PASADENA, Calif., May 2, 2016 /PRNewswire/ -- Alexandria Real Estate Equities, Inc.
(NYSE: ARE) today announced financial and operating results for the first quarter ended March 31,
2016.
Joel S. Marcus, chairman, chief executive officer, and founder of Alexandria Real Estate
Equities, Inc. ("Alexandria"), stated, "We are pleased to start 2016 with a very successful
first quarter executed by our best-in-class team."
Key 1Q16 Highlights:
- Funds from operations ("FFO") per share – diluted, as adjusted, of $1.34, up 4.7%, for 1Q16,
compared to $1.28 for 1Q15;
- In 1Q16, Verily, Alphabet Inc.'s life science subsidiary, subleased 407,369 rentable square feet ("RSF") from Amgen Inc. at
249/259/269 East Grand Avenue in our South San Francisco submarket. The sublease highlights
the continued demand from high-quality science and technology companies in our key urban innovation clusters;
- Executed leases for 388,872 RSF during 1Q16, despite minimal contractual lease expirations in 2016 and our highly
pre-leased value-creation pipeline;
- Rental rate increases of 33.6% and 16.9% (cash basis) for 1Q16 lease renewals and re-leasing of space aggregating 218,342
RSF (included in the 388,872 RSF above);
- Same property NOI growth of 5.3% and 6.2% (cash basis) for 1Q16, compared to 1Q15;
- Disciplined allocation of capital to value-creation pipeline of highly leased Class A buildings in urban innovation
clusters:
|
Year of Delivery
|
|
RSF
|
|
Leased %
|
|
Incremental Annual NOI
|
|
2016
|
|
1,465,977
|
|
90%
|
|
$75 million to $80 million
|
|
2017-2018
|
|
2,036,828
|
|
72%
|
|
$120 million to $130 million
|
|
|
3,502,805
|
|
81%
|
|
$195 million to $210 million
|
- Recycling estimated proceeds of $104.4 million from disposition of all our investments in
Asia in several separate transactions over the next 12 months. Proceeds will be allocated to
development of Class A facilities in high value urban innovation clusters
- In March 2016, we recognized an impairment charge of $29.0
million for two land parcels in India that met the criteria for classification as
held for sale in March 2016. As of March 31, 2016, we only had
one binding sale agreement related to one land parcel. This land parcel was sold on May 2,
2016, at a sales price of $7.5 million with no gain or loss.
- On April 22, 2016, our Board of Directors approved the monetization of our remaining real
estate investments in Asia. As a result of this decision, we recognized an aggregate
impairment charge of $153.0 million to reduce our net book value to fair value less cost to
sell for all of our remaining investments in Asia;
- $2.0 billion of liquidity, including availability on our $304.3
million secured construction loan for 100 Binney Street closed in April 2016;
- 7.4x net debt to adjusted EBITDA – 1Q16 annualized, goal of achieving less than 6.0x;
- 7.2x net debt to adjusted EBITDA – 1Q16 trailing 12 months;
- Common stock dividend for 1Q16 of $0.80 per common share, up 3 cents, or 4%, over 4Q15;
continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also
importantly retaining capital for reinvestment.
|
Results
|
1Q16
|
|
1Q15
|
|
Change
|
|
|
FFO attributable to Alexandria's common
stockholders – diluted, as adjusted:
|
|
|
|
|
|
|
|
|
|
In Millions
|
$
|
97.1
|
|
$
|
91.3
|
|
$
|
5.7
|
|
|
6.3
|
%
|
|
|
Per Share
|
$
|
1.34
|
|
$
|
1.28
|
|
$
|
0.06
|
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Alexandria's common stockholders –
diluted:
|
|
|
|
|
|
|
|
|
|
In Millions
|
$
|
(3.8)
|
|
$
|
17.8
|
|
$
|
(21.6)
|
|
|
N/A
|
|
|
Per Share
|
$
|
(0.05)
|
|
$
|
0.25
|
|
$
|
(0.30)
|
|
|
N/A
|
|
|
Transactions impacting net (loss) income and EPS attributable to
Alexandria's common
stockholders:
|
|
|
|
Amount
|
|
Per share - diluted
|
|
|
|
(in millions, except per share amounts)
|
1Q16
|
|
1Q15
|
|
1Q16
|
|
1Q15
|
|
|
|
Impairment of real estate - rental properties
|
$
|
—
|
|
$
|
14.5
|
|
$
|
—
|
|
$
|
0.20
|
|
|
|
Impairment of real estate - land parcels
|
29.0
|
|
—
|
|
0.40
|
|
—
|
|
|
|
Preferred stock redemption charge
|
3.0
|
|
—
|
|
0.04
|
|
—
|
|
|
|
Net income attributable to NCI
|
4.0
|
|
0.5
|
|
0.06
|
|
0.01
|
|
|
|
Total
|
$
|
36.0
|
|
$
|
15.0
|
|
$
|
0.50
|
|
$
|
0.21
|
|
|
|
Weighted average shares of common stock outstanding
|
|
72.6
|
|
|
71.4
|
|
|
|
|
|
|
First Quarter Ended March 31, 2016, Financial and Operating Results
March 31, 2016
Core operating metrics
|
(In millions)
|
1Q16
|
|
1Q15
|
|
Change
|
|
|
Total revenues
|
$
|
216.1
|
|
$
|
196.8
|
|
$
|
19.3
|
|
|
9.8%
|
|
|
NOI, including our pro rata share of consolidated
and unconsolidated real estate joint ventures
|
$
|
145.3
|
|
$
|
136.4
|
|
$
|
8.9
|
|
|
