Alexandria Real Estate Equities, Inc 8-K, filed Nov 1, 2005
Alexandria Real Estate Equities, Inc. (ARE)
About this 8-K
Alexandria Real Estate Equities, Inc filed this 8-K on November 1, 2005, reporting on events of September 30, 2005.
Items reported
- Item 2.02: Financial results
- 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): October 31, 2005
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
|
|
385 East Colorado Boulevard, Suite 299
Pasadena, California 91101
(Address of principal executive offices including zip code)
(626) 578-0777
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
On October 31, 2005, we issued a press release entitled "Alexandria Real Estate Equities, Inc. Reports Third Quarter 2005 Results" which sets forth our results of operations for the third quarter and nine months ended September 30, 2005. 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 October 31, 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.
|
ALEXANDRIA REAL ESTATE EQUITIES, INC. |
|
November 1, 2005 |
By: /s/ JOEL S. MARCUS |
|
Joel S. Marcus |
|
|
Chief Executive Officer |
|
|
(Principal Executive Officer) |
|
By: /s/ DEAN A. SHIGENAGA |
|
|
|
Dean A. Shigenaga |
|
Chief Financial Officer |
|
|
(Principal Financial and Accounting Officer) |
EXHIBIT INDEX
|
|
Exhibit Title |
|
|
* 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
Third Quarter 2005 Results
-Company Reports Funds from Operations Per Share (Diluted) of $1.21, Up
8%
Over Third Quarter 2004, and Earnings Per Share (Diluted) of $0.56
for Third Quarter 2005 -
Highlights
- Third Quarter 2005 Funds from Operations (FFO) Per Share (Diluted) of $1.21
- Third Quarter 2005 Total Revenues Up 37%, FFO Available to Common Stockholders Up 18% and FFO Per Share (Diluted) Up 8% Over Third Quarter 2004
- Third Quarter 2005 Earnings Per Share (Diluted) of $0.56
- Executed 32 Leases for 343,000 Square Feet of Space
- Added Five Properties Aggregating 301,000 Square Feet
- Commenced Ground-Up Development of Three Properties Aggregating 339,000 Square Feet
PASADENA, CA. - October 31, 2005 -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the third quarter and nine months ended September 30, 2005.
For the third quarter of 2005, we reported total revenues of $63,752,000 and FFO available to common stockholders of $25,969,000, or $1.21 per common share (diluted), compared to total revenues of $46,459,000 and FFO available to common stockholders of $21,944,000, or $1.12 per common share (diluted), for the third quarter of 2004. Comparing the third quarter of 2005 to the third quarter of 2004, total revenues increased 37%, FFO available to common stockholders increased 18% and FFO per common share (diluted) increased 8%. For the nine months ended September 30, 2005, we reported total revenues of $178,008,000 and FFO available to common stockholders of $75,097,000, or $3.60 per common share (diluted), compared to total revenues of $132,655,000 and FFO available to common stockholders of $63,228,000, or $3.22 per common share (diluted), for the nine months ended September 30, 2004. Comparing the nine months ended September 30, 2005 to the nine months ended September 30, 2004, total revenues increased 34%, FFO available to common stockholders increased 19% and FFO per common share (diluted) increased 12%. FFO for the nine months ended September 30, 2004 included the impact of the preferred stock redemption charge of $1,876,000, or $0.10 per share (diluted), recorded in the second quarter of 2004.
FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. A reconciliation of GAAP net income available to common stockholders to FFO available to common stockholders, on both an aggregate and a per share diluted basis, is included in the financial information accompanying this press release. The primary reconciling item between GAAP net income available to common stockholders and FFO available to common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended September 30, 2005 and 2004 was $14,073,000 and $10,574,000, respectively. Depreciation and amortization expense for the nine months ended September 30, 2005 and 2004 was $39,965,000 and $30,643,000, respectively. Net income available to common stockholders for the third quarter of 2005 was $11,969,000, or $0.56 per share (diluted), compared to net income available to common stockholders of $11,370,000, or $0.58 per share (diluted) for the third quarter of 2004. Net income available to common stockholders for the nine months ended September 30, 2005 was $35,186,000, or $1.69 per share (diluted), compared to net income available to common stockholders of $34,212,000, or $1.74 per share (diluted) for the nine months ended September 30, 2004. Net income available to common stockholders for the nine months ended September 30, 2004 included a gain on the sale of property of $1,627,000, or $0.08 per share (diluted), recorded in the first quarter of 2004, and also included the impact of the preferred stock redemption charge of $1,876,000, or $0.10 per share (diluted), recorded in the second quarter of 2004.
