EX-99.1 2 a3q19ex991supp.htm EXHIBIT 99.1 Exhibit
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Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019
i



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(1)
Refer to the “Annual Rental Revenue,” “Class A Properties and AAA Locations,” and “Investment-Grade or Publicly Traded Large Cap Tenants” sections in “Definitions and Reconciliations” of our Supplemental Information for additional information. As of September 30, 2019, annual rental revenue solely from investment-grade tenants within our overall tenant base and within our top 20 tenants was 43% and 71%, respectively.
(2)
Refer to “Summary of Debt” in the “Key Credit Metrics” section of our Supplemental Information for additional information.

 
 
 
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Table of Contents
September 30, 2019
 
 


EARNINGS PRESS RELEASE
Page
 
 
Page
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL INFORMATION
Page
 
 
Page
 
External Growth / Investments in Real Estate
 
 
 
New Class A Development and Redevelopment Properties:
 
 
 
 
 
Internal Growth
 
 
 
Balance Sheet Management
 
 
 
 
 
Definitions and Reconciliations
 
 
 
 
 
 
 
 
 
 

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Please refer to page 7 of this Earnings Press Release and our Supplemental Information for further information.
 
This document is not an offer to sell or a solicitation to buy securities of Alexandria Real Estate Equities, Inc. Any offers to sell or solicitations to buy our securities shall be made only by means of a prospectus approved for that purpose. Unless otherwise indicated, the “Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and our consolidated subsidiaries.

 
Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019
iii
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Alexandria Real Estate Equities, Inc.
Reports:
3Q19 Revenues of $390.5 Million, Up 14.2% Over 3Q18;
3Q19 Net Loss per Share – Diluted of $(0.44);
3Q19 FFO per Share – Diluted, As Adjusted, of $1.75; and
Operational Excellence and Growing Dividends

PASADENA, Calif. – October 28, 2019 – Alexandria Real Estate Equities, Inc. (NYSE:ARE)
announced financial and operating results for the third quarter ended September 30, 2019.
Key highlights
 
 
 
 
YTD
Operating results
3Q19
 
3Q18
 
3Q19
 
3Q18
Total revenues:
 
 
 
 
 
 
 
In millions
$
390.5

 
$
341.8

 
$
1,123.2

 
$
987.0

Growth
14.2%

 
 
 
13.8%

 
 
 
 
 
 
 
 
 
 
Net (loss) income attributable to Alexandria’s common stockholders – diluted:
In millions
$
(49.8
)
 
$
210.2

 
$
150.4

 
$
394.1

Per share
$
(0.44
)
 
$
1.99

 
$
1.35

 
$
3.85

 
 
 
 
 
 
 
 
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions
$
197.1

 
$
173.6

 
$
579.6

 
$
504.0

Per share
$
1.75

 
$
1.66

 
$
5.19

 
$
4.92

 
 
 
 
 
 
 
 
Net loss for 3Q19 relates primarily to the loss on early extinguishment of debt and unrealized losses on non-real estate investments. Refer to “Key Items Included in Operating Results” on the next page for additional information.

Mercer Mega Block in Seattle: 800,000 RSF premier multi-use campus in Lake Union
In September 2019, we were selected by the City of Seattle to develop an approximately 800,000 RSF premier multi-use campus at Mercer Mega Block in Seattle’s Lake Union submarket. Along with our existing nearly 806,000 RSF in value-creation opportunities, the future development of this community-centric, amenity-driven, mixed-use innovation campus will strategically provide a pipeline of high quality buildings to address demand in the vibrant Lake Union submarket. We expect to complete this acquisition in 2020.

88 Bluxome Street is the first and only project to win full approval in Central SoMa
In July 2019, we, along with TMG Partners, won full project approval to develop a 1.1 million RSF mixed-use campus at 88 Bluxome Street in Central SoMa. Anchored by a 490,000 RSF lease with Pinterest, Inc., the future development, which is the first and only project in Central SoMa to receive full approval and 100% of its Prop M allocation from the San Francisco Planning Commission, is nearly 60% pre-leased. Construction is expected to commence in 2020.

A REIT industry-leading, high-quality tenant roster
•
53% of annual rental revenue from investment-grade or publicly traded large cap tenants.
•
Weighted-average remaining lease term of 8.3 years.
 




Strong internal growth
•
Continued strong internal growth; vacancy in recently acquired properties provide opportunity to increase income from rentals and net operating income.
•
Net operating income (cash basis) of $963.5 million for 3Q19 annualized, up $96.4 million, or 11.1%, compared to 3Q18 annualized
•
Same property net operating income growth:
•
2019 guidance ranges of 1.5% to 3.5%, an increase of 0.5% at the midpoint, and 6.0% to 8.0% (cash basis), reflect our expectation of solid full-year performance.
•
2.5% and 5.7% (cash basis) for 3Q19, compared to 3Q18
•
3.3% and 8.1% (cash basis) for YTD 3Q19, compared to YTD 3Q18
•
Continued strong leasing activity and rental rate growth over expiring rates on renewed and re-leased space:
 
 
3Q19
 
YTD 3Q19
Total leasing activity – RSF
 
1,241,677

 
3,310,598

Lease renewals and re-leasing of space:
 
 
 
 
RSF (included in total leasing activity above)
 
758,113

 
1,855,458

Rental rate increases
 
27.9%

 
30.6%

Rental rate increases (cash basis)
 
11.2%

 
16.2%


Strong external growth; disciplined allocation of capital to visible, highly leased
value-creation pipeline
•
Since the beginning of 4Q18, we have placed into service 2.5 million RSF of development and redevelopment projects, including 1.3 million RSF in 3Q19.
•
Significant near-term growth of annual net operating income (cash basis), including our share of unconsolidated real estate joint ventures, of $70 million upon the burn-off of initial free rent on recently delivered projects.
•
We commenced development and redevelopment projects aggregating 1.8 million RSF during YTD 3Q19, including three projects aggregating 447,998 RSF in 3Q19.
•
During YTD 3Q19, we leased 1.2 million RSF of development and redevelopment space.

Opportunistic senior notes payable issuances and refinancing of near-term maturities
During 3Q19, we opportunistically issued $1.9 billion of unsecured senior notes payable, with a weighted-average interest rate of 3.52% and maturity of 18.5 years. Proceeds were used primarily to refinance $1.7 billion of unsecured senior debt. As of September 30, 2019, our weighted average remaining term on outstanding debt is 10.7 years, with no debt maturing until 2023.

Sale of partial interests in three core Class A properties
During 3Q19, we completed the sales of partial interests in three properties for an aggregate sales price of $462.2 million and received aggregate consideration in excess of book value of approximately $180.2 million, representing a weighted-average cash capitalization rate of 4.6%. We retained control over each of these newly formed joint ventures, and therefore, we consolidate these properties. For consolidated joint ventures, we account for the difference between the consideration received and the book value of the interest sold as an equity transaction, with no gain or loss recognized in earnings.

 
 
 
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Third Quarter Ended September 30, 2019, Financial and Operating Results (continued)
September 30, 2019
 
 

Continued growth in common stock dividend
Common stock dividend declared for 3Q19 of $1.00 per common share, aggregating $3.94 per common share for the twelve months ended September 30, 2019, up 28 cents, or 8%, over the twelve months ended September 30, 2018; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

1165 Eastlake Avenue East fully leased long-term by Adaptive Biotechnologies Corporation
In August 2019, we signed a 12-year, full-building lease with Adaptive Biotechnologies Corporation at 1165 Eastlake Avenue East to be its new headquarters. This amenity-rich, sustainable 100,086 RSF office/laboratory development is located within the prominent Eastlake Life Science Campus in the heart of our Lake Union life science cluster in Seattle.

Key items included in operating results
Key items included in net (loss) income attributable to Alexandria’s common stockholders:
 
 
 
 
 
YTD
(In millions, except per share amounts)
3Q19
 
3Q18
 
3Q19
 
3Q18
 
3Q19
 
3Q18
 
3Q19
 
3Q18
Amount
 
Per Share – Diluted
 
Amount
 
Per Share – Diluted
(Losses) gains on non-real estate investments(1):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized
$
(70.0
)
 
$
117.2

 
$
(0.62
)
 
$
1.11

 
$
13.2

 
$
194.5

 
$
0.12

 
$
1.90

Realized
—

 
—

 
—

 
—

 
—

 
8.3

 
—

 
0.08

Gain on sales of real estate
—

 
35.7

 
—

 
0.34

 
—

 
35.7

 
—

 
0.35

Impairment of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate
—

 
—

 
—

 
—

 
—

 
(6.3
)
 
—

 
(0.06
)
Non-real estate investments(1)
(7.1
)
 
—

 
(0.06
)
 
—

 
(7.1
)
 
—

 
(0.06
)
 
—

Early extinguishment of debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss
(40.2
)
 
(1.1
)
 
(0.36
)
 
(0.01
)
 
(47.6
)
 
(1.1
)
 
(0.43
)
 
(0.01
)
Our share of gain
—

 
0.8

 
—

 
0.01

 
—

 
0.8

 
—

 
0.01

Loss on early termination of interest rate hedge agreements
(1.7
)
 
—

 
(0.02
)
 
—

 
(1.7
)
 
—

 
(0.02
)
 
—

Preferred stock redemption charge
—

 
—

 
—

 
—

 
(2.6
)
 
—

 
(0.02
)
 
—

Allocation to unvested restricted stock awards
—

 
(2.4
)
 
—

 
(0.02
)
 
—

 
(3.4
)
 
—

 
(0.03
)
Total
$
(119.0
)
 
$
150.2

 
$
(1.06
)
 
$
1.43

 
$
(45.8
)
 
$
228.5

 
$
(0.41
)
 
$
2.23

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding for calculation of earnings
per share – diluted
112.1

 
105.4

 
 
 
 
 
111.7

 
102.4

(1) Refer to “Investments” on page 45 of our Supplemental Information for additional information.

 
Completed acquisitions
During 3Q19, we completed the acquisitions of 11 properties for an aggregate purchase price of $459.2 million. These acquisitions include future development and redevelopment opportunities, aggregating 537,850 RSF, strategically located across multiple markets, and operating properties aggregating 546,389 RSF, of which 111,080 RSF are existing vacant space that we anticipate to lease-up in the future.

Core operating metrics as of or for the quarter ended September 30, 2019
High-quality revenues and cash flows, and operational excellence
Percentage of annual rental revenue in effect from:
 
 
 
 
Investment-grade or publicly traded large cap tenants
 
53
%
 
 
Class A properties in AAA locations
 
78
%
 
 
Occupancy of operating properties in North America
 
96.6
%
(1)
 
Operating margin
 
70
%
 
 
Adjusted EBITDA margin
 
68
%
 
 
Weighted-average remaining lease term:
 
 
 
 
All tenants
 
8.3

years
Top 20 tenants
 
11.8

years
 
 
 
 
 
(1)
Decline of 0.8% from 97.4% for our overall occupancy at 2Q19 reflects: (i) 111,080 RSF, or 0.4% of existing vacancy, at properties recently acquired in 3Q19 which we anticipate leasing up in the future; and (ii) 116,556 RSF, or 0.5% vacancy, that became vacant as expected during 3Q19 at 3545 Cray Court related to downtime for renovation of the property. During 3Q19, we executed a lease for 64,108 RSF at 3545 Cray Court, or 55% of the property, that is expected to commence in 3Q20, upon completion of the renovations.

Refer to the previous page for information on our total revenues, net operating income, same property net operating income growth, rental rate growth, and leasing activity.

Balance sheet management
Key metrics as of September 30, 2019
•$17.5 billion of total equity capitalization
•
$24.3 billion of total market capitalization
•
$3.5 billion of liquidity
•
95% of net operating income is unencumbered
 
 
3Q19
 
Goal
 
 
Quarter
 
Trailing 12
 
4Q19
 
 
Annualized
 
Months
 
Annualized
Net debt to Adjusted EBITDA
 
5.8x
 
6.1x
 
Less than or equal to 5.3x
Fixed-charge coverage ratio
 
3.9x
 
4.1x
 
Greater than 4.0x
Value-creation pipeline as a percentage of gross investments in real estate
 
3Q19
 
Percentage Leased/Negotiating
New Class A development and redevelopment projects:
 
 
 
 
Undergoing construction with initial occupancy targeted for 4Q19 and 2020 and our pre-leased pre-construction project at 88 Bluxome Street
 
7%
 
64%
Undergoing pre-construction, marketing, and future value-creation projects
 
5%
 
N/A

 
 
 
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Third Quarter Ended September 30, 2019, Financial and Operating Results (continued)
September 30, 2019
 
 

Key capital events
•
During 3Q19, we had the following sales of partial interests in two core Class A properties:
(Dollars in millions, except per RSF amounts)
 
Partial Interest
 
 
 
 
 
 
Sales Price
 
Capitalization Rate (Cash)
Property
 
Submarket
 
RSF
 
Sold
 
Total
 
Per RSF
 
5200 Illumina Way
 
University Town Center
 
792,687

 
49%
 
$
286.7

 
$
681

(1) 
4.7
%
 
500 Forbes Boulevard
 
South San Francisco
 
155,685

 
90%
 
139.5

 
996

 
 
4.4

 
 
 
 
 
948,372

 
 
 
$
426.2

 
$
733

 
 
4.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represents $264.6 million, or $681 per RSF, for the operating buildings and $22.1 million, or $100 per RSF, for the developable land parcel. This transaction values 100% of the campus at $585.2 million and represents a value in excess of book basis aggregating $269.1 million.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
•
During 3Q19, our issuances and repayments of debt included the following:
(Dollars in millions)
Date
 
Effective Interest Rate
 
Maturity Date
 
Principal Amount
 
Annual Interest Expense
Issuances
 
 
 
 
 
 
 
 
 
Unsecured senior notes payable
Sept
 
2.87
%
 
12/15/29
 
$
400

 
$
12

Unsecured senior notes payable
July
 
3.48
%
 
8/15/31
 
750

 
26

Unsecured senior notes payable
July
 
4.09
%
 
2/1/50
 
500

 
20

Unsecured senior notes payable
Sept
 
3.51
%
 
2/1/50
 
200

 
7

Weighted-average/total
 
 
3.52
%
 
18.5 years
 
1,850

 
65

 
 
 
 
 
 
 
 
 
 
Repayments of debt
 
 
 
 
 
 
 
 
 
Unsecured senior notes payable
July/Aug
 
2.96
%
 
1/15/20
 
400

 
12

Unsecured senior notes payable
July/Aug
 
4.75
%
 
4/1/22
 
550

 
26

Unsecured senior bank term loan
July/Sept
 
3.62
%
 
1/2/25
 
350

 
13

Unsecured senior line of credit
Sept
 
3.14
%
 
1/28/24
 
360

 
11

Weighted-average/total
 
 
3.73
%
 
2.9 years
 
1,660

 
$
62

Proceeds held in cash
 
 
 
 
 
 
$
190

 
 
 
 
 
 
 
 
 
 
 
 
•
As a result of our debt refinancing, we recognized losses on early extinguishment of debt and losses on early terminations of interest rate hedge agreements of $40.2 million and $1.7 million, respectively.
•
During 2019, equity issuances included 602,484 shares of common stock issued in 2Q19 under our ATM program for net proceeds of $86.1 million and 1.1 million shares issued during 3Q19 to settle forward equity sales agreements for net proceeds of $150.1 million. As of September 30, 2019, 7.0 million shares remain unsettled under forward equity sales agreements, for which we expect to receive proceeds of $979.2 million.
•
In September 2019, we established a commercial paper program that has the ability to issue up to $750.0 million of commercial notes with a maximum maturity of 397 days from the date of issue. Our commercial paper program is backed by our $2.2 billion unsecured senior line of credit, and any outstanding balance on our commercial paper program will reduce the borrowing capacity under our unsecured senior line of credit. Borrowings under the program will be used to fund short-term capital needs. As of September 30, 2019, we had no outstanding borrowings under our commercial paper program.
 
Investments
We carry our investments in publicly traded companies and certain privately held entities at fair value. During 3Q19, we had investment losses of $63.1 million, comprising $14.1 million in realized gains, $7.1 million in impairments related to three privately held non-real estate investments, and $70.0 million in unrealized losses.

Corporate responsibility, industry leadership, and strategic initiatives
•
In September 2019, we achieved the following in the 2019 Global Real Estate Sustainability Benchmark (“GRESB”) Real Estate Assessment: (i) GRESB 5 Star Rating (out of 5 stars), (ii) our third consecutive “Green Star” designation, and (iii) our second consecutive “A” disclosure score.
•
In October 2019, we accepted the 2019 Developer of the Year Award from NAIOP, the Commercial Real Estate Development Association. This award annually honors the development company that best exemplifies leadership and innovation as demonstrated by the outstanding quality of projects and services, financial consistency and stability, ability to adapt to market conditions, and support for the local community.

Subsequent events
•
In October 2019, we elected to convert the remaining 2.3 million outstanding shares of our 7.00% Series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”) into shares of our common stock. The Series D Convertible Preferred Stock became eligible for mandatory conversion at our discretion upon our common stock price exceeding $149.46 per share for the specified period of time required to cause the mandatory conversion. We converted the 7.00% Series D Convertible Preferred Stock into 578 thousand shares of common stock. This conversion was accounted for as an equity transaction, and we did not recognize a gain or loss.

 
 
Acquisitions
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September 30, 2019
(Dollars in thousands)
 
 


Property
 
Submarket/Market
 
Date of
Purchase
 
Number of Properties
 
Operating
Occupancy
 
Square Footage
 
Purchase Price
 
 
 
 
Future Development
 
Active Redevelopment
 
Operating With Future Development/ Redevelopment
 
Operating
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed 1H19
 
Various
 
1H19
 
13
 
98
%
 
 
805,400

 
—

 
187,764

 
334,933

 
$
744,450

(1) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed 3Q19:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
945 Market Street (99.5% interest in consolidated JV)
 
Mission Bay/SoMa/San Francisco
 
7/31/19
 
1
 
N/A

 
 
—

 
255,765

 
—

 
—

 
 
179,000

(2) 
4224/4242 Campus Point Court and 10210 Campus Point Drive
(55% interest in consolidated JV)
 
University Town Center/San Diego
 
7/9/19
 
3
 
83
%
(3) 
 
—

 
—

 
—

 
314,103

 
 
140,250

 
25, 35, and 45 West Watkins Mill Road
 
Gaithersburg/Maryland
 
8/21/19
 
3
 
87
%
 
 
—

 
—

 
—

 
138,938

 
 
51,130

 
3160 Porter Drive
 
Greater Stanford/San Francisco
 
8/12/19
 
1
 
N/A

 
 
—

 
92,147

 
—

 
—

 
 
26,000

(2) 
47-50 30th Street
 
New York City/
New York City
 
7/10/19
 
—
 
N/A

 
 
135,938

 
—

 
—

 
—

 
 
25,000

(2) 
Other
 
Various
 
3Q19
 
3
 
37
%
 
 
54,000

 
—

 
58,814

 
34,534

 
 
37,850

(2) 
Completed YTD 3Q19
 
 
 
 
 
24
 
87
%
 
 
995,338

 
347,912

 
246,578

 
822,508

 
 
1,203,680

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4Q19:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pending
 
San Diego
 
4Q19
 
Various
 
76
%
 
 
700,000

 
—

 
—

 
560,000

 
 
122,500

(2), (4) 
Additional targeted acquisitions
 
Various
 
4Q19
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
223,820

 
2019 acquisitions
 
 
 
 
 
24
 
83
%
 
 
1,695,338

 
347,912

 
246,578

 
1,382,508

 
$
1,550,000

(5) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Identified for 2020:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pending
 
San Francisco
Bay Area
 
2020
 
1
 
100
%
 
 
—

 
—

 
—

 
138,000

 
$
157,500

(4) 
Pending
 
San Francisco
Bay Area
 
2020
 
—
 
N/A

 
 
700,000

 
—

 
—

 
—

 
 
120,000

(2) 
Mercer Mega Block
 
Lake Union/Seattle
 
2020
 
—
 
N/A

 
 
800,000

 
—

 
—

 
—

 
 
143,000

(2) 
 
 
 
 
 
 
1
 
100
%
 
 
1,500,000

 
—

 
—

 
138,000

 
$
420,500

 
 
 
 
 
 
 
 
 
 
 
 
3,195,338

 
347,912

 
246,578

 
1,520,508

 
 
 
 

(1)
Refer to our second quarter ended June 30, 2019, Earnings Press Release and Supplemental Information filed on July 29, 2019, for transactions and related yield information.
(2)
We expect to provide total estimated costs and related yields in the future, subsequent to the commencement of development or redevelopment.
(3)
The property is currently 83% occupied, and a lease for 32,537 RSF will commence in 4Q19 upon completion of renovations, which will increase occupancy to 94%. The remaining 6% of the property is under negotiation and expected to be occupied by 4Q19. We expect to achieve unlevered yields of 6.9% and 6.0% on initial stabilized and initial stabilized (cash) bases, respectively.
(4)
We expect to provide yields for operating properties subsequent to closing the acquisition.
(5)
Represents midpoint of 2019 acquisitions guidance range of $1.5 billion to $1.6 billion.

 
 
Sales of Partial Interests in Core Class A Properties
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September 30, 2019
(Dollars in thousands, except per RSF amounts)
 
 


 
 
 
 
 
 
 
 
Square Footage
 
 
 
 
Capitalization Rate
(Cash Basis)(1)
 
 
 
 
 
 
 
 
 
Consideration in Excess of Book Value(2)
Property
 
Submarket/Market
 
Date of Sale
 
Interest Sold
 
Operating
 
Future Development
 
Capitalization Rate(1)
 
 
 
Sales Price
 
Sales Price per RSF
 
Sales of noncontrolling partial interests in core Class A properties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75/125 Binney Street
 
Cambridge/Greater Boston
 
2/13/19
 
60%
 
388,270
 
N/A
 
4.2%
 
4.3%
 
 
$
438,000
 
 
 
$
1,880

 
$
202,246

 
10260 Campus Point Drive and
4161 Campus Point Court
 
University Town Center/San Diego
 
7/26/19
 
45%
 
(3) 
 
(3) 
 
(3) 
 
(3) 
 
 
36,000
 
 
 
N/A

 
N/A

 
500 Forbes Boulevard
 
South San Francisco/
San Francisco
 
8/1/19
 
90%
 
155,685
 
N/A
 
4.2%
 
4.4%
 
 
139,500
 
 
 
$
996

 
$
48,385

 
5200 Illumina Way
 
University Town Center/San Diego
 
8/21/19
 
49%
 
792,687
 
451,832
 
5.7%
 
4.7%
 
 
286,747
 
 
 
N/A

 
$
131,864

(4) 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
$
900,247
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 guidance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
925,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Capitalization rates are calculated based upon net operating income and net operating income (cash basis), annualized for the quarter preceding the date on which the property is sold.
(2)
We retained control over each of these newly formed joint ventures, and therefore, we consolidate these properties. For consolidated joint ventures, we account for the difference between the consideration received and the book value of the interest sold as an equity transaction, with no gain or loss recognized in earnings.
(3)
In December 2018, we acquired two buildings adjacent to our Campus Pointe by Alexandria campus aggregating 269,048 RSF, comprising 109,164 RSF at 10260 Campus Point Drive and 159,884 RSF at 4161 Campus Point Court for a total purchase price of $80.0 million. Refer to our first quarter ended March 31, 2019, Earnings Press Release and Supplemental Information filed on April 29, 2019, for more information. In July 2019, as had been contemplated at the time of the original acquisition, we completed the formation of this joint venture through the sale of a 45% noncontrolling interest to an institutional investor.
(4)
This transaction values 100% of the campus at $585.2 million and represents a value in excess of book basis aggregating $269.1 million.


