Alexandria Real Estate Equities, Inc 8-K, filed Aug 2, 2004
Alexandria Real Estate Equities, Inc. (ARE)
About this 8-K
Alexandria Real Estate Equities, Inc filed this 8-K on August 2, 2004.
Items reported
- Item 12
- Item 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 2, 2004
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
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135 North Los Robles Avenue, Suite 250
Pasadena, California 91101
(Address of principal executive offices including zip code)
(626) 578-0777
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated August 2, 2004
Item 12. Results of Operations and Financial Condition
On August 2, 2004, we issued a press release entitled "Alexandria Real Estate Equities, Inc. Reports Second Quarter 2004 Results" which sets forth our results of operations for the second quarter and six months ended June 30, 2004. A copy of that press release is attached hereto as Exhibit 99.1.
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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August 2, 2004 |
By: /s/ JOEL S. MARCUS |
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Joel S. Marcus |
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Chief Executive Officer |
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(Principal Executive Officer) |
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By: /s/ PETER J. NELSON |
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Peter J. Nelson |
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Chief Financial Officer and Treasurer |
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(Principal Financial and Accounting Officer) |
EXHIBIT INDEX
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Exhibit Title |
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* Also provided in PDF format as a courtesy.
Exhibit 99.1
Contact: Joel S. Marcus
Chief Executive Officer
Alexandria Real Estate Equities, Inc.
(626) 396-4828
Alexandria Real Estate Equities, Inc.
Reports
Second Quarter 2004 Results
- Company Reports Funds from Operations of $1.01 Per Share
(Diluted), and
Net Income Available to Common
Stockholders of 50 Cents Per Share (Diluted),
for Second Quarter 2004 -
Highlights
- Second Quarter 2004 Funds from Operations (FFO) of $1.01 Per Share (Diluted) Net of $0.10 Cents Per Share (Diluted) of Preferred Stock Redemption Charge
- Second Quarter 2004 Total Revenues Up 10%
- Second Quarter 2004 Net Income Available to Common Stockholders of 50 Cents Per Share (Diluted)
- Elected to Redeem 9.50% Series A Cumulative Redeemable Preferred Stock Incurring Redemption Charge of $1,876,000, or $0.10 Per Share (Diluted)
- Completed Offering of 5,185,500 Shares of 8.375% Series C Cumulative Redeemable Preferred Stock
- Same Property NOI Growth of 1.7% for Quarter (GAAP Basis)
- Executed 22 Leases for 247,000 Square Feet of Space
- Completed Acquisitions of Six Properties Aggregating 218,000 Square Feet
PASADENA, CA. - August 2, 2004 -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the quarter and six months ended June 30, 2004.
For the second quarter of 2004, Alexandria reported FFO of $19,815,000, or $1.01 per share (diluted), on total revenues of $43,523,000. Net income available to common stockholders for the second quarter of 2004 was $9,727,000, or 50 cents per share (diluted). For the six months ended June 30, 2004, Alexandria reported FFO of $41,284,000, or $2.11 per share (diluted), on total revenues of $86,298,000. Net income available to common stockholders for the six months ended June 30, 2004 was $22,842,000, or $1.17 per share (diluted). Net income available to common stockholders for the six months ended June 30, 2004 includes a gain on sale of property aggregating $1,627,000, or 8 cents per share (diluted). FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. A reconciliation of FFO to GAAP net income, on a per share basis, is included in the financial information accompanying this press release.
ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS SECOND QUARTER 2004
RESULTS
Page 2
In June 2004, the Company elected to redeem all 1,543,500 outstanding shares of 9.50% Series A cumulative redeemable preferred stock ("Series A preferred stock"). The redemption occurred in July 2004 at a redemption price of $25.00 per share, plus $0.5409722 per share representing accumulated and unpaid dividends to the redemption date. In accordance with Emerging Issues Task Force Topic D-42 ("D-42"), "The Effect on the Calculation of Earnings Per Share for the Redemption or Induced Conversion of Preferred Stock", the original cost of issuance of the Series A preferred stock has been recorded as a charge to net income available to common stockholders at the date the Company elected to redeem all shares. Therefore, during the second quarter of 2004, a charge of approximately $1,876,000 was recorded for costs related to the redemption of the Series A preferred stock. Excluding this charge for the second quarter of 2004, FFO increased by 8% and FFO per share (diluted) increased by 6%, net income available to common stockholders increased by 12% and net income available to common stockholders per share (diluted) increased by 9%, compared to the second quarter of 2003. Excluding this charge for the six months ended June 30, 2004, FFO increased by 8% and FFO per share (diluted) increased by 6%, compared to the six months ended June 30, 2003. Excluding this charge and the gain and the loss on property sales, net income available to common stockholders increased by 12% and net income available to common stockholders per share (diluted) increased by 9%, compared to the six months ended June 30, 2003.
