted to include the retrospective impact of new accounting literature adopted on January 1, 2009 related to accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.

(b) For purposes of calculating the consolidated ratio of earnings to combined fixed charges and preferred stock dividends, earnings consist of earnings from continuing operations before income taxes and fixed charges less noncontrolling interests’ in income of subsidiaries which have not incurred fixed charges. Fixed charges consist of interest incurred (including amortization of deferred financing costs and capitalized interest) and preferred stock dividends.

(c) Ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2008 includes the effect of non-cash impairment charges aggregating $13,251,000 for other-than-temporary declines in the fair value of certain investments. Excluding the impact of the non-cash impairment charges, the ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2008 was 1.13.

(d) Ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2007 includes the effect of the preferred stock redemption charge. Excluding the impact of this charge, the ratio of earnings to combined fixed charges and preferred stock dividends for the year ended December 31, 2007 was 1.09.

Exhibit 14.1

ALEXANDRIAREAL ESTATE EQUITIES, INC.

BusinessIntegrity Policy and Procedures for Reporting Non-Compliance

PURPOSE AND SCOPE

The purposes of this Business Integrity Policy and Procedures for Reporting Non-Compliance (the “Policy”) are to ensure that all employees, officers and directors understand that it is the intent of Alexandria Real Estate Equities, Inc. and its affiliates (“ARE,” the “Company,” “we,” “us, “ or “our”) to comply with all laws and regulations and to transact business in accordance with the highest moral and ethical standards, including the requirements of Section 406 of the Sarbanes-Oxley Act of 2002, and to provide procedures for employees, officers and directors to report instances of non-compliance with this Policy.

This Policy applies to all employees, officers and directors of ARE. Any violation of this Policy will result in prompt disciplinary action, up to and including termination of employment and, in appropriate cases, civil action or referral for criminal prosecution.

POLICY SUMMARY

ARE has always sought to maintain a highly ethical and moral posture in the conduct of its business and operations. ARE employees, officers and directors must not be subject to undue influences, interests or relationships that will conflict with the best interests of ARE. All applicable laws and regulations must be complied with in a material manner in both form and substance in all transactions and activities. ARE’s accounting and financial records must be maintained in accordance with generally accepted accounting principles (“GAAP”) and internal accounting controls must be adhered to at all times. In addition, public disclosures of financial and business information must be accurate, timely and in compliance with all laws and regulations. Compliance with these basic principles directly contributes to the value of ARE and our reputation as The Landlord of Choice to the Life Science Industry®. Should an employee, officer or director become aware of any known or possible instance of non-compliance with this Policy, the employee, officer or director has the affirmative duty to promptly disclose such possible non-compliance in accordance with procedures described in this Policy.

ARE’S BUSINESS INTEGRITY PRINCIPLES

The following principles and guidelines are provided to assist all ARE employees, officers and directors in the conduct of ARE’s business and operations:

Conflictsof Interest. Conflicts of interest, and situations or transactions that present the appearance of a conflict of interest, should be avoided. A “conflict of interest” occurs when an individual’s private interest interferes, or may interfere, in any meaningful way with the

interests of ARE and its shareholders. This can arise when an employee, officer or director has interests that make it difficult to perform his or her work objectively and effectively. Conflicts of interest also include obtaining improper personal benefits, or providing improper personal benefits to others, as a result of a person’s position with ARE. Any known or potential conflict of interest should be promptly reported to an employee’s supervisors or, in the case of senior officers and directors, to ARE’s Board of Directors.

Factors to be considered by an employee, officer or director in evaluating a potential conflict of interest include:

· Could my outside business interests affect my job performance or my judgment on behalf of ARE or affect others with whom I work?

· Can I reasonably conduct the activity outside of normal work hours?

· Will I be using ARE equipment, materials or proprietary or confidential information in my activities?

· Could the activity have any potential adverse or beneficial impact on ARE’s business or its relationships with tenants, partners or other entities with whom ARE does business?

