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Alexandria Real Estate Equities, Inc. Reports First Quarter 2008 Operating and Financial Results
 
PASADENA, Calif.
(Map)
-
For the first quarter of 2008, we reported total revenues of FFO is a non-GAAP measure widely used by publicly traded real estate
investment trusts. A reconciliation of GAAP net income available to common
stockholders to FFO available to common stockholders and FFO available to
common stockholders after supplemental adjustments on both an aggregate and
per share (diluted) basis is included in the financial information
accompanying this press release. The primary reconciling item between GAAP
net income available to common stockholders and FFO available to common
stockholders is depreciation and amortization expense. Depreciation and
amortization expense for the three months ended Net income available to common stockholders for the first quarter of 2008
was For the first quarter of 2008, we executed a total of 48 leases for approximately 570,000 rentable square feet of space at 31 different properties (excluding month-to-month leases). Of this total, approximately 369,000 rentable square feet related to new or renewal leases of previously leased space and approximately 201,000 rentable square feet related to developed, redeveloped or previously vacant space. Of the 201,000 rentable square feet, approximately 129,000 rentable square feet were delivered from our development or redevelopment programs, with the remaining approximately 72,000 rentable square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 14.1% higher (on a GAAP basis) than rental rates for expiring leases. During the first quarter of 2008, we sold one property located in the
As of Based on our current view of existing market conditions and certain current assumptions, our updated guidance for FFO per share (diluted) and earnings per share (diluted) is as follows:
2008
--------------
FFO per share (diluted) (1) $5.86(1)
Earnings per share (diluted) (2) $3.00(2)
Non-cash impairment charges recognized
in the first quarter of 2008 $0.21
(1) Includes non-cash impairment charges aggregating $6,635,000, or
$0.21 per share (diluted), related to assets "held for sale" and
certain investments. Our updated guidance for 2008 FFO per share
(diluted) after supplemental adjustments for the non-cash impairment
charges is $6.07.
(2) Includes non-cash impairment charges aggregating $6,635,000 and gains
on sales of property aggregating $20,213,000.
Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life
Science Industry(R), is the largest owner and preeminent first-in-class
international real estate investment trust focused principally on
science-driven cluster formation through the ownership, operation, management,
redevelopment, selective development and acquisition of properties containing
technical environments, including office/laboratory space. This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
------------------------
2008 2007
----------- -----------
Income statement data
Total revenues $109,959 $94,786
Expenses
Rental operations 28,329 23,277
General and administrative 8,787 8,074
Interest 22,245 20,263
Depreciation and amortization 25,673 22,920
Non-cash impairment on investments 1,985 -
----------- -----------
87,019 74,534
Minority interest 951 907
----------- -----------
Income from continuing
operations 21,989 19,345
Income from discontinued operations, net 15,699 2,439
----------- -----------
Net income 37,688 21,784
Dividends on preferred stock 2,928 3,877
Preferred stock redemption charge - 2,799
----------- -----------
Net income available to
common stockholders $34,760 $15,108
=========== ===========
Weighted average shares of
common stock outstanding
Basic 31,546,591 28,899,303
=========== ===========
Diluted 31,801,945 29,299,733
=========== ===========
Earnings per share - basic
Continuing operations
(net of preferred stock
dividends and preferred
stock redemption charge) $0.60 $0.44
Discontinued operations, net 0.50 0.08
----------- -----------
Earnings per share - basic $1.10 $0.52
=========== ===========
Earnings per share - diluted
Continuing operations
(net of preferred stock
dividends and preferred
stock redemption charge) $0.60 $0.44
Discontinued operations, net 0.49 0.08
----------- -----------
Earnings per share - diluted $1.09 $0.52
=========== ===========
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Unaudited)
Funds from Operations Generally accepted accounting principles ("GAAP") basis accounting for
real estate assets utilizes historical cost accounting and assumes real estate
values diminish over time. In an effort to overcome the difference between
