Alexandria Real Estate Equities, Inc. Reports Second Quarter Ended June 30, 2015 Financial and Operating Results

4.5% Cash Cap Rate on Sale of 70% Interest in Core Asset to High Quality Institutional Investor

2015 Recipient of NAREIT Gold Investor Communication and Reporting Excellence Award

Strong Demand Drives Record Leasing Volume Exceeding 1.9 Million RSF in 2Q15

FFO Per Share - Basic and Diluted, of $1.31 for 2Q15, up 10.1% over 2Q14

EPS - Diluted of $0.44 for 2Q15, up 12.8% over 2Q14

Total Revenues of $204.2 million for 2Q15, up 15.7% over 2Q14

Jul 27, 2015, 16:10 ET from Alexandria Real Estate Equities, Inc.

PASADENA, Calif., July 27, 2015 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced financial and operating results for the second quarter ended June 30, 2015.

Joel S. Marcus, Chairman, Chief Executive Officer, and Founder of Alexandria Real Estate Equities, Inc., said, "Congratulations to our first-in-class team on the solid execution of another strong quarter of financial and operating results, including the following key highlights:

  • Executed agreement for the sale of a 70% interest in our Class A facility located at 225 Binney Street, Cambridge, MA, to TIAA-CREF for a sale price of $190.1 million at a cash cap rate of 4.5%; we expect to complete the sale in 4Q15;
  • 2015 recipient of the NAREIT Investor CARE (Communication and Reporting Excellence) Gold Award by NAREIT as a best-in-class REIT that delivers transparency, quality, and efficient communications and reporting to the investment community;
  • FFO per share diluted for 2Q15 of $1.31, up 10.1%, compared to $1.19 for 2Q14;
  • Same property NOI growth of 0.5% and 4.7% (cash basis) for 2Q15, as compared to 2Q14;
  • Rental rate increases of 14.5% and 7.0% (cash basis) for 2Q15 lease renewals and re-leasing of space aggregating 783,042 RSF;
  • Executed 1.9 million RSF of leasing in 2Q15; strong demand and pricing power in our key cluster markets;
  • Executed 1.1 million RSF (included in the 1.9 million RSF above) of leases related to Class A ground-up development space providing further visibility into key near-term multi-year growth drivers; further increasing proportion of total ABR in the future from Class A assets and high quality tenants; and
  • Common stock dividend for 2Q15 of $0.77 per common share, up 5 cents, or 7%, over 2Q14; continuation of strategy to share growth in cash flows from operating activities with our shareholders while also retaining important capital for investment."

4.5% Cash cap rate on sale of 70% interest in core real estate asset

  • In July 2015, we executed an agreement for the sale of a 70% interest in our Class A facility located at 225 Binney Street, Cambridge, MA, to TIAA-CREF for a sale price of $190.1 million at a cash cap rate of 4.5%; we expect to complete the sale in 4Q15

2015 Recipient of NAREIT Investor CARE Award

  • 2015 recipient of the Investor CARE (Communication and Reporting Excellence) Gold Award by NAREIT as a best-in-class REIT that delivers transparency, quality, and efficient communications and reporting to the investment community

Results

  • Funds from operations ("FFO") attributable to Alexandria Real Estate Equities, Inc.'s ("Alexandria's") common stockholders – basic and diluted:
    • $1.31 per share for 2Q15, up 10.1%, compared to $1.19 per share for 2Q14
    • $2.59 per share for YTD 2Q15, up 9.7%, compared to $2.36 per share for YTD 2Q14
    • $93.4 million for 2Q15, up $8.9 million, or 10.6%, compared to $84.5 million for 2Q14
    • $184.8 million for YTD 2Q15, up $17.2 million, or 10.3%, compared to $167.6 million for YTD 2Q14
  • Net income attributable to Alexandria's common stockholders – diluted:
    • $31.3 million, or $0.44 per share, for 2Q15, compared to $27.9 million, or $0.39 per share, for 2Q14
    • $49.1 million, or $0.69 per share, for YTD 2Q15, compared to $60.6 million, or $0.85 per share, for YTD 2Q14