In June 2004, the Company completed an offering of 5,185,500 shares of 8.375% Series C cumulative redeemable preferred stock (including the shares issued upon exercise of the underwriters' over-allotment option). The shares were issued at a price of $25.00 per share, resulting in net proceeds of approximately $124.2 million (after deducting the underwriters' discounts and other offering costs). The dividends on the Series C preferred stock are cumulative and accrue from the closing date of the offering, or June 29, 2004, and will be payable in arrears on the 15th day of January, April, July and October, beginning on October 15, 2004. The proceeds from the offering were used to reduce the outstanding balance on our unsecured line of credit and to redeem all of the outstanding 9.50% Series A preferred stock.
The Company announced that it had executed a total of 22 leases during the second quarter of 2004 for approximately 247,000 square feet of space at 15 different properties (excluding 22 month-to-month leases for approximately 63,000 square feet which were effective during the quarter). Of this total, approximately 87,000 square feet were for redeveloped, developed or previously vacant space at ten properties, approximately 70,000 square feet of which were delivered from the Company's redevelopment or development programs, with the remaining approximately 17,000 square feet for previously vacant space. The remaining approximately 160,000 square feet were for new or renewal leases related to previously leased space. Rental rates for these new or renewal leases were on average approximately 10% higher (on a GAAP basis) than expiring leases. For the six months ended June 30, 2004, the Company signed a total of 41 leases for approximately 535,000 square feet (excluding month-to-month leases). Of this total, approximately 220,000 square feet were for redeveloped, developed or previously vacant space at 16 different properties, of which approximately 182,000 square feet were delivered from the Company's redevelopment and development programs. The remaining 315,000 square feet were for new or renewal space with rental rates on average approximately 10% higher (on a GAAP basis) than expiring leases.
During the second quarter, the Company announced that it had acquired two properties aggregating approximately 90,000 square feet in the Eastern Massachusetts market for approximately $13.8 million. The Company assumed a $9.5 million loan secured by the properties and paid the balance in cash. The Company also announced that during the second quarter it had acquired one property in the Suburban Washington D.C. market containing approximately 92,000 square feet for approximately $25.6 million in cash. The Company
ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS SECOND QUARTER 2004
RESULTS
Page 3
also acquired two properties aggregating approximately 35,000 square feet in the Seattle, Washington market for approximately $5.5 million in cash during the second quarter. Also during the second quarter, the Company completed the acquisition of one property in the San Francisco Bay market for approximately $25.3 million in cash.
Based on the Company's current view of existing market conditions and certain current assumptions, the Company has updated its prior earnings guidance:
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2004 |
2005 |
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FFO per common share (diluted) * |
$4.40 |
$4.77 |
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Net income per common share (diluted) * |
$2.33 |
$2.69 |
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Preferred stock redemption charge |
($0.10) |
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* Includes preferred stock redemption charge and excludes gain on sale of real estate |
As a result of the redemption of all of the outstanding shares of the 9.50% Series A preferred stock, and in compliance with D-42, the Company recorded a charge of approximately $1,876,000 in the second quarter of 2004 related to the costs of redemption of the Series A preferred stock. In providing this guidance above, the Company has included the charge for the costs of redemption of the Series A preferred stock in accordance with D-42.
Alexandria Real Estate Equities, Inc. is a publicly-traded real estate investment trust principally focused on the ownership, operation, management, acquisition, expansion and selective redevelopment and development of properties containing office/laboratory space. Such properties are designed and improved for lease primarily to pharmaceutical, biotechnology, life science research, product, service, defense, educational and translational medicine institutions/entities, as well as related government agencies. Alexandria's portfolio currently consists of 96 properties comprising approximately 6.1 million square feet of office/laboratory space.
