Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 15, 2020 | |
Cover [Abstract] | ||
Entity Central Index Key | 0001035443 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-12993 | |
Entity Registrant Name | ALEXANDRIA REAL ESTATE EQUITIES, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 95-4502084 | |
Entity Address, Address Line One | 26 North Euclid Avenue | |
Entity Address, City or Town | Pasadena | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 91101 | |
City Area Code | 626 | |
Local Phone Number | 578-0777 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | ARE | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 134,943,637 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Assets | ||
Investments in real estate | $ 17,600,648 | $ 14,844,038 |
Investments in unconsolidated real estate joint ventures | 330,792 | 346,890 |
Cash and cash equivalents | 446,255 | 189,681 |
Restricted cash | 38,788 | 53,008 |
Tenant receivables | 7,641 | 10,691 |
Deferred rent | 719,552 | 641,844 |
Deferred leasing costs | 266,440 | 270,043 |
Investments | 1,330,945 | 1,140,594 |
Other assets | 1,169,610 | 893,714 |
Total assets | 21,910,671 | 18,390,503 |
Liabilities, Noncontrolling Interests, and Equity | ||
Secured notes payable | 342,363 | 349,352 |
Unsecured senior notes payable | 7,230,819 | 6,044,127 |
Unsecured senior line of credit and commercial paper | 249,989 | 384,000 |
Accounts payable, accrued expenses, and other liabilities | 1,609,340 | 1,320,268 |
Dividends payable | 143,040 | 126,278 |
Total liabilities | 9,575,551 | 8,224,025 |
Commitments and contingencies | ||
Redeemable noncontrolling interests | 11,232 | 12,300 |
Alexandria Real Estate Equities, Inc.’s stockholders’ equity: | ||
Common stock | 1,333 | 1,208 |
Additional paid-in capital | 10,711,119 | 8,874,367 |
Accumulated other comprehensive loss | (10,638) | (9,749) |
Alexandria Real Estate Equities, Inc.’s stockholders’ equity | 10,701,814 | 8,865,826 |
Noncontrolling interests | 1,622,074 | 1,288,352 |
Total equity | 12,323,888 | 10,154,178 |
Total liabilities, noncontrolling interests, and equity | $ 21,910,671 | $ 18,390,503 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue | $ 545,042 | $ 390,484 | $ 1,421,917 | $ 1,123,182 |
Expenses: | ||||
Rental operations | 140,443 | 116,450 | 393,457 | 323,640 |
General and administrative | 36,913 | 27,930 | 100,651 | 79,041 |
Interest | 43,318 | 46,203 | 134,071 | 128,182 |
Depreciation and amortization | 176,831 | 135,570 | 520,354 | 404,094 |
Impairment of real estate | 7,680 | 0 | 22,901 | 0 |
Loss on early extinguishment of debt | 52,770 | 40,209 | 52,770 | 47,570 |
Total expenses | 457,955 | 366,362 | 1,224,204 | 982,527 |
Equity in earnings of unconsolidated real estate joint ventures | 3,778 | 2,951 | 4,555 | 5,359 |
Investment income (loss) | 3,348 | (63,076) | 166,184 | 41,980 |
Gain on sales of real estate | 1,586 | 0 | 1,586 | 0 |
Net income (loss) | 95,799 | (36,003) | 370,038 | 187,994 |
Net income attributable to noncontrolling interests | (14,743) | (11,199) | (40,563) | (27,270) |
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s stockholders | 81,056 | (47,202) | 329,475 | 160,724 |
Dividends on preferred stock | 0 | (1,173) | 0 | (3,204) |
Preferred stock redemption charge | 0 | 0 | 0 | (2,580) |
Net income attributable to unvested restricted stock awards | (1,730) | (1,398) | (5,304) | (4,532) |
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $ 79,326 | $ (49,773) | $ 324,171 | $ 150,408 |
Earnings (loss) per share attributable to Alexandria’s common stockholders – basic and diluted: | ||||
Earnings (loss) per share – basic (USD per share) | $ 0.64 | $ (0.44) | $ 2.62 | $ 1.35 |
Earnings (loss) per share - diluted (USD per share) | $ 0.63 | $ (0.44) | $ 2.61 | $ 1.35 |
Income from rentals | ||||
Revenue | $ 543,412 | $ 385,776 | $ 1,416,873 | $ 1,112,143 |
Other income | ||||
Revenue | $ 1,630 | $ 4,708 | $ 5,044 | $ 11,039 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 95,799 | $ (36,003) | $ 370,038 | $ 187,994 |
Unrealized gains (losses) on interest rate hedge agreements: | ||||
Unrealized interest rate hedge losses arising during the period | 0 | (79) | 0 | (1,763) |
Reclassification adjustment for amortization to interest expense included in net income | 0 | 38 | 0 | (1,777) |
Reclassification of losses related to terminated interest rate hedge instruments to interest expense included in net income (loss) | 0 | 1,702 | 0 | 1,702 |
Unrealized gains (losses) on interest rate hedge agreements, net | 0 | 1,661 | 0 | (1,838) |
Unrealized gains (losses) on foreign currency translation: | ||||
Unrealized foreign currency translation gains (losses) arising during the period | 2,442 | (2,076) | (889) | 724 |
Unrealized gains (losses) on foreign currency translation, net | 2,442 | (2,076) | (889) | 724 |
Total other comprehensive income (loss) | 2,442 | (415) | (889) | (1,114) |
Comprehensive income (loss) | 98,241 | (36,418) | 369,149 | 186,880 |
Less: comprehensive income attributable to noncontrolling interests | (14,743) | (11,199) | (40,563) | (27,270) |
Comprehensive income (loss) attributable to Alexandria Real Estate Equities, Inc.’s stockholders | $ 83,498 | $ (47,617) | $ 328,586 | $ 159,610 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity and Noncontrolling Interests (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Redeemable Noncontrolling Interests | 7.00% Series D Cumulative Convertible Preferred Stock | 7.00% Series D Cumulative Convertible Preferred StockPreferred Stock | 7.00% Series D Cumulative Convertible Preferred StockAdditional Paid-In Capital | 7.00% Series D Cumulative Convertible Preferred StockRetained Earnings |
Dividends declared on common stock (per share) | $ 2.97 | ||||||||||
Dividends declared on preferred stock (USD per share) | $ 1.3125 | ||||||||||
Beginning balance (shares) at Dec. 31, 2018 | 111,011,816 | ||||||||||
Beginning balance at Dec. 31, 2018 | $ 7,883,928 | $ 1,110 | $ 7,286,954 | $ 0 | $ (10,435) | $ 541,963 | $ 64,336 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net income | 187,340 | 160,724 | 26,616 | ||||||||
Total other comprehensive income (loss) | (1,114) | (1,114) | |||||||||
Contributions from and sales of noncontrolling interests | 1,012,309 | 381,339 | 630,970 | ||||||||
Distributions to noncontrolling interests | (38,260) | (38,260) | |||||||||
Issuances of common stock (in shares) | 1,684,484 | ||||||||||
Issuance of common stock | 235,487 | $ 17 | 235,470 | ||||||||
Issuances pursuant to stock plan (in shares) | 654,067 | ||||||||||
Issuances pursuant to stock plan | 50,637 | $ 7 | 50,630 | ||||||||
Taxes paid related to net settlement of equity awards (in shares) | (177,443) | ||||||||||
Taxes paid related to net settlement of equity awards | (25,150) | $ 2 | (25,148) | ||||||||
Repurchase of 7.00% Series D Preferred Stock | $ (9,240) | (6,875) | $ 215 | $ (2,580) | |||||||
Dividends declared on common stock | (337,687) | (337,687) | |||||||||
Dividends declared on preferred stock | (3,204) | (3,204) | |||||||||
Reclassification of distributions in excess of earnings | 0 | (186,272) | 186,272 | ||||||||
Ending balance (shares) at Sep. 30, 2019 | 113,172,924 | ||||||||||
Ending balance at Sep. 30, 2019 | $ 8,951,521 | $ 1,132 | 7,743,188 | 0 | (11,549) | 1,161,289 | 57,461 | ||||
Beginning balance at Dec. 31, 2018 | $ 10,786 | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Net Income | 654 | ||||||||||
Contribution from noncontrolling interests | 1,281 | ||||||||||
Distributions to noncontrolling interests | (622) | ||||||||||
Ending balance at Sep. 30, 2019 | 12,099 | ||||||||||
Dividends declared on common stock (per share) | $ 1 | ||||||||||
Dividends declared on preferred stock (USD per share) | $ 0.4375 | ||||||||||
Beginning balance (shares) at Jun. 30, 2019 | 111,985,568 | ||||||||||
Beginning balance at Jun. 30, 2019 | $ 8,400,475 | $ 1,120 | 7,581,573 | 0 | (11,134) | 771,455 | 57,461 | ||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net income | (36,222) | (47,202) | 10,980 | ||||||||
Total other comprehensive income (loss) | (415) | (415) | |||||||||
Contributions from and sales of noncontrolling interests | 572,032 | 179,093 | 392,939 | ||||||||
Distributions to noncontrolling interests | (14,085) | (14,085) | |||||||||
Issuances of common stock (in shares) | 1,082,000 | ||||||||||
Issuance of common stock | 150,093 | $ 11 | 150,082 | ||||||||
Issuances pursuant to stock plan (in shares) | 130,376 | ||||||||||
Issuances pursuant to stock plan | 16,452 | $ 2 | 16,450 | ||||||||
Taxes paid related to net settlement of equity awards (in shares) | (25,020) | ||||||||||
Taxes paid related to net settlement of equity awards | (21,064) | $ 1 | (21,063) | ||||||||
Dividends declared on common stock | (114,572) | (114,572) | |||||||||
Dividends declared on preferred stock | (1,173) | (1,173) | |||||||||
Reclassification of distributions in excess of earnings | 0 | (162,947) | 162,947 | ||||||||
Ending balance (shares) at Sep. 30, 2019 | 113,172,924 | ||||||||||
Ending balance at Sep. 30, 2019 | $ 8,951,521 | $ 1,132 | 7,743,188 | 0 | (11,549) | 1,161,289 | $ 57,461 | ||||
Beginning balance at Jun. 30, 2019 | 10,994 | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Net Income | 219 | ||||||||||
Contribution from noncontrolling interests | 1,093 | ||||||||||
Distributions to noncontrolling interests | (207) | ||||||||||
Ending balance at Sep. 30, 2019 | 12,099 | ||||||||||
Dividends declared on common stock (per share) | $ 3.15 | ||||||||||
Beginning balance (shares) at Dec. 31, 2019 | 120,800,315 | ||||||||||
Beginning balance at Dec. 31, 2019 | $ 10,154,178 | $ 1,208 | 8,874,367 | 0 | (9,749) | 1,288,352 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net income | 369,355 | 329,475 | 39,880 | ||||||||
Total other comprehensive income (loss) | (889) | (889) | |||||||||
Contributions from and sales of noncontrolling interests | 414,025 | 56,026 | 357,999 | ||||||||
Distributions to noncontrolling interests | (64,157) | (64,157) | |||||||||
Issuances of common stock (in shares) | 12,051,916 | ||||||||||
Issuance of common stock | 1,813,573 | $ 120 | 1,813,453 | ||||||||
Issuances pursuant to stock plan (in shares) | 573,361 | ||||||||||
Issuances pursuant to stock plan | 64,330 | $ 6 | 64,324 | ||||||||
Taxes paid related to net settlement of equity awards (in shares) | (113,806) | ||||||||||
Taxes paid related to net settlement of equity awards | (17,341) | $ (1) | (17,340) | ||||||||
Dividends declared on common stock | (406,702) | (406,702) | |||||||||
Reclassification of distributions in excess of earnings | 0 | (79,711) | 79,711 | ||||||||
Ending balance (shares) at Sep. 30, 2020 | 133,311,786 | ||||||||||
Ending balance at Sep. 30, 2020 | 12,323,888 | $ 1,333 | 10,711,119 | 0 | (10,638) | 1,622,074 | |||||
Beginning balance at Dec. 31, 2019 | 12,300 | 12,300 | |||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Net Income | 683 | ||||||||||
Contribution from noncontrolling interests | 187 | ||||||||||
Distributions to noncontrolling interests | (1,938) | ||||||||||
Ending balance at Sep. 30, 2020 | $ 11,232 | 11,232 | |||||||||
Dividends declared on common stock (per share) | $ 1.06 | ||||||||||
Beginning balance (shares) at Jun. 30, 2020 | 124,558,619 | ||||||||||
Beginning balance at Jun. 30, 2020 | $ 11,056,854 | $ 1,246 | 9,443,274 | 0 | (13,080) | 1,625,414 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Net income | 95,551 | 81,056 | 14,495 | ||||||||
Total other comprehensive income (loss) | 2,442 | 2,442 | |||||||||
Contributions from and sales of noncontrolling interests | 8,561 | 15 | 8,546 | ||||||||
Distributions to noncontrolling interests | (26,381) | (26,381) | |||||||||
Issuances of common stock (in shares) | 8,659,294 | ||||||||||
Issuance of common stock | 1,309,235 | $ 86 | 1,309,149 | ||||||||
Issuances pursuant to stock plan (in shares) | 102,072 | ||||||||||
Issuances pursuant to stock plan | 21,988 | $ 1 | 21,987 | ||||||||
Taxes paid related to net settlement of equity awards (in shares) | (8,199) | ||||||||||
Taxes paid related to net settlement of equity awards | (1,322) | $ 0 | (1,322) | ||||||||
Dividends declared on common stock | (143,040) | (143,040) | |||||||||
Reclassification of distributions in excess of earnings | 0 | (61,984) | 61,984 | ||||||||
Ending balance (shares) at Sep. 30, 2020 | 133,311,786 | ||||||||||
Ending balance at Sep. 30, 2020 | 12,323,888 | $ 1,333 | $ 10,711,119 | $ 0 | $ (10,638) | $ 1,622,074 | |||||
Beginning balance at Jun. 30, 2020 | 12,122 | ||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||
Net Income | 248 | ||||||||||
Contribution from noncontrolling interests | 94 | ||||||||||
Distributions to noncontrolling interests | (1,232) | ||||||||||
Ending balance at Sep. 30, 2020 | $ 11,232 | $ 11,232 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating Activities | ||
Net income (loss) | $ 370,038 | $ 187,994 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 520,354 | 404,094 |
Impairment of real estate | 22,901 | 0 |
Gain on sale of real estate | (1,586) | 0 |
Loss on early extinguishment of debt | 52,770 | 47,570 |
Equity in earnings of unconsolidated real estate joint ventures | (4,555) | (5,359) |
Distributions of earnings from unconsolidated real estate joint ventures | 3,720 | 2,607 |
Amortization of loan fees | 7,589 | 6,864 |
Amortization of debt premiums | (2,686) | (2,870) |
Amortization of acquired below-market leases | (43,730) | (20,976) |
Deferred rent | (72,786) | (79,835) |
Stock compensation expense | 32,108 | 33,401 |
Investment income | (166,184) | (41,980) |
Changes in operating assets and liabilities: | ||
Tenant receivables | 2,486 | (886) |
Deferred leasing costs | (35,280) | (34,374) |
Other assets | (6,094) | (4,986) |
Accounts payable, accrued expenses, and other liabilities | 29,876 | 14,302 |
Net cash provided by operating activities | 708,941 | 505,566 |
Proceeds from sale of real estate | 199,537 | 0 |
Investing Activities | ||
Proceeds from sale of real estate | 199,537 | 0 |
Additions to real estate | (1,072,102) | (914,722) |
Purchases of real estate | (1,989,648) | (1,289,319) |
Change in escrow deposits | (7,041) | 1,899 |
Investments in unconsolidated real estate joint ventures | (3,291) | (99,955) |
Return of capital from unconsolidated real estate joint ventures | 20,225 | 0 |
Additions to non-real estate investments | (116,366) | (133,866) |
Sales of non-real estate investments | 103,670 | 85,093 |
Net cash used in investing activities | (2,865,016) | (2,350,870) |
Financing Activities | ||
Repayments of borrowings from secured notes payable | (4,741) | (304,455) |
Proceeds from issuance of unsecured senior notes payable | 1,697,651 | 2,721,169 |
Repayments of unsecured senior notes payable | 500,000 | 950,000 |
Borrowings from unsecured senior line of credit | 2,700,000 | 4,068,000 |
Repayments of borrowings from unsecured senior line of credit | (3,084,000) | (3,933,000) |
Repayments of borrowings from unsecured senior bank term loan | 0 | 350,000 |
Premium paid for early extinguishment of debt | 48,653 | 34,677 |
Proceeds from issuances under commercial paper program | 18,818,900 | 0 |
Repayments of borrowings under commercial paper program | 18,568,900 | 0 |
Payments of loan fees | (16,990) | (33,854) |
Taxes paid related to net settlement of equity awards | (16,231) | (25,150) |
Repurchase of 7.00% Series D cumulative convertible preferred stock | 0 | (9,240) |
Proceeds from issuance of common stock | 1,813,573 | 235,487 |
Dividends on common stock | (389,940) | (332,458) |
Dividends on preferred stock | 0 | (3,138) |
Contributions from and sales of noncontrolling interests | 64,207 | 1,015,874 |
Distributions to and redemption of noncontrolling interests | (66,095) | (38,882) |
Net cash provided by financing activities | 2,398,781 | 2,025,676 |
Effect of foreign exchange rate changes on cash and cash equivalents | (352) | 468 |
Net increase in cash, cash equivalents, and restricted cash | 242,354 | 180,840 |
Cash, cash equivalents, and restricted cash as of the beginning of period | 242,689 | 272,130 |
Cash, cash equivalents, and restricted cash as of the end of period | 485,043 | 452,970 |
Supplemental Disclosures and Non-Cash Investing and Financing Activities: | ||
Cash paid during the period for interest, net of interest capitalized | 146,371 | 125,164 |
Accrued construction for current-period additions to real estate | 205,771 | 211,691 |
Assumption of secured notes payable in connection with purchase of properties | 0 | (28,200) |
Right-of-use asset | 67,283 | 267,559 |
Lease liability | (67,283) | (273,545) |
Contribution of assets from real estate joint venture partner | 350,000 | 0 |
Issuance of noncontrolling interest to joint venture partner | $ (292,930) | $ 0 |
Organization and basis of prese
Organization and basis of presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and basis of presentation | ORGANIZATION AND BASIS OF PRESENTATION Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500 ® urban office REIT, is the first, longest-tenured, and pioneering owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations. As used in this quarterly report on Form 10-Q, references to the “Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries. The accompanying unaudited consolidated financial statements include the accounts of Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminated. We have prepared the accompanying interim consolidated financial statements in accordance with GAAP and in conformity with the rules and regulations of the SEC. In our opinion, the interim consolidated financial statements presented herein reflect all adjustments, of a normal recurring nature, that are necessary to fairly present the interim consolidated financial statements. The results of operations for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2019. Any references to our market capitalization, number or quality of buildings or tenants, quality of location, square footage, number of leases, or occupancy percentage, and any amounts derived from these values in these notes to consolidated financial statements, are outside the scope of our independent registered public accounting firm’s review. |
Summary of significant accounti
Summary of significant accounting policies | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of significant accounting policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation On an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly owned by us in accordance with the consolidation guidance. Our evaluation considers all of our variable interests, including equity ownership, as well as fees paid to us for our involvement in the management of each partially owned entity. To fall within the scope of the consolidation guidance, an entity must meet both of the following criteria: • The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity can be in the form of a partnership, limited liability company, or corporation, among others; and • We have a variable interest in the legal entity – i.e., variable interests that are contractual, such as equity ownership, or other financial interests that change with changes in the fair value of the entity’s net assets. If an entity does not meet both criteria above, we apply other accounting literature, such as the cost or equity method of accounting. If an entity does meet both criteria above, we evaluate such entity for consolidation under either the variable interest model if the legal entity meets any of the following characteristics to qualify as a VIE, or under the voting model for all other legal entities that are not VIEs. A legal entity is determined to be a VIE if it has any of the following three characteristics: 1) The entity does not have sufficient equity to finance its activities without additional subordinated financial support; 2) The entity is established with non-substantive voting rights (i.e., the entity deprives the majority economic interest holder(s) of voting rights); or 3) The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion if they lack any of the following: • The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence the entity’s economic performance, as evidenced by: • Substantive participating rights in day-to-day management of the entity’s activities; or • Substantive kick-out rights over the party responsible for significant decisions; • The obligation to absorb the entity’s expected losses; or • The right to receive the entity’s expected residual returns. Our real estate joint ventures consist of limited partnerships or limited liability companies. For an entity structured as a limited partnership or a limited liability company, our evaluation of whether the equity holders (equity partners other than the general partner or the managing member of a joint venture) lack the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members (the noncontrolling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows: • Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating decisions made in the ordinary course of business that most significantly influence the entity’s economic performance. • Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause. If we conclude that any of the three characteristics of a VIE are met, including that the equity holders lack the characteristics of a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model. Variable interest model If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits — that is, (i) we have the power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power), and (ii) we have the obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE (benefits). We consolidate VIEs whenever we determine that we are the primary beneficiary. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements for information on specific joint ventures that qualify as VIEs. If we have a variable interest in a VIE but are not the primary beneficiary, we account for our investment using the equity method of accounting. Voting model If a legal entity fails to meet any of the three characteristics of a VIE (i.e., insufficiency of equity, existence of non-substantive voting rights, or lack of a controlling financial interest), we then evaluate such entity under the voting model. Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares and that other equity holders do not have substantive participating rights. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements for further information on our unconsolidated real estate joint ventures that qualify for evaluation under the voting model. Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and equity; the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements; and the amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Investments in real estate Evaluation of business combination or asset acquisition We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the definition of a business is accounted for as an asset acquisition. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business: • Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or • The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction). An acquired process is considered substantive if: • The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable, and experienced in performing the process; • The process cannot be replaced without significant cost, effort, or delay; or • The process is considered unique or scarce. Generally, our acquisitions of real estate or in-substance real estate do not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort, or delay. When evaluating acquired service or management contracts, we consider the nature of the services performed, the terms of the contract relative to similar arm’s-length contracts, and the availability of comparable vendors in evaluating whether the acquired contract constitutes a substantive process. Recognition of real estate acquired We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the definition of a business is accounted for as an asset acquisition. For acquisitions of real estate or in-substance real estate that are accounted for as business combinations, we allocate the acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, noncontrolling interests, and previously existing ownership interests at fair value as of the acquisition date. Assets include intangible assets such as tenant relationships, acquired in-place leases, and favorable intangibles associated with in-place leases in which we are the lessor. Liabilities include unfavorable intangibles associated with in-place leases in which we are the lessor. In addition, for acquired in-place finance or operating leases in which we are the lessee, acquisition consideration is allocated to lease liabilities and related right-of-use assets, adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. Any excess (deficit) of the consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill (bargain purchase gain). Acquisition costs related to business combinations are expensed as incurred. Generally, we expect that acquisitions of real estate or in-substance real estate will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related intangible assets). The accounting model for asset acquisitions is similar to the accounting model for business combinations, except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. Any excess (deficit) of the consideration transferred relative to the sum of the fair value of the assets acquired and liabilities assumed is allocated to the individual assets and liabilities based on their relative fair values. As a result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. Incremental and external direct acquisition costs (such as legal and other third-party services) are capitalized. We exercise judgment to determine the key assumptions used to allocate the purchase price of real estate acquired among its components. The allocation of the consideration to the various components of properties acquired during the year can have an effect on our net income due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related depreciation and amortization expense in our consolidated statements of operations. We apply judgment in utilizing available comparable market information to assess relative fair value. We assess the relative fair values of tangible and intangible assets and liabilities based on available comparable market information, including estimated replacement costs, rental rates, and recent market transactions. In addition, we may use estimated cash flow projections that utilize appropriate discount and capitalization rates. Estimates of future cash flows are based on a number of factors, including the historical operating results, known and anticipated trends, and market/economic conditions that may affect the property. The value of tangible assets acquired is based upon our estimation of fair value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. If there is a bargain fixed-rate renewal option for the period beyond the noncancellable lease term of an in-place lease, we evaluate intangible factors such as the business conditions in the industry in which the lessee operates, the economic conditions in the area in which the property is located, and the ability of the lessee to sublease the property during the renewal term, in order to determine the likelihood that the lessee will renew. When we determine there is reasonable assurance that such bargain purchase option will be exercised, we consider the option in determining the intangible value of such lease and its related amortization period. We also recognize the relative fair values of assets acquired, the liabilities assumed, and any noncontrolling interest in acquisitions of less than a 100% interest when the acquisition constitutes a change in control of the acquired entity. The values allocated to buildings and building improvements, land improvements, tenant improvements, and equipment are depreciated on a straight-line basis using the shorter of the respective ground lease term, estimated useful life, or up to 40 years, for buildings and building improvements; estimated life, or up to 20 years, for land improvements; the respective lease term or estimated useful life for tenant improvements; and the shorter of the lease term or estimated useful life for equipment. The values of acquired in-place leases and associated favorable intangibles (i.e., acquired above-market leases) are classified in other assets in our consolidated balance sheets and are amortized over the remaining terms of the related leases as a reduction of income from rentals in our consolidated statements of operations. The values of unfavorable intangibles (i.e., acquired below-market leases) associated with acquired in-place leases are classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets and are amortized over the remaining terms of the related leases as an increase in income from rentals in our statements of operations. Capitalized project costs We capitalize project costs, including pre-construction costs, interest, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, pre-construction, or construction of a project. Capitalization of development, redevelopment, pre-construction, and construction costs is required while activities are ongoing to prepare an asset for its intended use. Fluctuations in our development, redevelopment, pre-construction, and construction activities could result in significant changes to total expenses and net income. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Should development, redevelopment, pre-construction, or construction activity cease, interest, property taxes, insurance, and certain other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and maintenance are expensed as incurred. Real estate sales A property is classified as held for sale when all of the following criteria for a plan of sale have been met: (i) management, having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (iii) an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within one year; (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Depreciation of assets ceases upon designation of a property as held for sale. If the disposal of a property represents a strategic shift that has (or will have) a major effect on our operations or financial results, such as (i) a major line of business, (ii) a major geographic area, (iii) a major equity method investment, or (iv) other major parts of an entity, then the operations of the property, including any interest expense directly attributable to it, are classified as discontinued operations in our consolidated statements of operations, and amounts for all prior periods presented are reclassified from continuing operations to discontinued operations. The disposal of an individual property generally will not represent a strategic shift and therefore will typically not meet the criteria for classification as a discontinued operation. We recognize gains/losses on real estate sales in accordance with the accounting standard on the derecognition of nonfinancial assets arising from contracts with noncustomers. Our ordinary output activities consist of the leasing of space to our tenants in our operating properties, not the sales of real estate. Therefore, sales of real estate (in which we are the seller) qualify as contracts with noncustomers. In our transactions with noncustomers, we apply certain recognition and measurement principles consistent with our method of recognizing revenue arising from contracts with customers. Derecognition of the asset is based on the transfer of control. If a real estate sales contract includes our ongoing involvement with the property, then we evaluate each promised good or service under the contract to determine whether it represents a separate performance obligation, constitutes a guarantee, or prevents the transfer of control. If a good or service is considered a separate performance obligation, an allocated portion of the transaction price is recognized as revenue as we transfer the related good or service to the buyer. The recognition of gain or loss on the sale of a partial interest also depends on whether we retain a controlling or noncontrolling interest in the property. If we retain a controlling interest in the property upon completion of the sale, we continue to reflect the asset at its book value, record a noncontrolling interest for the book value of the partial interest sold, and recognize additional paid-in capital for the difference between the consideration received and the partial interest at book value. Conversely, if we retain a noncontrolling interest upon completion of the sale of a partial interest of real estate, we would recognize a gain or loss as if 100% of the real estate were sold. Prior to and subsequent to the end of each quarter, we review current activities and changes in the business conditions of all of our long-lived assets to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Long-lived assets to be held and used, including our rental properties, CIP, land held for development, right-of-use assets related to operating leases in which we are the lessee, and intangibles, are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Triggering events or impairment indicators for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the asset, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. If an impairment charge is not required to be recognized, the recognition of depreciation or amortization is adjusted prospectively, as necessary, to reduce the carrying amount of the real estate to its estimated disposition value over the remaining period that the asset is expected to be held and used. We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives. We use the held for sale impairment model for our properties classified as held for sale. The held for sale impairment model is different from the held and used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held for sale. International operations In addition to operating properties in the U.S., we have three operating properties in Canada and one operating property in China. The functional currency for our subsidiaries operating in the U.S. is the U.S. dollar. The functional currencies for our foreign subsidiaries are the local currencies in each respective country. The assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect as of the financial statement date. Revenue and expense accounts of our foreign subsidiaries are translated using the weighted-average exchange rate for the periods presented. Gains or losses resulting from the translation are classified in accumulated other comprehensive income as a separate component of total equity and are excluded from net income. Whenever a foreign investment meets the criteria for classification as held for sale, we evaluate the recoverability of the investment under the held for sale impairment model. We may recognize an impairment charge if the carrying amount of the investment exceeds its fair value less cost to sell. In determining an investment’s carrying