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Alexandria Real Estate Equities, Inc. Reports: 2019 Revenues of $1.5 billion, Up 15.4% Over 2018; 4Q19 and 2019 Net Income per Share - Diluted of $1.74 and $3.12; 4Q19 and 2019 FFO per Share - Diluted, As Adjusted, of $1.77 and $6.96; and Continued Operational Excellence and Growing Dividends

PASADENA, Calif., Feb. 3, 2020 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) announced financial and operating results for the fourth quarter and year ended December 31, 2019.

Alexandria Real Estate Inc

Key highlights




Operating results

4Q19


4Q18


2019


2018

Total revenues:








In millions

$

408.1


$

340.5


$

1,531.3


$

1,327.5

Growth

19.9%




15.4%











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

In millions

$

199.6


$

(31.7)


$

351.0


$

364.0

Per share

$

1.74


$

(0.30)


$

3.12


$

3.52









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

In millions

$

203.4


$

178.0


$

783.0


$

682.0

Per share

$

1.77


$

1.68


$

6.96


$

6.60

Celebrating our 25th Anniversary; an important milestone in company history

Since our initial launch in January 1994 as a garage startup with a strategic business plan, $19 million in Series A capital, and a unique 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, a recognized leader in life science cluster development, and a trusted partner to innovative companies, highly respected cities, and renowned institutions. From our initial public offering in May 1997 through December 31, 2019, we have generated a total shareholder return of 1,714% and a total market capitalization of $26.3 billion as of December 31, 2019.

A REIT industry-leading, high-quality tenant roster

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

  • Weighted-average remaining lease term of 8.1 years.

Continued growth in common stock dividend

Common stock dividend declared for 4Q19 of $1.03 per common share, aggregating $4.00 per common share for the year ended December 31, 2019, up 27 cents, or 7%, over the year ended December 31, 2018; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

Strong internal growth; highest leasing activity in our history and highest annual rental rate increases during the past 10 years

  • Continued strong internal growth; acquired vacancy from recent acquisitions provides opportunity to increase income from rentals and net operating income.

  • Net operating income (cash basis) of $1.0 billion for 4Q19 annualized, up $134.1 million, or 15.3%, compared to 4Q18 annualized.

  • Same property net operating income growth:

    • 2.0% and 4.0% (cash basis) for 4Q19, compared to 4Q18

    • 3.1% and 7.1% (cash basis) for 2019, compared to 2018

  • Continued strong leasing activity during 2019, representing the highest leasing activity in our history and rental rate growth over expiring rates on renewed and re-leased space during 2019, representing our highest annual rental rate increases during the past 10 years:



4Q19


2019

Total leasing activity – RSF


1,752,124


5,062,722

Lease renewals and re-leasing of space:





RSF (included in total leasing activity above)


571,650


2,427,108

Rental rate increases


37.0%


32.2%

Rental rate increases (cash basis)


21.7%


17.6%

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

  • Since the beginning of 2019, we have placed into service 2.1 million RSF of development and redevelopment projects, with weighted-average initial stabilized yields of 7.4% and 6.9% (cash basis).

  • Significant near-term growth of annual net operating income (cash basis), including our share of unconsolidated real estate joint ventures, of $55 million upon the burn-off of initial free rent on recently delivered projects.

  • We commenced development and redevelopment projects aggregating 1.9 million RSF during 2019.

  • During 2019, we leased 1.4 million RSF of development and redevelopment space.

Completion of acquisitions with significant value-creation opportunities in key submarkets

During 4Q19, we completed the acquisition of 23 properties for an aggregate purchase price of $956.5 million, comprising 3.3 million RSF, including 2.1 million RSF of current and future value-creation opportunities.

