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 FIRST QUARTER 2008
OPERATING AND FINANCIAL RESULTS
Highlights
First Quarter 2008:
· First Quarter 2008 Funds from Operations (FFO) Per Share (Diluted) of $1.48, up 7%, Before Non-Cash Impairment Charges, Compared to First Quarter 2007 FFO Per Share (Diluted) of $1.38, Before Preferred Stock Redemption Charge
· First Quarter 2008 Total Revenues up 16%, FFO Available to Common Stockholders up 16%, Before Non-Cash Impairment and Preferred Stock Redemption Charges, Compared to First Quarter 2007
· First Quarter 2008 Earnings Per Share (Diluted) of $1.09, up 110%, Compared to First Quarter 2007 Earnings Per Share (Diluted) of $0.52
· First Quarter 2008 GAAP Same Property Revenues Less Operating Expenses up 3.6%
· Executed 48 Leases for 570,000 Rentable Square Feet
· First Quarter 2008 GAAP Rental Rate Increase of 14.1% on Renewed/Released Space
· Completed Redevelopment of Multiple Spaces at Five Properties Aggregating 103,267 Rentable Square Feet
· Sold Six Properties for $70 Million at a Gain of $20 Million
· Closed 7.00% Series D Cumulative Convertible Preferred Stock Offering with Net Proceeds of $242 Million
· Closed Refinancing of $76 Million Secured Loan
PASADENA, CA. – May 8, 2008 – Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the first quarter ended March 31, 2008.
For the first quarter of 2008, we reported total revenues of $109,959,000 and FFO available to common stockholders of $46,976,000, or $1.48 per share (diluted), before non-cash impairment charges, compared to total revenues of $94,786,000 and FFO available to common stockholders of $40,345,000, or $1.38 per share (diluted), before a preferred stock redemption charge, for the first quarter of 2007. Comparing the first quarter of 2008 to the first quarter of 2007, total revenues increased 16%, FFO available to common stockholders and FFO per share (diluted) increased 16% and 7%, respectively, before non-cash impairment and preferred stock redemption charges. Our results for the first quarter of 2008 included non-cash impairment charges aggregating $6,635,000, or $0.21 per share (diluted), related to two assets “held for sale” and certain investments, and our results for the first quarter of 2007 included a preferred stock redemption charge of $2,799,000, or $0.10 per share (diluted).
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 and FFO available to common stockholders after supplemental adjustments 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 March 31, 2008 and 2007 was $25,810,000 and $23,518,000, respectively. Net income available to common stockholders for the first quarter of 2008 was $34,760,000, or $1.09 per share (diluted), compared to net income available to common stockholders of $15,108,000, or $0.52 per share (diluted), for the first quarter of 2007. Net income available to common stockholders for the first quarter of 2008 included aggregate gains of $20,213,000 on sales of six properties and non-cash impairment charges aggregating $6,635,000 related to two assets “held for sale” and certain investments. Net income available to common stockholders for the first quarter of 2007 included a gain on sale of one property of $1,121,000 and a preferred stock redemption charge of $2,799,000.
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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FIRST QUARTER 2008 RESULTS
Page 2
For the first quarter of 2008, we executed a total of 48 leases for approximately 570,000 rentable square feet of space at 31 different properties (excluding month-to-month leases). Of this total, approximately 369,000 rentable square feet related to new or renewal leases of previously leased space and approximately 201,000 rentable square feet related to developed, redeveloped or previously vacant space. Of the 201,000 rentable square feet, approximately 129,000 rentable square feet were delivered from our development or redevelopment programs, with the remaining approximately 72,000 rentable square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 14.1% higher (on a GAAP basis) than rental rates for expiring leases.
During the first quarter of 2008, we sold one property located in the San Diego market with approximately 86,962 rentable square feet and five properties in the east bay area of the San Francisco Bay market aggregating approximately 272,730 rentable square feet. The aggregate sales price for the properties sold in the first quarter of 2008 was approximately $70 million.
As of March 31, 2008, approximately 89% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of March 31, 2008, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. Additionally, as of March 31, 2008, approximately 92% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures and approximately 94% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.
Based on our current view of existing market conditions and certain current assumptions, our updated guidance for FFO per share (diluted) and earnings per share (diluted) is as follows:
| | 2008 | |
FFO per share (diluted) (1) | | $5.86 | (1) | |
Earnings per share (diluted) (2) | | $3.00 | (2) | |
Non–cash impairment charges recognized in the first quarter of 2008 | | $0.21 | | |
(1) Includes non–cash impairment charges aggregating $6,635,000, or $0.21 per share (diluted), related to assets “held for sale” and certain investments. Our updated guidance for 2008 FFO per share (diluted) after supplemental adjustments for the non-cash impairment charges is $6.07.
(2) Includes non–cash impairment charges aggregating $6,635,000 and gains on sales of property aggregating $20,213,000.
Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life Science Industry®, is the largest owner and preeminent first-in-class international real estate investment trust focused principally on science-driven cluster formation through the ownership, operation, management, redevelopment, selective development and acquisition of properties containing technical environments, including office/laboratory space. Alexandria is the leading provider of high-quality environmentally sustainable real estate, technical infrastructure, services and capital to the broad and diverse life science industry. Client tenants include institutional (universities and independent not-for-profit institutions), pharmaceutical, biotechnology, medical device, product, service, and translational entities, as well as government agencies. Alexandria’s operating platform is based on the principle of “clustering,” with assets and operations located in key life science markets. Our asset base approximates 13.3 million rentable square feet consisting of 159 properties approximating 11.7 million rentable square feet (including spaces undergoing active redevelopment) and properties undergoing ground-up development approximating 1.6 million rentable square feet. In addition, our asset base will enable us to grow to approximately 22.3 million square feet through future ground-up development approximating 9.0 million square feet of office/laboratory space.
This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws. 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
March 31, | |
| | 2008 | | 2007 | |
Income statement data | | | | | |
Total revenues | | $ | 109,959 | | $ | 94,786 | |
| | | | | |
Expenses | | | | | |
Rental operations | | 28,329 | | 23,277 | |
General and administrative | | 8,787 | | 8,074 | |
Interest | | 22,245 | | 20,263 | |
Depreciation and amortization | | 25,673 | | 22,920 | |
Non-cash impairment on investments | | 1,985 | | – | |
| | 87,019 | | 74,534 | |
| | | | | |
Minority interest | | 951 | | 907 | |
Income from continuing operations | | 21,989 | | 19,345 | |
| | | | | |
Income from discontinued operations, net | | 15,699 | | 2,439 | |
| | | | | |
Net income | | 37,688 | | 21,784 | |
| | | | | |
Dividends on preferred stock | | 2,928 | | 3,877 | |
Preferred stock redemption charge | | – | | 2,799 | |
Net income available to common stockholders | | $ | 34,760 | | $ | 15,108 | |
| | | | | |
Weighted average shares of common stock outstanding | | | | | |
Basic | | 31,546,591 | | 28,899,303 | |
Diluted | | 31,801,945 | | 29,299,733 | |
| | | | | |
Earnings per share – basic | | | | | |
Continuing operations (net of preferred stock dividends and preferred stock redemption charge) | | $ | 0.60 | | $ | 0.44 | |
Discontinued operations, net | | 0.50 | | 0.08 | |
Earnings per share – basic | | $ | 1.10 | | $ | 0.52 | |
| | | | | |
Earnings per share – diluted | | | | | |
Continuing operations (net of preferred stock dividends and preferred stock redemption charge) | | $ | 0.60 | | $ | 0.44 | |
Discontinued operations, net | | 0.49 | | 0.08 | |
Earnings per share – diluted | | $ | 1.09 | | $ | 0.52 | |
(Continued on next page)
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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 among real estate investment trusts (“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.
We also present FFO after supplemental adjustments which excludes non-cash impairment and preferred stock redemption charges. FFO after supplemental adjustments differs from FFO established by NAREIT and may not be comparable to that of other REITs. We believe FFO after supplemental adjustments provides a meaningful supplemental financial measure.
Neither FFO or FFO after supplemental adjustments should 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, and FFO after supplemental adjustments to funds from operations available to common stockholders and funds from operations available to common stockholders after supplemental adjustments for the three months ended March 31, 2008 and 2007 (in thousands, except per share data):
| | Three Months
Ended
March 31, 2008 | | Three Months
Ended
March 31, 2007 | |
Reconciliation of net income available to common stockholders to funds from
operations available to common stockholders after supplemental adjustments | | | | | |
Net income available to common stockholders | | $ | 34,760 | | $ | 15,108 | |
Add: Depreciation and amortization (1) | | 25,810 | | 23,518 | |
Add: Minority interest | | 951 | | 907 | |
Subtract: Gain on sales of property (2) | | (20,213 | ) | (1,121 | ) |
Subtract: FFO allocable to minority interest | | (967 | ) | (866 | ) |
Funds from operations available to common stockholders | | 40,341 | | 37,546 | |
Add: Preferred stock redemption charge (3) | | – | | 2,799 | |
Add: Non-cash impairment charges (4) | | 6,635 | | – | |
Funds from operations available to common stockholders after supplemental adjustments | | $ | 46,976 | | $ | 40,345 | |
FFO per share (diluted) after supplemental adjustments | | | | | |
Basic | | $ | 1.49 | | $ | 1.40 | |
Diluted | | $ | 1.48 | | $ | 1.38 | |
Reconciliation of earnings per share (diluted) to FFO per share (diluted) after
supplemental adjustments | | | | | |
Earnings per share (diluted) | | $ | 1.09 | | $ | 0.52 | |
Depreciation and amortization (1) | | 0.82 | | 0.80 | |
Minority interest | | 0.03 | | 0.03 | |
Gain on sales of property (2) | | (0.64 | ) | (0.04 | ) |
FFO allocable to minority interest) | | (0.03 | ) | (0.03 | ) |
FFO per share (diluted) | | $ | 1.27 | | $ | 1.28 | |
Preferred stock redemption charge (3) | | – | | 0.10 | |
Non-cash impairment charges (4) | | 0.21 | | – | |
FFO per share (diluted) after supplemental adjustments | | $ | 1.48 | | $ | 1.38 | |
(1) Includes depreciation and amortization for assets “held for sale” reflected as discontinued operations (for the periods prior to when such assets were designated as “held for sale”).