amount, we consider its net book value and any cumulative unrealized foreign currency translation adjustment related to the investment. The appropriate amounts of foreign exchange rate gains or losses classified in accumulated other comprehensive income are reclassified to net income when realized upon the sale of our investment or upon the complete or substantially complete liquidation of our investment. Investments We hold investments in publicly traded companies and privately held entities primarily involved in the life science, technology, and agtech industries. As a REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10%. Our equity investments (except those accounted for under the equity method and those that result in consolidation of the investee) are measured as follows: • Investments in publicly traded companies are classified as investments with readily determinable fair values and are presented at fair value in our consolidated balance sheets, with changes in fair value recognized in net income. The fair values for our investments in publicly traded companies are determined based on sales prices or quotes available on securities exchanges. • Investments in privately held entities without readily determinable fair values fall into two categories: • Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships, are presented at fair value using NAV as a practical expedient, with changes in fair value recognized in net income. We use NAV per share reported by limited partnerships generally without adjustment, unless we are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the investment at our reporting date. We disclose the timing of liquidation of an investee’s assets and the date when redemption restrictions will lapse (or indicate if this timing is unknown) if the investee has communicated this information to us or has announced it publicly. • Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income. For investments in privately held entities that do not report NAV per share, an observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution preferences, and conversion rights to the investments we hold. We monitor investments in privately held entities that do not report NAV per share throughout the year for new developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements, capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators: (i) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee; (ii) a significant adverse change in the regulatory, economic, or technological environment of the investee, (iii) a significant adverse change in the general market condition, including the research and development of technology and products that the investee is bringing or attempting to bring to the market, or (iv) significant concerns about the investee’s ability to continue as a going concern. If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value. Investments in privately held entities are accounted for under the equity method, unless our interest in the entity is deemed to be so minor that we have virtually no influence over the entity’s operating and financial policies. Under the equity method of accounting, we initially recognize our investment at cost and adjust the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. We had no investments accounted for under the equity method as of September 30, 2020. We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified within investment income. Unrealized gains and losses represent changes in fair value for investments in publicly traded companies, changes in NAV, as a practical expedient to estimate fair value, for investments in privately held entities that report NAV per share, and observable price changes on our investments in privately held entities that do not report NAV per share. Impairments are realized losses, which result in an adjusted cost, and represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share to their estimated fair value. Realized gains and losses represent the difference between proceeds received upon disposition of investments and their historical or adjusted cost. In April 2019, the FASB issued an accounting standard that amends the financial instruments standard by clarifying that all private investments that do not report NAV per share and are adjusted under the measurement alternative (for observable price changes and impairments) described above represent nonrecurring fair value measurement adjustments and therefore require applicable fair value disclosures, including disclosures about the level of the fair value hierarchy within which the fair value measurements are categorized. The accounting standard became effective for us and was adopted on January 1, 2020. Beginning in 2020, pursuant to the requirements of this new standard, we provide incremental fair value disclosures related to our investments in privately held entities that do not report NAV per share in Note 9 – “Fair value measurements” to these unaudited consolidated financial statements. Revenues The table below provides detail of our consolidated total revenues for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 539,001 $ 372,593 $ 1,398,084 $ 1,074,395 Direct financing lease 619 607 1,847 1,812 Revenues subject to the lease accounting standard 539,620 373,200 1,399,931 1,076,207 Revenues subject to the revenue recognition accounting standard 3,792 12,576 16,942 35,936 Income from rentals 543,412 385,776 1,416,873 1,112,143 Other income 1,630 4,708 5,044 11,039 Total revenues $ 545,042 $ 390,484 $ 1,421,917 $ 1,123,182 During the three and nine months ended September 30, 2020, revenues that were subject to the lease accounting standard aggregated $539.6 million and $1.4 billion, respectively, and represented 99.0% and 98.5%, respectively, of our total revenues. During the three and nine months ended September 30, 2020, our total revenues also included $5.4 million, or 1.0%, and $22.0 million, or 1.5%, respectively, subject to other accounting guidance. Our other income consisted primarily of construction management fees and interest income earned during the three and nine months ended September 30, 2020. For a detailed discussion related to our revenue streams, refer to the “Lease accounting” and “Recognition of revenue arising from contracts with customers” sections within this Note 2 to these unaudited consolidated financial statements. Lease accounting Transition On January 1, 2019, we adopted a new lease accounting standard that sets principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). The new lease accounting standard required the use of the modified retrospective transition method. Upon adoption of the new lease accounting standard, we elected the following practical expedients and accounting policies provided by this lease standard: • Package of practical expedients – required us not to reevaluate our existing or expired leases as of January 1, 2019, under the new lease accounting standard. • Optional transition method practical expedient – required us to apply the new lease accounting standard prospectively from the adoption date of January 1, 2019. • Single component accounting policy – required us to account for lease and nonlease components within a lease under the new lease accounting standard if certain criteria are met. • Land easements practical expedient – required us to continue to account for land easements existing as of January 1, 2019, under the accounting standards applied to them prior to January 1, 2019. • Short-term lease accounting policy – required us not to record the related lease liabilities and right-of-use as |
Investments in real estate
Investments in real estate | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
Investments in real estate | INVESTMENTS IN REAL ESTATE Our consolidated investments in real estate, including real estate assets held for sale as described in Note 15 – “Assets classified as held for sale” to these unaudited consolidated financial statements, consisted of the following as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Rental properties: Land (related to rental properties) $ 2,504,345 $ 2,225,785 Buildings and building improvements 13,323,098 11,775,132 Other improvements 1,435,597 1,277,862 Rental properties 17,263,040 15,278,779 Development and redevelopment of new Class A properties: Development and redevelopment projects 2,786,649 2,057,084 Future development projects 594,877 182,746 Gross investments in real estate 20,644,566 17,518,609 Less: accumulated depreciation (3,074,757) (2,704,657) Net investments in real estate – North America 17,569,809 14,813,952 Net investments in real estate – Asia 30,839 30,086 Investments in real estate $ 17,600,648 $ 14,844,038 Acquisitions Our real estate asset acquisitions during the nine months ended September 30, 2020, consisted of the following (dollars in thousands): Square Footage Market Number of Properties Future Development Active Redevelopment Operating With Future Development/Redevelopment Operating Purchase Price Greater Boston 1 — — — 509,702 $ 226,512 San Francisco 5 260,000 — 300,010 582,309 105,000 (1) San Diego 2 — — — 219,628 102,250 Other 3 35,000 — 71,021 180,960 50,817 Three months ended March 31, 2020 11 295,000 — 371,031 1,492,599 484,579 San Francisco 2 700,000 — 26,738 — 113,250 San Diego 1 200,000 — 41,475 — 43,000 Other 1 544,825 63,774 — — 59,000 Three months ended June 30, 2020 4 1,444,825 63,774 68,213 — 215,250 Greater Boston 4 890,000 — 515,273 243,082 435,564 San Francisco 1 — — — 104,011 115,200 San Diego 2 240,000 — 139,135 — 97,500 Research Triangle 16 — 652,381 100,145 1,485,621 590,412 Other 1 327,488 — 42,380 — 44,244 Three months ended September 30, 2020 24 1,457,488 652,381 796,933 1,832,714 1,282,920 Nine months ended September 30, 2020 39 3,197,313 716,155 1,236,177 3,325,313 $ 1,982,749 (2) (1) In January 2020, we formed a real estate joint venture with subsidiaries of Boston Properties, Inc. Amount excludes our partner’s contributed real estate assets with a total fair market value of $350.0 million. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements for additional information. (2) Represents the aggregate contractual purchase price of our acquisitions, which differ from purchases of real estate in our consolidated statements of cash flows due to closing costs and other acquisition adjustments such as prorations of rents and expenses. Based upon our evaluation of each acquisition, we determined that substantially all of the fair value related to each acquisition is concentrated in a single identifiable asset or a group of similar identifiable assets, or is associated with a land parcel with no operations. Accordingly, each transaction did not meet the definition of a business and therefore was accounted for as an asset acquisition. In each of these transactions, we allocated the total consideration for each acquisition to the individual assets and liabilities acquired on a relative fair value basis. During the nine months ended September 30, 2020, we acquired 39 properties for an aggregate purchase price of $2.0 billion. In connection with our acquisitions, we recorded in-place leases aggregating $247.8 million and below-market leases in which we are the lessor aggregating $141.5 million. As of September 30, 2020, the weighted-average amortization period remaining on our in-place and below-market leases acquired during the nine months ended September 30, 2020, was 8.8 years and 10.6 years, respectively, and 9.5 years in total. In January 2020, we formed a real estate joint venture with subsidiaries of Boston Properties, Inc. through our contribution of real estate assets and are targeting a 51% ownership interest over time. Our partner contributed three office buildings, aggregating 776,003 RSF, at 601, 611, and 651 Gateway Boulevard, and land supporting 260,000 SF of future development with aggregate fair market value of $350.0 million. For the discussion of our formation of consolidated real estate joint venture, refer to the “Formation of a consolidated real estate joint venture, impairment of an unconsolidated real estate joint venture, and sales of partial interests” section within Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements. Sales of real estate assets and impairment charges For the discussion of our sales of partial interests in 681, 685, and 701 Gateway Boulevard in our South San Francisco submarket during the three months ended March 31, 2020, and sales of properties at 9808 and 9868 Scranton Road in our Sorrento Mesa submarket during the three months ended June 30, 2020, refer to the “Formation of a consolidated real estate joint venture, impairment of an unconsolidated real estate joint venture, and sales of partial interests” section within Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements. Impairment charges During the nine months ended September 30, 2020, we recognized impairment charges aggregating $22.9 million, as described below. We recognized impairment charges aggregating $15.2 million, which primarily consisted of a $10 million write-off of the pre-acquisition deposit for a previously pending acquisition of an operating tech office property for which our revised economic projections declined from our initial underwriting. We recognized this impairment charge in April 2020 concurrently with the submission of our notice to terminate the transaction. In addition, during the nine months ended September 30, 2020, we recognized impairment charges of $7.7 million primarily related to our real estate asset located at 945 Market Street in our SoMa submarket to lower the asset’s carrying amount to its estimated fair value less costs to sell. In September 2020, we completed the sale of the real estate asset for a sales price of $198.0 million with no gain or loss. Refer to Note 15 – “Assets classified as held for sale” to these unaudited consolidated financial statements for additional information. |
Consolidated and unconsolidated
Consolidated and unconsolidated real estate joint ventures | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Consolidated and unconsolidated real estate joint ventures | CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES From time to time, we enter into joint venture agreements through which we own a partial interest in real estate entities that own, develop, and operate real estate properties. As of September 30, 2020, our real estate joint ventures held the following properties: Property Market Submarket Our Ownership Interest (1) Consolidated joint ventures (2) : 225 Binney Street Greater Boston Cambridge/Inner Suburbs 30.0 % 75/125 Binney Street Greater Boston Cambridge/Inner Suburbs 40.0 % 57 Coolidge Avenue Greater Boston Cambridge/Inner Suburbs 75.0 % 409 and 499 Illinois Street San Francisco Mission Bay 60.0 % 1500 Owens Street San Francisco Mission Bay 50.1 % Alexandria Technology Center ® – Gateway (3) San Francisco South San Francisco 45.0 % 500 Forbes Boulevard San Francisco South San Francisco 10.0 % Alexandria Point (4) San Diego University Town Center 55.0 % 5200 Illumina Way San Diego University Town Center 51.0 % 9625 Towne Centre Drive San Diego University Town Center 50.1 % SD Tech by Alexandria (5) San Diego Sorrento Mesa 50.0 % Unconsolidated joint ventures (2) : 1655 and 1725 Third Street San Francisco Mission Bay 10.0 % Menlo Gateway San Francisco Greater Stanford 49.0 % 704 Quince Orchard Road Maryland Gaithersburg 56.8 % (6) (1) Refer to the table on the next page that shows the categorization of our joint ventures under the consolidation framework. (2) In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in six other consolidated joint ventures in North America and we hold an interest in two other insignificant unconsolidated real estate joint ventures in North America. (3) Excludes 600, 630, 650, 901, and 951 Gateway Boulevard in our South San Francisco submarket. (4) Excludes 9880 Campus Point Drive in our University Town Center submarket. (5) Excludes 5505 Morehouse Drive and 10121 and 10151 Barnes Canyon Road in our Sorrento Mesa submarket. (6) Represents our ownership interest; our voting interest is limited to 50%. Our consolidation policy is fully described under the “Consolidation” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. Consolidation accounting is highly technical, but its framework is primarily based on the controlling financial interests and benefits of the joint ventures. We generally consolidate a joint venture that is a legal entity that we control (i.e., we have the power to direct the activities of the joint venture that most significantly affect its economic performance) through contractual rights, regardless of our ownership interest, and where we determine that we have benefits through the allocation of earnings or losses and fees paid to us that could be significant to the joint venture (the “VIE model”). We also generally consolidate joint ventures when we have a controlling financial interest through voting rights and where our voting interest is greater than 50% (the “voting model”). Voting interest differs from ownership interest for some joint ventures. We account for joint ventures that do not meet the consolidation criteria under the equity method of accounting by recognizing our share of income and losses. The table below shows the categorization of our joint ventures under the consolidation framework: Property Consolidation Model Voting Interest Consolidation Analysis Conclusion 225 Binney Street VIE model Not applicable under VIE model We have: Consolidated 75/125 Binney Street (i) The power to direct the activities of the joint venture that most significantly affect its economic performance; and 57 Coolidge Avenue 409 and 499 Illinois Street 1500 Owens Street Alexandria Technology Center ® – Gateway 500 Forbes Boulevard (ii) Benefits that can be significant to the joint venture. Alexandria Point 5200 Illumina Way Therefore, we are the primary beneficiary of each VIE 9625 Towne Centre Drive SD Tech by Alexandria Menlo Gateway We do not control the joint venture and are therefore not the primary beneficiary Equity method of accounting 704 Quince Orchard Road Voting model Does not exceed 50% Our voting interest is 50% or less 1655 and 1725 Third Street Formation of a consolidated real estate joint venture, impairment of an unconsolidated real estate joint venture, and sales of partial interests 57 Coolidge Avenue In July 2020, we formed a real estate joint venture with a local developer and investor to acquire a land parcel aggregating approximately 275,000 SF at 57 Coolidge Avenue in our Cambridge/Inner Suburbs submarket for a contractual purchase price of approximately $32.6 million. Our ownership interest in the joint venture is 75%. As part of the joint venture agreement, we are responsible for activities that most significantly impact the economic performance of the joint venture. In addition, our joint venture partner lacks kick-out rights over our role as property manager. Therefore, we determined that our joint venture partner does not have a controlling financial interest, and consequently this joint venture should be accounted for as a VIE. We also determined that we are the primary beneficiary of the joint venture because, as noted above, we are responsible for activities that most significantly impact the economic performance of the joint venture, and also have the obligation to absorb losses of or the right to receive benefits from the joint venture that could potentially be significant to the joint venture. Accordingly, we have consolidated the joint venture under the variable interest model. Refer to the “Consolidation” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. Alexandria Technology Center ® – Gateway In January 2020, we formed a real estate joint venture with subsidiaries of Boston Properties, Inc. We currently own 45% of the real estate joint venture and are expecting to increase our ownership to 51%. Our partner contributed three office buildings, aggregating 776,003 RSF, at 601, 611, and 651 Gateway Boulevard, and land supporting 260,000 SF of future development with aggregate fair market value of $350.0 million. We contributed one office building, one office/laboratory building, one amenity building, aggregating 313,262 RSF, at 701, 681, and 685 Gateway Boulevard, respectively, and land supporting 377,000 SF of future development with aggregate fair market value of $281.9 million. This future campus in our South San Francisco submarket will aggregate 1.7 million RSF. As part of the joint venture agreement, we are responsible for activities that most significantly impact the economic performance of the joint venture. In addition, our joint venture partner lacks kick-out rights over our role as property manager. Therefore, we determined that our joint venture partner does not have a controlling financial interest, and consequently this joint venture should be accounted for as a VIE. We also determined that we are the primary beneficiary of the joint venture because, as noted above, we are responsible for activities that most significantly impact the economic performance of the joint venture, and also have the obligation to absorb losses of or the right to receive benefits from the joint venture that could potentially be significant to the joint venture. Accordingly, we have consolidated the joint venture under the variable interest model. The aggregate fair value of the properties we contributed to the joint venture of $281.9 million exceeded their historical cost basis. These properties remained consolidated in our financial statements; therefore, no adjustments were made to the carrying values of these properties, and no gain was recognized in our consolidated statements of operations. We accounted for this transaction as an equity transaction with an adjustment of $55.8 million to our additional paid-in capital and noncontrolling interest balances. Refer to the “Consolidation” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. 1401/1413 Research Boulevard In January 2015, we formed a joint venture with a local retail developer and operator by contributing a land parcel located in our Rockville submarket of Maryland. The joint venture developed a retail shopping center aggregating approximately 90,000 RSF, which was primarily funded by a $26.2 million construction loan that is non-recourse to us and matures in May 2021. As of December 31, 2019, our investment in this joint venture was $7.7 million, which primarily consisted of the value of the retail shopping center, and was accounted for under the equity method of accounting as we did not have a controlling interest. In March 2020, as a result of the impact of COVID-19 pandemic and the State of Maryland’s shelter-in-place orders, which led to the closure of the retail center, and the near-term debt maturity of the secured loan, we evaluated the recoverability of our investment and recognized a $7.6 million impairment charge to lower the carrying amount of our investment balance, which primarily consisted of real estate, to its estimated fair value less costs to sell. The estimated real estate impairment charge reduced our investment balance in the joint venture to zero dollars and was classified in equity in earnings of unconsolidated real estate joint ventures within our consolidated statements of operations for the nine months ended September 30, 2020. 9808 and 9868 Scranton Road In April 2020, we completed the sale of properties aggregating 219,628 RSF at 9808 and 9868 Scranton Road in our Sorrento Mesa submarket to the existing SD Tech by Alexandria consolidated real estate joint venture, of which we own 50%. The gross proceeds received from our partner for its 50% interest in the properties were $51.1 million. We continue to control and consolidate this joint venture; therefore, we accounted for the difference between the consideration received and the book value of the interest sold as an equity transaction with no gain recognized in earnings. Consolidated VIEs’ balance sheet information The table below aggregates the balance sheet information of our consolidated VIEs as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Investments in real estate $ 3,096,227 $ 2,678,476 Cash and cash equivalents 97,744 81,021 Other assets 322,830 280,343 Total assets $ 3,516,801 $ 3,039,840 Secured notes payable $ — $ — Other liabilities 188,648 149,471 Total liabilities 188,648 149,471 Redeemable noncontrolling interests 1,620 2,388 Alexandria Real Estate Equities, Inc.’s share of equity 1,705,418 1,600,729 Noncontrolling interests’ share of equity 1,621,115 1,287,252 Total liabilities and equity $ 3,516,801 $ 3,039,840 In determining whether to aggregate the balance sheet information of consolidated VIEs, we considered the similarity of each VIE, including the primary purpose of these entities to own, manage, operate, and lease real estate properties owned by the VIEs, and the similar nature of our involvement in each VIE as a managing member. Due to the similarity of the characteristics, we present the balance sheet information of these entities on an aggregated basis. None of our consolidated VIEs’ assets have restrictions that limit their use to settle specific obligations of the VIE. There are no creditors or other partners of our consolidated VIEs that have recourse to our general credit. Our maximum exposure to our consolidated VIEs is limited to our variable interests in each VIE. Unconsolidated real estate joint ventures Our maximum exposure to our unconsolidated VIEs is limited to our investment in each VIE. Our investments in unconsolidated real estate joint ventures, accounted for under the equity method of accounting presented in our consolidated balance sheets as of September 30, 2020, and December 31, 2019, consisted of the following (in thousands): Property September 30, 2020 December 31, 2019 Menlo Gateway $ 297,933 $ 288,408 704 Quince Orchard Road 4,875 4,748 1655 and 1725 Third Street 16,067 37,016 Other 11,917 16,718 $ 330,792 $ 346,890 Our unconsolidated real estate joint ventures have the following secured loans that include the following key terms as of September 30, 2020 (dollars in thousands): Unconsolidated Joint Venture Our Share Maturity Date Stated Rate Interest Rate (1) 100% at Joint Venture Level Debt Balance (2) 704 Quince Orchard Road 56.8% 3/16/23 L+1.95% 3.22 % (3) $ 12,326 1655 and 1725 Third Street 10.0% 3/10/25 4.50% 4.57 % 598,126 Menlo Gateway, Phase II 49.0% 5/1/35 4.53% 4.59 % 106,603 Menlo Gateway, Phase I 49.0% 8/10/35 4.15% 4.18 % 140,203 $ 857,258 (1) Includes interest expense and amortization of loan fees. (2) Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2020. (3) Includes a 1.00% LIBOR floor on the interest rate. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | LEASES We are subject to the lease accounting standard that sets principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). As a lessor, we are required to disclose, among other things, the following: • A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset; • Tabular presentation of undiscounted cash flows to be received over the next five years and thereafter separately for operating leases and direct financing leases; • The amount of lease income and its location on the statements of operations; • Income classified separately for operating leases and direct financing leases; and • Our risk management strategy to mitigate declines in residual value of the leased assets. As a lessee, we are required to disclose, among other things, the following: • A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset; • The amounts of lease liabilities and corresponding right-of-use assets and their respective locations in the balance sheet; • The weighted-average remaining lease term and weighted-average discount rate of leases; • Tabular presentation of undiscounted cash flows of our remaining lease payment obligations over the next five years and thereafter; and • Total lease costs, including cash paid, amounts expensed, and amounts capitalized. Refer to the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. Leases in which we are the lessor As of September 30, 2020, we had 326 properties aggregating 31.2 million operating RSF locate d in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. We focus on developing Class A properties in AAA innovation cluster locations, which we consider to be highly desirable for tenancy by life science, technology, and agtech entities. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space. As of September 30, 2020, a ll leases in which we are the lessor were classified as operating leases with the exception of one direct financing lease. Our operating leases and direct financing lease are described below. Operating leases As of September 30, 2020, our 326 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The remaining lease term related to each of the two land parcels is 72.2 years. Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of September 30, 2020, are outlined in the table below (in thousands): Year Amount 2020 $ 300,587 2021 1,243,756 2022 1,246,288 2023 1,196,020 2024 1,087,929 Thereafter 6,943,932 Total $ 12,018,512 Refer to Note 3 – “Investments in real estate” to these unaudited consolidated financial statements for additional information about our owned real estate assets, which are the underlying assets under our operating leases. Direct financing lease As of September 30, 2020, we had one direct financing lease agreement for a parking structure with a remaining lease term of 72.2 years. The lessee has an option to purchase the underlying asset at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The components of net investment in our direct financing lease as of September 30, 2020 and December 31, 2019, are summarized in the table below (in thousands): September 30, 2020 December 31, 2019 Gross investment in direct financing lease $ 259,179 $ 260,457 Less: unearned income (218,694) (220,541) Less: allowance for credit losses (2,839) — Net investment in direct financing lease $ 37,646 $ 39,916 On January 1, 2020, we adopted an accounting standard that requires companies to estimate and recognize expected losses, rather than incurred losses, which results in the earlier recognition of credit losses even if the expected risk of credit loss is remote. This new accounting standard applies to our direct financing lease described above. Upon adoption of the new standard on January 1, 2020, we recognized a credit loss adjustment related to this direct financing lease aggregating $2.2 million, as described in detail within the “Allowance for credit losses” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. During the three months ended March 31, 2020, we updated our assessment of the current estimated credit loss related to this direct financing lease and estimated the loss to increase to $2.8 million as of March 31, 2020. As a result, we recognized an additional credit loss adjustment of $614 thousand classified within rental operations in our unaudited consolidated statement of operations for the nine months ended September 30, 2020. No adjustment to the estimated credit loss balance was required during the three months ended June 30, 2020 and September 30, 2020. For further details, refer to the “Allowance for credit losses” section in Note 2 – “Summary of significant accounting policies.” Future lease payments to be received under the terms of our direct financing lease as of September 30, 2020, are outlined in the table below (in thousands): Year Total 2020 $ 428 2021 1,756 2022 1,809 2023 1,863 2024 1,919 Thereafter 251,404 Total $ 259,179 Income from rentals Our total income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and to the revenue recognition accounting standard as shown below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 539,001 $ 372,593 $ 1,398,084 $ 1,074,395 Direct financing lease 619 607 1,847 1,812 Revenues subject to the lease accounting standard 539,620 373,200 1,399,931 1,076,207 Revenues subject to the revenue recognition accounting standard 3,792 12,576 16,942 35,936 Income from rentals $ 543,412 $ 385,776 $ 1,416,873 $ 1,112,143 Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to the “Revenues” and “Recognition of revenue arising from contracts with customers” sections in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. During the three months ended September 30, 2020, we executed an agreement with Pinterest, Inc. to terminate our contract related to a future lease of 488,899 RSF at our 88 Bluxome Street development project, which has not commenced vertical construction, located in our SoMa submarket. We expect demolition of the existing building at the site prior to the commencement of vertical construction of the project. We received a contract termination fee of $89.5 million and incurred expenses of $3.3 million, resulting in an aggregate termination fee of $86.2 million. The contract termination fee of $89.5 million was classified within income from rentals, and related expenses of $3.3 million were classified within rental operations in our unaudited consolidated statements of operations for the three and nine months ended September 30, 2020. Residual value risk management strategy Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business objective to invest primarily in high-demand markets with limited supply of available space, (ii) directly managing our leased properties, conducting frequent property inspections, proactively addressing potential maintenance issues before they arise, and timely resolving any occurring issues, (iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms, and (iv) focusing on making continuous improvements to our sustainability efforts and achievement of our sustainability goals for ground-up development of new buildings, which are targeting Gold or Platinum LEED ® certification. Our environmentally focused design decisions, careful selection of construction materials, and continuous monitoring of our properties throughout their lives are expected to promote the durability of building infrastructure and enhance residual value of our properties. Leases in which we are the lessee Operating lease agreements We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value. We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to the “Lessee accounting” subsection of the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. As of September 30, 2020, the present value of the remaining contractual payments aggregating $793.7 million, under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $326.0 million. Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $317.1 million. As of September 30, 2020, the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 44 years, and the weighted-average discount rate was 4.97%. The weighted-average discount rate is based on the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Ground lease obligations as of September 30, 2020, included leases for 34 of our properties, which accounted for approximately 10% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $7.3 million as of September 30, 2020, our ground lease obligations have remaining lease terms ranging from approximately 33 years to 94 years, including extension options which we are reasonably certain to exercise. The reconciliation of future lease payments, under noncancellable operating ground and office leases in which we are the lessee, to the operating lease liability reflected in our unaudited consolidated balance sheet as of September 30, 2020, is presented in the table below (in thousands): Year Total 2020 $ 4,538 2021 18,544 2022 19,093 2023 19,268 2024 19,512 Thereafter 712,703 Total future payments under our operating leases in which we are the lessee 793,658 Effect of discounting (467,613) Operating lease liability $ 326,045 Lessee operating costs Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 14 years, exclusive of extension options. For the three and nine months ended September 30, 2020 and 2019, our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Gross operating lease costs $ 5,623 $ 5,157 $ 17,060 $ 14,581 Capitalized lease costs (894) (452) (2,614) (902) Expenses for operating leases in which we are the lessee $ 4,729 $ 4,705 $ 14,446 $ 13,679 |