6.5%
|
|
- All tenants:
- 52% of annualized base rent ("ABR") from investment-grade tenants as of 1Q16
- Top 20 tenants as of 1Q16:
- 81% of ABR from investment-grade tenants
- 8.2 years weighted average remaining lease term
- In 1Q16, Verily, Alphabet Inc.'s life science subsidiary, subleased 407,369 RSF at 249/259/269 East Grand Avenue in our
South San Francisco submarket from Amgen Inc. The sublease highlights the continued demand
from high-quality science and technology companies in our key urban innovation clusters
- Executed leases for 388,872 RSF during 1Q16, despite minimal contractual lease expirations in 2016 and our highly
pre-leased value-creation pipeline:
- 33.6% and 16.9% (cash basis) rental rate increases on lease renewals and re-leasing of space aggregating 218,342 RSF
(included in the 388,872 RSF above)
- Same property NOI growth of 5.3% and 6.2% (cash basis) for 1Q16, compared to 1Q15
- Occupancy for operating properties in North America of 97.3% as of 1Q16
- Operating margin at 70% for 1Q16
- Adjusted EBITDA margin at 65% for 1Q16
External growth: visible, multiyear, highly leased value-creation pipeline
- Disciplined allocation of capital to value-creation pipeline of highly leased Class A buildings in urban innovation
clusters:
|
Year of Delivery
|
|
RSF
|
|
Leased %
|
|
Incremental Annual NOI
|
|
2016
|
|
1,465,977
|
|
90%
|
|
$75 million to $80 million
|
|
2017-2018
|
|
2,036,828
|
|
72%
|
|
$120 million to $130 million
|
|
|
3,502,805
|
|
81%
|
|
$195 million to $210 million
|
- 1Q16 commencement of development project:
- 150,000 RSF development project at 505 Brannan Street in our Mission Bay/SoMa submarket; 100% leased to Pinterest,
Inc.
Balance sheet
- $2.0 billion of liquidity, including availability on our $304.3
million secured construction loan for 100 Binney Street closed in April 2016
- 7.4x net debt to Adjusted EBITDA – 1Q16 annualized, with goal of achieving less than 6.0x
- 7.2x net debt to Adjusted EBITDA – 1Q16 trailing 12 months
- 3.3x fixed-charge coverage ratio – 1Q16 annualized
- 3.4x fixed-charge coverage ratio – 1Q16 trailing 12 months
- Proceeds from sales of investments in life science entities aggregated $10.9 million in
1Q16
- Repurchased 931,934 outstanding shares of our Series D cumulative convertible preferred stock at an aggregate price of
$25.6 million, or $27.49 per share, and recognized a preferred
stock redemption charge of $3.0 million in 1Q16
- Sold an aggregate of 293,235 shares of common stock under our ATM program for gross proceeds of $25.9 million, or $88.44 per share, and net proceeds of approximately
$25.3 million in 1Q16
- $11.1 billion total market capitalization as of 1Q16
- 16% of gross investments in real estate – North America in value-creation pipeline as of
1Q16, with a target range from 10% to 15% as of 4Q16
- Limited debt maturities through 2018 and well-laddered maturity profile
- 15% unhedged variable-rate debt as a percentage of total debt as of 1Q16
- Executed additional interest rate swap agreements during 1Q16, with an aggregate notional amount of $500 million, to increase notional hedged variable-rate debt to a minimum of $900
million and $250 million during 2017 and 2018, respectively
LEED certifications
- 57% of our total ABR expected to be generated from LEED projects upon completion of our in-process projects
Subsequent events
- In April 2016, we closed a secured construction loan with commitments available for borrowing
of $304.3 million for our development project at 100 Binney Street in our Cambridge submarket, which bears interest at a rate of LIBOR+200 bps
- On May 2, 2016, we repaid a $126.0 million secured note payable
with an effective interest rate of 6.64%
- In April 2016, we completed the purchase of the remaining outstanding noncontrolling interest
in our 1.2 million RSF campus at Alexandria Technology Square® in our Cambridge
submarket for $54 million
- In April 2016, we completed the sale of 16020 Industrial Drive in our Gaithersburg submarket of Maryland for a sales price of $6.4 million
- Recycling estimated proceeds of $104.4 million from disposition of all our investments in
Asia in several separate transactions over the next 12 months. Proceeds will be allocated to
development of Class A facilities in high value urban innovation clusters
- In March 2016, we recognized an impairment charge of $29.0
million for two land parcels in India that met the criteria for classification as
held for sale in March 2016. As of March 31, 2016, we only had
one binding sale agreement related to one land parcel. This land parcel was sold on May 2,
2016, at a sales price of $7.5 million with no gain or loss.
