Toggle SGML Header (+)


Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 29, 2019


ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)

Maryland
 
1-12993
 
95-4502084
(State or other jurisdiction of
incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)

 385 East Colorado Boulevard, Suite 299, Pasadena, California 91101
(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code: (626) 578-0777
 
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

           Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

            Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $.01 par value per share
ARE
New York Stock Exchange
7.00% Series D Cumulative Convertible Preferred Stock
ARE/PD
New York Stock Exchange






Item 2.02.  Results of Operations and Financial Condition.

On July 29, 2019, Alexandria Real Estate Equities, Inc. (the “Company”) issued a press release entitled “Alexandria Real Estate Equities, Inc. Reports Second Quarter Ended June 30, 2019 Financial and Operating Results.”  The press release referred to certain supplemental information that is available on the Company’s website at www.are.com.  A copy of the press release and supplemental information are attached hereto as Exhibit 99.1.

The information contained in this Item 2.02, including the exhibit referenced herein, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section.  Such information shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits.

99.1     Alexandria Real Estate Equities, Inc.’s Earnings Press Release and Supplemental Information for the Second Quarter Ended June 30, 2019.

Forward-looking Statements

This current report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act.  These statements include words such as “forecast,” “guidance,” “projects,” “estimates,” “anticipates,” “goals,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” or “will,” or the negative of these words or similar words.  Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in each such statement.  A number of important factors could cause actual results to differ materially from those included within or contemplated by the forward-looking statements, including, but not limited to, the factors described in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.  The Company does not undertake any responsibility to update any of these factors or to announce publicly any revisions to any of the forward-looking statements contained in this or any other document, whether as a result of new information, future events, or otherwise.





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
ALEXANDRIA REAL ESTATE EQUITIES, INC.
 
 
 
 
 
 
July 29, 2019
 
By:
/s/ Joel S. Marcus
 
 
 
 
Joel S. Marcus
 
 
 
 
Executive Chairman
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Stephen A. Richardson
 
 
 
 
Stephen A. Richardson
 
 
 
 
Co-Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Peter M. Moglia
 
 
 
 
Peter M. Moglia
 
 
 
 
Co-Chief Executive Officer and
Co-Chief Investment Officer
 
 
 
 
 
 
 
 
 
By:
/s/ Dean A. Shigenaga
 
 
 
 
Dean A. Shigenaga
 
 
 
 
Co-President and Chief Financial Officer
 





EXHIBIT INDEX

Exhibit
Number        Exhibit Title    
99.1Alexandria Real Estate Equities, Inc.’s Earnings Press Release and Supplemental Information for the Second Quarter Ended June 30, 2019.


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
398940868_q219frontcover.jpg

 




398940868_q219insidecover1.jpg

 
Alexandria Real Estate Equities, Inc. All Rights Reserved. © 2019
i




398940868_q219insidecover2.jpg
(1)
Refer to the “Annual Rental Revenue,” “Class A Properties and AAA Locations,” and “Investment-Grade or Publicly Traded Large Cap Tenants” sections in “Definitions and Reconciliations” of our Supplemental Information for additional information. As of June 30, 2019, annual rental revenue solely from investment-grade tenants within our overall tenant base and within our top 20 tenants was 45% and 75%, respectively.
(2)
Refer to “Summary of Debt” in the “Key Credit Metrics” section of our Supplemental Information for additional information.

 
ii

 
 
 
398940868_q219logo1.jpg
Table of Contents
June 30, 2019
 
 


EARNINGS PRESS RELEASE
Page
 
 
Page
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL INFORMATION
Page
 
 
Page
 
External Growth / Investments in Real Estate
 
 
 
 
New Class A Development and Redevelopment Properties:
 
 
 
 
Internal Growth
 
 
 
 
Balance Sheet Management
 
 
 
 
 
Definitions and Reconciliations
 
 
 
 
 
 
 

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. Please refer to page 7 of this Earnings Press Release and our Supplemental Information for further information.
 
