Alexandria Real Estate Equities, Inc. Reports Fourth Quarter and Year Ended December 31, 2012 Financial and Operating Results

Thu Feb 7, 2013 8:30am EST

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FFO Per Share - Diluted, as Adjusted, of $1.16 and $4.38 for Three Months and
Year Ended 4Q12
PASADENA, Calif.,  Feb. 7, 2013  /PRNewswire/ -- Alexandria Real Estate
Equities, Inc. (NYSE: ARE) today announced financial and operating results for
the fourth quarter and year ended  December 31, 2012.

Fourth Quarter and Year Ended  December 31, 2012, Highlights

Results

* Funds From Operations ("FFO") Attributable to Alexandria Real Estate Equities,
Inc.'s Common Stockholders - Diluted, as Adjusted, for the Three Months Ended 
December 31, 2012, was  $72.9 Million, or  $1.16  Per Share;  FFO Attributable
to Alexandria Real Estate Equities, Inc.'s Common Stockholders - Diluted, as
Adjusted, for the Year Ended  December 31, 2012, was  $272.1 Million, or  $4.38 
Per Share  
* Adjusted Funds From Operations ("AFFO") Attributable to Alexandria Real Estate
Equities, Inc.'s Common Stockholders - Diluted, for the Three Months Ended 
December 31, 2012, was  $66.3 Million, or  $1.05  Per Share;  AFFO Attributable
to Alexandria Real Estate Equities, Inc.'s Common Stockholders - Diluted, for
the Year Ended  December 31, 2012, was  $257.7 Million, or  $4.15  Per Share  
* Net Income Attributable to Alexandria Real Estate Equities, Inc.'s Common
Stockholders - Diluted, for the Three Months Ended  December 31, 2012, was 
$21.0 Million, or  $0.33  Per Share; Net Income Attributable to Alexandria Real
Estate Equities, Inc.'s Common Stockholders - Diluted, for the Three Months
Ended  December 31, 2012, was  $24.7 Million, or  $0.39  Per Share, Excluding
Impairment of Land Parcel/Real Estate Aggregating  $3.7 Million, or  $0.06  Per
Share; Net Income Attributable to Alexandria Real Estate Equities, Inc.'s Common
Stockholders - Diluted, for the Year Ended  December 31, 2012, was  $67.6
Million, or  $1.09  Per Share; Net Income Attributable to Alexandria Real Estate
Equities, Inc.'s Common Stockholders - Diluted, for the Year Ended  December 31,
2012, was  $85.8 Million, or  $1.38  Per Share, Excluding Impairment of Land
Parcel/Real Estate, Loss on Early Extinguishment of Debt, Gain on Sale of Land
Parcel/Real Estate, and Preferred Stock Redemption Charge Aggregating  $18.2
Million, or  $0.29  Per Share

Core Operating Metrics

* Total Revenues for the Three Months Ended  December 31, 2012, were  $154.2
Million, Up 11%, Compared to Total Revenues for the Three Months Ended  December
31, 2011, of  $139.2 Million; Total Revenues for the Year Ended  December 31,
2012, were  $586.1 Million, Up 7%, Compared to Total Revenues for the Year Ended
 December 31, 2011, of  $548.2 Million
* Net Operating Income ("NOI") from Continuing and Discontinued Operations for
the Three Months Ended  December 31, 2012, was  $111.1 Million, or  $444.5
Million  on an Annualized Basis, Up 9%, Compared to NOI from Continuing and
Discontinued Operations for the Three Months Ended  December 31, 2011, of 
$101.8 Million, or  $407.2 Million  on an Annualized Basis; NOI for the Three
Months Ended  December 31, 2012, was  $107.5 Million, Up 10%, Compared to NOI
for the Three Months Ended  December 31, 2011, of  $97.7 Million; NOI for the
Year Ended  December 31, 2012, was  $411.6 Million, Up 6%, Compared to NOI for
the Year Ended  December 31, 2011, of  $388.7 Million
* 47% of Total Annualized Base Rent ("ABR") from Investment-Grade Client Tenants
 
* Investment-Grade Client Tenants Represented 72% of Top 10 Client Tenants' ABR 

* Operating Margins at 70% for the Three Months Ended  December 31, 2012
* Cash and GAAP Same Property Net Operating Income Increases of 6.3% and 0.7%,
Respectively, for the Three Months Ended  December 31, 2012
* Cash and GAAP Same Property Net Operating Income Increase of 3.5% and Decrease
of 0.5%, Respectively, for the Year Ended  December 31, 2012
* Second Highest Year of Leasing Activity in Company History  
* During the Three Months Ended  December 31, 2012, Executed 47 Leases for
678,000 Rentable Square Feet, Including 265,000 Rentable Square Feet of
Development and Redevelopment Space; Rental Rate Decrease of 2.9% and Increase
of 2.6% on a Cash and GAAP Basis, Respectively, on Renewed/Re-Leased Space;
Excluding One Lease for 70,000 Rentable Square Feet in the Suburban  Washington,
D.C., Market, Rental Rates for Renewed/Re-Leased Space were, on Average, 1.3%
Higher and 6.1% Higher than Rental Rates for Expiring Leases on a Cash and GAAP
Basis, Respectively  
* During the Year Ended  December 31, 2012, Executed 187 Leases for 3,281,000
Rentable Square Feet, Including 1,135,000 Rentable Square Feet of Development
and Redevelopment Space; Rental Rate Decrease of 2.0% and Increase of 5.2% on a
Cash and GAAP Basis, Respectively, on Renewed/Re-Leased Space; Excluding One
Lease for 48,000 Rentable Square Feet in the Research Triangle Park Market and
Two Leases for 141,000 Rentable Square Feet in the Suburban  Washington, D.C.,
Market, Rental Rates for Renewed/Re-Leased Space were, on Average, 0.4% Higher
and 7.1% Higher than Rental Rates for Expiring Leases on a Cash and GAAP Basis,
Respectively  
* Occupancy Percentage for North America Operating Properties of 94.6%, Up from
94.2%, and Occupancy Percentage for North America Operating and Redevelopment
Properties of 91.6% Up from 90.0%; Occupancy Percentage for All Operating
Properties of 93.4%, Up from 93.0%, Including Asia Properties, and Occupancy
Percentage for All Operating and Redevelopment Properties of 89.8%, Up from
88.3%, Including Asia Properties

ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results
(Unaudited) 

Value-Added Opportunities and External Growth  

Key Commencements - Development

* In  November 2012, Commenced Development of 430 East 29th  Street, the West
Tower of the Alexandria Center™  for Life Science -  New York City, Located in
the Greater NYC Market, a Building with 419,806 Rentable Square Feet; 14%
Pre-Leased Plus an Additional 40% Subject to Letters of Intent  
* In  April 2012, Commenced Development of 360 Longwood Avenue, Located in the
Greater Boston Market, a 37% Pre-Leased Unconsolidated Joint Venture Project
with 414,000 Rentable Square Feet

Key Commencements - Redevelopment

* In  October 2012, Commenced Conversion of Manufacturing Space into Laboratory
Space Through Redevelopment of 4757 Nexus Center Drive, Located in the San Diego
Market, a 100% Pre-Leased Project with 68,423 Rentable Square Feet  
* In  October 2012, Commenced Conversion of Office Space into Laboratory Space
Through Redevelopment of 1616 Eastlake Avenue, Located in the Seattle Market, a
61% Pre-Leased Project with 66,776 Rentable Square Feet

Key Deliveries - Development

* In  November 2012, Completed Development of 259 East Grand Avenue, Located in
the San Francisco Bay Area Market, a 100% Leased Building with 170,618 Rentable
Square Feet  
* In  October 2012, Completed Development of 400/450 East Jamie Court, Located
in the San Francisco Bay Area Market, an 80% Leased Project with 163,036 Total
Rentable Square Feet  
* In  October 2012, Completed Development of 5200 Illumina Way, Located in the
San Diego Market, a 100% Leased Project with 127,373 Rentable Square Feet  
* In  September 2012, Completed Development of 4755 Nexus Center Drive, Located
in the San Diego Market, a 100% Leased Project with 45,255 Rentable Square Feet 

* In  April 2012, Completed Development Located in the Canadian Market, a 100%
Leased Project with 26,426 Rentable Square Feet

Key Deliveries - Redevelopment

* In November/December 2012, Partially Completed Redevelopment of 100% Leased
140,532 Rentable Square Feet at 400 Technology Square, Located in the Greater
Boston Market, a Building with 212,124 Total Rentable Square Feet  
* From  November 2011  to  September 2012, Completed Redevelopment of 10300
Campus Point Drive, Located in the San Diego Market, a 96% Leased Project with
279,138 Rentable Square Feet, including 189,562 Rentable Square Feet Completed
in  September 2012
* In  June 2012, Completed Redevelopment of 3530/3550  John Hopkins Court,
Located in the San Diego Market, a 100% Leased Project with 98,320 Rentable
Square Feet

Balance Sheet Strategy and Significant Milestones

* Our Balance Sheet Strategy Continues to Focus on Our Leverage Target of 6.5x
Net Debt to Adjusted EBITDA by  December 31, 2013, by Funding our Significant
Development and Redevelopment Projects in 2013 with Leverage-Neutral Sources of
Capital and by Continuing to Execute Our Asset Recycling Program  
* In 2012, Executed Capital Strategy and Proved Access to Diverse Sources of
Capital Strategically Important to Our Long-Term Capital Structure; Successfully
Accessed Every Long-Term Component of Our Targeted Sources of Capital, Including
Proceeds from Our Asset Recycling Program, Unsecured Senior Line of Credit,
4.60% Unsecured Senior Notes Payable Offering, Secured Construction Loan, 6.45%
Series E Preferred Stock Offering, and Selective "At The Market" Common Stock
Offerings  
* Completed  $75.1 Million  of Asset Sales in 2012; Completed Additional  $84.0
Million  of Asset Sales in 2013  
* In  June 2012, Established an "At The Market" Common Stock Offering Program
and Raised  $97.9 Million  in Net Proceeds from Sales Under This Program in 2012
 
