UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 27, 2015


ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)

Maryland
 
1-12993
 
95-4502084
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)




385 East Colorado Boulevard, Suite 299
 
 
Pasadena, California
 
91101
(Address of principal executive offices)
 
(Zip Code)


Registrant’s telephone number, including area code: (626) 578-0777
 

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o               Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o               Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o               Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o               Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))








Item 2.02.  Results of Operations and Financial Condition.

On April 27, 2015, Alexandria Real Estate Equities, Inc. (the “Company”) issued a press release entitled “Alexandria Real Estate Equities, Inc. Reports First Quarter Ended March 31, 2015 Financial and Operating Results” which sets forth the Company’s results of operations and financial condition for the first quarter ended March 31, 2015.  The press release referred to certain supplemental information that is available on the Company’s website at www.are.com.  A copy of the press release and supplemental information are attached hereto as Exhibit 99.1.

The information contained in this Item 2.02, including the exhibit referenced herein, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section.  Such information shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits.

99.1                Alexandria Real Estate Equities, Inc.’s Earnings Press Release and Supplemental Information for the First Quarter Ended March 31, 2015.

Forward-looking Statements

This current report on Form 8-K contains 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.  These statements include words such as “forecast,” “guidance,” “projects,” “estimates,” “anticipates,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” or “will,” or the negative of these words or similar words.  Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in each such statement.  A number of important factors could cause actual results to differ materially from those included within or contemplated by the forward-looking statements, including, but not limited to, the factors described in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.  The Company does not undertake any responsibility to update any of these factors or to announce publicly any revisions to any of the forward-looking statements contained in this or any other document, whether as a result of new information, future events, or otherwise.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
ALEXANDRIA REAL ESTATE EQUITIES, INC.
 
 
 
 
 
 
April 27, 2015
 
By:
/s/ Joel S. Marcus
 
 
 
 
Joel S. Marcus
 
 
 
 
Chairman/Chief Executive Officer
 
 
 
 
(Principal Executive Officer)
 
 
 
 
 
 
 
 
 
By:
/s/ Dean A. Shigenaga
 
 
 
 
Dean A. Shigenaga
 
 
 
 
Chief Financial Officer
 
 
 
 
(Principal Financial Officer)
 





EXHIBIT INDEX

Exhibit
 Number
 
Exhibit Title
99.1
 
Alexandria Real Estate Equities, Inc.’s Earnings Press Release and Supplemental Information for the First Quarter Ended March 31, 2015.




1Q15 - EX 99.1



 
 
 




 
 
 


ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Table of Contents

 
Page
EARNINGS PRESS RELEASE
 
First Quarter Ended March 31, 2015, Financial and Operating Results
Guidance
Dispositions and Other Sources of Capital
4
Earnings Call Information and About the Company
Consolidated Statements of Income
Consolidated Balance Sheets
Funds From Operations and Adjusted Funds From Operations
SUPPLEMENTAL INFORMATION
 
Company Profile
Investor Information
Financial and Asset Base Highlights
Operating Information
 
Key Operating Metrics
Same Property Performance
Leasing Activity
Lease Expirations
Top 20 Client Tenants
Client Tenant Mix
Summary of Properties and Occupancy
Property Listing
 
 
Page
SUPPLEMENTAL INFORMATION (continued)
 
Value-Creation Projects and Acquisitions
 
Key Real Estate Metrics
Investments in Real Estate
Overview of Value-Creation Pipeline in North America
Deliveries of Value-Creation Development Projects
Current Value-Creation Projects
Near-Term and Future Value-Creation Projects in North America
Unconsolidated Joint Ventures
Capital Allocation and Projected Construction Spending
Historical Construction Spending
Acquisitions
Real Estate Investments in Asia
Balance Sheet
 
Key Credit Metrics
Summary of Debt
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 see page 5 of the earnings press release for further information.

This document is not an offer to sell or 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 its consolidated subsidiaries.



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
i



Alexandria Real Estate Equities, Inc.
Reports

First Quarter Ended March 31, 2015
Financial and Operating Results

FFO Per Share – Diluted, of $1.28 for 1Q15, up 9.4% over 1Q14
EPS – Diluted of $0.25 for 1Q15
Total Revenues of $196.8 million for 1Q15, up 11.7% over 1Q14

PASADENA, CA. – April 27, 2015 – Alexandria Real Estate Equities, Inc. (NYSE:ARE) today announced financial and operating results for the first quarter ended March 31, 2015.

“Our results for the first quarter of 2015 highlight both the strength of our operating fundamentals and our unique real estate platform strategy focused on Class A assets in urban innovation cluster campuses located in Greater Boston, the San Francisco Bay Area, New York City, and San Diego. Our growth in FFO and NAV continued into the first quarter of 2015, as we reported FFO per share of $1.28, up 9.4% over the first quarter of 2014. Growth in FFO and cash flows for the quarter was again driven by strong internal growth, including 18.5% cash rental rate increases on lease renewals/re-leasing of space and a 7.8% cash same property NOI increase. Our value-creation pipeline continued to deliver significant earnings and NAV growth with highly leased projects located in collaborative urban innovation campuses. Furthermore, we delivered 494,477 RSF into service, including 388,270 RSF at 75/125 Binney Street in March 2015. We also commenced the ground-up development at 50/60 Binney Street in our Cambridge submarket, with 98% of the project leased or under negotiation, including 251,234 RSF leased to Sanofi for 97% of 50 Binney Street. Our value-creation deliveries during the quarter decreased our non-income producing assets as a percentage of total assets to 12%.

“With our operating properties generating steady growth and our value-creation pipeline producing significant additional growth of NOI, EBITDA, and NAV, we remain confident in our ability to deliver strong results in 2015 while improving our net debt to adjusted EBITDA to <7.0x by year-end,” said Joel S. Marcus, Chairman, Chief Executive Officer, and Founder of Alexandria Real Estate
 
Equities, Inc.
Results

Funds from operations (“FFO”) attributable to Alexandria Real Estate Equities, Inc.’s (“Alexandria’s”) common stockholders – diluted:
$1.28 per share for 1Q15, up 9.4%, compared to
$1.17 per share for 1Q14
$91.3 million for 1Q15, up $8.3 million, or 9.9%, compared to
$83.1 million for 1Q14
Net income attributable to Alexandria’s common stockholders – diluted:
$17.8 million, or $0.25 per share, for 1Q15, compared to
$32.7 million, or $0.46 per share, for 1Q14
Results for 1Q15, included an impairment of real estate of $14.5 million, or $0.20 per share

Core operating metrics

Total revenues of $196.8 million for 1Q15, up $20.6 million, or 11.7%,
compared to $176.2 million for 1Q14
Net operating income (“NOI”), including our share of unconsolidated joint ventures, of
$136.4 million for 1Q15, up $12.7 million, or 10.3%, compared to
$123.7 million for 1Q14
Same property NOI increase of 2.3% and 7.8% (cash basis) for 1Q15, compared to 1Q14
Executed leases for 1,022,669 rentable square feet (“RSF”) during 1Q15, including:
251,234 RSF to Sanofi at 50 Binney Street in our Cambridge submarket
145,946 RSF to Illumina, Inc. (“Illumina”) at 5200 Illumina Way in our University Town Center submarket
83,561 RSF to Massachusetts Institute of Technology (“MIT”) at 600 Technology Square in our Cambridge submarket
30.8% and 18.5% (cash basis) rental rate increase on lease renewals and re-leasing of space aggregating 489,286 RSF
Occupancy for properties in North America, as of 1Q15:
96.8% occupancy for operating properties, up 20 basis points (“bps”) from 1Q14
95.9% occupancy for operating and redevelopment properties, up 80 bps from 1Q14
Operating margins steady at 69% for 1Q15
Adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”)
margins solid at 64% for 1Q15




ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
1



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015


External growth: value-creation projects and acquisitions

Value-creation projects

Development and redevelopment value-creation projects were on average 90% leased or under negotiation (71% leased and 19% under negotiation)
1Q15 key deliveries of value-creation projects:
388,270 RSF, primarily to ARIAD Pharmaceuticals, Inc. at 75/125 Binney Street in our Cambridge submarket
43,209 RSF to various client tenants at 430 East 29th Street in our Manhattan submarket
60,891 RSF to Receptos, Inc. and The Medicines Company at 3013/3033 Science Park Road in our Torrey Pines submarket
1Q15 key commencements of value-creation development projects:
Commenced a 530,477 RSF value-creation development project at 50/60 Binney Street located in our Cambridge submarket; 98% leased or under negotiation, including 47% leased to Sanofi.

Acquisitions

In January 2015, we completed the acquisition of 640 Memorial Drive in the Cambridge submarket for $176.5 million. This property is a 225,504 RSF Class A, LEED® Gold Certified, office/laboratory building in Mid-Cambridge, near the MIT campus, and it is 100% leased to two high-quality life science client tenants pursuant to long-term leases. In connection with the acquisition, we assumed a secured note payable of $82.0 million with an interest rate of 3.93% and a maturity date in 2023.
In January 2015, we executed an agreement to purchase the outstanding 10% noncontrolling interest in our flagship campus at Alexandria Technology Square® in our Cambridge submarket for $108.3 million. The first installment of $54.3 million was paid on April 1, 2015, and the second installment of $54.0 million is due on April 1, 2016.


 

Balance sheet

$11.3 billion total market capitalization as of March 31, 2015
12% non-income-producing assets (percentage of gross investments in real estate)
7.5x net debt to adjusted EBITDA – 1Q15 annualized;
2015 target range from 6.5x to 7.5x, with goal of <7.0x by 4Q15
3.3x fixed charge coverage ratio – 1Q15 annualized; 2015 target range from 3.0x to 3.5x
Executed additional interest rate swap agreements in March and April 2015, with an aggregate notional amount of $750 million to increase notional hedged variable-rate debt to $950 million during 2015 and a minimum of $800 million during 2016.
19% unhedged variable-rate debt as a percentage of total debt as of March 31, 2015

LEED statistics and other awards

As of March 31, 2015, 53 LEED projects, including 32 LEED certified projects aggregating 4.8 million RSF and 21 additional LEED projects in process aggregating 4.0 million square feet.
54% of our total annualized base rent (“ABR”) will be generated from LEED projects upon completion of our in-process projects.
In March 2015, we were awarded the 2015 Owner of the Year Award by the Engineering News-Record New England for outstanding work developing dynamic campuses for our client tenants in our Greater Boston market.
In March 2015, we were awarded the 2014 Land Deal of the Year Award by the San Francisco Business Times for our signature land acquisition of 1455/1515 Third Street in our Mission Bay submarket, 100% pre-leased to Uber Technologies, Inc.
In March 2015, we were awarded the Deal of the Year Award by the San Diego Business Journal for our role in expanding Illumina’s campus and supporting the company’s growth in our University Town Center submarket.

Subsequent events

In April 2015:
We amended the employment agreement with Joel S. Marcus to extend his term as our CEO through March 31, 2018.
We leased 300,000 RSF, or 100%, to Stripe, Inc. at 510 Townsend Street in our SoMa submarket of the San Francisco Bay Area. We expect to commence ground-up development of this build-to-suit project in 2015, upon receipt of Prop M entitlement allocation.
We leased 106,173 RSF, or 75%, to Eli Lilly and Company at our 10300 Campus Point Drive project in our University Town Center submarket in San Diego. We expect to commence ground-up development of our 142,034 RSF project in 2015, upon receipt of permits/approvals.
We leased 80,000 RSF to Juno Therapeutics, Inc. at 400 Dexter Avenue North in our Lake Union submarket in Seattle. Juno Therapeutics, Inc. has an expansion option for 71,000 RSF. We expect to commence ground-up development of our 287,806 RSF project in 2015, upon receipt of master use plan approval.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Guidance
(Dollars in thousands, except per share amounts)

The following updated guidance is based on our current view of existing market conditions and other assumptions for the year ending December 31, 2015.  There can be no assurance that actual amounts will be materially higher or lower than these expectations. See our discussion of “forward-looking statements” on the following page.
Summary of Key Changes in Guidance
 
 
Description
FFO per share diluted
+ $0.02

 
Midpoint of range increased by $0.02 to $5.22 and narrowed range from $0.20 to $0.10, driven by strong rental rate increases on leasing activity
Net debt to Adjusted EBITDA – 4Q15 annualized
<7.0x

 
See below for summary of key changes to sources and uses of capital
Uses of capital:
Midpoint
 
Description
Acquisition
$
200,000

 
Ÿ $200 million of incremental acquisitions of value-creation development opportunities primarily in the Mission Bay/SoMa submarket, including a $135 million non-cash transaction (tax-deferred structure)
Increase in uses of capital
$
200,000

 
Sources of capital:
 
 
 
Non-cash acquisition
$
135,000

 
Ÿ Partial repayment and refinancing of the outstanding $375 million 2016 Unsecured Senior Bank Term Loan

Increase in pending sales
85,000

 
 
Remainder/asset sales
180,000

 
Ÿ $200 million net reduction in debt from additional asset sales/remainder
Net reduction in debt
(200,000
)
 
 
Net increase in sources of capital
$
200,000

 
 

EPS and FFO Per Share Attributable to Alexandria’s Common Stockholders – Diluted
Earnings per share
 
$1.42 to $1.52
Add: depreciation and amortization
 
3.57
Add: impairment of real estate
 
0.20
Other
 
(0.02)
FFO per share
 
$5.17 to $5.27
Key Assumptions
 
Low
 
High
Occupancy percentage for operating properties in
North America as of December 31, 2015
 
96.9%

 
97.4%

 
 
 
 
 
Same property performance:
 
 
 
 
NOI increase
 
0.5%

 
2.5%

NOI increase (cash basis)
 
5.0%

 
7.0%

 
 
 
 
 
Lease renewals and re-leasing of space:
 
 
 
 
Rental rate increases
 
14.0%

 
17.0%

Rental rate increases (cash basis)
 
8.0%

 
10.0%

 
 
 
 
 
Straight-line rent revenue
 
$
45,000

 
$
50,000

General and administrative expenses
 
$
55,000

 
$
59,000

Capitalization of interest
 
$
35,000

 
$
45,000

Interest expense
 
$
106,000

 
$
116,000

 
Key Credit Metrics
 
 
Net debt to Adjusted EBITDA – 4Q15 annualized
 
<7.0x
Fixed charge coverage ratio – 4Q15 annualized
 
3.0x to 3.5x
Non-income-producing assets as a percentage of gross investments in real estate as of December 31, 2015
 
10% to 15%
Key Sources and Uses of Capital
 
As of 3/31/15
 
Low
 
High
Sources of capital:
 
 
 
 
 
 
Net cash provided by operating activities after dividends
 
$
31,000

 
$
115,000

 
$
135,000

Incremental debt
 
189,000

 
190,000

 
270,000

Non-cash acquisition
 

 
125,000

 
145,000

Remainder/asset sales (see next page)
 
68,000

 
615,000

 
695,000

Total sources of capital
 
$
288,000

 
$
1,045,000

 
$
1,245,000

 
 
 
 
 
 
 
Uses of capital:
 
 
 
 
 
 
Construction
 
$
111,000

 
$
645,000

 
$
745,000

Acquisitions
 
177,000

 
400,000

 
500,000

Total uses of capital
 
$
288,000

 
$
1,045,000

 
$
1,245,000

 
 
 
 
 
 
 
Incremental debt:
 
 
 
 
 
 
Issuance of unsecured senior and other notes payable 
 
$
82,000

 
$
385,000

 
$
535,000

Borrowings under existing secured construction loans
 
30,000

 
80,000

 
130,000

Repayments of secured notes payable
 
(8,000
)
 
(61,000
)
 
(137,000
)
Activity on unsecured senior line of credit/other
 
85,000

 
(214,000
)
 
(258,000
)
Incremental debt
 
$
189,000

 
$
190,000

 
$
270,000



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ALL RIGHTS RESERVED © 2015
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Dispositions and other sources of capital
(Dollars in thousands)

Property – Market/Submarket
 
Date Sold
 
1Q15 Impairments
 
Number of Properties
 
Square Feet
 
Annual NOI (1)
 
Sales Price/NBV (2)
 
Dispositions in 1Q15
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
661 University Avenue – Canada/Toronto
 
January
 
$

 
1
 
N/A

 
$
(1,363
)
 
$
54,104
 
(3) 
Other
 
January/ March
 
14,510

(4) 
2
 
196,859

 
(595
)
 
14,335
 
 
Dispositions in 1Q15
 
 
 
$
14,510

 
 
 
 
 
$
(1,958
)
 
68,439
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pending and projected remainder/asset sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
500 Forbes Boulevard – San Francisco Bay Area/South San Francisco
 
 
 
1
 
155,685

 
$
5,683

 
345,000
to
395,000
 
225 Binney Street – Greater Boston/Cambridge (target sale of 70% to 90% interest)
 
1
 
305,212

 
10,666

(5) 
 
270 Third Street – Greater Boston/Cambridge (residential project under construction)
 
1
 
N/A

 

 
 
 
 
 
 
 
 
 
 
 
 
$
16,349

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
 
 
 
 
3
 
166,441

 
$
1,507

(6) 
35,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed and pending asset sales
 
 
 
 
 
 
 
 
 
 
 
450,000

to
500,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Projected – remainder/asset sales (see summary on prior page)
 
 
 
 
 
TBD

 
TBD

 
165,000

to
195,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total dispositions completed and other sources of capital
 
 
 
 
 

 
$
615,000

to
$
695,000

 

(1)
Annualized using actual results for the quarter ended prior to date of sale or 1Q15 for pending and projected asset sales and other assets “held for sale” as of March 31, 2015.
(2)
Represents sale price for assets sold, estimated sale price for pending and projected asset sales, and net book value as of March 31, 2015, for other assets “held for sale.”
(3)
Represents land and land improvements that were subject to a ground lease prior to the sale with the Company as the lessee. Our annualized net operating loss of $1.4 million primarily represented ground rent expense. Prior to the completion of the sale in January 2015, our land and land improvements were leased to a client tenant and the client tenant was completing the construction of a 780,540 RSF building. Rental payments from the client tenant were anticipated to commence in the future upon completion and stabilization of the building.
(4)
During 1Q15, we committed to the sale of a vacant 175,000 RSF building located in Hyderabad, India. Accordingly, we recognized an impairment charge of $14.5 million to reduce the property’s net book value to our estimate of its fair value less cost to sell of $12.4 million. The impairment is primarily related to $7.5 million of increased project costs incurred during a longer-than-anticipated government permitting process to address additional building zoning requirements that arose subsequent to our acquisition of this building, as well as $4.2 million of foreign exchange losses. We estimated that $8.1 million of additional capital expenditures would have been required to complete and lease the building.
(5)
Represents estimated 80% (mid-point of range from 70% to 90%) joint venture share of annualized NOI of $13.3 million for the entire property for the quarter ended 1Q15.
(6)
Includes annualized net operating loss of $172 thousand related to one vacant building aggregating 21,940 RSF classified in discontinued operations in our accompanying consolidated statements of income. This is the only property classified in discontinued operations as of March 31, 2015.


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ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Earnings Call Information

We will host a conference call on Tuesday, April 28, 2015, at 3:00 p.m. Eastern Time (“ET”)/12:00 p.m. noon Pacific Time (“PT”) that is open to the general public to discuss our financial and operating results for the first quarter ended March 31, 2015. To participate in this conference call, dial (877) 856-1955 or (719) 325-4784 and confirmation code 2665879 shortly before 3:00 p.m. ET/12:00 p.m. noon PT. 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 6:00 p.m. ET/3:00 p.m. PT on Tuesday, April 28, 2015. The replay number is (888) 203-1112 or (719) 457-0820 and the confirmation code is 2665879.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2015, is available in the “For Investors” section of our website at www.are.com or by following this link: http://www.are.com/fs/2015q1.pdf.

For any questions, please contact Joel S. Marcus, Chairman, Chief Executive Officer & Founder, at (626) 578-9693 or Dean A. Shigenaga, Executive Vice President & Chief Financial Officer, at (626) 578-0777.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE) is a fully integrated, self-administered, and self-managed real estate investment trust (“REIT”) focused on unique collaborative campuses in urban innovation clusters located in key coastal science and technology gateway cities, with a total market capitalization of $11.3 billion as of March 31, 2015, and an asset base of 30.7 million square feet, including 18.5 million RSF of operating and current value-creation projects, as well as an additional 2.2 million square feet of near-term and 10.0 million square feet of future ground-up development projects. Alexandria pioneered this niche in 1994 and has since established a dominant market presence in AAA locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle Park.

