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 2006 Results
- Company Reports Funds from Operations Per Share (Diluted) of $1.24, Up 4%
Over First Quarter 2005, and Earnings Per Share (Diluted) of $0.56 -
Highlights
- First Quarter 2006 Funds From Operations Per Share (FFO) (Diluted) of $1.24 Up 4%
- First Quarter 2006 Total Revenues Up 25%, FFO Available to Common Stockholders Up 19%
- First Quarter 2006 Earnings Per Share (Diluted) of $0.56
- Executed 28 Leases for 502,000 Square Feet
- First Quarter 2006 GAAP Basis Rental Rate Increase of 6.2%
- First Quarter 2006 GAAP Basis Same Property Revenues Less Operating Expenses Up 2.0% Over First Quarter 2005
- Added Five Properties Aggregating 333,000 Square Feet for Total Consideration of $99 million
- Added One Land Parcel with Approximately 494,000 Developable Square Feet
- Completed Ground-Up Development of One Property
- Completed Redevelopment of Multiple Spaces at Two Properties
PASADENA, CA. - May 8, 2006 -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the first quarter 2006.
For the first quarter of 2006, we reported total revenues of $68,591,000 and FFO available to common stockholders of $28,154,000, or $1.24 per share (diluted), compared to total revenues of $55,055,000 and FFO available to common stockholders of $23,608,000, or $1.19 per share (diluted), for the first quarter of 2005. Comparing the first quarter of 2006 to the first quarter of 2005, total revenues increased 25%, FFO available to common stockholders increased 19% and FFO per share (diluted) increased 4%.
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 March 31, 2006 and 2005 was $15,443,000 and $12,641,000, respectively. Net income available to common stockholders for the first quarter of 2006 was $12,733,000, or $0.56 per share (diluted), compared to net income available to common stockholders of $10,967,000, or $0.55 per share (diluted) for the first quarter of 2005.
For the first quarter 2006 we executed a total of 28 leases for approximately 502,000 square feet of space at 19 different properties (excluding month-to- month leases). Of this total, approximately 185,000 square feet were for new or renewal leases related to previously leased space and approximately 317,000 square feet were for redeveloped, developed or previously vacant space. Of the 317,000 square feet, approximately 286,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 31,000 square feet for previously vacant space. Rental rates for these new or renewal leases were on average approximately 6.2% higher (on a GAAP basis) than rental rates for expiring leases.
During the first quarter of 2006, we added five properties aggregating approximately 333,000 square feet. We paid approximately $99.5 million cash for the properties. Also during the first quarter of 2006, we added one land parcel with approximately 494,000 developable square feet. We paid approximately $6.5 million cash for the land parcel.
As of March 31, 2006, approximately 85% 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 March 31, 2006, approximately 6% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses. Additionally, as of March 31, 2006, approximately 90% of our leases (on a square footage basis) provided for the recapture of certain capital expenditures and approximately 90% 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.
Based on our current view of existing market conditions and certain current assumptions, we have updated our prior guidance for 2006 FFO per share (diluted) and earnings per share (diluted) as follows:
| | | | |
| | 2006 | | |
FFO per share (diluted) | $ 5.16 | | |
Earnings per share (diluted) | $ 2.32 | | |
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 (universities and not-for-profit institutions), pharmaceutical, biotechnology, life science product, service, biodefense and translational research entities, as well as government agencies. Our portfolio currently consists of 140 properties comprising approximately 9.2 million square feet of office/laboratory space.
