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): January 28, 2011

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

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 1.01  Entry into a Material Definitive Agreement.

 

On January 28, 2011 (the “Effective Date”), Alexandria Real Estate Equities, Inc. and certain of its subsidiaries (collectively, the “Company”) entered into a third amendment (the “Third Amendment”) to the Company’s second amended and restated credit agreement dated October 31, 2006, as further amended on December 1, 2006 and May 2, 2007 (the “Existing Credit Agreement,” and as amended by the Third Amendment, the “Amended Credit Agreement”).

 

The Third Amendment amends the Existing Credit Agreement to, among other things, increase the maximum permitted borrowings under the credit facilities from $1.9 billion to $2.25 billion, consisting of a $1.5 billion unsecured revolving credit facility (increased from $1.15 billion) and a $750 million unsecured term loan (together the “Unsecured Credit Facility”) and provide the Company an accordion option to increase commitments under its Unsecured Credit Facility by up to an additional $300 million.  Borrowings under the Unsecured Credit Facility bear interest at LIBOR or the specified base rate, plus in either case a margin specified in the Amended Credit Agreement (the “Applicable Margin”).  The Applicable Margin for the Company’s LIBOR borrowings under the revolving credit facility was initially set at 2.4% as of the Effective Date.   The Applica ble Margin for the Company’s LIBOR borrowings under the unsecured term loan remained unchanged at 1.0% as of the Effective Date.

 

Under the Third Amendment, the maturity date for the unsecured revolving credit facility will be January 28, 2015, provided that the Company exercises its sole right under the amendment to extend this maturity date twice by an additional six months after each exercise.  The maturity date for the unsecured term loan remains unchanged at October 2012, assuming the Company exercises its sole right to extend the maturity date by one year.  The Third Amendment also modifies certain financial covenants with respect to the Unsecured Credit Facility, including the fixed charge coverage ratio, secured debt ratio, leverage ratio, minimum book value, and interest coverage ratio covenants, and adds covenants relating to an unsecured leverage ratio and unsecured debt yield.  According to the financial covenants under the Third Amendment, we must not, as of the last day of any fiscal quarter, permit our:

 

·                  leverage ratio to exceed 60%

·                  unsecured leverage ratio to exceed 60%

·                  fixed charged coverage ratio to be less than 1.50

·                  unsecured debt yield to be less than 11% until June 30, 2011 and 12% thereafter

·                  minimum book value to be less than the sum of $2.0 billion and 50% of the net proceeds of equity offerings after the Effective Date

·                  secured debt ratio to exceed 40%

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, and Citigroup Global Markets Inc. serve as Joint Lead Arrangers, Bank of America, N.A. serves as Administrative Agent, JPMorgan Chase Bank, N.A. and Citibank, N.A. serve as Co-Syndication Agents, and The Bank of Nova Scotia, Barclays Bank PLC, The Royal Bank of Scotland PLC, BBVA Compass Bank and RBC Capital Markets serve as Co-Documentation Agents under the Third Amendment.

 

The foregoing summary of the Third Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Third Amendment, a copy of which will be filed as an exhibit to the Company’s quarterly report on Form 10-Q for the quarter ending March 31, 2011.

 

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Item 2.02.  Results of Operations and Financial Condition.

 

On February 2, 2011, we issued a press release entitled “Alexandria Real Estate Equities, Inc. Reports Fourth Quarter and Year Ended December 31, 2010 Financial and Operating Results” which sets forth our results of operations and financial condition for the fourth quarter and year ended December 31, 2010.  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 2.03  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information included in Item 1.01 is incorporated herein by reference.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)   Exhibits.

 

99.1                Press Release dated February 2, 2011.

 

99.2                Alexandria Real Estate Equities, Inc.’s Supplemental Financial, Operating, & Property Information for the fourth quarter and year ended December 31, 2010.

 

Forward-looking Statements

 

This current report on Form 8-K contains 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.  These statements include words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” or “anticipates,” or the negative of these words or similar words, and include (without limitation) statements regarding the anticipated maturity date of the unsecured revolving credit facility and unsecured term loan under the Amended Credit Agreement.  Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in each such statement.  A number of important factors could cause actual results to differ materially from those included within or contemplated by the forward-looking statements, including, but not limited to, the factors described in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.  The Company does not undertake any responsibility to update any of these factors or to announce publicly any revisions to any of the forward-looking statements contained in this or any other document, whether as a result of new information, future events, or otherwise.

 

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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.

 

	ALEXANDRIA REAL ESTATE EQUITIES, INC.
February 3, 2011	By:	/s/ Joel S. Marcus
		Joel S. Marcus
		Chairman/Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Dean A. Shigenaga
		Dean A. Shigenaga
		Chief Financial Officer
		(Principal Financial and Chief Accounting Officer)

 

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EXHIBIT INDEX

 

Exhibit Number		Exhibit Title
99.1		Press Release dated February 2, 2010.
99.2		Alexandria Real Estate Equities, Inc.’s Supplemental Financial, Operating, & Property Information for the fourth quarter and year ended December 31, 2010.