* In  June 2012, Closed a Secured Construction Loan with Aggregate Commitments
of  $55.0 Million  for a Development Project at 259 East Grand Avenue Located in
the San Francisco Bay Area Market  
* In  April 2012, Amended Our  $1.5 Billion  Unsecured Senior Line of Credit to
Reduce Its Interest Rate and Extend Its Maturity Date to  April 2017, Assuming
We Exercise Our Sole Right to Extend the Maturity Date Twice  
* In  April 2012, Redeemed All  $129.6 Million  of Our Outstanding 8.375% Series
C Preferred Stock  
* In  March 2012, Completed a 6.45% Series E Preferred Stock Offering with Net
Proceeds of  $124.9 Million
* In  February 2012, Completed Our 4.60% Unsecured Senior Notes Payable Offering
with Net Proceeds of  $544.6 Million; Net Proceeds from the Offering Were Used
to Repay Certain Outstanding Variable Rate Bank Debt, Including All  $250
Million  of Our 2012 Unsecured Senior Bank Term Loan  
* In January and  April 2012, Retired All  $84.8 Million  of Our 3.70% Unsecured
Senior Convertible Notes

Events Subsequent to Year End

* In  January 2013, Executed a Lease for 244,123 Rentable Square Feet at 75/125
Binney Street, Located in the Greater Boston Market and in the First Quarter of
2013 Expect to Commence Development of this 386,275 Rentable Square Feet, 63%
Pre-Leased Project  
* In  January 2013, Completed Sale of 1124 Columbia Street and Two Land Parcels,
Located in the Seattle Market, a Building with 203,817 Rentable Square Feet, for
a Sales Price of Approximately  $42.6 Million, to a Buyer Expected to Renovate
and Reposition the Property for Medical Office Use  
* In  February 2013, Completed Sale of 25/35/45 West Watkins Mill Road, 1201
Clopper Road, and a Land  Parcel, Located in the Suburban Washington D.C.,
Market, Two Buildings with an Aggregate of 282,523 Rentable Square Feet, for a
Sales Price of Approximately  $41.4 Million, to a Buyer Expected to Renovate and
Reposition these Properties; Recognized a Gain on Sale of Approximately  $0.1
Million

ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results
(Unaudited) 

VALUE-ADDED OPPORTUNITIES AND EXTERNAL GROWTH

As of  December 31, 2012, 96% of our leases contained annual rent escalations
that were either fixed or based on a consumer price index or another index.  Our
initial stabilized yield on a cash basis reflects cash rents at date of
stabilization and does not reflect contractual rent escalations beyond the
stabilization date.  We expect, on average, our contractual cash rents related
to our value-added projects to increase over time.  Initial stabilized yield is
calculated as the quotient of the estimated amounts of net operating income and
our investment in the property at stabilization ("Initial Stabilized Yield").

During the three months and year ended  December 31, 2012, we executed leases
aggregating 265,000 and 1,135,000 rentable square feet, respectively, related to
our development and redevelopment projects.

Development and redevelopment

The following table summarizes the commencement of key development and
redevelopment projects (dollars in thousands, except per square foot amounts):

                                                                                                      Investment                            Initial                                                         
                                                     Commencement     Rentable          Pre-Leased    at                      Per           Stabilized Yield            Key                                 
 Address/Market                                       Date             Square Feet       %             Completion              RSF           Cash            GAAP      Client Tenant                       
 Development                                                                                                                                                                                               
 75/125 Binney Street, Greater Boston                 1Q13             386,275      (1)  63% (1)       $        351,439        $      910    8.0%            8.2%      ARIAD Pharmaceuticals, Inc.         
 430 East 29th  Street, Greater NYC                   November 2012    419,806           14% (2)       $        463,245        $   1,103     6.6%            6.5%      Roche                               
 360 Longwood Avenue, Greater Boston                  April 2012       414,000           37% (3)       $        350,000   (4)  $      845    8.3%            8.9%      Dana-Farber Cancer Institute, Inc.  
                                                                                                                                                                                                        
 Redevelopment                                                                                                                                                                                             
 4757 Nexus Center Drive, San Diego                   October 2012     68,423            100%          $          34,829       $      509    7.6%            7.8%      Genomatica, Inc.                    
 1616 Eastlake Avenue, Seattle                        October 2012     66,776            61%           $          37,816       $      566    8.4%            8.6%      Infectious Disease Research         
                                                                                                                                                                      Institute                           
                                                                                                                                                                                                                           
 (1)   Represents a one-building project with two towers totaling 386,275 rentable square feet.  ARIAD Pharmaceuticals, Inc. leased 100% of the 216,926 rentable square feet at 125 Binney Street and 27,197 rentable square   
 
       feet at  75 Binney Street, with additional potential expansion opportunities through June 30, 2014.  See page 10 for additional details on current assumptions included in our guidance for funding the cost to complete the 
 
       development of 75/125 Binney Street.                                                                                                                                                                              
 (2)   We have an additional 40% of the 419,806 rentable square feet that are at the letter of intent stage.                                                                                                               
 (3)   Dana-Farber Cancer Institute, Inc. also has an option to lease an additional two floors of approximately 99,000 rentable square feet, or an additional 24% of the total rentable square feet of our unconsolidated joint venture   
 
       development project through June 2014.                                                                                                                                                                            
 (4)   Represents the total venture cost at completion.  As of December 31, 2012, our equity investment was approximately $28.7 million related to our 27.5% ownership interest in the unconsolidated real estate entity.  Our   
 
       expected remaining cash commitment to the venture of approximately $16.9 million is less than the $22.3 million received in March 2012 from an in-substance partial sale of our interest in the underlying real estate. 


The following table summarizes the delivery of key development and redevelopment
projects during the year ended  December 31, 2012  (dollars in thousands, except
per square foot amounts):

                                            Portion Delivered                                              Total Project                                                                                                            
                                                                                         Occupancy     Investment                             Total Project Initial                                                        
                                            Completion                Rentable           as of         at                     Per             Stabilized Yield                         Key                                 
 Address/Market                             Date                      Square Feet        12/31/2012    Completion             RSF             Cash                GAAP               Client Tenant(s)                    
 Development                                                                                                                                                                                                             
 259 East Grand Avenue, San Francisco       November 2012             170,618            100%          $          74,090      $      434      8.7%      (1)       8.6%      (1)      Onyx Pharmaceuticals, Inc.          
 
   Bay Area                                                                                                                                                                                                            
 400/450 East Jamie Court, San              October 2012              163,036            80%           $        112,106       $      688      4.9%      (2)       4.9%      (2)      Stem CentRx, Inc.                   
 
   Francisco Bay Area                                                                                                                                                                                                  
 5200 Illumina Way, San Diego               October 2012              127,373            100%          $          46,978      $      369      7.0%                11.2%              Illumina, Inc.                      
 4755 Nexus Center Drive, San Diego         September 2012            45,255             100%          $          23,084      $      510      6.8%                7.5%               Optimer Pharmaceuticals, Inc.       
 Canada                                     April 2012                26,426             100%          $           8,883      $      336      7.7%                8.3%               GlaxoSmithKline plc                 
                                                                                                                                                                                                                         
 Redevelopment                                                                                                                                                                                                           
 400 Technology Square, Greater Boston      November -                140,532 (3)        100%          $        144,688       $   1,030       8.1%                8.9%               Ragon Institute of MGH, MIT         
                                            
December 2012                                                                                                                           
and Harvard; Epizyme, Inc.;        
                                                                                                                                                                                     
Aramco Services Company, Inc.      
 10300 Campus Point Drive, San Diego        November 2011  -          279,138 (4)        96%           $        131,649       $      472      7.9%                7.7%               The Regents of the University of    
                                            
September  2012                                                                                                                         
California; Celgene Corporation    
 3530/3550 John Hopkins Court, San Diego    June 2012                 98,320             100%          $          50,898      $      518      8.9%                9.1%               Genomics Institute of the           
                                                                                                                                                                                     
Novartis Research Foundation;      
                                                                                                                                                                                     
Verenium Corporation               
                                                                                                                                                                                                                         
 (1)  The Initial Stabilized Yield on a cash and GAAP basis for this project was approximately 8.7% and 8.6%, respectively, or approximately 0.7% and 0.6% higher than the mid-point of our previous Initial Stabilized Yield estimates   
 
       of 8.0%, on a cash and GAAP basis, respectively.                                                                                                                                                                                
 (2)  The Initial Stabilized Yield on a cash and GAAP basis for this project was approximately 4.9% and 4.9%, respectively, or approximately 0.7% and 0.6% higher than our previous Initial Stabilized Yield estimate of 4.2% and 4.3%,   
 
       on a cash and GAAP basis, respectively.                                                                                                                                                                                         
 (3)  In November and December 2012, we partially completed the redevelopment of 140,532 rentable square feet at 400 Technology Square, a building with 212,124 total rentable square feet.                                              
 (4)  Includes 189,562 rentable square feet delivered in September 2012, and 89,576 rentable square feet delivered in November 2011.                                                                                                     


Acquisitions

In  April 2012, we acquired 3013/3033 Science Park Road located in the  San
Diego  market, which consists of two buildings aggregating 176,500 rentable
square feet of non-laboratory space, for approximately  $13.7 million.  The
property was 100% leased on a short-term basis to a non-life science tenant and
thereafter, we expect to redevelop the property.  We expect to provide an
estimate of our Initial Stabilized Yields in the future upon commencement of
development/redevelopment activity.

 



ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results
(Tabular dollar amounts in thousands, except per square foot amounts)
(Unaudited) 



BALANCE SHEET STRATEGY AND SIGNIFICANT MILESTONES

Our balance sheet strategy continues to focus on our leverage target of
achieving net debt to adjusted EBITDA of 6.5x by  December 31, 2013, by funding
our significant development and redevelopment projects in 2013 with
leverage-neutral sources of capital and by continuing to execute our asset
recycling program.  During 2012, we executed our capital strategy and proved
that we have access to diverse sources of capital that we believe is
strategically important to our long-term capital structure.  These sources of
capital included 1) real estate asset dispositions, 2) secured construction
project financing, 3) unsecured line of credit, 4) unsecured note payable, 5)
joint venture capital, 6) preferred stock, and 7) common stock through our "at
the market" common stock offering program.

Real estate asset sales

We continue the disciplined execution of our asset recycling program to monetize
non-strategic operating and non-income-producing assets as a source of capital
while minimizing the issuance of common equity.  We target the following asset
types for sale and redeploy the capital to fund active development and
redevelopment projects with significant pre-leasing:

* Older buildings: elimination of potential capital expenditures and leasing
risk;  
* Non-strategic assets: disposition of properties not proximate to academic
medical research centers in core life science cluster locations;  
* Assets with alternative uses for buyer: transformation into non-laboratory
space, such as medical office buildings, hospitals, and residential spaces;  
* Suburban locations: reinvestment in higher value, Class-A assets in urban
"brain trust" life science cluster locations; or  
* Excess land: reduction of non-income-producing land holdings in certain
clusters, while maintaining specific land parcels for future growth.

A portion of our projected 2013 asset sales is under negotiation and we expect
to identify the remainder of the assets for disposition in the first half of
2013 in order to seek to achieve our target dispositions.