We executed a total of 32 leases during the third quarter of 2005 for approximately 343,000 square feet of space at 19 different properties (excluding month-to-month leases for approximately 41,000 square feet, which were effective during the quarter). Of this total, approximately 201,000 square feet were for new or renewal leases related to previously leased space and approximately 142,000 square feet were for redeveloped, developed or previously vacant space. Of the 142,000 square feet, approximately 66,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 76,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 2% higher (on a GAAP basis) than rental rates for expiring leases. Excluding two renewal leases for approximately 76,000 square feet related to one tenant in the East Bay submarket of San Francisco, rental rates for new or renewal leases for the third quarter of 2005 were on average approximately 7% higher (on a GAAP basis) than rental rates for expiring leases. For the nine months ended September 30, 2005 we executed a total of 77 leases for approximately 1,055,000 square feet of space at 44 different properties (excluding month-to-month leases). Of this total, approximately 472,000 square feet were for new or renewal leases related to previously leased space and approximately 583,000 square feet were for redeveloped, developed or previously vacant space. Of the 583,000 square feet, approximately 418,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 165,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 10% higher (on a GAAP basis) than rental rates for expiring leases. Excluding two renewal leases for approximately 76,000 square feet related to one tenant in the East Bay submarket of San Francisco, rental rates for new or renewal leases for the nine months ended September 30, 2005 were on average approximately 13% higher (on a GAAP basis) than rental rates for expiring leases.
During the third quarter of 2005, we added five properties aggregating approximately 301,000 square feet in the San Francisco Bay, Eastern Massachusetts, Suburban Washington D.C. and Seattle markets. The total consideration, including debt, for these properties was approximately $69.4 million. In connection with the acquisition of two of these properties, we assumed two secured notes payable aggregating approximately $5.6 million.
Based on our current view of existing market conditions and certain current assumptions, we have updated our prior guidance for FFO per share (diluted) and earnings per share (diluted) to the following:
|
2005 |
2006 |
||
|
FFO per share (diluted) |
$4.82 |
$5.14 |
|
|
Earnings per share (diluted) |
$2.26 |
$2.45 |
Alexandria Real Estate Equities, Inc. is a publicly-traded real estate investment trust focused principally on the ownership, operation, management, acquisition and selective redevelopment and development of properties containing office/laboratory space. Such properties are designed and improved for lease primarily to institutional (universities and not-for-profit institutions), pharmaceutical, biotechnology, life science product, service, biodefense and translational medicine entities, as well as government agencies. Our portfolio currently consists of 130 properties comprising approximately 8.4 million square feet of office/laboratory space.
As of September 30, 2005, approximately 84% of our leases (on a square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of September 30, 2005, approximately 6% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses. Additionally, as of September 30, 2005, approximately 89% of our leases (on a square footage basis) provided for the recapture of certain capital expenditures and approximately 90% of our leases (on a square footage basis) contained effective annual rent escalations that are either fixed or indexed based on the consumer price index or another index.
This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws. Our actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.