***********

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 2015 earnings per share attributable to Alexandria’s common stockholders – diluted, 2015 FFO per share attributable to Alexandria’s common stockholders – diluted, NOI, 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,” “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 complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development, 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 client tenants, general and local economic conditions, a favorable capital market environment, performance of our operations in areas such as delivery of current and future development and redevelopment projects, leasing activity, 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.

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ALL RIGHTS RESERVED © 2015
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended
 
 
3/31/15

12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Revenues:
 
 

 
 

 
 

 
 

 
 

Rental
 
$
143,608

 
$
140,873

 
$
137,718

 
$
134,992

 
$
130,570

Tenant recoveries
 
48,394

 
45,282

 
45,572

 
40,944

 
41,682

Other income
 
4,751

 
2,519

 
2,325

 
466

 
3,934

Total revenues
 
196,753

 
188,674

 
185,615

 
176,402

 
176,186

 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
Rental operations
 
61,223

 
56,881

 
57,423

 
52,353

 
52,507

General and administrative
 
14,387

 
13,861

 
12,609

 
13,836

 
13,224

Interest
 
23,236

 
22,188

 
20,555

 
17,433

 
19,123

Depreciation and amortization
 
58,920

 
57,973

 
58,388

 
57,314

 
50,421

Impairment of real estate
 
14,510

 
51,675

 

 

 

Loss on early extinguishment of debt
 

 

 
525

 

 

Total expenses
 
172,276

 
202,578

 
149,500

 
140,936

 
135,275

 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated joint ventures
 
574

 
554

 

 

 

Income (loss) from continuing operations
 
25,051

 
(13,350
)
 
36,115

 
35,466

 
40,911

 
 
 
 
 
 
 
 
 
 
 
(Loss) income from discontinued operations
 
(43
)
 
1,722

 
(180
)
 
(147
)
 
(162
)
Gain on sales of real estate – land parcels
 

 
5,598

 
8

 
797

 

Net income (loss)
 
25,008

 
(6,030
)
 
35,943

 
36,116

 
40,749

Dividends on preferred stock
 
(6,247
)
 
(6,284
)
 
(6,471
)
 
(6,472
)
 
(6,471
)
Preferred stock redemption charge
 

 
(1,989
)
 

 

 

Net income attributable to noncontrolling interests
 
(492
)
 
(1,362
)
 
(1,340
)
 
(1,307
)
 
(1,195
)
Net income attributable to unvested restricted stock awards
 
(483
)
 
(489
)
 
(506
)
 
(405
)
 
(374
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
 
$
17,786

 
$
(16,154
)
 
$
27,626

 
$
27,932

 
$
32,709

 
 
 
 
 
 
 
 
 
 
 
Earnings per share attributable to Alexandria’s common stockholders – basic and diluted:
 
 
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.25

 
$
(0.25
)
 
$
0.39

 
$
0.39

 
$
0.46

Discontinued operations
 

 
0.02

 

 

 

Earnings per share – basic and diluted
 
$
0.25

 
$
(0.23
)
 
$
0.39

 
$
0.39

 
$
0.46

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria’s common stockholders – basic and diluted
 
71,366

 
71,314

 
71,195

 
71,126

 
71,073

 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
 
$
0.74

 
$
0.74

 
$
0.72

 
$
0.72

 
$
0.70



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
6



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Consolidated Balance Sheets
(In thousands)
(Unaudited)

 
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Assets
 
 
 
 

 
 

 
 

 
 

Investments in real estate
 
$
7,388,059

 
$
7,226,016

 
$
7,197,630

 
$
7,030,117

 
$
6,930,262

Cash and cash equivalents
 
90,641

 
86,011

 
67,023

 
61,701

 
74,970

Restricted cash
 
56,704

 
26,884

 
24,245

 
24,519

 
30,454

Tenant receivables
 
10,627

 
10,548

 
10,830

 
10,654

 
10,619

Deferred rent
 
243,459

 
234,124

 
225,506

 
214,793

 
202,087

Deferred leasing and financing costs
 
199,576

 
201,798

 
199,835

 
193,621

 
192,618

Investments
 
283,062

(1) 
236,389

 
177,577

 
174,802

 
169,322

Other assets
 
133,093

 
114,266

 
117,668

 
105,442

 
145,707

Total assets
 
$
8,405,221

 
$
8,136,036

 
$
8,020,314

 
$
7,815,649

 
$
7,756,039

 
 
 
 
 
 
 
 
 
 
 
Liabilities, Noncontrolling Interests, and Equity
 
 
 
 
 
 
 
 
 
 
Secured notes payable
 
$
760,476

 
$
652,209

 
$
636,825

 
$
615,551

 
$
597,511

Unsecured senior notes payable
 
1,747,450

 
1,747,370

 
1,747,290

 
1,048,310

 
1,048,270

Unsecured senior line of credit
 
421,000

 
304,000

 
142,000

 
571,000

 
506,000

Unsecured senior bank term loans
 
975,000

 
975,000

 
975,000

 
1,100,000

 
1,100,000

Accounts payable, accrued expenses, and tenant security deposits
 
645,619

(2) 
489,085

 
504,535

 
434,528

 
443,893

Dividends payable
 
58,824

 
58,814

 
57,549

 
57,377

 
55,860

Total liabilities
 
4,608,369

 
4,226,478

 
4,063,199

 
3,826,766

 
3,751,534

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
14,282

 
14,315

 
14,348

 
14,381

 
14,413

 
 
 
 
 
 
 
 
 
 
 
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
Series D cumulative convertible preferred stock
 
237,163

 
237,163

 
250,000

 
250,000

 
250,000

Series E cumulative redeemable preferred stock
 
130,000

 
130,000

 
130,000

 
130,000

 
130,000

Common stock
 
716

 
715

 
714

 
713

 
712

Additional paid-in capital
 
3,383,456

 
3,461,189

 
3,523,195

 
3,542,334

 
3,560,453

Accumulated other comprehensive income (loss)
 
29,213

 
(628
)
 
(28,711
)
 
(16,245
)
 
(18,429
)
Alexandria’s stockholders’ equity
 
3,780,548

 
3,828,439

 
3,875,198

 
3,906,802

 
3,922,736

Noncontrolling interests
 
2,022

 
66,804

 
67,569

 
67,700

 
67,356

Total equity
 
3,782,570

 
3,895,243

 
3,942,767

 
3,974,502

 
3,990,092

Total liabilities, noncontrolling interests, and equity
 
$
8,405,221

 
$
8,136,036

 
$
8,020,314

 
$
7,815,649

 
$
7,756,039


(1)
Includes unrealized gains on publicly traded investments aggregating $81.9 million as of March 31, 2015, classified in accumulated other comprehensive income (loss) within stockholders’ equity.
(2)
In January 2015, we executed an agreement to purchase the outstanding 10% noncontrolling interest in Alexandria Technology Square® and recognized a liability of $114 million.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
7



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Funds From Operations and Adjusted Funds From Operations
(In thousands)
(Unaudited)

The following table presents a reconciliation of net income (loss) attributable to Alexandria’s common stockholders – basic, the most directly comparable financial measure presented in accordance with generally accepted accounting principles (“GAAP”), to FFO attributable to Alexandria’s common stockholders – basic and diluted, FFO attributable to Alexandria’s common stockholders – diluted, as adjusted, and adjusted funds from operations (“AFFO”) attributable to Alexandria’s common stockholders – diluted. The table below includes our share of consolidated and unconsolidated joint venture amounts.
 
 
Three Months Ended
 
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Net income (loss) attributable to Alexandria’s common stockholders
 
$
17,786

 
$
(16,154
)
 
$
27,626

 
$
27,932

 
$
32,709

Depreciation and amortization (1)
 
59,202

 
58,302

 
58,388

 
57,314

 
50,421

Impairment of real estate – rental properties
 
14,510

 
26,975

 

 

 

Gain on sales of real estate – rental properties (2)
 

 
(1,838
)
 

 

 

Gain on sales of real estate – land parcels
 

 
(5,598
)
 
(8
)
 
(797
)
 

Amount attributable to noncontrolling interests/
unvested restricted stock awards:
 
 
 
 

 
 

 
 

 
 

Net income
 
975

 
1,851

 
1,846

 
1,712

 
1,569

FFO
 
(1,141
)
 
(2,063
)
 
(2,278
)
 
(1,648
)
 
(1,629
)
FFO attributable to Alexandria’s common stockholders – basic and diluted (3)
 
91,332

 
61,475

 
85,574

 
84,513

 
83,070

Impairment of real estate – land parcels
 

 
24,700

 

 

 

Loss on early extinguishment of debt
 

 

 
525

 

 

Preferred stock redemption charge
 

 
1,989

 

 

 

Allocation to unvested restricted stock awards
 

 
(259
)
 
(4
)
 

 

FFO attributable to Alexandria’s common stockholders – diluted, as adjusted
 
91,332

 
87,905

 
86,095

 
84,513

 
83,070

Non-revenue-enhancing capital expenditures:
 
 

 
 

 
 

 
 

 
 

Building improvements
 
(2,278
)
 
(1,989
)
 
(2,405
)
 
(1,255
)
 
(1,780
)
Tenant improvements and leasing commissions
 
(5,775
)
 
(5,499
)
 
(1,693
)
 
(3,934
)
 
(4,053
)
Straight-line rent revenue (1)
 
(10,697
)
 
(10,023
)
 
(10,892
)
 
(12,737
)
 
(11,882
)
Straight-line rent expense on ground leases
 
363

 
657

 
723

 
697

 
711

Amortization of acquired below market leases
 
(933
)
 
(654
)
 
(757
)
 
(618
)
 
(816
)
Amortization of loan fees (1)
 
2,835

 
2,822

 
2,786

 
2,743

 
2,561

Amortization of debt (premiums) discounts
 
(82
)
 
17

 
(36
)
 
(69
)
 
205

Stock compensation expense
 
3,690

 
4,624

 
3,068

 
3,076

 
3,228

Allocation to unvested restricted stock awards
 
118

 
98

 
71

 
90

 
94

AFFO attributable to Alexandria’s common stockholders – diluted
 
$
78,573

 
$
77,958

 
$
76,960

 
$
72,506

 
$
71,338


(1)
Includes our share of consolidated and unconsolidated joint venture amounts.
(2)
Gain on sales of real estate – rental properties recognized during 4Q14 are classified in (loss) income from discontinued operations in the consolidated statements of income.
(3)
Calculated in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) in its April 2002 White Paper and related implementation guidance.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
8



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Funds From Operations Per Share and Adjusted Funds From Operations Per Share
(In thousands, except per share amounts)
(Unaudited)

The following table presents a reconciliation of earnings per share attributable to Alexandria’s common stockholders – basic, the most directly comparable financial measure presented in accordance with GAAP, to FFO per share attributable to Alexandria’s common stockholders – diluted, FFO per share attributable to Alexandria’s common stockholders – diluted, as adjusted, and AFFO per share attributable to Alexandria’s common stockholders – diluted. For the computation of the weighted average shares used to compute the per share information, refer to the “Definitions and Reconciliations” section in our supplemental information. The table below includes our share of consolidated and unconsolidated joint venture amounts.
 
 
Three Months Ended
 
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Earnings per share attributable to Alexandria’s common stockholders – basic and diluted
 
$
0.25

 
$
(0.23
)
 
$
0.39

 
$
0.39

 
$
0.46

Depreciation and amortization
 
0.83

 
0.82

 
0.81

 
0.81

 
0.71

Impairment of real estate – rental properties
 
0.20

 
0.38

 

 

 

Gain on sales of real estate – rental properties
 

 
(0.03
)
 

 

 

Gain on sales of real estate – land parcels
 

 
(0.08
)
 

 
(0.01
)
 

FFO per share attributable to Alexandria’s common stockholders – basic and diluted (1)
 
1.28

 
0.86

 
1.20

 
1.19

 
1.17

Impairment of real estate – land parcels
 

 
0.34

 

 

 

Loss on early extinguishment of debt
 

 

 
0.01

 

 

Preferred stock redemption charge
 

 
0.03

 

 

 

FFO per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
1.28

 
1.23

 
1.21

 
1.19

 
1.17

Non-revenue-enhancing capital expenditures:
 
 
 
 
 
 
 
 
 
 
Building improvements
 
(0.03
)
 
(0.03
)
 
(0.03
)
 
(0.02
)
 
(0.03
)
Tenant improvements and leasing commissions
 
(0.08
)
 
(0.08
)
 
(0.02
)
 
(0.06
)
 
(0.06
)
Straight-line rent revenue
 
(0.15
)
 
(0.14
)
 
(0.15
)
 
(0.18
)
 
(0.17
)
Straight-line rent expense on ground leases
 
0.01

 
0.01

 
0.01

 
0.01

 
0.01

Amortization of acquired below market leases
 
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.01
)
 
(0.01
)
Amortization of loan fees
 
0.03

 
0.05

 
0.03

 
0.04

 
0.04

Stock compensation expense
 
0.05

 
0.06

 
0.04

 
0.05

 
0.05

AFFO per share attributable to Alexandria’s common stockholders – diluted
 
$
1.10

 
$
1.09

 
$
1.08

 
$
1.02

 
$
1.00

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares of common stock outstanding for calculating FFO, FFO, as adjusted, and AFFO per share attributable to Alexandria’s common stockholders – basic and diluted
 
71,366

 
71,314

 
71,195

 
71,126

 
71,073


(1)
Calculated in accordance with standards established by the Board of Governors of the NAREIT in its April 2002 White Paper and related implementation guidance.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
9










SUPPLEMENTAL
INFORMATION








 
 
 


ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Company Profile

Alexandria Real Estate Equities, Inc. (NYSE:ARE), is the largest and leading REIT uniquely focused on collaborative science campuses in urban innovation clusters located in key coastal gateway cities, with a total market capitalization of $11.3 billion as of March 31, 2015, and an asset base of 30.7 million square feet, including 18.5 million RSF of operating and current value-creation projects, as well as an additional 2.2 million square feet of near-term and 10.0 million square feet of future ground-up development projects. Alexandria pioneered this niche in 1994 and has since established a dominant market presence in AAA locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle Park. Alexandria is known for its high-quality and diverse client tenant base, with approximately 52% of total annualized base rent as of March 31, 2015, generated from investment-grade client tenants – a REIT industry-leading percentage. Alexandria has a longstanding and proven track record of developing Class A assets clustered in urban science and technology campuses that provide its innovative client 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. We believe these advantages result 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 our website at www.are.com.

Unique niche strategy

Alexandria’s primary business objective is to maximize stockholder value by providing its stockholders with the greatest possible total return and long-term asset value
based on a multifaceted platform of internal and external growth. The key elements of our strategy include:

A consistent focus on collaborative science and technology campuses in urban innovation clusters offering highly dynamic environments with creative amenities that enhance productivity and foster innovation;
A unique and proven cluster model concentrating on best-in-class locations, Class A assets, high-quality client tenants, highly skilled scientific and entrepreneurial management talent, and significant and strategic investment risk capital;
First-in-class facilities that complement the cutting-edge scientific and managerial talent, smart capital, technology, and world-renowned academic and medical institutions in our clusters, providing our client tenants with dynamic environments to accelerate innovation, discovery, and commercialization;
Our facilities are focused on providing high-quality and generic space to meet the real estate requirements of, and that are reusable by, a wide range of client tenants.
Utilizing our long-term relationships with real estate professionals, top-tier investors, research institutions, and world-class global network to develop, acquire, and lease real estate focused on innovative science and technology companies;
Drawing upon our broad and meaningful science and technology industry relationships to attract new and leading client tenants; and
Strong and flexible capital structure to enable solid future growth.
 
Client tenant base

The impressive quality, diversity, breadth, and depth of our significant relationships with our client tenants provide Alexandria with high-quality and stable cash flows. Alexandria’s strong underwriting skills and long-term industry relationships positively distinguish Alexandria from all other publicly traded REITs and real estate companies. As of March 31, 2015, investment-grade client tenants represented 52% of total annualized base rent. Additionally, as of March 31, 2015, the annualized base rent from our client tenant base consisted of the following mix:

26.6% from public biotechnology companies
22.0% from multinational pharmaceutical companies
21.7% from life science product, service, and device companies
19.6% from institutional (academic/medical, non-profit, and U.S. government)
6.8% from private biotechnology companies
3.3% from office and technology companies

Executive/senior management

Alexandria’s executive and senior management team has unique experience and expertise in creating highly dynamic and collaborative campuses in key coastal science and technology gateway cities 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 its niche. Alexandria’s senior management team averages over 25 years of real estate experience, including over 13 years with Alexandria. Our sophisticated management team also includes regional market directors with leading reputations and longstanding relationships within the science and technology communities in their respective urban innovation clusters. We believe that our unparalleled expertise, experience, reputation, and key relationships with the real estate, science, and technology industries provide Alexandria significant competitive advantages in attracting new business opportunities.

Executive management
Joel S. Marcus
 
Chairman, Chief Executive Officer & Founder
Dean A. Shigenaga
 
EVP, Chief Financial Officer & Treasurer
Thomas J. Andrews
 
EVP – Regional Market Director – Greater Boston
Jennifer J. Banks
 
General Counsel, EVP & Corporate Secretary
Peter M. Moglia
 
Chief Investment Officer
Stephen A. Richardson
 
Chief Operating Officer & Regional Market Director – San Francisco Bay Area
Daniel J. Ryan
 
EVP – Regional Market Director – San Diego & Strategic Operations


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
11



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Investor Information

Corporate Headquarters
 
Trading Symbols
 
Information Requests
385 East Colorado Boulevard, Suite 299
 
New York Stock Exchange
 
Phone:
(626) 396-4828
Pasadena, California 91101
 
Common stock: ARE
 
E-mail:
corporateinformation@are.com
 
 
Series E preferred stock: ARE–E
 
Web:
www.are.com

Common stock data (at the end of the quarter unless otherwise noted)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q15
 
4Q14
 
3Q14
 
2Q14
 
1Q14
Closing stock price
$
98.04

 
$
88.74

 
$
73.75

 
$
77.64

 
$
72.56

Dividend per share – quarter/annualized
$
0.74/2.96

 
$
0.74/2.96

 
$
0.72/2.88

 
$
0.72/2.88

 
$
0.70/2.80

Dividend payout ratio for the quarter
 
58%

 
 
60%

 
 
60%

 
 
61%

 
 
60%

Dividend yield – annualized
 
3.0%

 
 
3.3%

 
 
3.9%

 
 
3.7%

 
 
3.9%

Common shares outstanding (in thousands)
 
71,545

 
 
71,464

 
 
71,372

 
 
71,318

 
 
71,246

Market value of common shares outstanding (in thousands)
$
7,014,285

 
$
6,341,704

 
$
5,263,672

 
$
5,537,136

 
$
5,169,623

Total market capitalization (in thousands)
$
11,290,054

 
$
10,392,126

 
$
9,147,179

 
$
9,253,401

 
$
8,799,376

Equity research coverage
Alexandria is currently covered by the following research analysts.  This list may not be complete 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 its management.  Alexandria does not by its reference or distribution of the information below imply its 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
 
Evercore ISI
 
J.P. Morgan Securities LLC
 
Robert W. Baird & Company
Jamie Feldman / Jeffrey Spector
 
Sheila McGrath / Nathan Crossett
 
Anthony Paolone / Gene Nusinzon
 
David Rodgers / Stephen Dye
(646) 855-5808 / (646) 855-1363
 
(212) 497-0882 / (212) 497-0870
 
(212) 622-6682 / (212) 622-1041
 
(216) 737-7341 / (312) 609-5480
 
 
 
 
 
 
 
Barclays Capital Inc.
 
Green Street Advisors, Inc.
 
Mizuho Securities USA Inc.
 
Standard & Poor’s
Ross Smotrich
 
Michael Knott / Kevin Tyler
 
Richard Anderson / Jieren Huang
 
Cathy Seifert
(212) 526-2306
 
(949) 640-8780 / (949) 640-8780
 
(212) 205-8445 / (201) 626-1085
 
(212) 438-9545
 
 
 
 
 
 
 
Citigroup Global Markets Inc.
 
JMP Securities – JMP Group, Inc.
 