 

5

Exhibit 99.1

 

 

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

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010

FINANCIAL AND OPERATING RESULTS

 

Highlights

 

Fourth Quarter 2010:

·             Fourth Quarter 2010 Funds from Operations Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $1.11, Before Losses on Early Extinguishment of Debt and Gain on Sales of Property

·             Fourth Quarter 2010 Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $1.52

·             Earnings Guidance Range for FFO per Share (Diluted) for the Year Ended December 31, 2011 of $4.58-$4.68, up 2 Cents Before January 2011 Losses on Early Extinguishment of Debt

·             Increased Quarterly Dividend to $0.45, up 29%, per Common Share for Fourth Quarter 2010

·             Executed 40 Leases for 1,074,000 Rentable Square Feet, Including a 347,000 Rentable Square Foot Campus Lease in San Diego, California and 275,000 Rentable Square Feet of Redevelopment and Development Space; Highest Single Quarter of Leasing Activity in Company History

·             Fourth Quarter 2010 GAAP Rental Rate Increase of 4.3% on Renewed/Released Space

·             GAAP Same Property Revenues Less Operating Expenses up 1.3%

·             Fourth Quarter 2010 Occupancy of Operating Properties Remains Steady at 94%; Fourth Quarter 2010 Occupancy of Operating and Redevelopment Properties at 89%

·             Repaid Three Secured Loans Approximating $63 Million and Repurchased, in Privately Negotiated Transactions, $83 Million  of 3.7% Unsecured Convertible Notes

·             Completed Ground-up Development of Alexandria Center™ for Life Science – New York City; 92% Occupancy and 96% Leased; LEED Gold Certified

·             Acquired Five Properties in Various Markets Aggregating Approximately 866,000 Rentable Square Feet for an Aggregate Purchase Price of $282 Million, Including Two Life Science Campuses Aggregating 720,000 Rentable Square Feet

·             Completed Sales of Land Parcels in Mission Bay, San Francisco for Aggregate Sales Price of $278 Million at a Gain of $59 Million

 

Year Ended December 31, 2010:

·             Total Return Performance of 547% from May 28, 1997 to December 31, 2010, Assuming Reinvestment of All Dividends

·             Positive GAAP Rental Rate Increases on Renewed/Released Space for 12 Consecutive Years

·             Average December 31 Occupancy Percentage for Operating Properties of 95% and Occupancy Percentage for Operating and Redevelopment Properties of 89% from December 31, 1998 to December 31, 2010

·             Positive GAAP Same Property Growth Quarter-to-Quarter for 50 Consecutive Quarters

·             2010 Funds from Operations Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $4.40, Before Losses on Early Extinguishment of Debt and Gain on Sales of Property

·             2010 Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.’s Common Stockholders of $2.19

·             Executed 142 Leases for 2,744,000 Rentable Square Feet, Including 712,000 Rentable Square Feet of Redevelopment and Development Space; Highest Year of Leasing Activity in Company History

·             GAAP Rental Rate Increase of 4.9% on Renewed/Released Space

·             GAAP Same Property Revenues Less Operating Expenses up 0.4%

·             Repaid Eight Secured Loans Approximating $119 Million, Retired Substantially All $240 Million of 8% Unsecured Convertible Notes, and Repurchased $83 Million of 3.7% Unsecured Convertible Notes

·             Acquired Seven Properties in Various Markets Aggregating Approximately 980,000 Rentable Square Feet for an Aggregate Purchase Price of $318 Million

·             Sold One Property and Land Parcels for an Aggregate Sales Price of $290 Million at an Aggregate Gain of $59 Million

·             Completed Redevelopment of Multiple Spaces at Nine Properties Aggregating 303,000 Rentable Square Feet

·             Completed Ground-Up Development of Three Properties Aggregating 553,000 Rentable Square Feet

·             Commenced Ground-Up Development of Two Fully Leased Properties Aggregating 220,000 Rentable Square Feet Pursuant to Long Term Leases

·             Obtained Final Zoning Approval for Alexandria Center™ at Kendall Square Located in East Cambridge, Massachusetts, an 11.3-Acre Development with 1.9 Million Rentable Square Feet of Life Science and Other Space

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010 RESULTS

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Highlights (continued)

 

January/February 2011:

·             Repurchased, in Privately Negotiated Transactions, Additional $43 Million of 3.7% Unsecured Convertible Notes

·             Extended Maturity Date and Increased Commitments on Unsecured Credit Facility from $1.9 Billion to $2.25 Billion

 

PASADENA, CA. – February 2, 2011 – Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced financial and operating results for the fourth quarter and year ended December 31, 2010.

 

Financial Results

 

For the fourth quarter of 2010, we reported funds from operations (“FFO”) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $58,474,000, or $1.07 per share (diluted), compared to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $54,247,000, or $1.09 per share (diluted), for the fourth quarter of 2009.  For the year ended December 31, 2010, we reported FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $179,764,000, or $3.52 per share (diluted), compared to FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $234,696,000, or $5.52 per share (diluted), for the year ended December 31, 2009.  During the year ended December 31, 2010, we recognized losses on early extinguishment of debt of approximately $45.2 million related to the repurchases, in privately negotiated transactions, of approximately $83 million of certain of our 3.70% unsecured convertible notes and the retirement of substantially all $240 million of our 8% unsecured convertible notes.  FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the year ended December 31, 2010 excluding the losses on early extinguishment of debt was $224,538,000, or $4.40 per share (diluted).  During the year ended December 31, 2009, we recognized a gain on early extinguishment of debt of approximately $11.3 million related to the repurchase, in privately negotiated transactions, of approximately $75 million of certain of our 3.70% unsecured convertible notes.  Additionally, during the year ended December 31, 2009, we recognized income of approximately $7.2 million for a cash payment related to real estate acquired in November 2007 and we recognized additional rental income of approximate ly $18.5 million related to a modification of a lease for a property in South San Francisco, California.  FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the year ended December 31, 2009 excluding these items was $198,013,000, or $4.65 per share (diluted).  The weighted average number of common stock outstanding for calculating FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders totaled 54,893,410 and 49,547,402 for the fourth quarter of 2010 and 2009, respectively, and 51,043,462 and 42,554,804 for the year ended December 31, 2010 and 2009, 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 items between GAAP net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and FFO attributable to Alexandria Real Estate E quities, Inc.’s common stockholders is depreciation and amortization expense and gain on sales of property. Depreciation and amortization expense for the three months ended December 31, 2010 and 2009 was $34,551,000 and $29,004,000, respectively.  Depreciation and amortization expense for the year ended December 31, 2010 and 2009 was $126,640,000 and $118,508,000, respectively.  Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the fourth quarter of 2010 was $83,243,000, or $1.52 per share (diluted), compared to net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders of $21,650,000, or $0.49 per share (diluted), for the fourth quarter of 2009.  Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders for the year ended December 31, 2010 was $105,941,000, or $2.19 per share (diluted), compared to net income attributable to Alexandria Real E state Equities, Inc.’s common stockholders of $104,974,000, or $2.72 per share (diluted), for the year ended December 31, 2009.

