Alexandria Real Estate Equities, Inc 8-K, filed Nov 5, 2009
Alexandria Real Estate Equities, Inc. (ARE)
About this 8-K
Alexandria Real Estate Equities, Inc filed this 8-K on November 5, 2009.
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 5, 2009
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
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Maryland |
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1-12993 |
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95-4502084 |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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385 East Colorado Boulevard, Suite 299 |
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Pasadena, California |
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91101 |
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(Address of principal executive offices) |
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(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 November 5, 2009, we issued a press release entitled “Alexandria Real Estate Equities, Inc. Reports Third Quarter 2009 Operating and Financial Results” which sets forth our results of operations and financial condition for the quarter ended September 30, 2009. That press release referred to certain supplemental information that is available on our website at www.labspace.com. Copies of the press release and supplemental information are attached hereto as Exhibits 99.1 and 99.2, respectively.
The information contained in this Current Report on Form 8-K, including the exhibits referenced herein, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Such information shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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99.1 |
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Press Release dated November 5, 2009. |
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99.2 |
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Alexandria Real Estate Equities, Inc.’s Supplemental Financial & Property Information for the quarter ended September 30, 2009. |
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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.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. |
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November 5, 2009 |
By: |
/s/ Joel S. Marcus |
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Joel S. Marcus |
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Chairman/Chief Executive Officer |
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(Principal Executive Officer) |
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By: |
/s/ Dean A. Shigenaga |
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Dean A. Shigenaga |
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Chief Financial Officer |
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(Principal Financial and Chief Accounting Officer) |
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EXHIBIT INDEX
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Exhibit |
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Exhibit Title |
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99.1 |
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Press Release dated November 5, 2009. |
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99.2 |
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Alexandria Real Estate Equities, Inc.’s Supplemental Financial & Property Information for the quarter ended September 30, 2009. |
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Exhibit 99.1
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Contact: |
Joel S. Marcus |
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Chairman/Chief Executive Officer |
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Alexandria Real Estate Equities, Inc. |
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(626) 578-9693 |
ALEXANDRIA REAL ESTATE EQUITIES, INC.
REPORTS THIRD QUARTER 2009
OPERATING AND FINANCIAL RESULTS
Highlights
Third Quarter 2009:
· Third Quarter 2009 Funds from Operations Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $1.13
· Third Quarter 2009 Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $0.47
· Third Quarter 2009 GAAP Same Property Revenues Less Operating Expenses Up 1%; Nine Months Ended September 30, 2009 GAAP Same Property Revenues Less Operating Expenses Up 4%
· Executed 29 Leases for 450,000 Rentable Square Feet; Nine Months Ended September 30, 2009 Executed 108 Leases for 1,349,000 Rentable Square Feet
· Third Quarter 2009 GAAP Rental Rate Increase of 5.6% on Renewed/Released Space
· Third Quarter Occupancy Remains Relatively Steady at 94.4%
· Operating Margins at 73%
· Reduced $104 Million of Secured Debt Obligations
· Entered into 15-Year Lease with Eli Lilly and Company as Anchor Tenant at Alexandria Center for Life Science at East River Science Park – NYCTM
· Closed Follow-on Common Stock Offering with Net Proceeds of $233 Million
· 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.
· As of September 30, 2009, Four Properties Aggregating 269,196 Rentable Square Feet Were Under Contract, LOI or Under Negotiation and Were Classified as “Held for Sale”
October 2009:
· Closed 10-Year Secured Loan for $120 Million
· Sold One Property Previously Classified as “Held For Sale” to a Life Science User
PASADENA, CA. – November 5, 2009 – Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the third quarter ended September 30, 2009.
For the third quarter of 2009, we reported funds from operations (“FFO”) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $50,609,000, or $1.13 per share (diluted), compared to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $46,273,000, or $1.45 per share (diluted), for the third quarter of 2008. Comparing the third quarter of 2009 to the third quarter of 2008, FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders increased 9% and FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders decreased 22%. The weighted average number of basic and diluted common stock outstanding for calculating FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders totaled 39,094,018 and 44,903,051, respectively, for the third quarter of 2009 and 31,694,711 and 31,807,455, respectively, for the third quarter of 2008. For the nine months ended September 30, 2009, we reported FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $180,427,000, or $4.49 per share (diluted), compared to FFO attributable to
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS THIRD QUARTER 2009 RESULTS
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Alexandria Real Estate Equities, Inc.’s common stockholders of $130,317,000, or $4.11 per share (diluted), for nine months ended September 30, 2008. Comparing the nine months ended September 30, 2009 to the nine months ended September 30, 2008, FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders increased 38% and 9%, respectively.
FFO is a non-GAAP measure widely used by publicly traded real estate investment trusts. We compute FFO in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its April 2002 White Paper and related implementation guidance. A reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders in accordance with United States generally accepted accounting principles (“GAAP”) to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders is included in the financial information accompanying this press release. The primary reconciling item between GAAP net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended September 30, 2009 and 2008 was $28,336,000 and $27,447,000, respectively. Depreciation and amortization expense for the nine months ended September 30, 2009 and 2008 was $89,504,000 and $80,260,000, respectively. Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the third quarter of 2009 was $18,203,000, or $0.47 per share (diluted), compared to net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $19,319,000, or $0.61 per share (diluted), for the third quarter of 2008. The weighted average number of basic and diluted common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders totaled 39,094,018 and 39,105,950, respectively, for the third quarter of 2009 and 31,694,711 and 31,807,455, respectively, for the third quarter of 2008. Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the nine months ended September 30, 2009 was $83,314,000, or $2.26 per share (diluted), compared to net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $71,521,000, or $2.25 per share (diluted), for the nine months ended September 30, 2008.
For the third quarter of 2009, we executed a total of 29 leases for approximately 450,000 rentable square feet of space at 21 different properties (excluding month-to-month leases). Of this total, approximately 207,000 rentable square feet related to new or renewal leases of previously leased space and approximately 243,000 rentable square feet related to developed, redeveloped or previously vacant space. Of the 243,000 rentable square feet, approximately 144,000 rentable square feet were delivered from our development or redevelopment programs, with the remaining approximately 99,000 rentable square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 5.6% higher (on a GAAP basis) than rental rates for expiring leases.
For the nine months ended September 30, 2009, we executed a total of 108 leases for approximately 1,349,000 rentable square feet of space at 49 different properties (excluding month-to-month leases). Of this total, approximately 788,000 rentable square feet related to new or renewal leases of previously leased space and approximately 561,000 rentable square feet related to developed, redeveloped or previously vacant space. Of the 561,000 rentable square feet, approximately 252,000 rentable square feet were delivered from our development or redevelopment programs, with the remaining approximately 309,000 rentable square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 4.9% higher (on a GAAP basis) than rental rates for expiring leases.
During the nine months ended September 30, 2009, we sold three properties aggregating 64,218 rentable square feet to a life science user. These properties were located in the San Diego market and were sold for approximately $14.5 million at a gain of approximately $2.2 million. As of September 30, 2009, four properties with approximately 269,196 rentable square feet were classified as “held for sale.” In October 2009, we sold one property located in the Suburban Washington, D.C. market aggregating 47,558 rentable square feet to a life science user for approximately $6.4 million.
In July 2009, we announced that we entered into a 15-year lease with Eli Lilly and Company (“Lilly”) as the anchor tenant at the Alexandria Center for Life Science at East River Science Park — NYCTM (“the Alexandria Center”), a highly advanced state-of-the-art urban science park in New York City. Lilly has leased approximately 91,000 rentable square feet, as well as an additional approximately 9,000 rentable square feet of core services space, at the Alexandria Center, which will become the new research headquarters for ImClone Systems, a wholly-owned subsidiary of Lilly, and New York City’s life science collaboration and translational research epicenter.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS THIRD QUARTER 2009 RESULTS
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Also in July 2009, we completed the ground-up development of one property located in the San Francisco Mission Bay submarket aggregating 102,000 rentable square feet pursuant to a 15-year lease with Pfizer Inc.
In October 2009, we closed on a 10-year secured loan with an insurance company approximating $120 million. The loan is secured by several of our operating properties.
As of September 30, 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 7% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. Additionally, approximately 92% 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.
Based on our current view of existing market conditions and certain current assumptions, our updated guidance for FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and earnings per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders is as follows:
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2009 |
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FFO per share (diluted) (1) |
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$5.52 (1) |
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Earnings per share (diluted) (1) |
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$2.69 (1) |
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(1) Our guidance for 2009 includes a $7.2 million gain for a cash payment related to real estate acquired in November 2007 and a $11.3 million gain on early extinguishment of debt recognized during the nine months ended September 30, 2009. Our guidance for FFO per share (diluted) for the twelve months ended December 31, 2009 assumes conversion of our 8% unsecured convertible notes as the impact of the conversion is expected to be dilutive under the “if-converted” method. Our guidance for earnings per share (diluted) for the twelve months ended December 31, 2009, however, does not assume conversion of our 8% unsecured convertible notes as the impact of the conversion is expected to be anti-dilutive under the “if-converted” method.
Alexandria Real Estate Equities, Inc. (“Alexandria”) has a very broad and diversified quality client tenant base. As of September 30, 2009, on a rental revenue basis by sector, Alexandria’s multinational pharmaceutical client tenants led by its top client tenants Novartis AG, Roche Holding Ltd, GlaxoSmithKline plc, Pfizer Inc., Johnson & Johnson and Merck & Co., Inc., represented approximately 28% of its client tenant base; revenue producing life science product and service companies led by Quest Diagnostics Incorporated, Qiagen N.V., Laboratory Corporation of America Holdings and Monsanto Company represented approximately 19% of its client tenant base; public biopharmaceutical companies represented approximately 17% of its client tenant base and included the three largest in the sector, Amgen Inc., Gilead Sciences, Inc., Celgene Corporation; government agencies and renowned medical and research institutions represented approximately 15% of its client tenant base and included The Scripps Research Institute, Massachusetts Institute of Technology, Fred Hutchinson Cancer Research Center, University of Washington, the Burnham Institute for Medical Research and the United States Government; private biopharmaceutical companies represented approximately 14% of its client tenant base and included high-quality, leading-edge companies with blue chip venture and institutional investors, including Achaogen, Inc., Ambrx, Inc., Intellikine, Inc., MacroGenics, Inc. and ToleRx, Inc.; the remaining approximately 7% of its client tenant base consisted of traditional office tenants. The two fastest growing client tenant sectors by revenue currently include leading institutional and multinational pharmaceutical. Alexandria’s innovative business model, very strong and unique life sciences and underwriting skills with substantial experience and expertise, long-term life science industry relationships and sophisticated management with both real estate and life science operating experience and expertise, set Alexandria apart from all other publicly-traded REITs.
We will host a conference call on Thursday, November 5, 2009 at 3:00 p.m. Eastern Time (“ET”)/12:00 p.m. noon Pacific Time (“PT”) that is open to the general public to discuss our operating and financial results for the third quarter ended September 30, 2009. To participate in this conference call, dial (719) 325-2255 and confirmation code 8251486, shortly before 3:00 p.m ET/12:00 p.m. noon PT. The audio web cast can be accessed at: www.labspace.com, in the Corporate Information section. A replay of the call will be available from 6:00 p.m. ET/3:00 p.m. PT on Thursday, November 5, 2009 through a limited time thereafter. The replay number is (719) 457-0820 and the confirmation code is 8251486.
Additionally, a copy of Alexandria Real Estate Equities, Inc.’s Supplemental Financial & Property Information for the quarter ended September 30, 2009 and this press release are available in the Corporate Information section of our website at www.labspace.com.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS THIRD QUARTER 2009 RESULTS
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Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life Science Industry®, is the largest owner and pre-eminent first-in-class REIT focused principally on science-driven cluster formation. Alexandria is 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, biopharmaceutical, 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 12.8 million rentable square feet consisting of 157 properties approximating 11.8 million rentable square feet (including spaces undergoing active redevelopment) and properties undergoing ground-up development approximating an additional 980,000 rentable square feet.
This press release includes “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. Such forward-looking statements include, without limitation, statements regarding our 2009 earnings per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, 2009 FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, the business plans of certain tenants and the expected impact of the conversion of our unsecured convertible notes. Our actual results may differ materially from those projected in such forward-looking statements. Factors that might cause such a difference include, without limitation, our failure 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, our failure to successfully operate or lease acquired properties, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, general and local economic conditions and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”). All forward-looking statements are made as of the date of this press release, and we assume no obligation to update this information. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.
