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 Exchange Act of 1934
Date of Report (Date of earliest event reported):June 14, 2021
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
| Maryland | 1-12993 | 95-4502084 |
|---|---|---|
| (State or other jurisdiction of<br><br> <br>incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
| 26 North Euclid Avenue | ||
| --- | --- | |
| 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:
| ¨ | Written communications pursuant to Rule 425 under<br>the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under<br>the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under<br>the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under<br>the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $.01 par value per share | ARE | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 7.01. Regulation FD Disclosure.
Alexandria Real Estate Equities, Inc. (the “Company”) previously provided guidance as of April 26, 2021, for, among other things, earnings per share (“EPS”), funds from operations (“FFO”) per share, and key sources and uses of capital, for the Company’s fiscal year ending December 31, 2021, which was included in its Form 8-K, filed with the Securities and Exchange Commission on April 26, 2021. The Company hereby updates its guidance for 2021, including key assumptions and key sources and uses of capital. The key changes to guidance for 2021 are attached hereto as Exhibit 99.1 and incorporated herein by reference. The guidance included in Exhibit 99.1 shall be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934.
Item 8.01. Other Events.
Recent Developments
We continue to execute our unique and differentiated life science strategy at an accelerated pace, expand our collaborative campuses and asset base in each of our key life science cluster submarkets, and have strategically positioned ourselves to take maximum advantage of historic tenant demand.
Historic demand for our value-creation developmentand redevelopment projects of high-quality office/laboratory space, as well as continued operational excellence at our world-class, sophisticatedlaboratory facilities and strong execution by our team, has translated into accelerated leasing activity.
Leasing activity of development and redevelopment projects:
| Leased RSF | In-Process RSF^(1)^ | |
|---|---|---|
| 2020 | YTD 2021<br> <br>Through June 14, 2021 | As of June 14, 2021 |
| 1.0 million | 0.9 million | 3.1 million |
| (1) | Represents in-process leasing activity on near-term value-creation development and redevelopment projects that are expected to commence<br>construction in 2021/2022. Includes 2.2 million RSF related to leases under negotiation/executed letters of intent, and 0.9 million RSF<br>related to letters of intent under negotiation. | |
| --- | --- |
Value-creation development and redevelopmentprojects are expected to generate significant growth in rental revenues and cash flows
Our value-creation pipeline of development and redevelopment projects consists of 7.6 million RSF, including 4.0 million RSF undergoing construction (79% leased/negotiating, including RSF in service) and 3.6 million RSF of near-term value-creation development and redevelopment projects (91% leased/negotiating) expected to commence construction in 2021/2022. These projects are expected to generate significant growth in annual rental revenues and cash flows as follows:
| Under Construction | Projects Expected to Commence<br> Construction in 2021/2022 | Incremental Projected <br> Annual Rental Revenues |
|---|---|---|
| 4.0 million RSF | 3.6 million RSF | |
| 31 Properties | 17 Properties | >$575 million |
| 79% Leased/Negotiating | 91% Leased/Negotiating |
Expansion of our collaborative campuses, aswell as our asset base in each of our key life science cluster markets, through strategic acquisitions is focused on value-creation developmentand redevelopment opportunities
| · | From April 1, 2021 through June 14, 2021, we completed the acquisition of 18 properties in key life science cluster submarkets<br>aggregating 5.9 million SF, including 5.0 million RSF of value-creation opportunities and 0.9 million RSF of operating space, for an aggregate<br>purchase price of $966.5 million. |
|---|---|
| · | Our current outlook for the remainder of 2021 includes projected acquisitions aggregating $2.1 billion. Each of these transactions<br>include significant future value-creation development and redevelopment opportunities. |
