PASADENA, Calif., April 30, 2018 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE:ARE) announced financial and operating results for the first quarter ended March 31, 2018.

Key highlights

Increased common stock dividend

Common stock dividend for 1Q18 of $0.90 per common share, up 7 cents, or 8%, over 1Q17; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

Improvement in credit rating outlook

In February 2018, S&P Global Ratings raised its credit outlook for our corporate credit rating to BBB/Positive from BBB/Stable. The positive outlook reflects S&P's belief that "there is further ratings upside over the next couple of years stemming from the company's high quality operating portfolio and projects under development, combined with a prudent financial policy."

Strong internal growth

  • Total revenues of $320.1 million, up 18.2%, for 1Q18, compared to $270.9 million for 1Q17;
  • Same property net operating income growth:
    • 4.0% and 14.6% (cash basis) for 1Q18, compared to 1Q17;
  • Continued solid leasing activity and strong rental rate growth, in light of modest contractual lease expirations at the beginning of 2018 and a highly leased value-creation pipeline:


1Q18

Total leasing activity – RSF


1,481,164

Lease renewals and re-leasing of space:



Rental rate increases


16.3%

Rental rate increases (cash basis)


19.0%

RSF (included in total leasing activity above)


234,548




  • Key leases executed during 1Q18 (included in total leasing activity above):

Property


Submarket


RSF


Tenant

1655 and 1725 Third Street


Mission Bay/SoMa


593,765


Uber Technologies, Inc.

Summers Ridge Science Park


Sorrento Mesa


192,070


Quidel Corporation

399 Binney Street


Cambridge


123,403


Three life science entities

279 East Grand Avenue


South San Francisco


104,013


Verily Life Sciences, LLC

681 Gateway Boulevard


South San Francisco


60,963


Twist Bioscience Corp.

 

Strong external growth; disciplined allocation of capital to visible, multiyear, highly leased value-creation pipeline

  • Development and redevelopment projects placed into service in 1Q18:
    • 91,155 RSF at our development project at 100 Binney Street in our Cambridge submarket, 100% leased to four high-quality biotechnology entities; and
    • 27,315 RSF at our redevelopment project at 266 and 275 Second Avenue in our Route 128 submarket, leased to Visterra, Inc.
  • Significant contractual near-term growth in annual cash rents of $76 million, of which $60 million will commence through 4Q18 ($35 million in 2Q18, $13 million in 3Q18, and $12 million in 4Q18). This is related to initial free rent granted on development and redevelopment projects recently placed into service (and no longer included in our value-creation pipeline) that are currently generating rental revenue.
  • 1Q18 commencements of development and redevelopment projects aggregating 651,951 RSF, including:
    • 593,765 RSF at 1655 and 1725 Third Street in our Mission Bay/SoMa submarket; and
    • 58,186 RSF at 704 Quince Orchard Road in our Gaithersburg submarket.
  • 81% leased on 2.3 million RSF of development and redevelopment projects undergoing construction (excludes RSF in service).

Completed strategic acquisitions

Acquisitions completed or under contract:

  • In 1Q18, we acquired 11 properties in four transactions for an aggregate purchase price of $320.5 million with current and future value-creation development and redevelopment opportunities.

Operating results

  • On January 1, 2018, we adopted a new accounting standard which requires us, on a prospective basis, to generally present our equity investments at fair value with changes in fair value reflected in earnings. In 1Q18, we recognized $72.2 million of unrealized gains from changes in fair value of our equity investments.

 


1Q18


1Q17


Change

Net income attributable to
Alexandria's common stockholders – diluted:










In millions

$

132.4


$

25.7


N/A

Per share

$

1.32


$

0.29


N/A







Funds from operations attributable to
Alexandria's common stockholders – diluted, as adjusted:











In millions

$

162.5


$

130.6


24.4%

Per share

$

1.62


$

1.48


9.5%









See "Items Included in Net Income Attributable to Alexandria's Common Stockholders" on the next page of this Earnings Press Release for additional information.

 

Items included in net income attributable to Alexandria's common stockholders:

(In millions, except per share amounts)

Amount


Per Share – Diluted

1Q18


1Q17


1Q18


1Q17

Realized gain on non-real estate investment(1)

$

8.3


$


$

0.08


$

Unrealized gains on non-real estate investments(2)

72.2



0.70


Loss on early extinguishment of debt


(0.7)



(0.01)

Preferred stock redemption charge


(11.3)



(0.12)

Total

$

80.5


$

(12.0)


$

0.78


$

(0.13)

Weighted-average shares of common stock outstanding for 
     calculation of earnings per share – diluted





100.1


88.2









(1)  Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized investment gains were $5.1 million for 1Q18.

