Exhibit 99.1

 

 

Contact:

 

Joel S. Marcus

 

 

Chairman/Chief Executive Officer

 

 

Alexandria Real Estate Equities, Inc.

 

 

(626) 578-9693

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

REPORTS FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2008

OPERATING AND FINANCIAL RESULTS

 

Highlights

Fourth Quarter 2008:

·       Fourth Quarter 2008 Funds from Operations (FFO) Per Share (Diluted) of $1.55, up 6%, Compared to $1.46 for Fourth Quarter 2007

·       Fourth Quarter 2008 Earnings Per Share from Continuing Operations (Diluted) of $0.66, up 10%, Compared to $0.60 for Fourth Quarter 2007

·       GAAP Same Property Revenues Less Operating Expenses up 4.3%

·       Executed 34 Leases for Approximately 513,000 Rentable Square Feet

·       GAAP Rental Rate Increase of 13.9% on Renewed/Released Space

·       Extended Maturity to 2010 of $175 Million Secured Note Payable

·       Completed Redevelopment of Multiple Spaces at Seven Properties Aggregating Approximately 116,000 Rentable Square Feet

·       Executed Long Term Lease with a Large Cap Biopharma Company at Mission Bay in San Francisco, Ca.

·       Executed Long Term Lease with Pfizer, Inc. at Technology Square in Cambridge, Ma.

·       Occupancy at Approximately 95%

·       Sold One Property Previously Classified as “Held For Sale”

 

Year Ended December 31, 2008:

·       Total Return Performance of 399% from May 28, 1997 to December 31, 2008, Assuming Reinvestment of All Dividends

·       Positive GAAP Year-to-Year Lease Rolls for Ten Consecutive Years

·       Positive GAAP Same Property Growth Quarter-to-Quarter for 42 Consecutive Quarters

·       2008 FFO Per Share (Diluted) of $6.06, up 6%, After Supplemental Adjustments, Compared to $5.70 for 2007, After Supplemental Adjustments

·       2008 Earnings Per Share From Continuing Operations (Diluted) of $2.60, up 15%, Compared to $2.27 for 2007

·       GAAP Same Property Revenues Less Operating Expenses up 3.3%

·       Executed 141 Leases for Approximately 2,161,000 Rentable Square Feet, up 37% Over 2007

·       GAAP Rental Rate Increase of 15.0% on Renewed/Released Space

·       Extended Maturities of Two Secured Notes Payable Aggregating Approximately $256 Million

·       Completed Redevelopment of Multiple Spaces at 14 Properties Aggregating Approximately 335,000 Rentable Square Feet; 88% Leased

·       Leased Approximately 630,000 Rentable Square Feet of Redevelopment and Development Space

·       Operating Margins Steady at Approximately 75%

·       Sold Eight Properties for Approximately $86 Million; Subsequent to Year End, in January 2009, Sold Three Properties in the San Diego Market for Approximately $14 Million; Completed Sales from January 1, 2008 Through January 31, 2009 Aggregating Approximately $100 Million and 498,000 Rentable Square Feet

·       Received LEED® Certifications for Two Buildings in the Eastern Massachusetts and San Francisco Bay Markets

·       Closed 7.00% Series D Cumulative Convertible Preferred Stock Offering with Net Proceeds of Approximately $242 Million

 

(more)

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED
DECEMBER 31, 2008 OPERATING AND FINANCIAL RESULTS

Page 2

 

PASADENA, CA. - February 9, 2009 – Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the fourth quarter and year ended December 31, 2008.

 

For the fourth quarter of 2008, we reported FFO available to common stockholders of $49,450,000, or $1.55 per share (diluted), compared to $46,324,000, or $1.46 per share (diluted), for the fourth quarter of 2007.  Comparing the fourth quarter of 2008 to the fourth quarter of 2007, FFO available to common stockholders and FFO per share (diluted) increased 7% and 6%, respectively.  For the year ended December 31, 2008, we reported FFO available to common stockholders of $193,310,000, or $6.06 per share (diluted), after supplemental adjustments, compared to $170,999,000, or $5.70 per share (diluted), after supplemental adjustments, for the year ended December 31, 2007.  Comparing the year ended December 31, 2008 to the year ended December 31, 2007, FFO available to common stockholders and FFO per share (diluted) increased 13% and 6%, respectively, after supplemental adjustments.  In 2008, we recognized additional rental income aggregating $11,268,000, or $0.35 per share (diluted), related to a modification of a lease for a property in South San Francisco, Ca. and a write-off of deferred rent.  In 2008, we also recognized non-cash impairment charges aggregating $13,251,000, or $0.42 per share (diluted), for other-than-temporary declines in the fair value of certain investments.  Additionally, in 2008, we incurred non-cash impairment charges aggregating $4,650,000, or $0.15 per share (diluted), related to two properties.  In 2007, we recognized a preferred stock redemption charge of $2,799,000, or $0.09 per share (diluted).