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010 RESULTS

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Financial Results (continued)

 

The following table summarizes the significant items noted above that impacted FFO (diluted) during each period presented (in thousands):

 

		Year Ended						Three Months Ended
		12/31/10			12/31/09			12/31/10			9/30/10			6/30/10			3/31/10			12/31/09
FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for FFO per share (diluted), as reported		$	179,764		$	234,696		$	58,474		$	53,862		$	9,840		$	53,980		$	54,247
Loss (gain) on early extinguishment of debt		45,168			(11,254		)	2,372			1,300			41,496			–			–
Cash receipt related to real estate acquired in November 2007		–			(7,242		)	–			–			–			–			–
Additional rental income related to modification of lease		–			(18,509		)	–			–			–			–			–
Assumed conversion of 8% unsecured convertible notes (1)		–			–			–			–			3,560			–			–
Impact of unvested restricted stock awards		(394		)	322			(20		)	(11		)	(333		)	–			–
FFO (diluted), as adjusted		$	224,538		$	198,013		$	60,826		$	55,151		$	54,563		$	53,980		$	54,247
Weighted average shares of common stock outstanding for calculating FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for FFO per share (diluted), as reported (1)		51,043,462			42,554,804			54,893,410			49,864,225			44,904,999			49,654,614			49,547,402
Add: Assumed conversion of 8% unsecured convertible notes		–			–			–			–			4,808,925			–			–
Weighted average shares of common stock outstanding for calculating FFO per share (diluted), as adjusted		51,043,462			42,554,804			54,893,410			49,864,225			49,713,924			49,654,614			49,547,402
FFO per share (diluted), as adjusted		$	4.40		$	4.65		$	1.11		$	1.11		$	1.10		$	1.09		$	1.09

 

(1)    Due to the loss on early extinguishment of debt recognized in the three months ended June 30, 2010, our FFO results for the three months ended June 30, 2010 did not assume conversion of our 8% unsecured convertible notes for FFO per share (diluted) purposes as the impact to FFO per share was antidilutive for the period pursuant to the if-converted method of accounting.  Excluding the losses on early extinguishment of debt, the impact of the assumed conversion of our 8% unsecured convertible notes would have been dilutive to FFO (diluted) for the three months ended June 30, 2010.  For all periods since issuance of the notes in April 2009, except for the three months ended June 30, 2010, ther e is no add back for the assumed conversion of our 8% unsecured convertible notes since FFO attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for FFO per share (diluted), as reported, already assumed conversion of our 8% unsecured convertible notes pursuant to the if-converted method of accounting.

 

Summary of 2010 FFO per Share (Diluted)

 

The following table provides a summary of our guidance for 2010 FFO per share (diluted) reconciled to reported FFO per share (diluted) for the year ended December 31, 2010:

 

Event		2010 FFO per Share (Diluted)
Guidance as reported on April 29, 2010 in connection with our first quarter 2010 earnings call		$	4.43
Loss on early extinguishment of debt in June 2010		(0.83		)
Guidance as reported on June 15, 2010 upon completion of Exchange Offer		3.60
Loss on early extinguishment of debt in July 2010		(0.03		)
Guidance as reported on July 29, 2010 in connection with our second quarter 2010 earnings call		3.57
Follow-on common stock offering in September 2010		–
Guidance as reported on November 3, 2010 in connection with our third quarter 2010 earnings call		3.57
Loss on early extinguishment of debt		(0.05		)
FFO per share (diluted), as reported on February 2, 2011 in connection with our fourth quarter and year ended December 31, 2010 earnings call		$	3.52

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010 RESULTS

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Leasing Activity

 

For the fourth quarter of 2010, we executed a total of 40 leases for approximately 1,074,000 rentable square feet at 30 different properties (excluding month-to-month leases).  Of this total, approximately 758,000 rentable square feet related to new or renewal leases of previously leased space (renewed/released space) and approximately 316,000 rentable square feet related to developed, redeveloped, or previously vacant space.  Of the 316,000 rentable square feet, approximately 275,000 rentable square feet were related to our development or redevelopment programs, with the remaining approximately 41,000 rentable square feet related to previously vacant space.  Rental rates for these new or renewal leases (renewed/released space) were on average approximately 4.3% higher on a GAAP basis than rental rates for the respective expiring leases.

 

For the year ended December 31, 2010, we executed a total of 142 leases for approximately 2,744,000 rentable square feet at 71 different properties (excluding month-to-month leases).  Of this total, approximately 1,778,000 rentable square feet related to new or renewal leases of previously leased space and approximately 966,000 rentable square feet related to developed, redeveloped, or previously vacant space.  Of the 966,000 rentable square feet, approximately 712,000 rentable square feet were related to our development or redevelopment programs, with the remaining approximately 254,000 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 the respective expiring leases.

 

As of December 31, 2010, approximately 96% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes, insurance, utilities, common area, and other operating expenses (including increases thereto) in addition to base rent.  Additionally, approximately 93% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures, and approximately 91% 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.