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 Real Estate Equities, Inc. All Rights Reserved. © 2019
iii

398940868_logo.jpg





Alexandria Real Estate Equities, Inc.
Reports:
2Q19 Revenues of $373.9 million, up 15.0% over 2Q18;
2Q19 and 1H19 EPS – Diluted of $0.68 and $1.80, respectively;
2Q19 and 1H19 FFO per Share – Diluted, As Adjusted, of $1.73 and $3.44, respectively; and Operational Excellence and Growing Dividends

PASADENA, Calif. – July 29, 2019 – Alexandria Real Estate Equities, Inc. (NYSE:ARE)
announced financial and operating results for the second quarter ended June 30, 2019.

Key highlights
Operating results
2Q19
 
2Q18
 
1H19
 
1H18
Total revenues:
 
 
 
 
 
 
 
In millions
$
373.9

 
$
325.0

 
$
732.7

 
$
645.2

Growth
15.0%

 
 
 
13.6%

 
 
 
 
 
 
 
 
 
 
Net income attributable to Alexandria’s common stockholders – diluted:
In millions
$
76.3

 
$
52.0

 
$
200.2

 
$
185.0

Per share
$
0.68

 
$
0.51

 
$
1.80

 
$
1.83

 
 
 
 
 
 
 
 
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions
$
192.7

 
$
167.9

 
$
382.5

 
$
330.4

Per share
$
1.73

 
$
1.64

 
$
3.44

 
$
3.27


88 Bluxome Street is the first and only project to win full approval in Central SoMa
In July 2019, we, along with TMG Partners, won full project approval to develop a 1.07 million RSF mixed-use campus at 88 Bluxome Street in Central SoMa. Anchored by a 490,000 RSF lease with Pinterest, Inc., the future development, which is the first and only project in Central SoMa to receive full approval and 100% of its Prop M allocation from the San Francisco Planning Commission, is nearly 60% pre-leased. Construction is expected to commence in 2020, and initial delivery is expected in 2022.

Strong internal growth
Net operating income (cash basis) of $938.5 million for 2Q19 annualized, up $119.9 million, or 14.6%, compared to 2Q18 annualized
Same property net operating income growth:
4.3% and 9.5% (cash basis) for 2Q19, compared to 2Q18
3.5% and 9.7% (cash basis) for 1H19, compared to 1H18
Continued strong leasing activity in light of modest contractual lease expirations at the beginning of 2019 and a highly leased value-creation pipeline; continued rental rate growth in 1H19 over expiring rates on renewed and re-leased space:
 
 
2Q19
 
1H19
Total leasing activity – RSF
 
819,949

 
2,068,921

Lease renewals and re-leasing of space:
 
 
 
 
RSF (included in total leasing activity above)
 
587,930

 
1,097,345

Rental rate increases
 
32.5%

 
32.6%

Rental rate increases (cash basis)
 
17.8%

 
20.1%

 




Strong external growth; disciplined allocation of capital to visible, highly leased
value-creation pipeline
Since the beginning of 4Q18, we have placed into service 1.2 million RSF of development and redevelopment projects, including 218,061 RSF in 2Q19.
Significant near-term growth in net operating income (cash basis) of $58 million annually upon the burn-off of initial free rent on recently delivered projects.
2Q19 commencements of development projects aggregating 841,178 RSF, includes:
526,178 RSF at Alexandria District for Science and Technology in our Greater Stanford submarket; and
315,000 RSF at 201 Haskins Way in our South San Francisco submarket.
Projects with initial occupancy in 2020 have grown to 2.2 million RSF.
During 2019, we leased 948,986 RSF of development and redevelopment space, including 196,020 RSF executed in July 2019.

A REIT industry-leading, high-quality tenant roster
53% of annual rental revenue from investment-grade or publicly traded large cap tenants.
Weighted-average remaining lease terms of 8.4 years.

