Alexandria Real Estate Equities, Inc 8-K, filed Nov 5, 2004
Alexandria Real Estate Equities, Inc. (ARE)
About this 8-K
Alexandria Real Estate Equities, Inc filed this 8-K on November 5, 2004, reporting on events of November 4, 2004.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
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): November 4, 2004
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
|
|
135 North Los Robles Avenue, Suite 250
Pasadena, California 91101
(Address of principal executive offices including zip code)
(626) 578-0777
(Registrant's telephone number, including area code)
Not Applicable
(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 November 4, 2004, we issued a press release entitled "Alexandria Real Estate Equities, Inc. Reports Third Quarter 2004 Results" which sets forth our results of operations for the third quarter and nine months ended September 30, 2004. A copy of that press release is attached hereto as Exhibit 99.1.
ITEM 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated November 4, 2004.
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. |
|
November 5, 2004 |
By: /s/ JOEL S. MARCUS |
|
Joel S. Marcus |
|
|
Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
By: /s/ DEAN A. SHIGENAGA |
|
|
|
Dean A. Shigenaga |
|
Acting Chief Financial Officer |
|
|
(Principal Financial and Accounting Officer) |
EXHIBIT INDEX
|
|
Exhibit Title |
|
|
* Also provided in PDF format as a courtesy.
Exhibit 99.1
Contact: Joel S. Marcus
Chief Executive Officer
Alexandria Real Estate Equities, Inc.
(626) 578-9693
Alexandria Real Estate Equities, Inc.
Reports
Third Quarter 2004 Results
- Company Reports Funds from Operations of $1.12 Per Common
Share (Diluted), and
Net Income Available to Common
Stockholders of 58 Cents Per Share (Diluted), for
Third Quarter 2004 -
Highlights
- Third Quarter 2004 Funds from Operations (FFO) of $1.12 Per Common Share (Diluted)
- Third Quarter 2004 Total Revenues Up 16%, FFO Up 8% and FFO Per Common Share (Diluted) Up 6% Over Third Quarter 2003
- Third Quarter 2004 Net Income Available to Common Stockholders of 58 Cents Per Share (Diluted)
- Redeemed 9.50% Series A Cumulative Redeemable Preferred Stock
- Executed 29 Leases for 496,000 Square Feet of Space
- Completed Acquisitions of Seven Properties Aggregating 478,000 Square Feet
- Purchased Land Parcels with Entitlements for Approximately 508,000 Square Feet
PASADENA, CA. - November 4, 2004 - Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the third quarter and nine months ended September 30, 2004.
For the third quarter of 2004, Alexandria reported FFO of $21,944,000, or $1.12 per common share (diluted), on total revenues of $46,510,000. Net income available to common stockholders for the third quarter of 2004 was $11,370,000, or 58 cents per share (diluted). For the nine months ended September 30, 2004, Alexandria reported FFO of $63,228,000, or $3.22 per common share (diluted), on total revenues of $132,808,000. Net income available to common stockholders for the nine months ended September 30, 2004 was $34,212,000, or $1.74 per share (diluted). FFO is a non-GAAP measure widely used by publicly traded real estate investment trusts. A reconciliation of GAAP net income to FFO, on a per common share basis (diluted), is included in the financial information accompanying this press release.
In July 2004, the Company redeemed all 1,543,500 outstanding shares of its 9.50% Series A cumulative redeemable preferred stock ("Series A preferred stock") at a redemption price of $25.00 per share, plus $0.5409722 per share representing accumulated and unpaid dividends to the redemption date. The Company redeemed its Series A preferred stock with proceeds from the sale of 5,185,500 shares of 8.375% Series C cumulative redeemable preferred stock in the second quarter of 2004. In accordance with Emerging Issues Task Force Topic D-42 ("EITF Topic D-42"), "The Effect on the Calculation of Earnings Per Share for the Redemption or Induced Conversion of Preferred Stock", the Company recorded a charge of approximately $1,876,000 to net income available to common stockholders during the second quarter of 2004 for costs related to the redemption of its Series A preferred stock. Excluding this charge for the nine months ended September 30, 2004, FFO increased by 8% and FFO per common share (diluted) increased by 6%, compared to the nine months ended September 30, 2003. Excluding this charge and the gains and loss on property sales, net income available to common stockholders for the nine months ended September 30, 2004 increased by 10% and net income available to common stockholders per share (diluted) increased by 8%, compared to the nine months ended September 30, 2003.