- On April 22, 2016, our Board of Directors approved the monetization of our remaining real
estate investments in Asia. As a result of this decision, we recognized an aggregate
impairment charge of $153.0 million to reduce our net book value to fair value less cost to
sell for all of our remaining investments in Asia
Incremental Annual NOI by Year of Delivery from Development and Redevelopment Projects
March 31, 2016
|
|
|
(1)
|
Represents incremental annual NOI upon stabilization of our development and
redevelopment projects, including our share of real estate joint venture development projects. Excludes NOI related
to spaces delivered and in service prior to March 31, 2016.
|
Disciplined Allocation of Capital and Management of Value-Creation Pipeline
March 31, 2016
2016 Disciplined Allocation of Capital (1)
16% of Gross Investments in Real Estate in North America Value-Creation Pipeline
|
Pre-Leased (2) Percentage of Ground-Up Developments Since
January 1, 2009
|
|
Ground-Up Developments Commenced & Delivered Since January 1,
2009
|
|
|
|
|
|
|
Single-Tenant
|
Multi-Tenant
|
|
Average
Initial Stabilized Yield
|
Average
Initial Stabilized Yield
|
|
|
|
|
(Cash Basis)
|
|
100%
|
38%
|
|
|
|
|
|
|
7.9%
|
7.6%
|
|
Pre-Leased
|
Pre-Leased
|
|
|
|
|
2.6M RSF
|
2.5M RSF
|
|
|
|
|
|
|
(1)
|
Includes projected construction and acquisitions for the year
ending December 31, 2016. Refer to page 44 of our Supplemental Information for additional details.
|
|
(2)
|
Represents average pre-leased percentage at the time
development commenced.
|
Dispositions
March 31, 2016
(Dollars in thousands)
|
Property/Market/Submarket
|
|
RSF/Acres
|
|
NOI (1)
|
|
Cash
NOI (1)
|
|
Actual/Estimated
Sales Price
|
|
|
Assets held for sale in North America:
|
|
|
|
|
|
|
|
|
|
|
|
16020 Industrial Drive/Maryland/Gaithersburg
|
|
71,000 RSF
|
|
$
|
1,022
|
|
$
|
896 (2)
|
|
$
|
6,400
|
|
|
306 Belmont Street and 350 Plantation Street/Greater Boston/Route
495/Worcester
|
|
90,690 RSF
|
|
$
|
1,557
|
|
$
|
1,347 (3)
|
|
|
17,550
|
|
|
Assets held for sale in North America
|
|
|
|
|
|
|
|
|
23,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia assets pending disposition: (4)
|
|
|
|
|
|
|
|
|
|
|
|
Operating properties
|
|
1,200,683 RSF
|
|
(5)
|
|
(5)
|
|
113,000
|
|
|
Land parcels
|
|
196 acres
|
|
(5)
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
136,950
|
|
|
|
|
|
(1)
|
Cash NOI excludes straight-line rent and amortization of acquired
below-market leases. NOI amounts represent the annualized amounts for 1Q16.
|
|
(2)
|
Property consists of an R&D/Warehouse building acquired in 2005 with
minimal capital improvements since acquisition. Buyer intends to make considerable investments in the building including
demolition of some of the existing space and re-purposing of its use.
|
|
(3)
|
Non-core properties located outside of our urban innovation clusters.
These properties are Class B office buildings leased to non-credit tenants and represent our last investment in
Worcester. The internal rate of return over our hold period, including the expected disposition of the asset, is
expected to be approximately 8.9%.
|
|
(4)
|
In March 2016, we recognized an impairment charge of $29.0 million for two
land parcels in India that met the criteria for classification as held for sale in March 2016. As of March 31, 2016, we
only had one binding sale agreement related to one land parcel. This land parcel was sold on May 2, 2016, at a sales
price of $7.5 million with no gain or loss. On April 22, 2016, our Board of Directors approved the monetization of our
real estate investments in Asia in order to invest capital into our highly leased value-creation pipeline. As a result of
this decision, we recognized an aggregate impairment charge of $153.0 million to reduce our net book value to fair value
less cost to sell for all of our remaining investments in Asia. In determining the carrying amount for evaluating the
real estate for impairment, we considered the cumulative foreign currency translation losses of approximately $32.0
million for our land parcels located in India, and $18.8 million for our rental properties in our India and China
submarkets, that will be reclassified to net income only when realized upon sale or disposition. We believe our real
estate investments in Asia will be monetized in several separate transactions over the next 12 months.
|
|
(5)
|
See page 51 of our Supplemental Information for operating and balance sheet
information related to our real estate investments in Asia.
|
Guidance
March 31, 2016
(Dollars in thousands, except per share amounts)
The following updated guidance is based on our current view of existing market conditions and other assumptions for the year
ending December 31, 2016. 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 7.
