Exhibit 99.1
Contact: Joel S. Marcus
Chief Executive Officer
Alexandria Real Estate Equities, Inc.
(626) 578-9693
Alexandria Real Estate Equities, Inc.
Reports
Second Quarter 2005 Results
- Company Reports Funds from Operations Per Share (Diluted) of $1.20, Up 19%, and
Earnings Per Share (Diluted) of $0.58, Up 16%, for Second Quarter 2005
Over Second Quarter 2004-
Highlights
- Second Quarter 2005 Funds from Operations (FFO) Per Share (Diluted) of $1.20
- Second Quarter 2005 Total Revenues Up 34%, FFO Available to Common Stockholders Up 29% and FFO Per Share (Diluted) Up 19% Over Second Quarter 2004
- Second Quarter 2005 Earnings Per Share (Diluted) of $0.58, Up 16% Over Second Quarter 2004
- Executed 30 Leases for 374,000 Square Feet of Space
- Completed Acquisitions of Four Properties Aggregating 231,000 Square Feet
PASADENA, CA. - August 2, 2005 -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the second quarter and six months ended June 30, 2005.
For the second quarter of 2005, we reported FFO available to common stockholders of $25,501,000, or $1.20 per common share (diluted), on total revenues of $58,217,000 compared to FFO available to common stockholders of $19,815,000, or $1.01 per common share (diluted), on total revenues of $43,472,000 for the second quarter of 2004. Comparing the second quarter of 2005 to the second quarter of 2004, FFO available to common stockholders increased 29%, FFO per common share (diluted) increased 19% and total revenues increased 34%. For the six months ended June 30, 2005, we reported FFO available to common stockholders of $49,109,000, or $2.39 per common share (diluted), on total revenues of $114,256,000 compared to FFO available to common stockholders of $41,284,000, or $2.11 per common share (diluted), on total revenues of $86,196,000 for the six months ended June 30, 2004. Comparing the six months ended June 30, 2005 to the six months ended June 30, 2004, FFO available to common stockholders increased 19%, FFO per common share (diluted) increased 13% and total revenues increased 33%. FFO for the second quarter and six months ended June 30, 2004 included the impact of the preferred stock redemption charge of $1,876,000, or $0.10 per share (diluted), recorded in the second quarter of 2004.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS SECOND QUARTER 2005 RESULTS
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FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. A reconciliation of GAAP net income available to common stockholders to FFO available to common stockholders, on both an aggregate and a per share diluted basis, is included in the financial information accompanying this press release. The primary reconciling item between GAAP net income available to common stockholders and FFO available to common stockholders is depreciation and amortization expense.Depreciation and amortization expense for the three months ended June 30, 2005 and 2004 was $13,251,000 and $10,088,000, respectively. Depreciation and amortization expense for the six months ended June 30, 2005 and 2004 was $25,892,000 and $20,069,000, respectively. Net income available to common stockholders for the second quarter of 2005 was $12,250,000, or $0.58 per share (diluted), compared to net income available to common stockholders of $9,727,000, or $0.50 per share (diluted) for the second quarter of 2004. Net income available to common stockholders for the six months ended June 30, 2005 was $23,217,000, or $1.13 per share (diluted), compared to net income available to common stockholders of $22,842,000, or $1.17 per share (diluted) for the six months ended June 30, 2004. Net income available to common stockholders for the six months ended June 30, 2004 included a gain on the sale of property of $1,627,000, or $0.08 per share (diluted), recorded in the first quarter of 2004, and also included the impact of the preferred stock redemption charge of $1,876,000, or $0.10 per share (diluted), recorded in the second quarter of 2004.
