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Alexandria Real Estate Equities, Inc. Reports: 1Q19 Revenues of $358.8 million, up 12.1% over 1Q18; 1Q19 Earnings per Share - Diluted of $1.11; 1Q19 FFO - Diluted, As Adjusted, per Share of $1.71; and Operational Excellence and Growing Dividends

PASADENA, Calif., April 29, 2019 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (ARE) announced financial and operating results for the first quarter ended March 31, 2019.

Key highlights

Operating results


1Q19


1Q18

Total revenues:




In millions

$

358.8


$

320.1

Growth from 1Q18

12.1%







Net income attributable to Alexandria's common stockholders – diluted:

In millions

$

123.6


$

132.4

Per share

$

1.11


$

1.32





Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted:

In millions

$

189.8


$

162.5

Per share

$

1.71


$

1.62

25th anniversary: an important milestone in company history

In January 2019, we celebrated the 25th anniversary of our founding. Since our initial launch in January 1994 as a garage startup with a unique, strategic business plan, $19 million in Series A capital, and a vision to create a new kind of real estate company focused on serving the life science industry, we have grown into an investment-grade rated S&P 500® company with a total market capitalization of $21.8 billion. From our initial public offering in May 1997 through March 31, 2019, we have generated a total shareholder return of 1,542%, assuming reinvestment of dividends.

A REIT industry-leading, high-quality tenant roster

50% of annual rental revenue from investment-grade or publicly traded large cap tenants.

Continuation of strong rental rate growth

Strong rental rate increases (cash basis) of 24.3% for 1Q19 represents our highest quarterly cash rental rate increase over the past 10 years.

Credit rating improvement

In February 2019, S&P Global Ratings raised our corporate issuer credit rating to BBB+/Stable from BBB/Positive. The rating upgrade reflects our consistently strong operating performance and continued successful delivery of our value-creation pipeline.

Sale of partial interest in core Class A property

In February 2019, we sold a 60% interest in 75/125 Binney Street, a Class A property in our Cambridge submarket, for a sales price of $438 million, or $1,880 per RSF, representing a 4.3% capitalization rate on 4Q18 net operating income (cash basis), annualized. We retained control over, and continue to consolidate, the new joint venture. We accounted for the $202.2 million difference between the consideration received and the book value of the 60% interest sold as an equity transaction with no gain recognized in earnings.

Anchor lease with Pinterest, Inc. at 88 Bluxome Street

In March 2019, we leased 488,899 RSF to Pinterest, Inc. at 88 Bluxome Street in our Mission Bay/SoMa submarket. The lease with Pinterest, Inc. brings pre-leasing of the 1.1 million RSF future development project to 58%.

Increased common stock dividend

Common stock dividend declared for 1Q19 of $0.97 per common share, up seven cents, or 7.8%, over 1Q18; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

Strong internal growth

  • Net operating income (cash basis) of $892.9 million for 1Q19 annualized, up $134.6 million, or 17.8%, compared to 1Q18 annualized
  • Same property net operating income growth:
  • Continued strong leasing activity and rental rate growth in light of modest contractual lease expirations at the beginning of 2019 and a highly leased value-creation pipeline:


1Q19

Total leasing activity – RSF


1,248,972

Lease renewals and re-leasing of space:




RSF (included in total leasing activity above)


509,415

Rental rate increases


32.9%

Rental rate increases (cash basis)


24.3%





Future growth of net operating income (cash basis) driven by recently delivered projects

Significant near-term growth of net operating income (cash basis) of $65 million upon the burn-off of initial free rent on recently delivered projects.

Strong external growth; disciplined allocation of capital to visible, highly leased value-creation pipeline

Since the beginning of 4Q18, we have placed into service 1.0 million RSF of development and redevelopment projects, including the following projects during 1Q19:

Property


Submarket


RSF


Leased


Tenant

279 East Grand Avenue


South San Francisco


139,810


100%


Verily Life Sciences, LLC;
insitro, Inc.

399 Binney Street


Cambridge


123,403


100%


Three life science entities










188 East Blaine Street


Lake Union


90,615


100%


bluebird bio, Inc.;

Seattle Cancer Care Alliance;

Sana Biotechnology, Inc.