New issuance of $1.25 billion unsecured senior notes to elongate debt maturities
In July 2019, we opportunistically issued $1.25 billion of unsecured senior notes payable, with a weighted-average interest rate of 3.72% and a weighted-average maturity of 19.5 years. The proceeds were used to refinance $1.125 billion of unsecured senior notes payable and unsecured senior bank term loan, with a weighted-average interest rate of 3.94% and a weighted-average maturity of 2.4 years, with remaining proceeds used to reduce the outstanding balance of our unsecured senior line of credit. Upon completion of the refinancing, the pro forma weighted-average remaining term on our outstanding debt is 10.1 years, with no debt maturing until 2023.

Increased common stock dividend
Common stock dividend declared for 2Q19 of $1.00 per common share, up three cents, or 3.1%, over 1Q19; continuation of our strategy to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

2019 Nareit Investor CARE Gold Award winner
2019 recipient of the Nareit Investor CARE (Communications and Reporting Excellence) Gold Award in the Large Cap Equity REIT category as the best-in-class REIT that delivers transparency, quality, and efficient communications and reporting to the investment community; our fourth Nareit Investor CARE Gold Award over the last five years.

 
1


 
 
 
398940868_q219logo1.jpg
Second Quarter Ended June 30, 2019, Financial and Operating Results (continued)
June 30, 2019
 
 

Completed acquisitions
During 2Q19, we completed the acquisitions of three properties and a land parcel for an aggregate purchase price of $296.5 million. These acquisitions consisted of:
5 and 15 Necco Street, located in our Seaport Innovation District submarket for $252.0 million, which includes a future ground-up development site aggregating 293,000 RSF, and a Class A office building aggregating 87,163 RSF, which is 87% leased for 12 years; and
Future development opportunities aggregating 337,400 RSF strategically located in our Sorrento Valley and Lake Union submarkets, including 58,680 RSF currently 100% occupied.

Key items included in operating results
Key items included in net income attributable to Alexandria’s common stockholders:
(In millions, except per share amounts)
Amount
 
Per Share – Diluted
 
Amount
 
Per Share – Diluted
2Q19
 
2Q18
 
2Q19
 
2Q18
 
1H19
 
1H18
 
1H19
 
1H18
Unrealized gains on non-real estate investments(1)
$
11.1

 
$
5.1

 
$
0.10

 
$
0.05

 
$
83.3

 
$
77.3

 
$
0.75

 
$
0.76

Realized gains on non-real estate investments

 

 

 

 

 
8.3

 

 
0.08

Impairment of real estate

 
(6.3
)
 

 
(0.06
)
 

 
(6.3
)
 

 
(0.06
)
Loss on early extinguishment of debt

 

 

 

 
(7.4
)
 

 
(0.07
)
 

Preferred stock redemption charge

 

 

 

 
(2.6
)
 

 
(0.02
)
 

Total
$
11.1

 
$
(1.2
)
 
$
0.10

 
$
(0.01
)
 
$
73.3

 
$
79.3

 
$
0.66

 
$
0.78

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding for calculation of earnings
per share – diluted
111.5

 
102.2

 
 
 
 
 
111.3

 
101.2

(1) Refer to “Investments” on page 46 of our Supplemental Information for additional information.

Core operating metrics as of or for the quarter ended June 30, 2019
High-quality revenues and cash flows, and operational excellence
Percentage of annual rental revenue in effect from:
 
 
 
Investment-grade or publicly traded large cap tenants
 
53
%
 
Class A properties in AAA locations
 
77
%
 
Occupancy of operating properties in North America
 
97.4
%
 
Operating margin
 
72
%
 
Adjusted EBITDA margin
 
69
%
 
Weighted-average remaining lease term:
 
 
 
All tenants
 
8.4
 years
 
Top 20 tenants
 
12.0
 years
 
 
 
 
 
Refer to the previous page for information on our total revenues, net operating income, same property net operating income growth, rental rate growth, and leasing activity.
 
