PASADENA, Calif., July 30, 2018 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) announced financial and operating results for the second quarter ended June 30, 2018.
Key highlights
Increased common stock dividend
Common stock dividend for 2Q18 of $0.93 per common share, up 7 cents, or 8.1%, over 2Q17; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.
Strong internal growth
2Q18 |
1H18 | |||||
Total leasing activity ? RSF |
985,996 |
2,467,160 | ||||
Lease renewals and re-leasing of space: |
||||||
Rental rate increases |
24.0% |
21.5% | ||||
Rental rate increases (cash basis) |
12.8% |
13.8% | ||||
RSF (included in total leasing activity above) |
727,265 |
961,813 | ||||
Property |
Submarket |
RSF |
Tenant | ||||
215 First Street |
Cambridge |
152,157 |
(1) |
Sarepta Therapeutics, Inc. | |||
960 Industrial Road |
Greater Stanford |
110,000 |
(2) |
Joby Aero, Inc. | |||
1201 Eastlake Avenue East |
Lake Union |
106,106 |
(3) |
Fred Hutchinson Cancer | |||
Alexandria Center® at One |
Cambridge |
69,512 |
(4) |
Ipsen Bioscience, Inc. | |||
950 Wind River Lane |
Gaithersburg |
50,000 |
AstraZeneca PLC | ||||
(1) |
Includes 121,476 RSF renewed/re-leased at rental rate increases of 53% and 36% (cash basis) and expansion of 30,681 RSF. 88,459 RSF represents early renewal of a lease expiration in January 2021. |
(2) |
Represents short-term lease for 110,000 RSF. The property also includes an additional 423,000 RSF undergoing entitlements for future development in one or two phases. |
(3) |
Re-leasing of space with a lease expiration in May 2019 at a rental rate increase of 35%. |
(4) |
Re-leasing of space with a lease expiration in June 2019 at rental rate increases of 16% and 49% (cash). |
Strong external growth; disciplined allocation of capital to visible, multiyear, highly leased value-creation pipeline
Property Leased % |
Unlevered Yields | ||||||||
Target Delivery |
Initial Stabilized |
Initial Stabilized (Cash) | |||||||
2018 |
501,325 |
RSF |
75% |
7.5% |
7.0% | ||||
2019 |
2,110,831 |
RSF |
86% |
7.3% |
6.7% | ||||
2,612,156 |
RSF |
84% |
7.3% |
6.8% | |||||
Recent and future growth in net operating income (cash basis) driven by recently delivered projects:
Completed strategic acquisitions
Acquisitions completed:
Operating results
2Q18 |
2Q17 |
1H18 |
1H17 | ||||||||||||
Net income attributable to Alexandria's common stockholders ? diluted: | |||||||||||||||
In millions |
$ |
52.0 |
$ |
31.6 |
$ |
185.0 |
$ |
57.3 |
|||||||
Per share |
$ |
0.51 |
$ |
0.35 |
$ |
1.83 |
$ |
0.64 |
|||||||
Funds from operations attributable to Alexandria's common stockholders ? diluted, as adjusted: | |||||||||||||||
In millions |
$ |
167.9 |
$ |
136.2 |
$ |
330.4 |
$ |
266.7 |
|||||||
Per share |
$ |
1.64 |
$ |
1.50 |
$ |
3.27 |
$ |
2.98 |
|||||||
See "Items Included in Net Income Attributable to Alexandria's Common Stockholders" below for additional information. |
Items included in net income attributable to Alexandria's common stockholders: | |||||||||||||||||||||||||||||||
(In millions, except per share amounts) |
Amount |
Per Share ? Diluted |
Amount |
Per Share ? Diluted | |||||||||||||||||||||||||||
2Q18 |
2Q17 |
2Q18 |
2Q17 |
1H18 |
1H17 |
1H18 |
1H17 | ||||||||||||||||||||||||
Realized gain on non-real estate |
$ |
? |
$ |
? |
$ |
? |
$ |
? |
$ |
8.3 |
$ |
? |
$ |
0.08 |
$ |
? | |||||||||||||||
Unrealized gains on non-real estate |
5.1 |
? |
0.05 |
? |
77.3 |
? |
0.76 |
? | |||||||||||||||||||||||
Gain on sales of real estate |
? |
0.1 |
? |
? |
? |
0.4 |
? |
? | |||||||||||||||||||||||
Impairment of: |
|||||||||||||||||||||||||||||||
Real estate |
(6.3) |
(0.2) |
(0.06) |
? |
(6.3) |
(0.2) |
(0.06) |
? | |||||||||||||||||||||||
Non-real estate investments |
? |
(4.5) |
? |
(0.05) |
? |