· Could the activity result in personal financial gain or other benefit to me or a member of my immediate family?

· Could the activity appear improper to an outside observer?

CorporateOpportunities. No employee, officer or director may take personal advantage of any opportunity that he or she discovers, or that is presented to him or her, as a result of his or her position with ARE or through access to Company information. Similarly, no person may use ARE property, information or position for personal gain or for any third party’s personal gain. If you have any question about the applicability of these provisions to a particular situation you may encounter, please contact the Company’s Chief Executive Officer.

Loyalty. All employees, officers and directors have a duty to ARE to advance its legitimate business interests and should not compete with or own an interest in any entity that competes with ARE, other than normal investments (i.e., less than 5% of securities or other beneficial interest) in publicly traded companies.

**Confidentiality.**Subject to the specific terms of any Employee Proprietary Information and Inventions Agreement between an employee and ARE, all confidential and/or proprietary information about ARE and its affiliated companies, business or operations that a person receives as a result of his or her position with ARE, including information about our tenants and other entities and/or persons with whom we do business or come into contact, should be held in strict confidence, except when disclosure of that information is authorized or legally required, and then only if approved by a duly authorized officer of ARE. ARE business matters and confidential and/or proprietary information should not be discussed with anyone outside ARE, other than ARE’s advisors and other persons who have a legitimate need to know the information and who are under an obligation of confidentiality, and should not be discussed in any public place. The obligation to treat

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certain information as confidential does not end when an employee, officer or director leaves ARE. Accordingly, employees, officers or directors may not disclose any confidential information to a new employer or to others, or use any confidential information, for any reason whatsoever after ceasing to be an ARE employee, officer or director, unless such disclosure or use is expressly authorized in advance by a duly authorized officer of the Company.

FairDealing. All employees, officers and directors of ARE must deal fairly with ARE’s tenants, vendors and other parties with whom ARE has a business relationship and with each other. No one associated with ARE should attempt to take unfair advantage of anyone through manipulation, concealment, abuse of confidential and/or proprietary information, misrepresentation of facts or any other unfair practice.

Protectionand Proper Use of ARE Assets. All employees, officers and directors should protect ARE’s assets and use them efficiently and only for legitimate business purposes. Theft, carelessness and waste have a direct impact on ARE’s profitability and are contrary to the interests of ARE and its shareholders. It is important that appropriate measures are taken to ensure the security of ARE computers and any computer or voicemail passwords. Whenever you use an ARE computer or communications resource to send e-mail, voicemail or to access Internet services, remember that you are acting as a representative of the Company. In addition, all e-mail, voicemail and personal files stored on ARE computers are ARE’s property. Employees, officers and directors have no expectation of privacy in connection with these resources. The use of technological resources must be consistent with all other ARE policies, including but not limited to those policies relating to sexual harassment, privacy, patents, copyrights and trademarks.

Compliancewith Law. All laws, rules and regulations must be complied with, including the securities laws prohibiting trading on the basis of non-public information. Insider trading is both unethical and illegal and will result in prompt disciplinary action by ARE, as well as the possibility of regulatory or criminal enforcement actions and private litigation. ARE’s policies regarding compliance with securities laws are set forth in the Company’s Policy Statement on Trading in Company Securities for Directors, Officers, Employees and Designated Consultants. If you have any questions regarding your obligations under federal and state securities laws or under our securities compliance policies, you should consult the Chief Executive Officer or the Chief Financial Officer.

