Exhibit 99.1
Contact: | | Joel S. Marcus |
| | Chairman/Chief Executive Officer |
| | Alexandria Real Estate Equities, Inc. |
| | (626) 578-9693 |
ALEXANDRIA REAL ESTATE EQUITIES, INC.
REPORTS
THIRD QUARTER 2007 RESULTS
Highlights
Third Quarter 2007:
• Third Quarter 2007 Funds from Operations (FFO) Per Share (Diluted) of $1.45, up 10%, Compared to Third Quarter 2006 FFO Per Share (Diluted) of $1.32
• Third Quarter 2007 Total Revenues up 23%, FFO Available to Common Stockholders up 21%
• Third Quarter 2007 Earnings Per Share (Diluted) of $0.68, up 21%, Compared to Third Quarter 2006 Earnings Per Share (Diluted) of $0.56
• Executed 41 Leases for 445,000 Rentable Square Feet
• Third Quarter 2007 GAAP Rental Rate Increase of 7.4% on Renewed/Released Space
• Third Quarter 2007 GAAP Same Property Revenues Less Operating Expenses up 4.1%
• Closed $200 Million Secured Loan
• Sold Five Real Estate Assets for Approximately $41 Million
• Acquired Twelve Properties Aggregating 836,684 Rentable Square Feet
• Executed MaRS Centre Ground Lease in Toronto, Canada for Planned Development of One Property Aggregating 770,000 Rentable Square Feet
• Completed Ground-Up Development of One Property in Mission Bay Aggregating 157,340 Rentable Square Feet
• Commenced Ground-Up Development of One Property in Mission Bay Aggregating 158,000 Rentable Square Feet
• Commenced First Ground-Up Development of Two Properties in China Aggregating 280,000 Rentable Square Feet
• Completed Redevelopment of Multiple Spaces at Three Properties Aggregating 47,722 Rentable Square Feet
• Closed Follow-on Common Stock Offering with Net Proceeds of Approximately $217 Million
PASADENA, CA. - November 5, 2007 - Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the third quarter ended September 30, 2007.
For the third quarter of 2007, we reported total revenues of $104,132,000 and FFO available to common stockholders of $42,723,000, or $1.45 per share (diluted), compared to total revenues of $84,754,000 and FFO available to common stockholders of $35,230,000, or $1.32 per share (diluted), for the third quarter of 2006. Comparing the third quarter of 2007 to the third quarter of 2006, total revenues increased 23%, FFO available to common stockholders increased 21% and FFO per share (diluted) increased 10%. For the nine months ended September 30, 2007, we reported
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS THIRD QUARTER 2007 RESULTS
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total revenues of $297,369,000 and FFO available to common stockholders of $121,876,000, or $4.14 per share (diluted), net of a preferred stock redemption charge, compared to total revenues of $222,920,000 and FFO available to common stockholders of $92,611,000, or $3.82 per share (diluted), for the nine months ended September 30, 2006. Comparing the nine months ended September 30, 2007 to the nine months ended September 30, 2006, total revenues increased 33%, FFO available to common stockholders increased 32% and FFO per share (diluted) increased 8%, net of a preferred stock redemption charge recognized in the first quarter of 2007. The preferred stock redemption charge related to the redemption of our Series B Preferred Stock was approximately $2,799,000, or $0.10 per share (diluted). Excluding the preferred stock redemption charge, FFO available to common stockholders for the nine months ended September 30, 2007 increased by 35% and FFO per share (diluted) increased by 11% as compared to the nine months ended September 30, 2006.
FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. A reconciliation of GAAP net income available to common stockholders to FFO available to common stockholders, on both an aggregate and per share diluted basis, is included in the financial information accompanying this press release. The primary reconciling item between GAAP net income available to common stockholders and FFO available to common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended September 30, 2007 and 2006 was $24,194,000 and $19,973,000, respectively. Depreciation and amortization expense for the nine months ended September 30, 2007 and 2006 was $70,366,000 and $51,585,000, respectively. Net income available to common stockholders for the third quarter of 2007 was $20,186,000, or $0.68 per share (diluted), compared to net income available to common stockholders of $14,942,000, or $0.56 per share (diluted), for the third quarter of 2006. Net income available to common stockholders for the nine months ended September 30, 2007 was $56,628,000, or $1.93 per share (diluted), compared to net income available to common stockholders of $40,814,000, or $1.68 per share (diluted), for the nine months ended September 30, 2006. In the first quarter of 2007, we recognized a preferred stock redemption charge of approximately $2,799,000, or $0.10 per share (diluted), related to the redemption of our Series B Preferred Stock. Excluding the preferred stock redemption charge, net income available to common stockholders for the nine months ended September 30, 2007 increased by 46% and net income per share (diluted) increased by 20% as compared to the nine months ended September 30, 2006.
For the third quarter of 2007, we executed a total of 41 leases for approximately 445,000 square feet of space at 29 different properties (excluding month-to-month leases). Of this total, approximately 265,000 square feet related to new or renewal leases of previously leased space and approximately 180,000 square feet related to redeveloped, developed or previously vacant space. Of the 180,000 square feet, approximately 24,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 156,000 square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 7.4% higher (on a GAAP basis) than rental rates for expiring leases.
For the nine months ended September 30, 2007, we executed a total of 110 leases for approximately 1,264,000 square feet of space at 53 different properties (excluding month-to-month leases). Of this total, approximately 784,000 square feet were for new or renewal leases related to previously leased space and approximately 480,000 square feet were for redeveloped, developed or previously vacant space. Of the 480,000 square feet, approximately 212,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 268,000 square feet for previously vacant space. Rental rates for new or renewal leases were on average approximately 8.0% higher (on a GAAP basis) than rental rates for expiring leases.
During the third quarter of 2007, we acquired twelve properties with approximately 837,000 rentable square feet. We paid approximately $366.8 million cash for the properties. One of these properties, an office building totaling approximately 49,000 rentable square feet, was classified as “held for sale” as of September 30, 2007.
As of September 30, 2007, approximately 89% of our leases (on a square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of September 30, 2007, approximately 4% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses. Additionally, as of September 30, 2007, approximately 90% of our leases (on a square footage basis) provided for the recapture of certain capital expenditures and approximately 94% of our leases (on a square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS THIRD QUARTER 2007 RESULTS
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Based on our current view of existing market conditions and certain current assumptions, we have updated our prior guidance for FFO per share (diluted) and earnings per share (diluted) as follows:
| | 2007 | |
FFO per share (diluted) (1) | | $ | 5.61 | |
Earnings per share (diluted) (2) | | $ | 2.50 | |
| | | |
(1) Includes preferred stock redemption charge of $0.10 per share diluted recognized in first quarter 2007 and excludes gains on sales of real estate.