Balance sheet management
Key metrics as of June 30, 2019
$15.9 billion of total equity capitalization
$22.2 billion of total market capitalization
$3.4 billion of liquidity
94% of net operating income is unencumbered
 
 
2Q19
 
Goal
 
 
Quarter
 
Trailing 12
 
4Q19
 
 
Annualized
 
Months
 
Annualized
Net debt to Adjusted EBITDA
 
5.8x
 
6.1x
 
Less than or equal to 5.3x
Fixed-charge coverage ratio
 
4.2x
 
4.2x
 
Greater than 4.0x
 
 
Percentage Leased/Negotiating
 
Quarter Annualized
Value-creation pipeline as a percentage of gross investments in real estate:
 
 
2Q19
 
4Q19
Goal
New Class A development and redevelopment projects:
 
 
 
 
 
 
Undergoing construction with initial occupancy targeted for 2019 and 2020 and our pre-leased pre-construction project at 88 Bluxome Street
 
74%
 
5%
 
Less than 15%
Undergoing pre-construction, marketing, and future value-creation projects
 
N/A
 
6%
 

Key capital events
During 2Q19, we completed sales and entered into forward equity sales agreement for an aggregate of 8.7 million shares of common stock, including issuances under our ATM program, at a weighted-average price of $144.50 per share, for aggregate net proceeds of approximately $1.2 billion as follows:
Issued 602,484 shares of common stock, at a weighted-average price of $145.58 per share, for net proceeds of $86.1 million.
Entered into forward equity sales agreements to sell an aggregate 8.1 million shares of common stock, at a weighted-average price of $144.42 per share, for expected net proceeds (net of underwriters’ discounts) aggregating $1.1 billion including:
4.4 million shares expiring in June 2020 at a price of $145.00 per share
3.7 million shares expiring in July 2020 at a weighted-average price of $143.73 per share
We expect to settle these forward equity sales in 2019 and the aggregate net proceeds that will be received upon settlement will be further adjusted as provided in the sales agreements.
As of July 29, 2019, the remaining aggregate amount available under our ATM program for future sales of common stock is $22.5 million. We expect to establish a new ATM program during 3Q19.

 
2


 
 
 
398940868_q219logo1.jpg
Second Quarter Ended June 30, 2019, Financial and Operating Results (continued)
June 30, 2019
 
 

Investments
We carry our investments in publicly traded companies and certain privately held entities at fair value. As of June 30, 2019, cumulative unrealized gains related to changes in fair value aggregated $323.4 million and our adjusted cost basis aggregated $734.4 million. Investment income included the following:
Unrealized gains of $11.1 million and $83.3 million recognized during 2Q19 and 1H19, respectively
Realized gains of $10.4 million and $21.8 million recognized during 2Q19 and 1H19, respectively

Corporate responsibility, industry leadership, and strategic initiatives
In April 2019, we announced the launch of a new strategic agricultural technology (agtech) business initiative and the opening of Phase I of the Alexandria Center® for AgTech – Research Triangle, the first and only fully integrated, amenity-rich, multi-tenant agtech R&D and greenhouse campus, in the heart of Research Triangle, the most important, dense, and diverse agtech cluster in the United States. The campus opened with a 97% leased, 175,000 RSF first phase redevelopment at 5 Laboratory Drive.
In June 2019, we announced our partnership with Columbia University to open our second Alexandria LaunchLabs® in New York City in the spring of 2020. The full-service platform will offer member companies 13,298 RSF of highly flexible, turnkey office/laboratory space and feature a high-tech event center to host workshops, networking events, and educational opportunities for the entrepreneurial life science community.
In June 2019, we celebrated the opening of the first facilities within a tech-focused opioid rehabilitation campus in Dayton, Ohio. In partnership with Verily Life Sciences, LLC, we are leading the design and development of this 59,000 RSF state-of-the-art campus to provide a comprehensive model of care dedicated to the recovery of people suffering from opioid addiction.

