Alexandria Real Estate Equities, Inc. Reports First Quarter Ended March 31, 2015 Financial and Operating Results

FFO Per Share - Diluted, of $1.28 for 1Q15, up 9.4% over 1Q14

EPS - Diluted of $0.25 for 1Q15

Total Revenues of $196.8 million for 1Q15, up 11.7% over 1Q14

News provided by

Alexandria Real Estate Equities, Inc.

Apr 27, 2015, 04:10 ET

PASADENA, Calif., April 27, 2015 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced financial and operating results for the first quarter ended March 31, 2015.

"Our results for the first quarter of 2015 highlight both the strength of our operating fundamentals and our unique real estate platform strategy focused on Class A assets in urban innovation cluster campuses located in Greater Boston, the San Francisco Bay Area, New York City, and San Diego. Our growth in FFO and NAV continued into the first quarter of 2015, as we reported FFO per share of $1.28, up 9.4% over the first quarter of 2014. Growth in FFO and cash flows for the quarter was again driven by strong internal growth, including 18.5% cash rental rate increases on lease renewals/re-leasing of space and a 7.8% cash same property NOI increase. Our value-creation pipeline continued to deliver significant earnings and NAV growth with highly leased projects located in collaborative urban innovation campuses. Furthermore, we delivered 494,477 RSF into service, including 388,270 RSF at 75/125 Binney Street in March 2015. We also commenced the ground-up development at 50/60 Binney Street in our Cambridge submarket, with 98% of the project leased or under negotiation, including 251,234 RSF leased to Sanofi for 97% of 50 Binney Street. Our value-creation deliveries during the quarter decreased our non-income producing assets as a percentage of total assets to 12%.

"With our operating properties generating steady growth and our value-creation pipeline producing significant additional growth of NOI, EBITDA, and NAV, we remain confident in our ability to deliver strong results in 2015 while improving our net debt to adjusted EBITDA to <7.0x by year-end," said Joel S. Marcus, Chairman, Chief Executive Officer, and Founder of Alexandria Real Estate Equities, Inc.

Results

Funds from operations ("FFO") attributable to Alexandria Real Estate Equities, Inc.'s ("Alexandria's") common stockholders – diluted:
- $1.28 per share for 1Q15, up 9.4%, compared to $1.17 per share for 1Q14
- $91.3 million for 1Q15, up $8.3 million, or 9.9%, compared to $83.1 million for 1Q14
Net income attributable to Alexandria's common stockholders – diluted:
- $17.8 million, or $0.25 per share, for 1Q15, compared to $32.7 million, or $0.46 per share, for 1Q14
- Results for 1Q15, included an impairment of real estate of $14.5 million, or $0.20 per share

Core operating metrics

Total revenues of $196.8 million for 1Q15, up $20.6 million, or 11.7%, compared to $176.2 million for 1Q14
Net operating income ("NOI"), including our share of unconsolidated joint ventures, of $136.4 million for 1Q15, up $12.7 million, or 10.3%, compared to $123.7 million for 1Q14
Same property NOI increase of 2.3% and 7.8% (cash basis) for 1Q15, compared to 1Q14
Executed leases for 1,022,669 rentable square feet ("RSF") during 1Q15, including:
- 251,234 RSF to Sanofi at 50 Binney Street in our Cambridge submarket
- 145,946 RSF to Illumina, Inc. ("Illumina") at 5200 Illumina Way in our University Town Center submarket
- 83,561 RSF to Massachusetts Institute of Technology ("MIT") at 600 Technology Square in our Cambridge submarket
- 30.8% and 18.5% (cash basis) rental rate increase on lease renewals and re-leasing of space aggregating 489,286 RSF
Occupancy for properties in North America, as of 1Q15:
- 96.8% occupancy for operating properties, up 20 basis points ("bps") from 1Q14
- 95.9% occupancy for operating and redevelopment properties, up 80 bps from 1Q14
Operating margins steady at 69% for 1Q15
Adjusted earnings before interest, taxes, depreciation, and amortization ("EBITDA") margins solid at 64% for 1Q15

