8-K
Alexandria Real Estate Equities, Inc. (ARE)
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 ExchangeAct of 1934
Date of Report (Date of earliest event reported): February 11, 2008
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))
Item 2.02. Resultsof Operations and Financial Condition.
On February 11, 2008, we issued a press release entitled “Alexandria Real Estate Equities, Inc. Reports Fourth Quarter 2007 Results” which sets forth our results of operations for the fourth quarter and year ended December 31, 2007. A copy of that press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press Release dated February 11, 2008.
2
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<br> ESTATE EQUITIES, INC. | ||
|---|---|---|
| February 11,<br> 2008 | By: | /s/ Joel S.<br> Marcus |
| Joel S. Marcus | ||
| Chief Executive<br> Officer | ||
| (Principal<br> Executive Officer) | ||
| By: | /s/ Dean A.<br> Shigenaga | |
| Dean A.<br> Shigenaga | ||
| Chief Financial<br> Officer | ||
| (Principal<br> Financial and Accounting Officer) |
3
EXHIBIT INDEX
| Exhibit Number | Exhibit Title |
|---|---|
| 99.1 | Press Release<br> dated February 11, 2008 |
4
Exhibit 99.1
| Contact: | Joel S. Marcus |
|---|---|
| **** | Chairman/Chief Executive Officer |
| **** | Alexandria Real Estate Equities, Inc. |
| **** | (626) 578-9693 |
ALEXANDRIA REAL ESTATE EQUITIES, INC.REPORTSFOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2007 RESULTS
Highlights
FourthQuarter 2007:
· Fourth Quarter 2007 Funds from Operations (FFO) Per Share (Diluted) of $1.46, up 9%, Compared to Fourth Quarter 2006 FFO Per Share (Diluted) of $1.34
· Fourth Quarter 2007 Total Revenues up 19%, FFO Available to Common Stockholders up 19%, Compared to Fourth Quarter 2006
· Fourth Quarter 2007 Earnings Per Share (Diluted) of $0.70, up 23%, Compared to Fourth Quarter 2006 Earnings Per Share (Diluted) of $0.57
· Executed 43 Leases for Approximately 432,000 Rentable Square Feet
· Fourth Quarter 2007 GAAP Rental Rate Increase of 12.4% on Renewed/Released Space
· Fourth Quarter 2007 GAAP Same Property Revenues Less Operating Expenses up 3.5%
· Commenced Ground-Up Development of One Property Aggregating Approximately 115,000 Rentable Square Feet
· Completed Redevelopment of Multiple Spaces at Three Properties Aggregating Approximately 67,949 Rentable Square Feet
· Sold One Real Estate Asset for Approximately $11 Million; Subsequent to Year End, In January and February 2008, Sold Five Real Estate Assets for Approximately $63.5 Million
· Closed $62 Million Pre-Construction Secured Loan
· Acquired One Land Parcel Aggregating Approximately 350,000 Developable Square Feet through a Joint Venture
· Acquired Two Properties Aggregating Approximately 404,986 Rentable Square Feet
YearEnded December 31, 2007:
· Total Return Performance of 711% from May 28, 1997 to December 31, 2007, Assuming Reinvestment of All Dividends
· 2007 FFO Per Share (Diluted) of $5.61 Net of $2.8 Million Preferred Stock Redemption Charge; FFO Per Share (Diluted) of $5.70, up 10%, Before the Preferred Stock Redemption Charge, Compared to 2006 FFO Per Share (Diluted) of $5.16
· 2007 Total Revenues up 30%, FFO Available to Common Stockholders up 28% , Compared to 2006
· 2007 Earnings Per Share (Diluted) of $2.63 Net of $2.8 Million Preferred Stock Redemption Charge; Earnings Per Share (Diluted) of $2.72, up 21%, Before the Preferred Stock Redemption Charge, Compared to 2006 Earnings Per Share (Diluted) of $2.25
· Executed 136 Leases for Approximately 1,583,000 Rentable Square Feet
· 2007 GAAP Rental Rate Increase of 9.8% on Renewed/Released Space
· 2007 GAAP Same Property Revenues Less Operating Expenses up 3.7%
· 2007 Common Stock Dividends up 5.4% Over 2006
· Received First Ever LEED Certified Core and Shell Office/Laboratory Building in the State of California
· Completed Ground-Up Development of One Property Aggregating Approximately 157,340 Rentable Square Feet
· Commenced Ground-Up Development of Four Properties Aggregating Approximately 553,000 Rentable Square Feet
· Completed Redevelopment of Multiple Spaces at Ten Properties Aggregating Approximately 258,411 Rentable Square Feet
· Sold Four Real Estate Assets and Four Land Parcels for Approximately $73 Million; Subsequent to Year End In January and February 2008, Sold Five Real Estate Assets for Approximately $63.5 Million; Completed Sales in 2007 and Period to Date in 2008 Aggregating Approximately 519,451 Rentable Square Feet
· Closed Follow-on Common Offering with Net Proceeds of Approximately $217 Million
· Redeemed 9.10% Series B Cumulative Redeemable Preferred Stock and Incurred Redemption Charge of Approximately $2.8 Million
· Closed $460 Million of 3.70% Convertible Notes
· Closed $200 Million Secured Loan and $62 Million Pre-Construction Secured Loan
· Increased Credit Facility to $1.9 Billion Plus a $500 Million Accordion
· Acquired Four Land Parcels Aggregating Approximately 541,592 Developable Square Feet
· Acquired Sixteen Properties Aggregating Approximately 1.3 Million Rentable Square Feet
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEARENDED DECEMBER 31, 2007 RESULTS
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PASADENA, CA. – February 11, 2008 – Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the fourth quarter and year ended December 31, 2007.
For the fourth quarter of 2007, we reported total revenues of $109,616,000 and FFO available to common stockholders of $46,324,000, or $1.46 per share (diluted), compared to total revenues of $91,907,000 and FFO available to common stockholders of $39,054,000, or $1.34 per share (diluted), for the fourth quarter of 2006. Comparing the fourth quarter of 2007 to the fourth quarter of 2006, total revenues increased 19%, FFO available to common stockholders increased 19% and FFO per share (diluted) increased 9%. For the year ended December 31, 2007, we reported total revenues of $405,360,000 and FFO available to common stockholders of $168,200,000, or $5.61 per share (diluted), net of a preferred stock redemption charge, compared to total revenues of $310,779,000 and FFO available to common stockholders of $131,665,000, or $5.16 per share (diluted), for the year ended December 31, 2006. Comparing the year ended December 31, 2007 to the year ended December 31, 2006, total revenues increased 30%, FFO available to common stockholders increased 28% and FFO per share (diluted) increased 9%, net of a preferred stock redemption charge recognized in the first quarter of 2007. The preferred stock redemption charge related to the redemption of our Series B Preferred Stock was approximately $2,799,000. Excluding the preferred stock redemption charge, FFO available to common stockholders for the year ended December 31, 2007 increased by 30% and FFO per share (diluted) increased by 10% as compared to the year ended December 31, 2006.
FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. A reconciliation of GAAP net income available to common stockholders to FFO available to common stockholders, on both an aggregate and per share diluted basis, is included in the financial information accompanying this press release. The primary reconciling item between GAAP net income available to common stockholders and FFO available to common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended December 31, 2007 and 2006 was $26,969,000 and $22,454,000, respectively. Depreciation and amortization expense for the years ended December 31, 2007 and 2006 was $97,335,000 and $74,039,000, respectively. Net income available to common stockholders for the fourth quarter of 2007 was $22,277,000, or $0.70 per share (diluted), compared to net income available to common stockholders of $16,512,000, or $0.57 per share (diluted), for the fourth quarter of 2006. Net income available to common stockholders for the year ended December 31, 2007 was $78,905,000, or $2.63 per share (diluted), compared to net income available to common stockholders of $57,326,000, or $2.25 per share (diluted), for the year ended December 31, 2006. In the first quarter of 2007, we recognized a preferred stock redemption charge of approximately $2,799,000 related to the redemption of our Series B Preferred Stock. Excluding the preferred stock redemption charge, net income available to common stockholders for the year ended December 31, 2007 increased by 43% and net income per share (diluted) increased by 21% as compared to the year ended December 31, 2006.