(2) Includes preferred stock redemption charge of $0.10 per share diluted recognized in first quarter 2007 and gains on sales of real estate.
Alexandria Real Estate Equities, Inc., Landlord and Developer of Choice to the Life Science Industry®, is a publicly-traded real estate investment trust focused principally on the ownership, operation, management, selective development, redevelopment and acquisition of life science properties. Our properties are designed and improved for lease primarily to institutional (universities and independent not-for-profit institutions), pharmaceutical, biotechnology, medical device, life science product, service, biodefense and translational medicine entities, as well as governmental agencies. We are the largest and leading provider of real estate to the broad and diverse life science industry with an asset base, as of September 30, 2007, that will enable us to grow to approximately 20.7 million square feet consisting of 167 properties approximating 11.8 million square feet, properties undergoing ground-up development approximating 1.5 million square feet, plus an imbedded pipeline for ground-up development approximating 7.4 million square feet.
This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.
(Tables follow)
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, | |
| | | | | | | | | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
Income statement data | | | | | | | | | |
Total revenues | | $ | 104,132 | | $ | 84,754 | | $ | 297,369 | | $ | 222,920 | |
| | | | | | | | | |
Expenses | | | | | | | | | |
Rental operations | | 25,522 | | 19,797 | | 72,428 | | 49,305 | |
General and administrative | | 8,343 | | 6,652 | | 24,342 | | 19,371 | |
Interest | | 23,947 | | 19,041 | | 64,374 | | 50,223 | |
Depreciation and amortization | | 24,080 | | 19,808 | | 70,025 | | 50,976 | |
| | 81,892 | | 65,298 | | 231,169 | | 169,875 | |
| | | | | | | | | |
Minority interest | | 909 | | 709 | | 2,718 | | 1,449 | |
Income from continuing operations | | 21,331 | | 18,747 | | 63,482 | | 51,596 | |
| | | | | | | | | |
Income from discontinued operations, net | | 1,569 | | 217 | | 5,250 | | 1,285 | |
| | | | | | | | | |
Net income | | 22,900 | | 18,964 | | 68,732 | | 52,881 | |
| | | | | | | | | |
Dividends on preferred stock | | 2,714 | | 4,022 | | 9,305 | | 12,067 | |
Preferred stock redemption charge | | - | | - | | 2,799 | | - | |
Net income available to common stockholders | | $ | 20,186 | | $ | 14,942 | | $ | 56,628 | | $ | 40,814 | |
| | | | | | | | | |
Weighted average shares of common stock outstanding | | | | | | | | | |
Basic | | 29,258,184 | | 26,323,345 | | 29,068,793 | | 23,848,661 | |
Diluted | | 29,507,316 | | 26,714,050 | | 29,406,687 | | 24,268,236 | |
| | | | | | | | | |
Earnings per share - basic | | | | | | | | | |
Continuing operations (net of preferred stock dividends and preferred stock redemption charge) | | $ | 0.64 | | $ | 0.56 | | $ | 1.77 | | $ | 1.66 | |
Discontinued operations, net | | 0.05 | | 0.01 | | 0.18 | | 0.05 | |
Earnings per share - basic | | $ | 0.69 | | $ | 0.57 | | $ | 1.95 | | $ | 1.71 | |
| | | | | | | | | |
Earnings per share - diluted | | | | | | | | | |
Continuing operations (net of preferred stock dividends and preferred stock redemption charge) | | $ | 0.63 | | $ | 0.55 | | $ | 1.75 | | $ | 1.63 | |
Discontinued operations, net | | 0.05 | | 0.01 | | 0.18 | | 0.05 | |
Earnings per share - diluted | | $ | 0.68 | | $ | 0.56 | | $ | 1.93 | | $ | 1.68 | |
| | | | | | | | | | | | | | | | | |
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Unaudited)
Funds from Operations
Generally accepted accounting principles (“GAAP”) basis accounting for real estate assets utilizes historical cost accounting and assumes real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Board of Governors of the National Association of Real Estate Investment Trusts (“NAREIT”) established the measurement tool of Funds From Operations (“FFO”). Since its introduction, FFO has become a widely used non-GAAP financial measure by REITs. We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper (the “White Paper”) and related implementation guidance, which may differ from the methodology for calculating FFO utilized by other equity REITs, and, accordingly, may not be comparable to such other REITs. The White Paper defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. While FFO is a relevant and widely used measure of operating performance for REITs, it should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions.
The following table presents a reconciliation of net income available to common stockholders, the most directly comparable GAAP financial measure to FFO, to funds from operations available to common stockholders for the three and nine months ended September 30, 2007 and 2006 (in thousands, except per share data):
| | Three Months
Ended
September 30, 2007 | | Three Months
Ended
September 30, 2006 | | Nine Months
Ended
September 30, 2007 | | Nine Months
Ended
September 30, 2006 | |
Reconciliation of net income available to common stockholders to funds from operations available to common stockholders | | | | | | | | | |
Net income available to common stockholders (1) | | $ | 20,186 | | $ | 14,942 | | $ | 56,628 | | $ | 40,814 | |
Add: Depreciation and amortization (2) | | 24,194 | | 19,973 | | 70,366 | | 51,585 | |
Add: Minority interest | | 909 | | 709 | | 2,718 | | 1,449 | |
Subtract: Gain on sales of property (3) | | (1,614 | ) | - | | (5,075 | ) | (59 | ) |
Subtract: FFO allocable to minority interest | | (952 | ) | (394 | ) | (2,761 | ) | (1,178 | ) |
Funds from operations available to common stockholders (1) | | $ | 42,723 | | $ | 35,230 | | $ | 121,876 | | $ | 92,611 | |
FFO per share | | | | | | | | | |
Basic | | $ | 1.46 | | $ | 1.34 | | $ | 4.19 | | $ | 3.88 | |
Diluted | | $ | 1.45 | | $ | 1.32 | | $ | 4.14 | | $ | 3.82 | |
| | | | | | | | | |
Reconciliation of earnings per share (diluted) to FFO per share (diluted) | | | | | | | | | |
Earnings per share (diluted) | | $ | 0.68 | | $ | 0.56 | | $ | 1.93 | | $ | 1.68 | |
Depreciation and amortization (2) | | 0.82 | | 0.75 | | 2.39 | | 2.13 | |
Minority interest | | 0.03 | | 0.03 | | 0.09 | | 0.06 | |
Gain on sales of property (3) | | (0.05 | | - | | (0.17) | ) | - | |
FFO allocable to minority interest | | (0.03 | ) | (0.02 | ) | (0.10 | ) | (0.05 | ) |
FFO per share (diluted) | | $ | 1.45 | | $ | 1.32 | | $ | 4.14 | | $ | 3.82 | |
(1) During the first quarter of 2007, we redeemed our 9.10% Series B cumulative redeemable preferred stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge of $2,799,000, or $0.10 per share (diluted), in the first quarter of 2007 for costs related to the redemption of our Series B Preferred Stock.