External growth: value-creation projects and acquisitions

Value-creation projects

Development and redevelopment value-creation projects were on average 90% leased or under negotiation (71% leased and 19% under negotiation)
1Q15 key deliveries of value-creation projects:
- 388,270 RSF, primarily to ARIAD Pharmaceuticals, Inc. at 75/125 Binney Street in our Cambridge submarket
- 43,209 RSF to various client tenants at 430 East 29th Street in our Manhattan submarket
- 60,891 RSF to Receptos, Inc. and The Medicines Company at 3013/3033 Science Park Road in our Torrey Pines submarket
1Q15 key commencements of value-creation development projects:
- Commenced a 530,477 RSF value-creation development project at 50/60 Binney Street located in our Cambridge submarket; 98% leased or under negotiation, including 47% leased to Sanofi.

Acquisitions

In January 2015, we completed the acquisition of 640 Memorial Drive in the Cambridge submarket for $176.5 million. This property is a 225,504 RSF Class A, LEED^® Gold Certified, office/laboratory building in Mid-Cambridge, near the MIT campus, and it is 100% leased to two high-quality life science client tenants pursuant to long-term leases. In connection with the acquisition, we assumed a secured note payable of $82.0 million with an interest rate of 3.93% and a maturity date in 2023.
In January 2015, we executed an agreement to purchase the outstanding 10% noncontrolling interest in our flagship campus at Alexandria Technology Square^® in our Cambridge submarket for $108.3 million. The first installment of $54.3 million was paid on April 1, 2015, and the second installment of $54.0 million is due on April 1, 2016.

Balance sheet

$11.3 billion total market capitalization as of March 31, 2015
12% non-income-producing assets (percentage of gross investments in real estate)
7.5x net debt to adjusted EBITDA – 1Q15 annualized; 2015 target range from 6.5x to 7.5x, with goal of <7.0x by 4Q15
3.3x fixed charge coverage ratio – 1Q15 annualized; 2015 target range from 3.0x to 3.5x
Executed additional interest rate swap agreements in March and April 2015, with an aggregate notional amount of $750 million to increase notional hedged variable-rate debt to $950 million during 2015 and a minimum of $800 million during 2016.
19% unhedged variable-rate debt as a percentage of total debt as of March 31, 2015

LEED statistics and other awards

As of March 31, 2015, 53 LEED projects, including 32 LEED certified projects aggregating 4.8 million RSF and 21 additional LEED projects in process aggregating 4.0 million square feet.
54% of our total annualized base rent ("ABR") will be generated from LEED projects upon completion of our in-process projects.
In March 2015, we were awarded the 2015 Owner of the Year Award by the Engineering News-Record New England for outstanding work developing dynamic campuses for our client tenants in our Greater Boston market.
In March 2015, we were awarded the 2014 Land Deal of the Year Award by the San Francisco Business Times for our signature land acquisition of 1455/1515 Third Street in our Mission Bay submarket, 100% pre-leased to Uber Technologies, Inc.
In March 2015, we were awarded the Deal of the Year Award by the San Diego Business Journal for our role in expanding Illumina's campus and supporting the company's growth in our University Town Center submarket.

Subsequent events

In April 2015:

We amended the employment agreement with Joel S. Marcus to extend his term as our CEO through March 31, 2018.
We leased 300,000 RSF, or 100%, to Stripe, Inc. at 510 Townsend Street in our SoMa submarket of the San Francisco Bay Area. We expect to commence ground-up development of this build-to-suit project in 2015, upon receipt of Prop M entitlement allocation.
We leased 106,173 RSF, or 75%, to Eli Lilly and Company at our 10300 Campus Point Drive project in our University Town Center submarket in San Diego. We expect to commence ground-up development of our 142,034 RSF project in 2015, upon receipt of permits/approvals.
We leased 80,000 RSF to Juno Therapeutics, Inc. at 400 Dexter Avenue North in our Lake Union submarket in Seattle. Juno Therapeutics, Inc. has an expansion option for 71,000 RSF. We expect to commence ground-up development of our 287,806 RSF project in 2015, upon receipt of master use plan approval.

