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): April 25, 2019


ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)

Maryland
 
1-12993
 
95-4502084
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)




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


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

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

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

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

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

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 1.01. Entry into a Material Definitive Agreement.

On April 25, 2019, Alexandria Real Estate Equities, Inc. (the “Company”) and its subsidiary Alexandria Real Estate Equities, L.P. entered into an escrow agreement (the “Citibank Escrow Agreement”) with Citibank, N.A., as administrative agent, certain lenders, and Shearman & Sterling LLP, as escrow agent (the “Unsecured Senior Bank Term Loan Escrow Agent”), pursuant to which the Company and the other parties to the Fifth Amended and Restated Term Loan Agreement (the “Unsecured Senior Bank Term Loan”) submitted their signature pages to the Unsecured Senior Bank Term Loan to be held by the Unsecured Senior Bank Term Loan Escrow Agent in escrow. Pursuant to the Citibank Escrow Agreement, the Unsecured Senior Bank Term Loan Escrow Agent will release the signatures to the Unsecured Senior Bank Term Loan and the Unsecured Senior Bank Term Loan will become effective upon satisfaction by the Company of certain conditions precedent to the effectiveness of the Unsecured Senior Bank Term Loan set forth in the Unsecured Senior Bank Term Loan. If the conditions are not satisfied by the Company on or prior to July 2, 2019, the Unsecured Senior Bank Term Loan signature pages will be deemed to have been revoked, the escrow arrangements under the Citibank Escrow Agreement will terminate, and the Unsecured Senior Bank Term Loan will not become effective.

The conditions to be satisfied by the Company include the delivery of certain legal opinions and certificates and the absence of any default under the Unsecured Senior Bank Term Loan. While there can be no assurance in this regard, the Company expects that it will satisfy the conditions on or prior to June 28, 2019, and that the Unsecured Senior Bank Term Loan will thereupon become effective. The purpose and effect of the Citibank Escrow Agreement are to permit the Company to “lock in” currently the terms and conditions of the Unsecured Senior Bank Term Loan and the identities of the lenders thereunder while deferring the effectiveness of the amendments set forth in the Unsecured Senior Bank Term Loan until the Company satisfies the conditions to effectiveness.

The Unsecured Senior Bank Term Loan will amend and restate the Company’s Fourth Amended and Restated Term Loan Agreement dated as of September 28, 2018, with Citibank, N.A., as administrative agent; Citibank, N.A., RBC Capital Markets, and The Bank of Nova Scotia, as joint lead arrangers and joint book running managers; and certain financial institutions party thereto as lenders. As of April 25, 2019, the principal amount outstanding under such facility was $350 million (the “Existing Unsecured Senior Bank Term Loan”).

The Unsecured Senior Bank Term Loan will extend the maturity date of the Existing Unsecured Senior Bank Term Loan to January 2, 2025.

Affiliates of lenders under the Unsecured Senior Bank Term Loan have, from time to time, performed, and may in the future perform, various financial advisory, investment banking, and general financing services for the Company.

The foregoing summary of the Unsecured Senior Bank Term Loan does not purport to be complete and is qualified in its entirety by reference to the full text of the Unsecured Senior Bank Term Loan, a copy of which is anticipated to be filed as an exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2019, to the extent it becomes effective.

Item 2.02.  Results of Operations and Financial Condition.

On April 29, 2019, the Company issued a press release entitled “Alexandria Real Estate Equities, Inc. Reports First Quarter Ended March 31, 2019 Financial and Operating Results.”  The press release referred to certain supplemental information that is available on the Company’s website at www.are.com.  A copy of the press release and supplemental information are attached hereto as Exhibit 99.1.

The information contained in this Item 2.02, including the exhibit 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 (the "Securities Act"), 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                Alexandria Real Estate Equities, Inc.’s Earnings Press Release and Supplemental Information for the First Quarter Ended March 31, 2019.

Forward-looking Statements

This current report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act.  These statements include words such as “forecast,” “guidance,” “projects,” “estimates,” “anticipates,” “goals,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” or “will,” or the negative of these words or similar words.  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.




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.
 
 
 
 
 
 
April 29, 2019
 
By:
/s/ Joel S. Marcus
 
 
 
 
Joel S. Marcus
 
 
 
 
Executive Chairman
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Stephen A. Richardson
 
 
 
 
Stephen A. Richardson
 
 
 
 
Co-Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Peter M. Moglia
 
 
 
 
Peter M. Moglia
 
 
 
 
Co-Chief Executive Officer and
Co-Chief Investment Officer
 
 
 
 
 
 
 
 
 
By:
/s/ Dean A. Shigenaga
 
 
 
 
Dean A. Shigenaga
 
 
 
 
Co-President and Chief Financial Officer
 




EXHIBIT INDEX

Exhibit
Number        Exhibit Title    
99.1Alexandria Real Estate Equities, Inc.’s Earnings Press Release and Supplemental Information for the First Quarter Ended March 31, 2019.


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Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019



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Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019
i



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(1)
Refer to “Annual Rental Revenue,” “Class A Properties and AAA Locations,” and “Investment-Grade or Publicly Traded Large Cap Tenants” in the “Definitions and Reconciliations” section of our Supplemental Information for additional information. As of March 31, 2019, annual rental revenue solely from investment-grade tenants within our overall tenant base and within our top 20 tenants was 46% and 75%, respectively.

 
ii
 
 
 
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Table of Contents
March 31, 2019
 
 


EARNINGS PRESS RELEASE
Page
 
 
Page
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL INFORMATION
Page
 
 
Page
 
External Growth / Investments in Real Estate
 
 
 
 
New Class A Development and Redevelopment Properties:
 
 
 
 
Internal Growth
 
 
 
 
 
Balance Sheet Management
 
 
 
 
 
Definitions and Reconciliations
 
 
 
 

This document 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. Please refer to page 7 of this Earnings Press Release and our Supplemental Information for further information.
 
This document is not an offer to sell or a solicitation to buy securities of Alexandria Real Estate Equities, Inc. Any offers to sell or solicitations to buy our securities shall be made only by means of a prospectus approved for that purpose. Unless otherwise indicated, the “Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and our consolidated subsidiaries.

 
Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019
iii
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Alexandria Real Estate Equities, Inc.
Reports:
1Q19 Revenues of $358.8 million, up 12.1% over 1Q18;
1Q19 Earnings per Share – Diluted of $1.11;
1Q19 FFO – Diluted, As Adjusted, per Share of $1.71; and
Operational Excellence and Growing Dividends


PASADENA, Calif. – April 29, 2019 – Alexandria Real Estate Equities, Inc. (NYSE:ARE)
announced financial and operating results for the first quarter ended March 31, 2019.

Key highlights

Operating results
 
1Q19
 
1Q18
Total revenues:
 
 
 
In millions
$
358.8

 
$
320.1

Growth from 1Q18
12.1%

 
 
 
 
 
 
Net income attributable to Alexandria’s common stockholders – diluted:
In millions
$
123.6

 
$
132.4

Per share
$
1.11

 
$
1.32

 
 
 
 
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions
$
189.8

 
$
162.5

Per share
$
1.71

 
$
1.62


25th anniversary: an important milestone in company history
In January 2019, we celebrated the 25th anniversary of our founding. Since our initial launch in January 1994 as a garage startup with a unique, strategic business plan, $19 million in Series A capital, and a vision to create a new kind of real estate company focused on serving the life science industry, we have grown into an investment-grade rated S&P 500® company with a total market capitalization of $21.8 billion. From our initial public offering in May 1997 through March 31, 2019, we have generated a total shareholder return of 1,542%, assuming reinvestment of dividends.

A REIT industry-leading, high-quality tenant roster

50% of annual rental revenue from investment-grade or publicly traded large cap tenants.

Continuation of strong rental rate growth
Strong rental rate increases (cash basis) of 24.3% for 1Q19 represents our highest quarterly cash rental rate increase over the past 10 years.

Credit rating improvement
In February 2019, S&P Global Ratings raised our corporate issuer credit rating to BBB+/Stable from BBB/Positive. The rating upgrade reflects our consistently strong operating performance and continued successful delivery of our value-creation pipeline.
 









Sale of partial interest in core Class A property
In February 2019, we sold a 60% interest in 75/125 Binney Street, a Class A property in our Cambridge submarket, for a sales price of $438 million, or $1,880 per RSF, representing a 4.3% capitalization rate on 4Q18 net operating income (cash basis), annualized. We retained control over, and continue to consolidate, the new joint venture. We accounted for the $202.2 million difference between the consideration received and the book value of the 60% interest sold as an equity transaction with no gain recognized in earnings.

Anchor lease with Pinterest, Inc. at 88 Bluxome Street
In March 2019, we leased 488,899 RSF to Pinterest, Inc. at 88 Bluxome Street in our Mission Bay/SoMa submarket. The lease with Pinterest, Inc. brings pre-leasing of the 1.1 million RSF future development project to 58%.

Increased common stock dividend
Common stock dividend declared for 1Q19 of $0.97 per common share, up seven cents, or 7.8%, over 1Q18; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

Strong internal growth
•
Net operating income (cash basis) of $892.9 million for 1Q19 annualized, up $134.6 million, or 17.8%, compared to 1Q18 annualized
•
Same property net operating income growth:
•
2.3% and 10.2% (cash basis) for 1Q19, compared to 1Q18
•
Continued strong leasing activity and rental rate growth in light of modest contractual lease expirations at the beginning of 2019 and a highly leased value-creation pipeline:
 
 
1Q19
 
Total leasing activity – RSF
 
1,248,972

 
Lease renewals and re-leasing of space:
 
 
 
RSF (included in total leasing activity above)
 
509,415

 
Rental rate increases
 
32.9%

 
Rental rate increases (cash basis)
 
24.3%

 
 
 
 
 

Future growth of net operating income (cash basis) driven by recently delivered projects

Significant near-term growth of net operating income (cash basis) of $65 million upon the burn-off of initial free rent on recently delivered projects.


 
1

 
 
 
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First Quarter Ended March 31, 2019, Financial and Operating Results (continued)
March 31, 2019
 
 

Strong external growth; disciplined allocation of capital to visible, highly leased
value-creation pipeline

Since the beginning of 4Q18, we have placed into service 1.0 million RSF of development and redevelopment projects, including the following projects during 1Q19:
Property
 
Submarket
 
RSF
 
Leased
 
Tenant
279 East Grand Avenue
 
South San Francisco
 
139,810

 
100%
 
Verily Life Sciences, LLC; insitro, Inc.
399 Binney Street
 
Cambridge
 
123,403

 
100%
 
Three life science entities
188 East Blaine Street
 
Lake Union
 
90,615

 
100%
 
bluebird bio, Inc.;
Seattle Cancer Care Alliance;
Sana Biotechnology, Inc.
681 Gateway Boulevard
 
South San Francisco
 
66,000

 
100%
 
Eli Lilly and Company
Alexandria PARC
 
Greater Stanford
 
48,547

 
100%
 
Workday, Inc.
 
 
 
 
 
 
 
 
 
•
1Q19 commencements of development projects aggregating 356,904 RSF, including:
•
174,640 RSF at 9800 Medical Center Drive in our Rockville submarket, which is 79% leased to REGENXBIO, Inc.;
•
98,000 RSF at 9880 Campus Point Drive in our University Town Center submarket; and
•
84,264 RSF at 9950 Medical Center Drive in our Rockville submarket, which is 100% leased to Autolus Therapeutics PLC.

Completed acquisitions

During 1Q19, we acquired 10 properties for an aggregate purchase price of $383.0 million in key submarkets. These acquisitions consisted of:
•
Future development opportunities aggregating 175,000 RSF in our Seaport Innovation District submarket, along with 129,084 RSF of operating properties with future development and redevelopment opportunities; and
•
247,770 RSF of operating properties strategically located in our Greater Stanford and Mission Bay/SoMa submarkets.

Key items included in operating results
Key items included in net income attributable to Alexandria’s common stockholders:
(In millions, except per share amounts)
Amount
 
Per Share – Diluted
1Q19
 
1Q18
 
1Q19
 
1Q18
Unrealized gains on non-real estate investments(1)
$
72.2

 
$
72.2

 
$
0.65

 
$
0.70

Realized gains on non-real estate investments
—

 
8.3

 
—

 
0.08

Loss on early extinguishment of debt
(7.4
)
 
—

 
(0.07
)
 
—

Preferred stock redemption charge
(2.6
)
 
—

 
(0.02
)
 
—

Total
$
62.2

 
$
80.5

 
$
0.56

 
$
0.78

 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding
for calculation of earnings per share – diluted
111.1

 
100.1

(1) Refer to “Investments” on page 45 of our Supplemental Information for additional information.

 
Core operating metrics as of or for the quarter ended March 31, 2019
High-quality revenues and cash flows and operational excellence
Percentage of annual rental revenue in effect from:
 
 
 
Investment-grade or publicly traded large cap tenants
 
50
%
 
Class A properties in AAA locations
 
77
%
 
Occupancy of operating properties in North America
 
97.2
%
 
Operating margin
 
72
%
 
Adjusted EBITDA margin
 
70
%
 
Weighted-average remaining lease term:
 
 
 
All tenants
 
8.4
 years
 
Top 20 tenants
 
12.1
 years
 
 
 
 
 
Refer to the previous page for information on our total revenues, net operating income, same property net operating income growth, leasing activity, and rental rate growth.

Balance sheet management

Key metrics as of March 31, 2019

•
$15.9 billion of total equity capitalization
•
$21.8 billion of total market capitalization
•
$2.7 billion of liquidity
•
No unhedged variable-rate debt
•
95% of unencumbered net operating income as a percentage of total net operating income
 
 
1Q19
 
 
 
 
 
Quarter
 
Trailing 12
 
4Q19
 
 
 
Annualized
 
Months
 
Goal
 
Net debt to Adjusted EBITDA
 
5.4x
 
5.8x
 
Less than or equal to 5.3x
(1) 
Fixed-charge coverage ratio
 
4.5x
 
4.2x
 
Greater than 4.0x
(1) 
Total value-creation pipeline as a percentage of gross investments in real estate in North America
 
10%
 
N/A
 
8% to 12%
 
(1)
Quarter annualized.

Key capital events
•
During 1Q19, we successfully increased our weighted-average remaining term of debt outstanding to over seven years, as a result of the following:
•
In March 2019, we completed an offering of $850.0 million of unsecured senior notes for net proceeds of $846.1 million. The unsecured senior notes consisted of:
•
$300.0 million of 4.85% unsecured senior notes due 2049.
•
$350.0 million of 3.80% unsecured senior notes due 2026. The net proceeds were used to repay a secured note payable related to 50/60 Binney Street, a recently completed Class A property, which was awarded LEED® Gold certification, and the remaining proceeds will be allocated to fund recently completed and future eligible green projects.
•
$200.0 million of our 4.00% unsecured senior notes payable due 2024 issued at a yield to maturity of 3.453%, and are part of the same series that was originally issued in 2018. The net proceeds will also be used to fund recently completed and future eligible green projects.

 
2

 
 
 
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First Quarter Ended March 31, 2019, Financial and Operating Results (continued)
March 31, 2019
 
 

Key capital events (continued)
•
In March 2019, we repaid the remaining $193.1 million balance of our secured construction loan related to 50/60 Binney Street and recognized a loss on early extinguishment of debt of $269 thousand.
•
In January 2019, we repaid early one secured note payable aggregating $106.7 million, which was due in 2020 and bore interest at 7.75%, and recognized a loss on early extinguishment of debt of $7.1 million, including the write-off of unamortized loan fees.
•
During 1Q19, we repurchased, in privately negotiated transactions, 275,000 shares of our 7.00% Series D cumulative convertible preferred stock for $9.2 million, or $33.60 per share, and recognized a preferred stock redemption charge of $2.6 million. As of 1Q19, 2.3 million shares of our 7.00% Series D cumulative convertible preferred stock were outstanding at a book value aggregating $57.5 million.
•
During the first quarter of 2019 and through April 29, 2019, there was no sale activity under our “at the market” common stock offering programs. As of April 29, 2019, the remaining aggregate amount available under our current programs for future sales of common stock is $658.7 million.
Investments
We carry our investments in publicly traded companies and certain privately held entities at fair value. As of March 31, 2019, cumulative unrealized gains related to changes in fair value aggregated $312.4 million and our adjusted cost basis aggregated $688.5 million. Investment income recognized in 1Q19 included the following:
•
Unrealized gains of $72.2 million; and
•
Realized gains of $11.4 million.

Corporate responsibility and industry leadership
•
In February 2019, it was announced that we are working with Verily Life Sciences, LLC, Alphabet’s life science division, to build a tech-focused rehabilitation campus in Dayton, Ohio, for the full and sustained recovery of people living with opioid addiction. The campus will provide a comprehensive model of care that will include a behavioral health treatment center, rehabilitation housing, and wrap-around services, and will act as a state of the art model for opioid addiction treatment nationwide.
•
In February 2019, we were recognized by the Center for Active Design, which operates Fitwel®, as the inaugural Industry Leading Company in Fitwel’s 2018 Best in Building Health. We were selected based on our 3-Star Fitwel certification (the highest rating possible); our leadership in promoting and educating the real estate industry on the opportunities for and benefits of building design, construction, and operational practices that support high levels of occupant health and wellness; and our #1 global ranking in the 2018 GRESB Health & Well-Being Module.
•
In March 2019, Alexandria LaunchLabs® – Cambridge, located at the Alexandria Center® at One Kendall Square in Greater Boston, achieved LEED gold certification and a Fitwel 3-Star certification.

 
Subsequent events
•
In April 2019, we entered into an agreement to extend the maturity date of our unsecured senior bank term loan to January 2, 2025. We expect that the extension will become effective in June 2019, upon the satisfaction of certain conditions.
•
In April 2019, we announced the launch of a new strategic agricultural technology (agtech) business initiative with the opening of the Alexandria Center® for AgTech – Research Triangle, the first state of the art, fully integrated, multi-tenant, amenity-rich agtech R&D and greenhouse campus. The campus opens with a 97% leased first phase, a 175,000 RSF redevelopment, at 5 Laboratory Drive, in the heart of Research Triangle, the most important, dense, and diverse agtech cluster in the United States.

 
3

 
 
Acquisitions
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March 31, 2019
(Dollars in thousands)
 
 


Property
 
Submarket/Market
 
Date of Purchase
 
Number of Properties
 
Operating
Occupancy
 
Square Footage
 
Unlevered Yields
 
Purchase Price
 
 
 
 
Future Development
 
Operating With Future Development/ Redevelopment
 
Operating
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
 
 
Value-creation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 Necco Street
 
Seaport Innovation District/Greater Boston
 
3/26/19
 
—
 
N/A
 
175,000

 
—

 
—

 
(1 
) 
 
 
(1 
) 
 
 
$
81,100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating with value-creation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3911 and 3931 Sorrento Valley Boulevard
 
Sorrento Mesa/San Diego
 
1/9/19
 
2
 
100%
 
—

 
53,220

 
—

 
7.2
%
 
 
6.6
%
 
 
 
23,250

 
Other
 
 
 
 
 
4
 
 
 
—

 
75,864

 
—

 
 
 
 
 
 
 
 
39,150

 
 
 
 
 
 
 
6
 
 
 
—

 
129,084

 
—

 
 
 
 
 
 
 
 
62,400

 
Operating
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3170 Porter Drive
 
Greater Stanford/
San Francisco
 
1/10/19
 
1
 
100%
 
—

 
—

 
98,626

 
7.5
%
 
 
5.1
%
 
 
 
100,250

 
Shoreway Science Center
 
Greater Stanford/
San Francisco
 
1/10/19
 
2
 
100%
 
—

 
—

 
82,462

 
7.2
%
 
 
5.5
%
 
 
 
73,200

 
260 Townsend Street
 
Mission Bay/SoMa/
San Francisco
 
3/14/19
 
1
 
100%
 
—

 
—

 
66,682

 
7.4
%
 
 
5.8
%
 
 
 
66,000

(2) 
 
 
 
 
 
 
4
 
 
 
—

 
—

 
247,770

 
 
 
 
 
 
 
 
239,450

 
Total acquisitions
 
 
 
 
 
10
 
 
 
175,000

 
129,084

 
247,770

 
 
 
 
 
 
 
 
382,950

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10260 Campus Point Drive and
4161 Campus Point Court
 
University Town Center/
San Diego
 
1/2/19
 
2
 
100%
 
N/A

 
N/A

 
N/A

 
(3 
) 
 
 
(3 
) 
 
 
 
65,000

(4) 
Pending
 
Various
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
182,050

 
2019 guidance range midpoint
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
630,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
We expect to provide total estimated costs and related yields in the future upon the commencement of development.
(2)
Purchase price includes the assumption of a $28.2 million secured loan with a stated interest rate of 4.14%.
(3)
Refer to the “New Class A Development and Redevelopment Properties: Summary of Pipeline” of our Supplemental Information for additional information.
(4)
In December 2018, we acquired two buildings adjacent to our Campus Pointe by Alexandria campus aggregating 269,048 RSF, comprising 109,164 RSF at 10260 Campus Point Drive and 159,884 RSF at 4161 Campus Point Court which are 100% leased through 2022. At lease expiration, 10260 Campus Point Drive will be redeveloped and expanded into a 176,455 RSF Class A building, which is 100% pre-leased for 15 years with the target delivery in 2021. 4161 Campus Point Court will support future development aggregating 201,900 RSF through one or more Class A buildings at our Campus Pointe by Alexandria campus. The total purchase price of $80.0 million was paid in two installments, $15.0 million in December 2018 and $65.0 million in January 2019.


 
4

 
 
Dispositions and Sale of Partial Interest in Core Class A Property
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March 31, 2019
(Dollars in thousands, except per RSF amounts)
 
 


Property
 
Submarket/Market
 
Date of Sale
 
RSF
 
Sales Price
 
Sales Price per RSF
 
Gain
 
Sale of partial interest in core Class A property:
 
 
 
 
 
 
 
 
 
 
 
 
 
75/125 Binney Street (sale of 60% noncontrolling interest)(1)
 
Cambridge/Greater Boston
 
2/13/19
 
388,270
 
$
438,000

 
$
1,880

 
(1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 guidance range midpoint
 
 
 
 
 
 
 
$
750,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
In February 2019, we sold a 60% interest in 75/125 Binney Street, a Class A property in our Cambridge submarket, for a sales price of $438 million, or $1,880 per RSF, representing a 4.3% capitalization rate on net operating income (cash basis), annualized, for the three months ended December 31, 2018. We retained control over, and continue to consolidate, the new joint venture. We accounted for the $202.2 million difference between the consideration received and the book value of the 60% interest sold as an equity transaction with no gain recognized in earnings.