real estate values and historical cost accounting for real estate assets, the
Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT") established the measurement tool of Funds From Operations
("FFO"). Since its introduction, FFO has become a widely used non-GAAP
financial measure among real estate investment trusts ("REITs"). We believe
that FFO is helpful to investors as an additional measure of the performance
of an equity REIT. We compute FFO in accordance with standards established by
the Board of Governors of NAREIT in its We also present FFO after supplemental adjustments which excludes non-cash impairment and preferred stock redemption charges. FFO after supplemental adjustments differs from FFO established by NAREIT and may not be comparable to that of other REITs. We believe FFO after supplemental adjustments provides a meaningful supplemental financial measure. Neither FFO or FFO after supplemental adjustments should be considered as an alternative to net income (determined in accordance with GAAP) as an indication of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to make distributions. The following table presents a reconciliation of net income available to
common stockholders, the most directly comparable GAAP financial measure to
FFO, and FFO after supplemental adjustments to funds from operations available
to common stockholders and funds from operations available to common
stockholders after supplemental adjustments for the three months ended
Reconciliation of net income
available to common stockholders
to funds from operations available Three Months Three Months
to common stockholders after Ended Ended
supplemental adjustments March 31, 2008 March 31, 2007
----------------- -----------------
Net income available to common
stockholders $ 34,760 $ 15,108
Add: Depreciation and
amortization (1) 25,810 23,518
Add: Minority interest 951 907
Subtract: Gain on sales of
property (2) (20,213) (1,121)
Subtract: FFO allocable to
minority interest (967) (866)
----------------- -----------------
Funds from operations available to
common stockholders 40,341 37,546
Add: Preferred stock redemption
charge (3) - 2,799
Add: Non-cash impairment
charges (4) 6,635 -
----------------- -----------------
Funds from operations available to
common stockholders after
supplemental adjustments $ 46,976 $ 40,345
================= =================
FFO per share (diluted) after
supplemental adjustments
Basic $ 1.49 $ 1.40
================= =================
Diluted $ 1.48 $ 1.38
================= =================
Reconciliation of earnings per share
(diluted) to FFO per share (diluted)
after supplemental adjustments
Earnings per share (diluted) $ 1.09 $ 0.52
Depreciation and amortization (1) 0.82 0.80
Minority interest 0.03 0.03
Gain on sales of property (2) (0.64) (0.04)
FFO allocable to minority
interest (0.03) (0.03)
----------------- -----------------
FFO per share (diluted) $ 1.27 $ 1.28
Preferred stock redemption charge (3) - 0.10
Non-cash impairment charges (4) 0.21 -
----------------- -----------------
FFO per share (diluted) after
supplemental adjustments $ 1.48 $ 1.38
================= =================
(1) Includes depreciation and amortization for assets "held for sale"
reflected as discontinued operations (for the periods prior to when
such assets were designated as "held for sale").
(2) Gain on sales of property relates to the disposition of six properties
sold during the first quarter 2008 and one property sold during
the first quarter of 2007. Gain on sales of property is included in
the income statement in income from discontinued operations, net.
(3) During the first quarter of 2007, we redeemed our 9.10% series B
cumulative redeemable preferred stock. Accordingly, in compliance
with FASB Emerging Issues Task Force D-42 ("EITF Topic D-42"), we
recorded a charge of $2,799,000, or $0.10 per share (diluted),
in the first quarter of 2007 for costs related to the redemption of
our series B preferred stock.
(4) In March 2008, we recognized aggregate non-cash impairment charges of
approximately $1,985,000 for other-than-temporary declines
in the fair value of certain investments and non-cash impairment
charges on two properties "held for sale" of approximately
$4,650,000 related to an industrial building located in a suburban
submarket south of Boston and an office building located in the San
Diego market. The non-cash impairment charges on two properties "held
for sale" are classified in income from discontinued operations, net.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Quarterly Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months Ended
Operational data 3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
--------- ---------- --------- --------- ---------
