PASADENA, Calif., Oct. 28, 2019 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE:ARE) announced financial and operating results for the third quarter ended September 30, 2019.
Key highlights
|
|
|
|
| YTD
|
Operating results
| 3Q19
|
| 3Q18
|
| 3Q19
|
| 3Q18
|
Total revenues:
|
|
|
|
|
|
|
|
In millions
| $
| 390.5
|
| $
| 341.8
|
| $
| 1,123.2
|
| $
| 987.0
|
Growth
| 14.2%
|
|
|
| 13.8%
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Alexandria's common stockholders – diluted:
|
In millions
| $
| (49.8)
|
| $
| 210.2
|
| $
| 150.4
|
| $
| 394.1
|
Per share
| $
| (0.44)
|
| $
| 1.99
|
| $
| 1.35
|
| $
| 3.85
|
|
|
|
|
|
|
|
|
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted:
|
In millions
| $
| 197.1
|
| $
| 173.6
|
| $
| 579.6
|
| $
| 504.0
|
Per share
| $
| 1.75
|
| $
| 1.66
|
| $
| 5.19
|
| $
| 4.92
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for 3Q19 relates primarily to the loss on early extinguishment of debt and unrealized losses on non-real estate investments. Refer to "Key Items Included in Operating Results" on the next page for additional information.
|
Mercer Mega Block in Seattle: 800,000 RSF premier multi-use campus in Lake Union
In September 2019, we were selected by the City of Seattle to develop an approximately 800,000 RSF premier multi-use campus at Mercer Mega Block in Seattle's Lake Union submarket. Along with our existing nearly 806,000 RSF in value-creation opportunities, the future development of this community-centric, amenity-driven, mixed-use innovation campus will strategically provide a pipeline of high quality buildings to address demand in the vibrant Lake Union submarket. We expect to complete this acquisition in 2020.
88 Bluxome Street is the first and only project to win full approval in Central SoMa
In July 2019, we, along with TMG Partners, won full project approval to develop a 1.1 million RSF mixed-use campus at 88 Bluxome Street in Central SoMa. Anchored by a 490,000 RSF lease with Pinterest, Inc., the future development, which is the first and only project in Central SoMa to receive full approval and 100% of its Prop M allocation from the San Francisco Planning Commission, is nearly 60% pre-leased. Construction is expected to commence in 2020.
A REIT industry-leading, high-quality tenant roster
- 53% of annual rental revenue from investment-grade or publicly traded large cap tenants.
- Weighted-average remaining lease term of 8.3 years.
Strong internal growth
- Continued strong internal growth; vacancy in recently acquired properties provide opportunity to increase income from rentals and net operating income.
- Net operating income (cash basis) of $963.5 million for 3Q19 annualized, up $96.4 million, or 11.1%, compared to 3Q18 annualized
- Same property net operating income growth:
- 2019 guidance ranges of 1.5% to 3.5%, an increase of 0.5% at the midpoint, and 6.0% to 8.0% (cash basis), reflect our expectation of solid full-year performance.
- 2.5% and 5.7% (cash basis) for 3Q19, compared to 3Q18
- 3.3% and 8.1% (cash basis) for YTD 3Q19, compared to YTD 3Q18
- Continued strong leasing activity and rental rate growth over expiring rates on renewed and re-leased space:
|
| 3Q19
|
| YTD 3Q19
|
Total leasing activity – RSF
|
| 1,241,677
|
| 3,310,598
|
Lease renewals and re-leasing of space:
|
|
|
|
|
RSF (included in total leasing activity above)
|
| 758,113
|
| 1,855,458
|
Rental rate increases
|
| 27.9%
|
| 30.6%
|
Rental rate increases (cash basis)
|
| 11.2%
|
| 16.2%
|
Strong external growth; disciplined allocation of capital to visible, highly leased value-creation pipeline
- Since the beginning of 4Q18, we have placed into service 2.5 million RSF of development and redevelopment projects, including 1.3 million RSF in 3Q19.
- Significant near-term growth of annual net operating income (cash basis), including our share of unconsolidated real estate joint ventures, of $70 million upon the burn-off of initial free rent on recently delivered projects.
- We commenced development and redevelopment projects aggregating 1.8 million RSF during YTD 3Q19, including three projects aggregating 447,998 RSF in 3Q19.
- During YTD 3Q19, we leased 1.2 million RSF of development and redevelopment space.
Opportunistic senior notes payable issuances and refinancing of near-term maturities
During 3Q19, we opportunistically issued $1.9 billion of unsecured senior notes payable, with a weighted-average interest rate of 3.52% and maturity of 18.5 years. Proceeds were used primarily to refinance $1.7 billion of unsecured senior debt. As of September 30, 2019, our weighted average remaining term on outstanding debt is 10.7 years, with no debt maturing until 2023.
Sale of partial interests in three core Class A properties
During 3Q19, we completed the sales of partial interests in three properties for an aggregate sales price of $462.2 million and received aggregate consideration in excess of book value of approximately $180.2 million, representing a weighted-average cash capitalization rate of 4.6%. We retained control over each of these newly formed joint ventures, and therefore, we consolidate these properties. For consolidated joint ventures, we account for the difference between the consideration received and the book value of the interest sold as an equity transaction, with no gain or loss recognized in earnings.
Continued growth in common stock dividend
Common stock dividend declared for 3Q19 of $1.00 per common share, aggregating $3.94 per common share for the twelve months ended September 30, 2019, up 28 cents, or 8%, over the twelve months ended September 30, 2018; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.
1165 Eastlake Avenue East fully leased long-term by Adaptive Biotechnologies Corporation
In August 2019, we signed a 12-year, full-building lease with Adaptive Biotechnologies Corporation at 1165 Eastlake Avenue East to be its new headquarters. This amenity-rich, sustainable 100,086 RSF office/laboratory development is located within the prominent Eastlake Life Science Campus in the heart of our Lake Union life science cluster in Seattle.