This press release contains forward-looking statements within the meaning of the federal securities laws. The Company's actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the Company's Form 10-K Annual Report and other periodic reports filed with the Securities and Exchange Commission.
(Tables follow)
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
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Income statement data
Total revenues $ 43,523 $ 39,456 $ 86,298 $ 79,496
Expenses
Rental operations 8,808 8,136 17,543 16,712
General and administrative 3,814 3,544 7,450 7,093
Interest 6,926 6,512 13,635 13,383
Depreciation and amortization 10,088 9,678 20,069 19,052
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29,636 27,870 58,697 56,240
Income from continuing operations 13,887 11,586 27,601 23,256
Income from discontinued operations, net -- 963 1,626 1,442
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Net income 13,887 12,549 29,227 24,698
Dividends on preferred stock 2,284 2,225 4,509 4,450
Preferred stock redemption charge 1,876 - 1,876 -
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Net income available to common stockholders $ 9,727 $ 10,324 $ 22,842 $ 20,248
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Weighted average shares of
common stock outstanding
-Basic 19,284,631 18,952,445 19,245,792 18,924,290
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-Diluted 19,608,854 19,190,472 19,595,337 19,160,395
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Basic income per common share
Income from continuing operations $ 0.72 $ 0.61 $ 1.43 $ 1.23
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Income from discontinued operations, net $ -- $ 0.05 $ 0.08 $ 0.08
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Net income $ 0.72 $ 0.66 $ 1.52 $ 1.31
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Net income available to common stockholders $ 0.50 $ 0.54 $ 1.19 $ 1.07
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Diluted income per common share
Income from continuing operations $ 0.71 $ 0.60 $ 1.41 $ 1.21
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Income from discontinued operations, net $ -- $ 0.05 $ 0.08 $ 0.08
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Net income $ 0.71 $ 0.65 $ 1.49 $ 1.29
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Net income available to common stockholders $ 0.50 $ 0.54 $ 1.17 $ 1.06
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
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Funds from operations (1)
Net income $ 13,887 $ 12,549 $ 29,227 $ 24,698
Add
Depreciation and amortization (2) 10,088 9,760 20,069 19,221
Subtract
Dividends on preferred stock (2,284) (2,225) (4,509) (4,450)
Preferred stock redemption charge (3) (1,876) -- (1,876) --
(Gain) loss on sales of property (4) -- -- (1,627) 455
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Funds from operations (FFO) $ 19,815 $ 20,084 $ 41,284 $ 39,924
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FFO per common share
-Basic $ 1.03 $ 1.06 $ 2.15 $ 2.11
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-Diluted $ 1.01 $ 1.05 $ 2.11 $ 2.08
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Reconciliation of net income per share (diluted)
to FFO per common share (diluted)
Net income per common share (diluted) $ 0.71 $ 0.65 $ 1.49 $ 1.29
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Depreciation and amortization per common share (diluted)$ 0.51 $ 0.51 $ 1.02 $ 1.00
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Dividends on preferred stock per common share (diluted) $ (0.12) $ (0.12) $ (0.23) $ (0.23)
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Preferred stock redemption charge per common share
(diluted) (3) $ (0.10) $ -- $ (0.10) $ --
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(Gain)loss on sales of property per common share
(diluted) (4) $ -- $ -- $ (0.08) $ 0.02
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FFO per common share (diluted) $ 1.01 $ 1.05 $ 2.11 $ 2.08
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As of As of
June 30, 2004 June 30, 2003
Balance sheet data -------------- --------------
Rental properties, net $ 1,068,493 $ 977,521
Total assets $ 1,379,744 $ 1,231,751
Total liabilities $ 775,098 $ 742,278
Stockholders' equity $ 604,646 $ 489,473
- 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 mis-correlation between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") established the measurement tool of funds from operations ("FFO"). Since its introduction, FFO has become a widely used non- GAAP financial measure by REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the "White Paper") and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance of REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. We believe that net income is the most directly comparable GAAP financial measure to FFO.
- Includes depreciation and amortization on assets "held for sale" reflected as discontinued operations (for the periods prior to when such assets were designated as "held for sale").