RBC Capital Markets
 
UBS Securities LLC
Michael Bilerman / Smedes Rose
 
Peter Martin / Aaron Hecht
 
Michael Carroll / Rich Moore
 
Ross Nussbaum / Nick Yulico
(212) 816-1383 / (212) 816-6243
 
(415) 835-8904 / (415) 835-3963
 
(440) 715-2649 / (440) 715-2646
 
(212) 713-2484 / (212) 713-3402
 
 
 
 
 
 
 
Cowen and Company, LLC
 
 
 
 
 
 
James Sullivan / Tom Catherwood
 
 
 
 
 
 
(646) 562-1380 / (646) 562-1382
 
 
 
 
 
 
Rating agencies
 
 
 
 
 
 
 
Moody’s Investors Service
 
Rating
 
Standard & Poor’s
 
Rating
 
Philip Kibel / Merrie Frankel
 
Baa2
 
George Skoufis / Jaime Gitler
 
BBB-
 
(212) 553-4569 / (212) 553-3652
 
Stable Outlook
 
(212) 438-2608 / (212) 438-5049
 
Positive Outlook
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
12



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Financial and Asset Base Highlights
(Dollars in thousands, except per share amounts)
(Unaudited)


 
 
Three Months Ended (unless stated otherwise)
 
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Operating data
 
 
 
 
 
 
 
 
 
 
Total revenues
 
$
196,753

 
$
188,674

 
$
185,615

 
$
176,402

 
$
176,186

Operating margins
 
69%

 
70%

 
69%

 
70%

 
70%

Adjusted EBITDA – quarter annualized
 
$
507,088

 
$
493,432

 
$
473,884

 
$
452,568

 
$
454,084

Adjusted EBITDA – trailing 12 months
 
$
481,743

 
$
468,492

 
$
457,498

 
$
441,914

 
$
428,699

Adjusted EBITDA margins – quarter annualized
 
64%

 
65%

 
64%

 
64%

 
65%

General and administrative expense as a percentage of total assets – trailing 12 months
 
0.7%

 
0.7%

 
0.7%

 
0.7%

 
0.6%

General and administrative expense as a percentage of total revenues – trailing 12 months
 
7.3%

 
7.4%

 
7.4%

 
7.6%

 
7.6%

Capitalized interest
 
$
10,971

 
$
11,665

 
$
12,125

 
$
11,302

 
$
12,013

Weighted average interest rate for capitalization of interest during period
 
3.54%

 
3.69%

 
3.73%

 
3.41%

 
3.88%

 
 
 
 
 
 
 
 
 
 
 
Net income (loss), FFO, and AFFO
 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to Alexandria’s common stockholders
 
$
17,786

 
$
(16,154
)
 
$
27,626

 
$
27,932

 
$
32,709

FFO attributable to Alexandria’s common stockholders – basic and diluted
 
$
91,332

 
$
61,475

 
$
85,574

 
$
84,513

 
$
83,070

FFO attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
91,332

 
$
87,905

 
$
86,095

 
$
84,513

 
$
83,070

AFFO attributable to Alexandria’s common stockholders – diluted
 
$
78,573

 
$
77,958

 
$
76,960

 
$
72,506

 
$
71,338

 
 
 
 
 
 
 
 
 
 
 
Per share data
 
 
 
 
 
 
 
 
 
 
Earnings per share attributable to Alexandria’s common stockholders – basic and diluted
 
$
0.25

 
$
(0.23
)
 
$
0.39

 
$
0.39

 
$
0.46

FFO per share attributable to Alexandria’s common stockholders – diluted
 
$
1.28

 
$
0.86

 
$
1.20

 
$
1.19

 
$
1.17

FFO per share attributable to Alexandria’s common stockholders – diluted, as adjusted
 
$
1.28

 
$
1.23

 
$
1.21

 
$
1.19

 
$
1.17

AFFO per share attributable to Alexandria’s common stockholders – diluted
 
$
1.10

 
$
1.09

 
$
1.08

 
$
1.02

 
$
1.00

 
 
 
 
 
 
 
 
 
 
 
Leasing activity and same property performance
 
 
 
 
 
 
 
 
 
 
Total leasing activity – RSF
 
1,022,669

 
581,660

 
871,416

 
752,364

 
563,394

Lease renewals and re-leasing of space – change in average new rental rates over expiring rates:
 
 
 
 
 
 
 
 
 
 
Rental rate increases
 
30.8%

 
10.1%

 
18.6%

 
9.9%

 
18.2%

Rental rate increases (cash basis)
 
18.5%

 
2.4%

 
5.6%

 
3.0%

 
10.4%

RSF (1)
 
489,286

 
318,434

 
169,248

 
497,965

 
448,301

Same property – percentage change over comparable quarter from prior year:
 
 
 
 
 
 
 
 
 
 
NOI increase
 
2.3%

 
3.6%

 
5.0%

 
5.3%

 
3.8%

NOI increase (cash basis)
 
7.8%

 
6.7%

 
5.9%

 
5.7%

 
4.3%

 
 
 
 
 
 
 
 
 
 
 
(1) Included in total leasing activity immediately above.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
13



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Financial and Asset Base Highlights (continued)
(Dollars in thousands, except per occupied RSF amounts)
(Unaudited)


 
 
Three Months Ended (unless stated otherwise)
 
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Asset base statistics – at end of period
 
 
 
 
 
 
 
 
 
 
Number of properties (including unconsolidated joint ventures)
 
193

 
193

 
194

 
191

 
189

Rentable square feet (operating and current value-creation projects)
 
18,527,998

 
18,729,282

 
18,458,379

 
17,881,108

 
17,715,931

Total square footage (including near-term and future developable square feet)
 
30,654,286

 
31,538,470

 
31,617,818

 
31,378,329

 
31,239,652

ABR per occupied RSF
 
$
38.67

 
$
37.23

 
$
37.23

 
$
36.76

 
$
36.18

Occupancy of operating properties – North America
 
96.8%

 
97.0%

 
97.3%

 
96.9%

 
96.6%

Occupancy of operating and redevelopment properties – North America
 
95.9%

 
96.1%

 
96.3%

 
95.6%

 
95.1%

 
 
 
 
 
 
 
 
 
 
 
Selected balance sheet information – at end of period
 
 
 
 
 
 
 
 
 
 
Gross investments in real estate
 
$
8,541,889

 
$
8,346,261

 
$
8,280,799

 
$
8,069,927

 
$
7,923,080

Total assets
 
$
8,405,221

 
$
8,136,036

 
$
8,020,314

 
$
7,815,649

 
$
7,756,039

Gross assets
 
$
9,559,051

 
$
9,256,281

 
$
9,103,483

 
$
8,855,459

 
$
8,748,857

Total unsecured debt
 
$
3,143,450

 
$
3,026,370

 
$
2,864,290

 
$
2,719,310

 
$
2,654,270

Total debt
 
$
3,903,926

 
$
3,678,579

 
$
3,501,115

 
$
3,334,861

 
$
3,251,781

Net debt
 
$
3,797,173

 
$
3,565,684

 
$
3,409,847

 
$
3,248,641

 
$
3,146,357

Total liabilities
 
$
4,608,369

 
$
4,226,478

 
$
4,063,199

 
$
3,826,766

 
$
3,751,534

Common shares outstanding (in thousands)
 
71,545

 
71,464

 
71,372

 
71,318

 
71,246

Total equity capitalization
 
$
7,386,128

 
$
6,713,547

 
$
5,646,064

 
$
5,918,540

 
$
5,547,595

Total market capitalization
 
$
11,290,054

 
$
10,392,126

 
$
9,147,179

 
$
9,253,401

 
$
8,799,376

 
 


 


 


 


 


Key credit metrics
 
 
 
 
 
 
 
 
 
 
Net debt to Adjusted EBITDA – quarter annualized
 
7.5x

 
7.2x

 
7.2x

 
7.2x

 
6.9x

Net debt to Adjusted EBITDA – trailing 12 months
 
7.9x

 
7.6x

 
7.5x

 
7.4x

 
7.3x

Fixed charge coverage ratio – quarter annualized
 
3.3x

 
3.3x

 
3.3x

 
3.5x

 
3.3x

Fixed charge coverage ratio – trailing 12 months
 
3.3x

 
3.3x

 
3.3x

 
3.2x

 
3.0x

Non-income-producing assets as a percentage of gross investments in real estate
 
12%

 
16%

 
17%

 
17%

 
17%

Unencumbered NOI as a percentage of total NOI
 
82%

 
84%

 
84%

 
84%

 
83%

Dividend payout ratio (common stock)
 
58%

 
60%

 
60%

 
61%

 
60%

Adjusted EBITDA margins
 
64%

 
65%

 
64%

 
64%

 
65%

 




ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
14



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Key Operating Metrics
(Unaudited)
Occupancy of Operating Properties
North America (1)
 
Same Property NOI Increase
 
NOI – Key Driver in NAV Growth
(In millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Drivers of Cash NOI Increase
 
Rental Rate Increases:
Renewed/Re-leased Space
 
Operating Margins
 
 
 
 
Percentage of
triple net leases
95%
 
 
Percentage of leases
containing annual
rent escalations
94%
 
 
Percentage of leases
providing for
the recapture of
capital expenditures
93%
 
 
 
 
 
 

(1)
As of the end of each respective period.
(2)
Represents the three months ended March 31, 2015, annualized.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
15



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Same Property Performance
(Dollars in thousands)
(Unaudited)
Same Property Financial Data
 
1Q15
 
Same Property Statistical Data
 
1Q15
Percentage change over comparable period from prior year:
 
 
 
Number of same properties
 
164
NOI increase
 
2.3%
 
Rentable square feet
 
13,997,782
NOI increase (cash basis)
 
7.8%
 
Occupancy – current period average
 
96.0%
Operating margin
 
69%
 
Occupancy – same period prior year average
 
95.4%
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
$ Change
 
% Change
Revenues:
 
 
 
 
 
 
 
 
Rental – same properties
 
$
124,980

 
$
123,169

 
$
1,811

 
1.5
%
Rental – non-same properties
 
18,628

 
7,401

 
11,227

 
151.7

Total rental
 
143,608

 
130,570

 
13,038

 
10.0

 
 
 
 
 
 
 
 
 
Tenant recoveries – same properties
 
42,929

 
40,361

 
2,568

 
6.4

Tenant recoveries – non-same properties
 
5,465

 
1,321

 
4,144

 
313.7

Total tenant recoveries
 
48,394

 
41,682

 
6,712

 
16.1

 
 
 
 
 
 
 
 
 
Other income – same properties
 
12

 
36

 
(24
)
 
(66.7
)
Other income – non-same properties
 
4,739

 
3,898

 
841

 
21.6

Total other income
 
4,751

 
3,934

 
817

 
20.8

 
 
 
 
 
 
 
 
 
Total revenues – same properties
 
167,921

 
163,566

 
4,355

 
2.7

Total revenues – non-same properties
 
28,832

 
12,620

 
16,212

 
128.5

Total revenues
 
196,753

 
176,186

 
20,567

 
11.7

 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
Rental operations – same properties
 
51,413

 
49,709

 
1,704

 
3.4

Rental operations – non-same properties
 
9,810

 
2,798

 
7,012

 
250.6

Total rental operations
 
61,223

 
52,507

 
8,716

 
16.6

 
 
 
 
 
 
 
 
 
Our share of NOI from unconsolidated joint ventures:
 
 
 
 
 
 
 
 
Joint venture NOI – same properties
 

 

 

 

Joint venture NOI – non-same properties
 
860

 

 
860

 
100.0

Our share of NOI from unconsolidated joint ventures
 
860

 

 
860

 
100.0

 
 
 
 
 
 
 
 
 
Net operating income from continuing operations:
 
 
 
 
 
 
 
 
NOI – same properties
 
116,508

 
113,857

 
2,651

 
2.3

NOI – non-same properties
 
19,882

 
9,822

 
10,060

 
102.4

Total NOI from continuing operations
 
$
136,390

 
$
123,679

 
$
12,711

 
10.3
%
 
 
 
 
 
 
 
 
 
NOI – same properties
 
$
116,508

 
$
113,857

 
$
2,651

 
2.3
%
Less: straight-line rent adjustments
 
(2,740
)
 
(8,272
)
 
5,532

 
(66.9
)
NOI – same properties (cash basis)
 
$
113,768

 
$
105,585

 
$
8,183

 
7.8
%

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
16



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Same Property Performance (continued)
(Unaudited)

The charts below provide two alternative calculations of same property performance in comparison to our historical same property performance. Our reported same property performance is based upon a pool of operating assets and completed developed and redeveloped assets to the extent that those assets were operating for the entirety of the comparable same property periods presented. The two alternative calculations presented below consist of (i) same property performance for the operating portfolio excluding assets that were recently developed or redeveloped and (ii) the same property performance for the operating portfolio including those assets that were either under current redevelopment or previously completed redevelopments. For each period presented, same property performance including redevelopment properties would have been higher than our traditional method of reporting same property performance. Same property performance including redevelopment properties will, from time to time, have significant growth in NOI as a result of the completion of the conversion of non-laboratory space (with lower NOI) to office/laboratory space (with higher NOI) through redevelopment.  We believe our traditional method of reporting same property performance is a more useful presentation since it excludes the potential significant increases in performance as a result of completion of significant redevelopment projects.

Percentage change in same property NOI over preceding period
Percentage change in same property NOI over preceding period (cash basis)
 
 
 
NOI Included in All Comparative Periods
 
 
 
Operating
Properties
 
Recently Completed
 
Properties Under Active
Legend
 
 
Developments
 
Redevelopments
 
Development
 
Redevelopment
Same property data as reported
 
Yes
 
Yes (1)
 
Yes (1)
 
No
 
No
 
 
 
 
 
 
 
 
 
 
 
Same property operating portfolio
 
Yes
 
No
 
No
 
No
 
No
 
 
 
 
 
 
 
 
 
 
 
Same property data including redevelopments
 
Yes
 
No
 
Yes
 
No
 
Yes

(1)
Recently delivered developments and redevelopments are included in the same property data for each of the year-over-year comparison periods only if the property was operating during both entire same property periods. For example, projects completed during 2013 are included in 2015 versus 2014 same property performance (as a percentage change over 2014).
 
The following table reconciles same properties to total properties for the quarter ended March 31, 2015:
Development – current
 
Properties
 
50/60 Binney Street
 
2

 
430 East 29th Street
 
1

 
5200 Illumina Way – Building 6
 
1

 
3013/3033 Science Park Road
 
2

 
6040 George Watts Hill Drive
 
1

 
360 Longwood Avenue (unconsolidated joint venture)
 
1

 
1455/1515 Third Street (unconsolidated joint venture)
 
2

 
 
 
10

 
 
 
 
 
Development – deliveries since January 1, 2014
 
Properties
 
269 East Grand Avenue
 
1

 
499 Illinois Street
 
1

 
75/125 Binney Street
 
1

 
 
 
3

 
 
 
 
 
Redevelopment – current
 
Properties
 
225 Second Avenue
 
1

 
11055/11065 Roselle Street
 
2

 
 
 
3

 
 
 
 
 
Redevelopment – deliveries since January 1, 2014
 
Properties
 
11075 Roselle Street
 
1

 
10121 Barnes Canyon Road
 
1

 
 
 
2

 
 
 
 
 
 
 
 
 
 
 
 
 
Summary
 
Properties
Development – current
 
10

Development – deliveries
 
3

Redevelopment – current
 
3

Redevelopment – deliveries
 
2

 
 
 
Development/redevelopment – Asia
 
2

 
 
 
Acquisitions since January 1, 2014:
 
 
3545 Cray Court
 
1

4025/4031/4045 Sorrento Valley Boulevard
 
3

9625 Towne Centre Drive
 
1

640 Memorial Drive
 
1

 
 
 
Properties “held for sale”
 
3

Total properties excluded from same properties
 
29

 
 
 
Same properties
 
164

 
 
 
Total properties as of March 31, 2015
 
193

 
 
 
 
 
 


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
17



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Leasing Activity
(Unaudited)
 
 
Three Months Ended
March 31, 2015
 
Year Ended
December 31, 2014
(Dollars are per RSF)
 
Including
Straight-line Rent
 
Cash Basis
 
Including
Straight-line Rent
 
Cash Basis
Leasing activity:
 
 
 
 
 
 
 
 
Renewed/re-leased space (1)
 
 

 
 

 
 

 
 

Rental rate changes
 
30.8%

 
18.5%

 
13.3%

 
5.4%

New rates
 
$
36.98

 
$
37.67

 
$
40.32

 
$
40.73

Expiring rates
 
$
28.27

 
$
31.79

 
$
35.60

 
$
38.63

Rentable square footage
 
489,286

 
 
 
1,447,516

 
 
Number of leases
 
38

 
 
 
124

 
 
Tenant improvements/leasing commissions per square foot
 
$
11.80

 
 
 
$
10.49

 
 
Average lease terms
 
4.1 years

 
 
 
3.5 years

 
 
 
 
 
 
 
 
 
 
 
Developed/redeveloped/previously vacant space leased
 
 
 
 
 
 
 
 
New rates
 
$
47.89

 
$
43.15

 
$
40.62

 
$
36.50

Rentable square footage
 
533,383

 
 
 
1,321,317

 
 
Number of leases
 
20

 
 
 
66

 
 
Tenant improvements/leasing commissions per square foot
 
$
19.18

 
 
 
$
14.96

 
 
Average lease terms
 
12.2 years

 
 
 
11.5 years

 
 
 
 
 
 
 
 
 
 
 
Leasing activity summary (totals):
 
 
 
 
 
 
 
 
New rates
 
$
42.67

 
$
40.53

 
$
40.46

 
$
38.71

Rentable square footage
 
1,022,669

(2) 
 
 
2,768,833

 
 
Number of leases
 
58

 
 
 
190

 
 
Tenant improvements/leasing commissions per square foot
 
$
15.65

 
 
 
$
12.62

 
 
Average lease terms
 
8.3 years

 
 
 
7.3 years

 
 
 
 
 
 
 
 
 
 
 
Lease expirations (1)
 
 
 
 
 
 
 
 
Expiring rates
 
$
28.29

 
$
32.06

 
$
33.09

 
$
35.79

Rentable square footage
 
616,528

 
 
 
1,733,614

 
 
Number of leases
 
50

 
 
 
151

 
 

(1)
Excludes 23 month-to-month leases for 103,763 RSF and 20 month-to-month leases for 43,672 RSF as of March 31, 2015, and December 31, 2014, respectively.
(2)
During 1Q15, we granted tenant concessions/free rent averaging approximately 2.8 months with respect to the 1,022,669 RSF leased.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
18



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Lease Expirations
(Unaudited)
Year of Lease Expiration
 
Number of Leases Expiring
 
RSF of Expiring Leases
 
Percentage of
Aggregate Total RSF
 
ABR of
Expiring Leases (per RSF)
 
Favorable Lease Structure
2015
 
 
52

(1) 
 
 
897,006

(1) 
 
 
5.4
%
 
 
 
$
27.92

 
 
Percentage of
triple net leases
95%
2016
 
 
96

 
 
 
1,198,870

 
 
 
7.2
%
 
 
 
$
32.25

 
 
2017
 
 
88

 
 
 
1,658,853

 
 
 
9.9
%
 
 
 
$
28.18

 
 
2018
 
 
72

 
 
 
1,618,216

 
 
 
9.7
%
 
 
 
$
40.06

 
 
 
 
2019
 
 
61

 
 
 
1,504,408

 
 
 
9.0
%
 
 
 
$
36.33

 
 
Percentage of leases
containing annual
rent escalations
94%
2020
 
 
49

 
 
 
1,405,953

 
 
 
8.4
%
 
 
 
$
35.82

 
 
2021
 
 
35

 
 
 
1,263,228

 
 
 
7.5
%
 
 
 
$
38.78

 
 
2022
 
 
21

 
 
 
793,378

 
 
 
4.7
%
 
 
 
$
33.74

 
 
 
 
2023
 
 
22

 
 
 
1,182,259

 
 
 
7.1
%
 
 
 
$
37.71

 
 
Percentage of leases
providing for
the recapture of
capital expenditures
93%
2024
 
 
14

 
 
 
752,398

 
 
 
4.5
%
 
 
 
$
45.13

 
 
Thereafter
 
 
38

 
 
 
3,212,519

 
 