681 Gateway Boulevard


South San Francisco


66,000


100%


Eli Lilly and Company

Alexandria PARC


Greater Stanford


48,547


100%


Workday, Inc.










  • 1Q19 commencements of development projects aggregating 356,904 RSF, including:

Completed acquisitions

During 1Q19, we acquired 10 properties for an aggregate purchase price of $383.0 million in key submarkets. These acquisitions consisted of:

  • Future development opportunities aggregating 175,000 RSF in our Seaport Innovation District submarket, along with 129,084 RSF of operating properties with future development and redevelopment opportunities; and
  • 247,770 RSF of operating properties strategically located in our Greater Stanford and Mission Bay/SoMa submarkets.

Key items included in operating results

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

(In millions, except per share amounts)

Amount


Per Share – Diluted

1Q19


1Q18


1Q19


1Q18

Unrealized gains on non-real estate investments(1)

$

72.2


$

72.2


$

0.65


$

0.70

Realized gains on non-real estate investments


8.3



0.08

Loss on early extinguishment of debt

(7.4)



(0.07)


Preferred stock redemption charge

(2.6)



(0.02)


Total

$

62.2


$

80.5


$

0.56


$

0.78









Weighted-average shares of common stock outstanding

for calculation of earnings per share – diluted

111.1


100.1


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

Core operating metrics as of or for the quarter ended March 31, 2019

High-quality revenues and cash flows and operational excellence

Percentage of annual rental revenue in effect from:




Investment-grade or publicly traded large cap tenants


50%


Class A properties in AAA locations


77%


Occupancy of operating properties in North America


97.2%


Operating margin


72%


Adjusted EBITDA margin


70%


Weighted-average remaining lease term:




All tenants


8.4 years

Top 20 tenants


12.1 years





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

Balance sheet management

Key metrics as of March 31, 2019

  • $15.9 billion of total equity capitalization
  • $21.8 billion of total market capitalization
  • $2.7 billion of liquidity
  • No unhedged variable-rate debt
  • 95% of unencumbered net operating income as a percentage of total net operating income


1Q19






Quarter


Trailing 12


4Q19




Annualized


Months


Goal


Net debt to Adjusted EBITDA


5.4x


5.8x


Less than or
equal to 5.3x

(1)

Fixed-charge coverage ratio


4.5x


4.2x


Greater than 4.0x

(1)

Total value-creation pipeline as a percentage of 
     gross investments in real estate in North 
     America


10%


N/A


8% to 12%



(1)     Quarter annualized.

 

Key capital events

  • During 1Q19, we successfully increased our weighted-average remaining term of debt outstanding to over seven years, as a result of the following:
  • During 1Q19, we repurchased, in privately negotiated transactions, 275,000 shares of our 7.00% Series D cumulative convertible preferred stock for $9.2 million, or $33.60 per share, and recognized a preferred stock redemption charge of $2.6 million. As of 1Q19, 2.3 million shares of our 7.00% Series D cumulative convertible preferred stock were outstanding at a book value aggregating $57.5 million.
  • During the first quarter of 2019 and through April 29, 2019, there was no sale activity under our "at the market" common stock offering programs. As of April 29, 2019, the remaining aggregate amount available under our current programs for future sales of common stock is $658.7 million.

Investments

We carry our investments in publicly traded companies and certain privately held entities at fair value. As of March 31, 2019, cumulative unrealized gains related to changes in fair value aggregated $312.4 million and our adjusted cost basis aggregated $688.5 million. Investment income recognized in 1Q19 included the following:

  • Unrealized gains of $72.2 million; and
  • Realized gains of $11.4 million.

