Exhibit 99.1
Contact: Joel S. Marcus
Chief Executive Officer
Alexandria Real Estate Equities, Inc.
(626) 578-9693
Alexandria Real Estate Equities, Inc.
Reports
First Quarter 2003 Results
- Company Reports Funds from Operations of $1.04 Per Share (Diluted), Up 9%, and
Net Income Available to Common Stockholders of 52 Cents Per Share (Diluted),
Up 13%, for First Quarter 2003 Over First Quarter 2002 -
Highlights
- First Quarter 2003 Funds from Operations (FFO) of $1.04 Per Share (Diluted)
- First Quarter 2003 Total Revenues Up 21%, FFO Up 25% and FFO Per Share (Diluted) Up 9% Over First Quarter 2002
- First Quarter 2003 Net Income Available to Common Stockholders of 52 Cents Per Share (Diluted), Up 13% Over First Quarter 2002
- Signed 22 Leases for 190,000 Square Feet of Space
- Purchased a Development Property in Seattle, Washington
- Closed a Fixed Rate Secured Loan
PASADENA, CA. - May 15, 2003 -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the quarter ended March 31, 2003.
For the first quarter of 2003, Alexandria reported FFO of $19,840,000, or $1.04 per share (diluted), on total revenues of $40,613,000, compared to FFO of $15,935,000, or 95 cents per share (diluted), on total revenues of $33,672,000 for the first quarter of 2002. Comparing the first quarter of 2003 to the first quarter of 2002, total revenues increased 21%, FFO increased 25% and FFO per share (diluted) increased 9%. FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. A reconciliation of FFO to GAAP net income is included in the financial information accompanying this press release. Net income available to common stockholders for the first quarter of 2003 was $9,924,000, or 52 cents per share (diluted), compared to net income available to common stockholders of $7,698,000, or 46 cents per share (diluted), for the first quarter of 2002.
(more)
ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FIRST QUARTER 2003 RESULTS
Page 2
The Company announced that it had signed a total of 22 leases during the first quarter for approximately 190,000 square feet of space at 15 different properties. Of this total, approximately 50,000 square feet were for redeveloped, developed or previously vacant space at nine properties, approximately 23,000 square feet of which were delivered from the Company's redevelopment or development programs with the remaining 27,000 square feet for vacant space. The remaining approximately 140,000 square feet were for new or renewal leases related to previously leased space. Rental rates for new or renewal leases were on average approximately 9% lower than expiring leases. Excluding one lease for approximately 21,000 square feet in the San Francisco Bay market, rental rates for new or renewal leases for the three month period were on average approximately 1% higher than expiring leases.
The Company announced that in March 2003 it had acquired for $34.7 million in cash, a property under development in Seattle, Washington. The property, upon completion, will contain approximately 165,000 square feet of office/laboratory space.
The Company also announced the closing of a fixed rate secured loan of $34 million in March 2003. The debt bears interest at 6.21% and is payable based on a 25-year amortization schedule, and is due in 2013.
Based on the Company's current view of existing market conditions and certain assumptions, the Company has updated its earnings guidance for 2003, and provided initial earnings guidance for 2004:
Range | ||
2003 | 2004 | |
Fully diluted net income per common share * | $2.22 to $2.26 | $2.71 to $2.75 |
Fully diluted FFO per common share * | $4.23 to $4.27 | $4.55 to $4.59 |
*excludes gains or losses on sales of assets | ||
Alexandria Real Estate Equities, Inc. is a publicly traded real estate operating company focused principally on the ownership, operation, management, acquisition, expansion and selective redevelopment and development of properties containing office/laboratory space. Such properties are designed and improved for lease primarily to pharmaceutical, biotechnology, life science product and service companies, not-for-profit scientific research institutions, universities and related government agencies. Alexandria's portfolio currently consists of 88 properties comprising approximately 5.7 million square feet of office/laboratory space.
This press release contains forward-looking statements within the meaning of the federal securities laws. The Company's actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the Company's Form 10-K Annual Report and other periodic reports filed with the Securities and Exchange Commission.