 

FFO is a non-GAAP measure widely used by publicly traded real estate investment trusts.  A reconciliation of GAAP net income available to common stockholders to FFO available to common stockholders on both an aggregate and per share (diluted) basis, is included in the financial information accompanying this press release.  The primary reconciling item between GAAP net income available to common stockholders and FFO available to common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended December 31, 2008 and 2007 was $28,483,000 and $26,969,000, respectively. Depreciation and amortization expense for the year ended December 31, 2008 and 2007 was $108,743,000 and $97,335,000, respectively.  Net income available to common stockholders for the fourth quarter of 2008 was $21,071,000, or $0.66 per share (diluted), compared to $22,277,000, or $0.70 per share (diluted), for the fourth quarter of 2007.  Net income available to common stockholders for the year ended December 31, 2008 was $98,644,000, or $3.09 per share (diluted), compared to $78,905,000, or $2.63 per share (diluted), for the year ended December 31, 2007.  Net income available to common stockholders for the year ended December 31, 2008 included additional rental income aggregating $11,268,000 related to a modification of a lease and a write-off of deferred rent, non-cash impairment charges aggregating $17,901,000 and gains on sales of properties aggregating $20,401,000.  The non-cash impairment charges consisted of $4,650,000 related to two properties and $13,251,000 for other-than-temporary declines in the fair value of certain investments.  Net income available to common stockholders for the year ended December 31, 2007 included gains on sales of four properties and four land parcels aggregating $7,976,000 and a preferred stock redemption charge aggregating $2,799,000.  Excluding these items, net income available to common stockholders for the year ended December 31, 2008 was $84,876,000, or $2.66 per share (diluted), compared to net income available to common stockholders of $73,728,000, or $2.46 per share (diluted), for the year ended December 31, 2007.

 

For the fourth quarter of 2008, we executed a total of 34 leases for approximately 513,000 rentable square feet of space at 26 different properties (excluding month-to-month leases).  Of this total, approximately 373,000 rentable square feet related to new or renewal leases of previously leased space and approximately 140,000 rentable square feet related to developed, redeveloped or previously vacant space.  Of the 140,000 rentable square feet, approximately 96,000 rentable square feet were delivered from our development or redevelopment programs, with the remaining approximately 44,000 rentable square feet related to previously vacant space.  Rental rates for these new or renewal leases were on average approximately 13.9% higher (on a GAAP basis) than rental rates for expiring leases.

 

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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED
DECEMBER 31, 2008 OPERATING AND FINANCIAL RESULTS

Page 3

 

For the year ended December 31, 2008, we executed a total of 141 leases for approximately 2,161,000 rentable square feet of space at 65 different properties (excluding month-to-month leases).  Of this total, approximately 1,254,000 rentable square feet were for new or renewal leases related to previously leased space and approximately 907,000 rentable square feet were for redeveloped, developed or previously vacant space.  Of the 907,000 rentable square feet, approximately 630,000 rentable square feet were delivered from our redevelopment or development programs, with the remaining approximately 277,000 rentable square feet related to previously vacant space.  Rental rates for new or renewal leases were on average approximately 15.0% higher (on a GAAP basis) than rental rates for expiring leases.

 

During the fourth quarter of 2008, we sold one property located in the Eastern Massachusetts market with approximately 25,000 rentable square feet for approximately $2 million.  During the year ended December 31, 2008, we sold eight properties, including five properties in the east bay area of the San Francisco Bay market, aggregating approximately 434,000 rentable square feet.  The aggregate sales price for the properties sold during the year ended December 31, 2008 was approximately $86 million.  As of December 31, 2008, three properties approximating 64,000 rentable square feet were classified as “held for sale.”  In January 2009, we sold these three properties for an aggregate sales price of approximately $14 million.  The net proceeds from these sales were used to repay outstanding debt.

 

In December 2008, we announced that a multinational, large cap biopharmaceutical company entered into a long-term lease at The Alexandria Center for Science and Technology at Mission Bay, San Francisco, California.  We also announced that Pfizer, Inc. entered into a long-term lease at Technology Square in Cambridge, Massachusetts.

 

As of December 31, 2008, approximately 89% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto.  In addition, as of December 31, 2008, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses.  Additionally, as of December 31, 2008, approximately 92% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures and approximately 94% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.

 

Based on our current view of existing market conditions and certain current assumptions, our guidance for FFO per share (diluted) and earnings per share (diluted) is as follows:

 

 

 

2009

 

FFO per share (diluted) (1)

 

$6.26 (1)

 

Earnings per share (diluted) (1)

 

$2.73 (1)

 

 

(1)      Effective January 1, 2009, we will adopt FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”) and FASB Staff Position No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”), both of which require retrospective application to prior periods.  Our guidance for 2009 includes the estimated additional non-cash interest we will recognize under FSP APB 14-1 which affects the accounting treatment for convertible debt instruments, such as our outstanding unsecured convertible notes.  In addition, our guidance for 2009 includes the estimated impact related to FSP EITF 03-6-1 which requires unvested share-based payment awards with nonforfeitable rights to receive dividends or dividend equivalents to be considered participating securities for the purposes of applying the two-class method of calculating earnings per share.  As a result, net income available to common stockholders, earnings per share, FFO and FFO per share will be adjusted for an allocation of net income to unvested stock awards.  We are still in the process of evaluating the overall impact of FSP APB 14-1 and FSP EITF 03-6-1, however, we believe that 2008 FFO per share (diluted) and earnings per share (diluted) as reported at $5.85 and $3.09, respectively, would have been approximately $5.62 and $2.89, respectively, after considering the estimated impact of FSP APB 14-1 and FSP EITF 03-6-1.   2008 FFO per share (diluted) included additional rental income related to a modification of a lease and a write-off of deferred rent aggregating $11,268,000 and non-cash impairment charges aggregating $17,901,000.  2008 earnings per share (diluted) included additional rental income related to a modification of a lease and a write-off of deferred rent aggregating $11,268,000, non-cash impairment charges aggregating $17,901,000 and gains on sales of property aggregating $20,401,000.