|
|
Period Recognized
|
|
|
|
|
|
FFO Per
Share - Diluted
|
|
FFO Per Share - Diluted,
As Adjusted
|
|
Summary of Key Changes in Guidance
|
|
1Q16
|
|
April 2016
|
|
Total
|
|
Per Share
|
|
|
|
Preferred stock redemption charge
|
|
$
|
3,046
|
|
$
|
—
|
|
$
|
3,046
|
|
$
|
0.04
|
|
Included
|
|
Excluded
|
|
Impairment charge related to real estate in Asia:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land parcels located in India
|
|
$
|
28,980
|
|
$
|
64,789
|
|
$
|
93,769
|
(1)
|
$
|
1.29
|
|
Included
|
|
Excluded
|
|
Rental properties
|
|
$
|
—
|
|
$
|
88,179
|
|
$
|
88,179
|
(1)
|
$
|
1.21
|
|
Excluded
|
|
Excluded
|
|
EPS and FFO per Share Attributable to Alexandria's Common Stockholders –
Diluted (2)
|
|
Earnings per share
|
|
$(1.04) to $(0.94)
|
|
Add: depreciation and amortization
|
|
4.00
|
|
Add: impairment of real estate – rental properties
|
|
1.21
|
|
Other
|
|
(0.02)
|
|
FFO per share
|
|
$4.15 to $4.25
|
|
Add: preferred stock redemption charge
|
|
0.04
|
|
Add: impairment of real estate – land parcels
|
|
1.29
|
|
Other
|
|
(0.02)
|
|
FFO per share, as adjusted
|
|
$5.46 to $5.56
|
|
|
2016 Guidance
|
|
Key Assumptions
|
|
Low
|
|
High
|
|
Occupancy percentage for operating properties in North America as
of December 31, 2016
|
|
96.5%
|
|
97.1%
|
|
|
|
|
|
|
Lease renewals and re-leasing of space:
|
|
|
|
|
|
Rental rate increases
|
|
14.0%
|
|
17.0%
|
|
Rental rate increases (cash basis)
|
|
6.0%
|
|
9.0%
|
|
|
|
|
|
|
Same property performance:
|
|
|
|
|
|
NOI increase
|
|
2.0%
|
|
4.0%
|
|
NOI increase (cash basis)
|
|
3.5%
|
|
5.5%
|
|
|
|
|
|
|
Straight-line rent revenue
|
|
$
|
51,000
|
|
$
|
56,000
|
|
General and administrative expenses
|
|
$
|
59,000
|
|
$
|
64,000
|
|
Capitalization of interest
|
|
$
|
45,000
|
|
$
|
55,000
|
|
Interest expense
|
|
$
|
108,000
|
|
$
|
118,000
|
|
Key Credit Metrics
|
|
2016 Guidance
|
|
Net debt to Adjusted EBITDA – 4Q annualized
|
|
6.5x to 6.9x
|
|
Fixed charge coverage ratio – 4Q annualized
|
|
3.0x to 3.5x
|
|
Value-creation pipeline as a percentage of gross investments
in real estate as of December 31, 2016
|
|
10% to 15%
|
|
|
2016 Guidance
|
|
|
Key Sources and Uses of Capital
|
|
Low
|
|
High
|
|
Mid-Point
|
|
|
Sources of capital for construction:
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities after dividends
|
|
$
|
115,000
|
|
$
|
135,000
|
|
$
|
125,000
|
|
|
Debt funding from growth in EBITDA
|
|
260,000
|
|
240,000
|
|
250,000
|
|
|
Internally generated sources
|
|
375,000
|
|
375,000
|
|
375,000
|
|
|
Asset sales (minimum target)
|
|
300,000
|
|
400,000
|
|
350,000
|
|
|
Other capital/sales of available-for-sale equity securities
|
|
125,000
|
|
125,000
|
|
125,000
|
|
|
Total sources/projected construction uses
|
|
$
|
800,000
|
|
$
|
900,000
|
|
$
|
850,000
|
|
|
|
|
|
|
|
|
|
|
Sources of capital for acquisitions:
|
|
|
|
|
|
|
|
|
Debt funding from growth in EBITDA
|
|
$
|
45,000
|
|
$
|
45,000
|
|
$
|
45,000
|
|
|
Other capital
|
|
105,000
|
|
205,000
|
|
155,000
|
|
|
Total sources/projected acquisitions uses (3)
|
|
$
|
150,000
|
|
$
|
250,000
|
|
$
|
200,000
|
|
|
|
|
|
|
|
|
|
|
Incremental debt (included above):
|
|
|
|
|
|
|
|
|
Issuance of unsecured senior notes payable
|
|
$
|
400,000
|
|
$
|
550,000
|
|
$
|
475,000
|
|
|
Borrowings under secured construction loans
|
|
175,000
|
|
225,000
|
|
200,000
|
|
|
Repayments of secured notes payable
|
|
(190,000)
|
|
(290,000)
|
|
(240,000)
|
|
|
Unsecured senior line of credit/other
|
|
(80,000)
|
|
(200,000)
|
|
(140,000)
|
|
|
Incremental debt
|
|
$
|
305,000
|
|
$
|
285,000
|
|
$
|
295,000
|
|
|
|
|
(1)
|
See footnote 4 on page 5. Also, pursuant to standards established by
NAREIT, impairments related to land parcels are included, and impairments related to depreciable properties are excluded,
from NAREIT defined FFO.
|
|
(2)
|
In 2016, we expect to amend and extend the maturity date of our $1.5
billion unsecured senior line of credit. Our guidance for the year ending December 31, 2016, excludes the potential loss
on early extinguishment of debt related to the write-off of any unamortized loan fees as a result of the
amendment.
|
|
(3)
|
Includes acquisition price of 88 Bluxome Street in our Mission Bay/SoMa
submarket of San Francisco that we expect to complete in 2H16. Also includes the purchase of the remaining noncontrolling
interest outstanding at Alexandria Technology Square® for $54 million completed in April 2016.
|
Earnings Call Information and About the Company
March 31, 2016
We will host a conference call on Tuesday, May 3, 2016, at 3:00 p.m. Eastern Time
("ET")/noon Pacific Time ("PT"), that is open to the general public to discuss our financial and
operating results for the first quarter ended March 31, 2016. To participate in this conference
call, dial (866) 598-9340 or (480) 293-0665 and confirmation code 6909465 shortly before 3:00 p.m.