(2) Includes depreciation and amortization on assets “held for sale” reflected as discontinued operations (for the periods prior to when such assets were designated as “held for sale”).
(3) Gain on sales of property relates to the disposition of four land parcels and one property during the third quarter of 2007, one property during the second quarter of 2007, one property during the first quarter of 2007, and three properties during the second quarter of 2006. Gain on sales of property is included in the income statement in income from discontinued operations, net.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Quarterly Supplemental Financial Information
| | For the Three Months Ended | |
Operational data | | 9/30/2007 | | 6/30/2007 | | 3/31/2007 | | 12/31/2006 | | 9/30/2006 | |
| | | | | | | | | | | |
Breakdown of revenues from continuing operations (a) | | | | | | | | | | | |
Rental income | | $ | 78,636 | | $ | 73,250 | | $ | 73,161 | | $ | 70,316 | | $ | 63,877 | |
Tenant recoveries | | 21,762 | | 19,094 | | 20,572 | | 19,024 | | 17,446 | |
Other income | | 3,734 | | 3,410 | | 3,750 | | 3,943 | | 3,431 | |
Total revenues | | $ | 104,132 | | $ | 95,754 | | $ | 97,483 | | $ | 93,283 | | $ | 84,754 | |
| | | | | | | | | | | | | | | | |
Funds from operations per share-diluted (b) | | $ | 1.45 | | $ | 1.42 | | $ | 1.28 | (c) | $ | 1.34 | | $ | 1.32 | |
Dividends per share on common stock | | $ | 0.76 | | $ | 0.76 | | $ | 0.74 | | $ | 0.74 | | $ | 0.72 | |
Dividend payout ratio (common stock) (d) | | 56.3% | | 53.8% | | 58.1% | | 55.6% | | 59.6% | |
Straight-line rent | | $ | 4,508 | | $ | 2,720 | (e) | $ | 5,082 | | $ | 5,671 | | $ | 4,515 | |
Capitalized interest | | $ | 15,035 | | $ | 13,548 | | $ | 10,844 | | $ | 9,010 | | $ | 9,726 | |
| | | |
| | As of | |
Other data | | 9/30/2007 | | 6/30/2007 | | 3/31/2007 | | 12/31/2006 | | 9/30/2006 | |
| | | | | | | | | | | |
Number of shares of common stock outstanding at end of period | | 31,243,448 | | 29,180,700 | | 29,129,238 | | 29,012,135 | | 28,957,698 | |
Number of properties (f) | | | | | | | | | | | |
Acquired/added/completed during period | | 13 | | 2 | | - | | 8 | | 10 | |
Sold/transferred to development (g) | | (1 | ) | (4 | )(h) | (1 | ) | - | | - | |
Owned at end of period | | 167 | | 155 | | 157 | | 158 | | 150 | |
Rentable square feet (f) | | | | | | | | | | | |
Acquired/added/completed during period | | 994,024 | | 104,312 | | - | | 573,027 | | 1,343,365 | |
Sold/transferred to development (g) | | (37,000 | ) | (375,112 | ) | (75,500 | ) | - | | - | |
Owned at end of period | | 11,813,534 | | 10,856,510 | | 11,127,310 | | 11,202,810 | | 10,629,783 | |
| | | | | | | | | | | |
Debt to total market capitalization (i) | | | | | | | | | | | |
Total debt | | $ | 2,502,832 | | $ | 2,274,269 | | $ | 2,176,594 | | $ | 2,024,866 | | $ | 1,721,348 | |
Preferred stock market capitalization | | 130,156 | | 132,593 | | 140,579 | | 193,360 | | 194,142 | |
Common stock market capitalization | | 3,007,494 | | 2,825,275 | | 2,923,702 | | 2,912,818 | | 2,716,232 | |
Total market capitalization | | $ | 5,640,482 | | $ | 5,232,137 | | $ | 5,240,875 | | $ | 5,131,044 | | $ | 4,631,722 | |
Debt to total market capitalization | | 44.4% | | 43.5% | | 41.5% | | 39.5% | | 37.2% | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(a) The historical results above exclude the results of assets “held for sale” which have been reflected as discontinued operations.
(b) See page 5 for a reconciliation of earnings per share (diluted) to FFO per share (diluted).
(c) During the first quarter of 2007, we redeemed our 9.10% Series B cumulative redeemable preferred stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge of $2,799,000, or $0.10 per share (diluted), in the first quarter of 2007 for costs related to the redemption of our Series B Preferred Stock.
(d) Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (common stock shares outstanding on the respective record date multiplied by the related dividend per share) to funds from operations for the respective quarter.
(e) Includes a rental payment of approximately $1.4 million from one tenant, the U.S. Government, in the second quarter of 2007. Pursuant to Statement of Financial Accounting Standards No. 13, “Accounting for Leases” rental payments due under this lease are recognized on a straight-line basis over the lease term.
(f) Includes assets “held for sale” during the applicable periods such assets were “held for sale”.
(g) During the third quarter of 2007, we also sold four land parcels to the Massachusetts Institute of Technology.
(h) Represents one asset sold in the second quarter of 2007 and the transfer of three properties from operating assets to imbedded future development opportunities undergoing pre-construction activities.
