Alexandria Real Estate Equities, Inc. Reports Fourth Quarter and Year Ended
December 31, 2007 Results
Highlights ----------
PASADENA, Calif., Feb. 11 /PRNewswire/ -- Alexandria Real Estate Equities,
Inc. (NYSE: ARE) today announced operating and financial results for the
fourth quarter and year ended December 31, 2007.
For the fourth quarter of 2007, we reported total revenues of $109,616,000
and FFO available to common stockholders of $46,324,000, or $1.46 per share
(diluted), compared to total revenues of $91,907,000 and FFO available to
common stockholders of $39,054,000, or $1.34 per share (diluted), for the
fourth quarter of 2006. Comparing the fourth quarter of 2007 to the fourth
quarter of 2006, total revenues increased 19%, FFO available to common
stockholders increased 19% and FFO per share (diluted) increased 9%. For the
year ended December 31, 2007, we reported total revenues of $405,360,000 and
FFO available to common stockholders of $168,200,000, or $5.61 per share
(diluted), net of a preferred stock redemption charge, compared to total
revenues of $310,779,000 and FFO available to common stockholders of
$131,665,000, or $5.16 per share (diluted), for the year ended December 31,
2006. Comparing the year ended December 31, 2007 to the year ended December
31, 2006, total revenues increased 30%, FFO available to common stockholders
increased 28% and FFO per share (diluted) increased 9%, net of a preferred
stock redemption charge recognized in the first quarter of 2007. The
preferred stock redemption charge related to the redemption of our Series B
Preferred Stock was approximately $2,799,000. Excluding the preferred stock
redemption charge, FFO available to common stockholders for the year ended
December 31, 2007 increased by 30% and FFO per share (diluted) increased by
10% as compared to the year ended December 31, 2006.
FFO is a non-GAAP measure widely used by publicly-traded real estate
investment trusts. A reconciliation of GAAP net income available to common
stockholders to FFO available to common stockholders, on both an aggregate and
per share diluted basis, is included in the financial information accompanying
this press release. The primary reconciling item between GAAP net income
available to common stockholders and FFO available to common stockholders is
depreciation and amortization expense. Depreciation and amortization expense
for the three months ended December 31, 2007 and 2006 was $26,969,000 and
$22,454,000, respectively. Depreciation and amortization expense for the
years ended December 31, 2007 and 2006 was $97,335,000 and $74,039,000,
respectively. Net income available to common stockholders for the fourth
quarter of 2007 was $22,277,000, or $0.70 per share (diluted), compared to net
income available to common stockholders of $16,512,000, or $0.57 per share
(diluted), for the fourth quarter of 2006. Net income available to common
stockholders for the year ended December 31, 2007 was $78,905,000, or $2.63
per share (diluted), compared to net income available to common stockholders
of $57,326,000, or $2.25 per share (diluted), for the year ended December 31,
2006. In the first quarter of 2007, we recognized a preferred stock
redemption charge of approximately $2,799,000 related to the redemption of our
Series B Preferred Stock. Excluding the preferred stock redemption charge,
net income available to common stockholders for the year ended December 31,
2007 increased by 43% and net income per share (diluted) increased by 21% as
compared to the year ended December 31, 2006.
For the fourth quarter of 2007, we executed a total of 43 leases for
approximately 432,000 rentable square feet of space at 29 different properties
(excluding month-to-month leases). Of this total, approximately 201,000
rentable square feet related to new or renewal leases of previously leased
space and approximately 231,000 rentable square feet related to redeveloped,
developed or previously vacant space. Of the 231,000 rentable square feet,
approximately 187,000 rentable square feet were delivered from our
redevelopment or development programs, with the remaining approximately 44,000
rentable square feet related to previously vacant space. Rental rates for
these new or renewal leases were on average approximately 12.4% higher (on a
GAAP basis) than rental rates for expiring leases. For the year ended
December 31, 2007, we executed a total of 136 leases for approximately
1,583,000 rentable square feet of space at 50 different properties (excluding
month-to-month leases). Of this total, approximately 896,000 rentable square
feet were for new or renewal leases related to previously leased space and
approximately 687,000 rentable square feet were for redeveloped, developed or
previously vacant space. Of the 687,000 rentable square feet, approximately
399,000 rentable square feet were delivered from our redevelopment or
development programs, with the remaining approximately 288,000 rentable square
feet for previously vacant space. Rental rates for new or renewal leases were
on average approximately 9.8% higher (on a GAAP basis) than rental rates for
expiring leases.
During the fourth quarter of 2007, we acquired one property in the Eastern
Massachusetts market and one property in the New Jersey/Suburban Philadelphia
market with approximately 404,986 aggregate rentable square feet. We paid
approximately $101.2 million cash for the properties and closed two secured
notes payable of $34.0 million and $23.9 million for total consideration of
$159.1 million. The largest property aggregating approximately 369,831
rentable square feet in the Eastern Massachusetts market is currently occupied
by multiple office tenants. This property also has an additional
approximately 390,786 developable square feet. Additionally, during the fourth
quarter of 2007, we acquired one development parcel in the Longwood Medical
submarket, Boston, MA., with approximately 350,000 developable square feet
through a joint venture. The purchase price of this land development parcel
was approximately $70.0 million. In connection with this purchase, we closed
a $62.0 million pre-construction secured loan of which approximately $38.2
million was drawn and outstanding as of December 31, 2007.
During the fourth quarter of 2007, we sold one office/industrial property
in the San Francisco Bay market, located south of the city of San Francisco,
with approximately 49,874 rentable square feet. The sale price of this
property was approximately $10.6 million. As of December 31, 2007, two
properties approximating 136,399 rentable square feet were classified as "held
for sale." In January 2008, we sold one of these properties located in the
San Diego market approximating 86,962 rentable square feet. In addition, in
February 2008, we sold four properties in the San Francisco Bay market
aggregating approximately 211,715 rentable square feet. The sales price for
the properties sold in 2008 was approximately $63.5 million. The net proceeds
from these sales were used to repay secured notes payable totaling
approximately $25.2 million with the balance used to reduce outstanding
borrowings on our unsecured line of credit.