(2) Gain on sales of property relates to the disposition of six properties sold during the first quarter 2008 and one property sold during the first quarter of 2007. Gain on sales of property is included in the income statement in income from discontinued operations, net.
(3) During the first quarter of 2007, we redeemed our 9.10% series B cumulative redeemable preferred stock. Accordingly, in compliance with FASB Emerging Issues Task Force D-42 (“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.
(4) In March 2008, we recognized aggregate non-cash impairment charges of approximately $1,985,000 for other-than-temporary declines in the fair value of certain investments and non-cash impairment charges on two properties “held for sale” of approximately $4,650,000 related to an industrial building located in a suburban submarket south of Boston and an office building located in the San Diego market. The non-cash impairment charges on two properties “held for sale” are classified in income from discontinued operations, net.
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Quarterly Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
| | | For the Three Months Ended | |
| | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 | | 6/30/2007 | | 3/31/2007 | |
| Operational data | | | | | | | | | | | |
| Rental income | | $ | 82,156 | | $ | 81,695 | | $ | 76,970 | | $ | 71,570 | | $ | 71,038 | |
| Tenant recoveries | | 24,553 | | 22,344 | | 21,420 | | 18,800 | | 20,010 | |
| Other income | | 3,250 | | 3,965 | | 3,717 | | 3,399 | | 3,738 | |
| Total revenues (continuing operations) (a) | | $ | 109,959 | | $ | 108,004 | | $ | 102,107 | | $ | 93,769 | | $ | 94,786 | |
| Funds from operations per share (diluted) after supplemental adjustments (b) | | $ | 1.48 | | $ | 1.46 | | $ | 1.45 | | $ | 1.42 | | $ | 1.38 | |
| Dividends per share on common stock | | $ | 0.78 | | $ | 0.78 | | $ | 0.76 | | $ | 0.76 | | $ | 0.74 | |
| Dividend payout ratio (common stock) (c) | | 53.2% | | 53.9% | | 56.3% | | 53.8% | | 54.1% | |
| Straight-line rent | | $ | 3,015 | | $ | 4,615 | | $ | 4,335 | | $ | 2,617 | (d) | $ | 4,188 | |
| Capitalized interest | | $ | 17,262 | (e) | $ | 16,609 | | $ | 15,035 | | $ | 13,548 | | $ | 10,844 | |
| Number of properties (f) | | | | | | | | | | | |
| Acquired/added/completed during period | | – | | 2 | | 13 | | 2 | | – | |
| Sold/transferred (g) | | (7 | ) | (3 | ) | (1 | ) | (4 | ) | (1 | ) |
| At end of period | | 159 | | 166 | | 167 | | 155 | | 157 | |
| Rentable square feet (f) | | | | | | | | | | | |
| Acquired/added/completed during period | | – | | 404,986 | | 994,024 | | 104,312 | | – | |
| Sold/transferred (g) | | (475,976 | ) | (92,927 | ) | (37,000 | ) | (375,112 | ) | (75,500 | ) |
| At end of period | | 11,691,497 | | 12,167,473 | | 11,855,414 | | 10,898,390 | | 11,169,190 | |
| | | | | | | | | | | | |
| | | As of | |
| Other data | | 3/31/2008 | | 12/31/2007 | | 9/30/2007 | | 6/30/2007 | | 3/31/2007 | |
| Number of shares of common stock outstanding | | 31,673,359 | | 31,603,344 | | 31,243,448 | | 29,180,700 | | 29,129,238 | |
| Closing price of common stock | | $ | 92.72 | | $ | 101.67 | | $ | 96.26 | | $ | 96.82 | | $ | 100.37 | |
| Debt to total market capitalization (h) | | | | | | | | | | | |
| Total debt | | $ | 2,625,852 | | $ | 2,787,904 | | $ | 2,502,832 | | $ | 2,274,269 | | $ | 2,176,594 | |
| Less minority interest share of debt | | (39,838 | ) | (39,320 | ) | (22,102 | ) | (22,089 | ) | (22,076 | ) |
| Our share of total debt | | 2,586,014 | | 2,748,584 | | 2,480,730 | | 2,252,180 | | 2,154,518 | |
| Preferred stock | | 352,127 | | 136,845 | | 130,156 | | 132,593 | | 140,579 | |
| Common stock market capitalization | | 2,936,754 | | 3,213,112 | | 3,007,494 | | 2,825,275 | | 2,923,702 | |
| Total market capitalization | | $ | 5,874,895 | | $ | 6,098,541 | | $ | 5,618,380 | | $ | 5,210,048 | | $ | 5,218,799 | |
| Debt to total market capitalization | | 44.0% | | 45.1% | | 44.2% | | 43.2% | | 41.3% | |
(a) The historical results above exclude the results of assets “held for sale” which have been reflected as discontinued operations.