Rental income $ 82,156 $ 81,695 $ 76,970 $71,570 $71,038
Tenant recoveries 24,553 22,344 21,420 18,800 20,010
Other income 3,250 3,965 3,717 3,399 3,738
--------- ---------- --------- --------- ---------
Total revenues
(continuing
operations)(a) $109,959 $108,004 $102,107 $93,769 $94,786
========= ========== ========= ========= =========
Funds from
operations
per share
(diluted)
after
supplemental
adjustments(b) $ 1.48 $ 1.46 $ 1.45 $ 1.42 $ 1.38
Dividends per
share on
common stock $ 0.78 $ 0.78 $ 0.76 $ 0.76 $ 0.74
Dividend payout
ratio
(common stock)(c) 53.2% 53.9% 56.3% 53.8% 54.1%
Straight-line
rent $ 3,015 $ 4,615 $ 4,335 $ 2,617(d) $ 4,188
Capitalized
interest $ 17,262(e) $ 16,609 $ 15,035 $13,548 $10,844
Number of
properties(f)
Acquired/added/
completed
during period - 2 13 2 -
Sold/
transferred(g) (7) (3) (1) (4) (1)
At end of period 159 166 167 155 157
Rentable square
feet(f)
Acquired/added/
completed
during period - 404,986 994,024 104,312 -
Sold/
transferred(g) (475,976) (92,927) (37,000) (375,112) (75,500)
At end of
period 11,691,497 12,167,473 11,855,414 10,898,390 11,169,190
As of
Other data 3/31/2008 12/31/2007 9/30/2007 6/30/2007 3/31/2007
---------- ---------- --------- --------- ---------
Number of
shares of
common
stock
outstanding 31,673,359 31,603,344 31,243,448 29,180,700 29,129,238
Closing price
of common
stock $92.72 $101.67 $96.26 $96.82 $100.37
Debt to
total market
capitalization(h)
Total debt $2,625,852 $2,787,904 $2,502,832 $2,274,269 $2,176,594
Less minority
interest share
of debt (39,838) (39,320) (22,102) (22,089) (22,076)
---------- ---------- --------- --------- ---------
Our share of
total debt 2,586,014 2,748,584 2,480,730 2,252,180 2,154,518
Preferred stock 352,127 136,845 130,156 132,593 140,579
Common stock
market
capitali-
zation 2,936,754 3,213,112 3,007,494 2,825,275 2,923,702
---------- ---------- --------- --------- ---------
Total market
capitali-
zation $5,874,895 $6,098,541 $5,618,380 $5,210,048 $5,218,799
========== ========== ========= ========= =========
Debt to
total market
capitalization 44.0% 45.1% 44.2% 43.2% 41.3%
(a) The historical results above exclude the results of assets "held for
sale" which have been reflected as discontinued operations.
(b) See page 4 for a reconciliation of earnings per share (diluted) to FFO
per share (diluted) and FFO per share (diluted) after supplemental
adjustments.
(c) Dividend payout ratio (common stock) is the ratio of the absolute
dollar amount of dividends on our common stock (common stock shares
outstanding on the respective record date multiplied by the related
dividend per share) to funds from operations after supplemental
adjustments for the respective quarter.
(d) Includes a rental payment of approximately $1.4 million from one
tenant, the U.S. Government, in the second quarter of 2007. Pursuant
to Statement of Financial Accounting Standards No. 13, "Accounting for
Leases," rental payments due under this lease are recognized on a
straight-line basis over the lease term.
(e) As of March 31, 2008, assets for which capitalization of interest is
required pursuant to Statement of Financial Accounting Standards
No. 34, "Capitalization of Interest Cost" ("SFAS 34"), approximated
$1.2 billion. This amount is classified as properties undergoing
development and redevelopment and land held for development on our
balance sheet. As of March 31, 2008, the weighted average interest
rate used in the calculation of capitalized interest required pursuant
to SFAS 34 was approximately 5.69%. SFAS 34 requires the interest rate
for capitalization to be based on applicable interest costs related to
borrowings outstanding during the period, including the impact of
interest rate swap agreements, debt premiums/discounts and
amortization of loan fees.
(f) Includes properties "held for sale" during the applicable periods such
assets were "held for sale." As of March 31, 2008, two properties
aggregating approximately 74,304 rentable square feet were classified
as "held for sale."
(g) During the first quarter of 2008, we sold six assets and transferred
one property from operating assets to embedded future development
opportunities. During the fourth quarter of 2007, we sold one asset
and transferred two properties from operating assets to embedded
future development opportunities. During the third quarter of 2007, we
sold one asset located in the New Jersey/Suburban Philadelphia market
and four land parcels to the Massachusetts Institute of Technology.
During the second quarter of 2007, we sold one asset and transferred
three properties from operating assets to embedded future development
opportunities. During the first quarter of 2007, we sold one asset
located in the Suburban Washington D.C. market.