| --- | --- |
| · | Refer to “Key Pending and Completed Acquisitions in our Key Life Science Cluster Markets” section below for additional<br>detail. |
| --- | --- |
Key pending and completed acquisitions in ourkey life science cluster markets
Charles Park located in our Cambridge Submarket
In June 2021, we entered into a definitive agreement to expand our campus at Alexandria Center® at Kendall Square through the acquisition of One Rogers Street and One Charles Park for a purchase price of $815.0 million. This acquisition provides a key expansion to our mega campus strategy in our Cambridge submarket, the premier life science market in the world, and consists of the following:
| · | Upon closing the acquisition, we expect to redevelop the two buildings aggregating 400,000 RSF into technical office/laboratory<br> space. |
|---|---|
| · | These two buildings are 100% under lease negotiation with several cutting-edge life science companies. |
| --- | --- |
| · | The redevelopment project is targeting initial occupancy in 2023. |
| --- | --- |
| · | Parking garage with approximately 650 spaces. |
| --- | --- |
| · | We expect to pursue additional entitlement opportunities for future development of additional office/laboratory space. |
| --- | --- |
| · | We expect to complete this acquisition in December 2021. |
| --- | --- |
Sequence District by Alexandria located in our Sorrento Mesa submarket
In June 2021, we acquired five operating buildings at 6260, 6290, 6310, 6340, and 6350 Sequence Drive, aggregating 487,023 RSF, located in our Sorrento Mesa submarket, for a purchase price of $298.5 million, with the opportunity to increase the campus by approximately 400,000 square feet through ground-up development.
| · | The five buildings are currently 100% occupied with a weighted-average remaining lease term of 2.7 years. We expect to develop or<br>redevelop these spaces upon expiration of the existing in-place leases. |
|---|---|
| · | The aggregate 887,000 RSF from this acquisition provides a significant future development opportunity to expand our existing Sequence District by Alexandria into a flagship mega campus aggregating 1.9 million square feet. |
| --- | --- |
Our completed and projected real estate asset acquisitions for 2021 consist of the following:
| Square<br> Footage | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Acquisitions<br> with Development/Redevelopment Opportunities | ||||||||||||||||||||||
| Property | Submarket/<br><br> Market | Date<br> of<br><br> Purchase | Number<br> of<br><br> Properties | Operating<br><br> Occupancy | Future<br> <br><br> Development | Active<br><br> Development/<br> Redevelopment | Operating<br> With<br> Future<br> Development/<br> Redevelopment | Operating | Total | Purchase<br> Price <br> (in thousands) | ||||||||||||
| Completed<br> in 1Q21 | 1Q21 | 25 | 94 | % | 374,426 | 849,411 | 431,066 | 1,353,247 | 80,032 | 3,088,182 | $ | 1,873,750 | ||||||||||
| Completed<br> 4/1/21 – 6/14/21: | ||||||||||||||||||||||
| Alexandria<br> Center^®^for Advanced Technologies – Sorrento Mesa | Sorrento<br> Mesa/San Diego | 6/10/21 | 5 | 100 | % | 887,000 | — | 487,023 | — | — | 1,374,023 | 298,476 | ^(1)^ | |||||||||
| 550<br> Arsenal Street | Cambridge/Inner<br> Suburbs/Greater Boston | 4/21/21 | 1 | 98 | % | 515,000 | — | 260,867 | — | — | 775,867 | 130,000 | ^(1)^ | |||||||||
| One Investors<br> Way | Route<br> 128/Greater Boston | 4/6/21 | 1 | 100 | % | 350,000 | — | — | 240,000 | — | 590,000 | 105,000 | ^(1)^ | |||||||||
| Other | Various | 2Q21 | 11 | 94 | % | 2,121,280 | 131,523 | 289,873 | 645,220 | — | 3,187,896 | 432,979 | ||||||||||
| 18 | 97 | % | 3,873,280 | 131,523 | 1,037,763 | 885,220 | — | 5,927,786 | 966,455 | |||||||||||||
| Pending<br> acquisitions: | ||||||||||||||||||||||
| Charles<br> Park | Cambridge/Greater<br> Boston | December 2021 | 2 | N/A | TBD^(2)^ | 400,000 | — | — | — | 400,000 | 815,000 | ^(1)^ | ||||||||||
| Mercer<br> Mega Block | Lake<br> Union/Seattle | 2H21 | — | N/A | 800,000 | — | — | — | — | 800,000 | 143,500 | |||||||||||
| 2 | 800,000 | 400,000 | — | — | — | 1,200,000 | 958,500 | |||||||||||||||
| 45 | 5,047,706 | 1,380,934 | 1,468,829 | 2,238,467 | 80,032 | 10,215,968 | 3,798,705 | |||||||||||||||
| Other<br> future acquisitions | 1,161,295 | |||||||||||||||||||||
| $ | 4,960,000 | |||||||||||||||||||||
| 2021<br> acquisition guidance range as of 6/14/21 | 4,460,000<br> – 5,460,000 |
All values are in US Dollars.