 
Subsequent events
In July 2019, we opportunistically issued $1.25 billion of unsecured senior notes payable, with a weighted-average interest rate of 3.72% and a weighted-average maturity of 19.5 years, including $750.0 million of 3.375% unsecured senior notes due 2031 and $500.0 million of 4.00% unsecured senior notes due 2050. The proceeds were used to refinance $1.125 billion of unsecured senior notes payable and unsecured senior bank term loan, with a weighted-average interest rate of 3.94% and a weighted-average maturity of 2.4 years, consisting of the following:
(i)
Refinancing of an aggregate $950.0 million of unsecured senior notes payable comprising $400.0 million of 2.75% unsecured senior notes payable due 2020 and $550.0 million of 4.60% unsecured senior notes payable due 2022, pursuant to a cash tender offer completed on July 17, 2019, and subsequent call for redemption. The redemption is expected to settle on August 16, 2019.
(ii)
Partial repayment of $175.0 million on our unsecured senior bank term loan. The remaining outstanding balance of the term loan will mature on January 2, 2025, if not repaid before maturity.
As a result of our refinancing and partial repayment, we expect to recognize a loss, primarily related to the early extinguishment of debt, of $43 million, or $0.38 per share, in 3Q19.
The remaining proceeds were used to reduce the outstanding balance of our unsecured senior line of credit.
Upon completion of the refinancing, the pro forma weighted-average remaining term on our outstanding debt is 10.1 years, with no debt maturing until 2023.
In July 2019, we acquired a 55% interest in 4224 and 4242 Campus Point Court and 10210 Campus Point Drive, located adjacent to our Campus Pointe by Alexandria campus in our University Town Center submarket of San Diego, for $140.3 million. The joint venture will include three operating properties aggregating 314,092 RSF, which are currently 83% occupied by multiple tenants. The properties, which have future value-creation opportunities, will be integrated into the current campus to create a 1.9 million RSF mega campus.

 
3


 
 
Acquisitions
398940868_q219logo1.jpg
June 30, 2019
(Dollars in thousands)
 
 


Property
 
Submarket/Market
 
Date of Purchase
 
Number of Properties
 
Operating
Occupancy
 
Square Footage
 
Unlevered Yields
 
Purchase Price
 
 
 
 
Future Development
 
Active Redevelopment
 
Operating With Future Development/ Redevelopment
 
Operating
 
Initial Stabilized
 
Initial Stabilized (Cash)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Completed 1Q19
 
Various
 
1Q19
 
10
 
100
%
 
 
175,000

 

 
129,084

 
247,770

 
(1 
) 
 
 
(1 
) 
 
 
$
447,950

(2 
) 
Completed 2Q19:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 Necco Street
 
Seaport Innovation District/Greater Boston
 
5/9/19(3)
 
1
 
87
%
(3) 
 

 

 

 
87,163

 
5.2
%
 
 
5.1
%
 
 
 
252,000

 
15 Necco Street
 
 
 
N/A

 
 
293,000

 

 

 

 
(4 
) 
 
 
(4 
) 
 
 
 
601 Dexter Avenue North
 
Lake Union/Seattle
 
6/18/19
 
1
 
100
%
 
 
188,400

 

 
18,680

 

 
(4 
) 
 
 
(4 
) 
 
 
 
28,500

 
4075 Sorrento Valley Boulevard
 
Sorrento Valley/
San Diego
 
5/13/19
 
1
 
100
%
 
 
149,000

 

 
40,000

 

 
(4 
) 
 
 
(4 
) 
 
 
 
16,000

(2 
) 
Completed 1H19
 
 
 
 
 
 
 
 
 
 
805,400

 

 
187,764

 
334,933

 
 
 
 
 
 
 
 
744,450

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent to 2Q19:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4224/4242 Campus Point Court and 10210 Campus Point Drive
(55% interest in consolidated JV)
 
University Town Center/San Diego
 
7/9/19
 
3
 
83
%
(5) 
 

 

 

 
314,092

 
6.9
%
 
 
6.0
%
 
 
 
