Alexandria Real Estate Equities, Inc. Reports First Quarter Ended March 31, 2018, Financial and Operating Results Strong Internal and External Growth, Operational Excellence, and Growing Dividends

Alexandria Real Estate Equities, Inc. Reports First Quarter Ended March 31, 2018, Financial and Operating Results Strong Internal and External Growth, Operational Excellence, and Growing Dividends

PR Newswire

PASADENA, Calif., April 30, 2018

PASADENA, Calif., April 30, 2018 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE:ARE) announced financial and operating results for the first quarter ended March 31, 2018.

Key highlights

Increased common stock dividend

Common stock dividend for 1Q18 of $0.90 per common share, up 7 cents, or 8%, over 1Q17; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

Improvement in credit rating outlook

In February 2018, S&P Global Ratings raised its credit outlook for our corporate credit rating to BBB/Positive from BBB/Stable. The positive outlook reflects S&P's belief that "there is further ratings upside over the next couple of years stemming from the company's high quality operating portfolio and projects under development, combined with a prudent financial policy."

Strong internal growth

  • Total revenues of $320.1 million, up 18.2%, for 1Q18, compared to $270.9 million for 1Q17;
  • Same property net operating income growth:
    • 4.0% and 14.6% (cash basis) for 1Q18, compared to 1Q17;
  • Continued solid leasing activity and strong rental rate growth, in light of modest contractual lease expirations at the beginning of 2018 and a highly leased value-creation pipeline:

1Q18

Total leasing activity – RSF

1,481,164

Lease renewals and re-leasing of space:

Rental rate increases

16.3%

Rental rate increases (cash basis)

19.0%

RSF (included in total leasing activity above)

234,548

  • Key leases executed during 1Q18 (included in total leasing activity above):

Property

Submarket

RSF

Tenant

1655 and 1725 Third Street

Mission Bay/SoMa

593,765

Uber Technologies, Inc.

Summers Ridge Science Park

Sorrento Mesa

192,070

Quidel Corporation

399 Binney Street

Cambridge

123,403

Three life science entities

279 East Grand Avenue

South San Francisco

104,013

Verily Life Sciences, LLC

681 Gateway Boulevard

South San Francisco

60,963

Twist Bioscience Corp.

 

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

  • Development and redevelopment projects placed into service in 1Q18:
    • 91,155 RSF at our development project at 100 Binney Street in our Cambridge submarket, 100% leased to four high-quality biotechnology entities; and
    • 27,315 RSF at our redevelopment project at 266 and 275 Second Avenue in our Route 128 submarket, leased to Visterra, Inc.
  • Significant contractual near-term growth in annual cash rents of $76 million, of which $60 million will commence through 4Q18 ($35 million in 2Q18, $13 million in 3Q18, and $12 million in 4Q18). This is related to initial free rent granted on development and redevelopment projects recently placed into service (and no longer included in our value-creation pipeline) that are currently generating rental revenue.
  • 1Q18 commencements of development and redevelopment projects aggregating 651,951 RSF, including:
    • 593,765 RSF at 1655 and 1725 Third Street in our Mission Bay/SoMa submarket; and
    • 58,186 RSF at 704 Quince Orchard Road in our Gaithersburg submarket.
  • 81% leased on 2.3 million RSF of development and redevelopment projects undergoing construction (excludes RSF in service).

Completed strategic acquisitions

Acquisitions completed or under contract:

  • In 1Q18, we acquired 11 properties in four transactions for an aggregate purchase price of $320.5 million with current and future value-creation development and redevelopment opportunities.

Operating results

  • On January 1, 2018, we adopted a new accounting standard which requires us, on a prospective basis, to generally present our equity investments at fair value with changes in fair value reflected in earnings. In 1Q18, we recognized $72.2 million of unrealized gains from changes in fair value of our equity investments.

 

1Q18

1Q17

Change

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








In millions

$

132.4

$

25.7

N/A

Per share

$

1.32

$

0.29

N/A




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









In millions

$

162.5

$

130.6

24.4%

Per share

$

1.62

$

1.48

9.5%






See "Items Included in Net Income Attributable to Alexandria's Common Stockholders" on the next page of this Earnings Press Release for additional information.