 

Unsecured Credit Facility

 

In January 2011, we entered into a third amendment (the “Third Amendment”) to our second amended and restated credit agreement dated October 31, 2006, as further amended on December 1, 2006 and May 2, 2007 (the “Existing Credit Agreement,” and as amended by the Third Amendment, the “Amended Credit Agreement”), with Bank of America, N.A., as administrative agent, and certain lenders. The Third Amendment amended the Existing Credit Agreement to, among other things, increase the maximum permitted borrowings under the credit facilities from $1.9 billion to $2.25 billion, consisting of a $1.5 billion unsecured line of credit (increased from $1.15 billion) and a $750 million unsecured term loan (together the “Unsecured Credit Facility”) and provide an accordion option to increase commitments under the Unsecured Credit Facility by up to an ad ditional $300 million.  Borrowings under the Unsecured Credit Facility will bear interest at LIBOR or the specified base rate, plus in either case a margin specified in the Amended Credit Agreement (the “Applicable Margin”).  The Applicable Margin for LIBOR borrowings under the revolving credit facility was initially set at 2.4%.  The Applicable Margin for the LIBOR borrowings under the unsecured term loan was not amended in the Third Amendment and was 1.0% as of December 31, 2010.

 

Under the Third Amendment, the maturity date for the unsecured revolving credit facility will be January 2015, assuming we exercise our sole right under the amendment to extend this maturity date twice by an additional six months after each exercise.  The maturity date for the $750 million unsecured term loan remained unchanged at October 2012, assuming we exercise our sole right to extend the maturity date by one year.  The Third Amendment modified certain financial covenants with respect to the Unsecured Credit Facility, including the fixed charge coverage ratio, secured debt ratio, leverage ratio, and minimum book value, and added covenants relating to an unsecured leverage ratio and unsecured debt yield.

 

Unsecured Convertible Notes

 

3.7% Unsecured Convertible Notes

 

In December 2010, we repurchased, in privately negotiated transactions, approximately $82.8 million of our 3.70% unsecured convertible notes at an aggregate cash price of approximately $84.6 million.  As a result of the repurchases, we recognized a loss on early extinguishment of debt of approximately $2.4 million during the fourth quarter of 2010.  In January 2011, we repurchased, in privately negotiated transactions, additional 3.70% unsecured convertible notes aggregating approximately $42.9 million at an aggregate cash price of approximately $44.1 million.  We recognized losses on early extinguishment of debt of approximately $1.2 million during January 2011.  As of February 2, 2011, approximately $259.1 million in principal was outstanding, including $5.4 million of unamortized discount.

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010 RESULTS

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Unsecured Convertible Notes (continued)

 

8% Unsecured Convertible Notes

 

In June 2010, we completed an exchange (the “Exchange Offer”) of approximately $232.7 million of our 8% unsecured convertible notes for consideration of 24.1546 shares of our common stock, a cash premium of $180 per $1,000 principal amount of the notes, plus accrued and unpaid interest.  As the Exchange Offer terms provided for an equivalent number of shares of our common stock, per bond, as compared to the existing bondholder conversion option, the Exchange Offer did not by itself impact our total weighted average shares of common stock outstanding for purposes of calculating FFO per share (diluted).  In July 2010, we repurchased, in a privately negotiated transaction, approximately $7.1 million of our 8% unsecured convertible notes for an aggregate cash price of approximately $12.8 million.  Thus, in the Exchan ge Offer and this privately negotiated transaction, we retired $239.8 million of our 8% unsecured convertible notes (representing substantially all $240 million outstanding principal amount of our 8% unsecured convertible notes).  In connection with the retirement of our 8% unsecured convertible notes, we recognized losses on early extinguishment of debt of approximately $42.8 million for the year ended December 31, 2010.  As of December 31, 2010, $250,000 in principal was outstanding, including $20,000 of unamortized discount.

 

Acquisitions

 

In August 2010, we announced that we had entered into definitive agreements to acquire three life science properties and other selected assets and interests of privately-held Veralliance Properties, Inc. (“Veralliance”), including continuing services from Veralliance Founder and President, Daniel Ryan and other key management and operational personnel. Veralliance was a San Diego-based corporate real estate solutions company focused on the acquisition, development, and management of office and life science assets in Southern California. The three life science properties, located in San Diego, California, contain an aggregate 161,000 rentable square feet and were acquired for an aggregate purchase price of approximately $50.0 million consisting of approximately $35.2 million in cash and our assumption of two secured loans aggregating approximately $14.8 million . We completed the acquisition of one of these properties in the third quarter of 2010 and completed the acquisitions of the other two properties in the fourth quarter of 2010.

 

In October 2010, we acquired a life science campus in the San Diego market aggregating approximately 347,000 rentable square feet for approximately $128 million.  The purchase of this life science campus included land supporting the future development of additional life science buildings aggregating approximately 420,000 rentable square feet.  At the time of this acquisition, the campus was subject to a 15-month lease with Biogen Idec Inc.  In December 2010, we executed a new lease for the entire 347,000 rentable square foot campus pursuant to a 20-year lease with Illumina, Inc. (“Illumina”) and, pursuant to the lease, also commenced the ground-up development of a building aggregating approximately 123,000 rentable square feet on the campus.  Illumina has the right to further expand the premises and lease one to three additional buildings that may be built on this campus.

 

In December 2010, we acquired one property in the San Diego market aggregating approximately 373,000 rentable square feet and one property in the Suburban Washington, D.C. market aggregating approximately 50,000 rentable square feet for approximately $114 million and approximately $14 million, respectively.

 

Dispositions

 

In November 2010, we completed sales of land parcels in Mission Bay, San Francisco for an aggregate sales price of approximately $278 million at a gain of approximately $59 million. The sales of the land parcels resulted in a reduction of our preconstruction developable square footage by approximately 2.0 million square feet in the Mission Bay, San Francisco submarket.  The cash proceeds from these sales were used to repay outstanding borrowings under our unsecured line of credit.