 
 
Guidance
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September 30, 2019
(Dollars in millions, except per share amounts)
 
 
 

The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2019. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of “forward-looking statements” on page 7 of this Earnings Press Release for additional information.
Summary of Key Changes in Guidance
 
Guidance
 
Summary of Key Changes in Key Credit Metric and Key Sources and Uses of Capital Guidance
 
 
Guidance/Guidance Midpoint
 
 
 
As of 10/28/19
 
As of 7/29/19
 
 
As of 10/28/19
 
As of 7/29/19
 
EPS, FFO per share, and FFO per share, as adjusted
 
See updates below
 
Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized
 
 
Less than or equal to 5.3x
 
 
 
Less than or equal to 5.4x
 
 
Occupancy percentage in North America as of December 31, 2019
 
96.7% to 97.3%
 
97.2% to 97.8%
 
 
 
 
 
 
 
 
Rental rate increases on lease renewals and re-leasing of space
 
28.0% to 31.0%
 
27.0% to 30.0%
 
Real estate dispositions and partial interest sales
 
 
$
925

 
 
 
$
870

 
 
Same property net operating income increases
 
1.5% to 3.5%
 
1.0% to 3.0%
 
Issuance of unsecured senior notes payable
 
 
$
2,700

 
 
 
$
2,100

 
 
Straight-line rent revenue
 
$99 to $109
 
$95 to $105
 
Repayments of unsecured senior bank term loan
 
 
$
(350
)
 
 
 
$
(175
)
 
 
Interest expense
 
$172 to $182
 
$167 to $177
 
Debt capital proceeds held in cash
 
 
$
190

 
 
 
$
—

 
 
Projected Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted, as Adjusted
 
 
 
As of 10/28/19
 
As of 7/29/19
 
Earnings per share(2)
 
$1.83 to $1.85
 
$2.39 to $2.47
 
Depreciation and amortization
 
 
4.75
 
 
 
4.85
 
 
Allocation to unvested restricted stock awards
 
 
(0.05)
 
 
 
(0.05)
 
 
Funds from operations per share(3)
 
$6.53 to $6.55
 
$7.19 to $7.27
 
Unrealized gains on non-real estate investment(2)
 
 
(0.12)
 
 
 
(0.75)
 
 
Impairment of non-real estate investments
 
 
0.06
 
 
 
—
 
 
Loss on early extinguishment of debt(4)
 
 
0.43
 
 
 
0.45
 
 
Loss on early termination of interest rate hedge agreements(4)
 
 
0.02
 
 
 
—
 
 
Preferred stock redemption charge
 
 
0.02
 
 
 
0.02
 
 
Allocation to unvested restricted stock awards
 
 
0.01
 
 
 
0.01
 
 
Funds from operations per share, as adjusted(5)
 
$6.95 to $6.97
 
$6.92 to $7.00
 
Midpoint
 
$6.96
 
$6.96
 
Key Assumptions
 
Low
 
High
 
Occupancy percentage in North America as of December 31, 2019(7)
 
96.7%

 
97.3%

 
Lease renewals and re-leasing of space:
 
 
 
 
 
Rental rate increases(5)
 
28.0%

 
31.0%

 
Rental rate increases (cash basis)
 
14.0%

 
17.0%

 
Same property performance:
 
 
 
 
 
Net operating income increase(5)
 
1.5%

 
3.5%

 
Net operating income increase (cash basis)
 
6.0%

 
8.0%

 
Straight-line rent revenue(5)
 
$
99

 
$
109

(8) 
General and administrative expenses
 
$
108

 
$
113

 
Capitalization of interest
 
$
79

 
$
89

 
Interest expense(4)(9)
 
$
172

 
$
182

 
 
Key Credit Metrics
 
2019 Guidance
 
 
 
Net debt to Adjusted EBITDA – 4Q19 annualized
 
Less than or equal to 5.3x
 
Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized(1)
 
Less than or equal to 5.3x
 
Fixed-charge coverage ratio – 4Q19 annualized
 
Greater than 4.0x
 
Value-creation pipeline as a percentage of gross real estate as of
December 31, 2019
 
Less than 15%
 
Key Sources and Uses of Capital (in millions)
 
Range
 
Midpoint
 
Certain Completed Items
Sources of capital:
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities after dividends
 
$
170

 
$
210

 
$
190

 
 
 
Incremental debt
 
695

 
755

 
 
725

 
See below
Real estate dispositions and partial interest sales
 
925

 
925

 
 
925

 
$
900

(4)
Common equity
 
1,150

 
1,250

 
 
1,200

 
$
1,215

(6)
Total sources of capital
 
$
2,940

 
$
3,140

 
$
3,040

 
 
 
Uses of capital:
 
 
 
 
 
 
 
 
 
 
Construction
 
$
1,250

 
$
1,350

 
$
1,300

 
 
 
Acquisitions
 
1,500

 
1,600

 
 
1,550

 
(4)
Debt capital proceeds held in cash
 
190

 
190

 
 
190

 
 
 
Total uses of capital
 
$
2,940

 
$
3,140

 
$
3,040

 
 
 
Incremental debt (included above):
 
 
 
 
 
 
 
 
 
 
Issuance of unsecured senior notes payable
 
$
2,700

 
$
2,700

 
$
2,700

 
$
2,700

(4)
Assumption of secured note payable
 
28

 
28

 
 
28

 
$
28

 
Repayments of unsecured senior notes payable
 
(950
)
 
(950
)
 
 
(950
)
 
$
(950
)
(4)
Repayments of secured notes payable
 
(310
)
 
(320
)
 
 
(315
)
 
$
(300
)
 
Repayments of unsecured senior bank term loan
 
(350
)
 
(350
)
 
 
(350
)
 
$
(350
)
(4)
$2.2 billion unsecured senior line of credit/other
 
(423
)
 
(353
)
 
 
(388
)
 
 
 
Incremental debt
 
$
695

 
$
755

 
$
725

 
 
 

(1)
In October 2019, we completed the conversion of all 2.3 million outstanding shares of our Series D Convertible Preferred Stock into shares of our common stock.
(2)
Excludes future unrealized gains or losses after September 30, 2019, that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.
(3)
Refer to the “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” section in “Definitions and Reconciliations” of our Supplemental Information for additional information.
(4)
Refer to this Earnings Press Release for additional information.
(5)
The midpoint for rental rate increases was up 1% in 3Q19, and up 3% in aggregate since our initial guidance on November 28, 2018. These cumulative adjustments resulted in upward pressure on the midpoints for same property net operating income and straight-line rent revenue, resulting in increases to both midpoints by 0.5% and $4 million, respectively. Additionally, since our initial guidance for 2019, the midpoint for FFO per share, as adjusted, increased by one cent.
(6)
Includes 602,484 shares of common stock issued in 2Q19 under our ATM program for net proceeds of $86.1 million and 1.1 million shares issued during 3Q19 to settle forward equity sales agreements for net proceeds of $150.1 million. As of September 30, 2019, 7.0 million shares remain unsettled under forward equity sales agreements, for which we expect to receive proceeds of $979.2 million.
(7)
The 1.0% reduction in occupancy guidance is attributable to vacancy aggregating 253,077 RSF representing lease-up opportunities at two acquisitions completed in 3Q19 and one pending acquisition expected to close in 4Q19.
(8)
Approximately 45% of straight-line rent revenue represents initial free rent on recently delivered and expected 2019 deliveries of new Class A properties from our development and redevelopment pipeline.
(9)
Increase in interest expense guidance by $5M primarily due to the $190M in excess proceeds from our issuances of unsecured senior notes payable in 3Q19, and the $1.7 million loss on early termination of interest rate hedge agreements.

 
 
 
q319logo1.jpg
Earnings Call Information and About the Company
September 30, 2019
 
 

We will host a conference call on Tuesday, October 29, 2019, at 3:00 p.m. Eastern Time (“ET”)/noon Pacific Time (“PT”), which is open to the general public to discuss our financial and operating results for the third quarter ended September 30, 2019. To participate in this conference call, dial (833) 366-1125 or (412) 902-6738 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the call for Alexandria Real Estate Equities, Inc. The audio webcast can be accessed at www.are.com in the “For Investors” section. A replay of the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT on Tuesday, October 29, 2019. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10134312.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the third quarter ended September 30, 2019, is available in the “For Investors” section of our website at www.are.com or by following this link: http://www.are.com/fs/2019q3.pdf.

For any questions, please contact Joel S. Marcus, executive chairman and founder; Stephen A. Richardson, co-chief executive officer; Peter M. Moglia, co-chief executive officer and co-chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; Sara M. Kabakoff, assistant vice president – corporate communications, at (626) 578-0777, or Paula Schwartz, managing director – Rx Communications Group, at (917) 322-2216.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office real estate investment trust (“REIT”), is the first and longest-tenured owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $24.3 billion as of September 30, 2019, and an asset base in North America of 38.5 million square feet (“SF”) as of October 28, 2019, including pending acquisitions. The asset base in North America includes 26.1 million RSF of operating properties and 2.5 million RSF of Class A properties undergoing construction or pre-construction, with projected initial occupancy in 4Q19-2020, 4.9 million RSF of intermediate-term Class A properties undergoing or nearing pre-construction, and 5.0 million SF of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, technology, and agtech companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

***********

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2019 earnings per share attributable to Alexandria’s common stockholders – diluted, 2019 funds from operations per share attributable to Alexandria’s common stockholders – diluted, net operating income, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of forward-looking words, such as “forecast,” “guidance,” “goals,” “projects,” “estimates,” “anticipates,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” or “will,” or the negative of those words or similar words. These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events. There can be no assurance that actual results will not be materially higher or lower than these expectations. These statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully place into service and lease any properties undergoing development or redevelopment and our existing space held for future development or redevelopment (including new properties acquired for that purpose), our failure to successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”). Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are made as of the date of this Earnings Press Release, and unless otherwise stated, we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.

Alexandria®, Lighthouse Design® logo, Building the Future of Life-Changing Innovation™, LaunchLabs®, Alexandria Center®, Alexandria Technology Square®, Alexandria Summit®, Alexandria Technology Center®, Alexandria Innovation Center®, and GradLabs™ are trademarks of Alexandria Real Estate Equities, Inc. All other company names, trademarks, and logos referenced herein are the property of their respective owners.

 
 
Consolidated Statements of Operations
q319logo1.jpg
September 30, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended
 
Nine Months Ended
 
 
9/30/19

6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
9/30/19
 
9/30/18
Revenues:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Income from rentals(1)
 
$
385,776

 
$
371,618

 
$
354,749

 
$
337,785

 
$
336,547

 
$
1,112,143

 
$
976,996

Other income
 
4,708

 
2,238

 
4,093

 
2,678

 
5,276

 
11,039

 
10,000

Total revenues
 
390,484

 
373,856

 
358,842

 
340,463

 
341,823

 
1,123,182


986,996

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental operations
 
116,450

 
105,689

 
101,501

 
97,682

 
99,759

 
323,640

 
283,438

General and administrative
 
27,930

 
26,434

 
24,677

 
22,385

 
22,660

 
79,041

 
68,020

Interest
 
46,203

(2) 
42,879

 
39,100

 
40,239

 
42,244

 
128,182

 
117,256

Depreciation and amortization
 
135,570

 
134,437

 
134,087

 
124,990

 
119,600

 
404,094

 
352,671

Impairment of real estate
 
—

 
—

 
—

 
—

 
—

 
—

 
6,311

Loss on early extinguishment of debt
 
40,209

(3) 
—

 
7,361

 
—

 
1,122

 
47,570

 
1,122

Total expenses
 
366,362

 
309,439

 
306,726

 
285,296

 
285,385

 
982,527

 
828,818

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
2,951

 
1,262

 
1,146

 
1,029

 
40,718

 
5,359

 
42,952

Investment (loss) income
 
(63,076
)
(4) 
21,500

 
83,556

 
(83,531
)
 
122,203

 
41,980

 
220,294

Gain on sales of real estate
 
—

 
—

 
—

 
8,704

 
—

 
—

 
—

Net (loss) income
 
(36,003
)
 
87,179

 
136,818

 
(18,631
)
 
219,359

 
187,994

 
421,424

Net income attributable to noncontrolling interests
 
(11,199
)
 
(8,412
)
 
(7,659
)
 
(6,053
)
 
(5,723
)
 
(27,270
)
 
(17,428
)
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.’s stockholders
 
(47,202
)
 
78,767

 
129,159

 
(24,684
)
 
213,636

 
160,724

 
403,996

Dividends on preferred stock
 
(1,173
)
 
(1,005
)
 
(1,026
)
 
(1,155
)
 
(1,301
)
 
(3,204
)
 
(3,905
)
Preferred stock redemption charge
 
—

 
—

 
(2,580
)
 
(4,240
)
 
—

 
(2,580
)
 
—

Net income attributable to unvested restricted stock awards
 
(1,398
)
 
(1,432
)
 
(1,955
)
 
(1,661
)
 
(3,395
)
 
(4,532
)
 
(6,010
)
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
 
$
(49,773
)
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
150,408

 
$
394,081

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.44
)
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
2.01

 
$
1.35

 
$
3.86

Diluted
 
$
(0.44
)
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
1.99

 
$
1.35

 
$
3.85

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
112,120

 
111,433

 
111,054

 
106,033

 
104,179

 
111,540

 
101,991

Diluted
 
112,120

 
111,501

 
111,054

 
106,033

 
105,385

 
111,712

 
102,354

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
 
$
1.00

 
$
1.00

 
$
0.97

 
$
0.97

 
$
0.93

 
$
2.97

 
$
2.76


(1)
Upon the adoption of new lease accounting standards on January 1, 2019, rental revenues and tenant recoveries are aggregated within income from rentals. Prior periods have been reclassified to conform to new standards. Refer to “Financial and Asset Base Highlights” and the “Lease Accounting” and “Tenant Recoveries” sections in “Definitions and Reconciliations” of our Supplemental Information for additional information.
(2)
Includes $1.7 million related to the early termination of our interest rate hedge agreements, recognized in conjunction with the early repayment of our unsecured senior bank term loan.
(3)
Related to the opportunistic refinancing of our unsecured senior notes payable due 2020 and 2022 and the early repayment of our unsecured senior bank term loan. Refer to page 3 in this Earnings Press Release for additional information.
(4)
Refer to “Investments” of our Supplemental Information for additional information.

 
 
Consolidated Balance Sheets
q319logo1.jpg
September 30, 2019
(In thousands)
 
 

 
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
Assets
 
 
 
 

 
 

 
 

 
 

Investments in real estate
 
$
13,618,280

 
$
12,872,824

 
$
12,410,350

 
$
11,913,693

 
$
11,587,312

Investments in unconsolidated real estate joint ventures
 
340,190

 
334,162

 
290,405

 
237,507

 
197,970

Cash and cash equivalents
 
410,675

 
198,909

 
261,372

 
234,181

 
204,181

Restricted cash
 
42,295

 
39,316

 
54,433

 
37,949

 
29,699

Tenant receivables
 
10,668

 
9,228

 
9,645

 
9,798

 
11,041

Deferred rent
 
615,817

 
585,082

 
558,103

 
530,237

 
511,680

Deferred leasing costs
 
252,772

 
247,468

 
241,268

 
239,070

 
238,295

Investments
 
990,454

 
1,057,854

 
1,000,904

 
892,264

 
957,356

Other assets
 
777,003

 
694,627

 
653,726

 
370,257

 
368,032

Total assets
 
$
17,058,154

 
$
16,039,470

 
$
15,480,206

 
$
14,464,956

 
$
14,105,566

 
 
 
 
 
 
 
 
 
 
 
Liabilities, Noncontrolling Interests, and Equity
 
 
 
 
 
 
 
 
 
 
Secured notes payable
 
$
351,852

 
$
354,186

 
$
356,461

 
$
630,547

 
$
632,792

Unsecured senior notes payable
 
6,042,831

 
5,140,914

 
5,139,500

 
4,292,293

 
4,290,906

Unsecured senior line of credit
 
343,000

 
514,000

 
—

 
208,000

 
413,000

Unsecured senior bank term loan
 
—

 
347,105

 
347,542

 
347,415

 
347,306

Accounts payable, accrued expenses, and other liabilities
 
1,241,276

 
1,157,417

 
1,171,377

 
981,707

 
907,094

Dividends payable
 
115,575

 
114,379

 
110,412

 
110,280

 
101,084

Total liabilities
 
8,094,534

 
7,628,001

 
7,125,292

 
6,570,242

 
6,692,182

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
12,099

 
10,994

 
10,889

 
10,786

 
10,771

 
 
 
 
 
 
 
 
 
 
 
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
7.00% Series D cumulative convertible preferred stock
 
57,461

 
57,461

 
57,461

 
64,336

 
74,386

Common stock
 
1,132

 
1,120

 
1,112

 
1,110

 
1,058

Additional paid-in capital
 
7,743,188

 
7,581,573

 
7,518,716

 
7,286,954

 
6,801,150

Accumulated other comprehensive loss
 
(11,549
)
 
(11,134
)
 
(10,712
)
 
(10,435
)
 
(3,811
)
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
 
7,790,232

 
7,629,020

 
7,566,577

 
7,341,965

 
6,872,783

Noncontrolling interests
 
1,161,289

 
771,455

 
777,448

 
541,963

 
529,830

Total equity
 
8,951,521

 
8,400,475

 
8,344,025

 
7,883,928

 
7,402,613

Total liabilities, noncontrolling interests, and equity
 
$
17,058,154

 
$
16,039,470

 
$
15,480,206

 
$
14,464,956

 
$
14,105,566



 
 
Funds From Operations and Funds From Operations per Share
q319logo1.jpg
September 30, 2019
(In thousands)
 
 

The following table presents a reconciliation of net (loss) income attributable to Alexandria’s common stockholders, the most directly comparable financial measure presented in accordance with generally accepted accounting principles (“GAAP”), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria’s common stockholders – diluted, and funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted, for the periods below:
 
 
Three Months Ended
 
Nine Months Ended
 
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
9/30/19
 
9/30/18
Net (loss) income attributable to Alexandria’s common stockholders – basic
 
$
(49,773
)
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
150,408

 
$
394,081

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
—

 
—

 
—

 
1,301

 
—

 
—

Net (loss) income attributable to Alexandria’s common stockholders – diluted
 
(49,773
)
 
76,330

 
123,598

 
(31,740
)
 
210,241

 
150,408

 
394,081

Depreciation and amortization
 
135,570

 
134,437

 
134,087

 
124,990

 
119,600

 
404,094

 
352,671

Noncontrolling share of depreciation and amortization from consolidated real estate JVs
 
(8,621
)
 
(6,744
)
 
(5,419
)
 
(4,252
)
 
(4,044
)
 
(20,784
)
 
(11,825
)
Our share of depreciation and amortization from unconsolidated real estate JVs
 
1,845

 
973

 
846

 
719

 
1,011

 
3,664

 
2,462

Gain on sales of real estate
 
—

 
—

 
—

 
(8,704
)
 
—

 
—

 
—

Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
—

 
—

 
(35,678
)
 
—

 
(35,678
)
Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
1,005

 
1,026

 
—

 
—

 
—

 
3,905

Allocation to unvested restricted stock awards
 
—

 
(1,445
)
 
(2,054
)
 
—

 
(1,312
)
 
(2,929
)
 
(4,595
)
Funds from operations attributable to Alexandria’s common stockholders – diluted(2)
 
79,021

 
204,556

 
252,084

 
81,013

 
289,818

 
534,453

 
701,021

Unrealized losses (gains) on non-real estate investments
 
70,043

 
(11,058
)
 
(72,206
)
 
94,850

 
(117,188
)
 
(13,221
)
 
(194,484
)
Realized gains on non-real estate investments
 
—

 
—

 
—

 
(6,428
)
 
—

 
—

 
(8,252
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
—

 
—

 
—

 
6,311

Impairment of non-real estate investments
 
7,133

(3) 
—

 
—

 
5,483

 
—

 
7,133

 
—

Loss on early extinguishment of debt
 
40,209

(4) 
—

 
7,361

 
—

 
1,122

 
47,570

 
1,122

Loss on early termination of interest rate hedge agreements
 
1,702

(5) 
—

 
—

 
—

 
—

 
1,702

 
—

Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
 
—

 
—

 
—

 
—

 
(761
)
 
—

 
(761
)
Preferred stock redemption charge
 
—

 
—

 
2,580

 
4,240

 
—

 
2,580

 
—

Removal of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
(1,005
)
 
(1,026
)
 
—

 
(1,301
)
 
—

 
(3,905
)
Allocation to unvested restricted stock awards
 
(1,002
)
 
179

 
990

 
(1,138
)
 
1,889

 
(657
)
 
2,938

Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
197,106

 
$
192,672

 
$
189,783

 
$
178,020

 
$
173,579

 
$
579,560

 
$
503,990


(1)
Refer to the “Weighted-Average Shares of Common Stock Outstanding – Diluted” section in “Definitions and Reconciliations” of our Supplemental Information for additional information regarding our 7.00% Series D cumulative convertible preferred stock.
(2)
Calculated in accordance with standards established by the Nareit Board of Governors. Refer to the “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” section in “Definitions and Reconciliations” of our Supplemental Information for additional information.
(3)
Relates to three privately held non-real estate investments.
(4)
Refer to page 3 for additional information.
(5)
Represents loss on the termination of our interest rate hedge agreements. The loss is included within interest expense in our consolidated statements of operations.

 
 
Funds From Operations and Funds From Operations per Share (continued)
q319logo1.jpg
September 30, 2019
(In thousands, except per share amounts)
 
 


The following table presents a reconciliation of net (loss) income per share attributable to Alexandria’s common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria’s common stockholders – diluted, and funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted, for the periods below. Per share amounts may not add due to rounding.
 
 
Three Months Ended
 
Nine Months Ended
 
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
9/30/19
 
9/30/18
Net (loss) income per share attributable to Alexandria’s common stockholders – diluted
 
$
(0.44
)
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
1.99

 
$
1.35

 
$
3.85

Depreciation and amortization 
 
1.14

 
1.15

 
1.17

 
1.14

 
1.11

 
3.46

 
3.35

Gain on sale of real estate
 
—

 
—

 
—

 
(0.08
)
 
—

 
—

 
—

Our share of gain on sales of real estate from unconsolidated real estate JVs
 
—

 
—

 
—

 
—

 
(0.34
)
 
—

 
(0.35
)
Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.01
)
Allocation to unvested restricted stock awards
 
—

 
—

 
(0.02
)
 
—

 
(0.01
)
 
(0.03
)
 
(0.04
)
Funds from operations per share attributable to Alexandria’s common stockholders – diluted(1)
 
0.70

 
1.83

 
2.26

 
0.76

 
2.75

 
4.78


6.80

Unrealized losses (gains) on non-real estate investments
 
0.62

 
(0.10
)
 
(0.65
)
 
0.89

 
(1.11
)
 
(0.12
)
 
(1.90
)
Realized gains on non-real estate investments
 
—

 
—

 
—

 
(0.06
)
 
—

 
—

 
(0.08
)
Impairment of real estate – land parcels
 
—

 
—

 
—

 
—

 
—

 
—

 
0.06

Impairment of non-real estate investments
 
0.06

 
—

 
—

 
0.05

 
—

 
0.06

 
—

Loss on early extinguishment of debt
 
0.36

 
—

 
0.07

 
—

 
0.01

 
0.43

 
0.01

Loss on early termination of interest rate hedge agreements
 
0.02

(1) 
—

 
—

 
—

 
—

 
0.02

 
—

Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
 
—

 
—

 
—

 
—

 
(0.01
)
 
—

 
(0.01
)
Preferred stock redemption charge
 
—

 
—

 
0.02

 
0.04

 
—

 
0.02

 
—

Removal of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
—

 
—

 
—

 
—

 
—

 
—

 
0.01

Allocation to unvested restricted stock awards
 
(0.01
)
 
—

 
0.01

 
—

 
0.02

 
—

 
0.03

Funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
1.75

 
$
1.73

 
$
1.71

 
$
1.68

 
$
1.66

 
$
5.19

 
$
4.92

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding(1) for calculations of:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share – diluted
 
112,120

 
111,501

 
111,054

 
106,033

 
105,385

 
111,712

 
102,354

Funds from operations – diluted, per share
 
112,562

 
112,077

 
111,635

 
106,244

 
105,385

 
111,712

 
103,097

Funds from operations – diluted, as adjusted, per share
 
112,562

 
111,501

 
111,054

 
106,244

 
104,641

 
111,712

 
102,354


(1)
Refer to footnotes on the previous page for additional information.











SUPPLEMENTAL
INFORMATION








 
 
 
q319logo1.jpg
Company Profile
September 30, 2019
 
 

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office REIT, is the first and longest-tenured owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $24.3 billion as of September 30, 2019, and an asset base in North America of 38.5 million SF as of October 28, 2019, including pending acquisitions. The asset base in North America includes 26.1 million RSF of operating properties and 2.5 million RSF of Class A properties undergoing construction or pre-construction, with projected initial occupancy in 4Q19-2020, 4.9 million RSF of intermediate-term Class A properties undergoing or nearing pre-construction, and 5.0 million SF of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, technology, and agtech companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

Tenant base

Alexandria is known for our high-quality and diverse tenant base, with 53% of our annual rental revenue generated from entities with an investment-grade credit rating or are publicly traded large cap tenants. The quality, diversity, breadth, and depth of our significant relationships with our tenants provide Alexandria with high-quality and stable cash flows. Alexandria’s underwriting team and long-term industry relationships positively distinguish us from all other publicly traded REITs and real estate companies.

Executive and senior management team

Alexandria’s executive and senior management team has unique experience and expertise in creating, owning, and operating highly dynamic and collaborative campuses in key urban life science, technology, and agtech cluster locations that inspire innovation. From the development of high-quality, sustainable real estate, to the ongoing cultivation of collaborative environments with unique amenities and events, the Alexandria team has a first-in-class reputation of excellence in our niche. Alexandria’s highly experienced management team also includes regional market directors with leading reputations and longstanding relationships within the life science, technology, and agtech communities in their respective urban innovation clusters. We believe that our expertise, experience, reputation, and key relationships in the real estate, life science, technology, and agtech industries provide Alexandria significant competitive advantages in attracting new business opportunities.
 
Alexandria’s executive and senior management team consists of 43 individuals, averaging 24 years of real estate experience, including 13 years with Alexandria. Our executive management team alone averages 19 years of experience with Alexandria.