 

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

(In millions, except per share amounts)

Amount


Per Share – Diluted

1Q18


1Q17

1Q18


1Q17

Realized gain on non-real estate investment(1)

$

8.3

$

—

$

0.08

$

—

Unrealized gains on non-real estate investments(2)

72.2

—

0.70

—

Loss on early extinguishment of debt

—

(0.7)

—

(0.01)

Preferred stock redemption charge

—

(11.3)

—

(0.12)

Total

$

80.5

$

(12.0)

$

0.78

$

(0.13)

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



100.1

88.2






(1)  Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized investment gains were $5.1 million for 1Q18.

(2)  See "Investments" on page 43 of our Supplemental Information for additional information.


Per share amounts above are shown net of the per share amounts allocable to unvested restricted stock awards.

 

Core operating metrics for 1Q18

High-quality revenue and cash flows and operational excellence

  • Percentage of annual rental revenue in effect from:
    • Investment-grade or large cap tenants: 57%
    • Class A properties in AAA locations: 79%
  • Occupancy of operating properties in North America: 96.6%
  • Operating margin: 71%
  • Adjusted EBITDA margin: 69%
  • Weighted-average remaining lease term:
    • Total tenants: 8.7 years
    • Top 20 tenants: 13.2 years
  • See "Strong internal growth" in the key highlights section on the previous page for information on our total revenues, same property net operating income growth, leasing activity, and rental rate growth.

Balance sheet management

Key metrics

  • $17.9 billion of total market capitalization as of 1Q18
  • $2.3 billion of liquidity as of 1Q18

 

1Q18
Annualized

Trailing 12
Months

4Q18
Goal

Net debt to Adjusted EBITDA

5.4x

6.1x

Less than 5.5x

Fixed-charge coverage ratio

4.6x

4.3x

Greater than 4.0x

Unhedged variable-rate debt as a percentage of 
     total debt

15%

N/A

5%

Current and future value-creation pipeline as a 
     percentage of gross investments in real estate 
     in North America

9%

N/A

8% to 12%

 

Key capital events

  • In January 2018, we entered into forward equity sales agreements to sell an aggregate 6.9 million shares of our common stock (including the exercise of underwriters' option) at a public offering price of $123.50 per share, before underwriting discounts. In March 2018, we settled 843,600 shares from our forward equity sales agreements and received proceeds of $100.2 million, net of underwriting discounts and adjustments provided in the forward equity sales agreements. We expect to receive proceeds of $713.7 million upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, which will fund current and near-term value-creation projects and acquisitions in 2018.

Corporate responsibility and industry leadership

  • 50% of annual rental revenue expected from LEED® certified projects upon completion of nine in-process projects. Two of our properties recently received LEED certifications, demonstrating our commitment to sustainability:
    • In March 2018, 505 Brannan Street in our Mission Bay/SoMa submarket received LEED Platinum certification; and
    • In April 2018, 100 Binney Street in our Cambridge submarket received LEED Gold certification.
  • In January 2018, we were awarded a 2017 Governor's Environmental and Economic Leadership Award, California's highest environmental honor recognizing entities that have demonstrated exceptional leadership and made notable contributions to conserving precious natural resources while promoting economic growth.
  • In January 2018, Alexandria Venture Investments launched the Alexandria Seed Capital Platform, an innovative seed-stage life science funding model and extension of Alexandria LaunchLabs®, which provides seed-stage financing to transformative life science companies. Alexandria Seed Capital Platform drives the growth of seed- and early-stage companies in New York City and across the country.
  • In February 2018, Joel S. Marcus, Executive Chairman and Founder, was appointed to the Navy SEAL Foundation board of directors.
  • In February 2018, Menlo Gateway in our Greater Stanford submarket was awarded "Development of the Year" by NAIOP San Francisco at its "Best of the Bay" awards event.
  • In March 2018, we announced elevations of key executive officers, effective in April 2018.

Subsequent events

  • During April 2018, we sold 782,967 shares of common stock under our at-the-market common stock offering program ("ATM program") for $122.20 per share and received net proceeds of $94.2 million.
  • In April 2018, our real estate joint venture at Menlo Gateway in our Greater Stanford submarket closed a secured construction loan with commitments available for borrowing of $157.3 million,  for the development of Phase II of the project. The loan matures on May 1, 2035, and bears interest at a fixed rate of 4.53%.