 

(more)

 


 

ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FOURTH QUARTER AND YEAR ENDED
DECEMBER 31, 2008 OPERATING AND FINANCIAL RESULTS

Page 4

 

Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life Science Industry®, is the largest owner and pre-eminent first-in-class real estate investment trust focused principally on science-driven cluster formation.  Alexandria is the leading provider of high-quality environmentally sustainable real estate, technical infrastructure and services to the broad and diverse life science industry.  Client tenants include institutional (universities and independent not-for-profit institutions), pharmaceutical, biopharmaceutical, medical device, product, service, and translational entities, as well as government agencies.  Alexandria’s operating platform is based on the principle of “clustering,” with assets and operations located in key life science markets.  Our asset base approximates 12.6 million rentable square feet consisting of 159 properties approximating 11.7 million rentable square feet (including spaces undergoing active redevelopment) and properties undergoing ground-up development approximating 875,000 rentable square feet.

 

This press release 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 2009 earnings per share (diluted), 2009 FFO per share (diluted) and our redevelopment and development pipelines.  Our actual results may differ materially from those projected in such forward-looking statements.  Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing and or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development, our failure to successfully operate or lease acquired properties, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, general and local economic conditions and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission (“SEC”).  All forward-looking statements are made as of today, and we assume no obligation to update this information.  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.

 

(Tables follow)


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial Information

(Dollars in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

 

 

2008

 

2007

 

2008

 

2007

 

Income statement data

 

 

 

 

 

 

 

 

 

Total revenues

 

$

126,572

 

$

107,596

 

$

460,668

 

$

397,062

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

Rental operations

 

29,078

 

26,923

 

114,543

 

97,103

 

General and administrative

 

8,973

 

8,127

 

34,796

 

32,316

 

Interest

 

19,686

 

23,451

 

78,791

 

86,126

 

Depreciation and amortization

 

28,368

 

26,474

 

108,233

 

95,008

 

Non-cash impairment on investments

 

11,266

 

 

13,251

 

 

 

 

97,371

 

84,975

 

349,614

 

310,553

 

 

 

 

 

 

 

 

 

 

 

Minority interest

 

971

 

951

 

3,799

 

3,669

 

Income from continuing operations

 

28,230

 

21,670

 

107,255

 

82,840

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations, net

 

(70

)

3,322

 

15,614

 

10,884

 

 

 

 

 

 

 

 

 

 

 

Net income

 

28,160

 

24,992

 

122,869

 

93,724

 

 

 

 

 

 

 

 

 

 

 

Dividends on preferred stock

 

7,089

 

2,715

 

24,225

 

12,020

 

Preferred stock redemption charge

 

 

 

 

2,799

 

Net income available to common stockholders

 

$

21,071

 

$

22,277

 

$

98,644

 

$

78,905

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock outstanding

 

 

 

 

 

 

 

 

 

Basic

 

31,757,072

 

31,446,999

 

31,653,829

 

29,668,231

 

Diluted

 

31,883,885

 

31,729,054

 

31,907,956

 

30,004,462

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – basic

 

 

 

 

 

 

 

 

 

Continuing operations (net of preferred stock dividends and preferred stock redemption charge)

 

$

0.66

 

$

0.60

 

$

2.63

 

$

2.29

 

Discontinued operations, net

 

 

0.11

 

0.49

 

0.37

 

Earnings per share – basic

 

$

0.66

 

$

0.71

 

$

3.12

 

$

2.66

 

 

 

 

 

 

 

 

 

 

 

Earnings per share – diluted

 

 

 

 

 

 

 

 

 

Continuing operations (net of preferred stock dividends and preferred stock redemption charge)

 

$

0.66

 

$

0.60

 

$

2.60

 

$

2.27

 

Discontinued operations, net

 

 

0.10

 

0.49

 

0.36

 

Earnings per share – diluted

 

$

0.66

 

$

0.70

 

$

3.09

 

$

2.63

 

 

(Continued on next page)

 

5


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial Information

(Unaudited)

 

Funds from Operations

 

United States generally accepted accounting principles (“GAAP”) basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time.  In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of Funds From Operations (“FFO”).  Since its introduction, FFO has become a widely used non-GAAP financial measure among real estate investment trusts (“REITs”).  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the “White Paper”) and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs.  The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

 

FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.

 

The following tables present 1) a reconciliation of net income available to common stockholders, the most directly comparable GAAP financial measure to FFO, to FFO available to common stockholders and 2) a reconciliation of earnings per share (diluted) to FFO per share (diluted), in each case, for the three months and year ended December 31, 2008 and 2007 (in thousands, except per share data):

 

Reconciliation of net income available to common stockholders to FFO available to common stockholders

 

Three Months
Ended
December 31,
2008

 

Three Months
Ended
December 31,
2007

 

Year
Ended
December 31,
2008

 

Year
Ended
December 31,
2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

21,071

 

$

22,277

 

$

98,644

 

$

78,905

 

Add: Depreciation and amortization (1)

 

28,483

 

26,969

 

108,743

 

97,335

 

Add: Minority interest

 

971

 

951

 

3,799

 

3,669

 

Subtract: Gain on sales of property (2)

 

(6

)

(2,901

)

(20,401

)

(7,976

)

Subtract: FFO allocable to minority interest

 

(1,069

)

(972

)

(4,108

)

(3,733

)

FFO available to common stockholders

 

$

49,450

 

$

46,324

 

$

186,677

 

$

168,200

 

FFO per share (diluted)

 

 

 

 

 

 

 

 

 

Basic

 

$

1.56

 

$

1.47

 

$

5.90

 

$

5.67

 

Diluted

 

$

1.55

 

$

1.46

 

$

5.85

(3)

$

5.61

(4)

 

 

 

 

 

 

 

 

 

 

Reconciliation of earnings per share (diluted) to FFO per share (diluted)

 

 

 

 

 

 

 

 

 

Earnings per share (diluted)

 

$

0.66

 

$

0.70

 

$

3.09

 

$

2.63

 

Depreciation and amortization (1)

 

0.89

 

0.85

 

3.41

 

3.25

 

Minority interest

 

0.03

 

0.03

 

0.12

 

0.12

 

Gain on sales of property (2)

 

 

(0.09

)

(0.64

)

(0.27

)

FFO allocable to minority interest

 

(0.03

)

(0.03

)

(0.13

)

(0.12

)

FFO per share (diluted)

 

$

1.55

 

$

1.46

 

$

5.85

 

$

5.61

 

 

(1)

 

Includes depreciation and amortization for assets “held for sale” reflected as discontinued operations for the periods prior to when such assets were classified as “held for sale”.