(b) See page 4 for a reconciliation of earnings per share (diluted) to FFO per share (diluted) and FFO per share (diluted) after supplemental adjustments.
(c) 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 after supplemental adjustments for the respective quarter.
(d) 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.
(e) As of March 31, 2008, assets for which capitalization of interest is required pursuant to Statement of Financial Accounting Standards No. 34, “Capitalization of Interest Cost” (“SFAS 34”), approximated $1.2 billion. This amount is classified as properties undergoing development and redevelopment and land held for development on our balance sheet. As of March 31, 2008, the weighted average interest rate used in the calculation of capitalized interest required pursuant to SFAS 34 was approximately 5.69%. SFAS 34 requires the interest rate for capitalization to be based on applicable interest costs related to borrowings outstanding during the period, including the impact of interest rate swap agreements, debt premiums/discounts and amortization of loan fees.
(f) Includes properties “held for sale” during the applicable periods such assets were “held for sale.” As of March 31, 2008, two properties aggregating approximately 74,304 rentable square feet were classified as “held for sale.”
(g) During the first quarter of 2008, we sold six assets and transferred one property from operating assets to embedded future development opportunities. During the fourth quarter of 2007, we sold one asset and transferred two properties from operating assets to embedded future development opportunities. During the third quarter of 2007, we sold one asset located in the New Jersey/Suburban Philadelphia market and four land parcels to the Massachusetts Institute of Technology. During the second quarter of 2007, we sold one asset and transferred three properties from operating assets to embedded future development opportunities. During the first quarter of 2007, we sold one asset located in the Suburban Washington D.C. market.
(h) Debt to total market capitalization is the ratio of our share 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 series C preferred stock and common stock multiplied by the related closing price at the end of each period presented, plus series D convertible preferred stock at liquidation value, plus our share of total debt.
5
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
| | March 31, | | December 31, | |
| | 2008 | | 2007 | |
| | (Unaudited) | | | |
Assets | | | | | |
Rental properties, net | | $ | 3,079,288 | | $ | 3,146,915 | |
Properties undergoing development and redevelopment and land held for development | | 1,246,905 | | 1,143,302 | |
Cash and cash equivalents | | 7,654 | | 8,030 | |
Tenant security deposits and other restricted cash | | 65,612 | | 51,911 | |
Tenant receivables | | 8,853 | | 6,759 | |
Deferred rent | | 84,152 | | 81,496 | |
Investments | | 74,134 | | 84,322 | |
Other assets | | 118,447 | | 119,359 | |
Total assets | | $ | 4,685,045 | | $ | 4,642,094 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
Secured notes payable | | $ | 1,115,852 | | $ | 1,212,904 | |
Unsecured line of credit and unsecured term loan | | 1,050,000 | | 1,115,000 | |
Unsecured convertible notes | | 460,000 | | 460,000 | |
Accounts payable, accrued expenses and tenant security deposits | | 264,850 | | 247,289 | |
Dividends payable | | 27,772 | | 27,575 | |
Total liabilities | | 2,918,474 | | 3,062,768 | |
| | | | | |
Minority interest | | 74,857 | | 75,506 | |
| | | | | |
Stockholders’ equity: | | | | | |
Series C preferred stock | | 129,638 | | 129,638 | |
Series D convertible preferred stock | | 220,000 | | – | |
Common stock | | 317 | | 316 | |
Additional paid-in capital | | 1,374,451 | | 1,365,773 | |
Accumulated other comprehensive (loss) income | | (32,692 | ) | 8,093 | |
Total stockholders’ equity | | 1,691,714 | | 1,503,820 | |
Total liabilities and stockholders’ equity | | $ | 4,685,045 | | $ | 4,642,094 | |
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
March 31, 2008
(Dollars in thousands)
(Unaudited)
Principal Maturities / Rates
| | Secured Debt | | Unsecured Debt | |
| Year | | Amount | | Weighted
Average
Interest Rate | | Amount | |
2008 | | $ | 7,744 | | | | 5.53% | (1) | | $ | – | | |
2009 | | 284,617 | | | | 5.52 | (2) | | – | | |