(i) Debt to total market capitalization is the ratio of total debt (secured notes payable, unsecured line of credit and unsecured term loan and unsecured convertible notes) to total market capitalization. Total market capitalization is equal to outstanding shares of preferred stock and common stock multiplied by the related closing price at the end of each period presented, plus total debt.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
| | September 30, | | December 31, | |
| | 2007 | | 2006 | |
| | (Unaudited) | | | |
| | | | | |
Assets | | | | | |
Rental properties, net | | $ | 3,255,989 | | $ | 2,924,881 | |
Properties undergoing development and land held for development | | 696,282 | | 397,701 | |
Cash and cash equivalents | | 10,780 | | 2,948 | |
Tenant security deposits and other restricted cash | | 56,399 | | 34,360 | |
Tenant receivables | | 7,001 | | 6,330 | |
Deferred rent | | 77,228 | | 68,412 | |
Investments | | 79,290 | | 74,824 | |
Other assets | | 124,034 | | 108,021 | |
Total assets | | $ | 4,307,003 | | $ | 3,617,477 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
Secured notes payable | | $ | 1,162,832 | | $ | 1,174,866 | |
Unsecured line of credit and unsecured term loan | | 880,000 | | 850,000 | |
Unsecured convertible notes | | 460,000 | | - | |
Accounts payable, accrued expenses and tenant security deposits | | 227,140 | | 158,119 | |
Dividends payable | | 26,604 | | 25,363 | |
Total liabilities | | 2,756,576 | | 2,208,348 | |
| | | | | |
Minority interest | | 59,719 | | 57,477 | |
| | | | | |
Stockholders’ equity: | | | | | |
Series B preferred stock | | - | | 57,500 | |
Series C preferred stock | | 129,638 | | 129,638 | |
Common stock | | 312 | | 290 | |
Additional paid-in capital | | 1,334,417 | | 1,139,629 | |
Accumulated other comprehensive income | | 26,341 | | 24,595 | |
Total stockholders’ equity | | 1,490,708 | | 1,351,652 | |
Total liabilities and stockholders’ equity | | $ | 4,307,003 | | $ | 3,617,477 | |
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
September 30, 2007
(Dollars in thousands)
(Unaudited)
Principal Maturities / Rates
| | | Secured Debt | | | | Unsecured Debt | |
| Year | | Amount | | Weighted
Average
Interest Rate | | | | Amount | |
| 2007 | | $ | 23,057 | | 6.13% | | (1) | | $ | | |
| 2008 | | 125,100 | | 6.12 | | (2) | | - | |
| 2009 | | 245,986 | | 6.26 | | (2) | | - | |
| 2010 | | 93,259 | | 6.22 | | (2) | | 130,000 | (3) |
| 2011 | | 108,191 | | 6.08 | | (2) | | 750,000 | (3) |
| Thereafter | | 567,239 | | 6.00 | | (2) | | 460,000 | (4) |
| Total | | $ | 1,162,832 | | | | | | $ | 1,340,000 | |
| | | | | | | | | | |
| | | | | | | | | | | | | |
Secured and Unsecured Debt Analysis
| | | Balance | | Percentage
of
Balance | | Weighted
Average Interest Rate | | Weighted
Average Maturity | |
| Secured Debt | | $ | 1,162,832 | | 46.5% | | 6.13% | | 4.8 Years | |
| Unsecured Debt | | 1,340,000 | | 53.5 | | 5.27 | (5) | 4.1 Years | |
| Total Debt | | $ | 2,502,832 | | 100.0% | | 5.67% | | 4.4 Years | |
| | | | | | | | | | |
Fixed and Floating Rate Debt Analysis
| | | Balance | |
Percentage
of
Balance
| |
Weighted Average
Interest Rate
| |
Weighted
Average
Maturity
| |
| Fixed Rate Debt | | $ | 1,350,893 | | 54.0% | | 5.26% | | 5.1 Years | |
| Floating Rate Debt - Hedged | | 628,500 | | 25.1 | | 5.88 | (5) | 4.0 Years | |
| Floating Rate Debt - Unhedged | | 523,439 | | 20.9 | | 6.46 | | 2.9 Years | |
| Total Debt | | $ | 2,502,832 | | 100.0% | | 5.67% | | 4.4 Years | |
| | | | | | | | | | |
(1) The weighted average interest rate is calculated based on outstanding debt as of September 30, 2007.
(2) The weighted average interest rate is calculated based on outstanding debt as of December 31st of the year immediately preceding the year presented.
(3) The unsecured line of credit matures in October 2010 and may be extended at our sole option for an additional one year period. The unsecured term loan matures in October 2011 and may be extended at our sole option for an additional one year period.
(4) On or after January 15, 2012, we have the right to redeem our 3.70% unsecured convertible notes, in whole or in part, at any time from time to time, for cash equal to 100% of the principal amounts of the notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the notes may require us to repurchase their notes, in whole or in part, on January 15, 2012, 2017 and 2022 for cash equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. Additional information regarding our unsecured convertible notes is contained in our Form 10-K filed with the Securities and Exchange Commission.