(2)

 

Gain on sales of property relates to the disposition of one property sold during the fourth quarter 2008, one property sold during the second quarter 2008, six properties sold during the first quarter 2008, one property sold during the fourth quarter of 2007, four land parcels and one property sold during the third quarter of 2007, one property sold during the second quarter of 2007 and one property sold during the first quarter of 2007. Gain on sales of property is included in the income statement in income from discontinued operations, net.

(3)

 

For the year ended December 31, 2008, we recognized additional rental income aggregating $11,268,000 related to a modification of a lease and a write-off of deferred rent and non-cash impairment charges aggregating $17,901,000. The non-cash impairment charges consisted of $4,650,000 related to two properties and $13,251,000 for other-than-temporary declines in the fair value of certain investments. FFO per share (diluted) for the year ended December 31, 2008 excluding these items was $6.06.

(4)

 

During the first quarter of 2007, we redeemed our 9.10% series B cumulative redeemable preferred stock. Accordingly, in compliance with FASB Emerging Issues Task Force D-42 (“EITF Topic D-42”), we recorded a charge of $2,799,000, or $0.09 per share (diluted), for costs related to the redemption of our series B preferred stock. FFO per share (diluted) for the year ended December 31, 2007 excluding this item was $5.70.

 

6


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Quarterly Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)

 

 

 

For the Three Months Ended

 

Operational data

 

12/31/2008

 

9/30/2008

 

6/30/2008

 

3/31/2008

 

12/31/2007

 

Rental income

 

$

97,778

 

$

85,503

 

$

82,861

 

$

81,841

 

$

81,379

 

Tenant recoveries

 

26,347

 

26,726

 

23,904

 

24,471

 

22,252

 

Other income

 

2,447

 

2,648

 

2,892

 

3,250

 

3,965

 

Total revenues (continuing operations) (a)

 

$

126,572

 

$

114,877

 

$

109,657

 

$

109,562

 

$

107,596

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from operations per share (diluted) (b)

 

$

1.55

 

$

1.53

 

$

1.51

 

$

1.27

(c)

$

1.46

 

Dividends per share on common stock

 

$

0.80

 

$

0.80

 

$

0.80

 

$

0.78

 

$

0.78

 

Dividend payout ratio (common stock) (d)

 

52.3%

 

52.7%

 

53.4%

 

62.0%

 

53.9%

 

Straight-line rent

 

$

2,547

 

$

3,274

 

$

3,437

 

$

3,015

 

$

4,615

 

Capitalized interest

 

$

19,235

(e)

$

17,646

 

$

18,437

 

$

17,262

 

$

16,609

 

Number of properties (f)

 

 

 

 

 

 

 

 

 

 

 

Acquired/added/completed during period

 

 

 

2

 

 

2

 

Sold/transferred (g)

 

(1

)

 

(1

)

(7

)

(3

)

At end of period

 

159

 

160

 

160

 

159

 

166

 

Rentable square feet (f)

 

 

 

 

 

 

 

 

 

 

 

Acquired/added/completed during period

 

 

 

60,000

 

 

404,986

 

Sold/transferred (g)

 

(24,867

)

 

(49,437

)

(475,976

)

(92,927

)

At end of period

 

11,685,912

 

11,710,779

 

11,710,779

 

11,700,216

 

12,176,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

Other data

 

12/31/2008

 

9/30/2008

 

6/30/2008

 

3/31/2008

 

12/31/2007

 

Number of shares of common stock outstanding

 

31,899,037

 

31,839,622

 

31,773,117

 

31,673,359

 

31,603,344

 

Closing price of common stock

 

$

60.34

 

$

112.50

 

$

97.34

 

$

92.72

 

$

101.67

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt to total market capitalization (h)

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

2,966,963

 

$

2,804,551

 

$

2,693,333

 

$

2,625,852

 

$

2,787,904

 

Less minority interest share of debt

 

(44,984

)

(42,384

)

(40,762

)

(39,838

)

(39,320

)

Our share of total debt

 

2,921,979

 

2,762,167

 

2,652,571

 

2,586,014

 

2,748,584

 

Preferred stock

 

353,658

 

368,489

 

377,616

 

352,127

 

136,845

 

Common stock market capitalization

 

1,924,788

 

3,581,957

 

3,092,795

 

2,936,754

 

3,213,112

 

Total market capitalization

 

$

5,200,425

 

$

6,712,613

 

$

6,122,982

 

$

5,874,895

 

$

6,098,541

 

Debt to total market capitalization

 

56.2%

 

41.1%

 

43.3%

 

44.0%

 

45.1%

 

 

(a)

 

The historical results above exclude the results of assets “held for sale” which have been classified as discontinued operations.

(b)

 

See page 6 for a reconciliation of earnings per share (diluted) to FFO per share (diluted).

(c)

 

In March 2008, we recognized aggregate non-cash impairment charges of approximately $1,985,000 for other-than-temporary declines in the fair value of certain investments and non-cash impairment charges of approximately $4,650,000 on two properties which were sold in May and October 2008. FFO per share (diluted) for the first quarter of 2008 before these items was $1.48.