(Tables follow)
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2003 March 31, 2002
-------------- --------------
Income statement data
Total revenues $ 40,613 $ 33,672
Expenses
Rental operations 8,786 6,658
General and administrative 3,549 3,473
Interest 6,871 6,359
Depreciation and amortization 9,461 7,994
-------------- --------------
28,667 24,484
Income from continuing operations 11,946 9,188
Income from discontinued operations 203 415
-------------- --------------
Net income 12,149 9,603
Dividends on preferred stock 2,225 1,905
-------------- --------------
Net income available to common stockholders $ 9,924 $ 7,698
============== ==============
Weighted average shares of
common stock outstanding
-Basic 18,895,821 16,409,258
============== ==============
-Diluted 19,136,372 16,720,857
============== ==============
Net income per common share
-Basic
Income from continuing operations $ 0.63 $ 0.56
============== ==============
Income from discontinued operations $ 0.01 $ 0.03
============== ==============
Net income $ 0.64 $ 0.59
============== ==============
Net income available to common stockholders $ 0.53 $ 0.47
============== ==============
-Diluted
Income from continuing operations $ 0.62 $ 0.55
============== ==============
Income from discontinued operations $ 0.01 $ 0.02
============== ==============
Net income $ 0.63 $ 0.57
============== ==============
Net income available to common stockholders $ 0.52 $ 0.46
============== ==============
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2003 March 31, 2002
-------------- --------------
Funds from operations (1)
Net income $ 12,149 $ 9,603
Add
Depreciation and amortization (2) 9,461 8,237
Loss on sale of property (3) 455 -
Subtract
Dividends on preferred stock (2,225) (1,905)
-------------- --------------
Funds from operations (FFO) $ 19,840 $ 15,935
============== ==============
FFO per common share
-Basic $ 1.05 $ 0.97
============== ==============
-Diluted $ 1.04 $ 0.95
============== ==============
Reconciliation of net income available to common
stockholders per share (diluted) to FFO per
common share (diluted)
Net income available to common stockholders per
share (diluted) $ 0.54 $ 0.46
============== ==============
Depreciation and amortization per common share (2) $ 0.49 $ 0.49
============== ==============
Loss on sale of property per common share (3) $ 0.02 $ -
============== ==============
FFO per common share (diluted) $ 1.04 $ 0.95
============== ==============
As of As of
March 31, 2003 March 31, 2002
Balance sheet data -------------- --------------
Rental properties, net $ 974,015 $ 798,570
Total assets $ 1,211,291 $ 977,986
Total liabilities $ 723,599 $ 571,334
Stockholders' equity $ 487,692 $ 406,652
(1) GAAP basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the mis-correlation between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") established the measurement tool of funds from operations ("FFO"). Since its introduction, FFO has become a widely used non-GAAP financial measure by REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the "White Paper"), which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from assets, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance of REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. We believe that net income is the most directly comparable GAAP financial measure to FFO.
(2) Includes depreciation and amortization on assets held for sale reflected as discontinued operations.
(3) Loss on sale of property relates to the disposition of a property in the San Francisco Bay market during the first quarter ended March 31, 2003. This loss is included on the income statement in income from discontinued operations.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Quarterly Supplemental Financial Information
For the Three Months Ended
3/31/2003 12/31/2002 9/30/2002 6/30/2002 3/31/2002
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of Revenues from Continuing Operations (a)
Rental Income $ 31,646 30,412 28,654 27,853 26,470
Tenant Recoveries 8,623 8,360 7,911 6,683 6,719
Other Income 344 523 299 305 483
----------- ----------- ----------- ----------- -----------
Total $ 40,613 39,295 36,864 34,841 33,672
=========== =========== =========== =========== ===========
Funds from Operations Per Share - Diluted (b) $ 1.04 1.03 0.98 0.97 0.95
Dividends Per Share on Common Stock $ 0.53 0.50 0.50 0.50 0.50
Dividend Payout Ratio (Common Stock) 50.8% 48.4% 52.4% 53.5% 52.8%
As of
3/31/2003 12/31/2002 9/30/2002 6/30/2002 3/31/2002
Other data ----------- ----------- ----------- ----------- -----------
Number of Shares of Common Stock Outstanding
at end of period 19,006,223 18,973,957 18,969,425 16,897,050 16,841,445
Number of Properties (c)
Acquired/completed during period 1 2 2 2 --
Sold/reconstruction during period (2) -- -- -- --
Owned at end of period 88 89 87 85 83
Square Feet (c)
Acquired/completed during period 51,340 158,336 98,497 170,244 --
Sold/reconstruction during period (70,281) -- -- -- --
Owned at end of period 5,727,182 5,746,123 5,587,787 5,489,290 5,319,046
(a) The historical results above exclude the results of assets held for sale which have been reflected as discontinued operations.