 
5

 
 
Guidance
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March 31, 2019
(Dollars in millions, except per share amounts)
 
 
 

The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2019. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of “forward-looking statements” on page 7 of this Earnings Press Release for additional information.
Summary of Key Changes in Guidance
 
Guidance
 
Summary of Key Changes in Key Sources and Uses of Capital Guidance
 
 
Guidance Midpoint
 
 
 
As of 4/29/19
 
As of 2/4/19
 
 
As of 4/29/19
 
As of 2/4/19
 
EPS, FFO per share, and FFO per share, as adjusted
 
See updates below
 
Issuance of unsecured senior notes payable
 
 
$
850

 
 
 
$
650

 
 
Rental rate increases
 
26.0% to 29.0%
 
25.0% to 28.0%
 
Repayment of secured notes payable
 
 
$
(315
)
 
 
 
$
(125
)
 
 
Rental rate increases (cash basis)
 
13.0% to 16.0%
 
11.0% to 14.0%
 
 
 
 
 
 
 
 
 
 
 
Projected Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted, as Adjusted
 
 
 
As of 4/29/19
 
As of 2/4/19
 
Earnings per share(1)
 
$2.65 to $2.75
 
$1.95 to $2.15
 
Depreciation and amortization
 
 
4.85
 
 
 
4.85
 
 
Allocation to unvested restricted stock awards
 
 
(0.05)
 
 
 
(0.03)
 
 
Funds from operations per share(2)
 
$7.45 to $7.55
 
$6.77 to $6.97
 
Unrealized gains on non-real estate investment(1)
 
 
(0.65)
 
 
 
—
 
 
Loss on early extinguishment of debt
 
 
0.07
 
 
 
0.06
 
 
Preferred stock redemption charge
 
 
0.02
 
 
 
0.02
 
 
Allocation to unvested restricted stock awards
 
 
0.01
 
 
 
—
 
 
Funds from operations per share, as adjusted
 
$6.90 to $7.00
 
$6.85 to $7.05
 
Midpoint
 
$6.95
 
$6.95
 
Key Assumptions
 
Low
 
High
 
Occupancy percentage in North America as of December 31, 2019
 
97.7%

 
98.3%

 
 
 
 
 
 
 
Lease renewals and re-leasing of space:
 
 
 
 
 
Rental rate increases
 
26.0%

 
29.0%

 
Rental rate increases (cash basis)
 
13.0%

 
16.0%

 
Same property performance:
 
 
 
 
 
Net operating income increase
 
1.0%

 
3.0%

 
Net operating income increase (cash basis)
 
6.0%

 
8.0%

 
 
 
 
 
 
 
Straight-line rent revenue
 
$
95

 
$
105

(5)
General and administrative expenses
 
$
108

 
$
113

 
Capitalization of interest
 
$
72

 
$
82

 
Interest expense
 
$
172

 
$
182

 
 
 
 
 
 
 
 
 
 
2019 Guidance
 
Key Credit Metrics
 
 
Net debt to Adjusted EBITDA – 4Q19 annualized
 
Less than or equal to 5.3x
 
Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized
 
Less than or equal to 5.4x
 
Fixed-charge coverage ratio – 4Q19 annualized
 
Greater than 4.0x
 
Value-creation pipeline as a percentage of gross real estate as of
December 31, 2019
 
8% to 12%
 
Key Sources and Uses of Capital
 
Range
 
Midpoint
 
Certain Completed Items
Sources of capital:
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities after dividends
 
$
170

 
$
210

 
$
190

 
 
 
Incremental debt
 
485

 
445

 
 
465

 
 
 
Real estate dispositions and partial interest sales:
 
 
 
 
 
 
 
 
 
 
Sale of partial interest in core Class A property
 
438

 
438

 
 
438

 
$
438

(3) 
Other
 
262

 
362

 
 
312

 
 
Common equity
 
475

 
575

 
 
525

 
 
 
Total sources of capital
 
$
1,830

 
$
2,030

 
$
1,930

 
 
 
Uses of capital:
 
 
 
 
 
 
 
 
 
 
Construction
 
$
1,250

 
$
1,350

 
$
1,300

 
 
 
Acquisitions
 
580

 
680

 
 
630

 
(4)
Total uses of capital
 
$
1,830

 
$
2,030

 
$
1,930

 
 
 
Incremental debt (included above):
 
 
 
 
 
 
 
 
 
 
Issuance of unsecured senior notes payable
 
$
850

 
$
850

 
$
850

 
$
850

 
Assumption of secured note payable
 
28

 
28

 
 
28

 
$
28

 
Repayments of secured notes payable
 
(310
)
 
(320
)
 
 
(315
)
 
$
(300
)
 
$2.2 billion unsecured senior line of credit/other
 
(83
)
 
(113
)
 
 
(98
)
 
 
 
Incremental debt
 
$
485

 
$
445

 
$
465

 
 
 



(1)
Excludes future unrealized gains or losses after March 31, 2019, that are required to be recognized in earnings.
(2)
Calculated in accordance with standards established by the Advisory Board of Governors of the National Association of Real Estate Investment Trusts (the “Nareit Board of Governors”). Refer to “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” in the “Definitions and Reconciliations” section of our Supplemental Information for additional information.
(3)
Refer to “Dispositions and Sale of Partial Interest in Core Class A Property” in this Earnings Press Release for additional information.
(4)
Refer to “Acquisitions” in this Earnings Press Release for additional information.
(5)
Approximately 45% of straight-line rent revenue represents initial free rent on recently delivered and expected 2019 deliveries of new Class A properties from our development and redevelopment pipeline.


 
6

 
 
 
q119logo1.jpg
Earnings Call Information and About the Company
March 31, 2019
 
 


We will host a conference call on Tuesday, April 30, 2019, at 3:00 p.m. Eastern Time (“ET”)/noon Pacific Time (“PT”), which is open to the general public to discuss our financial and operating results for the first quarter ended March 31, 2019. To participate in this conference call, dial (833) 366-1125 or (412) 902-6738 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the call for Alexandria Real Estate Equities, Inc. The audio webcast can be accessed at www.are.com in the “For Investors” section. A replay of the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT on Tuesday, April 30, 2019. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10128833.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2019, is available in the “For Investors” section of our website at www.are.com or by following this link: http://www.are.com/fs/2019q1.pdf.

For any questions, please contact Joel S. Marcus, executive chairman and founder; Stephen A. Richardson, co-chief executive officer; Peter M. Moglia, co-chief executive officer and co-chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; or Sara M. Kabakoff, assistant vice president – corporate communications, at (626) 578-0777.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® company, is an urban office real estate investment trust (“REIT”) uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations, with a total market capitalization of $21.8 billion and an asset base in North America of 33.7 million square feet (“SF”) as of March 31, 2019. The asset base in North America includes 23.2 million RSF of operating properties and 4.4 million RSF of new Class A properties currently undergoing construction or pre-construction, consisting of 2.1 million RSF of development and redevelopment projects under construction, and 2.3 million RSF undergoing pre‑construction activities. Additionally, the asset base in North America includes 6.1 million SF of intermediate-term and future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science and technology companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

***********

This document 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 2019 earnings per share attributable to Alexandria’s common stockholders – diluted, 2019 funds from operations per share attributable to Alexandria’s common stockholders – diluted, net operating income, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of forward-looking words, such as “forecast,” “guidance,” “goals,” “projects,” “estimates,” “anticipates,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” or “will,” or the negative of those words or similar words. These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events. There can be no assurance that actual results will not be materially higher or lower than these expectations. These statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially from the results discussed in the 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 place into service and lease any properties undergoing development or redevelopment and our existing space held for future development or redevelopment (including new properties acquired for that purpose), our failure to successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”). Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are made as of the date of this Earnings Press Release, and unless otherwise stated, we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 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.

Alexandria®, Lighthouse Design® logo, Building the Future of Life-Changing Innovation™, LaunchLabs®, Alexandria Center®, Alexandria Technology Square®, Alexandria Summit®, Alexandria Technology Center®, Alexandria Innovation Center®, and GradLabs™ are trademarks of Alexandria Real Estate Equities, Inc. All other company names, trademarks, and logos referenced herein are the property of their respective owners.


 
7

 
 
Consolidated Statements of Operations
q119logo1.jpg
March 31, 2019
(In thousands, except per share amounts)
 
 

 
 
Three Months Ended
 
 
3/31/19

12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Revenues:
 
 

 
 

 
 

 
 

 
 

Income from rentals(1)
 
$
354,749

 
$
337,785

 
$
336,547

 
$
322,794

 
$
317,655

Other income
 
4,093

 
2,678

 
5,276

 
2,240

 
2,484

Total revenues
 
358,842

 
340,463

 
341,823

 
325,034

 
320,139

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
Rental operations
 
101,501

 
97,682

 
99,759

 
91,908

 
91,771

General and administrative
 
24,677

 
22,385

 
22,660

 
22,939

 
22,421

Interest
 
39,100

 
40,239

 
42,244

 
38,097

 
36,915

Depreciation and amortization
 
134,087

 
124,990

 
119,600

 
118,852

 
114,219

Impairment of real estate
 
—

 
—

 
—

 
6,311

 
—

Loss on early extinguishment of debt
 
7,361


—

 
1,122

 
—

 
—

Total expenses
 
306,726

 
285,296

 
285,385

 
278,107

 
265,326

 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
1,146

 
1,029

 
40,718

 
1,090

 
1,144

Investment income (loss)
 
83,556

 
(83,531
)
 
122,203

 
12,530

 
85,561

Gain on sales of real estate
 
—

 
8,704

 
—

 
—

 
—

Net income (loss)
 
136,818

 
(18,631
)
 
219,359

 
60,547

 
141,518

Net income attributable to noncontrolling interests
 
(7,659
)
 
(6,053
)
 
(5,723
)
 
(5,817
)
 
(5,888
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s stockholders
 
129,159

 
(24,684
)
 
213,636

 
54,730

 
135,630

Dividends on preferred stock
 
(1,026
)
 
(1,155
)
 
(1,301
)
 
(1,302
)
 
(1,302
)
Preferred stock redemption charge
 
(2,580
)
 
(4,240
)
 
—

 
—

 
—

Net income attributable to unvested restricted stock awards
 
(1,955
)
 
(1,661
)
 
(3,395
)
 
(1,412
)
 
(1,941
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
52,016

 
$
132,387

 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
1.11

 
$
(0.30
)
 
$
2.01

 
$
0.51

 
$
1.33

Diluted
 
$
1.11

 
$
(0.30
)
 
$
1.99

 
$
0.51

 
$
1.32

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
111,054

 
106,033

 
104,179

 
101,881

 
99,855

Diluted
 
111,054

 
106,033

 
105,385

 
102,236

 
100,125

 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
 
$
0.97

 
$
0.97

 
$
0.93

 
$
0.93

 
$
0.90


(1)
Upon the adoption of new lease accounting standards on January 1, 2019, rental revenues and tenant recoveries are aggregated within income from rentals. Prior periods have been reclassified to conform to new standards. Refer to “Financial and Asset Base Highlights” and “Lease Accounting” in the “Definitions and Reconciliations” section of our Supplemental Information for additional information.

 
8

 
 
Consolidated Balance Sheets
q119logo1.jpg
March 31, 2019
(In thousands)
 
 

 
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Assets
 
 
 
 

 
 

 
 

 
 

Investments in real estate
 
$
12,410,350

 
$
11,913,693

 
$
11,587,312

 
$
11,190,771

 
$
10,671,227

Investments in unconsolidated real estate joint ventures
 
290,405

 
237,507

 
197,970

 
192,972

 
169,865

Cash and cash equivalents
 
261,372

 
234,181

 
204,181

 
287,029

 
221,645

Restricted cash
 
54,433

 
37,949

 
29,699

 
34,812

 
37,337

Tenant receivables
 
9,645

 
9,798

 
11,041

 
8,704

 
11,258

Deferred rent
 
558,103

 
530,237

 
511,680

 
490,428

 
467,112

Deferred leasing costs
 
241,268

 
239,070

 
238,295

 
232,964

 
226,803

Investments
 
1,000,904

 
892,264

 
957,356

 
790,753

 
724,310

Other assets
 
653,726

(1) 
370,257

 
368,032

 
333,757

 
291,639

Total assets
 
$
15,480,206

 
$
14,464,956

 
$
14,105,566

 
$
13,562,190

 
$
12,821,196

 
 
 
 
 
 
 
 
 
 
 
Liabilities, Noncontrolling Interests, and Equity
 
 
 
 
 
 
 
 
 
 
Secured notes payable
 
$
356,461

 
$
630,547

 
$
632,792

 
$
776,260

 
$
775,689

Unsecured senior notes payable
 
5,139,500

 
4,292,293

 
4,290,906

 
4,289,521

 
3,396,912

Unsecured senior line of credit
 
—

 
208,000

 
413,000

 
—

 
490,000

Unsecured senior bank term loans
 
347,542

 
347,415

 
347,306

 
548,324

 
548,197

Accounts payable, accrued expenses, and tenant security deposits
 
1,171,377

(1) 
981,707

 
907,094

 
849,274

 
783,986

Dividends payable
 
110,412

 
110,280

 
101,084

 
98,676

 
93,065

Total liabilities
 
7,125,292

 
6,570,242

 
6,692,182

 
6,562,055

 
6,087,849

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
10,889

 
10,786

 
10,771

 
10,861

 
10,212

 
 
 
 
 
 
 
 
 
 
 
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
7.00% Series D cumulative convertible preferred stock
 
57,461

 
64,336

 
74,386

 
74,386

 
74,386

Common stock
 
1,112

 
1,110

 
1,058

 
1,033

 
1,007

Additional paid-in capital
 
7,518,716

 
7,286,954

 
6,801,150

 
6,387,527

 
6,117,976

Accumulated other comprehensive (loss) income
 
(10,712
)
 
(10,435
)
 
(3,811
)
 
(2,485
)
 
1,228

Alexandria Real Estate Equities, Inc.’s stockholders’ equity
 
7,566,577

 
7,341,965

 
6,872,783

 
6,460,461

 
6,194,597

Noncontrolling interests
 
777,448

 
541,963

 
529,830

 
528,813

 
528,538

Total equity
 
8,344,025

 
7,883,928

 
7,402,613

 
6,989,274

 
6,723,135

Total liabilities, noncontrolling interests, and equity
 
$
15,480,206

 
$
14,464,956

 
$
14,105,566

 
$
13,562,190

 
$
12,821,196


(1)
Increase is related to the recognition of a lease liability and corresponding right-of-use asset for our operating leases in which we are a lessee, upon the adoption of a new lease accounting standard on January 1, 2019. As of March 31, 2019, the right-of-use asset and corresponding lease liability aggregated $238.4 million and $244.6 million, respectively. Refer to “Lease Accounting” in the “Definitions and Reconciliations” section of our Supplemental Information for additional information.

 
9

 
 
Funds From Operations and Funds From Operations per Share
q119logo1.jpg
March 31, 2019
(In thousands)
 
 

The following table presents a reconciliation of net income (loss) attributable to Alexandria’s common stockholders, the most directly comparable financial measure presented in accordance with generally accepted accounting principles (“GAAP”), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria’s common stockholders – diluted, and funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted, for the periods below:
 
 
Three Months Ended
 
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Net income (loss) attributable to Alexandria’s common stockholders – basic
 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
52,016

 
$
132,387

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
—

 
1,301

 
—

 
—

Net income (loss) attributable to Alexandria’s common stockholders – diluted
 
123,598

 
(31,740
)
 
210,241

 
52,016

 
132,387

Depreciation and amortization
 
134,087

 
124,990

 
119,600

 
118,852

 
114,219

Noncontrolling share of depreciation and amortization from consolidated real estate JVs
 
(5,419
)
 
(4,252
)
 
(4,044
)
 
(3,914
)
 
(3,867
)
Our share of depreciation and amortization from unconsolidated real estate JVs
 
846

 
719

 
1,011

 
807

 
644

Gain on sales of real estate
 
—

 
(8,704
)
 
—

 
—

 
—

Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
(35,678
)
 
—

 
—

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
1,026

 
—

 
—

 
—

 
1,302

Allocation to unvested restricted stock awards
 
(2,054
)
 
—

 
(1,312
)
 
(1,042
)
 
(1,548
)
Funds from operations attributable to Alexandria’s common stockholders – diluted(2)
 
252,084

 
81,013

 
289,818

 
166,719

 
243,137

Unrealized (gains) losses on non-real estate investments
 
(72,206
)
 
94,850

 
(117,188
)
 
(5,067
)
 
(72,229
)
Realized gains on non-real estate investments
 
—

 
(6,428
)
 
—

 
—

 
(8,252
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
6,311

 
—

Impairment of non-real estate investments
 
—

 
5,483

 
—

 
—

 
—

Loss on early extinguishment of debt
 
7,361

 
—

 
1,122

 
—

 
—

Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
 
—

 
—

 
(761
)
 
—

 
—

Preferred stock redemption charge
 
2,580

 
4,240

 
—

 
—

 
—

Removal of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
(1,026
)
 
—

 
(1,301
)
 
—

 
(1,302
)
Allocation to unvested restricted stock awards
 
990

 
(1,138
)
 
1,889

 
(18
)
 
1,125

Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
189,783

 
$
178,020

 
$
173,579

 
$
167,945

 
$
162,479


(1)
Refer to “Weighted-Average Shares of Common Stock Outstanding – Diluted” in the “Definitions and Reconciliations” section of our Supplemental Information for additional information regarding our 7.00% Series D cumulative convertible preferred stock.
(2)
Calculated in accordance with standards established by the Nareit Board of Governors. Refer to “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” in the “Definitions and Reconciliations” section of our Supplemental Information for additional information.

 
10

 
 
Funds From Operations and Funds From Operations per Share (continued)
q119logo1.jpg
March 31, 2019
(In thousands, except per share amounts)
 
 


The following table presents a reconciliation of net income (loss) per share attributable to Alexandria’s common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria’s common stockholders – diluted, and funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted, for the periods below. Per share amounts may not add due to rounding.
 
 
Three Months Ended
 
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
 Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted
 
$
1.11

 
$
(0.30
)
 
$
1.99

 
$
0.51

 
$
1.32

Depreciation and amortization 
 
1.17

 
1.14

 
1.11

 
1.13

 
1.08

Gain on sale of real estate
 
—

 
(0.08
)
 
—

 
—

 
—

Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
(0.34
)
 
—

 
—

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
—

 
—

 
—

 
0.01

Allocation to unvested restricted stock awards
 
(0.02
)
 
—

 
(0.01
)
 
(0.01
)
 
—

Funds from operations per share attributable to Alexandria’s common stockholders – diluted(2)
 
2.26

 
0.76

 
2.75

 
1.63

 
2.41

Unrealized (gains) losses on non-real estate investments
 
(0.65
)
 
0.89

 
(1.11
)
 
(0.05
)
 
(0.70
)
Realized gains on non-real estate investments
 
—

 
(0.06
)
 
—

 
—

 
(0.08
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
0.06

 
—

Impairment of non-real estate investments
 
—

 
0.05

 
—

 
—

 
—

Loss on early extinguishment of debt
 
0.07

 
—

 
0.01

 
—

 
—

Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
 
—

 
—

 
(0.01
)
 
—

 
—

Preferred stock redemption charge
 
0.02

 
0.04

 
—

 
—

 
—

Removal of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
—

 
—

 
—

 
(0.01
)
Allocation to unvested restricted stock awards
 
0.01

 
—

 
0.02

 
—

 
—

Funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
1.71

 
$
1.68

 
$
1.66

 
$
1.64

 
$
1.62

 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding(1) for calculations of:
 
 
 
 
 
 
 
 
 
 
Earnings per share – diluted
 
111,054

 
106,033

 
105,385

 
102,236

 
100,125

Funds from operations – diluted, per share
 
111,635

 
106,244

 
105,385

 
102,236

 
100,866

Funds from operations – diluted, as adjusted, per share
 
111,054

 
106,244

 
104,641

 
102,236

 
100,125


(1)
Refer to footnote 1 on the previous page for additional information.
(2)
Refer to footnote 2 on the previous page for additional information.



 
11









SUPPLEMENTAL
INFORMATION








 
 
 
q119logo1.jpg
Company Profile
March 31, 2019
 
 

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® company, is an urban office REIT uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations, with a total market capitalization of $21.8 billion and an asset base in North America of 33.7 million SF as of March 31, 2019. The asset base in North America includes 23.2 million RSF of operating properties and 4.4 million RSF of new Class A properties currently undergoing construction or pre-construction, consisting of 2.1 million RSF of development and redevelopment projects under construction, and 2.3 million RSF undergoing pre‑construction activities. Additionally, the asset base in North America includes 6.1 million SF of intermediate-term and future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science and technology companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

Tenant base

Alexandria is known for our high-quality and diverse tenant base, with 50% of our annual rental revenue generated from entities with an investment-grade credit rating or are publicly traded large cap tenants. The quality, diversity, breadth, and depth of our significant relationships with our tenants provide Alexandria with high-quality and stable cash flows. Alexandria’s underwriting team and long-term industry relationships positively distinguish us from all other publicly traded REITs and real estate companies.

Executive and senior management team

Alexandria’s executive and senior management team has unique experience and expertise in creating highly dynamic and collaborative campuses in key urban life science and technology cluster locations that inspire innovation. From the development of high-quality, sustainable real estate, to the ongoing cultivation of collaborative environments with unique amenities and events, the Alexandria team has a first-in-class reputation of excellence in our niche. Alexandria’s highly experienced management team also includes regional market directors with leading reputations and longstanding relationships within the life science and technology communities in their respective urban innovation clusters. We believe that our expertise, experience, reputation, and key relationships in the real estate, life science, and technology industries provide Alexandria significant competitive advantages in attracting new business opportunities.
 
Alexandria’s executive and senior management team consists of 42 individuals, averaging 24 years of real estate experience, including 13 years with Alexandria. Our executive management team alone averages 19 years of experience with Alexandria.

EXECUTIVE MANAGEMENT TEAM
Joel S. Marcus
Executive Chairman & Founder
Stephen A. Richardson
Co-Chief Executive Officer
Peter M. Moglia
Co-Chief Executive Officer & Co-Chief Investment Officer
Dean A. Shigenaga
Co-President & Chief Financial Officer
Thomas J. Andrews
Co-President & Regional Market Director – Greater Boston
Daniel J. Ryan
Co-Chief Investment Officer & Regional Market Director – San Diego
Jennifer J. Banks
Co-Chief Operating Officer, General Counsel & Corporate Secretary
Lawrence J. Diamond
Co-Chief Operating Officer & Regional Market Director – Maryland
Vincent R. Ciruzzi
Chief Development Officer
John H. Cunningham
Executive Vice President – Regional Market Director – New York City

 
13

 
 
 
q119logo1.jpg
Investor Information
March 31, 2019
 
 

Corporate Headquarters
 
New York Stock Exchange Trading Symbols
 
Information Requests
385 East Colorado Boulevard, Suite 299
 
Common stock: ARE
 
Phone:
(626) 578-0777
Pasadena, California 91101
 
7.00% Series D preferred stock: ARE PRD
 
Email:
 
 
 
 
Web:
www.are.com
 
 
 
 
 
 
Equity Research Coverage
Alexandria is currently covered by the following research analysts. This list may be incomplete 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, estimates, or forecasts of Alexandria or our management. Alexandria does not by our reference or distribution of the information below imply our endorsement of or concurrence with any opinions, estimates, or forecasts of these analysts. 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.
Bank of America Merrill Lynch
 
Citigroup Global Markets Inc.
 
J.P. Morgan Securities LLC
 
RBC Capital Markets
Jamie Feldman / Jeffrey Spector
 
Michael Bilerman / Emmanuel Korchman
 
Anthony Paolone / Patrice Chen
 
Michael Carroll / Jason Idoine
(646) 855-5808 / (646) 855-1363
 
(212) 816-1383 / (212) 816-1382
 
(212) 622-6682 / (212) 622-1893
 
(440) 715-2649 / (440) 715-2651
 
 
 
 
 
 
 
Barclays Capital Inc.
 
