Alexandria Real Estate Equities, Inc. Reports First Quarter Ended March 31, 2012 Financial and Operating Results

PASADENA, Calif., May 1, 2012 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced financial and operating results for the first quarter ended March 31, 2012.

First Quarter Ended March 31, 2012 Highlights

Results

• Funds From Operations Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders Before Loss on Early Extinguishment of Debt and Preferred Stock Redemption Charge – Diluted for the Three Months Ended March 31, 2012, was $66.3 Million, or $1.08 Per Share
• Adjusted Funds from Operations Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted for the Three Months Ended March 31, 2012, was $62.5 million, or $1.02 Per Share
• Net Income Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders – Diluted, for the Three Months Ended March 31, 2012, was $18.4 Million, or $0.30 Per Share

Significant Balance Sheet Management Milestones

• Completed Debut 4.6% Unsecured Senior Notes Offering with Aggregate Net Proceeds of $544.6 Million; Net Proceeds From Offering Were Used to Repay Certain Outstanding Variable Rate Bank Debt
• Completed 6.45% Series E Perpetual Preferred Stock Offering with Aggregate Net Proceeds of $124.9 Million; Net Proceeds From Offering Were Used to Redeem $129.6 Million of Outstanding 8.375% Series C Perpetual Preferred Stock in April 2012
• Lowered Interest Rate and Extended Maturity Date to April 2017 Pursuant to Amendment to $1.5 Billion Unsecured Senior Line of Credit in April 2012
• Assets Under Contract For Sale and Completed Asset Sales Aggregating Total Sale Price of $47.4 Million, or 42%, of $112 Million Sales Target for 2012
• Reduced Unhedged Variable Rate Debt to 5% of Total Debt

Core Operating Metrics

• Total Revenues for the Three Months Ended March 31, 2012, Were $145.0 Million, as Compared to Total Revenues for the Three Months Ended December 31, 2011, of $145.8 Million, and Total Revenues for the Three Months Ended March 31, 2011, of $139.9 Million
• Net Operating Income ("NOI") for the Three Months Ended March 31, 2012, was $101.6 Million, Compared to NOI for the Three Months Ended December 31, 2011, of $101.8 Million, and NOI for the Three Months Ended March 31, 2011, of $98.9 Million
• Operating Margins were Solid at 70%
• Solid Life Science Space Demand in Key Cluster Markets; Executed 63 Leases for 912,000 Rentable Square Feet, Including 394,000 Rentable Square Feet of Redevelopment and Development Space
  • Fourth Highest Quarter of Leasing Activity in Company History 
  • Rental Rate Increase of 3.3% and Decrease of 2.8% on a GAAP and Cash Basis, Respectively, on Renewed/Re-leased Space; Excluding One Lease for 18,000 Rentable Square Feet Related to One Tenant in the Sorrento Valley Submarket in San Diego, Rental Rates for Renewed/Re-Leased Space Were on Average 7.6% and 1.1% Higher than Rental Rates for Expiring Leases on a GAAP and Cash Basis, Respectively
  • Key Life Science Space Leasing
    • Dana-Farber Cancer Institute, Inc. Leased 154,000 Rentable Square Feet of a Multi-Tenant Development in the Greater Boston Market
    • Onyx Pharmaceuticals, Inc. Leased 171,000 Rentable Square Feet Build-to-Suit Development in the San Francisco Bay Market
    • Hamner Institute Leased 100,000 Rentable Square Feet Building in the Research Triangle Park Market
    • Illumina, Inc. Leased 23,000 Rentable Square Feet Development Expansion in the San Diego Market
  • 46% of Annualized Base Rent From Investment Grade Tenants
  • Cash and GAAP Same Property Revenues Less Operating Expenses Increase of 1.7% and Decrease of 0.7%, Respectively
  • Occupancy Percentage for Operating Properties of 94.2% and Occupancy Percentage for Operating and Redevelopment Properties of 87.9%

Value-Added Opportunities and External Growth

• 100% Leased on Five of Seven Ground-Up Development Projects Aggregating 987,000 Rentable Square Feet, Including Commencement of 100% Pre-leased 171,000 Rentable Square Feet Single Tenant Ground-Up Development Project in the San Francisco Bay Market
• 63% Leased/Negotiating on 11 Redevelopment Projects Aggregating 910,000 Rentable Square Feet