For the fourth quarter of 2007, we executed a total of 43 leases for approximately 432,000 rentable square feet of space at 29 different properties (excluding month-to-month leases). Of this total, approximately 201,000 rentable square feet related to new or renewal leases of previously leased space and approximately 231,000 rentable square feet related to redeveloped, developed or previously vacant space. Of the 231,000 rentable square feet, approximately 187,000 rentable square feet were delivered from our redevelopment or development programs, with the remaining approximately 44,000 rentable square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 12.4% higher (on a GAAP basis) than rental rates for expiring leases. For the year ended December 31, 2007, we executed a total of 136 leases for approximately 1,583,000 rentable square feet of space at 50 different properties (excluding month-to-month leases). Of this total, approximately 896,000 rentable square feet were for new or renewal leases related to previously leased space and approximately 687,000 rentable square feet were for redeveloped, developed or previously vacant space. Of the 687,000 rentable square feet, approximately 399,000 rentable square feet were delivered from our redevelopment or development programs, with the remaining approximately 288,000 rentable square feet for previously vacant space. Rental rates for new or renewal leases were on average approximately 9.8% higher (on a GAAP basis) than rental rates for expiring leases.
During the fourth quarter of 2007, we acquired one property in the Eastern Massachusetts market and one property in the New Jersey/Suburban Philadelphia market with approximately 404,986 aggregate rentable square feet. We paid approximately $101.2 million cash for the properties and closed two secured notes payable of $34.0 million and $23.9 million for total consideration of $159.1 million. The largest property aggregating approximately 369,831 rentable square feet in the Eastern Massachusetts market is currently occupied by multiple office tenants. This property also has an additional approximately 390,786 developable square feet. Additionally, during the fourth quarter of 2007, we acquired one development parcel in the Longwood Medical submarket, Boston, MA., with approximately
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEARENDED DECEMBER 31, 2007 RESULTS
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350,000 developable square feet through a joint venture. The purchase price of this land development parcel was approximately $70.0 million. In connection with this purchase, we closed a $62.0 million pre-construction secured loan of which approximately $38.2 million was drawn and outstanding as of December 31, 2007.
During the fourth quarter of 2007, we sold one office/industrial property in the San Francisco Bay market, located south of the city of San Francisco, with approximately 49,874 rentable square feet. The sale price of this property was approximately $10.6 million. As of December 31, 2007, two properties approximating 136,399 rentable square feet were classified as “held for sale.” In January 2008, we sold one of these properties located in the San Diego market approximating 86,962 rentable square feet. In addition, in February 2008, we sold four properties in the San Francisco Bay market aggregating approximately 211,715 rentable square feet. The sales price for the properties sold in 2008 was approximately $63.5 million. The net proceeds from these sales were used to repay secured notes payable totaling approximately $25.2 million with the balance used to reduce outstanding borrowings on our unsecured line of credit.
As of December 31, 2007, approximately 88% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of December 31, 2007, approximately 9% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. Additionally, as of December 31, 2007, approximately 91% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures and approximately 94% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.
Based on our current view of existing market conditions and certain current assumptions, our guidance for FFO per share (diluted) and earnings per share (diluted) as follows:
| 2008 | ||
|---|---|---|
| FFO per share<br> (diluted) | $ | 6.10 |
| Earnings per<br> share (diluted) | $ | 3.27 |
AlexandriaReal Estate Equities, Inc., Landlord and Developer of Choice to the LifeScience Industry®, is a publicly-traded real estate investment trust focusedprincipally on the ownership, operation, management, selective development,redevelopment and acquisition of life science properties. Our properties are designed and improved forlease primarily to institutional (universities and independent not-for-profitinstitutions), pharmaceutical, biotechnology, medical device, life science product,service, and translational medicine entities, as well as governmental agencies.We are the largest and leading provider of real estate to the broad and diverselife science industry with an asset base, as of December 31, 2007, thatwill enable us to grow to approximately 22.4 million square feet consisting of 166properties approximating 12.1 million rentable square feet, propertiesundergoing ground-up development approximating 1.6 million rentable squarefeet, plus an imbedded pipeline for ground-up development approximating 8.7million developable square feet.
This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.
(Tables follow)
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollarsin thousands, except per share data)
(Unaudited)
| Three Months Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | |||||||
| 2007 | 2006 | 2007 | 2006 | |||||
| Income statement data | ||||||||
| Total revenues | $ | 109,616 | $ | 91,907 | $ | 405,360 | $ | 310,779 |
| Expenses | ||||||||
| Rental operations | 27,446 | 21,625 | 99,210 | 69,775 | ||||
| General and<br> administrative | 8,131 | 6,693 | 32,456 | 26,051 | ||||
| Interest | 24,013 | 21,148 | 88,387 | 71,371 | ||||
| Depreciation and<br> amortization | 26,838 | 22,095 | 96,476 | 72,432 | ||||
| 86,428 | 71,561 | 316,529 | 239,629 | |||||
| Minority interest | 951 | 838 | 3,669 | 2,287 | ||||
| Income from<br> continuing operations | 22,237 | 19,508 | 85,162 | 68,863 | ||||
| Income from<br> discontinued operations, net | 2,755 | 1,027 | 8,562 | 4,553 | ||||
| Net income | 24,992 | 20,535 | 93,724 | 73,416 | ||||
| Dividends on preferred<br> stock | 2,715 | 4,023 | 12,020 | 16,090 | ||||
| Preferred stock<br> redemption charge | - | - | 2,799 | - | ||||
| Net income<br> available to common stockholders | $ | 22,277 | $ | 16,512 | $ | 78,905 | $ | 57,326 |
| Weighted average<br> shares of common stock outstanding | ||||||||
| Basic | 31,446,999 | 28,821,942 | 29,668,231 | 25,102,200 | ||||
| Diluted | 31,729,054 | 29,222,144 | 30,004,462 | 25,524,478 | ||||
| Earnings per<br> share – basic | ||||||||
| Continuing<br> operations (net of preferred stock dividends and preferred stock redemption<br> charge) | $ | 0.62 | $ | 0.53 | $ | 2.37 | $ | 2.10 |
| Discontinued<br> operations, net | 0.09 | 0.04 | 0.29 | 0.18 | ||||
| Earnings per<br> share – basic | $ | 0.71 | $ | 0.57 | $ | 2.66 | $ | 2.28 |
| Earnings per<br> share – diluted | ||||||||
| Continuing<br> operations (net of preferred stock dividends and preferred stock redemption<br> charge) | $ | 0.62 | $ | 0.53 | $ | 2.34 | $ | 2.07 |
| Discontinued<br> operations, net | 0.08 | 0.04 | 0.29 | 0.18 | ||||
| Earnings per<br> share – diluted | $ | 0.70 | $ | 0.57 | $ | 2.63 | $ | 2.25 |
(Continuedon next page)
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ALEXANDRIAREAL ESTATE EQUITIES, INC.
FinancialInformation
(Unaudited)
Fundsfrom Operations
Generally accepted accounting principles (“GAAP”) basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of Funds From Operations (“FFO”). Since its introduction, FFO has become a widely used non-GAAP financial measure by REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the “White Paper”) and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance for REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.