(Tables follow)
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Income Statements
(Dollars in thousands, except per share data)
(Unaudited)
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Three
Months Ended |
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Nine
Months Ended |
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2009 |
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2008 (1) |
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2009 |
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2008 (1) |
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Income statement data |
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Total revenues |
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$ |
114,605 |
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$ |
112,531 |
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$ |
365,771 |
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$ |
327,133 |
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Expenses |
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Rental operations |
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30,783 |
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29,057 |
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91,430 |
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83,567 |
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General and administrative |
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9,610 |
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8,587 |
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27,827 |
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25,816 |
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Interest |
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20,909 |
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21,289 |
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61,865 |
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63,174 |
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Depreciation and amortization |
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28,031 |
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26,924 |
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87,878 |
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78,520 |
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Non-cash impairment on investments |
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– |
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– |
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– |
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1,985 |
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Total expenses |
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89,333 |
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85,857 |
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269,000 |
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253,062 |
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Gain on early extinguishment of debt |
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– |
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– |
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11,254 |
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– |
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Income from continuing operations |
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25,272 |
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26,674 |
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108,025 |
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74,071 |
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Income from discontinued operations, net |
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1,106 |
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928 |
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3,718 |
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18,458 |
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Net income |
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26,378 |
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27,602 |
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111,743 |
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92,529 |
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Net income attributable to noncontrolling interests |
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886 |
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929 |
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6,123 |
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2,828 |
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Dividends on preferred stock |
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7,090 |
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7,090 |
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21,268 |
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17,136 |
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Net income attributable to unvested restricted stock awards |
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199 |
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265 |
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1,038 |
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1,048 |
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Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
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$ |
18,203 |
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$ |
19,318 |
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$ |
83,314 |
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$ |
71,517 |
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Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic |
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Continuing operations |
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$ |
0.44 |
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$ |
0.58 |
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$ |
2.16 |
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$ |
1.68 |
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Discontinued operations, net |
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0.03 |
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0.03 |
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0.10 |
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0.58 |
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Earnings per share – basic |
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$ |
0.47 |
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$ |
0.61 |
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$ |
2.26 |
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$ |
2.26 |
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Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted |
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Continuing operations |
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$ |
0.44 |
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$ |
0.58 |
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$ |
2.16 |
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$ |
1.68 |
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Discontinued operations, net |
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0.03 |
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0.03 |
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0.10 |
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0.57 |
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Earnings per share – diluted |
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$ |
0.47 |
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$ |
0.61 |
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$ |
2.26 |
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$ |
2.25 |
(1) Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
(Continued on next page)
5
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
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September 30, |
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December 31, |
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2009 |
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2008 (1) |
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Assets |
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Rental properties, net |
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$ |
3,366,960 |
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$ |
3,215,723 |
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Land held for future development |
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254,549 |
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109,478 |
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Construction in progress |
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1,349,656 |
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1,398,895 |
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Cash and cash equivalents |
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68,280 |
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71,161 |
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Tenant security deposits and other restricted cash |
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60,002 |
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67,782 |
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Tenant receivables |
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3,789 |
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6,453 |
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Deferred rent |
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92,022 |
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85,733 |
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Investments |
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71,080 |
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61,861 |
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Other assets |
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126,999 |
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114,991 |
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Total assets |
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$ |
5,393,337 |
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$ |
5,132,077 |
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Liabilities and Equity |
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Secured notes payable |
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$ |
837,177 |
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$ |
1,081,963 |
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Unsecured line of credit and unsecured term loan |
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1,248,000 |
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1,425,000 |
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Unsecured convertible notes |
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580,919 |
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431,145 |
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Accounts payable, accrued expenses and tenant security deposits |
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325,720 |
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386,801 |
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Dividends payable |
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21,665 |
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32,105 |
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Total liabilities |
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3,013,481 |
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3,357,014 |
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Redeemable noncontrolling interests |
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41,232 |
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33,963 |
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Alexandria Real Estate Equities, Inc. stockholders’ equity: |
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Series C preferred stock |
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129,638 |
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129,638 |
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Series D cumulative convertible preferred stock |
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250,000 |
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250,000 |
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Common stock |
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437 |
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319 |
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Additional paid-in capital |
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1,961,421 |
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1,407,294 |
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Accumulated other comprehensive loss |
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(44,162 |
) |
(87,241 |
) |
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Total Alexandria Real Estate Equities, Inc. stockholders’ equity |
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2,297,334 |
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1,700,010 |
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Noncontrolling interests |
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41,290 |
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41,090 |
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Total equity |
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2,338,624 |
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1,741,100 |
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Total |
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$ |
5,393,337 |
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$ |
5,132,077 |
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(1) Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
6
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Earnings per Share
(Unaudited)
Earnings per Share (“EPS”)
The following table presents the computation of basic and diluted EPS for the three and nine months ended September 30, 2009 and 2008 (in thousands, except share and per share data):
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||
|
|
|
2009 |
|
2008 (1) |
|
2009 |
|
2008 (1) |
|
||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for basic earnings per share |
|
$ |
18,203 |
|
$ |
19,318 |
|
$ |
83,314 |
|
$ |
71,517 |
|
|
Assumed conversion of 8% unsecured convertible notes |
|
– |
|
– |
|
– |
|
– |
|
||||
|
Effect of dilutive securities and assumed conversion attributable to unvested restricted stock awards |
|
– |
|
1 |
|
– |
|
4 |
|
||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders assuming effect of dilutive securities and assumed conversion – numerator for diluted earnings per share |
|
$ |
18,203 |
|
$ |
19,319 |
|
$ |
83,314 |
|
$ |
71,521 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for basic earnings per share |
|
39,094,018 |
|
31,694,711 |
|
36,858,606 |
|
31,619,163 |
|
||||
|
Effect of dilutive securities and assumed conversion: |
|
|
|
|
|
|
|
|
|
||||
|
Dilutive effect of stock options |
|
11,932 |
|
112,744 |
|
8,207 |
|
126,671 |
|
||||
|
Assumed conversion of 8% unsecured convertible notes |
|
– |
|
– |
|
– |
|
– |
|
||||
|
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders assuming effect of dilutive securities and assumed conversion – denominator for diluted earnings per share |
|
39,105,950 |
|
31,807,455 |
|
36,866,813 |
|
31,745,834 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
0.47 |
|
$ |
0.61 |
|
$ |
2.26 |
|
$ |
2.26 |
|
|
Diluted |
|
$ |
0.47 |
|
$ |
0.61 |
|
$ |
2.26 |
|
$ |
2.25 |
|
|
(1) |
Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities. |
7
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Funds from Operations
(Unaudited)
Funds from Operations (“FFO”) (1)
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 for the three and nine months ended September 30, 2009 and 2008 (in thousands, except share and per share data):
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
||||||||
|
|
|
2009 |
|
2008 (2) |
|
2009 |
|
2008 (2) |
|
||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
$ |
18,203 |
|
$ |
19,318 |
|
$ |
83,314 |
|
$ |
71,517 |
|
|
Add: Depreciation and amortization (3) |
|
28,336 |
|
27,447 |
|
89,504 |
|
80,260 |
|
||||
|
Add: Net income attributable to noncontrolling interests |
|
886 |
|
929 |
|
6,123 |
|
2,828 |
|
||||
|
Add: Net income attributable to unvested restricted stock awards |
|
199 |
|
265 |
|
1,038 |
|
1,048 |
|
||||
|
Subtract: Gain on sales of property |
|
– |
|
– |
|
(2,234 |
) |
(20,395 |
) |
||||
|
Subtract: FFO attributable to noncontrolling interests |
|
(918 |
) |
(1,054 |
) |
(2,837 |
) |
(3,039 |
) |
||||
|
Subtract: FFO attributable to unvested restricted stock awards |
|
(505 |
) |
(634 |
) |
(2,153 |
) |
(1,909 |
) |
||||
|
FFO attributable to Alexandria Real Estate, Inc.’s common stockholders – numerator for basic FFO per share |
|
46,201 |
|
46,271 |
|
172,755 |
|
130,310 |
|
||||
|
Add: Assumed conversion of 8% unsecured convertible notes |
|
4,384 |
|
– |
|
7,581 |
|
– |
|
||||
|
Add: Effect of dilutive securities and assumed conversion attributable to unvested restricted stock awards |
|
24 |
|
2 |
|
91 |
|
7 |
|
||||
|
FFO attributable to
Alexandria Real Estate, Inc.’s common
stockholders assuming effect of dilutive securities and assumed conversion —
numerator |
|
$ |
50,609 |
|
$ |
46,273 |
|
$ |
180,427 |
|
$ |
130,317 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average shares
of common stock outstanding for calculating FFO per share attributable to
Alexandria Real Estate Equities, Inc.’s common |
|
39,094,018 |
|
31,694,711 |
|
36,858,606 |
|
31,619,163 |
|
||||
|
Effect of dilutive securities and assumed conversion: |
|
|
|
|
|
|
|
|
|
||||
|
Dilutive effect of stock options |
|
11,932 |
|
112,744 |
|
8,207 |
|
126,671 |
|
||||
|
Assumed conversion of 8% unsecured convertible notes |
|
5,797,101 |
|
– |
|
3,333,864 |
|
– |
|
||||
|
Weighted average shares
of common stock outstanding for calculating FFO per share attributable to
Alexandria Real Estate Equities, Inc.’s common |
|
44,903,051 |
|
31,807,455 |
|
40,200,677 |
|
31,745,834 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
1.18 |
|
$ |
1.46 |
|
$ |
4.69 |
|
$ |
4.12 |
|
|
Diluted |
|
$ |
1.13 |
|
$ |
1.45 |
|
$ |
4.49 |
|
$ |
4.11 |
|
|
(1) |
See note regarding FFO on page 9. |
|
(2) |
Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities. |
|
(3) |
Includes depreciation and amortization for assets “held for sale” reflected as discontinued operations (for the periods prior to when such assets were designated as “held for sale”). |
8
Note Regarding 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.
FFO 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.
9
Exhibit 99.2
|
|
SUPPLEMENTAL FINANCIAL & PROPERTY INFORMATION
QUARTER ENDED SEPTEMBER 30, 2009
Conference Call Information: Thursday, November 5, 2009 3:00PM Eastern Time/12:00PM Noon Pacific Time Number: (719) 325-2255 Confirmation Code: 8251486
385 EAST COLORADO BOULEVARD, SUITE 299 PASADENA, CALIFORNIA 91101 (626) 396-4828 www.labspace.com |
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Table of Contents
September 30, 2009
(Unaudited)
|
|
|
Page |
|
Equity Research Coverage and Company Information |
|
3 |
|
Condensed Consolidated Income Statements |
|
4 |
|
Condensed Consolidated Balance Sheets |
|
5 |
|
Financial and Portfolio Highlights |
|
6 |
|
Earnings per Share |
|
7 |
|
Funds from Operations |
|
8 |
|
Adjusted Funds from Operations |
|
9 |
|
Debt Information |
|
10 |
|
Summary of Properties |
|
14 |
|
Same Property Comparisons |
|
15 |
|
Leasing Activity |
|
16 |
|
Summary of Lease Expirations |
|
19 |
|
20 Largest Client Tenants |
|
20 |
|
Client Tenant Mix |
|
21 |
|
Summary of Additions and Dispositions of Properties |
|
22 |
|
Real Estate |
|
23 |
|
Value Add Activities |
|
24 |
|
Summary of Capital Expenditures |
|
31 |
|
Definitions and Other Information |
|
32 |
This Supplemental Financial & Property Information package includes “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. You can identify the forward-looking statements by their use of forward-looking words, such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates,” or the negative of those words or similar words. Our actual results may differ materially from those projected in such forward-looking statements. Factors that might cause such a difference include, without limitation, our failure 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, our failure to successfully operate or lease acquired properties, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, general and local economic conditions and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”). All forward-looking statements are made as of November 5, 2009, the date this Supplemental Financial & Property Information package is first made available on our website, and we assume no obligation to update this information. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.
This Supplemental Financial & Property Information package is not an offer to sell or solicitation to buy securities of Alexandria Real Estate Equities, Inc. Any offers to sell or solicitations to buy securities of Alexandria Real Estate Equities, Inc. shall be made only by means of a prospectus approved for that purpose. Unless otherwise indicated, the “Company,” “we,” “us” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries.
2
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Equity Research Coverage and Company Information
September 30, 2009
|
Equity Research Coverage |
||||||
|
|
|
|
|
|
|
|
|
Argus Research |
|
|
|
Keefe, Bruyette & Woods |
||
|
William L. Eddleman, Jr. |
|
(212) 425-7500 |
|
Sheila McGrath |
|
(212) 887-7793 |
|
|
|
|
|
Bill Carrier |
|
(212) 887-3810 |
|
Banc of America Securities-Merrill Lynch |
|
|
|
|
||
|
James Feldman |
|
(212) 449-6339 |
|
Morningstar |
|
|
|
Jana Galan |
|
(212) 449-5151 |
|
David Rodziewicz |
|
(312) 244-7037 |
|
|
|
|
|
|
|
|
|
Barclays Capital |
|
|
|
Oppenheimer |
|
|
|
Ross L. Smotrich |
|
(212) 526-2306 |
|
Mark Biffert |
|
(212) 667-7062 |
|
Jeffrey S. Langbaum |
|
(212) 526-0971 |
|
Samit Parikh |
|
(212) 667-6224 |
|
|
|
|
|
|
|
|
|
Citigroup Global Markets |
|
|
|
RW Baird |
|
|
|
Michael Bilerman |
|
(212) 816-1383 |
|
David AuBuchon |
|
(314) 863-4235 |
|
Mark K. Montandon |
|
(212) 816-6243 |
|
Justin Pelham-Webb |
|
(314) 863-6413 |
|
|
|
|
|
|
|
|
|
JMP Securities |
|
|
|
Standard & Poor’s |
|
|
|
William C. Marks |
|
(415) 835-8944 |
|
Robert McMillan |
|
(212) 438-9522 |
|
Susan Gutierrez |
|
(415) 835-3909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
JP Morgan Securities |
|
|
|
|
|
|
|
Anthony Paolone |
|
(212) 622-6682 |
|
|
|
|
|
Joseph Dazio |
|
(212) 622-6416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information Requests |
|
|
||
|
|
|
|
|
|
||
|
|
|
385 East Colorado Boulevard, Suite 299 |
|
|
||
|
|
|
Pasadena, California 91101 |
|
|
||
|
|
|
(626) 396-4828 |
|
|
||
|
|
|
Web: www.labspace.com |
|
|
||
|
|
|
E-mail: corporateinformation@labspace.com |
|
|
||
Alexandria Real Estate Equities, Inc. is currently covered by the equity research analysts listed above. This list may not be complete and is subject to change as firms add or delete coverage of our company. Please note that any opinions, estimates or forecasts regarding our historical or predicted performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Alexandria Real Estate Equities, Inc. or its management. Alexandria Real Estate Equities, Inc. does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations. Interested persons may obtain copies of analysts’ reports on their own as we do not distribute these reports. Several of these firms may from time-to-time own our stock and/or hold other long or short positions in our stock, and may provide compensated services to us.
