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30.04.2018 22:44:00
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Alexandria Real Estate Equities, Inc. Reports First Quarter Ended March 31, 2018, Financial and Operating Results Strong Internal and External Growth, Operational Excellence, and Growing Dividends
PASADENA, Calif., April 30, 2018 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE:ARE) announced financial and operating results for the first quarter ended March 31, 2018.
Key highlights
Increased common stock dividend
Common stock dividend for 1Q18 of $0.90 per common share, up 7 cents, or 8%, over 1Q17; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.
Improvement in credit rating outlook
In February 2018, S&P Global Ratings raised its credit outlook for our corporate credit rating to BBB/Positive from BBB/Stable. The positive outlook reflects S&P's belief that "there is further ratings upside over the next couple of years stemming from the company's high quality operating portfolio and projects under development, combined with a prudent financial policy."
Strong internal growth
- Total revenues of $320.1 million, up 18.2%, for 1Q18, compared to $270.9 million for 1Q17;
- Same property net operating income growth:
- 4.0% and 14.6% (cash basis) for 1Q18, compared to 1Q17;
- Continued solid leasing activity and strong rental rate growth, in light of modest contractual lease expirations at the beginning of 2018 and a highly leased value-creation pipeline:
1Q18 | |||
Total leasing activity – RSF | 1,481,164 | ||
Lease renewals and re-leasing of space: | |||
Rental rate increases | 16.3% | ||
Rental rate increases (cash basis) | 19.0% | ||
RSF (included in total leasing activity above) | 234,548 | ||
- Key leases executed during 1Q18 (included in total leasing activity above):
Property | Submarket | RSF | Tenant | ||||
1655 and 1725 Third Street | Mission Bay/SoMa | 593,765 | Uber Technologies, Inc. | ||||
Summers Ridge Science Park | Sorrento Mesa | 192,070 | Quidel Corporation | ||||
399 Binney Street | Cambridge | 123,403 | Three life science entities | ||||
279 East Grand Avenue | South San Francisco | 104,013 | Verily Life Sciences, LLC | ||||
681 Gateway Boulevard | South San Francisco | 60,963 | Twist Bioscience Corp. | ||||
Strong external growth; disciplined allocation of capital to visible, multiyear, highly leased value-creation pipeline
- Development and redevelopment projects placed into service in 1Q18:
- 91,155 RSF at our development project at 100 Binney Street in our Cambridge submarket, 100% leased to four high-quality biotechnology entities; and
- 27,315 RSF at our redevelopment project at 266 and 275 Second Avenue in our Route 128 submarket, leased to Visterra, Inc.
- Significant contractual near-term growth in annual cash rents of $76 million, of which $60 million will commence through 4Q18 ($35 million in 2Q18, $13 million in 3Q18, and $12 million in 4Q18). This is related to initial free rent granted on development and redevelopment projects recently placed into service (and no longer included in our value-creation pipeline) that are currently generating rental revenue.
- 1Q18 commencements of development and redevelopment projects aggregating 651,951 RSF, including:
- 593,765 RSF at 1655 and 1725 Third Street in our Mission Bay/SoMa submarket; and
- 58,186 RSF at 704 Quince Orchard Road in our Gaithersburg submarket.
- 81% leased on 2.3 million RSF of development and redevelopment projects undergoing construction (excludes RSF in service).
Completed strategic acquisitions
Acquisitions completed or under contract:
- In 1Q18, we acquired 11 properties in four transactions for an aggregate purchase price of $320.5 million with current and future value-creation development and redevelopment opportunities.
Operating results
- On January 1, 2018, we adopted a new accounting standard which requires us, on a prospective basis, to generally present our equity investments at fair value with changes in fair value reflected in earnings. In 1Q18, we recognized $72.2 million of unrealized gains from changes in fair value of our equity investments.