The following table presents a reconciliation of net income available to common stockholders, the most directly comparable GAAP financial measure to FFO, to funds from operations available to common stockholders for the three months and year ended December 31, 2007 and 2006 (in thousands, except per share data):
| Reconciliation of net income available to | Three Months | **** | Three Months | **** | Year | **** | Year | **** | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| common stockholders to funds from | Ended | **** | Ended | **** | Ended | **** | Ended | **** | ||||
| operations available to common stockholders | December 31, 2007 | **** | December 31, 2006 | **** | December 31, 2007 | **** | December 31, 2006 | **** | ||||
| Net income<br> available to common stockholders (1) | $ | 22,277 | $ | 16,512 | $ | 78,905 | $ | 57,326 | ||||
| Add:<br> Depreciation and amortization (2) | 26,969 | 22,454 | 97,335 | 74,039 | ||||||||
| Add: Minority<br> interest | 951 | 838 | 3,669 | 2,287 | ||||||||
| Subtract: Gain<br> on sales of property (3) | (2,901 | ) | - | (7,976 | ) | (59 | ) | |||||
| Subtract: FFO<br> allocable to minority interest | (972 | ) | (750 | ) | (3,733 | ) | (1,928 | ) | ||||
| Funds from<br> operations available to common stockholders (1) | $ | 46,324 | $ | 39,054 | $ | 168,200 | $ | 131,665 | ||||
| FFO per share | ||||||||||||
| Basic | $ | 1.47 | $ | 1.36 | $ | 5.67 | $ | 5.25 | ||||
| Diluted | $ | 1.46 | $ | 1.34 | $ | 5.61 | $ | 5.16 | ||||
| Reconciliation of earnings per share (diluted) to FFO per share (diluted) | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Earnings per<br> share (diluted) | $ | 0.70 | $ | 0.57 | $ | 2.63 | $ | 2.25 | ||||
| Depreciation and<br> amortization (2) | 0.85 | 0.77 | 3.25 | 2.90 | ||||||||
| Minority<br> interest | 0.03 | 0.03 | 0.12 | 0.09 | ||||||||
| Gain on sales of<br> property (3) | (0.09 | ) | - | (0.27 | ) | - | ||||||
| FFO allocable to<br> minority interest | (0.03 | ) | (0.03 | ) | (0.12 | ) | (0.08 | ) | ||||
| FFO per share<br> (diluted) | $ | 1.46 | $ | 1.34 | $ | 5.61 | $ | 5.16 | ||||
| (1) | During the first quarter of<br> 2007, we redeemed our 9.10% Series B cumulative redeemable preferred<br> stock. Accordingly, in compliance with<br> EITF Topic D-42, we recorded a charge of $2,799,000 in the first quarter of<br> 2007 for costs related to the redemption of our Series B Preferred<br> Stock. | |||||||||||
| --- | --- | |||||||||||
| (2) | Includes depreciation and<br> amortization for assets “held for sale” reflected as discontinued operations<br> (for the periods prior to when such assets were designated as “held for sale.”) | |||||||||||
| (3) | Gain on sales of property<br> relates to the disposition of one property sold during fourth quarter 2007, four<br> land parcels and one property sold during the third quarter of 2007, one<br> property sold during the second quarter of 2007, one property sold during the<br> first quarter of 2007, and three properties sold during the second quarter of<br> 2006. Gain on sales of property is included in the income statement in income<br> from discontinued operations, net. |
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ALEXANDRIAREAL ESTATE EQUITIES, INC.Quarterly Supplemental Financial Information*(Dollarsin thousands, except per share data)(Unaudited)*
| For the Three Months Ended | **** | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operational data | 12/31/2007 | **** | 9/30/2007 | **** | 6/30/2007 | **** | 3/31/2007 | **** | 12/31/2006 | ||||||||||
| Breakdown of<br> revenues from continuing operations (a) | |||||||||||||||||||
| Rental income | |||||||||||||||||||
| Tenant recoveries | 22,553 | 21,733 | 19,055 | 20,441 | 18,642 | ||||||||||||||
| Other income | 3,977 | 3,731 | 3,410 | 3,750 | 3,936 | ||||||||||||||
| Total revenues | |||||||||||||||||||
| Funds from<br> operations per share-diluted (b) | (c) | ||||||||||||||||||
| Dividends per<br> share on common stock | |||||||||||||||||||
| Dividend payout<br> ratio (common stock) (d) | 53.9% | 56.3% | 53.8% | 58.1% | 55.6% | ||||||||||||||
| Straight-line<br> rent | (e) | ||||||||||||||||||
| Capitalized<br> interest | (f) | ||||||||||||||||||
| Number of<br> properties (g) | |||||||||||||||||||
| Acquired/added/completed<br> during period | 2 | 13 | 2 | - | 8 | ||||||||||||||
| Sold/transferred<br> to development (h) | (3 | ) | (1 | ) | (4 | ) | (1 | ) | - | ||||||||||
| Owned at end of<br> period | 166 | 167 | 155 | 157 | 158 | ||||||||||||||
| Rentable square<br> feet (g) | |||||||||||||||||||
| Acquired/added/completed<br> during period | 404,986 | 994,024 | 104,312 | - | 573,027 | ||||||||||||||
| Sold/transferred<br> to development (h) | (92,927 | ) | (37,000 | ) | (375,112 | ) | (75,500 | ) | - | ||||||||||
| Owned at end of<br> period | 12,125,992 | 11,813,933 | 10,856,909 | 11,127,709 | 11,203,209 | ||||||||||||||
| As of | |||||||||||||||||||
| 12/31/2007 | **** | 9/30/2007 | **** | 6/30/2007 | **** | 3/31/2007 | **** | 12/31/2006 | |||||||||||
| Other data | |||||||||||||||||||
| Number of shares<br> of common stock outstanding | 31,603,344 | 31,243,448 | 29,180,700 | 29,129,238 | 29,012,135 | ||||||||||||||
| Closing price of<br> common stock | 101.67 | 96.26 | 96.82 | 100.37 | 100.40 | ||||||||||||||
| Debt to total market capitalization (i) | |||||||||||||||||||
| Total debt | 2,787,904 | 2,502,832 | 2,274,269 | 2,176,594 | 2,024,866 | ||||||||||||||
| Less minority<br> interest share of debt | (39,320 | ) | (22,102 | ) | (22,089 | ) | (22,076 | ) | (22,064 | ) | |||||||||
| Our share of debt | 2,748,584 | 2,480,730 | 2,252,180 | 2,154,518 | 2,002,802 | ||||||||||||||
| Preferred stock<br> market capitalization | 136,845 | 130,156 | 132,593 | 140,579 | 193,360 | ||||||||||||||
| Common stock<br> market capitalization | 3,213,112 | 3,007,494 | 2,825,275 | 2,923,702 | 2,912,818 | ||||||||||||||
| Total market<br> capitalization | 5,618,380 | 5,210,048 | 5,218,799 | 5,108,980 | |||||||||||||||
| Debt to total<br> market capitalization | 45.1% | 44.2% | 43.2% | 41.3% | 39.2% |
All values are in US Dollars.