 
19.2
%
 
 
 
$
48.80

 
 

 
 
2015 RSF of Expiring Leases
 
ABR of
Expiring Leases
(per RSF)
 
 
2016 RSF of Expiring Leases

ABR of
Expiring Leases
(per RSF)
 
 
Leased
 
Negotiating/
Anticipating
 
Targeted for
Redevelopment
 
Remaining
Expiring Leases
 
Total (1)
 
 
 
Leased

Negotiating/
Anticipating

Targeted for
Redevelopment

Remaining
Expiring Leases

Total

Market
 
 
 
 
 
 
 
 





Greater Boston
 
89,105

 
39,917

 

 
167,944

(2) 
296,966

 
$
35.91

 
 
27,303


39,301




223,453


290,057


$
40.17

San Francisco Bay Area
 
74,909

 
15,081

 

 
23,822

 
113,812

 
39.69

 
 
23,892


10,142




116,027


150,061


32.10

New York City
 

 

 

 
9,330

 
9,330

 
 N/A

 
 






5,449


5,449


 N/A

San Diego
 

 

 
182,611

(3) 
35,919


218,530

 
16.29

 
 





 
254,423


254,423


39.81

Seattle
 

 

 

 
39,578

 
39,578

 
20.22

 
 
2,468


9,594




38,975


51,037


32.75

Maryland
 
7,227

 

 

 
101,751

 
108,978

 
16.70

 
 






148,654


148,654


26.15

Research Triangle Park
 

 
2,189

 

 
92,350

(4) 
94,539

 
20.56

 
 


44,866




97,478


142,344


23.15

Canada
 

 

 

 

 

 

 
 






67,479


67,479


23.99

Non-cluster markets
 

 
4,703

 

 
5,647

 
10,350

 
N/A

 
 






3,854


3,854


N/A

Asia
 

 

 

 
4,923

 
4,923

 
17.05


 


81,170




4,342


85,512


15.98

Total
 
171,241

 
61,890

 
182,611

 
481,264

 
897,006

 
$
27.92

 
 
53,663


185,073




960,134


1,198,870


$
32.25

Percentage of expiring leases
 
19
%
 
7
%
 
20
%
 
54
%
 
100
%
 
 
 
 
4
%

15
%

%

81
%

100
%


 

(1)
Excludes 23 month-to-month leases for 103,763 RSF.
(2)
Includes a lease for 128,325 RSF expiring on May 31, 2015, at 19 Presidential Way, Woburn, MA. We are currently marketing this space for lease.
(3)
Comprises 48,880 RSF at 10151 Barnes Canyon Road and 133,731 RSF at 9625 Towne Centre Drive, which were acquired in 3Q13 and 4Q14, respectively, with the intent to redevelop them into tech office spaces in 4Q15 and 3Q15, respectively, upon expiration of the acquired in-place leases.
(4)
Includes a lease for 81,580 RSF that expired on April 24, 2015, at 2525 NC Highway 54, Durham, NC. We are currently marketing this space for lease.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
19



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Top 20 Client Tenants
(Dollars in thousands)
(Unaudited)

 
 
 
 
Remaining Lease Term in Years (1)
 
Aggregate
RSF
 
ABR
 
Percentage of Aggregate ABR
 
Investment-Grade Ratings
 
 
Client Tenant
 
 
 
 
 
Fitch
 
Moody’s
 
S&P
1
 
Novartis AG
 
 
2.5

(2) 
 
697,814

 
$
33,374

 
5.5
%
 
 AA
 
 Aa3
 
 AA-
2
 
ARIAD Pharmaceuticals, Inc.
 
 
15.0

 
 
386,111

 
30,147

 
5.0

 
 
 
3
 
Illumina, Inc.
 
 
14.9

 
 
595,886

 
25,406

 
4.2

 
 
 
 BBB-
4
 
New York University
 
 
15.5

 
 
209,224

 
19,897

 
3.3

 
 
 Aa3
 
 AA-
5
 
Roche
 
 
5.5

 
 
343,472

 
16,490

 
2.7

 
 AA
 
 A1
 
 AA
6
 
United States Government
 
 
9.1

 
 
344,727

 
16,456

 
2.7

 
 AAA
 
 Aaa
 
 AA+
7
 
Eli Lilly and Company
 
 
8.7

 
 
257,119

 
15,356

 
2.5

 
 A
 
 A2
 
 AA-
8
 
FibroGen, Inc.
 
 
8.6

 
 
234,249

 
14,278

 
2.4

 
 
 
9
 
Amgen Inc.
 
 
8.5

 
 
401,623

 
14,274

 
2.4

 
 BBB
 
 Baa1
 
 A
10
 
Biogen Inc.
 
 
13.2

 
 
313,872

 
13,707

 
2.3

 
 
 Baa1
 
 A-
11
 
Dana-Farber Cancer Institute, Inc.
 
 
15.3

 
 
154,100

 
11,877

 
2.0

 
 
 A1
 
12
 
Massachusetts Institute of Technology
 
 
4.4

 
 
202,897

 
10,589

 
1.8

 
 
 Aaa
 
 AAA
13
 
The Regents of the University of California
 
 
8.4

 
 
230,633

 
10,285

 
1.7

 
 AA
 
 Aa2
 
 AA
14
 
Bristol-Myers Squibb Company
 
 
3.8

 
 
251,316

 
10,087

 
1.7

 
 A-
 
 A2
 
 A+
15
 
Celgene Corporation
 
 
6.4

 
 
273,086

 
10,084

 
1.7

 
 
 Baa2
 
 BBB+
16
 
The Scripps Research Institute
 
 
2.9

 
 
218,031

 
10,027

 
1.7

 
 AA-
 
 Aa3
 
17
 
GlaxoSmithKline plc
 
 
4.3

 
 
208,394

 
9,557

 
1.6

 
 A+
 
 A2
 
 A+
18
 
Sanofi
 
 
5.0

 
 
179,697

 
8,012

 
1.3

 
 AA-
 
 A1
 
 AA
19
 
Alnylam Pharmaceuticals, Inc.
 
 
6.5

 
 
129,424

 
6,955

 
1.2

 
 
 
20
 
Sumitomo Dainippon Pharma Co., Ltd.
 
 
8.0

 
 
106,232

 
6,441

 
1.1

 
 
 
 
 
Total/weighted average
 
 
9.0

 
 
5,737,907

 
$
293,299

 
48.8
%
 
 
 
 
 
 

(1)
Based on percentage of aggregate annualized base rent in effect as of March 31, 2015.
(2)
Excludes (i) one lease extension in the Greater Boston area that was executed in April 2015, and (ii) extension options for international leases controlled by Novartis AG.  As of March 31, 2015, the remaining lease term would be 3.0 years considering the executed lease extension in Greater Boston and the international extension options.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
20



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Client Tenant Mix
(Unaudited)

 
 
Investment-Grade Client Tenants:
 
 
52%
 
 
of ARE’s
Total ABR
 
 
 
 
 
 
(By ABR)

Multinational Pharmaceutical
 
Institutional (Academic/Medical,
Non-Profit, and U.S. Government)
 
Life Science Product, Service, and Device
 
Biotechnology: Public & Private
• AstraZeneca PLC
• Bayer AG
• Bristol-Myers Squibb Company
• Eisai Co., Ltd.
• Eli Lilly and Company
• GlaxoSmithKline plc
• Merck & Co., Inc.
• Novartis AG
• Pfizer Inc.
• Roche
• Sanofi
• Shire plc
• Sumitomo Dainippon Pharma Co., Ltd.
• UCB S.A.
 
 
• Dana-Farber Cancer Institute, Inc.
• Duke University
• Environmental Protection Agency
• Fred Hutchinson Cancer Research Center
• Massachusetts Institute of Technology
• National Institutes of Health
• New York University
• Partners HealthCare System, Inc.
• Sanford-Burnham Medical Research Institute
• Stanford University
• The Regents of the University of California
• The Scripps Research Institute
• UMass Memorial Health Care, Inc.
• University of North Carolina Health Care System
• United States Government
• University of Washington
 
• Aramco Services Company
• BASF Corporation
• Canon U.S. Life Sciences, Inc.
• DSM N.V.
• Fluidigm Corporation
• Foundation Medicine, Inc.
• Google Inc.
• Illumina, Inc.
• Laboratory Corporation of America Holdings
• Monsanto Company
• Myriad Genetics, Inc.
• Quest Diagnostics Incorporated
• Sigma-Aldrich Corporation
• Smith & Nephew plc
• Thermo Fisher Scientific Inc.

 
 
• Alnylam Pharmaceuticals, Inc.
• ARIAD Pharmaceuticals, Inc.
• Amgen Inc.
• Biogen Inc.
• bluebird bio, Inc.
• Celgene Corporation
• Epizyme, Inc.
• FibroGen, Inc.
• FORMA Therapeutics, Inc.
• Gilead Sciences, Inc.
• Medivation, Inc.
• Nektar Therapeutics
• Principia Biopharma Inc.
• Quanticel Pharmaceuticals, Inc.
• Receptos, Inc.
• Sage Therapeutics, Inc.
• Syros Pharmaceuticals, Inc.
• Warp Drive Bio, LLC


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
21



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Summary of Properties and Occupancy
(Unaudited)

Summary of properties
 
 
RSF
 
Number of Properties
 
ABR
(Dollars in thousands)
Market
 
Operating
 
Development
 
Redevelopment
 
Total
 
% Total
 
 
Greater Boston
 
4,319,427

 
786,382

 
112,500

 
5,218,309

 
28
%
 
42

 
$
208,517

 
36
%
San Francisco Bay Area
 
2,713,034

 
422,980

 

 
3,136,014

 
17

 
27

 
115,322

 
19

New York City
 
678,816

 
134,013

 

 
812,829

 
4

 
4

 
53,494

 
9

San Diego
 
3,144,604

 
358,609

 
31,277

 
3,534,490

 
19

 
48

 
102,311

 
17

Seattle
 
746,260

 

 

 
746,260

 
4

 
10

 
30,369

 
5

Maryland
 
2,156,196

 

 

 
2,156,196

 
12

 
29

 
49,298

 
8

Research Triangle Park
 
980,763

 
61,547

 

 
1,042,310

 
6

 
15

 
20,864

 
3

Canada
 
322,967

 

 

 
322,967

 
2

 
4

 
8,100

 
1

Non-cluster markets
 
105,033

 

 

 
105,033

 
1

 
3

 
1,373

 

North America
 
15,167,100

 
1,763,531

 
143,777

 
17,074,408

 
93

 
182

 
589,648

 
98

Asia
 
1,197,464

 

 

 
1,197,464

 
6

 
8

 
6,503

 
1

Subtotal
 
16,364,564

 
1,763,531

 
143,777

 
18,271,872

 
99

 
190

 
596,151

 
99

Properties “held for sale” (1)
 
256,126

 

 

 
256,126

 
1

 
3

 
6,668

 
1

Total
 
16,620,690

 
1,763,531

 
143,777

 
18,527,998

 
100
%
 
193

 
$
602,819

 
100
%

Summary of occupancy percentages
 
 
Operating Properties
 
Operating and Redevelopment Properties
Market
 
3/31/15
 
12/31/14
 
3/31/14
 
3/31/15
 
12/31/14
 
3/31/14
Greater Boston
 
98.9
%
 
98.8
%
 
97.5
%
 
96.4
%

95.9
%
 
94.5
%
San Francisco Bay Area
 
98.5

 
98.9

 
99.9

 
98.5

 
98.9

 
99.9

New York City
 
99.5

 
99.5

 
98.3

 
99.5

 
99.5

 
98.3

San Diego
 
94.9

 
96.5

 
96.6

 
93.9

 
95.5

 
93.0

Seattle
 
96.2

 
94.8

 
92.9

 
96.2

 
94.8

 
92.9

Maryland
 
93.2

 
92.5

 
92.2

 
93.2

 
92.5

 
92.2

Research Triangle Park
 
98.8

 
99.1

 
99.0

 
98.8

 
99.1

 
99.0

Subtotal
 
97.0

 
97.2

 
96.8

 
96.1

 
96.2

 
95.2

Canada
 
99.0

 
97.6

 
96.8

 
99.0

 
97.6

 
96.8

Non-cluster markets
 
68.0

 
77.3

 
76.2

 
68.0

 
77.3

 
76.2

North America
 
96.8
%
 
97.0
%
 
96.6
%
 
95.9
%
 
96.1
%
 
95.1
%

(1)
See page 27 for additional information.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
22



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Property Listing
(Unaudited, dollars in thousands)

 
 
 
 
RSF
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
 
 
ABR
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Greater Boston
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cambridge/Inner Suburbs
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® at Kendall Square
 
1,361,734

 
530,477

 

 
1,892,211

 
8
 
$
74,284

 
99.2
%
 
99.2
%
 
 
50/60, 75/125, and 225 Binney Street, 161 and 215 First Street, 150 Second Street, and 300 Third Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Square®
 
1,181,635

 

 

 
1,181,635

 
7
 
68,980

 
99.5

 
99.5

 
 
100, 200, 300, 400, 500, 600, and 700 Technology Square
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
480/500 Arsenal Street
 
234,260

 

 

 
234,260

 
2
 
8,281

 
100.0

 
100.0

 
 
640 Memorial Drive
 
225,504

 

 

 
225,504

 
1
 
13,575

 
100.0

 
100.0

 
 
780/790 Memorial Drive
 
99,658

 

 

 
99,658

 
2
 
6,483

 
95.3

 
95.3

 
 
167 Sidney Street/99 Erie Street
 
54,549

 

 

 
54,549

 
2
 
2,713

 
100.0

 
100.0

 
 
79/96 Thirteenth Street Charlestown Navy Yard
 
25,309

 

 

 
25,309

 
1
 
620

 
100.0

 
100.0

 
 
Cambridge/Inner Suburbs
 
3,182,649

 
530,477

 

 
3,713,126

 
23
 
174,936

 
99.3

 
99.3

 
Longwood Medical Area
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
360 Longwood Avenue
(unconsolidated joint venture – 27.5% ownership)
 
157,631

 
255,905

 

 
413,536

 
1
 
12,215

 
100.0

 
100.0

 
Route 128
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Park at 128
 
343,882

 

 

 
343,882

 
8
 
8,699

 
92.2

 
92.2

 
 
3, 6, and 8 Preston Court; 29, 35, and 44 Hartwell Avenue; 35, 45, and 47 Wiggins Avenue; and
60 Westview Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19 Presidential Way
 
128,325

 

 

 
128,325

 
1
 
3,398

 
100.0

 
100.0

 
 
100 Beaver Street
 
82,330

 

 

 
82,330

 
1
 
2,303

 
100.0

 
100.0

 
 
285 Bear Hill Road
 
26,270

 

 

 
26,270

 
1
 
801

 
100.0

 
100.0

 
 
225 Second Avenue
 

 

 
112,500

 
112,500

 
1
 

 
N/A

 

 
 
Route 128
 
580,807

 

 
112,500

 
693,307

 
12
 
15,201

 
95.4

 
79.9

 
Route 495/Worcester
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
111/130 Forbes Boulevard
 
155,846

 

 

 
155,846

 
2
 
1,415

 
100.0

 
100.0

 
 
20 Walkup Drive
 
91,045

 

 

 
91,045

 
1
 
670

 
100.0

 
100.0

 
 
306 Belmont Street and 350 Plantation Street
 
90,690

 

 

 
90,690

 
2
 
1,315

 
100.0

 
100.0

 
 
30 Bearfoot Road
 
60,759

 

 

 
60,759

 
1
 
2,765

 
100.0

 
100.0

 
 
Route 495/Worcester
 
398,340

 

 

 
398,340

 
6
 
6,165

 
100.0

 
100.0

 
 
Greater Boston
 
4,319,427

 
786,382

 
112,500

 
5,218,309

 
42
 
$
208,517

 
98.9
%
 
96.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
23



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Property Listing
(Unaudited, dollars in thousands)

 
 
 
 
RSF
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
 
 
ABR
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Francisco Bay Area
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mission Bay
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
409/499 Illinois Street
 
455,069

 

 

 
455,069

 
2
 
$
26,750

 
100.0
%
 
100.0
%
 
 
455 Mission Bay Boulevard South
 
210,398

 

 

 
210,398

 
1
 
9,801

 
100.0

 
100.0

 
 
1500 Owens Street
 
158,267

 

 

 
158,267

 
1
 
7,112

 
100.0

 
100.0

 
 
1700 Owens Street
 
157,340

 

 

 
157,340

 
1
 
8,799

 
89.1

 
89.1

 
 
1455/1515 Third Street
(unconsolidated joint venture – 51.0% ownership)
 

 
422,980

 

 
422,980

 
2
 

 
N/A

 
N/A

 
 
Mission Bay
 
981,074

 
422,980

 

 
1,404,054

 
7
 
52,462

 
98.2

 
98.2

 
South San Francisco
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gateway
 
448,175

 

 

 
448,175

 
6
 
17,175

 
100.0

 
100.0

 
 
600, 630, 650, 681, 901, and 951 Gateway Boulevard
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
249/259/269 East Grand Avenue
 
407,369

 

 

 
407,369

 
3
 
16,489

 
100.0

 
100.0

 
 
400/450 East Jamie Court
 
163,035

 

 

 
163,035

 
2
 
5,938

 
100.0

 
100.0

 
 
7000 Shoreline Court
 
136,395

 

 

 
136,395

 
1
 
4,411

 
100.0

 
100.0

 
 
341/343 Oyster Point Boulevard
 
107,960

 

 

 
107,960

 
2
 
3,313

 
100.0

 
100.0

 
 
South San Francisco
 
1,262,934

 

 

 
1,262,934

 
14
 
47,326

 
100.0

 
100.0

 
Palo Alto/Stanford Research Park
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
849/863 Mitten Road and 866 Malcolm Road
 
103,857

 

 

 
103,857

 
1
 
2,566

 
100.0

 
100.0

 
 
2425 Garcia Avenue and 2400/2450 Bayshore Parkway
 
98,446

 

 

 
98,446

 
1
 
3,869

 
100.0

 
100.0

 
 
3165 Porter Drive
 
91,644

 

 

 
91,644

 
1
 
3,885

 
100.0

 
100.0

 
 
75/125 Shoreway Road
 
83,005

 

 

 
83,005

 
1
 
1,626

 
71.0

 
71.0

 
 
3350 West Bayshore Road
 
60,000

 

 

 
60,000

 
1
 
1,919

 
100.0

 
100.0

 
 
2625/2627/2631 Hanover Street
 
32,074

 

 

 
32,074

 
1
 
1,669

 
100.0

 
100.0

 
 
Palo Alto/Stanford Research Park
 
469,026

 

 

 
469,026

 
6
 
15,534

 
94.9

 
94.9

 
 
San Francisco Bay Area
 
2,713,034

 
422,980

 

 
3,136,014

 
27
 
$
115,322

 
98.5
%
 
98.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
New York City
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manhattan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Center® for Life Science
 
593,661

 
134,013

 

 
727,674

 
2
 
$
49,425

 
99.5
%
 
99.5
%
 
 
430 and 450 East 29th Street
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pennsylvania
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
102 Witmer Road
 
50,000

 

 

 
50,000

 
1
 
3,334

 
100.0

 
100.0

 
 
701 Veterans Circle
 
35,155

 

 

 
35,155

 
1
 
735

 
100.0

 
100.0

 
 
Pennsylvania
 
85,155

 

 

 
85,155

 
2
 
4,069

 
100.0

 
100.0

 
 
New York City
 
678,816

 
134,013

 

 
812,829

 
4
 
$
53,494

 
99.5
%
 
99.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
24



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Property Listing
(Unaudited, dollars in thousands)

 
 
 
 
RSF
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
 
 
ABR
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
San Diego
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Torrey Pines
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Nautilus
 
241,191

 

 

 
241,191

 
4
 
$
8,008

 
90.3
%
 
90.3
%
 
 
3530/3550 John Hopkins Court and
3535/3565 General Atomics Court
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Sunrise
 
231,526

 

 

 
231,526

 
3
 
8,863

 
100.0

 
100.0

 
 
10931, 10933, and 10975 North Torrey Pines Road,
3010 Science Park Road, and 10996 Torreyana Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Spectrum
 
261,583

 
63,000

 

 
324,583

 
4
 
11,593

 
100.0

 
100.0

 
 