The Company announced that it had executed a total of 29 leases during the third quarter of 2004 for approximately 496,000 square feet of space at 19 different properties (excluding 24 month-to-month leases for approximately 67,000 square feet, which were effective during the quarter). Of this total, approximately 229,000 square feet were for new or renewal leases related to previously leased space and approximately 267,000 square feet were for redeveloped, developed or previously vacant space. Of the 267,000 square feet, approximately 175,000 square feet were delivered from the Company's redevelopment or development programs, with the remaining approximately 92,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 8% higher (on a GAAP basis) than rental rates for expiring leases. For the nine months ended September 30, 2004, the Company signed a total of 63 leases for approximately 991,000 square feet (excluding month-to-month leases). Of this total, approximately 365,000 square feet were for redeveloped, developed or previously vacant space at 18 different properties, of which approximately 316,000 square feet were delivered from the Company's redevelopment and development programs. The remaining 626,000 square feet were for new or renewal space with rental rates on average approximately 8% higher (on a GAAP basis) than rental rates for expiring leases.
During the third quarter of 2004, the Company announced that it had acquired seven properties aggregating approximately 478,000 square feet in four markets. The Company purchased one property in the San Diego market, one property in the Southeast market, two properties in the New Jersey/Suburban Philadelphia market and three properties in the Suburban Washington D.C. market. The Company paid approximately $65.6 million cash for the properties together with the assumption of two secured notes payable totaling $12.2 million. Also, during the third quarter of 2004, the Company purchased land parcels with entitlements of approximately 508,000 square feet for $31.0 million cash.
Based on the Company's current view of existing market conditions and certain current assumptions, the Company has updated its prior earnings guidance as follows:
|
2004 |
2005 |
||
|
FFO per common share (diluted) * |
$4.40 |
$4.78 |
|
|
Net income per common share (diluted) * |
$2.27 |
$2.59 |
|
|
Preferred stock redemption charge |
($0.10) |
||
|
* Includes preferred stock redemption charge and excludes gain on sale of real estate |
In providing this guidance above, the Company has included the second quarter charge of approximately $1,876,000 for the costs of redemption of the Series A preferred stock in accordance with EITF Topic D-42.
Alexandria Real Estate Equities, Inc. is a publicly traded real estate investment trust focused principally on the ownership, operation, management, acquisition, expansion and selective redevelopment and development of properties containing office/laboratory space. Such properties are designed and improved for lease primarily to pharmaceutical, biotechnology, life science product, service, biodefense, educational and translational medicine institutions/entities, as well as related government agencies. Alexandria's portfolio currently consists of 103 properties comprising approximately 6.7 million square feet of office/laboratory space.
This press release contains forward-looking statements within the meaning of the federal securities laws. The Company's 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 the Company's Form 10-K Annual Report and 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 Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept.30,2004 Sept.30, 2003 Sept.30, 2004 Sept.30, 2003
-------------- -------------- -------------- --------------
Income statement data
Total revenues $ 46,510 $ 40,085 $ 132,808 $ 119,581
Expenses
Rental operations 10,184 8,171 27,727 24,883
General and administrative 3,662 3,568 11,112 10,661
Interest 6,626 6,532 20,261 19,915
Depreciation and amortization 10,574 9,737 30,643 28,789
-------------- -------------- -------------- --------------
31,046 28,008 89,743 84,248
Income from continuing operations 15,464 12,077 43,065 35,333
Income from discontinued operations, net -- 9,517 1,626 10,959
-------------- -------------- -------------- --------------
Net income 15,464 21,594 44,691 46,292
Dividends on preferred stock 4,094 2,225 8,603 6,674
Preferred stock redemption charge -- -- 1,876 --