| (a) | The historical results<br> above exclude the results of assets “held for sale” which have been reflected<br> as discontinued operations. |
|---|---|
| (b) | See page 5 for a<br> reconciliation of earnings per share (diluted) to FFO per share (diluted). |
| (c) | During the first quarter of<br> 2007, we redeemed our 9.10% Series B cumulative redeemable preferred<br> stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge<br> of $2,799,000, or $0.10 per share (diluted), in the first quarter of 2007 for<br> costs related to the redemption of our Series B Preferred Stock. |
| (d) | Dividend payout ratio<br> (common stock) is the ratio of the absolute dollar amount of dividends on our<br> common stock (common stock shares outstanding on the respective record date<br> multiplied by the related dividend per share) to funds from operations for<br> the respective quarter. |
| (e) | Includes a rental payment<br> of approximately $1.4 million from one tenant, the U.S. Government, in the<br> second quarter of 2007. Pursuant to Statement of Financial Accounting<br> Standards No. 13, “Accounting for Leases” rental payments due under this<br> lease are recognized on a straight-line basis over the lease term. |
| (f) | As of December 31,<br> 2007, assets for which capitalization of interest is required pursuant to<br> Statement of Financial Accounting Standards No. 34, “Capitalization of<br> Interest Cost” (“SFAS 34”), approximated $1.1 billion. This amount is<br> classified as properties undergoing development and redevelopment and land<br> held for development on our balance sheet. As of December 31, 2007, the<br> weighted average interest rate used in the calculation of capitalized<br> interest required pursuant to SFAS 34 was approximately 6.27%. SFAS 34<br> requires the interest rate for capitalization to be based on applicable<br> interest costs related to borrowings outstanding during the period, including<br> the impact of interest rate swap agreements, debt premiums/discounts and<br> amortization of loan fees. |
| (g) | Includes properties “held<br> for sale” during the applicable periods such assets were “held for sale.” As<br> of December 31, 2007, two properties aggregating approximately 136,399 square feet were classified as “held<br> for sale.” |
| (h) | During<br> the fourth quarter of 2007, we sold one asset and transferred two properties<br> from operating assets to imbedded future development opportunities. During<br> the third quarter of 2007, we sold one asset located in the New<br> Jersey/Suburban Philadelphia market and four land parcels to the<br> Massachusetts Institute of Technology. During the second quarter of 2007, we<br> sold one asset and transferred three properties from operating assets to<br> imbedded future development opportunities. During the first quarter of 2007,<br> we sold one asset located in the Suburban Washington D.C. market. |
| (i) | Debt to total market<br> capitalization is the ratio of our share of total debt (secured notes<br> payable, unsecured line of credit and unsecured term loan and unsecured<br> convertible notes) to total market capitalization. Total market<br> capitalization is equal to outstanding shares of preferred stock and common<br> stock multiplied by the related closing price at the end of each period<br> presented, plus our share of total debt. |
6
ALEXANDRIAREAL ESTATE EQUITIES, INC.Annual Supplemental Financial Information*(Dollarsin thousands, except per share data)(Unaudited)*
| For the Year Ended | **** | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operational data | 12/31/2007 | **** | 12/31/2006 | **** | 12/31/2005 | **** | 12/31/2004 | **** | 12/31/2003 | ||||||
| Breakdown of<br> revenues from continuing operations (a) | |||||||||||||||
| Rental income | $ | 306,710 | $ | 236,848 | $ | 180,100 | $ | 135,900 | $ | 117,329 | |||||
| Tenant recoveries | 83,782 | 62,104 | 46,739 | 33,077 | 29,076 | ||||||||||
| Other income | 14,868 | 11,827 | 4,767 | 3,489 | 1,964 | ||||||||||
| Total revenues | $ | 405,360 | $ | 310,779 | $ | 231,606 | $ | 172,466 | $ | 148,369 | |||||
| Funds from<br> operations per share-diluted (b) | $ | 5.61 | (c) | $ | 5.16 | $ | 4.82 | $ | 4.41 | (d) | $ | 4.23 | |||
| Dividends per<br> share on common stock | $ | 3.04 | $ | 2.86 | $ | 2.72 | $ | 2.52 | $ | 2.20 | |||||
| Dividend payout<br> ratio (common stock) (e) | 55.4% | 58.8% | 57.9% | 56.7% | 51.8% | ||||||||||
| Number of<br> properties (f) | |||||||||||||||
| Acquired/added/completed<br> during period | 17 | 29 | 22 | 23 | 4 | ||||||||||
| Sold/transferred<br> to development | (9 | ) | (3 | ) | (1 | ) | (1 | ) | (4 | ) | |||||
| Owned at end of<br> period | 166 | 158 | 132 | 111 | 89 | ||||||||||
| Rentable square<br> feet (f) | |||||||||||||||
| Acquired/added/completed<br> during period | 1,503,322 | 2,683,211 | 1,392,299 | 1,717,209 | 267,164 | ||||||||||
| Sold/transferred<br> to development | (580,539 | ) | (268,099 | ) | (16,500 | ) | 2,891 | (338,256 | ) | ||||||
| Owned at end of<br> period | 12,125,992 | 11,203,209 | 8,788,097 | 7,412,298 | 5,692,198 | ||||||||||
| **** | As of | ||||||||||||||
| **** | 12/31/2007 | **** | 12/31/2006 | **** | 12/31/2005 | **** | 12/31/2004 | **** | 12/31/2003 | **** | |||||
| Other data | |||||||||||||||
| Number of shares<br> of common stock outstanding | 31,603,344 | 29,012,135 | 22,441,294 | 19,594,418 | 19,264,023 | ||||||||||
| Closing price of common<br> stock | $ | 101.67 | $ | 100.40 | $ | 80.50 | $ | 74.42 | $ | 57.90 | |||||
| Debt to total market capitalization (g) | |||||||||||||||
| Total debt | $ | 2,787,904 | $ | 2,024,866 | $ | 1,406,666 | $ | 1,186,946 | $ | 709,007 | |||||
| Less minority<br> interest share of debt | (39,320 | ) | (22,064 | ) | - | - | - | ||||||||
| Our share of debt | 2,748,584 | 2,002,802 | 1,406,666 | 1,186,946 | 709,007 | ||||||||||
| Preferred stock<br> market capitalization | 136,845 | 193,360 | 192,419 | 199,360 | 104,421 | ||||||||||
| Common stock<br> market capitalization | 3,213,112 | 2,912,818 | 1,806,524 | 1,458,217 | 1,115,387 | ||||||||||
| Total market<br> capitalization | $ | 6,098,541 | $ | 5,108,980 | $ | 3,405,609 | $ | 2,844,523 | $ | 1,928,815 | |||||
| Debt to total<br> market capitalization | 45.1% | 39.2% | 41.3% | 41.7% | 36.8% | ||||||||||
| (a) | The historical results<br> above exclude the results of assets “held for sale” which have been reflected<br> as discontinued operations. | ||||||||||||||
| --- | --- | ||||||||||||||
| (b) | See page 5 for a<br> reconciliation of earnings per share (diluted) to FFO per share (diluted). | ||||||||||||||
| (c) | During the first quarter of<br> 2007, we redeemed our 9.10% Series B cumulative redeemable preferred<br> stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge<br> of $2,799,000 in the first quarter of 2007 for costs related to the<br> redemption of our Series B Preferred Stock. | ||||||||||||||
| (d) | Includes the effect of the<br> preferred stock redemption charge of $1,876,000 recorded in the second<br> quarter of 2004 for cost related to the redemption of our Series A<br> Preferred Stock. | ||||||||||||||
| (e) | Dividend payout ratio<br> (common stock) is the ratio of the absolute dollar amount of dividends on our<br> common stock (common stock shares outstanding on the respective record date<br> multiplied by the related dividend per share) to funds from operations for<br> the respective year. | ||||||||||||||
| (f) | Includes assets “held for<br> sale” during the applicable periods such assets were “held for sale.” | ||||||||||||||
| (g) | Debt to total market<br> capitalization is the ratio of our share of total debt (secured notes<br> payable, unsecured line of credit and unsecured term loan and unsecured<br> convertible notes) to total market capitalization. Total market<br> capitalization is equal to outstanding shares of preferred stock and common<br> stock multiplied by the related closing price at the end of each period<br> presented, plus our share of total debt. |