3115/3215 Merryfield Row and 3013/3033 Science Park Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11119 North Torrey Pines Road
 
72,506

 

 

 
72,506

 
1
 
2,570

 
100.0

 
100.0

 
 
3545 Cray Court
 
116,556

 

 

 
116,556

 
1
 
4,827

 
100.0

 
100.0

 
 
Torrey Pines
 
923,362

 
63,000

 

 
986,362

 
13
 
35,861

 
97.5

 
97.5

 
University Town Center
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5200 Illumina Way
 
497,078

 
295,609

 

 
792,687

 
6
 
19,522

 
100.0

 
100.0

 
 
10300 Campus Point Drive
 
449,759

 

 

 
449,759

 
1
 
16,446

 
100.0

 
100.0

 
 
ARE Esplanade
 
180,208

 

 

 
180,208

 
3
 
6,709

 
93.1

 
93.1

 
 
4755, 4757, and 4767 Nexus Center Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE Towne Centre
 
272,309

 

 

 
272,309

 
4
 
3,725

 
78.1

 
78.1

 
 
9363, 9373, 9393, and 9625 Towne Centre Drive (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9880 Campus Point Drive
 
71,510

 

 

 
71,510

 
1
 
2,774

 
100.0

 
100.0

 
 
University Town Center
 
1,470,864

 
295,609

 

 
1,766,473

 
15
 
49,176

 
95.1

 
95.1

 
Sorrento Mesa
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5810/5820 and 6138/6150 Nancy Ridge Drive
 
138,844

 

 

 
138,844

 
2
 
2,816

 
75.6

 
75.6

 
 
ARE Portola
 
105,812

 

 

 
105,812

 
3
 
1,796

 
70.0

 
70.0

 
 
6175, 6225, and 6275 Nancy Ridge Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10121/10151 Barnes Canyon Road (2)
 
102,392

 

 

 
102,392

 
2
 
1,948

 
100.0

 
100.0

 
 
7330 Carroll Road
 
66,244

 

 

 
66,244

 
1
 
2,451

 
100.0

 
100.0

 
 
5871 Oberlin Drive
 
33,817

 

 

 
33,817

 
1
 
973

 
100.0

 
100.0

 
 
Sorrento Mesa
 
447,109

 

 

 
447,109

 
9
 
9,984

 
85.3

 
85.3

 
Sorrento Valley
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11025/11035/11045/11055/11065/11075 Roselle Street
 
90,378

 

 
31,277

 
121,655

 
6
 
2,253

 
100.0

 
74.3

 
 
3985/4025/4031/4045 Sorrento Valley Boulevard
 
103,111

 

 

 
103,111

 
4
 
2,542

 
100.0

 
100.0

 
 
Sorrento Valley
 
193,489

 

 
31,277

 
224,766

 
10
 
4,795

 
100.0

 
86.1

 
I-15 Corridor
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13112 Evening Creek Drive
 
109,780

 

 

 
109,780

 
1
 
2,495

 
100.0

 
100.0

 
 
San Diego
 
3,144,604

 
358,609

 
31,277

 
3,534,490

 
48
 
$
102,311

 
94.9
%
 
93.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) We acquired 9625 Towne Centre Drive in 4Q14 with an in-place lease.  The property contains 133,731 RSF and will undergo conversion into tech office space through redevelopment in 3Q15, upon expiration of the acquired in-place lease.
(2) We acquired these properties in 3Q13 with the intent to redevelop them upon the expiration of the in-place leases. We completed the redevelopment of 53,512 RSF at 10121 Barnes Canyon Road in 3Q14 and delivered 100% of the project to Outerwall Inc., a high-quality technology client tenant. The remaining 48,880 RSF will undergo conversion into tech office space through redevelopment beginning in 4Q15 upon expiration of the acquired in-place lease.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
25



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Property Listing
(Unaudited, dollars in thousands)

 
 
 
 
RSF
 
Number of Properties
 
 
 
Occupancy Percentage
 
 
 
 
 
 
ABR
 
Operating
 
Operating and Redevelopment
Market / Submarket / Address
 
Operating
 
Development
 
Redevelopment
 
Total
 
 
 
 
Seattle
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lake Union
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1201/1208 Eastlake Avenue East
 
203,369

 

 

 
203,369

 
2
 
$
8,748

 
100.0
%
 
100.0
%
 
 
1616 Eastlake Avenue East
 
168,708

 

 

 
168,708

 
1
 
6,261

 
83.3

 
83.3

 
 
1551 Eastlake Avenue East
 
117,482

 

 

 
117,482

 
1
 
3,548

 
100.0

 
100.0

 
 
199 East Blaine Street
 
115,084

 

 

 
115,084

 
1
 
6,164

 
100.0

 
100.0

 
 
219 Terry Avenue North
 
30,705

 

 

 
30,705

 
1
 
1,598

 
100.0

 
100.0

 
 
1600 Fairview Avenue East
 
27,991

 

 

 
27,991

 
1
 
1,133

 
100.0

 
100.0

 
 
Lake Union
 
663,339

 

 

 
663,339

 
7
 
27,452

 
95.8

 
95.8

 
Elliott Bay
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3000/3018 Western Avenue
 
47,746

 

 

 
47,746

 
1
 
1,839

 
100.0

 
100.0

 
 
410 West Harrison/410 Elliott Avenue West
 
35,175

 

 

 
35,175

 
2
 
1,078

 
100.0

 
100.0

 
 
Elliott Bay
 
82,921

 

 

 
82,921

 
3
 
2,917

 
100.0

 
100.0

 
 
Seattle
 
746,260

 

 

 
746,260

 
10
 
$
30,369

 
96.2
%
 
96.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maryland
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rockville
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9800 Medical Center Drive
 
282,436

 

 

 
282,436

 
4
 
$
12,395

 
100.0
%
 
100.0
%
 
 
1330 Piccard Drive
 
131,511

 

 

 
131,511

 
1
 
3,121

 
100.0

 
100.0

 
 
1500/1550 East Gude Drive
 
90,489

 

 

 
90,489

 
2
 
1,681

 
100.0

 
100.0

 
 
14920/15010 Broschart Road
 
86,703

 

 

 
86,703

 
2
 
1,948

 
100.0

 
100.0

 
 
1405 Research Boulevard
 
71,669

 

 

 
71,669

 
1
 
2,091

 
100.0

 
100.0

 
 
5 Research Place
 
63,852

 

 

 
63,852

 
1
 
2,389

 
100.0

 
100.0

 
 
9920 Medical Center Drive
 
58,733

 

 

 
58,733

 
1
 
455

 
100.0

 
100.0

 
 
5 Research Court
 
54,906

 

 

 
54,906

 
1
 

 

 

 
 
12301 Parklawn Drive
 
49,185

 

 

 
49,185

 
1
 
1,169

 
100.0

 
100.0

 
 
Rockville
 
889,484

 

 

 
889,484

 
14
 
25,249

 
93.8

 
93.8

 
Gaithersburg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg I
 
377,401

 

 

 
377,401

 
4
 
7,223

 
89.7

 
89.7

 
 
9 West Watkins Mill Road and 910, 930, and
940 Clopper Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alexandria Technology Center® – Gaithersburg II
 
237,137

 

 

 
237,137

 
5
 
5,284

 
95.8

 
95.8

 
 
708 Quince Orchard Road, 1300 Quince Orchard Boulevard, and 19, 20, and 22 Firstfield Road
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16020 Industrial Drive
 
71,000

 

 

 
71,000

 
1
 
1,048

 
100.0

 
100.0

 
 
401 Professional Drive
 
63,154

 

 

 
63,154

 
1
 
829

 
71.3

 
71.3

 
 
950 Wind River Lane
 
50,000

 

 

 
50,000

 
1
 
1,082

 
100.0

 
100.0

 
 
620 Professional Drive
 
27,950

 

 

 
27,950

 
1
 
1,191

 
100.0

 
100.0

 
 
Gaithersburg
 
826,642

 

 

 
826,642

 
13
 
16,657

 
91.9

 
91.9

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

 

 

 
191,884

 
1
 
2,254

 
86.6

 
86.6

 
 
Northern Virginia
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   14225 Newbrook Drive
 
248,186

 

 

 
248,186

 
1
 
5,138

 
100.0

 
100.0

 
 
Maryland
 
2,156,196

 

 

 
2,156,196

 
29
 
$
49,298

 
93.2
%
 
93.2
%

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
26



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Property Listing
(Unaudited, dollars in thousands)

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

 

 

 
186,870

 
3
 
$
3,154

 
93.8
%
 
93.8
%
 
 
100, 800, and 801 Capitola Drive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
108/110/112/114 TW Alexander Drive
 
158,417

 

 

 
158,417

 
1
 
4,537

 
100.0

 
100.0

 
 
Alexandria Innovation Center® – Research Triangle Park
 
135,677

 

 

 
135,677

 
3
 
2,924

 
100.0

 
100.0

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

 

 

 
100,000

 
1
 
1,062

 
100.0

 
100.0

 
 
7 Triangle Drive
 
96,626

 

 

 
96,626

 
1
 
3,156

 
100.0

 
100.0

 
 
407 Davis Drive
 
81,956

 

 

 
81,956

 
1
 
1,644

 
100.0

 
100.0

 
 
2525 East NC Highway 54
 
81,580

 

 

 
81,580

 
1
 
1,692

 
100.0

 
100.0

 
 
601 Keystone Park Drive
 
77,395

 

 

 
77,395

 
1
 
1,341

 
100.0

 
100.0

 
 
5 Triangle Drive
 
32,120

 

 

 
32,120

 
1
 
824

 
100.0

 
100.0

 
 
6101 Quadrangle Drive
 
30,122

 

 

 
30,122

 
1
 
530

 
100.0

 
100.0

 
 
6040 George Watts Hill Drive
 

 
61,547

 

 
61,547

 
1
 

 
N/A

 
N/A

 
 
Research Triangle Park
 
980,763

 
61,547

 

 
1,042,310

 
15
 
$
20,864

 
98.8
%
 
98.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Canada
 
322,967

 

 

 
322,967

 
4
 
8,100

 
99.0

 
99.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-cluster markets
 
105,033

 

 

 
105,033

 
3
 
1,373

 
68.0

 
68.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
 
15,167,100

 
1,763,531

 
143,777

 
17,074,408

 
182
 
$
589,648

 
96.8
%
 
95.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asia
 
1,197,464

 

 

 
1,197,464

 
8
 
6,503

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subtotal
 
16,364,564

 
1,763,531

 
143,777

 
18,271,872

 
190
 
$
596,151

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Properties “held for sale”
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
500 Forbes Boulevard (South San Francisco)
 
155,685

 

 

 
155,685

 
1
 
5,540

 
 
 
 
 
 
Other
 
100,441

 

 

 
100,441

 
2
 
1,128

 
 
 
 
 
 
Properties “held for sale”
 
256,126

 

 

 
256,126

 
3
 
$
6,668

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
16,620,690

 
1,763,531

 
143,777

 
18,527,998

 
193
 
$
602,819

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
27



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Key Real Estate Metrics
(Unaudited)
2015 Disciplined Allocation of Capital (1)
 
Current Value-Creation Projects
 
12% Non-Income-Producing Assets
 
1.9M RSF
 
 
90%
 
 
Leased/Negotiating (2)
 
 
 
 
 
LEED Certified Percentage of ABR (3)
 
Near-Term Value-Creation Projects
 
Pre-Leased (4) Percentage of Ground-Up Developments Since January 1, 2009
 
2.2M RSF
 
 
 
 
47%
 
 
Leased/Negotiating (2)
 

(1)
Includes actual and projected construction and acquisitions for the year ending December 31, 2015. Refer to page 45 for additional details.
(2)
See page 30 for breakdown.
(3)
Upon completion of our in-process LEED certification projects.
(4)
Multi-tenancy projects since January 1, 2009, aggregating 1.8 million RSF were on average 37% pre-leased at the time development commenced.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
28



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Investments in Real Estate
(Dollars in thousands, except per square foot amounts)
(Unaudited)
 
 
Investments in Real Estate
 
 
 
 
 
 
 
 
 
 
Consolidated
 
ARE
Share of Unconsolidated Joint Venture
 
Total
 
Square Feet
 
 
 
 
 
 
 
 
 
Unconsolidated Joint Venture
 
 
 
Per SF (1)

 
Page
 
 
Amount
 
%
 
Consolidated
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental properties
$
7,509,763

 
$
45,710

 
$
7,555,473

 
88
%
 
16,463,059

 
157,631

 
16,620,690

 
$
460

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current value-creation projects/
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Construction in progress (“CIP”):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current development in North America
361,182

 
114,275

 
475,457

 
 
 
1,084,646

 
678,885

 
1,763,531

 
377

Current redevelopment in North America
52,927

 

 
52,927

 
 
 
143,777

 

 
143,777

 
368

 
 
414,109

 
114,275

 
528,384

 
6
%
 
1,228,423

 
678,885

 
1,907,308

 
376

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental properties and current value-creation projects
 
7,923,872

 
159,985

 
8,083,857

 
 
 
17,691,482

 
836,516

 
18,527,998

 
452

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Near-term value-creation projects in North America (CIP):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100 Binney Street
130,475

 

 
130,475

 
2
%
 
416,788

 

 
416,788

 
313

Other projects
38  43
97,169

 

 
97,169

 
1
%
 
1,747,992

 

 
1,747,992

 
56

 
 
227,644

 

 
227,644

 
 
 
2,164,780

 

 
2,164,780

 
105

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future value-creation projects:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North America
190,407

 

 
190,407

 
2
%
 
3,541,801



 
3,541,801

 
54

Asia
79,938

 

 
79,938

 
1
%
 
6,419,707

 

 
6,419,707

 
12

 
 
270,345

 

 
270,345

 
 
 
9,961,508

 

 
9,961,508

 
27

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Near-term and future value-creation projects
 
497,989

 

 
497,989

 
 
 
12,126,288

 

 
12,126,288

 
41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current, near-term, and future value-creation projects
 
912,098

 
114,275

 
1,026,373

 
12
%
 
13,354,711

 
678,885

 
14,033,596

 
87

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross investments in real estate
 
8,421,861

 
159,985

 
$
8,581,846

 
100
%
 
29,817,770

 
836,516

 
30,654,286

 
$
289

Equity method of accounting –
unconsolidated joint ventures
120,028

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
Gross investments in real estate –
including unconsolidated joint ventures
 
8,541,889

 
N/A

 
 
 
 
 
 
 
 
 
 
 
 
Less: accumulated depreciation
 
(1,153,830
)
 
(545
)
 
 
 
 
 
 
 
 
 
 
 
 
Investments in real estate
 
$
7,388,059

 
$
159,440

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Items that include our share of unconsolidated joint ventures are not calculated directly from amounts shown on this page. The per square foot amount represents the total cost of our rental properties and value-creation projects, including our partners’ share, divided by the total rentable or developable square feet of the respective property.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
29



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Overview of Value-Creation Pipeline in North America
 
 
CIP
Square Feet
 
Total Project
 
Year of NOI Contribution – Forecast
 
 
 
Square
Feet
 
Leased
 
Negotiating
 
Leased/Negotiating
 
2015
2016
2017
2018
Property – Market/Submarket
 
 
 
 
 
 
Current value-creation development and redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
360 Longwood Avenue – Greater Boston/Longwood Medical Area
 
255,905

 
413,536

 
38
%
 
25
%
 
63
%
 
430 East 29th Street – New York City/Manhattan
 
134,013

 
418,639

 
69

 
23

 
92

 
3013/3033 Science Park Road – San Diego/Torrey Pines
 
63,000

 
165,938

 
81

 

 
81

 
225 Second Avenue – Greater Boston/Route 128
 
112,500

 
112,500

 
100

 

 
100

 
11055/11065/11075 Roselle Street – San Diego/Sorrento Valley
 
31,277

 
55,213

 
75

 

 
75

 
6040 George Watts Hill Drive – Research Triangle Park/RTP
 
61,547

 
61,547

 
100

 

 
100

 
5200 Illumina Way–Bldg 6 – San Diego/University Town Center
 
295,609

 
295,609

 
100

 

 
100

 
1455/1515 Third Street – San Francisco Bay Area/Mission Bay
 
422,980

 
422,980

 
100

 

 
100

 
50/60 Binney Street – Greater Boston/Cambridge
 
530,477

 
530,477

 
47

 
51

 
98

 
Total/weighted average
 
1,907,308

 
2,476,439

 
71
%
 
19
%
 
90
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Near-term value-creation development projects (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10300 Campus Point Drive–Bldg 2 – San Diego/University Town Center
 
142,034

 
142,034

 
75
%
 
%
 
75
%
 
4796 Executive Drive – San Diego/University Town Center
 
61,755

 
61,755

 

 
100

(2) 
100

 
100 Binney Street – Greater Boston/Cambridge
 
416,788

 
416,788

 

 
98

(3) 
98

 
510 Townsend Street – San Francisco Bay Area/SoMa
 
300,000

 
300,000

 
100

 

 
100

 
10300 Campus Point Drive–Bldg 3 – San Diego/University Town Center
 
150,353

 
150,353

 

 

 

 
400 Dexter Avenue North – Seattle/Lake Union
 
287,806

 
287,806

 
28

 
24

(4) 
52

 
5200 Illumina Way – San Diego/University Town Center
 
386,044

 
386,044

 

 

 

 
East 29th Street – New York City/Manhattan
 
420,000

 
420,000

 

 

 

 
Total/weighted average
 
2,164,780

 
2,164,780

 
22
%
 
25
%
 
47
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)    See page 19 for RSF targeted for redevelopment.
(2)    Under lease negotiations.
(3)    Includes an executed letter of intent for up to 242,000 RSF, or 58%, of the project.
(4)    Represents an option for Juno Therapeutics, Inc. to expand in the project by up to approximately 71,000 RSF, or additional 24% of the project.
 