Evercore ISI
 
Mitsubishi UFJ Securities (USA), Inc.
 
Robert W. Baird & Co. Incorporated
Ross Smotrich / Trevor Young
 
Sheila McGrath / Wendy Ma
 
Karin Ford / Ryan Cybart
 
David Rodgers
(212) 526-2306 / (212) 526-3098
 
(212) 497-0882 / (212) 497-0870
 
(212) 405-7249 / (212) 405-6591
 
(216) 737-7341
 
 
 
 
 
 
 
BTIG, LLC
 
Green Street Advisors, Inc.
 
Mizuho Securities USA Inc.
 
SMBC Nikko Securities America, Inc.
Tom Catherwood / James Sullivan
 
Daniel Ismail / Chris Darling
 
Haendel St. Juste / Zachary Silverberg
 
Richard Anderson
(212) 738-6140 / (212) 738-6139
 
(949) 640-8780 / (949) 640-8780
 
(212) 209-9300 / (212) 205-7855
 
(917) 262-2795
 
 
 
 
 
 
 
CFRA
 
JMP Securities – JMP Group, Inc.
 
 
 
 
Kenneth Leon
 
Peter Martin
 
 
 
 
(646) 517-2552
 
(415) 835-8904
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Income Coverage
 
Rating Agencies
J.P. Morgan Securities LLC
 
Wells Fargo & Company
 
Moody’s Investors Service
 
S&P Global Ratings
Mark Streeter / Ian Snyder
 
Thierry Perrein / Kevin McClure
 
(212) 553-0376
 
Fernanda Hernandez / Michael Souers
(212) 834-5086 / (212) 834-3798
 
(704) 410-3262 / (704) 410-3252
 
 
 
(212) 438-1347 / (212) 438-2508
 
 
 
 
 
 
 

 
14

 
 
 
q119logo1.jpg
Sustainability
March 31, 2019
 
 

q119sustainability.jpg

(1)
For the years ended December 31, 2016 and 2017. We expect to disclose data for the year ended December 31, 2018 in 2019.
(2)
Upon completion of 15 projects in process targeting LEED certification.
(3)
Upon completion of three projects in process targeting WELL certification.
(4)
Upon completion of 11 projects in process targeting Fitwel certification.

 
15

 
 
 
q119logo1.jpg
High-Quality, Diverse, and Innovative Tenants
March 31, 2019
 
 



Cash Flows From High-Quality, Diverse, and Innovative Tenants

Investment-Grade or
Publicly Traded Large Cap Tenants
 
Tenant Mix
 
 
 
 
q119clienttenantmix.jpg
 
 
 
 
 
 
 
 
50%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s Total
 
Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
A REIT Industry-Leading Tenant Roster
 
Percentage of ARE’s Annual Rental Revenue(1)






(1)
Represents annual rental revenue in effect as of March 31, 2019.
(2)
Our annual rental revenue from technology tenants consists of:
•
38% from investment-grade credit rated or publicly traded large cap tenants
•
47% from Uber Technologies, Inc., Stripe, Inc., and Pinterest, Inc.
•
15% from all other technology tenants

 
16

 
 
 
q119logo1.jpg
Class A Properties in AAA Locations
March 31, 2019
 
 


High-Quality Cash Flows From Class A Properties in AAA Locations

Class A Properties in
AAA Locations
 
AAA Locations
 
 
 
 
q119realestate.jpg
 
 
 
 
 
 
 
 
77%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s
 
Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of ARE’s Annual Rental Revenue(1)








(1)
Represents annual rental revenue in effect as of March 31, 2019.

 
17

 
 
 
q119logo1.jpg
Occupancy
March 31, 2019
 
 



Solid Demand for Class A Properties in AAA Locations
Drives Solid Occupancy

Solid Historical Occupancy(1)
 
Occupancy Across Key Locations
 
 
 
 
q119occupancy.jpg
 
 
 
 
 
 
 
 
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Over 10 Years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 








(1)
Average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of March 31, 2019.


 
18

 
 
Financial and Asset Base Highlights
q119logo1.jpg
March 31, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Selected financial data from consolidated financial statements and related information
 
 
 
 
 
 
 
 
 
 
Rental revenues
 
$
274,563

 
$
260,102

 
$
255,496

 
$
250,635

 
$
244,485

Tenant recoveries
 
$
80,186

 
$
77,683

 
$
81,051

 
$
72,159

 
$
73,170

 
 
 
 
 
 
 
 
 
 
 
Operating margin
 
72%

 
71%

 
71%

 
72%

 
71%

Adjusted EBITDA margin
 
70%

 
69%

 
69%

 
69%

 
69%

Adjusted EBITDA – quarter annualized
 
$
1,029,944

 
$
968,888

 
$
957,008

 
$
911,284

 
$
914,444

Adjusted EBITDA – trailing 12 months
 
$
966,781

 
$
937,906

 
$
900,032

 
$
854,237

 
$
815,178

 
 
 
 
 
 
 
 
 
 
 
Net debt at end of period
 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

 
$
5,326,039

 
$
4,979,254

Net debt to Adjusted EBITDA – quarter annualized
 
5.4x

 
5.4x

 
5.7x

 
5.8x

 
5.4x

Net debt to Adjusted EBITDA – trailing 12 months
 
5.8x

 
5.6x

 
6.1x

 
6.2x

 
6.1x

Net debt and preferred stock to Adjusted EBITDA – quarter annualized
 
5.5x

 
5.5x

 
5.8x

 
5.9x

 
5.5x

Net debt and preferred stock to Adjusted EBITDA – trailing 12 months
 
5.8x

 
5.7x

 
6.2x

 
6.3x

 
6.2x

 
 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio – quarter annualized
 
4.5x

 
4.1x

 
4.1x

 
4.3x

 
4.6x

Fixed-charge coverage ratio – trailing 12 months
 
4.2x

 
4.2x

 
4.3x

 
4.3x

 
4.3x

Unencumbered net operating income as a percentage of total net operating income
 
95%

 
88%

 
88%

 
88%

 
87%

 
 
 
 
 
 
 
 
 
 
 
Closing stock price at end of period
 
$
142.56

 
$
115.24

 
$
125.79

 
$
126.17

 
$
124.89

Common shares outstanding (in thousands) at end of period
 
111,181

 
111,012

 
105,804

 
103,346

 
100,696

Total equity capitalization at end of period
 
$
15,936,979

 
$
12,879,366

 
$
13,412,222

 
$
13,142,725

 
$
12,682,876

Total market capitalization at end of period
 
$
21,780,482

 
$
18,357,621

 
$
19,096,226

 
$
18,756,830

 
$
17,893,674

 
 
 
 
 
 
 
 
 
 
 
Dividend per share – quarter/annualized
 
$0.97/$3.88

 
$0.97/$3.88

 
$0.93/$3.72

 
$0.93/$3.72

 
$0.90/$3.60

Dividend payout ratio for the quarter
 
57%

 
60%

 
57%

 
57%

 
56%

Dividend yield – annualized
 
2.7%

 
3.4%

 
3.0%

 
2.9%

 
2.9%

 
 
 
 
 
 
 
 
 
 
 
Amounts related to operating leases:(1)
 
 
 
 
 
 
 
 
 
 
Operating lease liabilities
 
$
244,601

 
$
—

 
$
—

 
$
—

 
$
—

Rent expense
 
$
4,492

 
$
4,164

 
$
3,999

 
$
3,916

 
$
3,832

 
 
 
 
 
 
 
 
 
 
 
General and administrative expenses as a percentage of net operating income –
trailing 12 months
 
9.5%

 
9.6%

 
9.5%

 
9.4%

 
9.3%

 
 
 
 
 
 
 
 
 
 
 
Capitalized interest
 
$
18,509

 
$
19,902

 
$
17,431

 
$
15,527

 
$
13,360

Weighted-average interest rate for capitalization of interest during the period
 
3.96%

 
4.01%

 
4.06%

 
3.92%

 
3.91%

(1) Refer to “Lease Accounting” in the “Definitions and Reconciliations” section of this Supplemental Information for additional information.

 
19

 
 
Financial and Asset Base Highlights (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands, except annual rental revenue per occupied RSF amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Amounts included in funds from operations and non-revenue-enhancing capital expenditures
 
 
 
 
 
 
 
 
 
 
Straight-line rent revenue
 
$
26,965

 
$
17,923

 
$
20,070

 
$
23,259

 
$
32,631

Amortization of acquired below-market leases
 
$
7,148

 
$
5,350

 
$
5,220

 
$
5,198

 
$
6,170

Straight-line rent expense on ground leases
 
$
246

 
$
272

 
$
272

 
$
252

 
$
240

Stock compensation expense
 
$
11,029

 
$
9,810

 
$
9,986

 
$
7,975

 
$
7,248

Amortization of loan fees
 
$
2,233

 
$
2,401

 
$
2,734

 
$
2,593

 
$
2,543

Amortization of debt premiums
 
$
801

 
$
611

 
$
614

 
$
606

 
$
575

Non-revenue-enhancing capital expenditures:
 
 
 
 
 
 
 
 
 
 
Building improvements
 
$
2,381

 
$
3,256

 
$
3,032

 
$
2,827

 
$
2,625

Tenant improvements and leasing commissions
 
$
8,709

 
$
11,758

 
$
17,748

 
$
10,686

 
$
2,836

 
 
 
 
 
 
 
 
 
 
 
Operating statistics and related information (at end of period)
 
 
 
 
 
 
 
 
 
 
Number of properties – North America
 
250

 
237

 
235

 
234

 
222

RSF – North America (including development and redevelopment projects under construction)
 
25,323,299

 
24,587,438

 
24,196,505

 
24,007,981

 
23,066,089

Total square feet – North America
 
33,688,294

 
33,097,210

 
32,186,813

 
31,976,194

 
30,240,017

Annual rental revenue per occupied RSF – North America
 
$
49.56

 
$
48.42

 
$
48.36

 
$
48.22

 
$
48.09

Occupancy of operating properties – North America
 
97.2%

 
97.3%

 
97.3%

 
97.1%

 
96.6%

Occupancy of operating and redevelopment properties – North America
 
95.5%

 
95.1%

 
94.6%

 
95.0%

 
94.3%

Weighted average remaining lease term (in years)
 
8.4

 
8.6

 
8.6

 
8.6

 
8.7

 
 
 
 
 
 
 
 
 
 
 
Total leasing activity – RSF
 
1,248,972

 
1,558,064

 
696,468

 
985,996

 
1,481,164

Lease renewals and re-leasing of space – change in average new rental rates over expiring rates:
 
 
 
 
 
 
 
 
 
 
Rental rate increases
 
32.9%

 
17.4%

 
35.4%

 
24.0%

 
16.3%

Rental rate increases (cash basis)
 
24.3%

 
11.4%

 
16.9%

 
12.8%

 
19.0%

RSF (included in total leasing activity above)
 
509,415

 
650,540

 
475,863

 
727,265

 
234,548

 
 
 
 
 
 
 
 
 
 
 
Same property – percentage change over comparable quarter from prior year:
 
 
 
 
 
 
 
 
 
 
Net operating income increase
 
2.3%

 
3.8%

 
3.4%

 
4.1%

 
4.0%

Net operating income increase (cash basis)
 
10.2%

 
7.6%

 
8.9%

 
6.3%

 
14.6%

 
 
 
 
 
 
 
 
 
 
 
 

 
20

 
 
 
q119logo1.jpg
Key Operating Metrics
March 31, 2019
 
 

Favorable Lease Structure(1)
 
Same Property Net Operating Income Growth
 
 
 
q119samepropa.jpg
q119samepropb.jpg
 
Stable cash flows
 
 
 
 
Percentage of triple
net leases
 
97%
 
 
Increasing cash flows
 
 
 
 
Percentage of leases containing
annual rent escalations
95%
 
 
Lower capex burden
 
 
 
 
Percentage of leases providing for the
recapture of capital expenditures
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Margins(2)
 
Rental Rate Growth:
Renewed/Re-Leased Space
 
 
 
 
 
 
 
 
 
q119rentalratea.jpg
q119rentalrateb.jpg
 
Operating
 
 
 
Adjusted EBITDA
 
 
72%
 
 
 
70%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Percentages calculated based on RSF as of March 31, 2019.
(2)
Represents percentages for the three months ended March 31, 2019.

 
21

 
 
Same Property Performance
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

 
 
Three Months Ended
 
 
 
Three Months Ended
 
Same Property Financial Data
 
March 31, 2019
 
Same Property Statistical Data
 
March 31, 2019
 
Percentage change over comparable period from prior year:
 
 
 
Number of same properties
 
196
 
Net operating income increase
 
2.3%
 
Rentable square feet
 
18,960,703
 
Net operating income increase (cash basis)
 
10.2%
 
Occupancy – current-period average
 
96.2%
 
Operating margin
 
72%
 
Occupancy – same-period prior-year average
 
96.4%
 
 
 
Three Months Ended March 31,
 
 
 
2019
 
2018
 
$ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
Income from rentals:
 
 
 
 
 
 
 
 
 
Same properties
 
$
230,275

 
$
224,187

 
$
6,088

 
2.7
%
 
Non-same properties
 
44,288

 
20,298

 
23,990

 
118.2

 
Rental revenues
 
274,563

 
244,485

 
30,078

 
12.3

 
 
 
 
 
 
 
 
 
 
 
Same properties
 
72,360

 
69,627

 
2,733

 
3.9

 
Non-same properties
 
7,826

 
3,543

 
4,283

 
120.9

 
Tenant recoveries
 
80,186

 
73,170

 
7,016

 
9.6

 
 
 
 
 
 
 
 
 
 
 
Income from rentals
 
354,749

 
317,655

 
37,094

 
11.7

 
 
 
 
 
 
 
 
 
 
 
Same properties
 
196

 
62

 
134

 
216.1

 
Non-same properties
 
3,897

 
2,422

 
1,475

 
60.9

 
Other income
 
4,093

 
2,484

 
1,609

 
64.8

 
 
 
 
 
 
 
 
 
 
 
Same properties
 
302,831

 
293,876

 
8,955

 
3.0

 
Non-same properties
 
56,011

 
26,263

 
29,748

 
113.3

 
Total revenues
 
358,842

 
320,139

 
38,703

 
12.1

 
 
 
 
 
 
 
 
 
 
 
Same properties
 
85,810

 
81,801

 
4,009

 
4.9

 
Non-same properties
 
15,691

 
9,970

 
5,721

 
57.4

 
Rental operations
 
101,501

 
91,771

 
9,730

 
10.6

 
 
 
 
 
 
 
 
 
 
 
Same properties
 
217,021

 
212,075

 
4,946

 
2.3

 
Non-same properties
 
40,320

 
16,293

 
24,027

 
147.5

 
Net operating income
 
$
257,341

 
$
228,368

 
$
28,973

 
12.7
%
 
 
 
 
 
 
 
 
 
 
 
Net operating income – same properties
 
$
217,021

 
$
212,075

 
$
4,946

 
2.3
%
 
Straight-line rent revenue
 
(15,328
)
 
(28,178
)
 
12,850

 
(45.6
)
 
Amortization of acquired below-market leases
 
(3,099
)
 
(3,614
)
 
515

 
(14.3
)
 
Net operating income – same properties (cash basis)
 
$
198,594

 
$
180,283

 
$
18,311

 
10.2
%
 
 
 
 
 
 
 
 
 
 
 
Refer to “Same Property Comparisons” in the “Definitions and Reconciliations” section of this Supplemental Information for a reconciliation of same properties to total properties.

 
22

 
 
Leasing Activity
q119logo1.jpg
March 31, 2019
(Dollars per RSF)
 
 

 
 
 
Three Months Ended
 
 
 
Year Ended
 
 
 
 
March 31, 2019
 
 
 
December 31, 2018
 
 
 
Including
Straight-Line Rent
 
Cash Basis
 
Including
Straight-Line Rent
 
Cash Basis
Leasing activity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewed/re-leased space(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental rate changes
 
 
32.9%

 
 
 
24.3%

 
 
 
24.1%

 
 
 
14.1%

 
New rates
 
 

$43.86

 
 
 

$41.20

 
 
 

$55.05

 
 
 

$52.79

 
Expiring rates
 
 

$33.00

 
 
 

$33.15

 
 
 

$44.35

 
 
 

$46.25

 
Rentable square footage
 
 
509,415

 
 
 
 
 
 
 
2,088,216

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$17.10

 
 
 
 
 
 
 

$20.61

 
 
 
 
 
Weighted-average lease term
 
 
6.5 years

 
 
 
 
 
 
 
6.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Developed/redeveloped/previously vacant space leased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$64.90

 
 
 

$64.25

 
 
 

$58.45

 
 
 

$48.73

 
Rentable square footage
 
 
739,557

 
 
 
 
 
 
 
2,633,476

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$21.32

 

 
 
 
 
 

$12.57

 
 
 
 
 
Weighted-average lease term
 
 
11.3 years

 
 
 
 
 
 
 
11.5 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leasing activity summary (totals):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$56.32

 
 
 

$54.85

 
 
 

$56.94

 
 
 

$50.52

 
Rentable square footage
 
 
1,248,972

(2) 
 
 
 
 
 
 
4,721,692

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$19.60

 
 
 
 
 
 
 

$16.13

 
 
 
 
 
Weighted-average lease term
 
 
9.3 years

 
 
 
 
 
 
 
9.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease expirations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiring rates
 
 

$32.96

 
 
 

$33.56

 
 
 

$42.98

 
 
 

$45.33

 
Rentable square footage
 
 
647,750

 
 
 
 
 
 
 
2,811,021

 
 
 
 
 


Leasing activity includes 100% of results for each property in which we have an investment in North America and excludes properties classified as held for sale.

(1)
Excludes month-to-month leases aggregating 40,581 RSF and 50,548 RSF as of March 31, 2019, and December 31, 2018, respectively.
(2)
During the three months ended March 31, 2019, we granted tenant concessions/free rent averaging 2.6 months with respect to the 1,248,972 RSF leased. Approximately 66% of the leases executed during the three months ended March 31, 2019, did not include concessions for free rent.    

 
23

 
 
 
q119logo1.jpg
Contractual Lease Expirations
March 31, 2019
 
 

Year
 
RSF
 
Percentage of
Occupied RSF
 
Annual Rental Revenue
(per RSF)(1)
 
Percentage of Total
Annual Rental Revenue
 
 
2019
(2)
 
 
859,904

 
 
 
3.8
%
 
 
 
$
41.57

 
 
 
3.3
%
 
 
 
2020
 
 
 
1,754,330

 
 
 
7.8
%
 
 
 
$
36.68

 
 
 
5.9
%
 
 
 
2021
 
 
 
1,538,636

 
 
 
6.8
%
 
 
 
$
39.76

 
 
 
5.6
%
 
 
 
2022
 
 
 
1,865,851

 
 
 
8.3
%
 
 
 
$
42.69

 
 
 
7.3
%
 
 
 
2023
 
 
 
2,341,908

 
 
 
10.4
%
 
 
 
$
43.64

 
 
 
9.4
%
 
 
 
2024
 
 
 
1,940,738

 
 
 
8.6
%
 
 
 
$
47.59

 
 
 
8.5
%
 
 
 
2025
 
 
 
1,593,735

 
 
 
7.1
%
 
 
 
$
47.56

 
 
 
6.9
%
 
 
 
2026
 
 
 
1,194,379

 
 
 
5.3
%
 
 
 
$
46.56

 
 
 
5.1
%
 
 
 
2027
 
 
 
2,209,690

 
 
 
9.8
%
 
 
 
$
46.97

 
 
 
9.5
%
 
 
 
2028
 
 
 
1,514,469

 
 
 
6.7
%
 
 
 
$
59.36

 
 
 
8.2
%
 
 
Thereafter
 
 
5,726,767

 
 
 
25.4
%
 
 
 
$
57.73

 
 
 
30.3
%
 
 

Market
 
2019 Contractual Lease Expirations (in RSF)
 
Annual Rental Revenue
(per RSF)(1)
 
2020 Contractual Lease Expirations (in RSF)

Annual Rental Revenue
(per RSF)(1)
 
Leased
 
Negotiating/
Anticipating
 
Targeted for Redevelopment
 
Remaining
Expiring
Leases(3)
 
Total(2)
 
 
Leased

Negotiating/
Anticipating

Targeted for Redevelopment

Remaining
Expiring Leases(4)
 
Total

 
 
 
 
 
 
 



 

Greater Boston
 
88,138

 
127,909

 
—

 
 
20,616

 
 
236,663

 
$
55.88

 
69,673


36,973


—

 

408,497

 
 
515,143


$
46.46

San Francisco
 
22,207

 
17,086

 
—

 
 
87,812

 
 
127,105

 
40.03

 
21,699


—


—

 

260,261

 
 
281,960


43.42

New York City
 
—

 
6,350

 
—

 
 
2,581

 
 
8,931

 
N/A

 
—


13,482


—

 

37,580


 
51,062


N/A

San Diego
 
89,469

 
—

 
—

 
 
134,752

 

224,221

 
33.29

 
679


—


—

 
 
285,236

 
 
285,915


28.45

Seattle
 
106,003

 
—

 
—

 
 
58,841

 
 
164,844

 
45.38

 
109,969


—


—

 

33,099


 
143,068


50.47

Maryland
 
17,630

 
—

 
—

 
 
8,022

 
 
25,652

 
22.75

 
—


10,950


—

 

244,862


 
255,812


22.23

Research Triangle
 
—

 
—

 
—

 
 
25,889

 
 
25,889

 
18.75

 
—


22,555


—

 

69,992


 
92,547


16.38

Canada
 
—

 
—

 
—

 
 
—

 
 
—

 
—

 
56,847

 
—

 
—

 
 
42,070

 
 
98,917

 
28.04

Non-cluster markets
 
—

 
7,465

 
—

 
 
39,134

 
 
46,599

 
22.50

 
—


—


—

 

29,906


 
29,906


30.73

Total
 
323,447

 
158,810

 
—

 
 
377,647

 
 
859,904

 
$
41.57

 
258,867


83,960


—

 

1,411,503


 
1,754,330


$
36.68

Percentage of expiring leases
 
38
%
 
18
%
 
—
%
 
 
44
%
 
 
100
%
 
 
 
15
%
 
5
%
 
—
%
 
 
80
%

 
100
%


 

(1)
Represents amounts in effect as of March 31, 2019.
(2)
Excludes month-to-month leases aggregating 40,581 RSF as of March 31, 2019.
(3)
Includes 116,556 RSF expiring in June 2019 at 3545 Cray Court in our Torrey Pines submarket, which is under evaluation for options to renovate as a Class A office/laboratory building. Any renovation we may undertake at this property will not be classified as a redevelopment, and as such the property will remain in our same properties. The next largest contractual lease expiration in 2019 is 50,400 RSF in our South San Francisco submarket.
(4)
The largest remaining contractual lease expiration in 2020 is 74,137 RSF in our South San Francisco submarket.