7
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
| December 31, | ||||
|---|---|---|---|---|
| 2007 | 2006 | |||
| (Unaudited) | **** | |||
| Assets | **** | **** | ||
| Rental<br> properties, net | $ | 3,146,915 | $ | 2,726,251 |
| Properties<br> undergoing development and redevelopment and land held for development | 1,143,302 | 596,331 | ||
| Cash and cash<br> equivalents | 8,030 | 2,948 | ||
| Tenant security<br> deposits and other restricted cash | 51,911 | 34,360 | ||
| Tenant<br> receivables | 6,759 | 6,330 | ||
| Deferred rent | 81,496 | 68,412 | ||
| Investments | 84,322 | 74,824 | ||
| Other assets | 119,359 | 108,021 | ||
| Total assets | $ | 4,642,094 | $ | 3,617,477 |
| Liabilities and Stockholders’ Equity | ||||
| Secured notes<br> payable | $ | 1,212,904 | $ | 1,174,866 |
| Unsecured line<br> of credit and unsecured term loan | 1,115,000 | 850,000 | ||
| Unsecured<br> convertible notes | 460,000 | - | ||
| Accounts<br> payable, accrued expenses and tenant security deposits | 247,289 | 158,119 | ||
| Dividends<br> payable | 27,575 | 25,363 | ||
| Total<br> liabilities | 3,062,768 | 2,208,348 | ||
| Minority<br> interest | 75,506 | 57,477 | ||
| Stockholders’<br> equity: | ||||
| Series B<br> preferred stock | - | 57,500 | ||
| Series C<br> preferred stock | 129,638 | 129,638 | ||
| Common stock | 316 | 290 | ||
| Additional paid-in<br> capital | 1,365,773 | 1,139,629 | ||
| Accumulated<br> other comprehensive income | 8,093 | 24,595 | ||
| Total<br> stockholders’ equity | 1,503,820 | 1,351,652 | ||
| Total<br> liabilities and stockholders’ equity | $ | 4,642,094 | $ | 3,617,477 |
8
ALEXANDRIAREAL ESTATE EQUITIES, INC.Summary of DebtDecember 31, 2007*(Dollarsin thousands)(Unaudited)*
Principal Maturities / Rates
| **** | Secured Debt | Unsecured Debt | **** | |||||
|---|---|---|---|---|---|---|---|---|
| Year | Amount | **** | Weighted Average Interest Rate (1) | Amount | **** | |||
| 2008 | $ | 160,074 | (2) | 6.08 | % | $ | - | |
| 2009 | 284,220 | 6.20 | - | |||||
| 2010 | 93,259 | 6.18 | 365,000 | (3) | ||||
| 2011 | 108,191 | 6.04 | 750,000 | (3) | ||||
| 2012 | 39,348 | 6.00 | 460,000 | (4) | ||||
| Thereafter | 527,812 | 5.93 | - | |||||
| Total | $ | 1,212,904 | (5) | $ | 1,575,000 |
Secured and Unsecured Debt Analysis
| **** | Balance | Percentage of Balance | Weighted Average Interest Rate (6) | Weighted Average Maturity | |||
|---|---|---|---|---|---|---|---|
| Secured Debt | $ | 1,212,904 | 43.5 | % | 6.08 | % | 4.4 Years |
| Unsecured Debt | 1,575,000 | 56.5 | 5.27 | 3.7 Years | |||
| Total Debt | $ | 2,787,904 | 100.0 | % | 5.62 | % | 4.0 Years |
Fixed and Floating Rate Debt Analysis
| **** | Balance | Percentage of Balance | Weighted Average Interest Rate (6) | Weighted Average Maturity | |||
|---|---|---|---|---|---|---|---|
| Fixed Rate Debt | $ | 1,362,949 | 48.9 | % | 5.27 | % | 4.8 Years |
| Floating Rate<br> Debt - Hedged | 778,500 | 27.9 | 5.85 | 3.8 Years | |||
| Floating Rate<br> Debt - Unhedged | 646,455 | 23.2 | 6.09 | 2.4 Years | |||
| Total Debt | $ | 2,787,904 | 100.0 | % | 5.62 | % | 4.0 Years |
| (1) | The weighted average<br> interest rate is calculated based on outstanding debt as of December 31^st^<br> of the year immediately preceding the year presented. | ||||||
| --- | --- | ||||||
| (2) | A secured note payable<br> totaling $34.0 million was repaid in early January 2008. Approximately<br> $76.4 million matures in the fourth quarter of 2008. We are in discussions<br> with our lender to extend/refinance this secured loan. | ||||||
| (3) | The unsecured line of<br> credit matures in October 2010 and may be extended at our sole option<br> for an additional one year period. The unsecured term loan matures in<br> October 2011 and may be extended at our sole option for an additional<br> one year period. | ||||||
| (4) | On or after<br> January 15, 2012, we have the right to redeem our 3.70% unsecured<br> convertible notes, in whole or in part, at any time from time to time, for<br> cash equal to 100% of the principal amounts of the notes to be redeemed plus<br> any accrued and unpaid interest to, but excluding, the redemption date.<br> Holders of the notes may require us to repurchase their notes, in whole or in<br> part, on January 15, 2012, 2017 and 2022 for cash equal to 100% of the<br> principal amount of the notes to be purchased plus any accrued and unpaid<br> interest to, but excluding, the repurchase date. Additional information<br> regarding our unsecured convertible notes is contained in our Form 10-K<br> filed with the Securities and Exchange Commission. | ||||||
| (5) | Includes minority interests’<br> share of scheduled principal maturities including lump sum principal payments<br> of $38.2 million and $211.3 million in 2009 and thereafter, respectively, of<br> which our share is approximately $21.0 million and $190.2 million,<br> respectively. | ||||||
| (6) | Represents the weighted<br> average contractual interest rate plus the impact of debt premiums/discounts<br> and our interest rate swap agreements. The weighted average interest rate<br> excludes bank fees and amortization of loan fees. See page 10 for<br> further details of our interest rate swap agreements. |
9
ALEXANDRIAREAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements
December 31, 2007
(Dollars in thousands)
(Unaudited)
| Transaction Dates | Effective Dates | Termination Dates | Interest Pay Rates (1) | Notional Amounts | Effective at December 31, 2007 | ||
|---|---|---|---|---|---|---|---|
| December 2004 | December 31, 2004 | January 2, 2008 | 3.590% | $ | 50,000 | $ | 50,000 |
| December 2004 | January 3, 2006 | July 1, 2008 | 3.927 | 50,000 | 50,000 | ||
| June 2006 | June 30, 2006 | September 30, 2009 | 5.299 | 125,000 | 125,000 | ||
| December 2003 | December 29, 2006 | October 31, 2008 | 5.090 | 50,000 | 50,000 | ||
| December 2005 | December 29, 2006 | November 30, 2009 | 4.730 | 50,000 | 50,000 | ||
| December 2005 | December 29, 2006 | November 30, 2009 | 4.740 | 50,000 | 50,000 | ||
| December 2006 | December 29, 2006 | March 31, 2014 | 4.990 | 50,000 | 50,000 | ||
| December 2006 | January 2, 2007 | January 3, 2011 | 5.003 | 28,500 | 28,500 | ||
| April 2004 | April 30, 2007 | April 30, 2008 | 4.850 | 50,000 | 50,000 | ||
| May 2005 | June 29, 2007 | June 30, 2008 | 4.400 | 50,000 | 50,000 | ||
| December 2006 | June 29, 2007 | October 31, 2008 | 4.920 | 50,000 | 50,000 | ||
| October 2007 | October 31, 2007 | June 30, 2008 | 4.458 | 50,000 | 50,000 | ||
| October 2007 | October 31, 2007 | September 30, 2012 | 4.546 | 50,000 | 50,000 | ||
| October 2007 | October 31, 2007 | September 30, 2013 | 4.642 | 50,000 | 50,000 | ||
| May 2005 | November 30, 2007 | November 28, 2008 | 4.460 | 25,000 | 25,000 | ||
| December 2005 | January 2, 2008 | December 31, 2010 | 4.768 | 50,000 | - | ||
| May 2005 | June 30, 2008 | June 30, 2009 | 4.509 | 50,000 | - | ||
| June 2006 | June 30, 2008 | June 30, 2010 | 5.325 | 50,000 | - | ||
| June 2006 | June 30, 2008 | June 30, 2010 | 5.325 | 50,000 | - | ||
| October 2007 | July 1, 2008 | March 31, 2013 | 4.622 | 25,000 | - | ||
| October 2007 | July 1, 2008 | March 31, 2013 | 4.625 | 25,000 | - | ||
| June 2006 | October 31, 2008 | December 31, 2010 | 5.340 | 50,000 | - | ||
| June 2006 | October 31, 2008 | December 31, 2010 | 5.347 | 50,000 | - | ||
| May 2005 | November 28, 2008 | November 30, 2009 | 4.615 | 25,000 | - | ||
| December 2006 | November 30, 2009 | March 31, 2014 | 5.015 | 75,000 | - | ||
| December 2006 | November 30, 2009 | March 31, 2014 | 5.023 | 75,000 | - | ||
| December 2006 | December 31, 2010 | October 31, 2012 | 5.015 | 100,000 | - | ||
| Total | $ | 778,500 | |||||
| (1) | The interest pay rates represent the interest rate<br> we will pay for one month LIBOR under the respective interest rate swap<br> agreement. These rates do not include any spread in addition to one month<br> LIBOR that is due monthly as interest expense. | ||||||
| --- | --- |
10
.ALEXANDRIA REAL ESTATEEQUITIES, INC.