Key items included in operating results
Key items included in net (loss) income attributable to Alexandria's common stockholders:
|
|
|
|
|
| YTD
|
(In millions, except per share
amounts)
| 3Q19
|
| 3Q18
|
| 3Q19
|
| 3Q18
|
| 3Q19
|
| 3Q18
|
| 3Q19
|
| 3Q18
|
Amount
|
| Per Share –
Diluted
|
| Amount
|
| Per Share –
Diluted
|
(Losses) gains on non-real
estate investments(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
| $
| (70.0)
|
| $
| 117.2
|
| $
| (0.62)
|
| $
| 1.11
|
| $
| 13.2
|
| $
| 194.5
|
| $
| 0.12
|
| $
| 1.90
|
Realized
| —
|
| —
|
| —
|
| —
|
| —
|
| 8.3
|
| —
|
| 0.08
|
Gain on sales of real estate
| —
|
| 35.7
|
| —
|
| 0.34
|
| —
|
| 35.7
|
| —
|
| 0.35
|
Impairment of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
| —
|
| —
|
| —
|
| —
|
| —
|
| (6.3)
|
| —
|
| (0.06)
|
Non-real estate
investments(1)
| (7.1)
|
| —
|
| (0.06)
|
| —
|
| (7.1)
|
| —
|
| (0.06)
|
| —
|
Early extinguishment of debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
| (40.2)
|
| (1.1)
|
| (0.36)
|
| (0.01)
|
| (47.6)
|
| (1.1)
|
| (0.43)
|
| (0.01)
|
Our share of gain
| —
|
| 0.8
|
| —
|
| 0.01
|
| —
|
| 0.8
|
| —
|
| 0.01
|
Loss on early termination of
interest rate hedge
agreements
| (1.7)
|
| —
|
| (0.02)
|
| —
|
| (1.7)
|
| —
|
| (0.02)
|
| —
|
Preferred stock redemption
charge
| —
|
| —
|
| —
|
| —
|
| (2.6)
|
| —
|
| (0.02)
|
| —
|
Allocation to unvested
restricted stock awards
| —
|
| (2.4)
|
| —
|
| (0.02)
|
| —
|
| (3.4)
|
| —
|
| (0.03)
|
Total
| $
| (119.0)
|
| $
| 150.2
|
| $
| (1.06)
|
| $
| 1.43
|
| $
| (45.8)
|
| $
| 228.5
|
| $
| (0.41)
|
| $
| 2.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock
outstanding for calculation of earnings
per share – diluted
| 112.1
|
| 105.4
|
|
|
|
|
| 111.7
|
| 102.4
|
|
(1) Refer to "Investments" on page 45 of our Supplemental Information for additional information
|
Completed acquisitions
During 3Q19, we completed the acquisitions of 11 properties for an aggregate purchase price of $459.2 million. These acquisitions include future development and redevelopment opportunities, aggregating 537,850 RSF, strategically located across multiple markets, and operating properties aggregating 546,389 RSF, of which 111,080 RSF are existing vacant space that we anticipate to lease-up in the future.
Core operating metrics as of or for the quarter ended September 30, 2019
High-quality revenues and cash flows, and operational excellence
Percentage of annual rental revenue in effect from:
|
|
|
|
Investment-grade or publicly traded large cap tenants
|
| 53 %
|
|
Class A properties in AAA locations
|
| 78 %
|
|
Occupancy of operating properties in North America
|
| 96.6 %
| (1)
|
Operating margin
|
| 70 %
|
|
Adjusted EBITDA margin
|
| 68 %
|
|
Weighted-average remaining lease term:
|
|
|
All tenants
|
| 8.3 years
|
Top 20 tenants
|
| 11.8 years
|
|
|
|
|
(1)
| Decline of 0.8% from 97.4% for our overall occupancy at 2Q19 reflects: (i) 111,080 RSF, or 0.4% of existing vacancy, at properties recently acquired in 3Q19 which we anticipate leasing up in the future; and (ii) 116,556 RSF, or 0.5% vacancy, that became vacant as expected during 3Q19 at 3545 Cray Court related to downtime for renovation of the property. During 3Q19, we executed a lease for 64,108 RSF at 3545 Cray Court, or 55% of the property, that is expected to commence in 3Q20, upon completion of the renovations.
|
Refer to the previous page for information on our total revenues, net operating income, same property net operating income growth, rental rate growth, and leasing activity.
Balance sheet management
Key metrics as of September 30, 2019
- $17.5 billion of total equity capitalization
- $24.3 billion of total market capitalization
- $3.5 billion of liquidity
- 95% of net operating income is unencumbered
|
| 3Q19
|
| Goal
|
|
| Quarter
|
| Trailing 12
|
| 4Q19
|
|
| Annualized
|
| Months
|
| Annualized
|
Net debt to Adjusted EBITDA
|
| 5.8x
|
| 6.1x
|
| Less than or equal to 5.3x
|
Fixed-charge coverage ratio
|
| 3.9x
|
| 4.1x
|
| Greater than 4.0x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-creation pipeline as a percentage of gross investments
in real estate
|
|
3Q19
|
| Percentage Leased/
Negotiating
|
New Class A development and redevelopment projects:
|
|
|
|
|
|
|
|
|
|
Undergoing construction with initial occupancy targeted for
4Q19 and 2020 and our pre-leased pre-construction
project at 88 Bluxome Street
|
|
7%
|
| 64%
|
Undergoing pre-construction, marketing, and future value-
creation projects
|
|
5%
|
| N/A
|
Key capital events
- During 3Q19, we had the following sales of partial interests in two core Class A properties:
|
| Partial Interest
|
|
|
|
(Dollars in millions, except per RSF amounts)
|
|
| Sales Price
|
| Capitalization
|
Property
|
| Submarket
|
| RSF
|
| Sold
|
| Total
|
| Per RSF
|
| Rate (Cash)
|
5200 Illumina Way
|
| University Town
Center
|
| 792,687
|
| 49%
|
| $
| 286.7
|
| $
| 681
| (1)
|
| 4.7%
|
500 Forbes
Boulevard
|
| South San
Francisco
|
| 155,685
|
| 90%
|
|
| 139.5
|
|
| 996
|
|
| 4.4
|
|
|
|
| 948,372
|
|
|
| $
| 426.2
|
| $
| 733
|
|
| 4.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents $264.6 million, or $681 per RSF, for the operating buildings and $22.1 million, or $100 per
RSF, for the developable land parcel. This transaction values 100% of the campus at $585.2 million and
represents a value in excess of book basis aggregating $269.1 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- During 3Q19, our issuances and repayments of debt included the following:
(Dollars in millions)
| Date
|
| Effective
Interest
Rate
|
| Maturity
Date
|
| Principal
Amount
|
| Annual
Interest
Expense
|
Issuances
|
|
|
|
|
|
|
|
|
|
Unsecured senior notes payable
| Sept
|
| 2.87 %
|
| 12/15/29
|
| $
| 400
|
| $
| 12
|
Unsecured senior notes payable
| July
|
| 3.48 %
|
| 8/15/31
|
| 750
|
| 26
|
Unsecured senior notes payable
| July
|
| 4.09 %
|
| 2/1/50
|
| 500
|
| 20
|
Unsecured senior notes payable
| Sept
|
| 3.51 %
|
| 2/1/50
|
| 200
|
| 7
|
Weighted-average/total
|
|
| 3.52 %
|
| 18.5 years
|
| 1,850
|
| 65
|
|
|
|
|
|
|
|
|
|
|
Repayments of debt
|
|
|
|
|
|
|
|
|
|
Unsecured senior notes payable
| July/Aug
|
| 2.96 %
|
| 1/15/20
|
| 400
|
| 12
|
Unsecured senior notes payable
| July/Aug
|
| 4.75 %
|
| 4/1/22
|
| 550
|
| 26
|
Unsecured senior bank term loan
| July/Sept
|
| 3.62 %
|
| 1/2/25
|
| 350
|
| 13
|
Unsecured senior line of credit
| Sept
|
| 3.14 %
|
| 1/28/24
|
| 360
|
| 11
|
Weighted-average/total
|
|
| 3.73 %
|
| 2.9 years
|
| 1,660
|
| $
| 62
|
Proceeds held in cash
|
|
|
|
|
|
| $
| 190
|
|
|
|
|
|
|
|
|
|
|
|
|
- As a result of our debt refinancing, we recognized losses on early extinguishment of debt and losses on early terminations of interest rate hedge agreements of $40.2 million and $1.7 million, respectively.