EXECUTIVE MANAGEMENT TEAM
Joel S. Marcus
Executive Chairman & Founder
Stephen A. Richardson
Co-Chief Executive Officer
Peter M. Moglia
Co-Chief Executive Officer & Co-Chief Investment Officer
Dean A. Shigenaga
Co-President & Chief Financial Officer
Thomas J. Andrews
Co-President & Regional Market Director – Greater Boston
Daniel J. Ryan
Co-Chief Investment Officer & Regional Market Director – San Diego
Jennifer J. Banks
Co-Chief Operating Officer, General Counsel & Corporate Secretary
Lawrence J. Diamond
Co-Chief Operating Officer & Regional Market Director – Maryland
Vincent R. Ciruzzi
Chief Development Officer
John H. Cunningham
Executive Vice President – Regional Market Director – New York City
Marc E. Binda
Executive Vice President – Finance & Treasurer
Joseph Hakman
Chief Strategic Transactions Officer

 
 
 
q319logo1.jpg
Investor Information
September 30, 2019
 
 

Corporate Headquarters
 
New York Stock Exchange Trading Symbols
 
Information Requests
26 North Euclid Avenue
 
Common stock: ARE
 
Phone:
(626) 578-0777
Pasadena, California 91101
 
 
 
Email:
corporateinformation@are.com
 
 
 
 
Web:
www.are.com
 
 
 
 
 
 
Equity Research Coverage
Alexandria is currently covered by the following research analysts. This list may be incomplete and is subject to change as firms initiate or discontinue coverage of our company. Please note that any opinions, estimates, or forecasts regarding our historical or predicted performance made by these analysts are theirs alone and do not represent opinions, estimates, or forecasts of Alexandria or our management. Alexandria does not by our reference or distribution of the information below imply our endorsement of or concurrence with any opinions, estimates, or forecasts of these analysts. Interested persons may obtain copies of analysts’ reports on their own as we do not distribute these reports. Several of these firms may, from time to time, own our stock and/or hold other long or short positions in our stock and may provide compensated services to us.
Bank of America Merrill Lynch
 
Citigroup Global Markets Inc.
 
JMP Securities – JMP Group, Inc.
 
RBC Capital Markets
Jamie Feldman / Jeffrey Spector
 
Michael Bilerman / Emmanuel Korchman
 
Peter Martin
 
Michael Carroll / Jason Idoine
(646) 855-5808 / (646) 855-1363
 
(212) 816-1383 / (212) 816-1382
 
(415) 835-8904
 
(440) 715-2649 / (440) 715-2651
 
 
 
 
 
 
 
Barclays Capital Inc.
 
Evercore ISI
 
J.P. Morgan Securities LLC
 
Robert W. Baird & Co. Incorporated
Ross Smotrich / Upal Rana
 
Sheila McGrath / Wendy Ma
 
Anthony Paolone
 
David Rodgers
(212) 526-2306 / (212) 526-4887
 
(212) 497-0882 / (212) 497-0870
 
(212) 622-6682
 
(216) 737-7341
 
 
 
 
 
 
 
BTIG, LLC
 
Green Street Advisors, Inc.
 
Mizuho Securities USA Inc.
 
SMBC Nikko Securities America, Inc.
Tom Catherwood / James Sullivan
 
Daniel Ismail / Chris Darling
 
Haendel St. Juste / Zachary Silverberg
 
Richard Anderson / Jay Kornreich
(212) 738-6140 / (212) 738-6139
 
(949) 640-8780 / (949) 640-8780
 
(212) 209-9300 / (212) 205-7855
 
(646) 521-2351 / (646) 424-3202
 
 
 
 
 
 
 
CFRA
 
 
 
 
 
 
Kenneth Leon
 
 
 
 
 
 
(646) 517-2552
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed Income Coverage
 
Rating Agencies
J.P. Morgan Securities LLC
 
Wells Fargo & Company
 
Moody’s Investors Service
 
S&P Global Ratings
Mark Streeter / Ian Snyder
 
Thierry Perrein / Kevin McClure
 
(212) 553-0376
 
Fernanda Hernandez / Michael Souers
(212) 834-5086 / (212) 834-3798
 
(704) 410-3262 / (704) 410-3252
 
 
 
(212) 438-1347 / (212) 438-2508
 
 
 
 
 
 
 

 
 
 
q319logo1.jpg
Sustainability Leadership and Commitment
September 30, 2019
 
 

q319sustainability.jpg
(1)
Relative to a 2015 baseline. Energy consumption, carbon pollution, and water consumption values are for our directly managed buildings.
(2)
Waste values are for our total portfolio, which includes both indirectly and directly managed buildings.
(3)
Upon completion of 18 projects in process targeting LEED certification.
(4)
Upon completion of 27 projects in process targeting either WELL or Fitwel certification.

 
 
Financial and Asset Base Highlights
q319logo1.jpg
September 30, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
Selected financial data from consolidated financial statements and related information
 
 
 
 
 
 
 
 
 
 
Rental revenues
 
$
293,182

 
$
289,625

 
$
274,563

 
$
260,102

 
$
255,496

Tenant recoveries
 
$
92,594

 
$
81,993

 
$
80,186

 
$
77,683

 
$
81,051

 
 
 
 
 
 
 
 
 
 
 
Operating margin
 
70%

 
72%

 
72%

 
71%

 
71%

Adjusted EBITDA margin
 
68%

 
69%

 
70%

 
69%

 
69%

Adjusted EBITDA – quarter annualized
 
$
1,099,908

 
$
1,063,056

 
$
1,029,944

 
$
968,888

 
$
957,008

Adjusted EBITDA – trailing 12 months
 
$
1,040,449

 
$
1,004,724

 
$
966,781

 
$
937,906

 
$
900,032

 
 
 
 
 
 
 
 
 
 
 
Net debt at end of period
 
$
6,333,459

 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

Net debt to Adjusted EBITDA – quarter annualized
 
5.8x

 
5.8x

 
5.4x

 
5.4x

 
5.7x

Net debt to Adjusted EBITDA – trailing 12 months
 
6.1x

 
6.1x

 
5.8x

 
5.6x

 
6.1x

Net debt and preferred stock to Adjusted EBITDA – quarter annualized
 
5.8x

 
5.8x

 
5.5x

 
5.5x

 
5.8x

Net debt and preferred stock to Adjusted EBITDA – trailing 12 months
 
6.1x

 
6.2x

 
5.8x

 
5.7x

 
6.2x

 
 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio – quarter annualized
 
3.9x

 
4.2x

 
4.5x

 
4.1x

 
4.1x

Fixed-charge coverage ratio – trailing 12 months
 
4.1x

 
4.2x

 
4.2x

 
4.2x

 
4.3x

Unencumbered net operating income as a percentage of total net operating income
 
95%

 
94%

 
95%

 
88%

 
88%

 
 
 
 
 
 
 
 
 
 
 
Closing stock price at end of period
 
$
154.04

 
$
141.09

 
$
142.56

 
$
115.24

 
$
125.79

Common shares outstanding (in thousands) at end of period
 
113,173

 
111,986

 
111,181

 
111,012

 
105,804

Total equity capitalization at end of period
 
$
17,522,382

 
$
15,887,660

 
$
15,936,979

 
$
12,879,366

 
$
13,412,222

Total market capitalization at end of period
 
$
24,260,065

 
$
22,243,865

 
$
21,780,482

 
$
18,357,621

 
$
19,096,226

 
 
 
 
 
 
 
 
 
 
 
Dividend per share – quarter/annualized
 
$1.00/$4.00

 
$1.00/$4.00

 
$0.97/$3.88

 
$0.97/$3.88

 
$0.93/$3.72

Dividend payout ratio for the quarter
 
57%

 
58%

 
57%

 
60%

 
57%

Dividend yield – annualized
 
2.6%

 
2.8%

 
2.7%

 
3.4%

 
3.0%

 
 
 
 
 
 
 
 
 
 
 
Amounts related to operating leases:(1)
 
 
 
 
 
 
 
 
 
 
Operating lease liabilities
 
$
270,614

 
$
243,585

 
$
244,601

 
$
—

 
$
—

Rent expense
 
$
4,705

 
$
4,482

 
$
4,492

 
$
4,164

 
$
3,999

 
 
 
 
 
 
 
 
 
 
 
General and administrative expenses
 
$
27,930

 
$
26,434

 
$
24,677

 
$
22,385

 
$
22,660

General and administrative expenses as a percentage of net operating income –
trailing 12 months
 
9.7%

 
9.5%

 
9.5%

 
9.6%

 
9.5%

 
 
 
 
 
 
 
 
 
 
 
Capitalized interest
 
$
24,558

 
$
21,674

 
$
18,509

 
$
19,902

 
$
17,431

Weighted-average interest rate for capitalization of interest during the period
 
4.00%

 
4.14%

 
3.96%

 
4.01%

 
4.06%

(1) Refer to the “Lease Accounting” section in “Definitions and Reconciliations” for additional information.

 
 
Financial and Asset Base Highlights (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands, except annual rental revenue per occupied RSF amounts)
 
 

 
 
Three Months Ended (unless stated otherwise)
 
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
Amounts included in funds from operations and non-revenue-enhancing capital expenditures
 
 
 
 
 
 
 
 
 
 
Straight-line rent revenue
 
$
27,394

 
$
25,476

 
$
26,965

 
$
17,923

 
$
20,070

Amortization of acquired below-market leases
 
$
5,774

 
$
8,054

 
$
7,148

 
$
5,350

 
$
5,220

Straight-line rent expense on ground leases
 
$
320

 
$
226

 
$
246

 
$
272

 
$
272

Stock compensation expense
 
$
10,935

 
$
11,437

 
$
11,029

 
$
9,810

 
$
9,986

Amortization of loan fees
 
$
2,251

 
$
2,380

 
$
2,233

 
$
2,401

 
$
2,734

Amortization of debt premiums
 
$
1,287

 
$
782

 
$
801

 
$
611

 
$
614

Non-revenue-enhancing capital expenditures:
 
 
 
 
 
 
 
 
 
 
Building improvements
 
$
2,901

 
$
2,876

 
$
2,381

 
$
3,256

 
$
3,032

Tenant improvements and leasing commissions
 
$
11,964

 
$
13,901

 
$
8,709

 
$
11,758

 
$
17,748

 
 
 
 
 
 
 
 
 
 
 
Operating statistics and related information (at end of period)
 
 
 
 
 
 
 
 
 
 
Number of properties – North America
 
269

 
257

 
250

 
237

 
235

RSF – North America (including development and redevelopment projects under construction)
 
27,288,263

 
26,321,122

 
25,323,299

 
24,587,438

 
24,196,505

Total square feet – North America
 
38,496,276

(1) 
37,120,560

 
33,688,294

 
33,097,210

 
32,186,813

Annual rental revenue per occupied RSF – North America
 
$
51.00

 
$
50.27

 
$
49.56

 
$
48.42

 
$
48.36

Occupancy of operating properties – North America
 
96.6%

(2) 
97.4%

 
97.2%

 
97.3%

 
97.3%

Occupancy of operating and redevelopment properties – North America
 
94.5%

 
96.4%

 
95.5%

 
95.1%

 
94.6%

Weighted-average remaining lease term (in years)
 
8.3

 
8.4

 
8.4

 
8.6

 
8.6

 
 
 
 
 
 
 
 
 
 
 
Total leasing activity – RSF
 
1,241,677

 
819,949

 
1,248,972

 
1,558,064

 
696,468

Lease renewals and re-leasing of space – change in average new rental rates over expiring rates:
 
 
 
 
 
 
 
 
 
 
Rental rate increases
 
27.9%

 
32.5%

 
32.9%

 
17.4%

 
35.4%

Rental rate increases (cash basis)
 
11.2%

 
17.8%

 
24.3%

 
11.4%

 
16.9%

RSF (included in total leasing activity above)
 
758,113

 
587,930

 
509,415

 
650,540

 
475,863

 
 
 
 
 
 
 
 
 
 
 
Same property – percentage change over comparable quarter from prior year:
 
 
 
 
 
 
 
 
 
 
Net operating income increase
 
2.5%

 
4.3%

 
2.3%

 
3.8%

 
3.4%

Net operating income increase (cash basis)
 
5.7%

 
9.5%

 
10.2%

 
7.6%

 
8.9%

 
 
 
 
 
 
 
 
 
 
 

(1)
Includes 4Q19 completed and pending acquisitions and 2020 identified acquisitions. Refer to “Acquisitions” of our Earnings Press Release for additional information.
(2)
Refer to footnote 2 on the “Summary of Properties and Occupancy” page for additional information.

 
 
 
q319logo1.jpg
High-Quality, Diverse, and Innovative Tenants
September 30, 2019
 
 



Long-Duration Cash Flows From High-Quality, Diverse, and
Innovative Tenants

Investment-Grade or
Publicly Traded Large Cap Tenants
 
Tenant Mix
 
 
 
 
 
q319clienttenantmix.jpg
 
53%
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-Duration Lease Terms
 
 
 
 
 
 
 
8.3 Years
 
 
 
 
 
 
 
 
 
 
Weighted-Average Remaining Term
 
 
 
Percentage of ARE’s Annual Rental Revenue(1)




(1)
Represents annual rental revenue in effect as of September 30, 2019.
(2)
78% of our annual rental revenue for technology tenants is from investment-grade or publicly traded large cap tenants.

 
 
 
q319logo1.jpg
Class A Properties in AAA Locations
September 30, 2019
 
 


High-Quality Cash Flows From Class A Properties in AAA Locations

Class A Properties in
AAA Locations
 
AAA Locations
 
 
 
 
q319realestate.jpg
 
 
 
 
 
 
 
 
78%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
of ARE’s
 
Annual Rental Revenue(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of ARE’s Annual Rental Revenue(1)








(1)
Represents annual rental revenue in effect as of September 30, 2019.

 
 
 
q319logo1.jpg
Occupancy
September 30, 2019
 
 



Solid Demand for Class A Properties in AAA Locations
Drives Solid Occupancy

Solid Historical Occupancy(1)
 
Occupancy Across Key Locations(2)
 
 
 
 
q319occupancys.jpg
 
 
 
 
 
 
 
 
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Over 10 Years
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



(1)
Average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of September 30, 2019.
(2)
As of September 30, 2019.
(3)
Decline of 0.8% from 97.4% for our overall occupancy at 2Q19 reflects:
(i)
111,080 RSF, or 0.4%, of existing vacancy at properties recently acquired in 3Q19 which we anticipate leasing up in the future; and
(ii)
116,556 RSF, or 0.5%, that became vacant as expected during 3Q19 at 3545 Cray Court in San Diego related to downtime for renovation of the property. During 3Q19, we executed a lease for 64,108 RSF at 3545 Cray Court, or 55% of the property, that is expected to commence in 3Q20, upon completion of the renovations.

 
 
 
q319logo1.jpg
Key Operating Metrics
September 30, 2019
 
 

Same Property Net Operating Income Growth
 
Favorable Lease Structure(1)
 
q319samepropa.jpg
q319samepropb.jpg
 
Strategic Lease Structure by Owner and Operator of Collaborative Life Science, Technology, and AgTech Campuses
 
 
Stable cash flows
 
 
 
 
Percentage of triple
net leases
 
97%
 
 
Increasing cash flows
 
 
 
 
Percentage of leases containing
annual rent escalations
95%
 
 
Lower capex burden
 
 
 
 
Percentage of leases providing for the
recapture of capital expenditures
96%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Rate Growth:
Renewed/Re-Leased Space
 
Margins(2)
 
q319rentalratea.jpg
q319rentalrateb.jpg
 
 
 
 
 
 
 
 
 
 
Operating
 
 
 
Adjusted EBITDA
 
 
70%
 
 
 
68%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Percentages calculated based on RSF as of September 30, 2019.
(2)
Represents percentages for the three months ended September 30, 2019.

 
 
Same Property Performance
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

 
 
September 30, 2019
 
 
 
September 30, 2019
Same Property Financial Data
 
Three Months Ended
 
Nine Months Ended
 
Same Property Statistical Data
 
Three Months Ended
 
Nine Months Ended
Percentage change over comparable period from prior year:
 
 
 
 
 
Number of same properties
 
211
 
195
Net operating income increase
 
2.5%
 
3.3%
 
Rentable square feet
 
20,445,617
 
18,874,263
Net operating income increase (cash basis)
 
5.7%
 
8.1%
 
Occupancy – current-period average
 
96.0%
(1) 
96.3%
Operating margin
 
71%
 
71%
 
Occupancy – same-period prior-year average
 
96.6%
 
96.5%
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
 
2019
 
2018
 
$ Change
 
% Change
 
2019
 
2018
 
$ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from rentals:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
$
252,161

 
$
245,358

 
$
6,803

 
2.8
%
 
$
697,063

 
$
673,498

 
$
23,565

 
3.5
%
Non-same properties
 
41,021

 
10,138

 
30,883

 
304.6

 
160,307

 
77,118

 
83,189

 
107.9

Rental revenues
 
293,182

 
255,496

 
37,686

 
14.8

 
857,370

 
750,616

 
106,754

 
14.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
81,983

 
78,856

 
3,127

 
4.0

 
222,778

 
212,148

 
10,630

 
5.0

Non-same properties
 
10,611

 
2,195

 
8,416

 
383.4

 
31,995

 
14,232

 
17,763

 
124.8

Tenant recoveries
 
92,594

 
81,051

 
11,543

 
14.2

 
254,773

 
226,380

 
28,393

 
12.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from rentals
 
385,776

 
336,547

 
49,229

 
14.6

 
1,112,143

 
976,996

 
135,147

 
13.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
169

 
69

 
100

 
144.9

 
403

 
203

 
200

 
98.5

Non-same properties
 
4,539

 
5,207

 
(668
)
 
(12.8
)
 
10,636

 
9,797

 
839

 
8.6

Other income
 
4,708

 
5,276

 
(568
)
 
(10.8
)
 
11,039

 
10,000

 
1,039

 
10.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
334,313

 
324,283

 
10,030

 
3.1

 
920,244

 
885,849

 
34,395

 
3.9

Non-same properties
 
56,171

 
17,540

 
38,631

 
220.2

 
202,938

 
101,147

 
101,791

 
100.6

Total revenues
 
390,484

 
341,823

 
48,661

 
14.2

 
1,123,182

 
986,996

 
136,186

 
13.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
96,007

 
91,713

 
4,294

 
4.7

 
262,614

 
249,368

 
13,246

 
5.3

Non-same properties
 
20,443

 
8,046

 
12,397

 
154.1

 
61,026

 
34,070

 
26,956

 
79.1

Rental operations
 
116,450

 
99,759

 
16,691

 
16.7

 
323,640

 
283,438

 
40,202

 
14.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Same properties
 
238,306

 
232,570

 
5,736

 
2.5

 
657,630

 
636,481

 
21,149

 
3.3

Non-same properties
 
35,728

 
9,494

 
26,234

 
276.3

 
141,912

 
67,077

 
74,835

 
111.6

Net operating income
 
$
274,034

 
$
242,064

 
$
31,970

 
13.2
%
 
$
799,542

 
$
703,558

 
$
95,984

 
13.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net operating income – same properties
 
$
238,306

 
$
232,570

 
$
5,736

 
2.5
%
 
$
657,630

 
$
636,481

 
$
21,149

 
3.3
%
Straight-line rent revenue
 
(15,303
)
 
(20,601
)
 
5,298

 
(25.7
)
 
(42,885
)
 
(65,041
)
 
22,156

 
(34.1
)
Amortization of acquired below-market leases
 
(3,599
)
 
(4,441
)
 
842

 
(19.0
)
 
(8,362
)
 
(10,376
)
 
2,014

 
(19.4
)
Net operating income – same properties (cash basis)
 
$
219,404

 
$
207,528

 
$
11,876

 
5.7
%
 
$
606,383

 
$
561,064

 
$
45,319

 
8.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Refer to the “Same Property Comparisons” section in “Definitions and Reconciliations” of this Supplemental Information for a reconciliation of same properties to total properties. “Definitions and Reconciliations” also contains definitions of “Tenant Recoveries” and “Net Operating Income” and their respective reconciliations from the most directly comparable financial measures presented in accordance with GAAP.

(1)
Decline from 2Q19 relates primarily to 116,556 RSF that became vacant as expected during 3Q19 at 3545 Cray Court related to downtime for renovation of the property. During 3Q19, we executed a lease for 64,108 RSF at 3545 Cray Court, or 55% of the property, that is expected to commence in 3Q20, upon completion of the renovations.

 
 
Leasing Activity
q319logo1.jpg
September 30, 2019
(Dollars per RSF)
 
 

 
 
 
Three Months Ended
 
 
 
Nine Months Ended
 
 
 
Year Ended
 
 
 
 
September 30, 2019
 
 
 
September 30, 2019
 
 
 
December 31, 2018
 
 
 
Including
Straight-Line Rent
 
Cash Basis
 
Including
Straight-Line Rent
 
Cash Basis
 
Including
Straight-Line Rent
 
Cash Basis
Leasing activity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewed/re-leased space(1)
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
Rental rate changes
 
 
27.9%

 
 
 
11.2%

 
 
 
30.6%

 
 
 
16.2%

 
 
 
24.1%

 
 
 
14.1%

 
New rates
 
 

$58.33

 
 
 

$56.31

 
 
 

$56.31

 
 
 

$54.00

 
 
 

$55.05

 
 
 

$52.79

 
Expiring rates
 
 

$45.61

 
 
 

$50.64

 
 
 

$43.12

 
 
 

$46.49

 
 
 

$44.35

 
 
 

$46.25

 
RSF
 
 
758,113

 
 
 
 
 
 
 
1,855,458

 
 
 
 
 
 
 
2,088,216

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$11.46

 
 
 
 
 
 
 

$18.63

 
 
 
 
 
 
 

$20.61

 
 
 
 
 
Weighted-average lease term
 
 
5.2 years

 
 
 
 
 
 
 
5.6 years

 
 
 
 
 
 
 
6.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Developed/redeveloped/previously vacant space leased
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$66.50

 
 
 

$63.27

 
 
 

$62.60

 
 
 

$60.69

 
 
 

$58.45

 
 
 

$48.73

 
RSF
 
 
483,564

 
 
 
 
 
 
 
1,455,140

 
 
 
 
 
 
 
2,633,476

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$17.49

 

 
 
 
 
 

$18.33

 
 
 
 
 
 
 

$12.57

 
 
 
 
 
Weighted-average lease term
 
 
10.9 years

 
 
 
 
 
 
 
10.6 years

 
 
 
 
 
 
 
11.5 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Leasing activity summary (totals):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New rates
 
 

$61.51

 
 
 

$59.02

 
 
 

$59.07

 
 
 

$56.94

 
 
 

$56.94

 
 
 

$50.52

 
RSF
 
 
1,241,677

 
 
 
 
 
 
 
3,310,598

(2) 
 
 
 
 
 
 
4,721,692

 
 
 
 
 
Tenant improvements/leasing commissions
 
 

$13.81

 
 
 
 
 
 
 

$18.50

 
 
 
 
 
 
 

$16.13

 
 
 
 
 
Weighted-average lease term
 
 
7.4 years

 
 
 
 
 
 
 
7.8 years

 
 
 
 
 
 
 
9.1 years

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease expirations(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expiring rates
 
 

$45.47

 
 
 

$49.81

 
 
 

$42.27

 
 
 

$45.36

 
 
 

$42.98

 
 
 

$45.33

 
RSF
 
 
891,794

 
 
 
 
 
 
 
2,184,894

 
 
 
 
 
 
 
2,811,021

 
 
 
 
 


Leasing activity includes 100% of results for each property in which we have an investment in North America.

(1)
Excludes month-to-month leases aggregating 51,580 RSF and 50,548 RSF as of September 30, 2019, and December 31, 2018, respectively.
(2)
During the nine months ended September 30, 2019, we granted tenant concessions/free rent averaging 2.3 months with respect to the 3,310,598 RSF leased. Approximately 65% of the leases executed during the nine months ended September 30, 2019, did not include concessions for free rent.

