Alexandria Real Estate Equities, Inc 8-K, filed Feb 14, 2005
Alexandria Real Estate Equities, Inc. (ARE)
About this 8-K
Alexandria Real Estate Equities, Inc filed this 8-K on February 14, 2005, reporting on events of February 14, 2004.
Items reported
- Item 1.02: Ended a material agreement
- Item 9.01: Financial statements and exhibits
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 14, 2005
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)
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 Results of Operations and Financial Condition
On February 14, 2005, we issued a press release entitled "Alexandria Real Estate Equities, Inc. Reports Fourth Quarter and Year Ended December 31, 2004 Results" which sets forth our results of operations for the fourth quarter and year ended December 31, 2004. A copy of that press release is attached hereto as Exhibit 99.1.
ITEM 9.01 Financial Statements and Exhibits
(c) Exhibits
99.1 Press Release dated February 14, 2005.
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 14, 2005 |
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/ DEAN A. SHIGENAGA |
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Dean A. Shigenaga |
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Chief Financial Officer |
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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
Chief Executive Officer
Alexandria Real Estate Equities, Inc.
(626) 578-9693
Alexandria Real Estate Equities, Inc. Reports Fourth Quarter
And
Year Ended December 31, 2004 Results
- Company Reports Funds from Operations of $1.18 Per Common
Share (Diluted) and
Net Income Available to Common
Stockholders of $0.58 Per Share (Diluted)
for Fourth Quarter 2004 -
Highlights
Fourth Quarter 2004:
- Fourth Quarter 2004 Funds from Operations (FFO) of $1.18 Per Common Share (Diluted)
- Fourth Quarter 2004 Total Revenues Up 23%, FFO Up 11% and FFO Per Common Share (Diluted) Up 9% Over Fourth Quarter 2003
- Fourth Quarter 2004 Net Income Available to Common Stockholders of $0.58 Per Share (Diluted)
- Executed 23 Leases for 190,000 Square Feet
- Completed Acquisitions of Eleven Properties Aggregating 935,000 Square Feet
- Purchased a Land Parcel with Entitlements for Approximately 935,000 Square Feet
Year Ended December 31, 2004:
- 2004 FFO of $4.41 Per Common Share (Diluted) (Includes a Preferred Stock Redemption Charge of $1,876,000, or $0.10 Per Common Share (Diluted))
- 2004 Total Revenues Up 14%, FFO Up 6% and FFO Per Common Share (Diluted) Up 4% Over 2003
- 2004 Net Income Available to Common Stockholders of $2.33 Per Share (Diluted)
- Executed 78 Leases for 1,146,000 Square Feet
PASADENA, CA. - February 14, 2005 - Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the fourth quarter and year ended December 31, 2004.
For the fourth quarter of 2004, Alexandria reported FFO of $23,362,000, or $1.18 per common share (diluted), on total revenues of $50,476,000. Net income available to common stockholders for the fourth quarter of 2004 was $11,482,000, or $0.58 per share (diluted). For the year ended December 31, 2004, Alexandria reported FFO of $86,620,000, or $4.41 per common share (diluted), on total revenues of $183,284,000. Net income available to common stockholders for the year ended December 31, 2004 was $45,724,000, or $2.33 per share (diluted). FFO is a non-GAAP measure widely used by publicly traded real estate investment trusts. A reconciliation of GAAP net income to FFO, on a per common share basis (diluted), is included in the financial information accompanying this press release.
In the second quarter of 2004, the Company elected to redeem all of the outstanding shares of its 9.50% Series A cumulative preferred stock ("Series A preferred stock"). Accordingly, in compliance with Emerging Issues Task Force Topic D-42 ("EITF Topic D-42"), "The Effect on the Calculation of Earnings Per Share for the Redemption or Induced Conversion of Preferred Stock", the Company recorded a charge of approximately $1,876,000 to net income available to common stockholders during the second quarter of 2004 for costs related to the redemption of its Series A preferred stock. In the third quarter of 2004, the Company redeemed its Series A preferred stock with proceeds from the sale, in the second quarter of 2004, of 5,185,500 shares of 8.375% Series C cumulative redeemable preferred stock. Before the preferred stock redemption charge, FFO increased by 9% to $88,496,000 for 2004 compared to $81,360,000 for 2003. Before this charge and the loss and gains on property sales, net income available to common stockholders increased by 8% to $45,973,000, or $2.34 per share (diluted) for 2004, compared to $42,459,000, or $2.21 per share (diluted) for 2003.