140,250

(2 
) 
Other
 
Various
 
July 2019
 
1
 
100
%
 
 
135,938

 

 

 
30,680

 
(4 
) 
 
 
(4 
) 
 
 
 
38,200

(2 
) 
Pending
 
San Francisco
Bay Area
 
3Q19
 
1
 
N/A

 
 

 
250,000

 

 

 
(4 
) 
 
 
(4 
) 
 
 
 
179,000

 
Pending
 
San Francisco
Bay Area
 
3Q19
 
1
 
N/A

 
 
700,000

 

 

 

 
(4 
) 
 
 
(4 
) 
 
 
 
120,000

 
Pending
 
San Francisco
Bay Area
 
3Q19
 
1
 
N/A

 
 

 
92,000

 

 

 
(4 
) 
 
 
(4 
) 
 
 
 
26,000

 
Pending
 
San Diego
 
3Q19
 
Various
 
76
%
 
 
700,000

 

 

 
560,000

 
(4), (6) 

 
 
(4), (6) 

 
 
 
122,500

 
 
 
 
 
 
 
 
 
 
 
 
1,535,938

 
342,000

 

 
904,772

 
 
 
 
 
 
 
 
625,950

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional targeted acquisitions
 
 
 
 
 
 
 
 
 
 
854,000

 

 

 

 
 
 
 
 
 
 
 
179,600

 
Total
 
 
 
 
 
 
 
 
 
 
3,195,338

 
342,000

 
187,764

 
1,239,705

 
 
 
 
 
 
 
$
1,550,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Refer to our first quarter ended March 31, 2019, Earnings Press Release and Supplemental Information filed on April 29, 2019, for related yield information.
(2)
Included within our acquisition guidance as of April 20, 2019. On June 20, 2019, we updated our 2019 acquisition guidance. Please see our Current Report on Form 8-K filed on June 20, 2019 for specific details. 
(3)
The seller accepted our offer on April 30, 2019, and we completed the acquisition of 5 and 15 Necco Street on May 9, 2019. The 5 Necco building is 87% leased for 12 years and expected to be occupied later in 2019. The remaining 13% of RSF is targeted for retail space.
(4)
We expect to provide total estimated costs and related yields in the future subsequent to the commencement of development or redevelopment.
(5)
The property is currently 83% occupied and a lease for 10% of the property will commence in 4Q19 upon completion of renovations, increasing occupancy to 93%.
(6)
We expect to provide yields for operating properties subsequent to closing the acquisition.

 
4


 
 
Dispositions and Sales of Partial Interests in Core Class A Properties
398940868_q219logo1.jpg
June 30, 2019
(Dollars in thousands, except per RSF amounts)
 
 


 
 
 
 
 
 
 
 
 
 
 
Capitalization Rate
(Cash Basis)(1)
 
 
 
 
 
 
 
 
 
Consideration in Excess of Book Value(2)
 
Property
 
Submarket/Market
 
Date of Sale
 
Square Footage
 
Capitalization Rate
 
 
 
Sales Price
 
Sales Price per RSF
 
 
Sales of noncontrolling partial interests in core Class A properties:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
75/125 Binney Street (sale of 60% noncontrolling interest)
 
Cambridge/Greater Boston
 
2/13/19
 
388,270

 
 
4.2%
 
4.3%
 
 
$
438,000
 
 
 
$
1,880

 
$
202,246

 
Pending(3)
 
San Francisco Bay Area
 
Pending
 
TBD

 
 
TBD
 
TBD
 
 
140,000
 
 
 
TBD

 
TBD

 
Pending(3)
 
San Diego
 
Pending
 
TBD

 
 
TBD
 
TBD
 
 
287,500
 
 
 
TBD

 
TBD

 
 
 
 
 
 
 


 
 
 
 
 
 
 
$
865,500
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2019 guidance range
 
 
 
 
 
 
 
 
 
 
 
 
$
820,000
 
$
920,000
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(1)
Capitalization rates are calculated based upon net operating income (cash basis), annualized for the quarter preceding the date on which the property is sold.
(2)
We retained or expect to retain control over and consolidate these joint ventures. For consolidated joint ventures, we account for the difference between the consideration received and the book value of the interest to be sold as an equity transaction, with no gain or loss recognized in earnings.
(3)
We expect to complete this partial interest sale during 3Q19.