The following table presents our completed real estate asset sales:

                                                                                      Rentable/      Sales              Occupancy    Annualized                                              
                                                                    Date              Developable    Price              at Date      GAAP                 Sales              Gain            
 Description                               Location                 of Sale           Square Feet    per SF             of Sale      NOI (1)              Price              on Sale         
 Sales completed in 2012                                                                                                                                                                     
 1201/1209 Mercer Street (2)               Seattle                  September 2012    76,029         $         73       0%           $              45    $      5,570       $        54     
 801 Dexter Avenue North (2)               Seattle                  August 2012       120,000        $         72       0%           $            (96)    8,600              $        55     
 200 Lawrence Drive/210 Welsh Pool Road    Pennsylvania             July 2012         210,866        $         94       100%         $         2,193      19,750        (3)  $      103      
 155 Fortune Boulevard (4)                 Route 495/Worcester      July 2012         36,000         $       222        100%         $            804     8,000              $   1,350       
 5110 Campus Drive (4)                     Pennsylvania             May 2012          21,000         $         86       71%          $              77    1,800              $          2    
 Land parcel                               Greater Boston           March 2012        (5)            $       275        N/A          N/A                  31,360             $   1,864       
 Sales completed in 2012                                                                                                                                  75,080                             
                                                                                                                                                                                             
 Sales completed in 1Q13                                                                                                                                                                     
 1124 Columbia Street                      Seattle                  January 2013      203,817        $       209        81% (6)      $         6,802      42,600             $         −     
 25/35/45 West Watkins Mill Road/1201      Suburban Washington      February 2013     282,523        $       147   (8)  100%         $         7,795      41,400             $        53     
 
   Clopper Road (7)                      
D.C.                                                                                                                                             
 Sales completed in 2013                                                                                                                                  84,000                             
                                                                                                                                                                                             
 Total                                                                                                                                                    $   159,080                        
                                                                                                                                                                                             
 (1)  Annualized using actual year-to-date results as of the quarter end prior to date of sale or December 31, 2012.                                                                                          
 (2)  Properties sold to residential developers.                                                                                                                                                              
 (3)  Sales price reflects the near-term lease expiration of a client tenant occupying 38,513 rentable square feet, or 18% of the total rentable square feet, on the date of sale.  In connection with the sale, we received a secured   
 
       note receivable for $6.1 million with a maturity date in 2018.                                                                                                                                       
 (4)  Properties were sold to client tenants.                                                                                                                                                                 
 (5)  In March 2012, we completed an in-substance partial sale of our interest in underlying real estate supporting a project with 414,000 rentable square feet for approximately $31.4 million, or approximately $275 per rentable square foot. 
 (6)  The property is expected to become 74% vacant in 2013 and the current buyer is expected to significantly renovate the property into medical office use.  The sales price of 1124 Columbia Street includes a $29.8 million secured   
 
       note receivable due in 2015 with an option to extend the maturity date by one year.  As of December 31, 2012, this property is classified in discontinued operations.                                
 (7)  These properties met the classification for discontinued operations in January 2013 and were classified as operating properties as of December 31, 2012.  We completed the sale on February 1, 2013, and recognized a $0.1   
 
       million gain upon the closing of the transaction.                                                                                                                                                    
 (8)  These properties are expected to become 17% vacant in 2013, with significant additional vacancy in subsequent years, and the buyer is expected to significantly renovate the property at 1201 Clopper Road. 


Impairment of real estate assets

During the three months ended  September 30, 2012, we committed to sell four
operating properties comprised of 1124 Columbia Street in the  Seattle  market
and One Innovation Drive, 377 Plantation Street, and 381 Plantation Street in
the suburban  Greater Boston  market, aggregating 504,130 rentable square feet,
rather than to hold them on a long-term basis.  At the time of our commitment to
dispose of these assets, these four properties were on average 94% occupied and
generated approximately  $12.8 million  in annual operating income.  Upon our
commitment to sell, we wrote down the value of these assets to our estimate of
fair value, based on the anticipated sales price, less cost to sell.  As a
result, we recognized an impairment charge of approximately  $9.8 million.  In 
December 2012, we entered into an agreement with a third party to sell 1124
Columbia Street, at a price of  $42.6 million  which was below our reduced
carrying value as of  September 30, 2012.  As a result we recognized an
additional impairment charge of  $1.6 million  to write down the carrying value
to our revised estimated fair value less cost to sell.  In  January 2013, we
completed the sale of this property and no gain or loss on sale was recognized.

During the three months ended  December 31, 2012, we committed to sell a land
parcel with 50,000 developable square feet rather than hold it on a long-term
basis for future development.  Upon our decision to sell, we wrote down the
value of the land parcel to our estimate of fair value, based on the anticipated
sales price, less cost to sell.  As a result, we recognized an impairment charge
of approximately  $2.1 million.

 



ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results
(Unaudited) 



Sale of land parcel

In  March 2012, we completed an in-substance partial sale of our interest in a
joint venture that owned a land parcel supporting a future building with 414,000
rentable square feet in the Longwood Medical Area of the  Greater Boston  market
to a newly formed joint venture (the "Restated JV") with National Development
and Charles River Realty Investors, and admitted as a 50% member Clarion
Partners, LLC, resulting in a reduction of our ownership interest from 55% to
27.5%.  The transfer of one-half of our 55% ownership interest in this real
estate venture to Clarion Partners, LLC, was accounted for as an in-substance
partial sale of an interest in the underlying real estate.  In connection with
the sale of one-half of our 55% ownership interest in the land parcel, we
received a special distribution of approximately  $22.3 million, which included
the recognition of a  $1.9 million  gain on sale of land and approximately  $5.4
million  from our share of loan refinancing proceeds.  The land parcel we sold
in  March 2012  did not meet the criteria for classification as discontinued
operations since the parcel did not have any significant operations prior to
disposition.  Pursuant to the presentation and disclosure literature on
gains/losses on sales or disposals by REITs required by the Securities and
Exchange Commission ("SEC"), gains or losses on sales or disposals by a REIT
that do not qualify as discontinued operations are classified below income
(loss)  from discontinued operations in the income statement.  Accordingly, we
classified the  $1.9 million  gain on sale of land below income (loss) from
discontinued operations, net, in the condensed consolidated statements of
income, and included the gain in income from continuing operations attributable
to Alexandria Real Estate Equities, Inc.'s common stockholders in the "control
number," or numerator for computation of earnings per share.  Our 27.5% share of
the land was sold at approximately  $31 million  (including closing costs), or
approximately  $275  per rentable square foot.  Upon formation of the Restated
JV, the existing  $38.4 million  secured loan was refinanced with a seven-year
(including two one-year extension options) non-recourse  $213 million  secured
construction loan with initial loan proceeds of  $50 million.  As of  December
31, 2012, the outstanding balance on the construction loan was  $61.0 million. 
We do not expect our share of capital contributions through the completion of
the project to exceed the approximate  $22.3 million  in net proceeds received
in this transaction.  Construction of this  $350 million  project commenced in
April 2012.  The initial occupancy date for this project is expected to be in
the fourth quarter of 2014.  The project is 37% pre-leased to Dana-Farber Cancer
Institute, Inc.  In addition, Dana-Farber Cancer Institute, Inc. has an option
to lease an additional two floors approximating 99,000 rentable square feet, or
24% of the total rentable square feet of the project.  In addition to our
economic share of the joint venture, we also expect to earn development and
other fees of approximately  $3.5 million  through 2015, and recurring annual
property management fees thereafter, from this project.

"At the market" common stock offering program

In  June 2012, we established an "at the market" common stock offering program
under which we may sell, from time to time, up to an aggregate of  $250.0
million  of our common stock through our sales agents, BNY Mellon Capital
Markets, LLC and Credit Suisse Securities (USA) LLC, during a three-year period.
 During the year ended  December 31, 2012, we sold an aggregate of 1,366,977
shares of common stock for gross proceeds of approximately  $100.0 million  at
an average stock price of  $73.15  and net proceeds of approximately  $97.9
million, including commissions and other expenses of approximately  $2.1
million.  Net proceeds from the sales were used to pay down the outstanding
balance on our senior unsecured line of credit or other borrowings, and for
general corporate purposes.  As of  December 31, 2012, approximately  $150.0
million  of our common stock remained available for issuance under the "at the
market" common stock offering program.

Secured construction loan for development project in  San Francisco Bay Area 
market

In  June 2012, we closed a secured construction loan with aggregate commitments
of  $55.0 million.  We have an option to extend the stated maturity date of 
July 1, 2015, by one year, twice, to  July 1, 2017.  The construction loan bears
interest at the London Interbank Offered Rate ("LIBOR") or the base rate
specified in the construction loan agreement, defined as the higher of either
the prime rate being offered by our lender or the federal funds rate in effect
on the day of borrowing ("Base Rate"), plus in either case a specified margin of
1.50% for LIBOR borrowings or 0.25% for Base Rate borrowings.  As of  December
31, 2012, commitments of  $38.1 million  were available under this loan.

Amendment of  $1.5 billion  unsecured senior line of credit

In  April 2012, we amended our  $1.5 billion  unsecured senior line of credit
with Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities
Inc., and Citigroup Global Markets Inc. as joint lead arrangers, and certain
lenders, to extend the maturity date of our unsecured senior line of credit,
provide an accordion option for up to an additional  $500 million, and reduce
the interest rate for outstanding borrowings.  The maturity date of the
unsecured senior line of credit was extended to  April 2017, assuming we
exercise our sole right to extend the stated maturity date twice by an
additional six months after each exercise.  Borrowings under the unsecured
senior line of credit bear interest at LIBOR or the base rate specified in the
amended unsecured senior line of credit agreement, plus in either case a
specified margin (the "Applicable Margin").  The Applicable Margin for LIBOR
borrowings under the unsecured senior line of credit was set at 1.20%, down from
the 2.40% in effect immediately prior to the modification.  In addition to the
Applicable Margin, our unsecured senior line of credit is subject to an annual
facility fee of 0.25% based on the aggregate commitments outstanding.  In
connection with the modification of our unsecured senior line of credit in 
April 2012, we recognized a loss on early extinguishment of debt of
approximately  $1.6 million  related to the write-off of a portion of
unamortized loan fees for the three months ended  June 30, 2012.