(4.5) |
? |
(0.05) | |||||||||||||||||||||||
Loss on early extinguishment of debt |
? |
? |
? |
? |
? |
(0.7) |
? |
(0.01) | |||||||||||||||||||||||
Preferred stock redemption charge |
? |
? |
? |
? |
? |
(11.3) |
? |
(0.12) | |||||||||||||||||||||||
Total |
$ |
(1.2) |
$ |
(4.6) |
$ |
(0.01) |
$ |
(0.05) |
$ |
79.3 |
$ |
(16.3) |
$ |
0.78 |
$ |
(0.18) | |||||||||||||||
Weighted-average shares of common stock |
102.2 |
90.7 |
101.2 |
89.5 | |||||||||||||||||||||||||||
(1) See "Investments" on page 46 of our Supplemental Information for additional information. |
Core operating metrics as of or for the quarter ended June 30, 2018
High-quality revenues and cash flows and operational excellence
Balance sheet management
Key metrics
2Q18 |
||||||
Quarter |
Trailing 12 |
4Q18 | ||||
Annualized |
Months |
Goal | ||||
Net debt to Adjusted EBITDA |
5.8x |
6.2x |
Less than 5.5x | |||
Fixed-charge coverage ratio |
4.3x |
4.3x |
Greater than 4.0x | |||
Unhedged variable-rate debt as a percentage of |
5% |
N/A |
Less than 5% | |||
Current and future value-creation pipeline as a |
10% |
N/A |
8% to 12% |
Key capital events
Corporate responsibility and industry leadership
Subsequent events
Sustainability |
June 30, 2018 |
Acquisitions |
|||||||||||||||||||||||||||||||
June 30, 2018 |
|||||||||||||||||||||||||||||||
(Dollars in thousands) |
|||||||||||||||||||||||||||||||
Property |
Submarket/Market |
Date of |
Number of |
Operating Occupancy |
Square Footage |
Unlevered Yields |
|||||||||||||||||||||||||
Operating |
Operating with |
Future Development |
Initial |
Initial |
|||||||||||||||||||||||||||
Purchase Price |
|||||||||||||||||||||||||||||||
Future Development |
|||||||||||||||||||||||||||||||
701 Dexter Avenue North |
Lake Union/Seattle |
7/20/18 |
1 |
N/A |
? |
? |
217,000 |
(1) |
(1) |
$ |
33,500 |
||||||||||||||||||||
Other |
Various |
Various |
? |
N/A |
? |
? |
493,000 |
(1) |
(1) |
58,205 |
|||||||||||||||||||||
Operating with Value-Creation |
|||||||||||||||||||||||||||||||
219 East 42nd Street |
Manhattan/New York City |
7/10/18 |
1 |
100% |
? |
349,947 |
(2) |
? |
6.8% |
(2) |
6.7% |
(2) |
203,000 |
||||||||||||||||||
100 Tech Drive |
Route 128/Greater Boston |
4/13/18 |
1 |
100% |
200,431 |
? |
300,000 |
8.7% |
7.3% |
87,250 |
|||||||||||||||||||||
Operating |
|||||||||||||||||||||||||||||||
Maryland Life Science Portfolio |
Rockville/Gaithersburg/ |
5/8/18 |
8 |
100% |
376,106 |
39,505 |
? |
9.1% |
7.0% |
(3) |
146,500 |
||||||||||||||||||||
2301 5th Avenue |
Lake Union/Seattle |
6/1/18 |
1 |
97% |
197,136 |
? |
? |
8.3% |
5.1% |
(3) |
95,000 |
||||||||||||||||||||
Other |
Various |
Various |
2 |
100% |
54,341 |
? |
? |
N/A |
N/A |
39,400 |
(4) |
||||||||||||||||||||
14 |
828,014 |
389,452 |
1,010,000 |
662,855 |
|||||||||||||||||||||||||||
1Q18 acquisitions |
339,400 |
||||||||||||||||||||||||||||||
Total |
$ |
1,002,255 |
|||||||||||||||||||||||||||||
2018 guidance midpoint |
$ |
1,010,000 |
(1) |
We expect to provide total estimated costs and related yields of development and redevelopment projects in the future. |
(2) |
We acquired a fee simple interest in this office building, which is currently occupied by Pfizer Inc. with a remaining lease term of six years. Upon expiration of the lease, we have the opportunity to increase cash flows through the conversion of office space into office/laboratory space through redevelopment. Under the Midtown East Rezoning, this property is currently entitled with an as-of-right density for an additional 230,000 developable square feet. Unlevered initial stabilized yields represent initial returns during the Pfizer, Inc. occupancy prior to any future redevelopment activities. We expect to provide total estimated costs and related yields of the development or redevelopment in the future. |