We executed a total of 30 leases during the second quarter of 2005 for approximately 374,000 square feet of space at 23 different properties (excluding month-to-month leases for approximately 67,000 square feet, which were effective during the quarter). Of this total, approximately 134,000 square feet were for new or renewal leases related to previously leased space and approximately 240,000 square feet were for redeveloped, developed or previously vacant space. Of the 240,000 square feet, approximately 194,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 46,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 14% higher (on a GAAP basis) than rental rates for expiring leases. For the six months ended June 30, 2005 we executed a total of 53 leases for approximately 736,000 square feet of space at 33 different properties (excluding month-to-month leases). Of this total, approximately 294,000 square feet were for new or renewal leases related to previously leased space and approximately 442,000 square feet were for redeveloped, developed or previously vacant space. Of the 442,000 square feet, approximately 354,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 88,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 15% higher (on a GAAP basis) than rental rates for expiring leases.
During the second quarter of 2005, we acquired four properties aggregating approximately 231,000 square feet in the Eastern Massachusetts market, one of our key life science cluster hubs. Three of these properties are included in our operating portfolio and are 100% occupied. The fourth property is 62% occupied. The unoccupied space of this property will undergo a change of use to office/laboratory space through redevelopment. We paid approximately $56.1 million cash for the properties and assumed two secured notes payable aggregating approximately $8.0 million.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS SECOND QUARTER 2005 RESULTS
Page 3
Based on our current view of existing market conditions and certain current assumptions, we have updated our prior earnings guidance:
| | | | |
| | 2005 | | 2006 |
FFO per share (diluted) | $4.81 | | $5.14 |
Earnings per share (diluted) | $2.34 | | $2.48 |
Alexandria Real Estate Equities, Inc. is a publicly-traded real estate investment trust focused principally on the ownership, operation, management, acquisition and selective redevelopment and development of properties containing office/laboratory space. Such properties are designed and improved for lease primarily to institutional, pharmaceutical, biotechnology, life science product, service, biodefense and translational research entities, as well as related government agencies. Our portfolio currently consists of 127 properties comprising approximately 8.2 million square feet of office/laboratory space.
As of June 30, 2005, approximately 84% of our leases (on a square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of June 30, 2005, approximately 6% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses. Additionally, as of June 30, 2005, approximately 89% of our leases (on a square footage basis) provided for the recapture of certain capital expenditures and approximately 89% of our leases (on a square footage basis) contained effective annual rent escalations that are either fixed or indexed based on the consumer price index or another index.
This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws. Our 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 our Annual Report on Form 10-K and our 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 Six Months Six Months
Ended Ended Ended Ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
-------------- -------------- -------------- ----------------
Income statement data
Total revenues $ 58,217 $ 43,472 $ 114,256 $ 86,196
Expenses
Rental operations 12,725 8,801 25,413 17,530
General and administrative 4,765 3,814 9,210 7,450
Interest 11,248 6,926 22,569 13,635
Depreciation and amortization 13,243 10,078 25,875 20,050
-------------- -------------- -------------- ----------------
41,981 29,619 83,067 58,665
Income from continuing operations 16,236 13,853 31,189 27,531
Income from discontinued operations, net 37 34 73 1,696
-------------- -------------- -------------- ----------------
Net income 16,273 13,887 31,262 29,227
Dividends on preferred stock 4,023 2,254 8,045 4,479
Preferred stock redemption charge -- 1,876 -- 1,876
-------------- -------------- -------------- ----------------
Net income available to common stockholders $ 12,250 $ 9,757 $ 23,217 $ 22,872
============== ============== ============== ================
Weighted average shares of common stock outstanding
Basic 20,936,265 19,284,631 20,206,497 19,245,792
============== ============== ============== ================
Diluted 21,274,364 19,608,854 20,536,039 19,595,337
============== ============== ============== ================
Earnings per share - basic:
Continuing operations (net of preferred stock dividends
and preferred stock redemption charge) $ 0.59 $ 0.50 $ 1.15 $ 1.10
Discontinued operations, net -- -- -- 0.09
-------------- -------------- -------------- ----------------
Earnings per share - basic $ 0.59 $ 0.50 $ 1.15 $ 1.19
============== ============== ============== ================
Earnings per share - diluted:
Continuing operations (net of preferred stock dividends
and preferred stock redemption charge) $ 0.58 $ 0.50 $ 1.13 $ 1.08
Discontinued operations, net -- -- -- 0.09
-------------- -------------- -------------- ----------------
Earnings per share - diluted $ 0.58 $ 0.50 $ 1.13 $ 1.17
============== ============== ============== ================
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Unaudited)
Funds from Operations
Generally accepted accounting principles ("GAAP") basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the miscorrelation 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") and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance for REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.