(d)

 

Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (common stock shares outstanding on the respective record date multiplied by the related dividend per share) to funds from operations.

(e)

 

As of December 31, 2008, assets for which capitalization of interest is required pursuant to Statement of Financial Accounting Standards No. 34, “Capitalization of Interest Cost” (“SFAS 34”), approximated $1.4 billion. This amount is classified as properties undergoing development and redevelopment, and land held for development on our balance sheet. The weighted average interest rate used in the calculation of capitalized interest required pursuant to SFAS 34 was approximately 5.37% for the three months ended December 31, 2008. SFAS 34 requires the interest rate for capitalization to be based on applicable interest costs related to borrowings outstanding during the period, including the impact of interest rate swap agreements, debt premiums/discounts and amortization of loan fees.

(f)

 

Includes properties “held for sale” during the applicable periods such assets were “held for sale.” As of December 31, 2008, three properties aggregating 64,218 rentable square feet were classified as “held for sale.”

(g)

 

During the fourth quarter of 2008, we sold one asset located in the Eastern Massachusetts market. During the second quarter of 2008, we sold one asset located in the San Diego market. During the first quarter of 2008, we sold six properties and transferred one property from operating assets to embedded future development opportunities. During the fourth quarter of 2007, we sold one property and transferred two properties from operating assets to embedded future development opportunities.

(h)

 

Debt to total market capitalization is the ratio of our share of total debt (secured notes payable, unsecured line of credit and unsecured term loan and unsecured convertible notes) to total market capitalization. Total market capitalization is equal to outstanding shares of series C preferred stock and common stock multiplied by the related closing price at the end of each period presented, plus series D cumulative convertible preferred stock at liquidation value, plus our share of total debt.

 

7


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Annual Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)

 

 

 

For the Year Ended

 

Operational data

 

12/31/2008

 

12/31/2007

 

12/31/2006

 

12/31/2005

 

12/31/2004

 

Rental income

 

$

347,983

 

$

300,011

 

$

229,636

 

$

172,755

 

$

128,467

 

Tenant recoveries

 

101,448

 

82,232

 

60,630

 

45,205

 

31,180

 

Other income

 

11,237

 

14,819

 

11,795

 

4,757

 

3,486

 

Total revenues (continuing operations) (a)

 

$

460,668

 

$

397,062

 

$

302,061

 

$

222,717

 

$

163,133

 

 

 

 

 

 

 

 

 

 

 

 

 

Funds from operations per share (diluted) (b)

 

$

5.85

(c)

$

5.61

(d)

$

5.16

 

$

4.82

 

$

4.41

(e)

Dividends per share on common stock

 

$

3.18

 

$

3.04

 

$

2.86

 

$

2.72

 

$

2.52

 

Dividend payout ratio (common stock) (f)

 

54.8%

 

55.4%

 

58.8%

 

57.9%

 

56.7%

 

Number of properties (g)

 

 

 

 

 

 

 

 

 

 

 

Acquired/added/completed during period

 

2

 

17

 

29

 

22

 

23

 

Sold/transferred to development

 

(9

)

(9

)

(3

)

(1

)

(1

)

Owned at end of period

 

159

 

166

 

158

 

132

 

111

 

Rentable square feet (g)

 

 

 

 

 

 

 

 

 

 

 

Acquired/added/completed during period

 

60,000

 

1,503,322

 

2,683,211

 

1,392,299

 

1,714,573

 

Sold/transferred to development

 

(550,280

)

(580,539

)

(268,099

)

(16,500

)

2,891

 

Owned at end of period

 

11,685,912

 

12,176,192

 

11,253,409

 

8,838,297

 

7,462,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

12/31/2008

 

12/31/2007

 

12/31/2006

 

12/31/2005

 

12/31/2004

 

Other data

 

 

 

 

 

 

 

 

 

 

 

Number of shares of common stock outstanding

 

31,899,037

 

31,603,344

 

29,012,135

 

22,441,294

 

19,594,418

 

Closing price of common stock

 

$

60.34

 

$

101.67

 

$

100.40

 

$

80.50

 

$

74.42

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt to total market capitalization (h)

 

 

 

 

 

 

 

 

 

 

 

Total debt

 

$

2,966,963

 

$

2,787,904

 

$

2,024,866

 

$

1,406,666

 

$

1,186,946

 

Less minority interest share of debt

 

(44,984

)

(39,320

)

(22,064

)

 

 

Our share of debt

 

2,921,979

 

2,748,584

 

2,002,802

 

1,406,666

 

1,186,946

 

Preferred stock market capitalization

 

353,658

 

136,845

 

193,360

 

192,419

 

199,360

 

Common stock market capitalization

 

1,924,788

 

3,213,112

 

2,912,818

 

1,806,524

 

1,458,217

 

Total market capitalization

 

$

5,200,425

 

$

6,098,541

 

$

5,108,980

 

$

3,405,609

 

$

2,844,523

 

Debt to total market capitalization

 

56.2%

 

45.1%

 

39.2%

 

41.3%

 

41.7%

 

 

(a)

 

The historical results above exclude the results of assets “held for sale” which have been reflected as discontinued operations.

(b)

 

See page 6 for a reconciliation of earnings per share (diluted) to FFO per share (diluted).

(c)

 

In 2008, we recognized additional rental income aggregating $11,268,000 related to a modification of a lease and a write-off of deferred rent and non-cash impairment charges aggregating $17,901,000. The non-cash impairment charges consisted of $4,650,000 related to two properties and $13,251,000 for other-than-temporary declines in the fair value of certain investments. FFO per share (diluted) before these items was $6.06.

