Alexandria Real Estate Equities, Inc 8-K, filed Feb 13, 2004
Alexandria Real Estate Equities, Inc. (ARE)
About this 8-K
Alexandria Real Estate Equities, Inc filed this 8-K on February 13, 2004, reporting on events of February 12, 2004.
Items reported
- Item 12
- Item 7
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 12, 2004
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
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135 North Los Robles Avenue, Suite 250
Pasadena, California 91101
(Address of principal executive offices including zip code)
(626) 578-0777
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Item 7. Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated February 12, 2004
Item 12. Results of Operations and Financial Condition
On February 12, 2004, we issued a press release entitled "Alexandria Real Estate Equities, Inc. Reports Fourth Quarter and Year Ended December 31, 2003 Results" which sets forth our results of operations for the fourth quarter and year ended December 31, 2003. A copy of that press release is attached hereto as Exhibit 99.1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. |
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February 12, 2004 |
By: /s/ JOEL S. MARCUS |
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Joel S. Marcus |
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Chief Executive Officer |
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(Principal Executive Officer) |
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By: /s/ PETER J. NELSON |
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Peter J. Nelson |
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Chief Financial Officer and Treasurer |
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(Principal Financial and Accounting Officer) |
EXHIBIT INDEX
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Exhibit Title |
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* Also provided in PDF format as a courtesy.
Exhibit 99.1
Contact: Joel S. Marcus
Chief Executive Officer
Alexandria Real Estate Equities, Inc.
(626) 578-9693
Alexandria Real Estate Equities, Inc. Reports Fourth Quarter
And
Year Ended December 31, 2003 Results
- Company Reports Funds from Operations of $1.08 Per Share
(Diluted) Up 11%, and
Net Income Available to Common Stockholders of 57 Cents Per
Share (Diluted) Up 50%
for Fourth Quarter 2003 Over Fourth Quarter 2002 -
Highlights
Fourth Quarter 2003:
- Fourth Quarter 2003 Funds from Operations (FFO) of $1.08 Per Share (Diluted)
- Fourth Quarter 2003 Total Revenues Up 6%, FFO Up 14% and FFO Per Share (Diluted) Up 11% Over Fourth Quarter 2002
- Fourth Quarter 2003 Net Income Available to Common Stockholders of 57 Cents Per Share (Diluted), Up 50% Over Fourth Quarter 2002
- Signed 26 Leases for 366,000 Square Feet of Space
- Completed Acquisitions of Three Office/Laboratory Properties Aggregating 216,000 Square Feet
- Closed Sale of One Property Aggregating 171,000 Square Feet
Year Ended December 31, 2003:
- 2003 FFO of $4.23 Per Share (Diluted)
- 2003 Total Revenues Up 13%, FFO Up 20% and FFO Per Share (Diluted) Up 11% Over 2002
- 2003 Net Income Available to Common Stockholders of $2.64 (Diluted)
- Signed 66 Leases for 785,000 Square Feet of Space
PASADENA, CA. - February 12, 2004 - Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the fourth quarter and year ended December 31, 2003.
For the fourth quarter of 2003, Alexandria reported FFO of $21,030,000, or $1.08 per share (diluted), on total revenues of $40,979,000, compared to FFO of $18,470,000, or 97 cents per share (diluted), on total revenues of $38,684,000 for the fourth quarter of 2002. Comparing the fourth quarter of 2003 to the fourth quarter of 2002, total revenues increased 6%, FFO increased 14% and FFO per share (diluted) increased 11%. Net income available to common stockholders for the fourth quarter of 2003 was $11,127,000, or 57 cents per share (diluted), compared to net income available to common stockholders of $7,229,000, or 38 cents per share (diluted), for the fourth quarter of 2002.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR
ENDED DECEMBER 31, 2003 RESULTS
Page 2
For the year ended December 31, 2003, Alexandria reported FFO of $81,360,000, or $4.23 per share (diluted), on total revenues of $160,558,000, compared to FFO of $68,069,000, or $3.81 per share (diluted), on total revenues of $142,271,000 for the year ended December 31, 2002. Comparing 2003 to 2002, total revenues increased 13%, FFO increased 20% and FFO per share (diluted) increased 11%. Net income available to common stockholders for the year ended December 31, 2003 was $50,745,000, or $2.64 per share (diluted), as compared to $31,453,000, or $1.76 per share (diluted), for the year ended December 31, 2002.
FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. Alexandria computes FFO in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"). In 2003, NAREIT issued guidance which modifies the calculation of FFO for both past and future periods. In accordance with NAREIT's revised guidance, the Company now includes losses from early extinguishment of debt [$1,002,000, or $0.06 per share (diluted) for 2002] and real estate impairment charges [$1,150,000, $0.06 per share (diluted) for 2002] in its calculation of FFO. As such, the reported amounts of FFO and FFO per share for the fourth quarter of 2002 and for the year ended December 31, 2002 have been modified from those previously reported. A reconciliation of FFO to GAAP net income showing the effects of the modifications based on recent guidance from NAREIT, is included in the financial information accompanying this press release.
The Company announced that it had signed a total of 26 leases during the fourth quarter for approximately 366,000 square feet of space at 19 different properties (excluding 17 month-to-month leases for approximately 65,000 square feet which were effective during the quarter). Of this total, approximately 131,000 square feet were for redeveloped, developed or previously vacant space at 12 properties, approximately 64,000 square feet of which were delivered from the Company's redevelopment or development programs, with the remaining approximately 67,000 square feet for previously vacant space. The remaining approximately 235,000 square feet were for new or renewal leases related to previously leased space. Rental rates for new or renewal leases were on average approximately 7% higher than expiring leases. For the year ended December 31, 2003, the Company signed a total of 66 leases for approximately 785,000 square feet of space at 32 different properties (excluding month-to-month leases). Of this total, approximately 265,000 square feet were for redeveloped, developed or previously vacant space at 21 properties, of which approximately 157,000 square feet were delivered from the Company's redevelopment or development programs. The remaining 520,000 square feet were for new or renewal space with rental rates on average approximately 6% higher than expiring leases.
The Company announced that it acquired an office/laboratory property aggregating approximately 67,000 square feet in the San Francisco Bay market for approximately $11.8 million in cash during November 2003. It also acquired an office/laboratory property in the San Francisco Bay market containing approximately 92,000 square feet of space for approximately $20 million in cash during December 2003. In December 2003, the Company acquired an office/laboratory property containing approximately 57,000 square feet in the San Diego market for approximately $13 million in cash. The properties are each fully leased to a single life science tenant.
The Company announced the closing of the sale in December 2003 of a non-core property containing approximately 171,000 square feet in Suburban Washington D.C. for approximately $9 million and recorded a loss of approximately $36,000 in connection with this transaction.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR
ENDED DECEMBER 31, 2003 RESULTS
Page 3
Based on the Company's current view of existing market conditions and certain contemporaneous assumptions, the Company has updated its prior earnings guidance:
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2005 |
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Fully diluted net income per common share * |
$2.54-$2.57 |
$2.88-$2.91 |
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Fully diluted FFO per common share |
$4.48-$4.51 |
$4.73-$4.76 |
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* excludes gains or losses on sales of real estate |
In providing this guidance, the Company stated that its Series A preferred stock may be redeemed on or after June 14, 2004. The write-off of offering costs in connection with any assumed redemption of this preferred stock, if at all, has not been considered or reflected in the guidance set forth above.
Alexandria Real Estate Equities, Inc. is a publicly traded real estate operating company principally focused on the ownership, operation, management, acquisition, expansion and selective redevelopment and development of properties containing office/laboratory space. Such properties are designed and improved for lease primarily to pharmaceutical, biotechnology, life science product and service companies, not-for-profit scientific research institutions, universities and related government agencies. Alexandria's portfolio currently consists of 89 properties comprising approximately 5.7 million square feet of office/laboratory space.
This press release contains forward-looking statements within the meaning of the federal securities laws. The Company's actual results may differ materially from those projected in the forward-looking
statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the Company's Form 10-K Annual Report and other periodic reports filed with the Securities and Exchange Commission.