-------------- -------------- -------------- --------------
Net income available to common stockholders $ 11,370 $ 19,369 $ 34,212 $ 39,618
============== ============== ============== ==============
Weighted average shares of
common stock outstanding
-Basic 19,352,670 19,023,162 19,281,678 18,957,609
============== ============== ============== ==============
-Diluted 19,668,360 19,276,932 19,614,092 19,191,021
============== ============== ============== ==============
Basic income per common share
Income from continuing operations $ 0.80 $ 0.63 $ 2.23 $ 1.86
============== ============== ============== ==============
Income from discontinued operations, net $ -- $ 0.50 $ 0.08 $ 0.58
============== ============== ============== ==============
Net income $ 0.80 $ 1.14 $ 2.32 $ 2.44
============== ============== ============== ==============
Net income available to common stockholders $ 0.59 $ 1.02 $ 1.77 $ 2.09
============== ============== ============== ==============
Diluted income per common share
Income from continuing operations $ 0.79 $ 0.63 $ 2.20 $ 1.84
============== ============== ============== ==============
Income from discontinued operations, net $ -- $ 0.49 $ 0.08 $ 0.57
============== ============== ============== ==============
Net income $ 0.79 $ 1.12 $ 2.28 $ 2.41
============== ============== ============== ==============
Net income available to common stockholders $ 0.58 $ 1.00 $ 1.74 $ 2.06
============== ============== ============== ==============
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
Sept.30, 2004 Sept.30, 2003 Sept.30, 2004 Sept. 30, 2003
-------------- -------------- -------------- --------------
Funds from operations (1)
Net income $ 15,464 $ 21,594 $ 44,691 $ 46,292
Add
Depreciation and amortization (2) 10,574 9,813 30,643 29,034
Subtract
Dividends on preferred stock (4,094) (2,225) (8,603) (6,674)
Preferred stock redemption charge (3) -- -- (1,876) --
Gain/loss on sales of property (4) -- (8,777) (1,627) (8,322)
-------------- -------------- -------------- --------------
Funds from operations (FFO) $ 21,944 $ 20,405 $ 63,228 $ 60,330
============== ============== ============== ==============
FFO per common share
-Basic $ 1.13 $ 1.07 $ 3.28 $ 3.18
============== ============== ============== ==============
-Diluted $ 1.12 $ 1.06 $ 3.22 $ 3.14
============== ============== ============== ==============
Reconciliation of net income per common share (diluted)
to FFO per common share (diluted)
Net income per common share (diluted) $ 0.79 $ 1.12 $ 2.28 $ 2.41
============== ============== ============== ==============
Depreciation and amortization per common share
(diluted) (2) $ 0.54 $ 0.51 $ 1.56 $ 1.51
============== ============== ============== ==============
Dividends on preferred stock per common share (diluted)$ (0.21) $ (0.12) $ (0.44) $ (0.35)
============== ============== ============== ==============
Preferred stock redemption charge per common share
(diluted) (3) $ -- $ -- $ (0.10) $ --
============== ============== ============== ==============
Gain/loss on sales of property per common share
(diluted) (4) $ -- $ (0.45) $ (0.08) $ (0.43)
============== ============== ============== ==============
FFO per common share (diluted) $ 1.12 $ 1.06 $ 3.22 $ 3.14
============== ============== ============== ==============
As of As of
Sept.30, 2004 Sept.30, 2003
Balance sheet data -------------- --------------
Rental properties, net $ 1,152,350 $ 942,794
Total assets $ 1,523,679 $ 1,211,145
Total liabilities $ 909,569 $ 709,783
Stockholders' equity $ 614,110 $ 501,362
- 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 miscorrelation 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 by 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 of REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our 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. We believe that net income is the most directly comparable GAAP financial measure to FFO.
- Includes depreciation and amortization on assets "held for sale" reflected as discontinued operations (for the periods prior to when such assets were designated as "held for sale").
- During the second quarter of 2004, the Company elected to redeem the 9.50% Series A cumulative redeemable preferred stock. Accordingly, in compliance with Emerging Issues Task Force Topic D-42, the Company recorded a charge of $1,876,000, or $0.10 per common share (diluted) in the second quarter of 2004 for costs related to the redemption of the Series A preferred stock.