(Tables follow)
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------ ------------------ ------------------ ------------------
Income statement data
Total revenues $ 63,752 $ 46,459 $ 178,008 $ 132,655
Expenses
Rental operations 14,360 10,178 39,773 27,708
General and administrative 5,993 3,662 15,180 11,112
Interest 13,160 6,626 35,729 20,261
Depreciation and amortization 14,073 10,565 39,948 30,615
------------------ ------------------ ------------------ ------------------
47,586 31,031 130,630 89,696
Minority interest 234 -- 257 --
------------------ ------------------ ------------------ ------------------
Income from continuing operations 15,932 15,428 47,121 42,959
Income from discontinued operations, net 59 36 132 1,732
------------------ ------------------ ------------------ ------------------
Net income 15,991 15,464 47,253 44,691
Dividends on preferred stock 4,022 4,094 12,067 8,603
Preferred stock redemption charge -- -- -- 1,876
------------------ ------------------ ------------------ ------------------
Net income available to common stockholders $ 11,969 $ 11,370 $ 35,186 $ 34,212
================== ================== ================== ==================
Weighted average shares of common stock outstanding
Basic 21,091,183 19,352,670 20,504,633 19,281,678
================== ================== ================== ==================
Diluted 21,486,731 19,668,360 20,857,755 19,614,092
================== ================== ================== ==================
Earnings per share - basic:
Continuing operations (net of preferred stock dividends
and preferred stock redemption charge) $ 0.57 $ 0.59 $ 1.71 $ 1.68
Discontinued operations, net -- -- 0.01 0.09
------------------ ------------------ ------------------ ------------------
Earnings per share - basic $ 0.57 $ 0.59 $ 1.72 $ 1.77
================== ================== ================== ==================
Earnings per share - diluted:
Continuing operations (net of preferred stock dividends
and preferred stock redemption charge) $ 0.56 $ 0.58 $ 1.68 $ 1.65
Discontinued operations, net -- -- 0.01 0.09
------------------ ------------------ ------------------ ------------------
Earnings per share - diluted $ 0.56 $ 0.58 $ 1.69 $ 1.74
================== ================== ================== ==================
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Unaudited)
Generally accepted accounting principles ("GAAP") basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the 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 for REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.
The following table presents a reconciliation of net income available to common stockholders, the most directly comparable GAAP financial measure to FFO, to funds from operations available to common stockholders for the three and nine months ended September 30, 2005 and 2004 (in thousands, except per share data):
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, 2005 September 30, 2004 September 30, 2005 September 30, 2004
------------------ ------------------ ------------------ ------------------
Reconciliation of net income available to common stockholders to
funds from operations available to common stockholders
Net income available to common stockholders (1) $ 11,969 $ 11,370 $ 35,186 $ 34,212
Add:
Depreciation and amortization (2) 14,073 10,574 39,965 30,643
Minority interest 234 -- 257 --
Subtract:
Gain on sales of property (3) (36) -- (36) (1,627)
FFO allocable to minority interest (271) -- (275) --
------------------ ------------------ ------------------ ------------------
Funds from operations available to common stockholders (1) $ 25,969 $ 21,944 $ 75,097 $ 63,228
================== ================== ================== ==================
FFO per share (1)
Basic $ 1.23 $ 1.13 $ 3.66 $ 3.28
================== ================== ================== ==================
Diluted $ 1.21 $ 1.12 $ 3.60 $ 3.22
================== ================== ================== ==================
Reconciliation of earnings per share (diluted) to
FFO per share (diluted)
Earnings per share (diluted) (1) $ 0.56 $ 0.58 $ 1.69 $ 1.74
Depreciation and amortization (2) 0.65 0.54 1.92 1.56
Minority interest 0.01 -- 0.01 --
Gain on sales of property (3) -- -- -- (0.08)
FFO allocable to minority interest (0.01) -- (0.01) --
------------------ ------------------ ------------------ ------------------
FFO per share (diluted) (1) $ 1.21 $ 1.12 $ 3.60 $ 3.22
================== ================== ================== ==================
- During the second quarter of 2004,
the Company elected to redeem its 9.5% 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 share (diluted).
- 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").