Summaryof Same Property Comparisons
(Dollars in thousands)
(Unaudited)
| **** | GAAP Basis (1) | Cash Basis (1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Quarter Ended | Quarter Ended | ||||||||||
| 12/31/2007 | 12/31/2006 | % Change | 12/31/2007 | 12/31/2006 | % Change | |||||||
| Revenue (2) | $ | 80,750 | $ | 77,026 | 4.8% | $ | 78,730 | $ | 71,907 | 9.5% | ||
| Operating<br> expenses | 20,617 | 18,937 | 8.9 | 20,617 | 18,937 | 8.9 | ||||||
| Revenue less<br> operating expenses | $ | 60,1339 | $ | 58,089 | 3.5% | $ | 58,113 | $ | 52,970 | 9.7% | ||
| **** | GAAP Basis (1) | Cash Basis (1) | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **** | Year Ended | Year Ended | ||||||||||
| 12/31/2007 | 12/31/2006 | % Change | 12/31/2007 | 12/31/2006 | % Change | |||||||
| Revenue (2) | $ | 213,425 | $ | 202,115 | 5.6 | % | $ | 207,883 | $ | 192,781 | 7.8 | % |
| Operating<br> expenses | 49,060 | 43,647 | 12.4 | 49,060 | 43,647 | 12.4 | ||||||
| Revenue less<br> operating expenses | $ | 164,365 | $ | 158,468 | 3.7 | % | $ | 158,823 | $ | 149,134 | 6.5 | % |
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented for the quarter periods (the “Fourth Quarter Same Properties”) and for the full year periods (the “2007 Same Properties.”) Same property occupancy for the quarters ended December 31, 2007 and 2006 was 94.9% and 94.0%, respectively. Same property occupancy for the year ended December 31, 2007 and 2006 was 95.8% and 95.1%, respectively. Properties undergoing redevelopment are excluded from same property results.
| (1) | Revenue less operating<br> expenses computed in accordance with GAAP is total revenue associated with<br> the Fourth Quarter Same Properties and 2007 Same Properties, as applicable,<br> (excluding lease termination fees, if any) less property operating expenses.<br> Under GAAP, rental revenue is recognized on a straight-line basis over the<br> respective lease terms. Revenue less operating expenses on a cash basis is<br> total revenue associated with the Fourth Quarter Same Properties and 2007 Same<br> Properties, as applicable (excluding lease termination fees, if any) less<br> property operating expenses, adjusted to exclude the effect of straight-line<br> rent adjustments required by GAAP. Straight-line rent adjustments for the<br> quarters ended December 31, 2007 and 2006 for the Fourth Quarter Same<br> Properties were $2,020,000 and $5,119,000, respectively. Straight-line rent<br> adjustments for the years ended December 31, 2007 and 2006 for the 2007<br> Same Properties were $5,542,000 and $9,334,000, respectively. We believe that<br> revenue less operating expenses on a cash basis is helpful to investors as an<br> additional measure of operating performance because it eliminates<br> straight-line rent adjustments to rental revenue. |
|---|---|
| (2) | Fees received from tenants<br> in connection with termination of their leases, if any, are excluded from<br> revenue in the Summary of Same Property Comparisons. As of December 31,<br> 2007, approximately 88% of our leases (on a square footage basis) were triple<br> net leases, requiring tenants to pay substantially all real estate taxes and<br> insurance, common area and other operating expenses, including increases<br> thereto. In addition, as of December 31, 2007, approximately 9% of our<br> leases (on a square footage basis) required the tenants to pay a majority of<br> operating expenses. |
11
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties
(Dollars in thousands)
(Unaudited)
| **** | December 31, 2007 | **** | **** | **** | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | Number of | **** | Rentable Square Feet | Annualized | Occupancy Percentage | |||||||
| **** | Properties | Operating | Redevelopment | Total | Base Rent (1) | 12/31/07 (1) (2) | 12/31/06 (3) | 9/30/07 (4) | ||||
| Markets | ||||||||||||
| California - Los<br> Angeles Metro | 2 | 31,343 | 29,660 | 61,003 | $ | 697 | 70.8 | % | 82.5 | % | 70.8 | % |
| California - San<br> Diego | 33 | 1,465,032 | 215,370 | 1,680,402 | 43,264 | 94.9 | 89.5 | 94.6 | ||||
| California - San<br> Francisco Bay | 23 | 1,837,457 | 30,217 | 1,867,674 | 63,569 | 95.8 | 94.0 | 95.1 | ||||
| Eastern<br> Massachusetts | 38 | 3,076,689 | 310,349 | 3,387,038 | 107,322 | 94.7 | 95.9 | 96.0 | ||||
| International -<br> Canada | 4 | 296,362 | 46,032 | 342,394 | 6,879 | 100.0 | 100.0 | 100.0 | ||||
| New<br> Jersey/Suburban Philadelphia | 8 | 441,504 | - | 441,504 | 9,176 | 96.6 | 96.6 | 96.3 | ||||
| Southeast | 12 | 596,172 | 62,234 | 658,406 | 10,423 | 86.0 | (5) | 78.1 | (5) | 87.3 | (5) | |
| Suburban<br> Washington D.C. | 31 | 2,430,402 | 69,366 | 2,499,768 | 48,004 | 90.1 | 92.5 | 92.3 | ||||
| Washington -<br> Seattle | 13 | 1,040,113 | 11,291 | 1,051,404 | 30,488 | 97.2 | 94.9 | 93.4 | ||||
| Total Properties<br> (Continuing Operations) | 164 | 11,215,074 | 774,519 | 11,989,593 | $ | 319,822 | 93.8 | % | 93.1 | % | 94.1 | % |
| (1) | Excludes spaces at<br> properties totaling approximately 774,519 rentable square feet undergoing a permanent change in use to<br> office/laboratory space through redevelopment and two properties totaling approximately<br> 136,399 rentable square feet that are<br> classified as “held for sale.” | |||||||||||
| --- | --- | |||||||||||
| (2) | Including spaces undergoing<br> a permanent change in use to office/laboratory space through redevelopment,<br> occupancy as of December 31, 2007 was 87.8%. See page 17 for<br> additional information on our redevelopment program. | |||||||||||
| (3) | Excludes spaces at<br> properties totaling approximately 612,699 rentable square feet undergoing a permanent change in use to<br> office/laboratory space through redevelopment as of December 31, 2006.<br> Including spaces undergoing a permanent change in use to office/laboratory<br> space through redevelopment, occupancy as of December 31, 2006 was<br> 88.0%. See page 17 for additional information on our redevelopment<br> program. | |||||||||||
| (4) | Excludes spaces at<br> properties totaling approximately 795,202 rentable square feet undergoing a permanent change in use to<br> office/laboratory space through redevelopment and one property totaling approximately<br> 49,437 rentable square feet that was<br> classified as “held for sale” as of September 30, 2007. Including spaces<br> undergoing a permanent change in use to office/laboratory space through<br> redevelopment, occupancy as of September 30, 2007 was 87.8%. See<br> page 17 for additional information on our redevelopment program. | |||||||||||
| (5) | Substantially all of the<br> vacant space is office or warehouse space. |
12
ALEXANDRIAREAL ESTATE EQUITIES, INC.
Summaryof Leasing Activity
For theQuarter Ended December 31, 2007
| **** | **** | **** | **** | **** | **** | TI’s/Lease | **** |
|---|---|---|---|---|---|---|---|
| **** | **** | Rentable | **** | **** | Rental | Commissions | Average |
| **** | Number | Square | Expiring | New | Rate | Per | Lease |
| **** | of Leases | Footage | Rates | Rates | Changes | Square Foot | Terms |
| Leasing Activity | |||||||
| Lease Expirations | |||||||
| Cash Basis | 40 | 409,374 | $28.28 | - | - | - | - |
| GAAP Basis | 40 | 409,374 | $26.03 | - | - | - | - |
| Renewed/Released<br> Space Leased | |||||||
| Cash Basis | 19 | 200,847 | $30.67 | $33.67 | 9.8% | $1.90 | 2.8 years |
| GAAP Basis | 19 | 200,847 | $30.17 | $33.91 | 12.4% | $1.90 | 2.8 years |
| Redeveloped/Developed/<br> Vacant Space Leased | |||||||
| Cash Basis | 24 | 231,365 | - | $26.91 | - | $6.76 | 8.6 years |
| GAAP Basis | 24 | 231,365 | - | $29.50 | - | $6.76 | 8.6 years |
| Month-to-Month<br> Leases In Effect | |||||||
| Cash Basis | 16 | 85,087 | $25.07 | $24.66 | - | - | - |
| GAAP Basis | 16 | 85,087 | $24.69 | $24.66 | - | - | - |
| Leasing Activity Summary | |||||||
| Excluding<br> Month-to-Month Leases | |||||||
| Cash Basis | 43 | 432,212 | - | $30.05 | - | $4.50 | 5.9 years |
| GAAP Basis | 43 | 432,212 | - | $31.55 | - | $4.50 | 5.9 years |
| Including<br> Month-to-Month Leases | |||||||
| Cash Basis | 59 | 517,299 | - | $29.16 | - | - | - |
| GAAP Basis | 59 | 517,299 | - | $30.42 | - | - | - |
13
ALEXANDRIAREAL ESTATE EQUITIES, INC.