As of December 31, 2007, approximately 88% of our leases (on a rentable
square footage basis) were triple net leases, requiring tenants to pay
substantially all real estate taxes and insurance, common area and other
operating expenses, including increases thereto. In addition, as of December
31, 2007, approximately 9% of our leases (on a rentable square footage basis)
required the tenants to pay a majority of operating expenses. Additionally,
as of December 31, 2007, approximately 91% of our leases (on a rentable square
footage basis) provided for the recapture of certain capital expenditures and
approximately 94% of our leases (on a rentable square footage basis) contained
effective annual rent escalations that were either fixed or indexed based on
the consumer price index or another index.
Based on our current view of existing market conditions and certain
current assumptions, our guidance for FFO per share (diluted) and earnings per
share (diluted) as follows:
2008
-------
FFO per share (diluted) $6.10
Earnings per share (diluted) $3.27
Alexandria Real Estate Equities, Inc., Landlord and Developer of Choice to
the Life Science Industry(R), is a publicly-traded real estate investment
trust focused principally on the ownership, operation, management, selective
development, redevelopment and acquisition of life science properties. Our
properties are designed and improved for lease primarily to institutional
(universities and independent not-for-profit institutions), pharmaceutical,
biotechnology, medical device, life science product, service, and
translational medicine entities, as well as governmental agencies. We are the
largest and leading provider of real estate to the broad and diverse life
science industry with an asset base, as of December 31, 2007, that will enable
us to grow to approximately 22.4 million square feet consisting of 166
properties approximating 12.1 million rentable square feet, properties
undergoing ground-up development approximating 1.6 million rentable square
feet, plus an imbedded pipeline for ground-up development approximating 8.7
million developable square feet.
This press release contains forward-looking statements, including earnings
guidance, within the meaning of the federal securities laws. Actual results
may differ materially from those projected in the forward-looking statements.
Additional information concerning factors that could cause actual results to
differ materially from those in the forward-looking statements is contained in
our Annual Report on Form 10-K and our other periodic reports filed with the
Securities and Exchange Commission.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
----------------------- -----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Income statement data
Total revenues $109,616 $91,907 $405,360 $310,779
Expenses
Rental operations 27,446 21,625 99,210 69,775
General and administrative 8,131 6,693 32,456 26,051
Interest 24,013 21,148 88,387 71,371
Depreciation and
amortization 26,838 22,095 96,476 72,432
---------- ---------- ---------- ----------
86,428 71,561 316,529 239,629
Minority interest 951 838 3,669 2,287
---------- ---------- ---------- ----------
Income from continuing
operations 22,237 19,508 85,162 68,863
Income from discontinued
operations, net 2,755 1,027 8,562 4,553
---------- ---------- ---------- ----------
Net income 24,992 20,535 93,724 73,416
Dividends on preferred stock 2,715 4,023 12,020 16,090
Preferred stock redemption
charge - - 2,799 -
---------- ---------- ---------- ----------
Net income available to
common stockholders $22,277 $16,512 $78,905 $57,326
========== ========== ========== ==========
Weighted average shares
of common stock
outstanding
Basic 31,446,999 28,821,942 29,668,231 25,102,200
========== ========== ========== ==========
Diluted 31,729,054 29,222,144 30,004,462 25,524,478
========== ========== ========== ==========
Earnings per share - basic
Continuing operations
(net of preferred stock
dividends and preferred
stock redemption charge) $0.62 $0.53 $2.37 $2.10
Discontinued operations,
net 0.09 0.04 0.29 0.18
---------- ---------- ---------- ----------
Earnings per share
- basic $0.71 $0.57 $2.66 $2.28
========== ========== ========== ==========
Earnings per share - diluted
Continuing operations
(net of preferred stock
dividends and preferred
stock redemption charge) $0.62 $0.53 $2.34 $2.07
Discontinued operations,
net 0.08 0.04 0.29 0.18
---------- ---------- ---------- ----------
Earnings per share
- diluted $0.70 $0.57 $2.63 $2.25
========== ========== ========== ==========
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Unaudited)
Funds from Operations
Generally accepted accounting principles ("GAAP") basis accounting for
real estate assets utilizes historical cost accounting and assumes real estate
values diminish over time. In an effort to overcome the difference between
real estate values and historical cost accounting for real estate assets, the
Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT") established the measurement tool of Funds From Operations
("FFO"). Since its introduction, FFO has become a widely used non-GAAP
financial measure by REITs. We believe that FFO is helpful to investors as an
additional measure of the performance of an equity REIT. We compute FFO in
accordance with standards established by the Board of Governors of NAREIT in
its April 2002 White Paper (the "White Paper") and related implementation
guidance, which may differ from the methodology for calculating FFO utilized
by other equity REITs, and, accordingly, may not be comparable to such other
REITs. The White Paper defines FFO as net income (loss) (computed in
accordance with GAAP), excluding gains (or losses) from sales, plus real
estate related depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. While FFO is a relevant and
widely used measure of operating performance for REITs, it 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.
The following table presents a reconciliation of net income available to
common stockholders, the most directly comparable GAAP financial measure to
FFO, to funds from operations available to common stockholders for the three
months and year ended December 31, 2007 and 2006 (in thousands, except per
share data):
Reconciliation of
net income available
to common
stockholders
to funds from Three Months Three Months Year Year
operations available Ended Ended Ended Ended
to common December 31, December 31, December 31, December 31,
stockholders 2007 2006 2007 2006
----------- ----------- ----------- -----------
Net income available to
common stockholders (1) $22,277 $16,512 $78,905 $57,326
Add: Depreciation and
amortization (2) 26,969 22,454 97,335 74,039
Add: Minority interest 951 838 3,669 2,287
Subtract: Gain on sales
of property (3) (2,901) - (7,976) (59)
Subtract: FFO allocable
to minority interest (972) (750) (3,733) (1,928)
----------- ----------- ----------- -----------
Funds from operations
available to common
stockholders (1) $46,324 $39,054 $168,200 $131,665
=========== =========== =========== ===========
FFO per share
Basic $1.47 $1.36 $5.67 $5.25
=========== =========== =========== ===========
Diluted $1.46 $1.34 $5.61 $5.16
=========== =========== =========== ===========
Reconciliation of earnings per share
(diluted) to FFO per share (diluted)
Earnings per share (diluted) $0.70 $0.57 $2.63 $2.25
Depreciation and
amortization(2) 0.85 0.77 3.25 2.90
Minority interest 0.03 0.03 0.12 0.09
Gain on sales of
property (3) (0.09) - (0.27) -
FFO allocable to minority
interest (0.03) (0.03) (0.12) (0.08)
----------- ----------- ----------- -----------
FFO per share (diluted) $1.46 $1.34 $5.61 $5.16
=========== =========== =========== ===========
(1) During the first quarter of 2007, we redeemed our 9.10% Series B
cumulative redeemable preferred stock. Accordingly, in compliance
with EITF Topic D-42, we recorded a charge of $2,799,000 in the first
quarter of 2007 for costs related to the redemption of our Series B
Preferred Stock.