 
 
 
q319logo1.jpg
Contractual Lease Expirations
September 30, 2019
 
 

Year
 
RSF
 
Percentage of
Occupied RSF
 
Annual Rental Revenue
(per RSF)(1)
 
Percentage of Total
Annual Rental Revenue
 
 
2019
(2)
 
 
263,242

 
 
 
1.1
%
 
 
 
$
42.90

 
 
 
0.9
%
 
 
 
2020
 
 
 
1,605,708

 
 
 
6.6
%
 
 
 
$
36.69

 
 
 
4.8
%
 
 
 
2021
 
 
 
1,420,131

 
 
 
5.8
%
 
 
 
$
43.22

 
 
 
5.0
%
 
 
 
2022
 
 
 
1,865,264

 
 
 
7.7
%
 
 
 
$
40.74

 
 
 
6.2
%
 
 
 
2023
 
 
 
2,471,595

 
 
 
10.2
%
 
 
 
$
45.13

 
 
 
9.1
%
 
 
 
2024
 
 
 
2,192,250

 
 
 
9.0
%
 
 
 
$
46.71

 
 
 
8.4
%
 
 
 
2025
 
 
 
1,620,318

 
 
 
6.7
%
 
 
 
$
47.62

 
 
 
6.3
%
 
 
 
2026
 
 
 
1,527,877

 
 
 
6.3
%
 
 
 
$
48.84

 
 
 
6.1
%
 
 
 
2027
 
 
 
2,346,920

 
 
 
9.7
%
 
 
 
$
48.25

 
 
 
9.3
%
 
 
 
2028
 
 
 
1,555,736

 
 
 
6.4
%
 
 
 
$
59.44

 
 
 
7.6
%
 
 
Thereafter
 
 
7,438,267

 
 
 
30.5
%
 
 
 
$
59.42

 
 
 
36.3
%
 
 

Market
 
2019 Contractual Lease Expirations (in RSF)
 
Annual Rental Revenue
(per RSF)(1)
 
2020 Contractual Lease Expirations (in RSF)

Annual Rental Revenue
(per RSF)(1)
 
Leased
 
Negotiating/
Anticipating
 
Targeted for Redevelopment
 
Remaining
Expiring
Leases
 
Total(2)
 
 
Leased

Negotiating/
Anticipating

Targeted for Redevelopment

Remaining
Expiring Leases(3)
 
Total

 
 
 
 
 
 
 



 

Greater Boston
 
70,868

 
—

 
—

 
 
9,580

 
 
80,448

 
$
71.95

 
52,406


103,584


—

 

346,393

 
 
502,383


$
49.26

San Francisco
 
3,178

 
22,625

 
—

 
 
27,775

 
 
53,578

 
40.28

 
43,286


37,281


—

 

203,230

(4) 
 
283,797


44.26

New York City
 
10,761

 
—

 
—

 
 
1,588

 
 
12,349

 
N/A

 
—


13,101


—

 

25,224


 
38,325


N/A

San Diego
 
54,042

 
—

 
—

 
 
3,722

 

57,764

 
23.10

 
679


25,127


—

 
 
299,324

(5) 
 
325,130


28.80

Seattle
 
—

 
2,421

 
—

 
 
—

 
 
2,421

 
N/A

 
12,727


—


—

 

32,047


 
44,774


38.68

Maryland
 
—

 
—

 
—

 
 
3,505

 
 
3,505

 
N/A

 
31,367


29,498


—

 

103,386


 
164,251


18.19

Research Triangle
 
3,139

 
6,105

 
—

 
 
10,735

 
 
19,979

 
24.52

 
—


54,331


—

 

39,028


 
93,359


17.54

Canada
 
—

 
—

 
—

 
 
—

 
 
—

 
—

 
64,728

 
—

 
—

 
 
29,865

 
 
94,593

 
28.17

Non-cluster markets
 
1,463

 
28,775

 
—

 
 
2,960

 
 
33,198

 
21.27

 
—


1,008


—

 

58,088


 
59,096


29.39

Total
 
143,451

 
59,926

 
—

 
 
59,865

 
 
263,242

 
$
42.90

 
205,193


263,930


—

 

1,136,585


 
1,605,708


$
36.69

Percentage of expiring leases
 
54
%
 
23
%
 
—
%
 
 
23
%
 
 
100
%
 
 
 
13
%
 
16
%
 
—
%
 
 
71
%

 
100
%


 

(1)
Represents amounts in effect as of September 30, 2019.
(2)
Excludes month-to-month leases aggregating 51,580 RSF as of September 30, 2019.
(3)
The largest remaining contractual lease expiration in 2020 is 60,759 RSF in our Greater Boston market.
(4)
Includes two leases aggregating 100,560 RSF at 630 and 650 Gateway Boulevard in our South San Francisco submarket that expire in 4Q20. We are considering options to renovate these buildings into Class A office/laboratory properties and will not be classified as a redevelopment. As such, we expect these properties to remain in our pool of same properties.
(5)
Includes 119,546 RSF at 9363, 9373, and 9393 Towne Centre Drive in our University Town Center submarket, which is under evaluation for development and potential additional density at this site, subject to future market conditions.

 
 
Top 20 Tenants
q319logo1.jpg
September 30, 2019
(Dollars in thousands, except average market cap amounts)
 
 

85% of Top 20 Annual Rental Revenue From Investment-Grade
or Publicly Traded Large Cap Tenants(1) 

 
 
Tenant
 
Remaining Lease Term in Years(1)
 
Aggregate
RSF
 
Annual Rental Revenue(1)
 
Percentage of Aggregate Annual Rental Revenue(1)
 
Investment-Grade
Credit Ratings
 
Average Market Cap(2)
(in billions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Moody’s
 
S&P
 
 
1
 
Takeda Pharmaceutical Company Ltd.
 
 
9.9

 
 
 
606,249

 
 
 
$
39,251

 
 
3.3
%
 
Baa2
 
BBB+
 
$
50.2

 
2
 
Facebook, Inc.
 
 
12.3

 
 
 
903,786

 
 
 
38,797

 
 
3.3

 
—
 
—
 
$
483.4

 
3
 
Illumina, Inc.
 
 
10.9

 
 
 
891,495

 
 
 
35,907

 
 
3.0

 
—
 
BBB
 
$
46.0

 
4
 
Eli Lilly and Company
 
 
9.6

 
 
 
554,089

 
 
 
34,096

 
 
2.9

 
A2
 
A+
 
$
117.7

 
5
 
Sanofi
 
 
8.7

 
 
 
494,693

 
 
 
33,845

 
 
2.8

 
A1
 
AA
 
$
107.9

 
6
 
Celgene Corporation
 
 
6.4

 
 
 
675,857

 
 
 
31,951

 
 
2.7

(3) 
Baa2
 
BBB+
 
$
61.7

 
7
 
Novartis AG
 
 
7.4

 
 
 
392,570

 
 
 
29,746

 
 
2.5

 
A1
 
AA-
 
$
223.5

 
8
 
Uber Technologies, Inc.
 
 
63.1

(4) 
 
 
1,016,745

 
 
 
27,433

 
 
2.3

 
B2
 
B-
 
$
66.7

 
9
 
Merck & Co., Inc.
 
 
11.7

 
 
 
421,623

 
 
 
24,304

 
 
2.0

 
A1
 
AA
 
$
204.9

 
10
 
bluebird bio, Inc.
 
 
7.7

 
 
 
312,805

 
 
 
23,076

 
 
1.9

 
—
 
—
 
$
6.9

 
11
 
Moderna, Inc.
 
 
9.4

 
 
 
373,163

 
 
 
21,383

 
 
1.8

 
—
 
—
 
$
6.0

 
12
 
Bristol-Myers Squibb Company
 
 
13.0

 
 
 
224,182

 
 
 
20,221

 
 
1.7

(3) 
A2
 
A+
 
$
80.5

 
13
 
Roche
 
 
3.6

 
 
 
372,943

 
 
 
19,769

 
 
1.7

 
Aa3
 
AA
 
$
228.0

 
14
 
New York University
 
 
12.0

 
 
 
201,284

 
 
 
19,002

 
 
1.6

 
Aa2
 
AA-
 
N/A

 
15
 
Pfizer Inc.
 
 
5.4

 
 
 
416,979

 
 
 
17,754

 
 
1.5

 
A1
 
AA-
 
$
235.0

 
16
 
Stripe, Inc.
 
 
8.0

 
 
 
295,333

 
 
 
17,736

 
 
1.5

 
—
 
—
 
N/A

 
17
 
Massachusetts Institute of Technology
 
 
5.8

 
 
 
256,126

 
 
 
17,129

 
 
1.4

 
Aaa
 
AAA
 
N/A

 
18
 
Amgen Inc.
 
 
4.5

 
 
 
407,369

 
 
 
16,838

 
 
1.4

 
Baa1
 
A
 
$
117.6

 
19
 
United States Government
 
 
8.6

 
 
 
267,219

 
 
 
15,629

 
 
1.3

 
Aaa
 
AA+
 
N/A

 
20
 
FibroGen, Inc.
 
 
4.1

 
 
 
234,249

 
 
 
14,198

 
 
1.2

 
—
 
—
 
$
4.0

 
 
 
Total/weighted-average
 
 
11.8

(4) 
 
 
9,318,759

 
 
 
$
498,065

 
 
41.8
%
 
 
 
 
 
 
 

(1)
Based on aggregate annual rental revenue in effect as of September 30, 2019. Refer to the “Annual Rental Revenue” section in “Definitions and Reconciliations” of this Supplemental Information for additional information on our methodology on annual rental revenue from unconsolidated real estate joint ventures.
(2)
Average daily market capitalization for the twelve months ended September 30, 2019. Refer to the “Total Market Capitalization” section in “Definitions and Reconciliations” of this Supplemental Information for additional information.
(3)
In April 2019, Bristol-Myers Squibb Company’s stockholders approved the acquisition of Celgene Corporation, with the transaction close expected by Bristol-Myers Squibb Company at the end of 2019 or the beginning of 2020. Pro forma for the anticipated acquisition, our annual rental revenue from Bristol-Myers Squibb Company is approximately 4.4% based on leases in effect as of September 30, 2019.
(4)
Includes a ground lease for land at 1455 and 1515 Third Street (two buildings aggregating 422,980 RSF) and a lease at 1655 and 1725 Third Street (two buildings aggregating 593,765 RSF) owned by our unconsolidated joint venture in which we have an ownership interest of 10%. Annual rental revenue is presented using 100% of the annual rental revenue of our consolidated properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Refer to footnote 1 for additional information. Excluding the ground lease, the weighted-average remaining lease term for our top 20 tenants was 8.9 years as of September 30, 2019.

 
 
Summary of Properties and Occupancy
q319logo1.jpg
September 30, 2019
(Dollars in thousands, except per RSF amounts)
 
 

Summary of properties
Market
 
RSF
 
Number of Properties
 
Annual Rental Revenue
 
 
Operating
 
Development
 
Redevelopment
 
Total
 
% of Total
 
 
Total
 
% of Total
 
Per RSF
 
Greater Boston
 
6,500,021

 
—

 
19,036

 
6,519,057

 
24
%
 
56

 
$
411,934

 
35
%
 
$
65.50

 
San Francisco
 
6,572,279

 
852,580

 
347,912

 
7,772,771

 
28

 
53

 
320,141

 
27

 
57.42

 
New York City
 
1,127,580

 
—

 
140,098

 
1,267,678

 
5

 
5

 
80,011

 
7

 
72.40

 
San Diego
 
5,096,461

 
98,000

 
—

 
5,194,461

 
19

 
64

 
183,346

 
15

 
38.77

 
Seattle
 
1,413,651

 
140,935

 
—

 
1,554,586

 
6

 
15

 
73,102

 
6

 
52.95

 
Maryland
 
2,663,261

 
258,904

 
41,627

 
2,963,792

 
11

 
42

 
73,212

 
6

 
28.77

 
Research Triangle
 
1,204,572

 
—

 
14,154

 
1,218,726

 
4

 
16

 
32,036

 
3

 
27.21

 
Canada
 
188,967

 
—

 
—

 
188,967

 
1

 
2

 
4,784

 
—

 
27.02

 
Non-cluster markets
 
483,527

 
—

 
—

 
483,527

 
2

 
14

 
12,118

 
1

 
33.17

 
Properties held for sale
 
124,698

 
—

 
—

 
124,698

 
—

 
2

 
2,386

 
—

 
N/A

 
North America
 
25,375,017

 
1,350,419

 
562,827

 
27,288,263

 
100
%
 
269

 
$
1,193,070

 
100
%
 
$
51.00

 
 
 
 
 
1,913,246
 
 
 
 
 
 
 
 
 
 
 
 
 


Summary of occupancy
 
 
Operating Properties
 
Operating and Redevelopment Properties
Market
 
9/30/19
 
6/30/19
 
9/30/18
 
9/30/19
 
6/30/19
 
9/30/18
Greater Boston
 
98.1
%
 
98.7
%
 
98.4
%
 
97.8
%
 
98.4
%
 
97.9
%
San Francisco
 
99.0

 
98.7

 
100.0

 
94.0

 
98.7

 
95.9

New York City
 
99.2

 
98.8

 
97.2

 
88.1

 
87.8

 
97.2

San Diego
 
92.8

(1) 
95.2

 
94.2

 
92.8

 
95.2

 
90.8

Seattle
 
97.7

 
97.3

 
97.6

 
97.7

 
97.3

 
97.6

Maryland
 
96.2

 
96.7

 
97.2

 
94.7

 
95.1

 
93.3

Research Triangle
 
97.8

 
97.9

 
96.6

 
96.6

 
94.2

 
86.3

Subtotal
 
97.0

 
97.6

 
97.5

 
94.8

 
96.6

 
94.7

Canada
 
93.7

 
93.7

 
98.6

 
93.7

 
93.7

 
98.6

Non-cluster markets
 
75.6

 
84.9

 
82.2

 
75.6

 
84.9

 
82.2

North America
 
96.6
%
(1) 
97.4
%
 
97.3
%
 
94.5
%
 
96.4
%
 
94.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Decline of 0.8% from 97.4% for our overall occupancy at 2Q19 reflects:
(i)
111,080 RSF, or 0.4%, of existing vacancy at properties recently acquired in 3Q19, which we anticipate leasing up in the future; and
(ii)
116,556 RSF, or 0.5%, that became vacant as expected during 3Q19 at 3545 Cray Court related to downtime for renovation of the property. During 3Q19, we executed a lease for 64,108 RSF at 3545 Cray Court, or 55% of the property, that is expected to commence in 3Q20, upon completion of the renovations.

Refer to “Definitions and Reconciliations” in this Supplemental Information for additional information.


 
 
Property Listing
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cambridge/Inner Suburbs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at Kendall Square
 
2,365,487

 
 
—

 
—

 
2,365,487

 
10
 
$
167,688

 
 
98.9
%
 
 
98.9
%
 
 
 
50, 60, 75/125(1), 100, and 225(1) Binney Street, 161 and 215 First Street, 150 Second Street, 300 Third Street, and 11 Hurley Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Square®
 
1,181,635

 
 
—

 
—

 
1,181,635

 
7
 
91,990

 
 
98.3

 
 
98.3

 
 
 
100, 200, 300, 400, 500, 600, and 700 Technology Square

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at One Kendall Square
 
813,705

 
 
—

 
—

 
813,705

 
10
 
68,446

 
 
96.9

`
 
96.9

 
 
 
One Kendall Square – Buildings 100, 200, 300, 400, 500, 600/700, 1400, 1800, 2000, and 399 Binney Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
480 and 500 Arsenal Street
 
234,260

 
 
—

 
—

 
234,260

 
2
 
10,647

 
 
100.0

 
 
100.0

 
 
 
640 Memorial Drive
 
225,504

 
 
—

 
—

 
225,504

 
1
 
13,815

 
 
100.0

 
 
100.0

 
 
 
780 and 790 Memorial Drive
 
99,658

 
 
—

 
—

 
99,658

 
2
 
7,966

 
 
100.0

 
 
100.0

 
 
 
167 Sidney Street and 99 Erie Street
 
54,549

 
 
—

 
—

 
54,549

 
2
 
4,016

 
 
100.0

 
 
100.0

 
 
 
79/96 13th Street (Charlestown Navy Yard)
 
25,309

 
 
—

 
—

 
25,309

 
1
 
620

 
 
100.0

 
 
100.0

 
 
 
Cambridge/Inner Suburbs
 
5,000,107

 
 
—

 
—

 
5,000,107

 
35
 
365,188

 
 
98.6

 
 
98.6

 
 
Seaport Innovation District
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 Necco Street
 
87,163

 
 
—

 
—

 
87,163

 
1
 
N/A

 
 
N/A

 
 
N/A

 
 
 
99 A Street
 
8,715

 
 
—

 
—

 
8,715

 
1
 
850

 
 
100.0

 
 
100.0

 
 
 
Seaport Innovation District
 
95,878

 
 
—

 
—

 
95,878

 
2
 
850

 
 
100.0

 
 
100.0

 
 
Route 128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Park at 128
 
343,882

 
 
—

 
—

 
343,882

 
8
 
10,739

 
 
93.3

 
 
93.3

 
 
 
3 and 6/8 Preston Court, 29, 35, and 44 Hartwell Avenue,
35 and 45/47 Wiggins Avenue, and 60 Westview Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225, 266, and 275 Second Avenue
 
298,581

 
 
—

 
19,036

 
317,617

 
3
 
12,874

 
 
100.0

 
 
94.0

 
 
 
100 Tech Drive
 
200,431

 
 
—

 
—

 
200,431

 
1
 
8,455

 
 
100.0

 
 
100.0

 
 
 
19 Presidential Way
 
144,892

 
 
—

 
—

 
144,892

 
1
 
5,212

 
 
99.4

 
 
99.4

 
 
 
100 Beaver Street
 
82,330

 
 
—

 
—

 
82,330

 
1
 
2,492

 
 
64.2

 
 
64.2

 
 
 
285 Bear Hill Road
 
26,270

 
 
—

 
—

 
26,270

 
1
 
1,167

 
 
100.0

 
 
100.0

 
 
 
Route 128
 
1,096,386

 
 
—

 
19,036

 
1,115,422

 
15
 
40,939

 
 
95.1

 
 
93.5

 
 
Route 495
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111 and 130 Forbes Boulevard
 
155,846

 
 
—

 
—

 
155,846

 
2
 
1,543

 
 
100.0

 
 
100.0

 
 
 
20 Walkup Drive
 
91,045

 
 
—

 
—

 
91,045

 
1
 
649

 
 
100.0

 
 
100.0

 
 
 
30 Bearfoot Road
 
60,759

 
 
—

 
—

 
60,759

 
1
 
2,765

 
 
100.0

 
 
100.0

 
 
 
Route 495
 
307,650

 
 
—

 
—

 
307,650

 
4
 
4,957

 
 
100.0

 
 
100.0

 
 
 
Greater Boston
 
6,500,021

 
 
—

 
19,036

 
6,519,057

 
56
 
$
411,934

 
 
98.1
%
 
 
97.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.

 
 
Property Listing (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mission Bay/SoMa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1655 and 1725 Third Street(1)
 
593,765

 
 
—

 
—

 
593,765

 
2
 
$
5,363

 
 
100.0
%
 
 
100.0
%
 
 
 
409 and 499 Illinois Street(1)
 
455,069

 
 
—

 
—

 
455,069

 
2
 
28,819

 
 
100.0

 
 
100.0

 
 
 
1455 and 1515 Third Street
 
422,980

 
 
—

 
—

 
422,980

 
2
 
22,228

 
 
100.0

 
 
100.0

 
 
 
510 Townsend Street
 
295,333

 
 
—

 
—

 
295,333

 
1
 
17,736

 
 
100.0

 
 
100.0

 
 
 
945 Market Street
 
—

 
 
—

 
255,765

 
255,765

 
1
 
—

 
 
N/A

 
 
—

 
 
 
88 Bluxome Street
 
232,470

 
 
—

 
—

 
232,470

 
1
 
3,813

 
 
100.0

 
 
100.0

 
 
 
455 Mission Bay Boulevard South
 
210,398

 
 
—

 
—

 
210,398

 
1
 
13,484

 
 
100.0

 
 
100.0

 
 
 
1500 Owens Street(1)
 
158,267

 
 
—

 
—

 
158,267

 
1
 
7,681

 
 
100.0

 
 
100.0

 
 
 
1700 Owens Street
 
157,340

 
 
—

 
—

 
157,340

 
1
 
11,210

 
 
99.9

 
 
99.9

 
 
 
505 Brannan Street
 
148,146

 
 
—

 
—

 
148,146

 
1
 
12,129

 
 
100.0

 
 
100.0

 
 
 
260 Townsend Street
 
66,682

 
 
—

 
—

 
66,682

 
1
 
5,736

 
 
100.0

 
 
100.0

 
 
 
Mission Bay/SoMa
 
2,740,450

 
 
—

 
255,765

 
2,996,215

 
14
 
128,199

 
 
100.0

 
 
91.5

 
 
South San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
213, 249, 259, 269, and 279 East Grand Avenue
 
908,302

 
 
11,402

 
—

 
919,704

 
5
 
47,789

 
 
100.0

 
 
100.0

 
 
 
Alexandria Technology Center® – Gateway
 
634,466

 
 
—

 
—

 
634,466

 
7
 
33,106

 
 
96.7

 
 
96.7

 
 
 
600, 630, 650, 681, 701, 901, and 951 Gateway Boulevard
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
201 Haskins Way
 
—

 
 
315,000

 
—

 
315,000

 
1
 
—

 
 
N/A

 
 
N/A

 
 
 
400 and 450 East Jamie Court
 
163,035

 
 
—

 
—

 
163,035

 
2
 
9,436

 
 
100.0

 
 
100.0

 
 
 
500 Forbes Boulevard(1)
 
155,685

 
 
—

 
—

 
155,685

 
1
 
6,619

 
 
100.0

 
 
100.0

 
 
 
7000 Shoreline Court
 
136,395

 
 
—

 
—

 
136,395

 
1
 
6,618

 
 
100.0

 
 
100.0

 
 
 
341 and 343 Oyster Point Boulevard
 
107,960

 
 
—

 
—

 
107,960

 
2
 
5,497

 
 
100.0

 
 
100.0

 
 
 
849/863 Mitten Road/866 Malcolm Road
 
103,857

 
 
—

 
—

 
103,857

 
1
 
4,635

 
 
100.0

 
 
100.0

 
 
 
South San Francisco
 
2,209,700

 
 
326,402

 
—

 
2,536,102

 
20
 
113,700

 
 
99.1

 
 
99.1

 
 
Greater Stanford
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 
 
 
 
 
 
 
Menlo Gateway(1)
 
772,983

 
 
—

 
—

 
772,983

 
3
 
29,688

 
 
100.0

 
 
100.0

 
 
 
100 Independence Drive and 125 and 135 Constitution Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria District for Science and Technology
 
—

 
 
526,178

 
—

 
526,178

 
2
 
—

 
 
N/A

 
 
N/A

 
 
 
825 and 835 Industrial Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria PARC
 
197,498

 
 
—

 
—

 
197,498

 
4
 
10,719

 
 
92.0

 
 
92.0

 
 
 
2100, 2200, 2300, and 2400 Geng Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Stanford Life Science District
 
190,270

 
 
—

 
92,147

 
282,417

 
3
 
13,902

 
 
100.0

 
 
67.4

 
 
 
3160, 3165, and 3170 Porter Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
960 Industrial Road
 
110,000

 
 
—

 
—

 
110,000

 
1
 
2,749

 
 
100.0

 
 
100.0

 
 
 
2425 Garcia Avenue/2400/2450 Bayshore Parkway
 
99,208

 
 
—

 
—

 
99,208

 
1
 
4,257

 
 
100.0

 
 
100.0

 
 
 
Shoreway Science Center
 
82,462

 
 
—

 
—

 
82,462

 
2
 
5,472

 
 
100.0

 
 
100.0

 
 
 
75 and 125 Shoreway Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1450 Page Mill Road
 
77,634

 
 
—

 
—

 
77,634

 
1
 
8,009

 
 
100.0

 
 
100.0

 
 
 
3350 West Bayshore Road
 
60,000

 
 
—

 
—

 
60,000

 
1
 
1,650

 
 
50.0

 
 
50.0

 
 
 
2625/2627/2631 Hanover Street
 
32,074

 
 
—

 
—

 
32,074

 
1
 
1,796

 
 
100.0

 
 
100.0

 
 
 
Greater Stanford
 
1,622,129

 
 
526,178

 
92,147

 
2,240,454

 
19
 
78,242

 
 
97.2

 
 
91.9

 
 
 
San Francisco
 
6,572,279

 
 
852,580

 
347,912

 
7,772,771

 
53
 
$
320,141

 
 
99.0
%
 
 
94.0
%
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.

