PASADENA, Calif., July 22,
2024 /PRNewswire/ -- Alexandria Real Estate Equities,
Inc. (NYSE: ARE) announced financial and operating results for the
second quarter ended June 30,
2024.
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Key
highlights
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Operating
results
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2Q24
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2Q23
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1H24
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1H23
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Total
revenues:
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In millions
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$
766.7
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$
713.9
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$ 1,535.8
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$ 1,414.7
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Growth
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7.4 %
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8.6 %
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Net income attributable
to Alexandria's common stockholders – diluted:
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In millions
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$
42.9
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$
87.3
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$
209.8
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$
162.5
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Per share
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$
0.25
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$
0.51
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$
1.22
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$
0.95
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Funds from operations
attributable to Alexandria's common stockholders – diluted, as
adjusted:
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In millions
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$
405.5
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$
382.4
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$
809.4
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$
756.1
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Per share
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$
2.36
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$
2.24
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$
4.71
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$
4.43
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An operationally excellent, industry-leading REIT with a
high-quality, diverse client base to support growing revenues,
stable cash flows, and strong margins
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(As of
June 30, 2024, unless stated
otherwise)
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Percentage of annual
rental revenue in effect from mega campuses
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74 %
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Percentage of annual
rental revenue in effect from investment-grade or
publicly
traded
large cap tenants
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53 %
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Sustained strength in
tenant collections:
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Tenant
receivables as a percentage of 2Q24 rental revenues
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0.9 %
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July 2024 tenant
rents and receivables collected as of July 22, 2024
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99.7 %
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2Q24 tenant
rents and receivables collected as of July 22, 2024
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99.9 %
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Occupancy of operating
properties in North America
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94.6 %
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Operating
margin
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72 %
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Adjusted EBITDA
margin
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72 %
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Percentage of leases
containing annual rent escalations
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96 %
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Weighted-average
remaining lease term:
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Top 20
tenants
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9.4
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years
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All
tenants
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7.4
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years
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Strong leasing volume and solid rental rate increases
- Strong leasing volume aggregating 1.1 million RSF during
2Q24.
- Solid rental rate increases of 7.4% and 3.7% (cash basis) for
2Q24 and 26.2% and 15.0% (cash basis) for 1H24.
- 79% of our leasing activity during the last twelve months was
generated from our existing tenant base.
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2Q24
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1H24
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Total leasing activity
– RSF
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1,114,001
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2,256,858
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Leasing of development
and redevelopment space – RSF
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340,989
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441,221
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Lease renewals and
re-leasing of space:
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RSF (included in
total leasing activity above)
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589,650
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1,584,420
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Rental rate
increase
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7.4 %
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26.2 %
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Rental rate
increase (cash basis)
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3.7 %
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15.0 %
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Continued solid net operating income and internal
growth
- Net operating income (cash basis) of $1.9 billion for 2Q24 annualized, up $122.7 million, or 6.9%, compared to 2Q23
annualized.
- Same property net operating income growth of 1.5% and 3.9%
(cash basis) for 2Q24 over 2Q23 and 1.1% and 3.7% (cash basis) for
1H24 over 1H23.
- 96% of our leases contain contractual annual rent escalations
approximating 3%.
Strong and flexible balance sheet with significant liquidity;
top 10% credit rating ranking among all publicly traded U.S.
REITs
- Net debt and preferred stock to Adjusted EBITDA of 5.4x and
fixed-charge coverage ratio of 4.5x for 2Q24 annualized.
- Significant liquidity of $5.6
billion.
- 32% of our total debt matures in 2049 and beyond.
- 13.0 years weighted-average remaining term of debt.
- 97.3% of our debt has a fixed rate.
- Total debt and preferred stock to gross assets of 29%.
- $1.1 billion of expected capital
contribution commitments from existing consolidated real estate
joint venture partners to fund construction from 3Q24 through
2027.
Consistent dividend strategy with a focus on retaining
significant net cash flows from operating activities after
dividends for reinvestment
- Common stock dividend declared for 2Q24 of $1.30 per common share aggregating $5.08 per common share for the twelve months
ended June 30, 2024, up 24 cents, or 5%, over the twelve months ended
June 30, 2023.
- Dividend yield of 4.4% as of June 30,
2024.
- Dividend payout ratio of 55% for the three months ended
June 30, 2024.
- Average annual dividend per-share growth of 5% from 2020
through 2Q24 annualized.
- Significant net cash flows from operating activities after
dividends retained for reinvestment aggregating $2.1 billion for the years ended December 31, 2020 through 2023 and including the
midpoint of our 2024 guidance range for net cash provided by
operating activities after dividends.
Ongoing execution of Alexandria's 2024 capital strategy
We expect to continue pursuing our strategy to fund a
significant portion of our capital requirements for the year ending
December 31, 2024 with dispositions and sales of partial
interests and are actively pursuing several dispositions and
partial interest sale opportunities.
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(in
millions)
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Completed dispositions
of 100% interest in properties not integral to our mega
campus
strategy
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$
77
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(1)
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Pending transactions
subject to letters of intent or purchase and sale
agreement
negotiations
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807
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Forward equity sales
agreements expected to be settled in 2024
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27
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911
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Additional targeted
dispositions, sales of partial interests, and common
equity
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639
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2024
guidance midpoint for dispositions, sales of partial interests, and
common equity
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$ 1,550
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(1)
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Refer to "Dispositions
and sales of partial interests" in the Earnings Press Release for
additional details.