Corporate responsibility and industry leadership

  • In February 2019, it was announced that we are working with Verily Life Sciences, LLC, Alphabet's life science division, to build a tech-focused rehabilitation campus in Dayton, Ohio, for the full and sustained recovery of people living with opioid addiction. The campus will provide a comprehensive model of care that will include a behavioral health treatment center, rehabilitation housing, and wrap-around services, and will act as a state of the art model for opioid addiction treatment nationwide.
  • In February 2019, we were recognized by the Center for Active Design, which operates Fitwel®, as the inaugural Industry Leading Company in Fitwel's 2018 Best in Building Health. We were selected based on our 3-Star Fitwel certification (the highest rating possible); our leadership in promoting and educating the real estate industry on the opportunities for and benefits of building design, construction, and operational practices that support high levels of occupant health and wellness; and our #1 global ranking in the 2018 GRESB Health & Well-Being Module.
  • In March 2019, Alexandria LaunchLabs® Cambridge, located at the Alexandria Center® at One Kendall Square in Greater Boston, achieved LEED gold certification and a Fitwel 3-Star certification.

Subsequent events

  • In April 2019, we entered into an agreement to extend the maturity date of our unsecured senior bank term loan to January 2, 2025. We expect that the extension will become effective in June 2019, upon the satisfaction of certain conditions.
  • In April 2019, we announced the launch of a new strategic agricultural technology (agtech) business initiative with the opening of the Alexandria Center® for AgTech – Research Triangle, the first state of the art, fully integrated, multi-tenant, amenity-rich agtech R&D and greenhouse campus. The campus opens with a 97% leased first phase, a 175,000 RSF redevelopment, at 5 Laboratory Drive, in the heart of Research Triangle, the most important, dense, and diverse agtech cluster in the United States.

 

Acquisitions

March 31, 2019

(Dollars in thousands)

Property


Submarket/Market


Date of
Purchase


Number of
Properties


Operating

Occupancy


Square Footage


Unlevered Yields


Purchase Price






Future
Development


Operating With
Future
Development/
Redevelopment


Operating


Initial
Stabilized


Initial
Stabilized
(Cash)











Value-creation


























10 Necco Street


Seaport Innovation 
     District/Greater Boston


3/26/19



N/A


175,000




(1)


(1)


$

81,100





























Operating with value-creation


























3911 and 3931 Sorrento Valley Boulevard


Sorrento Mesa/San Diego


1/9/19


2


100%



53,220



7.2%


6.6%



23,250



Other






4





75,864










39,150









6





129,084










62,400



Operating


























3170 Porter Drive


Greater Stanford/
     
San Francisco


1/10/19


1


100%




98,626


7.5%


5.1%



100,250



Shoreway Science Center


Greater Stanford/
     
San Francisco


1/10/19


2


100%




82,462


7.2%


5.5%



73,200



260 Townsend Street


Mission Bay/SoMa/
     
San Francisco


3/14/19


1


100%




66,682


7.4%


5.8%



66,000

(2)








4






247,770









239,450



Total acquisitions






10




175,000


129,084


247,770









382,950





























10260 Campus Point Drive and
     
4161 Campus Point Court


University Town Center/
     
San Diego


1/2/19


2


100%


N/A   


N/A  


N/A   


(3)


(3)



65,000

(4)


Pending


Various





















182,050



2019 guidance range midpoint






















$

630,000























































(1)

We expect to provide total estimated costs and related yields in the future upon the commencement of development.

(2)

Purchase price includes the assumption of a $28.2 million secured loan with a stated interest rate of 4.14%.

(3)

Refer to the "New Class A Development and Redevelopment Properties: Summary of Pipeline" of our Supplemental Information for additional information.

(4)

In December 2018, we acquired two buildings adjacent to our Campus Pointe by Alexandria campus aggregating 269,048 RSF, comprising 109,164 RSF at 10260 Campus Point Drive and 159,884 RSF at 4161 Campus Point Court which
are 100% leased through 2022. At lease expiration, 10260 Campus Point Drive will be redeveloped and expanded into a 176,455 RSF Class A building, which is 100% pre-leased for 15 years with the target delivery in 2021. 4161 Campus
Point Court will support future development aggregating 201,900 RSF through one or more Class A buildings at our Campus Pointe by Alexandria campus. The total purchase price of $80.0 million was paid in two installments, $15.0 million
in December 2018 and $65.0 million in January 2019.