(2)  See "Investments" on page 43 of our Supplemental Information for additional information.


Per share amounts above are shown net of the per share amounts allocable to unvested restricted stock awards.

 

Core operating metrics for 1Q18

High-quality revenue and cash flows and operational excellence

  • Percentage of annual rental revenue in effect from:
    • Investment-grade or large cap tenants: 57%
    • Class A properties in AAA locations: 79%
  • Occupancy of operating properties in North America: 96.6%
  • Operating margin: 71%
  • Adjusted EBITDA margin: 69%
  • Weighted-average remaining lease term:
    • Total tenants: 8.7 years
    • Top 20 tenants: 13.2 years
  • See "Strong internal growth" in the key highlights section on the previous page for information on our total revenues, same property net operating income growth, leasing activity, and rental rate growth.

Balance sheet management

Key metrics

  • $17.9 billion of total market capitalization as of 1Q18
  • $2.3 billion of liquidity as of 1Q18

 



1Q18
Annualized


Trailing 12
Months


4Q18
Goal

Net debt to Adjusted EBITDA


5.4x


6.1x


Less than 5.5x

Fixed-charge coverage ratio


4.6x


4.3x


Greater than 4.0x

Unhedged variable-rate debt as a percentage of 
     total debt


15%


N/A


5%

Current and future value-creation pipeline as a 
     percentage of gross investments in real estate 
     in North America


9%


N/A


8% to 12%

 

Key capital events

  • In January 2018, we entered into forward equity sales agreements to sell an aggregate 6.9 million shares of our common stock (including the exercise of underwriters' option) at a public offering price of $123.50 per share, before underwriting discounts. In March 2018, we settled 843,600 shares from our forward equity sales agreements and received proceeds of $100.2 million, net of underwriting discounts and adjustments provided in the forward equity sales agreements. We expect to receive proceeds of $713.7 million upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, which will fund current and near-term value-creation projects and acquisitions in 2018.

Corporate responsibility and industry leadership

  • 50% of annual rental revenue expected from LEED® certified projects upon completion of nine in-process projects. Two of our properties recently received LEED certifications, demonstrating our commitment to sustainability:
    • In March 2018, 505 Brannan Street in our Mission Bay/SoMa submarket received LEED Platinum certification; and
    • In April 2018, 100 Binney Street in our Cambridge submarket received LEED Gold certification.
  • In January 2018, we were awarded a 2017 Governor's Environmental and Economic Leadership Award, California's highest environmental honor recognizing entities that have demonstrated exceptional leadership and made notable contributions to conserving precious natural resources while promoting economic growth.
  • In January 2018, Alexandria Venture Investments launched the Alexandria Seed Capital Platform, an innovative seed-stage life science funding model and extension of Alexandria LaunchLabs®, which provides seed-stage financing to transformative life science companies. Alexandria Seed Capital Platform drives the growth of seed- and early-stage companies in New York City and across the country.
  • In February 2018, Joel S. Marcus, Executive Chairman and Founder, was appointed to the Navy SEAL Foundation board of directors.
  • In February 2018, Menlo Gateway in our Greater Stanford submarket was awarded "Development of the Year" by NAIOP San Francisco at its "Best of the Bay" awards event.
  • In March 2018, we announced elevations of key executive officers, effective in April 2018.

Subsequent events

  • During April 2018, we sold 782,967 shares of common stock under our at-the-market common stock offering program ("ATM program") for $122.20 per share and received net proceeds of $94.2 million.
  • In April 2018, our real estate joint venture at Menlo Gateway in our Greater Stanford submarket closed a secured construction loan with commitments available for borrowing of $157.3 million,  for the development of Phase II of the project. The loan matures on May 1, 2035, and bears interest at a fixed rate of 4.53%.