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Alexandria's highly leased
value-creation pipeline delivered incremental annual net operating
income of $16 million commencing during 2Q24 and is expected
to deliver incremental annual net operating income aggregating
$480 million by 1Q28
- During 2Q24, we placed into service development and
redevelopment projects aggregating 284,982 RSF that are 100% leased
across multiple submarkets and delivered incremental annual net
operating income of $16 million. 2Q24
deliveries included:
- 195,435 and 25,655 RSF at 9810 Darnestown Road and 9808 Medical
Center Drive, respectively, located on the Alexandria
Center® for Life Science – Shady Grove mega campus in
our Rockville submarket.
- Annual net operating income (cash basis) is expected to
increase by $80 million upon the
burn-off of initial free rent, with a weighted-average burn-off
period of approximately seven months, from recently delivered
projects.
- 69% of the RSF in our total value-creation pipeline is within
our mega campuses.
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Development and
Redevelopment Projects
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Incremental
Annual Net
Operating
Income
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RSF
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Leased/
Negotiating
Percentage
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(dollars in
millions)
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Placed into
service:
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1Q24
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$
26
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343,445
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100 %
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2Q24
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16
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284,982
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100
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Placed into service in
1H24
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$
42
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628,427
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100 %
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Expected to be placed
into service(1):
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3Q24
through 4Q25
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$
187
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(2)
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5,432,915
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1Q26
through 1Q28
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293
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61 %
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(3)
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$
480
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(1)
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Represents expected
incremental annual net operating income to be placed into service
from deliveries of projects undergoing construction and one
committed near-term project expected to commence construction in
the next two years.
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(2)
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Includes 1.5
million RSF that is expected to stabilize through 2025 and is
87% leased, and partial deliveries through 4Q25 from projects
expected to stabilize in 2026 and beyond. In addition to the
projects represented, we are evaluating one priority anticipated
development project that could commence active construction in 2H24
and may have initial delivery in 2025. Refer to the initial and
stabilized occupancy years under "New Class A/A+ development and
redevelopment properties: current projects" in the Supplemental
Information for additional details.
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(3)
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71% of the
leased RSF of our value-creation projects was generated from
our existing tenant base.
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Strong balance sheet management
Key metrics as of
or for the three months ended June 30, 2024
- $32.5 billion in total market
capitalization.
- $20.1 billion in total equity
capitalization, which ranks in the top 10% among all publicly
traded U.S. REITs.
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2Q24
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Target
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Quarter
Annualized
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Trailing
12 Months
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4Q24
Annualized
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Net debt and preferred
stock to
Adjusted
EBITDA
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5.4x
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5.6x
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Less than or equal to
5.1x
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Fixed-charge coverage
ratio
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4.5x
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4.6x
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Greater than or equal
to 4.5x
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Key capital events
- In July 2024, we executed an
agreement with the lender group to amend and restate our unsecured
senior line of credit to, among other changes, extend the maturity
date from January 22, 2028 to
January 22, 2030, including extension
options that we control. We expect that the amendment and
restatement will become effective in September 2024 upon the satisfaction of certain
conditions.
- During 2Q24, we entered into new forward equity sales
agreements aggregating $27.8 million
to sell 230 thousand shares of common stock under our ATM program
at an average price of $122.32
(before underwriting discounts). We expect to settle these forward
equity sales agreements in 2024. As of July
22, 2024, the remaining aggregate amount available under our
ATM program for future sales of common stock was $1.47 billion.
Investments
- As of June 30, 2024:
- Our non-real estate investments aggregated $1.5 billion.
- Unrealized gains presented in our consolidated balance sheet
were $159.8 million, comprising gross
unrealized gains and losses aggregating $284.2 million and $124.4
million, respectively.
- Investment loss of $43.7 million
for 2Q24 presented in our consolidated statement of operations
consisted of $33.4 million of
realized gains, partially offset by $12.8
million of impairment charges and $64.2 million of unrealized losses.
Other key highlights
- In June 2024, Alexandria was added to the Health Care REITs
industry under the Global Industry Classification Standard
(GICS®) by S&P Dow Jones Indices and MSCI, and to
the FTSE NAREIT Equity Health Care Index.
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Key items included
in net income attributable to Alexandria's common
stockholders:
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2Q24
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2Q23
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2Q24
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2Q23
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1H24
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1H23
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1H24
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1H23
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(in millions, except
per share
amounts)
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Amount
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Per Share –
Diluted
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Amount
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Per Share –
Diluted
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Unrealized losses on
non-real
estate
investments
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$ (64.2)
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$ (77.9)
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$
(0.37)
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$
(0.46)
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$ (35.1)
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$
(143.8)
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$
(0.20)
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$
(0.84)
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Gain on sales of real
estate
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—
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214.8
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—
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1.26
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0.4
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214.8
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—
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1.26
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Impairment of non-real
estate
investments
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(12.8)
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(23.0)
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(0.08)
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(0.13)
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(27.5)
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(23.0)
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(0.16)
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(0.13)
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Impairment of real
estate
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(30.8)
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(168.6)
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(0.18)
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(0.99)
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(30.8)
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(168.6)
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(0.18)
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(0.99)
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Total
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$
(107.8)
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$ (54.7)
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$
(0.63)
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$
(0.32)
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$ (93.0)
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$
(120.6)
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$
(0.54)
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$
(0.70)
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Refer to "Funds from
operations and funds from operations per share" in the Earnings
Press Release for additional details.