(3) |
These properties provide an opportunity to increase cash flows through the re-leasing of in-place leases currently 16% and 25% below market at the Maryland Life Science Portfolio and 2301 5th Avenue, respectively. |
(4) |
Includes, among others, the final installment related to our November 2016 acquisition of 1455 and 1515 Third Street of $18.9 million which was paid during the three months ended June 30, 2018. |
Guidance | ||||||||||
June 30, 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. 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 8 of this Earnings Press Release for additional information. | ||||||||||
Guidance |
Guidance | |||||||||
Summary of Key Changes in Guidance |
As of 7/30/18 |
As of 4/30/18 |
Summary of Key Changes in Guidance |
As of 7/30/18 |
As of 4/30/18 | |||||
EPS, FFO per share, and FFO per share, as adjusted |
See updates below(1) |
Key sources and uses of capital |
(2) |
N/A | ||||||
Occupancy percentage in North America as of December 31, 2018 |
97.1% to 97.7% |
96.9% to 97.5% |
Rental rate increases |
17.0% to 20.0% |
13.0% to 16.0% | |||||
Rental rate increases (cash basis) |
9.5% to 12.5% |
7.5% to 10.5% |
Projected Earnings per Share and Funds From Operations per Share Attributable to Alexandria's |
|||||||||
As of 7/30/18 |
As of 4/30/18 |
||||||||
Earnings per share |
$2.87 to $2.93 |
$2.88 to $2.98 |
|||||||
Depreciation and amortization |
4.50 |
4.45 |
|||||||
Allocation to unvested restricted stock awards |
(0.05) |
(0.05) |
|||||||
Funds from operations per share |
$7.32 to $7.38 |
$7.28 to $7.38 |
|||||||
Realized gain on non-real estate investment in 1Q18 |
(0.08) |
(0.08) |
|||||||
Unrealized gains on non-real estate investments(3) |
(0.76) |
(0.70) |
|||||||
Impairment of real estate ? land parcels(4) |
0.06 |
? |
|||||||
Allocation to unvested restricted stock awards/other |
0.03 |
0.02 |
|||||||
Funds from operations per share, as adjusted |
$6.57 to $6.63 |
$6.52 to $6.62 |
|||||||
Midpoint |
$6.60 |
$6.57 |
Key Assumptions |
Low |
High |
|||||||
Occupancy percentage in North America as of December 31, 2018 |
97.1% |
97.7% |
|||||||
Lease renewals and re-leasing of space: |
|||||||||
Rental rate increases |
17.0% |
20.0% |
|||||||
Rental rate increases (cash basis) |
9.5% |
12.5% |
|||||||
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 |
(7) | ||||
General and administrative expenses |
$ |
85 |
$ |
90 |
|||||
Capitalization of interest |
$ |
55 |
$ |
65 |
|||||
Interest expense |
$ |
155 |
$ |
165 |
|||||
Guidance |
|||
Key Credit Metrics |
|||
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 as of December 31, 2018 |
Less than 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 | |||||||||||||||
Sources of capital: |
||||||||||||||||||
Net cash provided by operating activities after dividends |
$ |
140 |
$ |
180 |
$ |
160 |
||||||||||||
Incremental debt |
540 |
500 |
520 |
|||||||||||||||
Real estate dispositions, partial interest sales, and |
1,330 |
1,530 |
1,430 |
$ |
1,200 |
(5) | ||||||||||||
Total sources of capital |
$ |
2,010 |
$ |
2,210 |
$ |
2,110 |
||||||||||||
Uses of capital: |
||||||||||||||||||
Construction |
$ |
1,050 |
$ |
1,150 |
$ |
1,100 |
||||||||||||
Acquisitions |
960 |
1,060 |
1,010 |
(6) |
||||||||||||||
Total uses of capital |
$ |
2,010 |
$ |
2,210 |
$ |
2,110 |
||||||||||||
Incremental debt (included above): |
||||||||||||||||||
Issuance of unsecured senior notes payable |
$ |
900 |
$ |
900 |
$ |
900 |
$ |
900 |
||||||||||
Repayments of secured notes payable |
(160) |
(165) |
(163) |
$ |
(150) |
|||||||||||||
Repayment of unsecured senior bank term loan |
(200) |
(200) |
(200) |
|||||||||||||||
$1.65 billion unsecured senior line of credit/other |