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
Ended Ended
March 31, 2006 March 31, 2005
----------------- -----------------
Income statement data
Total revenues $ 68,591 $ 55,055
Expenses
Rental operations 15,443 12,401
General and administrative 6,452 4,445
Interest 14,865 11,321
Depreciation and amortization 15,274 12,506
----------------- -----------------
52,034 40,673
Minority interest 370 --
----------------- -----------------
Income from continuing operations 16,187 14,382
Income from discontinued operations, net 568 607
----------------- -----------------
Net income 16,755 14,989
Dividends on preferred stock 4,022 4,022
----------------- -----------------
Net income available to common stockholders $ 12,733 $ 10,967
================= =================
Weighted average shares of common stock outstanding
Basic 22,322,290 19,468,620
================= =================
Diluted 22,759,795 19,789,798
================= =================
Earnings per share - basic
Continuing operations (net of preferred stock dividends) $ 0.54 $ 0.53
Discontinued operations, net 0.03 0.03
----------------- -----------------
Earnings per share - basic $ 0.57 $ 0.56
================= =================
Earnings per share - diluted
Continuing operations (net of preferred stock dividends) $ 0.53 $ 0.52
Discontinued operations, net 0.03 0.03
----------------- -----------------
Earnings per share - diluted $ 0.56 $ 0.55
================= =================
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 difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") established the measurement tool of Funds From Operations ("FFO"). Since its introduction, FFO has become a widely used non- GAAP financial measure 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 months ended March 31, 2006 and 2005 (in thousands, except per share data):
Three Months Three Months
Ended Ended
March 31, 2006 March 31, 2005
----------------- -----------------
Reconciliation of net income available to common stockholders to
funds from operations available to common stockholders
Net income available to common stockholders $ 12,733 $ 10,967
Add:
Depreciation and amortization (1) 15,443 12,641
Minority interest 370 --
Subtract:
FFO allocable to minority interest (392) --
----------------- -----------------
Funds from operations available to common stockholders $ 28,154 $ 23,608
================= =================
FFO per share
Basic $ 1.26 $ 1.21
================= =================
Diluted $ 1.24 $ 1.19
================= =================
Reconciliation of earnings per share (diluted) to
FFO per share (diluted)
Earnings per share (diluted) $ 0.56 $ 0.55
Depreciation and amortization (1) 0.68 0.64
Minority interest 0.02 --
FFO allocable to minority interest (0.02) --
----------------- -----------------
FFO per share (diluted) $ 1.24 $ 1.19
================= =================
- 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").
Alexandria Real Estate Equities, Inc. and Subsidiaries
Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Quarterly Supplemental Financial Inform
For the Three Months Ended
03/31/2006 12/31/2005 09/30/2005 06/30/2005 03/31/2005
Operational data ----------- ----------- ----------- ----------- -----------
Breakdown of revenues from continuing operations (a)
Rental income $ 52,546 $ 50,231 $ 47,523 $ 45,020 $ 43,053
Tenant recoveries 14,047 13,052 13,153 11,188 11,281
Other income 1,998 1,658 1,350 1,069 721
----------- ----------- ----------- ----------- -----------
Total $ 68,591 $ 64,941 $ 62,026 $ 57,277 $ 55,055
=========== =========== =========== =========== ===========
Funds from operations per share - diluted (b) $ 1.24 $ 1.22 $ 1.21 $ 1.20 $ 1.19
Dividends per share on common stock $ 0.70 $ 0.70 $ 0.68 $ 0.68 $ 0.66
Dividend payout ratio (common stock) 57.0% 57.2% 59.0% 56.8% 58.9%
Straight line rent $ 2,977 $ 1,492 $ 3,020 $ 3,305 $ 2,836
As of
03/31/2006 12/31/2005 09/30/2005 06/30/2005 03/31/2005
Other data ----------- ----------- ----------- ----------- -----------
Number of shares of common stock outstanding
at end of period 22,555,587 22,441,294 22,437,761 21,204,620 21,075,793
Number of properties (c)
Acquired/added/completed during period 6 6 5 5 6
Sold/reconstructed during period -- -- (1) -- --
Owned at end of period 139 133 127 123 118
Rentable square feet (c)
Acquired/added/completed during period 380,043 415,978 301,458 333,788 341,075
Sold/reconstructed during period -- -- (16,500) -- --
Owned at end of period 9,163,779 8,783,736 8,367,758 8,082,800 7,749,012
Debt to total market capitalization (d)
Total debt $ 1,544,430 $ 1,406,666 $ 1,271,698 $ 1,301,934 $ 1,217,917
Preferred stock 193,917 192,419 196,420 197,474 194,692
Common stock 2,150,224 1,806,524 1,855,378 1,557,479 1,356,860
----------- ----------- ----------- ----------- -----------
Total market capitalization $ 3,888,571 $ 3,405,609 $ 3,323,496 $ 3,056,887 $ 2,769,469
=========== =========== =========== =========== ===========
Debt to total market capitalization 39.7% 41.3% 38.3% 42.6% 44.0%
- The historical results above exclude the results of assets "held for sale" which have been reflected as discontinued operations.