 
 
Property Listing (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for Life Science – New York City
 
740,972

 
 
—

 
—

 
740,972

 
3
 
$
64,988

 
 
98.7
%
 
 
98.7
%
 
 
 
430 and 450 East 29th Street(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
219 East 42nd Street
 
349,947

 
 
—

 
—

 
349,947

 
1
 
14,006

 
 
100.0

 
 
100.0

 
 
 
Alexandria Center® – Long Island City
 
36,661

 
 
—

 
140,098

 
176,759

 
1
 
1,017

 
 
100.0

 
 
20.7

 
 
 
30-02 48th Avenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York City
 
1,127,580

 
 
—

 
140,098

 
1,267,678

 
5
 
80,011

 
 
99.2

 
 
88.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Torrey Pines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Spectrum
 
336,461

 
 
—

 
—

 
336,461

 
3
 
17,409

 
 
98.3

 
 
98.3

 
 
 
3215 Merryfield Row and 3013 and 3033 Science Park Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Torrey Ridge
 
294,326

 
 
—

 
—

 
294,326

 
3
 
11,697

 
 
83.8

 
 
83.8

 
 
 
10578, 10618, and 10628 Science Center Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Sunrise
 
236,635

 
 
—

 
—

 
236,635

 
3
 
8,901

 
 
99.7

 
 
99.7

 
 
 
10931/10933 and 10975 North Torrey Pines Road,
3010 Science Park Road, and 10996 Torreyana Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Nautilus
 
220,651

 
 
—

 
—

 
220,651

 
4
 
10,613

 
 
100.0

 
 
100.0

 
 
 
3530 and 3550 John Hopkins Court and 3535 and 3565 General Atomics Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3545 Cray Court
 
116,556

 
 
—

 
—

 
116,556

 
1
 
—

 
 
—

 
 
—

 
 
 
11119 North Torrey Pines Road
 
72,506

 
 
—

 
—

 
72,506

 
1
 
3,676

 
 
100.0

 
 
100.0

 
 
 
Torrey Pines
 
1,277,135

 
 
—

 
—

 
1,277,135

 
15
 
52,296

 
 
86.6

 
 
86.6

 
 
University Town Center
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria
 
1,353,583

 
 
98,000

 
—

 
1,451,583

 
9
 
51,170

 
 
94.9

 
 
94.9

 
 
 
9880, 10210(2),10260(2), 10290(2), and 10300(2) Campus Point Drive and 4110(2), 4161(2), 4224(2), and 4242(2) Campus Point Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5200 Illumina Way(2)
 
792,687

 
 
—

 
—

 
792,687

 
6
 
29,977

 
 
100.0

 
 
100.0

 
 
 
ARE Towne Centre
 
304,046

 
 
—

 
—

 
304,046

 
4
 
9,227

 
 
93.1

 
 
93.1

 
 
 
9363, 9373, 9393, and 9625(2) Towne Centre Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Esplanade
 
243,084

 
 
—

 
—

 
243,084

 
4
 
8,313

 
 
87.3

 
 
87.3

 
 
 
4755, 4757, and 4767 Nexus Center Drive and 4796 Executive Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
University Town Center
 
2,693,400

 
 
98,000

 
—

 
2,791,400

 
23
 
$
98,687

 
 
95.5
%
 
 
95.5
%
 
 
 

(1) In partnership with Columbia University, we expect to open our second LaunchLabs® site in New York City, a 13,298 RSF space at 3960 Broadway. Due to the small size of this project, it has been excluded from the “External
       Growth/Investments in Real Estate” section of this Supplemental Information. Consistent with our development and redevelopment projects, this project is excluded from our operating occupancy percentage during the period of redevelopment.
(2) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
 

 
 
Property Listing (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Diego (continued)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sorrento Mesa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Summers Ridge Science Park
 
316,531

 
 
—

 
—

 
316,531

 
4
 
$
10,843

 
 
100.0
%
 
 
100.0
%
 
 
 
9965, 9975, 9985, and 9995 Summers Ridge Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10121 and 10151 Barnes Canyon Road 
 
102,392

 
 
—

 
—

 
102,392

 
2
 
2,689

 
 
100.0

 
 
100.0

 
 
 
ARE Portola
 
101,857

 
 
—

 
—

 
101,857

 
3
 
3,236

 
 
100.0

 
 
100.0

 
 
 
6175, 6225, and 6275 Nancy Ridge Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5810/5820 Nancy Ridge Drive
 
82,272

 
 
—

 
—

 
82,272

 
1
 
2,364

 
 
100.0

 
 
100.0

 
 
 
7330 Carroll Road
 
66,244

 
 
—

 
—

 
66,244

 
1
 
2,431

 
 
100.0

 
 
100.0

 
 
 
5871 Oberlin Drive
 
33,817

 
 
—

 
—

 
33,817

 
1
 
—

 
 
—

 
 
—

 
 
 
Sorrento Mesa
 
703,113

 
 
—

 
—

 
703,113

 
12
 
21,563

 
 
95.2

 
 
95.2

 
 
Sorrento Valley
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3911, 3931, 3985, 4025, 4031, 4045, and 4075 Sorrento Valley Boulevard
 
191,378

 
 
—

 
—

 
191,378

 
7
 
5,587

 
 
94.3

 
 
94.3

 
 
 
11025, 11035, 11045, 11055, 11065, and 11075 Roselle Street
 
121,655

 
 
—

 
—

 
121,655

 
6
 
2,241

 
 
74.6

 
 
74.6

 
 
 
Sorrento Valley
 
313,033

 
 
—

 
—

 
313,033

 
13
 
7,828

 
 
86.6

 
 
86.6

 
 
I-15 Corridor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13112 Evening Creek Drive
 
109,780

 
 
—

 
—

 
109,780

 
1
 
2,972

 
 
100.0

 
 
100.0

 
 
 
San Diego
 
5,096,461

 
 
98,000

 
—

 
5,194,461

 
64
 
183,346

 
 
92.8

 
 
92.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Eastlake Life Science Campus by Alexandria – North Campus
 
586,416

 
 
40,849

 
—

 
627,265

 
5
 
30,985

 
 
96.9

 
 
96.9

 
 
 
1616 and 1551 Eastlake Avenue East, 188 and 199 East Blaine Street, and 1600 Fairview Avenue East
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Eastlake Life Science Campus by Alexandria – South Campus
 
206,134

 
 
100,086

 
—

 
306,220

 
3
 
11,761

 
 
100.0

 
 
100.0

 
 
 
1165, 1201, and 1208 Eastlake Avenue East
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
400 Dexter Avenue North
 
290,111

 
 
—

 
—

 
290,111

 
1
 
15,236

 
 
100.0

 
 
100.0

 
 
 
2301 5th Avenue
 
197,135

 
 
—

 
—

 
197,135

 
1
 
9,996

 
 
99.1

 
 
99.1

 
 
 
219 Terry Avenue North
 
30,705

 
 
—

 
—

 
30,705

 
1
 
1,835

 
 
100.0

 
 
100.0

 
 
 
601 Dexter Avenue North
 
18,680

 
 
—

 
—

 
18,680

 
1
 
425

 
 
100.0

 
 
100.0

 
 
 
Lake Union
 
1,329,181

 
 
140,935

 
—

 
1,470,116

 
12
 
70,238

 
 
98.5

 
 
98.5

 
 
Elliott Bay
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3000/3018 Western Avenue
 
47,746

 
 
—

 
—

 
47,746

 
1
 
1,839

 
 
100.0

 
 
100.0

 
 
 
410 West Harrison Street and 410 Elliott Avenue West
 
36,724

 
 
—

 
—

 
36,724

 
2
 
1,025

 
 
63.9

 
 
63.9

 
 
 
Elliott Bay
 
84,470

 
 
—

 
—

 
84,470

 
3
 
2,864

 
 
84.3

 
 
84.3

 
 
 
Seattle
 
1,413,651

 
 
140,935

 
—

 
1,554,586

 
15
 
$
73,102

 
 
97.7
%
 
 
97.7
%
 
 
 
 
 

 
 
Property Listing (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rockville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9800, 9900, 9920, and 9950 Medical Center Drive
 
383,956

 
 
258,904

 
—

 
642,860

 
8
 
$
13,851

 
 
89.5
%
 
 
89.5
%
 
 
 
9704, 9708, 9712, and 9714 Medical Center Drive
 
214,725

 
 
—

 
—

 
214,725

 
4
 
7,862

 
 
100.0

 
 
100.0

 
 
 
1330 Piccard Drive
 
131,511

 
 
—

 
—

 
131,511

 
1
 
3,562

 
 
100.0

 
 
100.0

 
 
 
1500 and 1550 East Gude Drive
 
90,489

 
 
—

 
—

 
90,489

 
2
 
1,681

 
 
100.0

 
 
100.0

 
 
 
14920 and 15010 Broschart Road
 
86,703

 
 
—

 
—

 
86,703

 
2
 
2,260

 
 
100.0

 
 
100.0

 
 
 
1405 Research Boulevard
 
72,170

 
 
—

 
—

 
72,170

 
1
 
2,100

 
 
87.9

 
 
87.9

 
 
 
5 Research Place
 
63,852

 
 
—

 
—

 
63,852

 
1
 
2,734

 
 
100.0

 
 
100.0

 
 
 
5 Research Court
 
51,520

 
 
—

 
—

 
51,520

 
1
 
1,798

 
 
100.0

 
 
100.0

 
 
 
9920 Belward Campus Drive
 
51,181

 
 
—

 
—

 
51,181

 
1
 
1,687

 
 
100.0

 
 
100.0

 
 
 
12301 Parklawn Drive
 
49,185

 
 
—

 
—

 
49,185

 
1
 
1,329

 
 
100.0

 
 
100.0

 
 
 
Rockville
 
1,195,292

 
 
258,904

 
—

 
1,454,196

 
22
 
38,864

 
 
95.9

 
 
95.9

 
 
Gaithersburg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg I
 
613,438

 
 
—

 
—

 
613,438

 
9
 
15,696

 
 
93.7

 
 
93.7

 
 
 
9, 25, 35, 45, 50, and 55 West Watkins Mill Road and 910, 930, and 940 Clopper Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg II
 
273,357

 
 
—

 
41,627

 
314,984

 
6
 
7,288

 
 
98.7

 
 
85.7

 
 
 
704 Quince Orchard Road(1), 708 Quince Orchard Road, and
19, 20, 21, and 22 Firstfield Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
401 Professional Drive
 
63,154

 
 
—

 
—

 
63,154

 
1
 
1,576

 
 
92.9

 
 
92.9

 
 
 
950 Wind River Lane
 
50,000

 
 
—

 
—

 
50,000

 
1
 
1,004

 
 
100.0

 
 
100.0

 
 
 
620 Professional Drive
 
27,950

 
 
—

 
—

 
27,950

 
1
 
1,191

 
 
100.0

 
 
100.0

 
 
 
Gaithersburg
 
1,027,899

 
 
—

 
41,627

 
1,069,526

 
18
 
26,755

 
 
95.5

 
 
91.7

 
 
Beltsville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8000/9000/10000 Virginia Manor Road
 
191,884

 
 
—

 
—

 
191,884

 
1
 
2,455

 
 
96.6

 
 
96.6

 
 
Northern Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
14225 Newbrook Drive
 
248,186

 
 
—

 
—

 
248,186

 
1
 
5,138

 
 
100.0

 
 
100.0

 
 
 
Maryland
 
2,663,261

 
 
258,904

 
41,627

 
2,963,792

 
42
 
$
73,212

 
 
96.2
%
 
 
94.7
%
 
 
 
(1) We own a partial interest in this property through a real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information.
 

 
 
Property Listing (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

Market / Submarket / Address
 
RSF 
 
Number of Properties
 
Annual Rental Revenue
 
Occupancy Percentage 
 
 
 
 
 
 
 
 
Operating
 
Operating and Redevelopment
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Alston
 
186,870

 
 
—

 
—

 
186,870

 
3
 
$
4,005

 
 
98.2
%
 
 
98.2
%
 
 
 
100, 800, and 801 Capitola Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase I – Research Triangle
 
160,846

 
 
—

 
14,154

 
175,000

 
1
 
4,811

 
 
100.0

 
 
91.9

 
 
 
5 Laboratory Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
108/110/112/114 TW Alexander Drive
 
158,417

 
 
—

 
—

 
158,417

 
1
 
4,681

 
 
100.0

 
 
100.0

 
 
 
Alexandria Innovation Center® – Research Triangle
 
135,677

 
 
—

 
—

 
135,677

 
3
 
3,643

 
 
98.3

 
 
98.3

 
 
 
7010, 7020, and 7030 Kit Creek Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 Davis Drive
 
100,000

 
 
—

 
—

 
100,000

 
1
 
1,928

 
 
93.5

 
 
93.5

 
 
 
7 Triangle Drive
 
96,626

 
 
—

 
—

 
96,626

 
1
 
3,156

 
 
100.0

 
 
100.0

 
 
 
2525 East NC Highway 54
 
82,996

 
 
—

 
—

 
82,996

 
1
 
3,651

 
 
100.0

 
 
100.0

 
 
 
407 Davis Drive
 
81,956

 
 
—

 
—

 
81,956

 
1
 
1,644

 
 
100.0

 
 
100.0

 
 
 
601 Keystone Park Drive
 
77,395

 
 
—

 
—

 
77,395

 
1
 
1,350

 
 
100.0

 
 
100.0

 
 
 
6040 George Watts Hill Drive
 
61,547

 
 
—

 
—

 
61,547

 
1
 
2,148

 
 
100.0

 
 
100.0

 
 
 
5 Triangle Drive
 
32,120

 
 
—

 
—

 
32,120

 
1
 
479

 
 
54.2

 
 
54.2

 
 
 
6101 Quadrangle Drive
 
30,122

 
 
—

 
—

 
30,122

 
1
 
540

 
 
100.0

 
 
100.0

 
 
 
Research Triangle
 
1,204,572

 
 
—

 
14,154

 
1,218,726

 
16
 
32,036

 
 
97.8

 
 
96.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
188,967

 
 
—

 
—

 
188,967

 
2
 
4,784

 
 
93.7

 
 
93.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-cluster markets
 
483,527

 
 
—

 
—

 
483,527

 
14
 
12,118

 
 
75.6

 
 
75.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America, excluding properties held for sale
 
25,250,319

 
 
1,350,419

 
562,827

 
27,163,565

 
267
 
1,190,684

 
 
96.6
%
 
 
94.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties held for sale
 
124,698

 
 
—

 
—

 
124,698

 
2
 
2,386

 
 
54.5
%
 
 
54.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total – North America
 
25,375,017

 
 
1,350,419

 
562,827

 
27,288,263

 
269
 
$
1,193,070

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Investments in Real Estate
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 

 
 
 
 
Development and Redevelopment
 
 
 
 
Operating
 
4Q19
 
2020
 
Intermediate-Term
 
Future
 
Subtotal
 
Total
Investments in real estate
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value as of September 30, 2019(1)
 
$
14,181,182

 
$
57,316

 
$
885,590

 
$
929,206

 
$
132,167

 
$
2,004,279

 
$
16,185,461

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Square footage(2), (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating
 
26,073,017

 
—

 
—

 
—

 
—

 
—

 
26,073,017

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction
 
—

 
127,068

 
1,786,178

 
—

 
—

 
1,913,246

 
1,913,246

Pre-construction
 
—

 
—

 
568,102

 
1,070,925

 
—

 
1,639,027

 
1,639,027

Future
 
—

 
—

 
—

 
4,141,735

 
5,784,704

 
9,926,439

 
9,926,439

Total square footage
 
26,073,017

 
127,068

 
2,354,280

 
5,212,660

 
5,784,704

 
13,478,712

 
39,551,729

Value-creation square feet currently included in rental properties(4)
 
—

 
—

 
—

 
(351,185
)
 
(704,268
)
 
(1,055,453
)
 
(1,055,453
)
 
 
26,073,017

 
127,068

 
2,354,280

 
4,861,475

 
5,080,436

 
12,423,259

 
38,496,276

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent acquisitions – completed and pending square feet included in the amounts above(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4Q19 pending acquisitions
 
560,000

 
—

 
—

 
—

 
700,000

 
700,000

 
1,260,000

2020 identified acquisitions
 
138,000

 
—

 
—

 
—

 
1,500,000

 
1,500,000

 
1,638,000

 
 
698,000

 
—

 
—

 
—

 
2,200,000

 
2,200,000

 
2,898,000

    
(1)
Excludes (i) 4Q19 completed and pending acquisitions, (ii) 2020 identified acquisitions, and (iii) construction spending incurred subsequent to 3Q19. In addition, balances exclude our share of the cost basis associated with our unconsolidated properties, which is classified in investments in unconsolidated real estate joint ventures in our consolidated balance sheets.
(2)
Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time and stabilization may not occur in the year of initial delivery.
(3)
Includes 4Q19 completed and pending acquisitions through October 28, 2019, and 2020 identified acquisitions. Refer to “Acquisitions” of our Earnings Press Release for additional information.
(4)
Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.

 
 
 
 
New Class A Development and Redevelopment Properties: Recent Deliveries
q319logo1.jpg
 
 
September 30, 2019
 
 
 







399 Binney Street
 
266 and 275 Second Avenue
 
1655 and 1725 Third Street
 
279 East Grand Avenue
 
681 Gateway Boulevard
Greater Boston/Cambridge
 
Greater Boston/Route 128
 
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
 
San Francisco/South San Francisco
164,000 RSF
 
203,757 RSF
 
593,765 RSF
 
211,405 RSF
 
142,400 RSF
In Service:
 
In Service:
 
In Service:
 
In Service:
 
In Service:
164,000
 RSF
|
98.3% Occupied
 
12,822
 RSF
|
100% Occupied
 
593,765
 RSF
|
100% Occupied
 
200,003
 RSF
|
100% Occupied
 
142,400
 RSF
|
89.2% Occupied
q319binney399.jpg
 
q319secondave.jpg
 
q319gsw.jpg
 
q319eastgrand279.jpg
 
q319gateway681.jpg
Menlo Gateway
 
Alexandria PARC
 
188 East Blaine Street
 
Alexandria Center® for AgTech, Phase I
San Francisco/Greater Stanford
 
San Francisco/Greater Stanford
 
Seattle/Lake Union
 
Research Triangle/Research Triangle
772,983 RSF
 
197,498 RSF
 
198,000 RSF
 
175,000 RSF
In Service:
 
In Service:
 
In Service:
 
In Service:
520,988
 RSF
|
100% Occupied
 
48,547
 RSF
|
92.0% Occupied
 
157,151
 RSF
|
100% Occupied
 
115,703
 RSF
|
100% Occupied
q319menlogateway.jpg
 
q319parc.jpg
 
q319eastblaine188.jpg
 
q319laboratory5.jpg


Refer to “New Class A Development and Redevelopment Properties: Projected 4Q19-2020 Deliveries and Pre-Construction Projects” of this Supplemental Information for information on the RSF in service and under construction, if applicable.

 
 
New Class A Development and Redevelopment Properties: Recent Deliveries (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 



Property/Market/Submarket
 
Our Ownership Interest
 
Date Delivered
 
RSF Placed Into Service
 
Occupancy Percentage(1)
 
Total Project
 
Unlevered Yields
 
 
 
 
 
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
4Q18
 
1Q19
 
2Q19
 
3Q19
 
Total
 
 
RSF
 
Investment
 
 
Consolidated development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
213 East Grand Avenue/San Francisco/
South San Francisco
 
100%
 
12/31/18
 
300,930

 
—

 
—

 
—

 
300,930

 
100%
 
300,930

 
 
$
256,600

 
 
7.4
%
 
 
 
6.5
%
 
399 Binney Street/Greater Boston/Cambridge
 
100%
 
Various
 
—

 
123,403

 
—

 
40,597

 
164,000

 
98.3%
 
164,000

 
 
$
185,000

 
 
7.9

 
 
 
7.3

 
279 East Grand Avenue/San Francisco/
South San Francisco
 
100%
 
Various
 
—

 
139,810

 
24,396

 
35,797

 
200,003

 
100%
 
211,405

 
 
$
151,000

 
 
7.8

 
 
 
8.1

 
188 East Blaine Street/Seattle/Lake Union
 
100%
 
Various
 
—

 
90,615

 
27,164

 
39,372

 
157,151

 
100%
 
198,000

 
 
$
190,000

 
 
6.7

 
 
 
6.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/Route 128
 
100%
 
Various
 
—

 
—

 
12,822

 
—

 
12,822

 
100%
 
203,757

 
 
$
89,000

 
 
8.4

 
 
 
7.1

 
Alexandria Center® for AgTech, Phase I/
Research Triangle/Research Triangle
 
100%
 
Various
 
8,380

 
2,614

 
73,809

 
30,900

 
115,703

 
100%
 
175,000

 
 
$
77,100

 
 
7.6

 
 
 
7.5

 
9625 Towne Centre Drive/San Diego/
University Town Center
 
50.1%
 
11/1/18
 
163,648

 
—

 
—

 
—

 
163,648

 
100%
 
163,648

 
 
$
89,000

 
 
7.3

 
 
 
7.3

 
9900 Medical Center Drive/Maryland/Rockville
 
100%
 
11/19/18
 
45,039

 
—

 
—

 
—

 
45,039

 
60.6%
 
45,039

 
 
$
16,800

 
 
8.6

 
 
 
8.4

 
681 Gateway Boulevard/San Francisco/
South San Francisco
 
100%
 
Various
 
—

 
66,000

 
76,400

 
—

 
142,400

 
89.2%
 
142,400

 
 
$
116,300

 
 
8.5

 
 
 
8.2

 
Alexandria PARC/San Francisco/
Greater Stanford
 
100%
 
3/29/19
 
—

 
48,547

 
—

 
—

 
48,547

 
92.0%
 
197,498

 
 
$
152,600

 
 
7.3

 
 
 
6.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture development projects
(RSF represents 100%; dollars and yields represent our share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
10%
 
Various
 
—

 
—

 
—

 
593,765

 
593,765

 
100%
 
593,765

 
 
$
77,500

 
 
7.8

 
 
 
6.1

 
Menlo Gateway/San Francisco/
Greater Stanford
 
48.3%
 
8/30/19
 
—

 
—

 
—

 
520,988

 
520,988

 
100%
 
772,983

 
 
$
415,000

 
 
7.1

 
 
 
6.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture redevelopment project
(RSF represents 100%; dollars and yields represent our share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
56.8%
 
Various
 
4,762

 
10,250

 
3,470

 
—

 
18,482

 
100%
 
79,931

 
 
$
13,300

 
 
8.9

 
 
 
8.8

 
Total
 
 
 
 
 
522,759

 
481,239

 
218,061

 
1,261,419

 
2,483,478

 
 
 
 
 
 
 
 
 
7.5
%
 
 
 
6.9
%
 

(1)
Relates to total operating RSF in service as of September 30, 2019.


 
New Class A Development and Redevelopment Properties: Projected 4Q19 Deliveries
q319logo1.jpg
 
 
September 30, 2019
 
 
 


266 and 275 Second Avenue
 
279 East Grand Avenue
Greater Boston/Route 128
 
San Francisco/South San Francisco
203,757 RSF
 
211,405 RSF
q319secondave.jpg
 
q319eastgrand279.jpg

188 East Blaine Street
 
704 Quince Orchard Road
Seattle/Lake Union
 
Maryland/Gaithersburg
198,000 RSF
 
79,931 RSF
q319eastblaine188.jpg
 
q319quince.jpg


RSF represents development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.

Refer to the “New Class A Development and Redevelopment Properties: Recent Deliveries” and “New Class A Development and Redevelopment Properties: Projected 4Q19–2020 Deliveries and Pre-Construction Projects” of this Supplemental Information for information on the RSF in service and under construction.

 
New Class A Development and Redevelopment Properties: Projected 2020 Deliveries and
Pre-Construction Projects
q319logo1.jpg
 
 
September 30, 2019
 
 
 

88 Bluxome Street
 
201 Haskins Way
 
Alexandria District for Science and Technology(1)
 
Alexandria Center® –
Long Island City
 
3115 Merryfield Row
San Francisco/Mission Bay/SoMa
 
San Francisco/South San Francisco
 
San Francisco/Greater Stanford
 
New York City/New York City
 
San Diego/Torrey Pines
1,070,925 RSF
 
315,000 RSF
 
526,178 RSF
 
176,759 RSF
 
87,000 RSF
q319bluxome.jpg
 
q319haskins.jpg
 
q319industrialroad.jpg
 
q319bindery.jpg
 
q319spectrum.jpg

9880 Campus Point Drive and
4150 Campus Point Court
 
1165 Eastlake Avenue East
 
9800 Medical Center Drive
 
9950 Medical Center Drive
 
8 Davis Drive
San Diego/University Town Center
 
Seattle/Lake Union
 
Maryland/Rockville
 
Maryland/Rockville
 
Research Triangle/Research Triangle
269,102 RSF
 
100,086 RSF
 
174,640 RSF
 
84,264 RSF
 
150,000 RSF
q319campus9880.jpg
 
q319eastlake1165.jpg
 
q319medical9800.jpg
 
q319medical9950.jpg
 
q319davis8.jpg


RSF represents development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.

(1)
Campus includes 825 and 835 Industrial Road.

 
New Class A Development and Redevelopment Properties: Projected 4Q19–2020 Deliveries and
Pre-Construction Projects
q319logo1.jpg
 
 
September 30, 2019
 
 
 

 
 
 
 
Square Footage
 
 
 
 
 
 
 
 
 
 
Property/Market/Submarket
 
Dev/Redev
 
 
 
CIP
 
Total Project
 
Percentage
 
Occupancy(1)
 
 
In Service
 
Construction
 
Pre-Construction
 
Total
 
 
Leased
 
Leased/Negotiating
 
Initial
 
Stabilized
2019 deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/Route 128
 
Redev
 
184,721

 
19,036

 
—

 
19,036

 
203,757

 
100
%
 
 
100
%
 
 
1Q18
 
2019
Alexandria Center® for AgTech, Phase I/Research Triangle/
Research Triangle
 
Redev
 
160,846

 
14,154

 
—

 
14,154

 
175,000

 
97

 
 
100

 
 
2Q18
 
2019
279 East Grand Avenue/San Francisco/South San Francisco
 
Dev
 
200,003

 
11,402

 
—

 
11,402

 
211,405

 
100

 
 
100

 
 
1Q19
 
2020
188 East Blaine Street/Seattle/Lake Union
 
Dev
 
157,151

 
40,849

 
—

 
40,849

 
198,000

 
79

 
 
100

 
 
1Q19
 
2020
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 deliveries: unconsolidated joint venture projects
(amounts represent 100%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
Redev
 
38,304

 
41,627

 
—

 
41,627

 
79,931

 
65

 
 
69

 
 
4Q18
 
2019
2019 deliveries
 
 
 
741,025

 
127,068

 
—

 
127,068

 
868,093

 
92

 
 
97

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® – Long Island City/New York City/
New York City
 
Redev
 
36,661

 
140,098

 
—

 
140,098

 
176,759

 
21

 
 
21

 
 
1Q20
 
2020
9880 Campus Point Drive and 4150 Campus Point Court/
San Diego/University Town Center(2)
 
Dev
 
—

 
98,000

 
171,102

 
269,102

 
269,102

 
72

 
 
74

 
 
1Q20
 
2022
9800 Medical Center Drive/Maryland/Rockville
 
Dev
 
—

 
174,640

 
—

 
174,640

 
174,640

 
82

 
 
100

 
 
3Q20
 
3Q20
9950 Medical Center Drive/Maryland/Rockville
 
Dev
 
—

 
84,264

 
—

 
84,264

 
84,264

 
100

 
 
100

 
 
3Q20
 
3Q20
201 Haskins Way/San Francisco/South San Francisco
 
Dev
 
—

 
315,000

 
—

 
315,000

 
315,000

 
33

 
 
33

 
 
3Q20
 
2021
Alexandria District for Science and Technology/San Francisco/
Greater Stanford
 
Dev
 
—

 
526,178

 
—

 
526,178

 
526,178

 
37

 
 
65

 
 
4Q20
 
2021
1165 Eastlake Avenue East/Seattle/Lake Union
 
Dev
 
—

 
100,086

 
—

 
100,086

 
100,086

(3) 
100

 
 
100

 
 
4Q20
 
4Q20
2019-2020 projected deliveries: undergoing active construction

 

 

 

 

 
66

 
 
75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries: recently acquired redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
945 Market Street/San Francisco/Mission Bay/SoMa
 
Redev
 
—

 
255,765

 
—

 
255,765

 
255,765

(3) 
—

(4 
) 
 
—

(4 
) 
 
4Q20
 
2021/22
3160 Porter Drive/San Francisco/Greater Stanford
 
Redev
 
—

 
92,147

 
—

 
92,147

 
92,147

(3) 
—

(4 
) 
 
—

(4 
) 
 
4Q20
 
2021
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58
%
 
 
66
%
 
 
 
 
 
2020 projected deliveries: marketing and pre-construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3115 Merryfield Row/San Diego/Torrey Pines
 
Dev
 
—

 
—

 
87,000

 
87,000

 
87,000

 
 
 
 
 
 
 
4Q20/1Q21
 
2021
8 Davis Drive/Research Triangle/Research Triangle
 
Dev
 
—

 
—

 
150,000

 
150,000

 
150,000

 
 
 
 
 
 
 
4Q20
 
2021
Alexandria Center® for AgTech, Phase II/Research Triangle/
Research Triangle
 
Dev
 
—

 
—

 
160,000

 
160,000

 
160,000

 
 
 
 
 
 
 
2020
 
2021
2020 projected deliveries
 
 
 
36,661

 
1,786,178

 
568,102

 
2,354,280

 
2,390,941

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-leased pre-construction project:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88 Bluxome Street/San Francisco/Mission Bay/SoMa
 
Dev
 
—

 
—

 
1,070,925
 
1,070,925
 
1,070,925
 
58
%
 
 
58
%
 
 
TBD
 
TBD
Total
 
 
 
777,686

 
1,913,246

 
1,639,027
 
3,552,273
 
4,329,959
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Initial occupancy dates are subject to leasing and/or market conditions. Multi-tenant projects may have occupancy by tenants over a period of time. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy.
(2)
Refer to footnote 3 on the next page.
(3)
During 3Q19, we commenced development and redevelopment of three projects aggregating 447,998 RSF.
(4)
Represents properties recently acquired in 3Q19 with no leases in place. During YTD 3Q19, we have executed leases aggregating 1.2 million RSF of our value-creation pipeline.