Leases | LEASES We are subject to the lease accounting standard that sets principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). As a lessor, we are required to disclose, among other things, the following: • A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset; • Tabular presentation of undiscounted cash flows to be received over the next five years and thereafter separately for operating leases and direct financing leases; • The amount of lease income and its location on the statements of operations; • Income classified separately for operating leases and direct financing leases; and • Our risk management strategy to mitigate declines in residual value of the leased assets. As a lessee, we are required to disclose, among other things, the following: • A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset; • The amounts of lease liabilities and corresponding right-of-use assets and their respective locations in the balance sheet; • The weighted-average remaining lease term and weighted-average discount rate of leases; • Tabular presentation of undiscounted cash flows of our remaining lease payment obligations over the next five years and thereafter; and • Total lease costs, including cash paid, amounts expensed, and amounts capitalized. Refer to the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. Leases in which we are the lessor As of September 30, 2020, we had 326 properties aggregating 31.2 million operating RSF locate d in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. We focus on developing Class A properties in AAA innovation cluster locations, which we consider to be highly desirable for tenancy by life science, technology, and agtech entities. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space. As of September 30, 2020, a ll leases in which we are the lessor were classified as operating leases with the exception of one direct financing lease. Our operating leases and direct financing lease are described below. Operating leases As of September 30, 2020, our 326 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The remaining lease term related to each of the two land parcels is 72.2 years. Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of September 30, 2020, are outlined in the table below (in thousands): Year Amount 2020 $ 300,587 2021 1,243,756 2022 1,246,288 2023 1,196,020 2024 1,087,929 Thereafter 6,943,932 Total $ 12,018,512 Refer to Note 3 – “Investments in real estate” to these unaudited consolidated financial statements for additional information about our owned real estate assets, which are the underlying assets under our operating leases. Direct financing lease As of September 30, 2020, we had one direct financing lease agreement for a parking structure with a remaining lease term of 72.2 years. The lessee has an option to purchase the underlying asset at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The components of net investment in our direct financing lease as of September 30, 2020 and December 31, 2019, are summarized in the table below (in thousands): September 30, 2020 December 31, 2019 Gross investment in direct financing lease $ 259,179 $ 260,457 Less: unearned income (218,694) (220,541) Less: allowance for credit losses (2,839) — Net investment in direct financing lease $ 37,646 $ 39,916 On January 1, 2020, we adopted an accounting standard that requires companies to estimate and recognize expected losses, rather than incurred losses, which results in the earlier recognition of credit losses even if the expected risk of credit loss is remote. This new accounting standard applies to our direct financing lease described above. Upon adoption of the new standard on January 1, 2020, we recognized a credit loss adjustment related to this direct financing lease aggregating $2.2 million, as described in detail within the “Allowance for credit losses” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. During the three months ended March 31, 2020, we updated our assessment of the current estimated credit loss related to this direct financing lease and estimated the loss to increase to $2.8 million as of March 31, 2020. As a result, we recognized an additional credit loss adjustment of $614 thousand classified within rental operations in our unaudited consolidated statement of operations for the nine months ended September 30, 2020. No adjustment to the estimated credit loss balance was required during the three months ended June 30, 2020 and September 30, 2020. For further details, refer to the “Allowance for credit losses” section in Note 2 – “Summary of significant accounting policies.” Future lease payments to be received under the terms of our direct financing lease as of September 30, 2020, are outlined in the table below (in thousands): Year Total 2020 $ 428 2021 1,756 2022 1,809 2023 1,863 2024 1,919 Thereafter 251,404 Total $ 259,179 Income from rentals Our total income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and to the revenue recognition accounting standard as shown below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 539,001 $ 372,593 $ 1,398,084 $ 1,074,395 Direct financing lease 619 607 1,847 1,812 Revenues subject to the lease accounting standard 539,620 373,200 1,399,931 1,076,207 Revenues subject to the revenue recognition accounting standard 3,792 12,576 16,942 35,936 Income from rentals $ 543,412 $ 385,776 $ 1,416,873 $ 1,112,143 Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to the “Revenues” and “Recognition of revenue arising from contracts with customers” sections in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. During the three months ended September 30, 2020, we executed an agreement with Pinterest, Inc. to terminate our contract related to a future lease of 488,899 RSF at our 88 Bluxome Street development project, which has not commenced vertical construction, located in our SoMa submarket. We expect demolition of the existing building at the site prior to the commencement of vertical construction of the project. We received a contract termination fee of $89.5 million and incurred expenses of $3.3 million, resulting in an aggregate termination fee of $86.2 million. The contract termination fee of $89.5 million was classified within income from rentals, and related expenses of $3.3 million were classified within rental operations in our unaudited consolidated statements of operations for the three and nine months ended September 30, 2020. Residual value risk management strategy Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business objective to invest primarily in high-demand markets with limited supply of available space, (ii) directly managing our leased properties, conducting frequent property inspections, proactively addressing potential maintenance issues before they arise, and timely resolving any occurring issues, (iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms, and (iv) focusing on making continuous improvements to our sustainability efforts and achievement of our sustainability goals for ground-up development of new buildings, which are targeting Gold or Platinum LEED ® certification. Our environmentally focused design decisions, careful selection of construction materials, and continuous monitoring of our properties throughout their lives are expected to promote the durability of building infrastructure and enhance residual value of our properties. Leases in which we are the lessee Operating lease agreements We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value. We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to the “Lessee accounting” subsection of the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. As of September 30, 2020, the present value of the remaining contractual payments aggregating $793.7 million, under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $326.0 million. Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $317.1 million. As of September 30, 2020, the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 44 years, and the weighted-average discount rate was 4.97%. The weighted-average discount rate is based on the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Ground lease obligations as of September 30, 2020, included leases for 34 of our properties, which accounted for approximately 10% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $7.3 million as of September 30, 2020, our ground lease obligations have remaining lease terms ranging from approximately 33 years to 94 years, including extension options which we are reasonably certain to exercise. The reconciliation of future lease payments, under noncancellable operating ground and office leases in which we are the lessee, to the operating lease liability reflected in our unaudited consolidated balance sheet as of September 30, 2020, is presented in the table below (in thousands): Year Total 2020 $ 4,538 2021 18,544 2022 19,093 2023 19,268 2024 19,512 Thereafter 712,703 Total future payments under our operating leases in which we are the lessee 793,658 Effect of discounting (467,613) Operating lease liability $ 326,045 Lessee operating costs Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 14 years, exclusive of extension options. For the three and nine months ended September 30, 2020 and 2019, our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Gross operating lease costs $ 5,623 $ 5,157 $ 17,060 $ 14,581 Capitalized lease costs (894) (452) (2,614) (902) Expenses for operating leases in which we are the lessee $ 4,729 $ 4,705 $ 14,446 $ 13,679 |
Leases | LEASES We are subject to the lease accounting standard that sets principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). As a lessor, we are required to disclose, among other things, the following: • A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset; • Tabular presentation of undiscounted cash flows to be received over the next five years and thereafter separately for operating leases and direct financing leases; • The amount of lease income and its location on the statements of operations; • Income classified separately for operating leases and direct financing leases; and • Our risk management strategy to mitigate declines in residual value of the leased assets. As a lessee, we are required to disclose, among other things, the following: • A description of the nature of leases, including terms for any variable payments, options to extend or terminate, and options to purchase the underlying asset; • The amounts of lease liabilities and corresponding right-of-use assets and their respective locations in the balance sheet; • The weighted-average remaining lease term and weighted-average discount rate of leases; • Tabular presentation of undiscounted cash flows of our remaining lease payment obligations over the next five years and thereafter; and • Total lease costs, including cash paid, amounts expensed, and amounts capitalized. Refer to the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. Leases in which we are the lessor As of September 30, 2020, we had 326 properties aggregating 31.2 million operating RSF locate d in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. We focus on developing Class A properties in AAA innovation cluster locations, which we consider to be highly desirable for tenancy by life science, technology, and agtech entities. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space. As of September 30, 2020, a ll leases in which we are the lessor were classified as operating leases with the exception of one direct financing lease. Our operating leases and direct financing lease are described below. Operating leases As of September 30, 2020, our 326 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The remaining lease term related to each of the two land parcels is 72.2 years. Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of September 30, 2020, are outlined in the table below (in thousands): Year Amount 2020 $ 300,587 2021 1,243,756 2022 1,246,288 2023 1,196,020 2024 1,087,929 Thereafter 6,943,932 Total $ 12,018,512 Refer to Note 3 – “Investments in real estate” to these unaudited consolidated financial statements for additional information about our owned real estate assets, which are the underlying assets under our operating leases. Direct financing lease As of September 30, 2020, we had one direct financing lease agreement for a parking structure with a remaining lease term of 72.2 years. The lessee has an option to purchase the underlying asset at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The components of net investment in our direct financing lease as of September 30, 2020 and December 31, 2019, are summarized in the table below (in thousands): September 30, 2020 December 31, 2019 Gross investment in direct financing lease $ 259,179 $ 260,457 Less: unearned income (218,694) (220,541) Less: allowance for credit losses (2,839) — Net investment in direct financing lease $ 37,646 $ 39,916 On January 1, 2020, we adopted an accounting standard that requires companies to estimate and recognize expected losses, rather than incurred losses, which results in the earlier recognition of credit losses even if the expected risk of credit loss is remote. This new accounting standard applies to our direct financing lease described above. Upon adoption of the new standard on January 1, 2020, we recognized a credit loss adjustment related to this direct financing lease aggregating $2.2 million, as described in detail within the “Allowance for credit losses” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. During the three months ended March 31, 2020, we updated our assessment of the current estimated credit loss related to this direct financing lease and estimated the loss to increase to $2.8 million as of March 31, 2020. As a result, we recognized an additional credit loss adjustment of $614 thousand classified within rental operations in our unaudited consolidated statement of operations for the nine months ended September 30, 2020. No adjustment to the estimated credit loss balance was required during the three months ended June 30, 2020 and September 30, 2020. For further details, refer to the “Allowance for credit losses” section in Note 2 – “Summary of significant accounting policies.” Future lease payments to be received under the terms of our direct financing lease as of September 30, 2020, are outlined in the table below (in thousands): Year Total 2020 $ 428 2021 1,756 2022 1,809 2023 1,863 2024 1,919 Thereafter 251,404 Total $ 259,179 Income from rentals Our total income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and to the revenue recognition accounting standard as shown below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 539,001 $ 372,593 $ 1,398,084 $ 1,074,395 Direct financing lease 619 607 1,847 1,812 Revenues subject to the lease accounting standard 539,620 373,200 1,399,931 1,076,207 Revenues subject to the revenue recognition accounting standard 3,792 12,576 16,942 35,936 Income from rentals $ 543,412 $ 385,776 $ 1,416,873 $ 1,112,143 Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to the “Revenues” and “Recognition of revenue arising from contracts with customers” sections in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for additional information. During the three months ended September 30, 2020, we executed an agreement with Pinterest, Inc. to terminate our contract related to a future lease of 488,899 RSF at our 88 Bluxome Street development project, which has not commenced vertical construction, located in our SoMa submarket. We expect demolition of the existing building at the site prior to the commencement of vertical construction of the project. We received a contract termination fee of $89.5 million and incurred expenses of $3.3 million, resulting in an aggregate termination fee of $86.2 million. The contract termination fee of $89.5 million was classified within income from rentals, and related expenses of $3.3 million were classified within rental operations in our unaudited consolidated statements of operations for the three and nine months ended September 30, 2020. Residual value risk management strategy Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business objective to invest primarily in high-demand markets with limited supply of available space, (ii) directly managing our leased properties, conducting frequent property inspections, proactively addressing potential maintenance issues before they arise, and timely resolving any occurring issues, (iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms, and (iv) focusing on making continuous improvements to our sustainability efforts and achievement of our sustainability goals for ground-up development of new buildings, which are targeting Gold or Platinum LEED ® certification. Our environmentally focused design decisions, careful selection of construction materials, and continuous monitoring of our properties throughout their lives are expected to promote the durability of building infrastructure and enhance residual value of our properties. Leases in which we are the lessee Operating lease agreements We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or covenants imposed by the leases, nor guarantees of residual value. We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to the “Lessee accounting” subsection of the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. As of September 30, 2020, the present value of the remaining contractual payments aggregating $793.7 million, under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $326.0 million. Our corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $317.1 million. As of September 30, 2020, the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 44 years, and the weighted-average discount rate was 4.97%. The weighted-average discount rate is based on the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Ground lease obligations as of September 30, 2020, included leases for 34 of our properties, which accounted for approximately 10% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $7.3 million as of September 30, 2020, our ground lease obligations have remaining lease terms ranging from approximately 33 years to 94 years, including extension options which we are reasonably certain to exercise. The reconciliation of future lease payments, under noncancellable operating ground and office leases in which we are the lessee, to the operating lease liability reflected in our unaudited consolidated balance sheet as of September 30, 2020, is presented in the table below (in thousands): Year Total 2020 $ 4,538 2021 18,544 2022 19,093 2023 19,268 2024 19,512 Thereafter 712,703 Total future payments under our operating leases in which we are the lessee 793,658 Effect of discounting (467,613) Operating lease liability $ 326,045 Lessee operating costs Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 14 years, exclusive of extension options. For the three and nine months ended September 30, 2020 and 2019, our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Gross operating lease costs $ 5,623 $ 5,157 $ 17,060 $ 14,581 Capitalized lease costs (894) (452) (2,614) (902) Expenses for operating leases in which we are the lessee $ 4,729 $ 4,705 $ 14,446 $ 13,679 |
Cash, cash equivalents, and res
Cash, cash equivalents, and restricted cash | 9 Months Ended |
Sep. 30, 2020 | |
Cash, cash equivalents, and restricted cash [Abstract] | |
Cash, cash equivalents, and restricted cash | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH Cash, cash equivalents, and restricted cash consisted of the following as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Cash and cash equivalents $ 446,255 $ 189,681 Restricted cash: Funds held in trust under the terms of certain secured notes payable 26,918 24,331 Funds held in escrow related to construction projects and investing activities 4,580 23,252 Other 7,290 5,425 38,788 53,008 Total $ 485,043 $ 242,689 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2020 | |
Investments [Abstract] | |
Investments | INVESTMENTS We hold investments in publicly traded companies and privately held entities primarily involved in the life science, technology, and agtech industries, as further described below. Investments in publicly traded companies Our investments in publicly traded companies are classified as investments with readily determinable fair values and are presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income in our consolidated statements of operations. Investments in privately held companies Our investments in privately held entities consist of (i) investments in entities that report NAV, and (ii) investments in privately held entities that do not report NAV. These investments are accounted for as follows: Investments in privately held entities that report NAV Investments in entities that report NAV, such as our privately held investments in limited partnerships, are presented at fair value using NAV as a practical expedient, with changes in fair value recognized in net income. We use NAV reported by limited partnerships generally without adjustment, unless we are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the investment at our reporting date. Investments in privately held entities that do not report NAV Investments in privately held entities that do not report NAV are carried at cost, adjusted for observable price changes and impairments, with changes recognized in net income. These investments continue to be evaluated on the basis of a qualitative assessment for indicators of impairment by utilizing the same monitoring criteria described in the “Investments” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements, and by monitoring the presence of the following impairment indicators: (i) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, (ii) a significant adverse change in the regulatory, economic, or technological environment of the investee, (iii) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, and/or (iv) significant concerns about the investee’s ability to continue as a going concern. If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value. Investments in privately held entities are accounted for under the equity method, unless our interest in the entity is deemed to be so minor that we have virtually no influence over the entity’s operating and financial policies. Under the equity method of accounting, we initially recognize our investment at cost and adjust the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. We had no investments accounted for under the equity method as of September 30, 2020. Investment income/loss recognition and classification We classify unrealized and realized gains and losses on our investments within investment income in our consolidated statements of operations. Unrealized gains and losses represent: (i) changes in fair value for investments in publicly traded companies, (ii) changes in NAV, as a practical expedient to estimate fair value, for investments in privately held entities that report NAV, and/or (iii) observable price changes of our investments in privately held entities that do not report NAV. An observable price arises from an orderly transaction for an identical or similar investment of the same issuer. Observable price changes result from, among other things, equity transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution preferences, and conversion rights to the investments we hold. Realized gains and losses represent the difference between proceeds received upon disposition of investments and their historical or adjusted cost. Impairments are realized losses, which result in an adjusted cost, and represent charges to reduce the carrying values of investments in privately held entities that do not report NAV to their estimated fair value. The following tables summarize our investments as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 Cost Unrealized Carrying Amount Investments: Publicly traded companies $ 175,538 $ 240,415 $ 415,953 Entities that report NAV 319,564 226,081 545,645 Entities that do not report NAV: Entities with observable price changes 50,127 75,642 125,769 Entities without observable price changes 243,578 — 243,578 Total investments $ 788,807 $ 542,138 $ 1,330,945 December 31, 2019 Cost Unrealized Carrying Amount Investments: Publicly traded companies $ 148,109 $ 170,528 $ 318,637 Entities that report NAV 271,276 162,626 433,902 Entities that do not report NAV: Entities with observable price changes 42,045 68,489 110,534 Entities without observable price changes 277,521 — 277,521 Total investments $ 738,951 $ 401,643 $ 1,140,594 Cumulative adjustments recognized on investments in privately held entities that do not report NAV, held as of September 30, 2020, aggregated $75.6 million, which consisted of upward adjustments representing unrealized gains of $77.9 million and downward adjustments representing unrealized losses of $2.3 million. Cumulative impairments recognized as a reduction to the cost of investments in privately held entities that do not report NAV, held as of September 30, 2020, aggregated $38.5 million. During the nine months ended September 30, 2020, adjustments recognized on investments in privately held entities that do not report NAV aggregated $7.2 million, which consisted of upward adjustments of $8.5 million primarily representing unrealized gains and downward adjustments of $1.3 million representing unrealized losses. Additionally, we recognized impairments of $24.5 million related to investments in privately held entities that do not report NAV. Refer to the “Investments” section of Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements for further details. Our investment income/loss for the three and nine months ended September 30, 2020, consisted of the following (in thousands): Three Months Ended September 30, 2020 Unrealized Realized Total Investments held at September 30, 2020: Publicly traded companies $ (12,453) $ — $ (12,453) Entities that report NAV 7,479 — 7,479 Entities that do not report NAV, held at period end 934 — 934 Total investments held at September 30, 2020 (4,040) — (4,040) Investment dispositions during the three months ended September 30, 2020: Recognized in the current period — 7,388 7,388 Previously recognized gains (9,973) 9,973 — Total investment dispositions during the three months ended September 30, 2020 (9,973) 17,361 7,388 Investment (loss) income $ (14,013) $ 17,361 $ 3,348 Nine Months Ended September 30, 2020 Unrealized Realized Total Investments held at September 30, 2020: Publicly traded companies $ 81,084 $ — $ 81,084 Entities that report NAV 63,455 — 63,455 Entities that do not report NAV, held at period end 7,153 (24,483) (17,330) Total investments held at September 30, 2020 151,692 (24,483) 127,209 Investment dispositions during the nine months ended September 30, 2020: Recognized in the current period — 38,975 38,975 Previously recognized gains (11,197) 11,197 — Total investment dispositions during the nine months ended September 30, 2020 (11,197) 50,172 38,975 Investment income $ 140,495 $ 25,689 $ 166,184 Our investment income/loss for the three and nine months ended September 30, 2019, consisted of the following (in thousands): Three Months Ended September 30, 2019 Unrealized Gains (Losses) Realized Total Investments held at September 30, 2019: Publicly traded companies $ (51,574) $ — $ (51,574) Entities that report NAV (2,840) — (2,840) Entities that do not report NAV, held at period end 237 (7,133) (6,896) Total investments held at September 30, 2019 (54,177) (7,133) (61,310) Investment dispositions during the three months ended September 30, 2019: Recognized in the current period — (1,766) (1,766) Previously recognized gains (15,866) 15,866 — Total investment dispositions during the three months ended September 30, 2019 (15,866) 14,100 (1,766) Investment (loss) income $ (70,043) $ 6,967 $ (63,076) Nine Months Ended September 30, 2019 Unrealized Gains (Losses) Realized Total Investments held at September 30, 2019: Publicly traded companies $ 566 $ — $ 566 Entities that report NAV 26,420 — 26,420 Entities that do not report NAV, held at period end 9,701 (7,133) 2,568 Total investments held at September 30, 2019 36,687 (7,133) 29,554 Investment dispositions during the nine months ended September 30, 2019: Recognized in the current period — 12,426 12,426 Previously recognized gains (23,466) 23,466 — Total investment dispositions during the nine months ended September 30, 2019 (23,466) 35,892 12,426 Investment income $ 13,221 $ 28,759 $ 41,980 Investments in privately held entities that report NAV We are committed to funding approximately $220.4 million for all investments in privately held entities primarily related to our investments in limited partnerships. Our funding commitments expire at various dates over the next 11 years, with a weighted-average expiration of 8.4 years as of September 30, 2020. These investments are not redeemable by us, but we may receive distributions from these investments throughout their term. Our investments in privately held entities that report NAV generally have expected initial terms in excess of 10 years. The weighted-average remaining term during which these investments are expected to be liquidated was 5.3 years as of September 30, 2020. |
Other assets
Other assets | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other assets | OTHER ASSETS The following table summarizes the components of other assets (in thousands): September 30, 2020 December 31, 2019 Acquired in-place leases $ 450,954 $ 281,650 Deferred compensation plan 29,154 22,225 Deferred financing costs – unsecured senior line of credit 10,664 13,064 Deposits 28,337 31,028 Furniture, fixtures, and equipment 32,332 23,031 Net investment in direct financing lease 37,646 39,916 Notes receivable 2,462 435 Operating lease right-of-use asset 317,067 264,709 Other assets 25,833 32,040 Prepaid expenses 81,180 11,324 Property, plant, and equipment 153,981 174,292 Total $ 1,169,610 $ 893,714 |
Fair value measurements