 
24

 
 
Top 20 Tenants
q119logo1.jpg
March 31, 2019
(Dollars in thousands, except average market cap amounts)
 
 

79% of Top 20 Annual Rental Revenue From Investment-Grade
or Publicly Traded Large Cap Tenants(1) 

 
 
Tenant
 
Remaining Lease Term in Years(1)
 
Aggregate
RSF
 
Annual Rental Revenue(1)
 
Percentage of Aggregate Annual Rental Revenue(1)
 
Investment-Grade
Credit Ratings
 
Average Market Cap(2)
(in billions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moody’s
 
S&P
 
 
1
 
Takeda Pharmaceutical Company Ltd.
 
 
10.4

 
 
 
606,248

 
 
 
$
39,159

 
 
3.5
%
 
Baa2
 
BBB+
 
$
39.1

 
2
 
Illumina, Inc.
 
 
11.4

 
 
 
891,495

 
 
 
34,830

 
 
3.1

 
—
 
BBB
 
$
44.6

 
3
 
Eli Lilly and Company
 
 
10.1

 
 
 
554,089

 
 
 
34,096

 
 
3.1

 
A2
 
A+
 
$
110.8

 
4
 
Sanofi
 
 
8.9

 
 
 
494,693

 
 
 
30,347

 
 
2.7

 
A1
 
AA
 
$
105.8

 
5
 
Celgene Corporation(3)
 
 
7.1

 
 
 
614,082

 
 
 
28,855

 
 
2.6

 
Baa2
 
BBB+
 
$
59.0

 
6
 
Novartis AG
 
 
8.3

 
 
 
336,794

 
 
 
26,343

 
 
2.4

 
A1
 
AA-
 
$
214.8

 
7
 
Merck & Co., Inc.
 
 
11.9

 
 
 
454,752

 
 
 
25,439

 
 
2.3

 
A1
 
AA
 
$
183.6

 
8
 
Bristol-Myers Squibb Company(3)
 
 
11.1

 
 
 
330,185

 
 
 
24,760

 
 
2.2

 
A2
 
A+
 
$
88.5

 
9
 
Uber Technologies, Inc.
 
 
73.7

(4) 
 
 
422,980

 
 
 
22,205

 
 
2.0

 
—
 
—
 
$
—

 
10
 
bluebird bio, Inc.
 
 
7.8

 
 
 
298,387

 
 
 
22,106

 
 
2.0

 
—
 
—
 
$
7.8

 
11
 
Moderna, Inc.
 
 
9.6

 
 
 
356,975

 
 
 
19,857

 
 
1.8

 
—
 
—
 
$
5.9

 
12
 
Roche
 
 
4.6

 
 
 
372,943

 
 
 
19,718

 
 
1.8

 
Aa3
 
AA
 
$
210.3

 
13
 
New York University
 
 
12.1

 
 
 
203,666

 
 
 
19,544

 
 
1.8

 
Aa2
 
AA-
 
$
—

 
14
 
Stripe, Inc.
 
 
8.5

 
 
 
295,333

 
 
 
17,736

 
 
1.6

 
—
 
—
 
$
—

 
15
 
Facebook, Inc.
 
 
11.4

 
 
 
382,798

 
 
 
17,482

 
 
1.6

 
—
 
—
 
$
479.0

 
16
 
Pfizer Inc.
 
 
5.6

 
 
 
416,226

 
 
 
17,437

 
 
1.6

 
A1
 
AA
 
$
236.2

 
17
 
Amgen Inc.
 
 
5.0

 
 
 
407,369

 
 
 
16,838

 
 
1.5

 
Baa1
 
A
 
$
122.9

 
18
 
Massachusetts Institute of Technology
 
 
6.2

 
 
 
256,126

 
 
 
16,729

 
 
1.5

 
Aaa
 
AAA
 
$
—

 
19
 
United States Government
 
 
8.9

 
 
 
264,358

 
 
 
15,434

 
 
1.4

 
Aaa
 
AA+
 
$
—

 
20
 
FibroGen, Inc.
 
 
4.6

 
 
 
234,249

 
 
 
14,198

 
 
1.3

 
—
 
—
 
$
4.5

 
 
 
Total/weighted average
 
 
12.1

(4) 
 
 
8,193,748

 
 
 
$
463,113

 
 
41.8
%
 
 
 
 
 
 
 

(1)
Based on aggregate annual rental revenue in effect as of March 31, 2019. Refer to “Annual Rental Revenue” in the “Definitions and Reconciliations” section of this Supplemental Information for additional information on our methodology on annual rental revenue from unconsolidated real estate joint ventures.
(2)
Average daily market capitalization for the 12 months ended March 31, 2019. Refer to “Total Market Capitalization” in the “Definitions and Reconciliations” section of this Supplemental Information for additional information.
(3)
In April 2019, Bristol-Myers Squibb Company’s stockholders approved the acquisition of Celgene Corporation with an expected transaction close during the third quarter of 2019. Bristol-Myers Squibb Company currently leases 106,003 RSF at 1201 Eastlake Avenue East in our Lake Union submarket that expires during the first half of 2019, and we have re-leased 100% of this RSF to an investment-grade institutional research center. Subsequent to the expected close of the transaction during the third quarter of 2019, our annual rental revenue from Bristol-Myers Squibb Company is expected to be approximately 4.4% based on leases in effect as of March 31, 2019.
(4)
Represents a ground lease with Uber Technologies, Inc. at 1455 and 1515 Third Street in our Mission Bay/SoMa submarket. Excluding the ground lease, the weighted-average remaining lease term for our top 20 tenants was 9.0 years as of March 31, 2019.

 
25

 
 
Summary of Properties and Occupancy
q119logo1.jpg
March 31, 2019
(Dollars in thousands, except per RSF amounts)
 
 

Summary of properties
Market
 
RSF
 
Number of Properties
 
Annual Rental Revenue
 
 
Operating
 
Development
 
Redevelopment
 
Total
 
% of Total
 
 
Total
 
% of Total
 
Per RSF
 
Greater Boston
 
6,359,439

 
40,597

 
31,858

 
6,431,894

 
25
%
 
55

 
$
397,596

 
36
%
 
$
63.64

 
San Francisco
 
5,320,933

 
1,186,348

 
76,400

 
6,583,681

 
26

 
48

 
281,135

 
25

 
54.38

 
New York City
 
1,114,282

 
—

 
140,098

 
1,254,380

 
5

 
4

 
79,093

 
7

 
71.88

 
San Diego
 
4,829,402

 
98,000

 
—

 
4,927,402

 
19

 
61

 
172,948

 
16

 
38.00

 
Seattle
 
1,328,332

 
107,385

 
—

 
1,435,717

 
6

 
13

 
65,511

 
6

 
50.50

 
Maryland
 
2,520,352

 
258,904

 
45,097

 
2,824,353

 
11

 
39

 
68,446

 
6

 
28.18

 
Research Triangle
 
1,099,863

 
—

 
118,863

 
1,218,726

 
5

 
16

 
28,535

 
3

 
26.67

 
Canada
 
188,967

 
—

 
—

 
188,967

 
1

 
2

 
4,713

 
—

 
26.68

 
Non-cluster markets
 
390,179

 
—

 
—

 
390,179

 
2

 
11

 
10,183

 
1

 
32.17

 
Properties held for sale
 
68,000

 
—

 
—

 
68,000

 
—

 
1

 
2,385

 
—

 
N/A

 
North America
 
23,219,749

 
1,691,234

 
412,316

 
25,323,299

 
100
%
 
250

 
$
1,110,545

 
100
%
 
$
49.56

 
 
 
 
 
2,103,550
 
 
 
 
 
 
 
 
 
 
 
 
 


Summary of occupancy
 
 
Operating Properties
 
Operating and Redevelopment Properties
Market
 
3/31/19
 
12/31/18
 
3/31/18
 
3/31/19
 
12/31/18
 
3/31/18
Greater Boston
 
98.2
%
 
98.7
%
 
95.7
%
 
97.7
%
 
98.2
%
 
95.2
%
San Francisco
 
99.8

 
100.0

 
99.9

 
98.4

 
96.2

 
98.9

New York City
 
98.7

 
98.3

 
100.0

 
87.7

 
87.3

 
100.0

San Diego
 
94.2

 
94.7

 
95.2

 
94.2

 
94.7

 
91.7

Seattle
 
97.7

 
97.7

 
96.6

 
97.7

 
97.7

 
96.6

Maryland
 
97.0

 
96.8

 
95.7

 
95.3

 
94.7

 
91.2

Research Triangle
 
97.3

 
95.4

 
96.8

 
87.8

 
85.9

 
82.9

Subtotal
 
97.6

 
97.6

 
96.8

 
95.8

 
95.3

 
94.4

Canada
 
93.5

 
95.2

 
99.6

 
93.5

 
95.2

 
99.6

Non-cluster markets
 
81.1

 
79.0

 
78.9

 
81.1

 
79.0

 
78.9

North America
 
97.2
%
 
97.3
%
 
96.6
%
 
95.5
%
 
95.1
%
 
94.3
%

Refer to “Definitions and Reconciliations” in this Supplemental Information for additional information.


 
26

 
 
Property Listing
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cambridge/Inner Suburbs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at Kendall Square
 
2,365,487

 
—

 
—

 
2,365,487

 
10
 
$
162,987

 
98.9
%
 
 
98.9
%
 
 
 
50, 60, 75/125(1), 100, and 225(1) Binney Street, 161 and 215 First Street, 150 Second Street, 300 Third Street, and 11 Hurley Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Square®
 
1,181,635

 
—

 
—

 
1,181,635

 
7
 
87,747

 
97.9

 
 
97.9

 
 
 
100, 200, 300, 400, 500, 600, and 700 Technology Square

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at One Kendall Square
 
773,108

 
40,597

 
—

 
813,705

 
10
 
64,738

 
98.7

`
 
98.7

 
 
 
One Kendall Square – Buildings 100, 200, 300, 400, 500, 600/700, 1400, 1800, 2000, and 399 Binney Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
480 and 500 Arsenal Street
 
234,260

 
—

 
—

 
234,260

 
2
 
10,647

 
100.0

 
 
100.0

 
 
 
640 Memorial Drive
 
225,504

 
—

 
—

 
225,504

 
1
 
13,815

 
100.0

 
 
100.0

 
 
 
780 and 790 Memorial Drive
 
99,658

 
—

 
—

 
99,658

 
2
 
7,789

 
100.0

 
 
100.0

 
 
 
167 Sidney Street and 99 Erie Street
 
54,549

 
—

 
—

 
54,549

 
2
 
4,014

 
100.0

 
 
100.0

 
 
 
79/96 13th Street (Charlestown Navy Yard)
 
25,309

 
—

 
—

 
25,309

 
1
 
620

 
100.0

 
 
100.0

 
 
 
Cambridge/Inner Suburbs
 
4,959,510

 
40,597

 
—

 
5,000,107

 
35
 
352,357

 
98.8

 
 
98.8

 
 
Seaport Innovation District
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
99 A Street
 
8,715

 
—

 
—

 
8,715

 
1
 
850

 
100.0

 
 
100.0

 
 
Route 128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Park at 128
 
343,882

 
—

 
—

 
343,882

 
8
 
11,037

 
100.0

 
 
100.0

 
 
 
3 and 6/8 Preston Court, 29, 35, and 44 Hartwell Avenue,
35 and 45/47 Wiggins Avenue, and 60 Westview Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225, 266, and 275 Second Avenue
 
285,759

 
—

 
31,858

 
317,617

 
3
 
12,328

 
100.0

 
 
90.0

 
 
 
100 Tech Drive
 
200,431

 
—

 
—

 
200,431

 
1
 
8,455

 
100.0

 
 
100.0

 
 
 
19 Presidential Way
 
144,892

 
—

 
—

 
144,892

 
1
 
5,134

 
96.8

 
 
96.8

 
 
 
100 Beaver Street
 
82,330

 
—

 
—

 
82,330

 
1
 
1,311

 
42.5

 
 
42.5

 
 
 
285 Bear Hill Road
 
26,270

 
—

 
—

 
26,270

 
1
 
1,167

 
100.0

 
 
100.0

 
 
 
Route 128
 
1,083,564

 
—

 
31,858

 
1,115,422

 
15
 
39,432

 
95.2

 
 
92.5

 
 
Route 495
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111 and 130 Forbes Boulevard
 
155,846

 
—

 
—

 
155,846

 
2
 
1,543

 
100.0

 
 
100.0

 
 
 
20 Walkup Drive
 
91,045

 
—

 
—

 
91,045

 
1
 
649

 
100.0

 
 
100.0

 
 
 
30 Bearfoot Road
 
60,759

 
—

 
—

 
60,759

 
1
 
2,765

 
100.0

 
 
100.0

 
 
 
Route 495
 
307,650

 
—

 
—

 
307,650

 
4
 
4,957

 
100.0

 
 
100.0

 
 
 
Greater Boston
 
6,359,439

 
40,597

 
31,858

 
6,431,894

 
55
 
$
397,596

 
98.2
%
 
 
97.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.

 
27

 
 
Property Listing (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mission Bay/SoMa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1655 and 1725 Third Street(1)
 
—

 
593,765

 
—

 
593,765

 
2
 
$
—

 
N/A

 
 
N/A

 
 
 
409 and 499 Illinois Street(1)
 
455,069

 
—

 
—

 
455,069

 
2
 
28,756

 
100.0
%
 
 
100.0
%
 
 
 
1455 and 1515 Third Street
 
422,980

 
—

 
—

 
422,980

 
2
 
22,205

 
100.0

 
 
100.0

 
 
 
510 Townsend Street
 
295,333

 
—

 
—

 
295,333

 
1
 
17,736

 
100.0

 
 
100.0

 
 
 
88 Bluxome Street
 
232,470

 
—

 
—

 
232,470

 
1
 
3,813

 
100.0

 
 
100.0

 
 
 
455 Mission Bay Boulevard South
 
210,398

 
—

 
—

 
210,398

 
1
 
13,317

 
100.0

 
 
100.0

 
 
 
1500 Owens Street(1)
 
158,267

 
—

 
—

 
158,267

 
1
 
7,681

 
100.0

 
 
100.0

 
 
 
1700 Owens Street
 
157,340

 
—

 
—

 
157,340

 
1
 
11,041

 
98.9

 
 
98.9

 
 
 
505 Brannan Street
 
148,146

 
—

 
—

 
148,146

 
1
 
12,108

 
100.0

 
 
100.0

 
 
 
260 Townsend Street
 
66,682

 
—

 
—

 
66,682

 
1
 
5,917

 
100.0

 
 
100.0

 
 
 
Mission Bay/SoMa
 
2,146,685

 
593,765

 
—

 
2,740,450

 
13
 
122,574

 
99.9

 
 
99.9

 
 
South San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
213, 249, 259, 269, and 279 East Grand Avenue
 
848,109

 
71,595

 
—

 
919,704

 
5
 
43,654

 
100.0

 
 
100.0

 
 
 
Alexandria Technology Center® – Gateway
 
558,066

 
—

 
76,400

 
634,466

 
7
 
27,199

 
100.0

 
 
88.0

 
 
 
600, 630, 650, 681, 701, 901, and 951 Gateway Boulevard
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
400 and 450 East Jamie Court
 
163,035

 
—

 
—

 
163,035

 
2
 
7,546

 
100.0

 
 
100.0

 
 
 
500 Forbes Boulevard
 
155,685

 
—

 
—

 
155,685

 
1
 
6,619

 
100.0

 
 
100.0

 
 
 
7000 Shoreline Court
 
136,395

 
—

 
—

 
136,395

 
1
 
5,861

 
98.5

 
 
98.5

 
 
 
341 and 343 Oyster Point Boulevard
 
107,960

 
—

 
—

 
107,960

 
2
 
5,497

 
100.0

 
 
100.0

 
 
 
849/863 Mitten Road/866 Malcolm Road
 
103,857

 
—

 
—

 
103,857

 
1
 
4,553

 
98.8

 
 
98.8

 
 
 
South San Francisco
 
2,073,107

 
71,595

 
76,400

 
2,221,102

 
19
 
100,929

 
99.8

 
 
96.3

 
 
Greater Stanford
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
Menlo Gateway(1)
 
251,995

 
520,988

 
—

 
772,983

 
3
 
8,373

 
100.0

 
 
100.0

 
 
 
100 Independence Drive and 125 and 135 Constitution Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria PARC
 
197,498

 
—

 
—

 
197,498

 
4
 
10,863

 
96.8

 
 
96.8

 
 
 
2100, 2200, 2300, and 2400 Geng Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Stanford Life Science District
 
190,270

 
—

 
—

 
190,270

 
2
 
13,902

 
100.0

 
 
100.0

 
 
 
3165 and 3170 Porter Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
960 Industrial Road
 
110,000

 
—

 
—

 
110,000

 
1
 
2,749

 
100.0

 
 
100.0

 
 
 
2425 Garcia Avenue/2400/2450 Bayshore Parkway
 
99,208

 
—

 
—

 
99,208

 
1
 
4,257

 
100.0

 
 
100.0

 
 
 
Shoreway Science Center
 
82,462

 
—

 
—

 
82,462

 
2
 
5,472

 
100.0

 
 
100.0

 
 
 
75 and 125 Shoreway Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1450 Page Mill Road
 
77,634

 
—

 
—

 
77,634

 
1
 
8,009

 
100.0

 
 
100.0

 
 
 
3350 West Bayshore Road
 
60,000

 
—

 
—

 
60,000

 
1
 
2,211

 
100.0

 
 
100.0

 
 
 
2625/2627/2631 Hanover Street
 
32,074

 
—

 
—

 
32,074

 
1
 
1,796

 
100.0

 
 
100.0

 
 
 
Greater Stanford
 
1,101,141

 
520,988

 
—

 
1,622,129

 
16
 
57,632

 
99.4

 
 
99.4

 
 
 
San Francisco
 
5,320,933

 
1,186,348

 
76,400

 
6,583,681

 
48
 
$
281,135

 
99.8
%
 
 
98.4
%
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.

 
28

 
 
Property Listing (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for Life Science – New York City
 
727,674

 
—

 
—

 
727,674

 
2
 
$
64,070

 
98.1
%
 
 
98.1
%
 
 
 
430 and 450 East 29th Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
219 East 42nd Street
 
349,947

 
—

 
—

 
349,947

 
1
 
14,006

 
100.0

 
 
100.0

 
 
 
Alexandria Life Science Factory
 
36,661

 
—

 
140,098

 
176,759

 
1
 
1,017

 
100.0

 
 
20.7

 
 
 
30-02 48th Avenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York City
 
1,114,282

 
—

 
140,098

 
1,254,380

 
4
 
79,093

 
98.7

 
 
87.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Torrey Pines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Spectrum
 
336,461

 
—

 
—

 
336,461

 
3
 
17,409

 
100.0

 
 
100.0

 
 
 
3215 Merryfield Row and 3013 and 3033 Science Park Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Torrey Ridge
 
294,326

 
—

 
—

 
294,326

 
3
 
13,283

 
89.6

 
 
89.6

 
 
 
10578, 10618, and 10628 Science Center Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Sunrise
 
236,635

 
—

 
—

 
236,635

 
3
 
8,850

 
99.7

 
 
99.7

 
 
 
10931/10933 and 10975 North Torrey Pines Road,
3010 Science Park Road, and 10996 Torreyana Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Nautilus
 
223,751

 
—

 
—

 
223,751

 
4
 
10,613

 
100.0

 
 
100.0

 
 
 
3530 and 3550 John Hopkins Court and 3535 and 3565 General Atomics Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3545 Cray Court
 
116,556

 
—

 
—

 
116,556

 
1
 
4,827

 
100.0

 
 
100.0

 
 
 
11119 North Torrey Pines Road
 
72,506

 
—

 
—

 
72,506

 
1
 
3,409

 
100.0

 
 
100.0

 
 
 
Torrey Pines
 
1,280,235

 
—

 
—

 
1,280,235

 
15
 
58,391

 
97.6

 
 
97.6

 
 
University Town Center
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria
 
1,067,847

 
98,000

 
—

 
1,165,847

 
6
 
36,436

 
93.3

 
 
93.3

 
 
 
9880, 10260, 10290(1), and 10300(1) Campus Point Drive and 4110(1) and 4161 Campus Point Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5200 Illumina Way
 
792,687

 
—

 
—

 
792,687

 
6
 
28,901

 
100.0

 
 
100.0

 
 
 
ARE Towne Centre
 
304,046

 
—

 
—

 
304,046

 
4
 
8,249

 
85.9

 
 
85.9

 
 
 
9363, 9373, 9393, and 9625(1) Towne Centre Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Esplanade
 
241,963

 
—

 
—

 
241,963

 
4
 
10,036

 
100.0

 
 
100.0

 
 
 
4755, 4757, and 4767 Nexus Center Drive and 4796 Executive Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
University Town Center
 
2,406,543

 
98,000

 
—

 
2,504,543

 
20
 
$
83,622

 
95.2
%
 
 
95.2
%
 
 
 

(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
 

 
29

 
 
Property Listing (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Diego (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sorrento Mesa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summers Ridge Science Park
 
316,531

 
—

 
—

 
316,531

 
4
 
$
10,843

 
100.0
%
 
 
100.0
%
 
 
 
9965, 9975, 9985, and 9995 Summers Ridge Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5810/5820 and 6138/6150 Nancy Ridge Drive
 
138,970

 
—

 
—

 
138,970

 
2
 
2,364

 
59.2

 
 
59.2

 
 
 
10121 and 10151 Barnes Canyon Road 
 
102,392

 
—

 
—

 
102,392

 
2
 
2,689

 
100.0

 
 
100.0

 
 
 
ARE Portola
 
101,857

 
—

 
—

 
101,857

 
3
 
3,236

 
100.0

 
 
100.0

 
 
 
6175, 6225, and 6275 Nancy Ridge Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7330 Carroll Road
 
66,244

 
—

 
—

 
66,244

 
1
 
2,431

 
100.0

 
 
100.0

 
 
 
5871 Oberlin Drive
 
33,817

 
—

 
—

 
33,817

 
1
 
—

 
—

 
 
—

 
 
 
Sorrento Mesa
 
759,811

 
—

 
—

 
759,811

 
13
 
21,563

 
88.1

 
 
88.1

 
 
Sorrento Valley
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3911, 3931, 3985, 4025, 4031, and 4045 Sorrento Valley Boulevard
 
151,378

 
—

 
—

 
151,378

 
6
 
4,157

 
92.8

 
 
92.8

 
 
 
11025, 11035, 11045, 11055, 11065, and 11075 Roselle Street
 
121,655

 
—

 
—

 
121,655

 
6
 
2,243

 
74.6

 
 
74.6

 
 
 
Sorrento Valley
 
273,033

 
—

 
—

 
273,033

 
12
 
6,400

 
84.7

 
 
84.7

 
 
I-15 Corridor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13112 Evening Creek Drive
 
109,780

 
—

 
—

 
109,780

 
1
 
2,972

 
100.0

 
 
100.0

 
 
 
San Diego
 
4,829,402

 
98,000

 
—

 
4,927,402

 
61
 
172,948

 
94.2

 
 
94.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Eastlake Life Science Campus by Alexandria – North Campus
 
519,880

 
107,385

 
—

 
627,265

 
5
 
25,577

 
97.5

 
 
97.5

 
 
 
1616 and 1551 Eastlake Avenue East, 188 and 199 East Blaine Street, and 1600 Fairview Avenue East
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Eastlake Life Science Campus by Alexandria – South Campus
 