Accurate,Fair and Timely Financial Reporting. ARE and each of its employees, officers and directors are responsible for assuring that all reports and other documents that we file with or submit to the Securities and Exchange Commission or other government agencies, and all of our other public communications, contain full, fair, accurate, timely and understandable financial statements and descriptions of ARE’s business. All personnel who are requested to assist in preparing any such reports or other communications, including both the collection of information and review of drafts of any such reports or other communications, should do so diligently and in full compliance with ARE’s disclosure controls and procedures. Anyone having questions regarding his or her responsibilities under this Policy or under ARE’s disclosure controls and procedures, or

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who becomes aware of any inaccuracy in any ARE filing or other communication, should promptly contact the Chief Executive Officer, the Chief Financial Officer, or Richard H. Klein, the Chairperson of the Audit Committee of the Board of Directors.

EXCEPTIONS TO POLICY

Waivers of the specific requirements of this Policy will only be approved in exceptional cases in which it is determined that the requested waiver would not involve a departure from our fundamental commitment to conducting business in compliance with applicable law and the highest ethical standards. Any waivers of this Policy for an employee other than an executive officer may only be granted by the Chief Executive Officer or the Chief Financial Officer. Any waiver of the Policy involving an executive officer or director may only be granted by the Board of Directors or a duly appointed committee of the Board. Any waivers of, or amendments or changes to, this Policy involving executive officers or directors of ARE will be disclosed through the filing of a Current Report on Form 8-K or other authorized method in accordance with applicable law and the rules of the New York Stock Exchange.

SEEKING HELP AND INFORMATION

This Policy is not intended to be a comprehensive rulebook and cannot address every situation you may face. If you feel uncomfortable about a situation or have any doubts about whether it is consistent with ARE’s ethical standards, we encourage you to seek help. We suggest you contact your supervisor for help first. If your supervisor cannot answer your question or if you do not feel comfortable contacting your supervisor, please contact the Chief Executive Officer, the Chief Financial Officer, or Richard H. Klein, the Chairperson of the Audit Committee of the Board of Directors.

REPORTING OF EVENTS OF POSSIBLE NON-COMPLIANCE

Facts or events that directly or indirectly conflict with the proper application of this Policy could adversely affect the value and reputation of ARE. Each employee, officer and director shares in the responsibility for ensuring compliance with this Policy and conducting herself or himself in a manner that is in compliance with all laws and regulations, the highest ethical standards and with this Policy.

Should an employee, officer or director become aware of any known or possible instance of non-compliance with this Policy, the employee, officer or director has the affirmative duty to promptly report such possible non-compliance to her/his supervisor, local management, the Chief Executive Officer, the Chief Financial Officer, or Richard H. Klein, the Chairperson of the Audit Committee of the Board of Directors. An employee, officer or director must promptly report any complaint an employee may have or receive from any fellow employee, client or other person regarding material accounting, internal accounting controls or auditing matters. Any reports made will be forwarded to Richard H. Klein, the Chairperson of the Audit Committee of the Board of Directors.

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If you believe that the person to whom you have reported material non-compliance with this Policy has not taken appropriate action, you should contact Richard H. Klein directly at (310) 459-9444 (telephone). Mr. Klein can also be reached by e-mail at rklein@labspace.com and by mail at 865 Swarthmore Avenue, Pacific Palisades, California 90272.

Violation of this Policy, and failure to report material non-compliance with this Policy, may be detrimental to ARE and will subject the employee, officer or director to disciplinary action, up to and including termination or removal.

It is most helpful if you give your identity when reporting any instance of possible non-compliance with this Policy so that ARE may contact you if further information is needed to pursue an investigation. All information provided will be kept confidential to the extent practicable under the circumstances. (including as consistent with the needs of a thorough investigation). However, you may anonymously disclose instances of possible non-compliance with this Policy if you are uncomfortable in providing your identity by submitting your concerns in writing to Mr. Klein. In either case, an employee, officer or director who discloses instances of possible noncompliance should keep all information related to the matter in strict confidence and not discuss such information with anyone other than authorized ARE employees conducting the investigation or other persons authorized by them.

If you are involved in the event of non-compliance with this Policy, the fact that you voluntarily reported such non-compliance, together with the degree of cooperation displayed by you and whether the non-compliance was intentional or unintentional, will be given appropriate consideration by ARE in its investigation and any resulting disciplinary action.