8.375% series C preferred stock redemption

In  April 2012, we redeemed all 5,185,500 outstanding shares of our Series C
Preferred Stock at a price equal to  $25.00  per share, or approximately  $129.6
million  in aggregate, and paid  $0.5234375  per share, representing accumulated
and unpaid dividends to the redemption date on such shares.  We announced the
redemption and recognized a preferred stock redemption charge of approximately 
$6.0 million  to net income attributable to Alexandria Real Estate Equities,
Inc.'s common stockholders in  March 2012, related to the write-off of original
issuance costs of the Series C Preferred Stock.

6.45% series E preferred stock offering

In  March 2012, we completed a public offering of 5,200,000 shares of our 6.45%
series E cumulative redeemable preferred stock ("Series E Preferred Stock"). 
The shares were issued at a price of  $25.00  per share, resulting in net
proceeds of approximately  $124.9 million  (after deducting underwriters'
discounts and other offering costs).  The proceeds were initially used to reduce
the outstanding borrowings under our unsecured senior line of credit.  We then
borrowed funds under our unsecured senior line of credit to redeem our 8.375%
series C cumulative redeemable preferred stock ("Series C Preferred Stock") in
April 2012.  The dividends on our Series E Preferred Stock are cumulative and
accrue from the date of original issuance.  We pay dividends quarterly in
arrears at an annual rate of 6.45%, or  $1.6125  per share.  Our Series E
Preferred Stock has no stated maturity date, is not subject to any sinking fund
or mandatory redemption provisions, and is not redeemable before  March 15,
2017, except to preserve our status as a REIT.  On and after  March 15, 2017, we
may, at our option, redeem the Series E Preferred Stock, in whole or in part, at
any time for cash at a redemption price of  $25.00  per share, plus any accrued
and unpaid dividends on the Series E Preferred Stock up to, but excluding, the
redemption date.  In addition, upon the occurrence of a change of control, we
may, at our option, redeem the Series E Preferred Stock, in whole or in part
within 120 days after the first date on which such change of control occurred,
by paying  $25.00  per share, plus any accrued and unpaid dividends up to, but
excluding, the date of redemption.  Investors in our Series E Preferred Stock
generally have no voting rights.   


 

ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results
(Unaudited) 



4.60% unsecured senior notes payable offering

In  February 2012, we completed the issuance of our 4.60% unsecured senior notes
payable due in February 2022.  Net proceeds of approximately  $544.6 million 
were used to repay certain outstanding variable rate bank debt, including the
entire  $250 million  of our 2012 unsecured senior bank term loan ("2012
Unsecured Senior Bank Term Loan"), and approximately  $294.6 million  of
outstanding borrowings under our unsecured senior line of credit.  In connection
with the retirement of our 2012 Unsecured Senior Bank Term Loan, we recognized a
loss on early extinguishment of debt of approximately  $0.6 million  related to
the write-off of unamortized loan fees for the three months ended  March 31,
2012.

Retirement of 3.70% unsecured senior convertible notes

In January 2012, we repurchased approximately  $83.8 million  in principal
amount of our 3.70% unsecured senior convertible notes ("3.70% Unsecured Senior
Convertible Notes") at par, pursuant to options exercised by holders thereof
under the indenture governing the notes.  In  April 2012, we repurchased the
remaining outstanding  $1.0 million  in principal amount of the notes.  In
aggregate, we repurchased approximately  $84.8 million  in principal amount of
the notes and we did not recognize a gain or loss as a result during the year
ended  December 31, 2012.

 



ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results
(Unaudited)





GUIDANCE

Earnings outlook

Based on our current view of existing market conditions and certain current
assumptions, we expect that our earnings per share attributable to Alexandria
Real Estate Equities, Inc.'s common stockholders - diluted and FFO per share
attributable to Alexandria Real Estate Equities, Inc.'s common stockholders -
diluted for the year ended  December 31, 2013, will be as set forth in the table
below.  The table below provides a reconciliation of FFO per share attributable
to Alexandria Real Estate Equities, Inc.'s common stockholders - diluted, a
non-GAAP measure, to earnings per share, the most directly comparable GAAP
measure and other key assumptions included in our guidance for the year ended 
December 31, 2013.

 Guidance for the Year Ended December 31, 2013                                          Reported on February 7, 2013    Reported on December 5, 2012    
 Earnings per share attributable to Alexandria Real Estate Equities, Inc.'s common      $1.41 to $1.61                  $1.39 to $1.59                  
 
       stockholders - diluted                                                                                                                         
 Depreciation and amortization                                                          $2.93 to $3.13                  $2.91 to $3.11                  
 FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common           $4.44 to $4.64                  $4.40 to $4.60                  
 
       stockholders - diluted                                                                                                                         
                                                                                                                                                        
 Key projection assumptions:                                                                                                                            
 Same property net operating income growth - cash basis                                 4% to 7%                        4% to 7%                        
 Same property net operating income growth - GAAP basis                                 0% to 3%                        0% to 3%                        
 Rental rate steps on lease renewals and re-leasing of space - cash basis               Flat to slightly positive       Flat to slightly positive       
 Rental rate steps on lease renewals and re-leasing of space - GAAP basis               Up 5% to 10%                    Up 5% to 10%                    
 Occupancy at the end of 2013                                                           93.9% to 94.3%                  93.6% to 94.0%                  
 Straight-line rents                                                                    $24 to $26 million              $24 to $26 million              
 Amortization of above and below market leases                                          $3 to $4 million                $3 to $4 million                
 G&A expenses                                                                           $48 to $51 million              $48 to $51 million              
 Capitalization of interest                                                             $47 to $53 million              $47 to $53 million              
 Interest expense, net                                                                  $74 to $84 million              $74 to $84 million              
 Net debt to adjusted EBITDA for the annualized three months ended December 31, 2013    6.5x                            6.5x                            
 Fixed charge coverage ratio for the annualized three months ended December 31, 2013    2.9x to 3.0x                    2.9x to 3.0x                    


As of  December 31, 2012, we had approximately  $431.6 million  and  $199.7
million  of construction in progress related to our three North American
development and eight North American redevelopment projects, respectively.  The
completion of these projects, along with recently delivered projects, certain
future projects, and contributions from same properties, is expected to
contribute significant increases in rental income, net operating income, and
cash flows.  Operating performance assumptions related to the completion of our
North American development and redevelopment projects, including the timing of
initial occupancy, stabilization dates, and Initial Stabilized Yields, are
included on page 9 and 10.  Certain key assumptions regarding our projections,
including the impact of various development and redevelopment projects, are
included in the tables above and on the following page.   

The completion of our development and redevelopment projects will result in
increased interest expense and other direct project costs, because these project
costs will no longer qualify for capitalization and these costs will be expensed
as incurred.  Our projection assumptions for depreciation and amortization,
general and administrative expenses, capitalization of interest, interest
expense, net, and net operating income growth are included in the tables on this
page and are subject to a number of variables and uncertainties, including those
discussed under the "Forward-looking Statements" section of Part I, the "Risk
Factors" section of Item 1A, and the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section under Item 7, of our
annual report on Form 10-K for the year ended  December 31, 2011, and the "Risk
Factors" section of Item 1A of our quarterly report on Form 10-Q for the period
ended  September 30, 2012.  To the extent our full year earnings guidance is
updated during the year, we will provide additional disclosure supporting
reasons for any significant changes to such guidance.  Further, we believe net
operating income is a key performance indicator and is useful to investors as a
performance measure because, when compared across periods, net operating income
reflects the impact on operations from trends in occupancy rates, rental rates,
and operating costs, providing perspective not immediately apparent from income
from continuing operations.

 



ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results
(Unaudited) 



Sources and uses of capital

We expect that our principal liquidity needs for the year ended  December 31,
2013, will be satisfied by the following multiple sources of capital as shown in
the table below.  There can be no assurance that our sources and uses of capital
will not be materially higher or lower than these expectations.  Our liquidity
available under our unsecured senior line of credit and from cash equivalents
was approximately  $1.1 billion  as of  December 31, 2012.

                                                                                   Reported on                                                                               Reported on                 
                                                                                   
February 7, 2013                                                                         
December 5, 2012           
 Sources and Uses of Capital for the Year Ended December 31, 2013 (in millions)    Completed                       Projected                    Total                    Total                       
 Sources of capital:                                                                                                                                                                                 
 Net cash provided by operating activities less dividends                          $                      −        $           130 - 150        $        130 - 150  (1)  $           130 - 150       
 2013 asset sales initially targeted for 4Q12 closing                              43                              34                           77                       −                           
 2013 asset sales initially projected on December 5, 2012 (2)                                                                                                                                        
 Non-income-producing                                                              −                               175 - 225              (3)   175 - 225           (3)  175 - 225                   
 Income-producing                                                                  41                              34 - 84                      75 - 125                 75 - 125                    
 Secured construction loan borrowing                                               −                               20 - 30                      20 - 30                  20 - 30                     
 Unsecured senior notes                                                            −                               350 - 450                    350 - 450                350 - 450                   
 Issuances under "at the market" common stock offering program                     −                               125 - 175                    125 - 175                125 - 175                   
 Total sources of capital                                                          $                     84        $        868 - 1,148         $     952 - 1,232        $        875 - 1,155        
                                                                                                                                                                                                     
 Uses of capital:                                                                                                                                                                                    
 Development, redevelopment, and construction                                      $                      −        $           545 - 595        $        545 - 595  (4)  $           545 - 595       
 Seller financing of asset sales                                                   39                              −                            39                       −                           
 Acquisitions                                                                      −                               −                            −                        −                      (5)  
 Secured notes payable repayments (6)                                              −                               37                           37                       52                          
 Unsecured senior bank term loan repayment                                         −                               125 - 175                    125 - 175                125 - 175                   
 Paydown of unsecured senior line of credit                                        45                              161 - 341                    206 - 386                153 - 333                   
 Total uses of capital                                                             $                     84        $        868 - 1,148         $     952 - 1,232        $        875 - 1,155        
                                                                                                                                                                                                     
 (1)  See "Projection Results - Key Projection Assumptions" on the previous page.                                                                                                                             
 (2)  A portion of our projected 2013 asset sales is under negotiation and we expect to identify the remainder of the assets for disposition in the first half of 2013 in order to achieve our                
 
       targeted dispositions.                                                                                                                                                                               
 (3)  Our guidance has assumed transfer of 50% of our ownership interest in the 75/125 Binney Street project to be accounted for as an in-substance partial sale of an interest in a land                     
 
       parcel, with the resulting entity presented as an unconsolidated joint venture (the "Binney JV") in our financial statements.  This sale of a land parcel is included in our total projected         
 
       asset sales for 2013.                                                                                                                                                                                
 (4)  See "Investment to Complete" columns in the "Development and Redevelopment Projects in North America" table on the following page for additional details underlying this estimate.                      
 