3
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Income Statements
(Dollars in thousands, except per share data)
(Unaudited)
|
|
|
Nine Months Ended (1) |
|
Three Months Ended (1) |
|
|||||||||||||||||
|
|
|
9/30/09 |
|
9/30/08 |
|
9/30/09 |
|
6/30/09 |
|
3/31/09 |
|
12/31/08 |
|
9/30/08 |
|
|||||||
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Rental |
|
$ |
278,033 |
|
$ |
244,893 |
|
$ |
87,436 |
|
$ |
87,051 |
|
$ |
103,546 |
|
$ |
96,173 |
|
$ |
83,704 |
|
|
Tenant recoveries |
|
76,900 |
|
73,468 |
|
26,007 |
|
24,445 |
|
26,448 |
|
25,904 |
|
26,187 |
|
|||||||
|
Other income |
|
10,838 |
|
8,772 |
|
1,162 |
|
8,910 |
|
766 |
|
2,427 |
|
2,640 |
|
|||||||
|
Total revenues |
|
365,771 |
|
327,133 |
|
114,605 |
|
120,406 |
|
130,760 |
|
124,504 |
|
112,531 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Rental operations |
|
91,430 |
|
83,567 |
|
30,783 |
|
28,793 |
|
31,854 |
|
28,468 |
|
29,057 |
|
|||||||
|
General and administrative |
|
27,827 |
|
25,816 |
|
9,610 |
|
8,803 |
|
9,414 |
|
8,973 |
|
8,587 |
|
|||||||
|
Interest |
|
61,865 |
|
63,174 |
|
20,909 |
|
21,063 |
|
19,893 |
|
20,934 |
|
21,289 |
|
|||||||
|
Depreciation and amortization |
|
87,878 |
|
78,520 |
|
28,031 |
|
28,993 |
|
30,854 |
|
27,874 |
|
26,924 |
|
|||||||
|
Non-cash impairment on investments |
|
– |
|
1,985 |
|
– |
|
– |
|
– |
|
11,266 |
|
– |
|
|||||||
|
Total expenses |
|
269,000 |
|
253,062 |
|
89,333 |
|
87,652 |
|
92,015 |
|
97,515 |
|
85,857 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Gain on early extinguishment of debt |
|
11,254 |
|
– |
|
– |
|
11,254 |
|
– |
|
– |
|
– |
|
|||||||
|
Income from continuing operations |
|
108,025 |
|
74,071 |
|
25,272 |
|
44,008 |
|
38,745 |
|
26,989 |
|
26,674 |
|
|||||||
|
Income from discontinued operations, net |
|
3,718 |
|
18,458 |
|
1,106 |
|
108 |
|
2,504 |
|
579 |
|
928 |
|
|||||||
|
Net income |
|
111,743 |
|
92,529 |
|
26,378 |
|
44,116 |
|
41,249 |
|
27,568 |
|
27,602 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Net income attributable to noncontrolling interests |
|
6,123 |
|
2,828 |
|
886 |
|
4,362 |
|
875 |
|
971 |
|
929 |
|
|||||||
|
Dividends on preferred stock |
|
21,268 |
|
17,136 |
|
7,090 |
|
7,089 |
|
7,089 |
|
7,089 |
|
7,090 |
|
|||||||
|
Net income attributable to unvested restricted stock awards |
|
1,038 |
|
1,048 |
|
199 |
|
367 |
|
517 |
|
284 |
|
265 |
|
|||||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
$ |
83,314 |
|
$ |
71,517 |
|
$ |
18,203 |
|
$ |
32,298 |
|
$ |
32,768 |
|
$ |
19,224 |
|
$ |
19,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Continuing operations |
|
$ |
2.16 |
|
$ |
1.68 |
|
$ |
0.44 |
|
$ |
0.83 |
|
$ |
0.93 |
|
$ |
0.59 |
|
$ |
0.58 |
|
|
Discontinued operations, net |
|
0.10 |
|
0.58 |
|
0.03 |
|
– |
|
0.08 |
|
0.02 |
|
0.03 |
|
|||||||
|
Earnings per share – basic |
|
$ |
2.26 |
|
$ |
2.26 |
|
$ |
0.47 |
|
$ |
0.83 |
|
$ |
1.01 |
|
0.61 |
|
$ |
0.61 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Continuing operations |
|
$ |
2.16 |
|
$ |
1.68 |
|
$ |
0.44 |
|
$ |
0.82 |
|
$ |
0.93 |
|
$ |
0.58 |
|
$ |
0.58 |
|
|
Discontinued operations, net |
|
0.10 |
|
0.57 |
|
0.03 |
|
– |
|
0.08 |
|
0.02 |
|
0.03 |
|
|||||||
|
Earnings per share – diluted |
|
$ |
2.26 |
|
$ |
2.25 |
|
$ |
0.47 |
|
$ |
0.82 |
|
$ |
1.01 |
|
$ |
0.60 |
|
$ |
0.61 |
|
(1) Historical results related to assets classified as “held for sale” as of September 30, 2009 have been reclassified from continuing operations to income from discontinued operations, net. Also includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
4
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
|
|
|
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
|
|||||
|
|
|
|
2009 |
|
2009 |
|
2009 |
|
2008 (1) |
|
2008 (1) |
|
|||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Rental properties, net |
|
|
$ |
3,366,960 |
|
$ |
3,243,268 |
|
$ |
3,230,710 |
|
$ |
3,215,723 |
|
$ |
3,104,206 |
|
|
Land held for future development |
|
|
254,549 |
|
240,411 |
|
109,561 |
|
109,478 |
|
95,668 |
|
|||||
|
Construction in progress |
|
|
1,349,656 |
|
1,406,451 |
|
1,452,434 |
|
1,398,895 |
|
1,365,680 |
|
|||||
|
Cash and cash equivalents |
|
|
68,280 |
|
70,313 |
|
125,281 |
|
71,161 |
|
15,391 |
|
|||||
|
Tenant security deposits and other restricted cash |
|
|
60,002 |
|
51,683 |
|
54,770 |
|
67,782 |
|
68,040 |
|
|||||
|
Tenant receivables |
|
|
3,789 |
|
4,665 |
|
5,992 |
|
6,453 |
|
6,849 |
|
|||||
|
Deferred rent |
|
|
92,022 |
|
87,697 |
|
85,970 |
|
85,733 |
|
87,097 |
|
|||||
|
Investments |
|
|
71,080 |
|
66,068 |
|
64,788 |
|
61,861 |
|
72,509 |
|
|||||
|
Other assets |
|
|
126,999 |
|
116,097 |
|
112,669 |
|
114,991 |
|
118,096 |
|
|||||
|
Total assets |
|
|
$ |
5,393,337 |
|
$ |
5,286,653 |
|
$ |
5,242,175 |
|
$ |
5,132,077 |
|
$ |
4,933,536 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Secured notes payable |
|
|
$ |
837,177 |
|
$ |
941,600 |
|
$ |
1,041,854 |
|
$ |
1,081,963 |
|
$ |
1,078,551 |
|
|
Unsecured line of credit and unsecured term loan |
|
|
1,248,000 |
|
1,307,000 |
|
1,355,000 |
|
1,425,000 |
|
1,266,000 |
|
|||||
|
Unsecured convertible notes |
|
|
580,919 |
|
577,984 |
|
433,408 |
|
431,145 |
|
428,997 |
|
|||||
|
Accounts payable, accrued expenses and tenant security deposits |
|
|
325,720 |
|
312,313 |
|
331,715 |
|
386,801 |
|
280,812 |
|
|||||
|
Dividends payable |
|
|
21,665 |
|
20,005 |
|
37,701 |
|
32,105 |
|
31,939 |
|
|||||
|
Total liabilities |
|
|
3,013,481 |
|
3,158,902 |
|
3,199,678 |
|
3,357,014 |
|
3,086,299 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Redeemable noncontrolling interests |
|
|
41,232 |
|
41,012 |
|
32,887 |
|
33,963 |
|
34,476 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Alexandria Real Estate Equities, Inc. stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Series C preferred stock |
|
|
129,638 |
|
129,638 |
|
129,638 |
|
129,638 |
|
129,638 |
|
|||||
|
Series D cumulative convertible preferred stock |
|
|
250,000 |
|
250,000 |
|
250,000 |
|
250,000 |
|
250,000 |
|
|||||
|
Common stock |
|
|
437 |
|
390 |
|
390 |
|
319 |
|
318 |
|
|||||
|
Additional paid-in capital |
|
|
1,961,421 |
|
1,718,737 |
|
1,668,546 |
|
1,407,294 |
|
1,408,689 |
|
|||||
|
Accumulated other comprehensive loss |
|
|
(44,162 |
) |
(53,013 |
) |
(79,868 |
) |
(87,241 |
) |
(16,596 |
) |
|||||
|
Total Alexandria Real Estate Equities, Inc. stockholders’ equity |
|
|
2,297,334 |
|
2,045,752 |
|
1,968,706 |
|
1,700,010 |
|
1,772,049 |
|
|||||
|
Noncontrolling interests |
|
|
41,290 |
|
40,987 |
|
40,904 |
|
41,090 |
|
40,712 |
|
|||||
|
Total equity |
|
|
2,338,624 |
|
2,086,739 |
|
2,009,610 |
|
1,741,100 |
|
1,812,761 |
|
|||||
|
Total |
|
|
$ |
5,393,337 |
|
$ |
5,286,653 |
|
$ |
5,242,175 |
|
$ |
5,132,077 |
|
$ |
4,933,536 |
|
(1) Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
5
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial and Portfolio Highlights
(In thousands, except share, per share, per square feet and property data)
(Unaudited)
|
|
|
For the Three Months Ended or As Of |
|
|||||||||||||
|
|
|
9/30/09 |
|
6/30/09 |
|
3/31/09 |
|
12/31/08 |
|
9/30/08 |
|
|||||
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Rental properties, net |
|
$ |
3,366,960 |
|
$ |
3,243,268 |
|
$ |
3,230,710 |
|
$ |
3,215,723 |
|
$ |
3,104,206 |
|
|
Land held for future development |
|
254,549 |
|
240,411 |
|
109,561 |
|
109,478 |
|
95,668 |
|
|||||
|
Construction in progress |
|
1,349,656 |
|
1,406,451 |
|
1,452,434 |
|
1,398,895 |
|
1,365,680 |
|
|||||
|
Gross book value of real estate |
|
5,471,930 |
|
5,367,100 |
|
5,245,244 |
|
5,152,786 |
|
4,972,145 |
|
|||||
|
Total assets |
|
5,393,337 |
|
5,286,653 |
|
5,242,175 |
|
5,132,077 |
|
4,933,536 |
|
|||||
|
Total debt |
|
2,666,096 |
|
2,826,584 |
|
2,830,262 |
|
2,938,108 |
|
2,773,548 |
|
|||||
|
Total liabilities |
|
3,013,481 |
|
3,158,902 |
|
3,199,678 |
|
3,357,014 |
|
3,086,299 |
|
|||||
|
Total market capitalization |
|
5,276,336 |
|
4,441,806 |
|
4,394,465 |
|
5,050,910 |
|
6,621,310 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total revenue |
|
$ |
114,605 |
|
$ |
120,406 |
|
$ |
130,760 |
|
$ |
124,504 |
|
$ |
112,531 |
|
|
Deferred rent |
|
3,106 |
|
2,700 |
|
1,509 |
|
2,547 |
|
3,274 |
|
|||||
|
Amortization of acquired above and below market leases |
|
1,510 |
|
1,736 |
|
4,745 |
|
4,066 |
|
1,814 |
|
|||||
|
Adoption of new accounting provisions impacting convertible notes |
|
798 |
|
1,093 |
|
930 |
|
1,563 |
|
1,927 |
|
|||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
18,203 |
|
32,298 |
|
32,768 |
|
19,224 |
|
19,318 |
|
|||||
|
Earnings per share – diluted |
|
0.47 |
|
0.82 |
|
1.01 |
|
0.60 |
|
0.61 |
|
|||||
|
FFO attributable to Alexandria Real Estate, Inc.’s common stockholders |
|
50,609 |
|
68,401 |
|
61,329 |
|
47,190 |
|
46,273 |
|
|||||
|
FFO per share – diluted |
|
1.13 |
|
1.59 |
|
1.89 |
|
1.48 |
|
1.45 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Common Shares Data |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Common shares outstanding |
|
43,715,900 |
|
39,040,518 |
|
38,974,166 |
|
31,899,037 |
|
31,839,622 |
|
|||||
|
Weighted average common shares outstanding – EPS – diluted |
|
39,105,950 |
|
43,071,925 |
|
32,498,107 |
|
31,810,348 |
|
31,807,455 |
|
|||||
|
Weighted average common shares outstanding – FFO – diluted |
|
44,903,051 |
|
43,071,925 |
|
32,498,107 |
|
31,810,348 |
|
31,807,455 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Financial Ratios |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Unencumbered net operating income as a percentage of total net operating income |
|
60.2% |
|
60.8% |
|
63.5% |
|
61.9% |
|
58.2% |
|
|||||
|
Operating margin |
|
73% |
|
74% |
|
75% |
|
77% |
|
74% |
|
|||||
|
General and administrative expense as a percentage of total revenues |
|
8.4% |
|
7.3% |
|
7.2% |
|
7.2% |
|
7.6% |
|
|||||
|
EBITDA – trailing 12 months |
|
$ |
341,639 |
|
$ |
342,624 |
|
$ |
321,519 |
|
$ |
315,389 |
|
$ |
314,741 |
|
|
Adjusted EBITDA – trailing 12 months |
|
$ |
353,831 |
|
$ |
354,198 |
|
$ |
343,526 |
|
$ |
326,566 |
|
$ |
311,182 |
|
|
Capitalized interest |
|
$ |
17,933 |
|
$ |
18,240 |
|
$ |
16,919 |
|
$ |
19,764 |
|
$ |
17,781 |
|
|
Weighted average interest rate used for capitalization |
|
5.16% |
|
5.23% |
|
4.89% |
|
5.52% |
|
5.69% |
|
|||||
|
Dividends per share on common stock |
|
$ |
0.35 |
|
$ |
0.35 |
|
$ |
0.80 |
|
$ |
0.80 |
|
$ |
0.80 |
|
|
Dividend payout ratio (common stock) |
|
30.5% |
|
20.2% |
|
51.4% |
|
54.8% |
|
55.6% |
|
|||||
|
Debt to gross assets (excluding cash) |
|
44.3% |
|
48.1% |
|
48.2% |
|
51.8% |
|
51.4% |
|
|||||
|
Debt to Adjusted EBITDA – trailing 12 months |
|
7.3 |
|
7.7 |
|
7.8 |
|
8.6 |
|
8.7 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Portfolio Statistics |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Number of properties |
|
157 |
|
156 |
|
156 |
|
159 |
|
160 |
|
|||||
|
Rentable square feet |
|
11,799,781 |
|
11,697,498 |
|
11,697,498 |
|
11,761,716 |
|
11,786,583 |
|
|||||
|
Occupancy (excluding redevelopment and properties “held for sale”) |
|
94.4% |
|
94.5% |
|
94.3% |
|
94.8% |
|
95.6% |
|
|||||
|
Occupancy (including redevelopment properties) |
|
89.1% |
|
89.4% |
|
89.6% |
|
90.0% |
|
89.8% |
|
|||||
|
Leasing activity – YTD rentable square feet |
|
1,349,098 |
|
935,580 |
|
464,603 |
|
2,161,144 |
|
1,695,506 |
|
|||||
|
Leasing activity – Qtr rentable square feet |
|
449,515 |
|
472,822 |
|
464,603 |
|
513,134 |
|
618,259 |
|
|||||
|
Leasing activity – YTD GAAP rental rate increase |
|
4.9% |
|
4.0% |
|
5.4% |
|
15.0% |
|
14.9% |
|
|||||
|
Leasing activity – Qtr GAAP rental rate increase |
|
5.6% |
|
3.3% |
|
5.4% |
|
13.9% |
|
8.2% |
|
|||||
|
Same property YTD revenue less operating expenses – GAAP basis |
|
3.7% |
|
4.0% |
|
3.6% |
|
3.3% |
|
3.1% |
|
|||||
|
Same property Qtr revenue less operating expenses – GAAP basis |
|
0.8% |
|
2.2% |
|
3.6% |
|
4.3% |
|
5.6% |
|
|||||
See “Definitions and Other Information” section of this report starting on page 32.
6
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Earnings per Share
(Dollars in thousands, except per share data)
(Unaudited)
Earnings per Share
|
|
|
Nine Months Ended |
|
Three Months Ended |
|
|||||||||||||||||
|
|
|
9/30/09 |
|
9/30/08 (1) |
|
9/30/09 |
|
6/30/09 |
|
3/31/09 |
|
12/31/2008 (1) |
|
9/30/08 (1) |
|
|||||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for basic earnings per share |
|
$ |
83,314 |
|
$ |
71,517 |
|
$ |
18,203 |
|
$ |
32,298 |
|
$ |
32,768 |
|
$ |
19,224 |
|
$ |
19,318 |
|
|
Assumed conversion of 8% unsecured convertible notes |
|
– |
|
– |
|
– |
|
3,197 |
|
– |
|
– |
|
– |
|
|||||||
|
Effect of dilutive securities and assumed conversion attributable to unvested restricted stock awards |
|
– |
|
4 |
|
– |
|
3 |
|
1 |
|
– |
|
1 |
|
|||||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders assuming effect of dilutive securities and assumed conversion – numerator for diluted earnings per share |
|
$ |
83,314 |
|
$ |
71,521 |
|
$ |
18,203 |
|
$ |
35,498 |
|
$ |
32,769 |
|
$ |
19,224 |
|
$ |
19,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for basic earnings per share |
|
36,858,606 |
|
31,619,163 |
|
39,094,018 |
|
38,929,971 |
|
32,478,671 |
|
31,757,072 |
|
31,694,711 |
|
|||||||
|
Effect of dilutive securities and assumed conversion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Dilutive effect of stock options |
|
8,207 |
|
126,671 |
|
11,932 |
|
1,167 |
|
19,436 |
|
53,276 |
|
112,744 |
|
|||||||
|
Assumed conversion of 8% unsecured convertible notes |
|
– |
|
– |
|
– |
|
4,140,787 |
|
– |
|
– |
|
– |
|
|||||||
|
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders assuming effect of dilutive securities and assumed conversion – denominator for diluted earnings per share |
|
36,866,813 |
|
31,745,834 |
|
39,105,950 |
|
43,071,925 |
|
32,498,107 |
|
31,810,348 |
|
31,807,455 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Basic |
|
$ |
2.26 |
|
$ |
2.26 |
|
$ |
0.47 |
|
$ |
0.83 |
|
$ |
1.01 |
|
$ |
0.61 |
|
$ |
0.61 |
|
|
Diluted |
|
$ |
2.26 |
|
$ |
2.25 |
|
$ |
0.47 |
|
$ |
0.82 |
|
$ |
1.01 |
|
$ |
0.60 |
|
$ |
0.61 |
|
(1) Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
See “Definitions and Other Information” section of this report starting on page 32.