2010 | | 92,482 | | | | 5.94 | (2) | | 300,000 | | (3) |
2011 | | 183,380 | | | | 5.80 | (2) | | 750,000 | | (3) |
2012 | | 38,489 | | | | 5.99 | (2) | | 460,000 | | (4) |
Thereafter | | 509,140 | | | | 5.92 | (2) | | – | | |
Total | | $ | 1,115,852 | | (5) | | | $ | 1,510,000 | | |
| | | | | | | | | |
| | | | | | | | | | | | | | |
Secured and Unsecured Debt Analysis
| | Balance | | Percentage
of
Balance | | Weighted
Average
Interest Rate (6) | | Weighted
Average
Maturity | |
| Secured Debt | | $ | 1,115,852 | | | 42.5% | | | 5.53% | | 4.6 Years | |
| Unsecured Debt | | 1,510,000 | | | 57.5 | | | 4.85 | | 3.4 Years | |
| Total Debt | | $ | 2,625,852 | | | 100.0% | | | 5.14% | | 3.9 Years | |
| | | | | | | | | | | |
Fixed and Floating Rate Debt Analysis
| | Balance | | Percentage
of
Balance | | Weighted
Average
Interest Rate (6) | | Weighted
Average
Maturity | |
| Fixed Rate Debt | | $ | 1,265,011 | | | 48.2% | | | 5.17% | | 5.0 Years | |
| Floating Rate Debt – Hedged | | 817,100 | | | 31.1 | | | 5.83 | | 3.4 Years | |
| Floating Rate Debt – Unhedged | | 543,741 | | | 20.7 | | | 4.04 | | 2.1 Years | |
| Total Debt | | $ | 2,625,852 | | | 100.0% | | | 5.14% | | 3.9 Years | |
| | | | | | | | | | | |
(1) | | The weighted average interest rate is calculated based on outstanding debt as of March 31, 2008. |
(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) | | Includes minority interests’ share of scheduled principal maturities of approximately $39.8 million. |
(6) | | Represents the weighted average contractual interest rate plus the impact of debt premiums/discounts and our interest rate swap agreements. The weighted average interest rate excludes bank fees and amortization of loan fees. See page 8 for further details of our interest rate swap agreements. |
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ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements
March 31, 2008
(Dollars in thousands)
(Unaudited)
Transaction Dates | | Effective
Dates | | Termination
Dates | | Interest Pay
Rates (1) | | Notional
Amounts | | Effective at
March 31,
2008 | |
| | | | | | | | | | | |
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 | |
| | | | | | | | | | | | |
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 | |
| | | | | | | | | | | | |
October 2007 | | October 31, 2007 | | June 30, 2008 | | | 4.458 | | 50,000 | | 50,000 | |
| | | | | | | | | | | | |
October 2007 | | October 31, 2007 | | September 30, 2012 | | | 4.546 | | 50,000 | | 50,000 | |
| | | | | | | | | | | | |
October 2007 | | October 31, 2007 | | September 30, 2013 | | | 4.642 | | 50,000 | | 50,000 | |
| | | | | | | | | | | | |
May 2005 | | November 30, 2007 | | November 28, 2008 | | | 4.460 | | 25,000 | | 25,000 | |
| | | | | | | | | | | | |
December 2005 | | January 2, 2008 | | December 31, 2010 | | | 4.768 | | 50,000 | | 50,000 | |
| | | | | | | | | | | | |
February 2008 | | February 7, 2008 | | December 1, 2008 | | | 2.640 | | 38,600 | | 38,600 | |
| | | | | | | | | | | | |
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 | | - | |
| | | | | | | | | | | | |
October 2007 | | July 1, 2008 | | March 31, 2013 | | | 4.622 | | 25,000 | | – | |
| | | | | | | | | | | | |
October 2007 | | July 1, 2008 | | March 31, 2013 | | | 4.625 | | 25,000 | | – | |
| | | | | | | | | | | | |
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 | | | | | | | | | | $ | 817,100 | |
| | | | | | | | | | | | | | |
(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.
8
.ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
| | GAAP Basis (1) | | Cash Basis (1) | |
| | Quarter Ended | | Quarter Ended | |
| | 3/31/2008 | | 3/31/2007 | | % Change | | 3/31/2008 | | 3/31/2007 | | % Change | |
Revenue (2) | | $ | 82,957 | | $ | 79,427 | | 4.4 | % | | $ | 80,953 | | $ | 75,679 | | 7.0 | % | |
Operating expenses | | 21,813 | | 20,404 | | 6.9 | | | 21,813 | | 20,404 | | 6.9 | | |
Revenue less operating expenses | | $ | 61,144 | | $ | 59,023 | | 3.6 | % | | $ | 59,140 | | $ | 55,275 | | 7.0 | % | |
NOTE: This summary represents operating data for all properties that were fully operating for the entire periods presented for the quarter periods (the “First Quarter Same Properties”). Same property occupancy for the quarters ended March 31, 2008 and 2007 was 95.3% and 94.3%, respectively. Properties undergoing redevelopment are excluded from same property results.
