UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): August 7, 2008

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

(Exact name of registrant as specified in its charter)

 

 

385 East Colorado Boulevard, Suite 299
Pasadena, California		91101
(Address of principal executive offices)		(Zip Code)

 

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

 

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o               Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o               Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o               Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o               Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))

 

 

Item 2.02.  Results of Operations and Financial Condition.

 

On August 7, 2008, we issued a press release entitled “Alexandria Real Estate Equities, Inc. Reports Second Quarter 2008 Operating and Financial Results” which sets forth our results of operations for the second quarter ended June 30, 2008.  A copy of that press release is attached hereto as Exhibit 99.1.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d) Exhibits.

 

99.1 Press Release dated August 7, 2008.

 

2

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	ALEXANDRIA REAL ESTATE EQUITIES, INC.
August 7, 2008	By:	/s/ Joel S. Marcus
		Joel S. Marcus
		Chairman/Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Dean A. Shigenaga
		Dean A. Shigenaga
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

 

3

 

EXHIBIT INDEX

 

Exhibit Number		Exhibit Title
99.1		Press Release dated August 7, 2008

 

4

Exhibit 99.1

 

 

 

Contact:		Joel S. Marcus
		Chairman/Chief Executive Officer
		Alexandria Real Estate Equities, Inc.
		(626) 578-9693

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

REPORTS SECOND QUARTER 2008

OPERATING AND FINANCIAL RESULTS

 

Highlights

 

Second Quarter 2008:

 

·              Second Quarter 2008 Funds from Operations (FFO) Per Share (Diluted) of $1.51, up 6%, Compared to Second Quarter 2007 FFO Per Share (Diluted) of $1.42

·              Second Quarter 2008 Total Revenues up 17%, FFO Available to Common Stockholders up 15%, Compared to Second Quarter 2007

·              Second Quarter 2008 Earnings Per Share From Continuing Operations (Diluted) of $0.67

·              Second Quarter 2008 GAAP Same Property Revenues Less Operating Expenses up 3.7%

·              Executed 37 Leases for 530,000 Rentable Square Feet in Second Quarter 2008; Approximately 1.1 Million Rentable Square Feet Leased in First Half 2008

·              Second Quarter 2008 GAAP Rental Rate Increase of 19.4% on Renewed/Released Space

·              Second Quarter 2008 Occupancy Increases to 95.0%

·              Second Quarter 2008 Operating Margins at 74%

·              Sold One Property Previously Classified as Held For Sale for $15 Million; Sold Seven Properties for $84 Million in First Half 2008

·              In August 2008, Executed 100,000 Square Foot Lease Plus Option for an Additional 50,000 Square Feet with Pfizer Inc. at the Alexandria Center for Science and Technology at Mission Bay

 

PASADENA, CA. – August 7, 2008 – Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the second quarter ended June 30, 2008.

 

For the second quarter of 2008, we reported total revenues of $110,054,000 and FFO available to common stockholders of $48,054,000, or $1.51 per share (diluted), compared to total revenues of $93,769,000 and FFO available to common stockholders of $41,607,000, or $1.42 per share (diluted), for the second quarter of 2007.  Comparing the second quarter of 2008 to the second quarter of 2007, total revenues increased 17%, FFO available to common stockholders increased 15% and FFO per share (diluted) increased 6%.  For the six months ended June 30, 2008, we reported total revenues of $220,013,000 and FFO available to common stockholders of $95,030,000, or $2.98 per share (diluted), before non-cash impairment charges, compared to total revenues of $188,555,000 and FFO available to common stockholders of $81,952,000, or $2.80 per share (diluted), before a preferred stock redemption charge, for the six months ended June 30, 2007.  Comparing the six months ended June 30, 2008 to the six months ended June 30, 2007, total revenues increased 17%, FFO available to common stockholders and FFO per share (diluted) increased 16% and 6%, respectively, before non-cash impairment and preferred stock redemption charges.  In the first quarter of 2008, we incurred non-cash impairment charges aggregating $6,635,000, or $0.21 per share (diluted), related to assets “held for sale” and certain investments, and in the first quarter of 2007 we recognized a preferred stock redemption charge of $2,799,000, or $0.10 per share (diluted).