Significant Announcements

• In April 2012, our Board of Directors Elected Maria C. Freire, Ph.D., as a Director of the Company
• On May 28, 2012, the Company Will Celebrate its 15th Anniversary as an NYSE Listed Company
  

ALEXANDRIA REAL ESTATE EQUITIES, INC.
First Quarter Ended March 31, 2012, Financial and Operating Results
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RESULTS

Funds from operations ("FFO")

FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders before loss on early extinguishment of debt and preferred stock redemption charge – diluted, for the three months ended March 31, 2012, was $66.3 million, or $1.08 per share, compared to FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders before loss on early extinguishment of debt – diluted, for the three months ended December 31, 2011, of $67.8 million, or $1.10 per share, and FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders before loss on early extinguishment of debt – diluted, for the three months ended March 31, 2011, of $63.1 million, or $1.15 per share.

Adjusted funds from operations ("AFFO")|

AFFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, for the three months ended March 31, 2012, was $62.5 million, or $1.02 per share, compared to AFFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, for the three months ended December 31, 2011, of $58.9 million, or $0.96 per share, and AFFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, for the three months ended March 31, 2011, of $58.8 million, or $1.07 per share.

Earnings per share

Net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, for the three months ended March 31, 2012, was $18.4 million, or $0.30 per share, compared to net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, for the three months ended December 31, 2011, of $27.0 million, or $0.44 per share, and net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted, for the three months ended March 31, 2011, of $24.4 million, or $0.44 per share.

ALEXANDRIA REAL ESTATE EQUITIES, INC.
First Quarter Ended March 31, 2012, Financial and Operating Results
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Items impacting comparability of results

During the three months ended March 31, 2012, we recognized a loss on early extinguishment of debt of approximately $0.6 million related to the write-off of unamortized loan fees, as a result of the early repayment of our unsecured senior bank term loan ("2012 Unsecured Senior Bank Term Loan"). We also recognized a gain on sale of a land parcel of approximately $1.9 million. See Sale of Land Parcel on the following page for further details. In addition, in March 2012, we elected to redeem all outstanding shares of our 8.375% Series C Preferred Stock ("Series C Preferred Stock"), and recognized a preferred stock redemption charge of approximately $6.0 million. See 6.45% Series E Preferred Stock Offering on the following page.

During the three months ended March 31, 2011, we recognized an aggregate loss on early extinguishment of debt of approximately $2.5 million related to the repurchase, in privately negotiated transactions, of approximately $96.1 million of certain of our 3.70% unsecured senior convertible notes ("3.70% Unsecured Senior Convertible Notes").

The following table highlights certain items noted above impacting comparability of results (in thousands):

SIGNIFICANT BALANCE SHEET MANAGEMENT MILESTONES

Debut 4.60% investment grade unsecured bond offering

During the three months ended March 31, 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 outstanding variable rate bank debt, including $250 million of our 2012 Unsecured Senior Bank Term Loan, and approximately $294.6 million of outstanding borrowings under our unsecured senior line of credit.

Debt repayments

During the three months ended March 31, 2012, we retired substantially all of our 3.70% Unsecured Senior Convertible Notes and the entire $250 million outstanding balance on our 2012 Unsecured Senior Bank Term Loan.  In conjunction 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, 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 this maturity date twice by an additional six months after each exercise. Borrowing under the unsecured senior line of credit will bear interest at London Interbank Offered Rate ("LIBOR") or the base rate specified in the amended 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 initially 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.
First Quarter Ended March 31, 2012, Financial and Operating Results
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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 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 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 March 2012, we called for redemption all 5,185,500 outstanding shares of our 8.375% Series C Preferred Stock at a redemption price equal to $25.00 per share plus $0.5234375 per share representing accumulated and unpaid dividends to the redemption date on April 13, 2012.  The preferred stock redemption liability included in the accompanying condensed consolidated balance sheet as of March 31, 2012, reflects the Series C Preferred Stock at its redemption amount of $129.6 million, excluding the portion relating to the accumulated and unpaid dividends.  As a result of calling our Series C Preferred Stock for redemption in March 2012, we recognized a preferred stock redemption charge of approximately $6.0 million for costs related to the issuance and redemption of our Series C Preferred Stock.  This amount represents the excess of the fair value of the consideration transferred to the holders over the carrying amount of the preferred stock.  The accumulated and unpaid dividends relating to the Series C Preferred Stock as of March 31, 2012, have been included in dividends payable in the accompanying condensed consolidated balance sheet.  The Series C Preferred Stock was redeemed on April 13, 2012.