ET/noon PT. The audio webcast can be accessed at www.are.com, in the "For Investors" section. A replay of the call will be available for a limited
time from 6:00 p.m. ET/3:00 p.m. PT on Tuesday, May 3, 2016. The
replay number is (888) 203-1112 or (719) 457-0820, and the confirmation code is 6909465.
Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2016, is available in the "For Investors" section of our website at www.are.com or by following this link: http://www.are.com/fs/2016q1.pdf.
For any questions, please contact Joel S. Marcus, chairman, chief executive officer, and
founder, at (626) 578-9693 or Dean A. Shigenaga, executive vice president and chief financial
officer, at (626) 578-0777.
About the Company
Alexandria Real Estate Equities, Inc. (NYSE: ARE) is a fully integrated, self-administered, and self-managed urban office real
estate investment trust ("REIT") uniquely focused on world-class collaborative science and technology campuses in AAA innovation
cluster locations, with a total market capitalization of $11.1 billion and an asset base in
North America of 24.5 million square feet as of March 31, 2016.
The asset base in North America includes 18.9 million RSF of operating properties and
development and redevelopment projects (under construction or pre-construction) and 5.6 million square feet of future ground-up
development projects. Alexandria pioneered this niche in 1994 and has since established a
dominant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego,
Seattle, Maryland, and Research Triangle Park.
***********
This document includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without
limitation, statements regarding our 2016 earnings per share attributable to Alexandria's common
stockholders – diluted, 2016 FFO per share attributable to Alexandria's common stockholders –
diluted, NOI, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of
forward-looking words, such as "forecast," "guidance," "projects," "estimates," "anticipates," "believes," "expects," "intends,"
"may," "plans," "seeks," "should," or "will," or the negative of those words or similar words. These forward-looking statements
are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and
similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future
events. There can be no assurance that actual results will not be materially higher or lower than these expectations. These
statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to
differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference
include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt
maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our
failure to successfully 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, general and local economic conditions, a favorable capital
market environment, leasing activity, lease renewals, and other risks and uncertainties detailed in our filings with the
Securities and Exchange Commission ("SEC"). Accordingly, you are cautioned not to place undue reliance on such forward-looking
statements. All forward-looking statements are made as of the date of this earnings press release, and unless otherwise stated,
we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise. For more discussion relating to risks and
uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and
risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any
subsequent quarterly reports on Form 10-Q.
Consolidated Statements of Income
March 31, 2016
(In thousands, except per share amounts)
|
|
Three Months Ended
|
|
|
|
3/31/16
|
|
12/31/15
|
|
9/30/15
|
|
6/30/15
|
|
3/31/15
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
|
|
$
|
158,276
|
|
$
|
158,100
|
|
$
|
155,311
|
|
$
|
151,805
|
|
$
|
143,608
|
|
|
Tenant recoveries
|
|
52,597
|
|
54,956
|
|
56,119
|
|
49,594
|
|
48,394
|
|
|
Other income
|
|
5,216
|
|
10,899
|
|
7,180
|
|
2,757
|
|
4,751
|
|
|
Total revenues
|
|
216,089
|
(1)
|
223,955
|
|
218,610
|
|
204,156
|
|
196,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental operations
|
|
65,837
|
|
68,913
|
|
68,846
|
|
62,250
|
|
61,223
|
|
|
General and administrative
|
|
15,188
|
|
15,102
|
|
15,143
|
|
14,989
|
|
14,387
|
|
|
Interest
|
|
24,855
|
(2)
|
28,230
|
|
27,679
|
|
26,668
|
|
23,236
|
|
|
Depreciation and amortization
|
|
70,866
|
|
72,245
|
|
67,953
|
|
62,171
|
|
58,920
|
|
|
Impairment of real estate
|
|
28,980
|
(3)
|
8,740
|
|
—
|
|
—
|
|
14,510
|
(3)
|
|
Loss on early extinguishment of debt
|
|
—
|
|
—
|
|
—
|
|
189
|
|
—
|
|
|
Total expenses
|
|
205,726
|
|
193,230
|
|
179,621
|
|
166,267
|
|
172,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in (losses) earnings of unconsolidated real estate joint
ventures
|
|
(397)
|
|
(174)
|
|
710
|
|
541
|
|
574
|
|
|
Gain on sales of real estate – rental properties
|
|
—
|
|
12,426
|
|
—
|
|
—
|
|
—
|
|
|
Income from continuing operations
|
|
9,966
|
|
42,977
|
|
39,699
|
|
38,430
|
|
25,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(43)
|
|
|
Net income
|
|
9,966
|
|
42,977
|
|
39,699
|
|
38,430
|
|
25,008
|
|
|
Net income attributable to noncontrolling interests
|
|
(4,030)
|
(4)
|
(972)
|
|
(170)
|
|
(263)
|
|
(492)
|
|
|
Net income attributable to Alexandria Real Estate Equities, Inc.