Fair value measurements | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | FAIR VALUE MEASUREMENTS We provide fair value information about all financial instruments for which it is practicable to estimate fair value. We measure and disclose the estimated fair value of financial assets and liabilities by utilizing a fair value hierarchy that distinguishes between data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. This hierarchy consists of three broad levels, as follows: (i) quoted prices in active markets for identical assets or liabilities (Level 1), (ii) significant other observable inputs (Level 2), and (iii) significant unobservable inputs (Level 3). Significant other observable inputs can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or liability, such as interest rates, foreign exchange rates, and yield curves. Significant unobservable inputs are typically based on an entity’s own assumptions, since there is little, if any, related market activity. In instances in which the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Assets and liabilities measured at fair value on a recurring basis The following table sets forth the assets that we measure at fair value on a recurring basis by level in the fair value hierarchy (in thousands). There were no liabilities measured at fair value on a recurring basis as of September 30, 2020, and December 31, 2019. In addition, there were no transfers of assets measured at fair value on a recurring basis to or from Level 3 in the fair value hierarchy during the nine months ended September 30, 2020. Fair Value Measurement Using Description Total Quoted Prices in Significant Significant Investments in publicly traded companies: As of September 30, 2020 $ 415,953 $ 415,953 $ — $ — As of December 31, 2019 $ 318,637 $ 318,637 $ — $ — Our investments in publicly traded companies represent investments with readily determinable fair values, and are carried at fair value, with changes in fair value classified in net income. We also hold investments in privately held entities, which consist of (i) investments that report NAV, and (ii) investments that do not report NAV, as further described below. Our investments in privately held entities that report NAV, such as our privately held investments in limited partnerships, are carried at fair value using NAV as a practical expedient, with changes in fair value classified in net income. As of September 30, 2020, and December 31, 2019, the carrying values of investments in privately held entities that report NAV aggregated $545.6 million and $433.9 million, respectively. These investments are excluded from the fair value hierarchy above as required by the fair value accounting standards. We estimate the fair value of each of our investments in limited partnerships based on the most recent NAV reported by each limited partnership. As a result, the determination of fair values of our investments in privately held entities that report NAV generally does not involve significant estimates, assumptions, or judgments. Assets and liabilities measured at fair value on a nonrecurring basis On January 1, 2020, we adopted a new accounting standard described within the “Investments” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. Beginning in 2020, in accordance with this new accounting standard, we provide fair value disclosures, including disclosures about the level in the fair value hierarchy, for our investments in privately held entities that do not report NAV, which were adjusted to their fair value by applying the measurement alternative described within the “Investments” section in Note 2 – “Summary of significant accounting policies” to these unaudited consolidated financial statements. The following table sets forth the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of September 30, 2020 (in thousands). These investments were measured at various times during the period from January 1, 2018, to September 30, 2020. Fair Value Measurement Using Description Total Quoted Prices in Significant Significant Investments in privately held entities that do not report NAV $ 140,351 $ — $ 125,769 (1) $ 14,582 (2) (1) This balance represents the total carrying amount of our equity investments in privately held entities with observable price changes, included in our total investments balance of $1.3 billion in our consolidated balance sheets as of September 30, 2020. For more information, refer to Note 7 – “Investments.” (2) This amount is included in the $243.6 million balance of investments in privately held entities without observable price changes disclosed in Note 7 – “Investments,” and represents the carrying amount of investments in privately held entities that do not report NAV for which impairments have been recognized in accordance with the measurement alternative guidance described within the “Investments” section in Note 2 – “Summary of significant accounting policies.” Our investments in privately held entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income. These investments are evaluated on a nonrecurring basis based on the observable price changes in orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until another observable transaction occurs. Therefore, the determination of fair values of our investments in privately held entities that do not report NAV does not involve significant estimates and assumptions or subjective and complex judgments. We also subject our investments in privately held entities that do not report NAV to a qualitative assessment for indicators of impairment. If indicators of impairment are present, we are required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value. During the nine months ended September 30, 2020, we recognized impairments of $24.5 million related to investments in privately held entities that do not report NAV. The estimates of fair value typically incorporate valuation techniques that include an income approach reflecting a discounted cash flow analysis, and a market approach that includes a comparative analysis of acquisition multiples and pricing multiples generated by market participants. In certain instances, we may use multiple valuation techniques for a particular investment and estimate its fair value based on an average of multiple valuation results. Refer to the “Formation of a consolidated real estate joint venture, impairment of an unconsolidated real estate joint venture, and sales of partial interests” section in Note 4 – “Consolidated and unconsolidated real estate joint ventures,” Note 7 – “Investments,” and Note 15 – “Assets classified as held for sale” to these unaudited consolidated financial statements for further discussion on assets and liabilities measured at fair value on a nonrecurring basis. The carrying values of cash and cash equivalents, restricted cash, tenant receivables, deposits, notes receivable, accounts payable, accrued expenses, and other short-term liabilities approximate their fair value. The fair values of our secured notes payable, unsecured senior notes payable, unsecured senior line of credit, and commercial paper were estimated using widely accepted valuation techniques, including discounted cash flow analyses using significant other observable inputs such as available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Because the valuations of our financial instruments are based on these types of estimates, the actual fair value of our financial instruments may differ materially if our estimates do not prove to be accurate. Additionally, the use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. As of September 30, 2020, and December 31, 2019, the book and estimated fair values of our secured notes payable, unsecured senior notes payable, unsecured senior line of credit, and amounts outstanding under our commercial paper program were as follows (in thousands): September 30, 2020 Book Value Fair Value Hierarchy Estimated Fair Value Level 1 Level 2 Level 3 Liabilities: Secured notes payable $ 342,363 $ — $ 369,569 $ — $ 369,569 Unsecured senior notes payable $ 7,230,819 $ — $ 8,351,863 $ — $ 8,351,863 Unsecured senior line of credit $ — $ — $ — $ — $ — Commercial paper program $ 249,989 $ — $ 249,994 $ — $ 249,994 December 31, 2019 Book Value Fair Value Hierarchy Estimated Fair Value Level 1 Level 2 Level 3 Liabilities: Secured notes payable $ 349,352 $ — $ 363,344 $ — $ 363,344 Unsecured senior notes payable $ 6,044,127 $ — $ 6,571,668 $ — $ 6,571,668 Unsecured senior line of credit $ 384,000 $ — $ 383,928 $ — $ 383,928 |
Secured and unsecured senior de
Secured and unsecured senior debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Secured and unsecured senior debt | SECURED AND UNSECURED SENIOR DEBT The following table summarizes our outstanding indebtedness and respective principal payments as of September 30, 2020 (dollars in thousands): Stated Interest Rate (1) Maturity Date (2) Principal Payments Remaining for the Periods Ending December 31, Unamortized (Deferred Financing Cost), (Discount) Premium Debt 2020 2021 2022 2023 2024 Thereafter Principal Total Secured notes payable San Diego 4.66 % 4.90 % 1/1/23 $ 451 $ 1,852 $ 1,942 $ 26,259 $ — $ — $ 30,504 $ (148) $ 30,356 Greater Boston 3.93 % 3.19 3/10/23 397 1,628 1,693 74,517 — — 78,235 1,369 79,604 Greater Boston 4.82 % 3.40 2/6/24 829 3,394 3,564 3,742 183,527 — 195,056 9,016 204,072 San Francisco 4.14 % 4.42 7/1/26 — — — — — 28,200 28,200 (572) 27,628 San Francisco 6.50 % 6.50 7/1/36 — 26 28 30 32 587 703 — 703 Secured debt weighted-average interest rate/subtotal 4.55 % 3.57 1,677 6,900 7,227 104,548 183,559 28,787 332,698 9,665 342,363 Commercial paper program (3) 0.26 % (3) 0.29 (3) (3) — (3) — — — 250,000 (3) — 250,000 (11) 249,989 Unsecured senior line of credit (4) L+0.825 % (4) N/A 1/28/24 — — — — — (3) — — — — Unsecured senior notes payable – green bond 4.00 % 4.03 1/15/24 — — — — 650,000 — 650,000 (402) 649,598 Unsecured senior notes payable 3.45 % 3.62 4/30/25 — — — — — 600,000 600,000 (4,020) 595,980 Unsecured senior notes payable 4.30 % 4.50 1/15/26 — — — — — 300,000 300,000 (2,585) 297,415 Unsecured senior notes payable – green bond 3.80 % 3.96 4/15/26 — — — — — 350,000 350,000 (2,720) 347,280 Unsecured senior notes payable 3.95 % 4.13 1/15/27 — — — — — 350,000 350,000 (3,185) 346,815 Unsecured senior notes payable 3.95 % 4.07 1/15/28 — — — — — 425,000 425,000 (3,090) 421,910 Unsecured senior notes payable 4.50 % 4.60 7/30/29 — — — — — 300,000 300,000 (1,963) 298,037 Unsecured senior notes payable 2.75 % 2.87 12/15/29 — — — — — 400,000 400,000 (3,788) 396,212 Unsecured senior notes payable 4.70 % 4.81 7/1/30 — — — — — 450,000 450,000 (3,627) 446,373 Unsecured senior notes payable 4.90 % 5.05 12/15/30 — — — — — 700,000 700,000 (8,036) 691,964 Unsecured senior notes payable 3.375 % 3.48 8/15/31 — — — — — 750,000 750,000 (7,055) 742,945 Unsecured senior notes payable 1.875 % 1.97 2/1/33 — — — — — 1,000,000 1,000,000 (10,774) 989,226 Unsecured senior notes payable 4.85 % 4.93 4/15/49 — — — — — 300,000 300,000 (3,360) 296,640 Unsecured senior notes payable 4.00 % 3.91 2/1/50 — — — — — 700,000 700,000 10,424 710,424 Unsecured debt weighted average/subtotal 3.69 — — — — 900,000 6,625,000 7,525,000 (44,192) 7,480,808 Weighted-average interest rate/total 3.69 % $ 1,677 $ 6,900 $ 7,227 $ 104,548 $ 1,083,559 $ 6,653,787 $ 7,857,698 $ (34,527) $ 7,823,171 (1) Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees. (2) Reflects any extension options that we control. (3) Refer to footnote 3 on the next page. (4) Refer to footnote 2 on the next page. The following table summarizes our secured and unsecured senior debt as of September 30, 2020 (dollars in thousands): Fixed-Rate Debt Variable-Rate Debt Weighted-Average Interest Remaining Term Total Percentage Rate (1) Secured notes payable $ 342,363 $ — $ 342,363 4.4 % 3.57 % 3.3 Unsecured senior notes payable 7,230,819 — 7,230,819 92.4 3.81 11.2 Unsecured senior line of credit (2) — — — — N/A 3.3 Commercial paper program — 249,989 249,989 3.2 0.29 (3) Total/weighted average $ 7,573,182 $ 249,989 $ 7,823,171 100.0 % 3.69 % 10.6 (3) Percentage of total debt 97 % 3 % 100 % (1) Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to the amortization of loan fees, amortization of debt premiums (discounts), and other bank fees. (2) On October 6, 2020, we amended our unsecured senior line of credit to increase commitments available for borrowing by $800 million to an aggregate of $3.0 billion and to extend the maturity date to January 6, 2026. Our unsecured senior line of credit includes a 0% LIBOR floor on the interest rate. Upon achieving certain sustainability thresholds, the rate on the unsecured senior line of credit is temporarily reduced by one basis point, but not below zero percent per year. (3) Under our commercial paper program, we have the ability to issue up to $1.0 billion in commercial paper notes bearing interest at short-term fixed rates, generally with a maturity of 30 days or less and with a maximum maturity of 397 days from the date of issuance. Borrowings under the program are used to fund short-term capital needs and are backed by our unsecured senior line of credit. The commercial paper outstanding as of September 30, 2020, matured on October 7, 2020. In the event we are unable to issue commercial paper notes or refinance outstanding borrowings under terms equal to or more favorable than those under our unsecured senior line of credit, we expect to borrow under the unsecured senior line of credit at L+0.825%. As such, we calculate the weighted-average remaining term of our commercial paper using the maturity date of our unsecured senior line of credit. Using the maturity date of our outstanding commercial paper, the consolidated weighted-average maturity term is 10.5 years. The commercial paper notes sold during the three months ended September 30, 2020, were issued at a weighted-average yield to maturity of 0.25% and had a weighted-average maturity term of 6.3 days. 4.90% and 1.875% unsecured senior notes payable In March 2020, we completed an offering of $700.0 million of unsecured senior notes payable due on December 15, 2030, at an interest rate of 4.90% for net proceeds of $691.6 million. The net proceeds were used to reduce the outstanding indebtedness under our unsecured senior line of credit and commercial paper program. In August 2020, we completed an offering of $1.0 billion of unsecured senior notes payable due on February 1, 2033, at an interest rate of 1.875% for net proceeds of $989.1 million (“1.875% Unsecured Senior Notes”). A portion of the proceeds was used to refinance our 3.90% unsecured senior notes payable due in 2023, aggregating $500.0 million, pursuant to a partial cash tender offer completed on August 5, 2020, and a subsequent call for redemption for the remaining outstanding amounts. The redemption was settled on September 4, 2020. The remaining proceeds were used to fund pending and recently completed acquisitions and construction of our highly leased development and redevelopment projects. As a result of our debt refinancing, we recognized a loss on early extinguishment of debt of $50.8 million, including the write-off of unamortized loan fees. Since January 1, 2019, we have completed the issuances of $4.4 billion in unsecured senior notes, with a weighted-average interest rate of 3.48% and a weighted-average maturity of 14.3 years as of September 30, 2020. $1.0 billion commercial paper program In September 2019, we established a $750.0 million commercial paper program, which received credit ratings of A-2 from S&P Global Ratings and Prime-2 from Moody’s Investors Service. In March 2020, we increased the aggregate amount we may issue from time to time under our commercial paper program from $750.0 million to $1.0 billion. Under this program, commercial paper notes can generally be issued with a maturity of 30 days or less and with a maximum maturity of 397 days from the date of issuance. Our commercial paper program is backed by our unsecured senior line of credit, and at all times we expect to retain a minimum undrawn amount of borrowing capacity under our unsecured senior line of credit equal to any outstanding notes issued under our commercial paper program. We use the net proceeds from the issuances of the notes for general working capital and other general corporate purposes. General corporate purposes may include, but are not limited to, the repayment of other debt and selective development, redevelopment, or acquisition of properties. During the three months ended September 30, 2020, we issued commercial paper notes at a weighted-average yield to maturity of 0.25%. As of September 30, 2020, we had $250.0 million of outstanding notes under our commercial paper program. $750 million unsecured senior line of credit In April 2020, we closed an additional unsecured senior line of credit with $750.0 million of available commitments, which had a maturity date of April 14, 2022, and bore interest at LIBOR plus 1.05%. In addition to the cost of borrowing, this line of credit was subject to an annual facility fee of 0.20% based on the aggregate commitment outstanding. The terms of the $750.0 million unsecured senior line of credit agreement required that the outstanding commitments be reduced by 100% of net cash proceeds from certain new debt transactions and 50% of net cash proceeds from new equity offerings as defined in the agreement. In August 2020, we received cash proceeds from the issuance of our $1.0 billion 1.875% Unsecured Senior Notes, and, pursuant to the terms of the $750.0 million unsecured senior line of credit agreement, all outstanding commitments from the line of credit were reduced to zero, and we terminated this facility. During the three months ended September 30, 2020, we wrote off unamortized fees related to the terminated facility aggregating $1.9 million, which is classified within loss on early extinguishment of debt in our consolidated statements of operations. Amendment of our unsecured senior line of credit On October 6, 2020, we amended our unsecured senior line of credit and recognized a loss on early extinguishment of debt of $651 thousand related to the write-off of unamortized loan fees. Key changes are summarized below: New Agreement Change Commitments available for borrowing $3.0 billion Increased by $800 million Interest rate LIBOR+0.825% Added a 0% LIBOR floor Maturity date January 6, 2026 Extended 2 years Interest expense The following table summarizes interest expense for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Gross interest $ 75,874 $ 70,761 $ 222,100 $ 192,923 Capitalized interest (32,556) (24,558) (88,029) (64,741) Interest expense $ 43,318 $ 46,203 $ 134,071 $ 128,182 |
Accounts payable, accrued expen
Accounts payable, accrued expenses, and other liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Accounts payable, accrued expenses, and tenant security deposits [Abstract] | |
Accounts payable, accrued expenses, and other liabilities | ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES The following table summarizes the components of accounts payable, accrued expenses, and other liabilities as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Accounts payable and accrued expenses $ 318,280 $ 198,994 Accrued construction 274,085 275,818 Acquired below-market leases 292,066 194,773 Conditional asset retirement obligations 48,102 14,037 Deferred rent liabilities 3,922 2,897 Operating lease liability 326,045 271,808 Unearned rent and tenant security deposits 277,964 275,863 Other liabilities 68,876 86,078 Total $ 1,609,340 $ 1,320,268 |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per share | EARNINGS PER SHARE From time to time, we enter into forward equity sales agreements, which are discussed in Note 13 – “Stockholders’ equity” to these unaudited consolidated financial statements. We considered the potential dilution resulting from the forward equity sales agreements on the EPS calculations. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are delivered until settlement. The common shares issued upon the settlement of the forward equity sales agreements, weighted for the period these common shares were outstanding, are included in the denominator of basic EPS. To determine the dilution resulting from the forward equity sales agreements during the period of time prior to settlement, we calculate the number of weighted-average shares outstanding – diluted using the treasury stock method. In October 2019, we elected to convert 2.3 million outstanding shares of our 7.00% Series D convertible preferred stock (“Series D Convertible Preferred Stock”) into shares of our common stock. As of December 31, 2019, we had no shares of our Series D Convertible Preferred Stock outstanding. For the period in 2019 during which our Series D Convertible Preferred Stock was outstanding, we calculated the number of weighted-average shares outstanding – diluted using the if-converted method. Shares of Alexandria Real Estate Equities, Inc.’s common shares issued upon conversion, weighted for the period the common shares were outstanding, were included in the denominator for the period after the date of conversion. We account for unvested restricted stock awards that contain nonforfeitable rights to dividends as participating securities and include these securities in the computation of EPS using the two-class method. Our forward equity sales agreements are not participating securities and are therefore not included in the computation of EPS using the two-class method. Under the two-class method, we allocate net income (after amounts attributable to noncontrolling interests, dividends on preferred stock, and preferred stock redemption charge) to common stockholders and unvested restricted stock awards by using the weighted-average shares of each class outstanding for quarter-to-date and year-to-date periods independently, based on their respective participation rights to dividends declared (or accumulated) and undistributed earnings. The table below is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2020 and 2019 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income (loss) $ 95,799 $ (36,003) $ 370,038 $ 187,994 Net income attributable to noncontrolling interests (14,743) (11,199) (40,563) (27,270) Dividends on preferred stock — (1,173) — (3,204) Preferred stock redemption charge — — — (2,580) Net income attributable to unvested restricted stock awards (1,730) (1,398) (5,304) (4,532) Numerator for basic and diluted EPS – net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders $ 79,326 $ (49,773) 324,171 150,408 Denominator for basic EPS – weighted-average shares of common stock outstanding 124,901 112,120 123,561 111,540 Dilutive effect of forward equity sales agreements 927 — 466 172 Denominator for diluted EPS – weighted-average shares of common stock outstanding 125,828 112,120 124,027 111,712 Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders: Basic $ 0.64 $ (0.44) $ 2.62 $ 1.35 Diluted $ 0.63 $ (0.44) $ 2.61 $ 1.35 |
Stockholders' equity
Stockholders' equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' equity | STOCKHOLDERS’ EQUITY Common equity transactions During the nine months ended September 30, 2020, we executed forward equity sales agreements for an aggregate of 13.8 million shares of common stock, including the exercise of an underwriters’ option, for aggregate net proceeds of approximately $2.1 billion, as follows: • In January 2020 and July 2020, we entered into forward equity sales agreements aggregating $1.0 billion and $1.1 billion, respectively, to sell an aggregate of 6.9 million shares for each offering (13.8 million in aggregate) of our common stock, including the exercise of underwriters’ options, at public offering prices of $155.00 per share and $160.50 per share, respectively, before underwriting discounts. • In March 2020, we settled 3.4 million shares and received proceeds of $500.0 million. In September 2020, we settled 8.7 million shares from our forward equity sales agreements and received proceeds of $1.3 billion. • We expect to settle the remaining 1.8 million shares outstanding in 2020 and receive proceeds of approximately $267.4 million, to be further adjusted as provided in the aforementioned agreements. We expect to use the proceeds to fund pending and recently completed acquisitions and the construction of our highly leased development projects. In February 2020, we entered into a new ATM common stock offering program, which allows us to sell up to an aggregate of $850.0 million of our common stock. As of September 30, 2020, we have $843.7 million available under our ATM program. Dividends During the three months ended March 31, 2020, we declared cash dividends on our common stock aggregating $130.0 million, or $1.03 per share. In April 2020, we paid the cash dividends on our common stock declared for the three months ended March 31, 2020. During the three months ended June 30, 2020, we declared cash dividends on our common stock aggregating $133.7 million, or $1.06 per share. In July 2020, we paid the cash dividends on our common stock declared for the three months ended June 30, 2020. During the three months ended September 30, 2020, we declared cash dividends on our common stock aggregating $143.0 million, or $1.06 per share. In October 2020, we paid the cash dividends on our common stock declared for the three months ended September 30, 2020. Accumulated other comprehensive loss The following table presents the changes in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders during the nine months ended September 30, 2020, due to net unrealized losses on foreign currency translation (in thousands): Total Balance as of December 31, 2019 $ (9,749) Other comprehensive loss before reclassifications (889) Net other comprehensive loss (889) Balance as of September 30, 2020 $ (10,638) Common stock, preferred stock, and excess stock authorizations Our charter authorizes the issuance of 200.0 million shares of common stock, of which 133.3 million shares were issued and outstanding as of September 30, 2020. Our charter also authorizes the issuance of up to 100.0 million shares of preferred stock, none of which were issued and outstanding as of September 30, 2020. In addition, 200.0 million shares of “excess stock” (as defined in our charter) are authorized, none of which were issued and outstanding as of September 30, 2020. |
Noncontrolling interests
Noncontrolling interests | 9 Months Ended |
Sep. 30, 2020 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling interests | NONCONTROLLING INTERESTS Noncontrolling interests represent the third-party interests in certain entities in which we have a controlling interest. These entities owned 38 properties as of September 30, 2020, and are included in our consolidated financial statements. Noncontrolling interests are adjusted for additional contributions and distributions, the proportionate share of the net earnings or losses, and other comprehensive income or loss. Distributions, profits, and losses related to these entities are allocated in accordance with the respective operating agreements. During the nine months ended September 30, 2020 and 2019, we distributed $64.6 million and $38.9 million, respectively, to our consolidated real estate joint venture partners. Certain of our noncontrolling interests have the right to require us to redeem their ownership interests in the respective entities. We classify these ownership interests in the entities as redeemable noncontrolling interests outside of total equity in our consolidated balance sheets. Redeemable noncontrolling interests are adjusted for additional contributions and distributions, the proportionate share of the net earnings or losses, and other comprehensive income or loss. If the amount of a redeemable noncontrolling interest is less than the maximum redemption value at the balance sheet date, such amount is adjusted to the maximum redemption value. Subsequent declines in the redemption value are recognized only to the extent that previous increases have been recognized. |
Assets classified as held for s
Assets classified as held for sale | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Assets classified as held for sale | ASSETS CLASSIFIED AS HELD FOR SALE As of September 30, 2020, three properties aggregating 458,006 RSF were classified as held for sale in our consolidated financial statements, none of which met the criteria for classification as discontinued operations. Accordingly, we ceased depreciation of these properties upon their classification as held for sale. During the three months ended September 30, 2020, we recognized impairment charges aggregating $7.7 million primarily related to a 255,765 RSF property located at 945 Market Street in our SoMa submarket. During the three months ended September 30, 2020, upon approval for sale by our Board of Directors, the real estate asset met the criteria for classification as held for sale but did not meet the criteria for classification as discontinued operations. Upon classification as held for sale, we determined the estimated fair value of this asset less costs to sell was lower than the carrying amount of the asset, and recognized an impairment charge of $6.8 million to lower the carrying amount to the estimated fair value less costs to sell. In September 2020, we completed the sale of the property for a sales price of $198.0 million with no gain or loss. Refer to “Impairment of long-lived assets” within Note 2 – “Summary of significant account policies” to these unaudited consolidated financial statements for additional information. The following is a summary of net assets as of September 30, 2020, and December 31, 2019, for our real estate investments that were classified as held for sale as of each respective date (in thousands): September 30, 2020 December 31, 2019 Total assets $ 44,465 $ 59,412 Total liabilities (2,208) (2,860) Total accumulated other comprehensive income 400 536 Net assets classified as held for sale $ 42,657 $ 57,088 |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Amendment of our unsecured senior line of credit On October 6, 2020, we amended our unsecured senior line of credit and recognized a loss on early extinguishment of debt of $651 thousand related to the write-off of unamortized loan fees. Key changes are summarized below: New Agreement Change Commitments available for borrowing $3.0 billion Increased by $800 million Interest rate LIBOR+0.825% Added a 0% LIBOR floor Maturity date January 6, 2026 Extended 2 years |
Summary of significant accoun_2
Summary of significant accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation | Consolidation On an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly owned by us in accordance with the consolidation guidance. Our evaluation considers all of our variable interests, including equity ownership, as well as fees paid to us for our involvement in the management of each partially owned entity. To fall within the scope of the consolidation guidance, an entity must meet both of the following criteria: • The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity can be in the form of a partnership, limited liability company, or corporation, among others; and • We have a variable interest in the legal entity – i.e., variable interests that are contractual, such as equity ownership, or other financial interests that change with changes in the fair value of the entity’s net assets. If an entity does not meet both criteria above, we apply other accounting literature, such as the cost or equity method of accounting. If an entity does meet both criteria above, we evaluate such entity for consolidation under either the variable interest model if the legal entity meets any of the following characteristics to qualify as a VIE, or under the voting model for all other legal entities that are not VIEs. A legal entity is determined to be a VIE if it has any of the following three characteristics: 1) The entity does not have sufficient equity to finance its activities without additional subordinated financial support; 2) The entity is established with non-substantive voting rights (i.e., the entity deprives the majority economic interest holder(s) of voting rights); or 3) The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion if they lack any of the following: • The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence the entity’s economic performance, as evidenced by: • Substantive participating rights in day-to-day management of the entity’s activities; or • Substantive kick-out rights over the party responsible for significant decisions; • The obligation to absorb the entity’s expected losses; or • The right to receive the entity’s expected residual returns. Our real estate joint ventures consist of limited partnerships or limited liability companies. For an entity structured as a limited partnership or a limited liability company, our evaluation of whether the equity holders (equity partners other than the general partner or the managing member of a joint venture) lack the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members (the noncontrolling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows: • Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating decisions made in the ordinary course of business that most significantly influence the entity’s economic performance. • Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause. If we conclude that any of the three characteristics of a VIE are met, including that the equity holders lack the characteristics of a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model. Variable interest model If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits — that is, (i) we have the power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power), and (ii) we have the obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE (benefits). We consolidate VIEs whenever we determine that we are the primary beneficiary. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements for information on specific joint ventures that qualify as VIEs. If we have a variable interest in a VIE but are not the primary beneficiary, we account for our investment using the equity method of accounting. Voting model If a legal entity fails to meet any of the three characteristics of a VIE (i.e., insufficiency of equity, existence of non-substantive voting rights, or lack of a controlling financial interest), we then evaluate such entity under the voting model. Under the voting model, we consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares and that other equity holders do not have substantive participating rights. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements for further information on our unconsolidated real estate joint ventures that qualify for evaluation under the voting model. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and equity; the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements; and the amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. |