(Tables follow)
Alexandria Real Estate Equities, Inc. and Subsidiaries
Financial Information
(Unaudited)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Three Months Year Year
Ended Ended Ended Ended
Dec. 31, 2003 Dec. 31, 2002 Dec. 31, 2003 Dec. 31, 2002
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Income statement data
Total revenues $ 40,979 $ 38,684 $ 160,558 $ 142,271
Expenses
Rental operations 7,911 7,988 32,794 29,135
General and administrative 3,550 3,452 14,211 13,436
Interest 6,501 6,382 26,416 24,984
Depreciation and amortization 9,844 8,526 38,633 32,898
Impairment on investments -- 2,545 -- 2,545
Loss on early extinguishment of debt (4) -- -- -- 1,002
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27,806 28,893 112,054 104,000
Income from continuing operations 13,173 9,791 48,504 38,271
Income (loss) from discontinued operations 179 (337) 11,139 1,761
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Net income 13,352 9,454 59,643 40,032
Dividends on preferred stock 2,225 2,225 8,898 8,579
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Net income available to common stockholders $ 11,127 $ 7,229 50,745 31,453
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Weighted average shares of
common stock outstanding
-Basic 19,101,416 18,856,036 18,993,856 17,594,228
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-Diluted 19,444,411 19,080,566 19,247,790 17,859,787
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Basic income per common share
Income from continuing operations $ 0.69 $ 0.52 $ 2.55 $ 2.18
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Income (loss) from discontinued operations $ 0.01 $ (0.02) $ 0.59 $ 0.10
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Net income $ 0.70 $ 0.50 $ 3.14 $ 2.28
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Net income available to common stockholders $ 0.58 $ 0.38 $ 2.67 $ 1.79
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Diluted income per common share
Income from continuing operations $ 0.68 $ 0.51 $ 2.52 $ 2.14
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Income (loss) from discontinued operations $ 0.01 $ (0.02) $ 0.58 $ 0.10
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Net income $ 0.69 $ 0.50 $ 3.10 $ 2.24
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Net income available to common stockholders $ 0.57 $ 0.38 $ 2.64 $ 1.76
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Alexandria Real Estate Equities, Inc. and Subsidiaries
Financial Information
(Unaudited)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Three Months Year Year
Ended Ended Ended Ended
Dec. 31, 2003 Dec. 31, 2002 Dec. 31, 2003 Dec. 31, 2002
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Funds from operations (1)
Net income $ 13,352 $ 9,454 $ 59,643 $ 40,032
Add
Depreciation and amortization (2) 9,867 8,696 38,901 34,071
Impairment on investments -- 2,545 -- 2,545
Loss/(gain) on sales of property (3) 36 -- (8,286) --
Subtract
Dividends on preferred stock (2,225) (2,225) (8,898) (8,579)
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Funds from operations (FFO) $ 21,030 $ 18,470 $ 81,360 $ 68,069
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Add
Loss on early extinguishment of debt (4) -- -- -- 1,002
Non-cash real estate impairment charge (5) -- 1,150 -- 1,150
Funds from operations, excluding loss on early
extinguishment of debt and non-cash real estate -------------- -------------- -------------- --------------
impairment charge $ 21,030 $ 19,620 $ 81,360 $ 70,221
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FFO per common share
-Basic $ 1.10 $ 0.98 $ 4.28 $ 3.87
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-Diluted $ 1.08 $ 0.97 $ 4.23 $ 3.81
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Reconciliation of net income available to common
stockholders per share (diluted) to FFO per
common share (diluted)
Net income available to common stockholders per
share (diluted) $ 0.57 $ 0.38 $ 2.64 $ 1.76
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Depreciation and amortization per common share (2) $ 0.51 $ 0.46 $ 2.02 $ 1.91
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Loss/(gain) on sales of property per common share (3)$ -- $ -- $ (0.43) $ --
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Impairment on investments $ -- $ 0.13 $ -- $ 0.14
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FFO per common share (diluted) $ 1.08 $ 0.97 $ 4.23 $ 3.81
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As of As of
Dec. 31, 2003 Dec. 31, 2002
Balance sheet data -------------- --------------
Rental properties, net $ 982,297 $ 976,422
Total assets $ 1,272,577 $ 1,159,243
Total liabilities $ 765,442 $ 673,390
Stockholders' equity $ 507,135 $ 485,853
- GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the mis-correlation between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") established the measurement tool of funds from operations ("FFO"). Since its introduction, FFO has become a widely used non-GAAP financial measure by REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the "White Paper") and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance of REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. We believe that net income is the most directly comparable GAAP financial measure to FFO.
- Includes depreciation and amortization on assets held for sale reflected as discontinued operations (for the periods prior to when such assets were designated as held for sale).
