Investments in real estate

3 Months Ended

Mar. 31, 2018

Real Estate [Abstract]

Investments in real estate

Investments in real estate

Our consolidated investments in real estate consisted of the following as of March 31, 2018, and December 31, 2017 (in thousands):

	March 31, 2018			December 31, 2017
Land (related to rental properties)	$	1,403,659		$	1,312,072
Buildings and building improvements	9,219,013			9,000,626
Other improvements	845,772			780,117
Rental properties	11,468,444			11,092,815
Development and redevelopment of new Class A properties:
Development and redevelopment projects (under construction or pre-construction)	1,044,377			955,218
Future development projects	96,813			96,112
Gross investments in real estate	12,609,634			12,144,145
Less: accumulated depreciation	(1,969,084		)	(1,875,810		)
Net investments in real estate – North America	10,640,550			10,268,335
Net investments in real estate – Asia	30,677			29,684
Investments in real estate	$	10,671,227		$	10,298,019

Acquisitions

Our real estate asset acquisitions during the three months ended March 31, 2018, consisted of the following (dollars in thousands):

Square Footage
Operating	Development/Redevelopment	Future Development	Purchase Price
490,659	697,066	50,000	$320,500

We evaluated each of the transactions detailed below to determine whether the integrated set of assets and activities acquired met the definition of a business. Acquisitions that do not meet the definition of a business are accounted for as asset acquisitions. An integrated set of assets and activities does not qualify as a business if substantially all of the fair value of the gross assets is concentrated in either a single identifiable asset or a group of similar identifiable assets, or if the acquired assets do not include a substantive process.

We evaluated each of the completed acquisitions and determined that substantially all of the fair value related to each acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets, or is a land parcel with no operations. Accordingly, each transaction did not meet the definition of a business and consequently was accounted for as an asset acquisition. In each of these transactions, we allocated the total consideration for each acquisition to the individual assets and liabilities acquired on a relative fair value basis.

Mission Bay/SoMa, San Francisco

1655 and 1725 Third Street

In March 2018, we acquired a 10% interest in a real estate joint venture with Uber Technologies, Inc. (“Uber”) and the Golden State Warriors in 1655 and 1725 Third Street, located in our Mission Bay/SoMa submarket. The joint venture is developing two buildings aggregating 593,765 RSF that are integrated within the new Golden State Warriors complex under development. The buildings are 100% leased to Uber. At the closing of the joint venture agreement, we contributed equity totaling $32.0 million. Refer to Note 4 – “Consolidated and Unconsolidated Real Estate Joint Ventures” to these unaudited consolidated financial statements for additional information.

Greater Stanford, San Francisco

Alexandria PARC

In January 2018, we acquired Alexandria PARC located at 2100, 2200, 2300, and 2400 Geng Road, a four-building office campus on 11 acres with 14 in-place leases with a weighted average remaining lease term of three years, aggregating 197,498 RSF, in our Greater Stanford submarket of San Francisco for a purchase price of $136.0 million. We are redeveloping 45,115 RSF from existing office space into office/laboratory space. 

Sorrento Mesa, San Diego

Summers Ridge Science Park

In January 2018, we acquired Summers Ridge Science Park located at 9965, 9975, 9985, and 9995 Summers Ridge Road, a campus with on-site amenities, consisting of four operating properties aggregating 316,531 RSF of office/laboratory space located in our Sorrento Mesa submarket of San Diego for a purchase price of $148.7 million. The property also includes a future development opportunity for an additional 50,000 RSF building. The properties are 100% leased as of March 31, 2018, to two life science product, service, and device companies for 15 years.

Gaithersburg, Maryland

704 Quince Orchard Road

In March 2018, we acquired a 56.8% interest in 704 Quince Orchard Road, an office building aggregating 79,931 RSF, located in our Gaithersburg submarket of Maryland for a purchase price of $3.9 million. The building is an expansion of the Alexandria Technology Center^® – Gaithersburg II campus. We are redeveloping 58,186 RSF from existing office space into office/laboratory space. Refer to Note 4 – “Consolidated and Unconsolidated Real Estate Joint Ventures” to these unaudited consolidated financial statements for additional information.

Sales of real estate assets

In January 2017, we completed the sale of a vacant property at 6146 Nancy Ridge Drive located in our Sorrento Mesa submarket of San Diego for a purchase price of $3.0 million and recognized a gain of $270 thousand.