(2) Includes depreciation and amortization for assets "held for sale"
reflected as discontinued operations (for the periods prior to when
such assets were designated as "held for sale.")
(3) Gain on sales of property relates to the disposition of one property
sold during fourth quarter 2007, four land parcels and one property
sold during the third quarter of 2007, one property sold during the
second quarter of 2007, one property sold during the first quarter of
2007, and three properties sold during the second quarter of 2006.
Gain on sales of property is included in the income statement in
income from discontinued operations, net.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Quarterly Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
For the Three Months Ended
Operational data 12/31/2007 9/30/2007 6/30/2007 3/31/2007 12/31/2006
---------- ---------- ---------- ---------- ----------
Breakdown of revenues
from continuing
operations (a)
Rental income $83,086 $78,309 $72,923 $72,392 $69,329
Tenant recoveries 22,553 21,733 19,055 20,441 18,642
Other income 3,977 3,731 3,410 3,750 3,936
---------- ---------- ---------- ---------- ----------
Total revenues $109,616 $103,773 $95,388 $96,583 $91,907
========== ========== ========== ========== ==========
Funds from operations
per share-diluted (b) $1.46 $1.45 $1.42 $1.28(c) $1.34
Dividends per share on
common stock $0.78 $0.76 $0.76 $0.74 $0.74
Dividend payout ratio
(common stock) (d) 53.9% 56.3% 53.8% 58.1% 55.6%
Straight-line rent $4,601 $4,508 $2,720(e) $5,082 $5,671
Capitalized interest $16,609(f) $15,035 $13,548 $10,844 $9,010
Number of
properties (g)
Acquired/added/completed
during period 2 13 2 - 8
Sold/transferred to
development (h) (3) (1) (4) (1) -
Owned at end of period 166 167 155 157 158
Rentable square feet (g)
Acquired/added/
completed
during period 404,986 994,024 104,312 - 573,027
Sold/transferred to
development (h) (92,927) (37,000) (375,112) (75,500) -
Owned at end of
period 12,125,992 11,813,933 10,856,909 11,127,709 11,203,209
As of
12/31/2007 9/30/2007 6/30/2007 3/31/2007 12/31/2006
---------- ---------- ---------- ---------- ----------
Other data
Number of shares of
common stock
outstanding 31,603,344 31,243,448 29,180,700 29,129,238 29,012,135
Closing price of
common stock $101.67 $96.26 $96.82 $100.37 $100.40
Debt to total market
capitalization (i)
Total debt $2,787,904 $2,502,832 $2,274,269 $2,176,594 $2,024,866
Less minority
interest share
of debt (39,320) (22,102) (22,089) (22,076) (22,064)
---------- ---------- ---------- ---------- ----------
Our share of debt 2,748,584 2,480,730 2,252,180 2,154,518 2,002,802
Preferred stock
market
capitalization 136,845 130,156 132,593 140,579 193,360
Common stock market
capitalization 3,213,112 3,007,494 2,825,275 2,923,702 2,912,818
---------- ---------- ---------- ---------- ----------
Total market
capitalization $6,098,541 $5,618,380 $5,210,048 $5,218,799 $5,108,980
---------- ---------- ---------- ---------- ----------
Debt to total
market
capitalization 45.1% 44.2% 43.2% 41.3% 39.2%
(a) The historical results above exclude the results of assets "held for
sale" which have been reflected as discontinued operations.
(b) See page 5 for a reconciliation of earnings per share (diluted) to FFO
per share (diluted).
(c) During the first quarter of 2007, we redeemed our 9.10% Series B
cumulative redeemable preferred stock. Accordingly, in compliance with
EITF Topic D-42, we recorded a charge of $2,799,000, or $0.10 per
share (diluted), in the first quarter of 2007 for costs related to the
redemption of our Series B Preferred Stock.
(d) Dividend payout ratio (common stock) is the ratio of the absolute
dollar amount of dividends on our common stock (common stock shares
outstanding on the respective record date multiplied by the related
dividend per share) to funds from operations for the respective
quarter.
(e) Includes a rental payment of approximately $1.4 million from one
tenant, the U.S. Government, in the second quarter of 2007. Pursuant
to Statement of Financial Accounting Standards No. 13, "Accounting for
Leases" rental payments due under this lease are recognized on a
straight-line basis over the lease term.
(f) As of December 31, 2007, assets for which capitalization of interest
is required pursuant to Statement of Financial Accounting Standards
No. 34, "Capitalization of Interest Cost" ("SFAS 34"), approximated
$1.1 billion. This amount is classified as properties undergoing
development and redevelopment and land held for development on our
balance sheet. As of December 31, 2007, the weighted average interest
rate used in the calculation of capitalized interest required pursuant
to SFAS 34 was approximately 6.27%. SFAS 34 requires the interest rate
for capitalization to be based on applicable interest costs related to
borrowings outstanding during the period, including the impact of
interest rate swap agreements, debt premiums/discounts and
amortization of loan fees.
(g) Includes properties "held for sale" during the applicable periods such
assets were "held for sale." As of December 31, 2007, two properties
aggregating approximately 136,399 square feet were classified as "held
for sale."
(h) During the fourth quarter of 2007, we sold one asset and transferred
two properties from operating assets to imbedded future development
opportunities. During the third quarter of 2007, we sold one asset
located in the New Jersey/Suburban Philadelphia market and four land
parcels to the Massachusetts Institute of Technology. During the
second quarter of 2007, we sold one asset and transferred three
properties from operating assets to imbedded future development
opportunities. During the first quarter of 2007, we sold one asset
located in the Suburban Washington D.C. market.