- Loss/(gain) on sales of property relates to the disposition of a property in the Suburban Washington D.C. market during the quarter ended December 31, 2003, the disposition of a property in the Eastern Massachusetts market during the quarter ended September 30, 2003 and the disposition of a property in the San Francisco Bay market during the quarter ended March 31, 2003. Loss/(gain) on sales of property is included on the income statement in income (loss) from discontinued operations.
- Pursuant to SFAS 145, "Rescission of FASB Statement No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections", in 2003 we reclassified the 2002 loss on early extinguishment of debt to continuing operations. In 2002, this loss was classified as an extraordinary item as previously required under SFAS 4, "Reporting Gains and Losses from Extinguishment of Debt". FFO for the year ended December 31, 2002 has been adjusted to include this loss. Previously, this loss was excluded from FFO.
- Pursuant to NAREIT's revised implementation guidance issued in October 2003, FFO includes non-cash real estate impairment charges recognized prior to the date of sale. Previously, such impairment write-downs were excluded from FFO.
Alexandria Real Estate Equities, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Quarterly Supplemental Financial Information
For the Three Months Ended
12/31/2003 9/30/2003 6/30/2003 3/31/2003 12/31/2002
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 32,686 31,258 31,248 31,222 29,989
Tenant recoveries 7,645 8,122 7,830 8,479 8,182
Other income 648 705 377 338 513
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Total $ 40,979 40,085 39,455 40,039 38,684
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Funds from operations per share - diluted (b) (c) $ 1.08 1.06 1.05 1.04 0.97
Dividends per share on common stock $ 0.58 0.56 0.53 0.53 0.50
Dividend payout ratio (common stock) (c) 53.1% 52.6% 50.5% 50.8% 51.4%
As of
12/31/2003 9/30/2003 6/30/2003 3/31/2003 12/31/2002
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 19,264,023 19,161,756 19,058,773 19,006,223 18,973,957
Number of properties (d)
Acquired/completed during period 3 -- -- 1 2
Sold/reconstruction during period (1) (1) -- (2) --
Owned at end of period 89 87 88 88 89
Square feet (d)
Acquired/completed during period 215,824 -- -- 51,340 158,336
Sold/reconstruction during period (171,475) (96,500) -- (70,281) --
Owned at end of period 5,668,895 5,624,546 5,721,046 5,721,046 5,739,987
Annual Supplemental Financial Information
For the Year Ended
12/31/2003 12/31/2002 12/31/2001 12/31/2000 12/31/1999
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 126,414 111,694 93,596 76,925 62,866
Tenant recoveries 32,076 29,020 24,143 19,837 15,268
Other income 2,068 1,557 3,122 3,360 1,399
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Total $ 160,558 142,271 120,861 100,122 79,533
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Funds from operations per share - diluted (b) (c) $ 4.23 3.81 3.53 3.17 2.82
Dividends per share on common stock $ 2.20 2.00 1.84 1.72 1.69
Dividend payout ratio (common stock) (c) 51.8% 52.7% 52.3% 54.7% 60.1%
As of
12/31/2003 12/31/2002 12/31/2001 12/31/2000 12/31/1999
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 19,264,023 18,973,957 15,548,356 15,548,356 13,745,622
Number of properties (d)
Acquired/completed during period 4 6 7 17 8
Sold/reconstruction during period (4) -- -- -- (1)
Owned at end of period 89 89 83 76 59
Square feet (d)
Acquired/completed during period 267,164 427,077 453,090 829,737 470,575
Sold/reconstruction during period (338,256) -- -- -- (24,460)
Owned at end of period 5,668,895 5,739,987 5,312,910 4,859,820 4,030,083
- The historical results above exclude the results of assets held for sale which have been reflected as discontinued operations.
- The White Paper on Funds from Operations ("FFO") issued by the Board of Governors of the National Association of Real Estate Investment Trusts in April 2002 defines FFO as net income, computed in accordance with generally accepted accounting principles, excluding gains or (losses) from sales, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. See page 5 for a reconciliation of FFO for the current quarter to net income, the most directly comparable GAAP financial measure.
- Amount or percentage for the period ended December 31, 2002 has been adjusted from that previously reported. See page 5 for a description of certain modifications to FFO from previously reported amounts.
- Includes assets held for sale during the applicable periods such assets were held for sale.
