Alexandria Real Estate Equities, Inc. Reports Second Quarter Ended June 30, 2012 Financial and Operating Results FFO Per Share - Diluted, as Adjusted of $1.07 and $2.14 for Three and Six Months Ended 2Q12

EPS − Diluted of $0.29 and $0.58 for Three and Six Months Ended 2Q12

Continued Solid Life Science Space Demand in Key Cluster Submarkets

PASADENA, Calif., July 30, 2012 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced financial and operating results for the second quarter ended June 30, 2012.

Second Quarter Ended June 30, 2012, Highlights

Results

  • Funds From Operations ("FFO") Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, as Adjusted, for the Three Months Ended June 30, 2012, was $65.8 Million, or $1.07 Per Share;  FFO Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, as Adjusted, for the Six Months Ended June 30, 2012, was $132.0 Million, or $2.14 Per Share
  • Adjusted Funds From Operations ("AFFO") Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, for the Three Months Ended June 30, 2012, was $64.0 Million, or $1.04 Per Share;  AFFO Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, for the Six Months Ended June 30, 2012, was $126.4 Million, or $2.05 Per Share
  • Net Income Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, for the Three Months Ended June 30, 2012, was $17.6 Million, or $0.29 Per Share;  Net Income Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, for the Six Months Ended June 30, 2012, was $36.0 Million, or $0.58 Per Share
  • Results for the Three Months Ended June 30, 2012, Included $5.8 Million, or $0.09 Per Diluted Share, Related to a Realized Gain on Equity Investment Primarily Related to One Non-Tenant Life Science Entity and a Loss on Early Extinguishment of Debt of Approximately $1.6 Million, or $0.03 Per Diluted Share, Related to the Write-Off of a Portion of Unamortized Loan Fees in Connection with Refinancing Our $1.5 Billion Unsecured Senior Line of Credit
  • The Following Table Presents a Reconciliation of FFO Per Share Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted to FFO Per Share Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, as Adjusted, For the Three and Six Months Ended June 30, 2012:


June 30, 2012




Three Months Ended


Six Months Ended


FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted


$                        1.13


$                        2.11


    Realized gain on equity investment primarily related to one non-tenant life science entity


(0.09)


(0.09)


Subtotal


1.04


2.02


    Loss on early extinguishment of debt  


0.03


0.03


    Preferred stock redemption charge



0.10


FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – 
     diluted, as adjusted


$                        1.07


$                        2.14


Significant Balance Sheet Management Milestones

  • In June 2012, Closed a Secured Construction Loan with Aggregate Commitments of $55 Million for a 100% Pre-Leased Development Project in the San Francisco Bay Market
  • Established an "At The Market" Common Stock Offering Program Under Which We May Sell Up to $250 Million of Our Common Stock; and Raised $39.9 Million in Net Proceeds from Sales Under This Program
  • In April 2012, Amended Our $1.5 Billion Unsecured Senior Line of Credit to Reduce Its Interest Rate and Extend Its Maturity Date to April 2017, Assuming We Exercise Our Sole Right to Extend the Maturity Date Twice
  • In April 2012, Redeemed All $129.6 Million of Outstanding 8.375% Series C Preferred Stock
  • In March 2012, Completed 6.45% Series E Preferred Stock Offering with Net Proceeds of $124.9 Million
  • In February 2012, Completed Debut 4.60% Unsecured Senior Notes Offering with Net Proceeds of $544.6 Million; Net Proceeds From Offering Were Used to Repay Certain Outstanding Variable Rate Bank Debt
  • In January and April 2012, Retired All $84.8 Million of Our 3.70% Unsecured Senior Convertible Notes
  • In February 2012, Repaid All $250 Million of Our 2012 Unsecured Senior Bank Term Loan
  • In March 2012, Sold an Interest in a Land Parcel to Our Joint Venture Partner for $31.4 Million
  • Assets Under Contract for Sale and Completed Asset Sales Aggregating Sale Price of $55.4 Million, or 49%, of $112 Million Sales Target for 2012; Additional Assets Under Negotiation for Sale

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Second Quarter Ended June 30, 2012, Financial and Operating Results

(Unaudited)

Core Operating Metrics

  • Total Revenues for the Three Months Ended June 30, 2012, were $154.1 Million, Compared to Total Revenues for the Three Months Ended June 30, 2011, of $143.3 Million; Total Revenues for the Six Months Ended June 30, 2012, were $298.8 Million, Compared to Total Revenues for the Six Months Ended June 30, 2011, of $283.0 Million
  • Net Operating Income ("NOI") for the Three Months Ended June 30, 2012, was $109.6 Million, Compared to NOI for the Three Months Ended June 30, 2011, of $102.7 Million; NOI for the Six Months Ended June 30, 2012, was $211.0 Million, Compared to NOI for the Six Months Ended June 30, 2011, of $201.4 Million
  • Operating Margins at 71% for the Three Months Ended June 30, 2012
  • Cash and GAAP Same Property Revenues Less Operating Expenses Increase of 1.6% and Decrease of 0.2%, Respectively, for the Three Months Ended June 30, 2012
  • Cash and GAAP Same Property Revenues Less Operating Expenses Increase of 1.9% and Decrease of 0.1%, Respectively, for the Six Months Ended June 30, 2012
  • 48% of Annualized Base Rent From Investment-Grade Tenants
  • Continued Solid Life Science Space Demand in Key Cluster Submarkets
    • During the Three Months Ended June 30, 2012, Executed 44 Leases for 959,000 Rentable Square Feet, Including 169,000 Rentable Square Feet of Development and Redevelopment Space;  Rental Rate Decrease of 0.8% and Increase of 5.8% on a Cash and GAAP Basis, Respectively, on Renewed/Re-leased Space; Excluding One Lease for 71,000 Rentable Square Feet Related to One Tenant in the Gaithersburg Submarket in Suburban Washington, D.C., Rental Rates for Renewed/Re-Leased Space were, on Average 1.1% and 6.7% Higher than Rental Rates for Expiring Leases on a Cash and GAAP Basis, Respectively
      • Fourth Highest Quarter of Leasing Activity in Company History; Continuing Solid Life Science Demand in Alexandria's Key Cluster Submarkets
      • Key Life Science Space Leasing
        • Massachusetts Institute of Technology Renewed 87,000 Rentable Square Feet in the Greater Boston Market
        • United States Government National Institutes of Health Leased 75,000 Rentable Square Feet of Redevelopment Space in the Suburban Washington, D.C. Market
        • Three Tenants Leased 75,000 Rentable Square Feet, Including One Renewal for 24,000 Rentable Square Feet at 400/450 East Jamie Court in the San Francisco Bay Market; Property 78% Leased
        • Infectious Disease Research Institute Leased 55,000 Rentable Square Feet in the Seattle Market
        • United States Government Department of Veterans Affairs Leased 51,000 Rentable Square Feet in the San Francisco Bay Market
        • 1366 Technologies, Inc. Leased 41,000 Rentable Square Feet in the Greater Boston Market
        • Epizyme, Inc. Leased 32,000 Rentable Square Feet of Redevelopment Space in the Greater Boston Market
        • Life Technologies Corporation Renewed 29,000 Rentable Square Feet in the Greater Boston Market
    • During the Six Months Ended June 30, 2012, Executed 105 Leases for 1,871,000 Rentable Square Feet, Including 563,000 Rentable Square Feet of Development and Redevelopment Space; Rental Rate Decrease of 1.4% and Increase of 5.2% on a Cash and GAAP Basis, Respectively, on Renewed/Re-Leased Space; Excluding One Lease for 71,000 Rentable Square Feet Related to One Tenant in the Gaithersburg Submarket in Suburban Washington, D.C., Rental Rates for Renewed/Re-Leased Space were Flat for Expiring Leases on a Cash Basis and on Average 5.7% Higher than Rental Rates on a GAAP Basis
  • Occupancy Percentage for North America Operating Properties of 93.9% and Occupancy Percentage for North America Operating and Redevelopment Properties of 88.4%; Occupancy Percentage for Operating Properties of 92.9%, Including Asia Properties and Occupancy Percentage for Operating and Redevelopment Properties of 86.9%, Including Asia Properties