(i) Debt to total market capitalization is the ratio of our share of total
debt (secured notes payable, unsecured line of credit and unsecured
term loan and unsecured convertible notes) to total market
capitalization. Total market capitalization is equal to outstanding
shares of preferred stock and common stock multiplied by the related
closing price at the end of each period presented, plus our share of
total debt.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Annual Supplemental Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
For the Year Ended
Operational data 12/31/2007 12/31/2006 12/31/2005 12/31/2004 12/31/2003
---------- ---------- ---------- ---------- ----------
Breakdown of revenues
from continuing
operations (a)
Rental income $306,710 $236,848 $180,100 $135,900 $117,329
Tenant recoveries 83,782 62,104 46,739 33,077 29,076
Other income 14,868 11,827 4,767 3,489 1,964
---------- ---------- ---------- ---------- ----------
Total revenues $405,360 $310,779 $231,606 $172,466 $148,369
========== ========== ========== ========== ==========
Funds from operations
per share-diluted (b) $5.61(c) $5.16 $4.82 $4.41(d) $4.23
Dividends per share on
common stock $3.04 $2.86 $2.72 $2.52 $2.20
Dividend payout ratio
(common stock) (e) 55.4% 58.8% 57.9% 56.7% 51.8%
Number of properties (f)
Acquired/added/completed
during period 17 29 22 23 4
Sold/transferred to
development (9) (3) (1) (1) (4)
Owned at end of period 166 158 132 111 89
Rentable square feet (f)
Acquired/added/
completed during
period 1,503,322 2,683,211 1,392,299 1,717,209 267,164
Sold/transferred
to development (580,539) (268,099) (16,500) 2,891 (338,256)
Owned at end of
period 12,125,992 11,203,209 8,788,097 7,412,298 5,692,198
As of
12/31/2007 12/31/2006 12/31/2005 12/31/2004 12/31/2003
---------- ---------- ---------- ---------- ----------
Other data
Number of shares
of common stock
outstanding 31,603,344 29,012,135 22,441,294 19,594,418 19,264,023
Closing price of
common stock $101.67 $100.40 $80.50 $74.42 $57.90
Debt to total market
capitalization (g)
Total debt $2,787,904 $2,024,866 $1,406,666 $1,186,946 $709,007
Less minority
interest share
of debt (39,320) (22,064) - - -
---------- ---------- ---------- ---------- ----------
Our share of debt 2,748,584 2,002,802 1,406,666 1,186,946 709,007
Preferred stock
market
capitalization 136,845 193,360 192,419 199,360 104,421
Common stock market
capitalization 3,213,112 2,912,818 1,806,524 1,458,217 1,115,387
---------- ---------- ---------- ---------- ----------
Total market
capitalization $6,098,541 $5,108,980 $3,405,609 $2,844,523 $1,928,815
---------- ---------- ---------- ---------- ----------
Debt to total
market
capitalization 45.1% 39.2% 41.3% 41.7% 36.8%
(a) The historical results above exclude the results of assets "held for
sale" which have been reflected as discontinued operations.
(b) See page 5 for a reconciliation of earnings per share (diluted) to FFO
per share (diluted).
(c) During the first quarter of 2007, we redeemed our 9.10% Series B
cumulative redeemable preferred stock. Accordingly, in compliance with
EITF Topic D-42, we recorded a charge of $2,799,000 in the first
quarter of 2007 for costs related to the redemption of our Series B
Preferred Stock.
(d) Includes the effect of the preferred stock redemption charge of
$1,876,000 recorded in the second quarter of 2004 for cost related to
the redemption of our Series A Preferred Stock.
(e) Dividend payout ratio (common stock) is the ratio of the absolute
dollar amount of dividends on our common stock (common stock shares
outstanding on the respective record date multiplied by the related
dividend per share) to funds from operations for the respective year.
(f) Includes assets "held for sale" during the applicable periods such
assets were "held for sale."
(g) Debt to total market capitalization is the ratio of our share of total
debt (secured notes payable, unsecured line of credit and unsecured
term loan and unsecured convertible notes) to total market
capitalization. Total market capitalization is equal to outstanding
shares of preferred stock and common stock multiplied by the related
closing price at the end of each period presented, plus our share of
total debt.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31,
-------------------------
2007 2006
---------- ----------
(Unaudited)
Assets
Rental properties, net $3,146,915 $2,726,251
Properties undergoing development and
redevelopment and land held for development 1,143,302 596,331
Cash and cash equivalents 8,030 2,948
Tenant security deposits and other restricted
cash 51,911 34,360
Tenant receivables 6,759 6,330
Deferred rent 81,496 68,412
Investments 84,322 74,824
Other assets 119,359 108,021
---------- ----------
Total assets $4,642,094 $3,617,477
========== ==========
Liabilities and Stockholders' Equity
Secured notes payable $1,212,904 $1,174,866
Unsecured line of credit and unsecured term
loan 1,115,000 850,000
Unsecured convertible notes 460,000 -
Accounts payable, accrued expenses and
tenant security deposits 247,289 158,119
Dividends payable 27,575 25,363
---------- ----------
Total liabilities 3,062,768 2,208,348
Minority interest 75,506 57,477
Stockholders' equity:
Series B preferred stock - 57,500
Series C preferred stock 129,638 129,638
Common stock 316 290
Additional paid-in capital 1,365,773 1,139,629
Accumulated other comprehensive income 8,093 24,595
---------- ----------
Total stockholders' equity 1,503,820 1,351,652
---------- ----------
Total liabilities and stockholders' equity $4,642,094 $3,617,477
========== ==========
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Debt
December 31, 2007
(Dollars in thousands)
(Unaudited)
Principal Maturities / Rates
Secured Debt Unsecured Debt
--------------------------------- ---------------
Weighted
Average
Year Amount Interest Rate (1) Amount
-------------- -------------- -------------- ---------------
2008 $160,074 (2) 6.08% $-
2009 284,220 6.20 -
2010 93,259 6.18 365,000 (3)
2011 108,191 6.04 750,000 (3)
2012 39,348 6.00 460,000 (4)
Thereafter 527,812 5.93 -
-------------- ---------------
Total $1,212,904 (5) $1,575,000
============== ===============
Secured and Unsecured Debt Analysis
Percentage Weighted Weighted
of Average Average
Balance Balance Interest Rate (6) Maturity
------------- ------------- ------------- --------------
Secured Debt $1,212,904 43.5% 6.08% 4.4 Years
Unsecured Debt 1,575,000 56.5 5.27 3.7 Years
------------- ------------- ------------- --------------
Total Debt $2,787,904 100.0% 5.62% 4.0 Years
============= ============= ============= ==============
Fixed and Floating Rate Debt Analysis
Percentage Weighted Weighted
of Average Average
Balance Balance Interest Rate (6) Maturity
------------- ------------- ------------- --------------
Fixed Rate Debt $1,362,949 48.9% 5.27% 4.8 Years
Floating Rate Debt -
Hedged 778,500 27.9 5.85 3.8 Years
Floating Rate Debt -
Unhedged 646,455 23.2 6.09 2.4 Years
------------- ------------- ------------- --------------
Total Debt $2,787,904 100.0% 5.62% 4.0 Years
============= ============= ============= ==============
(1) The weighted average interest rate is calculated based on outstanding
debt as of December 31st of the year immediately preceding the year
presented.