Guidance
(Dollars in thousands, except per share amounts)

The following updated guidance is based on our current view of existing market conditions and other assumptions for the year ending December 31, 2015. There can be no assurance that actual amounts will be materially higher or lower than these expectations. See our discussion of "forward-looking statements" below.

Summary of Key Changes in Guidance			Description
FFO per share diluted	+ $0.02		Midpoint of range increased by $0.02 to $5.22 and narrowed range from $0.20 to $0.10, driven by strong rental rate increases on leasing activity
Net debt to Adjusted EBITDA – 4Q15 annualized	<7.0x		See below for summary of key changes to sources and uses of capital
Uses of capital:	Midpoint		Description
Acquisition	$	200,000	-- $200 million of incremental acquisitions of value-creation development opportunities primarily in the Mission Bay/SoMa submarket, including a $135 million non-cash transaction (tax-deferred structure)
Increase in uses of capital	$	200,000
Sources of capital:
Non-cash acquisition	$	135,000	-- Partial repayment and refinancing of the outstanding $375 million 2016 Unsecured Senior Bank Term Loan
Increase in pending sales	85,000
Remainder/asset sales	180,000		-- $200 million net reduction in debt from additional asset sales/remainder
Net reduction in debt	(200,000)
Net increase in sources of capital	$	200,000

EPS and FFO Per Share Attributable to Alexandria's Common Stockholders – Diluted
Earnings per share		$1.42 to $1.52
Add: depreciation and amortization		3.57
Add: impairment of real estate		0.20
Other		(0.02)
FFO per share		$5.17 to $5.27

Key Assumptions	Low		High
Occupancy percentage for operating properties in North America as of December 31, 2015	96.9%		97.4%

Same property performance:
NOI increase	0.5%		2.5%
NOI increase (cash basis)	5.0%		7.0%

Lease renewals and re-leasing of space:
Rental rate increases	14.0%		17.0%
Rental rate increases (cash basis)	8.0%		10.0%

Straight-line rent revenue	$	45,000	$	50,000
General and administrative expenses	$	55,000	$	59,000
Capitalization of interest	$	35,000	$	45,000
Interest expense	$	106,000	$	116,000

Key Credit Metrics
Net debt to Adjusted EBITDA – 4Q15 annualized		<7.0x
Fixed charge coverage ratio – 4Q15 annualized		3.0x to 3.5x
Non-income-producing assets as a percentage of gross investments in real estate as of December 31, 2015		10% to 15%

Key Sources and Uses of Capital	As of 3/31/15		Low		High
Sources of capital:
Net cash provided by operating activities after dividends	$	31,000	$	115,000	$	135,000
Incremental debt	189,000		190,000		270,000
Non-cash acquisition	—		125,000		145,000
Remainder/asset sales (see next page)	68,000		615,000		695,000
Total sources of capital	$	288,000	$	1,045,000	$	1,245,000

Uses of capital:
Construction	$	111,000	$	645,000	$	745,000
Acquisitions	177,000		400,000		500,000
Total uses of capital	$	288,000	$	1,045,000	$	1,245,000

Incremental debt:
Issuance of unsecured senior and other notes payable	$	82,000	$	385,000	$	535,000
Borrowings under existing secured construction loans	30,000		80,000		130,000
Repayments of secured notes payable	(8,000)		(61,000)		(137,000)
Activity on unsecured senior line of credit/other	85,000		(214,000)		(258,000)
Incremental debt	$	189,000	$	190,000	$	270,000

Dispositions and other sources of capital
(Dollars in thousands)

Property – Market/Submarket	Date Sold	1Q15 Impairments			Number of Properties	Square Feet	Annual NOI ⁽¹⁾			Sales Price/NBV ⁽²⁾
Dispositions in 1Q15
661 University Avenue – Canada/Toronto	January	$	—		1	N/A	$	(1,363)		$	54,104				⁽³⁾
Other	January/ March	14,510		⁽⁴⁾	2	196,859	(595)			14,335
Dispositions in 1Q15		$	14,510				$	(1,958)		68,439