The Company announced that it had executed a total of 23 leases during the fourth quarter of 2004 for approximately 190,000 square feet of space at 17 different properties (excluding 22 month-to-month leases for approximately 39,000 square feet, which were effective during the quarter). Of this total, approximately 110,000 square feet were for new or renewal leases related to previously leased space and approximately 80,000 square feet were for redeveloped, developed or previously vacant space. Of the 80,000 square feet, approximately 44,000 square feet were delivered from the Company's redevelopment or development programs, with the remaining approximately 36,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 9% higher (on a GAAP basis) than rental rates for expiring leases. During the year ended December 31, 2004, the Company executed a total of 78 leases for approximately 1,146,000 square feet of space at 37 different properties (excluding 22 month-to-month leases for approximately 39,000 square feet, which were effective during the year). Of this total, approximately 702,000 square feet were for new or renewal leases related to previously leased space and approximately 444,000 square feet were for redeveloped, developed or previously vacant space. Of the 444,000 square feet, approximately 359,000 square feet were delivered from the Company's redevelopment or development programs, with the remaining approximately 85,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 9% higher (on a GAAP basis) than rental rates for expiring leases.
During the fourth quarter of 2004, the Company acquired eleven properties aggregating approximately 935,000 square feet in five markets. The Company purchased one property in the San Diego market, one property in the San Francisco Bay market, one property in the Eastern Massachusetts market, two properties in the Seattle market and six properties in the Suburban Washington D.C. market. The Company paid approximately $145.4 million cash for the properties together with the assumption of three secured notes payable totaling $105.9 million. Also, during the fourth quarter of 2004, the Company purchased a land parcel with entitlements of approximately 935,000 square feet for $50.4 million cash.
Based on the Company's current view of existing market conditions and certain current assumptions, the Company has updated its prior earnings guidance as follows:
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FFO per common share (diluted) |
$4.78 |
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Net income per common share (diluted) |
$2.56 |
Alexandria Real Estate Equities, Inc. is a publicly traded real estate investment trust focused principally 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, service, biodefense, educational and translational medicine institutions/entities, as well as related government agencies. Alexandria's portfolio currently consists of 113 properties comprising approximately 7.5 million square feet of office/laboratory space.
This press release contains forward-looking statements, including earnings guidance, 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 Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.
(Tables follow)
Alexandria Real Estate Equities, Inc.
Financial Information
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
Three Months Three Months Year Year
Ended Ended Ended Ended
December 31,2004 December 31,2003 December 31,2004 December 31, 2003
-------------- -------------- -------------- ----------------
Income statement data
Total revenues $ 50,476 $ 40,979 $ 183,284 $ 160,558
Expenses
Rental operations 10,690 7,911 38,417 32,794
General and administrative 3,993 3,550 15,105 14,211
Interest 8,409 6,501 28,670 26,416
Depreciation and amortization 11,880 9,844 42,523 38,633
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34,972 27,806 124,715 112,054
Income from continuing operations 15,504 13,173 58,569 48,504
Income from discontinued operations, net -- 179 1,626 11,139
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Net income 15,504 13,352 60,195 59,643
Dividends on preferred stock 4,022 2,225 12,595 8,898
Preferred stock redemption charge -- -- 1,876 --
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Net income available to common stockholders $ 11,482 $ 11,127 $ 45,724 $ 50,745
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Weighted average shares of common stock outstanding
Basic 19,415,687 19,101,416 19,315,364 18,993,856
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Diluted 19,755,325 19,444,411 19,658,759 19,247,790
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Basic income per common share
Income from continuing operations $ 0.80 $ 0.69 $ 3.03 $ 2.55
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Income from discontinued operations, net $ -- $ 0.01 $ 0.08 $ 0.59
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Net income $ 0.80 $ 0.70 $ 3.12 $ 3.14
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Net income available to common stockholders $ 0.59 $ 0.58 $ 2.37 $ 2.67
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Diluted income per common share
Income from continuing operations $ 0.78 $ 0.68 $ 2.98 $ 2.52
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Income from discontinued operations, net $ -- $ 0.01 $ 0.08 $ 0.58
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Net income $ 0.78 $ 0.69 $ 3.06 $ 3.10
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Net income available to common stockholders $ 0.58 $ 0.57 $ 2.33 $ 2.64
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Alexandria Real Estate Equities, Inc.