 

Sustainability

March 31, 2018                                                                                                                                                             

 

 

Acquisitions
March 31, 2018
(Dollars in thousands)


Property


Submarket/Market


Date of
Purchase


Number of
Properties


Anticipated
Use


Operating

Occupancy


Square Footage


Unlevered Yields


Purchase Price






Operating


Development/

Redevelopment


Future
Development


Initial
Stabilized


Initial
Stabilized
(Cash)












1Q18 Acquisitions


























1655 and 1725 Third Street
     (10% interest in unconsolidated JV)


Mission Bay/SoMa/
     
San Francisco


3/2/18


2


Office


N/A



593,765



7.8%


6.0%



$

31,950




Alexandria PARC


Greater Stanford/
     San Francisco


1/25/18


4


Office/lab


100%


152,383


45,115



TBD



136,000

























Summers Ridge Science Park


Sorrento Mesa/
     
San Diego


1/5/18


4


Office/lab


100%


316,531



50,000


8.2%


6.3%



148,650




704 Quince Orchard Road
     
(56.8% interest in unconsolidated JV)


Gaithersburg/

     Maryland


3/16/18


1


Office/lab


100%


21,745


58,186



TBD



3,900































11






490,659


697,066


50,000







320,500






























1455 and 1515 Third Street
     
(acquisition of remaining 49% interest)(1)


Mission Bay/SoMa/
     San Francisco


N/A


N/A


Office


100%


N/A  




N/A


N/A



18,900



























339,400
























































2Q18 Acquisitions completed or under purchase agreements/letters of intent




































100 Tech Drive


Route 128/
     
Greater Boston


4/13/18


1


Office/lab


100%


200,431



300,000


8.7%


7.3%



87,250




1455 and 1515 Third Street 

     (acquisition of remaining 49% interest)(1)


Mission Bay/SoMa/

     San Francisco


N/A


N/A


Office


100%


N/A  




N/A


N/A



18,900






























Pending


Various










612,747



253,000


TBD



268,050
















813,178



553,000







374,200




Total acquisitions























$

713,600




2018 Guidance range






















$670,000 – $770,000


























We expect to provide total estimated costs at completion and related yields of development and redevelopment projects in the future.



(1)

The first installment of $18.9 million related to our November 2016 acquisition of 1455 and 1515 Third Street was paid in 2Q17, and the second installment of $18.9 million was paid in January 2018. We expect to pay the third and final installment during 2Q18.

 

Guidance
March 31, 2018
(Dollars in millions, except per share amounts)



The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2018. Updates to guidance include: a) two cent increases to the midpoints, and reduction of the ranges from 20 cents to 10 cents for EPS - diluted, FFO per share - diluted, and FFO per share - diluted, as adjusted, and b) updating the EPS and FFO per share - diluted guidance ranges to include an investment gain of $8.3 million related to one non-real estate investment in a life science entity and unrealized gains of $72.2 million related to non-real estate investments in 1Q18. There can be no assurance that actual amounts will be materially higher or lower than these expectations. See our discussion of "forward-looking statements" on page 6 of this Earnings Press Release.



Earnings per Share and Funds From Operations per Share Attributable to Alexandria's
Common Stockholders – Diluted


Earnings per share


$2.88 to $2.98


Depreciation and amortization


4.45


Allocation to unvested restricted stock awards


(0.05)


Funds from operations per share


$7.28 to $7.38


Realized gain on non-real estate investment in 1Q18


(0.08)

(1)

Unrealized gains on non-real estate investments in 1Q18


(0.70)

(2)

Allocation to unvested restricted stock awards


0.02


Funds from operations per share, as adjusted


$6.52 to $6.62


 

Key Assumptions


Low


High


Occupancy percentage in North America as of December 31, 2018


96.9%


97.5%


Lease renewals and re-leasing of space:






Rental rate increases


13.0%


16.0%


Rental rate increases (cash basis)


7.5%


10.5%


Same property performance:






Net operating income increase


2.5%


4.5%


Net operating income increase (cash basis)


9.0%


11.0%








Straight-line rent revenue


$

92


$

102

(4)

General and administrative expenses


$

85


$

90


Capitalization of interest


$

55


$

65


Interest expense


$

155


$

165








 

Key Credit Metrics


2018 Guidance

Net debt to Adjusted EBITDA – 4Q18 annualized


Less than 5.5x

Net debt and preferred stock to Adjusted EBITDA – 4Q18 annualized


Less than 5.5x

Fixed-charge coverage ratio – 4Q18 annualized


Greater than 4.0x

Unhedged variable-rate debt as a percentage of total debt


5%

Value-creation pipeline as a percentage of gross real estate as of
December 31, 2018


8% to 12%




 