1Q18 | 1Q17 | Change | ||||||||
Net income attributable to | ||||||||||
In millions | $ | 132.4 | $ | 25.7 | N/A | |||||
Per share | $ | 1.32 | $ | 0.29 | N/A | |||||
Funds from operations attributable to | ||||||||||
In millions | $ | 162.5 | $ | 130.6 | 24.4% | |||||
Per share | $ | 1.62 | $ | 1.48 | 9.5% | |||||
See "Items Included in Net Income Attributable to Alexandria's Common Stockholders" on the next page of this Earnings Press Release for additional information. | ||||||||||
Items included in net income attributable to Alexandria's common stockholders: | |||||||||||||||
(In millions, except per share amounts) | Amount | Per Share – Diluted | |||||||||||||
1Q18 | 1Q17 | 1Q18 | 1Q17 | ||||||||||||
Realized gain on non-real estate investment(1) | $ | 8.3 | $ | — | $ | 0.08 | $ | — | |||||||
Unrealized gains on non-real estate investments(2) | 72.2 | — | 0.70 | — | |||||||||||
Loss on early extinguishment of debt | — | (0.7) | — | (0.01) | |||||||||||
Preferred stock redemption charge | — | (11.3) | — | (0.12) | |||||||||||
Total | $ | 80.5 | $ | (12.0) | $ | 0.78 | $ | (0.13) | |||||||
Weighted-average shares of common stock outstanding for | 100.1 | 88.2 | |||||||||||||
(1) Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized investment gains were $5.1 million for 1Q18. (2) See "Investments" on page 43 of our Supplemental Information for additional information. | |||||||||||||||
Per share amounts above are shown net of the per share amounts allocable to unvested restricted stock awards. | |||||||||||||||
Core operating metrics for 1Q18
High-quality revenue and cash flows and operational excellence
- Percentage of annual rental revenue in effect from:
- Investment-grade or large cap tenants: 57%
- Class A properties in AAA locations: 79%
- Occupancy of operating properties in North America: 96.6%
- Operating margin: 71%
- Adjusted EBITDA margin: 69%
- Weighted-average remaining lease term:
- Total tenants: 8.7 years
- Top 20 tenants: 13.2 years
- See "Strong internal growth" in the key highlights section on the previous page for information on our total revenues, same property net operating income growth, leasing activity, and rental rate growth.
Balance sheet management
Key metrics
- $17.9 billion of total market capitalization as of 1Q18
- $2.3 billion of liquidity as of 1Q18
1Q18 | Trailing 12 | 4Q18 | ||||
Net debt to Adjusted EBITDA | 5.4x | 6.1x | Less than 5.5x | |||
Fixed-charge coverage ratio | 4.6x | 4.3x | Greater than 4.0x | |||
Unhedged variable-rate debt as a percentage of | 15% | N/A | 5% | |||
Current and future value-creation pipeline as a | 9% | N/A | 8% to 12% |
Key capital events
- In January 2018, we entered into forward equity sales agreements to sell an aggregate 6.9 million shares of our common stock (including the exercise of underwriters' option) at a public offering price of $123.50 per share, before underwriting discounts. In March 2018, we settled 843,600 shares from our forward equity sales agreements and received proceeds of $100.2 million, net of underwriting discounts and adjustments provided in the forward equity sales agreements. We expect to receive proceeds of $713.7 million upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, which will fund current and near-term value-creation projects and acquisitions in 2018.
Corporate responsibility and industry leadership
- 50% of annual rental revenue expected from LEED® certified projects upon completion of nine in-process projects. Two of our properties recently received LEED certifications, demonstrating our commitment to sustainability:
- In March 2018, 505 Brannan Street in our Mission Bay/SoMa submarket received LEED Platinum certification; and
- In April 2018, 100 Binney Street in our Cambridge submarket received LEED Gold certification.
- In January 2018, we were awarded a 2017 Governor's Environmental and Economic Leadership Award, California's highest environmental honor recognizing entities that have demonstrated exceptional leadership and made notable contributions to conserving precious natural resources while promoting economic growth.
- In January 2018, Alexandria Venture Investments launched the Alexandria Seed Capital Platform, an innovative seed-stage life science funding model and extension of Alexandria LaunchLabs®, which provides seed-stage financing to transformative life science companies. Alexandria Seed Capital Platform drives the growth of seed- and early-stage companies in New York City and across the country.
- In February 2018, Joel S. Marcus, Executive Chairman and Founder, was appointed to the Navy SEAL Foundation board of directors.
- In February 2018, Menlo Gateway in our Greater Stanford submarket was awarded "Development of the Year" by NAIOP San Francisco at its "Best of the Bay" awards event.