- Gain/loss on sales of property relates to the disposition of a property in the Suburban Washington D.C. market during the quarter ended March 31, 2004, the disposition of a property in the Eastern Massachusetts market during the quarter ended September 30, 2003, and the disposition of a property in the San Francisco Bay market during the quarter ended March 31, 2003. Gain/loss on sales of property is included in the income statement in income from discontinued operations, net.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Quarterly Supplemental Financial Information
For the Three Months Ended
09/30/2004 06/30/2004 03/31/2004 12/31/2003 09/30/2003
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 35,911 34,489 33,774 32,686 31,258
Tenant recoveries 9,615 8,426 8,314 7,645 8,122
Other income 984 608 687 648 705
----------- ----------- ----------- ----------- -----------
Total $ 46,510 43,523 42,775 40,979 40,085
=========== =========== =========== =========== ===========
Funds from operations per common share - diluted (b) $ 1.12 1.01 (c) 1.10 1.08 1.06
Dividends per share on common stock $ 0.64 0.62 0.60 0.58 0.56
Dividend payout ratio (common stock) 56.8% 60.7%(d) 54.2% 53.1% 52.6%
As of
09/30/2004 06/30/2004 03/31/2004 12/31/2003 09/30/2003
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 19,460,642 19,386,842 19,378,282 19,264,023 19,161,756
Number of properties (e)
Acquired/completed during period 7 5 1 3 --
Sold/reconstructed during period -- -- (1) (1) (1)
Owned at end of period 101 94 89 89 87
Square feet (e)
Acquired/completed during period 477,659 218,132 103,816 215,824 --
Sold/reconstructed/expanded during period -- 45,033 (42,142) (171,475) (96,500)
Owned at end of period 6,490,500 6,012,841 5,749,676 5,688,002 5,643,653
- The historical results above exclude the results of assets "held for sale" which have been reflected as discontinued operations.
- The White Paper on Funds from Operations ("FFO") issued by the Board of Governors of the NAREIT in April 2002 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. See page 5 for a reconciliation of net income to FFO, the most directly comparable GAAP financial measure.
- FFO per common share (diluted) for the three months ended June 30, 2004 includes the effect of the preferred stock redemption charge of $1,876,000, or $0.10 per common share (diluted). Excluding the effect of this charge, FFO per common share (diluted) is $1.11.
- The dividend payout ratio (common stock) includes the effect of the preferred stock redemption charge. Excluding the impact of this charge, the dividend payout ratio (common stock) for the three months ended June 30, 2004 is 55.4%.
- Includes assets "held for sale" during the applicable periods such assets were "held for sale".
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2004 2003
------------ ------------
(Unaudited)
Assets
Rental properties, net $ 1,152,350 $ 982,297
Properties under development 196,617 153,379
Cash and cash equivalents 5,330 4,985
Tenant security deposits and other restricted cash 14,879 11,057
Tenant receivables 2,351 1,969
Deferred rent 40,285 31,503
Investments 62,349 47,126
Other assets 49,518 40,261
------------ ------------
Total assets $ 1,523,679 $ 1,272,577
============ ============
Liabilities and Stockholders' Equity
Secured notes payable $ 371,046 $ 320,007
Unsecured line of credit and unsecured term loan 476,000 389,000
Accounts payable, accrued expenses and
tenant security deposits 46,234 43,408
Preferred stock redemption liability -- -
Dividends payable 16,289 13,027
------------ ------------
Total liabilities 909,569 765,442
Total stockholders' equity 614,110 507,135
------------ ------------
Total liabilities and stockholders' equity $ 1,523,679 $ 1,272,577
============ ============
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
September 30, 2004
(Dollars in thousands)
(Unaudited)
Principal Maturities/Rates (1)
Weighted Average
Year Amount Interest Rate
- ----------------------- ----------- --------------
2004 $ 1,619 6.84%
2005 29,139 (2) 7.07%(2)
2006 26,743 7.06%(2)
2007 16,318 7.00%
2008 39,110 6.95%
Thereafter 257,959 6.94%
----------- --------------
Subtotal 370,888 6.98%
Unamortized Premium 158 ==============
-----------
Total $ 371,046
===========
Secured and Unsecured Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Secured Debt $ 371,046 43.80% 6.85% 6.7 Years
Unsecured Debt 476,000 (3) 56.20% 3.04%(3) 2.7 Years
----------- ------- -------------- -----------
Total Debt $ 847,046 100.00% 4.70% 4.5 Years
=========== ======= ============== ===========
Fixed and Floating Rate Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Fixed Rate Debt $ 345,144 40.75% 7.10% 7.2 Years
Floating Rate Debt 501,902 (3) 59.25% 3.06%(3) 2.6 Years
----------- ------- -------------- -----------
Total Debt $ 847,046 100.00% 4.70% 4.5 Years
=========== ======= ============== ===========
- Excludes our unsecured line of credit and unsecured term loan.