- Gain on sales of property relates to the disposition of one property in the Southeast market during the third quarter of 2005, and one property in the Suburban Washington D.C. market during the first quarter of 2004. 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)
For the Three Months Ended
09/30/2005 06/30/2005 03/31/2005 12/31/2004 09/30/2004
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 48,814 $ 45,699 $ 43,731 $ 39,660 $ 35,867
Tenant recoveries 13,588 11,449 11,587 9,504 9,608
Other income 1,350 1,069 721 1,262 984
----------- ----------- ----------- ----------- -----------
Total $ 63,752 $ 58,217 $ 56,039 $ 50,426 $ 46,459
=========== =========== =========== =========== ===========
Funds from operations per share - diluted (b) $ 1.21 $ 1.20 $ 1.19 $ 1.18 $ 1.12
Dividends per share on common stock $ 0.68 $ 0.68 $ 0.66 $ 0.66 $ 0.64
Dividend payout ratio (common stock) 59.0% 56.8% 58.9% 55.6% 56.8%
Straight line rent $ 3,020 $ 3,305 $ 2,836 $ 3,047 $ 3,065
As of
09/30/2005 06/30/2005 03/31/2005 12/31/2004 09/30/2004
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 22,437,761 21,204,620 21,075,793 19,594,418 19,460,642
Number of properties (c)
Acquired/added/completed during period 5 5 6 11 7
Sold/reconstructed during period (1) -- -- -- --
Owned at end of period 129 125 120 114 103
Square feet (c)
Acquired/added/completed during period 301,458 333,788 341,075 934,608 477,659
Sold/reconstructed/expanded during period (16,500) -- -- -- --
Owned at end of period 8,388,255 8,103,297 7,769,509 7,428,434 6,493,826
Debt to total market capitalization (d)
Total debt $ 1,271,698 $ 1,301,934 $ 1,217,917 $ 1,186,946 $ 847,046
Preferred stock 196,420 197,474 194,692 199,360 198,266
Common stock 1,855,378 1,557,479 1,356,860 1,458,217 1,278,953
----------- ----------- ----------- ----------- -----------
Total market capitalization $ 3,323,496 $ 3,056,887 $ 2,769,469 $ 2,844,523 $ 2,324,265
=========== =========== =========== =========== ===========
Debt to total market capitalization ratio 38.3% 42.6% 44.0% 41.7% 36.4%
- The historical results above exclude the results of assets "held for sale" which have been reflected as discontinued operations.
- See page 5 for a reconciliation of earnings per share to FFO per share.
- Includes assets "held for sale" during the applicable periods such assets were "held for sale".
- Debt to market capitalization is the ratio of total debt (secured notes payable and unsecured line of credit and unsecured term loan) to total market capitalization. Total market capitalization is equal to the outstanding shares of preferred stock and common stock times the related closing stock prices at each quarter end date, plus total debt.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
2005 2004
------------ ------------
(Unaudited)
Assets
Rental properties, net $ 1,695,956 $ 1,427,853
Properties under development 279,425 252,249
Cash and cash equivalents 4,551 3,158
Tenant security deposits and other restricted cash 19,434 17,669
Tenant receivables 3,265 2,542
Deferred rent 48,329 43,166
Investments 77,101 67,419
Other assets 68,738 58,228
------------- --------------
Total assets $ 2,196,799 $ 1,872,284
============= ==============
Liabilities and Stockholders' Equity
Secured notes payable $ 666,698 $ 638,946
Unsecured line of credit and unsecured term loan 605,000 548,000
Accounts payable, accrued expenses and
tenant security deposits 65,454 48,581
Dividends payable 18,892 16,284
------------- --------------
Total liabilities 1,356,044 1,251,811
------------- --------------
Minority interest 20,132 --
Stockholders' equity:
Series B preferred stock 57,500 57,500
Series C preferred stock 129,638 129,638
Common stock 224 196
Additional paid-in capital 604,357 414,028
Retained earnings -- 5,267
Accumulated other comprehensive income 28,904 13,844
------------- --------------
Total stockholders' equity 820,623 620,473
------------- --------------
Total liabilities and stockholders' equity $ 2,196,799 $ 1,872,284
============= ==============
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
September 30, 2005
(Dollars in thousands)
(Unaudited)
Principal Maturities/Rates
Secured Debt Unsecured Debt
---------------------------- ----------------------------
Weighted Weighted
Average Average
Year Amount Interest Rate(1) Amount Interest Rate(2)
- ----------------------- ------------ ------------- ----------- -------------
2005 $ 1,916 6.15% $ -- --
2006 188,565 6.15% -- --
2007 62,399 6.36% 355,000 5.21%
2008 115,629 6.28% -- --
2009 40,172 6.82% 250,000 5.11%
Thereafter 253,456 6.80% -- --
------------ -----------
Subtotal 662,137 605,000
Unamortized Premium 4,561 --
------------ -----------
Total $ 666,698 $ 605,000
============ ===========
Secured and Unsecured Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Secured Debt $ 666,698 52.4% 6.14% 3.9 Years
Unsecured Debt 605,000 47.6% 5.17% 3.1 Years
----------- ------- -------------- -----------
Total Debt $ 1,271,698 100.0% 5.68% 3.5 Years
=========== ======= ============== ===========
Fixed and Floating Rate Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Fixed Rate Debt $ 482,760 38.0% 6.43% 5.1 Years
Floating Rate Debt 788,938 (3) 62.0% 5.22% (3) 2.5 Years
----------- ------- -------------- -----------
Total Debt $ 1,271,698 100.0% 5.68% 3.5 Years
=========== ======= ============== ===========
- The weighted average interest rate related to our secured debt is calculated based on the outstanding debt as of October 1st for 2005, and as of January 1st for each year thereafter.