- During the second quarter of 2004, the Company elected to redeem the 9.50% Series A cumulative redeemable preferred stock. Accordingly, in compliance with Emerging Issues Task Force Topic D-42, the Company recorded a charge in the second quarter of 2004 for costs related to the redemption of the Series A preferred stock.
- (Gain) loss on sales of property relates to the disposition of a property in the Suburban Washington D.C. market during the quarter ended March 31, 2004 and the disposition of a property in the San Francisco Bay market during the quarter ended March 31, 2003. (Gain) loss on sales of property is included on the income statement in income from discontinued operations.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Quarterly Supplemental Financial Information
For the Three Months Ended
06/30/2004 03/31/2004 12/31/2003 09/30/2003 06/30/2003
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 34,489 33,774 32,686 31,258 31,248
Tenant recoveries 8,426 8,314 7,645 8,122 7,830
Other income 608 687 648 705 378
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Total $ 43,523 42,775 40,979 40,085 39,456
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Funds from operations per share - diluted (b) $ 1.01 1.10 1.08 1.06 1.05
Dividends per share on common stock $ 0.62 0.60 0.58 0.56 0.53
Dividend payout ratio (common stock) 60.7%(c) 54.2% 53.1% 52.6% 50.5%
As of
06/30/2004 03/31/2004 12/31/2003 09/30/2003 06/30/2003
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 19,386,842 19,378,282 19,264,023 19,161,756 19,058,773
Number of properties (d)
Acquired/completed during period 5 1 3 -- --
Sold/reconstructed during period -- (1) (1) (1) --
Owned at end of period 94 89 89 87 88
Square feet (d)
Acquired/completed during period 218,132 103,816 215,824 -- --
Sold/reconstructed/expanded during period 45,033 (42,142) (171,475) (96,500) --
Owned at end of period 6,008,837 5,745,672 5,683,998 5,639,649 5,736,149
- The historical results above exclude the results of assets "held for sale" which have been reflected as discontinued operations.
- The White Paper on Funds from Operations ("FFO") issued by the Board of Governors of the National Association of Real Estate Investment Trusts in April 2002 defines FFO as net income (loss), computed in accordance with generally accepted accounting principles, excluding gains or (losses) from sales, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. See page 5 for a reconciliation of FFO to net income, the most directly comparable GAAP financial measure and footnote (3) on page 5 regarding the preferred stock redemption charge of $1,876,000, or 10 cents per share (diluted), recorded in the second quarter of 2004.
- The dividend payout ratio (common stock) includes the effect of the preferred stock redemption charge. Excluding the impact of this charge, the dividend payout ratio (common stock) for the three months ended June 30, 2004 is 55.4%.
- Includes assets "held for sale" during the applicable periods such assets were "held for sale".
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
June 30, December 31,
2004 2003
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Assets
Rental properties, net $ 1,068,493 $ 982,297
Properties under development 161,890 153,379
Cash and cash equivalents 3,030 4,985
Tenant security deposits and other restricted cash 13,259 11,057
Tenant receivables 2,097 1,969
Deferred rent 37,386 31,503
Investments 50,622 47,126
Other assets 42,967 40,261
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Total assets $ 1,379,744 $ 1,272,577
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Liabilities and Stockholders' Equity
Secured notes payable $ 360,486 $ 320,007
Unsecured line of credit and unsecured term loan 324,000 389,000
Accounts payable, accrued expenses and tenant
security deposits 38,090 43,408
Preferred stock redemption liability 38,588 -
Dividends payable 13,934 13,027
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Total liabilities 775,098 765,442
Total stockholders' equity 604,646 507,135
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Total liabilities and stockholders' equity $ 1,379,744 $ 1,272,577
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
June 30, 2004
(Dollars in thousands)
(Unaudited)
Principal Maturities/Rates (1) Weighted Average
Year Amount Interest Rate
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2004 $ 3,057 6.87%
2005 28,863 (2) 7.13%(2)
2006 26,336 7.12%(2)
2007 15,891 7.06%
2008 38,665 7.02%
Thereafter 247,484 7.01%
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Subtotal 360,296 7.03%
Unamortized Premium 190 ==============
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Total $ 360,486
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Secured and Unsecured Debt Analysis
Weighted Average Weighted
% of Effective Average
Balance Balance Interest Rate Maturity
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Secured Debt $ 360,486 52.67% 6.87% 7.0 Years
Unsecured Debt 324,000 (3) 47.33% 2.75%(3)3.3 Years
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Total Debt $ 684,486 100.0% 4.92% 5.2 Years
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Floating and Fixed Rate Debt Analysis
Weighted Average Weighted
% of Effective Average
Balance Balance Interest Rate Maturity
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Fixed Rate Debt $ 338,116 49.40% 7.13% 7.4 Years
Floating Rate Debt 346,370 (3) 50.60% 2.77%(3)3.1 Years
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Total Debt $ 684,486 100.0% 4.92% 5.2 Years
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- Excludes our unsecured line of credit.