(h) Debt to total market capitalization is the ratio of our share of total
debt (secured notes payable, unsecured line of credit and unsecured
term loan and unsecured convertible notes) to total market
capitalization. Total market capitalization is equal to outstanding
shares of series C preferred stock and common stock multiplied by the
related closing price at the end of each period presented, plus series
D convertible preferred stock at liquidation value, plus our share of
total debt.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
March 31, December 31,
2008 2007
----------- -----------
(Unaudited)
Assets
Rental properties, net $3,079,288 $3,146,915
Properties undergoing development
and redevelopment
and land held for development 1,246,905 1,143,302
Cash and cash equivalents 7,654 8,030
Tenant security deposits and
other restricted cash 65,612 51,911
Tenant receivables 8,853 6,759
Deferred rent 84,152 81,496
Investments 74,134 84,322
Other assets 118,447 119,359
----------- -----------
Total assets $4,685,045 $4,642,094
=========== ===========
Liabilities and Stockholders' Equity
Secured notes payable $1,115,852 $1,212,904
Unsecured line of credit and
unsecured term loan 1,050,000 1,115,000
Unsecured convertible notes 460,000 460,000
Accounts payable, accrued expenses
and tenant security deposits 264,850 247,289
Dividends payable 27,772 27,575
----------- -----------
Total liabilities 2,918,474 3,062,768
Minority interest 74,857 75,506
Stockholders' equity:
Series C preferred stock 129,638 129,638
Series D convertible preferred stock 220,000 -
Common stock 317 316
Additional paid-in capital 1,374,451 1,365,773
Accumulated other comprehensive
(loss) income (32,692) 8,093
----------- -----------
Total stockholders' equity 1,691,714 1,503,820
----------- -----------
Total liabilities and stockholders' equity $4,685,045 $4,642,094
=========== ===========
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
March 31, 2008
(Dollars in thousands)
(Unaudited)
Principal Maturities / Rates
Secured Debt Unsecured Debt
---------------------------------- -----------------
Weighted
Average
Year Amount Interest Rate Amount
------------------- ---------------- ---------------- -----------------
2008 $ 7,744 5.53%(1) $-
-
2009 284,617 5.52(2)
2010 92,482 5.94(2) 300,000(3)
2011 183,380 5.80(2) 750,000(3)
2012 38,489 5.99(2) 460,000(4)
Thereafter
509,140 5.92(2) -
---------------- -----------------
Total $1,115,852(5) $1,510,000
================ =================
Secured and Unsecured Debt Analysis
Weighted
Percentage Average Weighted
of Interest Average
Balance Balance Rate(6) Maturity
----------- ----------- ----------- ----------
Secured Debt $1,115,852 42.5% 5.53% 4.6 Years
Unsecured Debt 1,510,000 57.5 4.85 3.4 Years
----------- ----------- ----------- ----------
Total Debt $2,625,852 100.0% 5.14% 3.9 Years
=========== =========== =========== ==========
Fixed and Floating Rate Debt Analysis
Weighted
Percentage Average Weighted
of Interest Average
Balance Balance Rate (6) Maturity
----------- ----------- ----------- ----------
Fixed Rate Debt $1,265,011 48.2% 5.17% 5.0 Years
Floating Rate Debt
- Hedged 817,100 31.1 5.83 3.4 Years
Floating Rate Debt
- Unhedged 543,741 20.7 4.04 2.1 Years
----------- ----------- ----------- ----------
Total Debt $2,625,852 100.0% 5.14% 3.9 Years
=========== =========== =========== ==========
(1) The weighted average interest rate is calculated based on outstanding
debt as of March 31, 2008.
(2) The weighted average interest rate is calculated based on outstanding
debt as of December 31st of the year immediately preceding the
year presented.
(3) The unsecured line of credit matures in October 2010 and may be
extended at our sole option for an additional one year period. The
unsecured term loan matures in October 2011 and may be extended at our
sole option for an additional one year period.
(4) On or after January 15, 2012, we have the right to redeem our 3.70%
unsecured convertible notes, in whole or in part, at any time from
time to time, for cash equal to 100% of the principal amounts of the
notes to be redeemed plus any accrued and unpaid interest to, but
excluding, the redemption date. Holders of the notes may require us to
repurchase their notes, in whole or in part, on January 15, 2012,
2017 and 2022 for cash equal to 100% of the principal amount of the
notes to be purchased plus any accrued and unpaid interest to, but
excluding, the repurchase date. Additional information regarding our
unsecured convertible notes is contained in our Form 10-K filed
with the Securities and Exchange Commission.
(5) Includes minority interests' share of scheduled principal maturities
of approximately $39.8 million.