New Class A Development and Redevelopment Properties: Projected 4Q19–2020 Deliveries and
Pre-Construction Projects (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 


 
 
Our Ownership Interest
 
 
 
 
 
Cost to Complete
 
 
 
 
Unlevered Yields
Property/Market/Submarket
 
 
In Service
 
CIP
 
Construction Loan
 
ARE
Funding
 
Total at
Completion
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
 
 
2019 deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Greater Boston/Route 128
 
100
%
 
 
$
79,427

 
$
8,126

 
 
$
—

 
 
$
1,447

 
$
89,000

 
 
 
8.4
%
 
 
 
7.1
%
 
Alexandria Center® for AgTech, Phase I/Research Triangle/Research Triangle(1)
 
100
%
 
 
67,481

 
6,999

 
 
—

 
 
2,620

 
77,100

 
 
 
7.6

 
 
 
7.5

 
279 East Grand Avenue/San Francisco/South San Francisco
 
100
%
 
 
124,146

 
10,570

 
 
—

 
 
16,284

 
151,000

 
 
 
7.8

 
 
 
8.1

 
188 East Blaine Street/Seattle/Lake Union
 
100
%
 
 
122,823

 
31,621

 
 
—

 
 
35,556

 
190,000

 
 
 
6.7

 
 
 
6.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 deliveries: unconsolidated joint venture projects(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(amounts represent our share)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
56.8
%
 
 
5,082

 
4,326

 
 
3,176

 
 
716

 
13,300

 
 
 
8.9

 
 
 
8.8

 
2019 deliveries
 
 
 
 
398,959

 
61,642

 
 
3,176

 
 
56,623

 
520,400

 
 
 
7.5

 
 
 
7.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries: consolidated projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® – Long Island City/New York City/New York City
 
100
%
 
 
16,107

 
69,464

 
 
—

 
 
98,729

 
184,300

 
 
 
5.5

 
 
 
5.6

 
9880 Campus Point Drive and 4150 Campus Point Court/San Diego/
University Town Center(3)
 
(2) 
 
 
—

 
118,425

 
 
—

 
 
136,575

 
255,000

 
 
 
6.3

(3) 
 
 
6.4

(3) 
9800 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
—

 
26,589

 
 
—

 
 
68,811

 
95,400

 
 
 
7.7

 
 
 
7.2

 
9950 Medical Center Drive/Maryland/Rockville
 
100
%
 
 
—

 
20,169

 
 
—

 
 
34,131

 
54,300

 
 
 
7.3

 
 
 
6.8

 
201 Haskins Way/San Francisco/South San Francisco
 
100
%
 
 
—

 
117,742

 
 
—

 
 
178,258

 
296,000

 
 
 
6.6

 
 
 
6.6

 
Alexandria District for Science and Technology/San Francisco/Greater Stanford
 
100
%
 
 
—

 
237,398

 
 
—

 
 
339,602

 
577,000

 
 
 
6.5

 
 
 
6.2

 
1165 Eastlake Avenue East/Seattle/Lake Union
 
100
%
 
 
—

 
37,886

 
 
—

 
 
100,114

 
138,000

 
 
 
6.5

(4) 
 
 
6.3

(4 
) 
 
 
 
 
 
16,107

 
627,673

 
 
—

 

956,220

 
1,600,000

 
 
 
6.5

 
 
 
6.3

 
 
 
 
 
 

 

 
 
$
3,176

 
 
$
1,012,843

 
$
2,120,400

 
 
 
6.7
%
 
 
 
6.6
%
 
2020 projected deliveries: recently acquired redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
945 Market Street/San Francisco/Mission Bay/SoMa
 
99.5
%
 
 
—

 
188,193

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3160 Porter Drive/San Francisco/Greater Stanford
 
100
%
 
 
—

 
26,738

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries: marketing and pre-construction projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3115 Merryfield Row/San Diego/Torrey Pines
 
100
%
 
 
—

 
31,857

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8 Davis Drive/Research Triangle/Research Triangle
 
100
%
 
 
—

 
3,598

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase II/Research Triangle/Research Triangle(1)
 
100
%
 
 
—

 
7,531

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2020 projected deliveries
 
 
 
 
16,107

 
885,590

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
$
415,066

 
$
947,232

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
New strategic collaborative campus, Alexandria Center® for AgTech – Research Triangle consists of Phase I at 5 Laboratory Drive, including campus amenities, and Phase II at 9 Laboratory Drive. 5 Laboratory Drive includes the high-quality Alexandria LaunchLabs® and amenities that create a dynamic ecosystem to accelerate discovery and commercialization.
(2)
Refer to “Joint Venture Financial Information” and “Definitions and Reconciliations” of this Supplemental Information for additional information.
(3)
Represents a two-phase development project as follows:
•
Initial phase represents 9880 Campus Point Drive, a 98,000 RSF project to develop Alexandria GradLabs™, a highly flexible, first-of-its-kind life science platform designed to provide post-seed-stage life science companies with turnkey, fully furnished office/laboratory suites and an accelerated, scalable path for growth. As of October 28, 2019, the project is 23% leased and we expect initial occupancy in 2020. The R&D building located at 9880 Campus Point Drive was demolished and as of September 30, 2019, continues to be included in our same property performance results. Refer to the “Same Property Comparison” section in “Definitions and Reconciliations” of this Supplemental Information for additional information.
•
Subsequent phase represents 4150 Campus Point Court, a 171,102 RSF, 100% leased pre-construction project with occupancy expected in 2022.
•
Project costs represent development costs for 9880 Campus Point Drive and 4150 Campus Point Court. Yields represent expected aggregate returns for Campus Pointe by Alexandria including 9880, 10290, and 10300 Campus Point Drive and 4150 Campus Point Court.
(4)
Yields represent anticipated aggregate returns for 1165 Eastlake Avenue, an amenity-rich research headquarter for Adaptive Biotechnologies Corporation, and 1208 Eastlake Avenue, an adjacent multi-tenant office/laboratory building.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 



Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries(1)
 
 
 
 
 
 
2019
 
2020
 
Intermediate-Term
 
Future
 
Total
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
266 and 275 Second Avenue/Route 128
 
100
%
 
 
$
8,126

 
19,036

 
—

 
—

 
—

 
19,036

 
325 Binney Street/Cambridge
 
100
%
 
 
106,079

 
—

 
—

 
208,965

(2) 
—

 
208,965

 
15 Necco Street/Seaport Innovation District
 
100
%
 
 
161,931

 
—

 
—

 
293,000

 
—

 
293,000

 
99 A Street/Seaport Innovation District
 
96.7
%
 
 
39,527

 
—

 
—

 
235,000

(3) 
—

 
235,000

 
10 Necco Street/Seaport Innovation District
 
100
%
 
 
84,378

 
—

 
—

 
175,000

 
—

 
175,000

 
215 Presidential Way/Route 128
 
100
%
 
 
6,049

 
—

 
—

 
130,000

 
—

 
130,000

 
Alexandria Technology Square®/Cambridge
 
100
%
 
 
7,787

 
—

 
—

 
—

 
100,000

 
100,000

 
100 Tech Drive/Route 128
 
100
%
 
 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
231 Second Avenue/Route 128
 
100
%
 
 
1,251

 
—

 
—

 
—

 
32,000

 
32,000

 
Other value-creation projects
 
100
%
 
 
8,695

 
—

 
—

 
—

 
41,955

 
41,955

 
 
 
 
 
 
423,823

 
19,036

 
—

 
1,041,965

 
473,955

 
1,534,956

 
San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
279 East Grand Avenue/South San Francisco
 
100
%
 
 
10,570

 
11,402

 
—

 
—

 
—

 
11,402

 
201 Haskins Way/South San Francisco
 
100
%
 
 
117,742

 
—

 
315,000

 
—

 
—

 
315,000

 
Alexandria District for Science and Technology/Greater Stanford
 
100
%
 
 
237,398

 
—

 
526,178

 
—

 
—

 
526,178

 
945 Market Street/Mission Bay/SoMa
 
99.5
%
 
 
188,193

 
—

 
255,765

 
—

 
—

 
255,765

 
3160 Porter Drive/Greater Stanford
 
100
%
 
 
26,738

 
—

 
92,147

 
—

 
—

 
92,147

 
88 Bluxome Street/Mission Bay/SoMa
 
100
%
 
 
191,880

 
—

 
—

 
1,070,925

(3), (4) 
—

 
1,070,925

 
505 Brannan Street, Phase II/Mission Bay/SoMa
 
99.7
%
 
 
17,349

 
—

 
—

 
165,000

 
—

 
165,000

 
960 Industrial Road/Greater Stanford
 
100
%
 
 
103,403

 
—

 
—

 
587,000

(3) 
—

 
587,000

 
East Grand Avenue/South San Francisco
 
100
%
 
 
5,988

 
—

 
—

 
—

 
90,000

 
90,000

 
Pending acquisition/San Francisco Bay Area
 
(5
)
 
 
(5)

 
—

 
—

 
—

 
700,000

 
700,000

 
Other value-creation projects
 
100
%
 
 
50,125

 
—

 
—

 
418,000

 
25,000

 
443,000

 
 
 
 
 
 
$
949,386

 
11,402

 
1,189,090

 
2,240,925

 
815,000

 
4,256,417

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)    Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.
(2)    We are seeking additional entitlements to increase the density of the site from its current 208,965 RSF.
(3)    Represents total square footage upon completion of development of a new Class A property. RSF presented includes rentable square footage of buildings currently in operation at properties that were recently acquired for their inherent future development opportunities, with the intent to demolish the existing property upon expiration of the existing in-place leases and commencement of future construction. Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.
(4)    This project is currently undergoing pre-construction. Refer to “New Class A Development and Redevelopment Properties: 4Q19-2020 Deliveries and Pre-Construction Projects” of this Supplemental Information for additional information.
(5)    Refer to “Acquisitions” in our Earnings Press Release for additional information.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 


Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries(1)
 
 
 
 
 
 
2019
 
2020
 
Intermediate-Term
 
Future
 
Total
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® – Long Island City/New York City
 
100
%
 
 
$
69,464

 
—

 
140,098

 
—

 
—

 
140,098

 
Alexandria Center® for Life Science – New York City/New York City
 
100
%
 
 
22,300

 
—

 
—

 
550,000

 
—

 
550,000

 
47-50 30th Street/New York City
 
100
%
 
 
26,706

 
—

 
—

 
135,938

 
—

 
135,938

 
219 East 42nd Street/New York City
 
100
%
 
 
—

 
—

 
—

 
—

 
579,947

(2) 
579,947

 
 
 
 
 
 
118,470

 
—

 
140,098

 
685,938

 
579,947

 
1,405,983

 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Campus Pointe by Alexandria/University Town Center
 
(3
)
 
 
168,512

 
—

 
269,102

 
120,000

 
629,445

(3), (4) 
1,018,547

 
3115 Merryfield Row/Torrey Pines
 
100
%
 
 
31,857

 
—

 
87,000

 
—

 
—

 
87,000

 
5200 Illumina Way/University Town Center
 
51
%
 
 
11,762

 
—

 
—

 
451,832

 
—

 
451,832

 
Townsgate by Alexandria/Del Mar Heights
 
100
%
 
 
19,460

 
—

 
—

 
125,000

 
—

 
125,000

 
4075 Sorrento Valley Boulevard/Sorrento Valley
 
100
%
 
 
7,563

 
—

 
—

 
—

 
149,000

(4) 
149,000

 
Vista Wateridge/Sorrento Mesa
 
100
%
 
 
4,022

 
—

 
—

 
—

 
163,000

 
163,000

 
Pending acquisition/San Diego
 
(5
)
 
 
(5)

 
—

 
—

 
—

 
700,000

 
700,000

 
Other value-creation projects
 
100
%
 
 
5,928

 
—

 
—

 
—

 
222,895

 
222,895

 
 
 
 
 
 
249,104

 
—

 
356,102

 
696,832

 
1,864,340

 
2,917,274

 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
188 East Blaine Street/Lake Union
 
100
%
 
 
31,621

 
40,849

 
—

 
—

 
—

 
40,849

 
1165 Eastlake Avenue East/Lake Union
 
100
%
 
 
37,886

 
—

 
100,086

 
—

 
—

 
100,086

 
1150 Eastlake Avenue East/Lake Union
 
100
%
 
 
32,324

 
—

 
—

 
260,000

 
—

 
260,000

 
701 Dexter Avenue North/Lake Union
 
100
%
 
 
40,780

 
—

 
—

 
217,000

 
—

 
217,000

 
601 Dexter Avenue/Lake Union
 
100
%
 
 
30,447

 
—

 
—

 
—

 
188,400

(4) 
188,400

 
Mercer Mega Block/Lake Union
 
(5
)
 
 
(5)

 
—

 
—

 
—

 
800,000

 
800,000

 
 
 
 
 
 
$
173,058

 
40,849

 
100,086

 
477,000

 
988,400

 
1,606,335

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)    Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.
(2)    Includes 349,947 RSF in operation with an opportunity to either convert the existing office space into office/laboratory space through future redevelopment or to expand the building by an additional 230,000 RSF through ground-up development. The building is currently occupied by Pfizer Inc. with a remaining lease term of six years.
(3)    During 3Q19, primarily through strategic planning as part of our recently completed acquisitions at 4161 Campus Point Court and 10260 Campus Point Drive, we obtained additional entitlements aggregating 219,100 RSF. This additional RSF will be allocated across new ground-up development projects within our Campus Pointe by Alexandria campus. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(4)     Represents total square footage upon completion of development of a new Class A property. RSF presented includes rentable square footage of buildings currently in operation at properties that were recently acquired for their inherent future development opportunities, with the intent to demolish the existing property upon expiration of the existing in-place leases and commencement of future construction. Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.
(5)    Refer to “Acquisitions” in our Earnings Press Release for additional information.

 
 
New Class A Development and Redevelopment Properties: Summary of Pipeline (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 


Property/Submarket
 
Our Ownership Interest
 
Book Value
 
Square Footage
 
 
 
 
Projected Deliveries(1)
 
 
 
 
 
 
2019
 
2020
 
Intermediate-Term
 
Future
 
Total
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
704 Quince Orchard Road/Gaithersburg
 
56.8
%
 
 
(2)

 
41,627

 
—

 
—

 
—

 
41,627

 
9800 Medical Center Drive/Rockville
 
100
%
 
 
$
27,820

 
—

 
174,640

 
—

 
64,000

 
238,640

 
9950 Medical Center Drive/Rockville
 
100
%
 
 
20,169

 
—

 
84,264

 
—

 
—

 
84,264

 
 
 
 
 
 
47,989

 
41,627

 
258,904

 
—

 
64,000

 
364,531

 
Research Triangle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for AgTech, Phase I/Research Triangle
 
100
%
 
 
6,999

 
14,154

 
—

 
—

 
—

 
14,154

 
Alexandria Center® for AgTech, Phase II/Research Triangle
 
100
%
 
 
7,531

 
—

 
160,000

 
—

 
—

 
160,000

 
8 Davis Drive/Research Triangle
 
100
%
 
 
4,319

 
—

 
150,000

 
70,000

 
—

 
220,000

 
6 Davis Drive/Research Triangle
 
100
%
 
 
15,609

 
—

 
—

 
—

 
800,000

 
800,000

 
Other value-creation projects
 
100
%
 
 
4,149

 
—

 
—

 
—

 
76,262

 
76,262

 
 
 
 
 
 
38,607

 
14,154

 
310,000

 
70,000

 
876,262

 
1,270,416

 
Other value-creation projects
 
100
%
 
 
3,842

 
—

 
—

 
—

 
122,800

 
122,800

 
 
 
 
 
 
$
2,004,279

 
127,068

 
2,354,280

 
5,212,660

 
5,784,704

 
13,478,712

(3) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Represents square footage of development and redevelopment projects by period of projected initial occupancy. Multi-tenant projects may have occupancy by tenants over a period of time.
(2)
This property is held by an unconsolidated real estate joint venture. Refer to “Joint Venture Financial Information” of this Supplemental Information for additional information on our ownership interest.
(3)
Total rentable square footage includes 1.1 million RSF of buildings currently in operation that will be redeveloped or replaced with new development RSF upon commencement of future construction. Refer to “Definitions and Reconciliations” of this Supplemental Information for additional detail on value-creation square feet currently included in rental properties.


 
 
Construction Spending
q319logo1.jpg
September 30, 2019
(Dollars in thousands, except per RSF amounts)
 
 


 
 
Nine Months Ended
 
Construction Spending
 
September 30, 2019
 
Additions to real estate – consolidated projects
 
$
914,722
 
 
Investments in unconsolidated real estate joint ventures
 
 
99,955
 
 
Contributions from noncontrolling interests
 
 
(8,033
)
 
Construction spending (cash basis)(1)
 
 
1,006,644
 
 
Change in accrued construction
 
 
12,128
 
 
Construction spending for the nine months ended September 30, 2019
 
 
1,018,772
 
 
Projected construction spending for the three months ending December 31, 2019
 
 
281,228
 
 
Guidance midpoint
 
$
1,300,000
 
 



 
 
 
 
 
 
 
 
Year Ending
 
Projected Construction Spending
 
December 31, 2019
 
Development, redevelopment, and pre-construction projects
 
$
1,041,000
 
 
Investments in unconsolidated real estate joint ventures
 
 
102,000
 
 
Contributions from noncontrolling interests (consolidated real estate joint ventures)
 
 
(22,000
)
 
Generic laboratory infrastructure/building improvement projects
 
 
150,000
 
 
Non-revenue-enhancing capital expenditures and tenant improvements
 
 
29,000
 
 
Guidance midpoint
 
$
1,300,000
 
 
 
 
 
 
 
 
 
Non-Revenue-Enhancing Capital Expenditures(2)
 
Nine Months Ended
 
Recent Average
per RSF(3)
 
 
September 30, 2019
 
 
 
Amount
 
Per RSF
 
 
Non-revenue-enhancing capital expenditures
 
$
8,158

 
$
0.35

 
 
$
0.50

 
 
 
 
 
 
 
 
 
 
Tenant improvements and leasing costs:
 
 
 
 
 
 
 
 
Re-tenanted space
 
$
22,384

 
$
26.72

 
 
$
22.31

 
Renewal space
 
12,190

 
11.98

 
 
13.22

 
Total tenant improvements and leasing costs/weighted-average
 
$
34,574

 
$
18.63

 
 
$
16.80

 


 


(1)
Includes revenue-enhancing projects and non-revenue-enhancing capital expenditures.
(2)
Excludes amounts that are recoverable from tenants, related to revenue-enhancing capital expenditures, or related to properties that have undergone redevelopment.
(3)
Represents the average of 2015 to 2018 and the nine months ended September 30, 2019, annualized.

 
 
Joint Venture Financial Information
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 


Consolidated Real Estate Joint Ventures
 
Unconsolidated Real Estate Joint Ventures
Property/Market/Submarket
 
Noncontrolling
Interest Share(1)
 
Property/Market/Submarket
 
Our Ownership Share(2)
500 Forbes Boulevard/San Francisco/South San Francisco
 
 
90.0
%
 
 
1401/1413 Research Boulevard/Maryland/Rockville
 
 
65.0
%
(3)
225 Binney Street/Greater Boston/Cambridge
 
 
70.0
%
 
 
704 Quince Orchard Road/Maryland/Gaithersburg
 
 
56.8
%
(3)
75/125 Binney Street/Greater Boston/Cambridge
 
 
60.0
%
 
 
Menlo Gateway/San Francisco/Greater Stanford
 
 
48.3
%
 
1500 Owens Street/San Francisco/Mission Bay/SoMa
 
 
49.9
%
 
 
1655 and 1725 Third Street/San Francisco/Mission Bay/SoMa
 
 
10.0
%
 
9625 Towne Centre Drive/San Diego/University Town Center
 
 
49.9
%
 
 
 
 
 
 
 
5200 Illumina Way/San Diego/University Town Center
 
 
49.0
%
 
 
 
 
 
 
 
Campus Pointe by Alexandria/San Diego/University Town Center(4)
 
 
45.0
%
 
 
 
 
 
 
 
409 and 499 Illinois Street/San Francisco/Mission Bay/SoMa
 
 
40.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in five other joint ventures in North America.
(2)
In addition to the unconsolidated real estate joint ventures listed, we hold one other insignificant unconsolidated real estate joint venture in North America.
(3)
Represents our ownership interest; our voting interest is limited to 50%.
(4)
Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4161, 4224, and 4242 Campus Point Court in our University Town Center submarket.

 
 
As of September 30, 2019
 
 
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
Investments in real estate
$
1,078,266

 
 
$
459,553

 
 
Cash and cash equivalents and restricted cash
 
29,255

 
 
 
8,902

 
 
Other assets
 
128,973

 
 
 
32,612

 
 
Secured notes payable (refer to page 48)
 
—

 
 
 
(139,076
)
 
 
Other liabilities
 
(63,106
)
 
 
 
(21,801
)
 
 
Redeemable noncontrolling interests
 
(12,099
)
 
 
 
—

 
 
 
$
1,161,289

 
 
$
340,190

 
 
 
Noncontrolling Interest Share of
Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
September 30, 2019
 
September 30, 2019
 
Three Months Ended
 
Nine Months Ended
 
Three Months Ended
 
Nine Months Ended
Total revenues
$
26,681

 
 
$
65,360

 
 
$
6,271

 
 
$
12,322

 
Rental operations
 
(6,988
)
 
 
 
(17,740
)
 
 
 
(606
)
 
 
 
(1,896
)
 
 
 
19,693

 
 
 
47,620

 
 
 
5,665

 
 
 
10,426

 
General and administrative
 
(92
)
 
 
 
(220
)
 
 
 
(26
)
 
 
 
(91
)
 
Interest
 
—

 
 
 
—

 
 
 
(843
)
 
 
 
(1,312
)
 
Depreciation and amortization
 
(8,621
)
 
 
 
(20,784
)
 
 
 
(1,845
)
 
 
 
(3,664
)
 
Fixed returns allocated to redeemable noncontrolling interests(1)
 
219

 
 
 
654

 
 
 
—

 
 
 
—

 
 
$
11,199

 
 
$
27,270

 
 
$
2,951

 
 
$
5,359

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Straight-line rent and below-market lease revenue
$
1,598

 
 
$
3,399

 
 
$
3,313

 
 
$
4,329

 
Funds from operations(2)
$
19,820

 
 
$
48,054

 
 
$
4,796

 
 
$
9,023

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These redeemable noncontrolling interests earn a fixed return on their investment rather than participate in the operating results of the property.
(2)
Refer to “Funds from Operations and Funds from Operations Per Share” in our Earnings Press Release and the “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” section in “Definitions and Reconciliations” in this Supplemental Information for the definition and reconciliation from the most directly comparable GAAP measure.

 
 
Investments
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 


    
We present our equity investments at fair value whenever fair value or net asset value (“NAV”) is readily available. Adjustments for our limited partnership investments represent changes in reported NAV as a practical expedient to estimate fair value. For investments without readily available fair values, we adjust the carrying amount whenever such investments have an observable price change and further adjustments are not made until another price change, if any, is observed. Refer to the “Investments” section in “Definitions and Reconciliations” of this Supplemental Information for additional information.