7
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Funds from Operations
(Dollars in thousands, except per share data)
(Unaudited)
Funds from Operations (“FFO”)
The following table presents a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, the most directly comparable financial measure calculated and presented in accordance with United States generally accepted accounting principles (“GAAP”), to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the nine month and three month periods noted below:
|
|
|
Nine Months Ended |
|
Three Months Ended |
|
|||||||||||||||||
|
|
|
9/30/09 |
|
9/30/08 (1) |
|
9/30/09 |
|
6/30/09 |
|
3/31/09 |
|
12/31/08 (1) |
|
9/30/08 (1) |
|
|||||||
|
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
$ |
83,314 |
|
$ |
71,517 |
|
$ |
18,203 |
|
$ |
32,298 |
|
$ |
32,768 |
|
$ |
19,224 |
|
$ |
19,318 |
|
|
Add: Depreciation and amortization (2) |
|
89,504 |
|
80,260 |
|
28,336 |
|
29,722 |
|
31,446 |
|
28,483 |
|
27,447 |
|
|||||||
|
Add: Net income attributable to noncontrolling interests |
|
6,123 |
|
2,828 |
|
886 |
|
4,362 |
|
875 |
|
971 |
|
929 |
|
|||||||
|
Add: Net income attributable to unvested restricted stock awards |
|
1,038 |
|
1,048 |
|
199 |
|
367 |
|
517 |
|
284 |
|
265 |
|
|||||||
|
Subtract: Gain on sales of property |
|
(2,234 |
) |
(20,395 |
) |
– |
|
– |
|
(2,234 |
) |
(6 |
) |
– |
|
|||||||
|
Subtract: FFO attributable to noncontrolling interests |
|
(2,837 |
) |
(3,039 |
) |
(918 |
) |
(842 |
) |
(1,077 |
) |
(1,069 |
) |
(1,054 |
) |
|||||||
|
Subtract: FFO attributable to unvested restricted stock awards |
|
(2,153 |
) |
(1,909 |
) |
(505 |
) |
(740 |
) |
(966 |
) |
(698 |
) |
(634 |
) |
|||||||
|
FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for basic FFO per share |
|
172,755 |
|
130,310 |
|
46,201 |
|
65,167 |
|
61,329 |
|
47,189 |
|
46,271 |
|
|||||||
|
Add: Assumed conversion of 8% unsecured convertible notes |
|
7,581 |
|
– |
|
4,384 |
|
3,197 |
|
– |
|
– |
|
– |
|
|||||||
|
Add: Effect of dilutive securities and assumed conversion attributable to unvested restricted stock awards |
|
91 |
|
7 |
|
24 |
|
37 |
|
– |
|
1 |
|
2 |
|
|||||||
|
FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders assuming effect of dilutive securities and assumed conversion – numerator for diluted FFO per share |
|
$ |
180,427 |
|
$ |
130,317 |
|
$ |
50,609 |
|
$ |
68,401 |
|
$ |
61,329 |
|
$ |
47,190 |
|
$ |
46,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Weighted average shares of common stock outstanding for calculating FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for basic FFO per share |
|
36,858,606 |
|
31,619,163 |
|
39,094,018 |
|
38,929,971 |
|
32,478,671 |
|
31,757,072 |
|
31,694,711 |
|
|||||||
|
Effect of dilutive securities and assumed conversion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Dilutive effect of stock options |
|
8,207 |
|
126,671 |
|
11,932 |
|
1,167 |
|
19,436 |
|
53,276 |
|
112,744 |
|
|||||||
|
Assumed conversion of 8% unsecured convertible notes |
|
3,333,864 |
|
– |
|
5,797,101 |
|
4,140,787 |
|
– |
|
– |
|
– |
|
|||||||
|
Weighted average shares of common stock outstanding for calculating FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders assuming effect of dilutive securities and assumed conversion – denominator for diluted FFO per share |
|
40,200,677 |
|
31,745,834 |
|
44,903,051 |
|
43,071,925 |
|
32,498,107 |
|
31,810,348 |
|
31,807,455 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Basic |
|
$ |
4.69 |
|
$ |
4.12 |
|
$ |
1.18 |
|
$ |
1.67 |
|
$ |
1.89 |
|
$ |
1.49 |
|
$ |
1.46 |
|
|
Diluted |
|
$ |
4.49 |
|
$ |
4.11 |
|
$ |
1.13 |
|
$ |
1.59 |
|
$ |
1.89 |
|
$ |
1.48 |
|
$ |
1.45 |
|
(1) Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
(2) Includes depreciation and amortization for assets “held for sale” reflected as discontinued operations (for the periods prior to when such assets were designated as “held for sale”).
See “Definitions and Other Information” section of this report starting on page 32.
8
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Adjusted
Funds from Operations
(Dollars in thousands)
(Unaudited)
Adjusted Funds from Operations
The following table presents a reconciliation of FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders to adjusted funds from operations (“AFFO”) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
|
|
|
For the Three Months Ended |
|
|||||||||||||
|
|
|
9/30/2009 |
|
6/30/2009 |
|
3/31/2009 |
|
12/31/2008 |
|
9/30/2008 |
|
|||||
|
FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
$ |
46,201 |
|
$ |
65,167 |
|
$ |
61,329 |
|
$ |
47,189 |
|
$ |
46,271 |
|
|
Add/(deduct): |
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Capital expenditures |
|
(565 |
) |
(270 |
) |
(492 |
) |
(202 |
) |
(197 |
) |
|||||
|
Second generation tenant improvements and leasing costs |
|
(819 |
) |
(894 |
) |
(691 |
) |
(1,931 |
) |
(762 |
) |
|||||
|
Amortization of loan fees |
|
2,061 |
|
2,023 |
|
1,793 |
|
1,710 |
|
1,683 |
|
|||||
|
Amortization of debt premiums/discounts |
|
2,923 |
|
2,605 |
|
2,262 |
|
2,106 |
|
1,989 |
|
|||||
|
Amortization of acquired above and below market leases |
|
(1,510 |
) |
(1,736 |
) |
(4,745 |
) |
(4,066 |
) |
(1,814 |
) |
|||||
|
Deferred rent |
|
(3,106 |
) |
(2,700 |
) |
(1,509 |
) |
(2,547 |
) |
(3,274 |
) |
|||||
|
Stock compensation |
|
4,141 |
|
3,694 |
|
3,022 |
|
3,563 |
|
3,523 |
|
|||||
|
Capitalized income from development projects |
|
1,545 |
|
1,631 |
|
1,662 |
|
1,659 |
|
1,725 |
|
|||||
|
Deferred rent on ground leases |
|
1,544 |
|
1,458 |
|
1,104 |
|
1,083 |
|
1,281 |
|
|||||
|
Impairment charges |
|
– |
|
– |
|
– |
|
11,266 |
|
– |
|
|||||
|
Gain on early extinguishment of debt |
|
– |
|
(11,254 |
) |
– |
|
– |
|
– |
|
|||||
|
Allocation to unvested restricted stock awards |
|
(67 |
) |
61 |
|
(37 |
) |
(184 |
) |
(56 |
) |
|||||
|
AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders |
|
$ |
52,348 |
|
$ |
59,785 |
|
$ |
63,698 |
|
$ |
59,646 |
|
$ |
50,369 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders assuming effect of dilutive securities and assumed conversion – denominator for diluted earnings per share |
|
39,105,950 |
|
43,071,925 |
|
32,498,107 |
|
31,810,348 |
|
31,807,455 |
|
|||||
|
Less: Assumed conversion of 8% unsecured convertible notes |
|
– |
|
4,140,787 |
|
– |
|
– |
|
– |
|
|||||
|
|
|
39,105,950 |
|
38,931,138 |
|
32,498,107 |
|
31,810,348 |
|
31,807,455 |
|
|||||
See “Definitions and Other Information” section of this report starting on page 32.
9
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Summary of Debt
September 30, 2009
(Dollars in thousands)
(Unaudited)
Debt Maturities / Rates
|
|
|
Secured Debt |
|
Unsecured Debt |
|
|||||||||||||||
|
|
|
|
|
Noncontrolling |
|
|
|
Weighted |
|
|
|
|
|
|||||||
|
|
|
|
|
Interests’ |
|
|
|
Average |
|
|
|
Unsecured |
|
|||||||
|
Year |
|
Our Share |
|
Share |
|
Total |
|
Interest Rate |
|
Credit Facility |
|
Convertible Notes |
|
|||||||
|
2009 |
|
$ |
2,723 |
|
$ |
65 |
|
$ |
2,788 |
|
5.62 |
% |
(1) |
|
$ |
– |
|
$ |
– |
|
|
2010 |
|
34,917 |
|
269 |
|
35,186 |
|
5.71 |
|
(2) |
|
– |
|
– |
|
|||||
|
2011 |
|
133,931 |
|
284 |
|
134,215 |
|
5.83 |
|
(2) |
|
498,000 |
(3) |
– |
|
|||||
|
2012 |
|
39,889 |
|
300 |
|
40,189 |
|
6.35 |
|
(2) |
|
750,000 |
(3) |
366,120 |
|
|||||
|
2013 |
|
72,533 |
|
17,617 |
|
90,150 |
|
6.57 |
|
(2) |
|
– |
|
– |
|
|||||
|
Thereafter |
|
513,803 |
|
20,846 |
|
534,649 |
|
6.75 |
|
(2) |
|
– |
|
214,799 |
|
|||||
|
Total |
|
$ |
797,796 |
|
$ |
39,381 |
|
$ |
837,177 |
(4) |
|
|
$ |
1,248,000 |
|
$ |
580,919 |
(5) |
||
Secured and Unsecured Debt Analysis
|
|
|
Balance |
|
Percentage |
|
Weighted |
|
Weighted |
|
|||
|
Secured Debt |
|
$ |
837,177 |
(4) |
31.4 |
% |
|
5.62 |
% |
|
6.4 Years |
|
|
Unsecured Line of Credit |
|
498,000 |
|
18.7 |
|
|
1.90 |
|
|
2.1 Years |
(7) |
|
|
Unsecured Term Loan |
|
750,000 |
|
28.1 |
|
|
5.57 |
|
|
3.1 Years |
(7) |
|
|
Unsecured Convertible Notes |
|
366,120 |
(5) |
13.7 |
|
|
3.70 |
|
|
2.3 Years |
|
|
|
Unsecured Convertible Notes |
|
214,799 |
(5) |
8.1 |
|
|
8.00 |
|
|
4.5 Years |
|
|
|
Total Debt |
|
$ |
2,666,096 |
|
100.0 |
% |
|
4.85 |
% |
|
3.9 Years |
|
|
(1) |
The weighted average interest rate is calculated based on outstanding debt as of September 30, 2009. |
|
(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) |
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. Our multi-year capital plan assumes that we will successfully amend and renegotiate our $1.9 billion unsecured credit facility to a significant availability level that will take into account our business needs, including a portion of the total commitment allocated to an unsecured line of credit and an unsecured term loan. The lead lenders under our $1.9 billion unsecured credit facility expect that we will be able to amend and renegotiate our total credit to include approximately 66%-75% of the current $1.9 billion capacity. See our Annual Report on Form 10-K for the year ended December 31, 2008 for additional disclosures on our unsecured line of credit and unsecured term loan. As of September 30, 2009, cash and cash equivalents were approximately $68.3 million. Additionally, as of September 30, 2009 restricted cash to fund certain construction costs was approximately $33.7 million. |
|
(4) |
Includes unamortized discount of approximately $2.1 million as of September 30, 2009. |
|
(5) |
Includes unamortized discount of approximately $43.8 million as of September 30, 2009. |
|
(6) |
Represents the weighted average contractual interest rate plus the impact of debt premiums/discounts and our interest rate swap agreements on our secured debt, unsecured line of credit and unsecured term loan and the contractual rates of 3.7% and 8% on our unsecured convertible notes. The weighted average interest rate excludes bank fees and amortization of loan fees. See also the “Summary of Interest Rate Swap Agreements” section of this report. |
|
(7) |
Assumes we exercise our sole right to extend the maturity date of our unsecured line of credit and unsecured term loan to October 2011 and October 2012, respectively. The interest rate related to outstanding borrowings for our unhedged floating rate debt is based upon one-month LIBOR. The interest rate resets periodically and will vary in future periods. |
10
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Summary of Secured Debt Principal Maturities By Maturity Date Through 2013
September 30, 2009
(Unaudited, in thousands)
|
Secured Debt Principal Maturities |
|
Maturity Date |
|
Type |
|
Stated Rate |
|
Effective Rate (1) |
|
Balance at |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
2009 Total |
|
None |
|
N/A |
|
N/A |
|
|
N/A |
|
|
$ |
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastern Massachusetts #1 |
|
3/11/2010 |
|
Bank |
|
2.40 |
% |
|
2.40 |
% |
|
$ |
7,205 |
(3) |
|
Washington – Seattle #1 |
|
7/1/2010 |
|
CMBS |
|
7.40 |
|
|
5.21 |
|
|
3,539 |
|
|
|
California – San Diego #1 |
|
10/1/2010 |
|
CMBS |
|
8.23 |
|
|
5.71 |
|
|
13,813 |
|
|
|
2010 Total |
|
|
|
|
|
|
|
|
|
|
|
$ |
24,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay #1 |
|
1/3/2011 |
|
Bank |
|
1.55 |
% |
|
1.55 |
% |
|
$ |
30,343 |
(3) |
|
Eastern Massachusetts #2 |
|
2/1/2011 |
|
Bank |
|
7.52 |
|
|
5.82 |
|
|
5,281 |
|
|
|
California – San Diego #2 |
|
8/2/2011 |
|
Not-for-Profit |
|
7.50 |
|
|
7.50 |
|
|
9,122 |
|
|
|
Eastern Massachusetts #3 |
|
10/1/2011 |
|
Bank |
|
8.10 |
|
|
5.69 |
|
|
2,376 |
|
|
|
Suburban Washington, D.C. #1 |
|
11/1/2011 |
|
CMBS |
|
7.25 |
|
|
5.82 |
|
|
3,095 |
|
|
|
Suburban Washington, D.C. #2 |
|
12/22/2011 |
|
Bank |
|
3.57 |
|
|
3.57 |
|
|
76,000 |
(4) |
|
|
2011 Total |
|
|
|
|
|
|
|
|
|
|
|
$ |
126,217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington – Seattle #2 |
|
1/1/2012 |
|
Bank |
|
1.41 |
% |
|
6.15 |
% |
|
$ |
28,500 |
(3)(5) |
|
Eastern Massachusetts #4 |
|
3/1/2012 |
|
Insurance Co. |
|
7.14 |
|
|
5.83 |
|
|
1,587 |
|
|
|
2012 Total |
|
|
|
|
|
|
|
|
|
|
|
$ |
30,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Diego #3 |
|
3/1/2013 |
|
Insurance Co. |
|
6.21 |
% |
|
6.21 |
% |
|
$ |
8,866 |
|
|
Eastern Massachusetts #5 |
|
4/6/2013 |
|
Bank |
|
4.26 |
|
|
4.26 |
|
|
38,444 |
(3)(6) |
|
|
Suburban Washington, D.C. #3 |
|
9/1/2013 |
|
CMBS |
|
6.36 |
|
|
6.36 |
|
|
27,724 |
|
|
|
California – San Francisco Bay #2 |
|
11/16/2013 |
|
Other |
|
6.14 |
|
|
6.14 |
|
|
7,527 |
|
|
|
2013 Total |
|
|
|
|
|
|
|
|
|
|
|
$ |
82,561 |
|
|
(1) |
Represents the weighted average contractual interest rate plus the impact of debt premiums/discounts and interest rate swap agreements as of September 30, 2009. The effective rate excludes bank fees and amortization of loan fees. |
|
(2) |
Represents the September 30, 2009 balances for secured debt maturing in each respective year. |
|
(3) |
Variable rate loan based on LIBOR plus an applicable spread. |
|
(4) |