 

FFO is a non-GAAP measure widely used by publicly traded real estate investment trusts.  A reconciliation of GAAP net income available to common stockholders to FFO available to common stockholders and FFO available to common stockholders after supplemental adjustments on both an aggregate and per share (diluted) basis, is included in the financial information accompanying this press release.  The primary reconciling item between GAAP net income available to common stockholders and FFO available to common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended June 30, 2008 and 2007 was $27,003,000 and $22,654,000, respectively.

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS SECOND QUARTER 2008 RESULTS
Page 2

 

Depreciation and amortization expense for the six months ended June 30, 2008 and 2007 was $52,813,000 and $46,172,000, respectively.  Net income available to common stockholders for the second quarter of 2008 was $21,303,000, or $0.67 per share (diluted), compared to net income available to common stockholders of $21,334,000, or $0.73 per share (diluted), for the second quarter of 2007.  Net income available to common stockholders for the second quarter of 2008 included a gain of $182,000 on the sale of one property.  Net income available to common stockholders for the second quarter of 2007 included a gain of $2,340,000 on the sale of one property.  Excluding gains on sales of properties, net income available to common stockholders for the second quarter of 2008 was $21,121,000, or $0.66 per share (diluted), compared to net income available to common stockholders of $18,994,000, or $0.65 per share (diluted), for the second quarter of 2007.  Net income available to common stockholders for the six months ended June 30, 2008 was $56,063,000, or $1.76 per share (diluted), compared to net income available to common stockholders of $36,442,000, or $1.24 per share (diluted), for the six months ended June 30, 2007.  Net income available to common stockholders for the six months ended June 30, 2008 included aggregate gains of $20,395,000 on sales of seven properties and non-cash impairment charges aggregating $6,635,000 related to one property “held for sale” as of June 30, 2008, a property sold during the second quarter of 2008 and certain investments.  Net income available to common stockholders for the six months ended June 30, 2007 included a gain on sales of two properties of $3,461,000 and a preferred stock redemption charge of $2,799,000.  Excluding gains on sales of properties and non-cash impairment and preferred stock redemption charges, net income available to common stockholders for the six months ended June 30, 2008 was $42,303,000, or $1.33 per share (diluted), compared to net income available to common stockholders of $35,780,000, or $1.22 per share (diluted), for the six months ended June 30, 2007.

 

For the second quarter of 2008, we executed a total of 37 leases for approximately 530,000 rentable square feet of space at 29 different properties (excluding month-to-month leases).  Of this total, approximately 343,000 rentable square feet related to new or renewal leases of previously leased space and approximately 187,000 rentable square feet related to developed, redeveloped or previously vacant space.  Of the 187,000 rentable square feet, approximately 124,000 rentable square feet were delivered from our development or redevelopment programs, with the remaining approximately 63,000 rentable square feet related to previously vacant space.  Rental rates for these new or renewal leases were on average approximately 19.4% higher (on a GAAP basis) than rental rates for expiring leases.

 

For the six months ended June 30, 2008, we executed a total of 82 leases for approximately 1,095,000 square feet of space at 48 different properties (excluding month-to-month leases).  Of this total, approximately 722,000 square feet were for new or renewal leases related to previously leased space and approximately 373,000 square feet were for redeveloped, developed or previously vacant space.  Of the 373,000 square feet, approximately 182,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 191,000 square feet for previously vacant space.  Rental rates for new or renewal leases were on average approximately 16.5% higher (on a GAAP basis) than rental rates for expiring leases.

 

During the second quarter of 2008, we sold one property located in the San Diego market with approximately 49,437 rentable square feet for approximately $15 million.  During the six months ended June 30, 2008, we sold seven properties, including five properties in the east bay area of the San Francisco Bay market, aggregating approximately 409,000 rentable square feet.  The aggregate sales price for the properties sold in the six months ended June 30, 2008 was approximately $84 million.