The following table presents a reconciliation of net income available to common stockholders, the most directly comparable GAAP financial measure to FFO, to funds from operations available to common stockholders for the three and six months ended June 30, 2005 and 2004 (in thousands, except per share data):
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
-------------- -------------- -------------- ----------------
Reconciliation of net income available to common stockholders to
funds from operations available to common stockholders
Net income available to common stockholders (1) $ 12,250 $ 9,757 $ 23,217 $ 22,872
Add: Depreciation and amortization (2) 13,251 10,088 25,892 20,069
Subtract: Gain on sale of property (3) -- -- -- (1,627)
-------------- -------------- -------------- ----------------
Funds from operations available to common stockholders (1)$ 25,501 $ 19,845 $ 49,109 $ 41,314
============== ============== ============== ================
FFO per share (1)
Basic $ 1.22 $ 1.03 $ 2.43 $ 2.15
============== ============== ============== ================
Diluted $ 1.20 $ 1.01 $ 2.39 $ 2.11
============== ============== ============== ================
Reconciliation of earnings per share (diluted) to
FFO per share (diluted)
Earnings per share (diluted) (1) $ 0.58 $ 0.50 $ 1.13 $ 1.17
Depreciation and amortization (2) 0.62 0.51 1.26 1.02
Gain on sale of property (3) -- -- -- (0.08)
-------------- -------------- -------------- ----------------
FFO per share (diluted) (1) $ 1.20 $ 1.01 $ 2.39 $ 2.11
============== ============== ============== ================
- During the second quarter of 2004, the Company elected to redeem its 9.5% Series A cumulative redeemable preferred stock. Accordingly, in compliance with Emerging Issues Task Force Topic D-42, the Company recorded a charge of $1,876,000, or $0.10 per share (diluted).
- Includes depreciation and amortization on assets "held for sale" reflected as discontinued operations (for the periods prior to when such assets were designated as "held for sale").
- Gain on sale of property relates to the disposition of a property in the Suburban Washington D.C. market during the first quarter of 2004. Gain on sale of property is included in the income statement in income from discontinued operations, net.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months Ended
06/30/2005 03/31/2005 12/31/2004 09/30/2004 06/30/2004
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 45,699 $ 43,731 $ 39,660 $ 35,867 $ 34,444
Tenant recoveries 11,449 11,587 9,504 9,608 8,420
Other income 1,069 721 1,262 984 608
----------- ----------- ----------- ----------- -----------
Total $ 58,217 $ 56,039 $ 50,426 $ 46,459 $ 43,472
=========== =========== =========== =========== ===========
Funds from operations per share - diluted (b) $ 1.20 $ 1.19 $ 1.18 $ 1.12 $ 1.01 (c)
Dividends per share on common stock $ 0.68 $ 0.66 $ 0.66 $ 0.64 $ 0.62
Dividend payout ratio (common stock) 56.8% 58.9% 55.6% 56.8% 60.7%(d)
Straight line rent $ 3,305 $ 2,836 $ 3,047 $ 3,065 $ 2,994
As of
06/30/2005 03/31/2005 12/31/2004 09/30/2004 06/30/2004
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 21,204,620 21,075,793 19,594,418 19,460,642 19,386,842
Number of properties (e)
Acquired/completed during period 5 6 11 7 5
Sold/reconstructed during period -- -- -- -- --
Owned at end of period 125 120 114 103 96
Square feet (e)
Acquired/completed during period 333,788 341,075 934,608 477,659 217,940
Sold/reconstructed/expanded during period -- -- -- -- 45,033
Owned at end of period 8,103,297 7,769,509 7,428,434 6,493,826 6,016,167
Debt to total market capitalization (f)
Total debt $ 1,301,934 $ 1,217,917 $ 1,186,946 $ 847,046 $ 684,486
Preferred stock 197,474 194,692 199,360 198,266 191,094
Common stock 1,557,479 1,356,860 1,458,217 1,278,953 1,100,756
----------- ----------- ----------- ----------- -----------
Total market capitalization $ 3,056,887 $ 2,769,469 $ 2,844,523 $ 2,324,265 $ 1,976,336
=========== =========== =========== =========== ===========
Debt to total market capitalization ratio 42.6% 44.0% 41.7% 36.4% 34.6%
- The historical results above exclude the results of assets "held for sale" which have been reflected as discontinued operations.