- See page 4 for a reconciliation of earnings per share (diluted) to FFO per share (diluted).
- 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 multiplied by the related closing prices at the end of each period presented, plus total debt.
Alexandria Real Estate Equities, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2006 2005
------------ ------------
(Unaudited)
Assets
Rental properties, net $ 1,912,130 $ 1,788,818
Properties under development and land held for
development 343,969 329,338
Cash and cash equivalents 3,430 3,911
Tenant security deposits and other restricted cash 23,125 21,013
Tenant receivables 5,830 4,764
Deferred rent 57,151 54,573
Investments 82,604 82,010
Other assets 82,886 78,023
------------- --------------
Total assets $ 2,511,125 $ 2,362,450
============= ==============
Liabilities and Stockholders' Equity
Secured notes payable $ 770,430 $ 666,666
Unsecured line of credit and unsecured term loan 774,000 740,000
Accounts payable, accrued expenses and
tenant security deposits 93,873 86,391
Dividends payable 19,634 19,478
------------- --------------
Total liabilities 1,657,937 1,512,535
------------- --------------
Minority interest 20,198 20,115
Stockholders' equity:
Series B preferred stock 57,500 57,500
Series C preferred stock 129,638 129,638
Common stock 226 224
Additional paid-in capital 609,120 607,405
Retained earnings -- --
Accumulated other comprehensive income 36,506 35,033
------------- --------------
Total stockholders' equity 832,990 829,800
------------- --------------
Total liabilities and stockholders' equity $ 2,511,125 $ 2,362,450
============= ==============
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
March 31, 2006
(Dollars in thousands)
(Unaudited)
Principal Maturities/Rates
Secured Debt Unsecured Debt
---------------------------- ----------------------------
Weighted Weighted
Average Average
Year Amount Interest Rate(1) Amount Interest Rate(2)
- ----------------------- ------------ ------------- ----------- -------------
2006 $ 33,597 6.32% $ -- --
2007 198,623 6.27% 274,000 6.05% (3)
2008 123,190 6.19% -- --
2009 42,084 6.56% 500,000 6.09% (4)
2010 88,553 6.52% -- --
Thereafter 280,145 6.29% -- --
------------ -----------
Subtotal 766,192 774,000
Unamortized Premium 4,238 --
------------ -----------
Total $ 770,430 $ 774,000
============ ===========
Secured and Unsecured Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Secured Debt $ 770,430 49.9% 6.31% 4.5 Years
Unsecured Debt 774,000 50.1% 6.08% 3.0 Years
----------- ------- -------------- -----------
Total Debt $ 1,544,430 100.0% 6.19% 3.7 Years
=========== ======= ============== ===========
Fixed and Floating Rate Debt Analysis
Weighted
% of Weighted Average Average
Balance Balance Interest Rate Maturity
----------- ------- -------------- -----------
Fixed Rate Debt $ 584,918 37.9% 6.31% 5.3 Years
Floating Rate Debt 959,512 (5) 62.1% 6.12% (5) 2.8 Years
----------- ------- -------------- -----------
Total Debt $ 1,544,430 100.0% 6.19% 3.7 Years
=========== ======= ============== ===========
- The weighted average interest rate related to our secured debt is calculated based on the outstanding debt as of April 1, 2006, and as of January 1st for each year thereafter.
- The weighted average interest rates related to our unsecured line of credit and unsecured term loan are calculated based on borrowings outstanding as of March 31, 2006.
- Unsecured line of credit matures in December 2007 and may be extended at our sole option for an additional one-year period.
- Unsecured term loan matures in December 2009.