Value-Added Opportunities and External Growth

  • In June 2012, Completed Redevelopment of 100% Leased, 98,320 Rentable Square Feet Project Located in the San Diego Market
  • In April 2012, Completed Development of 100% Leased, 26,426 Rentable Square Feet Project Located in the Canada Market
  • In April 2012, Commenced Development of 37% Pre-Leased, 414,000 Rentable Square Feet Unconsolidated Joint Venture Project Located in the Greater Boston Market
  • In January 2012, Commenced Development of 100% Pre-Leased, 170,618 Rentable Square Feet Project Located in the San Francisco Bay Market

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Second Quarter Ended June 30, 2012, Financial and Operating Results

(Tabular dollar amounts in thousands)

(Unaudited)

Total revenues, net operating income, and operating margins

Total revenues for the three months ended June 30, 2012, were $154.1 million, compared to total revenues for the three months ended June 30, 2011, of $143.3 million.  Total revenues for the six months ended June 30, 2012, were $298.8 million, compared to total revenues for the six months ended June 30, 2011, of $283.0 million.  Other income for the three months ended June 30, 2012, included a realized gain of approximately $5.8 million on an equity investment primarily related to one non-tenant life science entity.  NOI for the three months ended June 30, 2012, was $109.6 million, compared to NOI for the three months ended June 30, 2011, of $102.7 million.  NOI for the six months ended June 30, 2012, was $211.0 million, compared to NOI for the six months ended June 30, 2011, of $201.4 million.  NOI before the realized gain of approximately $5.8 million for the three and six months ended June 30, 2012, was $103.8 million and $205.2 million, respectively.  Operating margins for the three months ended June 30, 2012, were 71%, compared to operating margins for the three months ended June 30, 2011, of 72%.  Operating margins for the six months ended June 30, 2012 and 2011 were 71%.

 



Three Months Ended


Six Months Ended


Total Revenues, NOI, and Operating Margins  


June 30, 2012


June 30, 2011


June 30, 2012


June 30, 2011


Rental revenues


$                   110,683


$                   109,248


$                   218,267


$                   215,300


Tenant recoveries


34,041


33,147


68,563


66,008


Other income


9,381


926


12,010


1,703


Total revenues


154,105


143,321


298,840


283,011












Rental operating expenses


44,506


40,595


87,888


81,630


Net operating income


$                   109,599


$                   102,726


$                   210,952


$                   201,381


Operating margins


71%


72%


71%


71%












General and administrative


$                     12,324


$                     10,764


$                     22,685


$                     20,258


Interest


17,922


16,567


34,149


34,377


Depreciation and amortization


52,316


40,173


95,682


76,716


Loss on early extinguishment of debt


1,602


1,248


2,225


3,743




84,164


68,752


154,741


135,094


Income from continuing operations


$                     25,435


$                     33,974


$                     56,211


$                     66,287


SIGNIFICANT BALANCE SHEET MILESTONES

Closed secured construction loan for development project in San Francisco Bay market

In June 2012, we closed a secured construction loan with aggregate commitments of $55 million.  The construction loan matures in June 2017, assuming we exercise our sole option to extend the stated maturity date of June 2015 by one year, twice.  The construction loan will be used to fund the majority of the cost to complete the development of a 100% pre-leased 170,618 rentable square feet life science laboratory building at 259 East Grand Avenue in the San Francisco Bay market.  The construction loan will bear interest at the London Interbank Offered Rate ("LIBOR") or the base rate specified in the construction loan agreement, defined as the higher of either the prime rate being offered by our lender or the federal funds rate in effect on the day of borrowing ("Base Rate"), plus in either case a specified margin of 1.50% for LIBOR borrowings or 0.25% for Base Rate borrowings.  As of June 30, 2012, $55 million of commitments were available.

Debut 4.60% unsecured senior notes payable offering

In February 2012, we completed the issuance of our 4.60% unsecured senior notes payable due in February 2022.  Net proceeds of approximately $544.6 million were used to repay certain outstanding variable rate bank debt, including the entire $250 million of our 2012 unsecured senior bank term loan ("2012 Unsecured Senior Bank Term Loan"), and approximately $294.6 million of outstanding borrowings under our unsecured senior line of credit.  In connection with the retirement of our 2012 Unsecured Senior Bank Term Loan, we recognized a loss on early extinguishment of debt of approximately $0.6 million related to the write-off of unamortized loan fees.