Core operating metrics

  • Total revenues:
    • $204.2 million for 2Q15, up $27.8 million, or 15.7%, compared to $176.4 million for 2Q14
    • $400.9 million for YTD 2Q15, up $48.3 million, or 13.7%, compared to $352.6 million for YTD 2Q14
  • Net operating income ("NOI"), including our share of unconsolidated joint ventures:
    • $142.8 million for 2Q15, up $18.8 million, or 15.1%, compared to $124.0 million for 2Q14
    • $279.2 million for YTD 2Q15, up $31.5 million, or 12.7%, compared to $247.7 million for YTD 2Q14
  • Same property NOI growth:
    • 0.5% and 4.7% (cash basis) increase for 2Q15, as compared to 2Q14
    • 1.4% and 6.2% (cash basis) increase for YTD 2Q15, as compared to YTD 2Q14
  • Executed leases for 1,915,379 rentable square feet ("RSF") during 2Q15, the highest quarterly leasing volume in the Company's history, including:
    • 304,326 RSF to Eli Lilly and Company, representing 100% of the recently acquired redevelopment project at 10290 Campus Point Drive in our University Town Center submarket in San Diego
    • 300,000 RSF to Stripe, Inc., representing 100% of 510 Townsend Street in our SoMa submarket in San Francisco
    • 208,394 RSF to Bristol-Myers Squibb Company, representing 48% of 100 Binney Street in our Cambridge submarket in Greater Boston
    • 90,423 RSF to Juno Therapeutics, Inc., representing 31% of 400 Dexter Avenue North in our Lake Union submarket in Seattle
    • 14.5% and 7.0% (cash basis) rental rate increases on lease renewals and re-leasing of space aggregating 783,042 RSF
  • Executed leases for 2,938,048 RSF during YTD 2Q15
    • 20.3% and 11.2% (cash basis) rental rate increases on lease renewals and re-leasing of space aggregating 1,272,328 RSF
  • Occupancy at 95.9% for properties in North America as of 2Q15
  • Operating margins at 70% for 2Q15
  • Adjusted EBITDA margins at 65% for 2Q15

External growth: value-creation projects and acquisitions Value-creation projects

  • Current development projects underway were on average 88% leased or under negotiation (71% leased and 17% under negotiation)
  • Near-term value-creation projects with estimated commencement of construction in 2H15, aggregating 1,097,564 RSF, were on average 100% leased or under negotiation (80% leased and 20% under negotiation)
  • 2Q15 key value-creation projects placed into service include:
    • 112,500 RSF to FORUM Pharmaceuticals Inc. at 225 Second Avenue in our Route 128 submarket in Greater Boston.
    • 51,997 RSF, including 48,990 RSF to the Dana-Farber Cancer Institute, Inc., at 360 Longwood Avenue in our Longwood Medical submarket in Greater Boston.
  • 2Q15 commencements of development project:
    • 287,806 RSF development project at 400 Dexter Avenue North in our Lake Union submarket; 64% leased/negotiating (31% leased and 33% under negotiation)

Acquisitions

  • In April 2015, we acquired 505 Brannan Street, a near-term development project in our SoMa submarket. The property is currently entitled for 135,000 RSF, and we are seeking entitlements for an additional 165,000 RSF. The purchase price of the land parcel was $34.0 million.
  • Refer to "Subsequent events" for details on acquisition of 10290 Campus Point Drive in our University Town Center submarket.

Balance sheet

  • $10.7 billion total market capitalization as of June 30, 2015
  • 12% of gross investment in real estate in value-creation pipeline (50% of pipeline undergoing construction)
  • 7.5x net debt to adjusted EBITDA – 2Q15 annualized; 2015 target range from 6.5x to 7.5x, with goal of <7.0x by 4Q15
  • 3.4x fixed charge coverage ratio – 2Q15 annualized
  • In June 2015, we completed a partial principal repayment of $25.0 million, extended the maturity date of the remaining $350 million unsecured senior bank term loan from 2016 to 2021 ("2021 Unsecured Senior Bank Term Loan"), and reduced pricing to LIBOR +1.10% from LIBOR +1.20%
  • In June 2015, we exercised the first of two one-year extensions on a $47.2 million secured construction loan, which extended the maturity date from July 1, 2015, to July 1, 2016
  • Limited debt maturities through 2018; well-laddered maturity profile
  • Executed additional interest rate swap agreements in April, June, and July 2015, with an aggregate notional amount of $550 million, to increase notional hedged variable-rate debt to a minimum of $800 million and $350 million during 2016 and 2017, respectively.
  • 22% unhedged variable-rate debt as a percentage of total debt as of June 30, 2015, with goal of <15% by 4Q15

LEED statistics

  • 51 LEED projects, including 35 LEED certified projects aggregating 5.4 million RSF and 16 additional LEED projects in process aggregating 3.3 million square feet
  • 55% of our total annualized base rent ("ABR") will be generated from LEED projects upon completion of our in-process projects