- See page 5 for a reconciliation of earnings per share to FFO per share.
- Includes the effect of the preferred stock redemption charge of $1,876,000, or $0.10 per share (diluted) recorded in the second quarter of 2004.
- The dividend payout ratio (common stock) includes the effect of the preferred stock redemption charge. Excluding the impact of this charge, the dividend payout ratio (common stock) for the second quarter of 2004 was 55.4%.
- Includes assets "held for sale" during the applicable periods such assets were "held for sale".
- Debt to market capitalization is the ratio of total debt (secured notes payable and unsecured line of credit and unsecured term loan) to total market capitalization. Total market capitalization is equal to the outstanding shares of preferred stock and common stock times the related closing stock prices at each quarter end date.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
2005 2004
------------ ------------
(Unaudited)
Assets
Rental properties, net $ 1,613,331 $ 1,427,853
Properties under development 268,687 252,249
Cash and cash equivalents 2,390 3,158
Tenant security deposits and other restricted cash 20,110 17,669
Tenant receivables 2,198 2,542
Deferred rent 45,547 43,166
Investments 73,396 67,419
Other assets 66,037 58,228
------------- --------------
Total assets $ 2,091,696 $ 1,872,284
============= ==============
Liabilities and Stockholders' Equity
Secured notes payable $ 662,934 $ 638,946
Unsecured line of credit and unsecured term loan 639,000 548,000
Accounts payable, accrued expenses and
tenant security deposits 55,680 48,581
Dividends payable 17,771 16,284
------------- --------------
Total liabilities 1,375,385 1,251,811
Stockholders' equity:
Series B preferred stock 57,500 57,500
Series C preferred stock 129,638 129,638
Common stock 212 196
Additional paid-in capital 520,261 421,835
Deferred compensation (12,020) (7,807)
Retained earnings 93 5,267
Accumulated other comprehensive income 20,627 13,844
------------- --------------
Total stockholders' equity 716,311 620,473
------------- --------------
Total liabilities and stockholders' equity $ 2,091,696 $ 1,872,284
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
June 30, 2005
(Dollars in thousands)
(Unaudited)
Principal Maturities/Rates
Secured Debt Unsecured Debt
-------------------------------- --------------
Weighted
Average
Year Amount Interest Rat(1) Amount
- ----------------------- ------------ ------------- --------------
2005 $ 19,391 5.98% $ --
2006 185,920 5.99% --
2007 49,270 6.35% 389,000 (2)
2008 115,491 6.28% --
2009 40,023 6.83% 250,000 (2)
Thereafter 248,460 6.81% --
------------ --------------
Subtotal 658,555 639,000
Unamortized Premium 4,379 --
------------ --------------
Total $ 662,934 $ 639,000
============ ==============
Secured and Unsecured Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Secured Debt $ 662,934 50.9% 5.97% 4.1 Years
Unsecured Debt 639,000 (3) 49.1% 4.60% 3.3 Years
----------- ------- -------------- -----------
Total Debt $ 1,301,934 100.0% 5.30% 3.7 Years
=========== ======= ============== ===========
Fixed and Floating Rate Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Fixed Rate Debt $ 478,815 36.8% 6.44% 5.3 Years
Floating Rate Debt 823,119 (3) 63.2% 4.63% (3) 2.7 Years
----------- ------- -------------- -----------
Total Debt $ 1,301,934 100.0% 5.30% 3.7 Years
=========== ======= ============== ===========
- The weighted average interest rate is calculated based on the outstanding debt as of July 1st for 2005, and as of January 1st for each year thereafter.