(1) We will provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction.
(2) We expect to pursue additional entitlement opportunities for future development of additional office/laboratory space.
Vacancy within the operating RSF of our recentvalue-creation acquisitions represents lease-up opportunities that will generate growth in annual rental revenues and cash flows
A portion of certain recent acquisitions with development/redevelopment opportunities also included operating properties with vacant space. As of March 31, 2021, we had 1.2 million RSF of vacancy from recently completed value-creation acquisitions. This 1.2 million RSF is now 37% leased/negotiating (31% leased and 6% negotiating), of which the majority is expected to commence occupancy by the end of 2021. For example, in August 2020, we acquired Alexandria Center^®^ for Life Science – Durham, a 16-building collaborative life science campus aggregating 2.2 million RSF, located in our Research Triangle market for $590.4 million. The campus comprises 12 operating properties, one operating property with future redevelopment opportunities, and three properties that are currently undergoing redevelopment. As of March 31, 2021, the operating properties contained 233,362 RSF of vacant space. Currently, this space is 72% leased/negotiating.
| As of | ||||||
|---|---|---|---|---|---|---|
| March 31, 2021 | June 14, 2021 | |||||
| Property<br> Market/Submarket | Vacancy Acquired<br> from Value-Creation<br> Opportunities | Percentage of <br> Vacancy Leased/ <br> Negotiating | Incremental<br> Projected Annual<br> Rental Revenues | |||
| Alexandria Center^®^ for Life Science – Durham<br> Research Triangle/Research Triangle | 233,362 | 72 | % | |||
| 601, 611, and 651 Gateway Blvd<br> San Francisco Bay Area/South San Francisco | 254,582 | 4 | ||||
| Alexandria Center^®^ for Life Science – Fenway<br> Greater Boston/Fenway | 98,174 | 39 | >$50 million | |||
| SD Tech by Alexandria<br> San Diego/Sorrento Mesa | 83,171 | 10 | ||||
| Other acquisitions/Various | 518,830 | 41 | ||||
| 1,188,119 | 37 | % |
Our completed and pending value-creation acquisitions subsequent to March 31, 2021 include an estimated 350,000 RSF of vacant operating space that will provide additional opportunities to grow annual rental revenues and cash flows. Our updated guidance assumes that we complete these pending acquisitions prior to December 31, 2021. The additional vacancy from these acquisitions is projected to result in a temporary 1.0% decline in our overall operating occupancy as of December 31, 2021. As such, our guidance for occupancy as of December 31, 2021, was updated to a range from 94.3% to 94.9%.
Updated guidance as of June 14, 2021
We have updated key components of our 2021 guidance that was provided on April 26, 2021. Refer to Exhibit 99.1 for specific details.