Subsequent events

  • In July 2015, we commenced development of a 431,483 RSF value-creation project at 100 Binney Street in our Cambridge submarket; 98% leased/negotiating, including 48% leased to Bristol-Myers Squibb Company.
  • In July 2015, we acquired 10290 Campus Point Drive, a property aggregating 304,326 RSF. This highly strategic acquisition is located adjacent to our uniquely positioned life science campus at the Alexandria Center® for Life Science at Campus Pointe with high-quality on-site amenities in the heart of our University Town Center submarket. The acquired property is 100% leased to the previous owner through September 30, 2015. In June 2015, we leased the entire 304,326 RSF to Eli Lilly and Company for 15.5 years. In October 2015, we expect to commence conversion of the space into Class A office/laboratory space through redevelopment. Upon completion of this redevelopment project, Eli Lilly and Company will relocate its existing presence at 10300 Campus Point Drive of 125,409 RSF and the previously announced 106,173 RSF expansion, into our recently acquired 10290 Campus Point Drive. These changes resulted in a net increase of 72,744 RSF leased to Eli Lilly and Company at the campus. Our campus will ultimately contain an aggregate of 1,046,472 RSF, including 292,387 RSF of capacity for future ground-up development.

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 $5.24, driven by strong leasing activity, and narrowed range from $0.10 to $0.06

 

Sources of capital:

Midpoint

Description

Incremental debt

$

(75,000)

-- Increase in income-producing asset sales generates higher proceeds resulting in a reduction in incremental debt.  A portion of the incremental proceeds will fund the acquisition of a redevelopment opportunity at 10290 Campus Point Drive.

 

-- Reduction in projected construction spending includes, among other items, approximately $17.5 million of construction funding assumed by the buyer of 270 Third Street (see "Dispositions and Other Sources of Capital" below)

 

-- Decrease in acquisitions primarily due to change in timing of non-cash acquisition from 2015 to 2016, offset by purchase in July 2015, of 10290 Campus Point Drive, a 100% pre-leased redevelopment project

Acquisition (non-cash)

(135,000)

Remainder/asset sales

115,000

Net decrease in sources of capital

$

(95,000)

Uses of capital:

Construction

$

(45,000)

Acquisition

(50,000)

Decrease in uses of capital

$

(95,000)

 

EPS and FFO Per Share Attributable to Alexandria's Common Stockholders – Diluted

Earnings per share

$1.44 to $1.50

Add: depreciation and amortization

3.59

Add: impairment of real estate

0.20

Other

(0.02)

FFO per share

$5.21 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 Properties' 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

$

47,000

$

52,000

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

Value-creation pipeline as a percentage of gross investments in real estate as of December 31, 2015

10% to 15%

 

Key Sources and Uses of Capital

Completed 1H15

Low

High

Sources of capital:

Net cash provided by operating activities after dividends

$

61,000

$

115,000

$

135,000

Incremental debt

316,000

115,000

195,000

Remainder/asset sales (see "Dispositions and Other Sources of Capital" below)

94,000

720,000

820,000

Total sources of capital

$

471,000

$

950,000

$

1,150,000

Uses of capital:

Construction

$

198,000

$

600,000

$

700,000

Acquisitions (1)

273,000

350,000

450,000

Total uses of capital

$

471,000

$

950,000

$

1,150,000

Incremental debt:

Issuance of unsecured senior and other notes payable

$

82,000

$

370,000

$

450,000

Borrowings under existing secured construction loans

43,000

80,000

130,000

Repayments of secured notes payable

(10,000)

(61,000)

(137,000)

Activity on unsecured senior line of credit/other

201,000

(274,000)

(248,000)

Incremental debt

$

316,000

$

115,000

$

195,000

 

(1) Includes the acquisition in July 2015 of 10290 Campus Point Drive, a property aggregating 304,326 RSF, for $105.0 million. See "Acquisitions" above for additional information.