       Our guidance for 2013 development, redevelopment, and construction spending of $545 to $595 million includes our estimated share of incremental capital required to complete the                     
 
       75/125 Binney Street Project.  See page 10 for additional details on the 75/125 Binney Street Project.                                                                                               
 (5)  Our guidance has assumed no acquisitions, but we review opportunistic acquisitions that we expect to fund on a leverage-neutral basis.                                                                  
 (6)  The reduction in projected secured notes payable of $15 million is related to two loans that were repaid in 2012 prior to their contractual maturity dates in 2013.                                     


The key assumptions behind the sources and uses of capital in the table above
are a favorable capital market environment and performance of our core
operations in areas such as delivery of current and future development and
redevelopment projects, leasing activity, and renewals.  Our expected sources
and uses of capital are subject to a number of variables and uncertainties,
including those discussed under the "Forward-looking statements" section of Part
I, the "Risk Factors" section of Item 1A, and the "Management's Discussion and
Analysis of Financial Condition and Results of Operations" section under Item 7,
of our annual report on Form 10-K for the year ended  December 31, 2011, and the
"Risk Factors" section of Item 1A of our quarterly report on Form 10-Q for the
period ended  September 30, 2012.  We expect to update our forecast of sources
and uses of capital on a quarterly basis.

 ALEXANDRIA REAL ESTATE EQUITIES, INC.                                                                                                                                                                                                                         
 Development and Redevelopment Projects in North America                                                                                                                                                                                                       
 December 31, 2012                                                                                                                                                                                                                                             
 (Tabular dollar amounts in thousands)                                                                                                                                                                                                                         
 (Unaudited)                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                               
                                                                  Project RSF (1)                                  Leased Status RSF (1)                                                                                                                 
 Market − Submarket/                                              In                                                                                                           % Leased/                                                     
 Property                                                         Service        CIP              Total        Leased        Negotiating       Marketing       Total           Negotiating    Client Tenants                                 
 Development projects in North America                                                                                                                                                                                                       
 Greater Boston - Cambridge                                                                                                                                                                                                                  
 225 Binney Street                                                −              305,212          305,212      305,212       −                 −               305,212         100%           Biogen Idec Inc.                               
 San Francisco Bay Area - Mission Bay                                                                                                                                                                                                        
 499 Illinois Street                                              −              222,780          222,780      −             −                 222,780         222,780         −              N/A                                            
 Greater NYC - Manhattan                                                                                                                                                                                                                     
 430 East 29th Street                                             −              419,806          419,806      60,816        167,244      (2)  191,746         419,806         54%            Roche                                          
 Development projects in North America                            −              947,798          947,798      366,028       167,244           414,526         947,798         56%                                                           
                                                                                                                                                                                                                                             
 Redevelopment projects in North America                                                                                                                                                                                                     
 Greater Boston - Cambridge                                                                                                                                                                                                                  
 400 Technology Square                                            140,532        71,592           212,124      169,939       −                 42,185          212,124         80%            Ragon Institute of MGH, MIT and Harvard;       
                                                                                                                                                                                              
Epizyme, Inc.; Warp Drive Bio, LLC; Aramco    
                                                                                                                                                                                              
Services Company, Inc.                        
 San Diego - University Town Center                                                                                                                                                                                                          
 4757 Nexus Center Drive                                          −              68,423           68,423       68,423        −                 −               68,423          100%           Genomatica, Inc.                               
 Seattle - Lake Union                                                                                                        −                                                                                                               
 1551 Eastlake Avenue                                             74,914         42,569           117,483      74,914        −                 42,569          117,483         64%            Puget Sound Blood Center and Program           
 1616 Eastlake Avenue                                             −              66,776           66,776       40,706        −                 26,070          66,776          61%            Infectious Disease Research Institute          
 Suburban and other redevelopment projects                        45,287         182,264          227,551      146,613       59,532            21,406          227,551         91%                                                           
 Redevelopment projects in North America                          260,733        431,624          692,357      500,595       59,532            132,230         692,357         81%                                                           
 Total development and redevelopment projects in North America    260,733        1,379,422        1,640,155    866,623       226,776           546,756         1,640,155       67%                                                           


                                                                  Investment (1)                                                                                                                               Initial Stabilized                              Initial                     
 Market − Submarket/                                              December 31, 2012                                To Complete                                   Total at               Per              Yield (1) (3)                  Project Start    Occupancy    Stabilization  
 Property                                                         In Service                 CIP                 2013                  Thereafter            Completion (3)         RSF              Cash              GAAP       Date (1)         Date (1)     Date (1)       
 Development projects in North America                                                                                                                                                                                                                                         
 Greater Boston - Cambridge                                                                                                                                                                                                                                                    
 225 Binney Street                                                $               −          $    104,422        $       75,851        $              −      $        180,273       $         591    7.5%              8.1%       4Q11             4Q13         4Q13           
 San Francisco Bay Area - Mission Bay                                                                                                                                                                                                                                          
 499 Illinois Street                                              $               −          $    113,196        $       17,119        $     22,894          $        153,209       $         688    6.4%              7.2%       2Q11             2Q14         1Q15           
 Greater NYC - Manhattan                                                                                                                                                                                                                                                       
 430 East 29th Street                                             $               −          $    213,960        $     134,057         $   115,228           $        463,245       $      1,103     6.6%              6.5%       4Q12             4Q13         2016           
 Development projects in North America                            $               −          $    431,578        $     227,027         $   138,122           $        796,727       $         841                                                                              
                                                                                                                                                                                                                                                                               
 Redevelopment projects in North America                                                                                                                                                                                                                                       
 Greater Boston - Cambridge                                                                                                                                                                                                                                                    
 400 Technology Square                                            $      85,732              $      43,966       $      14,990         $              −      $        144,688       $         682    8.1%              8.9%       4Q11             4Q12         4Q13           
 San Diego - University Town Center                                                                                                                                                                                                                                            
 4757 Nexus Center Drive                                          $               −          $        3,966      $      24,167         $       6,696         $          34,829      $         509    7.6%              7.8%       4Q12             4Q13         4Q13 (5)       
 Seattle - Lake Union                                                                                                                                                                                                                                                          
 1551 Eastlake Avenue                                             $      41,787              $      17,520       $        4,703        $              −      $          64,010      $         545    6.7%              6.7%       4Q11             4Q11         4Q13           
 1616 Eastlake Avenue                                             $               −          $      29,033       $        4,115        $       4,668         $          37,816      $         566    8.4%              8.6%       4Q12             2Q13         2014           
 Suburban and other redevelopment projects                        $      42,320              $    105,259        $      37,391         $              −      $        184,970       $         813                                                                              
 Redevelopment projects in North America                          $    169,839               $    199,744        $      85,366         $     11,364          $        466,313       $         674                                                                              
 Total development and redevelopment projects in North America    $    169,839               $    631,322        $    312,393          $   149,486           $     1,263,040        $         770                                                                              


Refer to the following page for all footnotes to the table above

 ALEXANDRIA REAL ESTATE EQUITIES, INC.                                                                                                                                                                 
 
Development and Redevelopment Projects in North America                                                                                                                                              
 December 31, 2012                                                                                                                                                                                     
 
(Tabular dollar amounts in thousands)                                                                                                                                                                
 
 (Unaudited)                                                                                                                                                                                         
                                                                                                                                                                                                       
 Development project commencements in the first quarter of 2013 in North America                                                                                                                       
                                                                                                                                                                                                       
                               Project RSF (1)                              Leased Status RSF (1)                                                                                                
 Market − Submarket/           In                                                                                                     % Leased/                                      
 Property                      Service        CIP            Total      Leased        Negotiating       Marketing       Total         Negotiating       Client Tenants               
 Greater Boston - Cambridge                                                                                                                                                          
 75/125 Binney Street          −              386,275  (5)   386,275    244,123       −                 142,152    (6)  386,275       63%          (6)  ARIAD Pharmaceuticals, Inc.  


                               Investment                                                                                                                                 Initial Stabilized                              Initial                     
 Market − Submarket/           December 31, 2012                    To Complete                                               Total at             Paer             Yield (1) (3)                  Project Start    Occupancy    Stabilization  
 Property                      In Service             CIP (4)     2013                Thereafter        Subtotal        Completion (3)       RSF              Cash              GAAP       Date (1)         Date (1)     Date (1)       
 Greater Boston - Cambridge                                                                                                                                                                                                             
 75/125 Binney Street          $           −          87,452      $     101,087  (7)  $   162,900       $   263,987     $        351,439     $         910    8.0%              8.2%       1Q13             1Q15         2016           


The following table presents the current assumptions included in our guidance
for funding of the cost to complete the 75/125 Binney Street project:

                                           Cost to Complete (7)                                                                                                
                                           2013                                   Thereafter                                 Total                         
 ARE investment                            $              40,000 - 50,000         $                                −         $            40,000 - 50,000  
 Binney JV partner capital contribution    20,000 - 25,000                        −                                          20,000 - 25,000               
 Secured construction loan                 30,000 - 40,000                        160,000 - 165,000                          190,000 - 205,000             
                                           $            90,000 - 115,000          $         160,000 - 165,000                $         250,000 - 280,000   


 (1)  All project information, including rentable square feet; investment; Initial Stabilized Yields; and project start, occupancy and stabilization dates, relates to the discrete portion of each property undergoing active development or redevelopment.  A       
      redevelopment project does not necessarily represent the entire property or the entire vacant portion of a property.  For example, the redevelopment project at 1616 Eastlake Avenue represents the conversion of two floors from office to laboratory/office   
      aggregating 66,776 rentable square feet.  The remaining rentable square feet of 101,714 at this property not undergoing active redevelopment was 74.8% occupied at December 31, 2012, and is included in our operating statistics.                              
 (2)  Represents rentable square feet subject to letters of intent.                                                                                                                                                                                                   
 (3)  As of December 31, 2012, 96% of our leases contained annual rent escalations that were either fixed or based on a consumer price index or another index.  Our Initial Stabilized Yield on a cash basis reflects cash rents at date of stabilization and does not 
      reflect contractual rent escalations beyond the stabilization date.  We expect, on average, our contractual cash rents related to our value-added projects to increase over time.  Our estimates for initial cash and GAAP yields, and total costs at           
      completion, represent our initial estimates at the commencement of the project.  We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.                       
 (4)  We expect to deliver 54,102 rentable square feet, or 79% of the total project, to Genomatica, Inc. in the fourth quarter of 2013.  Genomatica, Inc. is contractually required to lease the remaining 14,411 rentable square feet no later than 18 to 24 months  
      following the delivery of the initial 54,102 rentable square foot space.                                                                                                                                                                                        
 (5)  As of December 31, 2012, this project was classified in land undergoing preconstruction activities (additional CIP) in North America.  This project will be transferred into active development upon commencement of vertical construction during the three     
      months ended March 31, 2013.                                                                                                                                                                                                                                    
 (6)  ARIAD Pharmaceuticals, Inc. has potential additional expansion opportunities through June 2014.                                                                                                                                                                 
 (7)  Our guidance has assumed transfer of 50% of our ownership interest in the 75/125 Binney Street project to be accounted for as an in-substance partial sale of an interest in a land parcel, with the resulting entity presented as an unconsolidated joint      
      venture (the "Binney JV") in our financial statements.  This sale of a land parcel is included in our total projected asset sales for 2013.  The total remaining cost to complete for the 75/125 Binney Street project is expected to aggregate approximately   
      $264 million through 2016, of which $101 million is expected to be invested in 2013.  The projected sources of funding for the $264 million cost to complete for this project include a secured construction loan of approximately $190 million to $205 million, 
      Binney JV partner capital contribution of approximately $75 million to $80 million, (approximately $20 million to $25 million to be used towards construction) and our investment in the project of approximately $40 million to $50 million.  Our guidance for 
      2013 development, redevelopment, and construction spending of $545 to $595 million, shown on page 8, includes our estimated investment in the project of approximately $40 million to $50 million into the Binney JV.                                           


ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Fourth Quarter and Year Ended  December 31, 2012, Financial and Operating
Results





EARNINGS CALL INFORMATION

We will host a conference call on  Thursday, February 7, 2013, at  3:00 p.m.
Eastern Time  ("ET")/12:00 p.m.noon Pacific Time  ("PT") that is open to the
general public to discuss our financial and operating results for the three
months and year ended  December 31, 2012.  To participate in this conference
call, dial (866) 638-3013 or (630) 691-2761 and confirmation code 34214742,
shortly before  3:00 p.m. ET/12:00 p.m.noon PT.  The audio web cast 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  5:30 p.m. ET/2:30 p.m. PT  on 
Thursday, February 7, 2013.  The replay number is (888) 843-7419 or (630)
652-3042 and the confirmation code is 34214742.

Additionally, a copy of this Earnings Press Release and Supplemental Information
for the fourth quarter and year ended  December 31, 2012, are available in the
"For Investors" section of our website at  www.are.com.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE: ARE), a self-administered and
self-managed REIT, is the largest and leading investment-grade REIT focused
principally on owning, operating, developing, redeveloping, and acquiring
high-quality, sustainable real estate for the broad and diverse life science
industry.  Founded in 1994,  Alexandria  was the first REIT to identify and
pursue the laboratory niche and has since had the first-mover advantage in every
core life science cluster location including  Greater Boston,  San Francisco Bay
Area,  San Diego,  New York City,  Seattle, Suburban  Washington, D.C., and
Research Triangle Park.   Alexandria's high-credit client tenants span the life
science industry, including renowned academic and medical institutions,
multinational pharmaceutical companies, public and private biotechnology
entities,  United States  government research agencies, medical device
companies, industrial biotech companies, venture capital firms, and life science
product and service companies.  As the recognized real estate partner of the
life science industry,  Alexandria  has a superior track record in driving
client tenant productivity and innovation through its best-in-class laboratory
and office space, collaborative locations adjacent to leading academic and
medical institutions, unparalleled life science real estate expertise and
services, and longstanding and expansive network in the life science community,
which we believe result in higher occupancy levels, longer lease terms, higher
rental income, higher returns, and greater long-term asset value. For additional
information on Alexandria Real Estate Equities, Inc., please visit  www.are.com.
 

***********

This press release 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 2013 earnings per share
attributable to Alexandria Real Estate Equities, Inc.'s common stockholders −
diluted, 2013 FFO per share attributable to Alexandria Real Estate Equities,
Inc.'s common stockholders − diluted, and net operating income for the year
ended  December 31, 2013, and our projected sources and uses of capital in 2013.
 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.  These statements are
subject to risks, uncertainties, assumptions and other important factors that
could cause actual results to differ materially from the results discussed in
the forward-looking statements.  Factors that might cause such a difference
include, without limitation, our failure to obtain capital (debt, construction
financing, and/or equity) or refinance debt maturities, increased interest rates
and operating costs, adverse economic or real estate developments in our
markets, our failure to successfully complete and lease our existing space held
for redevelopment and new properties acquired for that purpose and any
properties undergoing development, our failure to successfully operate or lease
acquired properties, decreased rental rates or increased vacancy rates or
failure to renew or replace expiring leases, defaults on or non-renewal of
leases by client tenants, general and local economic conditions, and other risks
and uncertainties detailed in our filings with the 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 press release, and 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 REAL ESTATE EQUITIES, INC.                                                                                                                                                                                                             
 
Condensed Consolidated Statements of Income                                                                                                                                                                                                      
 
(Dollars in thousands, except per share amounts)                                                                                                                                                                                                 
 
(Unaudited)                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                   
                                                                 Three Months Ended                                                                                                           Year Ended                                      
                                                                 12/31/12                9/30/12                 6/30/12                 3/31/12                 12/31/11             12/31/12                 12/31/11             
 Revenues:                                                                                                                                                                                                                          
 Rental                                                          $       114,205         $       108,367         $       106,463         $       103,417         $       104,634      $       432,452          $       414,164      
 Tenant recoveries                                               36,180                  34,448                  32,172                  32,386                  33,031               135,186                  128,299              
 Other income                                                    3,785                   2,640                   9,381                   2,629                   1,584                18,435                   5,762                
 Total revenues                                                  154,170                 145,455                 148,016                 138,432                 139,249              586,073                  548,225              
                                                                                                                                                                                                                                    
 Expenses:                                                                                                                                                                                                                          
 Rental operations                                               46,639                  44,614                  42,359                  40,911                  41,553               174,523                  159,567              
 General and administrative                                      12,643                  12,485                  12,309                  10,358                  10,601               47,795                   41,127               
 Interest                                                        17,941                  17,094                  17,922                  16,227                  14,757               69,184                   63,378               
 Depreciation and amortization                                   48,072                  47,176                  51,276                  42,326                  39,762               188,850                  153,087              
 Impairment of land parcel                                       2,050                   −                       −                       −                       −                    2,050                    −                    
 Loss on early extinguishment of debt                            −                       −                       1,602                   623                     −                    2,225                    6,485                
 Total expenses                                                  127,345                 121,369                 125,468                 110,445                 106,673              484,627                  423,644              
                                                                                                                                                                                                                                    
 Income from continuing operations                               26,825                  24,086                  22,548                  27,987                  32,576               101,446                  124,581              
                                                                                                                                                                                                                                    
 Income (loss) from discontinued operations                                                                                                                                                                                         
 Income from discontinued operations before                      3,583                   4,018                   3,093                   2,924                   2,886                13,618                   11,760               
 
   impairment of real estate                                                                                                                                                                                                      
 Impairment of real estate                                       (1,601)                 (9,799)                 −                       −                       −                    (11,400)                 (994)                
 Income (loss) from discontinued operations, net                 1,982                   (5,781)                 3,093                   2,924                   2,886                2,218                    10,766               
                                                                                                                                                                                                                                    
 Gain on sale of land parcel                                     −                       −                       −                       1,864                   −                    1,864                    46                   
 Net income                                                      28,807                  18,305                  25,641                  32,775                  35,462               105,528                  135,393              
                                                                                                                                                                                                                                    
 Net income attributable to noncontrolling interests             1,012                   828                     851                     711                     1,142                3,402                    3,975                
 Dividends on preferred stock                                    6,471                   6,471                   6,903                   7,483                   7,090                27,328                   28,357               
 Preferred stock redemption charge                               −                       −                       −                       5,978                   −                    5,978                    −                    
 Net income attributable to unvested restricted stock            324                     360                     271                     235                     270                  1,190                    1,088                
 
   awards                                                                                                                                                                                                                         
 Net income attributable to Alexandria Real Estate               $         21,000        $         10,646        $         17,616        $         18,368        $         26,960     $         67,630         $       101,973      
 
   Equities, Inc.'s common stockholders                                                                                                                                                                                           
                                                                                                                                                                                                                                    
 Earnings per share attributable to Alexandria Real Estate                                                                                                                                                                          
 
         Equities, Inc.'s common stockholders - basic and                                                                                                                                                                         
 
         diluted:                                                                                                                                                                                                                 
 Continuing operations                                           $            0.30       $            0.26       $            0.24       $            0.25       $            0.39    $            1.05        $            1.55    
 Discontinued operations, net                                    0.03                    (0.09)                  0.05                    0.05                    0.05                 0.04                     0.18                 
 Earnings per share - basic and diluted                          $            0.33       $            0.17       $            0.29       $            0.30       $            0.44    $            1.09        $            1.73    
                                                                                                                                                                                                                                    
 Weighted average shares of common stock outstanding             63,091,781              62,364,210              61,663,367              61,507,807              61,427,495           62,159,913               59,066,812           
 
   for calculating earnings per share attributable to                                                                                                                                                                             
 
   Alexandria Real Estate Equities, Inc.'s common                                                                                                                                                                                 
 
   stockholders - basic                                                                                                                                                                                                           
 Dilutive effect of stock options                                −                       −                       173                     1,160                   3,939                331                      10,798               
 Weighted average shares of common stock outstanding             63,091,781              62,364,210              61,663,540              61,508,967              61,431,434           62,160,244               59,077,610           
 
   for calculating earnings per share attributable to                                                                                                                                                                             
 
   Alexandria Real Estate Equities, Inc.'s common                                                                                                                                                                                 
 
   stockholders - diluted                                                                                                                                                                                                         


 ALEXANDRIA REAL ESTATE EQUITIES, INC.                                                                                                                                                                       
 
Condensed Consolidated Balance Sheets                                                                                                                                                                      
 
(Dollars in thousands)                                                                                                                                                                                     
 
(Unaudited)                                                                                                                                                                                                
                                                                                                                                                                                                             
                                                                     December 31,             September 30,            June 30,                 March 31,                December 31,             
                                                                     2012                     2012                     2012                     2012                     2011                     
 Assets                                                                                                                                                                                           
 Investments in real estate, net                                     $          6,424,578     $          6,300,027     $          6,208,354     $          6,113,252     $          6,008,440     
 Cash and cash equivalents                                           140,971                  94,904                   80,937                   77,361                   78,539                   
 Restricted cash                                                     39,947                   44,863                   41,897                   39,803                   23,332                   
 Tenant receivables                                                  8,449                    10,124                   6,143                    8,836                    7,480                    
 Deferred rent                                                       170,396                  160,914                  155,295                  150,515                  142,097                  
 Deferred leasing and financing costs, net                           160,048                  152,021                  151,355                  143,754                  135,550                  
 Investments                                                         115,048                  107,808                  104,454                  98,152                   95,777                   
 Other assets                                                        90,679                   94,356                   93,304                   86,418                   82,914                   
 Total assets                                                        $          7,150,116     $          6,965,017     $          6,841,739     $          6,718,091     $          6,574,129     
                                                                                                                                                                                                  