Pending and projected remainder/asset sales
500 Forbes Boulevard – San Francisco Bay Area/South San Francisco					1	155,685	$	5,683		345,000 to 395,000
225 Binney Street – Greater Boston/Cambridge (target sale of 70% to 90% interest)					1	305,212	10,666		⁽⁵⁾
270 Third Street – Greater Boston/Cambridge (residential project under construction)					1	N/A	—
							$	16,349

Other					3	166,441	$	1,507	⁽⁶⁾	35,000

Completed and pending asset sales										450,000		to	500,000

Projected – remainder/asset sales (see summary on prior page)						TBD	TBD			165,000		to	195,000

Total dispositions completed and other sources of capital										$	615,000	to	$	695,000

(1)	Annualized using actual results for the quarter ended prior to date of sale or 1Q15 for pending and projected asset sales and other assets "held for sale" as of March 31, 2015.
(2)	Represents sale price for assets sold, estimated sale price for pending and projected asset sales, and net book value as of March 31, 2015, for other assets "held for sale."
(3)	Represents land and land improvements that were subject to a ground lease prior to the sale with the Company as the lessee. Our annualized net operating loss of $1.4 million primarily represented ground rent expense. Prior to the completion of the sale in January 2015, our land and land improvements were leased to a client tenant and the client tenant was completing the construction of a 780,540 RSF building. Rental payments from the client tenant were anticipated to commence in the future upon completion and stabilization of the building.
(4)	During 1Q15, we committed to the sale of a vacant 175,000 RSF building located in Hyderabad, India. Accordingly, we recognized an impairment charge of $14.5 million to reduce the property's net book value to our estimate of its fair value less cost to sell of $12.4 million. The impairment is primarily related to $7.5 million of increased project costs incurred during a longer-than-anticipated government permitting process to address additional building zoning requirements that arose subsequent to our acquisition of this building, as well as $4.2 million of foreign exchange losses. We estimated that $8.1 million of additional capital expenditures would have been required to complete and lease the building.
(5)	Represents estimated 80% (mid-point of range from 70% to 90%) joint venture share of annualized NOI of $13.3 million for the entire property for the quarter ended 1Q15.
(6)	Includes annualized net operating loss of $172 thousand related to one vacant building aggregating 21,940 RSF classified in discontinued operations in our accompanying consolidated statements of income. This is the only property classified in discontinued operations as of March 31, 2015.

Earnings Call Information

We will host a conference call on Tuesday, April 28, 2015, 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 first quarter ended March 31, 2015. To participate in this conference call, dial (877) 856-1955 or (719) 325-4784 and confirmation code 2665879 shortly before 3:00 p.m. ET/12:00 p.m. noon PT. The audio webcast 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 6:00 p.m. ET/3:00 p.m. PT on Tuesday, April 28, 2015. The replay number is (888) 203-1112 or (719) 457-0820 and the confirmation code is 2665879.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2015, is available in the "For Investors" section of our website at www.are.com or by following this link: http://www.are.com/fs/2015q1.pdf.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE: ARE) is a fully integrated, self-administered, and self-managed real estate investment trust ("REIT") focused on unique collaborative campuses in urban innovation clusters located in key coastal science and technology gateway cities, with a total market capitalization of $11.3 billion as of March 31, 2015, and an asset base of 30.7 million square feet, including 18.5 million RSF of operating and current value-creation projects, as well as an additional 2.2 million square feet of near-term and 10.0 million square feet of future ground-up development projects. Alexandria pioneered this niche in 1994 and has since established a dominant market presence in AAA locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle Park.