- A portion of our floating rate debt is hedged by existing swap agreements (see page 8). The interest rate on floating rate debt shown above does not reflect the impact of such swap agreements.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements(1)
March 31, 2006
(Dollars in thousands)
(Unaudited)
Effective at
Notional March 31, Interest
Transaction Dates Effective Dates Amounts 2006 Pay Rates (2) Termination Dates
- ----------------------- -------------------- ------------ -------------- ------------ -----------------
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 30, 2005 50,000 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 50,000 3.927% July 1, 2008
May 2005 December 30, 2005 25,000 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
December 2005 December 29, 2006 50,000 -- 4.730% November 30, 2009
December 2005 December 29, 2006 50,000 -- 4.740% November 30, 2009
December 2005 January 2, 2008 50,000 -- 4.768% December 31, 2010
--------------
Total Notional Amount in Effect at March 31, 2006 $ 375,000
==============
- For all interest rate swap agreements, interest is received based on one month LIBOR.
- The interest pay rates represent the interest rate we will pay for one month LIBOR under the respective interest rate swap agreement. These rates do not include any spread in addition to one month LIBOR that is due monthly as interest expense under our unsecured line of credit and unsecured term loan.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
-------------------------------- -------------------------------
Quarter Ended Quarter Ended
---------- ---------- --------- ---------- ---------- --------
3/31/2006 3/31/2005 % Change 3/31/2006 3/31/2005 % Change
---------- ---------- --------- ---------- ---------- --------
Revenue (2) $ 48,336 $ 47,374 2.0% $ 46,712 $ 44,704 4.5%
Operating expenses 11,208 10,982 2.0% 11,208 10,982 2.0%
---------- ---------- --------- ---------- ---------- --------
Revenue less
operating expenses $ 37,128 $ 36,392 2.0% $ 35,504 $ 33,722 5.3%
========== ========== ========= ========== ========== ========
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented ("First Quarter Same Properties"). Properties under redevelopment are excluded from same property results.
- Revenue less operating expenses computed under GAAP is total revenue associated with the First Quarter 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 First Quarter 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 quarters ended March 31, 2006 and 2005 for the First Quarter Same Properties were $1,624,000 and $2,670,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent adjustments to rental revenue.
- 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 Properties
(Dollars in thousands)
March 31, 2006 December 31, 2005
----------------------------------------------- -------------
Number of Rentable Annualized Occupancy Occupancy
Properties Square Feet Base Rent Percentage Percentage
----------- ----------- ---------- ----------- -------------
Markets
California - Pasadena 1 31,343 $ 825 100.0% 100.0%
California - San Diego 23 1,070,017 27,463 93.3% 92.2%
California - San Francisco Bay 15 1,043,737 30,684 96.5% 96.5%
Eastern Massachusetts 23 1,376,122 37,012 95.0% 93.6%
New Jersey/Suburban Philadelphia 6 350,749 6,030 98.0% 98.0% (1)
Southeast 10 539,203 9,096 82.4%(2) 85.9% (2)
Suburban Washington D.C. 30 2,410,336 48,445 95.6% 97.0% (1)
Washington - Seattle 10 783,091 23,506 89.7% 87.8%
International - Canada 3 296,362 6,377 100.0% 100.0%
----------- ----------- ---------- ----------- -------------
Total Operating Properties 121 7,900,960 $ 189,438 94.1% 94.3%
=========== =========== ========== =========== =============
Properties Under Redevelopment (3) 15 994,720 16,056 45.6% 45.7%
----------- ----------- ---------- ----------- -------------
Total Properties (Continuing Operations)(1) 136 8,895,680 $ 205,494 88.7% 88.5%
----------- ----------- ---------- ----------- -------------
- Occupancy percentage as of December 31, 2005 excludes three properties totaling 268,099 square feet that are classified as "held for sale" as of March 31, 2006. The occupancy of these three properties was previously included in the occupancy percentage of our operating properties.
- Substantially all of the vacant space is office or warehouse space.