 

Sustainability

March 31, 2018                                                                                                                                                             

 

 

Acquisitions
March 31, 2018
(Dollars in thousands)


Property

Submarket/Market

Date of
Purchase

Number of
Properties

Anticipated
Use

Operating

Occupancy

Square Footage

Unlevered Yields

Purchase Price




Operating

Development/

Redevelopment

Future
Development

Initial
Stabilized

Initial
Stabilized
(Cash)










1Q18 Acquisitions
























1655 and 1725 Third Street
     (10% interest in unconsolidated JV)

Mission Bay/SoMa/
     San Francisco

3/2/18

2

Office

N/A

—

593,765

—

7.8%

6.0%

$

31,950


Alexandria PARC

Greater Stanford/
     San Francisco

1/25/18

4

Office/lab

100%

152,383

45,115

—

TBD

136,000























Summers Ridge Science Park

Sorrento Mesa/
     San Diego

1/5/18

4

Office/lab

100%

316,531

—

50,000

8.2%

6.3%

148,650


704 Quince Orchard Road
     (56.8% interest in unconsolidated JV)

Gaithersburg/

     Maryland

3/16/18

1

Office/lab

100%

21,745

58,186

—

TBD

3,900





























11




490,659

697,066

50,000





320,500




























1455 and 1515 Third Street
     (acquisition of remaining 49% interest)(1)

Mission Bay/SoMa/
     San Francisco

N/A

N/A

Office

100%

N/A  


—

—

N/A

N/A

18,900

























339,400






















































2Q18 Acquisitions completed or under purchase agreements/letters of intent


































100 Tech Drive

Route 128/
     Greater Boston

4/13/18

1

Office/lab

100%

200,431

—

300,000

8.7%

7.3%

87,250


1455 and 1515 Third Street 

     (acquisition of remaining 49% interest)(1)

Mission Bay/SoMa/

     San Francisco

N/A

N/A

Office

100%

N/A  


—

—

N/A

N/A

18,900




























Pending

Various








612,747

—

253,000

TBD

268,050














813,178

—

553,000





374,200


Total acquisitions





















$

713,600


2018 Guidance range




















$670,000 – $770,000
























We expect to provide total estimated costs at completion and related yields of development and redevelopment projects in the future.



(1)

The first installment of $18.9 million related to our November 2016 acquisition of 1455 and 1515 Third Street was paid in 2Q17, and the second installment of $18.9 million was paid in January 2018. We expect to pay the third and final installment during 2Q18.

 

Guidance
March 31, 2018
(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, 2018. Updates to guidance include: a) two cent increases to the midpoints, and reduction of the ranges from 20 cents to 10 cents for EPS - diluted, FFO per share - diluted, and FFO per share - diluted, as adjusted, and b) updating the EPS and FFO per share - diluted guidance ranges to include an investment gain of $8.3 million related to one non-real estate investment in a life science entity and unrealized gains of $72.2 million related to non-real estate investments in 1Q18. 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 page 6 of this Earnings Press Release.

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

Earnings per share

$2.88 to $2.98

Depreciation and amortization

4.45

Allocation to unvested restricted stock awards

(0.05)

Funds from operations per share

$7.28 to $7.38

Realized gain on non-real estate investment in 1Q18

(0.08)

(1)

Unrealized gains on non-real estate investments in 1Q18

(0.70)

(2)

Allocation to unvested restricted stock awards

0.02

Funds from operations per share, as adjusted

$6.52 to $6.62

 

Key Assumptions

Low

High

Occupancy percentage in North America as of December 31, 2018

96.9%

97.5%

Lease renewals and re-leasing of space:




Rental rate increases

13.0%

16.0%

Rental rate increases (cash basis)

7.5%

10.5%

Same property performance:




Net operating income increase

2.5%

4.5%

Net operating income increase (cash basis)

9.0%

11.0%






Straight-line rent revenue

$

92

$

102

(4)

General and administrative expenses

$

85

$

90

Capitalization of interest

$

55

$

65

Interest expense

$

155

$

165






 