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Subsequent event
- In July 2024, we executed an
amendment to our existing ground lease agreement at the Alexandria
Technology Square® mega campus aggregating 1.2 million
RSF in our Cambridge submarket to
extend the term by 24 years from January 1,
2065 to December 31, 2088. The
amendment requires that we prepay our entire rent obligation for
the extended lease term aggregating $270.0
million in two equal installments during the fourth quarter
of 2024 and the first quarter of 2025. This amount will be
amortized on a straight-line basis over the remaining lease term
from July 2024 through December 2088, and the amended operating lease
will result in an incremental annual rent expense of approximately
$3.6 million. Alexandria Technology
Square® is a foundational mega campus in the heart of
the global life science ecosystem in Cambridge and is the Greater Boston base of operations of key
strategic long-tenured tenants such as Novartis AG, GlaxoSmithKline
plc, Massachusetts Institute of
Technology, and Mass General Brigham. Securing this ground
lease through December 2088
significantly enhances the long-term value of our investment in
this critical mega campus.
Industry and corporate responsibility leadership: catalyzing
and leading the way for positive change to benefit human health and
society
- In June 2024, we released our
2023 Corporate Responsibility Report, which reinforces our
longstanding operational excellence across our differentiated
Labspace® platform and highlights:
- Our new target to reduce operational greenhouse gas (GHG)
emissions intensity by advancing our energy efficiency,
electrification, alternative energy, and renewable electricity
initiatives. As an example of our renewable electricity
initiatives, a recent long-term power purchase agreement in our
Greater Boston market is expected
to enable us to meet 100% of the electricity needs for Alexandria-paid accounts in this market with
renewable energy.
- Our pioneering corporate responsibility pillars, which aim to
address the most pressing issues facing our nation, including the
mental health and addiction crises.
- In April 2024, Alexandria earned several 2024 regional TOBY
(The Outstanding Building of the Year) Awards from BOMA
(Building Owners and Managers Association). The TOBY Awards are the
commercial real estate industry's highest recognition honoring
excellence in commercial building management and operations.
- In the BOMA Mid-Atlantic region, 60 Binney Street on the
Alexandria Center® at Kendall Square mega campus won in
the Life Science category and Building 1400 on the Alexandria
Center® at One Kendall Square mega campus won in the
Renovated Building category.
- In the BOMA Pacific Southwest region, the Alexandria
Center® for Life Science – San
Carlos mega campus won in the Life Science category.
- In the BOMA Pacific Northwest region, 1165 Eastlake Avenue East
on the Alexandria Center® for Life Science – Eastlake
mega campus won in the Life Science category.
- Additionally, our innovative energy district at the Alexandria
Center® for Life Science – South Lake Union mega campus
received the Seattle 2030
District's 2024 Vision Award for Energy, and 6040 George Watts Hill
Drive, Phase II, in Research Triangle was recognized as the Best
Development Project in the 2024 Triangle Commercial Real Estate
Women's (TCREW) Champion Awards.
About Alexandria Real Estate Equities, Inc.
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P
500® company, is a best-in-class, mission-driven
life science REIT making a positive and lasting impact on the
world. As the pioneer of the life science real estate niche with
our founding in 1994, Alexandria
is the preeminent and longest-tenured owner, operator, and
developer of collaborative life science mega campuses in AAA
innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. As of June 30, 2024, Alexandria has a total market
capitalization of $32.5 billion
and an asset base in North America
that includes 42.1 million RSF of operating properties and 5.3
million RSF of Class A/A+ properties undergoing construction and
one committed near-term project expected to commence construction
in the next two years. Alexandria
has a longstanding and proven track record of developing Class A/A+
properties clustered in life science mega campuses that provide our
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 companies through our venture capital
platform. 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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Guidance
June 30, 2024
(Dollars in millions, except per share amounts)
|
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The
following guidance for 2024 has been updated to reflect our current
view of existing market conditions and assumptions for the year
ending December 31, 2024. There can be no assurance that actual
results will not be materially higher or lower than these
expectations. Also, refer to our discussion of "forward-looking
statements" on page 7 of the Earnings Press Release for additional
details.
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Changes to our guidance for 2024 key sources and uses of
capital include a $150 million increase to the midpoint of our
guidance range for dispositions, sales of partial interests, and
common equity primarily to fund the first $135 million
installment of the ground lease prepayment at our Alexandria
Technology Square® mega campus aggregating 1.2
million RSF in our Cambridge submarket due in the fourth quarter of
2024 in connection with an amendment of our existing ground lease
agreement to extend the term of the lease by 24 years from
January 1, 2065 to December 31, 2088. Refer to
"Subsequent event" in the Earnings Press Release for additional
information.