(5) The weighted average interest rates include the impact of our interest rate swap agreements. See page 9 for further details of our interest rate swap agreements.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements
September 30, 2007
(Dollars in thousands)
(Unaudited)
Transaction Dates | | Effective
Dates | | Termination
Dates | | Interest Pay
Rates (1) | | Notional
Amounts | | Effective at
September 30,
2007 | |
| | | | | | | | | | | |
December 2004 | | December 31, 2004 | | January 2, 2008 | | 3.590% | | $ | 50,000 | | $ | 50,000 | |
| | | | | | | | | | | |
December 2004 | | January 3, 2006 | | July 1, 2008 | | 3.927 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
June 2006 | | June 30, 2006 | | September 30, 2009 | | 5.299 | | 125,000 | | 125,000 | |
| | | | | | | | | | | |
May 2005 | | November 30, 2006 | | November 30, 2007 | | 4.330 | | 25,000 | | 25,000 | |
| | | | | | | | | | | |
December 2003 | | December 29, 2006 | | October 31, 2008 | | 5.090 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
December 2005 | | December 29, 2006 | | November 30, 2009 | | 4.730 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
December 2005 | | December 29, 2006 | | November 30, 2009 | | 4.740 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
December 2006 | | December 29, 2006 | | March 31, 2014 | | 4.990 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
December 2006 | | January 2, 2007 | | January 3, 2011 | | 5.003 | | 28,500 | | 28,500 | |
| | | | | | | | | | | |
April 2004 | | April 30, 2007 | | April 30, 2008 | | 4.850 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
May 2005 | | June 29, 2007 | | June 30, 2008 | | 4.400 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
December 2006 | | June 29, 2007 | | October 31, 2008 | | 4.920 | | 50,000 | | 50,000 | |
| | | | | | | | | | | |
May 2005 | | November 30, 2007 | | November 28, 2008 | | 4.460 | | 25,000 | | - | |
| | | | | | | | | | | |
December 2005 | | January 2, 2008 | | December 31, 2010 | | 4.768 | | 50,000 | | - | |
| | | | | | | | | | | |
May 2005 | | June 30, 2008 | | June 30, 2009 | | 4.509 | | 50,000 | | - | |
| | | | | | | | | | | |
June 2006 | | June 30, 2008 | | June 30, 2010 | | 5.325 | | 50,000 | | - | |
| | | | | | | | | | | |
June 2006 | | June 30, 2008 | | June 30, 2010 | | 5.325 | | 50,000 | | - | |
| | | | | | | | | | | |
June 2006 | | October 31, 2008 | | December 31, 2010 | | 5.340 | | 50,000 | | - | |
| | | | | | | | | | | |
June 2006 | | October 31, 2008 | | December 31, 2010 | | 5.347 | | 50,000 | | - | |
| | | | | | | | | | | |
May 2005 | | November 28, 2008 | | November 30, 2009 | | 4.615 | | 25,000 | | - | |
| | | | | | | | | | | |
December 2006 | | November 30, 2009 | | March 31, 2014 | | 5.015 | | 75,000 | | - | |
| | | | | | | | | | | |
December 2006 | | November 30, 2009 | | March 31, 2014 | | 5.023 | | 75,000 | | - | |
| | | | | | | | | | | |
December 2006 | | December 31, 2010 | | October 31, 2012 | | 5.015 | | 100,000 | | - | |
| | | | | | | | | | | |
Total | | | | | | | | | | $ | 628,500 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | |
(1) The interest pay rates represent the interest rate we will pay for one month LIBOR under the respective interest rate swap agreement. These rates do not include any spread in addition to one month LIBOR that is due monthly as interest expense.
9
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
| | GAAP Basis (1)
Quarter Ended | | Cash Basis (1)
Quarter Ended | |
| | | | | |
| | 9/30/2007 | | 9/30/2006 | | % Change | | 9/30/2007 | | 9/30/2006 | | % Change | |
Revenue (2) | | $ | 65,684 | | $ | 61,471 | |
6.9%
| | $ | 64,395 | | $ | 58,369 | | 10.3% | |
Operating expenses | | 16,888 | | 14,616 | | 15.5 | | 16,888 | | 14,616 | | 15.5 | |
Revenue less operating expenses | | $ | 48,796 | | $ | 46,855 | | 4.1% | | $ | 47,507 | | $ | 43,753 | | 8.6% | |
| | GAAP Basis (1) | | Cash Basis (1) | |
| | Nine Months Ended | | Nine Months Ended | |
| |
9/30/2007
| | 9/30/2006 | | % Change | | 9/30/2007 | | 9/30/2006 | | % Change | |
Revenue (2) | | $ | 167,386 | | $ | 158,052 | |
5.9%
| | $ | 163,269 | | $ | 151,605 | | 7.7% | |
Operating expenses | | 40,076 | | 35,082 | | 14.2 | | 40,076 | | 35,082 | | 14.2 | |
Revenue less operating expenses | | $ | 127,310 | | $ | 122,970 | | 3.5% | | $ | 123,193 | | $ | 116,523 | | 5.7% | |
NOTE: This summary represents operating data for all properties that were owned and fully operating for the entire periods presented (the “Third Quarter Same Properties”) for the quarter periods and (the “Nine Months Same Properties”) for the nine month periods. Same property occupancy for the quarters ended September 30, 2007 and 2006 was 93.9% and 92.9%, respectively. Same property occupancy for the nine months ended September 30, 2007 and 2006 was 94.2% and 94.4%, respectively. Properties undergoing redevelopment are excluded from same property results.
(1) Revenue less operating expenses computed under GAAP is total revenue associated with the Third Quarter Same Properties and Nine Months Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the Third Quarter Same Properties and Nine Months Same Properties, as applicable (excluding lease termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarters ended September 30, 2007 and 2006 for the Third Quarter Same Properties were $1,289,000 and $3,102,000, respectively. Straight-line rent adjustments for the nine months ended September 30, 2007 and 2006 for the Nine Months Same Properties were $4,117,000 and $6,447,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent adjustments to rental revenue.
(2) Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Summary of Same Property Comparisons. As of September 30, 2007, approximately 89% of our leases (on a square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of September 30, 2007, approximately 4% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses.
10
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties
(Dollars in thousands)
| | September 30, 2007 | | June 30, 2007 | |
| | | | | | | | | | | | | | | |
| | Number of | | Rentable Square Feet | | Annualized | | Occupancy | | Occupancy | |
| | Properties | | Operating | | Redevelopment | | Total | | Base Rent (1) | | Percentage (1)(2) | | Percentage (3) | |
Markets | | | | | | | | | | | | | | | |
California - Los Angeles Metro | | 2 | | 31,343 | | 29,660 | | 61,003 | | $ | 696 | | 70.8 | % | | 70.8 | % | |
California - San Diego | | 34 | | 1,519,515 | | 247,849 | | 1,767,364 | | 43,662 | | 94.6 | | | 89.9 | | |
California - San Francisco Bay | | 24 | | 1,887,310 | | 30,238 | | 1,917,548 | | 64,415 | | 95.1 | | | 96.7 | | |
Eastern Massachusetts | | 37 | | 2,717,554 | | 299,653 | | 3,017,207 | | 96,168 | | 96.0 | | | 95.7 | | |
International - Canada | | 4 | | 296,362 | | 46,032 | | 342,394 | | 6,676 | | 100.0 | | | 100.0 | | |
New Jersey/Suburban Philadelphia | | 7 | | 406,349 | | - | | 406,349 | | 8,524 | | 96.3 | | | 96.6 | | |
Southeast | | 12 | | 596,172 | | 62,234 | | 658,406 | | 10,561 | | 87.3 | (4) | | 86.2 | (4) | |
Suburban Washington D.C. | | 31 | | 2,419,833 | | 79,536 | | 2,499,369 | | 49,151 | | 92.3 | | | 90.4 | | |
Washington - Seattle | | 15 | | 1,094,457 | | - | | 1,094,457 | | 30,630 | | 93.4 | | | 93.7 | | |
Total Properties (Continuing Operations) | | 166 | | 10,968,895 | | 795,202 | | 11,764,097 | | $ | 310,483 | | 94.1 | % | | 93.3 | % | |
(1) Excludes spaces at properties totaling 795,202 square feet undergoing a permanent change in use to office/laboratory space through redevelopment and one property totaling 49,437 square feet that is classified as “held for sale.”