Key Credit Metrics

2018 Guidance

Net debt to Adjusted EBITDA – 4Q18 annualized

Less than 5.5x

Net debt and preferred stock to Adjusted EBITDA – 4Q18 annualized

Less than 5.5x

Fixed-charge coverage ratio – 4Q18 annualized

Greater than 4.0x

Unhedged variable-rate debt as a percentage of total debt

5%

Value-creation pipeline as a percentage of gross real estate as of
December 31, 2018

8% to 12%

 

Key Sources and Uses of Capital

Range

Midpoint

Certain
Completed
Items

Sources of capital:









Net cash provided by operating activities after dividends

$

140

$

180

$

160


Incremental debt

470

430

450


Real estate dispositions, partial interest sales, and common equity

1,110

1,310

1,210

$

908

(3)

Total sources of capital

$

1,720

$

1,920

$

1,820


Uses of capital:









Construction

$

1,050

$

1,150

$

1,100


Acquisitions

670

770

720

(5)

Total uses of capital

$

1,720

$

1,920

$

1,820


Incremental debt (included above):









Issuance of unsecured senior notes payable

$

550

$

650

$

600


Repayments of secured notes payable

(10)

(15)

(13)


Repayment of unsecured senior bank term loan

(200)

(200)

(200)


$1.65 billion unsecured senior line of credit/other

130

(5)

63


Incremental debt

$

470

$

430

$

450




(1)

Represents an investment gain of $8.3 million related to one non-real estate investment in a life science entity recognized in 1Q18.

(2)

Per share amounts of unrealized gains on non-real estate investments in 1Q18 may be different for the full year ended December 31, 2018,
depending on the weighted-average shares outstanding for the year ended December 31, 2018. Excludes future changes in fair value
for equity investments pursuant to a new accounting standard effective January 1, 2018. See page 43 of our Supplemental Information for additional information.

(3)

We have completed transactions aggregating $908 million through April 2018. This includes completed and projected settlement of our forward equity sales agreements and completed sales under our ATM program, including 6.9 million shares of our common stock subject to forward equity sales agreements executed in January 2018. Additionally, in March 2018, we settled 843,600 shares from the forward equity sales agreements and received proceeds of $100.2 million, net of underwriting discounts and adjustments provided in the forward equity sales agreements. We expect to receive proceeds of $713.7 million upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, in 2018. Also, includes 782,967 shares of common stock sold in April 2018 under our ATM program at $122.20 per share, with net proceeds of $94.2 million.

(4)

Approximately 50% of straight-line rent revenue represents initial free rent on recently delivered and expected 2018 deliveries of new Class A properties from our development and redevelopment pipeline.

(5)

See "Acquisitions" on page 4 of this Earnings Press Release.

 

Earnings Call Information and About the Company
March 31, 2018

We will host a conference call on Tuesday, May 1, 2018, 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, 2018. To participate in this conference call, dial (877) 270-2148 or (412) 902-6510 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the Alexandria Real Estate Equities, Inc. call. 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, May 1, 2018. The replay number is (877) 344-7529 or (412) 317-0088, and the confirmation code is 10117375.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2018, is available in the "For Investors" section of our website at www.are.com or by following this link: http://www.are.com/fs/2018q1.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 chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; or Sara M. Kabakoff, senior manager – corporate communications, at (626) 578-0777.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE: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 $17.9 billion and an asset base in North America of 30.2 million SF as of March 31, 2018. The asset base in North America includes 20.8 million RSF of operating properties and 3.5 million RSF of development and redevelopment of new Class A properties currently undergoing construction and pre-construction activities with target delivery dates ranging from 2018 through 2020. Additionally, the asset base in North America includes 5.9 million SF of intermediate-term and future development projects, including 3.6 million SF of intermediate-term 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 Park. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide its 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 its 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 2018 earnings per share attributable to Alexandria's common stockholders – diluted, 2018 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," "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.