Alexandria Real Estate Equities, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
December 31, December 31,
2003 2002
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Assets
Rental properties, net $ 982,297 $ 976,422
Properties under development 153,379 68,386
Cash and cash equivalents 4,985 3,790
Tenant security deposits and other restricted cash 11,057 8,020
Tenant receivables 1,969 2,641
Deferred rent 31,503 26,063
Investments 47,126 39,650
Other assets 40,261 34,271
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Total assets $ 1,272,577 $ 1,159,243
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Liabilities and stockholders' equity
Secured notes payable $ 320,007 $ 276,878
Unsecured line of credit and unsecured term loan 389,000 338,000
Accounts payable, accrued expenses and tenant
security deposits 43,408 47,118
Dividends payable 13,027 11,394
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Total liabilities 765,442 673,390
Total stockholders' equity 507,135 485,853
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Total liabilities and stockholders' equity $ 1,272,577 $ 1,159,243
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
December 31, 2003
(Dollars in thousands)
(Unaudited)
Principal Amortization/Maturities (1)
Year Amount
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2004 $ 9,415 (2)
2005 28,370 (3)
2006 25,571
2007 15,123
2008 37,859
Thereafter 203,417
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Subtotal 319,755
Unamortized Premium 252
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Total $ 320,007
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Secured and Unsecured Debt Analysis
Weighted Average Weighted
% of Effective Average
Balance Balance Interest Rate Maturity
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Secured Debt $ 320,007 45.13% 7.06% 6.9 Years
Unsecured Debt 389,000 (4) 54.87% 2.64% (4) 3.6 Years
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Total Debt $ 709,007 100.00% 4.63% 5.1 Years
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Floating and Fixed Rate Debt Analysis
Weighted Average Weighted
% of Effective Average
Balance Balance Interest Rate Maturity
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Fixed Rate Debt $ 297,487 41.96% 7.37% 7.3 Years
Floating Rate Debt 411,520 (4) 58.04% 2.65% (4) 3.5 Years
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Total Debt $ 709,007 100.00% 4.63% 5.1 Years
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- Excludes the line of credit
- Of this amount, $3,342,000 represents the outstanding balance of a loan maturing in August 2004 which will be paid down with proceeds from our unsecured line of credit.
- Of this amount, $22,520,000 represents the outstanding balance on a loan related to a property developed in the San Francisco Bay market, which has a maturity of January 2005, and may be extended, at the borrower's option, for an additional year.
- A portion of our floating rate debt is hedged by existing swap agreements (see page 9). The interest rate on floating rate debt shown above does not reflect the impact of such swap agreements.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements (1)
December 31, 2003
(Dollars in thousands)
(Unaudited)
Notional Interest
Transaction Dates Effective Dates Amounts Pay Rates Termination Dates
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Hedges for Unsecured Line of Credit
March 2002 December 31, 2002 $ 50,000 5.364% December 31, 2004
July 2002 January 1, 2003 $ 25,000 3.855% June 30, 2005
July 2002 January 1, 2003 $ 25,000 3.865% June 30, 2005
December 2002 January 2, 2003 $ 25,000 3.285% June 30, 2006
December 2002 January 2, 2003 $ 25,000 3.285% June 30, 2006
November 2002 June 1, 2003 $ 25,000 3.115% December 31, 2005
November 2002 June 1, 2003 $ 25,000 3.155% December 31, 2005
Effective at December 31, 2003 $ 200,000
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Hedges for Unsecured Term Loan
December 2003 December 31, 2003 $ 50,000 1.53% December 31, 2004
December 2003 December 31, 2004 $ 50,000 3.00% December 30, 2005
December 2003 December 30, 2005 $ 50,000 4.15% December 29, 2006
December 2003 December 29, 2006 $ 50,000 5.09% October 31, 2008
Effective at December 31, 2003 $ 50,000
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Total Interest Rate Swap Agreements in
Effect at December 31, 2003 $ 250,000
=========
- For all interest rate swap agreements, interest is received based on one month LIBOR.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Operating Portfolio
December 31, 2003
(Dollars in thousands)
Number of Rentable Annualized Occupancy
Properties Square Feet Base Rent Percentages(1)
----------- ----------- ---------- --------------
Markets
California - Pasadena 1 31,343 $ 393 45.8%(2)
California - San Diego 23 1,027,546 28,988 94.9%
California - San Francisco Bay 10 642,578 19,918 100.0%
Eastern Massachusetts 9 598,894 21,247 88.3%
New Jersey/Suburban Philadelph 6 346,919 6,251 100.0%
Southeast 5 259,414 3,778 74.1%(2)
Suburban Washington D.C. 20 1,552,238 27,033 94.0%(3)
Washington - Seattle 5 439,964 16,165 99.8%
----------- ----------- ---------- --------------
Total 79 4,898,896 $ 123,773 93.9%(3)
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- Excludes occupancy at properties under full or partial redevelopment.