206,031

 
—

 
—

 
206,031

 
2
 
10,155

 
100.0

 
 
100.0

 
 
 
1201 and 1208 Eastlake Avenue East
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
400 Dexter Avenue North
 
290,111

 
—

 
—

 
290,111

 
1
 
15,236

 
100.0

 
 
100.0

 
 
 
2301 5th Avenue
 
197,135

 
—

 
—

 
197,135

 
1
 
9,888

 
97.4

 
 
97.4

 
 
 
219 Terry Avenue North
 
30,705

 
—

 
—

 
30,705

 
1
 
1,843

 
100.0

 
 
100.0

 
 
 
Lake Union
 
1,243,862

 
107,385

 
—

 
1,351,247

 
10
 
62,699

 
98.6

 
 
98.6

 
 
Elliott Bay
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3000/3018 Western Avenue
 
47,746

 
—

 
—

 
47,746

 
1
 
1,839

 
100.0

 
 
100.0

 
 
 
410 West Harrison Street and 410 Elliott Avenue West
 
36,724

 
—

 
—

 
36,724

 
2
 
973

 
63.9

 
 
63.9

 
 
 
Elliott Bay
 
84,470

 
—

 
—

 
84,470

 
3
 
2,812

 
84.3

 
 
84.3

 
 
 
Seattle
 
1,328,332

 
107,385

 
—

 
1,435,717

 
13
 
$
65,511

 
97.7
%
 
 
97.7
%
 
 
 
 
 

 
30

 
 
Property Listing (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rockville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9800, 9900, 9920, and 9950 Medical Center Drive
 
383,956

 
258,904

 
—

 
642,860

 
8
 
$
14,114

 
95.6
%
 
 
95.6
%
 
 
 
9704, 9708, 9712, and 9714 Medical Center Drive
 
214,725

 
—

 
—

 
214,725

 
4
 
7,862

 
100.0

 
 
100.0

 
 
 
1330 Piccard Drive
 
131,511

 
—

 
—

 
131,511

 
1
 
3,562

 
100.0

 
 
100.0

 
 
 
1500 and 1550 East Gude Drive
 
90,489

 
—

 
—

 
90,489

 
2
 
1,681

 
100.0

 
 
100.0

 
 
 
14920 and 15010 Broschart Road
 
86,703

 
—

 
—

 
86,703

 
2
 
2,260

 
100.0

 
 
100.0

 
 
 
1405 Research Boulevard
 
71,669

 
—

 
—

 
71,669

 
1
 
2,100

 
88.6

 
 
88.6

 
 
 
5 Research Place
 
63,852

 
—

 
—

 
63,852

 
1
 
2,734

 
100.0

 
 
100.0

 
 
 
5 Research Court
 
51,520

 
—

 
—

 
51,520

 
1
 
1,087

 
65.7

 
 
65.7

 
 
 
9920 Belward Campus Drive
 
51,181

 
—

 
—

 
51,181

 
1
 
1,568

 
100.0

 
 
100.0

 
 
 
12301 Parklawn Drive
 
49,185

 
—

 
—

 
49,185

 
1
 
1,329

 
100.0

 
 
100.0

 
 
 
Rockville
 
1,194,791

 
258,904

 
—

 
1,453,695

 
22
 
38,297

 
96.4

 
 
96.4

 
 
Gaithersburg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg I
 
377,585

 
—

 
—

 
377,585

 
4
 
9,526

 
100.0

 
 
100.0

 
 
 
9 West Watkins Mill Road and 910, 930, and 940 Clopper Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg II
 
269,887

 
—

 
45,097

 
314,984

 
6
 
7,043

 
97.4

 
 
83.4

 
 
 
704 Quince Orchard Road(1), 708 Quince Orchard Road, and
19, 20, 21, and 22 Firstfield Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50 and 55 West Watkins Mill Road
 
96,915

 
—

 
—

 
96,915

 
2
 
2,168

 
79.4

 
 
79.4

 
 
 
401 Professional Drive
 
63,154

 
—

 
—

 
63,154

 
1
 
1,636

 
100.0

 
 
100.0

 
 
 
950 Wind River Lane
 
50,000

 
—

 
—

 
50,000

 
1
 
1,004

 
100.0

 
 
100.0

 
 
 
620 Professional Drive
 
27,950

 
—

 
—

 
27,950

 
1
 
1,191

 
100.0

 
 
100.0

 
 
 
Gaithersburg
 
885,491

 
—

 
45,097

 
930,588

 
15
 
22,568

 
96.9

 
 
92.2

 
 
Beltsville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8000/9000/10000 Virginia Manor Road
 
191,884

 
—

 
—

 
191,884

 
1
 
2,443

 
96.6

 
 
96.6

 
 
Northern Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14225 Newbrook Drive
 
248,186

 
—

 
—

 
248,186

 
1
 
5,138

 
100.0

 
 
100.0

 
 
 
Maryland
 
2,520,352

 
258,904

 
45,097

 
2,824,353

 
39
 
$
68,446

 
97.0
%
 
 
95.3
%
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
 

 
31

 
 
Property Listing (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Alston
 
186,870

 
—

 
—

 
186,870

 
3
 
$
3,582

 
93.7
%
 
 
93.7
%
 
 
 
100, 800, and 801 Capitola Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech – Research Triangle
 
56,137

 
—

 
118,863

 
175,000

 
1
 
1,588

 
100.0

 
 
32.1

 
 
 
5 Laboratory Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
108/110/112/114 TW Alexander Drive
 
158,417

 
—

 
—

 
158,417

 
1
 
4,682

 
100.0

 
 
100.0

 
 
 
Alexandria Innovation Center® – Research Triangle
 
135,677

 
—

 
—

 
135,677

 
3
 
3,707

 
100.0

 
 
100.0

 
 
 
7010, 7020, and 7030 Kit Creek Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 Davis Drive
 
100,000

 
—

 
—

 
100,000

 
1
 
1,950

 
96.7

 
 
96.7

 
 
 
7 Triangle Drive
 
96,626

 
—

 
—

 
96,626

 
1
 
3,156

 
100.0

 
 
100.0

 
 
 
2525 East NC Highway 54
 
82,996

 
—

 
—

 
82,996

 
1
 
3,680

 
100.0

 
 
100.0

 
 
 
407 Davis Drive
 
81,956

 
—

 
—

 
81,956

 
1
 
1,644

 
100.0

 
 
100.0

 
 
 
601 Keystone Park Drive
 
77,395

 
—

 
—

 
77,395

 
1
 
1,379

 
100.0

 
 
100.0

 
 
 
6040 George Watts Hill Drive
 
61,547

 
—

 
—

 
61,547

 
1
 
2,148

 
100.0

 
 
100.0

 
 
 
5 Triangle Drive
 
32,120

 
—

 
—

 
32,120

 
1
 
479

 
54.2

 
 
54.2

 
 
 
6101 Quadrangle Drive
 
30,122

 
—

 
—

 
30,122

 
1
 
540

 
100.0

 
 
100.0

 
 
 
Research Triangle
 
1,099,863

 
—

 
118,863

 
1,218,726

 
16
 
28,535

 
97.3

 
 
87.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
188,967

 
—

 
—

 
188,967

 
2
 
4,713

 
93.5

 
 
93.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-cluster markets
 
390,179

 
—

 
—

 
390,179

 
11
 
10,183

 
81.1

 
 
81.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America, excluding properties held for sale
 
23,151,749

 
1,691,234

 
412,316

 
25,255,299

 
249
 
1,108,160

 
97.2
%
 
 
95.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties held for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
68,000

 
—

 
—

 
68,000

 
1
 
2,385

 
100.0
%
 
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total – North America
 
23,219,749

 
1,691,234

 
412,316

 
25,323,299

 
250
 
$
1,110,545

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
32

 
 
 
q119logo1.jpg
Disciplined Management of Ground-Up Developments
March 31, 2019
 
 


q119preleasing.jpg
(1)
Represents developments commenced since January 1, 2008, comprising 31 projects aggregating 7.5 million RSF.
(2)
Represents developments commenced and delivered since January 1, 2008, comprising 23 projects aggregating 5.5 million RSF.

 
33

 
 
Investments in Real Estate
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

 
 
Investments in Real Estate
 
Square Footage
 
 
 
Operating
 
Construction
 
Pre-
Construction
 
Intermediate-Term
 
Future
 
Total
Investments in real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental properties – consolidated
 
$
13,272,113

 
22,248,395

 
—

 
—

 
—

 
—

 
22,248,395

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New Class A development and redevelopment properties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 deliveries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated
 
289,182

 
684,525

 
586,796

 
—

 
—

 
—

 
1,271,321

Unconsolidated(1)
 
N/A

 
286,829

 
1,159,850

 
—

 
—

 
—

 
1,446,679

2019 deliveries
 
289,182

 
971,354

 
1,746,646

 
—

 
—

 
—

 
2,718,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 deliveries
 
415,077

 
—

 
356,904

 
1,539,455

 
—

 
—

 
1,896,359

2021-2022 deliveries
 
592,654

 
—

 
—

 
1,070,925

 
3,490,009

 
—

 
4,560,934

Future
 
181,859

 
—

 
—

 
—

 
—

 
3,234,786

 
3,234,786

New Class A development and redevelopment properties
 
1,478,772

 
971,354

 
2,103,550

 
2,610,380

 
3,490,009

 
3,234,786

 
12,410,079

Value-creation square feet currently included in rental properties(2)
 
N/A

 
—

 
—

 
(341,634
)
 
(118,715
)
 
(509,831
)
 
(970,180
)
Gross investments in real estate
 
14,750,885

 
23,219,749

 
2,103,550

 
2,268,746

 
3,371,294

 
2,724,955

 
33,688,294

 
 
 
 
 
 
4,372,296
 
6,096,249
 
 
Less: accumulated depreciation
 
(2,371,088
)
 
 
 
 
 
 
 
 
 
 
 
 
Net investments in real estate – North America
 
12,379,797

 
 
 
 
 
 
 
 
 
 
 
 
Net investments in real estate – Asia
 
30,553

 
 
 
 
 
 
 
 
 
 
 
 
Investments in real estate
 
$
12,410,350

 
 
 
 
 
 
 
 
 
 
 
 

(1)
Our share of the cost basis associated with square footage of our unconsolidated properties is classified in investments in unconsolidated real estate joint ventures in our consolidated balance sheets.
 
(2)
Represents RSF of buildings currently in operation that will be redeveloped or replaced with new development RSF upon commencement of construction as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property/Submarket
 
RSF
 
 
 
 
 
 
 
 
 
 
Pre-construction:
 
 
 
 
 
 
 
 
 
 
 
 
88 Bluxome Street/Mission Bay/SoMa
 
232,470

 
 
 
 
 
 
 
 
 
 
10260 Campus Point Drive/University Town Center
 
109,164

 
 
 
 
 
 
 
 
 
 
 
 
341,634

 
 
 
 
 
 
 
 
 
 
Intermediate-term:
 
 
 
 
 
 
 
 
 
 
 
 
99 A Street/Seaport Innovation District
 
8,715

 
 
 
 
 
 
 
 
 
 
960 Industrial Road/Greater Stanford
 
110,000

 
 
 
 
 
 
 
 
 
 
 
 
118,715

 
 
 
 
 
 
 
 
 
 
Future:
 
 
 
 
 
 
 
 
 
 
 
 
219 East 42nd Street/New York City
 
349,947

 
 
 
 
 
 
 
 
 
 
4161 Campus Point Court/University Town Center
 
159,884

 
 
 
 
 
 
 
 
 
 
 
 
509,831

 
 
 
 
 
 
 
 
 

 
34

 
 
 
 
New Class A Development and Redevelopment Properties: Recent Deliveries
q119logo1.jpg
 
 
March 31, 2019
 
 
 






399 Binney Street
 
279 East Grand Avenue
 
681 Gateway Boulevard
Greater Boston/Cambridge
 
San Francisco/South San Francisco
 
San Francisco/South San Francisco
123,403 RSF
 
139,810 RSF
 
66,000 RSF
Rubius Therapeutics, Inc.
Relay Therapeutics, Inc.
Celsius Therapeutics, Inc.
 
Verily Life Sciences, LLC
insitro, Inc.
 
Eli Lilly and Company
q119binney399.jpg
 
q119eastgrand279.jpg
 
q119gateway681.jpg

Alexandria PARC
 
188 East Blaine Street
San Francisco/Greater Stanford
 
Seattle/Lake Union
48,547 RSF
 
90,615 RSF
Workday, Inc.
 
bluebird bio, Inc.
Seattle Cancer Care Alliance
Sana Biotechnology, Inc.
 
q119eastblaine188.jpg

 
35

 
 
New Class A Development and Redevelopment Properties: Recent Deliveries (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 



Property/Market/Submarket
 
Our Ownership Interest
 
Date Delivered
 
RSF Placed Into Service
 
Operating Property Leased Percentage
 
Total Project
 
Unlevered Yields
 
 
 
 
 
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
Prior to 10/1/18
 
4Q18
 
1Q19
 
Total
 
 
RSF
 
Investment
 
 
Consolidated development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
213 East Grand Avenue/San Francisco/South San Francisco
 
100%
 
12/31/18
 
—

 
300,930

 
—

 
300,930

 
100%
 
300,930

 
 
$
256,600

 
 
7.4
%
 
 
 
6.5
%
 
399 Binney Street/Greater Boston/Cambridge
 
100%
 
1/25/19
 
—

 
—

 
123,403

 
123,403

 
100%
 
164,000

 
 
$
182,000

 
 
7.7
%
(1) 
 
 
7.2
%
(1) 
279 East Grand Avenue/San Francisco/South San Francisco
 
100%
 
Various
 
—

 
—

 
139,810

 
139,810

 
100%
 
211,405

 
 
$
151,000

 
 
7.8
%
 
 
 
8.1
%
 
188 East Blaine Street/Seattle/Lake Union
 
100%
 
3/27/19
 
—

 
—

 
90,615

 
90,615

 
100%
 
198,000

 
 
$
190,000

 
 
6.7
%
 
 
 
6.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase I/Research Triangle/Research Triangle
 
100%
 
Various
 
45,143

 
8,380

 
2,614

 
56,137

 
100%
 
175,000

 
 
$
77,100

 
 
7.6
%
 
 
 
7.5
%
 
9625 Towne Centre Drive/San Diego/University Town Center
 
50.1%
 
11/1/18
 
—

 
163,648

 
—

 
163,648

 
100%
 
163,648

 
 
$
89,000

 
 
7.3
%
 
 
 
7.3
%
 
9900 Medical Center Drive/Maryland/Rockville
 
100%
 
11/19/18
 
—

 
45,039

 
—

 
45,039

 
58%
 
45,039

 
 
$
16,800

 
 
8.6
%
 
 
 
8.4
%
 
681 Gateway Boulevard/San Francisco/South San Francisco
 
100%
 
3/1/19
 
—

 
—

 
66,000

 
66,000

 
100%
 
142,400

 
 
$
108,000

 
 
8.5
%
 
 
 
7.9
%
 
Alexandria PARC/San Francisco/Greater Stanford
 
100%
 
3/29/19
 
—

 
—

 
48,547

 
48,547

 
100%
 
197,498

 
 
$
152,600

 
 
7.3
%
 
 
 
6.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture redevelopment project
(RSF represents 100%; dollars and yields represent our share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
56.8%
 
Various
 
—

 
4,762

 
10,250

 
15,012

 
100%
 
79,931

 
 
$
13,300

 
 
8.9
%
 
 
 
8.8
%
 
Total
 
 
 
 
 
45,143

 
522,759

 
481,239

 
1,049,141

 
 
 
 
 
 
 
 
 
7.5
%
 
 
 
7.1
%
 


(1)
Improvements in initial stabilized yield and initial stabilized yield (cash) of 40 bps and 50 bps, respectively, were driven by the leasing of space at higher rental rates than those underwritten at acquisition.

 
36

 
New Class A Development and Redevelopment Properties: 2019 Deliveries
q119logo1.jpg
 
 
March 31, 2019
 
 
 



399 Binney Street
 
266 and 275 Second Avenue
 
1655 and 1725 Third Street
 
279 East Grand Avenue
 
681 Gateway Boulevard
Greater Boston/Cambridge
 
Greater Boston/Route 128
 
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
 
San Francisco/South San Francisco
40,597 RSF
 
31,858 RSF
 
593,765 RSF
 
71,595 RSF
 
76,400 RSF
Rubius Therapeutics, Inc.
 
Blossom Innovations, LLC
Multi-Tenant/Marketing
 
Uber Technologies, Inc.
 
Verily Life Sciences, LLC
insitro, Inc.
 
Twist Bioscience Corporation
Multi-Tenant/Marketing
q119binney399.jpg
 
q119secondave.jpg
 
q119gsw.jpg
 
q119eastgrand279.jpg
 
q119gateway681.jpg

Menlo Gateway
 
Alexandria Life Science Factory
 
188 East Blaine Street
 
704 Quince Orchard Road
 
Alexandria Center® for AgTech, Phase I
San Francisco/Greater Stanford
 
New York City/New York City
 
Seattle/Lake Union
 
Maryland/Gaithersburg
 
Research Triangle/Research Triangle
520,988 RSF
 
140,098 RSF
 
107,385 RSF
 
45,097 RSF
 
118,863 RSF
Facebook, Inc.
 
Multi-Tenant/Marketing
 
Alpine Immune Sciences Inc.
Multi-Tenant/Marketing
 
Multi-Tenant/Marketing
 
Arysta LifeScience Inc.
StrideBio, Inc.
GreenLight Biosciences, Inc.
q119menlogateway.jpg
 
q119bindery.jpg
 
q119eastblaine188.jpg
 
q119quince.jpg
 
q119laboratory5.jpg

 
37

New Class A Development and Redevelopment Properties: 2019 Deliveries (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 

Property/Market/Submarket
 
Dev/Redev
 
Square Footage
 
Percentage
 
Project Start
 
Occupancy(1)
 
 
In Service
 
CIP
 
Total
 
Leased
 
Leased/Negotiating
 
 
Initial
 
Stabilized
Consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/Route 128
 
Redev
 
171,899

 
31,858

 
 
203,757

 
91
%
 
 
100
%
 
 
3Q17
 
1Q18
 
2019
Alexandria Center® for AgTech, Phase I/Research Triangle/Research Triangle(2)
 
Redev
 
56,137

 
118,863

 
 
175,000

 
97

 
 
100

 
 
2Q17
 
2Q18
 
2019
399 Binney Street/Greater Boston/Cambridge
 
Dev
 
123,403

 
40,597

 
 
164,000

 
98

 
 
98

 
 
4Q17
 
1Q19
 
2019
279 East Grand Avenue/San Francisco/South San Francisco
 
Dev
 
139,810

 
71,595

 
 
211,405

 
100

 
 
100

 
 
4Q17
 
1Q19
 
2020
188 East Blaine Street/Seattle/Lake Union
 
Dev
 
90,615

 
107,385

 
 
198,000

 
67

 
 
68

 
 
2Q18
 
1Q19
 
2020
681 Gateway Boulevard/San Francisco/South San Francisco
 
Redev
 
66,000

 
76,400

 
 
142,400

 
89

 
 
100

 
 
3Q18
 
1Q19
 
2019
Alexandria Life Science Factory/New York City/New York City
 
Redev
 
36,661

 
140,098

 
 
176,759

 
21

 
 
21

 
 
4Q18
 
4Q19
 
2020
 
 
 
 
684,525

 
586,796

 
 
1,271,321

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture projects(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(amounts represent 100%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
Redev
 
34,834

 
45,097

 
 
79,931

 
48

 
 
48

 
 
1Q18
 
4Q18
 
2019
Menlo Gateway/San Francisco/Greater Stanford
 
Dev
 
251,995

 
520,988

 
 
772,983

 
100

 
 
100

 
 
4Q17
 
4Q19
 
4Q19
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
Dev
 
—

 
593,765

 
 
593,765

 
100

 
 
100

 
 
1Q18
 
4Q19
 
4Q19
 
 
 
 
286,829

 
1,159,850

 
 
1,446,679

 
 
 
 
 
 
 
 
 
 
 
 
2019 deliveries
 
 
 
971,354

 
1,746,646

 
 
2,718,000

 
89
%
 
 
91
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our Ownership Interest
 
 
 
 
 
Cost to Complete
 
 
 
 
Unlevered Yields
Property/Market/Submarket
 
 
In Service
 
CIP
 
Construction Loan
 
ARE
Funding
 
Total at
Completion
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
 
 
Consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/Route 128
 
100
%
 
 
$
72,988

 
$
12,227

 
 
$
—

 
 
$
3,785

 
$
89,000

 
 
 
8.4
%
 
 
 
7.1
%
 
Alexandria Center® for AgTech, Phase I/Research Triangle/Research Triangle(2)
 
100
%
 
 
19,671

 
39,128

 
 
—

 
 
18,301

 
77,100

 
 
 
7.6

 
 
 
7.5

 
399 Binney Street/Greater Boston/Cambridge
 
100
%
 
 
134,890

 
35,467

 
 
—

 
 
11,643

 
182,000

 
 
 
7.7

(4) 
 
 
7.2

(4) 
279 East Grand Avenue/San Francisco/South San Francisco
 
100
%
 
 
74,251

 
36,730

 
 
—

 
 
40,019

 
151,000

 
 
 
7.8

 
 
 
8.1

 
188 East Blaine Street/Seattle/Lake Union
 
100
%
 
 
58,868

 
61,699

 
 
—

 
 
69,433

 
190,000

 
 
 
6.7

 
 
 
6.7

 
681 Gateway Boulevard/San Francisco/South San Francisco
 
100
%
 
 
26,391

 
40,115

 
 
—

 
 
41,494

 
108,000

 
 
 
8.5

 
 
 
7.9

 
Alexandria Life Science Factory/New York City/New York City
 
100
%
 
 
16,031

 
63,816

 
 
—

 
 
104,453

 
184,300

 
 
 
5.5

 
 
 
5.6

 
 
 
 
 
 
403,090

 
289,182

 
 
—

 
 
289,128

 
981,400

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture projects(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(amounts represent our share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
56.8
%
 
 
3,718

 
4,353

 
 
4,407

 
 
822

 
13,300

 
 
 
8.9

 
 
 
8.8

 
Menlo Gateway/San Francisco/Greater Stanford
 
44.5
%
 
 
115,991

 
184,977

 
 
83,707

 
 
45,325

 
430,000

 
 
 
6.9

 
 
 
6.3

 
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
10.0
%
 
 
—

 
60,488

 
 
15,648

 
 
1,864

 
78,000

 
 
 
7.8

 
 
 
6.0

 
 
 
 
 
 
119,709

 
249,818

 
 
103,762

 
 
48,011

 
521,300

 
 
 
 
 
 
 
 
 
2019 deliveries
 
 
 
 
$
522,799

 
$
539,000

 
 
$
103,762

 
 
$
337,139

 
$
1,502,700

 
 
 
7.2
%
 
 
 
6.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Initial occupancy dates are subject to leasing and/or market conditions. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy.
(2)
New strategic collaborative campus, Alexandria Center® for AgTech – Research Triangle consists of Phase I at 5 Laboratory Drive, including campus amenities, and Phase II at 9 Laboratory Drive. 5 Laboratory Drive includes the high-quality LaunchLabs and amenities to create a dynamic ecosystem to accelerate discovery and commercialization.
(3)
Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
(4)
Improvements in initial stabilized yield and initial stabilized yield (cash) of 40 bps and 50 bps, respectively, were driven by the leasing of space at higher rental rates than those underwritten at acquisition.