 

Consolidated Statements of Income
March 31, 2018
(In thousands, except per share amounts)

Three Months Ended

3/31/18

12/31/17

9/30/17

6/30/17

3/31/17

Revenues:









Rental

$

244,485

$

228,025

$

216,021

$

211,942

$

207,193

Tenant recoveries

73,170

70,270

67,058

60,470

61,346

Other income

2,484

496

2,291

647

2,338

Total revenues

320,139

298,791

285,370

273,059

270,877











Expenses:









Rental operations

91,771

88,073

83,469

76,980

77,087

General and administrative

22,421

18,910

17,636

19,234

19,229

Interest

36,915

36,082

31,031

31,748

29,784

Depreciation and amortization

114,219

107,714

107,788

104,098

97,183

Impairment of real estate

—

—

—

203

—

Loss on early extinguishment of debt

—

2,781

—

—

670

Total expenses

265,326

253,560

239,924

232,263

223,953











Equity in earnings of unconsolidated real estate joint ventures

1,144

376

14,100

589

361

Investment income

85,561

(1)

—

—

—

—

Gain on sales of real estate – rental properties

—

—

—

—

270

Gain on sales of real estate – land parcels

—

—

—

111

—

Net income

141,518

45,607

59,546

41,496

47,555

Net income attributable to noncontrolling interests

(5,888)

(6,219)

(5,773)

(7,275)

(5,844)

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

135,630

39,388

53,773

34,221

41,711

Dividends on preferred stock

(1,302)

(1,302)

(1,302)

(1,278)

(3,784)

Preferred stock redemption charge

—

—

—

—

(11,279)

Net income attributable to unvested restricted stock awards

(1,941)

(1,255)

(1,198)

(1,313)

(987)

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

$

132,387

$

36,831

$

51,273

$

31,630

$

25,661











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









Basic

$

1.33

$

0.39

$

0.55

$

0.35

$

0.29

Diluted

$

1.32

$

0.38

$

0.55

$

0.35

$

0.29











Weighted-average shares of common stock outstanding:









Basic

99,855

95,138

92,598

90,215

88,147

Diluted

100,125

95,914

93,296

90,745

88,200











Dividends declared per share of common stock

$

0.90

$

0.90

$

0.86

$

0.86

$

0.83





















(1)     See "Investments" on page 43 of our Supplemental Information for additional information.

 

Consolidated Balance Sheets
March 31, 2018
(In thousands)

3/31/18

12/31/17

9/30/17

6/30/17

3/31/17

Assets









Investments in real estate

$

10,671,227

$

10,298,019

$

10,046,521

$

9,819,413

$

9,470,667

Investments in unconsolidated real estate joint ventures

169,865

110,618

33,692

58,083

50,457

Cash and cash equivalents

221,645

254,381

118,562

124,877

151,209

Restricted cash

37,337

22,805

27,713

20,002

18,320

Tenant receivables

11,258

10,262

9,899

8,393

9,979

Deferred rent

467,112

434,731

402,353

383,062

364,348

Deferred leasing costs

226,803

221,430

208,265

201,908

202,613

Investments

724,310

(1)

523,254

485,262

424,920

394,471

Other assets

291,639

228,453

213,056

205,009

206,562

Total assets

$

12,821,196

$

12,103,953

$

11,545,323

$

11,245,667

$

10,868,626











Liabilities, Noncontrolling Interests, and Equity









Secured notes payable

$

775,689

$

771,061

$

1,153,890

$

1,127,348

$

1,083,758

Unsecured senior notes payable

3,396,912

3,395,804

2,801,290

2,800,398

2,799,508

Unsecured senior line of credit

490,000

50,000

314,000

300,000

—

Unsecured senior bank term loans

548,197

547,942

547,860

547,639

547,420

Accounts payable, accrued expenses, and tenant security deposits

783,986

763,832

740,070

734,189

782,637

Dividends payable

93,065

92,145

83,402

81,602

78,976

Preferred stock redemption liability

—

—

—

—

130,000

Total liabilities

6,087,849

5,620,784

5,640,512

5,591,176

5,422,299











Commitments and contingencies




















Redeemable noncontrolling interests

10,212

11,509

11,418

11,410

11,320











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









7.00% Series D cumulative convertible preferred stock

74,386

74,386

74,386

74,386

74,386

Common stock

1,007

998

943

921

899

Additional paid-in capital

6,117,976

(1)

5,824,258

5,287,777

5,059,180

4,855,686

Accumulated other comprehensive income

1,228

50,024

43,864

22,677

21,460

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

6,194,597

5,949,666

5,406,970

5,157,164

4,952,431

Noncontrolling interests

528,538

521,994

486,423

485,917

482,576

Total equity

6,723,135

6,471,660

5,893,393

5,643,081

5,435,007

Total liabilities, noncontrolling interests, and equity

$

12,821,196

$

12,103,953

$

11,545,323

$

11,245,667

$

10,868,626

(1)    Includes unrealized gains aggregating $213.1 million. See "Investments" on page 43 of our Supplemental Information for additional information.