- A portion of our floating rate debt is hedged by existing swap agreements (see page 9). The interest rate on floating rate debt shown above does not reflect the impact of such swap agreements.
- The weighted average interest rates on borrowings outstanding on our unsecured line of credit and unsecured term loan as of June 30, 2005 were 4.60% and 4.58%, respectively.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements(1)
June 30, 2005
(Dollars in thousands)
(Unaudited)
Effective at
Notional June 30, Interest
Transaction Dates Effective Dates Amounts 2005 Pay Rates Termination Dates
- ------------------ ------------------ ---------- -------------- ------------ -----------------
November 2002 June 1, 2003 $ 25,000 $ 25,000 3.115% December 31, 2005
November 2002 June 1, 2003 25,000 25,000 3.155% December 31, 2005
December 2002 January 2, 2003 25,000 25,000 3.285% June 30, 2006
December 2002 January 2, 2003 25,000 25,000 3.285% June 30, 2006
December 2003 December 31,2004 50,000 50,000 3.000% December 30, 2005
December 2003 December 30, 2005 50,000 -- 4.150% December 29, 2006
December 2003 December 29, 2006 50,000 -- 5.090% October 31, 2008
March 2004 December 31, 2004 25,000 25,000 2.956% December 31, 2006
March 2004 December 31, 2004 25,000 25,000 2.956% December 31, 2006
April 2004 April 29, 2005 50,000 50,000 3.140% April 28, 2006
April 2004 April 28, 2006 50,000 -- 4.230% April 30, 2007
April 2004 April 30, 2007 50,000 -- 4.850% April 30, 2008
June 2004 June 30, 2005 50,000 50,000 4.343% June 30, 2007
December 2004 December 31, 2004 50,000 50,000 3.590% January 2, 2008
December 2004 January 3, 2006 50,000 -- 3.927% July 1, 2008
May 2005 December 30, 2005 25,000 -- 4.120% November 30, 2006
May 2005 June 30, 2006 50,000 -- 4.270% June 29, 2007
May 2005 November 30, 2006 25,000 -- 4.330% November 30, 2007
May 2005 June 29, 2007 50,000 -- 4.400% June 30, 2008
May 2005 November 30, 2007 25,000 -- 4.460% November 28, 2008
May 2005 June 30, 2008 50,000 -- 4.509% June 30, 2009
May 2005 November 28, 2008 25,000 -- 4.615% November 30, 2009
--------------
Total Interest Rate Swap Agreements in Effect
at 6/30/05 $ 350,000
==============
- For all interest rate swap agreements, interest is received based on one month LIBOR.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Operating Portfolio
June 30, 2005
(Dollars in thousands)
June 30, 2005 March 31, 2005
----------------------------------------------- -------------
Number of Rentable Annualized Occupancy Occupancy
Properties Square Feet Base Rent Percentage Percentage
----------- ----------- ---------- ----------- -------------
Markets
California - Pasadena 1 31,343 807 98.9% 98.9%
California - San Diego 22 1,052,304 29,134 94.4% 94.4%
California - San Francisco Bay 14 927,453 27,546 97.1% 100.0%
Eastern Massachusetts 18 1,038,536 30,247 93.8% 92.5%
New Jersey/Suburban Philadelphia 7 458,623 7,826 98.5% 100.0%
Southeast 8 400,391 6,207 84.1%(1) 84.5%
Suburban Washington D.C. 30 2,321,770 46,886 96.6% 95.3%
Washington - Seattle 10 793,910 23,519 90.6% 87.3%
International - Canada 1 68,000 2,564 100.0% 100.0%
----------- ----------- ---------- ----------- -------------
Total 111 7,092,330 $ 174,736 94.7%(2) 94.0%
=========== =========== ========== ============================
- All, or substantially all, of the vacant space is office or warehouse space.