 

 

Dispositions and Other Sources of Capital

(Dollars in thousands)

Property – Market/Submarket

Date Sold

Number of Operating Properties

Square Feet

Annual NOI (1)

Sales Price (2)

Dispositions completed in 1Q15

661 University Avenue – Canada/Toronto

January

1

N/A

$

(1,363)

$

54,104

Other

January/ March

2

196,859

(595)

14,335

Dispositions completed in 1Q15

$

(1,958)

68,439

Dispositions completed in 2Q15

270 Third Street – Greater Boston/Cambridge (3)

  Sales price

June

N/A

$

43,000

  Construction funding    assumed by buyer

(17,523)

Net proceeds

25,477

Pending/targeted asset sales

225 Binney Street – Greater Boston/Cambridge (sale of 70% interest at 4.5% cash capitalization rate) (4)

1

305,212

$

9,332

(4)

190,110

500 Forbes Boulevard – San Francisco/South San Francisco

1

155,685

$

5,628

240,974

to

290,974

Other

240,000

$

8,200

Completed and pending/targeted asset sales

525,000

to

575,000

Projected – remainder/asset sales

TBD

TBD

195,000

to

245,000

Total dispositions completed and other sources of capital (5)

$

720,000

to

$

820,000

 

(1)

Annualized using actual results for the quarter ended prior to the date of sale, or 2Q15 for pending/targeted asset sales, as of June 30, 2015.

(2)

Represents the sales price for completed dispositions and the estimated sales price for pending/targeted asset sales, as of June 30, 2015.

(3)

Represents a residential project under construction totaling 91 units at the Alexandria Center® at Kendall Square.  Our projected key sources and uses of capital reflect the savings of $17.5 million in projected construction spending.

(4)

In July 2015, we executed an agreement to sell a 70% interest in our 225 Binney Street property to a high quality institutional investor for $190.1 million at a 4.5% cash capitalization rate.  We expect to complete the sale in 4Q15.  Annual NOI represents 70% of annualized 2Q15 NOI of $13.3 million (including straight-line rent) for this property.  Annualized 2Q15 NOI, excluding straight-line rent, was $8.7 million.

(5)

We anticipate a portion of dispositions and other sources of capital will come from the sale of equity investments in publicly traded entities.  As of June 30, 2015, our $172.6 million of equity investments in publicly traded entities had unrealized gains aggregating $138.7 million.

 

Key NAV Consideration

Photo - http://photos.prnewswire.com/prnh/20150727/245807-INFO

Earnings Call Information

We will host a conference call on Tuesday, July 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 second quarter ended June 30, 2015.  To participate in this conference call, dial (877) 545-1403 or (719) 325-4748 and confirmation code 9589266 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, July 28, 2015.  The replay number is (888) 203-1112 or (719) 457-0820 and the confirmation code is 9589266.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the second quarter ended June 30, 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/2015q2.pdf.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE: ARE) is a fully integrated, self-administered, and self-managed office real estate investment trust ("REIT") uniquely focused on collaborative science and technology campuses in urban innovation clusters with a total market capitalization of $10.7 billion as of June 30, 2015, and an asset base of 31.1 million square feet, including 18.8 million RSF of operating and current value-creation projects, as well as an additional 12.3 million square feet of near-term and 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, San Francisco, 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 place into service 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 current and future development and redevelopment projects being placed into service, 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

Six Months Ended

6/30/15

3/31/15

12/31/14

9/30/14

6/30/14

6/30/15

6/30/14

Revenues:

Rental

$

151,805

$

143,608

$

140,873

$

137,718

$

134,992

$

295,413

$

265,562

Tenant recoveries

49,594

48,394

45,282

45,572

40,944

97,988

82,626

Other income

2,757

4,751

2,519

2,325

466

7,508

4,400

Total revenues

204,156

196,753

188,674

185,615

176,402

400,909

352,588

Expenses:

Rental operations

62,250

61,223

56,881

57,423

52,353

123,473

104,860

General and administrative

14,989

14,387

13,861

12,609

13,836

29,376

27,060

Interest

26,668

23,236

22,188

20,555

17,433

49,904

36,556

Depreciation and amortization

62,171

58,920

57,973

58,388

57,314

121,091

107,735

Impairment of real estate

14,510

51,675

14,510

Loss on early extinguishment of debt

189

525

189

Total expenses

166,267

172,276

202,578

149,500

140,936

338,543

276,211

Equity in earnings of unconsolidated joint ventures

541

574

554

1,115

Income (loss) from continuing operations

38,430

25,051

(13,350)

36,115

35,466

63,481

76,377

(Loss) income from discontinued operations

(43)

1,722

(180)

(147)

(43)

(309)

Gain on sales of real estate – land parcels

5,598

8

797

797

Net income (loss)

38,430

25,008

(6,030)

35,943

36,116

63,438

76,865

Dividends on preferred stock

(6,246)

(6,247)

(6,284)

(6,471)

(6,472)

(12,493)

(12,943)