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2024 Guidance
Midpoint
|
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Summary of Key
Changes in Guidance
|
|
As of
7/22/24
|
|
As of
4/22/24
|
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Summary of Key
Changes in Sources and Uses of Capital
|
|
As of
7/22/24
|
|
As of
4/22/24
|
|
EPS, FFO per share, and
FFO per share, as adjusted
|
|
See updates
below
|
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Dispositions, sales of
partial interests, and common equity
|
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$1,550
|
|
$1,400
|
|
|
|
|
|
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Ground lease
prepayment(1)
|
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$135
|
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$—
|
|
|
|
|
|
|
|
|
|
|
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Key Credit Metric
Targets(2)
|
|
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Net debt and preferred
stock to Adjusted EBITDA – 4Q24 annualized
|
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Less than or equal to
5.1x
|
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Fixed-charge coverage
ratio – 4Q24 annualized
|
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Greater than or equal
to 4.5x
|
|
|
|
|
Projected 2024
Earnings per Share and Funds From Operations per Share Attributable
to
Alexandria's Common Stockholders – Diluted
|
|
|
|
As of
7/22/24
|
|
As of
4/22/24
|
|
|
Earnings per
share(3)
|
|
$2.98 to
$3.10
|
|
$3.60 to
$3.72
|
|
|
Depreciation and
amortization of real estate assets
|
|
5.95
|
|
|
5.95
|
|
|
|
Impairment of real
estate – rental properties and land
|
|
0.01
|
|
|
—
|
|
|
|
Allocation to unvested
restricted stock awards
|
|
(0.05)
|
|
|
(0.06)
|
|
|
|
Funds from operations
per share(2)
|
|
$8.89 to
$9.01
|
|
|
$9.49 to
$9.61
|
|
|
|
Unrealized losses
(gains) on non-real estate investments
|
|
0.20
|
|
|
(0.17)
|
|
|
|
Impairment of non-real
estate investments
|
|
0.16
|
|
|
0.09
|
|
|
|
Impairment of real
estate
|
|
0.17
|
|
|
—
|
|
|
|
Allocation to unvested
restricted stock awards
|
|
(0.01)
|
|
|
—
|
|
|
|
Funds from operations
per share, as adjusted(2)
|
|
$9.41 to
$9.53
|
|
|
$9.41 to
$9.53
|
|
|
|
Midpoint
|
|
$9.47
|
|
|
$9.47
|
|
|
|
|
|
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|
|
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|
|
Certain
Completed
Items
|
|
Key Sources and Uses
of Capital
|
|
Range
|
|
Midpoint
|
|
|
Sources of
capital:
|
|
|
|
|
|
|
|
|
|
|
Incremental
debt
|
|
$ 885
|
|
$ 885
|
|
$ 885
|
|
See below
|
|
Net cash provided by
operating activities after
dividends
|
|
400
|
|
500
|
|
450
|
|
|
|
|
Dispositions, sales of
partial interests, and
common
equity(4) (refer to page 6)
|
|
1,050
|
|
2,050
|
|
1,550
|
|
(4)
|
|
Total sources of
capital
|
|
$
2,335
|
|
$
3,435
|
|
$
2,885
|
|
|
|
|
Uses of
capital:
|
|
|
|
|
|
|
|
|
|
|
Construction
|
|
$
1,950
|
|
$
2,550
|
|
$
2,250
|
|
|
|
|
Acquisitions (refer to
page 5)
|
|
250
|
|
750
|
|
500
|
|
$ 202
|
|
|
Ground lease
prepayment(1)
|
|
135
|
|
135
|
|
135
|
|
|
|
|
Total uses of
capital
|
|
$
2,335
|
|
$
3,435
|
|
$
2,885
|
|
|
|
|
Incremental debt
(included above):
|
|
|
|
|
|
|
|
|
|
|
Issuance of unsecured
senior notes payable(5)
|
|
$
1,000
|
|
$
1,000
|
|
$
1,000
|
|
$
1,000
|
(5)
|
|
Unsecured senior line
of credit, commercial
paper,
and other
|
|
(115)
|
|
(115)
|
|
(115)
|
|
|
|
|
Net incremental
debt
|
|
$ 885
|
|
$ 885
|
|
$ 885
|
|
|
|
|
|
Key
Assumptions
|
|
Low
|
|
High
|
|
|
Occupancy percentage in
North America as of December 31, 2024
|
|
94.6 %
|
|
95.6 %
|
|
|
Lease renewals and
re-leasing of space:
|
|
|
|
|
|
|
Rental rate
increases
|
|
11.0 %
|
|
19.0 %
|
|
|
Rental rate increases
(cash basis)
|
|
5.0 %
|
|
13.0 %
|
|
|
Same property
performance:
|
|
|
|
|
|
|
Net operating income
increases
|
|
0.5 %
|
|
2.5 %
|
|
|
Net operating income
increases (cash basis)
|
|
3.0 %
|
|
5.0 %
|
|
|
Straight-line rent
revenue
|
|
$
169
|
|
$
184
|
|
|
General and
administrative expenses
|
|
$
181
|
|
$
191
|
|
|
Capitalization of
interest
|
|
$
325
|
|
$
355
|
|
|
Interest
expense
|
|
$
154
|
|
$
184
|
|
|
Realized gains on
non-real estate investments(6)
|
|
$
95
|
|
$
125
|
|
|
|
|
(1)
|
Refer to "Subsequent
event" in the Earnings Press Release for additional
details.
|
|
(2)
|
Refer to "Definitions
and reconciliations" in the Supplemental Information for
additional details.
|
|
(3)
|
Excludes unrealized
gains or losses on non-real estate investments after June 30, 2024
that are required to be recognized in earnings and are excluded
from funds from operations per share, as adjusted.
|
|
(4)
|
We expect to continue
pursuing our strategy to fund a significant portion of our capital
requirements for the year ending December 31, 2024 with
dispositions and sales of partial interests in properties not
integral to our mega campus strategy and are actively pursuing
several dispositions and partial interest sale opportunities. As of
July 22, 2024, we completed dispositions aggregating $77.2
million, have additional pending transactions subject to letters of
intent or purchase and sale agreement negotiations aggregating
$806.7 million, and entered into new forward equity sales
agreements aggregating $27.8 million, which, in aggregate,
represents 59% of the $1.55 billion midpoint of our guidance
range.
|
|
(5)
|
Represents $1.0 billion
of unsecured senior notes payable issued in February 2024. Subject
to market conditions, we may seek additional opportunities in 2024
to fund the repayment of our $600.0 million of 3.45% unsecured
senior notes payable due on April 30, 2025 through issuance of
additional unsecured senior notes payable, which is not assumed in
our current 2024 guidance.
|
|
(6)
|
Represents realized
gains and losses included in funds from operations per share –
diluted, as adjusted, and excludes significant impairments realized
on non-real estate investments, if any. Refer to "Investments" in
the Supplemental Information for additional details.