|
|
5,936
|
|
42,005
|
|
39,529
|
|
38,167
|
|
24,516
|
|
|
Dividends on preferred stock
|
|
(5,907)
|
|
(6,246)
|
|
(6,247)
|
|
(6,246)
|
|
(6,247)
|
|
|
Preferred stock redemption charge
|
|
(3,046)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Net income attributable to unvested restricted stock awards
|
|
(801)
|
|
(628)
|
|
(623)
|
|
(630)
|
|
(483)
|
|
|
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.'s
common stockholders
|
|
$
|
(3,818)
|
(3)
|
$
|
35,131
|
|
$
|
32,659
|
|
$
|
31,291
|
|
$
|
17,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to Alexandria Real Estate Equities, Inc.'s
common stockholders – basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
$
|
(0.05)
|
(3)
|
$
|
0.49
|
|
$
|
0.46
|
|
$
|
0.44
|
|
$
|
0.25
|
(3)
|
|
Discontinued operations
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Earnings per share – basic and diluted
|
|
$
|
(0.05)
|
|
$
|
0.49
|
|
$
|
0.46
|
|
$
|
0.44
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding for calculating
earnings per share attributable to Alexandria's common stockholders –
basic and diluted
|
|
72,584
|
|
71,833
|
|
71,500
|
|
71,412
|
|
71,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.80
|
|
$
|
0.77
|
|
$
|
0.77
|
|
$
|
0.77
|
|
$
|
0.74
|
|
|
|
|
(1)
|
Decrease in total revenues from 4Q15 is primarily related to a $2.4 million
reduction in tenant recoveries due to lower operating expenses and a $3.6 million decrease in investment
gains.
|
|
(2)
|
Decrease in interest expense from 4Q15 is primarily related to a reduction
of interest expense on our unsecured senior line of credit related to the $453.1 million in sales of partial interest in
three Class A assets in December 2015, and an increase in capitalized interest driven by the increase in development
activities related to our 3.5 million RSF highly leased value creation pipeline.
|
|
(3)
|
See footnote 4 on page 5.
|
|
(4)
|
Increase in net income attributable to noncontrolling interests is due to
the sales described in footnote 2 above.
|
Consolidated Balance Sheets
March 31, 2016
(In thousands)
|
|
3/31/16
|
|
12/31/15
|
|
9/30/15
|
|
6/30/15
|
|
3/31/15
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in real estate
|
|
$
|
7,741,466
|
|
$
|
7,629,922
|
|
$
|
7,527,738
|
|
$
|
7,321,820
|
|
$
|
7,268,031
|
|
|
Investments in unconsolidated real estate joint ventures
|
|
127,165
|
|
127,212
|
|
126,471
|
|
121,055
|
|
120,028
|
|
|
Cash and cash equivalents
|
|
146,197
|
|
125,098
|
|
76,383
|
|
68,617
|
|
90,641
|
|
|
Restricted cash
|
|
14,885
|
|
28,872
|
|
36,993
|
|
44,191
|
|
56,704
|
|
|
Tenant receivables
|
|
9,979
|
|
10,485
|
|
10,124
|
|
9,279
|
|
10,627
|
|
|
Deferred rent
|
|
293,144
|
|
280,570
|
|
267,954
|
|
257,427
|
|
243,459
|
|
|
Deferred leasing costs (1)
|
|
192,418
|
|
192,081
|
|
184,798
|
|
169,466
|
|
159,007
|
|
|
Investments
|
|
316,163
|
|
353,465
|
|
330,570
|
|
360,614
|
|
283,062
|
|
|
Other assets (1)
|
|
130,115
|
|
133,312
|
|
151,669
|
|
145,073
|
|
147,979
|
|
|
Total assets
|
|
$
|
8,971,532
|
|
$
|
8,881,017
|
|
$
|
8,712,700
|
|
$
|
8,497,542
|
|
$
|
8,379,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Noncontrolling Interests, and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Secured notes payable (1)
|
|
$
|
816,578
|
|
$
|
809,818
|
|
$
|
767,874
|
|
$
|
763,844
|
|
$
|
753,483
|
|
|
Unsecured senior notes payable (1)
|
|
2,031,284
|
|
2,030,631
|
|
1,734,857
|
|
1,734,310
|
|
1,733,765
|
|
|
Unsecured senior line of credit
|
|
299,000
|
|
151,000
|
|
843,000
|
|
624,000
|
|
421,000
|
|
|
Unsecured senior bank term loans (1)
|
|
944,637
|
|
944,243
|
|
943,857
|
|
943,463
|
|
969,995
|
|
|
Accounts payable, accrued expenses, and tenant security deposits
|
|
628,467
|
|
589,356
|
|
586,594
|
|
531,612
|
|
645,619
|
|
|
Dividends payable
|
|
64,275
|
|
62,005
|
|
61,340
|
|
61,194
|
|
58,824
|
|
|
Total liabilities
|
|
4,784,241
|
|
4,587,053
|
|
4,937,522
|
|
4,658,423
|
|
4,582,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
|
14,218
|
|
14,218
|
|
14,218
|
|
14,248
|
|
14,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexandria Real Estate Equities, Inc.'s stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
Series D cumulative convertible preferred stock
|
|
213,864
|
|
237,163
|
|
237,163
|
|
237,163
|
|
237,163
|
|
|
Series E cumulative redeemable preferred stock
|
|
130,000
|
|
130,000
|
|
130,000
|
|
130,000
|
|
130,000
|
|
|
Common stock
|
|
729
|
|
725
|
|
718
|
|
717
|
|
716
|
|
|
Additional paid-in capital
|
|
3,529,660
|
|
3,558,008
|
|
3,356,043
|
|
3,371,016
|
|