(1) | Revenue less operating expenses computed in accordance with GAAP is total revenue associated with the First Quarter Same Properties (excluding lease termination fees, if any) less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the First Quarter Same Properties (excluding lease termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarters ended March 31, 2008 and 2007 for the First Quarter Same Properties were $2,004,000 and $3,748,000, 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 March 31, 2008, 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 March 31, 2008, approximately 8% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses. |
9
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties
(Dollars in thousands)
(Unaudited)
| | March 31, 2008 | | December 31, 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 | | 1 | | 31,343 | | – | | 31,343 | | $ | 696 | | 70.8 | % | | 70.8 | % | |
California – San Diego | | 34 | | 1,473,715 | | 236,347 | | 1,710,062 | | 43,028 | | 94.1 | | | 94.9 | | |
California – San Francisco Bay | | 17 | | 1,457,444 | | 21,216 | | 1,478,660 | | 55,964 | | 96.9 | | | 95.8 | | |
Eastern Massachusetts | | 37 | | 3,069,398 | | 333,896 | | 3,403,294 | | 110,202 | | 96.6 | | | 94.7 | | |
International – Canada | | 4 | | 342,394 | | – | | 342,394 | | 9,215 | | 100.0 | | | 100.0 | | |
New Jersey/Suburban Philadelphia | | 8 | | 441,504 | | – | | 441,504 | | 9,176 | | 96.6 | | | 96.6 | | |
Southeast | | 12 | | 597,775 | | 60,631 | | 658,406 | | 11,074 | | 89.5 | (4) | | 86.0 | (4) | |
Suburban Washington D.C. | | 31 | | 2,431,630 | | 68,138 | | 2,499,768 | | 47,823 | | 91.0 | | | 90.1 | | |
Washington – Seattle | | 13 | | 1,040,471 | | 11,291 | | 1,051,762 | | 31,127 | | 97.3 | | | 97.2 | | |
Total Properties (Continuing Operations) | | 157 | | 10,885,674 | | 731,519 | | 11,617,193 | | $ | 318,305 | | 94.8 | % | | 93.8 | % | |
(1) | Excludes spaces at properties totaling approximately 731,519 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment and two properties totaling approximately 74,304 rentable square feet that are classified as “held for sale.” |
(2) | Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of March 31, 2008 was 88.8%. See page 14 for additional information on our redevelopment program. |
(3) | Excludes spaces at properties totaling 774,519 rentable square feet undergoing a permanent change in use to office/laboratory space through redevelopment and two properties totaling approximately 136,399 rentable square feet that are classified as “held for sale.” Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of December 31, 2007 was 87.8%. See page 14 for additional information on our redevelopment program. |
(4) | Substantially all of the vacant space is office or warehouse space. |
10
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended March 31, 2008
| | | | | | | | | | | | TI’s/Lease | | | |
| | | | Rentable | | | | | | Rental | | Commissions | | Average | |
| | Number | | Square | | Expiring | | New | | Rate | | Per | | Lease | |
| | of Leases | | Footage | | Rates | | Rates | | Changes | | Square Foot | | Terms | |
Leasing Activity | | | | | | | | | | | | | | | |
Lease Expirations | | | | | | | | | | | | | | | |
Cash Basis | | 44 | | 633,450 | | $25.96 | | – | | – | | – | | – | |
GAAP Basis | | 44 | | 633,450 | | $24.91 | | – | | – | | – | | – | |
| | | | | | | | | | | | | | | |
Renewed/Released Space Leased | | | | | | | | | | | | | | | |
Cash Basis | | 21 | | 369,312 | | $26.55 | | $28.58 | | 7.6% | | $5.81 | | 3.3 years | |
GAAP Basis | | 21 | | 369,312 | | $25.11 | | $28.64 | | 14.1% | | $5.81 | | 3.3 years | |
| | | | | | | | | | | | | | | |
Developed/Redeveloped/Vacant Space Leased | | | | | | | | | | | | | | | |
Cash Basis | | 27 | | 201,098 | | – | | $31.65 | | – | | $6.57 | | 4.2 years | |
GAAP Basis | | 27 | | 201,098 | | – | | $31.89 | | – | | $6.57 | | 4.2 years | |
| | | | | | | | | | | | | | | |
Month-to-Month Leases in Effect | | | | | | | | | | | | | | | |
Cash Basis | | 14 | | 81,463 | | $20.19 | | $20.16 | | – | | – | | – | |
GAAP Basis | | 14 | | 81,463 | | $19.97 | | $20.16 | | – | | – | | – | |
| | | | | | | | | | | | | | | |
Leasing Activity Summary | | | | | | | | | | | | | | | |
Excluding Month-to-Month Leases | | | | | | | | | | | | | | | |
Cash Basis | | 48 | | 570,410 | | – | | $29.66 | | – | | $6.07 | | 3.6 years | |
GAAP Basis | | 48 | | 570,410 | | – | | $29.79 | | – | | $6.07 | | 3.6 years | |
| | | | | | | | | | | | | | | |
Including Month-to-Month Leases | | | | | | | | | | | | | | | |
Cash Basis | | 62 | | 651,873 | | – | | $28.47 | | – | | – | | – | |
GAAP Basis | | 62 | | 651,873 | | – | | $28.58 | | – | | – | | – | |
11
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
March 31, 2008
Year of Lease
Expiration | | Number of
Leases Expiring | | Rentable Square
Footage of
Expiring Leases | | Percentage of
Aggregate