Key items included in operating results

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

(In millions, except per share 
     amounts)

Amount


Per Share –
Diluted


Amount


Per Share –
Diluted

4Q19


4Q18


4Q19


4Q18


2019


2018


2019


2018

















Gains (losses) on non-real 
     estate investments(1):
















     Unrealized

$

148.3


$

(94.9)


$

1.29


$

(0.89)


$

161.5


$

99.6


$

1.44


$

0.96

     Realized


6.4



0.06



14.7



0.14

Gain on sales of real estate

0.5


8.7



0.08


0.5


44.4



0.43

Impairment of:
















Real estate

(12.3)

(2)


(0.11)



(12.3)


(6.3)


(0.11)


(0.06)

Non-real estate 
     investments(1)

(10.0)


(5.5)


(0.09)


(0.05)


(17.1)


(5.5)


(0.15)


(0.05)

Early extinguishment of debt:
















Loss





(47.6)


(1.1)


(0.42)


(0.01)

Our share of gain






0.8



0.01

Loss on early termination of 
     interest rate hedge 
     agreements





(1.7)



(0.02)


Preferred stock redemption 
     charge


(4.2)



(0.04)


(2.6)


(4.2)


(0.02)


(0.04)

Allocation to unvested 
     restricted stock awards






(2.2)



(0.02)

Total

$

126.5


$

(89.5)


$

1.09


$

(0.84)


$

80.7


$

140.2


$

0.72


$

1.36

















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

115.0


106.0






112.5


103.3


(1)  Refer to "Investments" on page 44 of our Supplemental Information for additional details.

(2)  Refer to "Consolidated Statements of Operations" in this Earnings Press Release for additional details.

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

High-quality revenues and cash flows, significant improvement in Adjusted EBITDA margin, 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


76%


Occupancy of operating properties in North America


96.8%

(1)

Operating margin


70%


Adjusted EBITDA margin


68%

(2)

Weighted-average remaining lease term:



All tenants


8.1

years

Top 20 tenants


11.6

years



(1)

Includes 259,616 RSF, or 1.0%, of vacancy representing lease-up opportunities at properties recently acquired during 2H19, primarily related to our SD Tech by Alexandria campus. Excluding these vacancies, occupancy of operating properties in North America would have been 97.8% as of December 31, 2019. Refer to "Occupancy" on page 20 of our Supplemental Information for additional details.

(2)

Represents an increase of 400 bps since the beginning of 2013.

Balance sheet management

Key metrics as of December 31, 2019

  • $26.3 billion of total market capitalization

  • $19.5 billion of total equity capitalization

  • $2.4 billion of liquidity(1)

(1)

In January 2020, we entered into $1.0 billion of forward equity sales agreements. Including the outstanding forward equity agreements, we had proforma liquidity of $3.4 billion.





4Q19


Goal



Quarter
Annualized


Trailing 12

Months


4Q20

Annualized

Net debt and preferred stock to Adjusted 
     EBITDA


5.7x  (1)


6.1x


Less than or equal to 5.2x

Fixed-charge coverage ratio


4.2x     


4.2x


Greater than 4.5x









(1)

Due to the timing of two acquisitions that closed in December 2019, we had a temporary 0.4x increase above our projected net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2019, annualized, for December 31, 2019. We remain committed to our guidance for net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2020, annualized, of less than or equal to 5.2x.



Value-creation pipeline of new Class A development and redevelopment projects as 
     a percentage of gross investments in real estate


4Q19


Under construction and 63% leased/negotiating


6%


Income-producing/potential cash flows/covered land play(1)


5%


Land


2%






(1)

Includes projects that have existing buildings which are generating or can generate operating cash flows. Also includes development rights associated with existing operating campuses.

Key capital events

  • During 2019, we opportunistically issued $2.7 billion of unsecured senior notes payable, with a weighted average interest rate of 3.77% and maturity of 16.9 years. Proceeds were primarily used to refinance and repay $1.6 billion of secured notes and unsecured senior debt. As of December 31, 2019, our weighted average remaining term on outstanding debt is 10.4 years, with no debt maturing until 2023.

  • During 2019, we completed dispositions and sales of partial interests for an aggregate sales price of $906.9 million and consideration in excess of book value of $382.5 million, including $900.2 million of dispositions and sales of partial interests completed during the first nine months of 2019. Proceeds were reinvested into our highly leased value-creation pipeline.