New Class A development and redevelopment properties: currentprojects
The following tables set forth a summary of our new Class A development and redevelopment properties under construction and pre-leased near-term projects as of March 31, 2021, and includes 400,000 RSF at Charles Park, a pending acquisition, as well as nearly 3.0 million RSF across 11 other pre-leased near-term projects. Our leased and leased/negotiating percentages are as of June 14, 2021 (dollars in thousands):
| Square Footage | Percentage | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Market<br> <br>Property/Submarket | Dev/Redev | In Service | CIP | Total | Leased | Leased/<br><br>Negotiating | ||||||||
| Under construction | ||||||||||||||
| Greater Boston | ||||||||||||||
| The Arsenal on the Charles/Cambridge/Inner Suburbs | Redev | 475,743 | 360,545 | 836,288 | 84 | % | 91 | % | ||||||
| 201 Brookline Avenue/Fenway | Dev | — | 510,116 | 510,116 | 17 | 80 | ||||||||
| 840 Winter Street/Route 128 | Redev | 30,009 | 130,000 | 160,009 | 19 | 19 | ||||||||
| San Francisco Bay Area | ||||||||||||||
| 201 Haskins Way/South San Francisco | Dev | — | 315,000 | 315,000 | 100 | 100 | ||||||||
| Alexandria Center^®^for Life Science – San Carlos/Greater Stanford | Dev | 196,020 | 330,158 | 526,178 | 100 | 100 | ||||||||
| 3160 Porter Drive/Greater Stanford | Redev | — | 92,147 | 92,147 | 20 | 38 | ||||||||
| New York City | ||||||||||||||
| Alexandria Center^®^ for Life Science – Long Island City/New York City | Redev | 54,377 | 122,382 | 176,759 | 35 | 44 | ||||||||
| San Diego | ||||||||||||||
| 3115 Merryfield Row/Torrey Pines | Dev | — | 146,456 | 146,456 | 100 | 100 | ||||||||
| SD Tech by Alexandria/Sorrento Mesa | Dev | — | 176,428 | 176,428 | 96 | 100 | ||||||||
| 5505 Morehouse Drive/Sorrento Mesa | Redev | — | 79,945 | 79,945 | 35 | 100 | ||||||||
| Other | Redev | — | 128,745 | 128,745 | 100 | 100 | ||||||||
| Seattle | ||||||||||||||
| Other | Redev | 246,647 | 213,976 | 460,623 | 51 | 51 | ||||||||
| Maryland | ||||||||||||||
| 9950 Medical Center Drive/Rockville | Dev | — | 84,264 | 84,264 | 100 | 100 | ||||||||
| 700 Quince Orchard Road/Gaithersburg | Redev | — | 169,420 | 169,420 | 100 | 100 | ||||||||
| 20400 Century Boulevard/Gaithersburg | Redev | — | 80,550 | 80,550 | 13 | 18 | ||||||||
| Research Triangle | ||||||||||||||
| Alexandria Center^®^ for Life Science – Durham/Research Triangle | Redev | — | 652,381 | 652,381 | 77 | 77 | ||||||||
| Alexandria Center^®^ for AgTech/Research Triangle | Redev/Dev | 180,400 | 160,000 | 340,400 | 55 | 59 | ||||||||
| Alexandria Center^®^ for Advanced Technologies/Research Triangle | Dev | — | 250,000 | 250,000 | 61 | 79 | ||||||||
| 1,183,196 | 4,002,513 | 5,185,709 | 69 | 79 | ||||||||||
| Pre-leased/negotiating near-term projects and key pending acquisitions | ||||||||||||||
| Charles Park/Greater Boston/Cambridge/^(1)^ | Redev | — | 400,000 | 400,000 | — | 100 | ||||||||
| Alexandria Point/San Diego/University Town Center | Dev | — | 171,102 | 171,102 | 100 | 100 | ||||||||
| Other near-term projects (11 projects) | Dev | — | 2,982,956 | 2,982,956 | — | 90 | ||||||||
| — | 3,554,058 | 3,554,058 | 5 | 91 | ||||||||||
| 1,183,196 | 7,556,571 | 8,739,767 | 43 | % | 84 | % | ||||||||
| (1) | We expect to complete this acquisition in December 2021. | |||||||||||||
| --- | --- | |||||||||||||
| UnleveredYields | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| MarketProperty/Submarket | OurOwnership <br><br>Interest | InService | CIP | CosttoComplete | Totalat <br><br>Completion | Initial<br><br>Stabilized | InitialStabilized(Cash Basis) | |||||||
| Under construction | ||||||||||||||
| Greater Boston | ||||||||||||||
| The Arsenal on the Charles/Cambridge/Inner<br>Suburbs | 100 | % | 357,448 | 248,243 | $ | 166,309 | $ | 772,000 | 6.2 | % | 5.5 | % | ||