 

In August 2008, we announced that Pfizer Inc. entered into a long-term lease for approximately 100,000 square feet, with an option for an additional 50,000 square feet, at 455 Mission Bay Boulevard South, San Francisco, California. Pfizer will locate its Biotherapeutics and Bioinnovation Center at the Alexandria Center for Science and Technology at Mission Bay and joins other prominent life science entities that comprise this world-class life science cluster.

 

As of June 30, 2008, approximately 89% 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, as of June 30, 2008, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses.  Additionally, as of June 30, 2008, approximately 92% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures and approximately 94% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.

 

Based on our current view of existing market conditions and certain current assumptions, our updated guidance for FFO per share (diluted) and earnings per share (diluted) is as follows:

 

		2008
FFO per share (diluted) (1)		$5.86 (1)
Earnings per share (diluted) (2)		$3.02 (2)
Non–cash impairment charges recognized in the first quarter of 2008		$0.21

 

(1)	Includes non-cash impairment charges aggregating $6,635,000, or $0.21 per share (diluted), related to one property “held for sale” as of June 30, 2008, a property sold during the second quarter of 2008 and certain investments.  Our guidance for 2008 FFO per share (diluted) after supplemental adjustments for the non-cash impairment charges is $6.07.
(2)	Includes non-cash impairment charges aggregating $6,635,000 and gains on sales of property aggregating $20,395,000.

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS SECOND QUARTER 2008 RESULTS
Page 3

 

Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life Science Industry^®, is the largest owner and pre-eminent first-in-class international real estate investment trust focused principally on science-driven cluster formation through the ownership, operation, management, redevelopment, selective development and acquisition of properties containing technical environments, including office/laboratory space.  Alexandria is 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.  Alexandria’s operating platform is based on the principle of “clustering”, with assets and operations located in key life science markets.  Our asset base approximates 13.3 million rentable square feet consisting of 160 properties approximating 11.7 million rentable square feet (including spaces undergoing active redevelopment) and properties undergoing ground-up development approximating 1.6 million rentable square feet.  In addition, our asset base will enable us to grow to approximately 22.4 million square feet through future ground-up development approximating 9.1 million square feet of office/laboratory space.

 

This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws.  Actual results may differ materially from those projected in the forward-looking statements.  Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.

 

(Tables follow)

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial Information

(Dollars in thousands, except per share data)

(Unaudited)

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2008			2007			2008			2007
Income statement data
Total revenues		$	110,054		$	93,769		$	220,013		$	188,555
Expenses
Rental operations		27,588			22,169			55,917			45,446
General and administrative		8,452			7,808			17,239			15,882
Interest		17,732			19,580			39,977			39,843
Depreciation and amortization		27,002			22,134			52,675			45,054
Non-cash impairment on investments		–			–			1,985			–
		80,774			71,691			167,793			146,225
Minority interest		948			902			1,899			1,809
Income from continuing operations		28,332			21,176			50,321			40,521
Income from discontinued operations, net		89			2,872			15,788			5,311
Net income		28,421			24,048			66,109			45,832
Dividends on preferred stock		7,118			2,714			10,046			6,591
Preferred stock redemption charge		–			–			–			2,799
Net income available to common stockholders		$	21,303		$	21,334		$	56,063		$	36,442
Weighted average shares of common stock outstanding
Basic		31,615,359			29,045,354			31,580,974			28,972,732
Diluted		31,887,477			29,362,514			31,856,468			29,337,440
Earnings per share – basic
Continuing operations (net of preferred stock dividends and preferred stock redemption charge)		$	0.67		$	0.63		$	1.28		$	1.08
Discontinued operations, net		–			0.10			0.50			0.18
Earnings per share – basic		$	0.67		$	0.73		$	1.78		$	1.26
Earnings per share – diluted
Continuing operations (net of preferred stock dividends and preferred stock redemption charge)		$	0.67		$	0.63		$	1.26		$	1.06
Discontinued operations, net		–			0.10			0.50			0.18
Earnings per share – diluted		$	0.67		$	0.73		$	1.76		$	1.24