- See Properties Under Redevelopment on page 15.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Three Months Ended March 31, 2006
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 36 297,041 $26.40 -- -- -- --
GAAP Basis 36 297,041 $25.51 -- -- -- --
Renewed/Releasable Space Leased
Cash Basis 14 185,013 $25.63 $26.80 4.6% $3.57 4.1 years
GAAP Basis 14 185,013 $24.51 $26.02 6.2% $3.57 4.1 years
Month-to-Month Leases In Effect
Cash Basis 18 52,495 $28.92 $28.92 -- -- --
GAAP Basis 18 52,495 $28.92 $28.92 -- -- --
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 14 317,383 -- $33.18 -- $5.67 9.4 years
GAAP Basis 14 317,383 -- $37.69 -- $5.67 9.4 years
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 28 502,396 -- $30.83 -- $4.90 7.4 years
GAAP Basis 28 502,396 -- $33.39 -- $4.90 7.4 years
Including Month-to-Month Leases
Cash Basis 46 554,891 -- $30.65 -- -- --
GAAP Basis 46 554,891 -- $32.97 -- -- --
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
March 31, 2006
Square Percentage of Annualized Base Rent
Year of Lease Number of Footage of Aggregate of Expiring Leases
Expiration Leases Expiring Expiring Leases Leased Square Feet (per square foot)
- ------------- --------------- --------------- ------------------ --------------------
2006 67 (1) 726,404 9.0% $24.22
2007 47 937,538 11.6% $26.39
2008 31 651,340 8.1% $25.82
2009 31 546,792 6.8% $22.04
2010 32 742,122 9.2% $22.24
Square Footage of Expiring Leases
Markets 2006 2007
- ----------------------------------- ----------- -----------
California - Pasadena 14,193 3,653
California - San Diego 180,309 129,824
California - San Francisco Bay 86,865 107,715
Eastern Massachusetts 179,789 81,590
New Jersey/Suburban Philadelphia -- 21,000
Southeast 57,532 62,564
Suburban Washington D.C. 151,580 511,650
Washington - Seattle 56,136 19,542
International - Canada -- --
----------- -----------
Total 726,404 (1) 937,538
=========== ===========
- Includes month-to-month leases for approximately 52,000 square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Additions to and Dispositions of Properties
For The Quarter Ended March 31, 2006
(Dollars in thousands)
Acquisition Month of Rentable
Markets Amount Acquisition Square Feet
- -------------------------------------------------- -------------- -------------- --------------
Additions to Operating Properties/Properties
Under Redevelopment
Washington - Seattle $ 5,000 January 24,000
Washington - Seattle 4,850 January 19,053
Eastern Massachusetts 9,400 March 113,045
-------------- --------------
Additions to Operating Properties 19,250 156,098
Eastern Massachusetts 72,715 March 131,547
Southeast 7,500 March 45,841
-------------- --------------
Additions to Properties Under Redevelopment 80,215 177,388 (1)
-------------- --------------
Total Additions to Operating Properties/Properties
Under Redevelopment $ 99,465 333,486
============== ==============
Acquisition Month of Developable
Markets Amount Acquisition Square Feet
- -------------------------------------------------- -------------- -------------- --------------
Additions of Land:
Suburban Washington D.C. $ 6,481 January 494,000
-------------- --------------
Total Additions of Land $ 6,481 494,000
============== ==============
Disposition Month of Rentable
Markets Amount Disposition Square Feet
- -------------------------------------------------- -------------- -------------- --------------
Dispositions:
None (2) N/A N/A N/A
- Approximately 81,000 square feet of the total 177,000 square feet was placed into our active redevelopment program for a permanent change of use to office/laboratory space.
- As of March 31, 2006, three properties totaling 268,099 square feet were classified as "held for sale".
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Development
March 31, 2006
| | Estimated | Total | |
| | In-Service | Rentable | |
Markets | Dates | Square Footage | Status |
| | | | |
San Diego | 2Q06 | 64,000 | Leased |
San Francisco Bay | 4Q06 | 121,000 | Leased |
San Francisco Bay | 4Q07 | 154,000 | Leased/Negotiating |
Suburban Washington D.C. | 2Q06 | 73,000 | Leased/Negotiating |
Seattle | 4Q06 | 50,000 | Leased |
Total | | 462,000 | |
| | | | |
As required under GAAP, interest is being capitalized on these ground-up development projects as activities are ongoing to bring these assets to their intended use. Interest capitalized on ground-up development and other construction projects for the three months ended March 31, 2006 was approximately $7.7 million.
In addition to properties under development, as of March 31, 2006, our asset base contains strategically located ground-up development opportunities for approximately 5.8 million developable square feet of office/laboratory space with an aggregate cost basis of approximately $245 million. See Summary of Imbedded Future Development and Redevelopment Square Footage on page 16.