 
 
September 30, 2019
 
Year Ended December 31, 2018
 
 
Three Months Ended
 
Nine Months Ended
 
Realized gains (losses)
 
$
6,967

(1) 
 
$
28,759

(1) 
 
$
37,129

(2) 
Unrealized (losses) gains
 
(70,043
)
 
 
13,221

 
 
99,634

 
Investment (loss) income
 
$
(63,076
)
 
 
$
41,980

 
 
$
136,763

 
 
 
 
 
 
 
 
 
 
 

Investments
 
Cost
 
Adjustments
 
Carrying Amount
Fair value:
 
 
 
 
 
 
 
 
 
Publicly traded companies
 
$
173,063

 
 
$
39,956

(3) 
 
$
213,019

 
Entities that report NAV
 
253,696

 
 
139,608

 
 
393,304

 
 
 
 
 
 
 
 
 
 
 
Entities that do not report NAV:
 
 
 
 
 
 
 
 
 
Entities with observable price changes
 
42,017

 
 
73,812

 
 
115,829

 
Entities without observable price changes
 
268,302

 
 
—

 
 
268,302

 
September 30, 2019
 
$
737,078

 
 
$
253,376

 
 
$
990,454

 
 
 
 
 
 
 
 
 
 
 
June 30, 2019
 
$
734,435

 
 
$
323,419

 
 
$
1,057,854

 

(1)
Includes realized gains for the three and nine months ended September 30, 2019 of $14.1 million and $35.9 million, respectively, and $7.1 million of impairments related to three privately held non-real estate investments recognized in 3Q19.
(2)
Includes realized gains of $14.7 million related to two publicly traded non-real estate investments and impairment of $5.5 million primarily related to one privately held non-real estate investment. Excluding these gains and impairment, our realized gains on non-real estate investments were $27.9 million for the year ended December 31, 2018.
(3)
Includes gross unrealized gains and losses of $69.9 million and $29.9 million, respectively.

 

 
Public/Private
Mix (Cost)
 
 
q319pubprivmix.jpg
 
 
 
 
 
Tenant/Non-Tenant
Mix (Cost)
 
 
q319tenantmix.jpg
 

 
 
 
q319logo1.jpg
Key Credit Metrics
September 30, 2019
 
 


Net Debt to Adjusted EBITDA(1) and
Net Debt and Preferred Stock to Adjusted EBITDA(1)
 
Unsecured Senior Line of Credit
 
 
 
(in millions)
 
q319netdebtpreferred.jpg
 
q319lineofcredit.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-Charge Coverage Ratio(1)
 
Liquidity(3)
 
 
 
 
 
 
q319fixedcharge.jpg
 
$3.5B
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
Availability under our $2.2 billion unsecured senior line of credit
$
1,857

 
 
Outstanding forward equity sales agreements
979

 
 
Cash, cash equivalents, and restricted cash
453

 
 
Investments in publicly traded companies
213

 
 
 
$
3,502

 
 
 
 
 
 
 
 
 
 
(1)
Quarter annualized.
(2)
In October 2019, we completed the conversion of all 2.3 million outstanding shares of our Series D Convertible Preferred Stock into shares of our common stock.
(3)
As of September 30, 2019.

 
 
 
q319logo1.jpg
Summary of Debt
September 30, 2019
 
 


Debt maturities chart
(In millions)

Weighted-Average Remaining Term of 10.7 Years

q319debtmaturities.jpg

(1)
We generally have limited outstanding borrowings under our $2.2 billion unsecured senior line of credit as of December 31 of each year. Our average outstanding balance as of December 31 for the past three years under our unsecured senior line of credit has been approximately $109.3 million. Additionally, we generally amend and extend the maturity date of our unsecured senior line of credit every two to three years.

 
 
Summary of Debt (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 



Fixed-rate and variable-rate debt
Fixed-Rate Debt
 
Variable-Rate Debt
 
Total
 
Percentage
 
Weighted-Average
 
 
 
 
 
Interest Rate(1)
 
Remaining Term
(in years)
 
 
 
 
 
 
Secured notes payable
$
351,852

 
$
—

 
$
351,852

 
5.2
%
 
3.58
%
 
4.3
Unsecured senior notes payable
6,042,831

 
—

 
6,042,831

 
89.7

 
3.99

 
11.4
$2.2 billion unsecured senior line of credit
—

 
343,000

 
343,000

 
5.1

 
3.14

 
4.3
Total/weighted average
$
6,394,683

 
$
343,000

 
$
6,737,683

 
100.0
%
 
3.93
%
 
10.7
Percentage of total debt
95
%
 
5
%
 
100
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.

Debt covenants
 
Unsecured Senior Notes Payable
 
$2.2 Billion Unsecured Senior Line of Credit
Debt Covenant Ratios(1)
 
Requirement
 
September 30, 2019
 
Requirement
 
September 30, 2019
Total Debt to Total Assets
 
≤ 60%
 
36%
 
≤ 60.0%
 
31.3%
 
Secured Debt to Total Assets
 
≤ 40%
 
2%
 
≤ 45.0%
 
1.6%
 
Consolidated EBITDA to Interest Expense
 
≥ 1.5x
 
6.2x
 
≥ 1.50x
 
3.83x
 
Unencumbered Total Asset Value to Unsecured Debt
 
≥ 150%
 
260%
 
N/A
 
N/A
 
Unsecured Interest Coverage Ratio
 
N/A
 
N/A
 
≥ 1.75x
 
6.07x
 
 
 
 
 
 
 
 
 
 
 
(1)
All covenant ratio titles utilize terms as defined in the respective debt agreements. EBITDA is not calculated pursuant to the definition set forth by the SEC in Exchange Act Release No. 47226.

Unconsolidated real estate joint ventures’ debt
 
 
 
 
 
 
 
 
 
 
 
 
 
100% at JV Level
 
Unconsolidated Joint Venture
 
Our Share
 
Maturity Date
 
Stated Rate
 
Interest Rate(1)
 
Debt Balance(2)
 
Remaining Commitments
 
1401/1413 Research Boulevard
 
 
65.0
%
 
 
5/17/20
 
L+2.50%
 
 
5.60
%
 
 
$
25,467

 
$
3,268

 
1655 and 1725 Third Street(3)
 
 
10.0
%
 
 
6/29/21
 
L+3.70%
 
 
5.80
%
 
 
282,513

 
92,487

 
704 Quince Orchard Road
 
 
56.8
%
 
 
3/16/23
 
L+1.95%
 
 
4.23
%
 
 
7,571

 
7,300

 
Menlo Gateway, Phase II
 
 
48.3
%
 
 
5/1/35
 
4.53%
 
 
4.59
%
 
 
43,700

 
112,126

 
Menlo Gateway, Phase I
 
 
48.3
%
 
 
8/10/35
 
4.15%
 
 
4.18
%
 
 
142,721

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
501,972

 
$
215,181

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Includes interest expense and amortization of loan fees.
(2)
Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2019.
(3)
This unconsolidated joint venture is in the process of refinancing this loan to, among other changes, extend the maturity date and fix the interest rate. We expect the refinancing to be completed in the next several quarters.

 
 
Summary of Debt (continued)
q319logo1.jpg
September 30, 2019
(Dollars in thousands)
 
 


Debt
 
Stated 
Rate
 
Interest
Rate(1)
 
Maturity
Date(2)
 
Principal Payments Remaining for the Periods Ending December 31,
 
Principal
 
Unamortized (Deferred Financing Cost), (Discount)/Premium
 
Total
 
 
 
 
 
2019
 
2020
 
2021
 
2022
 
2023
 
Thereafter
 
 
 
 
Secured notes payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Diego
 
4.66
%
 
 
4.90
%
 
1/1/23
 
 
$
430

 
$
1,763

 
$
1,852

 
$
1,942

 
$
26,259

 
$
—

 
$
32,246

 
$
(214
)
 
$
32,032

 
Greater Boston
 
3.93
%
 
 
3.19

 
3/10/23
 
 
382

 
1,566

 
1,628

 
1,693

 
74,517

 
—

 
79,786

 
1,904

 
81,690

 
Greater Boston
 
4.82
%
 
 
3.40

 
2/6/24
 
 
790

 
3,206

 
3,395

 
3,564

 
3,742

 
183,527

 
198,224

 
11,639

 
209,863

 
San Francisco
 
4.14
%
 
 
4.42

 
7/1/26
 
 
—

 
—

 
—

 
—

 
—

 
28,200

 
28,200

 
(661
)
 
27,539

 
San Francisco
 
6.50
%
 
 
6.50

 
7/1/36
 
 
—

 
25

 
26

 
28

 
30

 
619

 
728

 
—

 
728

 
Secured debt weighted-average interest rate/subtotal
 
4.55
%
 
 
3.58

 
 
 
 
1,602

 
6,560

 
6,901

 
7,227

 
104,548

 
212,346

 
339,184

 
12,668

 
351,852

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$2.2 billion unsecured senior line of credit
 
L+0.825
%
 
 
3.14

 
1/28/24
 
 
—

 
—

 
—

 
—

 
—

 
343,000

 
343,000

 
—

 
343,000

 
Unsecured senior notes payable
 
3.90
%
 
 
4.04

 
6/15/23
 
 
—

 
—

 
—

 
—

 
500,000

 
—

 
500,000

 
(2,212
)
 
497,788

 
Unsecured senior notes payable – green bond
 
4.00
%
 
 
4.03

 
1/15/24
 
 
—

 
—

 
—

 
—

 
—

 
650,000

 
650,000

 
(600
)
 
649,400

 
Unsecured senior notes payable
 
3.45
%
 
 
3.62

 
4/30/25
 
 
—

 
—

 
—

 
—

 
—

 
600,000

 
600,000

 
(4,882
)
 
595,118

 
Unsecured senior notes payable
 
4.30
%
 
 
4.50

 
1/15/26
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(3,060
)
 
296,940

 
Unsecured senior notes payable – green bond
 
3.80
%
 
 
3.96

 
4/15/26
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,201
)
 
346,799

 
Unsecured senior notes payable
 
3.95
%
 
 
4.13

 
1/15/27
 
 
—

 
—

 
—

 
—

 
—

 
350,000

 
350,000

 
(3,674
)
 
346,326

 
Unsecured senior notes payable
 
3.95
%
 
 
4.07

 
1/15/28
 
 
—

 
—

 
—

 
—

 
—

 
425,000

 
425,000

 
(3,507
)
 
421,493

 
Unsecured senior notes payable
 
4.50
%
 
 
4.60

 
7/30/29
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(2,181
)
 
297,819

 
Unsecured senior notes payable
 
2.75
%
 
 
2.87

 
12/15/29
 
 
—

 
—

 
—

 
—

 
—

 
400,000

 
400,000

 
(4,189
)
 
395,811

 
Unsecured senior notes payable
 
4.70
%
 
 
4.81

 
7/1/30
 
 
—

 
—

 
—

 
—

 
—

 
450,000

 
450,000

 
(3,995
)
 
446,005

 
Unsecured senior notes payable
 
3.375
%
 
 
3.48

 
8/15/31
 
 
—

 
—

 
—

 
—

 
—

 
750,000

 
750,000

 
(7,685
)
 
742,315

 
Unsecured senior notes payable
 
4.85
%
 
 
4.93

 
4/15/49
 
 
—

 
—

 
—

 
—

 
—

 
300,000

 
300,000

 
(3,475
)
 
296,525

 
Unsecured senior notes payable
 
4.00
%
 
 
3.91

 
2/1/50
 
 
—

 
—

 
—

 
—

 
—

 
700,000

 
700,000

 
10,492

 
710,492

 
Unsecured debt weighted-average/subtotal
 
 
 
 
3.95

 
 
 
 
—

 
—

 
—

 
—

 
500,000

 
5,918,000

 
6,418,000

 
(32,169
)
 
6,385,831

 
Weighted-average interest rate/total
 
 
 
 
3.93
%
 
 
 
 
$
1,602

 
$
6,560

 
$
6,901

 
$
7,227

 
$
604,548

 
$
6,130,346

 
$
6,757,184

 
$
(19,501
)
 
$
6,737,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balloon payments
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
600,487

 
$
6,129,421

 
$
6,729,908

 
$
—

 
$
6,729,908

 
Principal amortization
 
 
 
 
 
 
 
 
 
1,602

 
6,560

 
6,901

 
7,227

 
4,061

 
925

 
27,276

 
(19,501
)
 
7,775

 
Total debt
 
 
 
 
 
 
 
 
 
$
1,602

 
$
6,560

 
$
6,901

 
$
7,227

 
$
604,548

 
$
6,130,346

 
$
6,757,184

 
$
(19,501
)
 
$
6,737,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate/hedged variable-rate debt
 
 
 
 
 
 
 
 
 
$
1,602

 
$
6,560

 
$
6,901

 
$
7,227

 
$
604,548

 
$
5,787,346

 
$
6,414,184

 
$
(19,501
)
 
$
6,394,683

 
Unhedged variable-rate debt
 
 
 
 
 
 
 
 
 
—

 
—

 
—

 
—

 
—

 
343,000

 
343,000

 
—

 
343,000

 
Total debt
 
 
 
 
 
 
 
 
 
$
1,602

 
$
6,560

 
$
6,901

 
$
7,227

 
$
604,548

 
$
6,130,346

 
$
6,757,184

 
$
(19,501
)
 
$
6,737,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average stated rate on maturing debt
 
 
 
 
 
 
 
 
 
N/A

 
N/A

 
N/A

 
N/A

 
3.94%

 
3.75%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
(2)
Reflects any extension options that we control.


 
 
 
q319logo1.jpg
Definitions and Reconciliations
September 30, 2019
 
 



This section contains additional information for sections throughout this Supplemental Information package and the accompanying Earnings Press Release, as well as explanations and reconciliations of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance and believe they provide useful information to investors. Additional detail can be found in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, as well as other documents filed with or furnished to the SEC from time to time.

Adjusted EBITDA and Adjusted EBITDA margin
 
The following table reconciles net income (loss) and revenues, the most directly comparable financial measures calculated and presented in accordance with GAAP, to Adjusted EBITDA and revenues, as adjusted, respectively:
 
Three Months Ended
(Dollars in thousands)
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
Net (loss) income
$
(36,003
)
 
$
87,179

 
$
136,818

 
$
(18,631
)
 
$
219,359

 
Interest expense
46,203

 
42,879

 
39,100

 
40,239

 
42,244

 
Income taxes
887

 
890

 
1,297

 
613

 
568

 
Depreciation and amortization
135,570

 
134,437

 
134,087

 
124,990

 
119,600

 
Stock compensation expense
10,935

 
11,437

 
11,029

 
9,810

 
9,986

 
Loss on early extinguishment of debt
40,209

 
—

 
7,361

 
—

 
1,122

 
Our share of gain on early extinguishment of debt from unconsolidated real estate JVs
—

 
—

 
—

 
—

 
(761
)
 
Gain on sale of real estate
—

 
—

 
—

 
(8,704
)
 
—

 
Our share of gain on sales of real estate from unconsolidated real estate JVs
—

 
—

 
—

 
—

 
(35,678
)
 
Significant realized gains on non-real estate investments
—

 
—

 
—

 
(6,428
)
 
—

 
Unrealized losses (gains) on non-real estate investments
70,043

 
(11,058
)
 
(72,206
)
 
94,850

 
(117,188
)
 
Impairment of non-real estate investments
7,133

 
—

 
—

 
5,483

 
—

 
Adjusted EBITDA
$
274,977

 
$
265,764

 
$
257,486

 
$
242,222

 
$
239,252

 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
390,484

 
$
373,856

 
$
358,842

 
$
340,463

 
$
341,823

 
Non-real estate investments – total realized gains
6,967

 
10,442

 
11,350

 
11,319

 
5,015

 
Significant realized gains on non-real estate investments
—

 
—

 
—

 
(6,428
)
 
—

 
Impairment of non-real estate investments
7,133

 
—

 
—

 
5,483

 
—

 
Revenues, as adjusted
$
404,584

 
$
384,298

 
$
370,192

 
$
350,837

 
$
346,838

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA margin
68%

 
69%

 
70%

 
69%

 
69%

 
    
We use Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization (“EBITDA”), excluding stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and impairments of real estate. Adjusted EBITDA also excludes unrealized gains or losses and significant realized gains and impairments that result from our non-real estate investments. These non-real estate investment amounts are classified in our consolidated statements of operations outside of revenues.
 

We believe Adjusted EBITDA provides investors with relevant and useful information as it allows investors to evaluate the operating performance of our business activities without having to account for differences recognized because of real estate and non-real estate investment and disposition decisions, financing decisions, capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. For example, we exclude gains or losses on the early extinguishment of debt to allow investors to measure our performance independent of our indebtedness and capital structure. We believe that adjusting for the effects of impairments and gains or losses on sales of real estate, and significant impairments and significant gains on the sale of non-real estate investments allows investors to evaluate performance from period to period on a consistent basis without having to account for differences recognized because of real estate and non-real estate investment and disposition decisions. We believe that excluding charges related to stock compensation and unrealized gains or losses facilitates for investors a comparison of our business activities across periods without the volatility resulting from market forces outside of our control. Adjusted EBITDA has limitations as a measure of our performance. Adjusted EBITDA does not reflect our historical expenditures or future requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant measure of performance, it does not represent net income (loss) or cash flows from operations calculated and presented in accordance with GAAP, and it should not be considered as an alternative to those indicators in evaluating performance or liquidity.

Our calculation of Adjusted EBITDA margin divides Adjusted EBITDA by our revenues, as adjusted. We believe that revenues, as adjusted, provides a denominator for Adjusted EBITDA margin that is calculated on a basis more consistent with that of the Adjusted EBITDA numerator. Specifically, revenues, as adjusted, includes the same realized gains on, and impairments of, non-real estate investments that are included in the reconciliation of Adjusted EBITDA. We believe that the consistent application of results from our non-real estate investments to both the numerator and denominator of Adjusted EBITDA margin provides a more useful calculation for the comparison across periods.

Annual rental revenue

Annual rental revenue represents the annualized fixed base rental amount, in effect as of the end of the period, related to our operating RSF. Annual rental revenue is presented using 100% of the annual rental revenue of our consolidated properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Annual rental revenue per RSF is computed by dividing annual rental revenue by the sum of 100% of the RSF of our consolidated properties and our share of the RSF of properties held in unconsolidated real estate joint ventures. As of September 30, 2019, approximately 97% of our leases (on an RSF basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Annual rental revenue excludes these operating expenses recovered from our tenants. Amounts recovered from our tenants related to these operating expenses, along with base rent, are classified in income from rentals in our consolidated statements of operations.


 
 
 
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Definitions and Reconciliations (continued)
September 30, 2019
 
 


Cash interest

Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts). Refer to the definition of fixed-charge coverage ratio for a reconciliation of interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest.

Class A properties and AAA locations

Class A properties are properties clustered in AAA locations that provide innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Class A properties generally command higher annual rental rates than other classes of similar properties.

AAA locations are in close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space.

Development, redevelopment, and pre-construction

A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new Class A properties, and property enhancements identified during the underwriting of certain acquired properties, located in collaborative life science, technology, and agtech campuses in AAA urban innovation clusters. These projects are generally focused on providing high-quality, generic, and reusable spaces that meet the real estate requirements of, and are reusable by, a wide range of tenants. Upon completion, each value-creation project is expected to generate a significant increase in rental income, net operating income, and cash flows. Our development and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

Development projects generally consist of the ground-up development of generic and reusable facilities. Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into office/laboratory, tech office, or agtech space. We generally will not commence new development projects for aboveground construction of new Class A office/laboratory, tech office, and agtech space without first securing significant pre-leasing for such space, except when there is solid market demand for high-quality Class A properties.

Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. Ultimately, these projects will provide high-quality facilities and are expected to generate significant revenue and cash flows.

 
Dividend payout ratio (common stock)

Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (shares of common stock outstanding on the respective record dates multiplied by the related dividend per share) to funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted.

Dividend yield

Dividend yield for the quarter represents the annualized quarter dividend divided by the closing common stock price at the end of the quarter.

Fixed-charge coverage ratio

Fixed-charge coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to fixed charges. We believe this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing obligations and preferred stock dividends. Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts).

The following table reconciles interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest and fixed charges:
 
Three Months Ended
(Dollars in thousands)
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
Adjusted EBITDA
$
274,977

 
$
265,764

 
$
257,486

 
$
242,222

 
$
239,252

 
 
 
 
 
 
 
 
 
 
Interest expense
$
46,203

 
$
42,879

 
$
39,100

 
$
40,239

 
$
42,244

Capitalized interest
24,558

 
21,674

 
18,509

 
19,902

 
17,431

Amortization of loan fees
(2,251
)
 
(2,380
)
 
(2,233
)
 
(2,401
)
 
(2,734
)
Amortization of debt premiums
1,287

 
782

 
801

 
611

 
614

Cash interest
69,797

 
62,955

 
56,177

 
58,351

 
57,555

Dividends on preferred stock
1,173

 
1,005

 
1,026

 
1,155

 
1,301

Fixed charges
$
70,970

 
$
63,960

 
$
57,203

 
$
59,506

 
$
58,856

 
 
 
 
 
 
 
 
 
 
Fixed-charge coverage ratio:
 
 
 
 
 
 
 
 
 
– quarter annualized
3.9x

 
4.2x

 
4.5x

 
4.1x

 
4.1x

– trailing 12 months
4.1x

 
4.2x

 
4.2x

 
4.2x

 
4.3x

 
 
 
 
 
 
 
 
 
 

 
 
 
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Definitions and Reconciliations (continued)
September 30, 2019
 
 


Funds from operations and funds from operations, as adjusted, attributable to Alexandria’s common stockholders

GAAP-basis accounting for real estate assets utilizes historical cost accounting and assumes that real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Nareit Board of Governors established funds from operations as an improved measurement tool. Since its introduction, funds from operations has become a widely used non-GAAP financial measure among equity REITs. We believe that funds from operations is helpful to investors as an additional measure of the performance of an equity REIT. Moreover, we believe that funds from operations, as adjusted, allows investors to compare our performance to the performance of other real estate companies on a consistent basis, without having to account for differences recognized because of real estate investment and disposition decisions, financing decisions, capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. On January 1, 2019, we adopted standards established by the Nareit Board of Governors in its November 2018 White Paper (the “Nareit White Paper”) on a prospective basis. The Nareit White Paper defines funds from operations as net income (computed in accordance with GAAP), excluding gains or losses on sales of real estate, and impairments of real estate, plus real estate-related depreciation and amortization, and after adjustments for our share of consolidated and unconsolidated partnerships and real estate joint ventures. Impairments represent the write-down of assets when fair value over the recoverability period is less than the carrying value due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.

We compute funds from operations, as adjusted, as funds from operations calculated in accordance with the Nareit White Paper, excluding significant gains, losses, and impairments realized on non-real estate investments, unrealized gains or losses on non-real estate investments, gains or losses on early extinguishment of debt, gains or losses on early termination of interest rate hedge agreements, preferred stock redemption charges, deal costs, and the amount of such items that is allocable to our unvested restricted stock awards. Neither funds from operations nor funds from operations, as adjusted, should be considered as alternatives to net income (determined in accordance with GAAP) as indications of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as measures of liquidity, nor are they indicative of the availability of funds for our cash needs, including our ability to make distributions.

The following table reconciles net income to funds from operations for the share of consolidated real estate joint ventures attributable to noncontrolling interests and our share of unconsolidated real estate joint ventures:
 
Noncontrolling Interest Share of Consolidated Real Estate JVs
 
Our Share of Unconsolidated
Real Estate JVs
 
September 30, 2019
 
September 30, 2019
(In thousands)
Three Months Ended
 
Nine Months Ended
 
Three Months Ended
 
Nine Months Ended
Net income
$
11,199

 
$
27,270

 
$
2,951

 
$
5,359

Depreciation and amortization
8,621

 
20,784

 
1,845

 
3,664

Funds from operations
$
19,820

 
$
48,054

 
$
4,796

 
$
9,023

 
 
 
 
 
 
 
 

 
Initial stabilized yield (unlevered)
Initial stabilized yield is calculated as the estimated amounts of net operating income at stabilization divided by our investment in the property. Our initial stabilized yield excludes the benefit of leverage. Our cash rents related to our value-creation projects are generally expected to increase over time due to contractual annual rent escalations. Our estimates for initial stabilized yields, initial stabilized yields (cash basis), and total costs at completion represent our initial estimates at the commencement of the project. We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.
•
Initial stabilized yield reflects rental income, including contractual rent escalations and any rent concessions over the term(s) of the lease(s), calculated on a straight-line basis.
•
Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have elapsed and our total cash investment in the property.

Investment-grade or publicly traded large cap tenants

Investment-grade or publicly traded large cap tenants represent tenants that are investment-grade rated or publicly traded companies with an average daily market capitalization greater than $10 billion for the twelve months ended September 30, 2019, as reported by Bloomberg Professional Services. In addition, we monitor the credit quality and related material changes of our tenants. Material changes that cause a tenant’s market capitalization to decline below $10 billion, which are not immediately reflected in the twelve-month average, may result in their exclusion from this measure.

Investments

We hold investments in publicly traded companies and privately held entities primarily involved in the life science and technology industries. We recognize, measure, present, and disclose these investments as follows:
 
 
 
 
Statements of Operations
 
 
Balance Sheet
 
Gains and Losses
 
 
Carrying Amount
 
Unrealized
 
Realized
 
 
 
 
 
 
 
 
 
 
 
 
 
Difference between proceeds received upon disposition and historical cost
Publicly traded companies
 
Fair value
 
Changes in fair value
 
Privately held entities without readily determinable fair values that:
 
 
 
 
 
Report NAV
 
Fair value, using NAV as a practical expedient
 
Changes in NAV, as a practical expedient to fair value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Do not report NAV
 
Cost, adjusted for observable price changes and impairments
 
Observable price changes
 
Impairments to reduce costs to fair value, which result in an adjusted cost basis and the differences between proceeds received upon disposition and adjusted or historical cost


 
 
 
q319logo1.jpg
Definitions and Reconciliations (continued)
September 30, 2019
 
 


For investments in privately held entities that do not report NAV per share, an observable price is a price observed in an orderly transaction for an identical or similar investment of the same issuer. Observable price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. For these transactions to be considered observable price changes of the same issuer, we evaluate whether these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold.