- The weighted average interest rates related to our unsecured line of credit and unsecured term loan are calculated based on borrowings outstanding as of September 30, 2005.
- 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)
September 30, 2005
(Dollars in thousands)
(Unaudited)
Effective at
Notional September 30, Interest
Transaction Dates Effective Dates Amounts 2005 Pay Rates Termination Dates
- ------------------ ------------------ ---------- -------------- ------------ -----------------
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 29, 2005 50,000 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 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
May 2005 December 30, 2005 25,000 -- 4.120% November 30, 2006
May 2005 June 30, 2006 50,000 -- 4.270% June 29, 2007
May 2005 November 30, 2006 25,000 -- 4.330% November 30, 2007
May 2005 June 29, 2007 50,000 -- 4.400% June 30, 2008
May 2005 November 30, 2007 25,000 -- 4.460% November 28, 2008
May 2005 June 30, 2008 50,000 -- 4.509% June 30, 2009
May 2005 November 28, 2008 25,000 -- 4.615% November 30, 2009
--------------
Total Interest Rate Swap Agreements in Effect at
9/30/05 $ 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
September 30, 2005
(Dollars in thousands)
September 30, 2005 June 30, 2005
----------------------------------------------- -------------
Number of Rentable Annualized Occupancy Occupancy
Properties Square Feet Base Rent Percentage Percentage
----------- ----------- ---------- ----------- -------------
Markets
California - Pasadena 1 31,343 807 98.9% 98.9%
California - San Diego 22 1,052,304 28,858 92.8% 94.4%
California - San Francisco Bay 15 1,043,737 30,904 97.6% 97.1%
Eastern Massachusetts 21 1,208,686 33,644 93.0% 93.8%
New Jersey/Suburban Philadelphia 7 458,623 7,827 98.5% 98.5%
Southeast 7 383,891 6,636 83.8%(1) 84.1%
Suburban Washington D.C. 31 2,405,311 49,495 97.8% 96.6%
Washington - Seattle 11 821,543 23,560 87.3% 90.6%
International - Canada 1 68,000 2,595 100.0% 100.0%
----------- ----------- ---------- ----------- -------------
Total 116 7,473,438 $ 184,326 94.7%(2) 94.7%
=========== =========== ========== ============================
- All, or substantially all, of the vacant space is office or warehouse space.
- Excludes 13 properties under full or partial redevelopment. The total rentable square feet associated with these properties was 914,817, of which 465,713 square feet were under redevelopment as of September 30, 2005. Including properties under full or partial redevelopment, occupancy as of September 30, 2005 was 89.5%. See page 16 for additional information on our redevelopment program.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
---------- ---------- --------- ---------- ---------- --------
9/30/05 9/30/04 % Change 9/30/05 9/30/04 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 36,886 $ 36,086 2.2% $ 36,280 $ 33,895 7.0%
Operating expenses 7,879 7,555 4.3% 7,879 7,555 4.3%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 29,007 $ 28,531 1.7% $ 28,401 $ 26,340 7.8% (3)
========== ========== ========= ========== ========== ========
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Nine Months Ended Nine Months Ended
---------- ---------- --------- ---------- ---------- --------
9/30/05 9/30/04 % Change 9/30/05 9/30/04 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 104,316 $ 101,470 2.8% $ 101,375 $ 94,945 6.8%
Operating expenses 20,975 19,745 6.2% 20,975 19,745 6.2%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 83,341 $ 81,725 2.0% $ 80,400 $ 75,200 6.9% (3)
========== ========== ========= ========== ========== ========
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented ("Third Quarter Same Properties" for the Quarter periods and "Nine Months Same Properties" for the Nine Month periods). Properties under redevelopment are excluded from same property results.