(6) Represents the weighted average contractual interest rate plus the
impact of debt premiums/discounts and our interest rate swap
agreements. The weighted average interest rate excludes bank fees and
amortization of loan fees. See page 8 for further details of our
interest rate swap agreements.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements
March 31, 2008
(Dollars in thousands)
(Unaudited)
Interest
Transaction Effective Termination Pay Notional Effective at
Dates Dates Dates Rates (1) Amounts March 31, 2008
---------- ----------- ------------- ---------- ---------- ---------------
Dec-04 3-Jan-06 1-Jul-08 3.927% $50,000 $50,000
Jun-06 30-Jun-06 30-Sep-09 5.299 125,000 125,000
Dec-03 29-Dec-06 31-Oct-08 5.090 50,000 50,000
Dec-05 29-Dec-06 30-Nov-09 4.730 50,000 50,000
Dec-05 29-Dec-06 30-Nov-09 4.740 50,000 50,000
Dec-06 29-Dec-06 31-Mar-14 4.990 50,000 50,000
Dec-06 2-Jan-07 3-Jan-11 5.003 28,500 28,500
Apr-04 30-Apr-07 30-Apr-08 4.850 50,000 50,000
May-05 29-Jun-07 30-Jun-08 4.400 50,000 50,000
Dec-06 29-Jun-07 31-Oct-08 4.920 50,000 50,000
Oct-07 31-Oct-07 30-Jun-08 4.458 50,000 50,000
Oct-07 31-Oct-07 30-Sep-12 4.546 50,000 50,000
Oct-07 31-Oct-07 30-Sep-13 4.642 50,000 50,000
May-05 30-Nov-07 28-Nov-08 4.460 25,000 25,000
Dec-05 2-Jan-08 31-Dec-10 4.768 50,000 50,000
Feb-08 7-Feb-08 1-Dec-08 2.640 38,600 38,600
May-05 30-Jun-08 30-Jun-09 4.509 50,000 -
Jun-06 30-Jun-08 30-Jun-10 5.325 50,000 -
Jun-06 30-Jun-08 30-Jun-10 5.325 50,000 -
Oct-07 1-Jul-08 31-Mar-13 4.622 25,000 -
Oct-07 1-Jul-08 31-Mar-13 4.625 25,000 -
Jun-06 31-Oct-08 31-Dec-10 5.340 50,000 -
Jun-06 31-Oct-08 31-Dec-10 5.347 50,000 -
May-05 28-Nov-08 30-Nov-09 4.615 25,000 -
Dec-06 30-Nov-09 31-Mar-14 5.015 75,000 -
Dec-06 30-Nov-09 31-Mar-14 5.023 75,000 -
Dec-06 31-Dec-10 31-Oct-12 5.015 100,000 -
---------------
Total $817,100
===============
(1) The interest pay rates represent the interest rate we will pay for
one month LIBOR under the respective interest rate swap agreement.
These rates do not include any spread in addition to one month
LIBOR that is due monthly as interest expense.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
Quarter Ended Quarter Ended
---------------------------- ------------------------------
3/31/2008 3/31/2007 % Change 3/31/2008 3/31/2007 % Change
--------- --------- -------- --------- --------- --------
Revenue (2) $82,957 $79,427 4.40% $80,953 $75,679 7.00%
Operating
expenses 21,813 20,404 6.9 21,813 20,404 6.9
--------- --------- -------- --------- --------- --------
Revenue less
operating
expenses $61,144 $59,023 3.60% $59,140 $55,275 7.00%
========= ========= ======== ========= ========= ========
NOTE: This summary represents operating data for all properties that were
fully operating for the entire periods presented for the quarter periods
(the "First Quarter Same Properties"). Same property occupancy for the
quarters ended March 31, 2008 and 2007 was 95.3% and 94.3%, respectively.
Properties undergoing redevelopment are excluded from same property
results.
(1) Revenue less operating expenses computed in accordance with GAAP is
total revenue associated with the First Quarter Same Properties
(excluding lease termination fees, if any) less property operating
expenses. Under GAAP, rental revenue is recognized on a straight-line
basis over the respective lease terms. Revenue less operating
expenses on a cash basis is total revenue associated with the First
Quarter Same Properties (excluding lease termination fees, if any)
less property operating expenses, adjusted to exclude the effect of
straight-line rent adjustments required by GAAP. Straight-line rent
adjustments for the quarters ended March 31, 2008 and 2007 for the
First Quarter Same Properties were $2,004,000 and $3,748,000,
respectively. We believe that revenue less operating expenses on a
cash basis is helpful to investors as an additional measure of
operating performance because it eliminates straight-line rent
adjustments to rental revenue.