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010 RESULTS

Page 6

 

Earnings Outlook

 

Based on our current view of existing market conditions and certain current assumptions, we expect our 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 for the year ended December 31, 2011 will be the midpoint within the following ranges:

 

		2011
FFO per share (diluted)		$4.58 - $4.68
Earnings per share (diluted)		$1.97 - $2.07

 

The following table provides a summary of our guidance issued for 2011 FFO per share (diluted):

 

Event		2011 FFO per Share (Diluted)
Guidance range as reported on December 7, 2010 in connection with Form 8-K filing		$4.58 - $4.68
Increase in guidance since December 7, 2010		0.02
Losses on early extinguishment of debt recognized in January 2011		(0.02	)
Guidance range as reported above on February 2, 2011 in connection with our fourth quarter and year ended December 31, 2010 earnings call		$4.58 - $4.68

 

Client Tenant Base

 

The quality, diversity, breadth, and depth of our significant relationships with our life science client tenants provide Alexandria Real Estate Equities, Inc. (“Alexandria”) with consistent and solid cash flows. As of December 31, 2010, Alexandria’s multinational pharmaceutical client tenants represented approximately 25% of our annualized base rent, led by Novartis AG, Eli Lilly and Company, Roche Holding Ltd, Bristol-Myers Squibb Company, GlaxoSmithKline plc, Pfizer Inc., and Merck & Co., Inc.; public biotechnology companies represented approximately 21% and included Amgen Inc., Gilead Sciences, Inc., Biogen Idec Inc., and Celgene Corporation; revenue-producing life science product and service companies represented approximately 18%, led by Quest Diagnostics Incorporated, Qiagen N.V., Laboratory Corporation of America Holdings, and Monsanto Company; government agencies and renowned medical and research institutions represented approximately 16% and included The Scripps Research Institute, Massachusetts Institute of Technology, Fred Hutchinson Cancer Research Center, University of Washington, Sanford-Burnham Medical Research Institute, and the United States Government; private biotechnology companies represented approximately 13% and included high-quality, leading-edge companies with blue-chip venture and institutional investors, including Achaogen Inc., Intellikine, Inc., MacroGenics, Inc., and Tolerx, Inc.; and the remaining approximately 7% consisted of traditional office tenants. Two of the fastest-growing client tenant sectors by revenue currently include leading institutional and multinational pharmaceutical entities. Alexandria’s strong life science underwriting skills, long-term life science industry relationships, and sophisticated management with both real estate and life science operating expertise set the Company apa rt from all other publicly traded REITs and real estate companies.

 

 (more)

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010 RESULTS

Page 7

 

Earnings Call Information

 

We will host a conference call on Thursday, February 3, 2011 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 financial and operating results for the fourth quarter and year ended December 31, 2010.  To participate in this conference call, dial (719) 325-4898 and confirmation code 5725824, 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 for a limited time from 6:00 p.m. ET/3:00 p.m. PT on Thursday, February 3, 2011.  The replay number is (719) 457-0820 and the confirmation code is 5725824.

 

Additionally, a copy of Alexandria Real Estate Equities, Inc.’s Supplemental Financial, Operating, & Property Information for the fourth quarter and year ended December 31, 2010 and this press release are available in the Corporate Information section of our website at www.labspace.com.

 

About the Company

 

Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life Science Industry®, is the largest owner and preeminent REIT focused principally on cluster development through the ownership, operation, management, selective acquisition, redevelopment, and development of properties containing life science laboratory space.  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, biotechnology, medical device, product, service, and government agencies.  Alexandria’s primary business objective is to maximiz e stockholder value by providing its stockholders with the greatest possible total return based on a multi-faceted platform of internal and external growth. Alexandria’s operating platform is based on the principle of “clustering” with assets and operations located adjacent to life science entities driving growth and technological advances within each cluster.

 

As of February 2, 2011, our asset base consisted of 167 properties approximating 13.7 million rentable square feet including 162 properties approximating 13.2 million rentable square feet (including spaces undergoing active redevelopment) and five properties undergoing ground-up development approximating an additional 475,818 rentable square feet.  In addition, our asset base will enable us to grow to approximately 26.4 million rentable square feet through additional ground-up development of approximately 12.7 million 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 2011 earnings per share (diluted) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, 2011 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 retirement or 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 capit al (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)

 

		Three Months Ended December 31,						Year Ended December 31,
		2010			2009			2010			2009
Revenues
Rental		$	99,902		$	88,629		$	368,666		$	368,230
Tenant recoveries		30,636			25,421			113,424			103,088
Other income		1,633			1,010			5,213			11,854
Total revenues		132,171			115,060			487,303			483,172
Expenses
Rental operations		36,726			29,434			132,278			122,281
General and administrative		8,602			8,468			34,390			36,299
Interest		17,191			19,452			69,642			82,249
Depreciation and amortization		34,535			28,974			126,539			117,775
Total expenses		97,054			86,328			362,849			358,604
Income from continuing operations before (loss) gain on early extinguishment of debt and gain on sales of land parcels		35,117			28,732			124,454			124,568
(Loss) gain on early extinguishment of debt		(2,372		)	–			(45,168		)	11,254
Income from continuing operations		32,745			28,732			79,286			135,822
(Loss) income from discontinued operations before gain on sales of real estate		(187		)	780			270			3,199
Gain on sales real estate		–			393			24			2,627
Income from discontinued operations, net		(187		)	1,173			294			5,826
Gain on sales of land parcels		59,442			–			59,442			–
Net income		92,000			29,905			139,022			141,648
Net income attributable to noncontrolling interests		944			924			3,729			7,047
Dividends on preferred stock		7,089			7,089			28,357			28,357
Net income attributable to unvested restricted stock awards		726			242			995			1,270
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders		$	83,241		$	21,650		$	105,941		$	104,974
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic
Continuing operations		$	1.52		$	0.47		$	2.18		$	2.57
Discontinued operations, net		–			0.03			0.01			0.15
Earnings per share – basic		$	1.52		$	0.50		$	2.19		$	2.72
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted
Continuing operations		$	1.52		$	0.46		$	2.18		$	2.57
Discontinued operations, net		–			0.03			0.01			0.15
Earnings per share – diluted		$	1.52		$	0.49		$	2.19		$	2.72

 

Note:  See the “Significant Events Impacting Comparability” section of this press release on page 12.