|
|
Acquisitions
June 30,
2024
(Dollars in
thousands)
|
|
Property
|
|
Submarket/Market
|
|
Date
of
Purchase
|
|
Operating
Occupancy
|
|
Future
Development
RSF(1)
|
|
Purchase
Price
|
|
Completed in
1Q24:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
285, 299, 307, and 345
Dorchester Avenue (60% interest in consolidated JV)
|
|
Seaport Innovation
District/Greater Boston
|
|
1/30/24
|
|
N/A
|
|
1,040,000
|
|
$
|
155,321
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
39,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
194,811
|
|
|
Completed in
2Q24:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
201,811
|
|
|
Pending acquisitions
subject to signed letters of intent or purchase and sale
agreements
|
|
|
|
|
|
|
|
|
|
|
|
47,600
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
249,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 guidance
range
|
|
|
|
|
|
|
|
|
|
|
|
$250,000 –
$750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
We expect to provide
total estimated costs and related yields for development and
redevelopment projects in the future, subsequent to the
commencement of construction.
|
|
Dispositions and
Sales of Partial Interests
June 30,
2024
(Dollars in
thousands)
|
|
|
Property
|
|
Submarket/Market
|
|
Date of
Sale
|
|
Interest
Sold
|
|
RSF
|
|
Sales
Price
|
|
|
Dispositions of 100%
interest in properties not integral to our mega campus
strategy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completed
in 1H24:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99 A
Street(1)
|
|
Seaport Innovation
District/Greater Boston
|
|
3/8/24
|
|
100 %
|
|
235,000
|
|
$
13,350
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
3,863
|
|
|
|
|
|
|
|
|
|
|
|
|
17,213
|
|
|
Completed in July
2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other(2)
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
77,213
|
|
|
Pending transactions
subject to letters of intent or purchase and sale agreement
negotiations
|
|
|
|
|
|
|
|
|
806,728
|
|
|
Additional targeted
dispositions and sales of partial interests
|
|
|
|
|
|
|
|
|
|
|
TBD
|
|
|
|
|
|
|
|
|
|
|
|
|
$
883,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 guidance range for
dispositions, sales of partial interests, and common
equity
|
|
|
|
|
|
|
|
|
$1,050,000 –
$2,050,000
|
|
|
|
|
(1)
|
We completed the sale
during the three months ended March 31, 2024 and recognized no gain
or loss.
|
|
(2)
|
The disposition
completed in July 2024 was leased to a single tenant with a July
2024 lease expiration and had annual net operating income of $18.6
million based upon 2Q24 annualized. This asset was previously
considered to be a potential development project upon expiration of
an in-place non-laboratory space lease in July 2024.
|
Earnings Call Information and About the Company
June 30, 2024
We will host a conference call on Tuesday, July 23, 2024, at 3:00 p.m. Eastern Time ("ET")/noon Pacific Time ("PT"), which is open to the
general public, to discuss our financial and operating results for
the second quarter ended June 30, 2024. To participate in this
conference call, dial (833) 366-1125 or (412) 902-6738 shortly
before 3:00 p.m. ET/noon PT and ask the operator to join the call for
Alexandria Real Estate Equities, Inc. The audio webcast can be
accessed at www.are.com in the "For Investors" section. A replay of
the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT
on Tuesday, July 23, 2024. The replay number is (877)
344-7529 or (412) 317-0088, and the access code is 8478776.
Additionally, a copy of this Earnings Press Release and
Supplemental Information for the second quarter ended June 30,
2024 is available in the "For Investors" section of our website at
www.are.com or by following this link:
https://www.are.com/fs/2024q2.pdf.
For any questions, please contact corporateinformation@are.com;
Joel S. Marcus, executive chairman
and founder; Peter M. Moglia, chief
executive officer and chief investment officer; Marc E. Binda, chief financial officer and
treasurer; Paula Schwartz, managing
director of Rx Communications Group, at (917) 633-7790; or
Sara M. Kabakoff, senior vice
president – chief content officer.
About the Company
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P
500® company, is a best-in-class, mission-driven life
science REIT making a positive and lasting impact on the world. As
the pioneer of the life science real estate niche with our founding
in 1994, Alexandria is the
preeminent and longest-tenured owner, operator, and developer of
collaborative life science mega campuses in AAA innovation cluster
locations, including Greater
Boston, the San Francisco Bay
Area, San Diego,
Seattle, Maryland, Research Triangle, and New York City. As of June 30, 2024,
Alexandria has a total market
capitalization of $32.5 billion
and an asset base in North America
that includes 42.1 million RSF of operating properties and 5.3
million RSF of Class A/A+ properties undergoing construction and
one committed near-term project expected to commence construction
in the next two years. Alexandria
has a longstanding and proven track record of developing Class A/A+
properties clustered in life science mega campuses that provide our
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 companies through our venture capital
platform. 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.
Forward-Looking Statements
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 2024 earnings per share, 2024 funds from
operations per share, 2024 funds from operations per share, as
adjusted, 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,"
"goals," "projects," "estimates," "anticipates," "believes,"
"expects," "intends," "may," "plans," "seeks," "should," "targets,"
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, lower than expected yields, 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, failure to obtain LEED and other healthy
building certifications and efficiencies, 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 Supplemental Information, 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.