- In March 2018, we announced elevations of key executive officers, effective in April 2018.
Subsequent events
- During April 2018, we sold 782,967 shares of common stock under our at-the-market common stock offering program ("ATM program") for $122.20 per share and received net proceeds of $94.2 million.
- In April 2018, our real estate joint venture at Menlo Gateway in our Greater Stanford submarket closed a secured construction loan with commitments available for borrowing of $157.3 million, for the development of Phase II of the project. The loan matures on May 1, 2035, and bears interest at a fixed rate of 4.53%.
Sustainability |
March 31, 2018 |
Acquisitions | ||||||||||||||||||||||||||||||
Property | Submarket/Market | Date of | Number of | Anticipated | Operating Occupancy | Square Footage | Unlevered Yields | Purchase Price | ||||||||||||||||||||||
Operating | Development/ Redevelopment | Future | Initial | Initial | ||||||||||||||||||||||||||
1Q18 Acquisitions | ||||||||||||||||||||||||||||||
1655 and 1725 Third Street | Mission Bay/SoMa/ | 3/2/18 | 2 | Office | N/A | — | 593,765 | — | 7.8% | 6.0% | $ | 31,950 | ||||||||||||||||||
Alexandria PARC | Greater Stanford/ | 1/25/18 | 4 | Office/lab | 100% | 152,383 | 45,115 | — | TBD | 136,000 | ||||||||||||||||||||
Summers Ridge Science Park | Sorrento Mesa/ | 1/5/18 | 4 | Office/lab | 100% | 316,531 | — | 50,000 | 8.2% | 6.3% | 148,650 | |||||||||||||||||||
704 Quince Orchard Road | Gaithersburg/ Maryland | 3/16/18 | 1 | Office/lab | 100% | 21,745 | 58,186 | — | TBD | 3,900 | ||||||||||||||||||||
11 | 490,659 | 697,066 | 50,000 | 320,500 | ||||||||||||||||||||||||||
1455 and 1515 Third Street | Mission Bay/SoMa/ | N/A | N/A | Office | 100% | N/A | — | — | N/A | N/A | 18,900 | |||||||||||||||||||
339,400 | ||||||||||||||||||||||||||||||
2Q18 Acquisitions completed or under purchase agreements/letters of intent | ||||||||||||||||||||||||||||||
100 Tech Drive | Route 128/ | 4/13/18 | 1 | Office/lab | 100% | 200,431 | — | 300,000 | 8.7% | 7.3% | 87,250 | |||||||||||||||||||
1455 and 1515 Third Street (acquisition of remaining 49% interest)(1) | Mission Bay/SoMa/ San Francisco | N/A | N/A | Office | 100% | N/A | — | — | N/A | N/A | 18,900 | |||||||||||||||||||
Pending | Various | 612,747 | — | 253,000 | TBD | 268,050 | ||||||||||||||||||||||||
813,178 | — | 553,000 | 374,200 | |||||||||||||||||||||||||||
Total acquisitions | $ | 713,600 | ||||||||||||||||||||||||||||
2018 Guidance range | $670,000 – $770,000 | |||||||||||||||||||||||||||||
We expect to provide total estimated costs at completion and related yields of development and redevelopment projects in the future. | ||||||||||||||||||||||||||||||
(1) | The first installment of $18.9 million related to our November 2016 acquisition of 1455 and 1515 Third Street was paid in 2Q17, and the second installment of $18.9 million was paid in January 2018. We expect to pay the third and final installment during 2Q18. | |||||||||||||||||||||||||||||
Guidance | |||||
The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2018. Updates to guidance include: a) two cent increases to the midpoints, and reduction of the ranges from 20 cents to 10 cents for EPS - diluted, FFO per share - diluted, and FFO per share - diluted, as adjusted, and b) updating the EPS and FFO per share - diluted guidance ranges to include an investment gain of $8.3 million related to one non-real estate investment in a life science entity and unrealized gains of $72.2 million related to non-real estate investments in 1Q18. There can be no assurance that actual amounts will be materially higher or lower than these expectations. See our discussion of "forward-looking statements" on page 6 of this Earnings Press Release. | |||||
Earnings per Share and Funds From Operations per Share Attributable to Alexandria's | |||||
Earnings per share | $2.88 to $2.98 | ||||
Depreciation and amortization | 4.45 | ||||
Allocation to unvested restricted stock awards | (0.05) | ||||
Funds from operations per share | $7.28 to $7.38 | ||||
Realized gain on non-real estate investment in 1Q18 | (0.08) | (1) | |||
Unrealized gains on non-real estate investments in 1Q18 | (0.70) | (2) | |||
Allocation to unvested restricted stock awards | 0.02 | ||||
Funds from operations per share, as adjusted | $6.52 to $6.62 | ||||
Key Assumptions | Low | High | |||||||
Occupancy percentage in North America as of December 31, 2018 | 96.9% | 97.5% | |||||||