| 201 Brookline<br>Avenue/Fenway | 97.9 | % | — | 370,409 | 363,591 | 734,000 | 6.8 | % | 6.0 | % | ||||
| 840 Winter Street/Route<br>128 | 100 | % | 12,517 | 47,979 | TBD | |||||||||
| San Francisco Bay Area | ||||||||||||||
| 201 Haskins Way/South San Francisco | 100 | % | — | 291,082 | 78,918 | 370,000 | 6.4 | % | 6.2 | % | ||||
| Alexandria<br>Center^®^for Life Science – San Carlos/Greater Stanford | 100 | % | 182,558 | 340,378 | 107,064 | 630,000 | 6.4 | % | 6.1 | % | ||||
| 3160 Porter<br>Drive/Greater Stanford | 100 | % | — | 74,864 | TBD | |||||||||
| New York City | ||||||||||||||
| Alexandria<br>Center^®^ for Life Science – Long Island City/New York City | 100 | % | 36,560 | 127,232 | 20,508 | 184,300 | 5.5 | % | 5.6 | % | ||||
| San Diego | ||||||||||||||
| 3115 Merryfield Row/Torrey Pines | 100 | % | — | 72,464 | 79,536 | 152,000 | 6.2 | % | 6.2 | % | ||||
| SD Tech by Alexandria/Sorrento<br>Mesa | 50.0 | % | — | 25,117 | 155,883 | 181,000 | 7.2 | % | 6.6 | % | ||||
| 5505 Morehouse<br>Drive/Sorrento Mesa | 100 | % | — | 21,950 | TBD | |||||||||
| Other | 100 | % | — | 27,855 | 19,145 | 47,000 | 8.0 | %^(1)^ | 8.0 | %^(1)^ | ||||
| Seattle | ||||||||||||||
| Other | 100 | % | 54,152 | 65,329 | TBD | |||||||||
| Maryland | ||||||||||||||
| 9950 Medical Center Drive/Rockville | 100 | % | — | 41,154 | 18,446 | 59,600 | 8.6 | % | 7.7 | % | ||||
| 700 Quince Orchard<br>Road/Gaithersburg | 100 | % | — | 49,561 | 29,939 | 79,500 | 8.6 | % | 7.3 | % | ||||
| 20400 Century<br>Boulevard/Gaithersburg | 100 | % | — | 8,920 | TBD | |||||||||
| Research Triangle | ||||||||||||||
| Alexandria<br>Center^®^ for Life Science – Durham/Research Triangle | 100 | % | — | 143,036 | 101,964 | 245,000 | 7.5 | % | 6.7 | % | ||||
| Alexandria<br>Center^®^ for AgTech/Research Triangle | 100 | % | 90,677 | 69,548 | 32,775 | 193,000 | 7.1 | % | 7.0 | % | ||||
| Alexandria<br>Center^®^ for Advanced Technologies/Research Triangle | 100 | % | — | 46,612 | 104,388 | 151,000 | 7.5 | % | 7.3 | % | ||||
| 733,912 | 2,071,733 | $ | 1,520,000 | ^(2)^ | $ | 4,330,000 | ^(2)^ | |||||||
| (1) | We expect to achieve yields greater than<br> 8.0%. | |||||||||||||
| --- | --- | |||||||||||||
| (2) | Amounts rounded to the nearest $50 million. | |||||||||||||
| --- | --- |
Fourth consecutive Nareit Gold Investor CARE Award
In June 2021, we were awarded our fourth consecutive, and sixth overall, Nareit Gold Investor CARE (Communications and Reporting Excellence) Award in the Large Cap Equity REIT category as the best-in-class REIT that delivers best-in-class communications and reporting excellence, including transparent, high-quality, and efficient disclosures and reporting to the investment community.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| 99.1 | 2021 Guidance issued by Alexandria<br> Real Estate Equities, Inc. on June 14, 2021. |
|---|---|
| 104 | Cover Page Interactive Data File (embedded within<br> the Inline XBRL document). |
The exhibit referenced herein provides key assumptions included in our guidance for the year ending December 31, 2021. Our expected sources and uses of capital are subject to a number of variables and uncertainties, including those discussed under the “Forward-looking statements” section under Part I and the “Risk Factors” section under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. We expect to update our forecast of key sources and uses of capital on a quarterly basis.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ALEXANDRIA REAL ESTATE EQUITIES, INC. | ||
|---|---|---|
| Date: June 14, 2021 | By: | /s/ Dean A. Shigenaga |
| Dean A. Shigenaga<br><br> <br>President and Chief Financial<br> Officer |
EXHIBIT 99.1
ALEXANDRIA REAL ESTATE EQUITIES, INC.