This document is not an offer to sell or a solicitation to buy
securities of Alexandria Real Estate Equities, Inc. Any offers to
sell or solicitations to buy our securities shall be made only by
means of a prospectus approved for that purpose. Unless otherwise
indicated, the "Company," "Alexandria," "ARE," "we," "us," and "our"
refer to Alexandria Real Estate Equities, Inc. and our consolidated
subsidiaries. Alexandria®, Lighthouse
Design® logo, Building the Future of Life-Changing
Innovation®, That's What's in Our DNA®,
Labspace®, At the Vanguard and Heart of the Life Science
Ecosystem™, Alexandria Center®, Alexandria Technology
Square®, Alexandria Technology Center®, and
Alexandria Innovation Center® are copyrights and
trademarks of Alexandria Real Estate Equities, Inc. All other
company names, trademarks, and logos referenced herein are the
property of their respective owners.
|
Consolidated
Statements of Operations
June 30,
2024
(Dollars in
thousands, except per share amounts)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
6/30/24
|
|
3/31/24
|
|
12/31/23
|
|
9/30/23
|
|
6/30/23
|
|
6/30/24
|
|
6/30/23
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
rentals
|
|
$
755,162
|
|
$
755,551
|
|
$
742,637
|
|
$
707,531
|
|
$
704,339
|
|
$
1,510,713
|
|
$
1,392,288
|
|
Other
income
|
|
11,572
|
|
13,557
|
|
14,579
|
|
6,257
|
|
9,561
|
|
25,129
|
|
22,407
|
|
Total
revenues
|
|
766,734
|
|
769,108
|
|
757,216
|
|
713,788
|
|
713,900
|
|
1,535,842
|
|
1,414,695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental
operations
|
|
217,254
|
|
218,314
|
|
222,726
|
|
217,687
|
|
211,834
|
|
435,568
|
|
418,767
|
|
General and
administrative
|
|
44,629
|
|
47,055
|
|
59,289
|
|
45,987
|
|
45,882
|
|
91,684
|
|
94,078
|
|
Interest
|
|
45,789
|
|
40,840
|
|
31,967
|
|
11,411
|
|
17,072
|
|
86,629
|
|
30,826
|
|
Depreciation and
amortization
|
|
290,720
|
|
287,554
|
|
285,246
|
|
269,370
|
|
273,555
|
|
578,274
|
|
538,857
|
|
Impairment of
real estate
|
|
30,763
|
|
—
|
|
271,890
|
|
20,649
|
|
168,575
|
|
30,763
|
|
168,575
|
|
Total
expenses
|
|
629,155
|
|
593,763
|
|
871,118
|
|
565,104
|
|
716,918
|
|
1,222,918
|
|
1,251,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated real estate joint ventures
|
|
130
|
|
155
|
|
363
|
|
242
|
|
181
|
|
285
|
|
375
|
|
Investment (loss)
income
|
|
(43,660)
|
|
43,284
|
|
8,654
|
|
(80,672)
|
|
(78,268)
|
|
(376)
|
|
(123,379)
|
|
Gain on sales of real
estate
|
|
—
|
|
392
|
|
62,227
|
|
—
|
|
214,810
|
|
392
|
|
214,810
|
|
Net income
(loss)
|
|
94,049
|
|
219,176
|
|
(42,658)
|
|
68,254
|
|
133,705
|
|
313,225
|
|
255,398
|
|
Net income attributable
to noncontrolling interests
|
|
(47,347)
|
|
(48,631)
|
|
(45,771)
|
|
(43,985)
|
|
(43,768)
|
|
(95,978)
|
|
(87,599)
|
|
Net income (loss)
attributable to Alexandria Real Estate Equities, Inc.'s
stockholders
|
|
46,702
|
|
170,545
|
|
(88,429)
|
|
24,269
|
|
89,937
|
|
217,247
|
|
167,799
|
|
Net income attributable
to unvested restricted stock awards
|
|
(3,785)
|
|
(3,659)
|
|
(3,498)
|
|
(2,414)
|
|
(2,677)
|
|
(7,444)
|
|
(5,283)
|
|
Net income (loss)
attributable to Alexandria Real Estate Equities, Inc.'s
common
stockholders
|
|
$
42,917
|
|
$
166,886
|
|
$
(91,927)
|
|
$
21,855
|
|
$
87,260
|
|
$
209,803
|
|
$
162,516
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to Alexandria Real Estate Equities,
Inc.'s
common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.25
|
|
$
0.97
|
|
$
(0.54)
|
|
$
0.13
|
|
$
0.51
|
|
$
1.22
|
|
$
0.95
|
|
Diluted
|
|
$
0.25
|
|
$
0.97
|
|
$
(0.54)
|
|
$
0.13
|
|
$
0.51
|
|
$
1.22
|
|
$
0.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
of common stock outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
172,013
|
|
171,949
|
|
171,096
|
|
170,890
|
|
170,864
|
|
171,981
|
|
170,824
|
|
Diluted
|
|
172,013
|
|
171,949
|
|
171,096
|
|
170,890
|
|
170,864
|
|
171,981
|
|
170,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share of common stock
|
|
$
1.30
|
|
$
1.27
|
|
$
1.27
|
|
$
1.24
|
|
$
1.24
|
|
$
2.57
|
|
$
2.45
|
|
Consolidated Balance
Sheets
June 30,
2024
(In
thousands)
|
|
|
6/30/24
|
|
3/31/24
|
|
12/31/23
|
|
9/30/23
|
|
6/30/23
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Investments in real
estate
|
|
$
32,673,839
|
|
$
32,323,138
|
|
$
31,633,511
|
|
$
31,712,731
|
|
$ 31,178,054
|
|
Investments in
unconsolidated real estate joint ventures
|
|
40,535
|
|
40,636
|
|
37,780
|
|
37,695
|
|
37,801
|
|
Cash and cash
equivalents
|
|
561,021
|
|
722,176
|
|
618,190
|
|
532,390
|
|
924,370
|
|
Restricted
cash
|
|
4,832
|
|
9,519
|
|
42,581
|
|
35,321
|
|
35,920
|
|
Tenant
receivables
|
|
6,822
|
|
7,469
|
|
8,211
|
|
6,897
|
|
6,951
|
|
Deferred
rent
|
|
1,190,336
|
|
1,138,936
|
|
1,050,319
|
|
1,012,666
|
|
984,366
|
|
Deferred leasing
costs
|
|
519,629
|
|
520,616
|
|
509,398
|
|
512,216
|
|
520,610
|
|
Investments
|
|
1,494,348
|