We have ongoing discussions with lenders to extend or refinance the debt secured by this property. |
|
(5) |
Assumes we exercise our sole right to extend the maturity date of this secured debt from January 1, 2011 to January 1, 2012. |
|
(6) |
Assumes we exercise our sole right to extend the maturity date of this secured debt from January 2, 2012 to April 6, 2013. |
11
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Total Market Capitalization and
Fixed/Floating Rate Debt Analysis
(Dollars in thousands, except per share data)
(Unaudited)
Total Market Capitalization
|
|
|
As of |
|
|||||||||||||
|
|
|
9/30/2009 |
|
6/30/2009 |
|
3/31/2009 |
|
12/31/2008 |
|
9/30/2008 |
|
|||||
|
Number of shares of common stock outstanding |
|
43,715,900 |
|
39,040,518 |
|
38,974,166 |
|
31,899,037 |
|
31,839,622 |
|
|||||
|
Closing price of common stock |
|
$ |
54.35 |
|
$ |
35.79 |
|
$ |
36.40 |
|
$ |
60.34 |
|
$ |
112.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total debt |
|
$ |
2,666,096 |
|
$ |
2,826,584 |
|
$ |
2,830,262 |
|
$ |
2,938,108 |
|
$ |
2,773,548 |
|
|
Less: debt attributable to noncontrolling interests |
|
(39,381 |
) |
(39,445 |
) |
(45,484 |
) |
(44,984 |
) |
(42,384 |
) |
|||||
|
Less: cash, cash equivalents and escrowed cash related to construction projects |
|
(101,931 |
) |
(99,155 |
) |
(160,090 |
) |
(120,660 |
) |
(60,300 |
) |
|||||
|
Our share of total debt |
|
2,524,784 |
|
2,687,984 |
|
2,624,688 |
|
2,772,464 |
|
2,670,864 |
|
|||||
|
Preferred stock |
|
375,593 |
|
356,562 |
|
351,117 |
|
353,658 |
|
368,489 |
|
|||||
|
Common stock market capitalization |
|
2,375,959 |
|
1,397,260 |
|
1,418,660 |
|
1,924,788 |
|
3,581,957 |
|
|||||
|
Total market capitalization |
|
$ |
5,276,336 |
|
$ |
4,441,806 |
|
$ |
4,394,465 |
|
$ |
5,050,910 |
|
$ |
6,621,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Debt to Adjusted EBITDA – trailing 12 months |
|
7.3 |
|
7.7 |
|
7.8 |
|
8.6 |
|
8.7 |
|
|||||
|
Debt to gross assets (excluding cash) |
|
44.3% |
|
48.1% |
|
48.2% |
|
51.8% |
|
51.4% |
|
|||||
|
Unencumbered net operating income as a percentage of total net operating income |
|
60.2% |
|
60.8% |
|
63.5% |
|
61.9% |
|
58.2% |
|
|||||
Fixed/Floating Rate Debt Analysis
|
|
|
September 30, 2009 |
|
Percentage |
|
Weighted |
|
Weighted |
|
|||
|
Fixed Rate Debt |
|
$ |
1,312,344 |
|
49.2 |
% |
|
5.61 |
% |
|
5.3 Years |
|
|
Floating Rate Debt – Hedged |
|
916,944 |
|
34.4 |
|
|
5.39 |
|
|
3.0 Years |
(b) |
|
|
Floating Rate Debt – Unhedged |
|
436,808 |
|
16.4 |
|
|
1.44 |
|
|
2.0 Years |
(b) |
|
|
Total Debt |
|
$ |
2,666,096 |
|
100.0 |
% |
|
4.85 |
% |
|
3.9 Years |
(b) |
|
(a) |
Represents the weighted average contractual interest rate plus the impact of debt premiums/discounts and our interest rate swap agreements on our secured debt, unsecured line of credit and unsecured term loan and the contractual rates of 3.7% and 8% on our unsecured convertible notes. The weighted average interest rate excludes bank fees and amortization of loan fees. See also the “Summary of Interest Rate Swap Agreements” section of this report. |
|
(b) |
Assumes we exercise our sole right to extend the maturity date of our unsecured line of credit and unsecured term loan to October 2011 and October 2012, respectively. The interest rate related to outstanding borrowings for our unhedged floating rate debt is based upon one-month LIBOR. The interest rate resets periodically and will vary in future periods. |
See “Definitions and Other Information” section of this report starting on page 32.
12
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements
September 30, 2009
(Dollars in thousands)
(Unaudited)
|
Transaction |
|
Effective |
|
Termination |
|
Interest Pay |
|
Notional |
|
Effective at |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
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 |
|
||
|
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 |
|
||
|
December 2005 |
|
January 2, 2008 |
|
December 31, 2010 |
|
4.768 |
|
|
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 |
|
25,000 |
|
||
|
October 2007 |
|
July 1, 2008 |
|
March 31, 2013 |
|
4.625 |
|
|
25,000 |
|
25,000 |
|
||
|
October 2008 |
|
October 10, 2008 |
|
December 31, 2009 |
|
2.750 |
|
|
75,000 |
|
75,000 |
|
||
|
October 2008 |
|
October 16, 2008 |
|
January 31, 2010 |
|
2.755 |
|
|
100,000 |
|
100,000 |
|
||
|
June 2006 |
|
October 31, 2008 |
|
December 31, 2010 |
|
5.340 |
|
|
50,000 |
|
50,000 |
|
||
|
June 2006 |
|
October 31, 2008 |
|
December 31, 2010 |
|
5.347 |
|
|
50,000 |
|
50,000 |
|
||
|
May 2005 |
|
November 28, 2008 |
|
November 30, 2009 |
|
4.615 |
|
|
25,000 |
|
25,000 |
|
||
|
October 2008 |
|
September 30, 2009 |
|
January 31, 2011 |
|
3.119 |
|
|
100,000 |
|
100,000 |
|
||
|
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 |
|
|
|
|
|
|
|
|
|
|
$ |
878,500 |
|
|
Interest pay rates represent the interest rates we will pay for one month LIBOR under the applicable interest rate swap agreement. These rates do not include any spread in addition to one month LIBOR that is due monthly as interest expense.
In May 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. The agreement sets a ceiling on one month LIBOR at 2.50% related to one secured note.
13
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties
(Dollars in thousands)
(Unaudited)
|
|
|
September 30, 2009 |
|
June 30, 2009 |
|
|||||||||||||
|
|
|
Number of |
|
Rentable Square Feet |
|
Annualized |
|
Occupancy |
|
Occupancy |
|
|||||||
|
Markets |
|
Properties |
|
Operating |
|
Redevelopment |
|
Total |
|
Base Rent (1) |
|
Percentage (1) (2) |
|
Percentage (3) |
|
|||
|
California – San Diego |
|
32 |
|
1,538,931 |
|
123,728 |
|
1,662,659 |
|
$ |
42,053 |
|
90.2 |
% |
|
90.9 |
% |
|
|
California – San Francisco Bay |
|
18 |
|
1,526,963 |
|
53,980 |
|
1,580,943 |
|
53,584 |
|
96.2 |
|
|
96.5 |
|
|
|
|
Eastern Massachusetts |
|
36 |
|
3,047,897 |
|
257,500 |
|
3,305,397 |
|
112,225 |
|
94.7 |
|
|
95.7 |
|
|
|
|
New Jersey/Suburban Philadelphia |
|
8 |
|
459,904 |
|
– |
|
459,904 |
|
8,563 |
|
88.0 |
|
|
88.0 |
|
|
|
|
Southeast |
|
13 |
|
716,174 |
|
40,390 |
|
756,564 |
|
15,831 |
|
92.6 |
|
|
94.9 |
|
|
|
|
Suburban Washington, D.C. |
|
30 |
|
2,281,959 |
|
165,644 |
|
2,447,603 |
|
47,690 |
|
94.6 |
|
|
92.2 |
|
|
|
|
Washington – Seattle |
|
12 |
|
975,121 |
|
– |
|
975,121 |
|
30,044 |
|
99.1 |
|
|
99.2 |
|
|
|
|
International – Canada |
|
4 |
|
342,394 |
|
– |
|
342,394 |
|
7,936 |
|
100.0 |
|
|
100.0 |
|
|
|
|
Total Properties (Continuing Operations) |
|
153 |
|
10,889,343 |
|
641,242 |
|
11,530,585 |
|
$ |
317,926 |
|
94.4 |
% |
|
94.5 |
% |
|
|
(1) |
Excludes spaces at properties totaling approximately 641,242 rentable square feet 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, and four properties with approximately 269,196 rentable square feet that are classified as “held for sale.” |
|
(2) |
Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of September 30, 2009 was 89.1%. See also the “Value Add Activities” section of this report for additional information on our redevelopment program. |
|
(3) |
Excludes spaces at properties totaling approximately 616,175 rentable square feet 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, and one property with approximately 92,711 rentable square feet that was classified as “held for sale.” Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of June 30, 2009 was 89.4%. See also the “Value Add Activities” section of this report for additional information on our redevelopment program. |
14
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
|
|
|
GAAP Basis |
|
Cash Basis |
|
||||||||||||
|
|
|
Quarter Ended |
|
Quarter Ended |
|
||||||||||||
|
|
|
9/30/2009 |
|
9/30/2008 |
|
% Change |
|
9/30/2009 |
|
9/30/2008 |
|
% Change |
|
||||
|
Revenue |
|
$ |
97,531 |
|
$ |
96,457 |
|
1.1% |
|
$ |
96,442 |
|
$ |
93,069 |
|
3.6% |
|
|
Operating expenses |
|
25,616 |
|
25,138 |
|
1.9 |
|
25,616 |
|
25,138 |
|
1.9 |
|
||||
|
Revenue less operating expenses |
|
$ |
71,915 |
|
$ |
71,319 |
|
0.8% |
|
$ |
70,826 |
|
$ |
67,931 |
|
4.3% |
|
|
|
|
GAAP Basis |
|
Cash Basis |
|
||||||||||||
|
|
|
Nine Months Ended |
|
Nine Months Ended |
|
||||||||||||
|
|
|
9/30/2009 |
|
9/30/2008 |
|
% Change |
|
9/30/2009 |
|
9/30/2008 |
|
% Change |
|
||||
|
Revenue |
|
$ |
285,168 |
|
$ |
275,583 |
|
3.5% |
|
$ |
282,000 |
|
$ |
266,136 |
|
6.0% |
|
|
Operating expenses |
|
74,673 |
|
72,578 |
|
2.9 |
|
74,673 |
|
72,578 |
|
2.9 |
|
||||
|
Revenue less operating expenses |
|
$ |
210,495 |
|
$ |
203,005 |
|
3.7% |
|
$ |
207,327 |
|
$ |
193,558 |
|
7.1% |
|
Quarterly Percentage Change in GAAP Same Property Revenues Less Operating Expenses
See “Definitions and Other Information” section of this report starting on page 32.
15
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended September 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
TI’s/Lease |
|
|
|
|
|
|
|
|
Rentable |
|
|
|
|
|
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 |
|
37 |
|
427,800 |
|
$27.32 |
|
– |
|
– |
|
– |
|
– |
|
|
GAAP Basis |
|
37 |
|
427,800 |
|
$27.88 |
|
– |
|
– |
|
– |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewed/Released Space Leased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
15 |
|
206,448 |
|
$23.33 |
|
$23.70 |
|
1.6% |
|
$4.95 |
|
3.7 years |
|
|
GAAP Basis |
|
15 |
|
206,448 |
|
$22.66 |
|
$23.93 |
|
5.6% |
|
$4.95 |
|
3.7 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed/Redeveloped/Vacant Space Leased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
14 |
|
243,067 |
|
– |
|
$43.95 |
|
– |
|
$6.06 |
|
9.2 years |
|
|
GAAP Basis |
|
14 |
|
243,067 |
|
– |
|
$46.89 |
|
– |
|
$6.06 |
|
9.2 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month-to-Month Leases in Effect |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
7 |
|
19,827 |
|
$21.55 |
|
$21.50 |
|
– |
|
– |
|
– |
|
|
GAAP Basis |
|
7 |
|
19,827 |
|
$20.24 |
|
$21.50 |
|
– |
|
– |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing Activity Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Month-to-Month Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
29 |
|
449,515 |
|
– |
|
$34.65 |
|
– |
|
$5.55 |
|
6.7 years |
|
|
GAAP Basis |
|
29 |
|
449,515 |
|
– |
|
$36.34 |
|
– |
|
$5.55 |
|
6.7 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Including Month-to-Month Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
36 |
|
469,342 |
|
– |
|
$34.09 |
|
– |
|
– |
|
– |
|
|
GAAP Basis |
|
36 |
|
469,342 |
|
– |
|
$35.72 |
|
– |
|
– |
|
– |
|
16
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Nine Months Ended September 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
TI’s/Lease |
|
|
|
|
|
|
|
|
Rentable |
|
|
|
|
|
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 |
|
109 |
|
1,365,044 |
|
$32.20 |
|
– |
|
– |
|
– |
|
– |
|
|
GAAP Basis |
|
109 |
|
1,365,044 |
|
$32.92 |
|
– |
|
– |
|
– |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewed/Released Space Leased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
73 |
|
788,002 |
|
$29.53 |
|
$30.37 |
|
2.8% |
|
$3.05 |
|
3.0 years |
|
|
GAAP Basis |
|
73 |
|
788,002 |
|
$28.46 |
|
$29.86 |
|
4.9% |
|
$3.05 |
|
3.0 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed/Redeveloped/Vacant Space Leased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
35 |
|
561,096 |
|
– |
|
$34.81 |
|
– |
|
$7.99 |
|
6.8 years |
|
|
GAAP Basis |
|
35 |
|
561,096 |
|
– |
|
$37.88 |
|
– |
|
$7.99 |
|
6.8 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month-to-Month Leases in Effect |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
7 |
|
19,827 |
|
$21.55 |
|
$21.50 |
|
– |
|
– |
|
– |
|
|
GAAP Basis |
|
7 |
|
19,827 |
|
$20.24 |
|
$21.50 |
|
– |
|
– |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasing Activity Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excluding Month-to-Month Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
108 |
|
1,349,098 |
|
– |
|
$32.22 |
|
– |
|
$5.11 |
|
4.6 years |
|
|
GAAP Basis |
|
108 |
|
1,349,098 |
|
– |
|
$33.20 |
|
– |
|
$5.11 |
|
4.6 years |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Including Month-to-Month Leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Basis |
|
115 |
|
1,368,925 |
|
– |
|
$32.06 |
|
– |
|
– |
|
– |
|
|
GAAP Basis |
|
115 |
|
1,368,925 |
|
– |
|
$33.03 |
|
– |
|
– |
|
– |
|
In December 2008, the Company entered into a modification of a lease in South San Francisco resulting in the recognition of additional rental income approximating $11.3 million and $18.5 million in the fourth quarter of 2008 and the first quarter of 2009, respectively. The Company completed the lease modification in December 2008 in order to lease the space to a high quality life science company. The leasing activity above excludes the impact of activity at this property due to the significance of the additional rental income recognized pursuant to the lease modification.