- Of this amount, $22,370,000 represents the outstanding balance on a loan, which has a maturity date of January 2005 and currently carries interest at 2.92% per annum, and may be extended at our option, for an additional year. If we extend the maturity of this loan to 2006, the weighted average interest rates for 2005 and 2006 would be 6.87% and 7.12%, respectively.
- A significant portion of our floating rate debt is hedged by existing swap agreements (see page 9). The interest rate on floating rate debt shown above does not reflect the impact of such swap agreements.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements (1)
June 30, 2004
(Dollars in thousands)
(Unaudited)
Notional Effective at Interest
Transaction Dates Effective Dates Amounts June 30, 2004 Pay Rates Termination Dates
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Hedges for Unsecured Line of Credit
March 2002 December 31, 2002 $ 50,000 $ 50,000 5.364% December 31, 2004
July 2002 January 1, 2003 $ 25,000 $ 25,000 3.855% June 30, 2005
July 2002 January 1, 2003 $ 25,000 $ 25,000 3.865% June 30, 2005
December 2002 January 2, 2003 $ 25,000 $ 25,000 3.285% June 30, 2006
December 2002 January 2, 2003 $ 25,000 $ 25,000 3.285% June 30, 2006
November 2002 June 1, 2003 $ 25,000 $ 25,000 3.115% December 31, 2005
November 2002 June 1, 2003 $ 25,000 $ 25,000 3.155% December 31, 2005
March 2004 December 31, 2004 $ 25,000 $ -- 2.956% December 31, 2006
March 2004 December 31, 2004 $ 25,000 $ -- 2.956% December 31, 2006
June 2004 June 30, 2005 $ 50,000 $ -- 4.343% June 30, 2007
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$ 200,000
Hedges for Unsecured Term Loan
December 2003 December 31,2003 $ 50,000 $ 50,000 1.530% December 31, 2004
December 2003 December 31,2004 $ 50,000 $ -- 3.000% December 30, 2005
December 2003 December 30,2005 $ 50,000 $ -- 4.150% December 29, 2006
December 2003 December 29,2006 $ 50,000 $ -- 5.090% October 31, 2008
April 2004 April 30, 2004 $ 50,000 $ 50,000 1.550% April 29, 2005
April 2004 April 29, 2005 $ 50,000 $ -- 3.140% April 28, 2006
April 2004 April 28, 2006 $ 50,000 $ -- 4.230% April 30, 2007
April 2004 April 30, 2007 $ 50,000 $ -- 4.850% April 30, 2008
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$ 100,000
Total Interest Rate Swap Agreements in --------------
at June 30, 2004 $ 300,000
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- For all interest rate swap agreements, interest is received based on one month LIBOR.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Operating Portfolio
June 30, 2004
(Dollars in thousands)
Number of Rentable Annualized Occupancy
Properties Square Feet Base Rent Percentages
----------- ----------- ---------- --------------
Markets
California - Pasadena 1 31,343 $ 525 63.3%(1)
California - San Diego 20 920,273 25,873 95.2%
California - San Francisco Bay 10 642,578 19,918 100.0%
Eastern Massachusetts 12 730,633 21,934 88.0%
New Jersey/Suburban Philadelphia 4 267,319 5,424 100.0%
Southeast 5 259,414 3,860 77.8%(1)
Suburban Washington D.C. 18 1,473,261 25,638 93.4%
Washington - Seattle 7 593,269 21,693 100.0%
----------- ----------- ---------- --------------
Total 77 4,918,090 $ 124,865 93.9%(2)
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- All, or substantially all, of the vacant space is office or warehouse space.