(2) Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of September 30, 2007 was 87.4%. See page 16 for additional information on our redevelopment program.
(3) Excludes spaces at properties totaling 812,785 square feet undergoing a permanent change in use to office/laboratory space through redevelopment. Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of June 30, 2007 was 86.3%. See page 16 for additional information on our redevelopment program.
(4) Substantially all of the vacant space is office or warehouse space.
11
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended September 30, 2007
| | | | | | | | | | | | TI’s/Lease | | | |
| | | | | | | | | | Rental | | Commissions | | Average | |
| | Number | | Square | | Expiring | | New | | Rate | | Per | | Lease | |
| | of Leases | | Footage | | Rates | | Rates | | Changes | | Square Foot | | Terms | |
Leasing Activity | | | | | | | | | | | | | | | |
Lease Expirations | | | | | | | | | | | | | | | |
Cash Basis | | 45 | | 356,031 | | $29.70 | | - | | - | | - | | - | |
GAAP Basis | | 45 | | 356,031 | | $28.62 | | - | | - | | - | | - | |
| | | | | | | | | | | | | | | |
Renewed/Released Space Leased | | | | | | | | | | | | | | | |
Cash Basis | | 19 | | 265,335 | | $32.56 | | $33.80 | | 3.8 | % | | $4.39 | | 4.2 years | |
GAAP Basis | | 19 | | 265,335 | | $31.19 | | $33.51 | | 7.4 | % | | $4.39 | | 4.2 years | |
| | | | | | | | | | | | | | | |
Redeveloped/Developed/Vacant Space Leased | | | | | | | | | | | | | | | |
Cash Basis | | 22 | | 179,442 | | - | | $37.05 | | - | | $19.60 | | 6.4 years | |
GAAP Basis | | 22 | | 179,442 | | - | | $38.99 | | - | | $19.60 | | 6.4 years | |
| | | | | | | | | | | | | | | |
Month-to-Month Leases In Effect | | | | | | | | | | | | | | | |
Cash Basis | | 21 | | 42,590 | | $23.72 | | $23.72 | | - | | - | | - | |
GAAP Basis | | 21 | | 42,590 | | $23.72 | | $23.72 | | - | | - | | - | |
| | | | | | | | | | | | | | | |
Leasing Activity Summary | | | | | | | | | | | | | | | |
Excluding Month-to-Month Leases | | | | | | | | | | | | | | | |
Cash Basis | | 41 | | 444,777 | | - | | $35.11 | | - | | $10.53 | | 4.8 years | |
GAAP Basis | | 41 | | 444,777 | | - | | $35.72 | | - | | $10.53 | | 4.8 years | |
| | | | | | | | | | | | | | | |
Including Month-to-Month Leases | | | | | | | | | | | | | | | |
Cash Basis | | 62 | | 487,367 | | - | | $34.12 | | - | | - | | - | |
GAAP Basis | | 62 | | 487,367 | | - | | $34.67 | | - | | - | | - | |
12
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Nine Months Ended September 30, 2007
| | | | | | | | | | | | TI’s/Lease | | | |
| | | | | | | | | | Rental | | Commissions | | Average | |
| | Number | | Square | | Expiring | | New | | Rate | | Per | | Lease | |
| | of Leases | | Footage | | Rates | | Rates | | Changes | | Square Foot | | Terms | |
Leasing Activity | | | | | | | | | | | | | | | |
Lease Expirations | | | | | | | | | | | | | | | |
Cash Basis | | 100 | | 1,357,292 | | $25.46 | | - | | - | | - | | - | |
GAAP Basis | | 100 | | 1,357,292 | | $27.30 | | - | | - | | - | | - | |
| | | | | | | | | | | | | | | |
Renewed/Released Space Leased | | | | | | | | | | | | | | | |
Cash Basis | | 51 | | 783,732 | | $29.10 | | $30.63 | | 5.3 | % | $4.66 | | 4.0 years | |
GAAP Basis | | 51 | | 783,732 | | $28.38 | | $30.65 | | 8.0 | % | $4.66 | | 4.0 years | |
| | | | | | | | | | | | | | | |
Redeveloped/Developed/ | | | | | | | | | | | | | | | |
Vacant Space Leased | | | | | | | | | | | | | | | |
Cash Basis | | 59 | | 479,821 | | - | | $35.22 | | - | | $11.26 | | 5.3 years | |
GAAP Basis | | 59 | | 479,821 | | - | | $36.98 | | - | | $11.26 | | 5.3 years | |
| | | | | | | | | | | | | | | |
Month-to-Month Leases In Effect | | | | | | | | | | | | | | | |
Cash Basis | | 21 | | 42,590 | | $23.72 | | $23.72 | | - | | - | | - | |
GAAP Basis | | 21 | | 42,590 | | $23.72 | | $23.72 | | - | | - | | - | |
| | | | | | | | | | | | | | | |
Leasing Activity Summary | | | | | | | | | | | | | | | |
Excluding Month-to-Month Leases | | | | | | | | | | | | | | | |
Cash Basis | | 110 | | 1,263,553 | | - | | $32.38 | | - | | $7.17 | | 4.5 years | |
GAAP Basis | | 110 | | 1,263,553 | | - | | $33.05 | | - | | $7.17 | | 4.5 years | |
| | | | | | | | | | | | | | | |
Including Month-to-Month Leases | | | | | | | | | | | | | | | |
Cash Basis | | 131 | | 1,306,143 | | - | | $32.09 | | - | | - | | - | |
GAAP Basis | | 131 | | 1,306,143 | | - | | $32.75 | | - | | - | | - | |
13
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
September 30, 2007
| | | | Square | | Percentage of | | Annualized Base Rent | |
Year of Lease | | Number of | | Footage of | | Aggregate | | of Expiring Leases | |
Expiration | | Leases Expiring | | Expiring Leases | | Leased Square Feet | | (per square foot) | |
2007 | | 42(1) | | 343,610 | | 3.3% | | $27.32 | |
2008 | | 48 | | 740,247 | | 7.2 | | 26.12 | |
2009 | | 62 | | 858,203 | | 8.3 | | 24.40 | |
2010 | | 48 | | 1,014,972 | | 9.8 | | 27.80 | |
2011 | | 54 | | 1,658,246 | | 16.1 | | 26.84 | |
| | | | Square Footage of Expiring Leases | |
Markets | | | | 2007 | | 2008 | |
| | | | | | | |
California - Los Angeles Metro | | | | - | | 4,006 | |
California - San Diego | | | | 88,439 | | 93,024 | |
California - San Francisco Bay | | | | 76,788 | | 271,862 | |
Eastern Massachusetts | | | | 78,491 | | 196,086 | |
International - Canada | | | | - | | - | |
New Jersey/Suburban Philadelphia | | | | - | | 40,000 | |
Southeast | | | | 17,374 | | 21,699 | |
Suburban Washington D.C. | | | | 64,001 | | 69,408 | |
Washington - Seattle | | | | 18,517 | | 44,162 | |
| | | | | | | |
Total | | | | 343,610 | (1) | 740,247 | |
(1) Includes 21 month-to-month leases for approximately 43,000 square feet.