? |
(35) |
(17) |
|||||||||||||||
Incremental debt |
$ |
540 |
$ |
500 |
$ |
520 |
(1) |
Midpoint of FFO per share, as adjusted guidance increased by $0.03 from $6.57 to $6.60 primarily due to the incremental acquisitions as noted in footnote 2, and the continued strength of our core and the related increases in projected occupancy and rental rate growth on leasing activity. |
(2) |
Updates to key sources and uses of capital guidance for 2018 include: (a) $290 million increase in the midpoint of acquisitions range from $720 million to $1.0 billion, (b) $220 million increase in the midpoint of real estate dispositions, partial interest sales, and common equity range from $1.2 billion to $1.4 billion, (c) $300 million increase in issuance of unsecured senior notes payable reflecting the June 2018 issuance of our $900 million unsecured senior notes, and (d) $150 million increase in repayments of secured notes payable reflecting the July 2018 partial repayment of our secured construction loan. |
(3) |
Per share amounts of unrealized gains on non-real estate investments may be different for the full year ending December 31, 2018, depending on the weighted-average shares outstanding for the year ending December 31, 2018. Excludes future unrealized gains or losses that could be recognized in earnings from changes in fair value of equity investments after June 30, 2018. See page 46 of our Supplemental Information for additional information. |
(4) |
Impairment of real estate aggregating $6.3 million recognized during the three months ended June 30, 2018, related to one land parcel located in Northern Virginia that was subsequently sold in July 2018 with no gain or loss. |
(5) |
We have completed transactions aggregating $1.2 billion through July 2018. This includes completed and projected settlement of our forward equity sales agreements and completed sales under our ATM program. In January 2018, we executed forward equity sales agreements for 6.9 million shares of our common stock. 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 $709.9 million upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, in 2018. During the three months ended June 30, 2018, we sold 2.5 million shares of common stock under our ATM program at $124.46 per share, with net proceeds of $300.8 million. In July 2018, we sold 703,625 shares of common stock under our ATM common stock offering program for $127.91 per share and received net proceeds of $88.7 million. |
(6) |
See "Acquisitions" on page 5 of this Earnings Press Release for additional information. |
(7) |
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. |
Earnings Call Information and About the Company
June 30, 2018
We will host a conference call on Tuesday, July 31, 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 second quarter ended June 30, 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, July 31, 2018. The replay number is (877) 344-7529 or (412) 317-0088, and the confirmation code is 10118275.
Additionally, a copy of this Earnings Press Release and Supplemental Information for the second quarter ended June 30, 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/2018q2.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 co-chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; or Sara M. Kabakoff, assistant vice president ? 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 $18.8 billion and an asset base in North America of 32.0 million SF as of June 30, 2018. The asset base in North America includes 21.5 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 7.0 million SF of intermediate-term and future 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," "goals," "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.