17
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
|
|
September 30, 2009 |
|
Years Ended |
|
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Quarter |
|
|
Year-to-Date |
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
||||||||||||
|
|
|
GAAP |
|
Cash |
|
|
GAAP |
|
Cash |
|
|
GAAP |
|
Cash |
|
|
GAAP |
|
Cash |
|
|
GAAP |
|
Cash |
|
|
GAAP |
|
Cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Expirations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square Footage |
|
427,800 |
|
427,800 |
|
|
1,365,044 |
|
1,365,004 |
|
|
1,664,944 |
|
1,664,944 |
|
|
1,626,033 |
|
1,626,033 |
|
|
1,224,143 |
|
1,224,143 |
|
|
1,258,034 |
|
1,258,034 |
|
|
Expiring Rates |
|
$27.88 |
|
$27.32 |
|
|
$32.92 |
|
$32.20 |
|
|
$25.52 |
|
$26.88 |
|
|
$26.97 |
|
$25.98 |
|
|
$22.42 |
|
$24.62 |
|
|
$24.40 |
|
$22.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewed/Released Space |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leased Rentable Square Footage |
|
206,448 |
|
206,448 |
|
|
788,002 |
|
788,002 |
|
|
1,254,285 |
|
1,254,285 |
|
|
895,894 |
|
895,894 |
|
|
704,826 |
|
704,826 |
|
|
796,945 |
|
796,945 |
|
|
New Rates |
|
$23.93 |
|
$23.70 |
|
|
$29.86 |
|
$30.37 |
|
|
$29.34 |
|
$28.60 |
|
|
$31.48 |
|
$31.41 |
|
|
$23.67 |
|
$23.64 |
|
|
$23.42 |
|
$23.63 |
|
|
Expiring Rates |
|
$22.66 |
|
$23.33 |
|
|
$28.46 |
|
$29.53 |
|
|
$25.51 |
|
$27.08 |
|
|
$28.66 |
|
$29.38 |
|
|
$20.74 |
|
$21.94 |
|
|
$22.66 |
|
$22.66 |
|
|
Rental Rate Changes |
|
5.6% |
|
1.6% |
|
|
4.9% |
|
2.8% |
|
|
15.0% |
|
5.6% |
|
|
9.8% |
|
6.9% |
|
|
14.1% |
|
7.7% |
|
|
3.4% |
|
4.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed/Redeveloped/Vacant Space Leased |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square Footage |
|
243,067 |
|
243,067 |
|
|
561,096 |
|
561,096 |
|
|
906,859 |
|
906,859 |
|
|
686,856 |
|
686,856 |
|
|
883,503 |
|
883,503 |
|
|
721,961 |
|
721,961 |
|
|
New Rates |
|
$46.89 |
|
$43.95 |
|
|
$37.88 |
|
$34.81 |
|
|
$37.64 |
|
$35.04 |
|
|
$33.68 |
|
$31.59 |
|
|
$32.89 |
|
$31.02 |
|
|
$25.65 |
|
$24.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rentable Square Footage |
|
449,515 |
|
449,515 |
|
|
1,349,098 |
|
1,349,098 |
|
|
2,161,144 |
|
2,161,144 |
|
|
1,582,750 |
|
1,582,750 |
|
|
1,588,329 |
|
1,588,329 |
|
|
1,518,906 |
|
1,518,906 |
|
|
New Rates |
|
$36.34 |
|
$34.65 |
|
|
$33.20 |
|
$32.22 |
|
|
$32.82 |
|
$31.30 |
|
|
$32.44 |
|
$31.49 |
|
|
$28.80 |
|
$27.74 |
|
|
$24.48 |
|
$24.01 |
|
|
TI’s/Lease Commissions per Square Foot |
|
$5.55 |
|
$5.55 |
|
|
$5.11 |
|
$5.11 |
|
|
$7.23 |
|
$7.23 |
|
|
$6.95 |
|
$6.95 |
|
|
$5.13 |
|
$5.13 |
|
|
$6.52 |
|
$6.52 |
|
|
Average Lease Terms |
|
6.7 years |
|
6.7 years |
|
|
4.6 years |
|
4.6 years |
|
|
5.5 years |
|
5.5 years |
|
|
5.1 years |
|
5.1 years |
|
|
6.3 years |
|
6.3 years |
|
|
6.2 years |
|
6.2 years |
|
18
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
September 30, 2009
|
Year of Lease |
|
Number of |
|
Rentable
Square |
|
Percentage of |
|
Annualized Base Rent |
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
16 (1) |
|
246,420 (1) |
|
2.4% |
|
$27.09 |
|
|
2010 |
|
76 |
|
974,125 |
|
9.5 |
|
25.93 |
|
|
2011 |
|
76 |
|
1,759,082 |
|
17.1 |
|
28.27 |
|
|
2012 |
|
67 |
|
1,385,630 |
|
13.5 |
|
33.34 |
|
|
2013 |
|
47 |
|
974,635 |
|
9.5 |
|
30.08 |
|
|
2014 |
|
43 |
|
998,180 |
|
9.7 |
|
28.39 |
|
|
2015 |
|
25 |
|
590,534 |
|
5.7 |
|
27.36 |
|
|
2016 |
|
17 |
|
987,095 |
|
9.6 |
|
30.76 |
|
|
2017 |
|
12 |
|
606,057 |
|
5.9 |
|
37.26 |
|
|
2018 |
|
11 |
|
737,172 |
|
7.2 |
|
44.60 |
|
|
|
|
2009 |
|
2010 |
|
||||
|
Markets |
|
Rentable Square |
|
Annualized Base Rent |
|
Rentable Square |
|
Annualized Base Rent |
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Diego |
|
91,699 |
|
$27.94 |
|
216,893 |
|
$25.55 |
|
|
California – San Francisco Bay |
|
24,009 |
|
33.53 |
|
238,040 |
|
30.02 |
|
|
Eastern Massachusetts |
|
47,753 |
|
28.94 |
|
169,875 |
|
30.12 |
|
|
New Jersey/Suburban Philadelphia |
|
– |
|
– |
|
63,460 |
|
14.75 |
|
|
Southeast |
|
20,332 |
|
29.89 |
|
107,359 |
|
22.82 |
|
|
Suburban Washington, D.C. |
|
62,627 |
|
21.06 |
|
40,353 |
|
15.08 |
|
|
Washington – Seattle |
|
– |
|
– |
|
138,145 |
|
24.85 |
|
|
International – Canada |
|
– |
|
– |
|
– |
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
246,420 |
(1) |
$27.09 |
|
974,125 |
|
$25.93 |
|
(1) Excludes seven month-to-month leases for approximately 20,000 rentable square feet.
19
ALEXANDRIA REAL ESTATE EQUITIES, INC.
20 Largest Client Tenants
September 30, 2009
(Unaudited)
|
|
|
Tenant |
|
Number |
|
Remaining |
|
Remaining |
|
Approximate |
|
Percentage of |
|
Annualized |
|
Percentage of |
|
|
|
1 |
|
Novartis AG |
|
4 |
|
6.4 |
|
6.8 |
|
400,255 |
|
3.9% |
|
$ |
24,073 |
|
7.6% |
|
|
2 |
|
Roche Holding Ltd |
|
5 |
|
8.0 |
|
8.3 |
|
387,813 |
|
3.8 |
|
14,834 |
|
4.7 |
|
|
|
3 |
|
GlaxoSmithKline plc |
|
6 |
|
5.7 |
|
6.6 |
|
350,278 |
|
3.4 |
|
14,154 |
|
4.5 |
|
|
|
4 |
|
ZymoGenetics, Inc. (4) |
|
2 |
|
9.6 |
|
9.6 |
|
203,369 |
|
2.0 |
|
8,747 |
|
2.7 |
|
|
|
5 |
|
United States Government |
|
6 |
|
3.9 |
|
3.9 |
|
308,205 |
|
3.0 |
|
8,359 |
|
2.6 |
|
|
|
6 |
|
Massachusetts Institute of Technology |
|
3 |
|
2.5 |
|
2.8 |
|
178,952 |
|
1.7 |
|
7,899 |
|
2.5 |
|
|
|
7 |
|
Theravance, Inc. (5) |
|
2 |
|
2.5 |
|
2.5 |
|
170,244 |
|
1.7 |
|
6,136 |
|
1.9 |
|
|
|
8 |
|
Pfizer Inc. |
|
2 |
|
10.2 |
|
10.2 |
|
120,140 |
|
1.2 |
|
5,648 |
|
1.8 |
|
|
|
9 |
|
Amylin Pharmaceuticals, Inc. |
|
3 |
|
6.7 |
|
6.9 |
|
158,983 |
|
1.5 |
|
5,467 |
|
1.7 |
|
|
|
10 |
|
Dyax Corp. |
|
1 |
|
2.4 |
|
2.4 |
|
91,495 |
|
0.9 |
|
5,407 |
|
1.7 |
|
|
|
11 |
|
The Scripps Research Institute |
|
2 |
|
7.2 |
|
7.1 |
|
96,500 |
|
0.9 |
|
5,193 |
|
1.6 |
|
|
|
12 |
|
Forrester Research, Inc. |
|
1 |
|
2.0 |
|
2.0 |
|
145,551 |
|
1.4 |
|
4,987 |
|
1.6 |
|
|
|
13 |
|
Alnylam Pharmaceuticals, Inc. |
|
1 |
|
7.0 |
|
7.0 |
|
95,410 |
|
0.9 |
|
4,466 |
|
1.4 |
|
|
|
14 |
|
Quest Diagnostics Incorporated |
|
1 |
|
7.3 |
|
7.3 |
|
248,186 |
|
2.4 |
|
4,341 |
|
1.4 |
|
|
|
15 |
|
Infinity Pharmaceuticals, Inc. |
|
2 |
|
3.3 |
|
3.3 |
|
67,167 |
|
0.7 |
|
4,302 |
|
1.4 |
|
|
|
16 |
|
Johnson & Johnson |
|
2 |
|
4.0 |
|
3.4 |
|
170,451 |
|
1.7 |
|
3,917 |
|
1.2 |
|
|
|
17 |
|
Fred Hutchinson Cancer Research Center |
|
2 |
|
4.8 |
|
4.9 |
|
123,322 |
|
1.2 |
|
3,853 |
|
1.2 |
|
|
|
18 |
|
Merck & Co., Inc. |
|
2 |
|
3.6 |
|
4.3 |
|
102,196 |
|
1.0 |
|
3,847 |
|
1.2 |
|
|
|
19 |
|
Qiagen N.V. |
|
2 |
|
6.5 |
|
6.5 |
|
158,879 |
|
1.5 |
|
3,845 |
|
1.2 |
|
|
|
20 |
|
Monsanto Company |
|
3 |
|
8.4 |
|
10.8 |
|
120,050 |
|
1.2 |
|
3,757 |
|
1.2 |
|
|
|
|
|
Total/Weighted Average: |
|
52 |
|
5.8 |
|
6.1 |
|
3,697,446 |
|
36.0% |
|
$ |
143,232 |
|
45.1% |
|
(1) Represents remaining lease term in years based on percentage of leased square feet.
(2) Represents remaining lease term in years based on percentage of annualized base rent.
(3) Annualized base rent means the annualized fixed base rental amount in effect as of September 30, 2009 (using rental revenue computed on a straight- line basis in accordance with GAAP).
(4) As of September 30, 2009, Novo A/S owned approximately 31.5% of ZymoGenetics, Inc.
(5) As of July 31, 2009, GlaxoSmithKline plc owned 15% of the outstanding stock of Theravance, Inc.