 Liabilities, Noncontrolling Interests, and Equity                                                                                                                                                
 Secured notes payable                                               $             716,144    $             719,350    $             719,977    $             721,715    $             724,305    
 Unsecured senior notes payable                                      549,805                  549,794                  549,783                  550,772                  84,959                   
 Unsecured senior line of credit                                     566,000                  413,000                  379,000                  167,000                  370,000                  
 Unsecured senior bank term loans                                    1,350,000                1,350,000                1,350,000                1,350,000                1,600,000                
 Accounts payable, accrued expenses, and tenant security deposits    423,708                  376,785                  348,037                  323,002                  325,393                  
 Dividends payable                                                   41,401                   39,468                   38,357                   36,962                   36,579                   
 Preferred stock redemption liability                                −                        −                        −                        129,638                  −                        
 Total liabilities                                                   3,647,058                3,448,397                3,385,154                3,279,089                3,141,236                
                                                                                                                                                                                                  
 Commitments and contingencies                                                                                                                                                                    
                                                                                                                                                                                                  
 Redeemablenoncontrolling interests                                  14,564                   15,610                   15,817                   15,819                   16,034                   
                                                                                                                                                                                                  
 Alexandria Real Estate Equities, Inc.'s stockholders' equity:                                                                                                                                    
 Series C Preferred Stock                                            −                        −                        −                        −                        129,638                  
 Series D Convertible Preferred Stock                                250,000                  250,000                  250,000                  250,000                  250,000                  
 Series E Preferred Stock                                            130,000                  130,000                  130,000                  130,000                  −                        
 Common stock                                                        632                      632                      622                      616                      616                      
 Additional paid-in capital                                          3,086,052                3,094,987                3,053,269                3,022,242                3,028,558                
 Accumulated other comprehensive loss                                (24,833)                 (19,729)                 (37,370)                 (23,088)                 (34,511)                 
 Alexandria Real Estate Equities, Inc.'s stockholders' equity        3,441,851                3,455,890                3,396,521                3,379,770                3,374,301                
 Noncontrolling interests                                            46,643                   45,120                   44,247                   43,413                   42,558                   
 Total equity                                                        3,488,494                3,501,010                3,440,768                3,423,183                3,416,859                
 Totalliabilities, noncontrolling interests, and equity              $          7,150,116     $          6,965,017     $          6,841,739     $          6,718,091     $          6,574,129     


 ALEXANDRIA REAL ESTATE EQUITIES, INC.                                                                                                                                                                                                                                                    
 
Funds From Operations and Adjusted Funds From Operations                                                                                                                                                                                                                                
 
(Dollars in thousands, except per share amounts)                                                                                                                                                                                                                                        
 
(Unaudited)                                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                                                                                          
 The following table presents a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − basic, the most directly comparable financial measure presented in accordance with GAAP, to FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted, FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders - diluted, as adjusted, and AFFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders - 
 diluted, for the periods below:                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                          
                                                                                   Three Months Ended                                                                                                                          Year Ended                                            
                                                                                   12/31/12                   9/30/12                    6/30/12                    3/31/12                    12/31/11                12/31/12                    12/31/11                
 Net income attributable to Alexandria Real Estate Equities, Inc.'scommon          $          21,000          $          10,646          $          17,616          $          18,368          $          26,960       $          67,630           $        101,973        
 
   stockholders - basic                                                                                                                                                                                                                                                  
 Depreciation and amortization                                                     48,072                     48,173                     52,355                     43,405                     40,966                  192,005                     158,026                 
 Gain on sale of real estate                                                       −                          (1,562)                    (2)                        −                          −                       (1,564)                     −                       
 Impairment of real estate                                                         1,601                      9,799                      −                          −                          −                       11,400                      994                     
 Gain on sale of land parcel                                                       −                          −                          −                          (1,864)                    −                       (1,864)                     (46)                    
 Amount attributable to noncontrolling interests/unvested stock awards:                                                                                                                                                                                                    
 Net income                                                                        1,336                      1,188                      1,122                      946                        1,412                   4,592                       5,063                   
 FFO                                                                               (1,109)                    (1,148)                    (1,133)                    (1,156)                    (1,539)                 (4,561)                     (6,402)                 
 FFO attributable to Alexandria Real Estate Equities, Inc.'scommon                 70,900                     67,096                     69,958                     59,699                     67,799                  267,638                     259,608                 
 
   stockholders - basic                                                                                                                                                                                                                                                  
 Assumed conversion of 8.00% Unsecured Senior Convertible Notes                    5                          5                          6                          5                          5                       21                          21                      
 FFO attributable to Alexandria Real Estate Equities, Inc.'scommon                 70,905                     67,101                     69,964                     59,704                     67,804                  267,659                     259,629                 
 
   stockholders - diluted                                                                                                                                                                                                                                                
 Realized gain on equity investment primarily related to one non-tenant life       −                          −                          (5,811)                    −                          −                       (5,811)                     −                       
 
         science entity                                                                                                                                                                                                                                                  
 Impairment of land parcel                                                         2,050                      −                          −                          −                          −                       2,050                       −                       
 Loss on early extinguishment of debt                                              −                          −                          1,602                      623                        −                       2,225                       6,485                   
 Preferred stock redemption charge                                                 −                          −                          −                          5,978                      −                       5,978                       −                       
 Allocation to unvested restricted stock awards                                    (19)                       −                          35                         (53)                       −                       (39)                        (69)                    
 FFO attributable to Alexandria Real Estate Equities, Inc.'scommon                 $          72,936          $          67,101          $          65,790          $          66,252          $          67,804       $        272,062            $        266,045        
 
   stockholders - diluted, as adjusted                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                           
 Non-revenue-enhancing capital expenditures:                                                                                                                                                                                                                               
 Building improvements                                                             (329)                      (935)                      (594)                      (210)                      (675)                   (2,068)                     (2,531)                 
 Tenant improvements and leasing commissions                                       (3,170)                    (1,844)                    (2,148)                    (2,019)                    (6,083)                 (9,181)                     (10,600)                
 Straight-line rent                                                                (9,240)                    (5,225)                    (5,195)                    (8,796)                    (9,558)                 (28,456)                    (26,797)                
 Straight-line rent on ground leases                                               471                        201                        1,207                      1,406                      1,221                   3,285                       4,704                   
 Capitalized income from development projects                                      45                         50                         72                         478                        537                     645                         3,973                   
 Amortization of acquired above and below market leases                            (844)                      (778)                      (778)                      (800)                      (812)                   (3,200)                     (9,332)                 
 Amortization of loan fees                                                         2,505                      2,470                      2,214                      2,643                      2,551                   9,832                       9,300                   
 Amortization of debt premiums/discounts                                           110                        112                        110                        179                        565                     511                         3,819                   
 Stock compensation                                                                3,748                      3,845                      3,274                      3,293                      3,306                   14,160                      11,755                  
 Allocation to unvested restricted stock awards                                    63                         19                         15                         31                         80                      127                         122                     
 AFFO attributable to Alexandria Real Estate Equities, Inc.'scommon                $          66,295          $          65,016          $          63,967          $          62,457          $          58,936       $        257,717            $        250,458        
 
   stockholders - diluted                                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                                          
                                                                                                                                                                                                                                                                                          
 The following table presents a reconciliation of net income per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − basic, to FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders − diluted, FFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders - diluted, as adjusted, and AFFO per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders - diluted, for the periods below. For the 
 computation of the weighted average shares used to compute the per share information, refer to the "Definitions and Other Information" section in our supplemental information:                                                                                                          
                                                                                                                                                                                                                                                                                          
                                                                                   Three Months Ended                                                                                                                          Year Ended                                            
                                                                                   12/31/12                   9/30/12                    6/30/12                    3/31/12                    12/31/11                12/31/12                    12/31/11                
 Net income per share attributable to Alexandria Real Estate Equities, Inc.'s      $               0.33       $               0.17       $               0.29       $               0.30       $               0.44    $               1.09        $               1.73    
 
    common stockholders - basic                                                                                                                                                                                                                                          
 Depreciation and amortization                                                     0.76                       0.78                       0.84                       0.70                       0.67                    3.10                        2.66                    
 Gain on sale of real estate                                                       −                          (0.03)                     −                          −                          −                       (0.03)                      −                       
 Impairment of real estate                                                         0.03                       0.16                       −                          −                          −                       0.18                        0.02                    
 Gain on sale of land parcel                                                       −                          −                          −                          (0.03)                     −                       (0.03)                      −                       
 Amount attributable to noncontrolling interests/unvested stock awards:                                                                                                                                                                                                    
 Net income                                                                        0.02                       0.02                       0.02                       0.02                       0.02                    0.07                        0.09                    
 FFO                                                                               (0.02)                     (0.02)                     (0.02)                     (0.02)                     (0.03)                  (0.07)                      (0.11)                  
 FFO per share attributable to Alexandria Real Estate Equities, Inc.'scommon       1.12                       1.08                       1.13                       0.97                       1.10                    4.31                        4.39                    
 
   stockholders - basic                                                                                                                                                                                                                                                  
 Assumed conversion of 8.00% Unsecured Senior Convertible Notes                    −                          −                          −                          −                          −                       −                           −                       
 FFO per share attributable to Alexandria Real Estate Equities, Inc.'scommon       1.12                       1.08                       1.13                       0.97                       1.10                    4.31                        4.39                    
 
   stockholders - diluted                                                                                                                                                                                                                                                
 Realized gain on equity investment primarily related to one non-tenant life       −                          −                          (0.09)                     −                          −                       (0.09)                      −                       
 
         science entity                                                                                                                                                                                                                                                  
 Impairment of land parcel                                                         0.04                       −                          −                          −                          −                       0.04                        −                       
 Loss on early extinguishment of debt                                              −                          −                          0.03                       0.01                       −                       0.02                        0.11                    
 Preferred stock redemption charge                                                 −                          −                          −                          0.10                       −                       0.10                        −                       
 FFO per share attributable to Alexandria Real Estate Equities, Inc.'scommon       $               1.16       $               1.08       $               1.07       $               1.08       $               1.10    $               4.38        $               4.50    
 