2021 Guidance
The following provides key updates to our 2021 guidance based on our current view of existing market conditions and other assumptions for the year ending December 31, 2021. There can be no assurance that actual amounts will not be materially higher or lower than these expectations.
Key updates include projected 2021 earnings per share, funds from operations per share, funds from operations per share, as adjusted, occupancy, rental rate increases on lease renewals and re-leasing of space, same property net operating income increase, straight-line rent revenue, construction spending, acquisitions, real estate dispositions and partial interest sales, common equity, and 2021 debt capital proceeds held in cash as shown in the following tables. We remain committed to our guidance for net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2021, annualized, of less than or equal to 5.2x.
| Projected 2021 Earnings per Share and Funds From Operations per Share Attributable to<br> Alexandria’s Common Stockholders – Diluted | |||
|---|---|---|---|
| As of 6/14/21 | |||
| Earnings per share^(1)^ | 1.60 to 1.70 | $1.58 to $1.68 | |
| Depreciation and amortization of real estate assets | 5.50 | 5.50 | |
| Gain on sales of real estate | (0.02) | (0.02) | |
| Impairment of real estate – rental properties | 0.04 | 0.04 | |
| Allocation to unvested restricted stock awards | (0.03) | (0.03) | |
| Funds from operations per share | 7.09 to 7.19 | $7.07 to $7.17 | |
| Unrealized losses on non-real estate investments | 0.34 | 0.34 | |
| Realized gains on non-real estate investments | (0.17) | (0.17) | |
| Loss on early extinguishment of debt | 0.49) | 0.49 | |
| Allocation to unvested restricted stock awards | (0.01) | (0.01) | |
| Other | (0.04) | (0.04) | |
| Funds from operations per share, as adjusted | 7.70 to 7.80 | $7.68 to $7.78 | |
| Midpoint | 7.75 | $7.73 |
All values are in US Dollars.