Alexandria®, Lighthouse Design® logo, Building the Future of Life-Changing Innovationtm, LaunchLabs®, Alexandria Center®, Alexandria Technology Square®, and Alexandria Summit® are trademarks of Alexandria Real Estate Equities, Inc. All other company names, trademarks, and logos referenced herein are the property of their respective owners.
Consolidated Statements of Income |
||||||||||||||||||||||||||||
June 30, 2018 |
||||||||||||||||||||||||||||
(In thousands, except per share amounts) |
||||||||||||||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||||||||||||||
6/30/18 |
3/31/18 |
12/31/17 |
9/30/17 |
6/30/17 |
6/30/18 |
6/30/17 | ||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||||||
Rental |
$ |
250,635 |
$ |
244,485 |
$ |
228,025 |
$ |
216,021 |
$ |
211,942 |
$ |
495,120 |
$ |
419,135 |
||||||||||||||
Tenant recoveries |
72,159 |
73,170 |
70,270 |
67,058 |
60,470 |
145,329 |
121,816 |
|||||||||||||||||||||
Other income |
2,240 |
2,484 |
496 |
2,291 |
647 |
4,724 |
2,985 |
|||||||||||||||||||||
Total revenues |
325,034 |
320,139 |
298,791 |
285,370 |
273,059 |
645,173 |
543,936 |
|||||||||||||||||||||
Expenses: |
||||||||||||||||||||||||||||
Rental operations |
91,908 |
91,771 |
88,073 |
83,469 |
76,980 |
183,679 |
154,067 |
|||||||||||||||||||||
General and administrative |
22,939 |
22,421 |
18,910 |
17,636 |
19,234 |
45,360 |
38,463 |
|||||||||||||||||||||
Interest |
38,097 |
36,915 |
36,082 |
31,031 |
31,748 |
75,012 |
61,532 |
|||||||||||||||||||||
Depreciation and amortization |
118,852 |
114,219 |
107,714 |
107,788 |
104,098 |
233,071 |
201,281 |
|||||||||||||||||||||
Impairment of real estate |
6,311 |
? |
? |
? |
203 |
6,311 |
203 |
|||||||||||||||||||||
Loss on early extinguishment of debt |
? |
? |
2,781 |
? |
? |
? |
670 |
|||||||||||||||||||||
Total expenses |
278,107 |
265,326 |
253,560 |
239,924 |
232,263 |
543,433 |
456,216 |
|||||||||||||||||||||
Equity in earnings of unconsolidated real estate joint ventures |
1,090 |
1,144 |
376 |
14,100 |
589 |
2,234 |
950 |
|||||||||||||||||||||
Investment income(1) |
12,530 |
85,561 |
? |
? |
? |
98,091 |
? |
|||||||||||||||||||||
Gain on sales of real estate ? rental properties |
? |
? |
? |
? |
? |
? |
270 |
|||||||||||||||||||||
Gain on sales of real estate ? land parcels |
? |
? |
? |
? |
111 |
? |
111 |
|||||||||||||||||||||
Net income |
60,547 |
141,518 |
45,607 |
59,546 |
41,496 |
202,065 |
89,051 |
|||||||||||||||||||||
Net income attributable to noncontrolling interests |
(5,817) |
(5,888) |
(6,219) |
(5,773) |
(7,275) |
(11,705) |
(13,119) |
|||||||||||||||||||||
Net income attributable to Alexandria Real Estate Equities, Inc.'s |
54,730 |
135,630 |
39,388 |
53,773 |
34,221 |
190,360 |
75,932 |
|||||||||||||||||||||
Dividends on preferred stock |
(1,302) |
(1,302) |
(1,302) |
(1,302) |
(1,278) |
(2,604) |
(5,062) |
|||||||||||||||||||||
Preferred stock redemption charge |
? |
? |
? |
? |
? |
? |
(11,279) |
|||||||||||||||||||||
Net income attributable to unvested restricted stock awards |
(1,412) |
(1,941) |
(1,255) |
(1,198) |
(1,313) |
(2,765) |
(2,300) |
|||||||||||||||||||||
Net income attributable to Alexandria Real Estate Equities, Inc.'s |
$ |
52,016 |
$ |
132,387 |
$ |
36,831 |
$ |
51,273 |
$ |
31,630 |
$ |
184,991 |
$ |
57,291 |
||||||||||||||
Net income per share attributable to Alexandria Real Estate Equities, |
||||||||||||||||||||||||||||
Basic |
$ |
0.51 |
$ |
1.33 |
$ |
0.39 |
$ |
0.55 |
$ |
0.35 |
$ |
1.83 |
$ |
0.64 |
||||||||||||||