- Of this amount, $22,257,000 represents the outstanding balance on a loan which has a maturity date of January 2005 and currently carries interest at 3.35% per annum. In November 2004, we exercised our option to extend the maturity date of this loan to January 2006. The weighted average interest rates for 2005 and 2006 would be 6.84% and 7.06%, respectively, based on this extended maturity date.
- A significant portion of our floating rate debt is hedged by existing swap agreements (see page 9). The interest rate on floating rate debt shown above does not reflect the impact of such swap agreements.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements (1)
September 30, 2004
(Dollars in thousands)
(Unaudited)
Effective at
Notional September 30, Interest
Transaction Dates Effective Dates Amounts 2004 Pay Rates Termination Dates
- ------------------ ------------------ ---------- -------------- ------------ -----------------
Hedges for Unsecured Line of Credit
March 2002 December 31, 2002 $ 50,000 $ 50,000 5.364% December 31, 2004
July 2002 January 1, 2003 $ 25,000 $ 25,000 3.855% June 30, 2005
July 2002 January 1, 2003 $ 25,000 $ 25,000 3.865% June 30, 2005
December 2002 January 2, 2003 $ 25,000 $ 25,000 3.285% June 30, 2006
December 2002 January 2, 2003 $ 25,000 $ 25,000 3.285% June 30, 2006
November 2002 June 1, 2003 $ 25,000 $ 25,000 3.115% December 31, 2005
November 2002 June 1, 2003 $ 25,000 $ 25,000 3.155% December 31, 2005
March 2004 December 31, 2004 $ 25,000 $ -- 2.956% December 31, 2006
March 2004 December 31, 2004 $ 25,000 $ -- 2.956% December 31, 2006
June 2004 June 30, 2005 $ 50,000 $ -- 4.343% June 30, 2007
--------------
$ 200,000
Hedges for Unsecured Term Loan
December 2003 December 31,2003 $ 50,000 $ 50,000 1.530% December 31, 2004
December 2003 December 31,2004 $ 50,000 $ -- 3.000% December 30, 2005
December 2003 December 30,2005 $ 50,000 $ -- 4.150% December 29, 2006
December 2003 December 29,2006 $ 50,000 $ -- 5.090% October 31, 2008
April 2004 April 30, 2004 $ 50,000 $ 50,000 1.550% April 29, 2005
April 2004 April 29, 2005 $ 50,000 $ -- 3.140% April 28, 2006
April 2004 April 28, 2006 $ 50,000 $ -- 4.230% April 30, 2007
April 2004 April 30, 2007 $ 50,000 $ -- 4.850% April 30, 2008
--------------
$ 100,000
--------------
Total Interest Rate Swap Agreements in Effect
at September 30, 2004 $ 300,000
==============
- For all interest rate swap agreements, interest is received based on one month LIBOR.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Operating Portfolio
September 30, 2004
(Dollars in thousands)
Number of Rentable Annualized Occupancy
Properties Square Feet Base Rent Percentage
----------- ----------- ---------- ---------------
Markets
California - Pasadena 1 31,343 602 79.4% (1)
California - San Diego 21 1,007,413 27,750 96.3%
California - San Francisco Bay 10 642,578 19,918 100.0%
Eastern Massachusetts 12 730,633 21,934 87.1%
New Jersey/Suburban Philadelphia 7 456,785 7,625 100.0%
Southeast 6 340,994 5,451 81.4% (1)
Suburban Washington D.C. 21 1,629,734 28,638 97.8%
Washington - Seattle 7 597,273 21,913 100.0%
----------- ----------- ---------- ---------------
Total 85 5,436,753 $ 133,831 95.6%(2)
=========== =========== ========== ===============
- All, or substantially all, of the vacant space is office or warehouse space.