- During 2019, equity issuances included 602,484 shares of common stock issued in 2Q19 under our ATM program for net proceeds of $86.1 million and 1.1 million shares issued during 3Q19 to settle forward equity sales agreements for net proceeds of $150.1 million. As of September 30, 2019, 7.0 million shares remain unsettled under forward equity sales agreements, for which we expect to receive proceeds of $979.2 million.
- In September 2019, we established a commercial paper program that has the ability to issue up to $750.0 million of commercial notes with a maximum maturity of 397 days from the date of issue. Our commercial paper program is backed by our $2.2 billion unsecured senior line of credit, and any outstanding balance on our commercial paper program will reduce the borrowing capacity under our unsecured senior line of credit. Borrowings under the program will be used to fund short-term capital needs. As of September 30, 2019, we had no outstanding borrowings under our commercial paper program.
Investments
We carry our investments in publicly traded companies and certain privately held entities at fair value. During 3Q19, we had investment losses of $63.1 million, comprising $14.1 million in realized gains, $7.1 million in impairments related to three privately held non-real estate investments, and $70.0 million in unrealized losses.
Corporate responsibility, industry leadership, and strategic initiatives
- In September 2019, we achieved the following in the 2019 Global Real Estate Sustainability Benchmark ("GRESB") Real Estate Assessment: (i) GRESB 5 Star Rating (out of 5 stars), (ii) our third consecutive "Green Star" designation, and (iii) our second consecutive "A" disclosure score.
- In October 2019, we accepted the 2019 Developer of the Year Award from NAIOP, the Commercial Real Estate Development Association. This award annually honors the development company that best exemplifies leadership and innovation as demonstrated by the outstanding quality of projects and services, financial consistency and stability, ability to adapt to market conditions, and support for the local community.
Subsequent events
- In October 2019, we elected to convert the remaining 2.3 million outstanding shares of our 7.00% Series D cumulative convertible preferred stock ("Series D Convertible Preferred Stock") into shares of our common stock. The Series D Convertible Preferred Stock became eligible for mandatory conversion at our discretion upon our common stock price exceeding $149.46 per share for the specified period of time required to cause the mandatory conversion. We converted the 7.00% Series D Convertible Preferred Stock into 578 thousand shares of common stock. This conversion was accounted for as an equity transaction, and we did not recognize a gain or loss.
Acquisitions
September 30, 2019
(Dollars in thousands)
|
|
Property
|
| Submarket/Market
|
| Date of
Purchase
|
| Number of
Properties
|
| Operating
Occupancy
|
| Square Footage
|
| Purchase Price
|
|
|
|
|
| Future
Development
|
| Active
Redevelopment
|
| Operating With
Future
Development/
Redevelopment
|
| Operating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completed 1H19
|
| Various
|
| 1H19
|
| 13
|
| 98%
|
|
| 805,400
|
| —
|
| 187,764
|
| 334,933
|
| $
| 744,450
| (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completed 3Q19:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
945 Market Street (99.5% interest in
consolidated JV)
|
| Mission Bay/SoMa/San
Francisco
|
| 7/31/19
|
| 1
|
| N/A
|
|
| —
|
| 255,765
|
| —
|
| —
|
|
| 179,000
| (2)
|
|
4224/4242 Campus Point Court and
10210 Campus Point Drive
(55% interest in consolidated JV)
|
| University Town Center/
San Diego
|
| 7/9/19
|
| 3
|
| 83%
| (3)
|
| —
|
| —
|
| —
|
| 314,103
|
|
| 140,250
|
|
|
25, 35, and 45 West Watkins Mill Road
|
| Gaithersburg/Maryland
|
| 8/21/19
|
| 3
|
| 87%
|
|
| —
|
| —
|
| —
|
| 138,938
|
|
| 51,130
|
|
|
3160 Porter Drive
|
| Greater Stanford/San
Francisco
|
| 8/12/19
|
| 1
|
| N/A
|
|
| —
|
| 92,147
|
| —
|
| —
|
|
| 26,000
| (2)
|
|
47-50 30th Street
|
| New York City/
New York City
|
| 7/10/19
|
| —
|
| N/A
|
|
| 135,938
|
| —
|
| —
|
| —
|
|
| 25,000
| (2)
|
|
Other
|
| Various
|
| 3Q19
|
| 3
|
| 37%
|
|
| 54,000
|
| —
|
| 58,814
|
| 34,534
|
|
| 37,850
| (2)
|
|
Completed YTD 3Q19
|
|
|
|
|
| 24
|
| 87%
|
|
| 995,338
|
| 347,912
|
| 246,578
|
| 822,508
|
|
| 1,203,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q19:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pending
|
| San Diego
|
| 4Q19
|
| Various
|
| 76%
|
|
| 700,000
|
| —
|
| —
|
| 560,000
|
|
| 122,500
| (2), (4)
|
|
Additional targeted acquisitions
|
| Various
|
| 4Q19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 223,820
|
|
|
2019 acquisitions
|
|
|
|
|
| 24
|
| 83%
|
|
| 1,695,338
|
| 347,912
|
| 246,578
|
| 1,382,508
|
| $
| 1,550,000
| (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identified for 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pending
|
| San Francisco
Bay Area
|
| 2020
|
| 1
|
| 100%
|
|
| —
|
| —
|
| —
|
| 138,000
|
| $
| 157,500
| (4)
|
|
Pending
|
| San Francisco
Bay Area
|
| 2020
|
| —
|
| N/A
|
|
| 700,000
|
| —
|
| —
|
| —
|
|
| 120,000
| (2)
|
|
Mercer Mega Block
|
| Lake Union/Seattle
|
| 2020
|
| —
|
| N/A
|
|
| 800,000
|
| —
|
| —
|
| —
|
|
| 143,000
| (2)
|
|
|
|
|
|
|
| 1
|
| 100%
|
|
| 1,500,000
|
| —
|
| —
|
| 138,000
|
| $
| 420,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,195,338
|
| 347,912
|
| 246,578
|
| 1,520,508
|
|
|
|
|
|
|
|
(1)
| Refer to our second quarter ended June 30, 2019, Earnings Press Release and Supplemental Information filed on July 29, 2019, for transactions and related yield information.
|
(2)
| We expect to provide total estimated costs and related yields in the future, subsequent to the commencement of development or redevelopment.
|
(3)
| The property is currently 83% occupied, and a lease for 32,537 RSF will commence in 4Q19 upon completion of renovations, which will increase occupancy to 94%. The remaining 6% of the property is under negotiation and expected to be
occupied by 4Q19. We expect to achieve unlevered yields of 6.9% and 6.0% on initial stabilized and initial stabilized (cash) bases, respectively.
|
(4)
| We expect to provide yields for operating properties subsequent to closing the acquisition.
|
(5)
| Represents midpoint of 2019 acquisitions guidance range of $1.5 billion to $1.6 billion.