14
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Additions and Dispositions of Properties
For the Quarter Ended September 30, 2007
(Dollars in thousands)
| | | Acquisition | | Month of | | Rentable | |
| Markets | | Amount | | Acquisition | | Square Feet | |
| | | | | | | | |
| Additions to Operating Properties: | | | | | | | |
| | | | | | | | |
| Washington - Seattle | | $ | 29,048 | (1) | July | | 175,734 | |
| | | | | | | | |
| California - San Diego/San Francisco | | 337,800 | (2) | July/August | | 660,950 | |
| | | | | | | | |
| Total additions to Operating Properties: | | $ | 366,848 | | | | 836,684 | |
| | | | | | | | |
| | | Disposition | | Month of | | Rentable | |
| Markets | | Amount | | Disposition | | Square Feet | |
| | | | | | | | |
| Dispositions: | | | | | | | |
| | | | | | | | |
| Eastern Massachusetts | | $ | 34,384 | (3) | September | | N/A | |
| | | | | | | | |
| New Jersey/Suburban Philadelphia | | 6,500 | | September | | 37,000 | |
| | | | | | | | |
| Total Dispositions: | | $ | 40,884 | | | | 37,000 | |
| | | | | | | | |
(1) Represents the purchase of three properties for a total contract price of approximately $29 million.
(2) Represents the purchase of nine properties for a total contract price of approximately $337.8 million.
(3) Amount relates to sale of four land parcels to the Massachusetts Institute of Technology.
15
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Square Footage Undergoing Redevelopment
September 30, 2007
| | | | | | | | Square Footage
Undergoing
Redevelopment/
Total Property | | | |
| | Placed
in
Redevelopment | | Estimated
In-Service
Dates | | Estimated
Investment
Per Square Foot | | | | |
| | | | | | | |
Markets/Submarkets | | | | | | Status | |
| | | | | | | | | | | |
California - Los Angeles Metro | | 2006 | | 2008 | | $80-100 | | 29,660/29,660 | | Construction | |
| | | | | | | | | | | |
California - San Diego/Torrey Pines | | 2004 | | 2009 | | $100-120 | | 87,140/87,140 | | Redesign/Construction (1) | |
| | | | | | | | | | | |
California - San Diego/Torrey Pines | | 2006 | | 2009 | | $80-100 | | 43,600/43,600 | | Construction | |
| | | | | | | | | | | |
California - San Diego/Sorrento | | 2006 | | 2008 | | $70-80 | | 30,147/30,147 | | Construction | |
| | | | | | | | | | | |
California - San Diego/Torrey Pines | | 2007 | | 2009 | | $80-100 | | 86,962/86,962 | | Redesign | |
| | | | | | | | | | | |
California - San Francisco Bay/Peninsula | | 2007 | | 2008 | | $80-100 | | 30,238/82,712 | | Construction | |
| | | | | | | | | | | |
Eastern Massachusetts/Suburban | | 2007 | | 2009 | | $100-120 | | 23,000/38,000 | | Construction | |
| | | | | | | | | | | |
Eastern Massachusetts/Suburban | | 2007 | | 2009 | | $70-80 | | 113,045/113,045 | | Redesign | |
| | | | | | | | | | | |
Eastern Massachusetts/Cambridge | | 2006 | | 2008 | | $120-175 | | 149,934/155,090 | | Construction | |
| | | | | | | | | | | |
Eastern Massachusetts/Suburban | | 2006 | | 2008 | | $100-120 | | 13,674/82,330 | | Construction | |
| | | | | | | | | | | |
International - Canada | | 2007 | | 2008 | | $140-160 | | 46,032/46,032 | | Construction | |
| | | | | | | | | | | |
Southeast/Florida | | 2006 | | 2008 | | $80-100 | | 45,841/45,841 | | Construction | |
| | | | | | | | | | | |
Southeast/Research Triangle Park | | 2007 | | 2008 | | $100-120 | | 16,393/77,395 | | Design | |
| | | | | | | | | | | |
Suburban Washington DC/Shady Grove | | 2007 | | 2008 | | $70-80 | | 10,170/60,495 | | Construction | |
| | | | | | | | | | | |
Suburban Washington DC/Shady Grove | | 2007 | | 2009 | | $70-80 | | 69,366/125,004 | | Redesign/Construction | |
| | | | | | | | | | | |
| | | | | | | | 795,202/1,103,453 | | | |
Our redevelopment program involves ongoing activities necessary for the permanent change of use of applicable redevelopment space to office/laboratory space. Spaces currently built out with laboratory improvements are generally not placed into our value-add redevelopment program. As required under GAAP, interest and other costs directly related and essential to the project are capitalized on redevelopment properties on the basis allocable only to that portion of space undergoing redevelopment. In addition to properties undergoing redevelopment, as of September 30, 2007, our asset base contained imbedded opportunities for future permanent change of use to office/laboratory space through redevelopment aggregating approximately 1,568,000 rentable square feet. See Summary of Imbedded Future Development and Redevelopment Square Footage on page 18.