(b) The White Paper on Funds from Operations ("FFO") issued by the Board of Governors of the National Association of Real Estate Investment Trusts in April 2002 defines FFO as net income, computed in accordance with generally accepted accounting principles, excluding gains or (losses) from assets, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. See page 4 for a reconciliation of FFO for the current quarter to net income, the most directly comparable GAAP financial measure.
(c) Includes assets held for sale.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, December 31,
2003 2002
------------ ------------
Assets
Rental properties, net $ 974,015 $ 976,422
Properties under development 118,584 68,386
Cash and cash equivalents 3,674 3,790
Tenant security deposits and other restricted cash 8,779 8,020
Tenant receivables 3,306 2,641
Deferred rent 28,029 26,063
Other assets 74,904 73,921
------------ ------------
Total assets $ 1,211,291 $ 1,159,243
============ ============
Liabilities and stockholders' equity
Secured notes payable $ 312,405 $ 276,878
Unsecured line of credit 354,000 338,000
Accounts payable, accrued expenses and tenant
security deposits 45,264 47,118
Dividends payable 11,930 11,394
------------ ------------
Total liabilities 723,599 673,390
Total stockholders' equity 487,692 485,853
------------ ------------
Total liabilities and stockholders' equity $ 1,211,291 $ 1,159,243
============ ============
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
March 31, 2003
(Dollars in thousands)
(Unaudited)
Principal Amortization/Maturities (1)
Year Amount
- ----------------------- -----------
2003 $ 4,246
2004 9,221
2005 27,506 (2)
2006 25,367
2007 31,383
Thereafter 213,030
-----------
Subtotal 310,753
Unamortized Premium 1,652
-----------
Total $ 312,405
===========
Secured and Unsecured Debt Analysis
Weighted Average Weighted
Effective Average
Balance Interest Rate Maturity
----------- -------------- -----------
Secured Debt $ 312,405 7.16% 6.8 Years
Unsecured Debt 354,000 2.91%(3) 2.3 Years
----------- -------------- -----------
Total Debt $ 666,405 4.90% 4.4 Years
=========== ============== ===========
Floating and Fixed Rate Debt Analysis
Weighted Average Weighted
Effective Average
Balance Interest Rate Maturity
----------- -------------- -----------
Fixed Rate Debt $ 290,553 7.47% 7.2 Years
Floating Rate Debt 375,852 2.92%(3) 2.3 Years
----------- -------------- -----------
Total Debt $ 666,405 4.90% 4.4 Years
=========== ============== ===========
(1) Excludes the line of credit
(2) Of this amount, $21,853,000 represents the outstanding balance on a loan related to a property developed in the San Francisco Bay market, which has a maturity of January 2005, and may be extended, at the borrower's option, for an additional year.