Key Sources and Uses of Capital


Range


Midpoint


Certain
Completed
Items

Sources of capital:











Net cash provided by operating activities after dividends


$

140


$

180


$

160




Incremental debt


470


430



450




Real estate dispositions, partial interest sales, and common equity


1,110


1,310



1,210


$

908

(3)

Total sources of capital


$

1,720


$

1,920


$

1,820




Uses of capital:











Construction


$

1,050


$

1,150


$

1,100




Acquisitions


670


770



720


(5)

Total uses of capital


$

1,720


$

1,920


$

1,820




Incremental debt (included above):











Issuance of unsecured senior notes payable


$

550


$

650


$

600




Repayments of secured notes payable


(10)


(15)



(13)




Repayment of unsecured senior bank term loan


(200)


(200)



(200)




$1.65 billion unsecured senior line of credit/other


130


(5)



63




Incremental debt


$

470


$

430


$

450






(1)

Represents an investment gain of $8.3 million related to one non-real estate investment in a life science entity recognized in 1Q18.

(2)

Per share amounts of unrealized gains on non-real estate investments in 1Q18 may be different for the full year ended December 31, 2018,
depending on the weighted-average shares outstanding for the year ended December 31, 2018. Excludes future changes in fair value
for equity investments pursuant to a new accounting standard effective January 1, 2018. See page 43 of our Supplemental Information for additional information.

(3)

We have completed transactions aggregating $908 million through April 2018. This includes completed and projected settlement of our forward equity sales agreements and completed sales under our ATM program, including 6.9 million shares of our common stock subject to forward equity sales agreements executed in January 2018. Additionally, in March 2018, we settled 843,600 shares from the forward equity sales agreements and received proceeds of $100.2 million, net of underwriting discounts and adjustments provided in the forward equity sales agreements. We expect to receive proceeds of $713.7 million upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, in 2018. Also, includes 782,967 shares of common stock sold in April 2018 under our ATM program at $122.20 per share, with net proceeds of $94.2 million.

(4)

Approximately 50% of straight-line rent revenue represents initial free rent on recently delivered and expected 2018 deliveries of new Class A properties from our development and redevelopment pipeline.

(5)

See "Acquisitions" on page 4 of this Earnings Press Release.

 

Earnings Call Information and About the Company
March 31, 2018

We will host a conference call on Tuesday, May 1, 2018, at 3:00 p.m. Eastern Time ("ET")/noon Pacific Time ("PT"), which is open to the general public to discuss our financial and operating results for the first quarter ended March 31, 2018. To participate in this conference call, dial (877) 270-2148 or (412) 902-6510 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the Alexandria Real Estate Equities, Inc. call. 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 5:00 p.m. ET/2:00 p.m. PT on Tuesday, May 1, 2018. The replay number is (877) 344-7529 or (412) 317-0088, and the confirmation code is 10117375.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2018, is available in the "For Investors" section of our website at www.are.com or by following this link: http://www.are.com/fs/2018q1.pdf.

For any questions, please contact Joel S. Marcus, executive chairman and founder; Stephen A. Richardson, co-chief executive officer; Peter M. Moglia, co-chief executive officer and chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; or Sara M. Kabakoff, senior manager – corporate communications, at (626) 578-0777.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® company, is an urban office real estate investment trust ("REIT") uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations, with a total market capitalization of $17.9 billion and an asset base in North America of 30.2 million SF as of March 31, 2018. The asset base in North America includes 20.8 million RSF of operating properties and 3.5 million RSF of development and redevelopment of new Class A properties currently undergoing construction and pre-construction activities with target delivery dates ranging from 2018 through 2020. Additionally, the asset base in North America includes 5.9 million SF of intermediate-term and future development projects, including 3.6 million SF of intermediate-term development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle Park. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide its innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science and technology companies through its venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

***********

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 2018 earnings per share attributable to Alexandria's common stockholders – diluted, 2018 funds from operations per share attributable to Alexandria's common stockholders – diluted, net operating income, 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 any properties undergoing development or redevelopment and our existing space held for future development or redevelopment (including new properties acquired for that purpose), 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 tenants, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or 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
March 31, 2018
(In thousands, except per share amounts)




Three Months Ended



3/31/18


12/31/17


9/30/17


6/30/17


3/31/17

Revenues:











Rental


$

244,485



$

228,025



$

216,021



$

211,942



$

207,193


Tenant recoveries


73,170



70,270



67,058



60,470



61,346


Other income


2,484



496



2,291



647



2,338


Total revenues


320,139



298,791



285,370



273,059



270,877













Expenses:











Rental operations


91,771



88,073



83,469



76,980



77,087


General and administrative


22,421



18,910



17,636



19,234



19,229


Interest


36,915



36,082



31,031



31,748



29,784


Depreciation and amortization


114,219



107,714



107,788



104,098



97,183


Impairment of real estate








203




Loss on early extinguishment of debt




2,781







670


Total expenses


265,326



253,560



239,924



232,263



223,953













Equity in earnings of unconsolidated real estate joint ventures


1,144



376



14,100



589



361


Investment income


85,561

(1)









Gain on sales of real estate – rental properties










270


Gain on sales of real estate – land parcels








111




Net income


141,518



45,607



59,546



41,496



47,555


Net income attributable to noncontrolling interests


(5,888)



(6,219)



(5,773)



(7,275)



(5,844)


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


135,630



39,388



53,773



34,221



41,711


Dividends on preferred stock


(1,302)



(1,302)



(1,302)



(1,278)



(3,784)


Preferred stock redemption charge










(11,279)


Net income attributable to unvested restricted stock awards


(1,941)



(1,255)



(1,198)



(1,313)



(987)


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


$

132,387



$

36,831



$

51,273



$

31,630



$

25,661













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











Basic


$

1.33



$

0.39



$

0.55



$

0.35



$

0.29


Diluted


$

1.32



$

0.38



$

0.55



$

0.35



$

0.29













Weighted-average shares of common stock outstanding:











Basic


99,855



95,138



92,598



90,215



88,147


Diluted


100,125



95,914



93,296



90,745



88,200













Dividends declared per share of common stock


$

0.90



$

0.90



$

0.86



$

0.86



$

0.83























(1)     See "Investments" on page 43 of our Supplemental Information for additional information.

 

Consolidated Balance Sheets
March 31, 2018
(In thousands)




3/31/18


12/31/17


9/30/17


6/30/17


3/31/17

Assets











Investments in real estate


$

10,671,227



$

10,298,019



$

10,046,521



$

9,819,413



$

9,470,667


Investments in unconsolidated real estate joint ventures


169,865



110,618



33,692



58,083



50,457


Cash and cash equivalents


221,645



254,381



118,562



124,877



151,209


Restricted cash


37,337



22,805



27,713



20,002



18,320


Tenant receivables


11,258



10,262



9,899



8,393



9,979


Deferred rent


467,112



434,731



402,353



383,062



364,348


Deferred leasing costs


226,803



221,430



208,265



201,908



202,613


Investments


724,310

(1)


523,254



485,262



424,920



394,471


Other assets


291,639



228,453



213,056



205,009



206,562


Total assets


$

12,821,196



$

12,103,953



$

11,545,323



$

11,245,667



$

10,868,626













Liabilities, Noncontrolling Interests, and Equity











Secured notes payable


$

775,689



$

771,061



$

1,153,890



$

1,127,348



$

1,083,758


Unsecured senior notes payable


3,396,912



3,395,804



2,801,290



2,800,398



2,799,508


Unsecured senior line of credit


490,000



50,000



314,000



300,000




Unsecured senior bank term loans


548,197



547,942



547,860



547,639



547,420


Accounts payable, accrued expenses, and tenant security deposits


783,986



763,832



740,070



734,189



782,637


Dividends payable


93,065



92,145



83,402



81,602



78,976


Preferred stock redemption liability










130,000


Total liabilities


6,087,849



5,620,784



5,640,512



5,591,176



5,422,299













Commitments and contingencies






















Redeemable noncontrolling interests


10,212



11,509



11,418



11,410



11,320













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











7.00% Series D cumulative convertible preferred stock


74,386



74,386



74,386



74,386



74,386


Common stock


1,007



998



943



921



899


Additional paid-in capital


6,117,976

(1)


5,824,258



5,287,777



5,059,180



4,855,686


Accumulated other comprehensive income


1,228



50,024



43,864



22,677



21,460


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


6,194,597



5,949,666



5,406,970



5,157,164



4,952,431


Noncontrolling interests


528,538



521,994



486,423



485,917



482,576


Total equity


6,723,135



6,471,660



5,893,393



5,643,081



5,435,007


Total liabilities, noncontrolling interests, and equity


$

12,821,196



$

12,103,953



$

11,545,323



$

11,245,667



$

10,868,626



(1)    Includes unrealized gains aggregating $213.1 million. See "Investments" on page 43 of our Supplemental Information for additional information.