Diluted |
$ |
0.51 |
$ |
1.32 |
$ |
0.38 |
$ |
0.55 |
$ |
0.35 |
$ |
1.83 |
$ |
0.64 |
||||||||||||||
Weighted-average shares of common stock outstanding: |
||||||||||||||||||||||||||||
Basic |
101,881 |
99,855 |
95,138 |
92,598 |
90,215 |
100,878 |
89,186 |
|||||||||||||||||||||
Diluted |
102,236 |
100,125 |
95,914 |
93,296 |
90,745 |
101,191 |
89,479 |
|||||||||||||||||||||
Dividends declared per share of common stock |
$ |
0.93 |
$ |
0.90 |
$ |
0.90 |
$ |
0.86 |
$ |
0.86 |
$ |
1.83 |
$ |
1.69 |
(1) |
See "Investments" on page 46 of our Supplemental Information for additional information. |
Consolidated Balance Sheets | ||||||||||||||||||||
June 30, 2018 | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
6/30/18 |
3/31/18 |
12/31/17 |
9/30/17 |
6/30/17 | ||||||||||||||||
Assets |
||||||||||||||||||||
Investments in real estate |
$ |
11,190,771 |
$ |
10,671,227 |
$ |
10,298,019 |
$ |
10,046,521 |
$ |
9,819,413 |
||||||||||
Investments in unconsolidated real estate joint ventures |
192,972 |
169,865 |
110,618 |
33,692 |
58,083 |
|||||||||||||||
Cash and cash equivalents |
287,029 |
221,645 |
254,381 |
118,562 |
124,877 |
|||||||||||||||
Restricted cash |
34,812 |
37,337 |
22,805 |
27,713 |
20,002 |
|||||||||||||||
Tenant receivables |
8,704 |
11,258 |
10,262 |
9,899 |
8,393 |
|||||||||||||||
Deferred rent |
490,428 |
467,112 |
434,731 |
402,353 |
383,062 |
|||||||||||||||
Deferred leasing costs |
232,964 |
226,803 |
221,430 |
208,265 |
201,908 |
|||||||||||||||
Investments |
790,753 |
724,310 |
523,254 |
485,262 |
424,920 |
|||||||||||||||
Other assets |
333,757 |
291,639 |
228,453 |
213,056 |
205,009 |
|||||||||||||||
Total assets |
$ |
13,562,190 |
$ |
12,821,196 |
$ |
12,103,953 |
$ |
11,545,323 |
$ |
11,245,667 |
||||||||||
Liabilities, Noncontrolling Interests, and Equity |
||||||||||||||||||||
Secured notes payable |
$ |
776,260 |
$ |
775,689 |
$ |
771,061 |
$ |
1,153,890 |
$ |
1,127,348 |
||||||||||
Unsecured senior notes payable |
4,289,521 |
3,396,912 |
3,395,804 |
2,801,290 |
2,800,398 |
|||||||||||||||
Unsecured senior line of credit |
? |
490,000 |
50,000 |
314,000 |
300,000 |
|||||||||||||||
Unsecured senior bank term loans |
548,324 |
548,197 |
547,942 |
547,860 |
547,639 |
|||||||||||||||
Accounts payable, accrued expenses, and tenant security deposits |
849,274 |
783,986 |
763,832 |
740,070 |
734,189 |
|||||||||||||||
Dividends payable |
98,676 |
93,065 |
92,145 |
83,402 |
81,602 |
|||||||||||||||
Total liabilities |
6,562,055 |
6,087,849 |
5,620,784 |
5,640,512 |
5,591,176 |
|||||||||||||||
Commitments and contingencies |
||||||||||||||||||||
Redeemable noncontrolling interests |
10,861 |
10,212 |
11,509 |
11,418 |
11,410 |
|||||||||||||||
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 |
1,033 |
1,007 |
998 |
943 |
921 |
|||||||||||||||
Additional paid-in capital |
6,387,527 |
6,117,976 |
5,824,258 |
5,287,777 |
5,059,180 |
|||||||||||||||
Accumulated other comprehensive (loss) income |
(2,485) |
1,228 |
50,024 |
43,864 |
22,677 |
|||||||||||||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity |
6,460,461 |
6,194,597 |
5,949,666 |
5,406,970 |
5,157,164 |
|||||||||||||||
Noncontrolling interests |
528,813 |
528,538 |
521,994 |
486,423 |
485,917 |
|||||||||||||||
Total equity |
6,989,274 |
6,723,135 |
6,471,660 |
5,893,393 |
5,643,081 |
|||||||||||||||
Total liabilities, noncontrolling interests, and equity |
$ |
13,562,190 |
$ |
12,821,196 |
$ |
12,103,953 |
$ |
11,545,323 |
$ |
11,245,667 |