 

 

Dispositions and Sale of Partial Interest in Core Class A Property

March 31, 2019

(Dollars in thousands, except per RSF amounts)


Property


Submarket/Market


Date of Sale


RSF


Sales Price


Sales Price
per RSF


Gain


Sale of partial interest in core Class A property:














75/125 Binney Street (sale of 60% noncontrolling interest)(1)


Cambridge/Greater Boston


2/13/19


388,270


$

438,000


$

1,880


(1)
















2019 guidance range midpoint








$

750,000






































(1)

In February 2019, we sold a 60% interest in 75/125 Binney Street, a Class A property in our Cambridge submarket, for a sales price of $438 million, or $1,880 per RSF, representing a 4.3% capitalization rate on net operating income (cash
basis), annualized, for the three months ended December 31, 2018. We retained control over, and continue to consolidate, the new joint venture. We accounted for the $202.2 million difference between the consideration received and the
book value of the 60% interest sold as an equity transaction with no gain recognized in earnings.

 

 

 

Guidance

March 31, 2019

(Dollars in millions, except per share amounts)


     The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2019. There can be no assurance that actual amounts will not be
materially higher or lower than these expectations. Refer to our discussion of "forward-looking statements" on page 7 of this Earnings Press Release for additional information.



Summary of Key Changes in Guidance


Guidance


Summary of Key Changes in Key Sources and Uses of 
     Capital Guidance



Guidance Midpoint


As of 4/29/19


As of 2/4/19



As of 4/29/19



As of 2/4/19

EPS, FFO per share, and FFO per share, as adjusted


See updates below


Issuance of unsecured senior notes payable



$

850


$



650

Rental rate increases


26.0% to 29.0%


25.0% to 28.0%


Repayment of secured notes payable



$

(315)


$



(125)

Rental rate increases (cash basis)


13.0% to 16.0%


11.0% to 14.0%


















Projected Earnings per Share and Funds From Operations per Share Attributable to Alexandria's 
     Common Stockholders – Diluted, as Adjusted



Key Credit Metrics


2019 Guidance



As of 4/29/19


As of 2/4/19


Net debt to Adjusted EBITDA – 4Q19 annualized


Less than or equal to 5.3x

Earnings per share(1)


$2.65 to $2.75


$1.95 to $2.15


Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized


Less than or equal to 5.4x

     Depreciation and amortization


4.85


4.85


Fixed-charge coverage ratio – 4Q19 annualized


Greater than 4.0x

     Allocation to unvested restricted stock awards


(0.05)


(0.03)


Value-creation pipeline as a percentage of gross real estate as of  


8% to 12%

Funds from operations per share(2)


$7.45 to $7.55


$6.77 to $6.97


     December 31, 2019










     Unrealized gains on non-real estate investment(1)


(0.65)









Certain

Completed

Items

     Loss on early extinguishment of debt


0.07


0.06








     Preferred stock redemption charge


0.02


0.02


Key Sources and Uses of Capital


Range


Midpoint


     Allocation to unvested restricted stock awards


0.01



Sources of capital:













Funds from operations per share, as adjusted


$6.90 to $7.00


$6.85 to $7.05


Net cash provided by operating activities after 


$

170


$

210


$

190






Midpoint


$6.95


$6.95


     dividends





















Incremental debt



485



445



465












Real estate dispositions and partial interest sales:















Key Assumptions


Low


High


     Sale of partial interest in core Class A property



438



438



438


$

438

(3)

Occupancy percentage in North America as of December 31, 2019


97.7%


98.3%


     Other



262



362



312












     Common equity



475



575



525






Lease renewals and re-leasing of space:






Total sources of capital


$

1,830


$

2,030


$

1,930






     Rental rate increases


26.0%


29.0%


Uses of capital:














     Rental rate increases (cash basis)


13.0%


16.0%


     Construction


$

1,250


$

1,350


$

1,300






Same property performance:






     Acquisitions



580



680



630



(4)


     Net operating income increase


1.0%


3.0%


Total uses of capital


$

1,830


$

2,030


$

1,930






     Net operating income increase (cash basis)


6.0%


8.0%


Incremental debt (included above):





















     Issuance of unsecured senior notes payable


$

850


$

850


$

850


$

850


Straight-line rent revenue


$

95


$

105

(5)

     Assumption of secured note payable



28



28



28


$

28


General and administrative expenses


$

108


$

113


     Repayments of secured notes payable



(310)



(320)



(315)


$

(300)


Capitalization of interest


$

72


$

82


     $2.2 billion unsecured senior line of credit/other



(83)



(113)



(98)






Interest expense


$

172


$

182


Incremental debt


$

485


$

445


$

465






































(1)

Excludes future unrealized gains or losses after March 31, 2019, that are required to be recognized in earnings.