  • In January 2020, we entered into forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock (including the exercise of an underwriters' option) at a public offering price of $155.00 per share, before underwriting discounts. We expect to settle these forward equity sales agreements in 2020, and receive proceeds of approximately $1.0 billion, to be further adjusted as provided in the sales agreements, which will fund pending and recently completed acquisitions and the construction of our highly leased development projects. Refer to "Subsequent Events" on next page.

  • During 4Q19, we issued 7.0 million shares of common stock to settle our remaining outstanding forward equity sales agreements that were entered into during 2Q19, and received net proceeds of $981.3 million. The proceeds were used to fund construction projects and to fund 2019 acquisitions completed prior to December 2019.

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

Investments

We carry our investments in publicly traded companies and certain privately held entities at fair value. Investment income included the following:

  • $152.7 million during 4Q19, comprising $14.4 million in realized gains, $10.0 million in impairments related to privately held non-real estate investments, and $148.3 million in unrealized gains.

  • $194.6 million during 2019, comprising $50.3 million in realized gains, $17.1 million in impairments related to privately held non-real estate investments, and $161.5 million in unrealized gains.

Industry leadership, strategic initiatives, and corporate responsibility

  • In October 2019, we accepted the 2019 Developer of the Year Award from NAIOP, the Commercial Real Estate Development Association. This award annually honors the development company that best exemplifies leadership and innovation as demonstrated by the outstanding quality of projects and services, financial consistency and stability, ability to adapt to market conditions, and support for the local community.

  • In November 2019, Alexandria, in collaboration with academic institutions, research hospitals, and life science industry partners, including Harvard University, the Massachusetts Institute of Technology, FUJIFILM Diosynth Biotechnologies, and GE Healthcare Life Sciences, announced the launch of a first-of-its-kind consortium to catalyze advanced biological innovation and manufacturing in Greater Boston with an aim to treat, prevent, and cure diseases.

  • In January 2020, we announced our first national $100,000 AgTech Innovation Prize competition to recognize startup and early-stage agtech and foodtech companies that demonstrate novel approaches to addressing agriculture-, food-, and nutrition-related challenges.

  • In January 2020, Alexandria Venture Investments, the company's venture capital arm, was recognized for a third consecutive year as the most active biopharma investor by new deal volume by Silicon Valley Bank in its "2020 Annual Report: Healthcare Investments and Exits." Alexandria's venture activity provides us with, among other things, mission-critical data and knowledge on innovations and trends.

  • Our philanthropy and volunteerism efforts provide mission-critical support to non-profit organizations doing meaningful work in areas of medical research, STEM education, military support services, and serving local communities. During 2019, our team members volunteered more than 4,500 hours to support over 250 non-profit organizations across the country.

  • We value both the health and wellness of our team members as well as supporting organizations on the leading edge of medical innovation. In November 2019, we were honored to support 59 of our team members who completed the New York City Marathon on behalf of Fred's Team and raised over $360 thousand to support mission-critical research at Memorial Sloan Kettering Cancer Center.

Subsequent events

  • As of February 3, 2020, we completed acquisitions of four properties in 2020 for an aggregate purchase price of $341.2 million, comprising 800,346 RSF of operating and redevelopment opportunities strategically located across multiple markets.

  • In January 2020, we formed a real estate joint venture with Boston Properties, Inc., in which we are targeting a 51% ownership interest over time. We are the managing member and will consolidate this joint venture pursuant to accounting literature since we have the power to direct the activities that most significantly affect the economic performance of the joint venture. Our partner contributed three office buildings and land supporting 260,000 square feet of future development, and we contributed one office building, one office/laboratory building, one amenity building, at 701, 681, and 685 Gateway Boulevard, respectively, and land supporting 377,000 square feet of future development. This future mega campus in our South San Francisco submarket will aggregate 1.7 million RSF, approximately 50% of which represents future development and redevelopment opportunities.