Lease renewals and re-leasing of space: | |||||||||
Rental rate increases | 13.0% | 16.0% | |||||||
Rental rate increases (cash basis) | 7.5% | 10.5% | |||||||
Same property performance: | |||||||||
Net operating income increase | 2.5% | 4.5% | |||||||
Net operating income increase (cash basis) | 9.0% | 11.0% | |||||||
Straight-line rent revenue | $ | 92 | $ | 102 | (4) | ||||
General and administrative expenses | $ | 85 | $ | 90 | |||||
Capitalization of interest | $ | 55 | $ | 65 | |||||
Interest expense | $ | 155 | $ | 165 | |||||
Key Credit Metrics | 2018 Guidance | |
Net debt to Adjusted EBITDA – 4Q18 annualized | Less than 5.5x | |
Net debt and preferred stock to Adjusted EBITDA – 4Q18 annualized | Less than 5.5x | |
Fixed-charge coverage ratio – 4Q18 annualized | Greater than 4.0x | |
Unhedged variable-rate debt as a percentage of total debt | 5% | |
Value-creation pipeline as a percentage of gross real estate as of | 8% to 12% | |
Key Sources and Uses of Capital | Range | Midpoint | Certain | ||||||||||||||||
Sources of capital: | |||||||||||||||||||
Net cash provided by operating activities after dividends | $ | 140 | $ | 180 | $ | 160 | |||||||||||||
Incremental debt | 470 | 430 | 450 | ||||||||||||||||
Real estate dispositions, partial interest sales, and common equity | 1,110 | 1,310 | 1,210 | $ | 908 | (3) | |||||||||||||
Total sources of capital | $ | 1,720 | $ | 1,920 | $ | 1,820 | |||||||||||||
Uses of capital: | |||||||||||||||||||
Construction | $ | 1,050 | $ | 1,150 | $ | 1,100 | |||||||||||||
Acquisitions | 670 | 770 | 720 | (5) | |||||||||||||||
Total uses of capital | $ | 1,720 | $ | 1,920 | $ | 1,820 | |||||||||||||
Incremental debt (included above): | |||||||||||||||||||
Issuance of unsecured senior notes payable | $ | 550 | $ | 650 | $ | 600 | |||||||||||||
Repayments of secured notes payable | (10) | (15) | (13) | ||||||||||||||||
Repayment of unsecured senior bank term loan | (200) | (200) | (200) | ||||||||||||||||
$1.65 billion unsecured senior line of credit/other | 130 | (5) | 63 | ||||||||||||||||
Incremental debt | $ | 470 | $ | 430 | $ | 450 | |||||||||||||
(1) | Represents an investment gain of $8.3 million related to one non-real estate investment in a life science entity recognized in 1Q18. | ||||||||||||||||||
(2) | Per share amounts of unrealized gains on non-real estate investments in 1Q18 may be different for the full year ended December 31, 2018, | ||||||||||||||||||
(3) | We have completed transactions aggregating $908 million through April 2018. This includes completed and projected settlement of our forward equity sales agreements and completed sales under our ATM program, including 6.9 million shares of our common stock subject to forward equity sales agreements executed in January 2018. Additionally, in March 2018, we settled 843,600 shares from the forward equity sales agreements and received proceeds of $100.2 million, net of underwriting discounts and adjustments provided in the forward equity sales agreements. We expect to receive proceeds of $713.7 million upon settlement of the remaining outstanding forward equity sales agreements, to be further adjusted as provided in the sales agreements, in 2018. Also, includes 782,967 shares of common stock sold in April 2018 under our ATM program at $122.20 per share, with net proceeds of $94.2 million. | ||||||||||||||||||
(4) | Approximately 50% of straight-line rent revenue represents initial free rent on recently delivered and expected 2018 deliveries of new Class A properties from our development and redevelopment pipeline. | ||||||||||||||||||
(5) | See "Acquisitions" on page 4 of this Earnings Press Release. | ||||||||||||||||||
Earnings Call Information and About the Company
March 31, 2018
We will host a conference call on Tuesday, May 1, 2018, at 3:00 p.m. Eastern Time ("ET")/noon Pacific Time ("PT"), which is open to the general public to discuss our financial and operating results for the first quarter ended March 31, 2018. To participate in this conference call, dial (877) 270-2148 or (412) 902-6510 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the Alexandria Real Estate Equities, Inc. call. The audio webcast can be accessed at www.are.com in the "For Investors" section. A replay of the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT on Tuesday, May 1, 2018. The replay number is (877) 344-7529 or (412) 317-0088, and the confirmation code is 10117375.
Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2018, is available in the "For Investors" section of our website at www.are.com or by following this link: http://www.are.com/fs/2018q1.pdf.
For any questions, please contact Joel S. Marcus, executive chairman and founder; Stephen A. Richardson, co-chief executive officer; Peter M. Moglia, co-chief executive officer and chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; or Sara M. Kabakoff, senior manager – corporate communications, at (626) 578-0777.
About the Company
Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® company, is an urban office real estate investment trust ("REIT") uniquely focused on collaborative life science and technology campuses in AAA innovation cluster locations, with a total market capitalization of $17.9 billion and an asset base in North America of 30.2 million SF as of March 31, 2018. The asset base in North America includes 20.8 million RSF of operating properties and 3.5 million RSF of development and redevelopment of new Class A properties currently undergoing construction and pre-construction activities with target delivery dates ranging from 2018 through 2020. Additionally, the asset base in North America includes 5.9 million SF of intermediate-term and future development projects, including 3.6 million SF of intermediate-term development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle Park. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science and technology campuses that provide its innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science and technology companies through its venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.
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This document includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2018 earnings per share attributable to Alexandria's common stockholders – diluted, 2018 funds from operations per share attributable to Alexandria's common stockholders – diluted, net operating income, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of forward-looking words, such as "forecast," "guidance," "projects," "estimates," "anticipates," "believes," "expects," "intends," "may," "plans," "seeks," "should," or "will," or the negative of those words or similar words. These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events. There can be no assurance that actual results will not be materially higher or lower than these expectations. These statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully place into service and lease any properties undergoing development or redevelopment and our existing space held for future development or redevelopment (including new properties acquired for that purpose), our failure to successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission ("SEC"). Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are made as of the date of this Earnings Press Release, and unless otherwise stated, we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.
Consolidated Statements of Income | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
3/31/18 | 12/31/17 | 9/30/17 | 6/30/17 | 3/31/17 | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Rental | $ | 244,485 | $ | 228,025 | $ | 216,021 | $ | 211,942 | $ | 207,193 | ||||||||||
Tenant recoveries | 73,170 | 70,270 | 67,058 | 60,470 | 61,346 | |||||||||||||||
Other income | 2,484 | 496 | 2,291 | 647 | 2,338 | |||||||||||||||
Total revenues | 320,139 | 298,791 | 285,370 | 273,059 | 270,877 | |||||||||||||||
Expenses: | ||||||||||||||||||||
Rental operations | 91,771 | 88,073 | 83,469 | 76,980 | 77,087 | |||||||||||||||
General and administrative | 22,421 | 18,910 | 17,636 | 19,234 | 19,229 | |||||||||||||||
Interest | 36,915 | 36,082 | 31,031 | 31,748 | 29,784 | |||||||||||||||
Depreciation and amortization | 114,219 | 107,714 | 107,788 | 104,098 | 97,183 | |||||||||||||||