- Excludes properties under full or partial redevelopment.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
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6/30/04 6/30/03 % Change 6/30/04 6/30/03 % Change
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Revenue (2) $ 34,598 $ 34,187 1.2% $ 32,844 $ 32,671 0.5%
Operating expenses 7,067 7,108 -0.6% 7,067 7,108 -0.6%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 27,531 $ 27,079 1.7% $ 25,777 $ 25,563 0.8%
========== ========== ========= ========== ========== ========
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Six Months Ended Six Months Ended
---------- ---------- --------- ---------- ---------- --------
6/30/04 6/30/03 % Change 6/30/04 6/30/03 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 66,834 $ 66,205 1.0% $ 63,250 $ 63,329 -0.1%
Operating expenses 13,523 13,801 -2.0% 13,523 13,801 -2.0%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 53,311 $ 52,404 1.7% $ 49,727 $ 49,528 0.4%
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NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented (the "Second Quarter Same Properties" for the Quarterly periods and "Six Months Same Properties" for the Six Month periods.).
- Revenue less operating expenses computed under GAAP is total revenue associated with the Second Quarter Same Properties and the Six 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 Second Quarter Same Properties and Six Months Same Properties, as applicable, (excluding termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarter ended June 30, 2004 and 2003 for the Second Quarter Same Properties were $1,754,000 and $1,516,000, respectively. Straight- line rent adjustments for the six months ended June 30, 2004 and 2003 for the Six Months Same Properties were $3,584,000 and $2,876,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates non-cash adjustments to rental revenue.
- Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Same Property Comparisons.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended June 30, 2004
Rental TI's/Lease Average
Number Square Expiring New Rate Commissions Lease
of Leases Footage Rates Rates Changes Per Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 37 248,360 $23.67 -- -- -- --
GAAP Basis 37 248,360 $25.27 -- -- -- --
Renewed / Releasable Space Leased
Cash Basis 13 159,461 $23.54 $26.63 13.1% $1.02 5.9 years
GAAP Basis 13 159,461 $26.27 $28.95 10.2% $1.02 5.9 years
Month-to-Month Leases In Effect
Cash Basis 22 62,967 $22.63 $22.65 0.1% -- --
GAAP Basis 22 62,967 $22.63 $22.65 0.1% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 9 87,066 -- $28.48 -- $6.98 10.3 years
GAAP Basis 9 87,066 -- $34.28 -- $6.98 10.3 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 22 246,527 -- $27.28 -- $3.12 7.5 years
GAAP Basis 22 246,527 -- $30.83 -- $3.12 7.5 years
Including Month-to-Month Leases
Cash Basis 44 309,494 -- $26.34 -- -- --
GAAP Basis 44 309,494 -- $29.17 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Six Months Ended June 30, 2004
Rental TI's/Lease Average
Number Square Expiring New Rate Commissions Lease
of Leases Footage Rates Rates Changes Per Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 56 681,258 $21.86 -- -- -- --
GAAP Basis 56 681,258 $22.80 -- -- -- --
Renewed / Releasable Space Leased
Cash Basis 23 315,155 $22.54 $24.00 6.5% $2.70 5.4 years
GAAP Basis 23 315,155 $23.88 $26.16 9.5% $2.70 5.4 years
Month-to-Month Leases In Effect
Cash Basis 22 62,967 $22.53 $22.65 0.5% -- --
GAAP Basis 22 62,967 $22.50 $22.65 0.7% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 18 220,005 -- $23.10 -- $19.42 9.6 years
GAAP Basis 18 220,005 -- $30.92 -- $19.42 9.6 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 41 535,160 -- $23.63 -- $9.57 7.1 years
GAAP Basis 41 535,160 -- $28.12 -- $9.57 7.1 years
Including Month-to-Month Leases
Cash Basis 63 598,127 -- $23.53 -- -- --
GAAP Basis 63 598,127 -- $27.54 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
June 30, 2004
Square Percentage of Annualized Base
Year of Number of Footage of Aggregate Rent of Expiring
Lease Leases Expiring Portfolio Lease Leases (per
Expiration Expiring Leases Square Feet square foot)
- --------- ---------- ---------- -------------- ----------------
2004 52 (1) 272,539 5.4% $25.98
2005 31 327,707 6.5% $27.48
2006 41 870,651 17.2% $24.46
2007 17 314,735 6.2% $23.64
2008 15 346,492 6.8% $26.92
- Includes 22 month-to-month leases for approximately 63,000 square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
June 30, 2004
|
Estimated |
Total |
|
|
In-Service |
Rentable |
|
|
Markets |
Dates |
Square Footage |
|
California - San Diego |
1Q05 |
45,000 |
|
Southeast |
2Q05 |
96,000 |
|
Suburban Washington D.C. |
4Q04 |
95,000 |
|
Suburban Washington D.C. |
2Q05 |
73,000 |
|
Washington - Seattle |
4Q04 |
59,000 (1) |
|
Total |
368,000 |
|
- Excludes certain phases of the property which were delivered to tenants during 2004.