  • In January 2020, we entered into forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock. Refer to the previous page for additional details.

  • We expect to file a new ATM program in the first quarter of 2020.

Select 2019 Highlights
December 31, 2019

(1)

Leasing activity aggregating 5.1 million RSF for 2019 represents the highest annual leasing activity in our history.

(2)

Rental rate increases of 32.2% and 17.6% (cash basis) represent our highest annual increase during the past 10 years.

2019 Acquisitions

December 31, 2019

(Dollars in thousands)

Property


Submarket/Market


Date of

Purchase


Number of
Properties


Operating

Occupancy


Square Footage


Unlevered Yields


Purchase Price






Future Development


Active Redevelopment


Operating With
Future
Development/
Redevelopment


Operating


Initial
Stabilized


Initial
Stabilized
(Cash)








































Completed YTD 3Q19


Various




24


87%


995,338


347,912


246,578


822,508








$

1,203,680

(1)




























Completed 4Q19:


























The Arsenal on the Charles


Cambridge/Inner      
     Suburbs/Greater      
     Boston


12/17/19


11


100%


200,000


153,157


154,855

(2)

528,276


(3)


(3)



525,500


3825 and 3875 Fabian Way


Greater Stanford/
     San Francisco


12/10/19


2


100%




478,000



8.2%

(4)


6.9%

(4)



291,000


SD Tech by Alexandria (50% 
     interest in consolidated JV)


Sorrento Mesa/
     San Diego


10/30/19


10


71%


720,000




598,316

(5)

6.6%

(5)


6.5%

(5)



114,964


14200 Shady Grove Road


Rockville/Maryland


10/31/19



N/A


435,000





(3)


(3)



25,000








23


81%


1,355,000


153,157


632,855


1,126,592









956,464


2019 acquisitions






47


83%


2,350,338


501,069


879,433


1,949,100








$

2,160,144






























(1)

Refer to our Form 10-Q for the quarterly period ended September 30, 2019 filed on October 29, 2019, for transactions and related yield information.

(2)

Represents leased square footage with contractual lease expirations in 3Q20 and 1Q21. Upon expiration of the existing leases, we anticipate this RSF will be redeveloped to office/laboratory space.

(3)

We expect to provide total estimated costs and related yields in the future, subsequent to the commencement of development or redevelopment.

(4)

Represents the initial stabilized yields related to the fully occupied operating properties upon closing.

(5)

The campus includes 10 operating buildings, of which we expect to renovate several vacant suites aggregating 182,056 RSF. We expect to achieve unlevered initial stabilized yields of 6.6% and 6.5% (cash basis) for the operating buildings
and yields for future development will be disclosed subsequent to the commencement of development.

2020 Acquisitions

December 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)




































2020 acquisitions:


























Completed


























275 Grove Street


Route 128/
     Greater Boston


1/10/20


1


99%




509,702


8.0%


6.7%


$

226,100

601, 611, and 651 Gateway 
     Boulevard(1)


South San Francisco/
     San Francisco


1/28/20


3


73%(2)


260,000


300,010


475,607


(3)


(3)



(1)

9808 and 9868 Scranton Road


Sorrento Mesa/
     San Diego


1/10/20


2


88%




219,628


7.3%


6.8%



102,250

Other




1/14/20


1


—%



71,016



N/A


N/A



12,800







7


80%


260,000


371,026


1,204,937









341,150

Pending


























Mercer Mega Block


Lake Union/Seattle


TBD



N/A


800,000




(3)


(3)



143,500

Pending


San Francisco


TBD



N/A


700,000




(3)


(3)



120,000

Pending


Various


TBD


5


N/A


500,000



423,000


N/A


N/A



345,350

2020 acquisitions






12





2,260,000


371,026


1,627,937








$

950,000

2020 guidance range





















$900,000 - $1,000,000   



























(1)