Amendment of $1.5 billion unsecured senior line of credit

In April 2012, we amended our $1.5 billion unsecured senior line of credit with Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., and Citigroup Global Markets Inc. as joint lead arrangers, and certain lenders, to extend the maturity date of our unsecured senior line of credit, provide an accordion option for up to an additional $500 million, and reduce the interest rate for outstanding borrowings.  The maturity date of the unsecured senior line of credit was extended to April 2017, assuming we exercise our sole right to extend the stated maturity date twice by an additional six months after each exercise.  Borrowings under the unsecured senior line of credit will bear interest at LIBOR or the base rate specified in the amended unsecured senior line of credit agreement, plus in either case a specified margin (the "Applicable Margin").  The Applicable Margin for LIBOR borrowings under the unsecured senior line of credit was set at 1.20%, down from 2.40% in effect immediately prior to the modification.  In addition to the Applicable Margin, our unsecured senior line of credit is subject to an annual facility fee of 0.25%.  In connection with the modification of our unsecured senior line of credit in April 2012, we recognized a loss on early extinguishment of debt of approximately $1.6 million related to the write-off of a portion of unamortized loan fees.

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Second Quarter Ended June 30, 2012, Financial and Operating Results

(Tabular dollar amounts in thousands)

(Unaudited)

6.45% series E preferred stock offering

In March 2012, we completed a public offering of 5,200,000 shares of our 6.45% series E cumulative redeemable preferred stock ("Series E Preferred Stock").  The shares were issued at a price of $25.00 per share, resulting in net proceeds of approximately $124.9 million (after deducting underwriters' discounts and other offering costs).  The proceeds were initially used to reduce the outstanding borrowings under our unsecured senior line of credit.  We then borrowed funds under our unsecured senior line of credit to redeem our 8.375% series C cumulative redeemable preferred stock ("Series C Preferred Stock") in April 2012.  The dividends on our Series E Preferred Stock are cumulative and accrue from the date of original issuance.  We pay dividends quarterly in arrears at an annual rate of 6.45%, or $1.6125 per share.  Our Series E Preferred Stock has no stated maturity date, is not subject to any sinking fund or mandatory redemption provisions, and is not redeemable before March 15, 2017, except to preserve our status as a real estate investment trust ("REIT").  On and after March 15, 2017, we may, at our option, redeem the Series E Preferred Stock, in whole or in part, at any time for cash at a redemption price of $25.00 per share, plus any accrued and unpaid dividends on the Series E Preferred Stock up to, but excluding, the redemption date.  In addition, upon the occurrence of a change of control, we may, at our option, redeem the Series E Preferred Stock, in whole or in part within 120 days after the first date on which such change of control occurred, by paying $25.00 per share, plus any accrued and unpaid dividends up to, but excluding, the date of redemption.  Investors in our Series E Preferred Stock generally have no voting rights.

8.375% series C preferred stock redemption

In April 2012, we redeemed all 5,185,500 outstanding shares of our Series C Preferred Stock at a price equal to $25.00 per share, and paid $0.5234375 per share, representing accumulated and unpaid dividends to the redemption date on such shares.  We recognized a charge of approximately $6.0 million to net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders during the six months ended June 30, 2012, related to the write-off of original issuance costs of the Series C Preferred Stock.

Establishment of "at the market" common stock offering program

In June 2012, we established an "at the market" common stock offering program under which we may sell, from time to time, up to an aggregate of $250 million of our common stock through our sales agents, BNY Mellon Capital Markets, LLC and Credit Suisse Securities (USA) LLC, during a three-year period.  In June 2012, we sold an aggregate of 573,686 shares of common stock for gross proceeds of approximately $40.5 million at an average stock price of $70.64 and net proceeds of approximately $39.9 million.  As of June 30, 2012, approximately $209.5 million of our common stock remained available for issuance under the "at the market" common stock offering program.

Real estate asset sale

Real Estate Asset Sales


Date
of sale


Location


Rentable
Square Feet


Gain
on Sale


Disposition
Amount


5110 Campus Drive


May 2012


Pennsylvania


21,000


$                         2


$                   1,800

(1)

Land parcel


March 2012


Greater Boston


(2)


1,864


31,360

(2)

Assets held for sale at contract price










22,200

(3)

Projected additional dispositions










56,640

(4)

Total projected 2012 dispositions










$                112,000














(1)       Represents a sale in May 2012 to a tenant that occupied 28% of the property on the date of sale.


(2)       In March 2012, we sold one-half of our 55% interest in a land parcel supporting a 414,000 rentable square feet project for approximately $31 
           million (including closing costs), or approximately $275 per rentable square foot. See discussion below.


(3)       Amount represents aggregate contract sales prices for three assets held for sale. Includes one property sold in July 2012 to a tenant occupying
           100% of the property, at a price of approximately $8.0 million, or approximately $222 per square foot, resulting in a gain of approximately $1.4 
           million.  The remaining two properties aggregating 196,029 future developable square feet are targeted for sale at an aggregate price of
           approximately $14.2 million, or approximately $72 per developable square foot.  Net book values of the three properties totaled approximately $19.4
           million as of June 30, 2012.


(4)       Represents estimate of proceeds from future dispositions that have not met the criteria for classification as discontinued operations.