Investments in real estate and properties classified as held for sale | Investments in real estate Evaluation of business combination or asset acquisition We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the definition of a business is accounted for as an asset acquisition. If either of the following criteria is met, the integrated set of assets and activities acquired would not qualify as a business: • Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group of similar identifiable assets; or • The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction). An acquired process is considered substantive if: • The process includes an organized workforce (or includes an acquired contract that provides access to an organized workforce) that is skilled, knowledgeable, and experienced in performing the process; • The process cannot be replaced without significant cost, effort, or delay; or • The process is considered unique or scarce. Generally, our acquisitions of real estate or in-substance real estate do not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or an acquired contract that cannot be replaced without significant cost, effort, or delay. When evaluating acquired service or management contracts, we consider the nature of the services performed, the terms of the contract relative to similar arm’s-length contracts, and the availability of comparable vendors in evaluating whether the acquired contract constitutes a substantive process. Recognition of real estate acquired We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the definition of a business is accounted for as an asset acquisition. For acquisitions of real estate or in-substance real estate that are accounted for as business combinations, we allocate the acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, noncontrolling interests, and previously existing ownership interests at fair value as of the acquisition date. Assets include intangible assets such as tenant relationships, acquired in-place leases, and favorable intangibles associated with in-place leases in which we are the lessor. Liabilities include unfavorable intangibles associated with in-place leases in which we are the lessor. In addition, for acquired in-place finance or operating leases in which we are the lessee, acquisition consideration is allocated to lease liabilities and related right-of-use assets, adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. Any excess (deficit) of the consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill (bargain purchase gain). Acquisition costs related to business combinations are expensed as incurred. Generally, we expect that acquisitions of real estate or in-substance real estate will not meet the definition of a business because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings, and related intangible assets). The accounting model for asset acquisitions is similar to the accounting model for business combinations, except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and liabilities assumed on a relative fair value basis. Any excess (deficit) of the consideration transferred relative to the sum of the fair value of the assets acquired and liabilities assumed is allocated to the individual assets and liabilities based on their relative fair values. As a result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. Incremental and external direct acquisition costs (such as legal and other third-party services) are capitalized. We exercise judgment to determine the key assumptions used to allocate the purchase price of real estate acquired among its components. The allocation of the consideration to the various components of properties acquired during the year can have an effect on our net income due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related depreciation and amortization expense in our consolidated statements of operations. We apply judgment in utilizing available comparable market information to assess relative fair value. We assess the relative fair values of tangible and intangible assets and liabilities based on available comparable market information, including estimated replacement costs, rental rates, and recent market transactions. In addition, we may use estimated cash flow projections that utilize appropriate discount and capitalization rates. Estimates of future cash flows are based on a number of factors, including the historical operating results, known and anticipated trends, and market/economic conditions that may affect the property. The value of tangible assets acquired is based upon our estimation of fair value on an “as if vacant” basis. The value of acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. If there is a bargain fixed-rate renewal option for the period beyond the noncancellable lease term of an in-place lease, we evaluate intangible factors such as the business conditions in the industry in which the lessee operates, the economic conditions in the area in which the property is located, and the ability of the lessee to sublease the property during the renewal term, in order to determine the likelihood that the lessee will renew. When we determine there is reasonable assurance that such bargain purchase option will be exercised, we consider the option in determining the intangible value of such lease and its related amortization period. We also recognize the relative fair values of assets acquired, the liabilities assumed, and any noncontrolling interest in acquisitions of less than a 100% interest when the acquisition constitutes a change in control of the acquired entity. The values allocated to buildings and building improvements, land improvements, tenant improvements, and equipment are depreciated on a straight-line basis using the shorter of the respective ground lease term, estimated useful life, or up to 40 years, for buildings and building improvements; estimated life, or up to 20 years, for land improvements; the respective lease term or estimated useful life for tenant improvements; and the shorter of the lease term or estimated useful life for equipment. The values of acquired in-place leases and associated favorable intangibles (i.e., acquired above-market leases) are classified in other assets in our consolidated balance sheets and are amortized over the remaining terms of the related leases as a reduction of income from rentals in our consolidated statements of operations. The values of unfavorable intangibles (i.e., acquired below-market leases) associated with acquired in-place leases are classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets and are amortized over the remaining terms of the related leases as an increase in income from rentals in our statements of operations. Capitalized project costs We capitalize project costs, including pre-construction costs, interest, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, pre-construction, or construction of a project. Capitalization of development, redevelopment, pre-construction, and construction costs is required while activities are ongoing to prepare an asset for its intended use. Fluctuations in our development, redevelopment, pre-construction, and construction activities could result in significant changes to total expenses and net income. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Should development, redevelopment, pre-construction, or construction activity cease, interest, property taxes, insurance, and certain other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and maintenance are expensed as incurred. Real estate sales A property is classified as held for sale when all of the following criteria for a plan of sale have been met: (i) management, having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition, subject only to terms that are usual and customary; (iii) an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within one year; (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Depreciation of assets ceases upon designation of a property as held for sale. If the disposal of a property represents a strategic shift that has (or will have) a major effect on our operations or financial results, such as (i) a major line of business, (ii) a major geographic area, (iii) a major equity method investment, or (iv) other major parts of an entity, then the operations of the property, including any interest expense directly attributable to it, are classified as discontinued operations in our consolidated statements of operations, and amounts for all prior periods presented are reclassified from continuing operations to discontinued operations. The disposal of an individual property generally will not represent a strategic shift and therefore will typically not meet the criteria for classification as a discontinued operation. We recognize gains/losses on real estate sales in accordance with the accounting standard on the derecognition of nonfinancial assets arising from contracts with noncustomers. Our ordinary output activities consist of the leasing of space to our tenants in our operating properties, not the sales of real estate. Therefore, sales of real estate (in which we are the seller) qualify as contracts with noncustomers. In our transactions with noncustomers, we apply certain recognition and measurement principles consistent with our method of recognizing revenue arising from contracts with customers. Derecognition of the asset is based on the transfer of control. If a real estate sales contract includes our ongoing involvement with the property, then we evaluate each promised good or service under the contract to determine whether it represents a separate performance obligation, constitutes a guarantee, or prevents the transfer of control. If a good or service is considered a separate performance obligation, an allocated portion of the transaction price is recognized as revenue as we transfer the related good or service to the buyer. The recognition of gain or loss on the sale of a partial interest also depends on whether we retain a controlling or noncontrolling interest in the property. If we retain a controlling interest in the property upon completion of the sale, we continue to reflect the asset at its book value, record a noncontrolling interest for the book value of the partial interest sold, and recognize additional paid-in capital for the difference between the consideration received and the partial interest at book value. Conversely, if we retain a noncontrolling interest upon completion of the sale of a partial interest of real estate, we would recognize a gain or loss as if 100% of the real estate were sold. |
Impairment of long-lived assets | Impairment of long-lived assets Prior to and subsequent to the end of each quarter, we review current activities and changes in the business conditions of all of our long-lived assets to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Long-lived assets to be held and used, including our rental properties, CIP, land held for development, right-of-use assets related to operating leases in which we are the lessee, and intangibles, are individually evaluated for impairment when conditions exist that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Triggering events or impairment indicators for long-lived assets to be held and used are assessed by project and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations, current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction costs, available market information, current and historical operating results, known trends, current market/economic conditions that may affect the asset, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under consideration. Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount to its estimated fair value. If an impairment charge is not required to be recognized, the recognition of depreciation or amortization is adjusted prospectively, as necessary, to reduce the carrying amount of the real estate to its estimated disposition value over the remaining period that the asset is expected to be held and used. We may adjust depreciation of properties that are expected to be disposed of or redeveloped prior to the end of their useful lives. We use the held for sale impairment model for our properties classified as held for sale. The held for sale impairment model is different from the held and used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held for sale. |
International operations | International operations In addition to operating properties in the U.S., we have three operating properties in Canada and one operating property in China. The functional currency for our subsidiaries operating in the U.S. is the U.S. dollar. The functional currencies for our foreign subsidiaries are the local currencies in each respective country. The assets and liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect as of the financial statement date. Revenue and expense accounts of our foreign subsidiaries are translated using the weighted-average exchange rate for the periods presented. Gains or losses resulting from the translation are classified in accumulated other comprehensive income as a separate component of total equity and are excluded from net income. Whenever a foreign investment meets the criteria for classification as held for sale, we evaluate the recoverability of the investment under the held for sale impairment model. We may recognize an impairment charge if the carrying amount of the investment exceeds its fair value less cost to sell. In determining an investment’s carrying amount, we consider its net book value and any cumulative unrealized foreign currency translation adjustment related to the investment. The appropriate amounts of foreign exchange rate gains or losses classified in accumulated other comprehensive income are reclassified to net income when realized upon the sale of our investment or upon the complete or substantially complete liquidation of our investment. |
Investments | Investments We hold investments in publicly traded companies and privately held entities primarily involved in the life science, technology, and agtech industries. As a REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10%. Our equity investments (except those accounted for under the equity method and those that result in consolidation of the investee) are measured as follows: • Investments in publicly traded companies are classified as investments with readily determinable fair values and are presented at fair value in our consolidated balance sheets, with changes in fair value recognized in net income. The fair values for our investments in publicly traded companies are determined based on sales prices or quotes available on securities exchanges. • Investments in privately held entities without readily determinable fair values fall into two categories: • Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships, are presented at fair value using NAV as a practical expedient, with changes in fair value recognized in net income. We use NAV per share reported by limited partnerships generally without adjustment, unless we are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the investment at our reporting date. We disclose the timing of liquidation of an investee’s assets and the date when redemption restrictions will lapse (or indicate if this timing is unknown) if the investee has communicated this information to us or has announced it publicly. • Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income. For investments in privately held entities that do not report NAV per share, an observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution preferences, and conversion rights to the investments we hold. We monitor investments in privately held entities that do not report NAV per share throughout the year for new developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements, capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators: (i) a significant deterioration in the earnings performance, asset quality, or business prospects of the investee; (ii) a significant adverse change in the regulatory, economic, or technological environment of the investee, (iii) a significant adverse change in the general market condition, including the research and development of technology and products that the investee is bringing or attempting to bring to the market, or (iv) significant concerns about the investee’s ability to continue as a going concern. If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value. Investments in privately held entities are accounted for under the equity method, unless our interest in the entity is deemed to be so minor that we have virtually no influence over the entity’s operating and financial policies. Under the equity method of accounting, we initially recognize our investment at cost and adjust the carrying amount of the investment to recognize our share of the earnings or losses of the investee subsequent to the date of our investment. We had no investments accounted for under the equity method as of September 30, 2020. We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified within investment income. Unrealized gains and losses represent changes in fair value for investments in publicly traded companies, changes in NAV, as a practical expedient to estimate fair value, for investments in privately held entities that report NAV per share, and observable price changes on our investments in privately held entities that do not report NAV per share. Impairments are realized losses, which result in an adjusted cost, and represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share to their estimated fair value. Realized gains and losses represent the difference between proceeds received upon disposition of investments and their historical or adjusted cost. In April 2019, the FASB issued an accounting standard that amends the financial instruments standard by clarifying that all private investments that do not report NAV per share and are adjusted under the measurement alternative (for observable price changes and impairments) described above represent nonrecurring fair value measurement adjustments and therefore require applicable fair value disclosures, including disclosures about the level of the fair value hierarchy within which the fair value measurements are categorized. The accounting standard became effective for us and was adopted on January 1, 2020. Beginning in 2020, pursuant to the requirements of this new standard, we provide incremental fair value disclosures related to our investments in privately held entities that do not report NAV per share in Note 9 – “Fair value measurements” to these unaudited consolidated financial statements. |
Revenues | Revenues The table below provides detail of our consolidated total revenues for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 539,001 $ 372,593 $ 1,398,084 $ 1,074,395 Direct financing lease 619 607 1,847 1,812 Revenues subject to the lease accounting standard 539,620 373,200 1,399,931 1,076,207 Revenues subject to the revenue recognition accounting standard 3,792 12,576 16,942 35,936 Income from rentals 543,412 385,776 1,416,873 1,112,143 Other income 1,630 4,708 5,044 11,039 Total revenues $ 545,042 $ 390,484 $ 1,421,917 $ 1,123,182 During the three and nine months ended September 30, 2020, revenues that were subject to the lease accounting standard aggregated $539.6 million and $1.4 billion, respectively, and represented 99.0% and 98.5%, respectively, of our total revenues. During the three and nine months ended September 30, 2020, our total revenues also included $5.4 million, or 1.0%, and $22.0 million, or 1.5%, respectively, subject to other accounting guidance. Our other income consisted primarily of construction management fees and interest income earned during the three and nine months ended September 30, 2020. For a detailed discussion related to our revenue streams, refer to the “Lease accounting” and “Recognition of revenue arising from contracts with customers” sections within this Note 2 to these unaudited consolidated financial statements. |
Leases summary | Lease accounting Transition On January 1, 2019, we adopted a new lease accounting standard that sets principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors). The new lease accounting standard required the use of the modified retrospective transition method. Upon adoption of the new lease accounting standard, we elected the following practical expedients and accounting policies provided by this lease standard: • Package of practical expedients – required us not to reevaluate our existing or expired leases as of January 1, 2019, under the new lease accounting standard. • Optional transition method practical expedient – required us to apply the new lease accounting standard prospectively from the adoption date of January 1, 2019. • Single component accounting policy – required us to account for lease and nonlease components within a lease under the new lease accounting standard if certain criteria are met. • Land easements practical expedient – required us to continue to account for land easements existing as of January 1, 2019, under the accounting standards applied to them prior to January 1, 2019. • Short-term lease accounting policy – required us not to record the related lease liabilities and right-of-use assets for operating leases in which we are the lessee with a term of 12 months or less. Upon adoption of the new lease accounting standard, we elected the package of practical expedients and the optional transition method, which permitted January 1, 2019, to be our initial application date. Our election of the package of practical expedients and the optional transition method allowed us not to reassess: • Whether any contracts effective prior to January 1, 2019, were leases or contained leases. This practical expedient was primarily applicable to entities that had contracts containing embedded leases. As of December 31, 2018, we had no such contracts; therefore, this practical expedient had no effect on us. • The lease classification for any leases that commenced prior to January 1, 2019. Our election of the package of practical expedients required us not to revisit the classification of our leases that commenced prior to January 1, 2019. For example, all of our leases that were classified as operating leases in accordance with the lease accounting standards in effect prior to January 1, 2019, continued to be classified as operating leases after adoption of the new lease standard. • Previously capitalized initial direct costs for any leases that commenced prior to January 1, 2019. Our election of the package of practical expedients and the optional transition method required us not to reassess whether initial direct leasing costs capitalized prior to the adoption of the new lease accounting standard in connection with the leases that commenced prior to January 1, 2019, qualified for capitalization under the new lease accounting standard. We applied the package of practical expedients consistently to all leases (i.e., in which we were the lessee or the lessor) that commenced before January 1, 2019. The election of this package permitted us to “run off” our leases that commenced before January 1, 2019, for the remainder of their lease terms and to apply the new lease accounting standard to leases commencing or modified after January 1, 2019. For our leases that commenced prior to January 1, 2019, under the package of practical expedients and optional transition method, we were not required to reassess whether initial direct leasing costs capitalized prior to the adoption of the new lease accounting standard in connection with such leases qualified for capitalization under the new lease accounting standard. Therefore, we continue to amortize these initial direct leasing costs over their respective lease terms. On January 1, 2019, as required by the new lease accounting standard, we recognized a cumulative adjustment to retained earnings aggregating $3.5 million to write off initial direct leasing costs that were capitalized in connection with leases that were executed but had not commenced before January 1, 2019. These costs were capitalized in accordance with the lease accounting standards existing prior to January 1, 2019, and would not qualify for capitalization under the new lease accounting standard. Under the package of practical expedients, all of our operating leases existing as of January 1, 2019, in which we were the lessee, continued to be classified as operating leases subsequent to the adoption of the new lease accounting standard. In accordance with the lease accounting standard adopted on January 1, 2019, we classified the present value of the remaining future rental payments associated with these operating leases in our consolidated balance sheets. Consequently, on January 1, 2019, we recognized a lease liability aggregating $218.7 million, which represented the present value of the remaining future rental payments aggregating $590.3 million related to our ground and office leases, in which we were the lessee, existing as of January 1, 2019. This liability was classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets and included approximately $27.0 million reclassified out of the deferred rent liabilities balance in accordance with the new lease standard. We have also recognized a corresponding right-of-use asset, which was classified within other assets in our consolidated balance sheets. The present value of the remaining lease payments was calculated for each operating lease existing as of January 1, 2019, in which we were the lessee by using each respective remaining lease term and a corresponding estimated incremental borrowing rate. The incremental borrowing rate is the interest rate that we estimated we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Subsequent application of the new lease accounting standard Definition of a lease When we enter into a contract or amend an existing contract, we evaluate whether the contract meets the definition of a lease. To meet the definition of a lease, the contract must meet all three criteria: (i) One party (lessor) must hold an identified asset; (ii) The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset throughout the period of the contract; and (iii) The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract. Lease classification The criteria to determine whether a lease should be accounted for as a finance lease for lessees or a sales-type lease for lessors include any of the following: (i) Ownership is transferred from lessor to lessee by the end of the lease term; (ii) An option to purchase is reasonably certain to be exercised; (iii) The lease term is for the major part of the underlying asset’s remaining economic life; (iv) The present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset; or (v) The underlying asset is specialized and is expected to have no alternative use at the end of the lease term. If any of these criteria is met, a lease is classified as a finance lease by the lessee and as a sales-type lease by the lessor. If none of the criteria are met, a lease is classified as an operating lease by the lessee but may still qualify as a direct financing lease or an operating lease for the lessor. The existence of a residual value guarantee from an unrelated third party other than the lessee may qualify the lease as a direct financing lease by the lessor. Otherwise, the lease is classified as an operating lease by the lessor. Therefore, lessees apply a dual approach by classifying leases as either finance or operating leases based on the principle of whether the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, which corresponds to a similar evaluation performed by lessors. |
Leases, lessor accounting | Lessor accounting Costs to execute leases We capitalize initial direct costs, which represent only incremental costs of a lease that would not have been incurred if the lease had not been obtained. Costs that we incur to negotiate or arrange a lease, regardless of its outcome, such as for fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs, are expensed as incurred. Operating leases We account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires us to account for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single component if two criteria are met: (i) The timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and (ii) The lease component would be classified as an operating lease if it were accounted for separately. Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our leases, and contingent rental payments. Nonlease components consist primarily of tenant recoveries representing reimbursements of rental operating expenses under our triple net lease structure, including recoveries for utilities, repairs and maintenance, and common area expenses. If the lease component is the predominant component, we account for all revenues under such lease as a single component in accordance with the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all revenues from our operating leases under the lease accounting standard and classify these revenues as income from rentals in our consolidated statements of operations. We commence recognition of income from rentals related to the operating leases at the date the property is ready for its intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. Income from rentals related to fixed rental payments under operating leases is recognized on a straight-line basis over the respective operating lease terms. We classify amounts expected to be received in later periods as deferred rent in our consolidated balance sheets. Amounts received currently but recognized as revenue in future periods are classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets. Income from rentals related to variable payments includes tenant recoveries, and contingent rental payments. Tenant recoveries, including reimbursements of utilities, repairs and maintenance, common area expenses, real estate taxes and insurance, and other operating expenses, are recognized as revenue in the period during which the applicable expenses are incurred and the tenant’s obligation to reimburse us arises. Income from rentals related to other variable payments is recognized when associated contingencies are removed. We assess collectibility from our tenants of future lease payments for each of our operating leases. If we determine that collectibility is probable, we recognize income from rentals based on the methodology described above. If we determine that collectibility is not probable, we recognize an adjustment to lower our income from rentals. Furthermore, we may recognize a general allowance at a portfolio level (not the individual level), if we do not expect to collect future lease payments in full. Due to the uncertainties posed to the business and operations of our tenants by the COVID-19 pandemic, during the three months ended March 31, 2020, we recognized an adjustment aggregating $1.6 million to lower our income from rentals and deferred rent related to certain leases where we determined that the collection of future lease payments was not probable. For these leases, we ceased the recognition of income from rentals on a straight-line basis and began the recognition of income from rentals on a cash basis as lease payments are collected. We will not resume straight-line recognition of income from rentals for these leases until we determine that collectibility of future payments related to these leases is probable. During the three months ended June 30, 2020 and September 30, 2020, no further adjustments were required. During the nine months ended September 30, 2020, we also recorded a general allowance aggregating $3.6 million, which was primarily incurred and recognized during the three months ended March 31, 2020, for a pool of deferred rent balances, which at the portfolio level (not the individual level) was not expected to be collected in full through the lease term. We recorded the general allowance as a reduction of our income from rentals and deferred rent balance within our consolidated statements of operations and consolidated balance sheets, respectively. Direct financing and sales-type leases As of September 30, 2020, we had one direct financing lease and no sales-type leases. Income from rentals related to our direct financing lease is recognized over the lease term using the effective interest rate method. At lease commencement, we record an asset within other assets in our consolidated balance sheets, which represents our net investment in the direct financing lease. This initial net investment is determined by aggregating the total future lease payments attributable to the direct financing lease and the estimated residual value of the property less unearned income. Over the lease term, the investment in the direct financing lease is reduced and rental income is recognized as income from rentals in our consolidated statements of operations, producing a constant periodic rate of return on the net investment in the direct financing lease. We evaluate our net investment in the direct financing lease for impairment under the new current expected credit loss standard that we adopted on January 1, 2020. For more information, refer to the “Allowance for credit losses” section within this Note 2 to these unaudited consolidated financial statements. |
Leases, lessee accounting | Lessee accounting We have operating lease agreements in which we are the lessee consisting of ground and office leases. At the lease commencement date (or at the acquisition date if the lease is acquired as part of a real estate acquisition), we are required to recognize a liability to account for our future obligations under these operating leases, and a corresponding right-of-use asset. The lease liability is measured based on the present value of the future lease payments, including payments during the term under our extension options that we are reasonably certain to exercise. The present value of the future lease payments is calculated for each operating lease using each respective remaining lease term and a corresponding estimated incremental borrowing rate, which is the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period. We classify the operating lease liability in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets. The right-of-use asset is measured based on the corresponding lease liability, adjusted for initial direct leasing costs and any other consideration exchanged with the landlord prior to the commencement of the lease, as well as adjustments to reflect favorable or unfavorable terms of an acquired lease when compared with market terms at the time of acquisition. Subsequently, the right-of-use asset is amortized on a straight-line basis during the lease term. We classify the right-of-use asset in other assets in our consolidated balance sheets. |
Recognition of revenue arising from contracts with customers | Recognition of revenue arising from contracts with customers We recognize revenues associated with transactions arising from contracts with customers, excluding revenues subject to the lease accounting standard discussed in the “Lease accounting” section above, in accordance with the revenue recognition accounting standard. A customer is distinguished from a noncustomer by the nature of the goods or services that are transferred. Customers are provided with goods or services that are generated by a company’s ordinary output activities, whereas noncustomers are provided with nonfinancial assets that are outside of a company’s ordinary output activities. We generally recognize revenue representing the transfer of goods and services to customers in an amount that reflects the consideration to which we expect to be entitled in the exchange. In order to determine the recognition of revenue from customer contracts, we use a five-step model to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation. We identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer. We consider whether we control the goods or services prior to the transfer to the customer in order to determine whether we should account for the arrangement as a principal or agent. If we determine that we control the goods or services provided to the customer, then we are the principal to the transaction, and we recognize the gross amount of consideration expected in the exchange. If we simply arrange but do not control the goods or services being transferred to the customer, then we are considered to be an agent to the transaction, and we recognize the net amount of consideration we are entitled to retain in the exchange. |
Monitoring tenant credit quality | Monitoring of tenant credit quality During the term of each lease, we monitor the credit quality and any related material changes of our tenants by (i) monitoring the credit rating of tenants that are rated by a nationally recognized credit rating agency, (ii) reviewing financial statements of the tenants that are publicly available or that are required to be delivered to us pursuant to the applicable lease, (iii) monitoring news reports regarding our tenants and their respective businesses, and (iv) monitoring the timeliness of lease payments. |
Allowance for credit losses | Allowance for credit losses On January 1, 2020, we adopted an accounting standard (further clarified in subsequently issued updates) that requires companies to estimate and recognize lifetime expected losses, rather than incurred losses, which results in the earlier recognition of credit losses even if the expected risk of credit loss is remote. The accounting standard applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases arising from sales-type and direct financing leases, and off-balance-sheet credit exposures (e.g., loan commitments). The standard does not apply to the receivables arising from operating leases. An assessment of the collectibility of operating lease payments and the recognition of an adjustment to lease income based on this assessment is governed by the lease accounting standard discussed in the “Lease accounting” section earlier within this Note 2 to these unaudited consolidated financial statements. Upon adoption of the accounting standard, we had one lease subject to this standard classified as a direct financing lease with a net investment balance aggregating $39.9 million prior to the credit loss adjustment. In this direct financing lease, the payment obligation of the lessee is collateralized by real estate property. Historically, we have had no collection issues related to this direct financing lease; therefore, we assessed the probability of default on this lease based on the lessee’s financial condition, credit rating, business prospects, remaining lease term, and expected value of the underlying collateral upon its repossession. Based on the aforementioned considerations, we estimated a credit loss adjustment related to this direct financing lease aggregating $2.2 million, which was recognized as a cumulative adjustment to retained earnings and as a reduction of the investment in the direct financing lease balance from $39.9 million to $37.7 million in our consolidated balance sheets on January 1, 2020. Subsequent to the initial recognition, at each reporting date we recognize a credit loss adjustment, if necessary, for our current estimate of expected credit losses, which is classified within rental operations in our consolidated statements of operations. For further details, refer to Note 5 – “Leases” to these unaudited consolidated financial statements. In addition to our direct financing lease, the accounting standard on credit losses applies to our receivables that result from revenue transactions within the scope of the revenue recognition accounting standard discussed in the “Recognition of revenue arising from contracts with customers” section earlier within this Note 2. Upon adoption of the standard on January 1, 2020, our receivables resulting from revenue transactions within the scope of revenue recognition accounting standard aggregated $16.1 million. Among other factors, we considered the short-term nature of these receivables, our positive assessment of the financial condition and business prospects of the payors, and minimal historical collectibility issues. Based on the aforementioned considerations, we estimated the credit loss related to our trade receivables to approximate $259 thousand , which was recognized as a cumulative adjustment to retained earnings and as a reduction of the trade receivables balance in our consolidated balance sheets on January 1, 2020. |