- Revenue less operating expenses computed under GAAP is total revenue associated with the Third Quarter Same Properties and the Nine Months 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 Third Quarter Same Properties and the Nine Months 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 quarters ended September 30, 2005 and 2004 for the Third Quarter Same Properties were $606,000 and $2,191,000, respectively. Straight-line rent adjustments for the nine months ended September 30, 2005 and 2004 for the Nine Months Same Properties were $2,941,000 and $6,525,000, 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.
- Revenue less operating expenses on a cash basis for the Third Quarter Same Properties and the Nine Months Same Properties were impacted by prepayment of a portion of rents due under two leases of $865,000 and $1,719,000, respectively. Pursuant to SFAS 13, "Accounting for Leases", these payments are recognized on a straight-line basis over the lease term. Excluding the impact of these leases, the percentage change in revenue less operating expenses on a cash basis for the Third Quarter Same Properties and the Nine Months Same Properties would have been 4.6% and 4.5%, respectively. Excluding these amounts, straight-line rent adjustments for the quarters ended September 30, 2005 and 2004 for the Third Quarter Same Properties were $1,471,000 and $2,191,000, respectively, and straight-line rent adjustments for the nine months ended September 30, 2005 and 2004 for the Nine Months Same Properties were $4,660,000 and $6,525,000, respectively.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended September 30, 2005
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 42 306,940 $24.30 -- -- -- --
GAAP Basis 42 306,940 $23.81 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 13 200,677 $24.69 $25.22 2.1% (1) $0.25 4.2 years
GAAP Basis 13 200,677 $23.86 $24.30 1.8% (1) $0.25 4.2 years
Month-to-Month Leases In Effect
Cash Basis 23 41,326 $25.31 $25.34 -- -- --
GAAP Basis 23 41,326 $25.32 $25.33 -- -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 19 142,229 -- $21.96 -- $13.16 8.8 years
GAAP Basis 19 142,229 -- $22.64 -- $13.16 8.8 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 32 342,906 -- $23.87 -- $5.61 6.1 years
GAAP Basis 32 342,906 -- $23.61 -- $5.61 6.1 years
Including Month-to-Month Leases
Cash Basis 55 384,232 -- $24.03 -- -- --
GAAP Basis 55 384,232 -- $23.79 -- -- --
(1) Excluding two renewal leases for 76,000 square feet related to one tenant in the East Bay submarket of San Francisco, rental rates for renewed/ released space were on average 3.2% higher than rental rates for expiring leases on a Cash Basis and 7.1% higher than rental rates for expiring leases on a GAAP basis.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Nine Months Ended September 30, 2005
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 74 767,707 $24.40 -- -- -- --
GAAP Basis 74 767,707 $24.98 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 30 472,298 $22.91 $23.93 4.5% (1) $1.00 4.5 years
GAAP Basis 30 472,298 $22.37 $24.51 9.6% (1) $1.00 4.5 years
Month-to-Month Leases In Effect
Cash Basis 23 41,326 $25.22 $25.34 -- -- --
GAAP Basis 23 41,326 $25.22 $25.33 -- -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 47 582,581 -- $24.54 -- $14.25 8.0 years
GAAP Basis 47 582,581 -- $25.66 -- $14.25 8.0 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 77 1,054,879 -- $24.27 -- $8.32 6.4 years
GAAP Basis 77 1,054,879 -- $25.14 -- $8.32 6.4 years
Including Month-to-Month Leases
Cash Basis 100 1,096,205 -- $24.31 -- -- --
GAAP Basis 100 1,096,205 -- $25.15 -- -- --
(1) Excluding two renewal leases for 76,000 square feet related to one tenant in the East Bay submarket of San Francisco, rental rates for renewed/ released space were on average 5.3% higher than rental rates for expiring leases on a Cash Basis and 12.9% higher than rental rates for expiring leases on a GAAP basis.
- Excludes certain phases of a property which were previously delivered to tenants.