 

(Continued on next page)

 

4

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial Information

(Unaudited)

 

Funds from Operations

 

Generally accepted accounting principles (“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 the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of Funds From Operations (“FFO”).  Since its introduction, FFO has become a widely used non-GAAP financial measure among real estate investment trusts (“REITs”).  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the “White Paper”) and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs.  The White Paper defines FFO as net income (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.

 

We also present FFO after supplemental adjustments which excludes non-cash impairment and preferred stock redemption charges.  FFO after supplemental adjustments differs from FFO established by NAREIT and may not be comparable to that of other REITs.  We believe FFO after supplemental adjustments provides a meaningful supplemental financial measure.

 

Neither FFO nor FFO after supplemental adjustments should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.

 

The following table presents a reconciliation of net income available to common stockholders, the most directly comparable GAAP financial measure to FFO, and FFO after supplemental adjustments to funds from operations available to common stockholders and funds from operations available to common stockholders after supplemental adjustments for the three and six months ended June 30, 2008 and 2007 (in thousands, except per share data):

 

		Three Months Ended June 30, 2008			Three Months Ended June 30, 2007			Six Months Ended June 30, 2008			Six Months Ended June 30, 2007
Reconciliation of net income available to common stockholders to funds from operations available to common stockholders after supplemental adjustments
Net income available to common stockholders		$	21,303		$	21,334		$	56,063		$	36,442
Add: Depreciation and amortization (1)		27,003			22,654			52,813			46,172
Add: Minority interest		948			902			1,899			1,809
Subtract: Gain on sales of property (2)		(182		)	(2,340		)	(20,395		)	(3,461		)
Subtract: FFO allocable to minority interest		(1,018		)	(943		)	(1,985		)	(1,809		)
Funds from operations available to common stockholders		48,054			41,607			88,395			79,153
Add: Preferred stock redemption charge (3)		–			–			–			2,799
Add: Non-cash impairment charges (4)		–			–			6,635			–
Funds from operations available to common stockholders after supplemental adjustments		$	48,054		$	41,607		$	95,030		$	81,952
FFO per share (diluted) after supplemental adjustments
Basic		$	1.52		$	1.43		$	3.01		$	2.83
Diluted		$	1.51		$	1.42		$	2.98		$	2.80
Reconciliation of earnings per share (diluted) to FFO per share (diluted) after supplemental adjustments
Earnings per share (diluted)		$	0.67		$	0.73		$	1.76		$	1.24
Depreciation and amortization (1)		0.85			0.77			1.66			1.58
Minority interest		0.03			0.03			0.06			0.06
Gain on sales of property (2)		(0.01		)	(0.08		)	(0.65		)	(0.12		)
FFO allocable to minority interest		(0.03		)	(0.03		)	(0.06		)	(0.06		)
FFO per share (diluted)		1.51			1.42			2.77			2.70
Preferred stock redemption charge (3)		–			–			–			0.10
Non-cash impairment charges (4)		–			–			0.21			–
FFO per share (diluted) after supplemental adjustments		$	1.51		$	1.42		$	2.98		$	2.80

 