***********

This document 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 2015 earnings per share attributable to Alexandria's common stockholders – diluted, 2015 FFO per share attributable to Alexandria's common stockholders – diluted, NOI, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of forward-looking words, such as "forecast," "guidance," "projects," "estimates," "anticipates," "believes," "expects," "intends," "may," "plans," "seeks," "should," or "will," or the negative of those words or similar words. These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events. There can be no assurance that actual results will not be materially higher or lower than these expectations. These statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially from the results discussed in the 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, increased vacancy rates or failure to renew or replace expiring leases, defaults on, or non-renewal of, leases by client tenants, general and local economic conditions, a favorable capital market environment, performance of our operations in areas such as delivery of current and future development and redevelopment projects, leasing activity, lease renewals, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission ("SEC"). Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are made as of the date of this earnings press release, and unless otherwise stated, we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. 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.

Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)

	Three Months Ended
	3/31/15		12/31/14		9/30/14		6/30/14		3/31/14
Revenues:
Rental	$	143,608	$	140,873	$	137,718	$	134,992	$	130,570
Tenant recoveries	48,394		45,282		45,572		40,944		41,682
Other income	4,751		2,519		2,325		466		3,934
Total revenues	196,753		188,674		185,615		176,402		176,186

Expenses:
Rental operations	61,223		56,881		57,423		52,353		52,507
General and administrative	14,387		13,861		12,609		13,836		13,224
Interest	23,236		22,188		20,555		17,433		19,123
Depreciation and amortization	58,920		57,973		58,388		57,314		50,421
Impairment of real estate	14,510		51,675		—		—		—
Loss on early extinguishment of debt	—		—		525		—		—
Total expenses	172,276		202,578		149,500		140,936		135,275

Equity in earnings of unconsolidated joint ventures	574		554		—		—		—
Income (loss) from continuing operations	25,051		(13,350)		36,115		35,466		40,911

(Loss) income from discontinued operations	(43)		1,722		(180)		(147)		(162)
Gain on sales of real estate – land parcels	—		5,598		8		797		—
Net income (loss)	25,008		(6,030)		35,943		36,116		40,749
Dividends on preferred stock	(6,247)		(6,284)		(6,471)		(6,472)		(6,471)
Preferred stock redemption charge	—		(1,989)		—		—		—
Net income attributable to noncontrolling interests	(492)		(1,362)		(1,340)		(1,307)		(1,195)
Net income attributable to unvested restricted stock awards	(483)		(489)		(506)		(405)		(374)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders	$	17,786	$	(16,154)	$	27,626	$	27,932	$	32,709

Earnings per share attributable to Alexandria's common stockholders – basic and diluted:
Continuing operations	$	0.25	$	(0.25)	$	0.39	$	0.39	$	0.46
Discontinued operations	—		0.02		—		—		—
Earnings per share – basic and diluted	$	0.25	$	(0.23)	$	0.39	$	0.39	$	0.46

Weighted average shares of common stock outstanding for calculating earnings per share attributable to Alexandria's common stockholders – basic and diluted	71,366		71,314		71,195		71,126		71,073

Dividends declared per share of common stock	$	0.74	$	0.74	$	0.72	$	0.72	$	0.70

Consolidated Balance Sheets
(In thousands)
(Unaudited)

	3/31/15			12/31/14		9/30/14		6/30/14		3/31/14
Assets
Investments in real estate	$	7,388,059		$	7,226,016	$	7,197,630	$	7,030,117	$	6,930,262
Cash and cash equivalents	90,641			86,011		67,023		61,701		74,970
Restricted cash	56,704			26,884		24,245		24,519		30,454
Tenant receivables	10,627			10,548		10,830		10,654		10,619
Deferred rent	243,459			234,124		225,506		214,793		202,087
Deferred leasing and financing costs	199,576			201,798		199,835		193,621		192,618
Investments	283,062		⁽¹⁾	236,389		177,577		174,802		169,322
Other assets	133,093			114,266		117,668		105,442		145,707
Total assets	$	8,405,221		$	8,136,036	$	8,020,314	$	7,815,649	$	7,756,039