 
38

 
New Class A Development and Redevelopment Properties: Projected 2020 Deliveries and
Pre-Construction Projects
q119logo1.jpg
 
 
March 31, 2019
 
 
 


88 Bluxome Street
 
201 Haskins Way
 
Alexandria District for Science and Technology(1)
 
3115 Merryfield Row
 
9880 and 10260 Campus Point Drive
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
 
San Francisco/Greater Stanford
 
San Diego/Torrey Pines
 
San Diego/University Town Center
1,070,925 RSF
 
280,000 RSF
 
530,000 RSF
 
87,000 RSF
 
274,455 RSF
q119bluxome.jpg
 
q119haskinsway.jpg
 
q119industrialroad.jpg
 
q119spectrum.jpg
 
q119campus9880.jpg

1165 Eastlake Avenue East
 
9800 Medical Center Drive
 
9950 Medical Center Drive
 
8 Davis Drive
 
Alexandria Center® for AgTech, Phase II
Seattle/Lake Union
 
Maryland/Rockville
 
Maryland/Rockville
 
Research Triangle/Research Triangle
 
Research Triangle/Research Triangle
106,000 RSF
 
174,640 RSF
 
84,264 RSF
 
200,000 RSF
 
160,000 RSF
q119eastlake1165.jpg
 
q119medical9800.jpg
 
q119medical9950.jpg
 
q119davis8.jpg
 
q119laboratory9.jpg








(1)
Campus includes 825 and 835 Industrial Road.

 
39

New Class A Development and Redevelopment Properties: Projected 2020 Deliveries and
Pre-Construction Projects (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 


 
 
 
 
Square Footage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property/Market/Submarket
 
Dev/
Redev
 
CIP
 
 
Percentage
 
 
 
 
Occupancy
 
 
 
Construction
 
Pre-Construction
 
Total
 
Leased
 
Leased/Negotiating
 
Project Start
 
Initial
 
Stabilized
Active construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9880 and 10260 Campus Point Drive/San Diego/University Town Center(1)
 
Dev/Redev
 
98,000

 
176,455

 
274,455

 
67
%
(2) 
 
67
%
(2) 
 
1Q19
 
2020
 
 
2022
 
9800 Medical Center Drive/Maryland/Rockville
 
Dev
 
174,640

 
—

 
174,640

 
82

 
 
82

 
 
1Q19
 
2020
 
 
2020
 
9950 Medical Center Drive/Maryland/Rockville
 
Dev
 
84,264

 
—

 
84,264

 
100

 
 
100

 
 
1Q19
 
2020
 
 
2020
 
 
 
 
 
356,904

 
176,455

 
533,359

 
77
%
 
 
77
%
 
 
 
 
 
 
 
 
 
Marketing and pre-construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
201 Haskins Way/San Francisco/South San Francisco
 
Dev
 
—

 
280,000

 
280,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria District for Science and Technology/San Francisco/Greater Stanford
 
Dev
 
—

 
530,000

 
530,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
3115 Merryfield Row/San Diego/Torrey Pines
 
Dev
 
—

 
87,000

 
87,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
1165 Eastlake Avenue East/Seattle/Lake Union
 
Dev
 
—

 
106,000

 
106,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
8 Davis Drive/Research Triangle/Research Triangle
 
Dev
 
—

 
200,000

 
200,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase II/Research Triangle/Research Triangle(3)
 
Dev
 
—

 
160,000

 
160,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
1,363,000

 
1,363,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 deliveries
 
 
 
356,904

 
1,539,455

 
1,896,359

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Key pre-leased pre-construction project
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88 Bluxome Street/San Francisco/Mission Bay/SoMa
 
Dev
 
—

 
1,070,925

 
1,070,925

 
58
%
 
 
58
%
 
 
(4)
 
TBD
(4) 
 
TBD
(4) 
 
 
 
 
356,904

 
2,610,380

 
2,967,284

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our Ownership Interest
 
 
 
Cost to Complete
 
Unlevered Yields
Property/Market/Submarket
 
 
CIP
 
ARE Funding
 
Total at
Completion
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
Active construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9880 and 10260 Campus Point Drive/San Diego/University Town Center(1)
 
100
%
 
 
$
116,539

 
$
138,461

 
$
255,000

 
 
6.3
%
(5) 
 
 
6.4
%
(5) 
9800 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
18,311

 
77,089

 
95,400

 
 
7.7
%
 
 
 
7.2
%
 
9950 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
6,513

 
47,787

 
54,300

 
 
7.3
%
 
 
 
6.8
%
 
 
 
 
 
 
141,363

 
$
263,337

 
$
404,700

 
 
 
 
 
 
 
 
Marketing and pre-construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
201 Haskins Way/San Francisco/South San Francisco
 
100
%
 
 
59,691

 
 
 
 
 
 
 
 
 
 
 
 
Alexandria District for Science and Technology/San Francisco/Greater Stanford
 
100
%
 
 
156,424

 
 
 
 
 
 
 
 
 
 
 
 
3115 Merryfield Row/San Diego/Torrey Pines
 
100
%
 
 
30,294

 
 
 
 
 
 
 
 
 
 
 
 
1165 Eastlake Avenue East/Seattle/Lake Union
 
100
%
 
 
22,166

 
 
 
 
 
 
 
 
 
 
 
 
8 Davis Drive/Research Triangle/Research Triangle
 
100
%
 
 
2,955

 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase II/Research Triangle/Research Triangle(3)
 
100
%
 
 
2,184

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
273,714

 
 
 
 
 
 
 
 
 
 
 
 
2020 deliveries
 
 
 
 
$
415,077

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
9880 Campus Point Drive previous R&D building was demolished for the development of GradLabs™, a highly flexible, first-of-its-kind life science platform designed to provide post-seed-stage life science companies with turnkey, fully furnished office/laboratory suites and an accelerated, scalable path for growth. As of March 31, 2019, the property continues to be included in our same property performance results. Refer to “Same Property Comparison” in the “Definitions and Reconciliations” section of this Supplemental Information for additional information.
(2)
9880 Campus Point Drive, aggregating 98,000 RSF, is 7% leased and 10260 Campus Point Drive, aggregating 176,455 RSF, is 100% pre-leased, resulting in 67% total leased.
(3)
New strategic collaborative campus, Alexandria Center® for AgTech – Research Triangle consists of Phase I at 5 Laboratory Drive and campus amenities, and Phase II at 9 Laboratory Drive.
(4)
Pinterest has signed a lease for 488,899 RSF at 88 Bluxome Street, an approximately 1.1 million RSF mixed-used campus development project in the heart of the Central SoMa neighborhood. We are currently seeking entitlements to bring a transformative, community-focused development that represents a meaningful opportunity to create a new destination that will revitalize the neighborhood and stimulate innovation and job growth in SoMa.
(5)
Represents Campus Pointe by Alexandria campus yields excluding 4161 and 4110 Campus Point Court, which are expected to be taken out of service over the next few years and undergo future value-creation development and redevelopment activities.

 
40

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 



Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries
 
 
 
 
 
 
 
 
2019
 
2020
 
2021–2022
 
Future
 
 
 
 
 
 
Construction
 
Construction
 
Pre-Construction
 
Pre-Construction
 
Intermediate- Term
 
 
Total
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undergoing construction or pre-construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
399 Binney Street (Alexandria Center® at One Kendall Square)/Cambridge
 
100
%
 
 
$
35,467

 
40,597

 
—

 
—

 
—

 
—

 
—

 
40,597

 
266 and 275 Second Avenue/Route 128
 
100
%
 
 
12,227

 
31,858

 
—

 
—

 
—

 
—

 
—

 
31,858

 
325 Binney Street/Cambridge
 
100
%
 
 
102,230

 
—

 
—

 
—

 
—

 
208,965

(1) 
—

 
208,965

 
99 A Street/Seaport Innovation District
 
97.2
%
 
 
36,655

 
—

 
—

 
—

 
—

 
235,000

(2) 
—

 
235,000

 
215 Presidential Way/Route 128
 
100
%
 
 
5,455

 
—

 
—

 
—

 
—

 
130,000

 
—

 
130,000

 
231 Second Avenue/Route 128
 
100
%
 
 
1,251

 
—

 
—

 
—

 
—

 
32,000

 
—

 
32,000

 
Future development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Alexandria Technology Square®/Cambridge
 
100
%
 
 
7,787

 
—

 
—

 
—

 
—

 
—

 
100,000

 
100,000

 
100 Tech Drive/Route 128
 
100
%
 
 
—

 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
10 Necco Street/Seaport Innovation District
 
100
%
 
 
82,033

 
—

 
—

 
—

 
—

 
—

 
175,000

 
175,000

 
Other value-creation projects
 
100
%
 
 
7,618

 
—

 
—

 
—

 
—

 
—

 
225,599

 
225,599

 
 
 
 
 
 
290,723

 
72,455

 
—

 
—

 
—

 
605,965

 
800,599

 
1,479,019

 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undergoing construction or pre-construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1655 and 1725 Third Street/Mission Bay/SoMa
 
10.0
%
 
 
(3)

 
593,765

 
—

 
—

 
—

 
—

 
—

 
593,765

 
279 East Grand Avenue/South San Francisco
 
100
%
 
 
36,730

 
71,595

 
—

 
—

 
—

 
—

 
—

 
71,595

 
681 Gateway Boulevard/South San Francisco
 
100
%
 
 
40,115

 
76,400

 
—

 
—

 
—

 
—

 
—

 
76,400

 
Menlo Gateway/Greater Stanford
 
44.5
%
 
 
(3)

 
520,988

 
—

 
—

 
—

 
—

 
—

 
520,988

 
201 Haskins Way/South San Francisco
 
100
%
 
 
59,691

 
—

 
—

 
280,000

 
—

 
—

 
—

 
280,000

 
Alexandria District for Science and Technology/
Greater Stanford
 
100
%
 
 
156,424

 
—

 
—

 
530,000

 
—

 
—

 
—

 
530,000

 
88 Bluxome Street/Mission Bay/SoMa
 
100
%
 
 
182,132

 
—

 
—

 
—

 
1,070,925

(2) 
—

 
—

 
1,070,925

 
505 Brannan Street, Phase II/Mission Bay/SoMa
 
99.7
%
 
 
16,925

 
—

 
—

 
—

 
—

 
165,000

 
—

 
165,000

 
960 Industrial Road/Greater Stanford
 
100
%
 
 
84,843

 
—

 
—

 
—

 
—

 
533,000

(2) 
—

 
533,000

 
Future development
 
 
 
 


 

 
 
 
 
 
 
 

 

 

 
East Grand Avenue/South San Francisco
 
100
%
 
 
5,988

 
—

 
—

 
—

 
—

 
—

 
90,000

 
90,000

 
Other value-creation projects
 
100
%
 
 
39,561

 
—

 
—

 
—

 
—

 
418,000

 
25,000

 
443,000

 
 
 
 
 
 
622,409

 
1,262,748

 
—

 
810,000

 
1,070,925

 
1,116,000

 
115,000

 
4,374,673

 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undergoing construction or pre-construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Life Science Factory/New York City
 
100
%
 
 
63,816

 
140,098

 
—

 
—

 
—

 
—

 
—

 
140,098

 
Alexandria Center® for Life Science – New York City/New York City
 
100
%
 
 
17,587

 
—

 
—

 
—

 
—

 
550,000

 
—

 
550,000

 
Future redevelopment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
219 East 42nd Street/New York City
 
100
%
 
 
—

 
—

 
—

 
—

 
—

 
—

 
579,947

(4) 
579,947

 
 
 
 
 
 
$
81,403

 
140,098

 
—

 
—

 
—

 
550,000

 
579,947

 
1,270,045

 
(1)    We are seeking additional entitlements to increase the density of the site from its current 208,965 RSF.
(2)    Represents total square footage upon completion of development of a new Class A property. RSF presented includes RSF of buildings currently in operation that will be demolished upon commencement of construction.
(3)    This property is held by an unconsolidated real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(4)    Includes 349,947 RSF in operation with an opportunity to either convert the existing office space into office/laboratory space through future redevelopment or to expand the building by an additional 230,000 RSF through ground-up development. The building is currently occupied by Pfizer Inc. with a remaining lease term of six years.

 
41

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 


Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries
 
 
 
 
 
 
 
 
2019
 
2020
 
2021–2022
 
Future
 
 
 
 
 
 
Construction
 
Construction
 
Pre-Construction
 
Pre-Construction
 
Intermediate- Term
 
 
Total
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undergoing construction or pre-construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria/University Town Center
 
(1
)
 
 
$
129,270

 
—

 
98,000

 
176,455

(2) 
—

 
230,000

 
—

 
504,455

 
3115 Merryfield Row/Torrey Pines
 
100
%
 
 
30,294

 
—

 
—

 
87,000

 
—

 
—

 
—

 
87,000

 
5200 Illumina Way/University Town Center
 
100
%
 
 
11,718

 
—

 
—

 
—

 
—

 
386,044

 
—

 
386,044

 
Townsgate by Alexandria/Del Mar Heights
 
100
%
 
 
18,282

 
—

 
—

 
—

 
—

 
125,000

 
—

 
125,000

 
Future development
 
 
 
 


 

 
 
 
 
 
 
 

 

 

 
Campus Pointe by Alexandria/University Town Center
 
(1
)
 
 
43,934

 
—

 
—

 
—

 
—

 
—

 
290,283

(3) 
290,283

 
Vista Wateridge/Sorrento Mesa
 
100
%
 
 
4,022

 
—

 
—

 
—

 
—

 
—

 
163,000

 
163,000

 
Other value-creation projects
 
100
%
 
 
5,931

 
—

 
—

 
—

 
—

 
—

 
222,895

 
222,895

 
 
 
 
 
 
243,451

 
—

 
98,000

 
263,455

 
—

 
741,044

 
676,178

 
1,778,677

 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undergoing construction or pre-construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
188 East Blaine Street/Lake Union
 
100
%
 
 
61,699

 
107,385

 
—

 
—

 
—

 
—

 
—

 
107,385

 
1165 Eastlake Avenue East/Lake Union
 
100
%
 
 
22,166

 
—

 
—

 
106,000

 
—

 
—

 
—

 
106,000

 
1150 Eastlake Avenue East/Lake Union
 
100
%
 
 
24,995

 
—

 
—

 
—

 
—

 
260,000

 
—

 
260,000

 
701 Dexter Avenue North/Lake Union
 
100
%
 
 
38,289

 
—

 
—

 
—

 
—

 
217,000

 
—

 
217,000

 
 
 
 
 
 
147,149

 
107,385

 
—

 
106,000

 
—

 
477,000

 
—

 
690,385

 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undergoing construction or pre-construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Gaithersburg
 
56.8
%
 
 
(4)

 
45,097

 
—

 
—

 
—

 
—

 
—

 
45,097

 
9800 Medical Center Drive/Rockville
 
100
%
 
 
18,311

 
—

 
174,640

 
—

 
—

 
—

 
—

 
174,640

 
9950 Medical Center Drive/Rockville
 
100
%
 
 
6,513

 
—

 
84,264

 
—

 
—

 
—

 
—

 
84,264

 
Future development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9800 Medical Center Drive/Rockville
 
100
%
 
 
1,215

 
—

 
—

 
—

 
—

 
—

 
64,000

 
64,000

 
 
 
 
 
 
26,039

 
45,097

 
258,904

 
—

 
—

 
—

 
64,000

 
368,001

 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Undergoing construction or pre-construction
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase I/
Research Triangle
 
100
%
 
 
39,128

 
118,863

 
—

 
—

 
—

 
—

 
—

 
118,863

 
Alexandria Center® for AgTech, Phase II/
Research Triangle
 
100
%
 
 
2,184

 
—

 
—

 
160,000

 
—

 
—

 
—

 
160,000

 
8 Davis Drive/Research Triangle
 
100
%
 
 
2,955

 
—

 
—

 
200,000

 
—

 
—

 
—

 
200,000

 
Future development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 Davis Drive/Research Triangle
 
100
%
 
 
15,394

 
—

 
—

 
—

 
—

 
—

 
800,000

 
800,000

 
Other value-creation projects
 
100
%
 
 
4,149

 
—

 
—

 
—

 
—

 
—

 
76,262

 
76,262

 
 
 
 
 
 
63,810

 
118,863

 
—

 
360,000

 
—

 
—

 
876,262

 
1,355,125

 
Other value-creation projects
 
100
%
 
 
3,788

 
—

 
—

 
—

 
—

 
—

 
122,800

 
122,800

 
 
 
 
 
 
$
1,478,772

 
1,746,646

 
356,904

 
1,539,455

 
1,070,925

 
3,490,009

 
3,234,786

 
11,438,725

(5) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(2)
RSF represent our future redevelopment and expansion opportunities at 10260 Campus Point Drive property, which includes 109,164 RSF of the building currently in operation that will be redeveloped and expanded into a 176,455 RSF Class A building.
(3)
Includes RSF of our building at 4161 Campus Point Court. Upon expiration of the existing lease, 4161 Campus Point Court will be demolished to support future development aggregating 201,900 RSF through one or more Class A buildings at our Campus Pointe by Alexandria campus.
(4)
This property is held by an unconsolidated real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(5)
Total RSF includes 970,180 RSF of buildings currently in operation that will be redeveloped or replaced with new development RSF upon commencement of future construction. Refer to footnote 2 in “Investments in Real Estate” of this Supplemental Information for additional information.

 
42

 
 
Construction Spending
q119logo1.jpg
March 31, 2019
(Dollars in thousands, except per RSF amounts)
 
 


 
 
Three Months Ended
 
Construction Spending
 
March 31, 2019
 
Additions to real estate – consolidated projects
 
$
241,049
 
 
Investments in unconsolidated real estate joint ventures
 
 
52,634
 
 
Contributions from noncontrolling interests
 
 
(5,025
)
 
Construction spending (cash basis)(1)
 
 
288,658
 
 
Change in accrued construction
 
 
9,939
 
 
Construction spending for the three months ended March 31, 2019
 
 
298,597
 
 
Projected construction spending for the nine months ended December 31, 2019
 
 
1,001,403
 
 
Guidance mid-point
 
$
1,300,000
 
 



 
 
 
 
 
 
 
 
Year Ending
 
Projected Construction Spending
 
December 31, 2019
 
Development, redevelopment, and pre-construction projects
 
$
1,041,000
 
 
Investments in unconsolidated real estate joint ventures
 
 
102,000
 
 
Contributions from noncontrolling interests (consolidated real estate joint ventures)
 
 
(22,000
)
 
Generic laboratory infrastructure/building improvement projects
 
 
150,000
 
 
Non-revenue-enhancing capital expenditures and tenant improvements
 
 
29,000
 
 
Guidance mid-point
 
$
1,300,000
 
 
 
 
 
 
 
 
 
Non-Revenue-Enhancing Capital Expenditures(2)
 
Three Months Ended
 
Recent Average
per RSF(3)
 
 
March 31, 2019
 
 
 
Amount
 
Per RSF
 
 
Non-revenue-enhancing capital expenditures
 
$
2,381

 
$
0.11

 
 
$
0.49

 
 
 
 
 
 
 
 
 
 
Tenant improvements and leasing costs:
 
 
 
 
 
 
 
 
Re-tenanted space
 
$
7,910

 
$
22.96

 
 
$
21.47

 
Renewal space
 
799

 
4.85

 
 
12.62

 
Total tenant improvements and leasing costs/weighted average
 
$
8,709

 
$
17.10

 
 
$
16.45

 


 


(1)
Includes revenue-enhancing projects and non-revenue-enhancing capital expenditures.
(2)
Excludes amounts that are recoverable from tenants, related to revenue-enhancing capital expenditures, or related to properties that have undergone redevelopment.
(3)
Represents the average of 2015 to 2018 and the three months ended March 31, 2019, annualized.

 
43

 
 
Joint Venture Financial Information
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 


Consolidated Real Estate Joint Ventures
(controlled by us through contractual rights or majority voting rights)
 
Unconsolidated Real Estate Joint Ventures
(controlled jointly or by our JV partners through contractual rights or majority voting rights)
Property/Market/Submarket
 
Noncontrolling
Interest Share(1)
 
Property/Market/Submarket
 
Our Ownership Share(2)
75/125 Binney Street/Greater Boston/Cambridge
 
 
60.0
%
 
 
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
 
10.0
%
 
225 Binney Street/Greater Boston/Cambridge
 
 
70.0
%
 
 
Menlo Gateway/San Francisco/Greater Stanford
 
 
44.5
%
(3) 
409 and 499 Illinois Street/San Francisco/Mission Bay/SoMa
 
 
40.0
%
 
 
1401/1413 Research Boulevard/Maryland/Rockville
 
 
65.0
%
(4) 
1500 Owens Street/San Francisco/Mission Bay/SoMa
 
 
49.9
%
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
 
56.8
%
(4) 
Campus Pointe by Alexandria/San Diego/University Town Center(5)
 
 
45.0
%
 
 
 
 
 
 
 
9625 Towne Centre Drive/San Diego/University Town Center
 
 
49.9
%
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
As of March 31, 2019
 
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
Investments in real estate
$
719,546

 
 
$
390,774

 
Cash and cash equivalents
 
24,686

 
 
 
5,128

 
Restricted cash
 
—

 
 
 
99

 
Other assets
 
69,616

 
 
 
28,727

 
Secured notes payable (refer to page 49)
 
—

 
 
 
(102,421
)
 
Other liabilities
 
(25,511
)
 
 
 
(31,902
)
 
Redeemable noncontrolling interests
 
(10,889
)
 
 
 
—

 
 
$
777,448

 
 
$
290,405

 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated Real Estate JVs
Total revenues
$
17,805

 
 
$
2,821

 
Rental operations
 
(4,910
)
 
 
 
(567
)
 
 
 
12,895

 
 
 
2,254

 
General and administrative
 
(34
)
 
 
 
(32
)
 
Interest
 
—

 
 
 
(230
)
 
Depreciation and amortization
 
(5,419
)
 
 
 
(846
)
 
Fixed returns allocated to redeemable noncontrolling interests(6)
 
217

 
 
 
—

 
 
$
7,659

 
 
$
1,146

 
 
 
 
 
 
 
 
 
Straight-line rent and below-market lease revenue
$
(1,022
)
 
 
$
453

 
Funds from operations
$
13,078

 
 
$
1,992

 
 
 
 
 
 
 
 
 

(1)
In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in four other joint ventures in North America.
(2)
In addition to the unconsolidated real estate joint ventures listed, we hold one other insignificant unconsolidated real estate joint venture in North America.
(3)
As of March 31, 2019, we have a 44.5% ownership interest in Menlo Gateway and expect our ownership to increase to 49% through future funding of construction costs in 2019.
(4)
Represents our ownership interest; our voting interest is limited to 50%.
(5)
Includes only 10290 and 10300 Campus Point Drive and 4110 Campus Point Court in our University Town Center submarket.
(6)
Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These redeemable noncontrolling interests earn a fixed return on their investment rather than participate in the operating results of the property.