Leased Square Feet | | Annualized Base Rent
of Expiring Leases
(per rentable
square foot) | |
| | | | | | | | | | |
2008 | | 50 | (1) | | 505,873 | (1) | | 4.9 | % | | $23. | 41 | |
2009 | | 66 | | | 846,012 | | | 8.2 | | | 25. | 04 | |
2010 | | 53 | | | 979,355 | | | 9.5 | | | 28. | 58 | |
2011 | | 64 | | | 1,706,734 | | | 16.5 | | | 27. | 78 | |
2012 | | 60 | | | 1,410,349 | | | 13.7 | | | 34. | 23 | |
| | Rentable Square
Footage of Expiring Leases | |
Markets | | 2008 | | 2009 | |
| | | | | |
California – Los Angeles Metro | | 4,006 | | 4,354 | |
California – San Diego | | 78,503 | | 203,464 | |
California – San Francisco Bay | | 78,567 | | 104,476 | |
Eastern Massachusetts | | 187,026 | | 126,242 | |
International – Canada | | – | | – | |
New Jersey/Suburban Philadelphia | | 40,000 | | 21,000 | |
Southeast | | 22,440 | | 87,015 | |
Suburban Washington D.C. | | 74,688 | | 265,525 | |
Washington – Seattle | | 20,643 | | 33,936 | |
| | | | | |
Total | | 505,873 | (1) | 846,012 | |
(1) Includes 14 month-to-month leases for approximately 81,000 rentable square feet.
12
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Additions and Dispositions of Properties
For the Quarter Ended March 31, 2008
(Dollars in thousands)
| | | Acquisition | | Month of | | Rentable | |
| Markets | | Amount | | Acquisition | | Square Feet | |
| | | | | | | | |
| Additions to Operating Properties: | | | | | | | |
| | | | | | | | |
| None | | | | | | | |
| | | | | | | | |
| | | Acquisition | | Month of | | Developable | |
| Markets | | Amount | | Acquisition | | Square Feet | |
| | | | | | | | |
| Additions to Land: | | | | | | | |
| | | | | | | | |
| None | | | | | | | |
| | | | | | | | |
| | | Disposition | | Month of | | Rentable | |
| Markets | | Amount | | Disposition | | Square Feet | |
| | | | | | | | |
| Dispositions: | | | | | | | |
| | | | | | | | |
| California – San Diego | | $ | 23,250 | | January | | 86,962 | |
| California – San Francisco Bay | | 46,400 | (1) | February/March | | 272,730 | |
| | | $ | 69,650 | | | | 359,692 | |
| | | | | | | | |
(1) Represents sale of five properties in the east bay area of the San Francisco Bay market.
13
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Square Footage Undergoing Redevelopment
March 31, 2008
Markets/Submarkets | | Placed
in
Redevelopment | | Estimated
In-Service
Dates | | Estimated Investment Per Square Foot | | Square Footage
Undergoing
Redevelopment/
Total Property | | Status | |
| | | | | | | | | | | |
California – San Diego | | 2006 | | 2008 | | $80-100 | | 29,660 / 29,660 | | Construction | |
| | | | | | | | | | | |
California – San Diego/Sorrento | | 2006 | | 2008 | | $70-80 | | 21,464 / 30,147 | | Construction | |
| | | | | | | | | | | |
California – San Diego/Torrey Pines | | 2004 | | 2009 | | $100-120 | | 87,140 / 87,140 | | Construction (1) | |
| | | | | | | | | | | |
California – San Diego/Torrey Pines | | 2006 | | 2009 | | $80-100 | | 43,600 / 43,600 | | Construction | |
| | | | | | | | | | | |
California – San Diego/Torrey Pines | | 2007 | | 2009 | | $80-100 | | 15,259 / 107,709 | | Construction | |
| | | | | | | | | | | |
California – San Diego/Torrey Pines | | 2007 | | 2009 | | $80-100 | | 39,224 / 76,084 | | Construction | |
| | | | | | | | | | | |
California – San Francisco Bay/Peninsula | | 2007 | | 2008 | | $80-100 | | 21,216 / 82,712 | | Construction | |
| | | | | | | | | | | |
Eastern Massachusetts/Cambridge | | 2006 | | 2008/2009 | | $120-175 | | 124,075 / 177,101 | | Design/Construction | |
| | | | | | | | | | | |
Eastern Massachusetts/Cambridge | | 2007 | | 2009 | | $100-130 | | 73,776 / 369,831 | | Design/Demolition | |
| | | | | | | | | | | |
Eastern Massachusetts/Suburban | | 2007 | | 2009 | | $100-120 | | 23,000 / 38,000 | | Construction | |
| | | | | | | | | | | |
Eastern Massachusetts/Suburban | | 2007 | | 2009 | | $70-80 | | 113,045 / 113,045 | | Redesign/Construction | |
| | | | | | | | | | | |
Southeast/Florida | | 2006 | | 2008 | | $80-100 | | 44,238 / 45,841 | | Construction | |
| | | | | | | | | | | |
Southeast/Research Triangle Park | | 2007 | | 2008 | | $100-120 | | 16,393 / 77,395 | | Design/Construction | |
| | | | | | | | | | | |
Suburban Washington D.C./Gaithersburg | | 2008 | | 2008 | | $40-50 | | 15,504 / 44,464 | | Construction | |
| | | | | | | | | | | |
Suburban Washington D.C./Shady Grove | | 2007 | | 2009 | | $70-80 | | 52,634 / 125,004 | | Construction | |
| | | | | | | | | | | |
Washington – Seattle | | 2007 | | 2008 | | $125-150 | | 11,291 / 32,279 | | Construction | |
| | | | | | | | | | | |
| | | | | | | | 731,519 / 1,480,012 | | | |
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 March 31, 2008, our asset base contained embedded opportunities for future permanent change of use to office/laboratory space through redevelopment aggregating approximately 1,699,000 rentable square feet. See Summary of Embedded Future Development and Redevelopment Square Footage on page 16.