 

Funds From Operations and Funds From Operations per Share
March 31, 2018
(In thousands, except for per share amounts)


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

Three Months Ended

3/31/18

12/31/17

9/30/17

6/30/17

3/31/17

Net income attributable to Alexandria's common stockholders

$

132,387

$

36,831

$

51,273

$

31,630

$

25,661

Depreciation and amortization

114,219

107,714

107,788

104,098

97,183

Noncontrolling share of depreciation and amortization from consolidated real estate JVs

(3,867)

(3,777)

(3,608)

(3,735)

(3,642)

Our share of depreciation and amortization from unconsolidated real estate JVs

644

432

383

324

412

Gain on sales of real estate – rental properties

—

—

—

—

(270)

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

—

—

(14,106)

—

—

Gain on sales of real estate – land parcels

—

—

—

(111)

—

Impairment of real estate – rental properties

—

—

—

203

—

Allocation to unvested restricted stock awards

(1,548)

(734)

(957)

(685)

(561)

Add: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)

1,302

—

—

—

—

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

243,137

140,466

140,773

131,724

118,783

Less: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)

(1,302)

—

—

—

—

Realized gain on non-real estate investment

(8,252)

(3)

—

—

—

—

Unrealized gains on non-real estate investments(4)

(72,229)

—

—

—

—

Impairment of land parcels and non-real estate investments

—

3,805

—

4,491

—

Loss on early extinguishment of debt

—

2,781

—

—

670

Preferred stock redemption charge

—

—

—

—

11,279

Allocation to unvested restricted stock awards

1,125

(94)

—

(58)

(150)

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

$

162,479

$

146,958

$

140,773

$

136,157

$

130,582


(1)

See definition for "Weighted-Average Shares of Common Stock Outstanding – Diluted" on page 55 of our Supplemental Information for additional information.

(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") in its April 2002 White Paper and related implementation
guidance.

(3)

Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized non-real estate investment gains were $5.1 million for 1Q18.

(4)

See "Investments" on page 43 of our Supplemental Information for additional information.

 

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

Three Months Ended

3/31/18

12/31/17

9/30/17

6/30/17

3/31/17

Net income per share attributable to Alexandria's common stockholders

$

1.32

$

0.38

$

0.55

$

0.35

$

0.29

Depreciation and amortization

1.08

1.08

1.11

1.10

1.06

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

—

—

(0.15)

—

—

Add: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)

0.01

—

—

—

—

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

2.41

1.46

1.51

1.45

1.35

Less: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)

(0.01)

—

—

—

—

Realized gain on non-real estate investment

(0.08)

(3)

—

—

—

—

Unrealized gains on non-real estate investments(4)

(0.70)

—

—

—

—

Impairment of land parcels and non-real estate investments

—

0.04

—

0.05

—

Loss on early extinguishment of debt

—

0.03

—

—

0.01

Preferred stock redemption charge

—

—

—

—

0.12

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

$

1.62

$

1.53

$

1.51

$

1.50

$

1.48











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









Earnings per share – diluted and funds from operations, as adjusted – diluted, per share

100,125

95,914

93,296

90,745

88,200

Funds from operations – diluted, per share

100,866

95,914

93,296

90,745

88,200

(1)    See definition for "Weighted-Average Shares of Common Stock Outstanding – Diluted" on page 55 of our Supplemental Information for additional information.

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

(3)    Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized non-real estate investment gains were $5.1 million for 1Q18.

(4)    See "Investments" on page 43 of our Supplemental Information for additional information.

 

 

 

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SOURCE Alexandria Real Estate Equities, Inc.

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