Funds From Operations and Funds From Operations per Share |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2018 |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In thousands) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6/30/18 |
3/31/18 |
12/31/17 |
9/30/17 |
6/30/17 |
6/30/18 |
6/30/17 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to Alexandria's common stockholders |
$ |
52,016 |
$ |
132,387 |
$ |
36,831 |
$ |
51,273 |
$ |
31,630 |
$ |
184,991 |
$ |
57,291 |
|||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization |
118,852 |
114,219 |
107,714 |
107,788 |
104,098 |
233,071 |
201,281 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling share of depreciation and amortization from consolidated real |
(3,914) |
(3,867) |
(3,777) |
(3,608) |
(3,735) |
(7,781) |
(7,377) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Our share of depreciation and amortization from unconsolidated real estate JVs |
807 |
644 |
432 |
383 |
324 |
1,451 |
736 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
? |
(111) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of real estate ? rental properties |
? |
? |
? |
? |
203 |
? |
203 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation to unvested restricted stock awards |
(1,042) |
(1,548) |
(734) |
(957) |
(685) |
(3,212) |
(1,245) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dilutive effect of assumed conversion of 7.00% Series D cumulative convertible |
? |
1,302 |
? |
? |
? |
2,604 |
? |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Funds from operations attributable to Alexandria's common stockholders ? |
166,719 |
243,137 |
140,466 |
140,773 |
131,724 |
411,124 |
250,508 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains on non-real estate investments(1) |
(5,067) |
(72,229) |
? |
? |
? |
(77,296) |
? |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gain on non-real estate investment |
? |
(8,252) |
? |
? |
? |
(8,252) |
? |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Removal of dilutive effect of assumed conversion of 7.00% Series D |
? |
(1,302) |
? |
? |
? |
(2,604) |
? |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of land parcels and non-real estate investments |
6,311 |
(3) |
? |
3,805 |
? |
4,491 |
6,311 |
(3) |
4,491 |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss on early extinguishment of debt |
? |
? |
2,781 |
? |
? |
? |
670 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred stock redemption charge |
? |
? |
? |
? |
? |
? |
11,279 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allocation to unvested restricted stock awards |
(18) |
1,125 |
(94) |
? |
(58) |
1,140 |
(209) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Funds from operations attributable to Alexandria's common stockholders ? |
$ |
167,945 |
$ |
162,479 |
$ |
146,958 |
$ |
140,773 |
$ |
136,157 |
$ |
330,423 |
$ |
266,739 |
(1) |
On January 1, 2018, we adopted an ASU that requires changes in the fair value of our non-real estate investments to be recognized in net income. During the three months ended March 31, 2018, we recognized unrealized gains of $72.2 million. These unrealized gains are
|
We compute funds from operations, as adjusted, excluding unrealized gains or losses on non-real estate investments. As a result, the assumed conversion of our Series D preferred stock was reversed from our Nareit FFO calculation, as its impact was anti-dilutive on a per share basis for our funds from operations, as adjusted.