(1)		Includes depreciation and amortization for assets “held for sale” reflected as discontinued operations (for the periods prior to when such assets were classified as “held for sale”).
(2)		Gain on sales of property relates to the disposition of one property sold during the second quarter 2008, six properties sold during the first quarter 2008, one property sold during the second quarter of 2007 and one property sold during the first quarter of 2007. Gain on sales of property is included in the income statement in income from discontinued operations, net.
(3)		During the first quarter of 2007, we redeemed our 9.10% series B cumulative redeemable preferred stock. Accordingly, in compliance with FASB Emerging Issues Task Force D-42 (“EITF Topic D-42”), we recorded a charge of $2,799,000, or $0.10 per share (diluted), in the first quarter of 2007 for costs related to the redemption of our series B preferred stock.
(4)		In March 2008, we recognized aggregate non-cash impairment charges of approximately $1,985,000 for other-than-temporary declines in the fair value of certain investments and non-cash impairment charges on two properties “held for sale” of approximately $4,650,000 related to an industrial building located in a suburban submarket south of Boston and an office building located in the San Diego market. The non-cash impairment charges recognized in March 2008 on these two properties are classified in income from discontinued operations, net.

 

5

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Quarterly Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)

 

		For the Three Months Ended
Operational data		6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007
Rental income		$	83,176		$	82,156		$	81,695		$	76,970		$	71,570
Tenant recoveries		23,986			24,553			22,344			21,420			18,800
Other income		2,892			3,250			3,965			3,717			3,399
Total revenues (continuing operations) (a)		$	110,054		$	109,959		$	108,004		$	102,107		$	93,769
Funds from operations per share (diluted) after supplemental adjustments (b)		$	1.51		$	1.48		$	1.46		$	1.45		$	1.42
Dividends per share on common stock		$	0.80		$	0.78		$	0.78		$	0.76		$	0.76
Dividend payout ratio (common stock) (c)		53.5%			53.2%			53.9%			56.3%			53.8%
Straight-line rent		$	3,437		$	3,015		$	4,615		$	4,335		$	2,617	(d)
Capitalized interest		$	18,437	(e)	$	17,262		$	16,609		$	15,035		$	13,548
Number of properties (f)
Acquired/added/completed during period		2			–			2			13			2
Sold/transferred (g)		(1		)	(7		)	(3		)	(1		)	(4		)
At end of period		160			159			166			167			155
Rentable square feet (f)
Acquired/added/completed during period		60,000			–			404,986			988,030			104,312
Sold/transferred (g)		(49,437		)	(475,976		)	(92,927		)	(37,000		)	(375,112		)
At end of period		11,696,066			11,685,503			12,161,479			11,849,420			10,898,390
								As of
Other data		6/30/2008			3/31/2008			12/31/2007			9/30/2007			6/30/2007
Number of shares of common stock outstanding		31,773,117			31,673,359			31,603,344			31,243,448			29,180,700
Closing price of common stock		$	97.34		$	92.72		$	101.67		$	96.26		$	96.82
Debt to total market capitalization (h)
Total debt		$	2,693,333		$	2,625,852		$	2,787,904		$	2,502,832		$	2,274,269
Less minority interest share of debt		(40,762		)	(39,838		)	(39,320		)	(22,102		)	(22,089		)
Our share of total debt		2,652,571			2,586,014			2,748,584			2,480,730			2,252,180
Preferred stock		377,616			352,127			136,845			130,156			132,593
Common stock market capitalization		3,092,795			2,936,754			3,213,112			3,007,494			2,825,275
Total market capitalization		$	6,122,982		$	5,874,895		$	6,098,541		$	5,618,380		$	5,210,048
Debt to total market capitalization		43.3%			44.0%			45.1%			44.2%			43.2%

 