(2) Fees received from tenants in connection with termination of their
leases, if any, are excluded from revenue in the Summary of Same
Property Comparisons. As of March 31, 2008, approximately 89% of our
leases (on a square footage basis) were triple net leases,
requiring tenants to pay substantially all real estate taxes and
insurance, common area and other operating expenses, including
increases thereto. In addition, as of March 31, 2008, approximately 8%
of our leases (on a square footage basis) required the tenants to
pay a majority of operating expenses.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties
(Dollars in thousands)
(Unaudited)
March 31, 2008
-----------------------------------------------
Rentable Square Feet
Number of ------------------------------------
Properties Operating Redevelopment Total
---------- ---------- ------------- ----------
Markets
California -
Los Angeles Metro 1 31,343 - 31,343
California - San Diego 34 1,473,715 236,347 1,710,062
California -
San Francisco Bay 17 1,457,444 21,216 1,478,660
Eastern
Massachusetts 37 3,069,398 333,896 3,403,294
International - Canada 4 342,394 - 342,394
New Jersey/
Suburban Philadelphia 8 441,504 - 441,504
Southeast 12 597,775 60,631 658,406
Suburban
Washington D.C. 31 2,431,630 68,138 2,499,768
Washington - Seattle 13 1,040,471 11,291 1,051,762
---------- ---------- ------------- ----------
Total Properties
(Continuing
Operations) 157 10,885,674 731,519 11,617,193
========== ========== ============= ==========
March 31, 2008 December 31, 2007
----------------------------- -----------------
Annualized Occupancy Occupancy
Base Rent(1) Percentage Percentage
(1)(2) (3)
-------------- ------------- -----------------
California -
Los Angeles Metro $696 70.80% 70.8%
California - San Diego 43,028 94.1 94.9
California -
San Francisco Bay 55,964 96.9 95.8
Eastern
Massachusetts 110,202 96.6 94.7
International - Canada 9,215 100.0 100.0
New Jersey/
Suburban Philadelphia 9,176 96.6 96.6
Southeast 11,074 89.5(4) 86.0(4)
Suburban Washington D.C. 47,823 91.0 90.1
Washington - Seattle 31,127 97.3 97.2
-------------- ------------- -----------------
Total Properties
(Continuing
Operations) $318,305 94.8% 93.8%
============== ============= =================
(1) Excludes spaces at properties totaling approximately 731,519 rentable
square feet undergoing a permanent change in use to office/laboratory
space through redevelopment and two properties totaling approximately
74,304 rentable square feet that are classified as "held for sale."
(2) Including spaces undergoing a permanent change in use to
office/laboratory space through redevelopment, occupancy as of March
31, 2008 was 88.8%. See page 14 for additional information on our
redevelopment program.
(3) Excludes spaces at properties totaling 774,519 rentable square feet
undergoing a permanent change in use to office/laboratory space
through redevelopment and two properties totaling approximately
136,399 rentable square feet that are classified as "held for sale."
Including spaces undergoing a permanent change in use to
office/laboratory space through redevelopment, occupancy as of
December 31, 2007 was 87.8%. See page 14 for additional information on
our redevelopment program.
(4) Substantially all of the vacant space is office or warehouse space.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended March 31, 2008
Number Rentable
of Square Expiring New
Leases Footage Rates Rates
-------- --------- -------- ---------
Leasing Activity
Lease Expirations
Cash Basis 44 633,450 $25.96 -
GAAP Basis 44 633,450 $24.91 -
Renewed/Released Space Leased
Cash Basis 21 369,312 $26.55 $28.58
GAAP Basis 21 369,312 $25.11 $28.64
Developed/Redeveloped/
Vacant Space Leased
Cash Basis 27 201,098 - $31.65
GAAP Basis 27 201,098 - $31.89
Month-to-Month Leases in Effect
Cash Basis 14 81,463 $20.19 $20.16
GAAP Basis 14 81,463 $19.97 $20.16
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis 48 570,410 - $29.66
GAAP Basis 48 570,410 - $29.79
Including Month-to-Month Leases
Cash Basis 62 651,873 - $28.47
GAAP Basis 62 651,873 - $28.58
TI's/Lease
Rental Commissions Average
Rate Per Lease
Changes Square Foot Terms
--------- ------------- -----------
Leasing Activity
Lease Expirations
Cash Basis - - -
GAAP Basis - - -
Renewed/Released Space Leased
Cash Basis 7.60% $5.81 3.3 years
GAAP Basis 14.10% $5.81 3.3 years
Developed/Redeveloped/
Vacant Space Leased
Cash Basis - $6.57 4.2 years
GAAP Basis - $6.57 4.2 years
Month-to-Month Leases in Effect
Cash Basis - - -
GAAP Basis - - -
Leasing Activity Summary
Excluding Month-to-Month Leases
Cash Basis - $6.07 3.6 years
GAAP Basis - $6.07 3.6 years