Sale of land parcel

In March 2012, we contributed our 55% ownership interest in a land parcel supporting a future 414,000 rentable square feet building in the Longwood Medical Area of the Greater Boston market to a newly formed joint venture (the "Restated JV") with National Development and Charles River Realty Investors, and admitted as a 50% member, Clarion Partners, LLC, resulting in a reduction of our ownership interest from 55% to 27.5%.  The transfer of one-half of our 55% ownership interest in this real estate venture to Clarion Partners, LLC, was accounted for as an in-substance partial sale of an interest in the underlying real estate.  In connection with the sale of one-half of our 55% ownership interest in the land parcel, we received a special distribution of approximately $22.3 million, which included the recognition of a $1.9 million gain on sale of land and approximately $5.4 million from our share of loan refinancing proceeds.  The land parcel we sold in March 2012 did not meet the criteria for discontinued operations since the parcel did not have any significant operations prior to disposition. Pursuant to the presentation and disclosure literature on gains/losses on sales or disposals by REITs required by the Securities and Exchange Commission ("SEC"), gains or losses on sales or disposals by a REIT that do not qualify as discontinued operations are classified below income from discontinued operations in the income statement.  Accordingly, we classified the $1.9 million gain on sale of land below income from discontinued operations, net, in the condensed consolidated statements of income.  Our 27.5% share of the land was sold at approximately $31 million (including closing costs), or approximately $275 per rentable square foot.  Upon formation of the Restated JV, the existing $38.4 million secured loan was refinanced with a seven-year (including two one-year extension options) non-recourse $213 million secured construction loan with initial loan proceeds of $50 million.  As of June 30, 2012, the outstanding balance on the construction loan was $51.1 million.  We do not expect our share of capital contributions through the completion of the project to exceed the approximate $22.3 million in net proceeds received in this transaction.  Construction of this $350 million project commenced in April 2012, with an initial occupancy date in the fourth quarter of 2014, and the project is 37% pre-leased to Dana-Farber Cancer Institute, Inc.  In addition, Dana-Farber Cancer Institute, Inc. has an option to an additional two floors approximating 99,000 rentable square feet, or 24% of the total rentable square feet of the project.  We expect to earn development and other fees of approximately $3.5 million through 2015, and recurring annual property management fees thereafter.  For the three and six months ended June 30, 2012, we recognized approximately $0.2 million of development fees.  These fees are classified in other income in the condensed consolidated statements of income.

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Second Quarter Ended June 30, 2012, Financial and Operating Results

(Unaudited)

VALUE-ADDED OPPORTUNITIES AND EXTERNAL GROWTH

Development and redevelopment

During the three and six months ended June 30, 2012, we executed leases aggregating 169,000 and 563,000 rentable square feet, respectively, related to our development and redevelopment projects.

In June 2012, we completed the redevelopment of 3530/3550 John Hopkins Court, a combined 98,320 rentable square feet multi-tenant campus located in the San Diego market, which is 100% leased to (1) Genomics Institute of the Novartis Research Foundation, a non-profit research institute, and (2) a leading industrial biotechnology company.  The stabilized yield on cost on a cash and GAAP basis for this project was approximately 8.9% and 9.1%, respectively.  Stabilized yield on cost is calculated as the quotient of net operating income and our investment in the property at stabilization ("Stabilized Yield").

In April 2012, we completed the development of a 26,426 rentable square feet building located in the Canada market, which is 100% leased to GlaxoSmithKline plc.  The Stabilized Yield on a cash and GAAP basis for this project was approximately 7.7% and 8.3%, respectively. 

In April 2012, we commenced ground-up development of 360 Longwood Avenue, our 414,000 rentable square feet unconsolidated joint venture development project located in the Longwood Medical Area of the Greater Boston Market, which is 37% pre-leased to the Dana-Farber Cancer Institute, Inc.  We expect to achieve an unlevered Stabilized Yield on a cash and GAAP basis in a range from 8.1% to 8.5% and 8.7% to 9.1%, respectively.  Funding for this project is primarily provided by capital from our joint venture partner and a $213.2 million non-recourse secured construction loan.  Additionally, our share of the future funding is expected to be less than the $22.3 million distribution we received in March 2012, upon admittance of the new partner and refinancing of the project.

In January 2012, we commenced a ground-up development of a 170,618 rentable square feet single tenant building at 259 East Grand Avenue in the San Francisco Bay market which is 100% pre-leased to Onyx Pharmaceuticals Inc.  We expect to achieve a Stabilized Yield on both a cash and GAAP basis for this property in a range from 7.8% to 8.2%.  Funding for this project will be primarily provided by the $55 million secured construction loan we closed in June 2012.

Acquisitions

In April 2012, we acquired 3013/3033 Science Park Road which consists of two life science laboratory buildings aggregating 176,500 rentable square feet, for approximately $13.7 million.  The property was 100% leased on a short-term basis through July 2012, and thereafter, we expect to redevelop approximately 105,000 rentable square feet.  The remaining square footage will be classified as future developable square feet.  We expect to provide an estimate of our Stabilized Yields in the future upon commencement of development/redevelopment activity.

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Second Quarter Ended June 30, 2012, Financial and Operating Results

(Unaudited)

GUIDANCE

Earnings outlook

Based on our current view of existing market conditions and certain current assumptions, we expect our earnings per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted and FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted for the year ended December 31, 2012, will be as set forth in the table below.  All projected FFO measures set forth below are non-GAAP measures.  The table below provides a reconciliation of such FFO measures to earnings per share, the most directly comparable GAAP measure.

 

Guidance for the Year Ended December 31, 2012


Reported on July 30, 2012


Reported on May 1, 2012


    Earnings per share attributable to Alexandria Real Estate Equities, Inc.'s common 
      stockholders – diluted


$1.36 - $1.46

 


$1.36 - $1.46

 


    Depreciation and amortization


$2.93 - $2.99


$2.84 - $2.90


    Gain on sales of property


$ (0.03)


$ (0.03)


    FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common
     stockholders – diluted


$4.32 - $4.36


$4.23 - $4.27


    Write-off of unamortized loan fees upon early retirement of the 2012 Unsecured Senior

       Bank Term Loan


$0.01


$0.01


    Write-off of unamortized loan fees upon modification of unsecured senior line of credit


$0.03


$0.03


    Preferred stock redemption charge


$0.10


$0.10


    Realized gain on equity investment primarily related to one non-tenant life science
       entity


$(0.09)



    FFO per share attributable to Alexandria Real Estate Equities, Inc.'s
        common stockholders – diluted, as adjusted


$4.37 - $4.41


$4.37 - $4.41








Key net operating income projection assumptions






    Same property net operating income growth – cash basis


3% to 5%


3% to 5%


    Same property net operating income growth – GAAP basis


0% to 2%


0% to 2%


    Rental rate steps on lease renewals and re-leasing of space – cash basis


Slightly negative/positive


Slightly negative/positive


    Rental rate steps on lease renewals and re-leasing of space – GAAP basis


Up to 5%


Up to 5%


    Straight-line rents


$6.5 million/qtr


$6.5 million/qtr


    Amortization of above and below market leases


$0.8 million/qtr


$0.8 million/qtr


    Realized gain on equity investment primarily related to one non-tenant life science
        entity


$5.8 million









Key expense and other projection assumptions






    General and administrative expenses in comparison to prior year


Up 12% to 14%


Up 12% to 14%


    Capitalization of interest


$56 to $62 million


$55.5 to $61.5 million


    Interest expense, net


$72 to $78 million


$73 to $79 million


 