In January 2020, we formed a real estate joint venture with Boston Properties, Inc., through a non-cash contribution, and are targeting a 51% ownership interest over time. Our initial ownership interest in the real estate joint venture was 44%, and we anticipate contributing additional capital over time to accrete to our target ownership interest of 51%. We are the managing member and will consolidate this joint venture pursuant to accounting literature since we have the power to direct the activities that most significantly affect the economic performance of the joint venture. Our partner contributed three office buildings and land supporting 260,000 square feet of future development, and we contributed one office building, one office/laboratory building, one amenity building, at 701, 681, and 685 Gateway Boulevard, respectively, and land supporting 377,000 square feet of future development. This future mega campus in our South San Francisco submarket will aggregate 1.7 million RSF, approximately 50% of which represents future development and redevelopment opportunities. We anticipate providing additional details within our Earnings Press Release and Supplemental Package for the first quarter ending March 31, 2020.

(2)

Includes 211,454 RSF of expected vacancy as of 1Q20. We expect this vacant RSF to result in a decline in our operating occupancy of 0.7% as of 1Q20. Refer to "Occupancy" on page 20 in our Supplemental Information for additional details.

(3)

We expect to provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction.

Guidance

December 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, 2020. 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 8 of this Earnings Press Release for additional details.

























Guidance


















Summary of Key Changes in Guidance


As of 2/3/20


As of 1/6/20


















Occupancy percentage in North America as of December 31,

95.4% to 96.0%


95.7% to 96.3%


















     2020(1)












































Projected 2020 Earnings per Share and Funds From Operations per Share Attributable to 







Key Credit Metrics


2020 Guidance









     Alexandria's Common Stockholders – Diluted















Earnings per share(2)




$2.17 to $2.37







Net debt and preferred stock to Adjusted EBITDA – 4Q20 annualized

Less than or equal to 5.2x









     Depreciation and amortization of real estate assets




5.15







Fixed-charge coverage ratio – 4Q20 annualized


Greater than 4.5x









     Allocation to unvested restricted stock awards




(0.04)


















Funds from operations per share(3)




$7.28 to $7.48



















Midpoint




$7.38








































Key Assumptions


Low


High






















Occupancy percentage in North America as of December 31, 2020(1)

95.4%


96.0%




Key Sources and Uses of Capital (in millions)


Range


Midpoint


Certain
Completed
Items

Lease renewals and re-leasing of space:








Sources of capital:











     Rental rate increases


28.0%


31.0%




     Net cash provided by operating activities after dividends


$

200



$

240



$

220





     Rental rate increases (cash basis)


14.0%


17.0%




     Incremental debt


400



360




380




Same property performance:








     Real estate dispositions, partial interest sales, and 
          common equity(4)


1,850



2,050




1,950



$

1,025

(5)


     Net operating income increase


1.5%


3.5%




Total sources of capital


$

2,450



$

2,650



$

2,550





     Net operating income increase (cash basis)


5.0%


7.0%




Uses of capital:











Straight-line rent revenue


$

113


$

123




     Construction


$

1,550



$

1,650



$

1,600





General and administrative expenses


$

121


$

126




     Acquisitions(4)


900



1,000




950



$

341



Capitalization of interest


$

108


$

118




Total uses of capital


$

2,450



$

2,650



$

2,550





Interest expense


$

169


$

179




Incremental debt (included above):























Issuance of unsecured senior notes payable


$

550



$

650



$

600

















$2.2 billion unsecured senior line of credit and 
     commercial paper program/other


(150)



(290)




(220)

















Incremental debt


$

400



$

360



$

380





(1)

The 0.3% reduction in occupancy guidance is attributable to vacancy aggregating 71,016 RSF representing lease-up opportunities at one acquisition completed in January 2020. Refer to "Occupancy" on page 20 in our Supplemental Information for additional details.

(2)

Excludes unrealized gains or losses after December 31, 2019, that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.

(3)

Refer to "Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria's Common Stockholders" in "Definitions and Reconciliations" of our Supplemental Information for additional details.      

(4)

Excludes the formation of a consolidated joint venture with Boston Properties, Inc. through non-cash contributions of real estate. Refer to "2020 Acquisitions" in this Earnings Press Release for additional details.