 

8

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

		December 31,			December 31,
		2010			2009
Assets
Investments in real estate:
Rental properties		$	4,546,769		$	3,903,955
Less: accumulated depreciation		(616,007		)	(520,647		)
Rental properties, net		3,930,762			3,383,308
Land held for future development		431,838			255,025
Construction in progress		1,045,536			1,400,795
Investment in unconsolidated real estate entity		36,678			–
Investments in real estate, net		5,444,814			5,039,128
Cash and cash equivalents		91,232			70,628
Restricted cash		28,354			47,291
Tenant receivables		5,492			3,902
Deferred rent		116,849			96,700
Investments		83,899			72,882
Other assets		135,221			126,696
Total assets		$	5,905,861		$	5,457,227
Liabilities, Noncontrolling Interests, and Equity
Secured notes payable		$	790,869		$	937,017
Unsecured line of credit and unsecured term loan		1,498,000			1,226,000
Unsecured convertible notes		295,293			583,929
Accounts payable, accrued expenses, and tenant security deposits		304,257			282,516
Dividends payable		31,114			21,686
Total liabilities		2,919,533			3,051,148
Redeemable noncontrolling interests		15,920			41,441
Alexandria Real Estate Equities, Inc. stockholders’ equity:
Series C preferred stock		129,638			129,638
Series D convertible preferred stock		250,000			250,000
Common stock		550			438
Additional paid-in capital		2,566,238			1,977,062
Retained earnings		734			–
Accumulated other comprehensive loss		(18,335		)	(33,730		)
Total Alexandria Real Estate Equities, Inc. stockholders’ equity		2,928,825			2,323,408
Noncontrolling interests		41,583			41,230
Total equity		2,970,408			2,364,638
Total liabilities, noncontrolling interests, and equity		$	5,905,861		$	5,457,227

 

9

 

 

 

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 periods below (in thousands, except share and per share data):

 

		Three Months Ended December 31,						Year Ended December 31,
		2010			2009			2010			2009
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for basic earnings per share		$	83,241		$	21,650		$	105,941		$	104,974
Effect of dilutive securities and assumed conversion:
Assumed conversion of 8% unsecured convertible notes		2			–			–			–
Amounts attributable to unvested restricted stock awards		–			–			–			–
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – numerator for diluted earnings per share		$	83,243		$	21,650		$	105,941		$	104,974
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		54,865,654			43,715,462			48,375,474			38,586,909
Effect of dilutive securities and assumed conversion (1):
Dilutive effect of stock options		21,709			34,839			29,566			13,160
Assumed conversion of 8% unsecured convertible notes		6,047			–			–			–
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for diluted earnings per share		54,893,410			43,750,301			48,405,040			38,600,069
Earnings per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
Basic		$	1.52		$	0.50		$	2.19		$	2.72
Diluted		$	1.52		$	0.49		$	2.19		$	2.72

 

 

(1)                   We use income from continuing operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders as the “control number” in determining whether potential common shares are dilutive or antidilutive to earnings per share.  For the three months and year ended December 31, 2010, the assumed conversion of our 8% unsecured convertible notes was dilutive to earnings per share from continuing operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders and has been included in diluted earnings per share.

 

 

Note:  See the “Significant Events Impacting Comparability” section of this press release on page 12.

 

10

 

 

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 periods below (in thousands, except share and per share data):

 

		Three Months Ended December 31,						Year Ended December 31,
		2010			2009			2010			2009
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders		$	83,241		$	21,650		$	105,941		$	104,974
Add: Depreciation and amortization		34,551			29,004			126,640			118,508
Add: Net income attributable to noncontrolling interests		944			924			3,729			7,047
Add: Net income attributable to unvested restricted stock awards		726			242			995			1,270
Subtract: Gain on sales of property		(59,442		)	(393		)	(59,466		)	(2,627		)
Subtract: FFO attributable to noncontrolling interests		(1,036		)	(1,006		)	(4,226		)	(3,843		)
Subtract: FFO attributable to unvested restricted stock awards		(512		)	(558		)	(1,608		)	(2,694		)
FFO attributable to Alexandria Real Estate, Inc.’s common stockholders – numerator for basic FFO per share		58,472			49,863			172,005			222,635
Effect of dilutive securities and assumed conversion:
Assumed conversion of 8% unsecured convertible notes		2			4,362			7,781			11,943
Amounts attributable to unvested restricted stock awards		–			22			(22		)	118
FFO attributable to Alexandria Real Estate, Inc.’s common stockholders – numerator for FFO per share (diluted)		$	58,474		$	54,247		$	179,764		$	234,696
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		54,865,654			43,715,462			48,375,474			38,586,909
Effect of dilutive securities and assumed conversion:
Dilutive effect of stock options		21,709			34,839			29,566			13,160
Assumed conversion of 8% unsecured convertible notes		6,047			5,797,101			2,638,422			3,954,735
Weighted average shares of common stock outstanding for calculating FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – denominator for FFO per share (diluted)		54,893,410			49,547,402			51,043,462			42,554,804
FFO per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
Basic		$	1.07		$	1.14		$	3.56		$	5.77
Diluted		$	1.07		$	1.09		$	3.52		$	5.52

 

(1)    See also note regarding FFO on page 13.