Financial Information
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
Three Months Three Months Year Year
Ended Ended Ended Ended
December 31,2004 December 31,2003 December 31,2004 December 31, 2003
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Reconciliation of net income to funds from operations (1)
Net income $ 15,504 $ 13,352 $ 60,195 $ 59,643
Add
Depreciation and amortization (2) 11,880 9,867 42,523 38,901
Subtract
Dividends on preferred stock (4,022) (2,225) (12,595) (8,898)
Preferred stock redemption charge (3) -- -- (1,876) --
Loss/gain on sales of property (4) -- 36 (1,627) (8,286)
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Funds from operations (FFO) $ 23,362 $ 21,030 $ 86,620 $ 81,360
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FFO per common share
Basic $ 1.20 $ 1.10 $ 4.48 $ 4.28
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Diluted $ 1.18 $ 1.08 $ 4.41 $ 4.23
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Reconciliation of net income per common share (diluted)
to FFO per common share (diluted)
Net income per common share (diluted) $ 0.78 $ 0.69 $ 3.06 $ 3.10
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Depreciation and amortization per common share (diluted) $ 0.60 $ 0.51 $ 2.17 $ 2.02
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Dividends on preferred stock per common share (diluted) $ (0.20) $ (0.12) $ (0.64) $ (0.46)
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Preferred stock redemption charge per common share (diluted)$ -- $ -- $ (0.10) $ --
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Loss/gain on sales of property per common share (diluted) $ -- $ -- $ (0.08) $ (0.43)
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FFO per common share (diluted) $ 1.18 $ 1.08 $ 4.41 $ 4.23
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As of As of
December 31,2004 December 31,2003
Balance sheet data -------------- --------------
Rental properties, net $ 1,427,853 $ 982,297
Total assets $ 1,872,284 $ 1,272,577
Total liabilities $ 1,251,811 $ 765,442
Stockholders' equity $ 620,473 $ 507,135
- 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 miscorrelation between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") established the measurement tool of Funds From Operations ("FFO"). Since its introduction, FFO has become a widely used non-GAAP financial measure by REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the "White Paper") and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance of REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. We believe that net income is the most directly comparable GAAP financial measure to FFO.
- Includes depreciation and amortization on assets "held for sale" reflected as discontinued operations (for the periods prior to when such assets were designated as "held for sale").
- During the second quarter of 2004, the Company elected to redeem the 9.50% Series A cumulative redeemable preferred stock. Accordingly, in compliance with Emerging Issues Task Force Topic D-42, the Company recorded a charge of $1,876,000, or $0.10 per common share (diluted) in the second quarter of 2004 for costs related to the redemption of the Series A preferred stock.
- Loss/gain on sales of property relates to the disposition of a property in the Suburban Washington D.C. market during the first quarter of 2004, the disposition of a property in the Suburban Washington D.C. market during the fourth quarter of 2003, the disposition of a property in the Eastern Massachusetts market during the third quarter of 2003, and the disposition of a property in the San Francisco Bay market during the first quarter of 2003. Loss/gain on sales of property is included in the income statement in income from discontinued operations, net.
ALEXANDRIA REAL ESTATE EQUITIES,
INC.
Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Quarterly Supplemental Financial Information
For the Three Months Ended
12/31/2004 09/30/2004 06/30/2004 03/31/2004 12/31/2003
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 39,705 35,911 34,489 33,774 32,686
Tenant recoveries 9,509 9,615 8,426 8,314 7,645
Other income 1,262 984 608 687 648
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Total $ 50,476 46,510 43,523 42,775 40,979
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Funds from operations per common share - diluted (b) $ 1.18 1.12 1.01 (c) 1.10 1.08
Dividends per share on common stock $ 0.66 0.64 0.62 0.60 0.58
Dividend payout ratio (common stock) 55.6% 56.8% 60.7%(d) 54.2% 53.1%
As of
12/31/2004 09/30/2004 06/30/2004 03/31/2004 12/31/2003
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 19,594,418 19,460,642 19,386,842 19,378,282 19,264,023
Number of properties (e)
Acquired/completed during period 11 7 5 1 3
Sold/reconstructed during period -- -- -- (1) (1)
Owned at end of period 112 101 94 89 89
Square feet (e)
Acquired/completed during period 934,608 477,659 217,940 103,816 215,824
Sold/reconstructed/expanded during period -- -- 45,033 (42,142) (171,475)
Owned at end of period 7,431,380 6,496,772 6,019,113 5,756,140 5,694,466
Annual Supplemental Financial Information
For the Year Ended
12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 143,879 126,414 111,694 93,596 76,925
Tenant recoveries 35,864 32,076 29,020 24,143 19,837
Other income 3,541 2,068 1,557 3,122 3,360
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Total $ 183,284 160,558 142,271 120,861 100,122
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Funds from operations per common share - diluted (b) $ 4.41 (c) 4.23 3.81 3.53 3.17
Dividends per share on common stock $ 2.52 2.20 2.00 1.84 1.72
Dividend payout ratio (common stock) 56.7%(d) 51.8% 52.7% 52.3% 54.7%
As of
12/31/2004 12/31/2003 12/31/2002 12/31/2001 12/31/2000
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 19,594,418 19,264,023 18,973,957 16,354,541 15,548,356
Number of properties (e)
Acquired/completed during period 24 4 6 7 17
Sold/reconstructed during period (1) (4) -- -- --
Owned at end of period 112 89 89 83 76
Square feet (e)
Acquired/completed during period 1,734,023 267,164 427,077 453,090 829,737
Sold/reconstructed/expanded during period 2,891 (338,256) -- -- --
Owned at end of period 7,431,380 5,694,466 5,765,558 5,338,481 4,885,391
- 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 NAREIT in April 2002 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. See page 5 for a reconciliation of net income to FFO, the most directly comparable GAAP financial measure.
- Includes the effect of the preferred stock redemption charge of $1,876,000, or $0.10 per common share (diluted) recorded in the second quarter of 2004.
- The dividend payout ratio (common stock) includes the effect of the preferred stock redemption charge. Excluding the impact of this charge, the dividend payout ratio (common stock) for the second quarter and year ended December 31, 2004 are 55.4% and 55.5%, respectively.
- Includes assets "held for sale" during the applicable periods such assets were "held for sale".
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2004 2003
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(Unaudited)
Assets
Rental properties, net $ 1,427,853 $ 982,297
Properties under development 252,249 153,379
Cash and cash equivalents 3,158 4,985
Tenant security deposits and other restricted cash 17,669 11,057
Tenant receivables 2,542 1,969
Deferred rent 43,166 31,503
Investments 67,419 47,126
Other assets 58,228 40,261
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Total assets $ 1,872,284 $ 1,272,577
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Liabilities and Stockholders' Equity
Secured notes payable $ 638,946 $ 320,007
Unsecured line of credit and unsecured term loan 548,000 389,000
Accounts payable, accrued expenses and
tenant security deposits 48,581 43,408
Preferred stock redemption liability -- --
Dividends payable 16,284 13,027
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Total liabilities 1,251,811 765,442
Total stockholders' equity 620,473 507,135
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Total liabilities and stockholders' equity $ 1,872,284 $ 1,272,577
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
December 31, 2004
(Dollars in thousands)
(Unaudited)
Principal Maturities/Rates (1)
Weighted Average
Year Amount Interest Rate(2)
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2005 $ 23,227 5.67%
2006 206,889 5.69%
2007 16,709 6.35%
2008 115,514 6.30%
2009 42,210 6.89%
Thereafter 230,883 6.90%
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Subtotal 635,432 6.12%
Unamortized Premium 3,514 ==============
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Total $ 638,946
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Secured and Unsecured Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
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Secured Debt $ 638,946 53.83% 5.67% 4.7 Years
Unsecured Debt 548,000 (3) 46.17% 3.72%(3) 2.8 Years
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Total Debt $ 1,186,946 100.00% 4.77% 3.8 Years
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Fixed and Floating Rate Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Fixed Rate Debt $ 437,213 36.84% 6.45% 6.3 Years
Floating Rate Debt 749,733 (3) 63.16% 3.79%(3) 2.3 Years
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Total Debt $ 1,186,946 100.00% 4.77% 3.8 Years
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- Excludes our unsecured line of credit and unsecured term loan.