20
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Client Tenant Mix
September 30, 2009
(Unaudited)
|
|
Multinational Pharmaceutical |
|
Institutional:
Independent Not-for-Profit/ |
|
Client tenant mix by annualized base rent |
· Abbot Laboratories · Astellas Pharma US, Inc. · AstraZeneca plc · Baxter International, Inc. · Eisai Co., Ltd. · GlaxoSmithKline plc · Johnson & Johnson · Merck & Co., Inc. · Novartis AG · Pfizer Inc. · Roche Holding Ltd · Sanofi-Aventis |
|
· Bill & Melinda Gates Foundation · The Burham Institute for Medical Research · Duke University · Environmental Protection Agency · Fred Hutchinson Cancer Research Center · Massachusetts Institute of Technology · The National Institutes of Health · The Scripps Research Institute · University of California, San Francisco · University of Massachusetts · UMass Memorial Medical Center · University of Washington |
|
|
|
|
|
|
Biotechnology: Public & Private |
|
Medical Device, Life Science Product, |
|
|
· Alnylam Pharmaceuticals, Inc. · Ambrx, Inc. · Amgen, Inc. · Anaphore, Inc. · Amylin Pharmaceuticals, Inc. · Avila Therapeutics, Inc. · Biogen Idec Inc. · BrainCells Inc. · Celegene Corporation · Gilead Sciences, Inc. · Ikaria Holdings, Inc. · Intellikine, Inc. · Intercell AG · MacroGenics, Inc. · Theravance, Inc. · Proteostasis Therapeutics, Inc. · ZymoGenetics, Inc. |
|
· Bio-Rad Laboratories, Inc. · Becton, Dickson and Company · Canon U.S. Life Sciences, Inc. · Laboratory Corporation Of America Holdings · Life Technologies Corporation · Monsanto Company · Pharmaceutical Product Development, Inc. · Qiagen N.V. · Quest Diagnostics Incorporated · Syngenta AG |
21
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Additions and Dispositions of Properties
For the Quarter Ended September 30, 2009
(Dollars in thousands)
|
|
|
Acquisition |
|
Month of |
|
Rentable |
|
Markets |
|
Amount |
|
Acquisition |
|
Square Feet |
|
|
|
|
|
|
|
|
|
Additions to Operating Properties: |
|
N/A |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition |
|
Month of |
|
Developable |
|
Markets |
|
Amount |
|
Acquisition |
|
Square Feet |
|
|
|
|
|
|
|
|
|
Additions to Land: |
|
N/A |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disposition |
|
Month of |
|
Rentable |
|
Markets |
|
Amount |
|
Disposition |
|
Square Feet |
|
|
|
|
|
|
|
|
|
Dispositions: |
|
N/A |
|
N/A |
|
N/A |
22
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Real Estate
September 30, 2009
(Dollars in thousands, except per square footage data)
|
|
|
Book Value |
|
Square Footage |
|
|
|
|
|
|
|
|
|
|
|
Land |
|
$ |
470,156 |
|
|
|
|
Buildings and building improvements |
|
3,216,373 |
|
|
|
|
|
Other improvements |
|
181,196 |
|
|
|
|
|
Gross book value of real estate – operating properties |
|
3,867,725 |
|
11,158,539 |
|
|
|
Less: Accumulated depreciation |
|
(500,765 |
) |
|
|
|
|
Rental properties, net |
|
3,366,960 |
|
|
|
|
|
Land held for future development (1) |
|
254,549 |
|
4,825,000 |
|
|
|
Construction in progress: |
|
|
|
|
|
|
|
Redevelopment |
|
133,437 |
|
641,242 |
|
|
|
Development |
|
370,164 |
|
980,000 |
|
|
|
Preconstruction |
|
598,538 |
|
5,260,000 |
|
|
|
New markets and other projects |
|
247,517 |
(2)(3) |
1,057,000 |
(2) |
|
|
Construction in progress |
|
1,349,656 |
|
7,938,242 |
|
|
|
Real estate, net |
|
4,971,165 |
|
23,921,781 |
|
|
|
Add: Accumulated depreciation |
|
500,765 |
|
|
|
|
|
Gross book value of real estate |
|
$ |
5,471,930 |
|
23,921,781 |
|
|
(1) |
Excludes a parcel with approximately 442,000 rentable square feet in New York City that we have an option to develop and a 924,000 developable square feet parcel in Edinburgh, Scotland that we have a long-term right to purchase. |
|
(2) |
Includes approximately 547,000 rentable square feet related to two ground-up development projects in China and approximately 410,000 rentable square feet related to our project in New York City. |
|
(3) |
Dollar amount also includes one parking structure in the San Francisco, Mission Bay market. |
23
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Value Add Activities
September 30, 2009
Construction in progress includes the following value add activities as of September 30, 2009 (dollars in thousands, except for per square footage data):
|
Value Add Activities |
|
Amount |
|
Square Feet |
|
Cost per Square Foot |
|
||
|
|
|
|
|
|
|
|
|
||
|
Redevelopment projects |
|
$ |
133,437 |
|
641,242 |
|
$ |
208 |
|
|
|
|
|
|
|
|
|
|
||
|
Development projects |
|
370,164 |
|
980,000 |
|
378 |
|
||
|
|
|
|
|
|
|
|
|
||
|
Preconstruction projects |
|
598,538 |
|
5,260,000 |
|
114 |
|
||
|
|
|
|
|
|
|
|
|
||
|
New markets and other projects |
|
247,517 |
|
1,057,000 |
|
234 |
|
||
|
|
|
|
|
|
|
|
|
||
|
Total |
|
$ |
1,349,656 |
|
7,938,242 |
|
$ |
170 |
|
A key component of our business 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 of various life science industry tenants. 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. 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 (which are projected to yield substantial revenues) and are required for the ultimate vertical construction of buildings. We are required to capitalize construction and preconstruction costs directly related and essential to the construction of a project while activities are ongoing to prepare an asset for its intended use. Capitalized interest assuming conversion of our 8% unsecured convertible notes for the three months ended September 30, 2009 was approximately $17.9 million. The interest rate required for the purpose of calculating capitalization of interest was approximately 5.16% for the three months ended September 30, 2009 assuming conversion of our 8% unsecured convertible notes.
24
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Value Add Activities
September 30, 2009
(continued)
The following table summarizes total rentable square footage undergoing redevelopment as of September 30, 2009:
|
Markets/Submarkets |
|
Placed |
|
Estimated |
|
Estimated |
|
Rentable |
|
Redevelopment/Leasing Status |
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Diego/Torrey Pines |
|
2007 |
|
2010 |
|
$120-130 |
|
84,504 / 84,504 |
|
Construction/Marketing; Negotiating |
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Diego/Torrey Pines |
|
2007 |
|
2009 |
|
$80-100 |
|
39,224 / 76,084 |
|
Construction/Marketing; Negotiating |
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay |
|
2009 |
|
2010 |
|
$50-70 |
|
53,980 / 53,980 |
|
Construction/Leased |
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastern Massachusetts/Cambridge |
|
2006 |
|
2009 |
|
$120-175 |
|
24,177 / 177,101 |
|
Construction/Marketing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastern Massachusetts/Cambridge |
|
2007 |
|
2010 |
|
$150-200 |
|
90,278 / 369,831 |
|
Design; Construction/Marketing; Negotiating |
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastern Massachusetts/Suburban |
|
2007 |
|
2010 |
|
$80-100 |
|
113,045 / 113,045 |
|
Construction/Marketing |
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastern Massachusetts/Suburban |
|
2008 |
|
2010 |
|
$120-140 |
|
30,000 / 30,000 |
|
Design; Construction/Marketing; Negotiating |
|
|
|
|
|
|
|
|
|
|
|
|
|
Southeast/Florida |
|
2006 |
|
2009 |
|
$80-100 |
|
40,390 / 44,855 |
|
Construction/Marketing; Negotiating |
|
|
|
|
|
|
|
|
|
|
|
|
|
Suburban Washington, D.C./Shady Grove |
|
2009 |
|
2010 |
|
$80-90 |
|
58,632 / 58,632 |
|
Design; Construction/Leased |
|
|
|
|
|
|
|
|
|
|
|
|
|
Suburban Washington, D.C./Shady Grove |
|
2007 |
|
2009 |
|
$70-80 |
|
50,633 / 123,501 |
|
Construction/Negotiating for All Space |
|
|
|
|
|
|
|
|
|
|
|
|
|
Suburban Washington, D.C./Shady Grove |
|
2009 |
|
2011 |
|
$80-100 |
|
56,379 / 56,379 |
|
Design/Negotiating for Full Bldg User |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
641,242 / 1,187,912 |
|
|
As of September 30, 2009, our estimated cost to complete was approximately $90 per rentable square foot for the 641,242 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment. 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.
25
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Value Add Activities
September 30, 2009
(continued)
The following table summarizes our properties undergoing ground-up development as of September 30, 2009 (dollars in thousands):
|
Markets/Submarkets |
|
Building |
|
Estimated |
|
Leased/ |
|
Estimated |
|
Rentable |
|
Leasing Status |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay/ Mission Bay |
|
Multi-tenant Bldg. with 3% Retail |
|
2010 |
|
97% |
|
$350 |
|
158,000 |
|
158,000 Rentable Square Feet Leased or Committed to UCSF and a Large Cap Life Science Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay/ Mission Bay |
|
Single or Multi-tenant Bldg. with 4% Retail |
|
2011 |
|
77% |
|
$350 |
|
105,000 |
|
Negotiating Lease for Significant Amount of Space with a Large Cap Life Science Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay/ So. San Francisco |
|
Two Bldgs., |
|
2010 |
|
0% |
|
$350 |
|
162,000 |
|
Marketing/Moving Former 16% Tenant to Another Property |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay/ So. San Francisco |
|
Single Tenant Bldg. |
|
2009 |
|
55% |
|
$350 |
|
130,000 |
|
72,000 Rentable Square Feet Leased to Exelixis Inc. with Option for Remaining Space Through 2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York – New York City – East Tower |
|
Multi-tenant Bldg. with 6% Retail |
|
2010/2011 |
|
51% |
|
$500 |
|
310,000 |
|
100,000 Rentable Square Feet Leased to Eli Lilly and Company; Leasing 57,000 Rentable Square Feet for Food, Conference and Core Services; Current Office/Laboratory Negotiations in Excess of 300,000 Rentable Square Feet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington – Seattle |
|
Single Tenant Bldg. with 5% Retail |
|
2010 (1) |
|
92% |
|
$390 |
|
115,000 |
|
106,000 Rentable Square Feet Leased to Gilead Sciences, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Properties Undergoing Ground-Up Development |
|
58% |
|
|
|
980,000 |
|
|
||||
(1) We anticipate delivery of this space to Gilead Sciences, Inc. in the first quarter of 2010.
Our original estimated investment per square foot includes hard and soft shell construction and certain office/laboratory improvements and excludes book basis related to land and land improvements and certain amenities which benefit the specific property under development and other adjacent properties. 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.
As of September 30, 2009, our estimated cost to complete the approximately 980,000 rentable square feet undergoing ground-up development was approximately $166 per rentable square foot. This estimate includes costs related to tenant infrastructure costs, including requirements for executed leases with Eli Lilly and Company, Exelixis Inc., 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.
26
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Value Add Activities
September 30, 2009
(continued)
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 are required for the ultimate vertical construction of buildings. We are required to capitalize construction and preconstruction costs directly related and essential to the construction of a project while activities are ongoing to prepare an asset for its intended use.
|
|
|
Square Footage |
|
||||||||||||
|
|
|
Construction in Progress |
|
|
|
|
|
|
|
||||||
|
Markets |
|
Redevelopment |
|
Development |
|
Preconstruction |
|
New Markets and |
|
Land |
|
Future |
|
Total Value Add |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Diego |
|
123,728 |
|
– |
|
298,000 |
|
– |
|
145,000 |
|
178,000 |
|
744,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay/Mission Bay |
|
– |
|
263,000 |
|
2,320,000 |
|
– |
|
– |
|
– |
|
2,583,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
California – San Francisco Bay/So. San Francisco |
|
53,980 |
|
292,000 |
|
144,000 |
|
– |
|
1,051,000 |
|
25,000 |
|
1,565,980 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastern Massachusetts |
|
257,500 |
|
– |
|
2,050,000 |
|
– |
|
225,000 |
|
540,000 |
|
3,072,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Suburban Washington, D.C. |
|
165,644 |
|
– |
|
– |
|
– |
|
787,000 |
|
457,000 |
|
1,409,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Washington – Seattle |
|
– |
|
115,000 |
|
248,000 |
|
– |
|
1,049,000 |
|
165,000 |
|
1,577,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International – Canada |
|
– |
|
– |
|
– |
|
– |
|
827,000 |
|
– |
|
827,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
40,390 |
|
310,000 |
|
200,000 |
|
1,057,000 |
|
741,000 |
|
222,000 |
|
2,570,390 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
641,242 |
|
980,000 |
|
5,260,000 |
|
1,057,000 |
|
4,825,000 |
(1) |
1,587,000 |
(2) |
14,350,242 |
|
|
(1) |
We have the right to develop a parcel with approximately 442,000 rentable square feet in New York City. We also have the right to purchase a 924,000 developable square feet parcel in Edinburgh, Scotland. The square footage related to these parcels is not included in the embedded future development square footage shown above. |
|
(2) |
Square footage related to future redevelopment is included in our operating asset base and represents non-laboratory uses (office, industrial or warehouse). |
27
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Value Add Activities
September 30, 2009
(continued)
Our significant value add projects include preconstruction activities at certain land parcels including: a) approximately 2.5 million developable square feet in San Francisco, including approximately 2.3 million developable square feet at Mission Bay, b) approximately 2.1 million developable square feet in Eastern Massachusetts, including approximately 1.7 million developable square feet located along Binney Street in Kendall Square and c) approximately 1.3 million developable square feet located in other key life science cluster markets.
San Francisco Bay – Mission Bay and South San Francisco Value Add Preconstruction Activities
The value add preconstruction activities in Mission Bay and South San Francisco will create high quality space in state-of-the-art environmentally sustainable facilities for our clients generating net operating income for the Company. The entitlement process includes a multitude of activities necessary for the vertical construction of these high quality facilities including, among other items, regulatory approval, mapping, conceptual design, schematic design, design development, permitting, construction drawings and estimating. Our value add projects in Mission Bay and South San Francisco, that have been completed or are now under construction, have attracted Merck & Co., Inc., Celgene Corporation, Pfizer Inc., Roche Holdings Ltd and University of California, San Francisco.
The ability to provide significant additional space in high quality state-of-the-art environmentally sustainable facilities at Mission Bay is a unique opportunity to enhance our current high quality client tenant roster. In addition to the opportunities located at Mission Bay, our asset base contains a broad pipeline of opportunities located in South San Francisco. This includes, among others, a high quality facility with entitlements completed or in process totaling over 275,000 square feet and a four building campus totaling an additional 405,000 square feet located nearby existing well established and emerging life science companies in South San Francisco.
The Alexandria Center for Science and Technology at Mission Bay (“The Alexandria Center”) when completed will consist of 13 high quality facilities totaling approximately 2.7 million rentable square feet. The Alexandria Center is organized into four discrete but highly interactive and collaborative campuses: the north campus which includes the 455 Mission Bay Boulevard project leased to Pfizer Inc.; the east campus, featuring the ability to accommodate a corporate headquarters facility of more than one million square feet; the south campus which is directly across the street from the UCSF hospital complex and likely to become an important location for physicians, clinicians and translational researchers; and the west campus which features a wide range of unique life science client tenant spaces.
28
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Value Add Activities
September 30, 2009
(continued)
San Francisco Bay – Mission Bay and South San Francisco Value Add Preconstruction Activities (continued)
At the heart of Mission Bay is UCSF, one of the nation’s top generators of life science commercial enterprises and the number two recipient of grants from the National Institutes of Health. At least 75 California life science companies, including two of the largest, Genentech, Inc. (now a subsidiary of Roche) and Chiron Corporation (now a subsidiary of Novartis AG), have been successfully launched by UCSF faculty or alumni. UCSF’s expansion of major research functions to its Mission Bay campus serves as a hub for basic scientific inquiry and a meeting place for academics from around the world. The wide range of UCSF’s sophisticated laboratories include the Center for Advanced Technology, as well as significant efforts in structural and chemical biology, molecular, cell and developmental biology, advanced microscopy, neurology and cardiology. Finally, the UCSF Mission Bay hospital campus is in the design phase, and will initially offer 280 beds in an integrated facility to serve women, children and cancer patients. The overriding emphasis of this array of diverse life science entities is to translate research discoveries into viable commercial products to solve critical unmet medical needs.
Eastern Massachusetts Value Add Preconstruction Activities
The largest ongoing value add project in Eastern Massachusetts is located on multiple sites along Binney Street in Kendall Square. Located in the eastern part of Cambridge close to downtown Boston, the Kendall Square neighborhood abuts the Massachusetts Institute of Technology (“MIT”) campus and is a short subway or bike ride from Harvard University (“Harvard”). MIT and Harvard are two of the leading universities for life science and technology research, each with a long and successful history of translational collaborations between academic scientists and industry. Working with local venture capitalists and experienced entrepreneurs, the universities have created leading biotech companies such as Genzyme Corporation and Biogen Idec and well over a hundred smaller life science firms in Cambridge alone. This fertile science and technology ecosystem has subsequently attracted investment by leading international pharmaceutical companies such as Novartis and GlaxoSmithKline, and has led to the creation of important new independent research organizations in Cambridge, such as the Broad Institute and the Whitehead Institute for Biomedical Research.
In February 2009, the Cambridge City Council approved our petition to significantly increase the zoning density on our Binney Street holdings, enabling the future development of up to 1.7 million rentable square feet of office/laboratory space on multiple adjacent sites. These sites currently hold income-producing low-rise buildings and surface parking lots, which, we believe, will eventually be replaced by high quality life science facilities in this desirable, land-constrained location. We will continue to advance our entitlement efforts for this assemblage, including the procurement of a Planned Unit Development Special Permit under the City’s Zoning Ordinance.