Real estate asset sales

Sale of land parcel

In March 2012, we contributed our 55% ownership interest in a land parcel aggregating 414,000 developable square feet in the Longwood Medical Area into a newly formed joint venture (the "Restated JV") with National Development, Charles River Realty Investors, and a newly admitted member, Clarion Partners, LLC, resulting in a reduction of our ownership interest from 55% to 27.5%.  In connection with the sale of 27.5% 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.   Our 27.5% share of the land was valued at approximately $31 million (including closing costs), or approximately $275 per developable square foot.  Upon formation of the Restated JV, the existing $38.4 million non-recourse secured loan was refinanced with a seven-year (including two one-year extension options) non-recourse $213 million construction loan with initial loan proceeds of $50 million.  We do not expect 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 is expected to commence early in the second quarter of 2012 and the project is 37% pre-leased to Dana-Farber Cancer Institute, Inc.  In addition, we expect to earn development and other fees of approximately $3.5 million through 2015, and recurring annual property management fees thereafter.

Assets held for sale

As of March 31, 2012, we had three properties classified as "held for sale" at an aggregate contract price of $16 million with an aggregate net book value of approximately $14.5 million.

ALEXANDRIA REAL ESTATE EQUITIES, INC.
First Quarter Ended March 31, 2012, Financial and Operating Results
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Investment grade ratings and key credit metrics

In July 2011, we received investment grade ratings from two major rating agencies.  Receipt of our investment grade ratings was a significant milestone for the Company that we believe will provide long-term value to our stockholders.  Key strengths of our balance sheet and business which highlight our investment grade credit profile include, among others, balance sheet liquidity, diverse and credit worthy tenant base, well located properties proximate to leading research institutions, favorable lease terms, stable occupancy and cash flows, and demonstrated life science and real estate expertise.  This significant milestone broadens our access to another key source of debt capital and allows us to continue to pursue our long-term capital, investment, and operating strategies.  The issuance of investment grade unsecured senior notes payable has allowed us to begin the transition from bank debt financing to unsecured senior notes payable, from variable rate debt to fixed rate debt, and from short-term debt to long-term debt. While this transition of bank debt is in process, we will utilize interest rate swap agreements to reduce our interest rate risk. We expect to keep our unhedged variable rate debt at less than 20% of our total debt.

CORE OPERATING METRICS

Total revenues, net operating income, and operating margins

Total revenues for the three months ended March 31, 2012, were $145.0 million, as compared to total revenues for the three months ended December 31, 2011, of $145.8 million, and total revenues for the three months ended March 31, 2011, of $139.9 million.  NOI for the three months ended March 31, 2012, was $101.6 million, compared to NOI for the three months ended December 31, 2011, of $101.8 million, and NOI for the three months ended March 31, 2011, of $98.9 million.  The operating margins for the three months ended March 31, 2012, were 70%, compared to the operating margins for the three months ended December 31, 2011, of 70%, and the operating margins for the three months ended March 31, 2011, of 71%. 

Strong demand in key cluster submarkets drives solid leasing activity

For the three months ended March 31, 2012, we executed a total of 63 leases for approximately 912,000 rentable square feet at 45 different properties (excluding month-to-month leases).  Of this total, approximately 275,000 rentable square feet related to new or renewal leases of previously leased space (renewed/re-leased space) and approximately 637,000 rentable square feet related to developed, redeveloped, or previously vacant space.  Of the 637,000 rentable square feet, approximately 394,000 rentable square feet related to our development or redevelopment programs, with the remaining approximately 243,000 rentable square feet related to previously vacant space.  Rental rates for these new or renewal leases of previously leased space (renewed/re-leased space) were on average approximately 2.8% lower on a cash basis and approximately 3.3% higher on a U.S generally accepted accounting principles ("GAAP") basis than rental rates for the respective expiring leases.