|
1,511,588
|
|
1,449,518
|
|
1,431,766
|
|
1,495,994
|
|
Other assets
|
|
1,356,503
|
|
1,424,968
|
|
1,421,894
|
|
1,501,611
|
|
1,475,191
|
|
Total assets
|
|
$
37,847,865
|
|
$
37,699,046
|
|
$
36,771,402
|
|
$
36,783,293
|
|
$ 36,659,257
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities,
Noncontrolling Interests, and Equity
|
|
|
|
|
|
|
|
|
|
|
|
Secured notes
payable
|
|
$
134,942
|
|
$
130,050
|
|
$
119,662
|
|
$
109,110
|
|
$
91,939
|
|
Unsecured senior notes
payable
|
|
12,089,561
|
|
12,087,113
|
|
11,096,028
|
|
11,093,725
|
|
11,091,424
|
|
Unsecured senior line
of credit and commercial paper
|
|
199,552
|
|
—
|
|
99,952
|
|
—
|
|
—
|
|
Accounts payable,
accrued expenses, and other liabilities
|
|
2,529,535
|
|
2,503,831
|
|
2,610,943
|
|
2,653,126
|
|
2,494,087
|
|
Dividends
payable
|
|
227,408
|
|
222,134
|
|
221,824
|
|
214,450
|
|
214,555
|
|
Total
liabilities
|
|
15,180,998
|
|
14,943,128
|
|
14,148,409
|
|
14,070,411
|
|
13,892,005
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
|
16,440
|
|
16,620
|
|
16,480
|
|
51,658
|
|
52,628
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexandria Real Estate
Equities, Inc.'s stockholders' equity:
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
1,720
|
|
1,720
|
|
1,719
|
|
1,710
|
|
1,709
|
|
Additional
paid-in capital
|
|
18,284,611
|
|
18,434,690
|
|
18,485,352
|
|
18,651,185
|
|
18,812,318
|
|
Accumulated
other comprehensive loss
|
|
(27,710)
|
|
(23,815)
|
|
(15,896)
|
|
(24,984)
|
|
(16,589)
|
|
Alexandria Real Estate
Equities, Inc.'s stockholders' equity
|
|
18,258,621
|
|
18,412,595
|
|
18,471,175
|
|
18,627,911
|
|
18,797,438
|
|
Noncontrolling
interests
|
|
4,391,806
|
|
4,326,703
|
|
4,135,338
|
|
4,033,313
|
|
3,917,186
|
|
Total equity
|
|
22,650,427
|
|
22,739,298
|
|
22,606,513
|
|
22,661,224
|
|
22,714,624
|
|
Total liabilities,
noncontrolling interests, and equity
|
|
$
37,847,865
|
|
$
37,699,046
|
|
$
36,771,402
|
|
$
36,783,293
|
|
$ 36,659,257
|
|
Funds From
Operations and Funds From Operations per Share
June 30,
2024
(In
thousands)
|
|
The
following table presents a reconciliation of net income (loss)
attributable to Alexandria's common stockholders, the most directly
comparable financial measure presented in
accordance
with U.S. generally accepted accounting principles ("GAAP"),
including our share of amounts from consolidated and unconsolidated
real estate joint ventures, to funds from operations
attributable to
Alexandria's common stockholders – diluted, and funds from
operations attributable to Alexandria's common stockholders –
diluted, as adjusted, for the periods below:
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
6/30/24
|
|
3/31/24
|
|
12/31/23
|
|
9/30/23
|
|
6/30/23
|
|
6/30/24
|
|
6/30/23
|
|
Net income (loss)
attributable to Alexandria's common stockholders –
basic
and
diluted
|
|
$ 42,917
|
|
$
166,886
|
|
$
(91,927)
|
|
$ 21,855
|
|
$ 87,260
|
|
$
209,803
|
|
$
162,516
|
|
Depreciation and
amortization of real estate assets
|
|
288,118
|
|
284,950
|
|
281,939
|
|
266,440
|
|
270,026
|
|
573,068
|
|
532,150
|
|
Noncontrolling share
of depreciation and amortization from consolidated real
estate
JVs
|
|
(31,364)
|
|
(30,904)
|
|
(30,137)
|
|
(28,814)
|
|
(28,220)
|
|
(62,268)
|
|
(56,398)
|
|
Our share of
depreciation and amortization from unconsolidated real estate
JVs
|
|
1,068
|
|
1,034
|
|
965
|
|
910
|
|
855
|
|
2,102
|
|
1,714
|
|
Gain on sales of real
estate
|
|
—
|
|
(392)
|
|
(62,227)
|
|
—
|
|
(214,810)
|
|
(392)
|
|
(214,810)
|
|
Impairment of real
estate – rental properties and land
|
|
2,182
|
|
—
|
|
263,982
|
|
19,844
|
|
166,602
|
|
2,182
|
|
166,602
|
|
Allocation to unvested
restricted stock awards
|
|
(1,305)
|
|
(3,469)
|
|
(2,268)
|
|
(838)
|
|
(872)
|
|
(4,736)
|
|
(2,220)
|
|
Funds from
operations attributable to Alexandria's common stockholders
–
diluted(1)
|
|
301,616
|
|
418,105
|
|
360,327
|
|
279,397
|
|
280,841
|
|
719,759
|
|
589,554
|
|
Unrealized losses
(gains) on non-real estate investments
|
|
64,238
|
|
(29,158)
|
|
(19,479)
|
|
77,202
|
|
77,897
|
|
35,080
|
|
143,752
|
|
Impairment of non-real
estate investments
|
|
12,788
|
(2)
|
14,698
|
|
23,094
|
|
28,503
|
|
22,953
|
|
27,486
|
|
22,953
|
|
Impairment of real
estate
|
|
28,581
|
(3)
|
—
|
|
7,908
|
|
805
|
|
1,973
|
|
28,581
|
|
1,973
|
|
Acceleration of stock
compensation expense due to executive officer
resignations
|
|
—
|
|
—
|
|
18,436
|
|
1,859
|
|
—
|
|
—
|
|
—
|
|
Allocation to unvested
restricted stock awards
|
|
(1,738)
|
|
247
|
|
(472)
|
|
(1,330)
|
|
(1,285)
|
|
(1,528)
|
|
(2,164)
|
|
Funds from
operations attributable to Alexandria's common stockholders
–
diluted, as adjusted
|
|
$
405,485
|
|
$
403,892
|
|
$
389,814
|
|
$
386,436
|
|
$
382,379
|
|
$
809,378
|
|
$
756,068
|
|
|
Refer to "Definitions
and reconciliations" in the Supplemental Information for additional
details.