(2)

Calculated in accordance with standards established by the Advisory Board of Governors of the National Association of Real Estate Investment Trusts (the "Nareit Board of Governors"). Refer to "Funds From
Operations and Funds From Operations, As Adjusted, Attributable to Alexandria's Common Stockholders" in the "Definitions and Reconciliations" section of our Supplemental Information for additional information.

(3)

Refer to "Dispositions and Sale of Partial Interest in Core Class A Property" in this Earnings Press Release for additional information.

(4)

Refer to "Acquisitions" in this Earnings Press Release for additional information.

(5)

Approximately 45% of straight-line rent revenue represents initial free rent on recently delivered and expected 2019 deliveries of new Class A properties from our development and redevelopment pipeline.

 

Earnings Call Information and About the Company
March 31, 2019

We will host a conference call on Tuesday, April 30, 2019, at 3:00 p.m. Eastern Time ("ET")/noon Pacific Time ("PT"), which is open to the general public to discuss our financial and operating results for the first quarter ended March 31, 2019. To participate in this conference call, dial (833) 366-1125 or (412) 902-6738 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the call for Alexandria Real Estate Equities, Inc. The audio webcast can be accessed at www.are.com in the "For Investors" section. A replay of the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT on Tuesday, April 30, 2019. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10128833.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2019, is available in the "For Investors" section of our website at www.are.com or by following this link: http://www.are.com/fs/2019q1.pdf.

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

About the Company

Alexandria Real Estate Equities, Inc. (ARE), an S&P 500® company, is an urban office real estate investment trust ("REIT") uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations, with a total market capitalization of $21.8 billion and an asset base in North America of 33.7 million square feet ("SF") as of March 31, 2019. The asset base in North America includes 23.2 million RSF of operating properties and 4.4 million RSF of new Class A properties currently undergoing construction or pre-construction, consisting of 2.1 million RSF of development and redevelopment projects under construction, and 2.3 million RSF undergoing pre-construction activities. Additionally, the asset base in North America includes 6.1 million SF of intermediate-term and future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science and technology companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

***********

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

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

 

Consolidated Statements of Operations

March 31, 2019

(In thousands, except per share amounts)




Three Months Ended



3/31/19


12/31/18


9/30/18


6/30/18


3/31/18

Revenues:











Income from rentals(1)


$

354,749



$

337,785



$

336,547



$

322,794



$

317,655


Other income


4,093



2,678



5,276



2,240



2,484


Total revenues


358,842



340,463



341,823



325,034



320,139













Expenses:











Rental operations


101,501



97,682



99,759



91,908



91,771


General and administrative


24,677



22,385



22,660



22,939



22,421


Interest


39,100



40,239



42,244



38,097



36,915


Depreciation and amortization


134,087



124,990



119,600



118,852



114,219


Impairment of real estate








6,311




Loss on early extinguishment of debt


7,361





1,122






Total expenses


306,726



285,296



285,385



278,107



265,326













Equity in earnings of unconsolidated real estate joint ventures


1,146



1,029



40,718



1,090



1,144


Investment income (loss)


83,556



(83,531)



122,203



12,530



85,561


Gain on sales of real estate




8,704








Net income (loss)


136,818



(18,631)



219,359



60,547



141,518


Net income attributable to noncontrolling interests


(7,659)



(6,053)



(5,723)



(5,817)



(5,888)


Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s stockholders


129,159



(24,684)



213,636



54,730



135,630


Dividends on preferred stock


(1,026)



(1,155)



(1,301)



(1,302)



(1,302)


Preferred stock redemption charge


(2,580)



(4,240)








Net income attributable to unvested restricted stock awards


(1,955)



(1,661)



(3,395)