- The weighted average interest rate is calculated based on the outstanding debt as of January 1st of each year.
- A significant portion of our floating rate debt is hedged by existing swap agreements (see page 9). The interest rate on floating rate debt shown above does not reflect the impact of such swap agreements.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements (1)
December 31, 2004
(Dollars in thousands)
(Unaudited)
Effective at
Notional December 31, Interest
Transaction Dates Effective Dates Amounts 2004 Pay Rates Termination Dates
- ------------------ ------------------ ---------- -------------- ------------ -----------------
July 2002 January 1, 2003 $ 25,000 $ 25,000 3.855% June 30, 2005
July 2002 January 1, 2003 $ 25,000 $ 25,000 3.865% June 30, 2005
November 2002 June 1, 2003 $ 25,000 $ 25,000 3.115% December 31, 2005
November 2002 June 1, 2003 $ 25,000 $ 25,000 3.155% December 31, 2005
December 2002 January 2, 2003 $ 25,000 $ 25,000 3.285% June 30, 2006
December 2002 January 2, 2003 $ 25,000 $ 25,000 3.285% June 30, 2006
December 2003 December 31,2004 $ 50,000 $ 50,000 3.000% December 30, 2005
December 2003 December 30, 2005 $ 50,000 $ -- 4.150% December 29, 2006
December 2003 December 29, 2006 $ 50,000 $ -- 5.090% October 31, 2008
March 2004 December 31, 2004 $ 25,000 $ 25,000 2.956% December 31, 2006
March 2004 December 31, 2004 $ 25,000 $ 25,000 2.956% December 31, 2006
April 2004 April 30, 2004 $ 50,000 $ 50,000 1.550% April 29, 2005
April 2004 April 29, 2005 $ 50,000 $ -- 3.140% April 28, 2006
April 2004 April 28, 2006 $ 50,000 $ -- 4.230% April 30, 2007
April 2004 April 30, 2007 $ 50,000 $ -- 4.850% April 30, 2008
June 2004 June 30, 2005 $ 50,000 $ -- 4.343% June 30, 2007
December 2004 December 31, 2004 $ 50,000 $ 50,000 3.590% January 2, 2008
December 2004 January 3, 2006 $ 50,000 $ -- 3.927% July 1, 2008
Total Interest Rate Swap Agreements --------------
in Effect at December 31, 2004 $ 350,000
==============
- 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, 2004
(Dollars in thousands)
Number of Rentable Annualized Occupancy
Properties Square Feet Base Rent Percentage
----------- ----------- ---------- ---------------
Markets
California - Pasadena 1 31,343 524 62.2% (1)
California - San Diego 21 1,007,571 28,171 96.3%
California - San Francisco Bay 10 642,578 19,940 100.0%
Eastern Massachusetts 13 710,794 21,251 89.2%
New Jersey/Suburban Philadelphia 7 458,623 7,820 100.0%
Southeast 6 340,994 5,439 81.8% (1)
Suburban Washington D.C. 28 2,203,252 40,073 95.2%
Washington - Seattle 9 740,503 24,806 99.9%
----------- ----------- ---------- ---------------
Total 95 6,135,658 $ 148,024 95.2%(2)
=========== =========== ========== ===============
- All, or substantially all, of the vacant space is office or warehouse space.