Investments in real estate

The following table reconciles our investments in real estate as of September 30, 2019:
(In thousands)
 
Investments in Real Estate
 
Gross investments in real estate
 
$
16,185,461

 
 
 
 
 
Less: accumulated depreciation
 
(2,596,337
)
 
Net investments in real estate – North America
 
13,589,124

 
Net investments in real estate – Asia
 
29,156

 
Investments in real estate
 
$
13,618,280

 

The following table represents RSF of buildings in operation as of September 30, 2019, that will be redeveloped or replaced with new development RSF upon commencement of future construction:
Property/Submarket
 
RSF
 
Intermediate-term projects:
 
 
 
88 Bluxome Street/Mission Bay/SoMa
 
232,470

 
960 Industrial Road/Greater Stanford
 
110,000

 
99 A Street/Seaport Innovation District
 
8,715

 
 
 
351,185

 
Future projects:
 
 
 
219 East 42nd Street/New York City
 
349,947

 
4161 Campus Point Court/University Town Center
 
159,884

 
10260 Campus Point Drive/University Town Center
 
109,164

 
4110 Campus Point Drive/University Town Center
 
15,667

 
4045 Sorrento Valley Boulevard/Sorrento Valley
 
10,926

 
4075 Sorrento Valley Boulevard/Sorrento Valley
 
40,000

 
601 Dexter Avenue North/Lake Union
 
18,680

 
 
 
704,268

 
Total value-creation RSF currently included in rental properties
 
1,055,453

 

 
Joint venture financial information

We present components of balance sheet and operating results information related to our joint ventures, which are not presented, or intended to be presented, in accordance with GAAP. We present the proportionate share of certain financial line items as follows: (i) for each real estate joint venture that we consolidate in our financial statements, which are controlled by us through contractual rights or majority voting rights, but of which we own less than 100%, we apply the noncontrolling interest economic ownership percentage to each financial item to arrive at the amount of such cumulative noncontrolling interest share of each component presented; and (ii) for each real estate joint venture that we do not control and do not consolidate, and are instead controlled jointly or by our joint venture partners through contractual rights or majority voting rights, we apply our economic ownership percentage to each financial item to arrive at our proportionate share of each component presented.

The components of balance sheet and operating results information related to joint ventures do not represent our legal claim to those items. For each entity that we do not wholly own, the joint venture agreement generally determines what equity holders can receive upon capital events, such as sales or refinancing, or in the event of a liquidation. Equity holders are normally entitled to their respective legal ownership of any residual cash from a joint venture only after all liabilities, priority distributions, and claims have been repaid or satisfied.

We believe this information can help investors estimate the balance sheet and operating results information related to our partially owned entities. Presenting this information provides a perspective not immediately available from consolidated financial statements and one that can supplement an understanding of the joint venture assets, liabilities, revenues, and expenses included in our consolidated results.

The components of balance sheet and operating results information related to joint ventures are limited as an analytical tool as the overall economic ownership interest does not represent our legal claim to each of our joint ventures’ assets, liabilities, or results of operations. In addition, joint venture financial information may include financial information related to the unconsolidated real estate joint ventures that we do not control. We believe that in order to facilitate for investors a clear understanding of our operating results and our total assets and liabilities, joint venture financial information should be examined in conjunction with our consolidated statements of operations and balance sheets. Joint venture financial information should not be considered an alternative to our consolidated financial statements, which are prepared in accordance with GAAP.

Key items included in net income attributable to Alexandria’s common stockholders

We present a tabular comparison of items, whether gain or loss, that may facilitate a high-level understanding of our results and provide context for the disclosures included in this Supplemental Information, our most recent annual report on Form 10-K for the year ended December 31, 2018, and our subsequent quarterly reports on Form 10-Q. We believe such tabular presentation promotes a better understanding for investors of the corporate-level decisions made and activities performed that significantly affect comparison of our operating results from period to period. We also believe this tabular presentation will supplement for investors an understanding of our disclosures and real estate operating results. Gains or losses on sales of real estate and impairments of held for sale assets are related to corporate-level decisions to dispose of real estate. Gains or losses on early extinguishment of debt, gains or losses on early termination of interest rate hedge agreements, and preferred stock redemption charges are related to corporate-level financing decisions focused on our capital structure strategy. Significant realized and unrealized gains or losses on non-real estate investments and impairments of real estate and non-real estate investments are not related to the operating performance of our real estate assets as they result from strategic, corporate-level non-real estate investment decisions and external market conditions. Impairments of non-real estate investments are not related to the operating performance of our real estate as they represent the write-down of non-real estate investments when

 
 
 
q319logo1.jpg
Definitions and Reconciliations (continued)
September 30, 2019
 
 


their fair values decline below their respective carrying values due to changes in general market or other conditions outside of our control. Significant items, whether a gain or loss, included in the tabular disclosure for current periods are described in further detail in this Supplemental Information.

Lease accounting

On January 1, 2019, we adopted new lease accounting standards that set out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). The new lease accounting standards did not result in material changes in the amount nor the timing of lease-related revenues that we recognized from our tenants. However, the new standards affected our financial statement presentation primarily in three specific areas.

Key differences between the prior accounting standard and the new lease accounting standards:

Prior to January 1, 2019, we classified rental revenues and tenant recoveries as separate line items on our consolidated statements of operations. Effective January 1, 2019, based on our election of a practical expedient, we are required to disclose the combined components of rental revenues and tenant recoveries as a single lease component, which is classified on our consolidated statements of operations as income from rentals. As a result, we do not disclose tenant recoveries as a separate GAAP revenue measure. Refer to “Tenant Recoveries” below for additional information on our definition of tenant recoveries revenue and its usefulness to investors.

The new lease accounting standard requires that lessors and lessees capitalize, as initial direct costs, only incremental costs of a lease that would not have been incurred if the lease had not been obtained. Effective January 1, 2019, costs that we incur to negotiate or arrange a lease, regardless of its outcome, such as for fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs, are expensed as incurred.

Under the package of practical expedients and optional transition method that we elected on January 1, 2019, we are not required to reassess whether initial direct leasing costs capitalized prior to the adoption of the new lease accounting standard in connection with the leases that commenced prior to January 1, 2019, qualify for capitalization under the new lease accounting standard. Therefore, we continue to amortize these initial direct leasing costs over the respective lease term.

In addition, the new lease accounting standards require companies to recognize a lease liability and a corresponding right-of-use asset on the consolidated balance sheets, and to represent the net present value of future rental payments related to operating leases in which we are the lessee. As a result, on January 1, 2019, we recognized a lease liability classified in accounts payable, accrued expenses, and other liabilities on our consolidated balance sheets, and a corresponding right‑of‑use asset included in other assets on our consolidated balance sheets, related to our ground leases existing as of January 1, 2019, for which we are the lessee. The net present value of the remaining future rental payments of our ground leases was calculated for each operating lease using the respective remaining lease term and a corresponding estimated incremental borrowing rate, which is the estimated interest rate that we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Net cash provided by operating activities after dividends

Net cash provided by operating activities after dividends includes the deduction for distributions to noncontrolling interests. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences.
 
Net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA

Net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA are non-GAAP financial measures that we believe are useful to investors as supplemental measures in evaluating our balance sheet leverage. Net debt is equal to the sum of total consolidated debt less cash, cash equivalents, and restricted cash. Net debt and preferred stock is equal to the sum of net debt, as discussed above, plus preferred stock outstanding as of the end of the period. Refer to the definition of Adjusted EBITDA and Adjusted EBITDA margin for further information on the calculation of Adjusted EBITDA.

The following table reconciles debt to net debt, and to net debt and preferred stock, and computes the ratio of each to Adjusted EBITDA:
(Dollars in thousands)
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
Secured notes payable
 
$
351,852

 
$
354,186

 
$
356,461

 
$
630,547

 
$
632,792

Unsecured senior notes payable
 
6,042,831

 
5,140,914

 
5,139,500

 
4,292,293

 
4,290,906

Unsecured senior line of credit
 
343,000

 
514,000

 
—

 
208,000

 
413,000

Unsecured senior bank term loan
 
—

 
347,105

 
347,542

 
347,415

 
347,306

Unamortized deferred financing costs
 
48,746

 
36,905

 
37,925

 
31,413

 
33,008

Cash and cash equivalents
 
(410,675
)
 
(198,909
)
 
(261,372
)
 
(234,181
)
 
(204,181
)
Restricted cash
 
(42,295
)
 
(39,316
)
 
(54,433
)
 
(37,949
)
 
(29,699
)
Net debt
 
$
6,333,459

 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

 
 
 
 
 
 
 
 
 
 
 
Net debt
 
$
6,333,459

 
$
6,154,885

 
$
5,565,623

 
$
5,237,538

 
$
5,483,132

7.00% Series D Convertible Preferred Stock
 
57,461

(1) 
57,461

 
57,461

 
64,336

 
74,386

Net debt and preferred stock
 
$
6,390,920

 
$
6,212,346

 
$
5,623,084

 
$
5,301,874

 
$
5,557,518

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
$
1,099,908

 
$
1,063,056

 
$
1,029,944

 
$
968,888

 
$
957,008

– trailing 12 months
 
$
1,040,449

 
$
1,004,724

 
$
966,781

 
$
937,906

 
$
900,032

Net debt to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
5.8
x
 
5.8
x
 
5.4
x
 
5.4
x
 
5.7
x
– trailing 12 months
 
6.1
x
 
6.1
x
 
5.8
x
 
5.6
x
 
6.1
x
Net debt and preferred stock to Adjusted EBITDA:
 
 
 
 
 
 
 
 
– quarter annualized
 
5.8
x
 
5.8
x
 
5.5
x
 
5.5
x
 
5.8
x
– trailing 12 months
 
6.1
x
 
6.2
x
 
5.8
x
 
5.7
x
 
6.2
x
 
 
 
 
 
 
 
 
 
 
 
(1)
In October 2019, we completed the conversion of all 2.3 million outstanding shares of our Series D Convertible Preferred Stock into shares of our common stock.

 
 
 
q319logo1.jpg
Definitions and Reconciliations (continued)
September 30, 2019
 
 


Net operating income, net operating income (cash basis), and operating margin

The following table reconciles net income (loss) to net operating income, and to net operating income (cash basis):
 
 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands)
 
9/30/19
 
9/30/18
 
9/30/19
 
9/30/18
Net (loss) income
 
$
(36,003
)
 
$
219,359

 
$
187,994

 
$
421,424

 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
(2,951
)
 
(40,718
)
 
(5,359
)
 
(42,952
)
General and administrative expenses
 
27,930

 
22,660

 
79,041

 
68,020

Interest expense
 
46,203

 
42,244

 
128,182

 
117,256

Depreciation and amortization
 
135,570

 
119,600

 
404,094

 
352,671

Impairment of real estate
 
—

 
—

 
—

 
6,311

Loss on early extinguishment of debt
 
40,209

 
1,122

 
47,570

 
1,122

Investment loss (income)
 
63,076

 
(122,203
)
 
(41,980
)
 
(220,294
)
Net operating income
 
274,034

 
242,064

 
799,542

 
703,558

Straight-line rent revenue
 
(27,394
)
 
(20,070
)
 
(79,835
)
 
(75,960
)
Amortization of acquired below-market leases
 
(5,774
)
 
(5,220
)
 
(20,976
)
 
(16,588
)
Net operating income (cash basis)
 
$
240,866

 
$
216,774

 
$
698,731

 
$
611,010

 
 
 
 
 
 
 
 
 
Net operating income (cash basis) – annualized
 
$
963,464

 
$
867,096

 
$
931,641

 
$
814,680

 
 
 
 
 
 
 
 
 
Net operating income (from above)
 
$
274,034

 
$
242,064

 
$
799,542

 
$
703,558

Total revenues
 
$
390,484

 
$
341,823

 
$
1,123,182

 
$
986,996

Operating margin
 
70%
 
71%
 
71%
 
71%

Net operating income is a non-GAAP financial measure calculated as net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our unconsolidated real estate joint ventures, general and administrative expenses, interest expense, depreciation and amortization, impairments of real estate, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and investment income or loss. We believe net operating income provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe net operating income is a useful measure for investors to evaluate the operating performance of our consolidated real estate assets. Net operating income on a cash basis is net operating income adjusted to exclude the effect of straight-line rent and amortization of acquired above- and below-market lease revenue adjustments required by GAAP. We believe that net operating income on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent revenue and the amortization of acquired above- and below-market leases.

Furthermore, we believe net operating income is useful to investors as a performance measure for our consolidated properties because, when compared across periods, net operating income reflects trends in occupancy rates, rental rates, and operating costs, which provide a perspective not immediately apparent from net income or loss. Net operating income can be used to measure the initial stabilized yields of our properties by calculating net operating income generated by a property divided by our investment in the property. Net operating income excludes certain components from net income in order to provide results that are more closely related to the results of operations of our properties. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred
 
at the corporate level rather than at the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort comparability of operating performance at the property level. Impairments of real estate have been excluded in deriving net operating income because we do not consider impairments of real estate to be property-level operating expenses. Impairments of real estate relate to changes in the values of our assets and do not reflect the current operating performance with respect to related revenues or expenses. Our impairments of real estate represent the write-down in the value of the assets to the estimated fair value less cost to sell. These impairments result from investing decisions or a deterioration in market conditions. We also exclude realized and unrealized investment income or loss, which results from investment decisions that occur at the corporate level related to non-real estate investments in publicly traded companies and certain privately held entities. Therefore, we do not consider these activities to be an indication of operating performance of our real estate assets at the property level. Our calculation of net operating income also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to corporate strategy. Property operating expenses included in determining net operating income primarily consist of costs that are related to our operating properties, such as utilities, repairs, and maintenance; rental expense related to ground leases; contracted services, such as janitorial, engineering, and landscaping; property taxes and insurance; and property-level salaries. General and administrative expenses consist primarily of accounting and corporate compensation, corporate insurance, professional fees, office rent, and office supplies that are incurred as part of corporate office management. We calculate operating margin as net operating income divided by total revenues.

We believe that in order to facilitate for investors a clear understanding of our operating results, net operating income should be examined in conjunction with net income or loss as presented in our consolidated statements of operations. Net operating income should not be considered as an alternative to net income or loss as an indication of our performance, nor as an alternative to cash flows as a measure of our liquidity or our ability to make distributions.

Operating statistics

We present certain operating statistics related to our properties, including number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations as of the end of the period. We believe these measures are useful to investors because they facilitate an understanding of certain trends for our properties. We compute the number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations at 100% for all properties in which we have an investment, including properties owned by our consolidated and unconsolidated real estate joint ventures. For operating metrics based on annual rental revenue, refer to our discussion of annual rental revenue herein.

Same property comparisons

As a result of changes within our total property portfolio during the comparative periods presented, including changes from assets acquired or sold, properties placed into development or redevelopment, and development or redevelopment properties recently placed into service, the consolidated total income from rentals, as well as rental operating expenses in our operating results, can show significant changes from period to period. In order to supplement an evaluation of our results of operations over a given quarterly or annual period, we analyze the operating performance for all consolidated properties that were fully operating for the entirety of the comparative periods presented, referred to as same properties. We separately present quarterly and year-to-date same property results to align with the interim financial information required by the SEC in our management’s discussion and analysis of our financial condition and results of operations. These same properties are analyzed separately from properties acquired subsequent to the first day in the earliest comparable quarterly or year-to-date period presented, properties that underwent development or redevelopment at any time during the comparative periods, unconsolidated real estate joint ventures, properties classified as held for sale, and corporate entities (legal entities

 
 
 
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Definitions and Reconciliations (continued)
September 30, 2019
 
 


performing general and administrative functions), which are excluded from same property results. Additionally, lease termination fees, if any, are excluded from the results of same properties.

The following table reconciles the number of same properties to total properties for the nine months ended September 30, 2019:
Development –
under construction
 
Properties
 
279 East Grand Avenue
 
1

 
188 East Blaine Street
 
1

 
9800 Medical Center Drive
 
1

 
9950 Medical Center Drive
 
1

 
Alexandria District for Science and Technology
 
2

 
201 Haskins Way
 
1

 
1165 Eastlake Avenue East
 
1

 
 
 
8

 
 
 
 
 
Development – placed into service after January 1, 2018
 
Properties
 
100 Binney Street
 
1

 
399 Binney Street
 
1

 
213 East Grand Avenue
 
1

 
 
 
3

 
 
 
 
 
Redevelopment –
under construction
 
Properties
 
Alexandria Center® for AgTech, Phase I
 
1

 
266 and 275 Second Avenue
 
2

 
Alexandria Center® – Long Island City
 
1

 
945 Market Street
 
1

 
3160 Porter Drive
 
1

 
 
 
6

 
 
 
 
 
Redevelopment – placed into service after January 1, 2018
 
Properties
 
9625 Towne Centre Drive
 
1

 
Alexandria PARC
 
4

 
681 Gateway Boulevard
 
1

 
9900 Medical Center Drive
 
1

 
 
 
7

 
 
 
 
 
Acquisitions after
January 1, 2018
 
Properties
 
100 Tech Drive
 
1

 
219 East 42nd Street
 
1

 
Summers Ridge Science Park
 
4

 
2301 5th Avenue
 
1

 
9704, 9708, 9712, and 9714 Medical Center Drive
 
4

 
9920 Belward Campus Drive
 
1

 
21 Firstfield Road
 
1

 
25, 35, 45, 50, and 55 West Watkins Mill Road
 
5

 
10260 Campus Point Drive and 4161 Campus Point Court
 
2

 
99 A Street
 
1

 
3170 Porter Drive
 
1

 
Shoreway Science Center
 
2

 
3911, 3931, and 4075 Sorrento Valley Boulevard
 
3

 
260 Townsend Street
 
1

 
5 Necco Street
 
1

 
601 Dexter Avenue North
 
1

 
4224/4242 Campus Point Court and 10210 Campus Point Drive
 
3

 
Other
 
9

 
 
 
42

 
 
 
 
 
Unconsolidated real estate JVs
 
6

 
Properties held for sale
 
2

 
Total properties excluded from same properties
 
74

 
Same properties
 
195

(1) 
Total properties in North America as of September 30, 2019
 
269

 
 
 
 
 
(1)
Includes 9880 Campus Point Drive and 3545 Cray Court. The 9880 Campus Point Drive building was occupied through January 2018 and is currently in active development and 3545 Cray Court is currently undergoing renovations.
 
Stabilized occupancy date

The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or greater.

Tenant recoveries

Tenant recoveries represent revenues comprising reimbursement of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses and earned in the period during which the applicable expenses are incurred and the tenant’s obligation to reimburse us arises.

On January 1, 2019, we adopted a new lease accounting standard, among other practical expedients and policies, and elected the single component accounting policy. As a result of our election of the single component accounting policy, we account for rental revenues and tenant recoveries generated through the leasing of real estate assets that qualify for this policy as a single component and classify associated revenue in income from rentals in our consolidated statements of operations. Prior to the adoption of the new lease accounting standard, we presented rental revenues and tenant recoveries separately in our consolidated statements of operations. We continue to provide investors with a separate presentation of rental revenues and tenant recoveries in the “Same Property Performance” section of this Supplemental Information because we believe it promotes investors’ understanding of the changes in our operating results. We believe that the presentation of tenant recoveries is useful to investors as a supplemental measure of our ability to recover operating expenses under our triple net leases, including recoveries of utilities, repairs and maintenance, insurance, property taxes, common area expenses, and other operating expenses, and of our ability to mitigate the effect to net income for any significant variability to components of our operating expenses.

The following table reconciles income from rentals to tenant recoveries:
 
Three Months Ended
 
Nine Months Ended
(In thousands)
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
9/30/19
 
9/30/18
Income from rentals
$
385,776

 
$
371,618

 
$
354,749

 
$
337,785

 
$
336,547

 
$
1,112,143

 
$
976,996

Rental revenues
(293,182
)
 
(289,625
)
 
(274,563
)
 
(260,102
)
 
(255,496
)
 
(857,370
)
 
(750,616
)
Tenant recoveries
$
92,594

 
$
81,993

 
$
80,186

 
$
77,683

 
$
81,051

 
$
254,773

 
$
226,380

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Total equity market capitalization

Total equity market capitalization is equal to the sum of outstanding shares of 7.00% Series D cumulative convertible preferred stock (“Series D Convertible Preferred Stock”) and common stock multiplied by the related closing price of each class of security at the end of each period presented.

Total market capitalization

Total market capitalization is equal to the sum of total equity market capitalization and total debt.


 
 
 
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Definitions and Reconciliations (continued)
September 30, 2019
 
 


Unencumbered net operating income as a percentage of total net operating income

Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income is derived from assets classified in continuing operations, which are not subject to any mortgage, deed of trust, lien, or other security interest, as of the period for which income is presented.

The following table summarizes unencumbered net operating income as a percentage of total net operating income:
 
Three Months Ended
(Dollars in thousands)
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
Unencumbered net operating income
$
259,128

 
$
251,397

 
$
243,191

 
$
213,285

 
$
213,107

Encumbered net operating income
14,906

 
16,770

 
14,150

 
29,496

 
28,957

Total net operating income
$
274,034

 
$
268,167

 
$
257,341

 
$
242,781

 
$
242,064

Unencumbered net operating income as a percentage of total net operating income
95%

 
94%

 
95%

 
88%

 
88%


Weighted-average interest rate for capitalization of interest

The weighted-average interest rate required for calculating capitalization of interest pursuant to GAAP represents a weighted-average rate based on the rates applicable to borrowings outstanding during the period, including expense/income related to our interest rate hedge agreements, amortization of loan fees, amortization of debt premiums (discounts), and other bank fees. A separate calculation is performed to determine our weighted-average interest rate for capitalization for each month. The rate will vary each month due to changes in variable interest rates, outstanding debt balances, the proportion of variable-rate debt to fixed-rate debt, the amount and terms of interest rate hedge agreements, and the amount of loan fee and premium (discount) amortization.

The following table presents the weighted-average interest rate for capitalization of interest:
 
Three Months Ended
 
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
Weighted-average interest rate for capitalization of interest
4.00%
 
4.14%
 
3.96%
 
4.01%
 
4.06%
 
Weighted-average shares of common stock outstanding – diluted

From time to time, we enter into capital market transactions, including forward equity sales agreements (“Forward Agreements”), to fund acquisitions, fund construction of our highly leased development and redevelopment projects, and for general working capital purposes. We are required to consider the potential dilutive effect of our forward equity sales agreements under the treasury stock method while the forward equity sales agreements are outstanding. As of September 30, 2019, we had Forward Agreements outstanding to sell an aggregate of 7.0 million shares of common stock, including 3.3 million shares expiring in June 2020 and 3.7 million shares expiring in July 2020.

Prior to the conversion of our remaining outstanding shares in October 2019, we considered the effect of assumed conversion of our outstanding 7.00% Series D Convertible Preferred Stock when determining potentially dilutive incremental shares to our common stock. When calculating the assumed conversion, we add back to net income or loss the dividends paid on our Series D Convertible Preferred Stock to the numerator and then include additional common shares assumed to have been issued (as displayed in the table below) to the denominator of the per share calculation. The effect of the assumed conversion is considered separately for our per share calculations of net income or loss; funds from operations, computed in accordance with the definition in the Nareit White Paper; and funds from operations, as adjusted. Prior to the conversion of our remaining outstanding shares in October 2019, our Series D Convertible Preferred Stock was dilutive and assumed to be converted when quarterly and annual basic EPS, funds from operations, or funds from operations, as adjusted, exceeded approximately $1.75 and $7.00 per share, respectively, subject to conversion ratio adjustments and the impact of repurchases of our Series D Convertible Preferred Stock. The effect of the assumed conversion was included when it was dilutive on a per share basis. The dilutive effect to both numerator and denominator may result in a per share effect of less than a half cent, which would appear as zero in our per share calculation, even when the dilutive effect to the numerator alone appears in our reconciliation.

The weighted-average shares of common stock outstanding used in calculating EPS – diluted, FFO per share – diluted, and FFO per share – diluted, as adjusted, during each period are calculated as follows:
 
Three Months Ended
 
Nine Months Ended
(In thousands)
9/30/19
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
9/30/19
 
9/30/18
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
112,120

 
111,433

 
111,054

 
106,033

 
104,179

 
111,540

 
101,991

Forward Agreements
—

 
68

 
—

 
—

 
462

 
172

 
363

Series D Convertible Preferred Stock
—

 
—

 
—

 
—

 
744

 
—

 
—

Diluted shares for EPS
112,120

 
111,501

 
111,054

 
106,033

 
105,385

 
111,712

 
102,354

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
112,120

 
111,433

 
111,054

 
106,033

 
104,179

 
111,540

 
101,991

Forward Agreements
442

 
68

 
—

 
211

 
462

 
172

 
363

Series D Convertible Preferred Stock
—

 
576

 
581

 
—

 
744

 
—

 
743

Diluted shares for FFO
112,562

 
112,077

 
111,635

 
106,244

 
105,385

 
111,712

 
103,097

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares for EPS
112,120

 
111,433

 
111,054

 
106,033

 
104,179

 
111,540

 
101,991

Forward Agreements
442

 
68

 
—

 
211

 
462

 
172

 
363

Series D Convertible Preferred Stock
—

 
—

 
—

 
—

 
—

 
—

 
—

Diluted shares for FFO, as adjusted
112,562

 
111,501

 
111,054

 
106,244

 
104,641

 
111,712

 
102,354