(1,412)



(1,941)


Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders


$

123,598



$

(31,740)



$

208,940



$

52,016



$

132,387













Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders:











Basic


$

1.11



$

(0.30)



$

2.01



$

0.51



$

1.33


Diluted


$

1.11



$

(0.30)



$

1.99



$

0.51



$

1.32













Weighted-average shares of common stock outstanding:











Basic


111,054



106,033



104,179



101,881



99,855


Diluted


111,054



106,033



105,385



102,236



100,125













Dividends declared per share of common stock


$

0.97



$

0.97



$

0.93



$

0.93



$

0.90












































(1)

Upon the adoption of new lease accounting standards on January 1, 2019, rental revenues and tenant recoveries are aggregated within income from rentals. Prior periods have been reclassified to conform to new standards. Refer to
"Financial and Asset Base Highlights" and "Lease Accounting" in the "Definitions and Reconciliations" section of our Supplemental Information for additional information.

 

 

Consolidated Balance Sheets

March 31, 2019

(In thousands)




3/31/19


12/31/18


9/30/18


6/30/18


3/31/18

Assets











Investments in real estate


$

12,410,350



$

11,913,693



$

11,587,312



$

11,190,771



$

10,671,227


Investments in unconsolidated real estate joint ventures


290,405



237,507



197,970



192,972



169,865


Cash and cash equivalents


261,372



234,181



204,181



287,029



221,645


Restricted cash


54,433



37,949



29,699



34,812



37,337


Tenant receivables


9,645



9,798



11,041



8,704



11,258


Deferred rent


558,103



530,237



511,680



490,428



467,112


Deferred leasing costs


241,268



239,070



238,295



232,964



226,803


Investments


1,000,904



892,264



957,356



790,753



724,310


Other assets


653,726


(1)

370,257



368,032



333,757



291,639


Total assets


$

15,480,206



$

14,464,956



$

14,105,566



$

13,562,190



$

12,821,196













Liabilities, Noncontrolling Interests, and Equity











Secured notes payable


$

356,461



$

630,547



$

632,792



$

776,260



$

775,689


Unsecured senior notes payable


5,139,500



4,292,293



4,290,906



4,289,521



3,396,912


Unsecured senior line of credit




208,000



413,000





490,000


Unsecured senior bank term loans


347,542



347,415



347,306



548,324



548,197


Accounts payable, accrued expenses, and tenant security deposits


1,171,377


(1)

981,707



907,094



849,274



783,986


Dividends payable


110,412



110,280



101,084



98,676



93,065


Total liabilities


7,125,292



6,570,242



6,692,182



6,562,055



6,087,849













Commitments and contingencies






















Redeemable noncontrolling interests


10,889



10,786



10,771



10,861



10,212













Alexandria Real Estate Equities, Inc.'s stockholders' equity:











7.00% Series D cumulative convertible preferred stock


57,461



64,336



74,386



74,386



74,386


Common stock


1,112



1,110



1,058



1,033



1,007


Additional paid-in capital


7,518,716



7,286,954



6,801,150



6,387,527



6,117,976


Accumulated other comprehensive (loss) income


(10,712)



(10,435)



(3,811)



(2,485)



1,228


Alexandria Real Estate Equities, Inc.'s stockholders' equity


7,566,577



7,341,965



6,872,783



6,460,461



6,194,597


Noncontrolling interests


777,448



541,963



529,830



528,813



528,538


Total equity


8,344,025



7,883,928



7,402,613



6,989,274



6,723,135


Total liabilities, noncontrolling interests, and equity


$

15,480,206



$

14,464,956



$

14,105,566



$

13,562,190



$

12,821,196




(1)

Increase is related to the recognition of a lease liability and corresponding right-of-use asset for our operating leases in which we are a lessee, upon the adoption of a
new lease accounting standard on January 1, 2019. As of March 31, 2019, the right-of-use asset and corresponding lease liability aggregated $238.4 million and $244.6 million,
respectively. Refer to "Lease Accounting" in the "Definitions and Reconciliations" section of our Supplemental Information for additional information.