Summaryof Leasing Activity
For the YearEnded December 31, 2007
| **** | **** | **** | **** | **** | **** | TI’s/Lease | **** |
|---|---|---|---|---|---|---|---|
| **** | **** | Rentable | **** | **** | Rental | Commissions | Average |
| **** | Number | Square | Expiring | New | Rate | Per | Lease |
| **** | of Leases | Footage | Rates | Rates | Changes | Square Foot | Terms |
| Leasing Activity | |||||||
| Lease Expirations | |||||||
| Cash Basis | 108 | 1,626,033 | $25.98 | - | - | - | - |
| GAAP Basis | 108 | 1,626,033 | $26.97 | - | - | - | - |
| Renewed/Released<br> Space Leased | |||||||
| Cash Basis | 61 | 895,894 | $29.38 | $31.41 | 6.9% | $4.49 | 4.0 years |
| GAAP Basis | 61 | 895,894 | $28.66 | $31.48 | 9.8% | $4.49 | 4.0 years |
| Redeveloped/Developed/<br> Vacant Space Leased | |||||||
| Cash Basis | 75 | 686,856 | - | $31.59 | - | $10.14 | 6.5 years |
| GAAP Basis | 75 | 686,856 | - | $33.68 | - | $10.14 | 6.5 years |
| Month-to-Month<br> Leases In Effect | |||||||
| Cash Basis | 16 | 85,087 | $25.07 | $24.66 | - | - | - |
| GAAP Basis | 16 | 85,087 | $24.69 | $24.66 | - | - | - |
| Leasing Activity Summary | |||||||
| Excluding<br> Month-to-Month Leases | |||||||
| Cash Basis | 136 | 1,582,750 | - | $31.49 | - | $6.95 | 5.1 years |
| GAAP Basis | 136 | 1,582,750 | - | $32.44 | - | $6.95 | 5.1 years |
| Including<br> Month-to-Month Leases | |||||||
| Cash Basis | 152 | 1,667,837 | - | $31.14 | - | - | - |
| GAAP Basis | 152 | 1,667,837 | - | $32.04 | - | - | - |
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ALEXANDRIAREAL ESTATE EQUITIES, INC.
Summaryof Lease Expirations
December 31,2007
| **** | **** | Rentable Square | Percentage of | Annualized Base Rent | |||
|---|---|---|---|---|---|---|---|
| Year of Lease | Number of | Footage of | Aggregate | of Expiring Leases | |||
| Expiration | Leases Expiring | Expiring Leases | Leased Square Feet | (per square foot) | |||
| 2008 | 67 | ^(1)^ | 846,022 | ^(1)^ | 8.0 | % | $25.59 |
| 2009 | 63 | 896,692 | 8.5 | 24.75 | |||
| 2010 | 50 | 1,025,693 | 9.7 | 28.16 | |||
| 2011 | 60 | 1,721,434 | 16.4 | 27.28 | |||
| 2012 | 58 | 1,405,285 | 13.4 | 33.56 | |||
| **** | Rentable Square Footage of Expiring Leases | ||||||
| --- | --- | --- | --- | ||||
| Markets | 2008 | **** | 2009 | ||||
| California - Los<br> Angeles Metro | 4,006 | 4,354 | |||||
| California - San<br> Diego | 93,250 | 203,464 | |||||
| California - San<br> Francisco Bay | 287,888 | 101,165 | |||||
| Eastern<br> Massachusetts | 267,776 | 152,697 | |||||
| International -<br> Canada | - | - | |||||
| New<br> Jersey/Suburban Philadelphia | 40,000 | 21,000 | |||||
| Southeast | 22,440 | 85,412 | |||||
| Suburban<br> Washington D.C. | 84,184 | 294,664 | |||||
| Washington -<br> Seattle | 46,478 | 33,936 | |||||
| Total | 846,022 | ^(1)^ | 896,692 |
(1) Includes 16 month-to-month leases for approximately 85,000 rentable square feet.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Additions and Dispositions of Properties
For the Quarter Ended December 31, 2007
(Dollars in thousands)
| **** | Acquisition | **** | Month of | Rentable | |
|---|---|---|---|---|---|
| Markets | Amount | **** | Acquisition | Square Feet | |
| Additions to Operating Properties: | |||||
| Eastern<br> Massachusetts | $ | 150,000 | (1) | October | 369,831 |
| New<br> Jersey/Suburban Philadelphia | 9,089 | October | 35,155 | ||
| Total Additions to Operating Properties: | $ | 159,089 | 404,986 | ||
| Acquisition | **** | Month of | Developable | ||
| --- | --- | --- | --- | --- | --- |
| Markets | Amount | **** | Acquisition | Square Feet | |
| Additions to Land: | |||||
| Eastern<br> Massachusetts | $ | 70,000 | (2) | November | 350,000 |
| Disposition | **** | Month of | Rentable | ||
| --- | --- | --- | --- | --- | --- |
| Markets | Amount | **** | Disposition | Square Feet | |
| Dispositions: | |||||
| California – San<br> Francisco Bay | $ | 10,550 | (3) | December | 49,874 |
(1) In connection with the purchase of this property, we closed two secured notes totaling approximately $57.9 million. In addition to the existing rentable square footage of approximately 369,831, this property also has an additional approximately 390,786 developable square footage. This additional future developable square footage is included in our Imbedded Future Development and Redevelopment Square Footage on page 19.
(2) In connection with the purchase of this property, we closed a $62.0 million pre-construction secured loan of which approximately $38.2 million was drawn and outstanding as of December 31, 2007. The Company has a 55% interest in this development project located in the Longwood Medical submarket, Boston, MA. The 350,000 future developable square footage is included in our Imbedded Future Development and Redevelopment Square Footage on page 19.
(3) Represents sale of one office/industrial building in a small submarket south of the city of San Francisco.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.Summary of Square Footage Undergoing RedevelopmentDecember 31 , 2007
| **** | **** | **** | **** | Square Footage | **** |
|---|---|---|---|---|---|
| **** | Placed | Estimated | Estimated | Undergoing | **** |
| **** | in | In-Service | Investment | Redevelopment/ | **** |
| Markets/Submarkets | Redevelopment | Dates | Per Square Foot | Total Property | Status |
| California - Los<br> Angeles Metro | 2006 | 2008 | $80-100 | 29,660/29,660 | Construction |
| California - San<br> Diego/Torrey Pines | 2004 | 2009 | $100-120 | 87,140/87,140 | Design/Construction (1) |
| California - San<br> Diego/Torrey Pines | 2006 | 2009 | $80-100 | 43,600/43,600 | Construction |
| California - San<br> Diego/Sorrento | 2006 | 2008 | $70-80 | 30,147/30,147 | Construction |
| California - San<br> Diego/Torrey Pines | 2007 | 2009 | $80-100 | 15,259/107,709 | Construction |
| California - San<br> Diego/Torrey Pines | 2007 | 2009 | $80-100 | 39,224/76,084 | Construction |
| California - San<br> Francisco Bay/<br><br> Peninsula | 2007 | 2008 | $80-100 | 30,217/82,712 | Construction |
| Eastern<br> Massachusetts/Suburban | 2007 | 2009 | $100-120 | 23,000/38,000 | Construction |
| Eastern<br> Massachusetts/Suburban | 2007 | 2009 | $70-80 | 113,045/113,045 | Redesign/Construction |
| Eastern<br> Massachusetts/Cambridge | 2006 | 2008/2009 | $120-175 | 105,850/155,090 | Design/Construction |
| Eastern<br> Massachusetts/Cambridge | 2007 | 2009 | $100-130 | 68,454/369,831 | Design/Demolition |
| International -<br> Canada | 2007 | 2008 | $140-160 | 46,032/46,032 | Construction |
| Southeast/Florida | 2006 | 2008 | $80-100 | 45,841/45,841 | Construction |
| Southeast/Research<br> Triangle Park | 2007 | 2008 | $100-120 | 16,393/77,395 | Design/Construction |
| Suburban<br> Washington D.C./Shady Grove | 2007 | 2009 | $70-80 | 69,366/125,004 | Construction |
| Washington -<br> Seattle | 2007 | 2009 | $125-150 | 11,291/32,279 | Design |
| 774,519/1,459,569 |
Our redevelopment program involves ongoing activities necessary for the permanent change of use of applicable redevelopment space to office/laboratory space. Spaces currently built out with laboratory improvements are generally not placed into our value-add redevelopment program. As required under GAAP, interest and other costs directly related and essential to the project are capitalized on redevelopment properties on the basis allocable only to that portion of space undergoing redevelopment. In addition to properties undergoing redevelopment, as of December 31, 2007, our asset base contained imbedded opportunities for future permanent change of use to office/laboratory space through redevelopment aggregating approximately 1,833,000 rentable square feet. See Summary of Imbedded Future Development and Redevelopment Square Footage on page 19.