|
Sales of Partial Interests in Core Class A Properties
September 30, 2019
(Dollars in thousands, except per RSF amounts)
|
|
|
|
|
|
|
|
|
| Square Footage
|
|
|
|
| Capitalization
Rate
(Cash Basis)(1)
|
|
|
|
|
|
|
|
|
| Consideration
in Excess of
Book Value(2)
|
Property
|
| Submarket/Market
|
| Date of
Sale
|
| Interest
Sold
|
| Operating
|
| Future
Development
|
| Capitalization
Rate(1)
|
|
| Sales Price
|
| Sales Price
per RSF
|
|
Sales of noncontrolling partial interests in core Class A properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75/125 Binney Street
|
| Cambridge/Greater
Boston
|
| 2/13/19
|
| 60%
|
| 388,270
|
| N/A
|
| 4.2%
|
| 4.3%
|
| $
| 438,000
|
| $
| 1,880
|
| $
| 202,246
|
|
10260 Campus Point Drive and
4161 Campus Point Court
|
| University Town Center/
San Diego
|
| 7/26/19
|
| 45%
|
| (3)
|
| (3)
|
| (3)
|
| (3)
|
| 36,000
|
| N/A
|
| N/A
|
|
500 Forbes Boulevard
|
| South San Francisco/
San Francisco
|
| 8/1/19
|
| 90%
|
| 155,685
|
| N/A
|
| 4.2%
|
| 4.4%
|
| 139,500
|
| $
| 996
|
| $
| 48,385
|
|
5200 Illumina Way
|
| University Town Center/
San Diego
|
| 8/21/19
|
| 49%
|
| 792,687
|
| 451,832
|
| 5.7%
|
| 4.7%
|
| 286,747
|
| N/A
|
| $
| 131,864
| (4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $
| 900,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 guidance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $
| 925,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
| Capitalization rates are calculated based upon net operating income and net operating income (cash basis), annualized for the quarter preceding the date on which the property is sold.
|
(2)
| We retained control over each of these newly formed joint ventures, and therefore, we consolidate these properties. For consolidated joint ventures, we account for the difference between the consideration received and the book value of
the interest sold as an equity transaction, with no gain or loss recognized in earnings.
|
(3)
| In December 2018, we acquired two buildings adjacent to our Campus Pointe by Alexandria campus aggregating 269,048 RSF, comprising 109,164 RSF at 10260 Campus Point Drive and 159,884 RSF at 4161 Campus Point Court for a
total purchase price of $80.0 million. Refer to our first quarter ended March 31, 2019, Earnings Press Release and Supplemental Information filed on April 29, 2019, for more information. In July 2019, as had been contemplated at the time
of the original acquisition, we completed the formation of this joint venture through the sale of a 45% noncontrolling interest to an institutional investor.
|
(4)
| This transaction values 100% of the campus at $585.2 million and represents a value in excess of book basis aggregating $269.1 million.
|
Guidance
September 30, 2019
(Dollars in milions, except per share amounts)
|
|
The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2019. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of "forward-looking statements" on page 7 of this Earnings Press Release for additional information.
|
|
|
|
Summary of Key Changes in Guidance
|
| Guidance
|
|
| Summary of Key Changes in Key Credit Metric and Key Sources
and Uses of Capital Guidance
|
|
| Guidance/Guidance Midpoint
|
|
|
|
|
| As of 10/28/19
|
| As of 7/29/19
|
|
|
| As of 10/28/19
|
| As of 7/29/19
|
|
|
|
|
|
EPS, FFO per share, and FFO per share, as adjusted
|
| See updates below
|
|
| Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized
|
|
| Less than or equal to 5.3x
|
| Less than or equal to 5.4x
|
|
|
|
|
Occupancy percentage in North America as of December 31, 2019
|
| 96.7% to 97.3%
|
| 97.2% to 97.8%
|
|
|
|
|
|
|
|
|
|
|
|
Rental rate increases on lease renewals and re-leasing of space
|
| 28.0% to 31.0%
|
| 27.0% to 30.0%
|
|
| Real estate dispositions and partial interest sales
|
|
| $
| 925
|
|
| $
| 870
|
|
|
|
|
|
|
Same property net operating income increases
|
| 1.5% to 3.5%
|
| 1.0% to 3.0%
|
|
| Issuance of unsecured senior notes payable
|
|
| $
| 2,700
|
|
| $
| 2,100
|
|
|
|
|
|
|
Straight-line rent revenue
|
| $99 to $109
|
| $95 to $105
|
|
| Repayments of unsecured senior bank term loan
|
|
| $
| (350)
|
|
| $
| (175)
|
|
|
|
|
|
|
Interest expense
|
| $172 to $182
|
| $167 to $177
|
|
| Debt capital proceeds held in cash
|
|
| $
| 190
|
|
| $
| —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected Earnings per Share and Funds From Operations per Share Attributable to Alexandria's
Common Stockholders – Diluted, as Adjusted
|
|
| Key Credit Metrics
|
|
| 2019 Guidance
|
|
|
|
|
|
|
| As of 10/28/19
|
| As of 7/29/19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share(2)
|
| $1.83 to $1.85
|
| $2.39 to $2.47
|
|
| Net debt to Adjusted EBITDA – 4Q19 annualized
|
|
|
| Less than or equal to 5.3x
|
|
|
|
|
|
|
Depreciation and amortization
|
| 4.75
|
| 4.85
|
|
| Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized(1)
|
|
|
| Less than or equal to 5.3x
|
|
|
|
|
|
|
Allocation to unvested restricted stock awards
|
| (0.05)
|
| (0.05)
|
|
| Fixed-charge coverage ratio – 4Q19 annualized
|
|
|
| Greater than 4.0x
|
|
|
|
|
|
|
Funds from operations per share(3)
|
| $6.53 to $6.55
|
| $7.19 to $7.27
|
|
| Value-creation pipeline as a percentage of gross real estate as of
December 31, 2019
|
|
|
| Less than 15%
|
|
|
|
|
|
|
Unrealized gains on non-real estate investment(2)
|
| (0.12)
|
| (0.75)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of non-real estate investments
|
| 0.06
|
| —
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on early extinguishment of debt(4)
|
| 0.43
|
| 0.45
|
|
| Key Sources and Uses of Capital (in millions)
|
| Range
|
| Midpoint
|
| Certain
Completed
Items
|
Loss on early termination of interest rate hedge agreements(4)
|
| 0.02
|
| —
|
|
| Sources of capital:
|
|
|
|
|
|
|
|
|
|
|
Preferred stock redemption charge
|
| 0.02
|
| 0.02
|
|
| Net cash provided by operating activities after
dividends
|
| $
| 170
|
|
| $
| 210
|
|
| $
| 190
|
|
|
|
|
Allocation to unvested restricted stock awards
|
| 0.01
|
| 0.01
|
|
| Incremental debt
|
| 695
|
|
| 755
|
|
|
| 725
|
|
| See below
|
Funds from operations per share, as adjusted(5)
|
| $6.95 to $6.97
|
| $6.92 to $7.00
|
|
| Real estate dispositions and partial interest sales
|
| 925
|
|
| 925
|
|
|
| 925
|
|
| $
| 900
| (4)
|
Midpoint
|
| $6.96
|
| $6.96
|
|
| Common equity
|
| 1,150
|
|
| 1,250
|
|
|
| 1,200
|
|
| $
| 1,215
| (6)
|
|
|
|
|
|
|
| Total sources of capital
|
| $
| 2,940
|
|
| $
| 3,140
|
|
| $
| 3,040
|
|
|
|
|
Key Assumptions
|
| Low
|
| High
|
|
| Uses of capital:
|
|
|
|
|
|
|
|
|
|
|
Occupancy percentage in North America as of December 31, 2019(7)
|
| 96.7%
|
| 97.3%
|
|
| Construction
|
| $
| 1,250
|
|
| $
| 1,350
|
|
| $
| 1,300
|
|
|
|
|
Lease renewals and re-leasing of space:
|
|
|
|
| Acquisitions
|
| 1,500
|
|
| 1,600
|
|
|
| 1,550
|
|
| (4)
|
|
Rental rate increases(5)
|
| 28.0%
|
| 31.0%
|
|
| Debt capital proceeds held in cash
|
| 190
|
|
| 190
|
|
|
| 190
|
|
|
|
|
Rental rate increases (cash basis)
|
| 14.0%
|
| 17.0%
|
|
| Total uses of capital
|
| $
| 2,940
|
|
| $
| 3,140
|
|
| $
| 3,040
|
|
|
|
|
Same property performance:
|
|
|
|