 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Second Quarter Ended June 30, 2012, Financial and Operating Results

(Unaudited)

Net operating income, net income, and FFO for the three months ended December 31, 2012

As of June 30, 2012, we had approximately $290.3 million and $275.1 million of construction in progress related to our six North American development and 10 North American redevelopment projects, respectively. The completion of these projects, along with recently delivered projects, certain future projects, and contributions from same properties, are expected to contribute significant increases in rental income, net operating income, and cash flows.  Net operating income is projected to increase quarter to quarter, from $103.8 million for the three months ended June 30, 2012 (before the realized gain of $5.8 million on an equity investment primarily related to one non-tenant life science entity) to a range from $110.5 million to $112.5 million for the three months ended December 31, 2012.  Operating performance assumptions related to the completion of our North America development and redevelopment projects, including the timing of initial occupancy, stabilization dates, and stabilization yields, are included on page 8.  Certain key assumptions regarding our projections, including the impact of various development and redevelopment projects, are included in the tables on the preceding page and below. 

The completion of our development and redevelopment projects will result in increased interest expense and other direct project costs, because these project costs will no longer qualify for capitalization and these costs will be expensed as incurred.  Our projections for general and administrative expenses, capitalization of interest, and interest expense, net, are included in the table on the preceding page and below.  Our projections of net operating income are subject to a number of variables and uncertainties, including those discussed under the "Forward-looking Statements" section of Part I, the "Risk Factors" section of Item 1A, and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section under Item 7, of our annual report on Form 10-K for the year ended December 31, 2011.  To the extent our full year earnings guidance is updated during the year, we will provide additional disclosure supporting reasons for any significant changes to such guidance.  Further, we believe net operating income is a key performance indicator and is useful to investors as a performance measure because, when compared across periods, net operating income reflects the impact on operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not immediately apparent from income from continuing operations.

 

Three Months Ended December 31, 2012 (in millions, except per share amounts)


Reported on July 30, 2012


Reported on May 1, 2012


Net operating income


$110.5 – $112.5


$111.0 – $113.0


General and administrative


$11.0 – $12.0


$11.0 – $12.0


Interest


$19.5 – $22.5


$20.0 – $23.0


Depreciation and amortization


$42.6 – $47.7


$42.6 – $47.7


Preferred stock dividends


$6.5


$6.5


Other


$1.0 – $1.4


$1.0 – $1.4


Net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders


$26.9 – $30.9


$26.9 – $30.9


FFO


$71.1 – $73.0


$71.1 – $73.0


FFO per share – diluted


$1.15 – $1.17


$1.15 – $1.17


Sources and uses of capital

We expect that our principal liquidity needs for the year ended December 31, 2012, will be satisfied by the following multiple sources of capital as shown in the table below.  There can be no assurance that our sources and uses of capital will not be materially higher or lower than these expectations.  Our liquidity available under our unsecured senior line of credit and from cash equivalents was approximately $1.2 billion as of June 30, 2012.



Reported on

July 30, 2012


Reported on

May 1, 2012



Sources and Uses of Capital for the Year Ended December 31, 2012 (in millions)


Completed


Projected


Total


Total



Sources of capital











        Net cash provided by operating activities less dividends


$                     41


$                     40


$                  81

(1)

$                    76



        Asset and land sales


41


71

(2)

112


112



        Unsecured senior notes payable


550



550


550



        Borrowings on secured construction financing



24


24


24



        Series E Preferred Stock issuance


125



125


125



        Issuances under "at the market" common stock offering program


40


(3)

40




        Debt, equity, and joint venture capital


(12)

(4)

248

(5)

236


247



Total sources of capital


$                   785


$                   383


$             1,168


$                1,134














Uses of capital











        Development, redevelopment, and construction


$                   269


$                   377


$                646

(6)

$                   612



        Acquisitions


46



46


46



        Secured debt repayments


5


6


11

(7)

11



        2012 Unsecured Senior Bank Term Loan repayment


250



250


250



        3.70% Unsecured Senior Convertible Notes repurchase


85



85


85



        Series C Preferred Stock redemption


130



130


130



Total uses of capital


$                   785


$                   383


$             1,168


$                1,134














(1)       See tables of "Key net operating income projection assumptions" and "Key expense and other projection assumptions" on the preceding page.

(2)       Represents an estimate of sources of capital from asset and land sales, including assets "held for sale" at contract price of $22 million as of June 30, 2012.

(3)       See "Debt, equity, and joint venture capital."

(4)       Represents additional amounts used to pay down outstanding borrowings on our unsecured line of credit.

(5)       Represents an estimate of sources of capital primarily consisting of borrowings under our unsecured senior line of credit and proceeds from our "at the market" common
            stock offering program.

(6)       See "Investment to Complete" columns in the tables related to construction in progress (page 8) for additional details underlying this estimate.

(7)       Based upon contractually scheduled payments or maturity dates.

The key assumptions behind the sources and uses of capital in the table above are a favorable capital market environment and performance of our core operations in areas such as delivery of current and future development and redevelopment projects, leasing activity, and renewals.  Our expected sources and uses of capital are subject to a number of variables and uncertainties, including those discussed under the "Forward-looking statements" section of Part I, the "Risk Factors" section of Item 1A, and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section under Item 7, of our annual report on Form 10-K for the year ended December 31, 2011.  We expect to update our forecast of sources and uses of capital on a quarterly basis.