- Excludes properties under full or partial redevelopment.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
---------- ---------- --------- ---------- ---------- --------
9/30/04 9/30/03 % Change 9/30/04 9/30/03 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 35,030 $ 33,776 3.7% $ 33,539 $ 32,354 3.7%
Operating expenses 7,522 6,767 11.2% 7,522 6,767 11.2%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 27,508 $ 27,009 1.8% $ 26,017 $ 25,587 1.7%
========== ========== ========= ========== ========== ========
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Nine Months Ended Nine Months Ended
---------- ---------- --------- ---------- ---------- --------
9/30/04 9/30/03 % Change 9/30/04 9/30/03 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 98,814 $ 97,224 1.6% $ 93,959 $ 93,151 0.9%
Operating expenses 20,139 19,812 1.7% 20,139 19,812 1.7%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 78,675 $ 77,412 1.6% $ 73,820 $ 73,339 0.7%
========== ========== ========= ========== ========== ========
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented (the "Third Quarter Same Properties" for the Quarter periods and "Nine Months Same Properties" for the Nine Month periods).
- Revenue less operating expenses computed under GAAP is total revenue associated with the Third Quarter Same Properties and the Nine Months Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the Third Quarter Same Properties and Nine Months Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarter ended September 30, 2004 and 2003 for the Third Quarter Same Properties were $1,491,000 and $1,422,000, respectively. Straight- line rent adjustments for the nine months ended September 30, 2004 and 2003 for the Nine Months Same Properties were $4,855,000 and $4,073,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates non-cash adjustments to rental revenue.
- Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Same Property Comparisons.
- Cash basis revenues less operating expenses for the quarter and nine months periods were impacted by a rolldown of rents of $341,000 per quarter, pursuant to a 1993 lease with the U.S. Food & Drug Administration (in place when the Company purchased the property in 1996). Excluding the impact of this one rent rolldown, revenues less operating expenses on a cash basis for the Third Quarter Same Properties and Nine Months Same Properties would have been 2.9% and 1.9%, respectively.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended September 30, 2004
TI's/Lease
Rental Commissions Average
Number Square Expiring New Rate Per Lease
of Leases Footage Rates Rates Changes Square Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 45 371,625 $28.69 -- -- -- --
GAAP Basis 45 371,625 $30.55 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 17 229,474 $30.73 $32.57 6.0% $0.27 2.0 years
GAAP Basis 17 229,474 $34.44 $37.11 7.8% $0.27 2.0 years
Month-to-Month Leases In Effect
Cash Basis 24 67,065 $22.80 $22.85 0.2% -- --
GAAP Basis 24 67,065 $22.80 $22.85 0.2% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 12 266,820 -- $18.64 -- $14.68 6.8 years
GAAP Basis 12 266,820 -- $20.49 -- $14.68 6.8 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 29 496,294 -- $25.08 -- $8.02 4.6 years
GAAP Basis 29 496,294 -- $28.18 -- $8.02 4.6 years
Including Month-to-Month Leases
Cash Basis 53 563,359 -- $24.82 -- -- --
GAAP Basis 53 563,359 -- $27.54 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Nine Months Ended September 30, 2004
TI's/Lease
Rental Commissions Average
Number Square Expiring New Rate Per Lease
of Leases Footage Rates Rates Changes Square Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 74 955,762 $24.37 -- -- -- --
GAAP Basis 74 955,762 $25.80 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 38 625,983 $24.09 $24.80 2.9% $2.50 4.7 years
GAAP Basis 38 625,983 $26.01 $28.05 7.8% $2.50 4.7 years
Month-to-Month Leases In Effect
Cash Basis 24 67,065 $22.68 $22.85 0.7% -- --
GAAP Basis 24 67,065 $22.65 $22.85 0.9% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 25 364,805 -- $23.64 -- $20.66 8.6 years
GAAP Basis 25 364,805 -- $28.92 -- $20.66 8.6 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 63 990,788 -- $24.37 -- $9.19 6.1 years
GAAP Basis 63 990,788 -- $28.37 -- $9.19 6.1 years
Including Month-to-Month Leases
Cash Basis 87 1,057,853 -- $24.27 -- -- --
GAAP Basis 87 1,057,853 -- $28.02 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
September 30, 2004
Square Percentage of Annualized Base
Year of Number of Footage of Aggregate Rent of Expiring
Lease Leases Expiring Portfolio Lease Leases (per
Expiration Expiring Leases Square Feet square foot)
- --------- ---------- ---------- -------------- ----------------
2004 40 (1) 232,500 4.1% $24.29
2005 37 367,277 6.5% $27.70
2006 41 862,691 15.3% $24.44
2007 19 341,825 6.1% $23.98
2008 14 368,045 6.5% $26.45
- Includes 24 month-to-month leases for approximately 67,000 square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
September 30, 2004
|
Estimated |
Total |
|
|
In-Service |
Rentable |
|
|
Markets |
Dates |
Square Footage |
|
California - San Diego |
1Q05 |
45,000 |
|
Southeast |
2Q05 |
96,000 |
|
Suburban Washington D.C. |
4Q04 |
95,000 |
|
Suburban Washington D.C. |
2Q05 |
73,000 |
|
Washington - Seattle |
4Q04 |
55,000 (1) |
|
Total |
364,000 |
|
- Excludes certain phases of the property which were delivered to tenants during 2004.