(5)

In January 2020, we entered into forward equity sales agreements to sell an aggregate of 6.9 million shares of our common stock (including the exercise of underwriters' option) at a public offering price of $155.00 per share, before underwriting discounts. We expect to settle these forward equity sales agreements in 2020 and receive proceeds of approximately $1.0 billion, to be further adjusted as provided in the sales agreements.

Earnings Call Information and About the Company
December 31, 2019

We will host a conference call on Tuesday, February 4, 2020, 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 fourth quarter and year ended December 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, February 4, 2020. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10136680.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the fourth quarter and year ended December 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/2019q4.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, vice president – corporate communications, at (626) 578-0777; or Paula Schwartz, managing director – Rx Communications Group, at (917) 322-2216.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office real estate investment trust ("REIT"), is the first and longest-tenured owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $26.3 billion as of December 31, 2019, and an asset base in North America of 39.2 million square feet ("SF"). The asset base in North America includes 27.0 million RSF of operating properties and 2.1 million RSF of Class A properties undergoing construction, 6.3 million RSF of near-term and intermediate-term development and redevelopment projects, and 3.8 million SF of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, technology, and agtech companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

***********

This document includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2020 earnings per share attributable to Alexandria's common stockholders – diluted, 2020 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

December 31, 2019

(Dollars in thousands, except per share amounts)


 



Three Months Ended


Year Ended



12/31/19


9/30/19


6/30/19


3/31/19


12/31/18


12/31/19


12/31/18

Revenues:















Income from rentals


$

404,721



$

385,776



$

371,618



$

354,749



$

337,785



$

1,516,864



$

1,314,781


Other income


3,393



4,708



2,238



4,093



2,678



14,432



12,678


Total revenues


408,114



390,484



373,856



358,842



340,463



1,531,296



1,327,459

















Expenses:















Rental operations


121,852



116,450



105,689



101,501



97,682



445,492



381,120


General and administrative


29,782



27,930



26,434



24,677



22,385



108,823



90,405


Interest


45,493



46,203



42,879



39,100



40,239



173,675



157,495


Depreciation and amortization


140,518



135,570



134,437



134,087



124,990



544,612



477,661


Impairment of real estate


12,334

(1)










12,334

(1)


6,311


Loss on early extinguishment of debt




40,209





7,361





47,570



1,122


Total expenses


349,979



366,362



309,439



306,726



285,296



1,332,506



1,114,114

















Equity in earnings of unconsolidated real estate joint ventures


4,777



2,951



1,262



1,146



1,029



10,136



43,981


Investment income (loss)


152,667

(2)


(63,076)



21,500



83,556



(83,531)



194,647



136,763


Gain on sales of real estate


474









8,704



474



8,704


Net income (loss)


216,053



(36,003)



87,179



136,818



(18,631)



404,047



402,793


Net income attributable to noncontrolling interests


(13,612)



(11,199)



(8,412)



(7,659)



(6,053)



(40,882)



(23,481)


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


202,441



(47,202)



78,767



129,159



(24,684)



363,165



379,312


Dividends on preferred stock




(1,173)



(1,005)



(1,026)



(1,155)



(3,204)



(5,060)


Preferred stock redemption charge








(2,580)



(4,240)



(2,580)



(4,240)


Net income attributable to unvested restricted stock awards


(2,823)



(1,398)



(1,432)



(1,955)



(1,661)



(6,386)



(6,029)


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


$

199,618



$

(49,773)



$

76,330



$

123,598



$

(31,740)



$

350,995



$

363,983

















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















Basic


$

1.75



$

(0.44)



$

0.68



$

1.11



$

(0.30)



$

3.13



$

3.53


Diluted


$

1.74



$

(0.44)



$

0.68



$

1.11



$

(0.30)



$

3.12



$

3.52

















Weighted-average shares of common stock outstanding:















Basic


114,175



112,120



111,433



111,054



106,033



112,204



103,010


Diluted


114,974



112,120



111,501



111,054



106,033



112,524



103,321

















Dividends declared per share of common stock


$

1.03



$

1.00



$

1.00



$

0.97



$

0.97



$

4.00



$

3.73




(1)

Represents charges to lower the carrying amount of two investments in real estate that were classified as held for sale during the three months ended December 31, 2019, to their estimated fair value.