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Development and Redevelopment in North America

June 30, 2012

(Tabular dollar amounts in thousands)

(Unaudited)



Project RSF


Leased Status RSF


Investment


Stabilized Yield





















June 30, 2012


To Complete











Market/


In














Leased/

Negotiating










Total at




Project

Start


Occu-

pancy


Stabili-

zation

Property


Service


CIP


Total


Leased


Negotiating


Marketing


Total


%


In Service


CIP


2012


Thereafter


Completion


Cash


GAAP


Date


Date


Date

Greater Boston – Cambridge





































225 Binney Street



303,143


303,143


303,143




303,143


100%


$          −


$   67,125


$   34,043


$   79,105


$   180,273


7.5%


8.1%


4Q11


4Q13


4Q13






































San Francisco Bay – Mission Bay





































499 Illinois Street



222,780


222,780




222,780


222,780



$          −


$ 109,309


$     8,544


$   30,247


$   148,100


6.7%


7.4%


2Q11


2Q13


2Q14






































San Francisco Bay – South SF





































259 East Grand Avenue



170,618


170,618


170,618




170,618


100%


$          −


$   28,599


$   25,371

(1)

$   26,891

(1)

$     80,861


7.8-8.2%


7.8-8.2%


1Q12


1Q13


1Q13

400/450 East Jamie Court


77,503


85,533


163,036


127,732



35,304


163,036


78%


$   48,303


$   48,537


$   10,047


$     1,603


$   108,490


4.2%


4.3%


4Q06


3Q11


2Q13

Other - 400/450 East Jamie Court (2)


















$   15,380


$  (15,380)






















































San Diego – University Town Center





































4755 Nexus Center Drive



45,255


45,255


45,255




45,255


100%


$          −


$   13,812


$     6,916


$     1,613


$     22,341


7.0%


7.7%


1Q11


3Q12


3Q12

5200 Illumina Way



127,373


127,373


127,373




127,373


100%


$          −


$   38,287


$     9,866


$     1,147


$     49,300


7.0%


10.8%


4Q10


4Q12


4Q12

Development projects in North America


77,503


954,702


1,032,205


774,121



258,084


1,032,205


75%


$   63,683


$ 290,289


$   94,787


$ 140,606


$   589,365
















































Greater Boston – Cambridge





































400 Technology Square



212,123


212,123


108,129


50,242


53,752


212,123


75%


$          −


$   92,962


$   28,432


$   18,156


$   139,550


8.1%


9.1%


4Q11


4Q12


4Q13






































San Diego – University Town Center





































10300 Campus Point Drive


89,576


189,562


279,138


261,412



17,726


279,138


94%


$   39,208


$   29,492


$   52,625


$   10,275


$   131,600


7.6%


7.7%


4Q10


4Q11


3Q12






































Seattle – Lake Union





































1551 Eastlake Avenue


65,342


52,141


117,483


65,342


8,000


44,141


117,483


62%


$   34,776


$   20,400


$     8,806


$         28


$     64,010


6.7%


6.7%


4Q11


4Q11


4Q13






































Suburban and other redevelopment projects


31,624


358,679


390,303


146,956


120,827


122,520


390,303


69%


$   18,316


$ 155,639


$   41,044


$   23,091


$   238,090











Other – suburban and other redevelopment projects (2)


















$   23,407


$  (23,407)

















Redevelopment projects in North America


186,542


812,505


999,047


581,839


179,069


238,139


999,047


76%


$ 115,707


$ 275,086


$ 130,907


$   51,550


$   573,250
















































Total development and redevelopment
projects in North America


264,045


1,767,207


2,031,252


1,355,960


179,169


496,223


2,031,252


76%


$ 179,390


$ 565,375


$ 225,694


$ 192,156


$ 1,162,615
















































(1)   Funding for this project will be primarily provided by the $55 million secured construction loan we closed in June 2012.

(2)   As of the period end, some portion of the real estate basis associated with the rentable square feet under redevelopment or development was classified as in service because activities necessary to prepare the asset for its intended use were no longer in progress.  In the near future, we anticipate recommencing activities necessary to prepare the asset for its intended use upon execution of leasing and
       final decisions related to design of each space.


ALEXANDRIA REAL ESTATE EQUITIES, INC.

Second Quarter Ended June 30, 2012, Financial and Operating Results

EARNINGS CALL INFORMATION

We will host a conference call on Tuesday, July 31, 2012, at 3:00 p.m. Eastern Time ("ET")/12:00 p.m. noon Pacific Time ("PT") that is open to the general public to discuss our financial and operating results for the three months and six months ended June 30, 2012.  To participate in this conference call, dial (800) 299-7635 or (617) 786-2901 and confirmation code 39831544, shortly before 3:00 p.m. ET/12:00 p.m. noon PT.  The audio web cast can be accessed at: www.are.com, in the For Investors section.  A replay of the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT on Tuesday, July 31, 2012.  The replay number is (888) 286-8010 or (617) 801-6888 and the confirmation code is 54524950.

Additionally, a copy of this Earnings Press Release and Supplemental Information for second quarter ended June 30, 2012, are available in the For Investors section of our website at www.are.com.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE: ARE), a self-administered and self-managed REIT, is the largest and leading investment-grade REIT focused principally on owning, operating, redeveloping, developing, and acquiring high-quality, sustainable real estate for the broad and diverse life science industry.  Founded in 1994, Alexandria was the first REIT to identify and pursue the laboratory niche and has since had the first-mover advantage in every core life science cluster location including Greater Boston, San Francisco Bay, San Diego, New York City, Seattle, Suburban Washington, D.C., and Research Triangle Park. Alexandria's high-credit client tenants span the life science industry, including renowned academic and medical institutions, multinational pharmaceutical companies, public and private biotechnology entities, United States government research agencies, medical device companies, clean technology companies, venture capital firms, and life science product and service companies. As the recognized real estate partner of the life science industry, Alexandria has a superior track record in driving client tenant productivity and innovation through its best-in-class laboratory and office space, collaborative locations adjacent to leading academic and medical institutions, unparalleled life science real estate expertise and services, and longstanding and expansive network in the life science community, which we believe result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria Real Estate Equities, Inc., please visit www.are.com.

***********

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Such forward-looking statements include, without limitation, statements regarding our 2012 earnings per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted, 2012 FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted, net operating income, and net income, for the year ended December 31, 2012, and our projected sources and uses of capital in 2012.  Our actual results may differ materially from those projected in such forward-looking statements.  Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development, our failure to successfully operate or lease acquired properties, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, general and local economic conditions, and other risks and uncertainties detailed in our filings with the SEC.  All forward-looking statements are made as of the date of this press release, and we assume no obligation to update this information.  For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)