| (1) | This project also includes<br> site work and a multi-story below and above ground parking structure to<br> support both the existing building undergoing redevelopment and an additional<br> building targeted for development in the future. The entitlement process for this project<br> was completed in early 2007. |
|---|
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ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Properties Undergoing Ground-Up DevelopmentDecember 31, 2007
| **** | **** | Construction | Estimated | Estimated | Rentable | **** | **** |
|---|---|---|---|---|---|---|---|
| **** | Building | Start | In-Service | Investment | Square | **** | **** |
| Markets/Submarkets | Descriptions | Dates | Dates | Per Square Foot (1) | Feet | **** | Status |
| California - San<br> Francisco Bay/ Mission Bay | One Multi-tenant Bldg. | 2007 | 2010 | $350 | 158,000 | Construction | |
| California - San<br> Francisco Bay/<br><br> So. San Francisco | Two Bldgs., Single or<br> Multi-tenant | 2006 | 2009 | $350 | 162,000 | Construction | |
| California - San<br> Francisco Bay/<br><br> So. San Francisco | One Single or<br> Multi-tenant Bldg. | 2006 | 2009 | $350 | 135,000 | Construction | |
| International -<br> China | Two Bldgs., Single or<br> Multi-tenant | 2007 | 2009 | $45 | 280,000 | Construction | |
| New York - New<br> York City | Two Multi-tenant Bldgs. | 2007 | 2010/2011 | $500 | 725,000 | (2) | Site Work |
| Washington -<br> Seattle | One Single or<br> Multi-tenant Bldg. | 2007 | 2010 | TBD | 115,000 | Site Work | |
| Total Properties Undergoing Ground-Up Development (1) | 1,575,000 |
In accordance with Statement of Financial Accounting Standards No. 34, “Capitalization of Interest Cost” (“SFAS 34”) and Statement of Financial Accounting Standards No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects” (“SFAS 67”), we are required to capitalize direct construction, including pre-construction costs, interest, property taxes, insurance and other costs directly related and essential to the construction of a project while activities are ongoing to prepare an asset for its intended use. Pre-construction costs include costs related to the development of plans and the process of obtaining entitlements and permits from government authorities. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Should development, redevelopment or construction activity cease, construction costs, including interest, would no longer be eligible for capitalization, under SFAS 34 and SFAS 67, and would be expensed as incurred.
| (1) | Our aggregate construction<br> costs to date approximate $96 per developable square foot. Amount excludes our investment per square<br> foot in land. |
|---|---|
| (2) | In addition, we have the<br> right to develop an additional parcel with approximately 442,000 rentable<br> square feet. This square footage is not included in the imbedded developable<br> square footage shown on page 19. |
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ALEXANDRIA REAL ESTATE EQUITIES, INC.Summary of Imbedded Future Development and Redevelopment Square FootageDecember 31, 2007
| **** | Imbedded Future Development | **** | **** | **** | |
|---|---|---|---|---|---|
| Markets | Development/ Pre-construction Square Footage (1) | Total Imbedded Development Square Footage | **** | Imbedded Future Redevelopment Square Footage | Total |
| California - San<br> Diego | 298,000 | 443,000 | 228,000 | 671,000 | |
| California - San<br> Francisco Bay/Mission Bay | 1,886,000 | 2,386,000 | - | 2,386,000 | |
| California - San<br> Francisco Bay/<br><br> So. San Francisco | 809,000 | 905,000 | 25,000 | 930,000 | |
| Eastern<br> Massachusetts | 2,050,000 | 2,275,000 | 621,000 | 2,896,000 | |
| International -<br> Canada | 763,000 | 827,000 | - | 827,000 | |
| Suburban<br> Washington D.C. | 425,000 | 787,000 | 502,000 | 1,289,000 | |
| Washington -<br> Seattle | 206,000 | 595,000 | 135,000 | 730,000 | |
| Other | 176,000 | 511,000 | 322,000 | 833,000 | |
| Total | 6,613,000 | 8,729,000 | (2) | 1,833,000 | 10,562,000 |
The imbedded future development and redevelopment square footage shown above represents future ground-up development projects and future redevelopment (permanent change in use of applicable space to office/laboratory space) projects. A significant portion of our imbedded future development square footage is in the development/pre-construction phase (entitlement, permitting, design, etc.). See discussion on SFAS 34 and SFAS 67 on page 18. The exact date of physical construction will depend on successful completion of development/pre-construction activities and management’s assessment of overall market conditions. As required under GAAP, direct construction, interest, property taxes, insurance and other costs directly related and essential to the development/pre-construction, or construction of a project, is mandated to be capitalized during pre-construction when activities are ongoing to bring these assets to their intended use.
(1) Development/pre-construction square footage is included in Imbedded Future Development-Total Imbedded Development Square Footage shown above.
(2) In addition, we have the right to develop an additional parcel with approximately 442,000 rentable square feet. This square footage is not included in the imbedded developable square footage shown above.
19
ALEXANDRIAREAL ESTATE EQUITIES, INC.
Summaryof Capital CostsFor the Year ended December 31, 2007
(Inthousands)
| Property-related capital expenditures<br> (1) | $ | 2,027 |
|---|---|---|
| Leasing costs<br> (2) | $ | 687 |
| Property-related<br> redevelopment costs (3) | $ | 162,393 |
| Property-related<br> development costs (3) | $ | 238,869 |
| (1) | Property-related capital expenditures include all<br> major capital and recurring capital expenditures except capital expenditures<br> that are recoverable from tenants, revenue-enhancing capital expenditures, or<br> costs related to the redevelopment of a property. Major capital expenditures<br> consist of roof replacements and HVAC systems which are typically identified<br> and considered at the time the property is acquired. Capital expenditures<br> fluctuate in any given period due to the nature, extent or timing of<br> improvements required and the extent to which they are recoverable from<br> tenants. Approximately 91% of our leases (based on rentable square feet)<br> provide for the recapture of certain capital expenditures (such as HVAC<br> systems maintenance and/or replacement, roof replacement and parking lot<br> resurfacing). In addition, we implement an active preventative maintenance<br> program at each of our properties to minimize capital expenditures. | |
| --- | --- | |
| (2) | Leasing costs consist of tenant improvements and<br> leasing commissions related to leasing of acquired vacant space and second<br> generation space. | |
| (3) | Amount includes leasing costs related to development<br> and redevelopment projects. |
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ALEXANDRIAREAL ESTATE EQUITIES, INC.
ConferenceCall Information
Forthe Fourth Quarter Ended and Year December 31, 2007
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the fourth quarter and year ended December 31, 2007:
| Date: | February 12, 2008 |
|---|---|
| Time: | 11:00 A.M. Eastern Standard Time/8:00 A.M.<br> Pacific Standard Time |
| Phone Number: | (719) 325-4763 |
| Confirmation Code: | 6172554 |
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