- 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. Approximately 89% 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.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
September 30, 2005
Square Percentage of Annualized Base Rent
Year of Lease Number of Footage of Aggregate Portfolio of Expiring Leases
Expiration Leases Expiring Expiring Leases Leased Square Feet (per square foot)
- ------------ -------------- ------------- ----------------- ------------------
2005 45 (1) 179,047 2.4% $24.51
2006 57 953,463 12.7% $24.89
2007 32 711,897 9.5% $27.06
2008 21 546,643 7.3% $26.69
2009 24 463,066 6.2% $21.56
Square Footage of Expiring Leases
Markets 2005 2006
- ----------------------------------- ----------- -----------
California - Pasadena -- 9,493
California - San Diego 18,478 241,383
California - San Francisco Bay 25,081 104,187
Eastern Massachusetts 37,295 158,779
New Jersey/Suburban Philadelphia 7,651 12,239
Southeast 2,069 76,810
Suburban Washington D.C. 52,982 297,389
Washington - Seattle 35,491 53,183
International - Canada -- --
----------- -----------
Total 179,047 (1) 953,463
=========== ===========
(1) Includes 23 month-to-month leases for approximately 41,000 square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
September 30, 2005
|
Estimated |
Total |
|
|
In-Service |
Rentable |
|
|
Markets |
Dates |
Square Footage |
|
San Diego |
4Q07 |
64,000 |
|
San Francisco Bay |
4Q07 |
121,000 |
|
San Francisco Bay |
4Q07 |
154,000 |
|
Southeast |
4Q05 |
46,000 |
|
Southeast |
1Q06 |
48,000 |
|
Suburban Washington D.C. |
2Q06 |
73,000 |
|
Seattle |
1Q06 |
50,000 (1) |
|
Total |
556,000 |
|
As required under GAAP, interest is being capitalized on these ground-up development projects as activities are ongoing to bring these assets to their intended use.
In addition to properties under development, as of September 30, 2005, our asset base contains strategically located ground-up development opportunities for approximately 4.5 million rentable square feet of office/laboratory space with an aggregate cost basis of approximately $182 million.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment
September 30, 2005
|
Estimated |
Total Rentable |
Total Square |
|
|
In-Service |
Square Footage |
Footage Under |
|
|
Markets |
Dates |
of Property |
Redevelopment |
|
San Diego |
4Q05 |
18,173 |
7,814 |
|
San Diego |
2Q06 |
17,590 |
17,590 |
|
San Diego |
3Q06 |
71,510 |
71,510 |
|
San Diego |
3Q07 |
87,140 |
87,140 |
|
San Francisco Bay |
1Q06 |
140,143 |
24,039 |
|
San Francisco Bay |
3Q06 |
60,000 |
30,000 |
|
Eastern Massachusetts |
1Q07 |
45,820 |
17,187 |
|
Eastern Massachusetts |
2Q06 |
115,179 |
33,539 |
|
New Jersey/Suburban Philadelphia |
2Q06 |
42,600 |
22,409 |
|
Southeast |
1Q06 |
60,519 |
33,321 |
|
Suburban Washington D.C. |
1Q06 |
131,415 |
44,208 |
|
Suburban Washington D.C. |
3Q06 |
92,449 |
60,443 |
|
Seattle |
2Q06 |
32,279 |
16,513 |
|
Total |
914,817 |
465,713 |
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 that portion of space actively undergoing redevelopment. Average occupancy for properties under full or partial redevelopment as of September 30, 2005 was 49% and is not included in the occupancy of the operating portfolio. In addition to properties under active redevelopment, as of September 30, 2005 our asset base contains opportunities for a permanent change of use to office/laboratory space through redevelopment aggregating approximately 1.0 million rentable square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Nine Months Ended September 30, 2005
(In thousands)
|
Property-related capital expenditures (1) |
$ 1,937 |
|
Leasing costs (2) |
$ 282 |
|
Property-related redevelopment costs |
$ 58,631 |
|
Property-related development costs |
$ 60,841 |
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Third Quarter and Nine Months Ended September 30,
2005
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the third quarter and nine months ended September 30, 2005:
|
Date: |
October 31, 2005 |
|
Time: |
3:00 P.M. Eastern Standard Time |
|
Phone Number: |
(913) 981-5509 |
|
Confirmation Code: |
7249189 |