(3) Does not reflect the impact of swap agreements which hedge certain floating rate debt.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements
March 31, 2003
(Dollars in thousands)
(Unaudited)
Notional Interest
Transaction Dates Effective Dates Amounts Pay Rates (1) Termination Dates
- ------------------ ------------------ ---------- ------------ -----------------
July 2000 May 31, 2001 $ 50,000 7.07% May 31, 2003
March 2002 December 31, 2002 $ 50,000 5.36% December 31, 2004
July 2002 January 1, 2003 $ 25,000 3.855% June 30, 2005
July 2002 January 1, 2003 $ 25,000 3.865% June 30, 2005
December 2002 January 2, 2003 $ 25,000 3.285% June 30, 2006
December 2002 January 2, 2003 $ 25,000 3.285% June 30, 2006
November 2002 June 1, 2003 $ 25,000 3.115% December 31, 2005
November 2002 June 1, 2003 $ 25,000 3.155% December 31, 2005
(1) For all interest rate swap agreements, interest is received based on one month LIBOR.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Operating Portfolio
March 31, 2003
(Dollars in thousands)
Number of Rentable Annualized Occupancy
Properties Square Feet Base Rent Percentages
----------- ----------- ---------- -----------
Markets
California - Pasadena 1 31,343 $ 602 95.7%
California - San Diego 20 845,548 23,503 94.5%
California - San Francisco Bay 10 614,490 19,564 100.0%
Eastern Massachusetts 11 746,734 24,682 91.0% (1)
New Jersey/Suburban Philadelphia 6 346,919 6,251 100.0%
Southeast 5 259,414 4,281 85.1% (2)
Suburban Washington D.C. 20 1,675,934 27,306 97.1%
Washington - Seattle 5 440,284 16,074 100.0%
----------- ----------- ---------- -----------
Total (3) 78 4,960,666 $ 122,263 95.9%
=========== =========== ========== ===========
(1) Substantially all of the vacant space in Eastern Massachusetts (64,010 square feet of the 67,463 vacant space feet) is located in Worcester and Randolph, which submarkets have exhibited significant weakness.
(2) All, or substantially all, of the vacant space is office or warehouse space.
(3) Excludes properties under full or partial redevelopment.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
---------- ---------- --------- ---------- ---------- --------
3/31/03 3/31/02 % Change 3/31/03 3/31/02 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue $ 29,236 $ 27,838 5.0% $ 28,555 $ 26,765 6.7%
Operating expenses 6,318 5,313 18.9%(2) 6,318 5,313 18.9% (2)
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 22,918 $ 22,525 1.7% $ 22,237 $ 21,452 3.7%
========== ========== ========= ========== ========== ========
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire period presented (the "First Quarter Same Properties").
(1) Revenue less operating expenses computed under GAAP is total revenue associated with the First Quarter Same Properties (excluding lease termination fees, if any) less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the First Quarter Same Properties (excluding termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarter ended March 31, 2003 and 2002 for the First Quarter Same Properties were $681,000 and $1,073,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates non-cash adjustments to rental revenue.
(2) Operating expenses for the First Quarter Same Properties increased by approximately $1.0 million or 18.9%, primarily due to increases in property taxes, utilities and snow removal expenses, substantially all of which are recoverable from our tenants through tenant recoveries. The increases in utilities and snow removal expenses are primarily due to the severe weather on the East Coast.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended March 31, 2003
Rental TI's/Lease Average
Number Square Expiring New Rate Commissions Lease
of Leases Footage Rates Rates Changes Per Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Lease Activity - Expired Leases
Lease Expirations
Cash Basis 29 215,979 $25.34 -- -- -- --
GAAP Basis 29 215,979 $24.50 -- -- -- --
Renewed / Released Space
Cash Basis 11 139,562 $27.52 $23.51 -14.6% (1) $0.99 2.1 years
GAAP Basis 11 139,562 $27.73 $25.18 -9.2% (1) $0.99 2.1 years
Month-to-Month Leases
Cash Basis 14 47,296 $17.26 $17.22 -0.2% -- --
GAAP Basis 14 47,296 $17.17 $17.22 0.3% -- --
Total Leasing - Expired Leases
Cash Basis 25 186,858 $24.92 $21.92 -12.0% (2) -- --
GAAP Basis 25 186,858 $25.06 $23.17 -7.5% (2) -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 11 50,289 -- $29.78 -- $1.63 2.5 Years
GAAP Basis 11 50,289 -- $30.23 -- $1.63 2.5 Years
All Lease Activity
Cash Basis 36 237,147 -- $23.59 -- -- --
GAAP Basis 36 237,147 -- $24.67 -- -- --
(1) Excluding a lease for 21,316 square feet in the San Francisco Bay market, rental rates for renewed or released space were on average 0.2% higher than expiring rates on a Cash Basis and 1.1% higher than expiring rates on a GAAP Basis.