Impairment of real estate | — | — | — | 203 | — | |||||||||||||||
Loss on early extinguishment of debt | — | 2,781 | — | — | 670 | |||||||||||||||
Total expenses | 265,326 | 253,560 | 239,924 | 232,263 | 223,953 | |||||||||||||||
Equity in earnings of unconsolidated real estate joint ventures | 1,144 | 376 | 14,100 | 589 | 361 | |||||||||||||||
Investment income | 85,561 | (1) | — | — | — | — | ||||||||||||||
Gain on sales of real estate – rental properties | — | — | — | — | 270 | |||||||||||||||
Gain on sales of real estate – land parcels | — | — | — | 111 | — | |||||||||||||||
Net income | 141,518 | 45,607 | 59,546 | 41,496 | 47,555 | |||||||||||||||
Net income attributable to noncontrolling interests | (5,888) | (6,219) | (5,773) | (7,275) | (5,844) | |||||||||||||||
Net income attributable to Alexandria Real Estate Equities, Inc.'s stockholders | 135,630 | 39,388 | 53,773 | 34,221 | 41,711 | |||||||||||||||
Dividends on preferred stock | (1,302) | (1,302) | (1,302) | (1,278) | (3,784) | |||||||||||||||
Preferred stock redemption charge | — | — | — | — | (11,279) | |||||||||||||||
Net income attributable to unvested restricted stock awards | (1,941) | (1,255) | (1,198) | (1,313) | (987) | |||||||||||||||
Net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders | $ | 132,387 | $ | 36,831 | $ | 51,273 | $ | 31,630 | $ | 25,661 | ||||||||||
Net income per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders: | ||||||||||||||||||||
Basic | $ | 1.33 | $ | 0.39 | $ | 0.55 | $ | 0.35 | $ | 0.29 | ||||||||||
Diluted | $ | 1.32 | $ | 0.38 | $ | 0.55 | $ | 0.35 | $ | 0.29 | ||||||||||
Weighted-average shares of common stock outstanding: | ||||||||||||||||||||
Basic | 99,855 | 95,138 | 92,598 | 90,215 | 88,147 | |||||||||||||||
Diluted | 100,125 | 95,914 | 93,296 | 90,745 | 88,200 | |||||||||||||||
Dividends declared per share of common stock | $ | 0.90 | $ | 0.90 | $ | 0.86 | $ | 0.86 | $ | 0.83 | ||||||||||
(1) See "Investments" on page 43 of our Supplemental Information for additional information. | ||||||||||||||||||||
Consolidated Balance Sheets | ||||||||||||||||||||
3/31/18 | 12/31/17 | 9/30/17 | 6/30/17 | 3/31/17 | ||||||||||||||||
Assets | ||||||||||||||||||||
Investments in real estate | $ | 10,671,227 | $ | 10,298,019 | $ | 10,046,521 | $ | 9,819,413 | $ | 9,470,667 | ||||||||||
Investments in unconsolidated real estate joint ventures | 169,865 | 110,618 | 33,692 | 58,083 | 50,457 | |||||||||||||||
Cash and cash equivalents | 221,645 | 254,381 | 118,562 | 124,877 | 151,209 | |||||||||||||||
Restricted cash | 37,337 | 22,805 | 27,713 | 20,002 | 18,320 | |||||||||||||||
Tenant receivables | 11,258 | 10,262 | 9,899 | 8,393 | 9,979 | |||||||||||||||
Deferred rent | 467,112 | 434,731 | 402,353 | 383,062 | 364,348 | |||||||||||||||
Deferred leasing costs | 226,803 | 221,430 | 208,265 | 201,908 | 202,613 | |||||||||||||||
Investments | 724,310 | (1) | 523,254 | 485,262 | 424,920 | 394,471 | ||||||||||||||
Other assets | 291,639 | 228,453 | 213,056 | 205,009 | 206,562 | |||||||||||||||
Total assets | $ | 12,821,196 | $ | 12,103,953 | $ | 11,545,323 | $ | 11,245,667 | $ | 10,868,626 | ||||||||||
Liabilities, Noncontrolling Interests, and Equity | ||||||||||||||||||||
Secured notes payable | $ | 775,689 | $ | 771,061 | $ | 1,153,890 | $ | 1,127,348 | $ | 1,083,758 | ||||||||||
Unsecured senior notes payable | 3,396,912 | 3,395,804 | 2,801,290 | 2,800,398 | 2,799,508 | |||||||||||||||
Unsecured senior line of credit | 490,000 | 50,000 | 314,000 | 300,000 | — | |||||||||||||||
Unsecured senior bank term loans | 548,197 | 547,942 | 547,860 | 547,639 | 547,420 | |||||||||||||||
Accounts payable, accrued expenses, and tenant security deposits | 783,986 | 763,832 | 740,070 | 734,189 | 782,637 | |||||||||||||||
Dividends payable | 93,065 | 92,145 | 83,402 | 81,602 | 78,976 | |||||||||||||||