The current construction cost of these ground-up development projects will average between $250 and $350 per developable square foot. Our aggregate construction costs to date approximate $215 per developable square foot.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Under Redevelopment
March 31, 2006
| | | Total Rentable | |
| | Estimated | Square Footage | Total Rentable |
| | In-Service | Under | Square Footage |
Markets | Dates | Redevelopment | of Property |
| | | | |
San Diego | 2Q06 | 17,590 | 17,590 |
San Diego | 4Q06 | 71,510 | 71,510 |
San Diego | 3Q07 | 87,140 | 87,140 |
San Francisco Bay | 3Q06 | 14,233 | 140,143 |
San Francisco Bay | 3Q06 | 30,000 | 60,000 |
San Francisco Bay | 3Q07 | 58,400 | 58,400 |
Eastern Massachusetts | 1Q07 | 17,187 | 45,820 |
Eastern Massachusetts | 2Q06 | 27,665 | 115,179 |
Eastern Massachusetts | 2Q07 | 26,589 | 26,589 |
Eastern Massachusetts | 1Q08 | 35,652 | 131,547 |
New Jersey/Suburban Philadelphia | 2Q06 | 15,012 | 42,600 |
Southeast | 1Q08 | 45,841 | 45,841 |
Suburban Washington D.C. | 3Q06 | 60,443 | 92,449 |
Seattle | 4Q07 | 12,719 | 27,633 |
Seattle | 2Q06 | 20,894 | 32,279 |
Total | | 540,875 | 994,720 |
Our redevelopment program involves ongoing 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 operating properties 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 actively undergoing redevelopment. Average occupancy for properties under full or partial redevelopment as of March 31, 2006 was 45.6% and is not included in the occupancy of the operating properties. The current construction cost of properties under redevelopment will average between $75 and $100 per square foot. In addition to properties under active redevelopment, as of March 31, 2006 our asset base contains imbedded opportunities for a future permanent change of use to office/laboratory space through redevelopment aggregating approximately 1.1 million rentable square feet. See Summary of Imbedded Future Development and Redevelopment Square Footage on page 16.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Imbedded Future Development and Redevelopment Square Footage
March 31, 2006
Imbedded Future Development and Redevelopment
----------------------------------------------
Development Redevelopment
Markets Square Footage Square Footage Total
- -------------------------------------------- -------------- -------------- --------------
San Francisco Bay 3,422,000 (1) 55,000 3,477,000
San Diego 467,000 (2) 143,000 610,000
Suburban Washington D.C. 886,000 (3) 397,000 1,283,000
Eastern Massachusetts 225,000 179,000 404,000
Washington - Seattle 386,000 (4) 120,000 506,000
Other 430,000 (5) 157,000 587,000
-------------- -------------- --------------
Total Imbedded Future Development and Redevel 5,816,000 1,051,000 6,867,000
============== ============== ==============
A significant portion of our imbedded future development and redevelopment square footage is in the preconstruction phase (entitlement, permitting, design, etc.) of development. As required under GAAP, interest is being capitalized during the preconstruction phase while activities are ongoing to bring these assets to their intended use.
- Approximately 3.4 million developable square feet located in the San Francisco Bay market is in the preconstruction phase of development.
- Approximately 350,000 developable square feet located in the San Diego market is in the preconstruction phase of development.
- Approximately 590,000 developable square feet located in the Suburban Washington D.C. market is in the preconstruction phase of development.
- Approximately 250,000 developable square feet located in the Seattle market is in the preconstruction phase of development.
- Approximately 100,000 developable square feet is in the preconstruction phase of development.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Three Months Ended March 31, 2006
(In thousands)
Property-related capital expenditures(1) | $ 261 |
Leasing costs(2) | $ 88 |
Property-related redevelopment costs(3) | $ 18,534 |
Property-related development costs(3) | $ 29,863 |
- 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 90% 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.
- Amount includes leasing costs related to development and redevelopment projects.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the First Quarter Ended March 31, 2006
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, 2006:
Date: | May 8, 2006 |
Time: | 2:00 P.M. Eastern Daylight Time |
Phone Number: | (913) 981-5509 |
Confirmation Code: | 5289804 |