(2) A secured note payable totaling $34.0 million was repaid in early
January 2008. Approximately $76.4 million matures in the fourth
quarter of 2008. We are in discussions with our lender to
extend/refinance this secured loan.
(3) The unsecured line of credit matures in October 2010 and may be
extended at our sole option for an additional one year period. The
unsecured term loan matures in October 2011 and may be extended at our
sole option for an additional one year period.
(4) On or after January 15, 2012, we have the right to redeem our 3.70%
unsecured convertible notes, in whole or in part, at any time from
time to time, for cash equal to 100% of the principal amounts of the
notes to be redeemed plus any accrued and unpaid interest to, but
excluding, the redemption date. Holders of the notes may require us to
repurchase their notes, in whole or in part, on January 15, 2012, 2017
and 2022 for cash equal to 100% of the principal amount of the notes
to be purchased plus any accrued and unpaid interest to, but
excluding, the repurchase date. Additional information regarding our
unsecured convertible notes is contained in our Form 10-K filed with
the Securities and Exchange Commission.
(5) Includes minority interests' share of scheduled principal maturities
including lump sum principal payments of $38.2 million and $211.3
million in 2009 and thereafter, respectively, of which our share is
approximately $21.0 million and $190.2 million, respectively.
(6) Represents the weighted average contractual interest rate plus the
impact of debt premiums/discounts and our interest rate swap
agreements. The weighted average interest rate excludes bank fees and
amortization of loan fees. See page 10 for further details of our
interest rate swap agreements.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Interest Rate Swap Agreements
December 31, 2007
(Dollars in thousands)
(Unaudited)
Interest Effective
Pay at
Transaction Effective Termination Rates Notional December
Dates Dates Dates (1) Amounts 31, 2007
------------- ----------------- --------------- ------- ------- -------
December 2004 December 31, 2004 January 2, 2008 3.590% $50,000 $50,000
December 2004 January 3, 2006 July 1, 2008 3.927 50,000 50,000
June 2006 June 30, 2006 September 30, 2009 5.299 125,000 125,000
December 2003 December 29, 2006 October 31, 2008 5.090 50,000 50,000
December 2005 December 29, 2006 November 30, 2009 4.730 50,000 50,000
December 2005 December 29, 2006 November 30, 2009 4.740 50,000 50,000
December 2006 December 29, 2006 March 31, 2014 4.990 50,000 50,000
December 2006 January 2, 2007 January 3, 2011 5.003 28,500 28,500
April 2004 April 30, 2007 April 30, 2008 4.850 50,000 50,000
May 2005 June 29, 2007 June 30, 2008 4.400 50,000 50,000
December 2006 June 29, 2007 October 31, 2008 4.920 50,000 50,000
October 2007 October 31, 2007 June 30, 2008 4.458 50,000 50,000
October 2007 October 31, 2007 September 30, 2012 4.546 50,000 50,000
October 2007 October 31, 2007 September 30, 2013 4.642 50,000 50,000
May 2005 November 30, 2007 November 28, 2008 4.460 25,000 25,000
December 2005 January 2, 2008 December 31, 2010 4.768 50,000 -
May 2005 June 30, 2008 June 30, 2009 4.509 50,000 -
June 2006 June 30, 2008 June 30, 2010 5.325 50,000 -
June 2006 June 30, 2008 June 30, 2010 5.325 50,000 -
October 2007 July 1, 2008 March 31, 2013 4.622 25,000 -
October 2007 July 1, 2008 March 31, 2013 4.625 25,000 -
June 2006 October 31, 2008 December 31, 2010 5.340 50,000 -
June 2006 October 31, 2008 December 31, 2010 5.347 50,000 -
May 2005 November 28, 2008 November 30, 2009 4.615 25,000 -
December 2006 November 30, 2009 March 31, 2014 5.015 75,000 -
December 2006 November 30, 2009 March 31, 2014 5.023 75,000 -
December 2006 December 31, 2010 October 31, 2012 5.015 100,000 -
--------
Total $778,500
========
(1) The interest pay rates represent the interest rate we will pay for
one month LIBOR under the respective interest rate swap agreement.
These rates do not include any spread in addition to one month LIBOR
that is due monthly as interest expense.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Same Property Comparisons
(Dollars in thousands)
(Unaudited)
GAAP Basis (1) Cash Basis (1)
Quarter Ended Quarter Ended
-------------------------------- --------------------------------
12/31/2007 12/31/2006 % Change 12/31/2007 12/31/2006 % Change
---------- ---------- ---------- ---------- ---------- ----------
Revenue(2) $80,750 $77,026 4.8% $78,730 $71,907 9.5%
Operating
expenses 20,617 18,937 8.9 20,617 18,937 8.9
---------- ---------- ---------- ---------- ---------- ----------
Revenue less
operating
expenses $60,133 $58,089 3.5% $58,113 $52,970 9.7%
========== ========== ========== ========== ========== ==========
GAAP Basis (1) Cash Basis (1)
Year Ended Year Ended
12/31/2007 12/31/2006 % Change 12/31/2007 12/31/2006 % Change
---------- ---------- ---------- ---------- ---------- ----------
Revenue(2) $213,425 $202,115 5.6% $207,883 $192,781 7.8%
Operating
expenses 49,060 43,647 12.4 49,060 43,647 12.4
---------- ---------- ---------- ---------- ---------- ----------
Revenue less
operating
expenses $164,365 $158,468 3.7% $158,823 $149,134 6.5%
========== ========== ========== ========== ========== ==========
NOTE: This summary represents operating data for all properties that were
owned and fully operating for the entire periods presented for the quarter
periods (the "Fourth Quarter Same Properties") and for the full year periods
(the "2007 Same Properties.") Same property occupancy for the quarters ended
December 31, 2007 and 2006 was 94.9% and 94.0%, respectively. Same property
occupancy for the year ended December 31, 2007 and 2006 was 95.8% and 95.1%,
respectively. Properties undergoing redevelopment are excluded from same
property results.