3,383,456
|
|
|
Accumulated other comprehensive (loss) income
|
|
(8,533)
|
|
49,191
|
|
35,238
|
|
83,980
|
|
29,213
|
|
|
Alexandria's stockholders' equity
|
|
3,865,720
|
|
3,975,087
|
|
3,759,162
|
|
3,822,876
|
|
3,780,548
|
|
|
Noncontrolling interests
|
|
307,353
|
|
304,659
|
|
1,798
|
|
1,995
|
|
2,022
|
|
|
Total equity
|
|
4,173,073
|
|
4,279,746
|
|
3,760,960
|
|
3,824,871
|
|
3,782,570
|
|
|
Total liabilities, noncontrolling interests, and equity
|
|
$
|
8,971,532
|
|
$
|
8,881,017
|
|
$
|
8,712,700
|
|
$
|
8,497,542
|
|
$
|
8,379,538
|
|
|
|
|
(1)
|
On January 1, 2016, we adopted an accounting standard update that requires
debt issuance costs, excluding debt issuance costs associated with a line of credit, to be presented on the balance sheet
as a direct deduction from the carrying amount of the related debt liability. Debt issuance costs associated with a line
of credit will continue to be presented as an asset. As a result of adopting the accounting standard update, the
unamortized deferred financing costs previously classified in deferred leasing and financing costs, aggregating $28.5
million as of March 31, 2016, were classified with the corresponding debt instrument appearing on the consolidated
balance sheets and deferred financing costs related to our unsecured senior line of credit, aggregating $10.9 million as
of March 31, 2016, were classified in other assets. This accounting standard update was also applied retroactively to all
periods presented, as required by the accounting standard update.
|
Funds From Operations and Adjusted Funds From Operations
March 31, 2016
(In thousands)
The following table presents a reconciliation of net (loss) income attributable to Alexandria's common stockholders – basic, the most directly comparable financial measure presented in
accordance with generally accepted accounting principles ("GAAP"), to FFO attributable to Alexandria's common stockholders – basic and diluted, FFO attributable to Alexandria's common stockholders – diluted, as adjusted, and adjusted funds from operations ("AFFO")
attributable to Alexandria's common stockholders – diluted.
|
|
Three Months Ended
|
|
|
|
3/31/16
|
|
12/31/15
|
|
9/30/15
|
|
6/30/15
|
|
3/31/15
|
|
|
Net (loss) income attributable to Alexandria's common
stockholders
|
|
$
|
(3,818)
|
|
$
|
35,131
|
|
$
|
32,659
|
|
$
|
31,291
|
|
$
|
17,786
|
|
|
Depreciation and amortization
|
|
69,308
|
|
72,528
|
|
68,398
|
|
62,523
|
|
59,202
|
|
|
Impairment of real estate – rental properties
|
|
—
|
|
8,740
|
|
—
|
|
—
|
|
14,510
|
|
|
Gain on sales of real estate – rental properties
|
|
—
|
|
(12,426)
|
|
—
|
|
—
|
|
—
|
|
|
Allocation to unvested restricted stock awards
|
|
(80)
|
|
(522)
|
|
(698)
|
|
(381)
|
|
(166)
|
|
|
FFO attributable to Alexandria's common stockholders – basic and diluted
(1)
|
|
65,410
|
|
103,451
|
|
100,359
|
|
93,433
|
|
91,332
|
|
|
Investment income
|
|
—
|
|
(7,731)
|
(2)
|
(5,378)
|
(2)
|
—
|
|
—
|
|
|
Impairment of real estate – land parcels
|
|
28,980
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Loss on early extinguishment of debt
|
|
—
|
|
—
|
|
—
|
|
189
|
|
—
|
|
|
Preferred stock redemption charge
|
|
3,046
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Allocation to unvested restricted stock awards
|
|
(358)
|
|
85
|
|
67
|
|
(2)
|
|
—
|
|
|
FFO attributable to Alexandria's common stockholders – diluted, as
adjusted
|
|
97,078
|
|
95,805
|
|
95,048
|
|
93,620
|
|
91,332
|
|
|
Non-revenue-enhancing capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Building improvements
|
|
(2,318)
|
|
(2,025)
|
|
(2,404)
|
|
(2,743)
|
|
(2,278)
|
|
|
Tenant improvements and leasing commissions
|
|
(2,475)
|
|
(4,436)
|
|
(5,499)
|
|
(6,429)
|
|
(5,775)
|
|
|
Straight-line rent revenue
|
|
(12,492)
|
|
(13,517)
|
|
(12,006)
|
|
(14,159)
|
|
(10,697)
|
|
|
Straight-line rent expense on ground leases
|
|
592
|
|
862
|
|
(1,245)
|
|
510
|
|
363
|
|
|
Amortization of acquired below-market leases
|
|
(974)
|
|
(997)
|
|
(3,182)
|
|
(1,006)
|
|
(933)
|
|
|
Amortization of loan fees
|
|
2,792
|
|
2,689
|
|
2,657
|
|
2,921
|
|
2,835
|
|
|
Amortization of debt premiums
|
|
(86)
|
|
(90)
|
|
(100)
|
|
(100)
|
|
(82)
|
|
|
Stock compensation expense
|
|
5,439
|
|
4,590
|
|
5,178
|
|
4,054
|
|
3,690
|
|
|
Allocation to unvested restricted stock awards
|
|
106
|
|
141
|
|
207
|
|
152
|
|
118
|
|
|
AFFO attributable to Alexandria's common stockholders –
diluted
|
|
$
|
87,662
|
|
$
|
83,022
|
|
$
|
78,654
|
|
$
|
76,820
|
|
$
|
78,573
|
|
|
|
|
(1)
|
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.