(1) This project also includes site work and a multi-story below and above ground parking structure to support both the existing building undergoing redevelopment and an additional building targeted for development in the future. The entitlement process for this project was completed in early 2007.
16
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Undergoing Ground-Up Development
September 30, 2007
Markets/Submarkets | | Building Descriptions | | Construction
Start
Dates | | Estimated
In-Service
Dates | | Estimated
Investment
Per Square Foot (1) | | Rentable
Square
Feet | | Status | |
| | | | | | | | | | | | | |
California - San Francisco Bay/ Mission Bay | | One Multi-tenant Bldg. | | 2007 | | 2010 | | $300-350 | | 158,000 | | Construction | |
| | | | | | | | | | | | | |
California - San Francisco Bay/ So. San Francisco | | Two Bldgs, Single or Multi-tenant | | 2006 | | 2009 | | $300-350 | | 162,000 | | Construction | |
| | | | | | | | | | | | | |
California - San Francisco Bay/ So. San Francisco | | One Single or Multi-tenant Bldg. | | 2006 | | 2009 | | $300-350 | | 135,000 | | Construction | |
| | | | | | | | | | | | | |
International - China | | Two Bldgs, Single or Multi-tenant | | 2007 | | 2009 | | $45 | | 280,000 | | Construction | |
| | | | | | | | | | | | | |
New York - New York City | | Two Multi-tenant Bldgs. | | 2007 | | 2009/2010/2011 | | $500 | | 735,000 | (2) | Site Work | |
| | | | | | | | | | | | | |
Total Properties Undergoing Ground-Up Development(1) | | | | | | | | | | 1,470,000 | | | |
In accordance with Statement of Financial Accounting Standards No. 34, “Capitalization of Interest Cost” (“SFAS 34”) and Statement of Financial Accounting Standards No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects” (“SFAS 67”), we are required to capitalize direct construction, including pre-construction costs, interest, property taxes, insurance and other costs directly related and essential to the construction of a project while activities are ongoing to prepare an asset for its intended use. Pre-construction costs include costs related to the development of plans and the process of obtaining entitlements and permits from government authorities. Costs incurred after a project is substantially complete and ready for its intended use are expensed as incurred. Should development, redevelopment or construction activity cease, construction costs, including interest, would no longer be eligible for capitalization, under SFAS 34 and SFAS 67, and would be expensed as incurred.
(1) Our aggregate construction costs to date approximate $76 per developable square foot. Amount excludes our investment per square foot in land.
(2) In addition, we have the right to develop an additional parcel with approximately 442,000 rentable square feet. This square footage is not included in the imbedded developable square footage shown on page 18.
17
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Imbedded Future Development and Redevelopment Square Footage
September 30, 2007
| | Imbedded Future Development | | | | | |
Markets | | Development/ Pre-construction Square Footage (1) | | Total Imbedded Development
Square Footage | | Imbedded Future
Redevelopment
Square Footage | | Total | |
| | | | | | | | | |
California - San Diego | | 435,000 | | 443,000 | | 228,000 | | 671,000 | |
| | | | | | | | | |
California - San Francisco Bay/Mission Bay | | 1,886,000 | | 2,386,000 | | - | | 2,386,000 | |
| | | | | | | | | |
California - San Francisco Bay/So. San Francisco | | 849,000 | | 970,000 | | 100,000 | | 1,070,000 | |
| | | | | | | | | |
Eastern Massachusetts | | 674,000 | | 899,000 | | 345,000 | | 1,244,000 | |
| | | | | | | | | |
International - Canada | | 770,000 | | 834,000 | | - | | 834,000 | |
| | | | | | | | | |
Suburban Washington D.C. | | 494,000 | | 856,000 | | 502,000 | | 1,358,000 | |
| | | | | | | | | |
Washington - Seattle | | 280,000 | | 707,000 | | 146,000 | | 853,000 | |
| | | | | | | | | |
Other | | - | | 336,000 | | 247,000 | | 583,000 | |
| | | | | | | | | |
Total | | 5,388,000 | | 7,431,000 | (2) | 1,568,000 | | 8,999,000 | |
The imbedded future development and redevelopment square footage shown above represents future ground-up development projects and future redevelopment (permanent change in use of applicable space to office/laboratory space) projects. A significant portion of our imbedded future development square footage is in the development/pre-construction phase (entitlement, permitting, design, etc.). See discussion on SFAS 34 and SFAS 67 on page 17. The exact date of physical construction will depend on successful completion of development/pre-construction activities and management’s assessment of overall market conditions. As required under GAAP, direct construction, interest, property taxes, insurance and other costs directly related and essential to the development/pre-construction, or construction of a project, is mandated to be capitalized during pre-construction when activities are ongoing to bring these assets to their intended use.
(1) Development/pre-construction square footage is included in Imbedded Future Development-Total Imbedded Development Square Footage shown above.
(2) In addition, we have the right to develop an additional parcel with approximately 442,000 rentable square feet. This square footage is not included in the imbedded developable square footage shown above.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Nine Months Ended September 30, 2007
(In thousands)
Property-related capital expenditures (1) | | | | $ | 1,603 | |
| | | | | |
Leasing costs (2) | | | | $ | 227 | |
| | | | | |
Property-related redevelopment costs (3) | | | | $ | 103,951 | |
| | | | | |
Property-related development costs (3) | | | | $ | 167,528 | |
(1) Property-related capital expenditures include all major capital and recurring capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures, or costs related to the redevelopment of a property. Major capital expenditures consist of roof replacements and HVAC systems which are typically identified and considered at the time the property is acquired. Capital expenditures fluctuate in any given period due to the nature, extent or timing of improvements required and the extent to which they are recoverable from tenants. Approximately 90% of our leases (based on rentable square feet) provide for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing). In addition, we implement an active preventative maintenance program at each of our properties to minimize capital expenditures.
(2) Leasing costs consist of tenant improvements and leasing commissions related to leasing of acquired vacant space and second generation space.
(3) Amount includes leasing costs related to development and redevelopment projects.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Third Quarter Ended September 30, 2007
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the third quarter and nine months ended September 30, 2007:
| | Date: | November 6, 2007 | |
| | | | |
| | Time: | 2:00 P.M. Eastern Standard Time/11:00 A.M. Pacific Standard Time | |
| | | | |
| | Phone Number: | (719) 325-4769 | |
| | | | |
| | Confirmation Code: | 4041239 | |
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