Income taxes | Income taxes We are organized and operate as a REIT pursuant to the Internal Revenue Code (the “Code”). Under the Code, a REIT that distributes at least 90% of its REIT taxable income to its stockholders annually (excluding net capital gains) and meets certain other conditions is not subject to federal income tax on its distributed taxable income, but could be subject to certain federal, foreign, state, and local taxes. We distribute 100% of our taxable income annually; therefore, a provision for federal income taxes is not required. In addition to our REIT returns, we file federal, foreign, state, and local tax returns for our subsidiaries. We file with jurisdictions located in the U.S., Canada, India, China, and other international locations. Our tax returns are subject to routine examination in various jurisdictions for the 2014 through 2019 calendar years. |
Employee share-based payments | Employee and non-employee share-based payments We have implemented an entity-wide accounting policy to account for forfeitures of share-based awards granted to employees and non-employees when they occur. As a result of this policy, we recognize expense on share-based awards with time-based vesting conditions without reductions for an estimate of forfeitures. This accounting policy only applies to service condition awards. For performance condition awards, we continue to assess the probability that such conditions will be achieved. Expenses related to forfeited awards are reversed as forfeitures occur. In addition, all nonforfeitable dividends paid on share-based payment awards are initially classified in retained earnings and reclassified to compensation cost only if forfeitures of the underlying awards occur. Our employee and non-employee share-based awards are measured on the grant date and recognized over the recipient’s required service period. |
Forward equity sales agreements | Forward equity sales agreements We account for our forward equity sales agreements in accordance with the accounting guidance governing financial instruments and derivatives. As of September 30, 2020, none of our forward equity sales agreements were deemed to be liabilities as they did not embody obligations to repurchase our shares, nor did they embody obligations to issue a variable number of shares for which the monetary value was predominantly fixed, varied with something other than the fair value of our shares, or varied inversely in relation to our shares. We also evaluated whether the agreements met the derivatives and hedging guidance scope exception to be accounted for as equity instruments and concluded that the agreements can be classified as equity contracts based on the following assessment: (i) none of the agreements’ exercise contingencies were based on observable markets or indices besides those related to the market for our own stock price and operations; and (ii) none of the settlement provisions precluded the agreements from being indexed to our own stock. |
Issuer and guarantor subsidiaries of guaranteed securities | Issuer and guarantor subsidiaries of guaranteed securities In March 2020, the SEC issued an amendment to existing guidance to reduce and simplify financial disclosure requirements for issuers and guarantors of registered debt offerings. The guidance is effective for filings on or after January 4, 2021, with early adoption permitted. Upon evaluation of the guidance, we elected to early adopt the amendment during the three months ended March 31, 2020. Generally, a parent entity must provide separate subsidiary issuer or guarantor financial statements, unless it qualifies for disclosure exceptions provided in the amendment. Currently, a parent entity must fully own the subsidiary issuer or guarantor and guarantee its registered security fully and unconditionally to qualify for disclosure exceptions under the existing guidance. Pursuant to the amendment, a parent entity may be eligible for disclosure exceptions if it meets the following criteria: • The subsidiary issuer or guarantor is a consolidated subsidiary of the parent company, and • The subsidiary issues a registered security that is: • Issued jointly and severally with the parent company, or • Fully and unconditionally guaranteed by the parent company. A parent entity that meets the above criteria may instead present summarized financial information (“alternative disclosures”). We evaluated the criteria and determined that we are eligible for the disclosure exceptions, which allow us to provide alternative disclosures. The amendment also allows for further simplification of disclosure requirements for entities that qualify for the alternative disclosures. A parent entity was required to provide disclosures within the footnotes to the consolidated financial statements. However, the amendment allows for such disclosures to be provided outside of the consolidated financial statements, including within the “Management’s discussion and analysis of financial condition and results of operations” section in Item 2. As such, our disclosures are no longer presented in our consolidated financial statements and have been relocated to the “Management’s discussion and analysis of financial condition and results of operations” section in Item 2. |
Joint venture distribution | Joint venture distributions We use the “nature of the distribution” approach to determine the classification within our statement of cash flows of cash distributions received from equity method investments, including our unconsolidated joint ventures. Under this approach, distributions are classified based on the nature of the underlying activity that generated the cash distributions. If we lack the information necessary to apply this approach in the future, we will be required to apply the “cumulative earnings” approach as an accounting change on a retrospective basis. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are classified as cash inflows from operating activities, and those in excess of that amount are classified as cash inflows from investing activities. |
Restricted cash | Restricted cash We present cash and cash equivalents separately from restricted cash within our consolidated balance sheets. We include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the consolidated statements of cash flows. We provide a reconciliation between the balance sheets and statements of cash flows, as required when the balance includes more than one line item for cash, cash equivalents, and restricted cash. We also provide a disclosure of the nature of the restrictions related to material restricted cash balances. |
Summary of significant accoun_3
Summary of significant accounting policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Revenues subject to new revenue recognition and lease ASUs | The table below provides detail of our consolidated total revenues for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 539,001 $ 372,593 $ 1,398,084 $ 1,074,395 Direct financing lease 619 607 1,847 1,812 Revenues subject to the lease accounting standard 539,620 373,200 1,399,931 1,076,207 Revenues subject to the revenue recognition accounting standard 3,792 12,576 16,942 35,936 Income from rentals 543,412 385,776 1,416,873 1,112,143 Other income 1,630 4,708 5,044 11,039 Total revenues $ 545,042 $ 390,484 $ 1,421,917 $ 1,123,182 |
Investments in real estate (Tab
Investments in real estate (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate [Abstract] | |
Schedule of Real Estate Properties | Our consolidated investments in real estate, including real estate assets held for sale as described in Note 15 – “Assets classified as held for sale” to these unaudited consolidated financial statements, consisted of the following as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Rental properties: Land (related to rental properties) $ 2,504,345 $ 2,225,785 Buildings and building improvements 13,323,098 11,775,132 Other improvements 1,435,597 1,277,862 Rental properties 17,263,040 15,278,779 Development and redevelopment of new Class A properties: Development and redevelopment projects 2,786,649 2,057,084 Future development projects 594,877 182,746 Gross investments in real estate 20,644,566 17,518,609 Less: accumulated depreciation (3,074,757) (2,704,657) Net investments in real estate – North America 17,569,809 14,813,952 Net investments in real estate – Asia 30,839 30,086 Investments in real estate $ 17,600,648 $ 14,844,038 |
Real estate assets acquisitions | Our real estate asset acquisitions during the nine months ended September 30, 2020, consisted of the following (dollars in thousands): Square Footage Market Number of Properties Future Development Active Redevelopment Operating With Future Development/Redevelopment Operating Purchase Price Greater Boston 1 — — — 509,702 $ 226,512 San Francisco 5 260,000 — 300,010 582,309 105,000 (1) San Diego 2 — — — 219,628 102,250 Other 3 35,000 — 71,021 180,960 50,817 Three months ended March 31, 2020 11 295,000 — 371,031 1,492,599 484,579 San Francisco 2 700,000 — 26,738 — 113,250 San Diego 1 200,000 — 41,475 — 43,000 Other 1 544,825 63,774 — — 59,000 Three months ended June 30, 2020 4 1,444,825 63,774 68,213 — 215,250 Greater Boston 4 890,000 — 515,273 243,082 435,564 San Francisco 1 — — — 104,011 115,200 San Diego 2 240,000 — 139,135 — 97,500 Research Triangle 16 — 652,381 100,145 1,485,621 590,412 Other 1 327,488 — 42,380 — 44,244 Three months ended September 30, 2020 24 1,457,488 652,381 796,933 1,832,714 1,282,920 Nine months ended September 30, 2020 39 3,197,313 716,155 1,236,177 3,325,313 $ 1,982,749 (2) (1) In January 2020, we formed a real estate joint venture with subsidiaries of Boston Properties, Inc. Amount excludes our partner’s contributed real estate assets with a total fair market value of $350.0 million. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to these unaudited consolidated financial statements for additional information. (2) Represents the aggregate contractual purchase price of our acquisitions, which differ from purchases of real estate in our consolidated statements of cash flows due to closing costs and other acquisition adjustments such as prorations of rents and expenses. |
Consolidated and unconsolidat_2
Consolidated and unconsolidated real estate joint ventures (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Consolidated and unconsolidated real estate joint venture properties | From time to time, we enter into joint venture agreements through which we own a partial interest in real estate entities that own, develop, and operate real estate properties. As of September 30, 2020, our real estate joint ventures held the following properties: Property Market Submarket Our Ownership Interest (1) Consolidated joint ventures (2) : 225 Binney Street Greater Boston Cambridge/Inner Suburbs 30.0 % 75/125 Binney Street Greater Boston Cambridge/Inner Suburbs 40.0 % 57 Coolidge Avenue Greater Boston Cambridge/Inner Suburbs 75.0 % 409 and 499 Illinois Street San Francisco Mission Bay 60.0 % 1500 Owens Street San Francisco Mission Bay 50.1 % Alexandria Technology Center ® – Gateway (3) San Francisco South San Francisco 45.0 % 500 Forbes Boulevard San Francisco South San Francisco 10.0 % Alexandria Point (4) San Diego University Town Center 55.0 % 5200 Illumina Way San Diego University Town Center 51.0 % 9625 Towne Centre Drive San Diego University Town Center 50.1 % SD Tech by Alexandria (5) San Diego Sorrento Mesa 50.0 % Unconsolidated joint ventures (2) : 1655 and 1725 Third Street San Francisco Mission Bay 10.0 % Menlo Gateway San Francisco Greater Stanford 49.0 % 704 Quince Orchard Road Maryland Gaithersburg 56.8 % (6) (1) Refer to the table on the next page that shows the categorization of our joint ventures under the consolidation framework. (2) In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in six other consolidated joint ventures in North America and we hold an interest in two other insignificant unconsolidated real estate joint ventures in North America. (3) Excludes 600, 630, 650, 901, and 951 Gateway Boulevard in our South San Francisco submarket. (4) Excludes 9880 Campus Point Drive in our University Town Center submarket. (5) Excludes 5505 Morehouse Drive and 10121 and 10151 Barnes Canyon Road in our Sorrento Mesa submarket. (6) Represents our ownership interest; our voting interest is limited to 50%. |
Consolidated VIE's balance sheet information | The table below aggregates the balance sheet information of our consolidated VIEs as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Investments in real estate $ 3,096,227 $ 2,678,476 Cash and cash equivalents 97,744 81,021 Other assets 322,830 280,343 Total assets $ 3,516,801 $ 3,039,840 Secured notes payable $ — $ — Other liabilities 188,648 149,471 Total liabilities 188,648 149,471 Redeemable noncontrolling interests 1,620 2,388 Alexandria Real Estate Equities, Inc.’s share of equity 1,705,418 1,600,729 Noncontrolling interests’ share of equity 1,621,115 1,287,252 Total liabilities and equity $ 3,516,801 $ 3,039,840 |
Investment in unconsolidated real estate joint ventures | Our investments in unconsolidated real estate joint ventures, accounted for under the equity method of accounting presented in our consolidated balance sheets as of September 30, 2020, and December 31, 2019, consisted of the following (in thousands): Property September 30, 2020 December 31, 2019 Menlo Gateway $ 297,933 $ 288,408 704 Quince Orchard Road 4,875 4,748 1655 and 1725 Third Street 16,067 37,016 Other 11,917 16,718 $ 330,792 $ 346,890 |
Summary of unconsolidated real estate joint ventures loans | Our unconsolidated real estate joint ventures have the following secured loans that include the following key terms as of September 30, 2020 (dollars in thousands): Unconsolidated Joint Venture Our Share Maturity Date Stated Rate Interest Rate (1) 100% at Joint Venture Level Debt Balance (2) 704 Quince Orchard Road 56.8% 3/16/23 L+1.95% 3.22 % (3) $ 12,326 1655 and 1725 Third Street 10.0% 3/10/25 4.50% 4.57 % 598,126 Menlo Gateway, Phase II 49.0% 5/1/35 4.53% 4.59 % 106,603 Menlo Gateway, Phase I 49.0% 8/10/35 4.15% 4.18 % 140,203 $ 857,258 (1) Includes interest expense and amortization of loan fees. (2) Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2020. (3) Includes a 1.00% LIBOR floor on the interest rate. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Lessor | |
Operating Lease - Schedule of Future Minimum Lease Receivable | As of September 30, 2020, our 326 properties were subject to operating lease agreements. Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The remaining lease term related to each of the two land parcels is 72.2 years. Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under the terms of our operating lease agreements, excluding expense reimbursements, in effect as of September 30, 2020, are outlined in the table below (in thousands): Year Amount 2020 $ 300,587 2021 1,243,756 2022 1,246,288 2023 1,196,020 2024 1,087,929 Thereafter 6,943,932 Total $ 12,018,512 |
Net investment in direct financing lease | As of September 30, 2020, we had one direct financing lease agreement for a parking structure with a remaining lease term of 72.2 years. The lessee has an option to purchase the underlying asset at fair market value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The components of net investment in our direct financing lease as of September 30, 2020 and December 31, 2019, are summarized in the table below (in thousands): September 30, 2020 December 31, 2019 Gross investment in direct financing lease $ 259,179 $ 260,457 Less: unearned income (218,694) (220,541) Less: allowance for credit losses (2,839) — Net investment in direct financing lease $ 37,646 $ 39,916 |
Direct Financing Leases - Schedule of Future Minimum Payment Receivable | Future lease payments to be received under the terms of our direct financing lease as of September 30, 2020, are outlined in the table below (in thousands): Year Total 2020 $ 428 2021 1,756 2022 1,809 2023 1,863 2024 1,919 Thereafter 251,404 Total $ 259,179 |
Income from rentals | Our total income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes revenues subject to the lease accounting standard and to the revenue recognition accounting standard as shown below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income from rentals: Revenues subject to the lease accounting standard: Operating leases $ 539,001 $ 372,593 $ 1,398,084 $ 1,074,395 Direct financing lease 619 607 1,847 1,812 Revenues subject to the lease accounting standard 539,620 373,200 1,399,931 1,076,207 Revenues subject to the revenue recognition accounting standard 3,792 12,576 16,942 35,936 Income from rentals $ 543,412 $ 385,776 $ 1,416,873 $ 1,112,143 |
Lessee | |
Operating Lease - Schedule of Future Minimum Lease Payable | The reconciliation of future lease payments, under noncancellable operating ground and office leases in which we are the lessee, to the operating lease liability reflected in our unaudited consolidated balance sheet as of September 30, 2020, is presented in the table below (in thousands): Year Total 2020 $ 4,538 2021 18,544 2022 19,093 2023 19,268 2024 19,512 Thereafter 712,703 Total future payments under our operating leases in which we are the lessee 793,658 Effect of discounting (467,613) Operating lease liability $ 326,045 |
Lessee Operating Costs | Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our office leases have remaining terms of up to 14 years, exclusive of extension options. For the three and nine months ended September 30, 2020 and 2019, our costs for operating leases in which we are the lessee were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Gross operating lease costs $ 5,623 $ 5,157 $ 17,060 $ 14,581 Capitalized lease costs (894) (452) (2,614) (902) Expenses for operating leases in which we are the lessee $ 4,729 $ 4,705 $ 14,446 $ 13,679 |
Cash, cash equivalents, and r_2
Cash, cash equivalents, and restricted cash (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Cash, cash equivalents, and restricted cash [Abstract] | |
Cash, cash equivalents, and restricted cash summary | Cash, cash equivalents, and restricted cash consisted of the following as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Cash and cash equivalents $ 446,255 $ 189,681 Restricted cash: Funds held in trust under the terms of certain secured notes payable 26,918 24,331 Funds held in escrow related to construction projects and investing activities 4,580 23,252 Other 7,290 5,425 38,788 53,008 Total $ 485,043 $ 242,689 |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investments [Abstract] | |
Summary of investments | The following tables summarize our investments as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 Cost Unrealized Carrying Amount Investments: Publicly traded companies $ 175,538 $ 240,415 $ 415,953 Entities that report NAV 319,564 226,081 545,645 Entities that do not report NAV: Entities with observable price changes 50,127 75,642 125,769 Entities without observable price changes 243,578 — 243,578 Total investments $ 788,807 $ 542,138 $ 1,330,945 December 31, 2019 Cost Unrealized Carrying Amount Investments: Publicly traded companies $ 148,109 $ 170,528 $ 318,637 Entities that report NAV 271,276 162,626 433,902 Entities that do not report NAV: Entities with observable price changes 42,045 68,489 110,534 Entities without observable price changes 277,521 — 277,521 Total investments $ 738,951 $ 401,643 $ 1,140,594 |
Schedule of net investment income | Our investment income/loss for the three and nine months ended September 30, 2020, consisted of the following (in thousands): Three Months Ended September 30, 2020 Unrealized Realized Total Investments held at September 30, 2020: Publicly traded companies $ (12,453) $ — $ (12,453) Entities that report NAV 7,479 — 7,479 Entities that do not report NAV, held at period end 934 — 934 Total investments held at September 30, 2020 (4,040) — (4,040) Investment dispositions during the three months ended September 30, 2020: Recognized in the current period — 7,388 7,388 Previously recognized gains (9,973) 9,973 — Total investment dispositions during the three months ended September 30, 2020 (9,973) 17,361 7,388 Investment (loss) income $ (14,013) $ 17,361 $ 3,348 Nine Months Ended September 30, 2020 Unrealized Realized Total Investments held at September 30, 2020: Publicly traded companies $ 81,084 $ — $ 81,084 Entities that report NAV 63,455 — 63,455 Entities that do not report NAV, held at period end 7,153 (24,483) (17,330) Total investments held at September 30, 2020 151,692 (24,483) 127,209 Investment dispositions during the nine months ended September 30, 2020: Recognized in the current period — 38,975 38,975 Previously recognized gains (11,197) 11,197 — Total investment dispositions during the nine months ended September 30, 2020 (11,197) 50,172 38,975 Investment income $ 140,495 $ 25,689 $ 166,184 Our investment income/loss for the three and nine months ended September 30, 2019, consisted of the following (in thousands): Three Months Ended September 30, 2019 Unrealized Gains (Losses) Realized Total Investments held at September 30, 2019: Publicly traded companies $ (51,574) $ — $ (51,574) Entities that report NAV (2,840) — (2,840) Entities that do not report NAV, held at period end 237 (7,133) (6,896) Total investments held at September 30, 2019 (54,177) (7,133) (61,310) Investment dispositions during the three months ended September 30, 2019: Recognized in the current period — (1,766) (1,766) Previously recognized gains (15,866) 15,866 — Total investment dispositions during the three months ended September 30, 2019 (15,866) 14,100 (1,766) Investment (loss) income $ (70,043) $ 6,967 $ (63,076) Nine Months Ended September 30, 2019 Unrealized Gains (Losses) Realized Total Investments held at September 30, 2019: Publicly traded companies $ 566 $ — $ 566 Entities that report NAV 26,420 — 26,420 Entities that do not report NAV, held at period end 9,701 (7,133) 2,568 Total investments held at September 30, 2019 36,687 (7,133) 29,554 Investment dispositions during the nine months ended September 30, 2019: Recognized in the current period — 12,426 12,426 Previously recognized gains (23,466) 23,466 — Total investment dispositions during the nine months ended September 30, 2019 (23,466) 35,892 12,426 Investment income $ 13,221 $ 28,759 $ 41,980 |
Other assets (Tables)
Other assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | The following table summarizes the components of other assets (in thousands): September 30, 2020 December 31, 2019 Acquired in-place leases $ 450,954 $ 281,650 Deferred compensation plan 29,154 22,225 Deferred financing costs – unsecured senior line of credit 10,664 13,064 Deposits 28,337 31,028 Furniture, fixtures, and equipment 32,332 23,031 Net investment in direct financing lease 37,646 39,916 Notes receivable 2,462 435 Operating lease right-of-use asset 317,067 264,709 Other assets 25,833 32,040 Prepaid expenses 81,180 11,324 Property, plant, and equipment 153,981 174,292 Total $ 1,169,610 $ 893,714 |
Fair value measurements (Tables
Fair value measurements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following table sets forth the assets that we measure at fair value on a recurring basis by level in the fair value hierarchy (in thousands). There were no liabilities measured at fair value on a recurring basis as of September 30, 2020, and December 31, 2019. In addition, there were no transfers of assets measured at fair value on a recurring basis to or from Level 3 in the fair value hierarchy during the nine months ended September 30, 2020. Fair Value Measurement Using Description Total Quoted Prices in Significant Significant Investments in publicly traded companies: As of September 30, 2020 $ 415,953 $ 415,953 $ — $ — As of December 31, 2019 $ 318,637 $ 318,637 $ — $ — |
Schedule of assets and liabilities measure at fair value on a nonrecurring basis | The following table sets forth the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of September 30, 2020 (in thousands). These investments were measured at various times during the period from January 1, 2018, to September 30, 2020. Fair Value Measurement Using Description Total Quoted Prices in Significant Significant Investments in privately held entities that do not report NAV $ 140,351 $ — $ 125,769 (1) $ 14,582 (2) (1) This balance represents the total carrying amount of our equity investments in privately held entities with observable price changes, included in our total investments balance of $1.3 billion in our consolidated balance sheets as of September 30, 2020. For more information, refer to Note 7 – “Investments.” (2) This amount is included in the $243.6 million balance of investments in privately held entities without observable price changes disclosed in Note 7 – “Investments,” and represents the carrying amount of investments in privately held entities that do not report NAV for which impairments have been recognized in accordance with the measurement alternative guidance described within the “Investments” section in Note 2 – “Summary of significant accounting policies.” As of September 30, 2020, and December 31, 2019, the book and estimated fair values of our secured notes payable, unsecured senior notes payable, unsecured senior line of credit, and amounts outstanding under our commercial paper program were as follows (in thousands): September 30, 2020 Book Value Fair Value Hierarchy Estimated Fair Value Level 1 Level 2 Level 3 Liabilities: Secured notes payable $ 342,363 $ — $ 369,569 $ — $ 369,569 Unsecured senior notes payable $ 7,230,819 $ — $ 8,351,863 $ — $ 8,351,863 Unsecured senior line of credit $ — $ — $ — $ — $ — Commercial paper program $ 249,989 $ — $ 249,994 $ — $ 249,994 December 31, 2019 Book Value Fair Value Hierarchy Estimated Fair Value Level 1 Level 2 Level 3 Liabilities: Secured notes payable $ 349,352 $ — $ 363,344 $ — $ 363,344 Unsecured senior notes payable $ 6,044,127 $ — $ 6,571,668 $ — $ 6,571,668 Unsecured senior line of credit $ 384,000 $ — $ 383,928 $ — $ 383,928 |
Secured and unsecured senior _2
Secured and unsecured senior debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of maturities of secured and unsecured debt | The following table summarizes our outstanding indebtedness and respective principal payments as of September 30, 2020 (dollars in thousands): Stated Interest Rate (1) Maturity Date (2) Principal Payments Remaining for the Periods Ending December 31, Unamortized (Deferred Financing Cost), (Discount) Premium Debt 2020 2021 2022 2023 2024 Thereafter Principal Total Secured notes payable San Diego 4.66 % 4.90 % 1/1/23 $ 451 $ 1,852 $ 1,942 $ 26,259 $ — $ — $ 30,504 $ (148) $ 30,356 Greater Boston 3.93 % 3.19 3/10/23 397 1,628 1,693 74,517 — — 78,235 1,369 79,604 Greater Boston 4.82 % 3.40 2/6/24 829 3,394 3,564 3,742 183,527 — 195,056 9,016 204,072 San Francisco 4.14 % 4.42 7/1/26 — — — — — 28,200 28,200 (572) 27,628 San Francisco 6.50 % 6.50 7/1/36 — 26 28 30 32 587 703 — 703 Secured debt weighted-average interest rate/subtotal 4.55 % 3.57 1,677 6,900 7,227 104,548 183,559 28,787 332,698 9,665 342,363 Commercial paper program (3) 0.26 % (3) 0.29 (3) (3) — (3) — — — 250,000 (3) — 250,000 (11) 249,989 Unsecured senior line of credit (4) L+0.825 % (4) N/A 1/28/24 — — — — — (3) — — — — Unsecured senior notes payable – green bond 4.00 % 4.03 1/15/24 — — — — 650,000 — 650,000 (402) 649,598 Unsecured senior notes payable 3.45 % 3.62 4/30/25 — — — — — 600,000 600,000 (4,020) 595,980 Unsecured senior notes payable 4.30 % 4.50 1/15/26 — — — — — 300,000 300,000 (2,585) 297,415 Unsecured senior notes payable – green bond 3.80 % 3.96 4/15/26 — — — — — 350,000 350,000 (2,720) 347,280 Unsecured senior notes payable 3.95 % 4.13 1/15/27 — — — — — 350,000 350,000 (3,185) 346,815 Unsecured senior notes payable 3.95 % 4.07 1/15/28 — — — — — 425,000 425,000 (3,090) 421,910 Unsecured senior notes payable 4.50 % 4.60 7/30/29 — — — — — 300,000 300,000 (1,963) 298,037 Unsecured senior notes payable 2.75 % 2.87 12/15/29 — — — — — 400,000 400,000 (3,788) 396,212 Unsecured senior notes payable 4.70 % 4.81 7/1/30 — — — — — 450,000 450,000 (3,627) 446,373 Unsecured senior notes payable 4.90 % 5.05 12/15/30 — — — — — 700,000 700,000 (8,036) 691,964 Unsecured senior notes payable 3.375 % 3.48 8/15/31 — — — — — 750,000 750,000 (7,055) 742,945 Unsecured senior notes payable 1.875 % 1.97 2/1/33 — — — — — 1,000,000 1,000,000 (10,774) 989,226 Unsecured senior notes payable 4.85 % 4.93 4/15/49 — — — — — 300,000 300,000 (3,360) 296,640 Unsecured senior notes payable 4.00 % 3.91 2/1/50 — — — — — 700,000 700,000 10,424 710,424 Unsecured debt weighted average/subtotal 3.69 — — — — 900,000 6,625,000 7,525,000 (44,192) 7,480,808 Weighted-average interest rate/total 3.69 % $ 1,677 $ 6,900 $ 7,227 $ 104,548 $ 1,083,559 $ 6,653,787 $ 7,857,698 $ (34,527) $ 7,823,171 (1) Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees. (2) Reflects any extension options that we control. (3) Refer to footnote 3 on the next page. (4) Refer to footnote 2 on the next page. |
Summary of secured and unsecured debt | The following table summarizes our secured and unsecured senior debt as of September 30, 2020 (dollars in thousands): Fixed-Rate Debt Variable-Rate Debt Weighted-Average Interest Remaining Term Total Percentage Rate (1) Secured notes payable $ 342,363 $ — $ 342,363 4.4 % 3.57 % 3.3 Unsecured senior notes payable 7,230,819 — 7,230,819 92.4 3.81 11.2 Unsecured senior line of credit (2) — — — — N/A 3.3 Commercial paper program — 249,989 249,989 3.2 0.29 (3) Total/weighted average $ 7,573,182 $ 249,989 $ 7,823,171 100.0 % 3.69 % 10.6 (3) Percentage of total debt 97 % 3 % 100 % (1) Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to the amortization of loan fees, amortization of debt premiums (discounts), and other bank fees. (2) On October 6, 2020, we amended our unsecured senior line of credit to increase commitments available for borrowing by $800 million to an aggregate of $3.0 billion and to extend the maturity date to January 6, 2026. Our unsecured senior line of credit includes a 0% LIBOR floor on the interest rate. Upon achieving certain sustainability thresholds, the rate on the unsecured senior line of credit is temporarily reduced by one basis point, but not below zero percent per year. (3) Under our commercial paper program, we have the ability to issue up to $1.0 billion in commercial paper notes bearing interest at short-term fixed rates, generally with a maturity of 30 days or less and with a maximum maturity of 397 days from the date of issuance. Borrowings under the program are used to fund short-term capital needs and are backed by our unsecured senior line of credit. The commercial paper outstanding as of September 30, 2020, matured on October 7, 2020. In the event we are unable to issue commercial paper notes or refinance outstanding borrowings under terms equal to or more favorable than those under our unsecured senior line of credit, we expect to borrow under the unsecured senior line of credit at L+0.825%. As such, we calculate the weighted-average remaining term of our commercial paper using the maturity date of our unsecured senior line of credit. Using the maturity date of our outstanding commercial paper, the consolidated weighted-average maturity term is 10.5 years. The commercial paper notes sold during the three months ended September 30, 2020, were issued at a weighted-average yield to maturity of 0.25% and had a weighted-average maturity term of 6.3 days. |
Amendment of unsecured senior line of credit detail | On October 6, 2020, we amended our unsecured senior line of credit and recognized a loss on early extinguishment of debt of $651 thousand related to the write-off of unamortized loan fees. Key changes are summarized below: New Agreement Change Commitments available for borrowing $3.0 billion Increased by $800 million Interest rate LIBOR+0.825% Added a 0% LIBOR floor Maturity date January 6, 2026 Extended 2 years On October 6, 2020, we amended our unsecured senior line of credit and recognized a loss on early extinguishment of debt of $651 thousand related to the write-off of unamortized loan fees. Key changes are summarized below: New Agreement Change Commitments available for borrowing $3.0 billion Increased by $800 million Interest rate LIBOR+0.825% Added a 0% LIBOR floor Maturity date January 6, 2026 Extended 2 years |
Schedule of Interest Incurred | The following table summarizes interest expense for the three and nine months ended September 30, 2020 and 2019 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Gross interest $ 75,874 $ 70,761 $ 222,100 $ 192,923 Capitalized interest (32,556) (24,558) (88,029) (64,741) Interest expense $ 43,318 $ 46,203 $ 134,071 $ 128,182 |
Accounts payable, accrued exp_2
Accounts payable, accrued expenses, and other liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounts payable, accrued expenses, and tenant security deposits [Abstract] | |