- Excludes 14 properties under full or partial redevelopment. The total rentable square feet associated with these properties was 1,010,967, of which 530,040 square feet were under redevelopment as of June 30, 2005. Including properties under full or partial redevelopment, occupancy as of June 30, 2005 was 88.8%.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
---------- ---------- --------- ---------- ---------- --------
6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 35,183 $ 34,099 3.2% $ 33,725 $ 31,881 5.8%
Operating expenses 7,062 6,629 6.5% 7,062 6,629 6.5%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 28,121 $ 27,470 2.4% $ 26,663 $ 25,252 5.6%
========== ========== ========= ========== ========== ========
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Six Months Ended Six Months Ended
---------- ---------- --------- ---------- ---------- --------
6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 68,370 $ 66,404 3.0% $ 65,584 $ 62,149 5.5%
Operating expenses 13,731 12,743 7.8% 13,731 12,743 7.8%
Revenue less ---------- ---------- --------- ---------- ---------- --------
operating expenses $ 54,639 $ 53,661 1.8% $ 51,853 $ 49,406 5.0%
========== ========== ========= ========== ========== ========
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented (the "Second Quarter Same Properties" for the Quarter periods and "Six Months Same Properties" for the Six Month periods). Properties under redevelopment are excluded from same property results.
- Revenue less operating expenses computed under GAAP is total revenue associated with the Second Quarter Same Properties and the Six Months Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the Second Quarter Same Properties and the Six Months Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarter ended June 30, 2005 and 2004 for the Second Quarter Same Properties were $1,458,000 and $2,218,000, respectively. Straight-line rent adjustments for the six months ended June 30, 2005 and 2004 for the Six Months Same Properties were $2,786,000 and $4,255,000, 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.
- Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Same Property Comparisons.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended June 30, 2005
TI's/Lease
Rental Commissions Average
Number Square Expiring New Rate Per Lease
of Leases Footage Rates Rates Changes Square Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 44 231,788 $22.71 -- -- -- --
GAAP Basis 44 231,788 $21.79 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 14 134,511 $21.73 $22.68 4.4% $2.83 4.1 years
GAAP Basis 14 134,511 $21.15 $24.16 14.2% $2.83 4.1 years
Month-to-Month Leases In Effect
Cash Basis 25 66,766 $21.87 $23.84 9.0% -- --
GAAP Basis 25 66,766 $21.81 $23.84 9.3% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 16 239,743 -- $22.85 -- $18.56 9.3 years
GAAP Basis 16 239,743 -- $25.34 -- $18.56 9.3 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 30 374,254 -- $22.79 -- $12.91 7.5 years
GAAP Basis 30 374,254 -- $24.91 -- $12.91 7.5 years
Including Month-to-Month Leases
Cash Basis 55 441,020 -- $22.95 -- -- --
GAAP Basis 55 441,020 -- $24.75 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Six Months Ended June 30, 2005
TI's/Lease
Rental Commissions Average
Number Square Expiring New Rate Per Lease
of Leases Footage Rates Rates Changes Square Foot Terms
--------- --------- --------- --------- -------- ----------- ---------
Leasing Activity
Lease Expirations
Cash Basis 60 551,777 $24.63 -- -- -- --
GAAP Basis 60 551,777 $25.71 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 20 294,196 $22.69 $24.11 6.3% $1.44 4.3 years
GAAP Basis 20 294,196 $22.38 $25.69 14.8% $1.44 4.3 years
Month-to-Month Leases In Effect
Cash Basis 25 66,766 $21.88 $23.84 9.0% -- --
GAAP Basis 25 66,766 $21.83 $23.84 9.2% -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 33 442,241 -- $25.38 -- $14.54 7.8 years
GAAP Basis 33 442,241 -- $26.63 -- $14.54 7.8 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 53 736,437 -- $24.87 -- $9.31 6.4 years
GAAP Basis 53 736,437 -- $26.25 -- $9.31 6.4 years
Including Month-to-Month Leases
Cash Basis 78 803,203 -- $24.79 -- -- --
GAAP Basis 78 803,203 -- $26.05 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
June 30, 2005
Square Percentage of Annualized Base Rent
Year of Lease Number of Footage of Aggregate Portfolio of Expiring Leases
Expiration Leases Expiring Expiring Leases Leased Square Feet (per square foot)
- ------------ -------------- ------------- ----------------- ------------------
2005 52 (1) 270,012 3.8% $25.94
2006 53 985,912 13.7% $24.33
2007 30 670,587 9.3% $26.79
2008 18 422,643 5.9% $25.99
2009 26 593,338 8.2% $23.37
- Includes 25 month-to-month leases for approximately 67,000 square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
June 30, 2005
| | Estimated | Total |
| | In-Service | Rentable |
Markets | Dates | Square Footage |
| | | |
Southeast | 4Q05 | 46,000 |
Southeast | 2Q06 | 48,000 |
Suburban Washington D.C. | 1Q06 | 73,000 |
Washington - Seattle | 4Q05 | 50,000 (1) |
Total | | 217,000 |
- Excludes certain phases of a property which were delivered to tenants during 2004.