 
44

 
 
Investments
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 


    
We present our equity investments at fair value whenever fair value or net asset value (“NAV”) is readily available. Adjustments for our limited partnership investments represent changes in reported NAV as a practical expedient to estimate fair value. For investments without readily available fair values, we adjust the carrying amount whenever such investments have an observable price change and further adjustments are not made until another price change, if any, is observed. Refer to “Investments” in the “Definitions and Reconciliations” section of this Supplemental Information for additional information.

 
 
Three Months Ended
 
Year Ended
 
 
March 31, 2019
 
December 31, 2018
Realized gains
 
$
11,350

 
 
$
37,129

(1) 
Unrealized gains
 
72,206

 
 
99,634

 
Investment income
 
$
83,556

 
 
$
136,763

 
 
 
 
 
 
 
 

Investments
 
Cost
 
Adjustments
 
Carrying Amount
 
Fair value:
 
 
 
 
 
 
 
 
 
 
Publicly traded companies
 
$
127,760

 
 
$
97,194

 
 
$
224,954

 
 
Entities that report NAV
 
223,986

 
 
145,616

 
 
369,602

 
 
 
 
 
 
 
 
 
 
 
 
 
Entities that do not report NAV:
 
 
 
 
 
 
 
 
 
 
Entities with observable price changes
 
42,865

 
 
69,551

 
 
112,416

 
 
Entities without observable price changes
 
293,932

 
 
—

 
 
293,932

 
 
March 31, 2019
 
$
688,543

 
 
$
312,361

 
 
$
1,000,904

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
$
652,109

 
 
$
240,155

 
 
$
892,264

 
 

(1)
Includes realized gains of $14.7 million related to two publicly traded non-real estate investments and impairment of $5.5 million primarily related to one privately held non-real estate investment. Excluding these gains and impairment, our realized gains on non-real estate investments were $27.9 million for the year ended December 31, 2018.
 

Public/Private
Mix (Cost)
 
Tenant/Non-Tenant
Mix (Cost)
q119pubprimix.jpg
 
q119tenantmix.jpg
 
 
 
315
 
$1.0B
Holdings
 
Total Carrying Amount
$2.2M
 
$688.5M
Average Cost
 
Total Cost

 
45

 
 
 
q119logo1.jpg
Key Credit Metrics
March 31, 2019
 
 


Net Debt to Adjusted EBITDA(1)
 
Net Debt and Preferred Stock to Adjusted EBITDA(1)
 
q119netdebt.jpg
 
q119netdebtpreferred.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-Charge Coverage Ratio(1)
 
Liquidity(2)
 
q119fixedcharge.jpg
 
 
 
 
 
$2.7B
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
Availability under our $2.2 billion unsecured senior line of credit
$
2,200

 
 
Cash, cash equivalents, and restricted cash
316

 
 
Investments in publicly traded companies
225

 
 
 
$
2,741

 
 
 
 
 
 
 
 
 

(1)
Quarter annualized.
(2)
As of March 31, 2019.


 
46

 
 
 
q119logo1.jpg
Summary of Debt
March 31, 2019
 
 


Debt maturities chart
(In millions)
q119debtmaturities.jpg

Fixed-rate/hedged and unhedged variable-rate debt
(Dollars in thousands)
 
Fixed-Rate/Hedged
Variable-Rate Debt
 
Unhedged
Variable-Rate Debt
 
Total
 
Percentage
 
Weighted-Average
 
 
 
 
 
Interest Rate(1)
 
Remaining Term
(in years)
 
 
 
 
 
 
Secured notes payable
$
356,461

 
$
—

 
$
356,461

 
6.1
%
 
3.58
%
 
4.8
Unsecured senior notes payable
5,139,500

 
—

 
5,139,500

 
88.0

 
4.16

 
7.5
$2.2 billion unsecured senior line of credit
—

 
—

 
—

 
—

 
N/A

 
4.8
Unsecured senior bank term loan
347,542

 
—

 
347,542

 
5.9

 
3.62

 
4.8
Total/weighted average
$
5,843,503

 
$
—

 
$
5,843,503

 
100.0
%
 
4.09
%
 
7.2
Percentage of total debt
100
%
 
—

 
100
%
 
 
 
 
 
 
 


(1)
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.

 
47

 
 
Summary of Debt (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 


Debt
 
Stated 
Rate
 
Interest
Rate(1)
 
Maturity
Date(2)
 
Principal Payments Remaining for the Periods Ending December 31,
 
Principal
 
Unamortized (Deferred Financing Cost), (Discount)/Premium
 
Total
 
 
 
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
 
 
 
Secured notes payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
4.66
%
 
 
4.90
%
 
1/1/23
 
 
$
1,266

 
$
1,763

 
$
1,852

 
$
1,942

 
$
26,259

 
$
—

 
$
33,082

 
$
(247
)
 
$
32,835

 
Greater Boston
 
3.93
%
 
 
3.19

 
3/10/23
 
 
1,135

 
1,566

 
1,628

 
1,693

 
74,517

 
—

 
80,539

 
2,170

 
82,709

 
Greater Boston
 
4.82
%
 
 
3.40

 
2/6/24
 
 
2,291

 
3,206

 
3,395

 
3,564

 
3,742

 
183,527

 
199,725

 
12,939

 
212,664

 
San Francisco
 
4.14
%
 
 
4.42

 
7/1/26
 
 
—

 
—

 
—

 
—

 
—

 
28,200

 
28,200

 
(698
)
 
27,502

 
San Francisco
 
6.50
%
 
 
6.50

 
7/1/36
 
 
23

 
25

 
26

 
28

 
30

 
619

 
751

 
—

 
751

 
Secured debt weighted-average interest rate/subtotal
 
4.55
%
 
 
3.58

 
 
 
 
4,715

 
6,560

 
6,901

 
7,227

 
104,548

 
212,346

 
342,297

 
14,164

 
356,461

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$2.2 billion unsecured senior line of credit
 
L+0.825
%
 
 
N/A

 
1/28/24
 
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
Unsecured senior bank term loan
 
L+0.90
%
 
 
3.62

 
1/28/24
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(2,458
)
 
347,542

 
Unsecured senior notes payable
 
2.75
%
 
 
2.96

 
1/15/20
 
 
—

 
400,000

 
—

 
—

 
—

 
—

 
400,000

 
(649
)
 
399,351

 
Unsecured senior notes payable
 
4.60
%
 
 
4.75

 
4/1/22
 
 
—

 
—

 
—

 
550,000

 
—

 
—

 
550,000

 
(1,953
)
 
548,047

 
Unsecured senior notes payable
 
3.90
%
 
 
4.04

 
6/15/23
 
 
—

 
—

 
—

 
—

 
500,000

 
—

 
500,000

 
(2,507
)
 
497,493

 
Unsecured senior notes payable – green bonds
 
4.00
%
 
 
4.03

 
1/15/24
 
 
—

 
—

 
—

 
—

 
—

 
650,000

 
650,000

 
(711
)
 
649,289

 
Unsecured senior notes payable
 
3.45
%
 
 
3.62

 
4/30/25
 
 
—

 
—

 
—

 
—

 
—

 
600,000

 
600,000

 
(5,312
)
 
594,688

 
Unsecured senior notes payable
 
4.30
%
 
 
4.50

 
1/15/26
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(3,296
)
 
296,704

 
Unsecured senior notes payable – green bonds
 
3.80
%
 
 
3.96

 
4/15/26
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,441
)
 
346,559

 
Unsecured senior notes payable
 
3.95
%
 
 
4.13

 
1/15/27
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,917
)
 
346,083

 
Unsecured senior notes payable
 
3.95
%
 
 
4.07

 
1/15/28
 
 
—

 
—

 
—

 
—

 
—

 
425,000

 
425,000

 
(3,714
)
 
421,286

 
Unsecured senior notes payable
 
4.50
%
 
 
4.60

 
7/30/29
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(2,290
)
 
297,710

 
Unsecured senior notes payable
 
4.70
%
 
 
4.81

 
7/1/30
 
 
—

 
—

 
—

 
—

 
—

 
450,000

 
450,000

 
(4,178
)
 
445,822

 
Unsecured senior notes payable
 
4.85
%
 
 
4.93

 
4/15/49
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(3,532
)
 
296,468

 
Unsecured debt weighted average/subtotal
 
 
 
 
4.13

 
 
 
 
—

 
400,000

 
—

 
550,000

 
500,000

 
4,075,000

 
5,525,000

 
(37,958
)
 
5,487,042

 
Weighted-average interest rate/total
 
 
 
 
4.09
%
 
 
 
 
$
4,715

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,287,346

 
$
5,867,297

 
$
(23,794
)
 
$
5,843,503

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balloon payments
 
 
 
 
 
 
 
 
 
$
—

 
$
400,000

 
$
—

 
$
550,000

 
$
600,487

 
$
4,286,421

 
$
5,836,908

 
$
—

 
$
5,836,908

 
Principal amortization
 
 
 
 
 
 
 
 
 
4,715

 
6,560

 
6,901

 
7,227

 
4,061

 
925

 
30,389

 
(23,794
)
 
6,595

 
Total debt
 
 
 
 
 
 
 
 
 
$
4,715

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,287,346

 
$
5,867,297

 
$
(23,794
)
 
$
5,843,503

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate/hedged variable-rate debt
 
 
 
 
 
 
 
 
 
$
4,715

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,287,346

 
$
5,867,297

 
$
(23,794
)
 
$
5,843,503

 
Unhedged variable-rate debt
 
 
 
 
 
 
 
 
 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
Total debt
 
 
 
 
 
 
 
 
 
$
4,715

 
$
406,560

 
$
6,901

 
$
557,227

 
$
604,548

 
$
4,287,346

 
$
5,867,297

 
$
(23,794
)
 
$
5,843,503

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average stated rate on maturing debt
 
 
 
 
 
 
 
 
 
N/A

 
2.75%

 
N/A

 
4.60%

 
3.94%

 
4.08%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
(2)
Reflects any extension options that we control.

 
48

 
 
Summary of Debt (continued)
q119logo1.jpg
March 31, 2019
(Dollars in thousands)
 
 


Unconsolidated real estate joint ventures’ debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100% at JV Level
 
Unconsolidated Joint Venture
 
Our Share
 
Maturity Date
 
Stated
Interest Rate
 
Interest Rate(1)
 
Debt Balance(2)
 
Remaining Commitments
 
1401/1413 Research Boulevard
 
 
65.0
%
 
 
5/17/20
 
L+2.50%
 
 
5.97
%
 
 
$
22,364

 
$
6,315

 
1655 and 1725 Third Street
 
 
10.0
%
 
 
6/29/21
 
L+3.70%
 
 
6.19
%
 
 
204,830

 
170,170

 
704 Quince Orchard Road
 
 
56.8
%
 
 
3/16/23
 
L+1.95%
 
 
4.68
%
 
 
6,020

 
8,833

 
Menlo Gateway, Phase II
 
 
44.5
%
(3) 
 
5/1/35
 
4.53%
 
 
N/A

 
 
—

 
157,270

 
Menlo Gateway, Phase I
 
 
44.5
%
(3) 
 
8/10/35
 
4.15%
 
 
4.18
%
 
 
143,940

 
408

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
377,154

 
$
342,996

 

(1)
Includes interest expense and amortization of loan fees for the three months ended March 31, 2019.
(2)
Represents outstanding principal, net of unamortized deferred financing costs, as of March 31, 2019.
(3)
Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.

Debt covenants
 
 
 
 
 
 
 
 
 
Debt Covenant Ratios(1)
 
Unsecured Senior Notes Payable
 
$2.2 Billion Unsecured Senior Line of Credit and
Unsecured Senior Bank Term Loan
 
Requirement
 
March 31, 2019
 
Requirement
 
March 31, 2019
Total Debt to Total Assets
 
≤ 60%
 
34%
 
≤ 60.0%
 
28.4%
 
Secured Debt to Total Assets
 
≤ 40%
 
2%
 
≤ 45.0%
 
1.7%
 
Consolidated EBITDA to Interest Expense
 
≥ 1.5x
 
5.9x
 
≥ 1.50x
 
3.97x
 
Unencumbered Total Asset Value to Unsecured Debt
 
≥ 150%
 
272%
 
N/A
 
N/A
 
Unsecured Interest Coverage Ratio
 
N/A
 
N/A
 
≥ 1.75x
 
6.43x
 

(1)
All covenant ratio titles utilize terms as defined in the respective debt agreements. EBITDA is not calculated pursuant to the definition set forth by the SEC in Exchange Act Release No. 47226.

Interest rate swap agreements
 
 
 
 
 
 
 
 
 
 
 
 
Effective Date
 
Maturity Date
 
Number of Contracts
 
Weighted-Average Interest Pay Rate(1)
 
Fair Value as of
 
 
Notional Amount in Effect as of
 
 
 
 
3/31/19
 
 
3/31/19
 
12/31/19
March 29, 2019
 
March 31, 2020
 
1
 
1.89%
 
$
494

 
 
$
100,000

 
$
100,000

March 29, 2019
 
March 31, 2020
 
3
 
2.84%
 
 
(1,143
)

 
250,000

 
250,000

Total
 
 
 
 
 

 
$
(649
)
 
 
$
350,000

 
$
350,000


(1)
In addition to the interest pay rate for each swap agreement, interest is payable at an applicable margin over LIBOR for borrowings outstanding as of March 31, 2019, as listed under the column heading “Stated Rate” in our summary table of outstanding indebtedness and respective principal payments on the previous page.

 
49

 
 
 
q119logo1.jpg
Definitions and Reconciliations
March 31, 2019
 
 



This section contains additional information for sections throughout this Supplemental Information package and the accompanying Earnings Press Release, as well as explanations and reconciliations of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance and believe they provide useful information to investors. Additional detail can be found in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, as well as other documents filed with or furnished to the SEC from time to time.

Adjusted EBITDA and Adjusted EBITDA margin
 
The following table reconciles net income (loss) and revenues, the most directly comparable financial measures calculated and presented in accordance with GAAP, to Adjusted EBITDA and revenues, as adjusted, respectively:
 
Three Months Ended
(Dollars in thousands)
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
 
Net income (loss)
$
136,818

 
$
(18,631
)
 
$
219,359

 
$
60,547

 
$
141,518

 
Interest expense
39,100

 
40,239

 
42,244

 
38,097

 
36,915

 
Income taxes
1,297

 
613

 
568

 
1,106

 
940

 
Depreciation and amortization
134,087

 
124,990

 
119,600

 
118,852

 
114,219

 
Stock compensation expense
11,029

 
9,810

 
9,986

 
7,975

 
7,248

 
Loss on early extinguishment of debt
7,361

 
—

 
1,122

 
—

 
—

 
Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
—

 
—

 
(761
)
 
—

 
—

 
Gain on sale of real estate
—

 
(8,704
)
 
—

 
—

 
—

 
Our share of gain on sales of real estate from unconsolidated real estate JVs
—

 
—

 
(35,678
)
 
—

 
—

 
Realized gains on non-real estate investments
—

 
(6,428
)
 
—

 
—

 
—

 
Unrealized (gains) losses on non-real estate investments
(72,206
)
 
94,850

 
(117,188
)
 
(5,067
)
 
(72,229
)
 
Impairment of real estate
—

 
—

 
—

 
6,311

 
—

 
Impairment of non-real estate investments
—

 
5,483

 
—

 
—

 
—

 
Adjusted EBITDA
$
257,486

 
$
242,222

 
$
239,252

 
$
227,821

 
$
228,611

 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
358,842

 
$
340,463

 
$
341,823

 
$
325,034

 
$
320,139

 
Non-real estate investments – total realized gains
11,350

 
11,319

 
5,015

 
7,463

 
13,332

 
Realized gains on non-real estate investments
—

 
(6,428
)
 
—

 
—

 
—

 
Impairment of non-real estate investments
—

 
5,483

 
—

 
—

 
—

 
Revenues, as adjusted
$
370,192

 
$
350,837

 
$
346,838

 
$
332,497

 
$
333,471

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
70%

 
69%

 
69%

 
69%

 
69%

 
    
We use Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization (“EBITDA”), excluding stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and impairments of real estate. Adjusted EBITDA also excludes unrealized gains or losses, and significant realized gains and impairments, which result from our
 
non-real estate investments. These non-real estate investment amounts are classified in our statements of operations outside of revenues.

We believe Adjusted EBITDA provides investors with relevant and useful information as it allows investors to evaluate the operating performance of our business activities without having to account for differences recognized because of real estate and non-real estate investment and disposition decisions, financing decisions, capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. For example, we exclude gains or losses on the early extinguishment of debt to allow investors to measure our performance independent of our indebtedness and capital structure. We believe that adjusting for the effects of impairments and gains or losses on sales of real estate, and significant impairments and significant gains on the sale of non-real estate investments allows investors to evaluate performance from period to period on a consistent basis without having to account for differences recognized because of real estate and non-real estate investment and disposition decisions. We believe that excluding charges related to stock compensation and unrealized gains or losses facilitates for investors a comparison of our business activities across periods without the volatility resulting from market forces outside of our control. Adjusted EBITDA has limitations as a measure of our performance. Adjusted EBITDA does not reflect our historical expenditures or future requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant measure of performance, it does not represent net income (loss) or cash flows from operations calculated and presented in accordance with GAAP, and it should not be considered as an alternative to those indicators in evaluating performance or liquidity.

Our calculation of Adjusted EBITDA margin divides Adjusted EBITDA by our revenues, as adjusted. We believe that revenues, as adjusted, provides a denominator for Adjusted EBITDA margin that is calculated on a basis more consistent with that of the Adjusted EBITDA numerator. Specifically, revenues, as adjusted, includes the same realized gains on, and impairments of, non-real estate investments that are included in the reconciliation of Adjusted EBITDA. We believe that the consistent application of results from our non-real estate investments to both the numerator and denominator of Adjusted EBITDA margin provides a more useful calculation for the comparison across periods.

Annual rental revenue

Annual rental revenue represents the annualized fixed base rental amount, in effect as of the end of the period, related to our operating RSF. Annual rental revenue is presented using 100% of the annual rental revenue of our consolidated properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Annual rental revenue per RSF is computed by dividing annual rental revenue by the sum of 100% of the RSF of our consolidated properties and our share of the RSF of properties held in unconsolidated real estate joint ventures. As of March 31, 2019, approximately 97% of our leases (on an RSF basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Annual rental revenue excludes these operating expenses recovered from our tenants. Amounts recovered from our tenants related to these operating expenses, along with base rent, are classified in income from rentals in our consolidated statements of income.


 
50

 
 
 
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Definitions and Reconciliations (continued)
March 31, 2019
 
 


Cash interest

Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts). Refer to the definition of fixed-charge coverage ratio for a reconciliation of interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest.

Class A properties and AAA locations

Class A properties are properties clustered in AAA locations that provide innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Class A properties generally command higher annual rental rates than other classes of similar properties.

AAA locations are in close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space.

Development, redevelopment, and pre-construction

A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new Class A properties and property enhancements identified during the underwriting of certain acquired properties, located in collaborative life science and technology campuses in AAA urban innovation clusters. These projects are generally focused on providing high-quality, generic, and reusable spaces that meet the real estate requirements of, and are reusable by, a wide range of tenants. Upon completion, each value-creation project is expected to generate a significant increase in rental income, net operating income, and cash flows. Our development and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

Development projects generally consist of the ground-up development of generic and reusable facilities. Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into office/laboratory or tech office space. We generally will not commence new development projects for aboveground construction of new Class A office/laboratory and tech office space without first securing significant pre-leasing for such space, except when there is solid market demand for high-quality Class A properties.

Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. Ultimately, these projects will provide high-quality facilities and are expected to generate significant revenue and cash flows.

Dividend payout ratio (common stock)

Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (shares of common stock outstanding on the respective record dates multiplied by the related dividend per share) to funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted.

 
Dividend yield

Dividend yield for the quarter represents the annualized quarter dividend divided by the closing common stock price at the end of the quarter.

Fixed-charge coverage ratio

Fixed-charge coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to fixed charges. We believe this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing obligations and preferred stock dividends. Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts).

The following table reconciles interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest and fixed charges:
 
Three Months Ended
(Dollars in thousands)
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Adjusted EBITDA
$
257,486

 
$
242,222

 
$
239,252

 
$
227,821

 
$
228,611

 
 
 
 
 
 
 
 
 
 
Interest expense
$
39,100

 
$
40,239

 
$
42,244

 
$
38,097

 
$
36,915

Capitalized interest
18,509

 
19,902

 
17,431

 
15,527

 
13,360

Amortization of loan fees
(2,233
)
 
(2,401
)
 
(2,734
)
 
(2,593
)
 
(2,543
)
Amortization of debt premiums
801

 
611

 
614

 
606

 
575

Cash interest
56,177

 
58,351

 
57,555

 
51,637

 
48,307

Dividends on preferred stock
1,026

 
1,155

 
1,301

 
1,302

 
1,302

Fixed charges
$
57,203

 
$
59,506

 
$
58,856

 
$
52,939

 
$
49,609

 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio:
 
 
 
 
 
 
 
 
 
– quarter annualized
4.5x

 
4.1x

 
4.1x

 
4.3x

 
4.6x

– trailing 12 months
4.2x

 
4.2x

 
4.3x

 
4.3x

 
4.3x

 
 
 
 
 
 
 
 
 
 

 
51

 
 
 
q119logo1.jpg
Definitions and Reconciliations (continued)
March 31, 2019
 
 


Funds from operations and funds from operations, as adjusted, attributable to Alexandria’s common stockholders

GAAP-basis accounting for real estate assets utilizes historical cost accounting and assumes that 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 Nareit Board of Governors established funds from operations as an improved measurement tool. Since its introduction, funds from operations has become a widely used non-GAAP financial measure among equity REITs. We believe that funds from operations is helpful to investors as an additional measure of the performance of an equity REIT. Moreover, we believe that funds from operations, as adjusted, allows investors to compare our performance to the performance of other real estate companies on a consistent basis, without having to account for differences recognized because of real estate investment and disposition decisions, financing decisions, capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. On January 1, 2019, we adopted standards established by the Nareit Board of Governors in its November 2018 White Paper (the “Nareit White Paper”) on a prospective basis. The Nareit White Paper defines funds from operations as net income (computed in accordance with GAAP), excluding gains or losses on sales of real estate, and impairments of real estate, plus real estate-related depreciation and amortization, and after adjustments for our share of consolidated and unconsolidated partnerships and real estate joint ventures. Impairments represent the write-down of assets when fair value over the recoverability period is less than the carrying value due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.

We compute funds from operations, as adjusted, as funds from operations calculated in accordance with the Nareit White Paper, excluding significant gains, losses, and impairments realized on non-real estate investments, unrealized gains or losses on non-real estate investments, gains or losses on early extinguishment of debt, preferred stock redemption charges, deal costs, and the amount of such items that is allocable to our unvested restricted stock awards. Neither funds from operations nor funds from operations, as adjusted, should be considered as alternatives to net income (determined in accordance with GAAP) as indications of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as measures of liquidity, nor are they indicative of the availability of funds for our cash needs, including our ability to make distributions.