Preferred stock redemption liability | — | — | — | — | 130,000 | |||||||||||||||
Total liabilities | 6,087,849 | 5,620,784 | 5,640,512 | 5,591,176 | 5,422,299 | |||||||||||||||
Commitments and contingencies | ||||||||||||||||||||
Redeemable noncontrolling interests | 10,212 | 11,509 | 11,418 | 11,410 | 11,320 | |||||||||||||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity: | ||||||||||||||||||||
7.00% Series D cumulative convertible preferred stock | 74,386 | 74,386 | 74,386 | 74,386 | 74,386 | |||||||||||||||
Common stock | 1,007 | 998 | 943 | 921 | 899 | |||||||||||||||
Additional paid-in capital | 6,117,976 | (1) | 5,824,258 | 5,287,777 | 5,059,180 | 4,855,686 | ||||||||||||||
Accumulated other comprehensive income | 1,228 | 50,024 | 43,864 | 22,677 | 21,460 | |||||||||||||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity | 6,194,597 | 5,949,666 | 5,406,970 | 5,157,164 | 4,952,431 | |||||||||||||||
Noncontrolling interests | 528,538 | 521,994 | 486,423 | 485,917 | 482,576 | |||||||||||||||
Total equity | 6,723,135 | 6,471,660 | 5,893,393 | 5,643,081 | 5,435,007 | |||||||||||||||
Total liabilities, noncontrolling interests, and equity | $ | 12,821,196 | $ | 12,103,953 | $ | 11,545,323 | $ | 11,245,667 | $ | 10,868,626 | ||||||||||
(1) Includes unrealized gains aggregating $213.1 million. See "Investments" on page 43 of our Supplemental Information for additional information. | ||||||||||||||||||||
Funds From Operations and Funds From Operations per Share | ||||||||||||||||||||
The following table presents a reconciliation of net income attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with generally accepted accounting principles ("GAAP"), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria's common stockholders – diluted, and funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below: | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
3/31/18 | 12/31/17 | 9/30/17 | 6/30/17 | 3/31/17 | ||||||||||||||||
Net income attributable to Alexandria's common stockholders | $ | 132,387 | $ | 36,831 | $ | 51,273 | $ | 31,630 | $ | 25,661 | ||||||||||
Depreciation and amortization | 114,219 | 107,714 | 107,788 | 104,098 | 97,183 | |||||||||||||||
Noncontrolling share of depreciation and amortization from consolidated real estate JVs | (3,867) | (3,777) | (3,608) | (3,735) | (3,642) | |||||||||||||||
Our share of depreciation and amortization from unconsolidated real estate JVs | 644 | 432 | 383 | 324 | 412 | |||||||||||||||
Gain on sales of real estate – rental properties | — | — | — | — | (270) | |||||||||||||||
Our share of gain on sales of real estate from unconsolidated real estate JVs | — | — | (14,106) | — | — | |||||||||||||||
Gain on sales of real estate – land parcels | — | — | — | (111) | — | |||||||||||||||
Impairment of real estate – rental properties | — | — | — | 203 | — | |||||||||||||||
Allocation to unvested restricted stock awards | (1,548) | (734) | (957) | (685) | (561) | |||||||||||||||
Add: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1) | 1,302 | — | — | — | — | |||||||||||||||
Funds from operations attributable to Alexandria's common stockholders – diluted(2) | 243,137 | 140,466 | 140,773 | 131,724 | 118,783 | |||||||||||||||
Less: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1) | (1,302) | — | — | — | — | |||||||||||||||
Realized gain on non-real estate investment | (8,252) | (3) | — | — | — | — | ||||||||||||||
Unrealized gains on non-real estate investments(4) | (72,229) | — | — | — | — | |||||||||||||||
Impairment of land parcels and non-real estate investments | — | 3,805 | — | 4,491 | — | |||||||||||||||
Loss on early extinguishment of debt | — | 2,781 | — | — | 670 | |||||||||||||||
Preferred stock redemption charge | — | — | — | — | 11,279 | |||||||||||||||
Allocation to unvested restricted stock awards | 1,125 | (94) | — | (58) | (150) | |||||||||||||||