| Incremental debt (included above):
|
|
|
|
|
|
|
|
|
|
|
Net operating income increase(5)
|
| 1.5%
|
| 3.5%
|
|
| Issuance of unsecured senior notes payable
|
| $
| 2,700
|
|
| $
| 2,700
|
|
| $
| 2,700
|
|
| $
| 2,700
| (4)
|
Net operating income increase (cash basis)
|
| 6.0%
|
| 8.0%
|
|
| Assumption of secured note payable
|
| 28
|
|
| 28
|
|
|
| 28
|
|
| $
| 28
|
|
Straight-line rent revenue(5)
|
| $
| 99
|
| $
| 109
| (8)
|
| Repayments of unsecured senior notes payable
|
| (950)
|
|
| (950)
|
|
|
| (950)
|
|
| $
| (950)
| (4)
|
General and administrative expenses
|
| $
| 108
|
| $
| 113
|
|
| Repayments of secured notes payable
|
| (310)
|
|
| (320)
|
|
|
| (315)
|
|
| $
| (300)
|
|
Capitalization of interest
|
| $
| 79
|
| $
| 89
|
|
| Repayments of unsecured senior bank term loan
|
| (350)
|
|
| (350)
|
|
|
| (350)
|
|
| $
| (350)
| (4)
|
Interest expense(4)(9)
|
| $
| 172
|
| $
| 182
|
|
| $2.2 billion unsecured senior line of credit/other
|
| (423)
|
|
| (353)
|
|
|
| (388)
|
|
|
|
|
|
|
|
|
|
|
| Incremental debt
|
| $
| 695
|
|
| $
| 755
|
|
| $
| 725
|
|
|
|
|
(1)
| In October 2019, we completed the conversion of all 2.3 million outstanding shares of our Series D Convertible Preferred Stock into shares of our common stock.
|
(2)
| Excludes future unrealized gains or losses after September 30, 2019, that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.
|
(3)
| Refer to the "Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria's Common Stockholders" section in "Definitions and Reconciliations" of our Supplemental Information for additional information.
|
(4)
| Refer to this Earnings Press Release for additional information.
|
(5)
| The midpoint for rental rate increases was up 1% in 3Q19, and up 3% in aggregate since our initial guidance on November 28, 2018. These cumulative adjustments resulted in upward pressure on the midpoints for same property net operating
income and straight-line rent revenue, resulting in increases to both midpoints by 0.5% and $4 million, respectively. Additionally, since our initial guidance for 2019, the midpoint for FFO per share, as adjusted, increased by one cent.
|
(6)
| Includes 602,484 shares of common stock issued in 2Q19 under our ATM program for net proceeds of $86.1 million and 1.1 million shares issued during 3Q19 to settle forward equity sales agreements for net proceeds of $150.1 million. As
of September 30, 2019, 7.0 million shares remain unsettled under forward equity sales agreements, for which we expect to receive proceeds of $979.2 million.
|
(7)
| The 1.0% reduction in occupancy guidance is attributable to vacancy aggregating 253,077 RSF representing lease-up opportunities at two acquisitions completed in 3Q19 and one pending acquisition expected to close in 4Q19.
|
(8)
| Approximately 45% of straight-line rent revenue represents initial free rent on recently delivered and expected 2019 deliveries of new Class A properties from our development and redevelopment pipeline.
|
(9)
| Increase in interest expense guidance by $5M primarily due to the $190M in excess proceeds from our issuances of unsecured senior notes payable in 3Q19, and the $1.7 million loss on early termination of interest rate hedge agreements.
|
We will host a conference call on Tuesday, October 29, 2019, at 3:00 p.m. Eastern Time ("ET")/noon Pacific Time ("PT"), which is open to the general public to discuss our financial and operating results for the third quarter ended September 30, 2019. To participate in this conference call, dial (833) 366-1125 or (412) 902-6738 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the call for Alexandria Real Estate Equities, Inc. The audio webcast can be accessed at www.are.com in the "For Investors" section. A replay of the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT on Tuesday, October 29, 2019. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10134312.
Additionally, a copy of this Earnings Press Release and Supplemental Information for the third quarter ended September 30, 2019, is available in the "For Investors" section of our website at www.are.com or by following this link: http://www.are.com/fs/2019q3.pdf.
For any questions, please contact Joel S. Marcus, executive chairman and founder; Stephen A. Richardson, co-chief executive officer; Peter M. Moglia, co-chief executive officer and co-chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; Sara M. Kabakoff, assistant vice president – corporate communications, at (626) 578-0777, or Paula Schwartz, managing director – Rx Communications Group, at (917) 322-2216.
About the Company
Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office real estate investment trust ("REIT"), is the first and longest-tenured owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $24.3 billion as of September 30, 2019, and an asset base in North America of 38.5 million square feet ("SF") as of October 28, 2019, including pending acquisitions. The asset base in North America includes 26.1 million RSF of operating properties and 2.5 million RSF of Class A properties undergoing construction or pre-construction, with projected initial occupancy in 4Q19-2020, 4.9 million RSF of intermediate-term Class A properties undergoing or nearing pre-construction, and 5.0 million SF of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, technology, and agtech companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.
***********
This document includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2019 earnings per share attributable to Alexandria's common stockholders – diluted, 2019 funds from operations per share attributable to Alexandria's common stockholders – diluted, net operating income, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of forward-looking words, such as "forecast," "guidance," "goals," "projects," "estimates," "anticipates," "believes," "expects," "intends," "may," "plans," "seeks," "should," or "will," or the negative of those words or similar words. These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events. There can be no assurance that actual results will not be materially higher or lower than these expectations. These statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully place into service and lease any properties undergoing development or redevelopment and our existing space held for future development or redevelopment (including new properties acquired for that purpose), our failure to successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission ("SEC"). Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are made as of the date of this Earnings Press Release, and unless otherwise stated, we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.
Alexandria®, Lighthouse Design® logo, Building the Future of Life-Changing Innovation™, LaunchLabs®, Alexandria Center®, Alexandria Technology Square®, Alexandria Summit®, Alexandria Technology Center®, Alexandria Innovation Center®, and GradLabs™ are trademarks of Alexandria Real Estate Equities, Inc. All other company names, trademarks, and logos referenced herein are the property of their respective owners.