- Excludes properties under full or partial redevelopment.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
---------- ---------- --------- ---------- ---------- --------
12/31/04 12/31/03 % Change 12/31/04 12/31/03 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 33,864 $ 33,253 1.8% $ 32,440 $ 31,920 1.6%
Operating expenses 6,422 6,285 2.2% 6,422 6,285 2.2%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 27,442 $ 26,968 1.8% $ 26,018 $ 25,635 1.5%
========== ========== ========= ========== ========== ========
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Year Ended Year Ended
---------- ---------- --------- ---------- ---------- --------
12/31/04 12/31/03 % Change 12/31/04 12/31/03 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 128,107 $ 125,463 2.1% $ 122,229 $ 119,988 1.9%
Operating expenses 24,977 24,579 1.6% 24,977 24,579 1.6%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 103,130 $ 100,884 2.2% $ 97,252 $ 95,409 1.9%
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NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented (the "Fourth Quarter Same Properties" for the Quarter periods and "2004 Same Properties" for the Full Year periods). Properties under redevelopment are excluded from same property results.
- Revenue less operating expenses computed under GAAP is total revenue associated with the Fourth Quarter Same Properties and the 2004 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 2004 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, 2004 and 2003 for the Fourth Quarter Same Properties were $1,424,000 and $1,333,000, respectively. Straight-line rent adjustments for the years ended December 31, 2004 and 2003 for the 2004 Same Properties were $5,878,000 and $5,475,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates non-cash adjustments to rental revenue.
- Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Same Property Comparisons.
- Cash basis revenues less operating expenses for the quarter and full year periods were impacted by a rolldown of rents of $341,000 per quarter beginning in January 2004, pursuant to a 1993 lease with the U.S. Food & Drug Administration (in place when the Company purchased the property in 1996). Excluding the impact of this one rent rolldown, revenues less operating expenses on a cash basis for the Fourth Quarter Same Properties and 2004 Same Properties would have been 2.9% and 3.3%, respectively.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended December 31, 2004
TI's/Lease
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 39 306,435 $25.09 -- -- -- --
GAAP Basis 39 306,435 $24.10 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 9 110,109 $26.90 $27.26 1.3% $0.82 3.8 years
GAAP Basis 9 110,109 $24.33 $26.47 8.8% $0.82 3.8 years
Month-to-Month Leases In Effect
Cash Basis 22 39,115 $19.69 $19.58 -0.6% -- --
GAAP Basis 22 39,115 $19.68 $19.58 -0.5% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 14 79,426 -- $27.59 -- $6.11 4.0 years
GAAP Basis 14 79,426 -- $28.86 -- $6.11 4.0 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 23 189,535 -- $27.40 -- $3.04 3.9 years
GAAP Basis 23 189,535 -- $27.47 -- $3.04 3.9 years
Including Month-to-Month Leases
Cash Basis 45 228,650 -- $26.06 -- -- --
GAAP Basis 45 228,650 -- $26.12 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Year Ended December 31, 2004
TI's/Lease
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 81 1,160,728 $24.24 -- -- -- --
GAAP Basis 81 1,160,728 $25.23 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 40 701,688 $23.84 $24.69 3.6% $2.35 4.7 years
GAAP Basis 40 701,688 $25.26 $27.46 8.7% $2.35 4.7 years
Month-to-Month Leases In Effect
Cash Basis 22 39,115 $19.56 $19.58 0.1% -- --
GAAP Basis 22 39,115 $19.50 $19.58 0.4% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 38 444,231 -- $24.34 -- $18.06 7.7 years
GAAP Basis 38 444,231 -- $28.91 -- $18.06 7.7 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 78 1,145,919 -- $24.55 -- $8.44 5.9 years
GAAP Basis 78 1,145,919 -- $28.02 -- $8.44 5.9 years
Including Month-to-Month Leases
Cash Basis 100 1,185,034 -- $24.39 -- -- --
GAAP Basis 100 1,185,034 -- $27.74 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
December 31, 2004
Square Percentage of Annualized Base
Year of Number of Footage of Aggregate Rent of Expiring
Lease Leases Expiring Portfolio Lease Leases (per
Expiration Expiring Leases Square Feet square foot)
- --------- ---------- ---------- -------------- ----------------
2005 74 (1) 471,854 7.3% $25.58
2006 44 880,169 13.6% $24.43
2007 26 660,500 10.2% $24.50
2008 17 409,580 6.3% $26.78
2009 20 516,954 8.0% $21.95
- Includes 22 month-to-month leases for approximately 39,000 square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
December 31, 2004
|
Estimated |
Total |
|
|
In-Service |
Rentable |
|
|
Markets |
Dates |
Square Footage |
|
California - San Diego |
2Q05 |
45,000 |
|
Southeast |
4Q05 |
46,000 |
|
Southeast |
2Q06 |
48,000 |
|
Suburban Washington D.C. |
1Q05 |
95,000 |
|
Suburban Washington D.C. |
4Q05 |
73,000 |
|
Washington - Seattle |
3Q05 |
51,000 (1) |
|
Total |
358,000 |
|
- Excludes certain phases of a property which were delivered to tenants during 2004.