Key life science space leasing:

• leased 154,000 rentable square feet of a multi-tenant development to Dana-Farber Cancer Institute, Inc. in the Greater Boston market
• leased 171,000 rentable square feet build-to-suit development to Onyx Pharmaceuticals, Inc. in the San Francisco Bay market
• leased 100,000 rentable square feet building to the Hamner Institute in the Research Triangle Park market
• leased 23,000 rentable square feet development expansion to Illumina, Inc. in the San Diego market

ALEXANDRIA REAL ESTATE EQUITIES, INC.
First Quarter Ended March 31, 2012, Financial and Operating Results
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Strong demand in key cluster submarkets drives solid leasing activity (continued)

Same property performance

Stable occupancy percentage

Client tenant base

The quality, diversity, breadth, and depth of our significant relationships with our life science client tenants provide the Company with solid cash flows. As of March 31, 2012, our multinational pharmaceutical client tenants represented approximately 26% of our annualized base rent, led by Novartis AG, Eli Lilly and Company, Roche Holding Ltd, Bristol-Myers Squibb Company, GlaxoSmithKline plc, and Pfizer Inc.; public biotechnology companies represented approximately 17% and included Amgen Inc., Gilead Sciences, Inc., Biogen Idec Inc., and Celgene Corporation; revenue-producing life science product and service, medical device, and clean technology companies represented approximately 22%, led by Illumina, Inc., Quest Diagnostics Incorporated, Qiagen N.V., Laboratory Corporation of America Holdings, and Monsanto Company; non-profit, renowned medical and research institutions, and government agencies represented approximately 17% and included Massachusetts Institute of Technology, The Scripps Research Institute, The Regents of the University of California, Fred Hutchinson Cancer Research Center, University of Washington, Sanford-Burnham Medical Research Institute, and the United States Government; private biotechnology companies represented approximately 15% and included high-quality, leading-edge companies with blue-chip venture and institutional investors, including FibroGen, Inc., Achaogen Inc., and FORMA Therapeutics, Inc.; and the remaining approximately 3% consisted of traditional office tenants. Alexandria's strong life science underwriting skills, long-term life science industry relationships, and sophisticated management with both real estate and life science operating expertise positively distinguishes the Company from all other publicly traded real estate investment trusts ("REITs") and real estate companies.

VALUE-ADDED OPPORTUNITIES AND EXTERNAL GROWTH

Development and redevelopment

During the three months ended March 31, 2012, we executed leases aggregating 353,940 and 40,276 rentable square feet related to our development and redevelopment projects, respectively.

In January 2012, we commenced a 100% pre-leased ground-up development of a 170,618 rentable square feet single tenant building at 259 East Grand Avenue in the San Francisco Bay market.  Stabilized yield on cost is calculated as the quotient of net operating income and our investment in the property at stabilization ("Stabilized Yield"). This project is 100% pre-leased to Onyx Pharmaceuticals Inc. and we expect to achieve a Stabilized Yield on both a cash and GAAP basis for this property in the range from 7.8% to 8.2%.  Funding for this property is expected to be provided by a construction loan and borrowings under our unsecured senior line of credit.  We expect to close the construction loan in the second quarter of 2012.

In March 2012, we executed a 154,000 rentable square foot lease with Dana-Farber Cancer Institute, Inc. for 37% of our 414,000 rentable square foot joint venture development project located in the Longwood Medical Area of the Greater Boston market.  Funding for this project is expected to be primarily provided by capital from our recently admitted joint venture partner and a non-recourse construction loan.  Additionally, our share of the funding is expected to be less than the $22.3 million distribution we received upon admittance of the new partner and refinancing of the project.  See Sale of Land Parcel on page 4 for additional information.

Acquisitions

In February 2012, we acquired 6 Davis Drive, a 100,000 rentable square foot life science laboratory building located in the Research Triangle Park market, for approximately $20 million.  The building is 100% leased to a non-profit research institute.  The property also includes opportunities to develop at least three additional build-to-suit or multi-tenant buildings aggregating at least an additional 450,000 rentable square feet in an excellent location.  We expect to achieve a Stabilized Yield on a cash and GAAP basis for the operating property of approximately 8.4% and 8.9%, respectively.  These yields assume a purchase price allocation of $11.8 million to the 100,000 rentable square foot operating property and $8.3 million to the land for future additional buildings.