Consolidated Statements of Operations
September 30, 2019
(Dollars in thousands, except per share amounts)
|
|
|
| Three Months Ended
|
| Nine Months Ended
|
|
| 9/30/19
|
| 6/30/19
|
| 3/31/19
|
| 12/31/18
|
| 9/30/18
|
| 9/30/19
|
| 9/30/18
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from rentals(1)
|
| $
| 385,776
|
|
| $
| 371,618
|
|
| $
| 354,749
|
|
| $
| 337,785
|
|
| $
| 336,547
|
|
| $
| 1,112,143
|
|
| $
| 976,996
|
|
Other income
|
| 4,708
|
|
| 2,238
|
|
| 4,093
|
|
| 2,678
|
|
| 5,276
|
|
| 11,039
|
|
| 10,000
|
|
Total revenues
|
| 390,484
|
|
| 373,856
|
|
| 358,842
|
|
| 340,463
|
|
| 341,823
|
|
| 1,123,182
|
|
| 986,996
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental operations
|
| 116,450
|
|
| 105,689
|
|
| 101,501
|
|
| 97,682
|
|
| 99,759
|
|
| 323,640
|
|
| 283,438
|
|
General and administrative
|
| 27,930
|
|
| 26,434
|
|
| 24,677
|
|
| 22,385
|
|
| 22,660
|
|
| 79,041
|
|
| 68,020
|
|
Interest
|
| 46,203
|
| (2)
| 42,879
|
|
| 39,100
|
|
| 40,239
|
|
| 42,244
|
|
| 128,182
|
|
| 117,256
|
|
Depreciation and amortization
|
| 135,570
|
|
| 134,437
|
|
| 134,087
|
|
| 124,990
|
|
| 119,600
|
|
| 404,094
|
|
| 352,671
|
|
Impairment of real estate
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 6,311
|
|
Loss on early extinguishment of debt
|
| 40,209
|
| (3)
| —
|
|
| 7,361
|
|
| —
|
|
| 1,122
|
|
| 47,570
|
|
| 1,122
|
|
Total expenses
|
| 366,362
|
|
| 309,439
|
|
| 306,726
|
|
| 285,296
|
|
| 285,385
|
|
| 982,527
|
|
| 828,818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated real estate joint ventures
|
| 2,951
|
|
| 1,262
|
|
| 1,146
|
|
| 1,029
|
|
| 40,718
|
|
| 5,359
|
|
| 42,952
|
|
Investment (loss) income
|
| (63,076)
|
| (4)
| 21,500
|
|
| 83,556
|
|
| (83,531)
|
|
| 122,203
|
|
| 41,980
|
|
| 220,294
|
|
Gain on sales of real estate
|
| —
|
|
| —
|
|
| —
|
|
| 8,704
|
|
| —
|
|
| —
|
|
| —
|
|
Net (loss) income
|
| (36,003)
|
|
| 87,179
|
|
| 136,818
|
|
| (18,631)
|
|
| 219,359
|
|
| 187,994
|
|
| 421,424
|
|
Net income attributable to noncontrolling interests
|
| (11,199)
|
|
| (8,412)
|
|
| (7,659)
|
|
| (6,053)
|
|
| (5,723)
|
|
| (27,270)
|
|
| (17,428)
|
|
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.'s
stockholders
|
| (47,202)
|
|
| 78,767
|
|
| 129,159
|
|
| (24,684)
|
|
| 213,636
|
|
| 160,724
|
|
| 403,996
|
|
Dividends on preferred stock
|
| (1,173)
|
|
| (1,005)
|
|
| (1,026)
|
|
| (1,155)
|
|
| (1,301)
|
|
| (3,204)
|
|
| (3,905)
|
|
Preferred stock redemption charge
|
| —
|
|
| —
|
|
| (2,580)
|
|
| (4,240)
|
|
| —
|
|
| (2,580)
|
|
| —
|
|
Net income attributable to unvested restricted stock awards
|
| (1,398)
|
|
| (1,432)
|
|
| (1,955)
|
|
| (1,661)
|
|
| (3,395)
|
|
| (4,532)
|
|
| (6,010)
|
|
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.'s
common stockholders
|
| $
| (49,773)
|
|
| $
| 76,330
|
|
| $
| 123,598
|
|
| $
| (31,740)
|
|
| $
| 208,940
|
|
| $
| 150,408
|
|
| $
| 394,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share attributable to Alexandria Real Estate
Equities, Inc.'s common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
| $
| (0.44)
|
|
| $
| 0.68
|
|
| $
| 1.11
|
|
| $
| (0.30)
|
|
| $
| 2.01
|
|
| $
| 1.35
|
|
| $
| 3.86
|
|
Diluted
|
| $
| (0.44)
|
|
| $
| 0.68
|
|
| $
| 1.11
|
|
| $
| (0.30)
|
|
| $
| 1.99
|
|
| $
| 1.35
|
|
| $
| 3.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
| 112,120
|
|
| 111,433
|
|
| 111,054
|
|
| 106,033
|
|
| 104,179
|
|
| 111,540
|
|
| 101,991
|
|
Diluted
|
| 112,120
|
|
| 111,501
|
|
| 111,054
|
|
| 106,033
|
|
| 105,385
|
|
| 111,712
|
|
| 102,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
| $
| 1.00
|
|
| $
| 1.00
|
|
| $
| 0.97
|
|
| $
| 0.97
|
|
| $
| 0.93
|
|
| $
| 2.97
|
|
| $
| 2.76
|
|
|
|
(1)
| Upon the adoption of new lease accounting standards on January 1, 2019, rental revenues and tenant recoveries are aggregated within income from rentals. Prior periods have been reclassified to conform to new standards. Refer to
"Financial and Asset Base Highlights" and the "Lease Accounting" and "Tenant Recoveries" sections in "Definitions and Reconciliations" of our Supplemental Information for additional information.
|
(2)
| Includes $1.7 million related to the early termination of our interest rate hedge agreements, recognized in conjunction with the early repayment of our unsecured senior bank term loan.
|
(3)
| Related to the opportunistic refinancing of our unsecured senior notes payable due 2020 and 2022 and the early repayment of our unsecured senior bank term loan. Refer to page 3 in this Earnings Press Release for additional information.
|
(4)
| Refer to "Investments" of our Supplemental Information for additional information.