Including Month-to-Month Leases
Cash Basis - - -
GAAP Basis - - -
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
March 31, 2008
Annualized
Rentable Base Rent
Square Percentage of of Expiring
Year of Number of Footage of Aggregate Leases
Lease Leases Expiring Leased Square (per rentable
Expiration Expiring Leases Feet square foot)
------------- ---------- -------------- -------------- --------------
2008 50(1) 505,873(1) 4.9% $23.41
2009 66 846,012 8.2 25.04
2010 53 979,355 9.5 28.58
2011 64 1,706,734 16.5 27.78
2012 60 1,410,349 13.7 34.23
Rentable Square
Footage of Expiring
Leases
Markets 2008 2009
---------------------------------- ------------ ---------
California - Los Angeles Metro 4,006 4,354
California - San Diego 78,503 203,464
California - San Francisco Bay 78,567 104,476
Eastern Massachusetts 187,026 126,242
International - Canada - -
New Jersey/Suburban Philadelphia 40,000 21,000
Southeast 22,440 87,015
Suburban Washington D.C. 74,688 265,525
Washington - Seattle 20,643 33,936
------------ ---------
Total 505,873(1) 846,012
============ =========
(1) Includes 14 month-to-month leases for approximately 81,000 rentable
square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Additions and Dispositions of Properties
For the Quarter Ended March 31, 2008
(Dollars in thousands)
Rentable
Acquisition Month of Square
Markets Amount Acquisition Feet
--------------------------------- ------------ ----------- ----------
Additions to Operating Properties:
None
Developable
Acquisition Month of Square
Markets Amount Acquisition Feet
--------------------------------- ------------ ----------- ----------
Additions to Land:
None
Rentable
Disposition Month of Square
Markets Amount Disposition Feet
--------------------------------- ------------ ----------- ----------
Dispositions:
California - San Diego $23,250 January 86,962
California - San Francisco Bay February/
46,400(1) March 272,730
------------ ----------
$69,650 359,692
============ ==========
(1) Represents sale of five properties in the east bay area of the San
Francisco Bay market.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Square Footage Undergoing Redevelopment
March 31, 2008
Estimated Square Footage
Placed Estimated Invest- Undergoing
in In- ment Redevelopment/
Markets/ Redeve- Service Per Square Total
Submarkets lopment Dates Foot Property Status
----------- --------- --------- -------- ---------------- -------------
California -
San Diego 2006 2008 $80-100 29,660/29,660 Construction
California -
San Diego/
Sorrento 2006 2008 $70-80 21,464/30,147 Construction
California -
San Diego/
Torrey
Pines 2004 2009 $100-120 87,140/87,140 Construction(1)
California -
San Diego/
Torrey
Pines 2006 2009 $80-100 43,600/43,600 Construction
California -
San Diego/
Torrey
Pines 2007 2009 $80-100 15,259/107,709 Construction
California -
San Diego/
Torrey
Pines 2007 2009 $80-100 39,224/76,084 Construction
California -
San
Francisco Bay/
Peninsula 2007 2008 $80-100 21,216/82,712 Construction
Eastern
Massachusetts/ Design/
Cambridge 2006 2008/2009 $120-175 124,075/177,101 Construction
Eastern
Massachusetts/ Design/
Cambridge 2007 2009 $100-130 73,776/369,831 Demolition
Eastern
Massachusetts/
Suburban 2007 2009 $100-120 23,000/38,000 Construction
Eastern
Massachusetts/ Redesign/
Suburban 2007 2009 $70-80 113,045/113,045 Construction
Southeast/
Florida 2006 2008 $80-100 44,238/45,841 Construction
Southeast/
Research
Triangle Design/
Park 2007 2008 $100-120 16,393/77,395 Construction
Suburban
Washington
D.C./
Gaithersburg 2008 2008 $40-50 15,504/44,464 Construction
Suburban
Washington
D.C./
Shady Grove 2007 2009 $70-80 52,634/125,004 Construction
Washington -
Seattle 2007 2008 $125-150 11,291/32,279 Construction
-------------------
731,519/1,480,012
===================
Our redevelopment program involves ongoing activities necessary for the
permanent change of use of applicable redevelopment space to
office/laboratory space. Spaces currently built out with laboratory
improvements are generally not placed into our value-add redevelopment
program. As required under GAAP, interest and other costs directly related
and essential to the project are capitalized on redevelopment properties
on the basis allocable only to that portion of space undergoing
redevelopment. In addition to properties undergoing redevelopment, as of
March 31, 2008, our asset base contained embedded opportunities for future
permanent change of use to office/laboratory space through redevelopment
aggregating approximately 1,699,000 rentable square feet. See Summary of
Embedded Future Development and Redevelopment Square Footage on page 16.