(d)

 

During the first quarter of 2007, we elected to redeem our 9.10% Series B cumulative redeemable preferred stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge of $2,799,000 for costs related to the redemption of our Series B Preferred Stock. FFO per share (diluted) before this item was $5.70.

(e)

 

During the second quarter of 2004, we redeemed our 9.50% Series A cumulative redeemable preferred stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge of $1,876,000 recorded in the second quarter of 2004 for costs related to the redemption of our Series A Preferred Stock. FFO per share (diluted) before this item was $4.51.

(f)

 

Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (common stock shares outstanding on the respective record date multiplied by the related dividend per share) to funds from operations.

(g)

 

Includes assets “held for sale” during the applicable periods such assets were “held for sale.” As of December 31, 2008, three properties with approximately 64,218 rentable square feet were classified as “held for sale.”

(h)

 

Debt to total market capitalization is the ratio of our share of total debt (secured notes payable, unsecured line of credit and unsecured term loan and unsecured convertible notes) to total market capitalization. Total market capitalization is equal to outstanding shares of series C preferred stock and common stock multiplied by the related closing price at the end of each period presented, plus series D cumulative convertible preferred stock at liquidation value, plus our share of total debt.

 

8


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Balance Sheets

(In thousands)

 

 

 

December 31,

 

 

 

2008

 

2007

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Rental properties, net

 

$

3,325,047

 

$

3,146,915

 

Properties undergoing development and redevelopment, and land held for development

 

1,397,423

 

1,143,302

 

Cash and cash equivalents

 

71,161

 

8,030

 

Tenant security deposits and other restricted cash

 

67,782

 

51,911

 

Tenant receivables

 

6,453

 

6,759

 

Deferred rent

 

85,733

 

81,496

 

Investments

 

61,861

 

84,322

 

Other assets

 

115,636

 

119,359

 

Total assets

 

$

5,131,096

 

$

4,642,094

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Secured notes payable

 

$

1,081,963

 

$

1,212,904

 

Unsecured line of credit and unsecured term loan

 

1,425,000

 

1,115,000

 

Unsecured convertible notes

 

460,000

 

460,000

 

Accounts payable, accrued expenses and tenant security deposits

 

386,811

 

247,289

 

Dividends payable

 

32,105

 

27,575

 

Total liabilities

 

3,385,879

 

3,062,768

 

 

 

 

 

 

 

Minority interest

 

75,021

 

75,506

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Series C preferred stock

 

129,638

 

129,638

 

Series D convertible preferred stock

 

250,000

 

 

Common stock

 

319

 

316

 

Additional paid-in capital

 

1,377,448

 

1,365,773

 

Accumulated other comprehensive (loss) income

 

(87,209

)

8,093

 

Total stockholders’ equity

 

1,670,196

 

1,503,820

 

Total liabilities and stockholders’ equity

 

$

5,131,096

 

$

4,642,094

 

 

9


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
December 31, 2008
(Dollars in thousands)
(Unaudited)

 

Principal Maturities / Rates

 

 

 

Secured Debt

 

Unsecured Debt

 

 

Year

 

Our Share

 

Minority Share

 

Total

 

Weighted
Average
Interest Rate (1)

 

Amount

 

 

2009

 

$

72,004

 

$

22,994

 

$

94,998

 

5.26

%

 

$

 

 

2010

 

257,768

 

270

 

258,038

 

5.23

 

 

 

 

2011

 

190,679

 

286

 

190,965

 

5.69

 

 

675,000

 (2)(3)

 

2012

 

37,280

 

302

 

37,582

 

5.95

 

 

1,210,000

 (2)(3)(4)

 

2013

 

49,500

 

319

 

49,819

 

5.89

 

 

 

 

Thereafter

 

429,748

 

20,813

 

450,561

 

5.85

 

 

 

 

Total

 

$

1,036,979

 

$

44,984

 

$

1,081,963

 

 

 

 

$

1,885,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured and Unsecured Debt Analysis

 

 

 

Balance

 

Percentage
of
Balance

 

Weighted
Average
Interest Rate (5)

 

Weighted
Average
Maturity

 

 

Secured Debt

 

$

1,081,963

 

36.5

%

 

5.26

%

 

3.9 Years

 

 

Unsecured Debt

 

1,885,000

 

63.5

 

 

4.15

 

 

2.5 Years

 (6)

 

Total Debt

 

$

2,966,963

 

100.0

%

 

4.56

%

 

3.0 Years

 (6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed and Floating Rate Debt Analysis

 

 

 

Balance

 

Percentage
of
Balance

 

Weighted
Average
Interest Rate (5)

 

Weighted Average Maturity

 

 

Fixed Rate Debt

 

$

1,245,516

 

42.0

%

 

5.17

%

 

4.2 Years

 

 

Floating Rate Debt – Hedged

 

953,500

 

32.1

 

 

5.71

 

 

2.6 Years

 (7)

 

Floating Rate Debt – Unhedged

 

767,947

 

25.9

 

 

2.14

 

 

1.5 Years

 (7)

 

Total Debt

 

$

2,966,963

 

100.0

%

 

4.56

%

 

3.0 Years

 (7)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

The weighted average interest rate is calculated based on outstanding debt as of December 31st of the year immediately preceding the year presented.

(2)

 

Our borrowing capacity and financial covenants under our unsecured line of credit and unsecured term loan are not directly dependent or variable based upon our stock price. Interest on outstanding borrowings under our unsecured credit facility is based upon LIBOR plus 1.00% to 1.45% depending on our leverage or the higher of the Federal Funds rate plus 0.50% or Bank of America’s (“BofA”) prime rate plus 0.0% to 0.25% depending on our leverage. As of December 31, 2008, one-month LIBOR was 0.44%, the Federal Funds rate was 0-0.25%, and BofA’s prime rate was 3.25%.