- All, or substantially all, of the vacant space is office or warehouse space.
- Includes one office property classified as held for sale and included in discontinued operations as of December 31, 2003. Excluding this property, which was under a binding sales contract as of December 31, 2003, the average occupancy percentage for the Suburban Washington D.C. market is 96.4% and the average total occupancy percentage is 94.6%.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
---------- ---------- --------- ---------- ---------- --------
12/31/03 12/31/02 % Change 12/31/03 12/31/02 % Change
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Revenue (2) $ 31,867 $ 31,695 0.5% $ 31,080 $ 30,502 1.9%
Operating expenses 6,374 6,676 -4.5% 6,374 6,676 -4.5%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 25,493 $ 25,019 1.9% $ 24,706 $ 23,826 3.7%
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GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Year Ended Year Ended
---------- ---------- --------- ---------- ---------- --------
12/31/03 12/31/02 % Change 12/31/03 12/31/02 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 107,288 $ 104,884 2.3% $ 105,008 $ 101,723 3.2%
Operating expenses 22,335 21,464 4.1% 22,335 21,464 4.1%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 84,953 $ 83,420 1.8% $ 82,673 $ 80,259 3.0%
========== ========== ========= ========== ========== ========
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented (the "Fourth Quarter Same Properties" for the Quarterly periods and "2003 Same Properties" for the full year).
- Revenue less operating expenses computed under GAAP is total revenue associated with the Fourth Quarter Same Properties and the 2003 Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the Fourth Quarter Same Properties and the 2003 Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarter ended December 31, 2003 and 2002 for the Fourth Quarter Same Properties were $787,000 and $1,193,000, respectively. Straight-line rent adjustments for the year ended December 31, 2003 and 2002 for the 2003 Same Properties were $2,280,000 and $3,161,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates non-cash adjustments to rental revenue.
- Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Same Property Comparison.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended December 31, 2003
Rental TI's/Lease Average
Number Square Expiring New Rate Commissions Lease
of Leases Footage Rates Rates Changes Per Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 37 386,835 $25.01 -- -- -- --
GAAP Basis 37 386,835 $23.73 -- -- -- --
Renewed / Releasable Space Leased
Cash Basis 14 234,600 $26.41 $25.86 -2.1% $11.36 6.0 years
GAAP Basis 14 234,600 $25.03 $26.85 7.3% $11.36 6.0 years
Month-to-Month Leases In Effect
Cash Basis 17 64,510 $19.78 $20.04 1.3% -- --
GAAP Basis 17 64,510 $19.73 $20.04 1.6% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 12 130,956 -- $19.08 -- $9.09 4.6 Years
GAAP Basis 12 130,956 -- $21.43 -- $9.09 4.6 Years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 26 365,556 -- $23.43 -- -- --
GAAP Basis 26 365,556 -- $24.91 -- -- --
Including Month-to-Month Leases
Cash Basis 43 430,066 -- $22.92 -- -- --
GAAP Basis 43 430,066 -- $24.18 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Year Ended December 31, 2003
Rental TI's/Lease Average
Number Square Expiring New Rate Commissions Lease
of Leases Footage Rates Rates Changes Per Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 76 882,564 $23.44 -- -- -- --
GAAP Basis 76 882,564 $22.80 -- -- -- --
Renewed / Releasable Space Leased
Cash Basis 37 519,724 $24.32 $23.78 -2.2% (1) $5.76 4.1 Years
GAAP Basis 37 519,724 $23.60 $24.97 5.8% (1) $5.76 4.1 Years
Month-to-Month Leases In Effect
Cash Basis 17 64,510 $19.95 $20.04 0.5% -- --
GAAP Basis 17 64,510 $19.75 $20.04 1.5% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 29 265,366 -- $22.43 -- $6.40 4.5 Years
GAAP Basis 29 265,366 -- $23.77 -- $6.40 4.5 Years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 66 785,090 -- $23.32 -- -- --
GAAP Basis 66 785,090 -- $24.56 -- -- --
Including Month-to-Month Leases
Cash Basis 83 849,600 -- $23.07 -- -- --
GAAP Basis 83 849,600 -- $24.22 -- -- --