As required under GAAP, interest is being capitalized on these ground-up development projects as activities are ongoing to bring the assets to their intended use.
In addition to properties under development, as of June 30, 2005 our asset base contains ground-up development opportunities for approximately 4.6 million rentable square feet with an aggregate cost basis of approximately $210 million.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment
June 30, 2005
| | Estimated | Total Rentable | Total Square |
| | In-Service | Square Footage | Footage Being |
Markets | Dates | of Property | Redeveloped |
| | | | |
California - San Diego | 4Q05 | 18,173 | 7,814 |
California - San Diego | 4Q05 | 17,590 | 17,590 |
California - San Diego | 3Q06 | 71,510 | 71,510 |
California - San Diego | 2Q07 | 87,140 | 87,140 |
California - San Francisco Bay | 4Q05 | 140,143 | 24,039 |
California - San Francisco Bay | 3Q06 | 60,000 | 30,000 |
Eastern Massachusetts | 4Q05 | 96,150 | 66,540 |
Eastern Massachusetts | 1Q07 | 45,820 | 17,187 |
Eastern Massachusetts | 4Q05 | 115,179 | 31,326 |
New Jersey/Suburban Philadelphia | 4Q05 | 42,600 | 22,409 |
Southeast | 4Q05 | 60,519 | 33,321 |
Suburban Washington D.C. | 1Q06 | 131,415 | 44,208 |
Suburban Washington D.C. | 1Q06 | 92,449 | 60,443 |
Washington - Seattle | 4Q05 | 32,279 | 16,513 |
Total | | 1,010,967 | 530,040 |
Our redevelopment program involves activities necessary for the permanent change of use of applicable redevelopment space to office/laboratory space. For properties undergoing redevelopment, the entire property is excluded from the operating portfolio and related statistics (e.g. occupancy information, same property performance, etc.). As required under GAAP, interest is capitalized on redevelopment properties on the basis allocable only to that portion of space undergoing redevelopment. Average occupancy for properties under full or partial redevelopment as of June 30, 2005 was 48% and is not included in the occupancy of the operating portfolio. In addition to properties under redevelopment, as of June 30, 2005 our asset base contains opportunities for a permanent change of use through redevelopment aggregating approximately 1.0 million rentable square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Six Months Ended June 30, 2005
(In thousands)
Property-related capital expenditures(1) | $ 1,476 |
Leasing costs(2) | $ 216 |
Property-related redevelopment costs | $ 33,926 |
Property-related development costs | $ 50,578 |
- Property-related capital expenditures include all major capital and recurring capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures, or costs related to the redevelopment of a property. Major capital expenditures consist of roof replacements and HVAC systems which are typically identified and considered at the time the property is acquired. 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.
- Leasing costs consist of tenant improvements and leasing commissions related to leasing of acquired vacant space and second generation space.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Second Quarter and Six Months Ended June 30, 2005
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the second quarter and six months ended June 30, 2005:
Date: | August 3, 2005 |
Time: | 2:00 P.M. Eastern Daylight Time |
Phone Number: | (719) 457-2641 |
Confirmation Code: | 4038925 |