(3)

 

Assumes we exercise our sole right to extend the maturity date of our unsecured line of credit from October 2010 to October 2011 and our unsecured term loan from October 2011 to October 2012. As of December 31, 2008, cash and cash equivalents were approximately $71.2 million.

(4)

 

On or after January 15, 2012, we have the right to redeem our 3.70% unsecured convertible notes, in whole or in part, at any time from time to time, for cash equal to 100% of the principal amounts of the notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the notes may require us to repurchase their notes, in whole or in part, on January 15, 2012, 2017 and 2022 for cash equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. Additional information regarding our unsecured convertible notes is contained in our Form 10-K filed with the Securities and Exchange Commission.

(5)

 

Represents the weighted average contractual interest rate plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees. See page 11 for further details of our interest rate swap agreements.

(6)

 

Assuming we elect to extend our unsecured line of credit and unsecured term loan to October 2011 and October 2012, respectively, the weighted average maturity on our unsecured debt and total debt would be 3.3 years and 3.5 years, respectively.

(7)

 

Assuming we elect to extend our unsecured line of credit and unsecured term loan to October 2011 and October 2012, respectively, the weighted average maturity on our hedged floating rate debt, unhedged floating rate debt and total debt would be 3.6 years, 2.1 years and 3.5 years, respectively. The interest rate related to outstanding borrowings for our unhedged floating rate debt is based upon one-month LIBOR. The interest rate resets periodically and will vary in future periods.

 

10


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Interest Rate Swap Agreements

December 31, 2008

(Dollars in thousands)

(Unaudited)

 

Transaction Dates

 

Effective
Dates

 

Termination
Dates

 

Interest Pay
Rates (1)

 

Notional
Amounts

 

Effective at
December 31,
2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 2006

 

June 30, 2006

 

September 30, 2009

 

5.299

%

 

$

125,000

 

$

125,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2005

 

December 29, 2006

 

November 30, 2009

 

4.730

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2005

 

December 29, 2006

 

November 30, 2009

 

4.740

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

December 29, 2006

 

March 31, 2014

 

4.990

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

January 2, 2007

 

January 3, 2011

 

5.003

 

 

28,500

 

28,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

October 31, 2007

 

September 30, 2012

 

4.546

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

October 31, 2007

 

September 30, 2013

 

4.642

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2005

 

January 2, 2008

 

December 31, 2010

 

4.768

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

May 2005

 

June 30, 2008

 

June 30, 2009

 

4.509

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 2006

 

June 30, 2008

 

June 30, 2010

 

5.325

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 2006

 

June 30, 2008

 

June 30, 2010

 

5.325

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

July 1, 2008

 

March 31, 2013

 

4.622

 

 

25,000

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2007

 

July 1, 2008

 

March 31, 2013

 

4.625

 

 

25,000

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2008

 

October 10, 2008

 

December 31, 2009

 

2.750

 

 

75,000

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2008

 

October 16, 2008

 

January 31, 2010

 

2.755

 

 

100,000

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 2006

 

October 31, 2008

 

December 31, 2010

 

5.340

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 2006

 

October 31, 2008

 

December 31, 2010

 

5.347

 

 

50,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

May 2005

 

November 28, 2008

 

November 30, 2009

 

4.615

 

 

25,000

 

25,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 2008

 

September 30, 2009

 

January 31, 2011

 

3.119

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

November 30, 2009

 

March 31, 2014

 

5.015

 

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

November 30, 2009

 

March 31, 2014

 

5.023

 

 

75,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 2006

 

December 31, 2010

 

October 31, 2012

 

5.015

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

$

953,500

 

 

(1)

 

The interest pay rates represent the interest rate we will pay for one month LIBOR under the respective interest rate swap agreement. These rates do not include any spread in addition to one month LIBOR that is due monthly as interest expense.

 

11


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Properties

(Dollars in thousands)

(Unaudited)

 

 

 

December 31, 2008

 

 

 

 

 

Number of

 

Rentable Square Feet

 

Annualized

 

Occupancy Percentage

 


Markets

 

Properties

 

Operating

 

Redevelopment

 

Total

 

Base Rent (1)

 

12/31/08 (1) (2)

 

12/31/07 (3)

 

9/30/08 (4)

 

California – Los Angeles Metro

 

1

 

31,343

 

 

31,343

 

$

820

 

88.3%

 

70.8%

 

88.3%

 

California – San Diego

 

31

 

1,494,551

 

148,657

 

1,643,208

 

43,594

 

92.6   

 

94.9   

 

94.2   

 

California – San Francisco Bay

 

17

 

1,478,660

 

 

1,478,660

 

56,542

 

98.4   

 

95.8   

 

98.7   

 

Eastern Massachusetts

 

38

 

3,147,365

 

308,931

 

3,456,296

 

116,017

 

96.7   

 

94.7   

 

97.1   

 

New Jersey/Suburban Philadelphia

 

8

 

441,504

 

 

441,504

 

8,341

 

87.5   

 

96.6   

 

87.5   

 

Southeast

 

13

 

621,586

 

65,834

 

687,420

 

12,446

 

94.7   

 

86.0(5)

 

94.5   

 

Suburban Washington, D.C.

 

31

 

2,428,466

 

66,635

 

2,495,101

 

48,608

 

90.5   

 

90.1   

 

92.4   

 

Washington – Seattle

 

13

 

1,045,768

 

 

1,045,768

 

32,244

 

98.7   

 

97.2   

 

99.0   

 

International – Canada

 

4

 

342,394

 

 

342,394

 

8,773

 

100.0   

 

100.0   

 

100.0   

 

Total Properties (Continuing Operations)

 

156

 

11,031,637

 

590,057

 

11,621,694

 

$

327,385

 

94.8%

 

93.8%

 

95.6%

 

 

(1)

 

Excludes spaces at properties totaling approximately 590,057 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment and three properties with approximately 64,218 rentable square feet that are classified as “held for sale.”