Value-Creation Development Projects
 
Value-Creation Redevelopment Projects
 
 
 
 
 


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
30



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Deliveries of Value-Creation Development Projects
(Dollars in thousands)
(Unaudited)
Property
75/125 Binney Street
430 East 29th Street
3013/3033 Science Park Road
360 Longwood Avenue
Project Type
Development
Development
Development
Unconsolidated JV Development
Photograph/
Rendering
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unlevered
 
 
Placed into Service in 1Q15
 
RSF In Service
 
%
of Project
In Service
 
Total Project
 
Average
Cash
Yield
 
Initial Stabilized Yield
(Cash Basis)
 
Initial Stabilized Yield
Property – Market/Submarket
 
Date
 
RSF
 
Prior to 1Q15
 
Total
 
 
Leased/
Negotiating
 
Investment
 
 
 
Consolidated development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75/125 Binney Street – Greater Boston/Cambridge
 
March 2015
 
388,270

 

 
388,270

 
100%
 
99%
 
$
361,000

(1) 
 
9.3
%
(1) 
 
 
8.4
%
(1) 
 
 
8.3
%
(1) 
430 East 29th Street – New York City/Manhattan
 
Various
 
43,209

 
241,417

 
284,626

 
68%
 
92%
 
$
463,245

 
 
7.1
%
(2) 
 
 
6.6
%
(2) 
 
 
6.5
%
(2) 
3013/3033 Science Park Road – San Diego/Torrey Pines
 
Various
 
60,891

 
42,047

 
102,938

 
62%
 
81%
 
$
104,790

 
 
7.7
%
(2) 
 
 
7.2
%
(2) 
 
 
7.1
%
(2) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unconsolidated joint venture (“JV”) development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
360 Longwood Avenue –
Greater Boston/Longwood Medical Area
 
March 2015
 
2,107

 
155,524

 
157,631

 
38%
 
63%
 
$
350,000

 
 
9.3
%
(2) 
 
 
8.3
%
(2) 
 
 
8.9
%
(2) 

(1)
Increase in yields and cost of completion compared to previously disclosed amounts. Previously disclosed estimated yields were 9.1% for average cash yield, 8.0% for initial stabilized yield (cash basis), and 8.2% for initial stabilized yield and cost of completion was $351.4 million. The updated information reflects the final terms of our lease with ARIAD Pharmaceuticals, Inc., and excludes an additional $25 per RSF tenant improvement allowance available to the client tenant in the future.  If the client tenant elects to use this allowance, the total cost at completion could increase up to an additional $10 million with an associated increase in rental income and an estimated 0.1% increase in our initial stabilized yield from 8.3% to 8.4%.
(2)    Consistent with previously disclosed yields.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
31



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Current Value-Creation Development Projects – Consolidated
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
Leased Status
 
Project Start
Date
 
Initial Occupancy Date
 
Stabilized Occupancy Date
 
 
Project RSF
 
Leased
 
Negotiating
 
Total Leased/Negotiating
 
 
 
Property – Market/Submarket
 
In Service
 
CIP
 
Total
 
RSF
 
%
 
RSF
 
%
 
RSF
 
%
 
 
 
Consolidated development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50/60 Binney Street – Greater Boston/Cambridge
 

 
530,477

 
530,477

 
251,234

 
47
%
 
268,911


51
%

520,145


98
%
 
1Q15
 
3Q17
 
2017
430 East 29th Street – New York City/Manhattan
 
284,626

 
134,013

 
418,639

 
288,237

 
69
%
 
94,925


23
%

383,162


92
%
 
4Q12
 
4Q13
 
2015
5200 Illumina Way–Building 6 –
San Diego/University Town Center
 

 
295,609

 
295,609

 
295,609

 
100
%
 


%

295,609


100
%
 
3Q14
 
3Q16
 
2016
3013/3033 Science Park Road – San Diego/Torrey Pines
 
102,938

 
63,000

 
165,938

 
135,002

 
81
%
 


%

135,002


81
%
 
2Q14
 
4Q14
 
2016
6040 George Watts Hill Drive –
Research Triangle Park/Research Triangle Park
 

 
61,547

 
61,547

 
61,547

 
100
%
 


%

61,547


100
%
 
4Q14
 
1Q16
 
2016
Consolidated development projects
 
387,564

 
1,084,646

 
1,472,210

 
1,031,629

 
70
%
 
363,836


25
%

1,395,465


95
%
 
 
 
 
 
 
 
 
Investment
 
Unlevered
Property – Market/Submarket
 
 
 
Cost to Complete – Internal Funding
 
 
 
 
Average Cash
Yield
 
Initial Stabilized Yield
(Cash Basis)
 
Initial Stabilized Yield
 
In Service
 
CIP
 
2015
 
Thereafter
 
Total at Completion
 
 
 
Consolidated development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50/60 Binney Street – Greater Boston/Cambridge (1)
 
$

 
$
215,692

 
$
98,618

 
$
TBD

 
$
TBD

 
TBD
 
TBD
 
TBD
430 East 29th Street – New York City/Manhattan
 
$
309,718

 
$
125,130

 
$
28,397

 
$

 
$
463,245

 
7.1%
 
6.6%
 
6.5%
5200 Illumina Way–Building 6 –
San Diego/University Town Center
 
$

 
$
11,448

 
$
29,657

 
$
28,795

 
$
69,900

 
8.6%
 
7.0%
 
8.4%
3013/3033 Science Park Road – San Diego/Torrey Pines
 
$
51,076

 
$
4,350

 
$
13,943

 
$
35,421

 
$
104,790

 
7.7%
 
7.2%
 
7.1%
6040 George Watts Hill Drive –
Research Triangle Park/Research Triangle Park
 
$

 
$
4,562

 
$
19,385

 
$
1,853

 
$
25,800

 
8.1%
 
7.3%
 
8.1%
Consolidated development projects
 
$
360,794

 
$
361,182

 
$
190,000

 
$
TBD

 
$
TBD

 
 
 
 
 
 

(1)
The design and budget of this project are in process, and the estimated project costs with related yields are expected to be disclosed in the near future.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
32



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Current Value-Creation Development Projects – Unconsolidated Joint Ventures
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
Leased Status
 
Project Start
Date
 
Initial Occupancy Date
 
Stabilized Occupancy Date
 
 
Project RSF
 
Leased
 
Negotiating
 
Total Leased/Negotiating
 
 
 
Property – Market/Submarket
 
In Service
 
CIP
 
Total
 
RSF
 
%
 
RSF
 
%
 
RSF
 
%
 
 
 
Unconsolidated joint venture development projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
360 Longwood Avenue
Greater Boston/Longwood Medical Area
 
157,631

 
255,905

 
413,536

 
157,631

 
38
%
 
103,752

 
25
%
 
261,383

 
63
%
 
2Q12
 
3Q14
 
2016
1455/1515 Third Street
San Francisco Bay Area/Mission Bay
 

 
422,980

 
422,980

 
422,980

 
100
%
 

 
%
 
422,980

 
100
%
 
3Q14
 
1Q17
 
2017
Total
 
157,631

 
678,885

 
836,516

 
580,611

 
70
%
 
103,752

 
12
%
 
684,363

 
82
%
 
 
 
 
 
 

 
 
Investment
 
 
 
 
 
 
 
 
 
 
Cost to Complete
 
 
 
 
Unlevered (1)
 
 
 
 
2015
 
Thereafter
 
 
 
 
Average Cash
Yield
 
Initial Stabilized Yield
(Cash Basis)
 
Initial Stabilized Yield
Property – Market/Submarket
 
 
Construction
Financing
 
Internal Funding
 
Construction
Financing
 
Internal Funding
 
Total at Completion
 
 
 
In Service
 
CIP
 
 
 
 
 
 
 
Unconsolidated joint venture development projects (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100% of joint venture: 360 Longwood Avenue
Greater Boston/Longwood Medical Area
 
$
115,293

 
$
187,704

 
$
29,125

 
$

 
$
17,878

 
$

 
$
350,000

 
 
 
 
 
 
100% of joint venture: 1455/1515 Third Street
San Francisco Bay Area/Mission Bay (3)
 
$
21,150

 
$
107,746

 
$

 
$
37,248

 
$

 
$
  TBD

 
$
TBD

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ARE share of unconsolidated joint venture development projects (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
27.5% of joint venture: 360 Longwood Avenue
Greater Boston/Longwood Medical Area
 
$
34,923

 
$
57,185

 
$
8,009

 
$
871

 
$
4,916

 
$
3,061

 
$
108,965

 
9.3%
 
8.3%
 
8.9%
51.0% of joint venture: 1455/1515 Third Street
San Francisco Bay Area/Mission Bay (3)
 
$
10,787

 
$
57,090

 
$

 
$
21,129

 
$

 
$
  TBD

 
$
TBD

 
 TBD
 
 TBD
 
 TBD
Total ARE share of unconsolidated joint venture
development projects
 
$
45,710

 
$
114,275

 
$
8,009

 
$
22,000

 
$
4,916

 
$
TBD

 
$
TBD

 
 
 
 
 
 

(1)
Our projected unlevered initial stabilized yield (cash basis) is based upon our share of the investment in real estate, including costs incurred directly by us outside of the joint venture. Development management fees earned from these development projects have been excluded from our estimate of unlevered yields.
(2)
See page 44 for additional information regarding our unconsolidated joint ventures.
(3)
The design and budget of this project are in process, and the estimated project costs with related yields are expected to be disclosed in the near future.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
33



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Current Value-Creation Development Projects
Property
50/60 Binney Street
430 East 29th Street
5200 Illumina Way – Building 6
Market/
Submarket
Greater Boston/
Cambridge
New York City/
Manhattan
San Diego/
University Town Center
RSF (in progress)
530,477
134,013
295,609
Project Type
Development
Development
Development
Client Tenants
Sanofi
Roche/New York University/Others
Illumina, Inc.
Photograph/
Rendering
 
 
 
 
 
Property
3013/3033 Science Park Road
6040 George Watts Hill Drive
360 Longwood Avenue
1455/1515 Third Street
Market/
Submarket
San Diego/
Torrey Pines
Research Triangle Park/
Research Triangle Park
Greater Boston/
Longwood Medical Area
San Francisco Bay Area/
Mission Bay
RSF (in progress)
63,000
61,547
255,905
422,980
Project Type
Development
Development
Unconsolidated Joint Venture Development
Unconsolidated Joint Venture
Development
Client Tenants
Receptos, Inc./
The Medicines Company
Fujifilm Diosynth Biotechnologies U.S.A., Inc.
Dana-Farber
Cancer Institute, Inc.
Uber Technologies, Inc.(1)
Photograph/
Rendering

(1)
We are currently working closely with Uber Technologies, Inc. (“Uber”) to revise the core/shell and exterior architecture of the building design.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
34



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Current Value-Creation Redevelopment Projects
(Dollars in thousands)
(Unaudited)

 
 
 
 
 
 
 
 
Leased Status
 
Project Start
Date
 
Initial Occupancy Date
 
Stabilized Occupancy Date
 
 
Project RSF
 
Leased
 
Negotiating
 
Total Leased/Negotiating
 
 
 
Property – Market/Submarket
 
In Service
 
CIP
 
Total
 
RSF
 
%
 
RSF
 
%
 
RSF
 
%
 
 
 
Consolidated redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
225 Second Avenue – Greater Boston/Route 128 (1)
 

 
112,500

 
112,500

 
112,500

 
100
%
 

 
%
 
112,500

 
100
%
 
1Q14
 
2Q15
 
2015
11055/11065/11075 Roselle Street – San Diego/Sorrento Valley (2)
 
23,936

 
31,277

 
55,213

 
41,163

(3) 
75
%
 

 
%
 
41,163

 
75
%
 
4Q13
 
2Q14
 
2015
Consolidated redevelopment projects
 
23,936

 
143,777

 
167,713

 
153,663

 
92
%
 

 
%
 
153,663

 
92
%
 
 
 
 
 
 

 
 
Investment
 
Unlevered
Property – Market/Submarket
 
 
 
Cost to Complete
 
Total at Completion
 
Average
Cash
Yield
 
Initial
Stabilized Yield
(Cash Basis)
 
Initial Stabilized Yield
 
In Service
 
CIP
 
2015
 
Thereafter
 
 
 
 
Consolidated redevelopment projects
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
225 Second Avenue – Greater Boston/Route 128
 
$

 
$
44,561

 
$
2,109

 
$

 
$
46,670

 
9.0%
 
8.3%
 
8.3%
11055/11065/11075 Roselle Street – San Diego/Sorrento Valley
 
$
7,118

 
$
8,366

 
$
2,866

 
$

 
$
18,350

 
8.0%
 
7.8%
 
7.9%
Consolidated redevelopment projects
 
$
7,118

 
$
52,927

 
$
4,975

 
$

 
$
65,020

 
 
 
 
 
 

(1)
Redevelopment property to accommodate expansion requirements of existing client tenant. Property was acquired in March 2014.
(2)
Redevelopment property to accommodate expansion requirements of existing client tenant. Property was acquired in November 2013.
(3)
In 2Q14, we delivered 23,936 RSF to a life science company. We expect to deliver the remaining leased 17,227 RSF in 2Q15.



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
35



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term and Future Value-Creation Development Projects in North America
(Dollars in thousands, except per square foot amounts)
(Unaudited)
 
 
Embedded Land (1)
 
Total
Property – Market/Submarket
 
Book Value
 
Square 
Feet
 
Cost Per
Square Foot
 
Square
Feet
 
Book Value
 
Square 
Feet
 
Cost Per
Square Foot
Near-Term Value-Creation Development Projects – Land undergoing 
predevelopment activities (CIP)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100 Binney Street – Greater Boston/Cambridge (2)
 
$
130,475

 
416,788

 
$
313

 

 
$
130,475

 
416,788

 
$
313

510 Townsend Street – San Francisco Bay Area/SoMa
 
59,441

 
300,000

 
198

 

 
59,441

 
300,000

 
198

5200 Illumina Way – San Diego/University Town Center
 
9,198

 
386,044

 
24

 

 
9,198

 
386,044

 
24

10300 Campus Point Drive – San Diego/University Town Center
 
6,195

 
292,387

 
21

 

 
6,195

 
292,387

 
21

4796 Executive Drive – San Diego/University Town Center
 
4,805

 
61,755

 
78

 

 
4,805

 
61,755

 
78

400 Dexter Avenue North – Seattle/Lake Union
 
17,530

 
287,806

 
61

 

 
17,530

 
287,806

 
61

East 29th Street – New York City/Manhattan
 

 

 

 
420,000

(3) 

 
420,000

 

Near-term value-creation development projects
 
$
227,644

 
1,744,780

 
$
130

 
420,000

 
227,644

 
2,164,780

 
105

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Future Value-Creation Development Projects – Land held for development
 
 
 
 
 
 
 
 
Alexandria Center® at Kendall Square–Residential –
Greater Boston/Cambridge (4)
 
$
33,059

 
288,515

 
$
115

 

 
33,059

 
288,515

 
115

Alexandria Technology Square® – Greater Boston/Cambridge
 
7,721

 
100,000

 
77

 

 
7,721

 
100,000

 
77

Grand Avenue – San Francisco Bay Area/South San Francisco (5)
 
45,056

 
397,132

 
113

 

 
45,056

 
397,132

 
113

560 Eccles Avenue – San Francisco Bay Area/South San Francisco (6)
 
17,655

 
144,000

 
123

 

 
17,655

 
144,000

 
123

ARE Sunrise – San Diego/Torrey Pines
 

 

 

 
133,000

 

 
133,000

 

1150/1165/1166 Eastlake Avenue East – Seattle/Lake Union (7)
 
33,078

 
266,266

 
124

 

 
33,078

 
266,266

 
124

Other
 
53,838

 
1,726,888

 
31

 
486,000

 
53,838

 
2,212,888

 
24

Future value-creation development projects
 
$
190,407

 
2,922,801

 
$
65

 
619,000

 
190,407

 
3,541,801

 
54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total near-term and future value-creation development projects in North America
 
 
 
 
 
1,039,000

 
$
418,051

 
5,706,581

 
$
73


(1)
Embedded land generally represents adjacent land acquired in connection with the acquisition of operating properties. As a result, the real estate basis attributable to these land parcels is classified in rental properties.
(2)
Includes infrastructure-related costs consisting of utility access and roads, installation of storm drain systems, infiltration systems, traffic lighting/signals, streets, and sidewalks.
(3)
We hold a right to ground-lease a parcel supporting the future ground-up development of approximately 420,000 SF at the Alexandria Center® for Life Science pursuant to an option under our ground lease. We have begun discussions regarding this option and the potential to increase the site density beyond 420,000 SF.
(4)
Includes two residential sites at our Alexandria Center® at Kendall Square project. We have commenced construction on one residential building (270 Third Street) with 91 units aggregating approximately 105,000 gross square feet, which we expect to sell later in 2015. See page 4 for further information.
(5)
Represents two additional land parcels located adjacent to/surrounding the recently developed 249/259/269 East Grand Avenue campus leased to Amgen Inc. in South San Francisco.
(6)
Represents an additional land parcel located nearby our 341/343 Oyster Point Boulevard properties and within walking distance of Roche’s campus in South San Francisco.
(7)
The cost per square foot for 1165 Eastlake Avenue East includes an existing structure that can substantially be incorporated into the development plans.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
36



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term Value-Creation Development Projects
Greater Boston
 
 
Operating/Development Project
 
Near-Term Value-Creation Project
 
 
Property
Alexandria Center® at Kendall Square
Market/Submarket
Greater Boston/Cambridge
Aerial
Background
Alexandria received final approval from the City of Cambridge to develop the Alexandria Center® at Kendall Square, a fully integrated campus featuring four
world-class office/laboratory and tech office buildings, high-quality amenities, and green space. Alexandria’s entitlement efforts resulted in an increase of 1.2 million developable square feet over the original entitlements in place at acquisition.
Near-Term Opportunity
Our near-term development opportunity consists of 416,788 RSF at 100 Binney Street. Subject to market conditions, we expect to commence development in the near term. We also expect to disclose the estimated investment and yields upon commencement of ground-up development.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
37



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term Value-Creation Development Projects
San Francisco Bay Area
 
 
Operating/Development Project
 
Near-Term Value-Creation Project
 
 
Property
510 Townsend Street
Market/Submarket
San Francisco Bay Area/SoMa
Aerial
Background
Alexandria’s 510 Townsend Street project was acquired in April 2014 and represents an expansion of our successful Mission Bay science and technology campus into the SoMa submarket.  The site is ideally located at the corner of Townsend and 6th Streets, placing it within close proximity to public transportation.  The site is also adjacent to one of Interstate 280’s key arrival points into San Francisco and is only blocks away from Interstate 80 and US 101 Freeways. Furthermore, with its highly strategic location at the intersection of Alexandria’s Mission Bay science and technology campus and the SoMa technology district, the 510 Townsend Street site, and this key cluster expansion, mirrors the convergence of life science, technology, and healthcare occurring with the digital health revolution.
Near-Term Opportunity
Ground-up development of a tech office building at 510 Townsend Street with approximately 300,000 RSF 100% leased to Stripe, Inc. We anticipate receipt of Prop M entitlement allocation soon and plan to commence construction as soon as possible in 2015.  We also expect to disclose the estimated investment and yields upon commencement of ground-up development.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
38



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term Value-Creation Development Projects
San Diego
 
 
Operating/Development Project
 
Near-Term Value-Creation Project
 
 
Property
5200 Illumina Way
Market/Submarket
San Diego/University Town Center
Aerial
Background
Alexandria owns and operates the headquarters campus of Illumina, Inc., the leading developer, manufacturer, and marketer of life science tools and integrated systems for large-scale analysis of genetic variation and function with a market capitalization of $26.5 billion as of December 31, 2014. The initial campus consisted of buildings 1, 2, and 3 which aggregated 346,581 RSF. With our development of buildings 4 and 5 (completed in 4Q12 and 1Q13, respectively) and our current development of building 6, we have expanded the total RSF by an additional 446,106 RSF. Furthermore, we began seeking approval of an additional 214,067 RSF of entitlements to the campus, bringing our future expansion capacity to 386,044 RSF and an aggregate campus of 1,178,731 RSF.
Near-Term Opportunity
Ground-up development of additional office/laboratory buildings aggregating 386,044 RSF. Subject to market conditions, we expect to commence development of at least one additional building over the next one to three years as we expect expansion requirements from Illumina, Inc.  We also expect to disclose the estimated investment and yields upon commencement of ground-up development.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
39



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term Value-Creation Development Projects
San Diego
 
 
Operating
 
Near-Term Value-Creation Project
 
 
Property
10300 Campus Point Drive
Market/Submarket
San Diego/University Town Center
Aerial
Background
10300 Campus Point Drive is Alexandria’s flagship multi-tenant office/laboratory campus in University Town Center consisting of 449,759 RSF. We are perfecting additional entitlements to increase our aggregate campus to 742,146 RSF.
Near-Term Opportunity
Ground-up development of two buildings aggregating 292,387 RSF.  In April 2015, we executed a lease with an existing client tenant for an expansion into 75% of a new 142,034 RSF building (building 2). We expect to commence construction of this building in 2015 upon receipt of permits/approvals. We also expect to disclose the estimated investment and yields upon commencement of ground-up development. Subject to market conditions and finalizing design and permits, we expect to commence development of the third building aggregating 150,353 RSF in the near term as we receive expansion requirements from an existing client tenant.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
40



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term Value-Creation Development Projects
San Diego
 
 
Operating
 
Near-Term Value-Creation Project
Property
ARE Esplanade
Market/Submarket
San Diego/University Town Center
Aerial
Background
Alexandria’s Esplanade campus features three single-tenant operating properties located at 4755, 4757, and 4767 Nexus Center Drive, aggregating 180,208 RSF of office/laboratory space in the University Town Center submarket of San Diego.
Near-Term Opportunity
Ground-up development of a build-to-suit building at 4796 Executive Drive will expand the ARE Esplanade footprint by an additional 61,755 RSF. We are in negotiations with a client tenant for 100% of the building. Subject to final lease negotiations as well as completion of the design and budget for the project, we expect to commence construction in 2015. We also expect to disclose investment and yields upon commencement of ground-up development.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
41



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term and Future Value-Creation Development Projects
Seattle
 
 
Operating
 
Near-Term and Future Value-Creation Project
 
Property
400 Dexter Avenue North
Market/Submarket
Seattle/Lake Union
Aerial
Background
Alexandria’s Dexter Avenue North asset is located in Lake Union, home to numerous highly renowned medical research institutions, including the Fred Hutchinson Cancer Research Center and the University of Washington, as well as the corporate headquarters for Amazon.com, Inc.
Near-Term Opportunity
Ground-up development of an office/laboratory building for 287,806 RSF. In April 2015, we executed a lease with Juno Therapeutics, Inc. for 80,000 RSF, and the client tenant has an expansion option for approximately 71,000 RSF. We expect to commence construction of this building in 2015, and we expect to disclose the estimated investment and yields upon commencement of ground-up development.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
42