(2)

Refer to "Investments" of our Supplemental Information for additional details.

 

Consolidated Balance Sheets

December 31, 2019

(In thousands)

 



12/31/19


9/30/19


6/30/19


3/31/19


12/31/18

Assets











Investments in real estate


$

14,844,038



$

13,618,280



$

12,872,824



$

12,410,350



$

11,913,693


Investments in unconsolidated real estate joint ventures


346,890



340,190



334,162



290,405



237,507


Cash and cash equivalents


189,681



410,675



198,909



261,372



234,181


Restricted cash


53,008



42,295



39,316



54,433



37,949


Tenant receivables


10,691



10,668



9,228



9,645



9,798


Deferred rent


641,844



615,817



585,082



558,103



530,237


Deferred leasing costs


270,043



252,772



247,468



241,268



239,070


Investments


1,140,594



990,454



1,057,854



1,000,904



892,264


Other assets


893,714



777,003



694,627



653,726



370,257


Total assets


$

18,390,503



$

17,058,154



$

16,039,470



$

15,480,206



$

14,464,956













Liabilities, Noncontrolling Interests, and Equity











Secured notes payable


$

349,352



$

351,852



$

354,186



$

356,461



$

630,547


Unsecured senior notes payable


6,044,127



6,042,831



5,140,914



5,139,500



4,292,293


Unsecured senior line of credit


384,000



343,000



514,000





208,000


Unsecured senior bank term loan






347,105



347,542



347,415


Accounts payable, accrued expenses, and other liabilities


1,320,268



1,241,276



1,157,417



1,171,377



981,707


Dividends payable


126,278



115,575



114,379



110,412



110,280


Total liabilities


8,224,025



8,094,534



7,628,001



7,125,292



6,570,242













Commitments and contingencies






















Redeemable noncontrolling interests


12,300



12,099



10,994



10,889



10,786













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











7.00% Series D cumulative convertible preferred stock




57,461



57,461



57,461



64,336


Common stock


1,208



1,132



1,120



1,112



1,110


Additional paid-in capital


8,874,367



7,743,188



7,581,573



7,518,716



7,286,954


Accumulated other comprehensive loss


(9,749)



(11,549)



(11,134)



(10,712)



(10,435)


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


8,865,826



7,790,232



7,629,020



7,566,577



7,341,965


Noncontrolling interests


1,288,352



1,161,289



771,455



777,448



541,963


Total equity


10,154,178



8,951,521



8,400,475



8,344,025



7,883,928


Total liabilities, noncontrolling interests, and equity


$

18,390,503



$

17,058,154



$

16,039,470



$

15,480,206



$

14,464,956


Funds From Operations and Funds From Operations per Share

December 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


Year Ended



12/31/19


9/30/19


6/30/19


3/31/19


12/31/18


12/31/19


12/31/18

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


$

199,618



$

(49,773)



$

76,330



$

123,598



$

(31,740)



$

350,995



$

363,983


Depreciation and amortization of real estate assets(1)


137,761



135,570



134,437



134,087



124,990



541,855



477,661


Noncontrolling share of depreciation and amortization from consolidated real 
     estate JVs


(10,176)



(8,621)



(6,744)



(5,419)



(4,252)



(30,960)



(16,077)


Our share of depreciation and amortization from unconsolidated real estate JVs


2,702



1,845



973



846



719



6,366



3,181


Gain on sales of real estate


(474)









(8,704)



(474)



(8,704)


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














(35,678)


Impairment of real estate – rental properties


12,334











12,334




Assumed conversion of 7.00% Series D cumulative convertible preferred stock






1,005



1,026





3,204



5,060


Allocation to unvested restricted stock awards


(1,809)