Three Months Ended


Six Months Ended




6/30/12


3/31/12


12/31/11


9/30/11


6/30/11


6/30/12


6/30/11


Revenues
















Rental


$       110,683


$       107,584


$       108,840


$       106,414


$       109,248


$       218,267


$       215,300


Tenant recoveries


34,041


34,522


35,124


35,076


33,147


68,563


66,008


Other income


9,381


2,629


1,584


2,475


926


12,010


1,703


Total revenues


154,105


144,735


145,548


143,965


143,321


298,840


283,011


















Expenses
















Rental operations


44,506


43,382


43,932


42,959


40,595


87,888


81,630


General and administrative


12,324


10,361


10,603


10,296


10,764


22,685


20,258


Interest


17,922


16,227


14,757


14,273


16,567


34,149


34,377


Depreciation and amortization


52,316


43,366


40,846


39,809


40,173


95,682


76,716


Total expenses


127,068


113,336


110,138


107,337


108,099


240,404


212,981


Income from continuing operations before loss on early
  extinguishment of debt


27,037


31,399


35,410


36,628


35,222


58,436


70,030


















Loss on early extinguishment of debt


(1,602)


(623)



(2,742)


(1,248)


(2,225)


(3,743)


Income from continuing operations


25,435


30,776


35,410


33,886


33,974


56,211


66,287


















Income (loss) from discontinued operations, net


206


135


52


(937)


337


341


649


















Gain on sale of land parcel



1,864



46



1,864



Net income


25,641


32,775


35,462


32,995


34,311


58,416


66,936


















Net income attributable to noncontrolling interests


851


711


1,142


966


938


1,562


1,867


Dividends on preferred stock


6,903


7,483


7,090


7,089


7,089


14,386


14,178


Preferred stock redemption charge



5,978





5,978



Net income attributable to unvested restricted stock awards


271


235


270


278


298


506


540


Net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders


$         17,616


$         18,368


$         26,960


$         24,662


$         25,986


$         35,984


$         50,351


















Earnings per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – basic and diluted
















Continuing operations


$            0.29


$            0.30


$            0.44


$            0.42


$            0.43


$            0.57


$            0.88


Discontinued operations, net





(0.02)


0.01


0.01


0.01


Earnings per share – basic and diluted


$            0.29


$            0.30


$            0.44


$            0.40


$            0.44


$            0.58


$            0.89


















Weighted average shares of common stock
         outstanding for calculating earnings per share
         attributable to Alexandria Real Estate Equities,
         Inc.'s common stockholders – basic


61,663,367


61,507,807


61,427,495


61,295,659


58,500,055


61,585,587


56,734,012


Dilutive effect of stock options


173


1,160


3,939


8,310


13,067


667


16,261


Weighted average shares of common stock
         outstanding for calculating earnings per share
         attributable to Alexandria Real Estate Equities,
         Inc.'s common stockholders – diluted


61,663,540


61,508,967


61,431,434


61,303,969


58,513,122


61,586,254


56,750,273


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

 



June 30,


March 31,


December 31,


September 30,


June 30,




2012


2012


2011


2011


2011


                          Assets












Investments in real estate, net


$          6,208,354


$          6,113,252


$          6,008,440


$          5,925,292


$          5,855,352


Cash and cash equivalents


80,937


77,361


78,539


73,056


60,925


Restricted cash


41,897


39,803


23,332


27,929


23,432


Tenant receivables


6,143


8,836


7,480


6,599


4,487


Deferred rent


155,295


150,515


142,097


132,954


125,867


Deferred leasing and financing costs, net


151,355


143,754


135,550


134,366


130,147


Investments


104,454


98,152


95,777


88,777


88,862


Other assets


93,304


86,418


82,914


66,583


54,212


Total assets


$          6,841,739


$          6,718,091


$          6,574,129


$          6,455,556


$          6,343,284














              Liabilities, Noncontrolling Interests, and Equity












Secured notes payable


$             719,977


$             721,715


$             724,305


$             760,882


$             774,691


Unsecured senior notes payable


549,783


550,772


84,959


84,484


203,638


Unsecured senior line of credit


379,000


167,000


370,000


814,000


575,000


Unsecured senior bank term loans


1,350,000


1,350,000


1,600,000


1,000,000


1,000,000


Accounts payable, accrued expenses, and tenant security deposits


348,037


323,002


325,393


330,044


300,030


Dividends payable


38,357


36,962


36,579


35,287


34,068


Preferred stock redemption liability



129,638





Total liabilities


3,385,154


3,279,089


3,141,236


3,024,697


2,887,427














Commitments and contingencies
























Redeemable noncontrolling interests


15,817


15,819


16,034


15,931


15,899














Alexandria Real Estate Equities, Inc.'s stockholders' equity:












Series C Preferred Stock




129,638


129,638


129,638


Series D Convertible Preferred Stock


250,000


250,000


250,000


250,000


250,000


Series E Preferred Stock


130,000


130,000





Common stock


622


616


616


614


614


Additional paid-in capital


3,053,269


3,022,242


3,028,558


3,025,444


3,024,603


Retained earnings







Accumulated other comprehensive loss


(37,370)


(23,088)


(34,511)


(32,202)


(6,272)


Alexandria Real Estate Equities, Inc.'s stockholders' equity


3,396,521


3,379,770


3,374,301


3,373,494


3,398,583


Noncontrolling interests


44,247


43,413


42,558


41,434


41,375


Total equity


3,440,768


3,423,183


3,416,859


3,414,928


3,439,958


Total liabilities, noncontrolling interests, and equity


$          6,841,739


$          6,718,091


$          6,574,129


$          6,455,556


$          6,343,284


 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Funds From Operations and Adjusted Funds From Operations

(Dollars in thousands, except per share amounts)

(Unaudited)

The following table presents a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − basic, the most directly comparable financial measure presented in accordance with GAAP, to FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted, FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, as adjusted, and AFFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted for the periods below:



Three Months Ended


Six Months Ended




6/30/12


3/31/12


12/31/11


9/30/11


6/30/11


6/30/12


6/30/11


Net income attributable to Alexandria Real Estate Equities, Inc.'s common
      stockholders – basic


$          17,616


$          18,368


$          26,960


$          24,662


$          25,986


$          35,984


$          50,351


      Depreciation and amortization


52,355


43,405


40,966


39,990


40,363


95,760


77,070


      Gain on sale of land parcel



(1,864)



(46)



(1,864)



      Gain on sale of real estate


(2)






(2)



      Impairment of real estate





994





      Amount attributable to noncontrolling interests/unvested stock awards:
















            Net income


1,122


946


1,412


1,244


1,236


2,068


2,407


            FFO


(1,133)


(1,156)


(1,539)


(1,580)


(1,671)


(2,305)