(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. |
14
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Undergoing Ground-Up Development
March 31, 2008
| | | | Construction | | Estimated | | Estimated | | Rentable | | | |
| | Building | | Start | | In-Service | | Investment | | Square | | | |
Markets/Submarkets | | Descriptions | | Dates | | Dates | | Per Square Foot (1) | | Feet | | Status | |
| | | | | | | | | | | | | |
California – San Francisco Bay/Mission Bay | | One Multi-tenant Bldg. | | 2007 | | 2010 | | $350 | | 158,000 | | Construction | |
| | | | | | | | | | | | | |
California – San Francisco Bay/So. San Francisco | | Two Bldgs., Single or Multi-tenant | | 2006 | | 2009 | | $350 | | 162,000 | | Construction | |
| | | | | | | | | | | | | |
California – San Francisco Bay/So. San Francisco | | One Single or Multi-tenant Bldg. | | 2006 | | 2009 | | $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 | | 2010/2011 | | $500 | | 725,000 | (2) | Construction | |
| | | | | | | | | | | | | |
Washington – Seattle | | One Single or Multi-tenant Bldg. | | 2007 | | 2010 | | TBD | | 115,000 | | Site Work | |
| | | | | | | | | | | | | |
Total Properties Undergoing Ground-Up Development (1) | | | | | | | | 1,575,000 | | | |
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 $121 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 embedded developable square footage shown on page 16. |
15
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Embedded Future Development and Redevelopment Square Footage
March 31, 2008
| | Embedded Future Development | | | | | |
Markets | |
Development/
Pre-construction
Square Footage (1)
| | Total Embedded
Development
Square Footage | | Embedded Future
Redevelopment
Square Footage | | Total | |
| | | | | | | | | |
California – San Diego | | 298,000 | | 443,000 | | 228,000 | | 671,000 | |
| | | | | | | | | |
California – San Francisco Bay/Mission Bay | | 2,386,000 | | 2,386,000 | | – | | 2,386,000 | |
| | | | | | | | | |
California – San Francisco Bay/So. San Francisco | | 549,000 | | 921,000 | | 25,000 | | 946,000 | |
| | | | | | | | | |
Eastern Massachusetts | | 2,050,000 | | 2,275,000 | | 589,000 | | 2,864,000 | |
| | | | | | | | | |
International – Canada | | 763,000 | | 827,000 | | – | | 827,000 | |
| | | | | | | | | |
Suburban Washington D.C. | | 425,000 | | 787,000 | | 472,000 | | 1,259,000 | |
| | | | | | | | | |
Washington – Seattle | | 206,000 | | 843,000 | | 135,000 | | 978,000 | |
| | | | | | | | | |
Other | | 176,000 | | 516,000 | | 250,000 | | 766,000 | |
| | | | | | | | | |
Total | | 6,853,000 | | 8,998,000 | (2) | 1,699,000 | | 10,697,000 | |
The embedded 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 embedded 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 15. Commencement of construction will depend on numerous factors, including the 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 Embedded Future Development -Total Embedded 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 embedded developable square footage shown above. |
16
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Quarter ended March 31, 2008
(In thousands)
Property-related capital expenditures (1) | | $ | 500 | |
| | | |
Leasing costs (2) | | $ | 238 | |
| | | |
Property-related costs (3) | | $ | 116,541 | |
(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 92% 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. |
17
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the First Quarter Ended March 31, 2008
Alexandria Real Estate Equities, Inc. will be hosting a conference call to discuss its operating and financial results for the first quarter ended March 31, 2008:
| Date: | | May 9, 2008 |
| | | |
| Time: | | 2:00 P.M. Eastern Daylight Time/11:00 A.M. Pacific Daylight Time |
| | | |
| Phone Number: | | (719) 325-4812 |
| | | |
| Confirmation Code: | | 6328049 |
18