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Near-Term Value-Creation Development Projects
New York City
 
 
Operating/Development Project
 
Near-Term Value-Creation Project
 
 
Property
Alexandria Center® for Life Science – North Land Parcel
Market/Submarket
New York City/Manhattan
Aerial
Background
Alexandria was selected by the City of New York to transform a riverfront parcel into the Alexandria Center® for Life Science, New York City’s first and only world-class life science cluster campus. In 2010, we completed the ground-up development of the East Tower consisting of 309,035 RSF. In 4Q12, we commenced ground-up development of the West Tower consisting of 418,639 RSF.
Near-Term Opportunity
We hold an option to ground lease a parcel supporting the future ground-up development of approximately 420,000 SF at the Alexandria Center® for Life Science. We have begun discussions regarding this option and the potential to increase the site density beyond 420,000 SF.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
43



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Unconsolidated Joint Ventures
(Dollars in thousands)
(Unaudited)

Three months ended March 31, 2015
 
360 Longwood Avenue
 
1455/1515 Third Street
 
Total
ARE Share
 
 
 
100%
 
ARE’s
27.5% Share
(1) 
100%
 
ARE’s
51% Share
(1) 
(1) 
Revenue
 
$
3,985

 
$
1,174

(2)
$
91

 
$
47

 
$
1,221

 
Rental operations
 
(1,063
)
 
(295
)
 
(130
)
 
(66
)
 
(361
)
 
Interest
 
(11
)
 
(4
)
 

 

 
(4
)
 
Depreciation and amortization
 
(579
)
 
(214
)
 
(132
)
 
(68
)
 
(282
)
 
Net income (loss)
 
$
2,332

 
$
661

 
$
(171
)
 
$
(87
)
 
$
574

 

As of March 31, 2015
 
360 Longwood Avenue
 
1455/1515 Third Street
 
Total
ARE Share
 
 
 
100%
 
ARE’s
27.5% Share
(1) 
100%
 
ARE’s
51% Share
(1) 
(1) 
Rental properties
 
$
115,293

 
$
34,923

 
$
21,150

 
$
10,787

 
$
45,710

 
Construction in progress
 
187,704

 
57,185

 
107,746

 
57,090

 
114,275

 
Gross investments in real estate
 
302,997

 
92,108

 
128,896

 
67,877

 
159,985

 
Less: accumulated depreciation
 
(1,132
)
 
(387
)
 
(309
)
 
(158
)
 
(545
)
 
Investments in real estate
 
301,865

 
91,721

 
128,587

 
67,719

 
159,440

 
Other assets
 
13,792

 
4,617

 
10,338

 
5,411

 
10,028

 
Total assets
 
$
315,657

 
$
96,338

 
$
138,925

 
$
73,130

 
$
169,468

 
 
 
 
 
 
 
 
 
 
 


 
Secured notes payable
 
$
166,467

(3)
$
45,778

 
$

 
$

 
$
45,778

 
Other liabilities
 
4,998

 
1,374

 
4,486

 
2,288

 
3,662

 
Total liabilities
 
171,465

 
47,152

 
4,486

 
2,288

 
49,440

 
Equity
 
144,192

 
49,186

 
134,439

 
70,842

 
120,028

 
Total liabilities and equity
 
$
315,657

 
$
96,338

 
$
138,925

 
$
73,130

 
$
169,468

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RSF
 
 
 
RSF
 
 
 
 
 
Rental properties
 
157,631

 
 
 

 
 
 
 
 
Active development (CIP) (4)
 
255,905

 
 
 
422,980

 
 
 
 
 
Total
 
413,536

 
 
 
422,980

 
 
 
 
 

(1)
Amounts include costs incurred directly by us outside of the joint ventures. We believe the information on our share of investments in unconsolidated joint ventures is useful information for investors as it provides our proportional share of the investments in real estate from all properties, including our share of the assets and liabilities of our unconsolidated joint ventures. This information also allows investors to estimate the impact of real estate investments and debt financing at the joint venture level.
(2)
Includes development fees earned.
(3)
Secured construction loan with an aggregate commitment of $213.2 million, which bears interest at LIBOR+3.75%, with a floor of 5.25%. The maturity date of the loan is April 1, 2017, with two, one-year options to extend the stated maturity date to April 1, 2019, subject to certain conditions.
(4)
See page 33 for further detail of our unconsolidated joint venture development projects.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
44



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Capital Allocation and Projected Construction Spending
(Dollars in thousands)
(Unaudited)

Capital Allocation
Projected Construction and Acquisition Spending in 2015 (1)
(1)
Includes actual and projected construction and acquisitions for the year ending December 31, 2015.

Projected Construction Spending
 
Nine Months Ending December 31, 2015
 
Current value-creation projects in North America:
 
 
 
 
 
 
 
 
Development (consolidated)
 
$
190,000

 
 
 
 
 
Development (unconsolidated joint venture)
 
 
22,000

 
 
 
 
 
Redevelopment
 
 
4,975

 
 
 
 
 
Developments/redevelopments recently transferred to rental properties
 
 
62,025

(1) 
 
 
 
Generic laboratory infrastructure/building improvement projects
 
 
41,000

(2) 
 
 
 
 
Current value-creation projects in North America
 
 
 
 
 
320,000
 
 
Near-term value-creation projects
 
 
 
 
 
253,000
 
(3) 
Value-creation projects
 
 
 
 
 
573,000
 
 
 
Non-revenue-enhancing capital expenditures and tenant improvements
 
 
 
 
 
11,000
 
 
Projected construction spending for the nine months ending December 31, 2015 (midpoint)
 
 
 
 
$
584,000
 
 
 
 
 
 
 
 
 
 
Full Year Construction Spending Guidance
 
Year Ending December 31, 2015
 
Projected construction spending for the nine months ending December 31, 2015 (range)
 
 
 
 
$
534,000

634,000

 
Actual construction spending for the three months ended March 31, 2015
 
 
 
 
 
111,343
 
 
Guidance range for the year ending December 31, 2015
 
 
 
 
$
645,000

745,000

 

(1)
Includes spending for recently delivered projects, including 4757 Nexus Center Drive and 1616 Eastlake Avenue East, that may require additional construction prior to occupancy, generally ranging from 15,000 to 30,000 RSF of the project plus amounts related to our recently completed development at 75/125 Binney Street.
(2)
Includes, among others, 3535 General Atomics Court, 9373 Towne Centre Drive, 5810/5820 Nancy Ridge Drive, 44 Hartwell Avenue, 19 Presidential Way, and 2525 East NC Highway 54.
(3)
See overview of our near-term value-creation projects on pages 30 and 36.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
45



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Historical Construction Spending
(Dollars in thousands, except per square foot amounts)
(Unaudited)

Actual Construction Spending
 
Three Months Ended March 31, 2015
Development – North America
 
$
64,488

Redevelopment – North America
 
14,262

Predevelopment
 
8,639

Generic laboratory infrastructure/building improvement projects in North America (1)
 
21,029

Development and redevelopment – Asia
 
2,925

Total construction spending
 
$
111,343

 
 
 
(1) Includes revenue-enhancing projects and non-revenue-enhancing capital expenditures shown in the table below.


Non-revenue-enhancing Capital Expenditures,
Tenant Improvements, and Leasing Costs (1)
 
Three Months Ended March 31, 2015
 
Recent Average
Per RSF (2)
 
Amount
 
RSF
 
Per RSF
 
Non-revenue-enhancing capital expenditures
 
$
2,278

 
15,554,054

 
$
0.15

 
$
0.34

 
 
 
 
 
 
 
 
 
Tenant improvements and leasing costs:
 
 
 
 
 
 
 
 
Re-tenanted space
 
$
1,171

 
69,530

 
$
16.84

 
$
13.48

Renewal space
 
4,604

 
419,756

 
10.97

 
7.40

Total tenant improvements and leasing costs/weighted average
 
$
5,775

 
489,286

 
$
11.80

 
$
8.66

 
 
 
 
 
 
 
 
 
(1)
Excludes amounts that are recoverable from client tenants, revenue-enhancing, or related to properties that have undergone redevelopment.
(2)
Represents the average of the years ended December 31, 2011 through December 31, 2014, and the three months ended March 31, 2015, annualized.



ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
46



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Acquisitions
(Dollars in thousands)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unlevered
Property – Market/Submarket
 
 
 
Date Acquired
 
Number of Properties
 
Purchase Price
 
Loan Assumption
 
 
 
Percentage Leased
 
Average
Cash Yield
 
Initial
Stabilized Yield (Cash)
 
Initial
Stabilized Yield
 
Type
 
 
 
 
 
RSF
 
 
 
 
640 Memorial Drive – Greater Boston/Cambridge
 
Operating
 
1/21/15
 
1
 
$
176,500

 
$
82,000

(1) 
225,504

 
100.0%
 
 
6.8%
 
 
 
6.4%
 
 
 
7.5%
 
Alexandria Technology Square® 
(10% noncontrolling interest) –
Greater Boston/Cambridge
 
Operating
 
1/21/15
 
7
(2) 
108,250

(2) 

 
1,181,635

 
99.5%
 
 
6.1%
(3) 
 
 
5.4%
(3) 
 
 
6.1%
(3) 
 
 
 
 
 
 
8
 
$
284,750

 
$
82,000

 
1,407,139

 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Represents a secured note payable with a contractual rate of 3.93% and a maturity date in 2023.
(2)
During the three months ended March 31, 2015, we executed an agreement to purchase the outstanding 10% noncontrolling interest in our 1.2 million RSF, flagship campus at Alexandria Technology Square® for $108.3 million. Upon execution of the purchase agreement, we recognized a liability representing the fair value of the aggregate consideration, primarily consisting of the $108.3 million purchase price. The first installment of $54.3 million was paid on April 1, 2015, and the second installment of $54.0 million is due on April 1, 2016.
(3)
We believe there is further upside in our projected returns as we anticipate significant rent growth from 81% of the leases contractually ending in the next five years. Additionally, we believe we can increase our 1.2 million RSF campus by an additional 100,000 RSF and further increase NOI. The campus is currently 99.5% occupied and subject to a long-term ground lease. After considering the $108.3 million purchase of the outstanding 10% noncontrolling interest in this flagship campus and the anticipated near and medium-term upside in NOI from rental rate growth and campus expansion, we estimate that we can enhance our unlevered yields on our aggregate investment in the campus over the next five years to 8.5% and 8.1% (cash).


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
47



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Real Estate Investments in Asia
(Unaudited)

 
Number of Properties 
 
ABR
(in thousands)
 
Occupancy Percentage
 
Book Value (1)
(in thousands)
 
Square Feet
Rental properties in China
2
 
$
1,218

 
53.8
%
 
$
81,414

 
632,078

Rental properties in India
6
 
5,285

 
62.2

 
69,316

 
565,386

Rental properties in Asia
8
 
$
6,503

 
57.8
%
 
150,730

 
1,197,464

 
 
 
 
 
 
 
 
 
 
Land held for future development in India
 
79,938

 
6,419,707

Total investments in real estate in Asia
 
$
230,668

(1 
) 
7,617,171


(1)
Includes cumulative unrealized foreign currency translation losses of approximately $39.7 million, as of March 31, 2015.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
48



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Key Credit Metrics (1) 
(Unaudited)
Net Debt to Adjusted EBITDA (2)
 
High Quality Tenancy
 
Pre-Leased Deliveries Drive Decline in
Non-Income-Producing Assets (3)
 
 
 
 
 
 
 
Investment-Grade Client Tenants:
 
 
52%
 
 
of ARE’s
Total ABR
 
 
 
 
 
 
 
 
 
Fixed Charge Coverage Ratio (2)
 
Adjusted EBITDA Margin (2)
 
Liquidity
(in millions)
 
64%
 
 
 
 
 
 
 
 
 
 
Gross Assets (4)
 
 
 
 
 
$10
 
 
 
 
Billion
 
 
 
 
 
 
 
(1) These credit metrics, among others, represent certain metrics Moody’s Investors Service and/or Standard & Poor’s consider in their overall credit rating assignment.
(2) Quarter annualized.
(3) Represents non-income-producing assets (CIP and land) as a percentage of gross investments in real estate. See chart on page 28.
(4) Represents total assets plus accumulated depreciation.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
49



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Summary of Debt
(Dollars in millions)
(Unaudited)

Debt maturities chart


 
 
 
 
 
2015 Debt Maturities
Amount
 
Rate (2)
 
Projection
$
47

 
1.68
%
 
We expect to exercise our option to extend the maturity date from July 1, 2015, to July 1, 2016
6

 
N/A

 
Various repayments
$
53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 Debt Maturities
Amount
 
Rate (2)
 
Projection
$
375

 
1.60
%
 
Partial repayment and amend and extend maturity to 2021
21

 
1.58
%
 
We have two, one-year options to extend the stated maturity date to June 1, 2018, subject to certain conditions
241

 
2.23
%
 
Various repayments
$
637

 
 
 
 

(1)
We expect to reduce the outstanding balance under our two unsecured senior bank term loans over the next few years. Additionally, we expect to partially repay a portion of our $375 million 2016 unsecured senior bank term loan and extend the maturity date of this loan from 2016 to 2021.
(2)
Represents the weighted average interest rate as of the end of the period plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
50



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Summary of Debt (continued)
(Dollars in thousands)
(Unaudited)

Fixed-rate/hedged and unhedged variable-rate debt
 
Fixed Rate/Hedged
Variable Rate
 
Unhedged
Variable Rate
 
Total
Consolidated
 
Percentage of
Total Debt
 
Weighted Average
Interest Rate at
End of Period (1)
 
Weighted Average
Remaining Term
(in years)
Secured notes payable
$
482,663

 
$
277,813

 
$
760,476

 
19.5
%
 
4.30
%
 
3.1
Unsecured senior notes payable
1,747,450

 

 
1,747,450

 
44.7

 
3.98

 
8.1
$1.5 billion unsecured senior line of credit

 
421,000

 
421,000

 
10.8

 
1.22

 
3.8
2016 Unsecured Senior Bank Term Loan
350,000

 
25,000

 
375,000

 
9.6

 
1.60

 
1.3
2019 Unsecured Senior Bank Term Loan
600,000

 

 
600,000

 
15.4

 
1.71

 
3.8
Total/weighted average
$
3,180,113

 
$
723,813

 
$
3,903,926

 
100.0
%
 
3.17
%
 
5.3
Percentage of total debt
81%

 
19%

 
100%

 
 
 
 
 
 
 

(1)
Represents the weighted average interest rate as of the end of the period plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees.



$11.3 Billion Total Market Capitalization
 
Fixed and Variable Rate Debt
 


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
51



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Summary of Debt (continued)
(Dollars in thousands)
(Unaudited)
 
 
Stated 
Rate
 
Weighted Average
Interest Rate (1)
 
Maturity Date (2)
 
Principal Payments Remaining for the Period Ending December 31,
 
 
 
 
Debt
 
 
 
 
2015
 
2016
 
2017
 
2018
 
2019
 
Thereafter
 
Total
Secured notes payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
San Francisco Bay Area
 
L+1.50
%
 
1.68
%
 
7/1/15
(3) 
$
46,983

 
$

 
$

 
$

 
$

 
$

 
$
46,983

Greater Boston, San Francisco Bay Area, and San Diego
 
5.73
 
 
5.73
 
 
1/1/16
 
1,356

 
75,501

 

 

 

 

 
76,857

Greater Boston, San Diego, and New York City
 
5.82
 
 
5.82
 
 
4/1/16
 
741

 
29,389

 

 

 

 

 
30,130

San Diego
 
5.74
 
 
3.00
 
 
4/15/16
 
132

 
6,916

 

 

 

 

 
7,048

San Francisco Bay Area
 
L+1.40
 
 
1.58
 
 
6/1/16
 

 
20,550

 

 

 

 

 
20,550

San Francisco Bay Area
 
6.35
 
 
6.35
 
 
8/1/16
 
1,976

 
126,715

 

 

 

 

 
128,691

Maryland
 
2.17
 
 
2.17
 
 
1/20/17
 

 

 
76,000

 

 

 

 
76,000

Greater Boston
 
L+1.35
 
 
1.53
 
 
8/23/17
 

 

 
134,280

 

 

 

 
134,280

San Diego, Maryland, and Seattle
 
7.75
 
 
7.75
 
 
4/1/20
 
1,189

 
1,696

 
1,832

 
1,979

 
2,138

 
104,352

 
113,186

San Diego
 
4.66
 
 
4.66
 
 
1/1/23
 
1,053

 
1,464

 
1,540

 
1,614

 
1,692

 
31,674

 
39,037

Greater Boston
 
3.93
 
 
3.10
 
 
3/10/23
 

 

 

 
1,091

 
1,505

 
79,404

 
82,000

San Francisco Bay Area
 
6.50
 
 
6.50
 
 
6/1/37
 
18

 
19

 
20

 
22

 
23

 
728

 
830

Unamortized premiums
 
 
 
 
 
 
 
 
 
547

 
610

 
573

 
588

 
595

 
1,971

 
4,884

Secured notes payable weighted average/subtotal
 
4.42
%
 
4.30
 
 
 
 
53,995

 
262,860

 
214,245

 
5,294

 
5,953

 
218,129

 
760,476

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016 Unsecured Senior Bank Term Loan
 
L+1.20
%
 
1.60
 
 
7/31/16
(4) 

 
375,000

 

 

 

 

 
375,000

2019 Unsecured Senior Bank Term Loan
 
L+1.20
%
 
1.71
 
 
1/3/19
 

 

 

 

 
600,000

 

 
600,000

$1.5 billion unsecured senior line of credit
 
L+1.10
%
(5) 
1.22
 
 
1/3/19
 

 

 

 

 
421,000

 

 
421,000

Unsecured senior notes payable
 
2.75
%
 
2.79
 
 
1/15/20
 

 

 

 

 

 
400,000

 
400,000

Unsecured senior notes payable
 
4.60
%
 
4.61
 
 
4/1/22
 

 

 

 

 

 
550,000

 
550,000

Unsecured senior notes payable
 
3.90
%
 
3.94
 
 
6/15/23
 

 

 

 

 

 
500,000

 
500,000

Unsecured senior notes payable
 
4.50
%
 
4.51
 
 
7/30/29
 

 

 

 

 

 
300,000

 
300,000

Unamortized discounts
 
 
 
 
 
 
 
 
 
(246
)
 
(337
)
 
(350
)
 
(362
)
 
(375
)
 
(880
)
 
(2,550
)
Unsecured debt weighted average/subtotal
 
 
 
 
2.93
 
 
 
 
(246
)
 
374,663

 
(350
)
 
(362
)
 
1,020,625

 
1,749,120

 
3,143,450

Weighted average/total
 
 
 
 
3.17
%
 
 
 
$
53,749

 
$
637,523

 
$
213,895

 
$
4,932

 
$
1,026,578

 
$
1,967,249

 
$
3,903,926

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balloon payments
 
 
 
 
 
 
 
 
 
$
46,983

 
$
632,449

 
$
210,280

 
$

 
$
1,021,000

 
$
1,954,466

 
$
3,865,178

Principal amortization
 
 
 
 
 
 
 
 
 
6,766

 
5,074

 
3,615

 
4,932

 
5,578

 
12,783

 
38,748

Total consolidated debt
 
 
 
 
 
 
 
 
 
$
53,749

 
$
637,523

 
$
213,895

 
$
4,932

 
$
1,026,578

 
$
1,967,249

 
$
3,903,926

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed-rate/hedged variable-rate debt
 
 
 
 
 
 
 
 
 
$
6,766

 
$
591,973

 
$
3,615

 
$
4,932

 
$
605,578

 
$
1,967,249

 
$
3,180,113

Unhedged variable-rate debt
 
 
 
 
 
 
 
 
 
46,983

 
45,550

 
210,280

 

 
421,000

 

 
723,813

Total consolidated debt
 
 
 
 
 
 
 
 
 
$
53,749

 
$
637,523

 
$
213,895

 
$
4,932

 
$
1,026,578

 
$
1,967,249

 
$
3,903,926


(1)
Represents the weighted average interest rate as of the end of the period plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees.
(2)
Includes any extension options that we control.
(3)
We have two, one-year options to extend the stated maturity date to July 1, 2017, subject to certain conditions. We expect to exercise our option to extend the maturity date from July 1, 2015, to July 1, 2016.
(4)
We expect to partially repay a portion of this loan and extend the maturity date to 2021.
(5)
Our unsecured senior line of credit contains a feature that allows lenders to competitively bid on the interest rate for borrowings under the facility. This may result in an interest rate that is below the stated rate of L+1.10%. In addition to the cost of borrowing, the facility is subject to an annual facility fee of 0.20%, based on the aggregate commitments outstanding.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
52



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Summary of Debt (continued)
(Dollars in thousands)
(Unaudited)

Secured construction loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property – Market/Submarket
 
Stated Rate
 
Maturity Date
 
Outstanding
Balance
 
Remaining Commitments
 
Total Commitments
259 East Grand Avenue – San Francisco Bay Area/South San Francisco
 
 
L+1.50%
 
 
 
7/1/15
(1)
 
$
46,983

 
$
8,017

 
$
55,000

269 East Grand Avenue – San Francisco Bay Area/South San Francisco
 
 
L+1.40%
 
 
 
6/1/16
(2)
 
20,550

 
15,450

 
36,000

75/125 Binney Street – Greater Boston/Cambridge
 
 
L+1.35%
 
 
 
8/23/17
(3)
 
134,280

 
116,120

 
250,400

 
 
 
 
 
 
 
 
 
 
$
201,813

 
$
139,587

 
$
341,400


(1)
We have two, one-year options to extend the stated maturity date to July 1, 2017, subject to certain conditions. We expect to exercise our option to extend the maturity date from July 1, 2015, to July 1, 2016.
(2)
We have two, one-year options to extend the stated maturity date to June 1, 2018, subject to certain conditions.
(3)
We have a one-year option to extend the stated maturity date to August 23, 2018, subject to certain conditions.