(1) This project also includes site work and a multi-story below and above
ground parking structure to support both the existing building
undergoing redevelopment and an additional building targeted for
development in the future. The entitlement process for this project
was completed in early 2007.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Undergoing Ground-Up Development
March 31, 2008
Estimated
Constru-Estimated Investment
ction In- Per Rentable
Markets/ Building Start Service Square Square
Submarkets Descriptions Dates Dates Foot (1) Feet Status
--------------------------------------------------------------------------
California -
San Francisco
Bay/Mission One Multi-
Bay tenant Bldg. 2007 2010 $350 158,000 Construction
California -
San Francisco Two Bldgs.,
Bay/So. San Single or
Francisco Multi-tenant 2006 2009 $350 162,000 Construction
California -
San Francisco One Single or
Bay/So. San Multi-tenant
Francisco Bldg. 2006 2009 $350 135,000 Construction
Two Bldgs.,
International - Single or
China Multi-tenant 2007 2009 $45 280,000 Construction
New York - Two Multi- 2010/
New York City tenant Bldgs. 2007 2011 $500 725,000(2)Construction
One Single or
Washington - Multi-tenant
Seattle Bldg. 2007 2010 TBD 115,000 Site Work
-----------
Total Properties Undergoing
Ground-Up Development (1) 1,575,000
===========
In accordance with Statement of Financial Accounting Standards No. 34,
"Capitalization of Interest Cost" ("SFAS 34") and Statement of Financial
Accounting Standards No. 67, "Accounting for Costs and Initial Rental
Operations of Real Estate Projects" ("SFAS 67"), we are required to
capitalize direct construction, including pre-construction costs,
interest, property taxes, insurance and other costs directly related and
essential to the construction of a project while activities are ongoing to
prepare an asset for its intended use. Pre-construction costs include
costs related to the development of plans and the process of obtaining
entitlements and permits from government authorities. Costs incurred after
a project is substantially complete and ready for its intended use are
expensed as incurred. Should development, redevelopment or construction
activity cease, construction costs, including interest, would no longer be
eligible for capitalization, under SFAS 34 and SFAS 67, and would be
expensed as incurred.
(1) Our aggregate construction costs to date approximate $121 per
developable square foot. Amount excludes our investment per square
foot in land.
(2) In addition, we have the right to develop an additional parcel with
approximately 442,000 rentable square feet. This square footage is
not included in the embedded developable square footage shown on
page 16.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Embedded Future Development and Redevelopment Square Footage
March 31, 2008
Embedded Future Development
-------------------------------
Total Embedded
Embedded Future
Development/ Development Redevelopment
Pre-construction Square Square
Markets Square Footage(1) Footage Footage Total
------------------ ------------ ------------- ----------
California -
San Diego 298,000 443,000 228,000 671,000
California -
San Francisco
Bay/Mission Bay 2,386,000 2,386,000 - 2,386,000
California -
San Francisco
Bay/So.
San Francisco 549,000 921,000 25,000 946,000
Eastern
Massachusetts 2,050,000 2,275,000 589,000 2,864,000
International -
Canada 763,000 827,000 - 827,000
Suburban
Washington D.C. 425,000 787,000 472,000 1,259,000
Washington -
Seattle 206,000 843,000 135,000 978,000
Other 176,000 516,000 250,000 766,000
------------------ ------------ ------------- ----------
Total 6,853,000 8,998,000(2) 1,699,000 10,697,000
================== ============ ============= ==========
The embedded future development and redevelopment square footage shown
above represents future ground-up development projects and future
redevelopment (permanent change in use of applicable space to
office/laboratory space) projects. A significant portion of our embedded
future development square footage is in the development/pre-construction
phase (entitlement, permitting, design, etc.). See discussion on SFAS 34
and SFAS 67 on page 15. Commencement of construction will depend on
numerous factors, including the successful completion of development/pre-
construction activities and management's assessment of overall market
conditions. As required under GAAP, direct construction, interest,
property taxes, insurance and other costs directly related and essential
to the development/pre-construction, or construction of a project, is
mandated to be capitalized during pre-construction when activities are
ongoing to bring these assets to their intended use.
(1) Development/pre-construction square footage is included in Embedded
Future Development -Total Embedded Development Square Footage
shown above.
(2) In addition, we have the right to develop an additional parcel with
approximately 442,000 rentable square fee
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