ALEXANDRIA REAL ESTATE EQUITIES, INC.      
First Quarter Ended March 31, 2012, Financial and Operating Results
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GUIDANCE

Earnings outlook

Based on our current view of existing market conditions and certain current assumptions, we expect our FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted and earnings per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders – diluted for the year ended December 31, 2012, will be as follows (amounts per share): 

A)      Ranges for depreciation and amortization, gain on sales of property, and other were not disclosed on February 22, 2012.

Projected interest expense, net and related capitalized interest for the year ended December 31, 2012 is expected to decrease from our prior guidance reported on February 22, 2012, by approximately $2.0 million and $1.5 million, respectively, primarily due to the amendment of our $1.5 billion unsecured senior line of credit, which among other changes, reduced the Applicable Margin for LIBOR borrowings under the unsecured senior line of credit to 1.2%, down from 2.4% in effect immediately prior to the amendment.  We expect general and administrative expenses for the year ended December 31, 2012, to increase from 12% to 14% over the year ended December 31, 2011 compared to our prior guidance of up 5% to 8%.  The increase is primarily due to the timing of hiring additional employees related to the growth in both the depth and breadth of our operations in multiple markets, and other compensation-related expenses.  Since December 31, 2011, our number of employees has increased by approximately 6%.  As a percentage of total revenues, we expect general and administrative expenses for the year ended December 31, 2012 to be consistent with the year ended December 31, 2011, at approximately 7% to 8% of total revenues.

ALEXANDRIA REAL ESTATE EQUITIES, INC.
First Quarter Ended March 31, 2012, Financial and Operating Results
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Net operating income, net income, and FFO for the three months ended December 31, 2012

As of March 31, 2012, we had seven ground-up development projects in process aggregating approximately 986,828 rentable square feet. We also had eleven projects undergoing conversion into laboratory space through redevelopment aggregating approximately 910,139 rentable square feet.  These projects along with recently delivered projects, certain future projects, and contribution 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 significantly quarter to quarter to a range from $111 million to $113 million for the three months ended December 31, 2012.  Operating performance assumptions related to the completion of our development and redevelopment projects, including the timing of initial occupancy, stabilization dates, and stabilization yields are included on page 16.  Certain key assumptions regarding our projection, 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 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Forward-looking statements, and Item 1A. Risk Factors, of this annual report on Form 10-K.  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.

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 cash equivalents was approximately $1.4 billion as of March 31, 2012.

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 and 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 in Part I under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors," 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.

First Quarter Ended March 31, 2012, Financial and Operating Results

EARNINGS CALL INFORMATION

We will host a conference call on Wednesday, May 2, 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 ended March 31, 2012.  To participate in this conference call, dial (800) 901-5241 or (617) 786-2963 and confirmation code 67381735, 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 Wednesday, May 2, 2012.  The replay number is (888) 286-8010 or (617) 801-6888 and the confirmation code is 58254800.

Additionally, a copy of this Press Release and Supplemental Information for the three months ended March 31, 2012, are available in the For Investors section of our website at www.are.com.

About the Company

Alexandria Real Estate Equities, Inc., a self-administered and self-managed REIT, is the largest owner and preeminent REIT, and leading life science real estate company focused principally on science-driven cluster formation through the ownership, operation, management, selective acquisition, development, and redevelopment of properties containing life science laboratory space.  Alexandria is the leading provider of high-quality, environmentally sustainable real estate, technical infrastructure, and services to the broad and diverse life science industry.  Client tenants include institutional (universities and independent non-profit institutions), pharmaceutical, biotechnology, product and service entities, clean-technology, medical device, and government agencies.  Our primary business objective is to maximize stockholder value by providing our stockholders with the greatest possible total return based on a multifaceted platform of internal and external growth. Our operating platform is based on the principle of "clustering," with assets and operations located adjacent to life science entities, driving growth and technological advances within each cluster. 

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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 Securities and Exchange Commission ("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 and per square foot amounts)

(Unaudited)

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Funds from Operations

(Dollars in thousands, except per share amounts)

 (Unaudited)

Funds from operations

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

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Adjusted Funds from Operations

(Dollars in thousands, except per share amounts)

 (Unaudited)

Adjusted funds from operations

The following table presents a reconciliation of FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders to AFFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders:

ALEXANDRIA REAL ESTATE EQUITIES, INC.

Financial and Asset Base Highlights

(Dollars in thousands, except per share and per square foot amounts)

(Unaudited)