| |
See "Investments" on page 46 of our Supplemental Information for additional information. See definitions for "Funds from operations and funds from operations, as adjusted, attributable to Alexandria's common stockholders" and "Weighted-Average Shares of Common Stock Outstanding ? Diluted" on pages 53 and 57, respectively, 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) |
Impairment of real estate recognized during the three months ended June 30, 2018, related to one land parcel located in Northern Virginia that was subsequently sold in July 2018 with no gain or loss. |
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. Per share amounts may not add due to rounding. | ||||||||||||||||||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||||||||||||||||||
6/30/18 |
3/31/18 |
12/31/17 |
9/30/17 |
6/30/17 |
6/30/18 |
6/30/17 | ||||||||||||||||||||||
Net income per share attributable to Alexandria's common stockholders |
$ |
0.51 |
$ |
1.32 |
$ |
0.38 |
$ |
0.55 |
$ |
0.35 |
$ |
1.83 |
$ |
0.64 |
||||||||||||||
Depreciation and amortization |
1.13 |
1.08 |
1.08 |
1.11 |
1.10 |
2.23 |
2.16 |
|||||||||||||||||||||
Our share of gain on sales of real estate from unconsolidated real estate JVs |
? |
? |
? |
(0.15) |
? |
? |
? |
|||||||||||||||||||||
Allocation to unvested restricted stock awards |
(0.01) |
? |
? |
? |
? |
(0.03) |
? |
|||||||||||||||||||||
Dilutive effect of assumed conversion of 7.00% Series D cumulative convertible |
? |
0.01 |
? |
? |
? |
? |
? |
|||||||||||||||||||||
Funds from operations per share attributable to Alexandria's common |
1.63 |
2.41 |
1.46 |
1.51 |
1.45 |
4.03 |
2.80 |
|||||||||||||||||||||
Unrealized gains on non-real estate investments(1) |
(0.05) |
(0.70) |
? |
? |
? |
(0.76) |
? |
|||||||||||||||||||||
Realized gain on non-real estate investment |
? |
(0.08) |
? |
? |
? |
(0.08) |
? |
|||||||||||||||||||||
Removal of dilutive effect of assumed conversion of 7.00% Series D cumulative |
? |
(0.01) |
? |
? |
? |
? |
? |
|||||||||||||||||||||
Impairment of land parcels and non-real estate investments |
0.06 |
(3) |
? |
0.04 |
? |
0.05 |
0.06 |
(3) |
0.05 |
|||||||||||||||||||
Loss on early extinguishment of debt |
? |
? |
0.03 |
? |
? |
? |
0.01 |
|||||||||||||||||||||
Preferred stock redemption charge |
? |
? |
? |
? |
? |
? |
0.12 |
|||||||||||||||||||||
Allocation to unvested restricted stock awards |
? |
? |
? |
? |
? |
0.02 |
? |
|||||||||||||||||||||
Funds from operations per share attributable to Alexandria's common stockholders ? diluted, as adjusted |
$ |
1.64 |
$ |
1.62 |
$ |
1.53 |
$ |
1.51 |
$ |
1.50 |
$ |
3.27 |
$ |
2.98 |
||||||||||||||
Weighted-average shares of common stock outstanding(1) for calculations of: |
||||||||||||||||||||||||||||
Earnings per share ? diluted and funds from operations ? diluted, as adjusted, per |
102,236 |
100,125 |
95,914 |
93,296 |
90,745 |
101,191 |
89,479 |
|||||||||||||||||||||
Funds from operations ? diluted, per share |
102,236 |
100,866 |
95,914 |
93,296 |
90,745 |
101,933 |
89,479 |
(1) |
See footnote 1 on prior page 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) |
See footnote 3 on prior page for additional information. |
SOURCE Alexandria Real Estate Equities, Inc.
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