Immediately adjacent to the Binney Street sites, we will transition from design into construction for the conversion into office/laboratory space of an approximately 90,000 rentable square foot portion of an existing office building known as Athenaeum Center. The balance of the approximately 369,000 rentable square foot office building is substantially leased. Delivery of the office/laboratory conversion space is scheduled to occur over the next one to two years.
29
ALEXANDRIA
REAL ESTATE EQUITIES, INC.
Value Add Activities
September 30, 2009
(continued)
Eastern Massachusetts Value Add Preconstruction Activities (continued)
Elsewhere in the Eastern Massachusetts region, design activities are ongoing at Longwood Center, our approximately 350,000 rentable square foot life science development located on a 1.0 acre parcel in the heart of Boston’s Longwood Medical Area (“LMA”). This project, partnered with a local development/investment group, has been entitled under the City of Boston’s site plan review process. The LMA is a compact and vibrant district which is home to world-renowned medical and academic institutions such as Harvard Medical School, Brigham & Womens’ Hospital, Dana Farber Cancer Institute, Childrens’ Hospital Boston, Beth Israel Deaconess Medical Center, and Joslin Diabetes Center, among several others. Fully entitled land sites are extremely scarce in the LMA and we believe that Longwood Center is well-positioned to accommodate expected growth within the district.
Among the completed value add projects in this region is the conversion of an approximately 175,000 square foot office building at Technology Square in Cambridge to office/laboratory use. This space has been substantially leased to Sirtris Pharmaceuticals, a GlaxoSmithKline company, the Novartis Institutes of Biomedical Research and a unit of Pfizer Inc. Another suburban building conversion resulted in a 59,000 square foot lease to a research division of Johnson & Johnson.
New Markets and Other Projects
A component of our business also includes ground-up development projects in new markets and other projects. We have two development parcels in China. One development parcel is located in South China for a two-building project aggregating approximately 275,000 rentable square feet. This project is nearing shell completion. The second development parcel is located in North China for a two-building project aggregating approximately 272,000 rentable square feet.
Additionally, other projects include an above-ground parking structure under construction at Mission Bay in San Francisco and construction related to site work, plaza, park and underground parking at the Alexandria Center for Life Science at East River Science Park – NYCTM, a unique one-of-a-kind highly advanced state-of-the-art urban science park.
30
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary
of Capital Expenditures
Five Year History
|
|
|
|
|
Nine Months |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
Ended |
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
Total/Weighted |
|
September 30, |
|
Year Ended December 31, |
|
|||||||||||||||
|
|
|
Average |
|
2009 |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
|||||||
|
Capital expenditures (1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Major capital expenditures |
|
$ |
6,403,000 |
|
$ |
444,000 |
|
$ |
405,000 |
|
$ |
1,379,000 |
|
$ |
575,000 |
|
$ |
972,000 |
|
$ |
2,628,000 |
(2) |
|
Recurring capital expenditures |
|
$ |
5,646,000 |
|
$ |
883,000 |
|
$ |
955,000 |
|
$ |
648,000 |
|
$ |
639,000 |
|
$ |
1,278,000 |
|
$ |
1,243,000 |
|
|
Weighted average square feet in portfolio |
|
59,025,253 |
|
11,735,444 |
|
11,770,769 |
|
11,476,217 |
|
9,790,326 |
|
8,128,690 |
|
6,123,807 |
|
|||||||
|
Per weighted average square foot in portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Major capital expenditures |
|
$ |
0.11 |
|
$ |
0.04 |
|
$ |
0.03 |
|
$ |
0.12 |
|
$ |
0.06 |
|
$ |
0.12 |
|
$ |
0.43 |
(2) |
|
Recurring capital expenditures |
|
$ |
0.10 |
|
$ |
0.08 |
|
$ |
0.08 |
|
$ |
0.06 |
|
$ |
0.07 |
|
$ |
0.16 |
|
$ |
0.20 |
|
|
Tenant improvements and leasing costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Retenanted space (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Tenant improvements and leasing costs |
|
$ |
8,505,000 |
|
$ |
1,171,000 |
|
$ |
3,481,000 |
|
$ |
1,446,000 |
|
$ |
1,370,000 |
|
$ |
324,000 |
|
$ |
713,000 |
|
|
Retenanted square feet |
|
1,407,356 |
|
154,269 |
|
505,773 |
|
224,767 |
|
248,846 |
|
130,887 |
|
142,814 |
|
|||||||
|
Per square foot leased of retenanted space |
|
$ |
6.04 |
|
$ |
7.59 |
|
$ |
6.88 |
|
$ |
6.43 |
|
$ |
5.51 |
|
$ |
2.48 |
|
$ |
4.99 |
|
|
Renewal space |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Tenant improvements and leasing costs |
|
$ |
8,211,000 |
|
$ |
1,233,000 |
|
$ |
2,364,000 |
|
$ |
1,942,000 |
|
$ |
957,000 |
|
$ |
778,000 |
|
$ |
937,000 |
|
|
Renewal square feet |
|
3,734,284 |
|
633,733 |
|
748,512 |
|
671,127 |
|
455,980 |
|
666,058 |
|
558,874 |
|
|||||||
|
Per square foot leased of renewal space |
|
$ |
2.20 |
|
$ |
1.95 |
|
$ |
3.16 |
|
$ |
2.89 |
|
$ |
2.10 |
|
$ |
1.17 |
|
$ |
1.68 |
|
The table above shows total and weighted 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).
|
(1) |
Property-related capital expenditures include all major capital and recurring capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures, or costs related to the redevelopment of a property. Major capital expenditures consist of roof replacements and HVAC systems that are typically identified and considered at the time a property is acquired. |
|
(2) |
Major capital expenditures for 2004 included a one-time HVAC system upgrade at one property totaling $1,551,000 or $0.25 per square foot. |
|
(3) |
Excludes space that has undergone redevelopment before retenanting. |
31
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information
September 30, 2009
This section contains additional information for sections throughout this supplemental information package as well as explanations of certain non-GAAP financial measures in sections of this document and the reasons why management believes these measures provide useful information to investors about our financial condition, results of operations or liquidity. Additional detail can be found in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, as well as other documents filed with or furnished to the SEC from time to time.
Footnotes for Financial and Portfolio Highlights
Capitalized Interest
A key component of our business 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 of various life science industry tenants. 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. 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 (which are projected to yield substantial revenues) and are required for the ultimate vertical construction of buildings. We are required to capitalize construction and preconstruction costs directly related and essential to the construction of a project while activities are ongoing to prepare an asset for its intended use. Capitalized interest assuming conversion of our 8% unsecured convertible notes for the three months ended September 30, 2009 was approximately $17.9 million. The interest rate required for the purpose of calculating capitalization of interest was approximately 5.16% for the three months ended September 30, 2009 assuming conversion of our 8% unsecured convertible notes.
Debt to Adjusted EBITDA
Debt to Adjusted EBITDA is the ratio of net debt (secured notes payable, unsecured line of credit, unsecured term loan and unsecured convertible notes less cash, cash equivalents and escrowed cash related to construction projects) to Adjusted EBITDA. We use the Debt to Adjusted EBITDA as a measure of liquidity. We believe that Debt to Adjusted EBITDA is relevant and useful to investors because it permits investors to measure our ability to meet our debt obligations. However, since this ratio is derived from Adjusted EIBTDA, its usefulness is limited by the same factors that limit the usefulness of Adjusted EBITDA. Further our computation of Debt to Adjusted EBITDA may not be comparable to similar ratios reported by other companies.
Debt to Gross Assets
Debt to gross assets is the ratio of net debt (secured notes payable, unsecured line of credit, unsecured term loan and unsecured convertible notes less cash, cash equivalents and escrowed cash related to construction projects) to gross assets. Gross assets is equal to total assets plus accumulated depreciation less cash, cash equivalents and escrowed cash related to construction projects.
Dividend Payout Ratio
Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (shares of common stock outstanding on the respective record date multiplied by the related dividend per share) to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders on a diluted basis. Historical amounts include the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
32
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)
September 30, 2009
Footnotes for Financial and Portfolio Highlights (continued)
Earnings per Share
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% unsecured senior convertible notes that are due in 2029 (“8% 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. A separate calculation is performed for FFO 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% Unsecured Convertible Notes to the numerator and our 8% Unsecured Convertible Notes would be assumed to have been converted at the beginning of the period presented (if outstanding for the entire period) and the resulting incremental shares associated with the assumed conversion would be included in the denominator. For purposes of calculating diluted earnings per share, the “if-converted method was dilutive to diluted earnings per share only for the three months ended June 30, 2009.
EBITDA and Adjusted EBITDA
EBITDA represents earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, and is used as a measure of both operating performance and liquidity. Adjusted EBITDA is calculated as EBITDA excluding impairments, gains or losses from sales of real estate, gains or losses on early extinguishment of debt and net stock compensation expenses. We use EBITDA and Adjusted EBITDA to measure both our operating performance and liquidity. We consider Adjusted EBITDA to provide investors relevant and useful information because it permits investors to view income from our operations on an unleveraged basis before the effects of taxes, non-cash depreciation and amortization, impairments, gains or losses from sales of real estate, gains or losses on early extinguishment of debt and net stock compensation expenses. By excluding interest expense, EBITDA and Adjusted EBITDA allow investors to measure our operating performance independent of our capital structure and indebtedness and, therefore, allows for a more meaningful comparison of our operating performance to that of other companies, both in the real estate industry and in other industries. As a liquidity measure, we believe that EBITDA and Adjusted EBITDA help investors analyze our ability to meet interest payments on outstanding debt and to make preferred dividend payments. We believe investors should consider EBITDA and Adjusted EBITDA, in conjunction with net income (the primary measure of our performance) and the other required United States generally accepted accounting principles (“GAAP”) measures of our performance and liquidity, to improve their understanding of our operating results and liquidity, and to make more meaningful comparisons of our performance between periods and as against other companies. EBITDA and Adjusted EBITDA have limitations as analytical tools and should be used in conjunction with our required GAAP presentations. EBITDA and Adjusted EBITDA do not reflect our historical cash expenditures or future cash requirements for capital expenditures or contractual commitments. While EBITDA and Adjusted EBITDA is a relevant and widely used measure of operating performance and liquidity, it does not represent net income or cash flow from operations as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating operating performance or liquidity. Further, our computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.
33
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)
September 30, 2009
Footnotes for Financial and Portfolio Highlights (continued)
EBITDA and Adjusted EBITDA (continued)
The following table reconciles net income to EBITDA and Adjusted EBITDA (in thousands):
|
|
|
Three Months Ended |
|
|||||||||||||
|
|
|
9/30/09 |
|
6/30/09 |
|
3/31/09 |
|
12/31/08 (1) |
|
9/30/08 (1) |
|
|||||
|
Net income |
|
$ |
26,378 |
|
$ |
44,116 |
|
$ |
41,249 |
|
$ |
27,568 |
|
$ |
27,602 |
|
|
Add: Interest expense (2) |
|
21,225 |
|
21,373 |
|
20,222 |
|
21,521 |
|
21,875 |
|
|||||
|
Add: Depreciation and amortization (2) |
|
28,336 |
|
29,722 |
|
31,446 |
|
28,483 |
|
27,447 |
|
|||||
|
EBITDA |
|
75,939 |
|
95,211 |
|
92,917 |
|
77,572 |
|
76,924 |
|
|||||
|
Add: Net stock compensation expenses |
|
4,141 |
|
3,694 |
|
3,022 |
|
3,563 |
|
3,523 |
|
|||||
|
Add: Impairment on investments |
|
– |
|
– |
|
– |
|
11,266 |
|
– |
|
|||||
|
Subtract: Gain on sales of property |
|
– |
|
– |
|
(2,234 |
) |
(6 |
) |
– |
|
|||||
|
Subtract: Gain on early extinguishment of debt |
|
– |
|
(11,254 |
) |
– |
|
– |
|
– |
|
|||||
|
Adjusted EBITDA |
|
$ |
80,080 |
|
$ |
87,651 |
|
$ |
93,705 |
|
$ |
92,395 |
|
$ |
80,447 |
|
|
(1) |
Includes the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities. |
|
(2) |
Includes interest expense, depreciation and amortization for assets “held for sale” reflected as discontinued operations (for the periods prior to when such assets were designated as “held for sale”). |
Total Market Capitalization
Total market capitalization is equal to the sum of outstanding shares of series C preferred stock and common stock multiplied by the related closing price at the end of each period presented, the liquidation value of the series D cumulative convertible preferred stock and our share of total debt (secured notes payable, unsecured line of credit, unsecured term loan and unsecured convertible notes less cash, cash equivalents and escrowed cash related to construction projects). Historical amounts include the retrospective impact of new accounting provisions adopted on January 1, 2009 impacting accounting for and disclosure of convertible debt, noncontrolling interests and participating securities.
34
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)
September 30, 2009
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 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.
FFO 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.
Adjusted Funds from Operations
Adjusted Funds from Operations (“AFFO”) is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders by adding to or deducting from FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders (i) recurring and non-recurring capital expenditures required to maintain and re-tenant our properties, (ii) second generation tenant improvements and leasing costs on retenanted and renewal space (excludes redevelopment expenditures), (iii) capitalized income from development projects, (iv) gain on early extinguishment of debt, (v) amortization of loan fees, debt premiums/discounts and acquired above and below market leases, (vi) effects of deferred rent, (vii) non-cash compensation expense related to restricted stock awards and (viii) other non-cash income or charges. AFFO is not intended to represent cash flow for the period, and is only intended to provide an additional perspective on our ability to fund cash needs and make distributions to shareholders by adjusting the effect of the non-cash items included in FFO, as well as recurring capital expenditures and leasing costs. We believe that net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders is the most directly comparable GAAP financial measure to AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders. We also believe that AFFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders provides useful information to the investment community about our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.
35
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Definitions and Other Information (continued)
September 30, 2009
Same Property Comparisons
The summary of same property comparisons represents operating data for all properties that were fully operating for the entire periods presented for the quarter periods (the “Third Quarter Same Properties”) and for the nine month periods (the “Nine Months Same Properties”). Same property occupancy for the quarters ended September 30, 2009 and 2008 was 94.1% and 95.3%, respectively. Same Property Occupancy for the nine months ended September 30, 2009 and 2008 was 94.6% and 95.1%, respectively. Properties undergoing redevelopment are excluded from same property results.
Revenue less operating expenses computed in accordance with GAAP 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. 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 (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 quarters ended September 30, 2009 and 2008 for the Third Quarter Same Properties were $1,089,000 and $3,388,000, respectively. Straight-line rent adjustments for the nine months ended September 30, 2009 and 2008 for the Nine Months Same Properties were $3,168,000 and $9,447,000, 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 straight-line rent adjustments to rental revenue.
Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Summary of Same Property Comparisons. As of September 30, 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 7% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses.
In the first quarter of 2009, we recognized additional rental income related to a modification of a lease for a property in South San Francisco. The operating results of this property have been excluded from the same property results for the nine months ended September 30, 2009. Including the results of this property, nine months 2009 GAAP same property revenue less operating expenses would have increased 10.3%.
36