- Excluding a lease for 21,316 square feet in the San Francisco Bay market, rental rates for renewed or released space were on average 2.5% higher than expiring rates on a Cash Basis and 9.7% higher than expiring rates on a GAAP Basis.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
December 31, 2003
Square Percentage of Annualized Base
Year of Number of Footage of Aggregate Rent of Expiring
Lease Leases Expiring Portfolio Lease Leases (per
Expiration Expiring Leases Square Feet square foot)
- --------- ---------- ---------- -------------- ----------------
2004 67 (1) 614,052 12.3% $21.30
2005 28 318,596 6.4% $28.00
2006 34 809,876 16.2% $24.21
2007 15 340,068 6.8% $24.16
2008 14 391,070 7.8% $29.10
- Includes 20 month-to-month leases for approximately 65,000 square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
December 31, 2003
|
Estimated |
Total |
|
|
In-Service |
Rentable |
|
|
Markets |
Dates |
Square Footage |
|
California - San Diego |
4Q04 |
45,000 |
|
Southeast |
1Q05 |
96,000 |
|
Suburban Washington D.C. |
2Q04 |
95,000 |
|
Suburban Washington D.C. |
1Q05 |
73,000 |
|
Washington - Seattle |
3Q04 |
165,000 |
|
Total |
474,000 (1) |
|
- Properties under development are ground-up development projects of office/laboratory facilities. As required under GAAP, interest is being capitalized on these projects, as activities are ongoing to bring the assets to their intended use.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment (1)
December 31, 2003
|
Estimated |
Total Rentable |
Total Square |
|
|
In-Service |
Square Footage |
Footage Being |
|
|
Markets |
Dates |
of Property |
Redeveloped |
|
California - San Francisco Bay |
Various |
153,837 |
35,515 |
|
California - San Francisco Bay |
Various |
98,964 |
21,316 |
|
California - San Francisco Bay |
3Q04 |
32,074 |
11,000 |
|
Eastern Massachusetts |
1Q04 |
40,000 |
40,000 |
|
Eastern Massachusetts |
4Q04 |
96,150 |
66,540 |
|
Eastern Massachusetts |
4Q04 |
51,340 |
51,340 |
|
Southeast |
Various |
119,916 |
42,912 |
|
Suburban Washington D.C. |
1Q05 |
131,415 |
67,709 |
|
Washington - Seattle |
TBD |
46,303 |
22,656 |
|
Total |
769,999 |
358,988 (2) |
- Average occupancy for properties under full or partial redevelopment as of December 31, 2003 was approximately 53.4% and is not included in the occupancy of the operating portfolio.
- The Company's redevelopment program involves activities necessary for the permanent change of use of applicable redevelopment space to office/laboratory space. For properties undergoing redevelopment, the entire property is excluded from the operating portfolio and related statistics (e.g. occupancy information, same property performance). As required under GAAP, interest is capitalized on redevelopment properties on the basis allocable only to the portion undergoing redevelopment.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Year Ended December 31, 2003
(Dollars in thousands)
|
Property-related capital expenditures (1) |
$ 2,485 |
|
Leasing costs (2) |
$ 864 |
|
Property-related redevelopment costs (3) |
$ 50,815 |
|
Property-related development costs |
$ 41,996 |
|
Purchase of property under development |
$ 36,332 |
|
Purchase of rental property (4) |
$ 48,729 |
- Property-related capital expenditures include all capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures or costs related to the redevelopment of a property. Capital expenditures fluctuate in any given period due to the nature, extent or timing of improvements required and the extent to which they are recoverable from tenants. Approximately 91% of our leases (based on rentable square feet) provide for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing). In addition, we implement an active preventative maintenance program at each of our properties to minimize capital expenditures.
- Leasing costs consist of tenant improvements and leasing commissions related to leasing of acquired vacant space and second generation space. Leasing costs exclude tenant improvements that are revenue-enhancing.
- Includes certain capital expenditures recoverable from tenants of approximately $2,768,000.
- Purchase amount includes the assumption of a secured note payable of approximately $3,384,000.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For Fourth Quarter and Year Ended December 31, 2003
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, 2003:
Date: February 12, 2004
Time: 3:00 P.M. Eastern Standard Time
Phone Number: (913) 981-5508
Confirmation Code: 334073