Debt covenants
 
Unsecured Senior Notes Payable
 
Unsecured Senior Line of Credit and
Unsecured Senior Bank Term Loans
Debt Covenant Ratios
 
Requirement
 
Actual
 
Requirement
 
Actual
Total Debt to Total Assets
 
≤ 60%
 
42%
 
≤ 60.0%
 
37.4%
Secured Debt to Total Assets
 
≤ 40%
 
8%
 
≤ 45.0%
 
7.1%
Consolidated EBITDA to Interest Expense
 
≥ 1.5x
 
6.2x
 
≥ 1.50x
 
3.14x
Unencumbered Total Asset Value to Unsecured Debt
 
≥ 150%
 
233%
 
N/A
 
N/A
Unsecured Leverage Ratio
 
N/A
 
N/A
 
≤ 60.0%
 
41.8%
Unsecured Interest Coverage Ratio
 
N/A
 
N/A
 
≥ 1.50x
 
7.84x


Interest rate swap agreements
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Contracts
 
Weighted Average Interest Pay Rate (1)
 
Fair Value as of 3/31/15
 
Notional Amount in Effect as of
Effective Date
 
Maturity Date
 
 
 
 
3/31/15
 
12/31/15
 
12/31/16
December 31, 2014
 
March 31, 2016
 
3
 
0.53%
 
$
(926
)
 
$
500,000

 
$
500,000

 
$

March 31, 2015
 
March 31, 2016
 
7
 
0.42%
 
(362
)
 
450,000

 
450,000

 

March 31, 2016
 
March 31, 2017
 
5
 
1.35%
 
(2,129
)
 

 

 
600,000

March 31, 2016
 
March 31, 2017
 
4
 
0.93%
 
N/A

(2) 

 

 
200,000

 
 
 
 
 
 
 
 
$
(3,417
)
 
$
950,000

 
$
950,000

 
$
800,000


(1)
In addition to the interest pay rate for each swap agreement, interest is also payable at an applicable margin for borrowings outstanding as of March 31, 2015. Borrowings under our unsecured senior bank term loans include an applicable margin of 1.20% and borrowings outstanding under our unsecured senior line of credit include an applicable margin of 1.10%.
(2)
These additional interest rate swap agreements were executed in April 2015.

ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
53



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Definitions and Reconciliations
(Unaudited)

This section contains additional information for sections throughout this supplemental information package as well as explanations of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance. Our computation of non-GAAP measures may not be comparable to similar measures reported by other companies.  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
 
The following table reconciles net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP, to EBITDA and Adjusted EBITDA:
 
Three Months Ended
(In thousands)
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Net income (loss)
$
25,008

 
$
(6,030
)
 
$
35,943

 
$
36,116

 
$
40,749

Interest expense:
 
 
 
 
 
 
 
 
 
Consolidated
23,236

 
22,188

 
20,555

 
17,433

 
19,123

Unconsolidated joint ventures
4

 
35

 

 

 

Total interest expense
23,240

 
22,223

 
20,555

 
17,433

 
19,123

Income taxes
1,122

 

 

 

 

Depreciation and amortization:
 
 
 
 
 
 
 
 
 
Continuing operations
58,920

 
57,973

 
58,388

 
57,314

 
50,421

Unconsolidated joint ventures
282

 
329

 

 

 

Total depreciation and amortization
59,202

 
58,302

 
58,388

 
57,314

 
50,421

EBITDA
108,572

 
74,495

 
114,886

 
110,863

 
110,293

Stock compensation expense
3,690

 
4,624

 
3,068

 
3,076

 
3,228

Loss on early extinguishment of debt

 

 
525

 

 

Gain on sales of real estate – rental properties

 
(1,838
)
 

 

 

Gain on sales of real estate – land parcels

 
(5,598
)
 
(8
)
 
(797
)
 

Impairment of real estate
14,510

 
51,675

 

 

 

Adjusted EBITDA
$
126,772

 
$
123,358

 
$
118,471

 
$
113,142

 
$
113,521


EBITDA represents earnings before interest, taxes, depreciation, and amortization, a non-GAAP financial measure, and is used by us and others as a supplemental measure of performance.  We use adjusted EBITDA (“Adjusted EBITDA”) to assess the performance of our operations, including our unconsolidated joint ventures, for financial and operational decision making, and as a supplemental or additional means of evaluating period-to-period comparisons on a consistent basis.  Adjusted EBITDA is calculated as EBITDA, excluding stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and impairments.  We believe Adjusted EBITDA provides investors relevant and useful information because it permits investors to view income from our operations on an unleveraged basis before the effects of taxes, depreciation and amortization, stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and impairments.

 
Adjusted EBITDA margins

Our total revenues exclude revenues from discontinued operations, and for the purposes of calculating the Adjusted EBITDA margin ratio, we exclude Adjusted EBITDA generated by our discontinued operations to improve the consistency and comparability from period to period.

The following table reconciles Adjusted EBITDA to Adjusted EBITDA – excluding discontinued operations:
 
Three Months Ended
(Dollars in thousands)
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Adjusted EBITDA
$
126,772

 
$
123,358

 
$
118,471

 
$
113,142

 
$
113,521

Add back: operating loss from discontinued operations
43

 
116

 
180

 
147

 
162

Adjusted EBITDA – excluding discontinued operations
$
126,815

 
$
123,474

 
$
118,651

 
$
113,289

 
$
113,683

Total revenues
$
196,753

 
$
188,674

 
$
185,615

 
$
176,402

 
$
176,186

Adjusted EBITDA margins
64%


65%


64%


64%


65%


Adjusted funds from operations
 
AFFO is a non-GAAP financial measure that we use as a supplemental measure of our performance.  AFFO excludes certain items that are not representative of our operating results because such items are dependent upon historical costs or are subject to judgmental valuation inputs and the timing of our decisions.

AFFO is not intended to represent cash flow for the period, and is intended only to provide an additional measure of performance.  We believe that net income (loss) attributable to Alexandria’s common stockholders is the most directly comparable GAAP financial measure to AFFO.  We believe that AFFO is a widely recognized measure of the operations of equity REITs, and presenting AFFO will enable investors to assess our performance in comparison to other equity REITs.  However, other equity REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to AFFO calculated by other equity REITs.  AFFO should not be considered as an alternative to net income (loss) (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.

Annualized base rent
 
Annualized base rent means the annualized fixed base rental amount in effect as of the end of the period, related to our operating rentable square feet (using rental revenue computed on a straight-line basis in accordance with GAAP). 



ALEXANDRIA REAL ESTATE EQUITIES, INC
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54



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Definitions and Reconciliations (continued)
(Unaudited)


Average cash yield

See definition of initial stabilized yield (unlevered).

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. See definition of fixed charge coverage ratio for a reconciliation of interest expense, the most directly comparable GAAP financial measure, to cash interest.

Construction in progress

A key component of our business model is our value-creation development and redevelopment projects.  These projects are focused on providing high-quality, generic, and reusable science and technology space to meet the real estate requirements of and are reusable by a wide range of client tenants.  We also have certain significant value-creation projects undergoing important and substantial predevelopment activities to bring these assets to their intended use.  These critical activities add significant value and are required for the construction of buildings.  Upon completion, each value-creation project is expected to generate significant revenues and cash flows.  Our development and redevelopment projects are generally in locations that are highly desirable to high-quality science and technology entities, which we believe results in higher occupancy levels, longer lease terms, and higher rental income and returns.  Development projects consist of the ground-up development of generic and reusable facilities.  We generally will not commence new development projects for aboveground construction of Class A science and technology space without first securing pre-leasing for such space except when there is significant market demand for high-quality Class A facilities.  Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into science and technology space.

Land undergoing predevelopment activities (CIP)

Land undergoing predevelopment activities is classified as construction in progress and is undergoing activities prior to commencement of construction of aboveground building improvements.  If aboveground construction is not initiated at completion of predevelopment activities, the land parcel will be classified as land held for future development.  Our objective with predevelopment is to reduce the time it takes to deliver projects to prospective client tenants.

We are required to capitalize project costs, including interest, property taxes, insurance, and other costs directly related and essential to the development or construction of a project during periods when activities necessary to prepare an asset for its intended use are in progress.  Predevelopment costs generally include the following activities prior to commencement of vertical construction:

Traditional preconstruction costs including entitlement, design, construction drawings, Building Information Modeling (3-D virtual modeling), budgeting, sustainability and energy optimization reviews, permitting, and planning for all aspects of the project.
Site and infrastructure construction costs including belowground site work, utility connections, land grading, drainage, egress and regress access points, foundation, and other costs to prepare the site for construction of aboveground building improvements.

Land held for future development

All predevelopment efforts have been advanced to appropriate stages and no further predevelopment activities are ongoing and therefore, interest, property taxes, and other costs related to these assets are expensed as incurred.
 
Dividend payout ratio

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 date multiplied by the related dividend per share) to FFO attributable to Alexandria’s common stockholders on a diluted basis, 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

The fixed charge coverage ratio is a supplemental measure of our ability to satisfy fixed financing obligations and preferred stock dividends. The following table presents a reconciliation of interest expense, the most directly comparable GAAP financial measure to cash interest and fixed charges:
 
Three Months Ended
(Dollars in thousands)
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Adjusted EBITDA
$
126,772

 
$
123,358

 
$
118,471

 
$
113,142

 
$
113,521

 
 
 
 
 
 
 
 
 
 
Interest expense
$
23,240

 
$
22,188

 
$
20,555

 
$
17,433

 
$
19,123

Add: capitalized interest
10,971

 
11,665

 
12,125

 
11,302

 
12,013

Less: amortization of loan fees
(2,835
)
 
(2,822
)
 
(2,786
)
 
(2,743
)
 
(2,561
)
Add: unconsolidated JV cash interest
588

 

 

 

 

Less: amortization of debt premiums (discounts)
82

 
(17
)
 
36

 
69

 
(205
)
Cash interest
32,046

 
31,014

 
29,930

 
26,061

 
28,370

Dividends on preferred stock
6,247

 
6,284

 
6,471

 
6,472

 
6,471

Fixed charges
$
38,293

 
$
37,298

 
$
36,401

 
$
32,533

 
$
34,841

Fixed charge coverage ratio:
 
 
 
 
 
 
 
 
 
– quarter annualized
3.3x

 
3.3x

 
3.3x

 
3.5x

 
3.3x

– trailing 12 months
3.3x

 
3.3x

 
3.3x

 
3.2x

 
3.0x




ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
55



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Definitions and Reconciliations (continued)
(Unaudited)


Funds from operations and funds from operations, as adjusted

FFO is a widely used non-GAAP financial measure among equity REITs.  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  Moreover, we believe that FFO, as adjusted, is also helpful because it allows investors to compare our performance to the performance of other real estate companies on a consistent basis, without having to account for differences caused by investment and disposition decisions, financing decisions, terms of securities, capital structures, and capital market transactions.  We compute FFO in accordance with standards established by the Board of Governors of the NAREIT in its April 2002 White Paper and related implementation guidance. Impairment write-downs of depreciable real estate are added back to net income for our computation of FFO, in accordance with NAREIT guidance. Our computation of FFO, as adjusted, further adds back impairment write-downs of non-depreciable real estate. Neither FFO nor FFO, as adjusted, should be considered as an alternative to net income (loss) (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of liquidity, nor are they indicative of the availability of funds for our cash needs, including funds available to make distributions.

Initial stabilized yield (unlevered)
Initial stabilized yield is calculated as the quotient of the estimated amounts of NOI and our investment in the property.  Our initial stabilized yield excludes the impact of leverage.  Our cash rents related to our value-creation projects are expected to increase over time and our average cash yields are expected, in general, to be greater than our initial stabilized yields on a cash basis.  Our estimates for initial yields, initial yields on a 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 less straight-line rent, 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.

Average cash yield reflects cash rents, including contractual rent escalations after initial rental concessions have elapsed, calculated on a straight-line basis.

 
Net debt to Adjusted EBITDA
Net debt to Adjusted EBITDA is a non-GAAP financial measure that we believe is useful to investors as a supplemental measure in evaluating our balance sheet leverage. Effective 1Q15 our calculation includes our share of unconsolidated joint venture debt.  The following table reconciles net debt to Adjusted EBITDA:
(Dollars in thousands)
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Secured notes payable:
 
 
 
 
 
 
 
 
 
 
Consolidated
 
$
760,476

 
$
652,209

 
$
636,825

 
$
615,551

 
$
597,511

Unconsolidated joint ventures
 
45,778

 

 

 

 

Total secured notes payable
 
806,254

 
652,209

 
636,825

 
615,551

 
597,511

Unsecured senior notes payable
 
1,747,450

 
1,747,370

 
1,747,290

 
1,048,310

 
1,048,270

Unsecured senior line of credit
 
421,000

 
304,000

 
142,000

 
571,000

 
506,000

Unsecured senior bank term loans
 
975,000

 
975,000

 
975,000

 
1,100,000

 
1,100,000

Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
Consolidated
 
(90,641
)
 
(86,011
)
 
(67,023
)
 
(61,701
)
 
(74,970
)
Unconsolidated joint ventures
 
(5,186
)
 

 

 

 

Total cash and cash equivalents
 
(95,827
)
 
(86,011
)
 
(67,023
)
 
(61,701
)
 
(74,970
)
Less: restricted cash
 
(56,704
)
 
(26,884
)
 
(24,245
)
 
(24,519
)
 
(30,454
)
Net debt
 
$
3,797,173

 
$
3,565,684

 
$
3,409,847

 
$
3,248,641

 
$
3,146,357

Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
$
507,088

 
$
493,432

 
$
473,884

 
$
452,568

 
$
454,084

– trailing 12 months
 
$
481,743

 
$
468,492

 
$
457,498

 
$
441,914

 
$
428,699

Net debt to Adjusted EBITDA:
 
 
 
 
 
 
 
 
 
 
– quarter annualized
 
7.5
x
 
7.2
x
 
7.2
x
 
7.2
x
 
6.9
x
– trailing 12 months
 
7.9
x
 
7.6
x
 
7.5
x
 
7.4
x
 
7.3
x


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
56



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Definitions and Reconciliations (continued)
(Unaudited)


NOI

The following table reconciles income from continuing operations to total NOI from continuing operations:
 
 
Three Months Ended
(In thousands)
 
3/31/15
 
3/31/14
Income from continuing operations
 
$
25,051

 
$
40,911

Add back:
 
 
 
 
General and administrative
 
14,387

 
13,224

Interest, including unconsolidated joint ventures
 
23,240

 
19,123

Depreciation and amortization, including unconsolidated joint ventures
 
59,202

 
50,421

Impairment of real estate
 
14,510

 


 
111,339

 
82,768

Total NOI from continuing operations
 
$
136,390

 
$
123,679


NOI is a non-GAAP financial measure equal to income from continuing operations, the most directly comparable GAAP financial measure, excluding loss on early extinguishment of debt, impairment of real estate, depreciation and amortization, interest expense, and general and administrative expense, including our share from our unconsolidated joint ventures.  We believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects primarily those income and expense items that are incurred at the property level.  Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets, including our share from our unconsolidated joint ventures.  NOI on a cash basis is NOI, adjusted to exclude the effect of straight-line rent adjustments required by GAAP.  We believe that NOI on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent adjustments to rental revenue.

Further, we believe NOI is useful to investors as a performance measure, because when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not immediately apparent from income from continuing operations.  NOI presented by us may not be comparable to NOI reported by other equity REITs that define NOI differently.  We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with income from continuing operations as presented in our consolidated statements of income.  NOI should not be considered as an alternative to income from continuing operations as an indication of our performance, or as an alternative to cash flows as a measure of liquidity, or our ability to make distributions.

 
Same property comparisons

As a result of changes within our total property portfolio during the comparative periods presented, including assets acquired, properties placed into development and redevelopment, and projects delivered into operations from development and redevelopment, the consolidated total rental revenues, tenant recoveries, and 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 period, we analyze the operating performance for all properties, including any unconsolidated joint ventures, that were fully operating for the entirety of the comparative periods presented separately from properties acquired subsequent to the first day in the earliest comparable period presented, properties that underwent development or redevelopment at any time during the comparative periods, and corporate entities (legal entities performing general and administrative functions), which are excluded from same property results. Additionally, rental revenues from lease termination fees, if any, are excluded from the results of the same properties.

Stabilized occupancy date

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

Total equity market capitalization

Total equity market capitalization is equal to the sum of outstanding shares of series E cumulative convertible preferred stock and common stock multiplied by the related closing price of each class at the end of each period presented and the liquidation value of the series D cumulative convertible preferred stock.
 
Total market capitalization
 
Total market capitalization is equal to the sum of total equity market capitalization and total debt.


ALEXANDRIA REAL ESTATE EQUITIES, INC
ALL RIGHTS RESERVED © 2015
57



ALEXANDRIA REAL ESTATE EQUITIES, INC.
March 31, 2015

Definitions and Reconciliations (continued)
(Unaudited)


Unencumbered NOI as a percentage of total NOI from continuing operations
 
Unencumbered NOI as a percentage of total NOI from continuing operations 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 primarily those income and expense items that are incurred at the unencumbered property level.  We use unencumbered NOI as a percentage of total NOI from continuing operations in order to assess our compliance with our financial covenants under our debt obligations because the measure serves as a proxy for a financial measure under such debt obligations.  Unencumbered NOI is derived from assets classified in continuing operations, including our share from unconsolidated joint ventures, which are not subject to any mortgage, deed of trust, lien, or other security interest as of the period for which income is presented.
 
Three Months Ended
(Dollars in thousands)
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Unencumbered NOI
$
111,957

 
$
111,741

 
$
108,155

 
$
103,951

 
$
103,096

Encumbered NOI
24,433

 
20,970

 
20,037

 
20,098

 
20,583

Total NOI from continuing operations
$
136,390

 
$
132,711

 
$
128,192

 
$
124,049

 
$
123,679

Unencumbered NOI as a percentage of total NOI
82%

 
84%

 
84%

 
84%

 
83%


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 and includes the impact of our interest rate swap agreements, amortization of debt discounts/premiums, amortization of loan fees, 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 effective interest rate swap agreements, and the amount of loan fee amortization.

The following table presents the weighted average interest rate for capitalization of interest:
 
Three Months Ended
 
3/31/15
 
12/31/14
 
9/30/14
 
6/30/14
 
3/31/14
Weighted average interest rate
3.54%
 
3.69%
 
3.73%
 
3.41%
 
3.88%



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ALL RIGHTS RESERVED © 2015
58