Liabilities, Noncontrolling Interests, and Equity
Secured notes payable	$	760,476		$	652,209	$	636,825	$	615,551	$	597,511
Unsecured senior notes payable	1,747,450			1,747,370		1,747,290		1,048,310		1,048,270
Unsecured senior line of credit	421,000			304,000		142,000		571,000		506,000
Unsecured senior bank term loans	975,000			975,000		975,000		1,100,000		1,100,000
Accounts payable, accrued expenses, and tenant security deposits	645,619		⁽²⁾	489,085		504,535		434,528		443,893
Dividends payable	58,824			58,814		57,549		57,377		55,860
Total liabilities	4,608,369			4,226,478		4,063,199		3,826,766		3,751,534

Commitments and contingencies

Redeemable noncontrolling interests	14,282			14,315		14,348		14,381		14,413

Alexandria Real Estate Equities, Inc.'s stockholders' equity:
Series D cumulative convertible preferred stock	237,163			237,163		250,000		250,000		250,000
Series E cumulative redeemable preferred stock	130,000			130,000		130,000		130,000		130,000
Common stock	716			715		714		713		712
Additional paid-in capital	3,383,456			3,461,189		3,523,195		3,542,334		3,560,453
Accumulated other comprehensive income (loss)	29,213			(628)		(28,711)		(16,245)		(18,429)
Alexandria's stockholders' equity	3,780,548			3,828,439		3,875,198		3,906,802		3,922,736
Noncontrolling interests	2,022			66,804		67,569		67,700		67,356
Total equity	3,782,570			3,895,243		3,942,767		3,974,502		3,990,092
Total liabilities, noncontrolling interests, and equity	$	8,405,221		$	8,136,036	$	8,020,314	$	7,815,649	$	7,756,039


(1)	Includes unrealized gains on publicly traded investments aggregating $81.9 million as of March 31, 2015, classified in accumulated other comprehensive income (loss) within stockholders' equity.
(2)	In January 2015, we executed an agreement to purchase the outstanding 10% noncontrolling interest in Alexandria Technology Square^® and recognized a liability of $114 million.

Funds From Operations and Adjusted Funds From Operations
(In thousands)
(Unaudited)

The following table presents a reconciliation of net income (loss) attributable to Alexandria's common stockholders – basic, the most directly comparable financial measure presented in accordance with generally accepted accounting principles ("GAAP"), to FFO attributable to Alexandria's common stockholders – basic and diluted, FFO attributable to Alexandria's common stockholders – diluted, as adjusted, and adjusted funds from operations ("AFFO") attributable to Alexandria's common stockholders – diluted. The table below includes our share of consolidated and unconsolidated joint venture amounts.

	Three Months Ended
	3/31/15		12/31/14		9/30/14		6/30/14		3/31/14
Net income (loss) attributable to Alexandria's common stockholders	$	17,786	$	(16,154)	$	27,626	$	27,932	$	32,709
Depreciation and amortization ⁽¹⁾	59,202		58,302		58,388		57,314		50,421
Impairment of real estate – rental properties	14,510		26,975		—		—		—
Gain on sales of real estate – rental properties ⁽²⁾	—		(1,838)		—		—		—
Gain on sales of real estate – land parcels	—		(5,598)		(8)		(797)		—
Amount attributable to noncontrolling interests/unvested restricted stock awards:
Net income	975		1,851		1,846		1,712		1,569
FFO	(1,141)		(2,063)		(2,278)		(1,648)		(1,629)
FFO attributable to Alexandria's common stockholders – basic and diluted ⁽³⁾	91,332		61,475		85,574		84,513		83,070
Impairment of real estate – land parcels	—		24,700		—		—		—
Loss on early extinguishment of debt	—		—		525		—		—
Preferred stock redemption charge	—		1,989		—		—		—
Allocation to unvested restricted stock awards	—		(259)		(4)		—		—
FFO attributable to Alexandria's common stockholders – diluted, as adjusted	91,332		87,905		86,095		84,513		83,070
Non-revenue-enhancing capital expenditures:
Building improvements	(2,278)		(1,989)		(2,405)		(1,255)		(1,780)
Tenant improvements and leasing commissions	(5,775)		(5,499)		(1,693)		(3,934)		(4,053)
Straight-line rent revenue ⁽¹⁾	(10,697)		(10,023)		(10,892)		(12,737)		(11,882)
Straight-line rent expense on ground leases	363		657		723		697		711
Amortization of acquired below market leases	(933)		(654)		(757)		(618)		(816)
Amortization of loan fees ⁽¹⁾	2,835		2,822		2,786		2,743		2,561
Amortization of debt (premiums) discounts	(82)		17		(36)		(69)		205
Stock compensation expense	3,690		4,624		3,068		3,076		3,228
Allocation to unvested restricted stock awards	118		98		71		90		94
AFFO attributable to Alexandria's common stockholders – diluted	$	78,573	$	77,958	$	76,960	$	72,506	$	71,338