(1) Revenue less operating expenses computed in accordance with GAAP is
total revenue associated with the Fourth Quarter Same Properties and
2007 Same Properties, as applicable, (excluding lease termination
fees, if any) less property operating expenses. Under GAAP, rental
revenue is recognized on a straight-line basis over the respective
lease terms. Revenue less operating expenses on a cash basis is total
revenue associated with the Fourth Quarter Same Properties and 2007
Same Properties, as applicable (excluding lease termination fees, if
any) less property operating expenses, adjusted to exclude the effect
of straight-line rent adjustments required by GAAP. Straight-line
rent adjustments for the quarters ended December 31, 2007 and 2006 for
the Fourth Quarter Same Properties were $2,020,000 and $5,119,000,
respectively. Straight-line rent adjustments for the years ended
December 31, 2007 and 2006 for the 2007 Same Properties were
$5,542,000 and $9,334,000, respectively. We believe that revenue less
operating expenses on a cash basis is helpful to investors as an
additional measure of operating performance because it eliminates
straight-line rent adjustments to rental revenue.
(2) Fees received from tenants in connection with termination of their
leases, if any, are excluded from revenue in the Summary of Same
Property Comparisons. As of December 31, 2007, approximately 88% of
our leases (on a square footage basis) were triple net leases,
requiring tenants to pay substantially all real estate taxes and
insurance, common area and other operating expenses, including
increases thereto. In addition, as of December 31, 2007, approximately
9% of our leases (on a square footage basis) required the tenants to
pay a majority of operating expenses.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties
(Dollars in thousands)
(Unaudited)
December 31, 2007
------------------------------------------------------
Rentable Square Feet
Number of -------------------- Annualized
Properties Operating Redevelopment Total Base Rent(1)
---------- ---------- ------------- ----- ------------
Markets
California -
Los Angeles Metro 2 31,343 29,660 61,003 $697
California - San Diego 33 1,465,032 215,370 1,680,402 43,264
California -
San Francisco Bay 23 1,837,457 30,217 1,867,674 63,569
Eastern Massachusetts 38 3,076,689 310,349 3,387,038 107,322
International - Canada 4 296,362 46,032 342,394 6,879
New Jersey/
Suburban Philadelphia 8 441,504 - 441,504 9,176
Southeast 12 596,172 62,234 658,406 10,423
Suburban Washington D.C. 31 2,430,402 69,366 2,499,768 48,004
Washington - Seattle 13 1,040,113 11,291 1,051,404 30,488
---------- ---------- ---------- --------- ------------
Total Properties
(Continuing
Operations) 164 11,215,074 774,519 11,989,593 $319,822
========== ========== ========== ========= ============
Occupancy Percentage
--------------------------------------------
12/31/07 (1)(2) 12/31/06 (3) 9/30/07 (4)
-------------- -------------- --------------
Markets
California - Los Angeles Metro 70.8% 82.5% 70.8%
California - San Diego 94.9 89.5 94.6
California - San Francisco Bay 95.8 94.0 95.1
Eastern Massachusetts 94.7 95.9 96.0
International - Canada 100.0 100.0 100.0
New Jersey/Suburban Philadelphia 96.6 96.6 96.3
Southeast 86.0(5) 78.1(5) 87.3(5)
Suburban Washington D.C. 90.1 92.5 92.3
Washington - Seattle 97.2 94.9 93.4
-------------- -------------- --------------
Total Properties
(Continuing Operations) 93.8% 93.1% 94.1%
============== ============== ==============
(1) Excludes spaces at properties totaling approximately 774,519 rentable
square feet undergoing a permanent change in use to office/laboratory
space through redevelopment and two properties totaling approximately
136,399 rentable square feet that are classified as "held for sale."
(2) Including spaces undergoing a permanent change in use to
office/laboratory space through redevelopment, occupancy as of
December 31, 2007 was 87.8%. See page 17 for additional information on
our redevelopment program.
(3) Excludes spaces at properties totaling approximately 612,699 rentable
square feet undergoing a permanent change in use to office/laboratory
space through redevelopment as of December 31, 2006. Including spaces
undergoing a permanent change in use to office/laboratory space
through redevelopment, occupancy as of December 31, 2006 was 88.0%.
See page 17 for additional information on our redevelopment program.
(4) Excludes spaces at properties totaling approximately 795,202 rentable
square feet undergoing a permanent change in use to office/laboratory
space through redevelopment and one property totaling approximately
49,437 rentable square feet that was classified as "held for sale" as
of September 30, 2007. Including spaces undergoing a permanent change
in use to office/laboratory space through redevelopment, occupancy as
of September 30, 2007 was 87.8%. See page 17 for additional
information on our redevelopment program.