Our properties under development are ground-up development projects of office/laboratory facilities. As required under GAAP, interest is being capitalized on these projects, as activities are ongoing to bring the assets to their intended use.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment
June 30, 2004
|
Estimated |
Total Rentable |
Total Square |
|
|
In-Service |
Square Footage |
Footage Being |
|
|
Markets |
Dates |
of Property |
Redeveloped |
|
California - San Diego |
4Q05 |
18,173 |
18,173 |
|
California - San Diego |
4Q05 |
17,590 |
17,590 |
|
California - San Diego |
3Q05 |
71,510 |
71,510 |
|
California - San Francisco Bay |
Various |
153,837 |
28,937 (1) |
|
California - San Francisco Bay |
Various |
98,964 |
35,016 (1) |
|
California - San Francisco Bay |
4Q04 |
32,074 |
11,000 (1) |
|
Eastern Massachusetts |
1Q05 |
96,150 |
66,540 |
|
Eastern Massachusetts |
3Q04 |
46,700 |
46,700 |
|
New Jersey/Suburban Philadelphia |
3Q04 |
37,000 |
37,000 |
|
New Jersey/Suburban Philadelphia |
2Q05 |
42,600 |
42,600 |
|
Southeast |
Various |
119,916 |
42,912 (1) |
|
Suburban Washington D.C. |
3Q05 |
131,415 |
52,449 |
|
Suburban Washington D.C. |
2Q05 |
53,595 |
26,722 |
|
Suburban Washington D.C. |
3Q05 |
92,449 |
92,449 |
|
Washington - Seattle |
TBD |
46,303 |
22,899 (2) |
|
Washington - Seattle |
3Q05 |
32,471 |
32,471 |
|
Total |
1,090,747 |
644,968 |
- Subject property contains multiple buildings, some of which are being redeveloped with various estimated in-service dates.
- Property will be demolished and a new building will be constructed based on significant new entitlements received in 2003.
Our redevelopment program involves activities necessary for the permanent change of use of applicable redevelopment space to office/laboratory space. For properties undergoing redevelopment, the entire property is excluded from the operating portfolio and related statistics (e.g. occupancy information, same property performance, etc.). As required under GAAP, interest is capitalized on redevelopment properties on the basis allocable only to the portion undergoing redevelopment. Average occupancy for properties under full or partial redevelopment as of June 30, 2004 was 40.9% and is not included in the occupancy of the operating portfolio.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Six Months Ended June 30, 2004
(Dollars in thousands)
|
Property-related capital expenditures (1) |
$ 1,481 |
|
Leasing costs (2) |
$ 493 |
|
Property-related redevelopment costs (3) |
$ 35,549 |
|
Property-related development costs |
$ 11,139 |
- Property-related capital expenditures include all capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures or costs related to the redevelopment of a property. Capital expenditures fluctuate in any given period due to the nature, extent or timing of improvements required and the extent to which they are recoverable from tenants. Approximately 90% of our leases (based on rentable square feet) provide for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing). In addition, we implement an active preventative maintenance program at each of our properties to minimize capital expenditures.
- Leasing costs consist of tenant improvements and leasing commissions related to leasing of acquired vacant space and second generation space. Leasing costs exclude tenant improvements that are revenue-enhancing.
- Includes certain capital expenditures recoverable from tenants of approximately $1,286,000.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Second Quarter and Six Months Ended June 30, 2004
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the second quarter and six months ended June 30, 2004.
Date: August 2, 2004
Time: 2:00 P.M. Eastern Daylight Time
Phone Number: (913) 981-5558
Confirmation Code: 102708