Schedule of accounts payable and accrued liabilities | The following table summarizes the components of accounts payable, accrued expenses, and other liabilities as of September 30, 2020, and December 31, 2019 (in thousands): September 30, 2020 December 31, 2019 Accounts payable and accrued expenses $ 318,280 $ 198,994 Accrued construction 274,085 275,818 Acquired below-market leases 292,066 194,773 Conditional asset retirement obligations 48,102 14,037 Deferred rent liabilities 3,922 2,897 Operating lease liability 326,045 271,808 Unearned rent and tenant security deposits 277,964 275,863 Other liabilities 68,876 86,078 Total $ 1,609,340 $ 1,320,268 |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of the numerators and denominators of the basic and diluted earnings per share computations | The table below is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2020 and 2019 (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income (loss) $ 95,799 $ (36,003) $ 370,038 $ 187,994 Net income attributable to noncontrolling interests (14,743) (11,199) (40,563) (27,270) Dividends on preferred stock — (1,173) — (3,204) Preferred stock redemption charge — — — (2,580) Net income attributable to unvested restricted stock awards (1,730) (1,398) (5,304) (4,532) Numerator for basic and diluted EPS – net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders $ 79,326 $ (49,773) 324,171 150,408 Denominator for basic EPS – weighted-average shares of common stock outstanding 124,901 112,120 123,561 111,540 Dilutive effect of forward equity sales agreements 927 — 466 172 Denominator for diluted EPS – weighted-average shares of common stock outstanding 125,828 112,120 124,027 111,712 Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders: Basic $ 0.64 $ (0.44) $ 2.62 $ 1.35 Diluted $ 0.63 $ (0.44) $ 2.61 $ 1.35 |
Stockholders' equity (Tables)
Stockholders' equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
Accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc. | The following table presents the changes in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders during the nine months ended September 30, 2020, due to net unrealized losses on foreign currency translation (in thousands): Total Balance as of December 31, 2019 $ (9,749) Other comprehensive loss before reclassifications (889) Net other comprehensive loss (889) Balance as of September 30, 2020 $ (10,638) |
Assets classified as held for_2
Assets classified as held for sale (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Summary of net assets of discontinued operations and (loss) income from discontinued operations, net | The following is a summary of net assets as of September 30, 2020, and December 31, 2019, for our real estate investments that were classified as held for sale as of each respective date (in thousands): September 30, 2020 December 31, 2019 Total assets $ 44,465 $ 59,412 Total liabilities (2,208) (2,860) Total accumulated other comprehensive income 400 536 Net assets classified as held for sale $ 42,657 $ 57,088 |
Subsequent events (Tables)
Subsequent events (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Amendment of unsecured senior line of credit detail | On October 6, 2020, we amended our unsecured senior line of credit and recognized a loss on early extinguishment of debt of $651 thousand related to the write-off of unamortized loan fees. Key changes are summarized below: New Agreement Change Commitments available for borrowing $3.0 billion Increased by $800 million Interest rate LIBOR+0.825% Added a 0% LIBOR floor Maturity date January 6, 2026 Extended 2 years On October 6, 2020, we amended our unsecured senior line of credit and recognized a loss on early extinguishment of debt of $651 thousand related to the write-off of unamortized loan fees. Key changes are summarized below: New Agreement Change Commitments available for borrowing $3.0 billion Increased by $800 million Interest rate LIBOR+0.825% Added a 0% LIBOR floor Maturity date January 6, 2026 Extended 2 years |
Summary of significant accoun_4
Summary of significant accounting policies (Details) | Jan. 01, 2019USD ($) | Sep. 30, 2020USD ($)property | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)property | Sep. 30, 2019USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) |
Property, plant and equipment depreciated on a straight-line basis using an estimated life | |||||||||
Maximum expected period of sale of property (in years) | 1 year | ||||||||
Cost method investment ownership percentage | 10.00% | 10.00% | |||||||
Percentage of total revenues | 99.00% | 98.50% | |||||||
Write-off of lease origination costs that were capitalized in connection with leases executed prior to 1/1/19 | $ 3,500,000 | ||||||||
Operating lease liability | 218,700,000 | $ 326,045,000 | $ 326,045,000 | $ 271,808,000 | |||||
Ground and operating lease obligation due | 590,300,000 | 793,700,000 | 793,700,000 | ||||||
Reclassification of deferred rent liabilities | $ 27,000,000 | ||||||||
Revenue with customer, asset, adjustment to allowance for credit loss | 0 | $ 0 | $ 1,600,000 | ||||||
Contract with customer, asset, allowance for credit loss | 3,600,000 | 3,600,000 | |||||||
Net investment in direct financing lease | $ 37,700,000 | $ 39,900,000 | |||||||
Direct financing lease, net investment in lease, allowance for credit loss | $ 2,800,000 | $ 2,200,000 | |||||||
Credit loss related to trade receivables | 259,000 | $ 259,000 | |||||||
Minimum percentage of taxable income to be distributed | 90.00% | ||||||||
Percent of taxable income, generally distributed as dividend | 100.00% | ||||||||
Income from rentals | |||||||||
Operating leases | 539,001,000 | $ 372,593,000 | $ 1,398,084,000 | $ 1,074,395,000 | |||||
Direct financing lease | 619,000 | 607,000 | 1,847,000 | 1,812,000 | |||||
Revenues subject to the new lease accounting standard | 539,620,000 | 373,200,000 | 1,399,931,000 | 1,076,207,000 | |||||
Revenue | $ 545,042,000 | 390,484,000 | $ 1,421,917,000 | 1,123,182,000 | |||||
Land improvements | Maximum | |||||||||
Property, plant and equipment depreciated on a straight-line basis using an estimated life | |||||||||
Estimated useful life | 20 years | ||||||||
Buildings and building improvements | Maximum | |||||||||
Property, plant and equipment depreciated on a straight-line basis using an estimated life | |||||||||
Estimated useful life | 40 years | ||||||||
Canada | |||||||||
Property, plant and equipment depreciated on a straight-line basis using an estimated life | |||||||||
Number of real estate properties | property | 3 | 3 | |||||||
China | |||||||||
Property, plant and equipment depreciated on a straight-line basis using an estimated life | |||||||||
Number of real estate properties | property | 1 | 1 | |||||||
Income from rentals | |||||||||
Income from rentals | |||||||||
Revenue | $ 543,412,000 | 385,776,000 | $ 1,416,873,000 | 1,112,143,000 | |||||
Other income | |||||||||
Income from rentals | |||||||||
Revenue | $ 1,630,000 | 4,708,000 | $ 5,044,000 | 11,039,000 | |||||
Revenues subject to other accounting guidance | |||||||||
Property, plant and equipment depreciated on a straight-line basis using an estimated life | |||||||||
Percentage of total revenues | 1.00% | 1.50% | |||||||
Income from rentals | |||||||||
Revenue | $ 5,400,000 | $ 22,000,000 | |||||||
Accounting Standards Update 2014-09 - Revenue from Contract with Customers | |||||||||
Property, plant and equipment depreciated on a straight-line basis using an estimated life | |||||||||
Receivables from revenue transactions within scope of revenue recognition | 16,100,000 | 16,100,000 | |||||||
Accounting Standards Update 2014-09 - Revenue from Contract with Customers | Income from rentals | |||||||||
Income from rentals | |||||||||
Revenues subject to the revenue recognition accounting standard | $ 3,792,000 | $ 12,576,000 | $ 16,942,000 | $ 35,936,000 |
Schedule of investment in real
Schedule of investment in real estates (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Real Estate Properties | ||
Investments in real estate | $ 17,600,648 | $ 14,844,038 |
North America | ||
Real Estate Properties | ||
Land (related to rental properties) | 2,504,345 | 2,225,785 |
Buildings and building improvements | 13,323,098 | 11,775,132 |
Other improvements | 1,435,597 | 1,277,862 |
Rental properties | 17,263,040 | 15,278,779 |
Development and redevelopment projects | 2,786,649 | 2,057,084 |
Future development projects | 594,877 | 182,746 |
Gross investments in real estate | 20,644,566 | 17,518,609 |
Less: accumulated depreciation | (3,074,757) | (2,704,657) |
Investments in real estate | 17,569,809 | 14,813,952 |
Asia | ||
Real Estate Properties | ||
Investments in real estate | $ 30,839 | $ 30,086 |
Acquisition (Details)
Acquisition (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($)ft²property | Jun. 30, 2020USD ($)ft²property | Mar. 31, 2020USD ($)ft²property | Sep. 30, 2020USD ($)ft²property | Sep. 30, 2019USD ($) | |
Real Estate | |||||
Number of Real Estate Properties Acquired | property | 24 | 4 | 11 | 24 | |
Purchase price | $ | $ 1,989,648 | $ 1,289,319 | |||
Contribution of assets from real estate joint venture partner | $ | $ 350,000 | $ 0 | |||
Greater Boston | |||||
Real Estate | |||||
Number of Real Estate Properties Acquired | property | 4 | 1 | 4 | ||
Purchase price | $ | $ 435,564 | $ 226,512 | |||
San Francisco | |||||
Real Estate | |||||
Number of Real Estate Properties Acquired | property | 1 | 2 | 5 | 1 | |
Purchase price | $ | $ 115,200 | $ 113,250 | $ 105,000 | ||
San Diego | |||||
Real Estate | |||||
Number of Real Estate Properties Acquired | property | 2 | 1 | 2 | 2 | |
Purchase price | $ | $ 97,500 | $ 43,000 | $ 102,250 | ||
Research Triangle | |||||
Real Estate | |||||
Number of Real Estate Properties Acquired | property | 16 | 16 | |||
Purchase price | $ | $ 590,412 | ||||
Other markets | |||||
Real Estate | |||||
Number of Real Estate Properties Acquired | property | 1 | 1 | 3 | 1 | |
Purchase price | $ | $ 44,244 | $ 59,000 | $ 50,817 | ||
North America | |||||
Real Estate | |||||
Number of Real Estate Properties Acquired | property | 39 | 39 | |||
Area of Real Estate Property | 31,200,000 | 31,200,000 | |||
Purchase price | $ | $ 1,282,920 | $ 215,250 | $ 484,579 | $ 1,982,749 | |
Future development | |||||
Real Estate | |||||
Area of Real Estate Property | 1,457,488 | 1,444,825 | 295,000 | 1,457,488 | |
Future development | Greater Boston | |||||
Real Estate | |||||
Area of Real Estate Property | 890,000 | 0 | 890,000 | ||
Future development | San Francisco | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 700,000 | 260,000 | 0 | |
Future development | San Diego | |||||
Real Estate | |||||
Area of Real Estate Property | 240,000 | 200,000 | 0 | 240,000 | |
Future development | Research Triangle | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 0 | |||
Future development | Other markets | |||||
Real Estate | |||||
Area of Real Estate Property | 327,488 | 544,825 | 35,000 | 327,488 | |
Future development | North America | |||||
Real Estate | |||||
Area of Real Estate Property | 3,197,313 | 3,197,313 | |||
Active redevelopment | |||||
Real Estate | |||||
Area of Real Estate Property | 652,381 | 63,774 | 0 | 652,381 | |
Active redevelopment | Greater Boston | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 0 | 0 | ||
Active redevelopment | San Francisco | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 0 | 0 | 0 | |
Active redevelopment | San Diego | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 0 | 0 | 0 | |
Active redevelopment | Research Triangle | |||||
Real Estate | |||||
Area of Real Estate Property | 652,381 | 652,381 | |||
Active redevelopment | Other markets | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 63,774 | 0 | 0 | |
Active redevelopment | North America | |||||
Real Estate | |||||
Area of Real Estate Property | 716,155 | 716,155 | |||
Operating with future development/redevelopment | |||||
Real Estate | |||||
Area of Real Estate Property | 796,933 | 68,213 | 371,031 | 796,933 | |
Operating with future development/redevelopment | Greater Boston | |||||
Real Estate | |||||
Area of Real Estate Property | 515,273 | 0 | 515,273 | ||
Operating with future development/redevelopment | San Francisco | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 26,738 | 300,010 | 0 | |
Operating with future development/redevelopment | San Diego | |||||
Real Estate | |||||
Area of Real Estate Property | 139,135 | 41,475 | 0 | 139,135 | |
Operating with future development/redevelopment | Research Triangle | |||||
Real Estate | |||||
Area of Real Estate Property | 100,145 | 100,145 | |||
Operating with future development/redevelopment | Other markets | |||||
Real Estate | |||||
Area of Real Estate Property | 42,380 | 0 | 71,021 | 42,380 | |
Operating with future development/redevelopment | North America | |||||
Real Estate | |||||
Area of Real Estate Property | 1,236,177 | 1,236,177 | |||
Operating property | |||||
Real Estate | |||||
Area of Real Estate Property | 1,832,714 | 0 | 1,492,599 | 1,832,714 | |
Acquired in-place leases | $ | $ 247,800 | $ 247,800 | |||
Below-market leases | $ | $ 141,500 | $ 141,500 | |||
Weighted average remaining amortization period, acquired in-place and below-market leases | 9 years 6 months | ||||
Operating property | Greater Boston | |||||
Real Estate | |||||
Area of Real Estate Property | 243,082 | 509,702 | 243,082 | ||
Operating property | San Francisco | |||||
Real Estate | |||||
Area of Real Estate Property | 104,011 | 0 | 582,309 | 104,011 | |
Operating property | San Diego | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 0 | 219,628 | 0 | |
Operating property | Research Triangle | |||||
Real Estate | |||||
Area of Real Estate Property | 1,485,621 | 1,485,621 | |||
Operating property | Other markets | |||||
Real Estate | |||||
Area of Real Estate Property | 0 | 0 | 180,960 | 0 | |
Operating property | North America | |||||
Real Estate | |||||
Area of Real Estate Property | 3,325,313 | 3,325,313 | |||
Alexandria Technology Center - Gateway | |||||
Real Estate | |||||
Area of Real Estate Property | 1,700,000 | ||||
Our ownership percentage (in percent) | 51.00% | ||||
Alexandria Technology Center Gateway - 601, 611, 651 Gateway Boulevard | |||||
Real Estate | |||||
Area of Real Estate Property | 776,003 | ||||
Contribution of assets from real estate joint venture partner | $ | $ 350,000 | ||||
Alexandria Technology Center Gateway - 601, 611, 651 Gateway Boulevard | Future development | |||||
Real Estate | |||||
Area of Real Estate Property | 260,000 | ||||
Acquired in-place leases | Operating property | |||||
Real Estate | |||||
Weighted average remaining amortization period, acquired in-place and below-market leases | 8 years 9 months 18 days | ||||
Below-market leases | Operating property | |||||
Real Estate | |||||
Weighted average remaining amortization period, acquired in-place and below-market leases | 10 years 7 months 6 days |
Real estate asset sales (Detail
Real estate asset sales (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Real Estate | |||||
Impairment of real estate | $ 7,680 | $ 0 | $ 15,200 | $ 22,901 | $ 0 |
Pending acquisition | |||||
Real Estate | |||||
Impairment of real estate | $ 10,000 | ||||
945 Market Street | |||||
Real Estate | |||||
Impairment of real estate | 6,800 | ||||
Proceeds from Sale of Real Estate | $ 198,000 |
Consolidated and unconsolidat_3
Consolidated and unconsolidated real estate joint ventures (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020USD ($)ft² | Jun. 30, 2020USD ($)ft² | Mar. 31, 2020USD ($)ft² | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($)ft² | Sep. 30, 2020USD ($)ft² | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Schedule of Equity Method Investments | ||||||||
Contribution of assets from real estate joint venture partner | $ 350,000 | $ 0 | ||||||
Contributions from and sales of noncontrolling interests | $ 8,561 | $ 572,032 | 414,025 | 1,012,309 | ||||
Long-term Debt | 7,823,171 | 7,823,171 | ||||||
Investments in unconsolidated real estate joint ventures | 330,792 | 330,792 | $ 346,890 | |||||
Impairment of real estate | $ 7,680 | 0 | $ 15,200 | $ 22,901 | 0 | |||
225 Binney Street | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 30.00% | 30.00% | ||||||
75/125 Binney Street | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 40.00% | 40.00% | ||||||
57 Coolidge Avenue | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 75.00% | 75.00% | ||||||
Area of Real Estate Property | ft² | 275,000 | 275,000 | ||||||
Payments to Acquire Real Estate and Real Estate Joint Ventures | $ 32,600 | |||||||
409/499 Illinois Street | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 60.00% | 60.00% | ||||||
1500 Owens Street | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 50.10% | 50.10% | ||||||
Alexandria Technology Center - Gateway | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 51.00% | |||||||
Area of Real Estate Property | ft² | 1,700,000 | |||||||
500 Forbes Boulevard | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 10.00% | 10.00% | ||||||
Campus Pointe by Alexandria | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 55.00% | 55.00% | ||||||
5200 Illumina Way | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 51.00% | 51.00% | ||||||
9625 Towne Centre Drive | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 50.10% | 50.10% | ||||||
SD Tech by Alexandria | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 50.00% | 50.00% | ||||||
Alexandria Technology Center Gateway - 681, 701, 751 Gateway Boulevard | ||||||||
Schedule of Equity Method Investments | ||||||||
Area of Real Estate Property | ft² | 313,262 | |||||||
Contribution of Property | $ 281,900 | |||||||
Alexandria Technology Center Gateway - 601, 611, 651 Gateway Boulevard | ||||||||
Schedule of Equity Method Investments | ||||||||
Area of Real Estate Property | ft² | 776,003 | |||||||
Contribution of assets from real estate joint venture partner | $ 350,000 | |||||||
9808 and 9868 Scranton Road | ||||||||
Schedule of Equity Method Investments | ||||||||
Area of Real Estate Property | ft² | 219,628 | 219,628 | ||||||
Proceeds from Sale of Real Estate | $ 51,100 | |||||||
Equity Method Investee | ||||||||
Schedule of Equity Method Investments | ||||||||
Long-term Debt | $ 857,258 | $ 857,258 | ||||||
Equity Method Investee | 1655 and 1725 Third Street | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 10.00% | 10.00% | ||||||
Investments in unconsolidated real estate joint ventures | $ 16,067 | $ 16,067 | 37,016 | |||||
Equity Method Investee | Menlo Gateway | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 49.00% | 49.00% | ||||||
Investments in unconsolidated real estate joint ventures | $ 297,933 | $ 297,933 | 288,408 | |||||
Equity Method Investee | 704 Quince Orchard Road | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 56.80% | 56.80% | ||||||
Investments in unconsolidated real estate joint ventures | $ 4,875 | $ 4,875 | 4,748 | |||||
Equity Method Investee | 1401/1413 Research Boulevard | ||||||||
Schedule of Equity Method Investments | ||||||||
Area of Real Estate Property | ft² | 90,000 | |||||||
Long-term Debt | $ 26,200 | |||||||
Investments in unconsolidated real estate joint ventures | $ 0 | $ 0 | $ 7,700 | |||||
Impairment of real estate | $ 7,600 | |||||||
Initial ownership interest | Alexandria Technology Center - Gateway | ||||||||
Schedule of Equity Method Investments | ||||||||
Our ownership percentage (in percent) | 45.00% | 45.00% | ||||||
Future development | ||||||||
Schedule of Equity Method Investments | ||||||||
Area of Real Estate Property | ft² | 1,457,488 | 1,444,825 | 295,000 | 1,444,825 | 1,457,488 | |||
Future development | Alexandria Technology Center Gateway - 681, 701, 751 Gateway Boulevard | ||||||||
Schedule of Equity Method Investments | ||||||||
Area of Real Estate Property | ft² | 377,000 | |||||||
Future development | Alexandria Technology Center Gateway - 601, 611, 651 Gateway Boulevard | ||||||||
Schedule of Equity Method Investments | ||||||||
Area of Real Estate Property | ft² | 260,000 | |||||||
Additional Paid-In Capital | ||||||||
Schedule of Equity Method Investments | ||||||||
Contributions from and sales of noncontrolling interests | $ 15 | $ 179,093 | $ 56,026 | $ 381,339 | ||||
Additional Paid-In Capital | Alexandria Technology Center - Gateway | ||||||||
Schedule of Equity Method Investments | ||||||||
Contributions from and sales of noncontrolling interests | $ 55,800 |
Consolidated VIE's balance shee
Consolidated VIE's balance sheet information (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Variable Interest Entity | ||
Investments in real estate | $ 17,600,648 | $ 14,844,038 |
Cash and cash equivalents | 446,255 | 189,681 |
Other assets | 1,169,610 | 893,714 |
Total assets | 21,910,671 | 18,390,503 |
Secured notes payable | 342,363 | 349,352 |
Total liabilities | 9,575,551 | 8,224,025 |
Redeemable noncontrolling interests | 11,232 | 12,300 |
Alexandria Real Estate Equities, Inc.'s share of equity | 10,701,814 | 8,865,826 |
Noncontrolling interests' share of equity | 1,622,074 | 1,288,352 |
Total liabilities, noncontrolling interests, and equity | 21,910,671 | 18,390,503 |
Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity | ||
Investments in real estate | 3,096,227 | 2,678,476 |
Cash and cash equivalents | 97,744 | 81,021 |
Other assets | 322,830 | 280,343 |
Total assets | 3,516,801 | 3,039,840 |
Secured notes payable | 0 | 0 |
Other Liabilities | 188,648 | 149,471 |
Total liabilities | 188,648 | 149,471 |
Redeemable noncontrolling interests | 1,620 | 2,388 |
Alexandria Real Estate Equities, Inc.'s share of equity | 1,705,418 | 1,600,729 |
Noncontrolling interests' share of equity | 1,621,115 | 1,287,252 |
Total liabilities, noncontrolling interests, and equity | $ 3,516,801 | $ 3,039,840 |
Unconsolidated real estate join
Unconsolidated real estate joint ventures (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Schedule of Equity Method Investments | ||
Investments in unconsolidated real estate joint ventures | $ 330,792 | $ 346,890 |
Unconsolidated Real Estate Joint Ventures Debt | ||
Weighted-Average Interest Rate at End of Period | 3.69% | |
Long-term Debt | $ 7,823,171 | |
Equity Method Investee | ||
Unconsolidated Real Estate Joint Ventures Debt | ||
Long-term Debt | 857,258 | |
Equity Method Investee | Menlo Gateway | ||
Schedule of Equity Method Investments | ||
Investments in unconsolidated real estate joint ventures | $ 297,933 | 288,408 |
Our ownership percentage (in percent) | 49.00% | |
Equity Method Investee | 704 Quince Orchard Road | ||
Schedule of Equity Method Investments | ||
Investments in unconsolidated real estate joint ventures | $ 4,875 | 4,748 |
Our ownership percentage (in percent) | 56.80% | |
Equity Method Investee | 1655 and 1725 Third Street | ||
Schedule of Equity Method Investments | ||
Investments in unconsolidated real estate joint ventures | $ 16,067 | 37,016 |
Our ownership percentage (in percent) | 10.00% | |
Equity Method Investee | Other unconsolidated real estate joint ventures | ||
Schedule of Equity Method Investments | ||
Investments in unconsolidated real estate joint ventures | $ 11,917 | $ 16,718 |
Secured debt maturing on 3/16/23 | Equity Method Investee | 704 Quince Orchard Road | ||
Unconsolidated Real Estate Joint Ventures Debt | ||
Maturity Date | Mar. 16, 2023 | |
Weighted-Average Interest Rate at End of Period | 3.22% | |
Long-term Debt | $ 12,326 | |
Secured debt maturing on 3/10/25 | Equity Method Investee | 1655 and 1725 Third Street | ||
Unconsolidated Real Estate Joint Ventures Debt | ||
Maturity Date | Mar. 10, 2025 | |
Stated interest rate (as a percent) | 4.50% | |
Weighted-Average Interest Rate at End of Period | 4.57% | |
Long-term Debt | $ 598,126 | |
Secured debt maturing on 5/1/35 | Equity Method Investee | Menlo Gateway | ||
Unconsolidated Real Estate Joint Ventures Debt | ||
Maturity Date | May 1, 2035 | |
Stated interest rate (as a percent) | 4.53% | |
Weighted-Average Interest Rate at End of Period | 4.59% | |
Long-term Debt | $ 106,603 | |
Secured debt maturing on 8/10/35 | Equity Method Investee | Menlo Gateway | ||
Unconsolidated Real Estate Joint Ventures Debt | ||
Maturity Date | Aug. 10, 2035 | |
Stated interest rate (as a percent) | 4.15% | |
Weighted-Average Interest Rate at End of Period | 4.18% | |
Long-term Debt | $ 140,203 | |
London Interbank Offered Rate (LIBOR) | Secured debt maturing on 3/16/23 | Equity Method Investee | 704 Quince Orchard Road | ||
Unconsolidated Real Estate Joint Ventures Debt | ||
Applicable margin (as a percent) | 1.95% |
Lessor (Details)
Lessor (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2020USD ($)ft² | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)ft² | Sep. 30, 2019USD ($) | Mar. 31, 2020USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | |
Operating Lease | |||||||
Land parcel subject to lease agreement that contains a purchase option | 2 | 2 | |||||
Lessee Option to Purchase Underlying Asset | 30 | ||||||
Rent Commence Date | Oct. 1, 2017 | ||||||
Operating Leases, Future Minimum Payments Receivable | |||||||
2020 | $ 300,587 | $ 300,587 | |||||
2021 | 1,243,756 | 1,243,756 | |||||
2022 | 1,246,288 | 1,246,288 | |||||
2023 | 1,196,020 | 1,196,020 | |||||
2024 | 1,087,929 | 1,087,929 | |||||
Thereafter | 6,943,932 | 6,943,932 | |||||
Total | 12,018,512 | $ 12,018,512 | |||||
Direct Financing Lease | |||||||
Remaining lease term | 72 years 2 months 12 days | ||||||
Lessee Option to Purchase Underlying Asset | 30 | ||||||
Direct Financing Lease, Net Investment in Leases | |||||||
Gross investment in direct financing lease | 259,179 | $ 259,179 | $ 260,457 | ||||
Less: unearned income | (218,694) | (218,694) | (220,541) | ||||
Less: allowance for credit losses | (2,839) | (2,839) | 0 | ||||
Net investment in direct financing lease | 37,646 | 37,646 | 39,916 | ||||
Direct Financing Leases, Future Minimum Payments Receivable | |||||||
2020 | 428 | 428 | |||||
2021 | 1,756 | 1,756 | |||||
2022 | 1,809 | 1,809 | |||||
2023 | 1,863 | 1,863 | |||||
2024 | 1,919 | 1,919 | |||||
Thereafter | 251,404 | 251,404 | |||||
Gross investment in direct financing lease | 259,179 | 259,179 | $ 260,457 | ||||
Direct financing lease, net investment in lease, allowance for credit loss | $ 2,800 | $ 2,200 | |||||
Adjustment to credit loss related to trade receivables | 614 | 614 | |||||
Income from rentals | |||||||
Operating leases | 539,001 | $ 372,593 | 1,398,084 | $ 1,074,395 | |||
Direct financing lease | 619 | 607 | 1,847 | 1,812 | |||
Revenues subject to the lease accounting standard | 539,620 | 373,200 | 1,399,931 | 1,076,207 | |||
Income from rentals | $ 545,042 | 390,484 | $ 1,421,917 | 1,123,182 | |||
Minimum | |||||||
Operating Lease | |||||||
Lessee Option to Purchase Underlying Asset | 15 | ||||||
Direct Financing Lease | |||||||
Lessee Option to Purchase Underlying Asset | 15 | ||||||
Maximum | |||||||
Operating Lease | |||||||
Lessee Option to Purchase Underlying Asset | 74.5 | ||||||
Direct Financing Lease | |||||||
Lessee Option to Purchase Underlying Asset | 74.5 | ||||||
Land parcels subject to lease agreement that contains a purchase option | |||||||
Operating Lease | |||||||
Remaining lease term | 72 years 2 months 12 days | ||||||
88 Bluxome Street | |||||||
Lessor, Lease, Description [Line Items] | |||||||
Area of Real Estate Property | ft² | 488,899 | 488,899 | |||||
Contract termination fee | $ 89,500 | ||||||
Contract termination fee, related expenses | 3,300 | ||||||
Gain (Loss) on Contract Termination | $ 86,200 | ||||||
North America | |||||||
Lessor, Lease, Description [Line Items] | |||||||
Number of real estate properties | 326 | 326 | |||||
Area of Real Estate Property | ft² | 31,200,000 | 31,200,000 | |||||
Income from rentals | |||||||
Income from rentals | |||||||
Income from rentals | $ 543,412 | 385,776 | $ 1,416,873 | 1,112,143 | |||
Income from rentals | Accounting Standards Update 2014-09 - Revenue from Contract with Customers | |||||||
Income from rentals | |||||||
Revenues subject to the revenue recognition accounting standard | $ 3,792 | $ 12,576 | $ 16,942 | $ 35,936 |
Lessee (Details)
Lessee (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020USD ($)property | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)property | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | |
Lessee, Lease, Description [Line Items] | ||||||
Ground and operating lease obligation due | $ 793,700 | $ 793,700 | $ 590,300 | |||
Operating lease liability | 326,045 | 326,045 | $ 271,808 | 218,700 | ||
Operating lease right-of-use asset | $ 317,067 | $ 317,067 | 264,709 | |||
Operating lease discount rate | 4.97% | 4.97% | ||||
Number of Properties Subject to Ground Leases | property | 34 | 34 | ||||
Net book value for the exclusion of one ground lease related to one operating property | $ 7,300 | $ 7,300 | ||||
Remaining lease term for operating lease obligations | 14 years | |||||
Operating lease costs - cash rents | $ 15,200 | $ 13,400 | ||||
Operating Lease Liabilities, Payments Due | ||||||
2020 | 4,538 | 4,538 | ||||
2021 | 18,544 | 18,544 | ||||
2022 | 19,093 | 19,093 | ||||
2023 | 19,268 | 19,268 | ||||
2024 | 19,512 | 19,512 | ||||
Thereafter | 712,703 | 712,703 | ||||
Total future payments under our operating leases in which we are the lessee | 793,658 | 793,658 | ||||
Effect of discounting | (467,613) | (467,613) | ||||
Operating lease liability | 326,045 | 326,045 | $ 271,808 | $ 218,700 | ||
Leasee operating costs | ||||||
Gross operating lease costs | 5,623 | $ 5,157 | 17,060 | 14,581 | ||
Capitalized lease costs | (894) | (452) | (2,614) | (902) | ||
Expenses for operating leases in which we are the lessee | $ 4,729 | $ 4,705 | $ 14,446 | $ 13,679 | ||
Minimum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Remaining lease term for ground lease obligation | 33 years | |||||
Maximum | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Remaining lease term for ground lease obligation | 94 years | |||||
Ground and operating leases | ||||||
Lessee, Lease, Description [Line Items] | ||||||
Weighted Average Remaining Lease Term | 44 years | 44 years |
Cash, cash equivalents, and r_3
Cash, cash equivalents, and restricted cash (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 |
Cash and Cash Equivalents | ||||
Cash and cash equivalents | $ 446,255 | $ 189,681 | ||
Restricted cash | 38,788 | 53,008 | ||
Cash, cash equivalents, and restricted cash | 485,043 | 242,689 | $ 452,970 | $ 272,130 |
Funds held in trust under the terms of certain secured notes payable | ||||
Cash and Cash Equivalents | ||||
Restricted cash | 26,918 | 24,331 | ||
Funds held in escrow related to construction projects and investing activities | ||||
Cash and Cash Equivalents | ||||
Restricted cash | 4,580 | 23,252 | ||
Other restricted cash | ||||
Cash and Cash Equivalents | ||||
Restricted cash | $ 7,290 | $ 5,425 |
Summary of Investments (Details
Summary of Investments (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Schedule of Investments | ||
Investment commitments | $ 220,400 | |
Limited partnership maximum expiration terms | 11 years | |
Weighted-average remaining liquidation term (in years) | 5 years 3 months 18 days | |
Limited partnership liquidation, expected initial term (in years) | 10 years | |
Summary of Investment [Abstract] | ||
Investment at fair value, cost | $ 788,807 | $ 738,951 |
Cumulative unrealized gains (losses) on investments | 542,138 | 401,643 |
Total investments | 1,330,945 | 1,140,594 |
Investments in publicly traded companies | ||
Summary of Investment [Abstract] | ||
Investment at fair value, cost | 175,538 | 148,109 |
Cumulative unrealized gains (losses) on investments | 240,415 | 170,528 |
Investments at fair value, book value | $ 415,953 | 318,637 |
Investments in privately held entities that report NAV | ||
Schedule of Investments | ||
Weighted-average remaining liquidation term (in years) | 8 years 4 months 24 days | |
Summary of Investment [Abstract] | ||
Investment at fair value, cost | $ 319,564 | 271,276 |
Cumulative unrealized gains (losses) on investments | 226,081 | 162,626 |
Investments at fair value, book value | 545,645 | 433,902 |
Investments in privately held entities that do not report NAV | Entities with observable price change | ||
Schedule of Investments | ||
Investments in privately held entities that do not report NAV, cumulative upward price adjustment | 77,900 | |
Investments in privately held entities that do not report NAV, cumulative downward price adjustment | (2,300) | |
Investments in privately held entities that do not report NAV, cumulative impairment loss | (38,500) | |
Annual adjustments recognized on investments in privately held entities that do not report NAV | 7,200 | |
Investments in privately held entities that do not report NAV, annual upward price adjustment | 8,500 | |
Investments in privately held entities that do not report NAV, annual downward price adjustment | (1,300) | |
Investments in privately held entities that do not report NAV, annual impairment loss | 24,500 | |
Summary of Investment [Abstract] | ||
Investment at fair value, cost | 50,127 | 42,045 |
Cumulative unrealized gains (losses) on investments | 75,642 | 68,489 |
Investments in privately held entities that do not report fair value, book value | 125,769 | 110,534 |
Investments in privately held entities that do not report NAV | Entities without observable price changes | ||
Summary of Investment [Abstract] | ||
Investment at fair value, cost | 243,578 | 277,521 |
Cumulative unrealized gains (losses) on investments | 0 | 0 |
Investments in privately held entities that do not report fair value, book value | $ 243,578 | $ 277,521 |
Investment Income (Details)
Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | $ (14,013) | $ (70,043) | $ 140,495 | $ 13,221 |
Investment income (loss), realized gains (losses) | 17,361 | 6,967 | 25,689 | 28,759 |
Investment income (loss) | 3,348 | (63,076) | 166,184 | 41,980 |
Investments in publicly traded companies | ||||
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | (12,453) | (51,574) | 81,084 | 566 |
Investment income (loss), realized gains (losses) | 0 | 0 | 0 | 0 |
Investment income (loss) | (12,453) | (51,574) | 81,084 | 566 |
Investments in privately held entities that report NAV | ||||
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | 7,479 | (2,840) | 63,455 | 26,420 |
Investment income (loss), realized gains (losses) | 0 | 0 | 0 | 0 |
Investment income (loss) | 7,479 | (2,840) | 63,455 | 26,420 |
Investments in privately held entities that do not report NAV | ||||
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | 934 | 237 | 7,153 | 9,701 |
Investment income (loss), realized gains (losses) | 0 | (7,133) | (24,483) | (7,133) |
Investment income (loss) | 934 | (6,896) | (17,330) | 2,568 |
Total investments at fair value, held at period end | ||||
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | (4,040) | (54,177) | 151,692 | 36,687 |
Investment income (loss), realized gains (losses) | 0 | (7,133) | (24,483) | (7,133) |
Investment income (loss) | (4,040) | (61,310) | 127,209 | 29,554 |
Investment disposed and recognized during the period | ||||
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | 0 | 0 | 0 | 0 |
Investment income (loss), realized gains (losses) | 7,388 | (1,766) | 38,975 | 12,426 |
Investment income (loss) | 7,388 | (1,766) | 38,975 | 12,426 |
Investment disposed and previously recognized | ||||
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | (9,973) | (15,866) | (11,197) | (23,466) |
Investment income (loss), realized gains (losses) | 9,973 | 15,866 | 11,197 | 23,466 |
Investment income (loss) | 0 | 0 | 0 | 0 |