(5) Substantially all of the vacant space is office or warehouse space.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Quarter Ended December 31, 2007
TI's/Lease
Commissions
Rentable Rental Per Average
Number Square Expiring New Rate Square Lease
of Leases Footage Rates Rates Changes Foot Terms
--------- --------- --------- ------ ------- -------- -------
Leasing Activity
Lease Expirations
Cash Basis 40 409,374 $28.28 - - - -
GAAP Basis 40 409,374 $26.03 - - - -
Renewed/Released
Space Leased
Cash Basis 19 200,847 $30.67 $33.67 9.8% $1.90 2.8 years
GAAP Basis 19 200,847 $30.17 $33.91 12.4% $1.90 2.8 years
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 24 231,365 - $26.91 - $6.76 8.6 years
GAAP Basis 24 231,365 - $29.50 - $6.76 8.6 years
Month-to-Month
Leases In Effect
Cash Basis 16 85,087 $25.07 $24.66 - - -
GAAP Basis 16 85,087 $24.69 $24.66 - - -
Leasing Activity Summary
Excluding
Month-to-Month
Leases
Cash Basis 43 432,212 - $30.05 - $4.50 5.9 years
GAAP Basis 43 432,212 - $31.55 - $4.50 5.9 years
Including
Month-to-Month
Leases
Cash Basis 59 517,299 - $29.16 - - -
GAAP Basis 59 517,299 - $30.42 - - -
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Leasing Activity
For the Year Ended December 31, 2007
TI's/Lease
Commissions
Rentable Rental Per Average
Number Square Expiring New Rate Square Lease
of Leases Footage Rates Rates Changes Foot Terms
--------- --------- --------- ------ ------- -------- -------
Leasing Activity
Lease Expirations
Cash Basis 108 1,626,033 $25.98 - - - -
GAAP Basis 108 1,626,033 $26.97 - - - -
Renewed/Released
Space Leased
Cash Basis 61 895,894 $29.38 $31.41 6.9% $4.49 4.0 years
GAAP Basis 61 895,894 $28.66 $31.48 9.8% $4.49 4.0 years
Redeveloped/Developed/
Vacant Space Leased
Cash Basis 75 686,856 - $31.59 - $10.14 6.5 years
GAAP Basis 75 686,856 - $33.68 - $10.14 6.5 years
Month-to-Month
Leases In Effect
Cash Basis 16 85,087 $25.07 $24.66 - - -
GAAP Basis 16 85,087 $24.69 $24.66 - - -
Leasing Activity Summary
Excluding
Month-to-Month
Leases
Cash Basis 136 1,582,750 - $31.49 - $6.95 5.1 years
GAAP Basis 136 1,582,750 - $32.44 - $6.95 5.1 years
Including
Month-to-Month
Leases
Cash Basis 152 1,667,837 - $31.14 - - -
GAAP Basis 152 1,667,837 - $32.04 - - -
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Lease Expirations
December 31, 2007
Rentable
Number Square
Year of of Footage of Percentage of Annualized Base Rent
Lease Leases Expiring Aggregate of Expiring Leases
Expiration Expiring Leases Leased Square Feet (per square foot)
---------- ---------- ---------- ------------------ --------------------
2008 67(1) 846,022(1) 8.0% $25.59
2009 63 896,692 8.5 24.75
2010 50 1,025,693 9.7 28.16
2011 60 1,721,434 16.4 27.28
2012 58 1,405,285 13.4 33.56
Rentable Square
Footage of Expiring Leases
Markets 2008 2009
------------------------------ ------------- -------------
California - Los Angeles Metro 4,006 4,354
California - San Diego 93,250 203,464
California - San Francisco Bay 287,888 101,165
Eastern Massachusetts 267,776 152,697
International - Canada - -
New Jersey/Suburban Philadelphia 40,000 21,000
Southeast 22,440 85,412
Suburban Washington D.C. 84,184 294,664
Washington - Seattle 46,478 33,936
------------- -------------
Total 846,022(1) 896,692
============= =============
(1) Includes 16 month-to-month leases for approximately 85,000 rentable
square feet.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Additions and Dispositions of Properties
For the Quarter Ended December 31, 2007
(Dollars in thousands)
Acquisition Month of Rentable
Markets Amount Acquisition Square Feet
------------------------------- ------------ ------------ ------------
Additions to Operating Properties:
Eastern Massachusetts $150,000 (1) October 369,831
New Jersey/Suburban Philadelphia 9,089 October 35,155
------------ ------------
Total Additions to Operating
Properties: $159,089 404,986
============ ============
Acquisition Month of Developable
Markets Amount Acquisition Square Feet
------------------------------- ------------ ------------ ------------
Additions to Land:
Eastern Massachusetts $70,000 (2) November 350,000
============ ============
Disposition Month of Rentable
Markets Amount Disposition Square Feet
------------------------------- ------------ ------------ ------------
Dispositions:
California - San Francisco Bay $10,550 (3) December 49,874
============ ============
(1) In connection with the purchase of this property, we closed two
secured notes totaling approximately $57.9 million. In addition to
the existing rentable square footage of approximately 369,831, this
property also has an additional 390,786 developable square footage.
This additional future developable square footage is included in our
Imbedded Future Development and Redevelopment Square Footage on page
19.
(2) In connection with the purchase of this property, we closed a $62.0
million pre-construction secured loan of which approximately $38.2
million was drawn and outstanding as of December 31, 2007. The
Company has a 55% interest in this development project located in the
Longwood Medical submarket, Boston, MA. The 350,000 future developable
square footage is included in our Imbedded Future Development and
Redevelopment Square Footage on page 19.
(3) Represents sale of one office/industrial building in a small submarket
south of the city of San Francisco.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Square Footage Undergoing Redevelopment
December 31, 2007
Esti-
mated
Placed Esti- Invest- Square
in mated ment Footage
Re- In- Per Undergoing
Markets/ develop- Service Square Redevelopment/
Submarkets ment Dates Foot Total Property Status
------------------ ------- ------- ------- --------------- --------------
California -
Los Angeles Metro 2006 2008 $80-100 29,660/29,660 Construction
California -
San Diego/
Torrey Pines 2004 2009 $100-120 87,140/87,140 Design/
Construction(1)
California -
San Diego/
Torrey Pines 2006 2009 $80-100 43,600/43,600 Construction
California -
San Diego/Sorrento 2006 2008 $70-80 30,147/30,147 Construction
California -
San Diego/
Torrey Pines 2007 2009 $80-100 15,259/107,709 Construction
California -
San Diego/
Torrey Pines 2007 2009 $80-100 39,224/76,084 Construction
California -
San Francisco Bay/
Peninsula 2007 2008 $80-100 30,217/82,712 Construction
Eastern Massachusetts/
Suburban 2007 2009 $100-120 23,000/38,000 Construction
Eastern Massachusetts/
Suburban 2007 2009 $70-80 113,045/113,045 Redesign/
Construction
Eastern Massachusetts/ 2008/
Cambridge 2006 2009 $120-175 105,850/155,090 Design/
Construction
Eastern Massachusetts/
Cambridge 2007 2009 $100-130 68,454/369,831 Design/
Demolition
International -
Canada 2007 2008 $140-160 46,032/46,032 Construction
Southeast/Florida 2006 2008 $80-100 45,841/45,841 Construction
Southeast/
Research Triangle
Park 2007 2008 $100-120 16,393/77,395 Design/
Construction
Suburban
Washington D.C./
Shady Grove 2007 2009 $70-80 69,366/125,004 Construction
Washington - Seattle 2007 2009 $125-150 11,291/32,279 Design
-----------------
774,519/1,459,569
=================
Our redevelopment program involves ongoing activities necessary for the
permanent change of use of applicable redevelopment space to office/laboratory
space. Spaces currently built out with laboratory improvements are generally
not placed into our value-add redevelopment program. As required under GAAP,
interest and other costs directly related and essential to the project are
capitalized on redevelopment properties on the basis allocable only to that
portion of space undergoing redevelopment. In addition to properties
undergoing redevelopment, as of December 31, 2007, our asset base contained
imbedded opportunities for future permanent change of use to office/laboratory
space through redevelopment aggregating approximately 1,833,000 rentable
square feet. See Summary of Imbedded Future Development and Redevelopment
Square Footage on page 19.