(a)		The historical results above exclude the results of assets “held for sale” which have been classified as discontinued operations.
(b)		See page 5 for a reconciliation of earnings per share (diluted) to FFO per share (diluted) and FFO per share (diluted) after supplemental adjustments.
(c)		Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (common stock shares outstanding on the respective record date multiplied by the related dividend per share) to funds from operations after supplemental adjustments for the respective quarter.
(d)		Includes a rental payment of approximately $1.4 million from one tenant, the U.S. Government, in the second quarter of 2007. Pursuant to Statement of Financial Accounting Standards No. 13, “Accounting for Leases,” rental payments due under this lease are recognized on a straight-line basis over the lease term.
(e)		As of June 30, 2008, assets for which capitalization of interest is required pursuant to Statement of Financial Accounting Standards No. 34, “Capitalization of Interest Cost” (“SFAS 34”), approximated $1.3 billion. This amount is classified as properties undergoing development and redevelopment and land held for development on our balance sheet. As of June 30, 2008, the weighted average interest rate used in the calculation of capitalized interest required pursuant to SFAS 34 was approximately 5.39%. SFAS 34 requires the interest rate for capitalization to be based on applicable interest costs related to borrowings outstanding during the period, including the impact of interest rate swap agreements, debt premiums/discounts and amortization of loan fees.
(f)		Includes properties “held for sale” during the applicable periods such assets were “held for sale.” As of June 30, 2008, one property with approximately 24,867 rentable square feet was classified as “held for sale.”
(g)		During the second quarter of 2008, we sold one asset located in the San Diego market. During the first quarter of 2008, we sold six properties and transferred one property from operating assets to embedded future development opportunities. During the fourth quarter of 2007, we sold one property and transferred two properties from operating assets to embedded future development opportunities. During the third quarter of 2007, we sold one property located in the New Jersey/Suburban Philadelphia market and four land parcels to the Massachusetts Institute of Technology. During the second quarter of 2007, we sold one property and transferred three properties from operating assets to embedded future development opportunities.
(h)		Debt to total market capitalization is the ratio of our share of total debt (secured notes payable, unsecured line of credit and unsecured term loan and unsecured convertible notes) to total market capitalization. Total market capitalization is equal to outstanding shares of series C preferred stock and common stock multiplied by the related closing price at the end of each period presented, plus series D convertible preferred stock at liquidation value, plus our share of total debt.

 

6

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Balance Sheets

(In thousands)

 

		June 30,			December 31,
		2008			2007
		(Unaudited)
Assets
Rental properties, net		$	3,119,482		$	3,146,915
Properties undergoing development and redevelopment and land held for development		1,316,622			1,143,302
Cash and cash equivalents		7,072			8,030
Tenant security deposits and other restricted cash		71,927			51,911
Tenant receivables		6,448			6,759
Deferred rent		87,222			81,496
Investments		75,131			84,322
Other assets		119,704			119,359
Total assets		$	4,803,608		$	4,642,094
Liabilities and Stockholders’ Equity
Secured notes payable		$	1,102,333		$	1,212,904
Unsecured line of credit and unsecured term loan		1,131,000			1,115,000
Unsecured convertible notes		460,000			460,000
Accounts payable, accrued expenses and tenant security deposits		251,652			247,289
Dividends payable		32,877			27,575
Total liabilities		2,977,862			3,062,768
Minority interest		74,788			75,506
Stockholders’ equity:
Series C preferred stock		129,638			129,638
Series D convertible preferred stock		250,000			–
Common stock		318			316
Additional paid-in capital		1,375,633			1,365,773
Accumulated other comprehensive (loss) income		(4,631		)	8,093
Total stockholders’ equity		1,750,958			1,503,820
Total liabilities and stockholders’ equity		$	4,803,608		$	4,642,094

 

7

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
June 30, 2008
(Dollars in thousands)
(Unaudited)

 

Principal Maturities / Rates

			Secured Debt						Unsecured Debt
	Year		Amount			Weighted Average Interest Rate			Amount
	2008		$	4,499		5.46%	(1)		$	–
	2009		285,382			5.45	(2)		–
	2010		91,123			5.91	(2)		381,000		(3)
	2011		181,911			5.77	(2)		750,000		(3)
	2012		36,903			5.96	(2)		460,000		(4)
	Thereafter		502,515			5.89	(2)		–
	Total		$	1,102,333	(5)				$	1,591,000

 

Secured and Unsecured Debt Analysis

			Balance			Percentage of Balance			Weighted Average Interest Rate (6)			Weighted Average Maturity
	Secured Debt		$	1,102,333		40.9	%		5.46	%			4.3 Years
	Unsecured Debt		1,591,000			59.1			4.77				3.2 Years
	Total Debt		$	2,693,333		100.0	%		5.05	%			3.6 Years