(2)

 

Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of December 31, 2008 was 90.0%. See page 18 for additional information on our redevelopment program.

(3)

 

Excludes spaces at properties totaling approximately 774,519 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment and two properties with approximately 136,399 rentable square feet that was classified as “held for sale” as of December 31, 2007. Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of December 31, 2007 was approximately 87.8%. See page 18 for additional information on our redevelopment program.

(4)

 

Excludes spaces at properties totaling approximately 708,473 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment and one property with approximately 24,867 rentable square feet that was classified as “held for sale” as of September 30, 2008. Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of September 30, 2008 was approximately 89.8%. See page 18 for additional information on our redevelopment program.

(5)

 

Substantially all of the vacant space was office or warehouse space.

 

12


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Same Property Comparisons

(Dollars in thousands)

(Unaudited)

 

 

 

GAAP Basis (1)

 

Cash Basis (1)

 

 

 

Quarter Ended

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2008

 

12/31/2007

 

% Change

 

12/31/2008

 

12/31/2007

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (2)

 

$

96,324

 

$

92,378

 

4.3

%

 

$

94,540

 

$

88,186

 

7.2

%

 

Operating expenses

 

24,091

 

23,103

 

4.3

 

 

24,091

 

23,103

 

4.3

 

 

Revenue less operating expenses

 

$

72,233

 

$

69,275

 

4.3

%

 

$

70,449

 

$

65,083

 

8.2

%

 

 

 

 

GAAP Basis (1)

 

Cash Basis (1)

 

 

 

Year Ended

 

Year Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/31/2008

 

12/31/2007

 

% Change

 

12/31/2008

 

12/31/2007

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue (2)

 

$

328,341

 

$

315,106

 

4.2

%

 

$

323,189

 

$

301,591

 

7.2

%

 

Operating expenses

 

85,188

 

79,715

 

6.9

 

 

85,188

 

79,715

 

6.9

 

 

Revenue less operating expenses

 

$

243,153

 

$

235,391

 

3.3

%

 

$

238,001

 

$

221,876

 

7.3

%

 

 

NOTE:  This summary represents operating data for all properties that were fully operating for the entire periods presented for the quarter periods (the “Fourth Quarter Same Properties”) and for the full year periods (the “2008 Same Properties”).  Same property occupancy for the quarters ended December 31, 2008 and 2007 was approximately 95.6% and approximately 95.8%, respectively.  Same Property Occupancy for the year ended December 31, 2008 and 2007 was approximately 95.7% for both periods respectively. Properties undergoing redevelopment are excluded from same property results.

 

(1)

 

Revenue less operating expenses computed in accordance with GAAP is total revenue associated with the Fourth Quarter Same Properties and 2008 Same Properties, as applicable (excluding lease termination fees, if any), less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the Fourth Quarter Same Properties and 2008 Same Properties (excluding lease termination fees, if any), less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarters ended December 31, 2008 and 2007 for the Fourth Quarter Same Properties were $1,784,000 and $4,192,000, respectively. Straight-line rent adjustments for the year ended December 31, 2008 and 2007 for the 2008 Same Properties were $5,152,000 and $13,515,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent adjustments to rental revenue.

 

 

 

(2)

 

Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Summary of Same Property Comparisons. As of December 31, 2008, approximately 89% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of December 31, 2008, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses.

 

13


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Leasing Activity

For the Quarter Ended December 31, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

TI’s/Lease

 

 

 

 

 

 

 

Rentable

 

 

 

 

 

Rental

 

Commissions

 

 

 

 

 

Number

 

Square

 

Expiring

 

New

 

Rate

 

Per

 

Lease

 

 

 

of Leases

 

Footage

 

Rates

 

Rates

 

Changes

 

Square Foot

 

Terms

 

Leasing Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Expirations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

41

 

528,555

 

$26.79

 

 

 

 

 

GAAP Basis

 

41

 

528,555

 

$25.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewed/Released Space Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

24

 

373,314

 

$28.58

 

$29.86

 

4.5%

 

$5.17

 

4.9 years

 

GAAP Basis

 

24

 

373,314

 

$27.18

 

$30.96

 

13.9%

 

$5.17

 

4.9 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Developed/Redeveloped/Vacant Space Leased

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

10

 

139,820

 

 

$32.90

 

 

$7.69

 

6.1 years

 

GAAP Basis

 

10

 

139,820

 

 

$33.21

 

 

$7.69

 

6.1 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Month-to-Month Leases in Effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

14

 

77,618

 

$24.00

 

$24.00

 

 

 

 

GAAP Basis

 

14

 

77,618

 

$23.99

 

$24.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leasing Activity Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluding Month-to-Month Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

34

 

513,134

 

 

$30.69

 

 

$5.86

 

5.2 years

 

GAAP Basis

 

34

 

513,134

 

 

$31.58

 

 

$5.86

 

5.2 years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Including Month-to-Month Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Basis

 

48

 

590,752

 

 

$29.81

 

 

 

 

GAAP Basis

 

48

 

590,752

 

 

$30.58

 

 

 

 

 

14


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Summary of Leasing Activity

For the Year Ended December 31, 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

TI’s/Lease

 

 

 

 

 

 

 

Rentable

 

 

 

 

 

Rental

 

Commissions

 

 

 

 

 

Number

 

Square

 

Expiring

 

New

 

Rate

 

Per

 

Lease

 

 

 

of Leases

 

Footage

 

Rates

 

Rates