(3,283)


FFO attributable to Alexandria Real Estate Equities, Inc.'s common

      stockholders – basic


69,958


59,699


67,799


65,264


65,914


129,641


126,545


      Assumed conversion of 8.00% Unsecured Senior Convertible Notes


6


5


5


4


7


11


12


FFO attributable to Alexandria Real Estate Equities, Inc.'s common

      stockholders – diluted


69,964


59,704


67,804


65,268


65,921


129,652


126,557


Realized gain on equity investment primarily related to one non-tenant life        science entity

(5,811)






(5,811)



Subtotal


64,153


59,704


67,804


65,268


65,921


123,841


126,557


      Loss on early extinguishment of debt


1,602


623



2,742


1,248


2,225


3,743


      Preferred stock redemption charge



5,978





5,978



      Allocation to unvested restricted stock awards


35


(53)



(38)


(12)


(20)


(32)


FFO attributable to Alexandria Real Estate Equities, Inc.'s common

      stockholders – diluted, as adjusted


$          65,790


$          66,252


$          67,804


$          67,972


$          67,157


$        132,024


$        130,268


















      Non-incremental revenue-enhancing capital expenditures:
















       Building improvements


(594)


(210)


(675)


(550)


(698)


(804)


(1,306)


            Tenant improvements and leasing commissions


(2,148)


(2,019)


(6,083)


(2,119)


(1,595)


(4,167)


(2,398)


      Straight-line rent


(5,195)


(8,796)


(9,558)


(7,647)


(2,885)


(13,991)


(9,592)


      Straight-line rent on ground leases


1,207


1,406


1,221


1,143


1,099


2,613


2,340


      Capitalized income from development projects


72


478


537


930


1,078


550


2,506


      Amortization of acquired above and below market leases


(778)


(800)


(812)


(940)


(2,726)


(1,578)


(7,580)


      Amortization of loan fees


2,214


2,643


2,551


2,144


2,327


4,857


4,605


      Amortization of debt premiums/discounts


110


179


565


750


1,169


289


2,504


      Stock compensation


3,274


3,293


3,306


3,344


2,749


6,567


5,105


      Allocation to unvested restricted stock awards


15


31


80


31


(4)


48


33


AFFO attributable to Alexandria Real Estate Equities, Inc.'s common
      stockholders – diluted


$          63,967


$          62,457


$          58,936


$          65,058


$          67,671


$        126,408


$        126,485


The following table presents a reconciliation of net income per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − basic, to FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted, FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, as adjusted, and AFFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted for the periods below.  For the computation of the weighted average shares used to compute the per share information, refer to the "Definitions and Other Information" section in our supplemental information:



Three Months Ended


Six Months Ended




6/30/12


3/31/12


12/31/11


9/30/11


6/30/11


6/30/12


6/30/11


Net income per share attributable to Alexandria Real Estate Equities, Inc.'s common
      stockholders – basic


$               0.29


$               0.30


$               0.44


$               0.40


$               0.44


$               0.58


$               0.89


      Depreciation and amortization


0.84


0.70


0.67


0.65


0.70


1.56


1.36


      Gain on sale of land parcel



(0.03)





(0.03)



      Impairment of real estate





0.02





      Amount attributable to noncontrolling interests/unvested stock awards:
















            Net income


0.02


0.02


0.02


0.02


0.02


0.03


0.04


            FFO


(0.02)


(0.02)


(0.03)


(0.03)


(0.03)


(0.04)


(0.06)


FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common

      stockholders – basic


1.13


0.97


1.10


1.06


1.13


2.11


2.23


Assumed conversion of 8.00% Unsecured Senior Convertible Notes









FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common

      stockholders – diluted


1.13


0.97


1.10


1.06


1.13


2.11


2.23


Realized gain on equity investment primarily related to one non-tenant life
      science entity

(0.09)






(0.09)



Subtotal


1.04


0.97


1.10


1.06


1.13


2.02


2.23


      Loss on early extinguishment of debt


0.03


0.01



0.05


0.02


0.03


0.07


      Preferred stock redemption charge



0.10





0.10



      Allocation to unvested restricted stock awards









FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common

      stockholders – diluted, as adjusted


$               1.07


$               1.08


$               1.10


$               1.11


$               1.15


$               2.14


$               2.30


















      Non-incremental revenue-enhancing capital expenditures:
















       Building improvements


(0.01)



(0.01)


(0.01)


(0.01)


(0.01)


(0.02)


            Tenant improvements and leasing commissions


(0.03)


(0.03)


(0.10)


(0.03)


(0.03)


(0.07)


(0.04)


      Straight-line rent


(0.08)


(0.14)


(0.16)


(0.12)


(0.05)


(0.23)


(0.17)


      Straight-line rent on ground leases


0.02


0.02


0.02


0.02


0.02


0.04


0.04


      Capitalized income from development projects



0.01


0.01


0.02


0.02


0.01


0.04


      Amortization of acquired above and below market leases


(0.01)


(0.01)


(0.01)


(0.02)


(0.05)


(0.03)


(0.13)


      Amortization of loan fees


0.03


0.04


0.05


0.03


0.04


0.09


0.08


      Amortization of debt premiums/discounts




0.01


0.01


0.02



0.04


      Stock compensation


0.05


0.05


0.05


0.05


0.05


0.11


0.09


      Allocation to unvested restricted stock awards









AFFO per share attributable to Alexandria Real Estate Equities, Inc.'s common
      stockholders – diluted


$               1.04


$               1.02


$               0.96


$               1.06


$               1.16


$               2.05


$               2.23



 

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Non-GAAP Measures

(Unaudited)

Funds from operations and funds from operations, as adjusted

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 FFO.  Since its introduction, FFO has become a widely used non-GAAP financial measure among equity REITs.  We believe that FFO is helpful to investors as an additional measure of the performance of an equity REIT.  Moreover, we believe that FFO, as adjusted is also helpful because it allows investors to compare our performance to the performance of other real estate companies between periods, and on a consistent basis, without having to account for differences caused by investment decisions, financing decisions, terms of securities, capital structures, and capital market transactions. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its April 2002 White Paper and related implementation guidance ("NAREIT White Paper"). The NAREIT White Paper defines FFO as net income (computed in accordance with GAAP), excluding gains from sales and real estate impairment losses, plus real estate related depreciation and amortizati