 

Fixed and Floating Rate Debt Analysis

			Balance			Percentage of Balance			Weighted Average Interest Rate (6)			Weighted Average Maturity
	Fixed Rate Debt		$	1,249,715		46.4	%		5.14	%			4.7 Years
	Floating Rate Debt – Hedged		817,100			30.3			5.92				3.2 Years
	Floating Rate Debt – Unhedged		626,518			23.3			3.76				1.9 Years
	Total Debt		$	2,693,333		100.0	%		5.05	%			3.6 Years

 

(1)		The weighted average interest rate is calculated based on outstanding debt as of June 30, 2008.
(2)		The weighted average interest rate is calculated based on outstanding debt as of December 31st of the year immediately preceding the year presented.
(3)		The unsecured line of credit matures in October 2010 and may be extended at our sole option for an additional one year period. The unsecured term loan matures in October 2011 and may be extended at our sole option for an additional one year period.
(4)		On or after January 15, 2012, we have the right to redeem our 3.70% unsecured convertible notes, in whole or in part, at any time from time to time, for cash equal to 100% of the principal amounts 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. Additional information regarding our unsecured convertible notes is contained in our Form 10-K filed with the Securities and Exchange Commission.
(5)		Includes minority interests’ share of scheduled principal maturities of approximately $40.8 million.
(6)		Represents the weighted average contractual interest rate plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees. See page 9 for further details of our interest rate swap agreements.

 

8

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Interest Rate Swap Agreements

June 30, 2008

(Dollars in thousands)

(Unaudited)

 

Transaction Dates		Effective Dates		Termination Dates		Interest Pay Rates (1)			Notional Amounts			Effective at June 30, 2008
December 2004		January 3, 2006		July 1, 2008		3.927	%		$	50,000		$	50,000
June 2006		June 30, 2006		September 30, 2009		5.299			125,000			125,000
December 2003		December 29, 2006		October 31, 2008		5.090			50,000			50,000
December 2005		December 29, 2006		November 30, 2009		4.730			50,000			50,000
December 2005		December 29, 2006		November 30, 2009		4.740			50,000			50,000
December 2006		December 29, 2006		March 31, 2014		4.990			50,000			50,000
December 2006		January 2, 2007		January 3, 2011		5.003			28,500			28,500
December 2006		June 29, 2007		October 31, 2008		4.920			50,000			50,000
October 2007		October 31, 2007		September 30, 2012		4.546			50,000			50,000
October 2007		October 31, 2007		September 30, 2013		4.642			50,000			50,000
May 2005		November 30, 2007		November 28, 2008		4.460			25,000			25,000
December 2005		January 2, 2008		December 31, 2010		4.768			50,000			50,000
February 2008		February 7, 2008		December 1, 2008		2.640			38,600			38,600
May 2005		June 30, 2008		June 30, 2009		4.509			50,000			50,000
June 2006		June 30, 2008		June 30, 2010		5.325			50,000			50,000
June 2006		June 30, 2008		June 30, 2010		5.325			50,000			50,000
October 2007		July 1, 2008		March 31, 2013		4.622			25,000			–
October 2007		July 1, 2008		March 31, 2013		4.625			25,000			–
June 2006		October 31, 2008		December 31, 2010		5.340			50,000			–
June 2006		October 31, 2008		December 31, 2010		5.347			50,000			–
May 2005		November 28, 2008		November 30, 2009		4.615			25,000			–
December 2006		November 30, 2009		March 31, 2014		5.015			75,000			–
December 2006		November 30, 2009		March 31, 2014		5.023			75,000			–
December 2006		December 31, 2010		October 31, 2012		5.015			100,000			–
Total												$	817,100

 

(1)

The interest pay rates represent the interest rate we will pay for one month LIBOR under the respective interest rate swap agreement. These rates do not include any spread in addition to one month LIBOR that is due monthly as interest expense.

 

9