The following table reconciles net income to funds from operations for the share of consolidated real estate joint ventures attributable to noncontrolling interests and our share of unconsolidated real estate joint ventures:
 
Three Months Ended March 31, 2019
 
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated Real Estate JVs
 
Net income
$
7,659

 
$
1,146

 
Depreciation and amortization
5,419

 
846

 
Funds from operations
$
13,078

 
$
1,992

 
 
 
 
 
 

 
Initial stabilized yield (unlevered)
Initial stabilized yield is calculated as the quotient of the estimated amounts of net operating income at stabilization and our investment in the property. Our initial stabilized yield excludes the benefit of leverage. Our cash rents related to our value-creation projects are generally expected to increase over time due to contractual annual rent escalations. Our estimates for initial stabilized yields, initial stabilized yields (cash basis), and total costs at completion represent our initial estimates at the commencement of the project. We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.

•
Initial stabilized yield reflects rental income, including contractual rent escalations and any rent concessions over the term(s) of the lease(s), calculated on a straight-line basis.
•
Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have elapsed and our total cash investment in the property.

Investment-grade or publicly traded large cap tenants

Investment-grade or publicly traded large cap tenants represent tenants that are investment-grade rated or publicly traded companies with an average daily market capitalization greater than $10 billion for the 12 months ended March 31, 2019, as reported by Bloomberg Professional Services. In addition, we monitor the credit quality and related material changes of our tenants. Material changes that cause a tenant’s market capitalization to decline below $10 billion, which are not immediately reflected in the 12-month average, may result in their exclusion from this measure.

Investments

We hold investments in publicly traded companies and privately held entities primarily involved in the life science and technology industries. We recognize, measure, present, and disclose these investments as follows:
 
 
 
 
Statements of Operations
 
 
Balance Sheet
 
Gains and Losses
 
 
Carrying Amount
 
Unrealized
 
Realized
 
 
 
 
 
 
 
 
 
 
 
 
 
Difference between proceeds received upon disposition and historical cost
Publicly traded entities
 
Fair value
 
Changes in fair value
 
Privately held entities without readily determinable fair values that:
 
 
 
 
 
Report NAV
 
Fair value, using NAV as a practical expedient
 
Changes in NAV, as a practical expedient to fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Do not report NAV
 
Cost, adjusted for observable price changes and impairments
 
Observable price changes
 
Impairments to reduce costs to fair value, which result in an adjusted cost basis and the differences between proceeds received upon disposition and adjusted or historical cost.

 
52

 
 
 
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Definitions and Reconciliations (continued)
March 31, 2019
 
 


For investments in privately held entities that do not report NAV per share, an observable price is a price observed in an orderly transaction for an identical or similar investment of the same issuer. Observable price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. For these transactions to be considered observable price changes of the same issuer, we evaluate whether these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold.

Joint venture financial information

We present components of balance sheet and operating results information related to our joint ventures, which are not presented in accordance with, or intended to be presented in accordance with, GAAP. We present the proportionate share of certain financial line items as follows: (i) for each real estate joint venture that we consolidate in our financial statements, but of which we own less than 100%, we apply the noncontrolling interest economic ownership percentage to each financial item to arrive at the amount of such cumulative noncontrolling interest share of each component presented; and (ii) for each real estate joint venture that we do not control, and do not consolidate, we apply our economic ownership percentage to each financial item to arrive at our proportionate share of each component presented.

The components of balance sheet and operating results information related to joint ventures do not represent our legal claim to those items. For each entity that we do not wholly own, the joint venture agreement generally determines what equity holders can receive upon capital events, such as sales or refinancing, or in the event of a liquidation. Equity holders are normally entitled to their respective legal ownership of any residual cash from a joint venture only after all liabilities, priority distributions, and claims have been repaid or satisfied.

We believe this information can help investors estimate the balance sheet and operating results information related to our partially owned entities. Presenting this information provides a perspective not immediately available from consolidated financial statements and one that can supplement an understanding of the joint venture assets, liabilities, revenues, and expenses included in our consolidated results.

The components of balance sheet and operating results information related to joint ventures are limited as an analytical tool as the overall economic ownership interest does not represent our legal claim to each of our joint ventures’ assets, liabilities, or results of operations. In addition, joint venture financial information may include financial information related to the unconsolidated real estate joint ventures that we do not control. We believe that in order to facilitate for investors a clear understanding of our operating results and our total assets and liabilities, joint venture financial information should be examined in conjunction with our consolidated statements of operations and balance sheets. Joint venture financial information should not be considered an alternative to our consolidated financial statements, which are prepared in accordance with GAAP.

Key items included in net income attributable to Alexandria’s common stockholders

We present a tabular comparison of items, whether gain or loss, that may facilitate a high-level understanding of our results and provide context for the disclosures included in this Supplemental Information, our most recent annual report on Form 10-K for the year ended December 31, 2018, and our subsequent quarterly reports on Form 10-Q. We believe such tabular presentation promotes a better understanding for investors of the corporate-level decisions made and activities performed that significantly affect comparison of our operating results from period to period. We also believe this tabular presentation will supplement for investors an understanding of our disclosures and real estate operating results. Gains or losses on sales of real estate and impairments of held for sale assets are related to corporate-level decisions to dispose of real estate. Gains or losses on early extinguishment of debt and preferred stock redemption charges are related to corporate-level financing decisions focused on our capital structure
 
strategy. Significant realized and unrealized gains or losses on non-real estate investments and impairments of real estate and non-real estate investments are not related to the operating performance of our real estate assets as they result from strategic, corporate-level non-real estate investment decisions and external market conditions. Impairments of non-real estate investments are not related to the operating performance of our real estate as they represent the write-down of a non-real estate investment when its fair value declines below its carrying value due to changes in general market or other conditions outside of our control. Significant items, whether a gain or loss, included in the tabular disclosure for current periods are described in further detail in this Supplemental Information.

Lease accounting

On January 1, 2019, we adopted new lease accounting standards that set out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). The new lease accounting standards did not result in material changes in the amount nor the timing of lease-related revenues that we recognized from our tenants. However, the new standards affected our financial statement presentation primarily in three specific areas.

Key differences between the prior accounting standard and the new lease accounting standards:

Prior to January 1, 2019, we classified rental revenues and tenant recoveries as separate line items on our consolidated statements of operations. Effective January 1, 2019, based on our election of a practical expedient, we are required to disclose the combined components of rental revenues and tenant recoveries as a single lease component, which is classified on our consolidated statements of operations as income from rentals. As a result, we do not disclose tenant recoveries as a separate GAAP revenue measure. However, we believe that tenant recoveries is useful to investors as a supplemental measure of our ability to recover operating expenses under our triple net leases, including recoveries of utilities, repairs and maintenance, insurance, property taxes, common area expenses, and other operating expenses, and of our ability to mitigate unexpected significant increases to any component of our operating expenses. Prior-period results have been reclassified to conform to the presentation requirements of the new standards. The following table reconciles rental revenues and tenant recoveries to income from rentals:
 
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Rental revenues
 
$
274,563

 
$
260,102

 
$
255,496

 
$
250,635

 
$
244,485

Tenant recoveries
 
80,186

 
77,683

 
81,051

 
72,159

 
73,170

Income from rentals
 
$
354,749

 
$
337,785

 
$
336,547

 
$
322,794

 
$
317,655

 
 
 
 
 
 
 
 
 
 
 

The new lease accounting standard requires that lessors and lessees capitalize, as initial direct costs, only incremental costs of a lease that would not have been incurred if the lease had not been obtained. Effective January 1, 2019, costs that we incur to negotiate or arrange a lease regardless of its outcome, such as fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs are expensed as incurred.

Under the package of practical expedients and optional transition method that we elected on January 1, 2019, we were not required to reassess whether initial direct leasing costs capitalized prior to the adoption of the new lease accounting standard in connection with the leases that commenced prior to January 1, 2019, qualify for capitalization under the new lease accounting standard. Therefore, we continue to amortize these initial direct leasing costs over the respective lease term.


 
53

 
 
 
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Definitions and Reconciliations (continued)
March 31, 2019
 
 


In addition, the new lease accounting standards require companies to recognize a lease liability and a corresponding right-of-use asset on the consolidated balance sheets, to represent the net present value of future rental payments related to operating leases in which we are the lessee. As a result, on January 1, 2019, we recognized a lease liability classified in accounts payable, accrued expenses, and tenant security deposits on our consolidated balance sheets, and a corresponding right‑of‑use asset included in other assets on our consolidated balance sheets, related to our ground leases existing as of January 1, 2019, for which we are the lessee. The net present value of the remaining future rental payments of our ground leases was calculated for each operating lease using the respective remaining lease term and a corresponding estimated incremental borrowing rate, which is the estimated interest rate that we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Net cash provided by operating activities after dividends

Net cash provided by operating activities after dividends includes the deduction for distributions to noncontrolling interests. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences.

 
Net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA

Net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA are non-GAAP financial measures that we believe are useful to investors as supplemental measures in evaluating our balance sheet leverage. Net debt is equal to the sum of total consolidated debt less cash, cash equivalents, and restricted cash. Net debt and preferred stock is equal to the sum of net debt, as discussed above, plus preferred stock outstanding as of the end of the period. Refer to the definition of Adjusted EBITDA and Adjusted EBITDA Margin for further information on the calculation of Adjusted EBITDA.

The following table reconciles debt to net debt, and to net debt and preferred stock, and computes the ratio of each to Adjusted EBITDA:
(Dollars in thousands)
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Secured notes payable
 
$
356,461

 
$
630,547

 
$
632,792

 
$
776,260

 
$
775,689

Unsecured senior notes payable
 
5,139,500

 
4,292,293

 
4,290,906

 
4,289,521

 
3,396,912

Unsecured senior line of credit
 
—

 
208,000

 
413,000

 
—

 
490,000

Unsecured senior bank term loans
 
347,542

 
347,415

 
347,306

 
548,324

 
548,197

Unamortized deferred financing costs
 
37,925

 
31,413

 
33,008

 
33,775

 
27,438

Cash and cash equivalents
 
(261,372
)
 
(234,181
)
 
(204,181
)
 
(287,029
)
 
(221,645
)
Restricted cash
 
(54,433
)
 
(37,949
)
 
(29,699
)
 
(34,812
)
 
(37,337
)
Net debt
 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

 
$
5,326,039

 
$
4,979,254

 
 
 
 
 
 
 
 
 
 
 
Net debt
 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

 
$
5,326,039

 
$
4,979,254

7.00% Series D convertible preferred stock
 
57,461

 
64,336

 
74,386

 
74,386

 
74,386

Net debt and preferred stock
 
$
5,623,084

 
$
5,301,874

 
$
5,557,518

 
$
5,400,425

 
$
5,053,640

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
$
1,029,944

 
$
968,888

 
$
957,008

 
$
911,284

 
$
914,444

– trailing 12 months
 
$
966,781

 
$
937,906

 
$
900,032

 
$
854,237

 
$
815,178

Net debt to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
5.4
x
 
5.4
x
 
5.7
x
 
5.8
x
 
5.4
x
– trailing 12 months
 
5.8
x
 
5.6
x
 
6.1
x
 
6.2
x
 
6.1
x
Net debt and preferred stock to Adjusted EBITDA:
 
 
 
 
 
 
 
 
– quarter annualized
 
5.5
x
 
5.5
x
 
5.8
x
 
5.9
x
 
5.5
x
– trailing 12 months
 
5.8
x
 
5.7
x
 
6.2
x
 
6.3
x
 
6.2
x


 
54

 
 
 
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Definitions and Reconciliations (continued)
March 31, 2019
 
 


Net operating income, net operating income (cash basis), and operating margin

The following table reconciles net income to net operating income and net operating income (cash basis):
 
 
Three Months Ended
(Dollars in thousands)
 
3/31/19
 
3/31/18
Net income
 
$
136,818

 
$
141,518

 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
(1,146
)
 
(1,144
)
General and administrative expenses
 
24,677

 
22,421

Interest expense
 
39,100

 
36,915

Depreciation and amortization
 
134,087

 
114,219

Loss on early extinguishment of debt
 
7,361

 
—

Investment income
 
(83,556
)
 
(85,561
)
Net operating income
 
257,341

 
228,368

Straight-line rent revenue
 
(26,965
)
 
(32,631
)
Amortization of acquired below-market leases
 
(7,148
)
 
(6,170
)
Net operating income (cash basis)
 
$
223,228

 
$
189,567

 
 
 
 
 
Net operating income (cash basis) – annualized
 
$
892,912

 
$
758,268

 
 
 
 
 
Net operating income (from above)
 
$
257,341

 
$
228,368

Total revenues
 
$
358,842

 
$
320,139

Operating margin
 
72%
 
71%

Net operating income is a non-GAAP financial measure calculated as net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our unconsolidated real estate joint ventures, general and administrative expenses, interest expense, depreciation and amortization, impairment of real estate, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and investment income or loss. We believe net operating income provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe net operating income is a useful measure for investors to evaluate the operating performance of our consolidated real estate assets. Net operating income on a cash basis is net operating income adjusted to exclude the effect of straight-line rent and amortization of acquired above- and below-market lease revenue adjustments required by GAAP. We believe that net operating income on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent revenue and the amortization of acquired above- and below-market leases.

Furthermore, we believe net operating income is useful to investors as a performance measure for our consolidated properties because, when compared across periods, net operating income reflects trends in occupancy rates, rental rates, and operating costs, which provide a perspective not immediately apparent from net income or loss. Net operating income can be used to measure the initial stabilized yields of our properties by calculating the quotient of net operating income generated by a property and our investment in the property. Net operating income excludes certain components from net income in order to provide results that are more closely related to the results of operations of our properties. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level rather than at the property level. In addition, depreciation and amortization,
 
because of historical cost accounting and useful life estimates, may distort comparability of operating performance at the property level. Impairments of real estate have been excluded in deriving net operating income because we do not consider impairments of real estate to be property-level operating expenses. Impairments of real estate relate to changes in the values of our assets and do not reflect the current operating performance with respect to related revenues or expenses. Our impairments of real estate represent the write-down in the value of the assets to the estimated fair value less cost to sell. These impairments result from investing decisions or a deterioration in market conditions. We also exclude realized and unrealized investment income or loss calculated under a new ASU effective January 1, 2018, which results from investment decisions that occur at the corporate level related to non-real estate investments in publicly traded companies and certain privately held entities. Therefore, we do not consider these activities to be an indication of operating performance of our real estate assets at the property level. Our calculation of net operating income also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to corporate strategy. Property operating expenses included in determining net operating income primarily consist of costs that are related to our operating properties, such as utilities, repairs, and maintenance; rental expense related to ground leases; contracted services, such as janitorial, engineering, and landscaping; property taxes and insurance; and property-level salaries. General and administrative expenses consist primarily of accounting and corporate compensation, corporate insurance, professional fees, office rent, and office supplies that are incurred as part of corporate office management. We calculate operating margin as net operating income divided by total revenues.

We believe that in order to facilitate for investors a clear understanding of our operating results, net operating income should be examined in conjunction with net income or loss as presented in our consolidated statements of operations. Net operating income should not be considered as an alternative to net income or loss as an indication of our performance, nor as an alternative to cash flows as a measure of our liquidity or our ability to make distributions.

Operating statistics

We present certain operating statistics related to our properties, including number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations as of the end of the period. We believe these measures are useful to investors because they facilitate an understanding of certain trends for our properties. We compute the number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations at 100% for all properties in which we have an investment, including properties owned by our consolidated and unconsolidated real estate joint ventures. For operating metrics based on annual rental revenue, refer to our discussion of annual rental revenue herein.


 
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Definitions and Reconciliations (continued)
March 31, 2019
 
 


Same property comparisons

As a result of changes within our total property portfolio during the comparative periods presented, including changes from assets acquired or sold, properties placed into development or redevelopment, and development or redevelopment properties recently placed into service, the consolidated total income from rentals, and rental operating expenses in our operating results can show significant changes from period to period. In order to supplement an evaluation of our results of operations over a given quarterly or annual period, we analyze the operating performance for all consolidated properties that were fully operating for the entirety of the comparative periods presented, referred to as same properties. We separately present quarterly and year-to-date same property results to align with the interim financial information required by the SEC in our management’s discussion and analysis of our financial condition and results of operations. These same properties are analyzed separately from properties acquired subsequent to the first day in the earliest comparable quarterly or year-to-date period presented, properties that underwent development or redevelopment at any time during the comparative periods, unconsolidated real estate joint ventures, properties classified as held for sale, and corporate entities (legal entities performing general and administrative functions), which are excluded from same property results. Additionally, lease termination fees, if any, are excluded from the results of same properties.

The following table reconciles the number of same properties to total properties for the three months ended March 31, 2019:
Development –
under construction
 
Properties
 
399 Binney Street
 
1

 
279 East Grand Avenue
 
1

 
188 East Blaine Street
 
1

 
9800 Medical Center Drive
 
1

 
9950 Medical Center Drive
 
1

 
 
 
5

 
 
 
 
 
Development – placed into service after January 1, 2018
 
Properties
 
100 Binney Street
 
1

 
213 East Grand Avenue
 
1

 
 
 
2

 
 
 
 
 
Redevelopment –
under construction
 
Properties
 
Alexandria Center® for AgTech, Phase I
 
1

 
266 and 275 Second Avenue
 
2

 
681 Gateway Boulevard
 
1

 
Alexandria Life Science Factory
 
1

 
 
 
5

 
 
 
 
 
Redevelopment – placed into service after January 1, 2018
 
Properties
 
9625 Towne Centre Drive
 
1

 
Alexandria PARC
 
4

 
9900 Medical Center Drive
 
1

 
 
 
6

 
 
 
 
 
Acquisitions after
January 1, 2018
 
Properties
 
100 Tech Drive
 
1

 
219 East 42nd Street
 
1

 
Summers Ridge Science Park
 
4

 
2301 5th Avenue
 
1

 
9704, 9708, 9712, and 9714 Medical Center Drive
 
4

 
9920 Belward Campus Drive
 
1

 
21 Firstfield Road
 
1

 
50 and 55 West Watkins Mill Road
 
2

 
10260 Campus Point Drive and 4161 Campus Point Court
 
2

 
99 A Street
 
1

 
3170 Porter Drive
 
1

 
Shoreway Science Center
 
2

 
3911 and 3931 Sorrento Valley Boulevard
 
2

 
260 Townsend Street
 
1

 
Other
 
5

 
 
 
29

 
 
 
 
 
Unconsolidated real estate JVs
 
6

 
Properties held for sale
 
1

 
Total properties excluded from same properties
 
54

 
Same properties
 
196

(1) 
Total properties in North America as of March 31, 2019
 
250

 
 
 
 
 
(1)
Includes 9880 Campus Point Drive, a building we acquired in 2001. The building was occupied through January 2018 and subsequently demolished. The 98,000 RSF project is currently in active development.
 
Stabilized occupancy date

The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or greater.

Total equity market capitalization
    
Total equity market capitalization is equal to the sum of outstanding shares of 7.00% Series D cumulative convertible preferred stock and common stock multiplied by the related closing price of each class of security at the end of each period presented.

Total market capitalization

Total market capitalization is equal to the sum of total equity market capitalization and total debt.

Unencumbered net operating income as a percentage of total net operating income
    
Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income is derived from assets classified in continuing operations, which are not subject to any mortgage, deed of trust, lien, or other security interest, as of the period for which income is presented.

The following table summarizes unencumbered net operating income as a percentage of total net operating income:
 
Three Months Ended
(Dollars in thousands)
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Unencumbered net operating income
$
243,191

 
$
213,285

 
$
213,107

 
$
204,843

 
$
198,599

Encumbered net operating income
14,150

 
29,496

 
28,957

 
28,283

 
29,769

Total net operating income
$
257,341

 
$
242,781

 
$
242,064

 
$
233,126

 
$
228,368

Unencumbered net operating income as a percentage of total net operating income
95%

 
88%

 
88%

 
88%

 
87%


Weighted-average interest rate for capitalization of interest

The weighted-average interest rate required for calculating capitalization of interest pursuant to GAAP represents a weighted-average rate based on the rates applicable to borrowings outstanding during the period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees. A separate calculation is performed to determine our weighted-average interest rate for capitalization for each month. The rate will vary each month due to changes in variable interest rates, outstanding debt balances, the proportion of variable-rate debt to fixed-rate debt, the amount and terms of interest rate hedge agreements, and the amount of loan fee and premium (discount) amortization.

The following table presents the weighted-average interest rate for capitalization of interest:
 
Three Months Ended
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
Weighted-average interest rate for capitalization of interest
3.96%
 
4.01%
 
4.06%
 
3.92%
 
3.91%

 
56

 
 
 
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Definitions and Reconciliations (continued)
March 31, 2019
 
 


Weighted-average shares of common stock outstanding – diluted

We enter into capital market transactions from time to time to fund acquisitions, fund construction of our highly leased development and redevelopment projects, and for general working capital purposes. In March 2017 and January 2018, we entered into forward equity sales agreements (“Forward Agreements”) to sell shares of our common stock. We are required to consider the potential dilutive effect of our forward equity sales agreements under the treasury stock method while the forward equity sales agreements are outstanding. As of March 31, 2019, we had no Forward Agreements outstanding.

We also consider the effect of assumed conversion of our outstanding 7.00% Series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”) when determining potentially dilutive incremental shares to our common stock. When calculating the assumed conversion, we add back to net income or loss the dividends paid on our Series D Convertible Preferred Stock to the numerator and then include additional common shares assumed to have been issued (as displayed in the table below) to the denominator of the per share calculation. The effect of the assumed conversion is considered separately for our per share calculations of net income or loss; funds from operations, computed in accordance with the definition in the Nareit White Paper; and funds from operations, as adjusted. Our Series D Convertible Preferred Stock is dilutive and assumed to be converted when quarterly and annual basic EPS, funds from operations, or funds from operations, as adjusted exceeds approximately $1.75 and $7.00 per share, respectively, subject to conversion ratio adjustments and the impact of repurchases of our Series D Convertible Preferred Stock. The effect of the assumed conversion is included when it is dilutive on a per share basis. The dilutive effect to both numerator and denominator may result in a per share effect of less than a half cent, which would appear as zero in our per share calculation, even when the dilutive effect to the numerator alone appears in our reconciliation.

The weighted-average shares of common stock outstanding used in calculating EPS – diluted, FFO per share – diluted, and FFO per share – diluted, as adjusted, during each period is calculated as follows:
 
Three Months Ended
(In thousands)
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
3/31/18
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
111,054

 
106,033

 
104,179

 
101,881

 
99,855

Forward Agreements
—

 
—

 
462

 
355

 
270

Series D Convertible Preferred Stock
—

 
—

 
744

 
—

 
—

Diluted shares for EPS
111,054

 
106,033

 
105,385

 
102,236

 
100,125

 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
111,054

 
106,033

 
104,179

 
101,881

 
99,855

Forward Agreements
—

 
211

 
462

 
355

 
270

Series D Convertible Preferred Stock
581

 
—

 
744

 
—

 
741

Diluted shares for FFO
111,635

 
106,244

 
105,385

 
102,236

 
100,866

 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
111,054

 
106,033

 
104,179

 
101,881

 
99,855

Forward Agreements
—

 
211

 
462

 
355

 
270

Series D Convertible Preferred Stock
—

 
—

 
—

 
—

 
—

Diluted shares for FFO, as adjusted
111,054

 
106,244

 
104,641

 
102,236

 
100,125


 
57