| Key Assumptions | As of 6/14/21 | As of 4/26/21 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | Low | High | Low | High | |||||||||||
| Occupancy percentage in North America as of December 31, 2021^(2)^ | 94.3 | % | 94.9 | % | 95.3 | % | 95.9 | % | |||||||
| Lease renewals and re-leasing of space: | |||||||||||||||
| Rental rate increases | 31.0 | % | 34.0 | % | 30.0 | % | 33.0 | % | |||||||
| Rental rate increases (cash basis) | 18.0 | % | 21.0 | % | 17.0 | % | 20.0 | % | |||||||
| Same property performance: | |||||||||||||||
| Net operating income increase | 1.7 | % | 3.7 | % | 1.5 | % | 3.5 | % | |||||||
| Net operating income increase (cash basis) | 4.3 | % | 6.3 | % | 4.3 | % | 6.3 | % | |||||||
| Straight-line rent revenue | $ | 119 | $ | 129 | $ | 114 | $ | 124 | |||||||
| General and administrative expenses | $ | 146 | $ | 151 | $ | 146 | $ | 151 | |||||||
| Capitalization of interest | $ | 172 | $ | 182 | $ | 172 | $ | 182 | |||||||
| Interest expense | $ | 128 | $ | 138 | $ | 128 | $ | 138 | |||||||
| (1) | Excludes unrealized gains or losses after March 31, 2021, that are required to be recognized in earnings<br>and are excluded from funds from operations per share, as adjusted. | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | Our completed and pending value-creation acquisitions subsequent to March 31, 2021 include an estimated<br>350,000 RSF of vacant operating space that will provide additional opportunities to grow rental revenues and cash flows. Our updated guidance<br>assumes that we complete these pending acquisitions prior to December 31, 2021. The additional vacancy from these acquisitions will<br>result in a temporary 1.0% decline in our overall operating occupancy as of December 31, 2021. | ||||||||||||||
| Key Credit Metrics | As of 6/14/21 | As of 4/26/21 | |||||||||||||
| --- | --- | --- | |||||||||||||
| Net debt and preferred stock to Adjusted EBITDA – 4Q21 annualized | Less than or equal to 5.2x | Less than or equal to 5.2x | |||||||||||||
| Fixed-charge coverage ratio – 4Q21 annualized | Greater than or equal to 4.8x | Greater than or equal to 4.8x | |||||||||||||
| As of 6/14/21 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Key Sources and Uses of Capital (in millions) | Range | Midpoint | Certain Completed Items | As of <br><br>4/26/21 Midpoint | |||||||||||
| Sources of capital: | |||||||||||||||
| Net cash provided by operating activities after dividends | $ | 210 | $ | 250 | $ | 230 | $ | 230 | |||||||
| Incremental debt | 1,215 | 875 | 1,045 | see below | 985 | ||||||||||
| 2020 debt capital proceeds held in cash at the beginning of 2021 | 150 | 250 | 200 | 200 | |||||||||||
| Real estate dispositions and partial interest sales | 1,670 | 2,170 | 1,920 | $ | 324 | ^(1)^ | 1,375 | ||||||||
| Common equity | 2,975 | 3,975 | 3,475 | $ | 1,634 | ^(2)^ | 2,200 | ||||||||
| Total sources of capital | $ | 6,220 | $ | 7,520 | $ | 6,870 | $ | 4,990 | |||||||
| Uses of capital: | |||||||||||||||
| Construction | $ | 1,760 | $ | 2,060 | $ | 1,910 | $ | 1,740 | |||||||
| Acquisitions | 4,460 | 5,460 | 4,960 | $ | 2,840 | 3,050 | |||||||||
| 2021 debt capital proceeds held in cash | — | — | — | 200 | |||||||||||
| Total uses of capital | $ | 6,220 | $ | 7,520 | $ | 6,870 | $ | 4,990 | |||||||
| Incremental debt (included above): | |||||||||||||||
| Issuance of unsecured senior notes payable | $ | 1,750 | $ | 1,750 | $ | 1,750 | $ | 1,750 | $ | 1,750 | |||||
| Principal repayments of unsecured senior notes payable | (650 | ) | (650 | ) | (650 | ) | $ | (650 | ) | (650 | ) | ||||
| Unsecured senior line of credit, commercial paper, and other | 115 | (225 | ) | (55 | ) | (115 | ) | ||||||||
| Incremental debt | $ | 1,215 | $ | 875 | $ | 1,045 | $ | 985 |
(1) Includes the sale, completed in April 2021, of a 70% partial interest in 213 East Grand Avenue in our South San Francisco submarket for a sales price of $301.0 million, or $1,429 per RSF, representing capitalization rates of 4.5% and 4.0% (cash basis). We retained control over the newly formed real estate joint venture and continue to consolidate this property.
(2) Includes (i) $1.1 billion in proceeds from the settlement of forward equity sales agreements issued in January 2021, and (ii) $0.5 billion in proceeds from the issuance of shares under our February 2021 ATM program. We expect to issue 1.5 million shares to settle the remaining outstanding forward equity sales agreements from our January 2021 offering and receive net proceeds of approximately $232 million in 2021.