(1,445)



(2,054)





(5,904)



(5,961)


Funds from operations attributable to Alexandria's common stockholders – 
     diluted(1)


339,956



79,021



204,556



252,084



81,013



877,416



783,465


Unrealized (gains) losses on non-real estate investments


(148,268)



70,043



(11,058)



(72,206)



94,850



(161,489)



(99,634)


Realized gains on non-real estate investments










(6,428)





(14,680)


Impairment of real estate – land parcels














6,311


Impairment of non-real estate investments


9,991

(2)


7,133







5,483



17,124



5,483


Loss on early extinguishment of debt




40,209





7,361





47,570



1,122


Loss on early termination of interest rate hedge agreements




1,702









1,702




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














(761)


Preferred stock redemption charge








2,580



4,240



2,580



4,240


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






(1,005)



(1,026)





(3,204)



(5,060)


Allocation to unvested restricted stock awards


1,760



(1,002)



179



990



(1,138)



1,307



1,517


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


$

203,439



$

197,106



$

192,672



$

189,783



$

178,020



$

783,006



$

682,003


(1)

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" of our
Supplemental Information for additional details.

(2)

Relates to two privately held non-real estate investments.

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

December 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


Year Ended



12/31/19


9/30/19


6/30/19


3/31/19


12/31/18


12/31/19


12/31/18

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


$

1.74



$

(0.44)



$

0.68



$

1.11



$

(0.30)



$

3.12



$

3.52


Depreciation and amortization of real estate assets


1.13



1.14



1.15



1.17



1.14



4.60



4.50


Gain on sales of real estate










(0.08)





(0.08)


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














(0.35)


Impairment of real estate – rental properties


0.11











0.11




Allocation to unvested restricted stock awards


(0.02)







(0.02)





(0.06)



(0.06)


Funds from operations per share attributable to Alexandria's common 
     stockholders – diluted(1)


2.96



0.70



1.83



2.26



0.76



7.77



7.53


Unrealized (gains) losses on non-real estate investments


(1.29)



0.62



(0.10)



(0.65)



0.89



(1.44)



(0.96)


Realized gains on non-real estate investments










(0.06)





(0.14)


Impairment of real estate – land parcels














0.06


Impairment of non-real estate investments


0.09



0.06







0.05



0.15



0.05


Loss on early extinguishment of debt




0.36





0.07





0.42



0.01


Loss on early termination of interest rate hedge agreements




0.02









0.02




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














(0.01)


Preferred stock redemption charge








0.02



0.04



0.02



0.04


Allocation to unvested restricted stock awards


0.01



(0.01)





0.01





0.02



0.02


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


$

1.77



$

1.75



$

1.73



$

1.71



$

1.68



$

6.96



$

6.60

















Weighted-average shares of common stock outstanding(2) for calculations of:















Earnings per share – diluted


114,974



112,120



111,501



111,054



106,033



112,524



103,321


Funds from operations – diluted, per share


114,974



112,562



112,077



111,635



106,244



112,966



104,048


Funds from operations – diluted, as adjusted, per share


114,974



112,562



111,501



111,054



106,244



112,524



103,321
























(1)

   Refer to footnotes on previous page for additional details.

(2)

   Refer to "Weighted-Average Shares of Common Stock Outstanding – Diluted" in the "Definitions and Reconciliations" of our Supplemental Information for additional details.

SOURCE Alexandria Real Estate Equities, Inc.

Related Links

http://www.are.com

You just read:

Alexandria Real Estate Equities, Inc. Reports: 2019 Revenues of $1.5 billion, Up 15.4% Over 2018; 4Q19 and 2019 Net Income per Share - Diluted of $1.74 and $3.12; 4Q19 and 2019 FFO per Share - Diluted, As Adjusted, of $1.77 and $6.96; and Continued Operational Excellence and Growing Dividends

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Alexandria Real Estate Equities, Inc. 

Feb 03, 2020, 16:10 ET