   stockholders - diluted, as adjusted                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                           
 Non-revenue-enhancing capital expenditures:                                                                                                                                                                                                                               
 Building improvements                                                             (0.01)                     (0.01)                     (0.01)                     −                          (0.01)                  (0.03)                      (0.04)                  
 Tenant improvements and leasing commissions                                       (0.05)                     (0.03)                     (0.03)                     (0.03)                     (0.10)                  (0.15)                      (0.18)                  
 Straight-line rent                                                                (0.15)                     (0.08)                     (0.08)                     (0.14)                     (0.16)                  (0.46)                      (0.45)                  
 Straight-line rent on ground leases                                               0.01                       −                          0.02                       0.02                       0.02                    0.05                        0.08                    
 Capitalized income from development projects                                      −                          −                          −                          0.01                       0.01                    0.01                        0.07                    
 Amortization of acquired above and below market leases                            (0.01)                     (0.01)                     (0.01)                     (0.01)                     (0.01)                  (0.05)                      (0.16)                  
 Amortization of loan fees                                                         0.04                       0.03                       0.03                       0.04                       0.05                    0.16                        0.16                    
 Amortization of debt premiums/discounts                                           −                          −                          −                          −                          0.01                    0.01                        0.06                    
 Stock compensation                                                                0.06                       0.06                       0.05                       0.05                       0.05                    0.23                        0.20                    
 AFFO per share attributable to Alexandria Real Estate Equities, Inc.'scommon      $               1.05       $               1.04       $               1.04       $               1.02       $               0.96    $               4.15        $               4.24    
 
   stockholders - diluted                                                                                                                                                                                                                                                


ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Non-GAAP Measures

Funds from operations and funds from operations, as adjusted

GAAP basis accounting for real estate assets utilizes historical cost accounting
and assumes that 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 FFO.  Since its introduction, FFO has become a widely used
non-GAAP financial measure among equity REITs.  We believe that FFO is helpful
to investors as an additional measure of the performance of an equity REIT. 
Moreover, we believe that FFO, as adjusted, is also helpful because it allows
investors to compare our performance to the performance of other real estate
companies between periods, and on a consistent basis, without having to account
for differences caused by investment and disposition decisions, financing
decisions, terms of securities, capital structures, and capital market
transactions.  We compute FFO in accordance with standards established by the
Board of Governors of NAREIT in its  April 2002  White Paper and related
implementation guidance ("NAREIT White Paper").  The NAREIT White Paper defines
FFO as net income (computed in accordance with GAAP), excluding gains (losses)
from sales of real estate and land parcels and impairments of real estate
(excluding land parcels), plus real estate related depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures.  Impairments of real estate relate to decreases in the estimated fair
value of real estate due to changes in general market conditions and do not
necessarily reflect the operating performance of the properties during the
corresponding period.  Impairments of real estate represent the non-cash
write-down of assets when fair value over the recoverability period is less than
the carrying value.  We compute FFO, as adjusted, as FFO calculated in
accordance with the NAREIT White Paper, plus losses on early extinguishment of
debt, preferred stock redemption charges, and impairments of land parcels, less
realized gain on equity investment primarily related to one non-tenant life
science entity, and the amount of such items which are allocable to our unvested
restricted stock awards.  Our calculations of both FFO and FFO, as adjusted, may
differ from those methodologies utilized by other equity REITs for similar
performance measurements, and, accordingly, may not be comparable to other
equity REITs.  Neither FFO nor FFO, as adjusted, 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 liquidity, nor are they indicative of
the availability of funds for our cash needs, including funds available to make
distributions.

Adjusted funds from operations

AFFO is a non-GAAP financial measure that we use as a supplemental measure of
our performance.  We compute AFFO by adding to or deducting from FFO, as
adjusted: (1) non-revenue-enhancing capital expenditures, tenant improvements,
and leasing commissions (excludes development and redevelopment expenditures);
(2) effects of straight-line rent and straight-line rent on ground leases; (3)
capitalized income from development projects; (4) amortization of acquired above
and below market leases, loan fees, and debt premiums/discounts; (5) non-cash
compensation expense; and (6) allocation of AFFO attributable to unvested
restricted stock awards.

We believe that AFFO is a useful supplemental performance measure because it
further adjusts to: (1) deduct certain expenditures that, although capitalized
and classified in depreciation expense, do not enhance the revenue or cash flows
of our properties; (2) eliminate the effect of straight-lining our rental income
and capitalizing income from development projects in order to reflect the actual
amount of contractual rents due in the period presented; and (3) eliminate the
effect of non-cash items that are not indicative of our core operations and do
not actually reduce the amount of cash generated by our operations.  We believe
that eliminating the effect of non-cash charges related to stock-based
compensation facilitates a comparison of our operations across periods and among
other equity REITs without the variances caused by different valuation
methodologies, the volatility of the expense (which depends on market forces
outside our control), and the assumptions and the variety of award types that a
company can use.  We believe that AFFO provides useful information by excluding
certain items that are not representative of our core operating results because
such items are dependent upon historical costs or subject to judgmental
valuation inputs and the timing of our decisions.

AFFO is not intended to represent cash flow for the period, and is intended only
to provide an additional measure of performance.  We believe that net income
attributable to Alexandria Real Estate Equities, Inc.'s common stockholders is
the most directly comparable GAAP financial measure to AFFO.  We believe that
AFFO is a widely recognized measure of the operations of equity REITs, and
presenting AFFO will enable investors to assess our performance in comparison to
other equity REITs.  However, other equity REITs may use different methodologies
for calculating AFFO and, accordingly, our AFFO may not be comparable to AFFO
calculated by other equity REITs.  AFFO should not 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.

 

ALEXANDRIA  REAL ESTATE EQUITIES, INC.
Non-GAAP Measures
(Dollar amounts in thousands)
(Unaudited) 

Net operating income

Net operating income is a non-GAAP financial measure equal to income from
continuing operations, the most directly comparable GAAP financial measure, plus
loss on early extinguishment of debt, impairment of land parcel, depreciation
and amortization, interest expense, and general and administrative expense.  We
believe net operating income provides useful information to investors regarding
our financial condition and results of operations because it reflects primarily
those income and expense items that are incurred at the property level. 
Therefore, we believe net operating income is a useful measure for evaluating
the operating performance of our real estate assets.  Net operating income on a
cash basis is net operating income on a GAAP basis, adjusted to exclude the
effect of straight-line rent adjustments required by GAAP.  We believe that net
operating income 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.

Further, we believe net operating income is useful to investors as a performance
measure, because when compared across periods, net operating income reflects the
impact on operations from trends in occupancy rates, rental rates, and operating
costs, providing perspective not immediately apparent from income from
continuing operations.  Net operating income excludes certain components from
income from continuing operations in order to provide results that are more
closely related to the results of operations of our properties.  For example,
interest expense is not necessarily linked to the operating performance of a
real estate asset and is often incurred at the corporate level rather than at
the property level.  In addition, depreciation and amortization, because of
historical cost accounting and useful life estimates, may distort operating
performance at the property level.  Real estate impairments have been excluded
in deriving net operating income because we do not consider impairment losses to
be property level operating expenses.  Real estate impairment losses relate to
changes in the values of our assets and do not reflect the current operating
performance with respect to related revenues or expenses.  Our real estate
impairments represent the write down in the value of the assets to the estimated
fair value less cost to sell.  These impairments result from investing decisions
and the deterioration in market conditions that adversely impact underlying real
estate values.  Our calculation of net operating income also excludes charges
incurred from changes in certain financing decisions, such as losses on early
extinguishment of debt, as these charges often relate to the timing of corporate
strategy.  Property operating expenses that are included in determining net
operating income consist of costs that are related to our operating properties,
such as utilities, repairs and maintenance, rental expense related to ground
leases, contracted services, such as janitorial, engineering, and landscaping,
property taxes and insurance, and property level salaries.  General and
administrative expenses consist primarily of accounting and corporate
compensation, corporate insurance, professional fees, office rent, and office
supplies that are incurred as part of corporate office management.  Net
operating income presented by us may not be comparable to net operating income
reported by other equity REITs that define net operating income differently.  We
believe that in order to facilitate a clear understanding of our operating
results, net operating income should be examined in conjunction with income from
continuing operations as presented in our condensed consolidated statements of
income.  Net operating income should not be considered as an alternative to
income from continuing operations as an indication of our performance, or as an
alternative to cash flows as a measure of liquidity, or our ability to make
distributions.  The following table presents a reconciliation of net operating
income from continuing operations to income from continuing operations, and a
reconciliation of net operating income from discontinued operations to income
from discontinued operations, net:

                                             Three Months Ended                                                       Year Ended                                                            
 Continuing operations                       December 31, 2012                      December 31, 2011               December 31, 2012                   December 31, 2011               
 Total revenues                              $                   154,170            $                   139,249     $                   586,073         $                   548,225     
 Rental operating expenses                   46,639                                 41,553                          174,523                             159,567                         
 Net operating income                        107,531                                97,696                          411,550                             388,658                         
 Operating margins                           70%                                    70%                             70%                                 71%                             
 General and administrative                  12,643                                 10,601                          47,795                              41,127                          
 Interest                                    17,941                                 14,757                          69,184                              63,378                          
 Depreciation and amortization               48,072                                 39,762                          188,850                             153,087                         
 Impairment of land parcel                   2,050                                  −                               2,050                               −                               
 Loss on early extinguishment of debt        −                                      −                               2,225                               6,485                           
 Income from continuing operations           $                     26,825           $                     32,576    $                   101,446         $                   124,581     
                                                                                                                                                                                        
 Discontinued operations                                                                                                                                                                
 Total revenues                              $                      5,898           $                      6,640    $                     24,706        $                     26,298    
 Rental operating expenses                   2,315                                  2,548                           9,496                               9,534                           
 Net operating income                        3,583                                  4,092                           15,210                              16,764                          
 Operating margins                           61%                                    62%                             62%                                 64%                             
 Interest                                    −                                      −                               −                                   65                              
 Depreciation and amortization               −                                      1,206                           3,156                               4,939                           
 Gain on sale of real estate                 −                                      −                               (1,564)                             −                               
 Impairment of real estate                   1,601                                  −                               11,400                              994                             
 Income from discontinued operations, net    $                      1,982           $                      2,886    $                      2,218        $                     10,766    


SOURCE  Alexandria Real Estate Equities, Inc.


Joel S. Marcus, Chairman, Chief Executive Officer, & Founder, Alexandria Real
Estate Equities, Inc., +1-626-578-9693

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