(1) This project also includes site work and a multi-story below and above
ground parking structure to support both the existing building
undergoing redevelopment and an additional building targeted for
development in the future. The entitlement process for this project
was completed in early 2007.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Properties Undergoing Ground-Up Development
December 31, 2007
Esti-
mated
Esti- Invest-
Construc- mated ment
tion In- Per Rentable
Markets/ Building Start Service Square Square
Submarkets Descriptions Dates Dates Foot(1) Feet Status
--------------------------------------------------------------------------
California - One
San Francisco Bay/ Multi-tenant
Mission Bay Bldg. 2007 2010 $350 158,000 Construction
California - Two Bldgs.,
San Francisco Bay/ Single or
So. San Francisco Multi-tenant 2006 2009 $350 162,000 Construction
California - One Single or
San Francisco Bay/ Multi-tenant
So. San Francisco Bldg. 2006 2009 $350 135,000 Construction
International - Two Bldgs.,
China Single or
Multi-tenant 2007 2009 $45 280,000 Construction
New York - Two
New York City Multi-tenant 2010/
Bldgs. 2007 2011 $500 725,000(2) Site Work
Washington - One Single or
Seattle Multi-tenant
Bldg. 2007 2010 TBD 115,000 Site Work
---------
Total Properties
Undergoing Ground-Up
Development (1) 1,575,000
=========
In accordance with Statement of Financial Accounting Standards No. 34,
"Capitalization of Interest Cost" ("SFAS 34") and Statement of Financial
Accounting Standards No. 67, "Accounting for Costs and Initial Rental
Operations of Real Estate Projects" ("SFAS 67"), we are required to capitalize
direct construction, including pre-construction costs, interest, property
taxes, insurance and other costs directly related and essential to the
construction of a project while activities are ongoing to prepare an asset for
its intended use. Pre-construction costs include costs related to the
development of plans and the process of obtaining entitlements and permits
from government authorities. Costs incurred after a project is substantially
complete and ready for its intended use are expensed as incurred. Should
development, redevelopment or construction activity cease, construction costs,
including interest, would no longer be eligible for capitalization, under SFAS
34 and SFAS 67, and would be expensed as incurred.
(1) Our aggregate construction costs to date approximate $96 per
developable square foot. Amount excludes our investment per square
foot in land.
(2) In addition, we have the right to develop an additional parcel with
approximately 442,000 rentable square feet. This square footage is not
included in the imbedded developable square footage shown on page 19.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Imbedded Future Development and Redevelopment Square Footage
December 31, 2007
Imbedded Future Development
--------------------------------
Development/ Total Imbedded Imbedded Future
Pre-construction Development Redevelopment
Markets Square Footage(1) Square Footage Square Footage Total
----------------- -------------- -------------- ---------
California - San Diego 298,000 443,000 228,000 671,000
California -
San Francisco Bay/
Mission Bay 1,886,000 2,386,000 - 2,386,000
California -
San Francisco Bay/
So. San Francisco 809,000 905,000 25,000 930,000
Eastern Massachusetts 2,050,000 2,275,000 621,000 2,896,000
International - Canada 763,000 827,000 - 827,000
Suburban Washington D.C. 425,000 787,000 502,000 1,289,000
Washington - Seattle 206,000 595,000 135,000 730,000
Other 176,000 511,000 322,000 833,000
----------------- -------------- -------------- ----------
Total 6,613,000 8,729,000(2) 1,833,000 10,562,000
================= ============== ============== ==========
The imbedded future development and redevelopment square footage shown
above represents future ground-up development projects and future
redevelopment (permanent change in use of applicable space to
office/laboratory space) projects. A significant portion of our imbedded
future development square footage is in the development/pre-construction phase
(entitlement, permitting, design, etc.). See discussion on SFAS 34 and SFAS 67
on page 18. The exact date of physical construction will depend on successful
completion of development/pre-construction activities and management's
assessment of overall market conditions. As required under GAAP, direct
construction, interest, property taxes, insurance and other costs directly
related and essential to the development/pre-construction, or construction of
a project, is mandated to be capitalized during pre-construction when
activities are ongoing to bring these assets to their intended use.
(1) Development/pre-construction square footage is included in Imbedded
Future Development-Total Imbedded Development Square Footage shown
above.
(2) In addition, we have the right to develop an additional parcel with
approximately 442,000 rentable square feet. This square footage is not
included in the imbedded developable square footage shown above.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Summary of Capital Costs
For the Year ended December 31, 2007
(In thousands)
Property-related capital expenditures (1) $2,027
Leasing costs (2) $687
Property-related redevelopment costs (3) $162,393
Property-related development costs (3) $238,869
(1) Property-related capital expenditures include all major capital and
recurring capital expenditures except capital expenditures that are
recoverable from tenants, revenue-enhancing capital expenditures, or
costs related to the redevelopment of a property. Major capital
expenditures consist of roof replacements and HVAC systems which are
typically identified and considered at the time the property is
acquired. Capital expenditures fluctuate in any given period due to
the nature, extent or timing of improvements required and the extent
to which they are recoverable from tenants. Approximately 91% of our
leases (based on rentable square feet) provide for the recapture of
certain capital expenditures (such as HVAC systems maintenance and/or
replacement, roof replacement and parking lot resurfacing). In
addition, we implement an active preventative maintenance program at
each of our properties to minimize capital expenditures.
(2) Leasing costs consist of tenant improvements and leasing commissions
related to leasing of acquired vacant space and second generation
space.
(3) Amount includes leasing costs related to development and redevelopment
projects.
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Conference Call Information
For the Fourth Quarter Ended and Year December 31, 2007
Alexandria Real Estate Equities, Inc. will be hosting a conference call to
discuss its operating and financial results for the fourth quarter and year
ended December 31, 2007:
Date: February 12, 2008
Time: 11:00 A.M. Eastern Standard Time/
8:00 A.M. Pacific Standard Time
Phone Number: (719) 325-4763
Confirmation Code: 6172554
SOURCE Alexandria Real Estate Equities, Inc.
Joel S. Marcus, Chairman, Chief Executive Officer, Alexandria Real Estate
Equities, Inc., +1-626-578-9693