|
Consolidated Balance Sheets
September 30, 2019
(In thousands)
|
|
|
| 9/30/19
|
| 6/30/19
|
| 3/31/19
|
| 12/31/18
|
| 9/30/18
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Investments in real estate
|
| $
| 13,618,280
|
|
| $
| 12,872,824
|
|
| $
| 12,410,350
|
|
| $
| 11,913,693
|
|
| $
| 11,587,312
|
|
Investments in unconsolidated real estate joint ventures
|
| 340,190
|
|
| 334,162
|
|
| 290,405
|
|
| 237,507
|
|
| 197,970
|
|
Cash and cash equivalents
|
| 410,675
|
|
| 198,909
|
|
| 261,372
|
|
| 234,181
|
|
| 204,181
|
|
Restricted cash
|
| 42,295
|
|
| 39,316
|
|
| 54,433
|
|
| 37,949
|
|
| 29,699
|
|
Tenant receivables
|
| 10,668
|
|
| 9,228
|
|
| 9,645
|
|
| 9,798
|
|
| 11,041
|
|
Deferred rent
|
| 615,817
|
|
| 585,082
|
|
| 558,103
|
|
| 530,237
|
|
| 511,680
|
|
Deferred leasing costs
|
| 252,772
|
|
| 247,468
|
|
| 241,268
|
|
| 239,070
|
|
| 238,295
|
|
Investments
|
| 990,454
|
|
| 1,057,854
|
|
| 1,000,904
|
|
| 892,264
|
|
| 957,356
|
|
Other assets
|
| 777,003
|
|
| 694,627
|
|
| 653,726
|
|
| 370,257
|
|
| 368,032
|
|
Total assets
|
| $
| 17,058,154
|
|
| $
| 16,039,470
|
|
| $
| 15,480,206
|
|
| $
| 14,464,956
|
|
| $
| 14,105,566
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Noncontrolling Interests, and Equity
|
|
|
|
|
|
|
|
|
|
|
Secured notes payable
|
| $
| 351,852
|
|
| $
| 354,186
|
|
| $
| 356,461
|
|
| $
| 630,547
|
|
| $
| 632,792
|
|
Unsecured senior notes payable
|
| 6,042,831
|
|
| 5,140,914
|
|
| 5,139,500
|
|
| 4,292,293
|
|
| 4,290,906
|
|
Unsecured senior line of credit
|
| 343,000
|
|
| 514,000
|
|
| —
|
|
| 208,000
|
|
| 413,000
|
|
Unsecured senior bank term loan
|
| —
|
|
| 347,105
|
|
| 347,542
|
|
| 347,415
|
|
| 347,306
|
|
Accounts payable, accrued expenses, and other liabilities
|
| 1,241,276
|
|
| 1,157,417
|
|
| 1,171,377
|
|
| 981,707
|
|
| 907,094
|
|
Dividends payable
|
| 115,575
|
|
| 114,379
|
|
| 110,412
|
|
| 110,280
|
|
| 101,084
|
|
Total liabilities
|
| 8,094,534
|
|
| 7,628,001
|
|
| 7,125,292
|
|
| 6,570,242
|
|
| 6,692,182
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests
|
| 12,099
|
|
| 10,994
|
|
| 10,889
|
|
| 10,786
|
|
| 10,771
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexandria Real Estate Equities, Inc.'s stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
7.00% Series D cumulative convertible preferred stock
|
| 57,461
|
|
| 57,461
|
|
| 57,461
|
|
| 64,336
|
|
| 74,386
|
|
Common stock
|
| 1,132
|
|
| 1,120
|
|
| 1,112
|
|
| 1,110
|
|
| 1,058
|
|
Additional paid-in capital
|
| 7,743,188
|
|
| 7,581,573
|
|
| 7,518,716
|
|
| 7,286,954
|
|
| 6,801,150
|
|
Accumulated other comprehensive loss
|
| (11,549)
|
|
| (11,134)
|
|
| (10,712)
|
|
| (10,435)
|
|
| (3,811)
|
|
Alexandria Real Estate Equities, Inc.'s stockholders' equity
|
| 7,790,232
|
|
| 7,629,020
|
|
| 7,566,577
|
|
| 7,341,965
|
|
| 6,872,783
|
|
Noncontrolling interests
|
| 1,161,289
|
|
| 771,455
|
|
| 777,448
|
|
| 541,963
|
|
| 529,830
|
|
Total equity
|
| 8,951,521
|
|
| 8,400,475
|
|
| 8,344,025
|
|
| 7,883,928
|
|
| 7,402,613
|
|
Total liabilities, noncontrolling interests, and equity
|
| $
| 17,058,154
|
|
| $
| 16,039,470
|
|
| $
| 15,480,206
|
|
| $
| 14,464,956
|
|
| $
| 14,105,566
|
|
Funds From Operations and Funds From Operations per Share
September 30, 2019
(In thousands)
|
|
The following table presents a reconciliation of net (loss) income attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with generally accepted accounting principles ("GAAP"), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria's common stockholders – diluted, and funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below:
|
|
|
| Three Months Ended
|
| Nine Months Ended
|
|
| 9/30/19
|
| 6/30/19
|
| 3/31/19
|
| 12/31/18
|
| 9/30/18
|
| 9/30/19
|
| 9/30/18
|
Net (loss) income attributable to Alexandria's common stockholders – basic
|
| $
| (49,773)
|
|
| $
| 76,330
|
|
| $
| 123,598
|
|
| $
| (31,740)
|
|
| $
| 208,940
|
|
| $
| 150,408
|
|
| $
| 394,081
|
|
Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 1,301
|
|
| —
|
|
| —
|
|
Net (loss) income attributable to Alexandria's common stockholders – diluted
|
| (49,773)
|
|
| 76,330
|
|
| 123,598
|
|
| (31,740)
|
|
| 210,241
|
|
| 150,408
|
|
| 394,081
|
|
Depreciation and amortization
|
| 135,570
|
|
| 134,437
|
|
| 134,087
|
|
| 124,990
|
|
| 119,600
|
|
| 404,094
|
|
| 352,671
|
|
Noncontrolling share of depreciation and amortization from consolidated real
estate JVs
|
| (8,621)
|
|
| (6,744)
|
|
| (5,419)
|
|
| (4,252)
|
|
| (4,044)
|
|
| (20,784)
|
|
| (11,825)
|
|
Our share of depreciation and amortization from unconsolidated real estate JVs
|
| 1,845
|
|
| 973
|
|
| 846
|
|
| 719
|
|
| 1,011
|
|
| 3,664
|
|
| 2,462
|
|
Gain on sales of real estate
|
| —
|
|
| —
|
|
| —
|
|
| (8,704)
|
|
| —
|
|
| —
|
|
| —
|
|
Our share of gain on sales of real estate from unconsolidated real estate JVs
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| (35,678)
|
|
| —
|
|
| (35,678)
|
|
Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
|
| —
|
|
| 1,005
|
|
| 1,026
|
|
| —
|
|
| —
|
|
| —
|
|
| 3,905
|
|
Allocation to unvested restricted stock awards
|
| —
|
|
| (1,445)
|
|
| (2,054)
|
|
| —
|
|
| (1,312)
|
|
| (2,929)
|
|
| (4,595)
|
|
Funds from operations attributable to Alexandria's common stockholders –
diluted(2)
|
| 79,021
|
|
| 204,556
|
|
| 252,084
|
|
| 81,013
|
|
| 289,818
|
|
| 534,453
|
|
| 701,021
|
|
Unrealized losses (gains) on non-real estate investments
|
| 70,043
|
|
| (11,058)
|
|
| (72,206)
|
|
| 94,850
|
|
| (117,188)
|
|
| (13,221)
|
|
| (194,484)
|
|
Realized gains on non-real estate investments
|
| —
|
|
| —
|
|
| —
|
|
| (6,428)
|
|
| —
|
|
| —
|
|
| (8,252)
|
|
Impairment of real estate – land parcels
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 6,311
|
|
Impairment of non-real estate investments
|
| 7,133
|
| (3)
| —
|
|
| —
|
|
| 5,483
|
|
| —
|
|
| 7,133
|
|
| —
|
|
Loss on early extinguishment of debt
|
| 40,209
|
| (4)
| —
|
|
| 7,361
|
|
| —
|
|
| 1,122
|
|
| 47,570
|
|
| 1,122
|
|
Loss on early termination of interest rate hedge agreements
|
| 1,702
|
| (5)
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 1,702
|
|
| —
|
|
Our share of gain on early extinguishment of debt from unconsolidated real estate
JVs
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| (761)
|
|
| —
|
|
| (761)
|
|
Preferred stock redemption charge
|
| —
|
|
| —
|
|
| 2,580
|
|
| 4,240
|
|
| —
|
|
| 2,580
|
|
| —
|
|
Removal of assumed conversion of 7.00% Series D cumulative convertible
preferred stock(1)
|
| —
|
|
| (1,005)
|
|
| (1,026)
|
|
| —
|
|
| (1,301)
|
|
| —
|
|
| (3,905)
|
|
Allocation to unvested restricted stock awards
|
| (1,002)
|
|
| 179
|
|
| 990
|
|
| (1,138)
|
|
| 1,889
|
|
| (657)
|
|
| 2,938
|
|
Funds from operations attributable to Alexandria's common stockholders –
diluted, as adjusted
|
| $
| 197,106
|
|
| $
| 192,672
|
|
| $
| 189,783
|
|
| $
| 178,020
|
|
| $
| 173,579
|
|
| $
| 579,560
|
|
| $
| 503,990
|
|
|
|
(1)
| Refer to the "Weighted-Average Shares of Common Stock Outstanding – Diluted" section in "Definitions and Reconciliations" of our Supplemental Information for additional information regarding our 7.00% Series D cumulative
convertible preferred stock.