 

 

Funds From Operations and Funds From Operations per Share

March 31, 2019

(In thousands)


     The following table presents a reconciliation of net income (loss) attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in
accordance with generally accepted accounting principles ("GAAP"), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations
attributable to Alexandria's common stockholders – diluted, and funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below:



Three Months Ended



3/31/19


12/31/18


9/30/18


6/30/18


3/31/18

Net income (loss) attributable to Alexandria's common stockholders – basic


$

123,598



$

(31,740)



$

208,940



$

52,016



$

132,387


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






1,301






Net income (loss) attributable to Alexandria's common stockholders – diluted


123,598



(31,740)



210,241



52,016



132,387


Depreciation and amortization


134,087



124,990



119,600



118,852



114,219


Noncontrolling share of depreciation and amortization from consolidated real estate JVs


(5,419)



(4,252)



(4,044)



(3,914)



(3,867)


Our share of depreciation and amortization from unconsolidated real estate JVs


846



719



1,011



807



644


Gain on sales of real estate




(8,704)








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






(35,678)






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


1,026









1,302


Allocation to unvested restricted stock awards


(2,054)





(1,312)



(1,042)



(1,548)


Funds from operations attributable to Alexandria's common stockholders – diluted(2)


252,084



81,013



289,818



166,719



243,137


Unrealized (gains) losses on non-real estate investments


(72,206)



94,850



(117,188)



(5,067)



(72,229)


Realized gains on non-real estate investments




(6,428)







(8,252)


Impairment of real estate – land parcels








6,311




Impairment of non-real estate investments




5,483








Loss on early extinguishment of debt


7,361





1,122






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






(761)






Preferred stock redemption charge


2,580



4,240








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


(1,026)





(1,301)





(1,302)


Allocation to unvested restricted stock awards


990



(1,138)



1,889



(18)



1,125


Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted


$

189,783



$

178,020



$

173,579



$

167,945



$

162,479




(1)

Refer to "Weighted-Average Shares of Common Stock Outstanding – Diluted" in the "Definitions and Reconciliations" section of our Supplemental Information for additional information regarding our 7.00% Series D cumulative convertible
preferred stock.

(2)

Calculated in accordance with standards established by the Nareit Board of Governors. Refer to "Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria's Common Stockholders" in the "Definitions and
Reconciliations" section of our Supplemental Information for additional information.

               

 

Funds From Operations and Funds From Operations per Share (continued)

March 31, 2019

(In thousands, except per share amounts)


     The following table presents a reconciliation of net income (loss) per share attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in
accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria's common
stockholders – diluted, and funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below. Per share amounts may not add due to rounding.





Three Months Ended



3/31/19


12/31/18


9/30/18


6/30/18


3/31/18

 Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.'s common 
     stockholders – diluted


$

1.11



$

(0.30)



$

1.99



$

0.51



$

1.32


Depreciation and amortization


1.17



1.14



1.11



1.13



1.08


Gain on sale of real estate




(0.08)








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






(0.34)






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










0.01


Allocation to unvested restricted stock awards


(0.02)





(0.01)



(0.01)




Funds from operations per share attributable to Alexandria's common stockholders – diluted(2)


2.26



0.76



2.75



1.63



2.41


Unrealized (gains) losses on non-real estate investments


(0.65)



0.89



(1.11)



(0.05)



(0.70)


Realized gains on non-real estate investments




(0.06)







(0.08)


Impairment of real estate – land parcels








0.06




Impairment of non-real estate investments




0.05








Loss on early extinguishment of debt


0.07





0.01






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






(0.01)






Preferred stock redemption charge


0.02



0.04








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










(0.01)


Allocation to unvested restricted stock awards


0.01





0.02






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


$

1.71



$

1.68



$

1.66



$

1.64



$

1.62













Weighted-average shares of common stock outstanding(1) for calculations of:











Earnings per share – diluted


111,054



106,033



105,385



102,236



100,125


Funds from operations – diluted, per share


111,635



106,244



105,385



102,236



100,866


Funds from operations – diluted, as adjusted, per share


111,054



106,244



104,641



102,236



100,125




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

(2)    Refer to footnote 2 on the previous page for additional information.

 

 

Cision

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