INVESTIGATIONS OF POSSIBLE EVENTS OF NON-COMPLIANCE

All reports concerning possible events of non-compliance with this Policy will be promptly, fairly and independently investigated and will be treated confidentially to the extent practicable under the circumstances.

It is imperative that persons disclosing possible non-compliancewith this Policy not attempt to conduct their own investigations. Investigations may involve complex legal issues. Acting on one’s own may compromise the integrity of an investigation and adversely affect both the employee and ARE. However, measures should be taken promptly to preserve documents and other items relevant to any investigation.

Employees are expected to cooperate in the investigation of any possible non-compliance with this Policy. If the result of the investigation indicates that corrective action is required, ARE will decide what steps it should take to rectify the problem and avoid its recurrence.

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Richard H. Klein, in his role as the Chairperson of the Audit Committee of the Board of Directors, will lead any required investigation and, if deemed necessary, appoint additional individuals to assist in the process. Mr. Klein will coordinate the investigation, findings and recommendations with authorized ARE management and ARE’s Human Resources Department before action is taken and the investigation is completed. Mr. Klein will report the status and results of any reports received and any resulting investigation to the Audit Committee, which will then take appropriate action with respect to the matter.

If a report of an instance of possible non-compliance with this Policy involves an individual who would normally participate in an investigation, that individual generally will not be notified of the investigation, and such individual will not be allowed to participate in conducting or reviewing the investigation.

All information obtained during an investigation shall be considered confidential and shall be disseminated only on a need-to-know basis. No information relating to an investigation shall be disposed of or destroyed without the prior written approval of Mr. Klein and the Chief Executive Officer.

It is ARE’s objective that all investigations be completed and resolved promptly and, if possible, within 60 days of the Company’s receipt of the complaint.

RETALIATION NOT PERMITTED

Retaliation against any employee or other person who in good faith reports any instance of non-compliance or possible non-compliance with this Policy or any potential violation of law, who assists another to make a good faith report, or who participates in good faith in an investigation of a report, is strictly prohibited and will not be tolerated. This includes retaliation relating to reports or complaints received from any source regarding accounting, internal accounting controls or auditing matters relating to ARE or any concerns regarding questionable accounting or auditing. This policy also protects those individuals that cooperate in investigations conducted by ARE or any government agency, or who provide information concerning suspected non-compliance or legal violations. In addition, ARE prohibits retaliation against an employee who refuses to participate in an act that would result in a violation of state or federal statute, rule or regulation, or who reports any suspected violations of law at a former employer. Any instance of retaliation will result in prompt disciplinary action, up to and including termination of employment with ARE or any of its affiliated companies, in addition to being punishable under applicable law. However, any employee or other person who makes a report known to be false or provides information known to be false may be subject to disciplinary action, up to and including termination of employment.

OBLIGATIONS OF EMPLOYEES, OFFICERS AND DIRECTORS

Read and understand the Policy. Employees, officers and directors are expected to read and understand this Policy, and comply fully with its terms. Please discuss any questions

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you may have regarding this Policy with your direct supervisor or the Chief Executive Officer or the Chief Financial Officer to ensure that you understand the Policy.

Follow the Policy. Employees, officers and directors must act in accordance with this Policy. ARE may periodically require employees, officers and directors to certify in writing their compliance with this Policy.

Report known or possible violations of the Policy. If you become aware of known or possible instances of non-compliance with this Policy, you must report such instances to your supervisor, local management, the Chief Executive Officer or the Chief Financial Officer, or anonymously to Mr. Klein, Chairperson of the Audit Committee of the Board of Directors, as appropriate. In addition, employees may report suspected violations of law to the California Attorney General or other state or federal agencies at any time.