(1)	Includes our share of consolidated and unconsolidated joint venture amounts.
(2)	Gain on sales of real estate – rental properties recognized during 4Q14 are classified in (loss) income from discontinued operations in the consolidated statements of income.
(3)	Calculated in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") in its April 2002 White Paper and related implementation guidance.

Funds From Operations Per Share and Adjusted Funds From Operations Per Share
(In thousands, except per share amounts)
(Unaudited)

The following table presents a reconciliation of earnings per share attributable to Alexandria's common stockholders – basic, the most directly comparable financial measure presented in accordance with GAAP, to FFO per share attributable to Alexandria's common stockholders – diluted, FFO per share attributable to Alexandria's common stockholders – diluted, as adjusted, and AFFO per share attributable to Alexandria's common stockholders – diluted. For the computation of the weighted average shares used to compute the per share information, refer to the "Definitions and Reconciliations" section in our supplemental information. The table below includes our share of consolidated and unconsolidated joint venture amounts.

	Three Months Ended
	3/31/15		12/31/14		9/30/14		6/30/14		3/31/14
Earnings per share attributable to Alexandria's common stockholders – basic and diluted	$	0.25	$	(0.23)	$	0.39	$	0.39	$	0.46
Depreciation and amortization	0.83		0.82		0.81		0.81		0.71
Impairment of real estate – rental properties	0.20		0.38		—		—		—
Gain on sales of real estate – rental properties	—		(0.03)		—		—		—
Gain on sales of real estate – land parcels	—		(0.08)		—		(0.01)		—
FFO per share attributable to Alexandria's common stockholders – basic and diluted ⁽¹⁾	1.28		0.86		1.20		1.19		1.17
Impairment of real estate – land parcels	—		0.34		—		—		—
Loss on early extinguishment of debt	—		—		0.01		—		—
Preferred stock redemption charge	—		0.03		—		—		—
FFO per share attributable to Alexandria's common stockholders – diluted, as adjusted	1.28		1.23		1.21		1.19		1.17
Non-revenue-enhancing capital expenditures:
Building improvements	(0.03)		(0.03)		(0.03)		(0.02)		(0.03)
Tenant improvements and leasing commissions	(0.08)		(0.08)		(0.02)		(0.06)		(0.06)
Straight-line rent revenue	(0.15)		(0.14)		(0.15)		(0.18)		(0.17)
Straight-line rent expense on ground leases	0.01		0.01		0.01		0.01		0.01
Amortization of acquired below market leases	(0.01)		(0.01)		(0.01)		(0.01)		(0.01)
Amortization of loan fees	0.03		0.05		0.03		0.04		0.04
Stock compensation expense	0.05		0.06		0.04		0.05		0.05
AFFO per share attributable to Alexandria's common stockholders – diluted	$	1.10	$	1.09	$	1.08	$	1.02	$	1.00

Weighted average shares of common stock outstanding for calculating FFO, FFO, as adjusted, and AFFO per share attributable to Alexandria's common stockholders – basic and diluted	71,366		71,314		71,195		71,126		71,073


(1)	Calculated in accordance with standards established by the Board of Governors of the NAREIT in its April 2002 White Paper and related implementation guidance.