Our properties under development are ground-up development projects of office/laboratory facilities. As required under GAAP, interest is being capitalized on these projects, as activities are ongoing to bring the assets to their intended use.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment
December 31, 2004
|
Estimated |
Total Rentable |
Total Square |
|
|
In-Service |
Square Footage |
Footage Being |
|
|
Markets |
Dates |
of Property |
Redeveloped |
|
California - San Diego |
4Q05 |
18,173 |
18,173 |
|
California - San Diego |
4Q05 |
17,590 |
17,590 |
|
California - San Diego |
3Q06 |
71,510 |
71,510 |
|
California - San Diego |
1Q07 |
87,140 |
87,140 |
|
California - San Francisco Bay |
Various |
153,837 |
22,561 (1) |
|
California - San Francisco Bay |
Various |
98,964 |
34,517 (1) |
|
California - San Francisco Bay |
1Q05 |
32,074 |
11,000 |
|
California - San Francisco Bay |
4Q05 |
140,143 |
24,039 |
|
Eastern Massachusetts |
3Q05 |
96,150 |
66,540 |
|
Eastern Massachusetts |
2Q05 |
115,179 |
44,928 |
|
New Jersey/Suburban Philadelphia |
3Q05 |
42,600 |
42,600 |
|
Southeast |
Various |
119,916 |
37,912 (1) |
|
Suburban Washington D.C. |
1Q06 |
131,415 |
52,449 |
|
Suburban Washington D.C. |
4Q05 |
92,449 |
76,043 |
|
Washington - Seattle |
TBD |
46,303 |
29,776 (2) |
|
Washington - Seattle |
3Q05 |
32,279 |
32,279 |
|
Total |
1,295,722 |
669,057 |
- Subject property contains multiple buildings, some of which are being redeveloped with various estimated in-service dates.
- Property will be demolished and a new building will be constructed based on significant new entitlements received in 2003.
Our redevelopment program involves activities necessary for the permanent change of use of applicable redevelopment space to office/laboratory space. For properties undergoing redevelopment, the entire property is excluded from the operating portfolio and related statistics (e.g. occupancy information, same property performance, etc.). As required under GAAP, interest is capitalized on redevelopment properties on the basis allocable only to the portion undergoing redevelopment. Average occupancy for properties under full or partial redevelopment as of December 31, 2004 was 48.4% and is not included in the occupancy of the operating portfolio.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Year Ended December 31, 2004
(In thousands)
|
Property-related capital expenditures (1) |
$ 3,871 |
|
Leasing costs (2) |
$ 680 |
|
Property-related redevelopment costs (3) |
$ 72,065 |
|
Property-related development costs |
$ 131,290 |
- Property-related capital expenditures include all major capital and recurring capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures, or costs related to the redevelopment of a property. Major capital expenditures consist of roof replacements and HVAC systems which are typically identified and considered at the time the property is acquired. 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. Property-related capital expenditures also include an HVAC system upgrade at one property totaling approximately $1.6 million for the year ended December 31, 2004. 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 $2,310,000.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Fourth Quarter and Year Ended December 31, 2004
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, 2004:
|
Date: |
February 14, 2005 |
|
Time: |
2:00 P.M. Eastern Standard Time |
|
Phone Number: |
(913) 981-5509 |
|
Confirmation Code: |
1006146 |