Preferred stock redemption charge

(1,989)

Net income attributable to noncontrolling interests

(263)

(492)

(1,362)

(1,340)

(1,307)

(755)

(2,502)

Net income attributable to unvested restricted stock awards

(630)

(483)

(489)

(506)

(405)

(1,113)

(779)

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

$

31,291

$

17,786

$

(16,154)

$

27,626

$

27,932

$

49,077

$

60,641

Earnings per share attributable to Alexandria's common stockholders – basic and diluted:

Continuing operations

$

0.44

$

0.25

$

(0.25)

$

0.39

$

0.39

$

0.69

$

0.85

Discontinued operations

0.02

Earnings per share – basic and diluted

$

0.44

$

0.25

$

(0.23)

$

0.39

$

0.39

$

0.69

$

0.85

Weighted-average shares of common stock outstanding for calculating earnings per share attributable to Alexandria's common stockholders – basic and diluted

71,412

71,366

71,314

71,195

71,126

71,389

71,100

Dividends declared per share of common stock

$

0.77

$

0.74

$

0.74

$

0.72

$

0.72

$

1.51

$

1.42

 

 

Consolidated Balance Sheets

(In thousands)

(Unaudited)

6/30/15

3/31/15

12/31/14

9/30/14

6/30/14

Assets

Investments in real estate

$

7,442,875

$

7,388,059

$

7,226,016

$

7,197,630

$

7,030,117

Cash and cash equivalents

68,617

90,641

86,011

67,023

61,701

Restricted cash

44,191

56,704

26,884

24,245

24,519

Tenant receivables

9,279

10,627

10,548

10,830

10,654

Deferred rent

257,427

243,459

234,124

225,506

214,793

Deferred leasing and financing costs

210,709

199,576

201,798

199,835

193,621

Investments

360,614

(1)

283,062

236,389

177,577

174,802

Other assets

131,179

133,093

114,266

117,668

105,442

Total assets

$

8,524,891

$

8,405,221

$

8,136,036

$

8,020,314

$

7,815,649

Liabilities, Noncontrolling Interests, and Equity

Secured notes payable

$

771,435

$

760,476

$

652,209

$

636,825

$

615,551

Unsecured senior notes payable

1,747,531

1,747,450

1,747,370

1,747,290

1,048,310

Unsecured senior line of credit

624,000

421,000

304,000

142,000

571,000

Unsecured senior bank term loans

950,000

975,000

975,000

975,000

1,100,000

Accounts payable, accrued expenses, and tenant security deposits

531,612

645,619

489,085

504,535

434,528

Dividends payable

61,194

58,824

58,814

57,549

57,377

Total liabilities

4,685,772

4,608,369

4,226,478

4,063,199

3,826,766

Commitments and contingencies

Redeemable noncontrolling interests

14,248

14,282

14,315

14,348

14,381

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

Series D cumulative convertible preferred stock

237,163

237,163

237,163

250,000

250,000

Series E cumulative redeemable preferred stock

130,000

130,000

130,000

130,000

130,000

Common stock

717

716

715

714

713

Additional paid-in capital

3,371,016

3,383,456

3,461,189

3,523,195

3,542,334

Accumulated other comprehensive income (loss)

83,980

29,213

(628)

(28,711)

(16,245)

Alexandria's stockholders' equity

3,822,876

3,780,548

3,828,439

3,875,198

3,906,802

Noncontrolling interests

1,995

2,022

66,804

67,569

67,700

Total equity

3,824,871

3,782,570

3,895,243

3,942,767

3,974,502

Total liabilities, noncontrolling interests, and equity

$

8,524,891

$

8,405,221

$

8,136,036

$

8,020,314

$

7,815,649

 

(1)

Includes unrealized gains on publicly traded investments aggregating $138.7 million as of June 30, 2015, classified in accumulated other comprehensive income (loss) within stockholder's equity.