|
(2)
| Calculated in accordance with standards established by the Nareit Board of Governors. Refer to the "Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria's Common Stockholders" section in
"Definitions and Reconciliations" of our Supplemental Information for additional information.
|
(3)
| Relates to three privately held non-real estate investments.
|
(4)
| Refer to page 3 for additional information.
|
(5)
| Represents loss on the termination of our interest rate hedge agreements. The loss is included within interest expense in our consolidated statements of operations.
|
Funds From Operations and Funds From Operations per Share (continued)
September 30, 2019
(In thousands, except per share amounts)
|
|
The following table presents a reconciliation of net (loss) income per share attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria's common stockholders – diluted, and funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below. Per share amounts may not add due to rounding.
|
|
|
| Three Months Ended
|
| Nine Months Ended
|
|
| 9/30/19
|
| 6/30/19
|
| 3/31/19
|
| 12/31/18
|
| 9/30/18
|
| 9/30/19
|
| 9/30/18
|
Net (loss) income per share attributable to Alexandria's common
stockholders – diluted
|
| $
| (0.44)
|
|
| $
| 0.68
|
|
| $
| 1.11
|
|
| $
| (0.30)
|
|
| $
| 1.99
|
|
| $
| 1.35
|
|
| $
| 3.85
|
|
Depreciation and amortization
|
| 1.14
|
|
| 1.15
|
|
| 1.17
|
|
| 1.14
|
|
| 1.11
|
|
| 3.46
|
|
| 3.35
|
|
Gain on sale of real estate
|
| —
|
|
| —
|
|
| —
|
|
| (0.08)
|
|
| —
|
|
| —
|
|
| —
|
|
Our share of gain on sales of real estate from unconsolidated real estate JVs
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| (0.34)
|
|
| —
|
|
| (0.35)
|
|
Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| (0.01)
|
|
Allocation to unvested restricted stock awards
|
| —
|
|
| —
|
|
| (0.02)
|
|
| —
|
|
| (0.01)
|
|
| (0.03)
|
|
| (0.04)
|
|
Funds from operations per share attributable to Alexandria's common
stockholders – diluted(1)
|
| 0.70
|
|
| 1.83
|
|
| 2.26
|
|
| 0.76
|
|
| 2.75
|
|
| 4.78
|
|
| 6.80
|
|
Unrealized losses (gains) on non-real estate investments
|
| 0.62
|
|
| (0.10)
|
|
| (0.65)
|
|
| 0.89
|
|
| (1.11)
|
|
| (0.12)
|
|
| (1.90)
|
|
Realized gains on non-real estate investments
|
| —
|
|
| —
|
|
| —
|
|
| (0.06)
|
|
| —
|
|
| —
|
|
| (0.08)
|
|
Impairment of real estate – land parcels
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 0.06
|
|
Impairment of non-real estate investments
|
| 0.06
|
|
| —
|
|
| —
|
|
| 0.05
|
|
| —
|
|
| 0.06
|
|
| —
|
|
Loss on early extinguishment of debt
|
| 0.36
|
|
| —
|
|
| 0.07
|
|
| —
|
|
| 0.01
|
|
| 0.43
|
|
| 0.01
|
|
Loss on early termination of interest rate hedge agreements
|
| 0.02
|
| (1)
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 0.02
|
|
| —
|
|
Our share of gain on early extinguishment of debt from unconsolidated real
estate JVs
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| (0.01)
|
|
| —
|
|
| (0.01)
|
|
Preferred stock redemption charge
|
| —
|
|
| —
|
|
| 0.02
|
|
| 0.04
|
|
| —
|
|
| 0.02
|
|
| —
|
|
Removal of assumed conversion of 7.00% Series D cumulative convertible
preferred stock(1)
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| —
|
|
| 0.01
|
|
Allocation to unvested restricted stock awards
|
| (0.01)
|
|
| —
|
|
| 0.01
|
|
| —
|
|
| 0.02
|
|
| —
|
|
| 0.03
|
|
Funds from operations per share attributable to Alexandria's common
stockholders – diluted, as adjusted
|
| $
| 1.75
|
|
| $
| 1.73
|
|
| $
| 1.71
|
|
| $
| 1.68
|
|
| $
| 1.66
|
|
| $
| 5.19
|
|
| $
| 4.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding(1) for calculations of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share – diluted
|
| 112,120
|
|
| 111,501
|
|
| 111,054
|
|
| 106,033
|
|
| 105,385
|
|
| 111,712
|
|
| 102,354
|
|
Funds from operations – diluted, per share
|
| 112,562
|
|
| 112,077
|
|
| 111,635
|
|
| 106,244
|
|
| 105,385
|
|
| 111,712
|
|
| 103,097
|
|
Funds from operations – diluted, as adjusted, per share
|
| 112,562
|
|
| 111,501
|
|
| 111,054
|
|
| 106,244
|
|
| 104,641
|
|
| 111,712
|
|
| 102,354
|
|
|
(1) Refer to footnotes on the previous page for additional information.
|
View original content:http://www.prnewswire.com/news-releases/alexandria-real-estate-equities-inc-reports-3q19-revenues-of-390-5-million-up-14-2-over-3q18-3q19-net-loss-per-share--diluted-of-0-44-3q19-ffo-per-share--diluted-as-adjusted-of-1-75-and-operational-excellence-and--300946548.html
SOURCE Alexandria Real Estate Equities, Inc.