|
|
|
(1)
|
Calculated in
accordance with standards established by the Nareit Board of
Governors.
|
|
(2)
|
Primarily related to
two non-real estate investments in privately held entities that do
not report NAV.
|
|
(3)
|
Primarily related to
two potential acquisitions in our Greater Boston market, which
aggregated 1.4 million of future development RSF. We initially
expected to close these acquisitions after 2024 for an aggregate
purchase price of $366.8 million. Our intent for each site included
the demolition of existing buildings upon expiration of the
existing in-place leases and the development of life science
properties. During the three months ended June 30, 2024,
we decided to no longer proceed with these acquisitions as a result
of the current macroeconomic environment that negatively impacted
the financial outlooks for these projects, and recognized this
impairment charge.
|
|
Funds From
Operations and Funds From Operations per Share
(continued)
June 30,
2024
(In thousands,
except per share amounts)
|
|
The
following table presents a reconciliation of net income (loss) per
share attributable to Alexandria's common stockholders, the most
directly comparable financial measure presented in
accordance with
GAAP, including our share of amounts from consolidated and
unconsolidated real estate joint ventures, to funds from operations
per share attributable to Alexandria's common
stockholders –
diluted, and funds from operations per share attributable to
Alexandria's common stockholders – diluted, as adjusted, for the
periods below. Per share amounts may not add due to
rounding.
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
6/30/24
|
|
3/31/24
|
|
12/31/23
|
|
9/30/23
|
|
6/30/23
|
|
6/30/24
|
|
6/30/23
|
|
Net income (loss)
per share attributable to Alexandria's common stockholders
–
diluted
|
|
$
0.25
|
|
$
0.97
|
|
$
(0.54)
|
|
$
0.13
|
|
$
0.51
|
|
$
1.22
|
|
$
0.95
|
|
Depreciation and
amortization of real estate assets
|
|
1.50
|
|
1.48
|
|
1.48
|
|
1.40
|
|
1.42
|
|
2.98
|
|
2.80
|
|
Gain on sales of real
estate
|
|
—
|
|
—
|
|
(0.36)
|
|
—
|
|
(1.26)
|
|
—
|
|
(1.26)
|
|
Impairment of real
estate – rental properties and land
|
|
0.01
|
|
—
|
|
1.54
|
|
0.12
|
|
0.98
|
|
0.01
|
|
0.98
|
|
Allocation to unvested
restricted stock awards
|
|
(0.01)
|
|
(0.02)
|
|
(0.01)
|
|
(0.01)
|
|
(0.01)
|
|
(0.02)
|
|
(0.02)
|
|
Funds from
operations per share attributable to Alexandria's
common
stockholders – diluted
|
|
1.75
|
|
2.43
|
|
2.11
|
|
1.64
|
|
1.64
|
|
4.19
|
|
3.45
|
|
Unrealized losses
(gains) on non-real estate investments
|
|
0.37
|
|
(0.17)
|
|
(0.11)
|
|
0.45
|
|
0.46
|
|
0.20
|
|
0.84
|
|
Impairment of non-real
estate investments
|
|
0.08
|
|
0.09
|
|
0.13
|
|
0.17
|
|
0.13
|
|
0.16
|
|
0.13
|
|
Impairment of real
estate
|
|
0.17
|
|
—
|
|
0.05
|
|
—
|
|
0.02
|
|
0.17
|
|
0.02
|
|
Acceleration of stock
compensation expense due to executive officer
resignations
|
|
—
|
|
—
|
|
0.11
|
|
0.01
|
|
—
|
|
—
|
|
—
|
|
Allocation to unvested
restricted stock awards
|
|
(0.01)
|
|
—
|
|
(0.01)
|
|
(0.01)
|
|
(0.01)
|
|
(0.01)
|
|
(0.01)
|
|
Funds from
operations per share attributable to Alexandria's
common
stockholders – diluted, as adjusted
|
|
$
2.36
|
|
$
2.35
|
|
$
2.28
|
|
$
2.26
|
|
$
2.24
|
|
$
4.71
|
|
$
4.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares
of common stock outstanding – diluted
|
|
172,013
|
|
171,949
|
|
171,096
|
|
170,890
|
|
170,864
|
|
171,981
|
|
170,824
|
|
|
Refer to "Definitions
and reconciliations" in the Supplemental Information for
additional details.
|
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SOURCE Alexandria Real Estate Equities, Inc.