ACKNOWLEDGEMENT OF POLICY

All employees, officers and directors are required to read and certify their understanding of ARE’s Business Integrity Policy and Procedures for Reporting Non-compliance by signing one counterpart of this Policy in the space indicated below and returning it to the head of Human Resources, Kristina Carlson.

I have read, understand, and will comply with ARE’s Business Integrity Policy.

Signature	Date
Printed Name

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EXHIBIT 21.1

List of Subsidiaries of Alexandria Real EstateEquities, Inc.

The list below excludes subsidiaries in the same line of business (ownership and operation of commercial real estate) and includes the immediate parent of each excluded subsidiary. The list also excludes subsidiaries, which in the aggregate, as a single subsidiary, would not constitute a significant subsidiary as of December 31, 2009. A total of 361 subsidiaries have been excluded.

	Jurisdiction of<br> Organization
Name of Subsidiary	and Type of<br> Entity
ARE – QRS Corp.	Maryland
Alexandria Real<br> Estate Equities, L.P.	Delaware
ARE – MA Region<br> No. 31, LLC	Delaware
ARE – Tech<br> Square, LLC	Delaware

Exhibit 23.1

CONSENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

· Form S-8 No. 333-34223, Form S-8 No. 333-60075 and Form S-8 No. 333-152433 pertaining to the Amended and Restated 1997 Stock Award and Incentive Plan of Alexandria Real Estate Equities, Inc.,

· Form S-3 No. 333-158400 of Alexandria Real Estate Equities, Inc., and in the related Prospectus,

· Form S-3 No. 333-142118 of Alexandria Real Estate Equities, Inc., and in the related Prospectus,

· Form S-3/A No. 333-56449 of Alexandria Real Estate Equities, Inc., and in the related Prospectus and

· Form S-3/A No. 333-81985 of Alexandria Real Estate Equities, Inc., and in the related Prospectus.

of our reports dated March 1, 2010, with respect to the consolidated financial statements and schedule of Alexandria Real Estate Equities, Inc., and the effectiveness of internal control over financial reporting of Alexandria Real Estate Equities, Inc., included in this Annual Report (Form 10-K) for the year ended December 31, 2009.

/s/ Ernst & Young LLP

Los Angeles, California

March 1, 2010

EXHIBIT 31.1

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CERTIFICATIONOF CHIEF EXECUTIVE OFFICER PURSUANT

SECTION 302OF THE SARBANES-OXLEY ACT OF 2002

I, Joel S. Marcus, certify that:

1. I have reviewed this annual report on Form 10-K 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 officer 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 officer 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.

Date:	March 1, 2010
		/s/ Joel S. Marcus
		Joel S. Marcus
		Chief Executive Officer

EXHIBIT 31.2

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CERTIFICATIONOF CHIEF FINANCIAL OFFICER PURSUANT

SECTION 302OF THE SARBANES-OXLEY ACT OF 2002

I, Dean A. Shigenaga, certify that:

1. I have reviewed this annual report on Form 10-K of Alexandria Real Estate Equities, Inc.;

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.

Date:	March 1, 2010
		/s/ Dean A. Shigenaga
		Dean A. Shigenaga
		Chief Financial Officer

EXHIBIT 32.0

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CERTIFICATIONOF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C.SECTION 1350.

ASADOPTED PURSUANT TO

SECTION 906OF THE SARBANES-OXLEY ACT OF 2002

I, Joel S. Marcus, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Alexandria Real Estate Equities, Inc. for the year ended December 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Alexandria Real Estate Equities, Inc.

Date:	March 1, 2010
		/s/ Joel S. Marcus
		Joel S. Marcus
		Chief Executive Officer

I, Dean A. Shigenaga, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-K of Alexandria Real Estate Equities, Inc. for the year ended December 31, 2009 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Alexandria Real Estate Equities, Inc.

Date:	March 1, 2010
		/s/ Dean A. Shigenaga
		Dean A. Shigenaga
		Chief Financial Officer