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted | $ | 162,479 | $ | 146,958 | $ | 140,773 | $ | 136,157 | $ | 130,582 | ||||||||||
(1) | See definition for "Weighted-Average Shares of Common Stock Outstanding – Diluted" on page 55 of our Supplemental Information for additional information. | |||||||||||||||||||
(2) | Calculated in accordance with standards established by the Advisory Board of Governors of the National Association of Real Estate Investment Trusts (the "Nareit Board of Governors") in its April 2002 White Paper and related implementation | |||||||||||||||||||
(3) | Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized non-real estate investment gains were $5.1 million for 1Q18. | |||||||||||||||||||
(4) | See "Investments" on page 43 of our Supplemental Information for additional information. | |||||||||||||||||||
The following table presents a reconciliation of net income per share attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria's common stockholders – diluted, and funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below. Amounts allocable to unvested restricted stock awards are not material and are not presented separately within the per share table below. Per share amounts may not add due to rounding. | ||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
3/31/18 | 12/31/17 | 9/30/17 | 6/30/17 | 3/31/17 | ||||||||||||||||
Net income per share attributable to Alexandria's common stockholders | $ | 1.32 | $ | 0.38 | $ | 0.55 | $ | 0.35 | $ | 0.29 | ||||||||||
Depreciation and amortization | 1.08 | 1.08 | 1.11 | 1.10 | 1.06 | |||||||||||||||
Our share of gain on sales of real estate from unconsolidated real estate JVs | — | — | (0.15) | — | — | |||||||||||||||
Add: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1) | 0.01 | — | — | — | — | |||||||||||||||
Funds from operations per share attributable to Alexandria's common stockholders – diluted(2) | 2.41 | 1.46 | 1.51 | 1.45 | 1.35 | |||||||||||||||
Less: effect of assumed conversion of 7.00% Series D cumulative convertible preferred stock(1) | (0.01) | — | — | — | — | |||||||||||||||
Realized gain on non-real estate investment | (0.08) | (3) | — | — | — | — | ||||||||||||||
Unrealized gains on non-real estate investments(4) | (0.70) | — | — | — | — | |||||||||||||||
Impairment of land parcels and non-real estate investments | — | 0.04 | — | 0.05 | — | |||||||||||||||
Loss on early extinguishment of debt | — | 0.03 | — | — | 0.01 | |||||||||||||||
Preferred stock redemption charge | — | — | — | — | 0.12 | |||||||||||||||
Funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted | $ | 1.62 | $ | 1.53 | $ | 1.51 | $ | 1.50 | $ | 1.48 | ||||||||||
Weighted-average shares of common stock outstanding(1) for calculations of: | ||||||||||||||||||||
Earnings per share – diluted and funds from operations, as adjusted – diluted, per share | 100,125 | 95,914 | 93,296 | 90,745 | 88,200 | |||||||||||||||
Funds from operations – diluted, per share | 100,866 | 95,914 | 93,296 | 90,745 | 88,200 | |||||||||||||||
(1) See definition for "Weighted-Average Shares of Common Stock Outstanding – Diluted" on page 55 of our Supplemental Information for additional information. | ||||||||||||||||||||
(2) Calculated in accordance with standards established by the Nareit Board of Governors in its April 2002 White Paper and related implementation guidance. | ||||||||||||||||||||
(3) Relates to one publicly traded non-real estate investment in a life science entity. Excluding this gain, our realized non-real estate investment gains were $5.1 million for 1Q18. | ||||||||||||||||||||
(4) See "Investments" on page 43 of our Supplemental Information for additional information. | ||||||||||||||||||||
SOURCE Alexandria Real Estate Equities, Inc.
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