(2) Excluding a lease for 21,316 square feet in the San Francisco Bay market, rental rates for all lease activity for expired leases were on average 0.1% higher than expiring rates on a Cash Basis and 0.9% higher than expiring rates on a GAAP Basis.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
March 31, 2003
Square Percentage of Annualized Base
Year of Number of Footage of Aggregate Rent of Expiring
Lease Leases Expiring Portfolio Lease Leases (per
Expiration Expiring Leases Square Feet square foot)
- --------- ---------- ---------- -------------- ----------------
2003 50 (1) 519,614 10.1% $23.16
2004 39 536,792 10.4% $20.57
2005 19 278,405 5.4% $27.96
2006 32 775,641 15.1% $23.50
2007 15 332,085 6.5% $24.13
(1) Includes 14 month-to-month leases and leases expiring between April 1, 2003 and December 31, 2003.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
March 31, 2003
Estimated | Total | |
In-Service | Rentable | |
Markets | Dates | Square Footage |
California - San Diego | 4Q03 | 45,000 |
Southeast | 2Q04 | 96,000 |
Suburban Washington D.C. | 3Q03 | 95,000 |
Suburban Washington D.C. | 4Q04 | 76,000 |
Washington - Seattle | 3Q04 | 165,000 |
Total | 477,000 |
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment
March 31, 2003
Estimated | Total Rentable | Total Square | |
In-Service | Square Footage | Footage Being | |
Markets | Dates | of Property (1) | Redeveloped |
California - San Diego | 3Q03 | 107,710 | 17,036 |
California - San Diego | 4Q03 | 17,590 | 17,590 |
California - San Francisco Bay (2) | Various | 153,837 | 42,710 |
Eastern Massachusetts | 4Q03 | 40,000 | 40,000 |
Eastern Massachusetts | 4Q03 | 96,150 | 96,150 |
Southeast | Various | 119,916 | 64,547 |
Suburban Washington D.C. | 2Q03 | 53,595 | 21,086 |
Suburban Washington D.C. | Various | 131,415 | 68,909 |
Washington - Seattle | TBD | 46,303 | 15,178 |
Total | 766,516 | 383,206 |
(1) Average occupancy for properties under full or partial redevelopment as of March 31, 2003 was approximately 50.0%.
(2) Includes two adjacent properties.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Expenditures
For the Three Months Ended March 31, 2003
(Dollars in thousands)
Property-related capital expenditures (1) | $ 370 |
Leasing costs (2) | $ 90 |
Property-related redevelopment costs | $ 13,127 |
Property-related development costs | $ 7,199 |
Purchase of property under development | $ 36,332 |
Purchase of rental property | $ 3,677 |
(1) Property-related capital expenditures include all capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures or costs related to the redevelopment of a property. Capital expenditures fluctuate in any given period due to the nature, extent or timing of improvements required and the extent to which they are recoverable from tenants. Approximately 89% of our leases (based on rentable square feet) provide for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing). In addition, we implement an active preventative maintenance program at each of our properties to minimize capital expenditures.
(2) Leasing costs consist of tenant improvements and leasing commissions related to leasing of acquired vacant space and second generation space. Leasing costs exclude tenant improvements that are revenue-enhancing.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Quarter Ended March 31, 2003
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the first quarter ended March 31, 2003.
Date: | May 15, 2003 |
Time: | 5:00 P.M. Eastern Daylight Time |
Phone Number: | (913) 981-5510 |
Confirmation Code: | 784935 |