 

Funds From Operations and Funds From Operations per Share
March 31, 2018
(In thousands, except for per share amounts)


     The following table presents a reconciliation of net income attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with generally accepted accounting principles ("GAAP"), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria's common stockholders – diluted, and funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below:




Three Months Ended



3/31/18


12/31/17


9/30/17


6/30/17


3/31/17

Net income attributable to Alexandria's common stockholders


$

132,387



$

36,831



$

51,273



$

31,630



$

25,661


Depreciation and amortization


114,219



107,714



107,788



104,098



97,183


Noncontrolling share of depreciation and amortization from consolidated real estate JVs


(3,867)



(3,777)



(3,608)



(3,735)



(3,642)


Our share of depreciation and amortization from unconsolidated real estate JVs


644



432



383



324



412


Gain on sales of real estate – rental properties










(270)


Our share of gain on sales of real estate from unconsolidated real estate JVs






(14,106)






Gain on sales of real estate – land parcels








(111)




Impairment of real estate – rental properties








203




Allocation to unvested restricted stock awards


(1,548)



(734)



(957)



(685)



(561)


Add: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)


1,302










Funds from operations attributable to Alexandria's common stockholders – diluted(2)


243,137



140,466



140,773



131,724



118,783


Less: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)


(1,302)










Realized gain on non-real estate investment


(8,252)

(3)









Unrealized gains on non-real estate investments(4)


(72,229)










Impairment of land parcels and non-real estate investments




3,805





4,491




Loss on early extinguishment of debt




2,781







670


Preferred stock redemption charge










11,279


Allocation to unvested restricted stock awards


1,125



(94)





(58)



(150)


Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted


$

162,479



$

146,958



$

140,773



$

136,157



$

130,582




(1)

See definition for "Weighted-Average Shares of Common Stock Outstanding – Diluted" on page 55 of our Supplemental Information for additional information.

(2)

Calculated in accordance with standards established by the Advisory Board of Governors of the National Association of Real Estate Investment Trusts (the "Nareit Board of Governors") in its April 2002 White Paper and related implementation
guidance.

(3)

Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized non-real estate investment gains were $5.1 million for 1Q18.

(4)

See "Investments" on page 43 of our Supplemental Information for additional information.

 

     The following table presents a reconciliation of net income per share attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria's common stockholders – diluted, and funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below. Amounts allocable to unvested restricted stock awards are not material and are not presented separately within the per share table below. Per share amounts may not add due to rounding.




Three Months Ended



3/31/18


12/31/17


9/30/17


6/30/17


3/31/17

Net income per share attributable to Alexandria's common stockholders


$

1.32



$

0.38



$

0.55



$

0.35



$

0.29


Depreciation and amortization


1.08



1.08



1.11



1.10



1.06


Our share of gain on sales of real estate from unconsolidated real estate JVs






(0.15)






Add: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)


0.01










Funds from operations per share attributable to Alexandria's common stockholders – diluted(2)


2.41



1.46



1.51



1.45



1.35


Less: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)


(0.01)










Realized gain on non-real estate investment


(0.08)

(3)









Unrealized gains on non-real estate investments(4)


(0.70)










Impairment of land parcels and non-real estate investments




0.04





0.05




Loss on early extinguishment of debt




0.03







0.01


Preferred stock redemption charge










0.12


Funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted


$

1.62



$

1.53



$

1.51



$

1.50



$

1.48













Weighted-average shares of common stock outstanding(1) for calculations of:











Earnings per share – diluted and funds from operations, as adjusted – diluted, per share


100,125



95,914



93,296



90,745



88,200


Funds from operations – diluted, per share


100,866



95,914



93,296



90,745



88,200



(1)    See definition for "Weighted-Average Shares of Common Stock Outstanding – Diluted" on page 55 of our Supplemental Information for additional information.

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

(3)    Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized non-real estate investment gains were $5.1 million for 1Q18.

(4)    See "Investments" on page 43 of our Supplemental Information for additional information.

 

 

 

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SOURCE Alexandria Real Estate Equities, Inc.


Source: Alexandria Real Estate Equities, Inc.