 

Note:  See the “Significant Events Impacting Comparability” section of this press release on page 12.

 

11

 

 

Significant Events Impacting Comparability

 

During the fourth quarter of 2010, we completed sales of land parcels in Mission Bay, San Francisco for an aggregate sales price of $278 million at a gain of approximately $59.4 million and we recognized a loss on early extinguishment of debt of approximately $2.4 million related to the repurchase, in privately negotiated transactions, of approximately $82.8 million of our 3.7% unsecured convertible notes.  During the third quarter of 2010, we recognized a loss on early extinguishment of debt of approximately $1.3 million related to the repurchase, in a privately negotiated transaction, of approximately $7 million of our 8% unsecured convertible notes.  During the second quarter of 2010, we recognized a loss on early extinguishment of debt of approximately $41.5 million upon completion of an exchange of our 8% unsecured convertible notes.  During the second quarter of 2009, we recognized addition al income approximating $7.2 million for a cash receipt related to real estate acquired in November 2007.  Additionally during the second quarter of 2009, we recognized a gain on early extinguishment of debt of approximately $11.3 million related to the repurchase, in privately negotiated transactions, of approximately $75 million of our 3.7% unsecured convertible notes.  During the first quarter of 2009, we recognized approximately $18.5 million of additional rental income related to the modification of a lease in South San Francisco.

 

The items described in the preceding paragraph are shown in the following table in each applicable period (in thousands):

 

		Three months ended December 31,						Year Ended December 31,
		2010			2009			2010			2009
Significant events impacting total revenues
Cash receipt related to real estate acquired in November 2007		$	–		$	–		$	–		$	7,242
Additional rental income related to modification of lease		–			–			–			18,509
		$	–		$	–		$	–		$	25,751
Significant events impacting net income
Cash receipt related to real estate acquired in November 2007		$	–		$	–		$	–		7,242
Additional rental income related to modification of lease		–			–			–			18,509
(Loss) gain on early extinguishment of debt		(2,372		)	–			(45,168		)	11,254
Gain on sales of property		59,442			393			59,466			2,627
		$	57,070		$	393		$	14,298		$	39,632
Significant events impacting FFO
Cash receipt related to real estate acquired in November 2007		$	–		$	–		$	–		$	7,242
Additional rental income related to modification of lease		–			–			–			18,509
(Loss) gain on early extinguishment of debt		(2,372		)	–			(45,168		)	11,254
		$	(2,372	)	$	–		$	(45,168	)	$	37,005

 

12

 

 

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 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, acc ordingly, 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.

 

13

 

Exhibit 99.2

 

SUPPLEMENTAL FINANCIAL, OPERATING, & PROPERTY INFORMATION       FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2010       Conference Call Information: Thursday, February 3, 2011 3:00PM Eastern Time/12:00PM Noon Pacific Time Number: (719) 325-4898 Confirmation Code: 5725824       385 EAST COLORADO BOULEVARD, SUITE 299 PASADENA, CALIFORNIA  91101 (626) 578-9693 www.labspace.com

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Table of Contents

December 31, 2010

(Unaudited)

 

	Page
Company Profile	3
Investor Information	4
Equity Research Coverage	5
Fourth Quarter and Year Ended December 31, 2010 Financial and Operating Results	6
Condensed Consolidated Income Statements	15
Condensed Consolidated Balance Sheets	16
Earnings (Loss) per Share	17
Funds from Operations	18
Adjusted Funds from Operations	19
Financial and Asset Base Highlights	20
Summary of Properties	23
Summary of Occupancy Percentage	24
Property Listing	25
Debt Information	31
Summary of Same Property Comparisons	36
Summary of Leasing Activity	37
Summary of Lease Expirations	40
20 Largest Client Tenants	41
Client Tenant Mix	42
Summary of Additions and Dispositions of Properties	43
Real Estate and Value-Added Projects	44
Summary of Capital Expenditures	52
Definitions and Other Information	53

 

This Supplemental Financial, Operating, & 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 February 2, 2011, the date this Supplemental Financial, Operating, & 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 un certainties 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, Operating, & 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.

Company Profile

December 31, 2010

 

The Company

 

Alexandria Real Estate Equities, Inc. (the “Company” or “Alexandria”), a self-administered and self-managed real estate investment trust (“REIT”), is the largest owner and preeminent REIT focused principally on science-driven cluster formation. Our operating platform is based on the principle of “clustering” with high-quality assets and operations located adjacent to life science entities driving growth and technological advances. The Company has significant real estate assets adjacent to key life science entities which we believe results in higher occupancy levels, longer lease terms, higher rental income, and higher returns.  These locations are in the best submarkets in each of the top life science cluster destinations, including San Francisco and San Diego, California; Greater Boston; New York City, New Jersey, and Suburban Philadelphia; Southeast; Suburban Washington, D.C.; Seattle, Washington; and international locations. Client tenants include institutional (universities and independent not-for-profit institutions), pharmaceutical, biotechnology, medical device, product, service, and government agencies.  The Company was founded in 1994 by Jerry M. Sudarsky and Joel S. Marcus and the Company executed its initial public offering in 1997.  Alexandria is the leading life science real estate company and is known for its very well located high-quality environmentally sustainable real estate, technical infrastructure, and unique expertise it provides to its broad and diverse high-quality life science industry client tenant base.

 

Management

 

Alexandria’s executive and senior management team is highly experienced in the REIT industry (with both real estate and life science experience and expertise) and is the most accomplished team focused on providing high-quality environmentally sustainable real estate, technical infrastructure, and unique expertise to the broad and diverse life science industry. Our deep and talented team has decades of real estate and life science industry experience. We believe that our expertise, experience, reputation, and key life science relationships provide Alexandria significant competitive advantages in attracting new business opportunities. Our management team also includes highly experienced regional market directors averaging over 20 years of real estate experience and 10 years with Alexandria. Our regional market directors have significant experience, expertise, as well as valuable relationships that enable Ale xandria to develop long-term relationships with preeminent life science entities.