Total investment disposition during the period | ||||
Net Investment Income | ||||
Investment income (loss), unrealized gains (losses) | (9,973) | (15,866) | (11,197) | (23,466) |
Investment income (loss), realized gains (losses) | 17,361 | 14,100 | 50,172 | 35,892 |
Investment income (loss) | $ 7,388 | $ (1,766) | $ 38,975 | $ 12,426 |
Other assets (Detail)
Other assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Acquired in-place leases | $ 450,954 | $ 281,650 |
Deferred compensation plan | 29,154 | 22,225 |
Deferred financing costs – unsecured senior line of credit | 10,664 | 13,064 |
Deposits | 28,337 | 31,028 |
Furniture, fixtures, and equipment | 32,332 | 23,031 |
Net investment in direct financing lease | 37,646 | 39,916 |
Notes receivable | 2,462 | 435 |
Operating lease right-of-use asset | 317,067 | 264,709 |
Other assets | 25,833 | 32,040 |
Prepaid expenses | 81,180 | 11,324 |
Property, plant, and equipment | 153,981 | 174,292 |
Total | $ 1,169,610 | $ 893,714 |
Assets and Liabilities on Recur
Assets and Liabilities on Recurring and Nonrecurring Basis (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($)transfer | Dec. 31, 2019USD ($) | |
Assets and liabilities measured at fair value | ||
Transfers in Fair Value Hierarchy | transfer | 0 | |
Investments | $ 1,330,945 | $ 1,140,594 |
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Secured notes payable | 342,363 | 349,352 |
Unsecured senior notes payable | 7,230,819 | 6,044,127 |
Unsecured senior lines of credit | 249,989 | 384,000 |
Commercial Paper | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Commercial Paper Program | 249,989 | |
Fair Value | Fair value measured on nonrecurring basis | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Secured notes payable, fair value | 369,569 | 363,344 |
Unsecured senior notes payable, fair value | 8,351,863 | 6,571,668 |
Fair Value | Fair value measured on nonrecurring basis | Commercial Paper | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Commercial paper, fair value disclosure | 249,994 | |
Fair Value | Fair value measured on nonrecurring basis | $2.2 billion unsecured senior line of credit | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Unsecured senior lines of credit, fair value | 0 | 383,928 |
Fair Value | Fair value measured on nonrecurring basis | Quoted prices in active markets for identical assets (Level 1) | Commercial Paper | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Commercial paper, fair value disclosure | 0 | |
Fair Value | Fair value measured on nonrecurring basis | Quoted prices in active markets for identical assets (Level 1) | $2.2 billion unsecured senior line of credit | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Unsecured senior lines of credit, fair value | 0 | 0 |
Fair Value | Fair value measured on nonrecurring basis | Significant other observable inputs (Level 2) | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Secured notes payable, fair value | 369,569 | 363,344 |
Unsecured senior notes payable, fair value | 8,351,863 | 6,571,668 |
Fair Value | Fair value measured on nonrecurring basis | Significant other observable inputs (Level 2) | Commercial Paper | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Commercial paper, fair value disclosure | 249,994 | |
Fair Value | Fair value measured on nonrecurring basis | Significant other observable inputs (Level 2) | $2.2 billion unsecured senior line of credit | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Unsecured senior lines of credit, fair value | 0 | 383,928 |
Fair Value | Fair value measured on nonrecurring basis | Significant unobservable input (Level 3) | Commercial Paper | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Commercial paper, fair value disclosure | 0 | |
Fair Value | Fair value measured on nonrecurring basis | Significant unobservable input (Level 3) | $2.2 billion unsecured senior line of credit | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Unsecured senior lines of credit, fair value | 0 | 0 |
Book Value | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Secured notes payable | 342,363 | 349,352 |
Unsecured senior notes payable | 7,230,819 | 6,044,127 |
Book Value | Commercial Paper | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Commercial Paper Program | 249,989 | |
Book Value | $2.2 billion unsecured senior line of credit | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Unsecured senior lines of credit | 0 | 384,000 |
Investments in publicly traded companies | ||
Assets and liabilities measured at fair value | ||
Investments in publicly traded companies | 415,953 | 318,637 |
Investments in publicly traded companies | Fair value measured on recurring basis | Quoted prices in active markets for identical assets (Level 1) | ||
Assets and liabilities measured at fair value | ||
Investments in publicly traded companies | 415,953 | 318,637 |
Investments in publicly traded companies | Fair value measured on recurring basis | Significant other observable inputs (Level 2) | ||
Assets and liabilities measured at fair value | ||
Investments in publicly traded companies | 0 | 0 |
Investments in publicly traded companies | Fair value measured on recurring basis | Significant unobservable input (Level 3) | ||
Assets and liabilities measured at fair value | ||
Investments in publicly traded companies | 0 | 0 |
Investments in publicly traded companies | Fair Value | Fair value measured on recurring basis | ||
Assets and liabilities measured at fair value | ||
Investments in publicly traded companies | 415,953 | 318,637 |
Investments in privately held entities that report NAV | ||
Assets and liabilities measured at fair value | ||
Investments in publicly traded companies | 545,645 | 433,902 |
Entities without observable price changes | Investments in privately held entities that do not report NAV | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Investments in privately held entities that do not report fair value, book value | 243,578 | $ 277,521 |
Entities without observable price changes | Investments in privately held entities that do not report NAV | Fair Value | Fair value measured on nonrecurring basis | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Investments in privately held entities that do not report fair value, book value | 140,351 | |
Entities without observable price changes | Investments in privately held entities that do not report NAV | Fair Value | Fair value measured on nonrecurring basis | Quoted prices in active markets for identical assets (Level 1) | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Investments in privately held entities that do not report fair value, book value | 0 | |
Entities without observable price changes | Investments in privately held entities that do not report NAV | Fair Value | Fair value measured on nonrecurring basis | Significant other observable inputs (Level 2) | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Investments in privately held entities that do not report fair value, book value | 125,769 | |
Entities without observable price changes | Investments in privately held entities that do not report NAV | Fair Value | Fair value measured on nonrecurring basis | Significant unobservable input (Level 3) | ||
Fair Value Measurements, Nonrecurring Value Measurement [Abstract] | ||
Investments in privately held entities that do not report fair value, book value | $ 14,582 |
Detail of secured and unsecured
Detail of secured and unsecured debt (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 26, 2020 | Sep. 30, 2020USD ($) | Jun. 30, 2020 | Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Oct. 06, 2020USD ($) | |
Debt Instrument | ||||||
Effective rate (as a percent) | 3.69% | 3.69% | ||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 1,677 | $ 1,677 | ||||
2021 | 6,900 | 6,900 | ||||
2022 | 7,227 | 7,227 | ||||
2023 | 104,548 | 104,548 | ||||
2024 | 1,083,559 | 1,083,559 | ||||
Thereafter | 6,653,787 | 6,653,787 | ||||
Outstanding Balance | 7,857,698 | 7,857,698 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (34,527) | (34,527) | ||||
Total Consolidated | $ 7,823,171 | $ 7,823,171 | ||||
Secured notes payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.55% | 4.55% | ||||
Effective rate (as a percent) | 3.57% | 3.57% | ||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 1,677 | $ 1,677 | ||||
2021 | 6,900 | 6,900 | ||||
2022 | 7,227 | 7,227 | ||||
2023 | 104,548 | 104,548 | ||||
2024 | 183,559 | 183,559 | ||||
Thereafter | 28,787 | 28,787 | ||||
Outstanding Balance | 332,698 | 332,698 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | 9,665 | 9,665 | ||||
Total Consolidated | $ 342,363 | $ 342,363 | ||||
Secured Notes Payable Maturing on 1/1/23 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.66% | 4.66% | ||||
Effective rate (as a percent) | 4.90% | 4.90% | ||||
Maturity Date | Jan. 1, 2023 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 451 | $ 451 | ||||
2021 | 1,852 | 1,852 | ||||
2022 | 1,942 | 1,942 | ||||
2023 | 26,259 | 26,259 | ||||
2024 | 0 | 0 | ||||
Thereafter | 0 | 0 | ||||
Outstanding Balance | 30,504 | 30,504 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (148) | (148) | ||||
Total Consolidated | $ 30,356 | $ 30,356 | ||||
Secured Notes Payable Maturing on 3/10/23 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 3.93% | 3.93% | ||||
Effective rate (as a percent) | 3.19% | 3.19% | ||||
Maturity Date | Mar. 10, 2023 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 397 | $ 397 | ||||
2021 | 1,628 | 1,628 | ||||
2022 | 1,693 | 1,693 | ||||
2023 | 74,517 | 74,517 | ||||
2024 | 0 | 0 | ||||
Thereafter | 0 | 0 | ||||
Outstanding Balance | 78,235 | 78,235 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | 1,369 | 1,369 | ||||
Total Consolidated | $ 79,604 | $ 79,604 | ||||
Secured Notes Payable Maturing on 2/6/24 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.82% | 4.82% | ||||
Effective rate (as a percent) | 3.40% | 3.40% | ||||
Maturity Date | Feb. 6, 2024 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 829 | $ 829 | ||||
2021 | 3,394 | 3,394 | ||||
2022 | 3,564 | 3,564 | ||||
2023 | 3,742 | 3,742 | ||||
2024 | 183,527 | 183,527 | ||||
Thereafter | 0 | 0 | ||||
Outstanding Balance | 195,056 | 195,056 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | 9,016 | 9,016 | ||||
Total Consolidated | $ 204,072 | $ 204,072 | ||||
Secured Notes Payable Maturing on 7/1/26 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.14% | 4.14% | ||||
Effective rate (as a percent) | 4.42% | 4.42% | ||||
Maturity Date | Jul. 1, 2026 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 28,200 | 28,200 | ||||
Outstanding Balance | 28,200 | 28,200 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (572) | (572) | ||||
Total Consolidated | $ 27,628 | $ 27,628 | ||||
Secured Notes Payable Maturing on 7/1/36 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 6.50% | 6.50% | ||||
Effective rate (as a percent) | 6.50% | 6.50% | ||||
Maturity Date | Jul. 1, 2036 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 26 | 26 | ||||
2022 | 28 | 28 | ||||
2023 | 30 | 30 | ||||
2024 | 32 | 32 | ||||
Thereafter | 587 | 587 | ||||
Outstanding Balance | 703 | 703 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | 0 | 0 | ||||
Total Consolidated | $ 703 | $ 703 | ||||
Unsecured Debt | ||||||
Debt Instrument | ||||||
Effective rate (as a percent) | 3.69% | 3.69% | ||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 900,000 | 900,000 | ||||
Thereafter | 6,625,000 | 6,625,000 | ||||
Outstanding Balance | 7,525,000 | 7,525,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (44,192) | (44,192) | ||||
Total Consolidated | 7,480,808 | $ 7,480,808 | ||||
$2.2 billion unsecured senior line of credit | ||||||
Debt Instrument | ||||||
Maturity Date | Jan. 28, 2024 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 0 | 0 | ||||
Outstanding Balance | 0 | 0 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | 0 | 0 | ||||
Total Consolidated | $ 0 | $ 0 | ||||
4.00% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.00% | 4.00% | ||||
Effective rate (as a percent) | 4.03% | 4.03% | ||||
Maturity Date | Jan. 15, 2024 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 650,000 | 650,000 | ||||
Thereafter | 0 | 0 | ||||
Outstanding Balance | 650,000 | 650,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (402) | (402) | ||||
Total Consolidated | $ 649,598 | $ 649,598 | ||||
3.45% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 3.45% | 3.45% | ||||
Effective rate (as a percent) | 3.62% | 3.62% | ||||
Maturity Date | Apr. 30, 2025 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 600,000 | 600,000 | ||||
Outstanding Balance | 600,000 | 600,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (4,020) | (4,020) | ||||
Total Consolidated | $ 595,980 | $ 595,980 | ||||
4.30% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.30% | 4.30% | ||||
Effective rate (as a percent) | 4.50% | 4.50% | ||||
Maturity Date | Jan. 15, 2026 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 300,000 | 300,000 | ||||
Outstanding Balance | 300,000 | 300,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (2,585) | (2,585) | ||||
Total Consolidated | $ 297,415 | $ 297,415 | ||||
3.80% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 3.80% | 3.80% | ||||
Effective rate (as a percent) | 3.96% | 3.96% | ||||
Maturity Date | Apr. 15, 2026 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 350,000 | 350,000 | ||||
Outstanding Balance | 350,000 | 350,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (2,720) | (2,720) | ||||
Total Consolidated | $ 347,280 | $ 347,280 | ||||
3.95% Unsecured Senior Notes Payable Due in 2027 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 3.95% | 3.95% | ||||
Effective rate (as a percent) | 4.13% | 4.13% | ||||
Maturity Date | Jan. 15, 2027 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 350,000 | 350,000 | ||||
Outstanding Balance | 350,000 | 350,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (3,185) | (3,185) | ||||
Total Consolidated | $ 346,815 | $ 346,815 | ||||
3.95% Unsecured Senior Notes Payable Due in 2028 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 3.95% | 3.95% | ||||
Effective rate (as a percent) | 4.07% | 4.07% | ||||
Maturity Date | Jan. 15, 2028 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 425,000 | 425,000 | ||||
Outstanding Balance | 425,000 | 425,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (3,090) | (3,090) | ||||
Total Consolidated | $ 421,910 | $ 421,910 | ||||
4.50% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.50% | 4.50% | ||||
Effective rate (as a percent) | 4.60% | 4.60% | ||||
Maturity Date | Jul. 30, 2029 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 300,000 | 300,000 | ||||
Outstanding Balance | 300,000 | 300,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (1,963) | (1,963) | ||||
Total Consolidated | $ 298,037 | $ 298,037 | ||||
2.75% Unsecured Senior Notes Payable Due 2029 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 2.75% | 2.75% | ||||
Effective rate (as a percent) | 2.87% | 2.87% | ||||
Maturity Date | Dec. 15, 2029 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 400,000 | 400,000 | ||||
Outstanding Balance | 400,000 | 400,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (3,788) | (3,788) | ||||
Total Consolidated | $ 396,212 | $ 396,212 | ||||
4.70% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.70% | 4.70% | ||||
Effective rate (as a percent) | 4.81% | 4.81% | ||||
Maturity Date | Jul. 1, 2030 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 450,000 | 450,000 | ||||
Outstanding Balance | 450,000 | 450,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (3,627) | (3,627) | ||||
Total Consolidated | $ 446,373 | $ 446,373 | ||||
4.90% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.90% | 4.90% | 4.90% | |||
Effective rate (as a percent) | 5.05% | 5.05% | ||||
Maturity Date | Dec. 15, 2030 | Dec. 15, 2030 | ||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 700,000 | 700,000 | ||||
Outstanding Balance | 700,000 | $ 700,000 | 700,000 | |||
Unamortized (Deferred Financing Cost), (Discount) Premium | (8,036) | (8,036) | ||||
Total Consolidated | $ 691,964 | $ 691,964 | ||||
3.375% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 3.375% | 3.375% | ||||
Effective rate (as a percent) | 3.48% | 3.48% | ||||
Maturity Date | Aug. 15, 2031 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 750,000 | 750,000 | ||||
Outstanding Balance | 750,000 | 750,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (7,055) | (7,055) | ||||
Total Consolidated | $ 742,945 | $ 742,945 | ||||
1.875% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 1.875% | 1.875% | ||||
Effective rate (as a percent) | 1.97% | 1.97% | ||||
Maturity Date | Feb. 1, 2033 | Feb. 1, 2033 | ||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 1,000,000 | 1,000,000 | ||||
Outstanding Balance | 1,000,000 | 1,000,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (10,774) | (10,774) | ||||
Total Consolidated | $ 989,226 | $ 989,226 | ||||
4.85% Unsecured Senior Notes Payable | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.85% | 4.85% | ||||
Effective rate (as a percent) | 4.93% | 4.93% | ||||
Maturity Date | Apr. 15, 2049 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 300,000 | 300,000 | ||||
Outstanding Balance | 300,000 | 300,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (3,360) | (3,360) | ||||
Total Consolidated | $ 296,640 | $ 296,640 | ||||
4.00% Unsecured Senior Notes Payables Due 2050 | ||||||
Debt Instrument | ||||||
Stated interest rate (as a percent) | 4.00% | 4.00% | ||||
Effective rate (as a percent) | 3.91% | 3.91% | ||||
Maturity Date | Feb. 1, 2050 | |||||
Future principal payments due on secured and unsecured debt | ||||||
2020 | $ 0 | $ 0 | ||||
2021 | 0 | 0 | ||||
2022 | 0 | 0 | ||||
2023 | 0 | 0 | ||||
2024 | 0 | 0 | ||||
Thereafter | 700,000 | 700,000 | ||||
Outstanding Balance | 700,000 | 700,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | 10,424 | 10,424 | ||||
Total Consolidated | 710,424 | 710,424 | ||||
$750 million unsecured senior line of credit | ||||||
Debt Instrument | ||||||
Maturity Date | Apr. 14, 2022 | |||||
Commercial Paper | ||||||
Future principal payments due on secured and unsecured debt | ||||||
2024 | $ 250,000 | $ 250,000 | ||||
Commercial Paper | ||||||
Debt Instrument | ||||||
Weighted-average yield to maturity, commercial paper | 0.25% | |||||
Stated interest rate (as a percent) | 0.26% | 0.26% | ||||
Effective rate (as a percent) | 0.29% | 0.29% | ||||
Maturity Date | Oct. 7, 2020 | |||||
Future principal payments due on secured and unsecured debt | ||||||
Outstanding Balance | $ 250,000 | $ 250,000 | ||||
Unamortized (Deferred Financing Cost), (Discount) Premium | (11) | (11) | ||||
Commercial paper program, gross | 250,000 | 250,000 | ||||
Commercial Paper Program | $ 249,989 | $ 249,989 | ||||
London Interbank Offered Rate (LIBOR) | $2.2 billion unsecured senior line of credit | ||||||
Debt Instrument | ||||||
Applicable margin (as a percent) | 0.825% | |||||
London Interbank Offered Rate (LIBOR) | $750 million unsecured senior line of credit | ||||||
Debt Instrument | ||||||
Applicable margin (as a percent) | 1.05% | |||||
Maximum | Commercial Paper | ||||||
Debt Instrument | ||||||
Number of maturity days from date of issuance | 397 | |||||
Subsequent Event | $3.0 billion unsecured senior line of credit | ||||||
Debt Instrument | ||||||
Maturity Date | Jan. 6, 2026 | |||||
Future principal payments due on secured and unsecured debt | ||||||
Total Consolidated | $ 3,000,000 | |||||
Subsequent Event | London Interbank Offered Rate (LIBOR) | $3.0 billion unsecured senior line of credit | ||||||
Debt Instrument | ||||||
Applicable margin (as a percent) | 0.825% |
Summary of secured and unsecure
Summary of secured and unsecured debt (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | |
Oct. 26, 2020 | Sep. 30, 2020 | Oct. 06, 2020 | |
Debt Instrument | |||
Long-term Debt | $ 7,573,182 | ||
Long-term Debt, Percentage Bearing Variable Interest, Amount, Net | 249,989 | ||
Total Consolidated | $ 7,823,171 | ||
Percentage of Total | 100.00% | ||
Weighted-Average Interest Rate at End of Period | 3.69% | ||
Weighted Average Remaining Terms (in years) | 10 years 7 months 6 days | ||
Percentage of fixed rate/hedged total debt | 97.00% | ||
Percentage of unhedged floating rate total debt | 3.00% | ||
Debt Instrument, Weighted Average Remaining Period Including Commercial Paper | 10 years 6 months | ||
Commercial Paper | |||
Debt Instrument | |||
Percentage of Total | 3.20% | ||
Weighted-Average Interest Rate at End of Period | 0.29% | ||
Weighted Average Remaining Terms (in years) | 6 years 3 months 18 days | ||
Short-term debt, Percentage Bearing Fixed Interest, Amount, Net | $ 0 | ||
Short-term Debt, Percentage Bearing Variable Interest, Amount, Net | 249,989 | ||
Commercial Paper Program | $ 249,989 | ||
Maturity Date | Oct. 7, 2020 | ||
Secured notes payable | |||
Debt Instrument | |||
Long-term Debt | $ 342,363 | ||
Long-term Debt, Percentage Bearing Variable Interest, Amount, Net | 0 | ||
Total Consolidated | $ 342,363 | ||
Percentage of Total | 4.40% | ||
Weighted-Average Interest Rate at End of Period | 3.57% | ||
Weighted Average Remaining Terms (in years) | 3 years 3 months 18 days | ||
Unsecured senior notes payable | |||
Debt Instrument | |||
Long-term Debt | $ 7,230,819 | ||
Long-term Debt, Percentage Bearing Variable Interest, Amount, Net | 0 | ||
Total Consolidated | $ 7,230,819 | ||
Percentage of Total | 92.40% | ||
Weighted-Average Interest Rate at End of Period | 3.81% | ||
Weighted Average Remaining Terms (in years) | 11 years 2 months 12 days | ||
Unsecured senior lines of credit | |||
Debt Instrument | |||
Long-term Debt | $ 0 | ||
Long-term Debt, Percentage Bearing Variable Interest, Amount, Net | 0 | ||
Total Consolidated | $ 0 | ||
Percentage of Total | 0.00% | ||
Weighted Average Remaining Terms (in years) | 3 years 3 months 18 days | ||
$2.2 billion unsecured senior line of credit | |||
Debt Instrument | |||
Total Consolidated | $ 0 | ||
Maturity Date | Jan. 28, 2024 | ||
$3.0 billion unsecured senior line of credit | Subsequent Event | |||
Debt Instrument | |||
Total Consolidated | $ 3,000,000 | ||
Maturity Date | Jan. 6, 2026 | ||
Line of Credit, Increase in Incremental Borrowing | $ 800,000 |
Unsecured senior notes payable
Unsecured senior notes payable (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 18 Months Ended | ||||||
Oct. 26, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | Oct. 06, 2020 | Dec. 31, 2019 | |
Debt Instrument | ||||||||||
Outstanding Balance | $ 7,857,698 | $ 7,857,698 | ||||||||
Proceeds from issuance of unsecured senior notes payable | 1,697,651 | $ 2,721,169 | ||||||||
Loss on early extinguishment of debt | (52,770) | $ (40,209) | (52,770) | (47,570) | ||||||
Premium paid for early extinguishment of debt | 48,653 | $ 34,677 | ||||||||
Long-term Debt | 7,823,171 | 7,823,171 | ||||||||
Commercial Paper | ||||||||||
Debt Instrument | ||||||||||
Outstanding Balance | $ 250,000 | $ 250,000 | ||||||||
Maturity Date | Oct. 7, 2020 | |||||||||
Stated interest rate (as a percent) | 0.26% | 0.26% | ||||||||
Commercial Paper, Maximum Issuance | $ 1,000,000 | $ 1,000,000 | $ 750,000 | |||||||
Weighted-average yield to maturity, commercial paper | 0.25% | |||||||||
4.90% Unsecured Senior Notes Payable | ||||||||||
Debt Instrument | ||||||||||
Outstanding Balance | $ 700,000 | $ 700,000 | $ 700,000 | |||||||
Maturity Date | Dec. 15, 2030 | Dec. 15, 2030 | ||||||||
Stated interest rate (as a percent) | 4.90% | 4.90% | 4.90% | |||||||
Proceeds from issuance of unsecured senior notes payable | $ 691,600 | |||||||||
Long-term Debt | $ 691,964 | $ 691,964 | ||||||||
Total unsecured senior notes issued since Jan.1, 2019 | ||||||||||
Debt Instrument | ||||||||||
Total issuance of unsecured senior notes | $ 4,400,000 | |||||||||
Weighted Average Interest Rate | 3.48% | 3.48% | ||||||||
Weighted average maturity years | 14 years 3 months 18 days | |||||||||
$750 million unsecured senior line of credit | ||||||||||
Debt Instrument | ||||||||||
Maturity Date | Apr. 14, 2022 | |||||||||
Loss on early extinguishment of debt | $ 1,900 | |||||||||
Annual facility fee (as a percent) | 0.20% | |||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 750,000 | $ 750,000 | ||||||||
1.875% Unsecured Senior Notes Payable | ||||||||||
Debt Instrument | ||||||||||
Outstanding Balance | $ 1,000,000 | $ 1,000,000 | ||||||||
Maturity Date | Feb. 1, 2033 | Feb. 1, 2033 | ||||||||
Stated interest rate (as a percent) | 1.875% | 1.875% | ||||||||
Proceeds from issuance of unsecured senior notes payable | $ 989,100 | |||||||||
Long-term Debt | 989,226 | $ 989,226 | ||||||||
3.90% Unsecured Senior Note Payable | ||||||||||
Debt Instrument | ||||||||||
Outstanding Balance | $ 500,000 | $ 500,000 | ||||||||
Stated interest rate (as a percent) | 3.90% | 3.90% | ||||||||
Cash tender offer settlement date | Aug. 5, 2020 | |||||||||
Unsecured senior notes payable redemption date | Sep. 4, 2020 | |||||||||
Loss on early extinguishment of debt | $ 50,800 | |||||||||
$3.0 billion unsecured senior line of credit | Subsequent Event | ||||||||||
Debt Instrument | ||||||||||
Maturity Date | Jan. 6, 2026 | |||||||||
Loss on early extinguishment of debt | $ 651 | |||||||||
Long-term Debt | $ 3,000,000 | |||||||||
$2.2 billion unsecured senior line of credit | ||||||||||
Debt Instrument | ||||||||||
Outstanding Balance | 0 | $ 0 | ||||||||
Maturity Date | Jan. 28, 2024 | |||||||||
Long-term Debt | $ 0 | $ 0 | ||||||||
London Interbank Offered Rate (LIBOR) | $750 million unsecured senior line of credit | ||||||||||
Debt Instrument | ||||||||||
Applicable margin (as a percent) | 1.05% | |||||||||
London Interbank Offered Rate (LIBOR) | $3.0 billion unsecured senior line of credit | Subsequent Event | ||||||||||
Debt Instrument | ||||||||||
Applicable margin (as a percent) | 0.825% | |||||||||
London Interbank Offered Rate (LIBOR) | $2.2 billion unsecured senior line of credit | ||||||||||
Debt Instrument | ||||||||||
Applicable margin (as a percent) | 0.825% |
Schedule of interest expense in
Schedule of interest expense incurred (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Interest expense incurred | ||||
Gross interest | $ 75,874 | $ 70,761 | $ 222,100 | $ 192,923 |
Capitalized interest | (32,556) | (24,558) | (88,029) | (64,741) |
Interest expense | $ 43,318 | $ 46,203 | $ 134,071 | $ 128,182 |
Accounts payable, accrued exp_3
Accounts payable, accrued expenses, and other liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 | Jan. 01, 2019 |
Accounts payable, accrued expenses, and tenant security deposits [Abstract] | |||
Accounts payable and accrued expenses | $ 318,280 | $ 198,994 | |
Accrued construction | 274,085 | 275,818 | |
Acquired below-market leases | 292,066 | 194,773 | |
Conditional asset retirement obligations | 48,102 | 14,037 | |
Deferred rent liabilities | 3,922 | 2,897 | |
Operating lease liability | 326,045 | 271,808 | $ 218,700 |
Unearned rent and tenant security deposits | 277,964 | 275,863 | |
Other liabilities | 68,876 | 86,078 | |
Accounts Payable and Accrued Liabilities | $ 1,609,340 | $ 1,320,268 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 29, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Earnings Per Share Reconciliation | ||||||
Net income (loss) | $ 95,799 | $ (36,003) | $ 370,038 | $ 187,994 | ||
Net income attributable to noncontrolling interests | (14,743) | (11,199) | (40,563) | (27,270) | ||
Dividends on preferred stock | 0 | (1,173) | 0 | (3,204) | ||
Preferred stock redemption charge | 0 | 0 | 0 | (2,580) | ||
Net income attributable to unvested restricted stock awards | (1,730) | (1,398) | (5,304) | (4,532) | ||
Numerator for basic and diluted EPS – net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $ 79,326 | $ (49,773) | $ 324,171 | $ 150,408 | ||
Denominator for basic EPS – weighted-average shares of common stock outstanding | 124,901,000 | 112,120,000 | 123,561,000 | 111,540,000 | ||
Dilutive effect of forward equity sales agreements | 927,000 | 0 | 466,000 | 172,000 | ||
Denominator for diluted EPS – weighted-average shares of common stock outstanding | 125,828,000 | 112,120,000 | 124,027,000 | 111,712,000 | ||
Earnings per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders - basic and diluted: | ||||||
Earnings (loss) per share – basic (USD per share) | $ 0.64 | $ (0.44) | $ 2.62 | $ 1.35 | ||
Earnings (loss) per share - diluted (USD per share) | $ 0.63 | $ (0.44) | $ 2.61 | $ 1.35 | ||
7.00% Series D Cumulative Convertible Preferred Stock | ||||||
Class of Stock | ||||||
Stock Redeemed or Called During Period, Shares | 2,300,000 | |||||
Preferred Stock, Shares Outstanding | 0 |
Stockholders' equity (Details)
Stockholders' equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | ||||||
Dividends declared on common stock | $ 143,040 | $ 133,700 | $ 130,000 | $ 114,572 | $ 406,702 | $ 337,687 |
Dividends declared on common stock (per share) | $ 1.06 | $ 1.06 | $ 1.03 | $ 1 | $ 3.15 | $ 2.97 |
Shares of common stock authorized | 200,000,000 | 200,000,000 | ||||
Shares of common stock issued and outstanding | 133,300,000 | 133,300,000 | ||||
Shares of preferred stock authorized | 100,000,000 | 100,000,000 | ||||
Shares of preferred stock issued and outstanding | 0 | 0 | ||||
Number of "excess stock" authorized (in shares) | 200,000,000 | |||||
Number of excess stock authorized issued and outstanding (in shares) | 0 | 0 |
ATM common stock offering progr
ATM common stock offering program and Forward Equity Sales Agreements (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 06, 2020 | Feb. 10, 2020 | Jan. 06, 2020 | Sep. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2019 |
Class of Stock | |||||||
Shares of common stock authorized | 200,000,000 | 200,000,000 | |||||
Net proceeds from issuance of common stock | $ 1,813,573 | $ 235,487 | |||||
Forward Equity Sales Agreements Entered in January 2020 | |||||||
Class of Stock | |||||||
Expected net proceeds from issuance of common stock | $ 1,000,000 | ||||||
Shares of common stock authorized | 6,900,000 | ||||||
Average issue price per share | $ 155 | ||||||
Issuances of common stock (in shares) | 3,400,000 | ||||||
Net proceeds from issuance of common stock | $ 500,000 | ||||||
Forward Equity Sales Agreement Entered in July 2020 | |||||||
Class of Stock | |||||||
Expected net proceeds from issuance of common stock | $ 1,100,000 | ||||||
Shares of common stock authorized | 6,900,000 | ||||||
Average issue price per share | $ 160.50 | ||||||
Forward Equity Sales Agreement - January and July 2020 | |||||||
Class of Stock | |||||||
Expected net proceeds from issuance of common stock | $ 2,100,000 | ||||||
Shares of common stock authorized | 13,800,000 | 13,800,000 | |||||
Issuances of common stock (in shares) | 8,700,000 | ||||||
Net proceeds from issuance of common stock | $ 1,300,000 | ||||||
Common stock available for future issuance (in shares) | 1,800,000 | 1,800,000 | |||||
Common stock available for future issuance (in dollars) | $ 267,400 | $ 267,400 | |||||
ATM common stock offering program, established February 2020 | |||||||
Class of Stock | |||||||
Expected net proceeds from issuance of common stock | $ 850,000 | ||||||
Common stock available for future issuance (in dollars) | $ 843,700 | $ 843,700 |
Accumulated other comprehensive
Accumulated other comprehensive loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Increase (Decrease) Accumulated Other Comprehensive Income (Loss) Net of Tax [Roll Forward] | ||||
Balance as of December 31, 2019 | $ (9,749) | |||
Other comprehensive income (loss) before reclassifications | $ 2,442 | $ (2,076) | (889) | $ 724 |
Balance as of September 30, 2020 | (10,638) | (10,638) | ||
Foreign Currency Translation | ||||
Increase (Decrease) Accumulated Other Comprehensive Income (Loss) Net of Tax [Roll Forward] | ||||
Balance as of December 31, 2019 | (9,749) | |||
Net other comprehensive income (loss) | (889) | |||
Balance as of September 30, 2020 | $ (10,638) | $ (10,638) |
Noncontrolling interests (Detai
Noncontrolling interests (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | |
Noncontrolling interests | ||
Payments to Noncontrolling Interests | $ 66,095 | $ 38,882 |
Noncontrolling Interests | ||
Noncontrolling interests | ||
Number of real estate properties subject to ownership from noncontrolling interest | 38 | |
Payments to Noncontrolling Interests | $ 64,600 | $ 38,900 |
Assets classified as held for_3
Assets classified as held for sale (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($)ft² | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($) | Sep. 30, 2020USD ($)ft² | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Assets held for sale - area of real estate | ft² | 458,006 | 458,006 | ||||
Impairment of real estate | $ 7,680 | $ 0 | $ 15,200 | $ 22,901 | $ 0 | |
Net assets held for sale [Abstract] | ||||||
Total assets | 44,465 | 44,465 | $ 59,412 | |||
Total liabilities | (2,208) | (2,208) | (2,860) | |||
Total accumulated other comprehensive income | 400 | 400 | 536 | |||
Net assets classified as held for sale | 42,657 | $ 42,657 | $ 57,088 | |||
945 Market Street | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Impairment of real estate | $ 6,800 | |||||
Area of Real Estate Property | ft² | 255,765 | 255,765 | ||||
Proceeds from Sale of Real Estate | $ 198,000 |
Subsequent events (Details)
Subsequent events (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 26, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 06, 2020 | |
Subsequent Event [Line Items] | ||||||
Loss on early extinguishment of debt | $ (52,770) | $ (40,209) | $ (52,770) | $ (47,570) | ||
Long-term Debt | $ 7,823,171 | $ 7,823,171 | ||||
Subsequent Event | $3.0 billion unsecured senior line of credit | ||||||
Subsequent Event [Line Items] | ||||||
Loss on early extinguishment of debt | $ 651 | |||||
Long-term Debt | $ 3,000,000 | |||||
Line of Credit, Increase in Incremental Borrowing | $ 800,000 | |||||
Maturity Date | Jan. 6, 2026 | |||||
Subsequent Event | $3.0 billion unsecured senior line of credit | London Interbank Offered Rate (LIBOR) | ||||||
Subsequent Event [Line Items] | ||||||
Applicable margin (as a percent) | 0.825% | |||||
LIBOR floor, interest rate | 0.00% |
Uncategorized Items - are-20200
Label | Element | Value |
Cumulative effect of adjustment upon adoption of new accounting standard update | are_Cumulativeeffectofadjustmentuponadoptionofnewaccountingstandardupdate | $ 2,484,000 |
Cumulative effect of adjustment upon adoption of new accounting standard update | are_Cumulativeeffectofadjustmentuponadoptionofnewaccountingstandardupdate | (3,525,000) |
Retained Earnings [Member] | ||
Cumulative effect of adjustment upon adoption of new accounting standard update | are_Cumulativeeffectofadjustmentuponadoptionofnewaccountingstandardupdate | 2,484,000 |
Cumulative effect of adjustment upon adoption of new accounting standard update | are_Cumulativeeffectofadjustmentuponadoptionofnewaccountingstandardupdate | $ (3,525,000) |