 

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

Six Months Ended

6/30/15

3/31/15

12/31/14

9/30/14

6/30/14

6/30/15

6/30/14

Net income (loss) attributable to Alexandria's common stockholders

$

31,291

$

17,786

$

(16,154)

$

27,626

$

27,932

$

49,077

$

60,641

Depreciation and amortization

62,523

59,202

58,302

58,388

57,314

121,725

107,735

Impairment of real estate – rental properties

14,510

26,975

14,510

Gain on sales of real estate – rental properties (1)

(1,838)

Gain on sales of real estate – land parcels

(5,598)

(8)

(797)

(797)

Amount attributable to noncontrolling interests/ unvested restricted stock awards:

Net income

893

975

1,851

1,846

1,712

1,868

3,281

FFO

(1,274)

(1,141)

(2,063)

(2,278)

(1,648)

(2,415)

(3,277)

FFO attributable to Alexandria's common stockholders – basic and diluted (2)

93,433

91,332

61,475

85,574

84,513

184,765

167,583

Impairment of real estate – land parcels

24,700

Loss on early extinguishment of debt

189

525

189

Preferred stock redemption charge

1,989

Allocation to unvested restricted stock awards

(2)

(259)

(4)

(2)

FFO attributable to Alexandria's common stockholders – diluted, as adjusted

93,620

91,332

87,905

86,095

84,513

184,952

167,583

Non-revenue-enhancing capital expenditures:

Building improvements

(2,743)

(2,278)

(1,989)

(2,405)

(1,255)

(5,021)

(3,035)

Tenant improvements and leasing commissions

(6,429)

(5,775)

(5,499)

(1,693)

(3,934)

(12,204)

(7,987)

Straight-line rent revenue

(14,159)

(3)

(10,697)

(10,023)

(10,892)

(12,737)

(24,856)

(24,619)

Straight-line rent expense on ground leases

510

363

657

723

697

873

1,408

Amortization of acquired below-market leases

(1,006)

(933)

(654)

(757)

(618)

(1,939)

(1,434)

Amortization of loan fees

2,921

2,835

2,822

2,786

2,743

5,756

5,304

Amortization of debt (premiums) discounts

(100)

(82)

17

(36)

(69)

(182)

136

Stock compensation expense

4,054

3,690

4,624

3,068

3,076

7,744

6,304

Allocation to unvested restricted stock awards

152

118

98

71

90

272

184

AFFO attributable to Alexandria's common stockholders – diluted

$

76,820

$

78,573

$

77,958

$

76,960

$

72,506

$

155,395

$

143,844

 

(1)

Gain on sales of real estate – rental properties recognized during 4Q14 is classified in (loss) income from discontinued operations in the consolidated statements of income.

(2)

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

(3)

Increase in straight-line rent revenue in 2Q15 compared to 1Q15 is primarily due to the completion of the development of 75/125 Binney Street located in Cambridge, Massachusetts, on March 24, 2015.  See "Key NAV Consideration" above for additional information.  Straight-line rent is expected to decline quarter to quarter through the remainder of 2015.

 

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

Six Months Ended

6/30/15

3/31/15

12/31/14

9/30/14

6/30/14

6/30/15

6/30/14

Earnings per share attributable to Alexandria's common stockholders – basic and diluted

$

0.44

$

0.25

$

(0.23)

$

0.39

$

0.39

$

0.69

$

0.85

Depreciation and amortization

0.87

0.83

0.82

0.81

0.81

1.70

1.52

Impairment of real estate – rental properties

0.20

0.38

0.20

Gain on sales of real estate – rental properties

(0.03)

Gain on sales of real estate – land parcels

(0.08)

(0.01)

(0.01)

FFO per share attributable to Alexandria's common stockholders – basic and diluted (1)

1.31

1.28

0.86

1.20

1.19

2.59

2.36

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

1.31

1.28

1.23

1.21

1.19

2.59

2.36

Non-revenue-enhancing capital expenditures:

Building improvements

(0.04)

(0.03)

(0.03)

(0.03)

(0.02)

(0.07)

(0.04)

Tenant improvements and leasing commissions

(0.09)

(0.08)

(0.08)

(0.02)

(0.06)

(0.17)

(0.11)

Straight-line rent revenue

(0.20)

(0.15)

(0.14)

(0.15)

(0.18)

(0.35)

(0.35)

Straight-line rent expense on ground leases

0.01

0.01

0.01

0.01

0.01

0.01

0.02

Amortization of acquired below-market leases

(0.01)

(0.01)

(0.01)

(0.01)

(0.01)

(0.02)

(0.02)

Amortization of loan fees

0.04

0.03

0.05

0.03

0.04

0.08

0.07

Stock compensation expense

0.06

0.05

0.06

0.04

0.05

0.11

0.09

AFFO per share attributable to Alexandria's common stockholders – diluted

$

1.08

$

1.10

$

1.09

$

1.08

$

1.02

$

2.18

$

2.02

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

71,412

71,366

71,314

71,195

71,126

71,389

71,100

 

(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.

 

SOURCE Alexandria Real Estate Equities, Inc.



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