 

Strategy

 

Alexandria’s primary business objective is to maximize stockholder value by providing its stockholders with the greatest possible total return based on a multi-faceted platform of internal and external growth. The key elements to our strategy include our consistent focus on high-quality assets and operations in the top life science cluster destinations with our properties located adjacent to life science entities driving growth and technological advances within each cluster. These adjacency locations are characterized by high barriers to entry and exit, limited supply of available space, and represent highly desirable locations for tenancy to life science entities. Alexandria’s strategy also includes leveraging on its deep and broad life science and real estate relationships in order to attract new and leading life science client tenants and value-added real estate opportunities through acquisitions, redevelopment, and development.

 

Summary (as of December 31, 2010)

 

Corporate headquarters		Pasadena, California
Markets		San Francisco Bay, San Diego, Greater Boston, NYC/New Jersey/Suburban Philadelphia, Southeast, Suburban Washington, D.C., Seattle, and International
Fiscal year-end		December 31
Total properties		167
Total rentable square feet		13.7 million
Common shares outstanding		55.0 million
Dividend – quarter/annualized		$0.45/$1.80
Closing dividend yield – annualized		2.5%
Total market capitalization		$7.0 billion

 

3

 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Investor Information

December 31, 2010

 

 

Executive/Senior Management
Joel S. Marcus		Chairman, Chief Executive Officer, & Founder		Thomas J. Andrews		EVP-Regional Market Director-Greater Boston
Dean A. Shigenaga		SVP, Chief Financial Officer, & Treasurer		John J. Cox		SVP-Regional Market Director-Seattle
James H. Richardson		Director and Senior Management Consultant		John H. Cunningham		SVP-Regional Market Director-NY/Strategic Operations
Jennifer J. Pappas		SVP, General Counsel, & Corporate Secretary		Larry J. Diamond		SVP-Regional Market Director-Mid Atlantic
Peter M. Moglia		Chief Investment Officer		Stephen A. Richardson		EVP-Regional Market Director-San Francisco Bay
Vincent R. Ciruzzi		SVP-Construction and Development		Daniel J. Ryan		SVP-Regional Market Director-San Diego/Strategic Operations
Peter J. Nelson		Senior Management Consultant

 

 

Company Information
Corporate Headquarters		Trading Symbols		Information Requests
385 East Colorado Boulevard, Suite 299		New York Stock Exchange (“NYSE”)		Phone:	(626) 396-4828
Pasadena, California 91101		Common stock: ARE		E-mail:	[email protected]
		Series C preferred stock: ARE-C		Web:	www.labspace.com

 

 

Common Stock Data (NYSE: ARE)
		4Q10			3Q10			2Q10			1Q10			4Q09
High trading price		$	76.19		$	73.89		$	75.18		$	69.03		$	68.24
Low trading price		$	65.60		$	60.11		$	60.48		$	55.54		$	51.35
Closing stock price, average for period		$	71.25		$	69.28		$	68.80		$	62.97		$	57.67
Closing stock price, at the end of the quarter		$	73.26		$	70.00		$	63.37		$	67.60		$	64.29
Dividends per share – annualized		$	1.80		$	1.40		$	1.40		$	1.40		$	1.40
Closing dividend yield – annualized		2.5%			2.0%			2.2%			2.1%			2.2%
Common shares outstanding at the end of the quarter		54,966,925			54,891,638			49,634,396			43,919,968			43,846,050
Closing market value of outstanding common shares (in thousands)		$	4,026,877		$	3,842,415		$	3,145,332		$	2,968,990		$	2,818,863

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC.

Equity Research Coverage

December 31, 2010

 

 

Argus Research			The Goldman Sachs Group, Inc.			Morningstar
William Eddleman, Jr.	(212) 425-7500		Jonathan Habermann	(917) 343-4260		Jason Ren	(312) 244-7008
			Sloan Bohlen	(212) 902-2796
			Conor Fennerty	(212) 902-4227
Banc of America Securities-Merrill Lynch			Green Street Advisors			RBC Capital Markets
James Feldman	(646) 855-5808		John Stewart	(949) 640-8780		Dave Rodgers	(440) 715-2647
Jeffrey Spector	(646) 855-1363		Michael Knott	(949) 640-8780		Michael Carroll	(440) 715-2649
Andrew Ryu	(646) 855-2926
Barclays Capital			International Strategy & Investment Group Inc			RW Baird
Ross Smotrich	(212) 526-2306		Steve Sakwa	(212) 446-9462		David AuBuchon	(314) 445-6520
Matthew Rand	(212) 526-0248		George Auerbach	(212) 446-9459		Justin Webb	(314) 445-6515
			Gwen Clark	(212) 446-5611
Citigroup Global Markets			JMP Securities			Standard & Poor’s
Michael Bilerman	(212) 816-1383		William Marks	(415) 835-8944		Robert McMillan	(212) 438-9522
Quentin Velleley	(212) 816-6981		Rochan Raichura	(415) 835-3909
Mark Montandon	(212) 816-6243
Cowen and Company			JP Morgan Securities			UBS
James Sullivan	(646) 562-1380		Anthony Paolone	(212) 622-6682		Ross Nussbaum	(212) 713-2484
Michael Gorman	(646) 562-1381		Joseph Dazio	(212) 622-6416		Robert Salisbury	(212) 713-4760
Credit Suisse			Keefe, Bruyette & Woods
Andrew Rosivach	(415) 249-7942		Sheila McGrath	(212) 887-7793
Suzanne Kim	(415) 249-7943		Kristin Brown	(212) 887-7738

 

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 initiate or discontinue 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.

 

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