|
|
(2)
|
Includes gross investment gains, primarily from the sale of two public
securities in each of 4Q15 and 3Q15, of $12.7 million and $8.7 million, respectively.
|
Funds From Operations Per Share and Adjusted Funds From Operations Per Share
March 31, 2016
(In thousands, except per share amounts)
The following table presents a reconciliation of earnings per share attributable to Alexandria's common stockholders – basic, the most directly comparable financial measure presented in
accordance with GAAP, to FFO per share attributable to Alexandria's common stockholders –
diluted, FFO per share attributable to Alexandria's common stockholders – diluted, as adjusted,
and AFFO per share attributable to Alexandria's common stockholders – diluted. Amounts allocable
to unvested restricted stock awards are not material and are not presented separately within the table below. Per share amounts
may not add due to rounding.
|
|
Three Months Ended
|
|
|
|
3/31/16
|
|
12/31/15
|
|
9/30/15
|
|
6/30/15
|
|
3/31/15
|
|
|
EPS attributable to Alexandria's common stockholders – basic and
diluted
|
|
$
|
(0.05)
|
|
$
|
0.49
|
|
$
|
0.46
|
|
$
|
0.44
|
|
$
|
0.25
|
|
|
Depreciation and amortization
|
|
0.95
|
|
1.00
|
|
0.95
|
|
0.87
|
|
0.83
|
|
|
Impairment of real estate – rental properties
|
|
—
|
|
0.12
|
|
—
|
|
—
|
|
0.20
|
|
|
Gain on sales of real estate – rental properties
|
|
—
|
|
(0.17)
|
|
—
|
|
—
|
|
—
|
|
|
FFO per share attributable to Alexandria's common stockholders – basic
and
diluted (1)
|
|
0.90
|
|
1.44
|
|
1.40
|
|
1.31
|
|
1.28
|
|
|
Investment income
|
|
—
|
|
(0.11)
|
|
(0.08)
|
|
—
|
|
—
|
|
|
Impairment of real estate – land parcels
|
|
0.40
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Preferred stock redemption charge
|
|
0.04
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
FFO per share attributable to Alexandria's common stockholders –
diluted, as
adjusted
|
|
1.34
|
|
1.33
|
|
1.33
|
|
1.31
|
|
1.28
|
|
|
Non-revenue-enhancing capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
Building improvements
|
|
(0.03)
|
|
(0.03)
|
|
(0.03)
|
|
(0.04)
|
|
(0.03)
|
|
|
Tenant improvements and leasing commissions
|
|
(0.04)
|
|
(0.06)
|
|
(0.08)
|
|
(0.09)
|
|
(0.08)
|
|
|
Straight-line rent revenue
|
|
(0.17)
|
|
(0.19)
|
|
(0.17)
|
|
(0.20)
|
|
(0.15)
|
|
|
Straight-line rent expense on ground leases
|
|
0.01
|
|
0.01
|
|
(0.02)
|
|
0.01
|
|
0.01
|
|
|
Amortization of acquired below-market leases
|
|
(0.01)
|
|
(0.01)
|
|
(0.04)
|
|
(0.01)
|
|
(0.01)
|
|
|
Amortization of loan fees
|
|
0.04
|
|
0.04
|
|
0.04
|
|
0.04
|
|
0.03
|
|
|
Stock compensation expense
|
|
0.07
|
|
0.07
|
|
0.07
|
|
0.06
|
|
0.05
|
|
|
AFFO per share attributable to Alexandria's
common stockholders – diluted
|
|
$
|
1.21
|
|
$
|
1.16
|
|
$
|
1.10
|
|
$
|
1.08
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding for calculating FFO,
FFO, as
adjusted, and AFFO per share attributable to Alexandria's common stockholders –
basic and diluted
|
|
72,584
|
|
71,833
|
|
71,500
|
|
71,412
|
|
71,366
|
|
|
|
|
(1)
|
Calculated in accordance with standards established by the NAREIT Board of
Governors in its April 2002 White Paper and related implementation guidance.
|
Photo - http://photos.prnewswire.com/prnh/20160501/362113
Photo - http://photos.prnewswire.com/prnh/20160501/362114
Photo - http://photos.prnewswire.com/prnh/20160501/362115
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/alexandria-real-estate-equities-inc-reports-first-quarter-ended-march-31-2016-financial-and-operating-results-300261053.html
SOURCE Alexandria Real Estate Equities, Inc.