Our properties under development are ground-up development projects of office/laboratory facilities. As required under GAAP, interest is being capitalized on these projects, as activities are ongoing to bring the assets to their intended use.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment
September 30, 2004
|
Estimated |
Total Rentable |
Total Square |
|
|
In-Service |
Square Footage |
Footage Being |
|
|
Markets |
Dates |
of Property |
Redeveloped |
|
California - San Diego |
4Q05 |
18,173 |
18,173 |
|
California - San Diego |
4Q05 |
17,590 |
17,590 |
|
California - San Diego |
3Q05 |
71,510 |
71,510 |
|
California - San Francisco Bay |
Various |
153,837 |
24,761 (1) |
|
California - San Francisco Bay |
Various |
98,964 |
56,332 (1) |
|
California - San Francisco Bay |
4Q04 |
32,074 |
11,000 (1) |
|
Eastern Massachusetts |
1Q05 |
96,150 |
66,540 |
|
Eastern Massachusetts |
4Q04 |
46,700 |
46,700 |
|
New Jersey/Suburban Philadelphia |
2Q05 |
42,600 |
42,600 |
|
Southeast |
Various |
119,916 |
42,912 (1) |
|
Suburban Washington D.C. |
4Q05 |
131,415 |
52,449 |
|
Suburban Washington D.C. |
4Q04 |
53,595 |
13,448 |
|
Suburban Washington D.C. |
3Q05 |
92,449 |
92,449 |
|
Washington - Seattle |
TBD |
46,303 |
22,759 (2) |
|
Washington - Seattle |
3Q05 |
32,471 |
32,471 |
|
Total |
1,053,747 |
611,694 |
- Subject property contains multiple buildings, some of which are being redeveloped with various estimated in-service dates.
- Property will be demolished and a new building will be constructed based on significant new entitlements received in 2003.
Our redevelopment program involves activities necessary for the permanent change of use of applicable redevelopment space to office/laboratory space. For properties undergoing redevelopment, the entire property is excluded from the operating portfolio and related statistics (e.g. occupancy information, same property performance, etc.). As required under GAAP, interest is capitalized on redevelopment properties on the basis allocable only to the portion undergoing redevelopment. Average occupancy for properties under full or partial redevelopment as of September 30, 2004 was 42.0% and is not included in the occupancy of the operating portfolio.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Nine Months Ended September 30, 2004
(In thousands)
|
Property-related capital expenditures (1) |
$ 3,258 |
|
Leasing costs (2) |
$ 584 |
|
Property-related redevelopment costs (3) |
$ 48,659 |
|
Property-related development costs |
$ 74,118 |
- Property-related capital expenditures include all capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures or costs related to the redevelopment of a property. Capital expenditures fluctuate in any given period due to the nature, extent or timing of improvements required and the extent to which they are recoverable from tenants. Property-related capital expenditures also include an HVAC system upgrade at one property totaling approximately $1.3 million for the nine months ended September 30, 2004. Approximately 92% of our leases (based on rentable square feet) 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 implement an active preventative maintenance program at each of our properties to minimize capital expenditures.
- Leasing costs consist of tenant improvements and leasing commissions related to leasing of acquired vacant space and second generation space. Leasing costs exclude tenant improvements that are revenue-enhancing.
- Includes certain capital expenditures recoverable from tenants of approximately $1,722,000.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Third Quarter and Nine Months Ended September 30,
2004
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the third quarter and nine months ended September 30, 2004:
|
Date: |
November 5, 2004 |
|
Time: |
1:00 P.M. Eastern Standard Time |
|
Phone Number: |
(913) 981-5509 |
|
Confirmation Code: |
818206 |