 
5


 
 
Guidance
398940868_q219logo1.jpg
June 30, 2019
(Dollars in millions, except per share amounts)
 
 
 

On June 20, 2019, we filed a Current Report on Form 8-K with updated guidance for the year ending December 31, 2019. The following further updates guidance based on our current view of existing market conditions and assumptions for the year ending December 31, 2019. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of “forward-looking statements” on page 7 of this Earnings Press Release for additional information.
Summary of Key Changes in Guidance
 
Guidance
 
Summary of Key Changes in Key Sources and Uses of Capital Guidance
 
 
Guidance Midpoint
 
 
 
As of 7/29/19
 
As of 6/20/19
 
 
As of 7/29/19
 
As of 6/20/19
 
EPS, FFO per share, and FFO per share, as adjusted
 
See updates below
 
Issuance of unsecured senior notes payable
 
 
$
2,100

 
 
 
$
850

 
 
Rental rate increases
 
27.0% to 30.0%
 
26.0% to 29.0%
 
Repayments of unsecured senior notes payable
 
 
$
(950
)
 
 
 
$

 
 
Rental rate increases (cash basis)
 
14.0% to 17.0%
 
13.0% to 16.0%
 
Repayments of unsecured senior bank term loan
 
 
$
(175
)
 
 
 
$

 
 
Projected Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted, as Adjusted
 
 
 
As of 7/29/19
 
As of 6/20/19
 
Earnings per share(1)
 
$2.39 to $2.47
 
$2.65 to $2.75
 
Depreciation and amortization
 
 
4.85
 
 
 
4.85
 
 
Allocation to unvested restricted stock awards
 
 
(0.05)
 
 
 
(0.05)
 
 
Funds from operations per share(2)
 
$7.19 to $7.27
 
$7.45 to $7.55
 
Unrealized gains on non-real estate investment(1)
 
 
(0.75)
 
 
 
(0.65)
 
 
Loss on early extinguishment of debt(3)
 
 
0.45
 
 
 
0.07
 
 
Preferred stock redemption charge
 
 
0.02
 
 
 
0.02
 
 
Allocation to unvested restricted stock awards
 
 
0.01
 
 
 
0.01
 
 
Funds from operations per share, as adjusted
 
$6.92 to $7.00
 
$6.90 to $7.00
 
Midpoint
 
$6.96
 
$6.95
 
Key Assumptions
 
Low
 
High
 
Occupancy percentage in North America as of December 31, 2019(6)
 
97.2%

 
97.8%

 
 
 
 
 
 
 
Lease renewals and re-leasing of space:
 
 
 
 
 
Rental rate increases
 
27.0%

 
30.0%

 
Rental rate increases (cash basis)
 
14.0%

 
17.0%

 
Same property performance:
 
 
 
 
 
Net operating income increase
 
1.0%

 
3.0%

 
Net operating income increase (cash basis)
 
6.0%

 
8.0%

 
 
 
 
 
 
 
Straight-line rent revenue
 
$
95

 
$
105

(7)
General and administrative expenses
 
$
108

 
$
113

 
Capitalization of interest
 
$
79

 
$
89

 
Interest expense
 
$
167

 
$
177

 
 
 
 
 
 
 
 
Key Credit Metrics
 
2019 Guidance
 
 
 
Net debt to Adjusted EBITDA – 4Q19 annualized
 
Less than or equal to 5.3x
 
Net debt and preferred stock to Adjusted EBITDA – 4Q19 annualized
 
Less than or equal to 5.4x
 
Fixed-charge coverage ratio – 4Q19 annualized
 
Greater than 4.0x
 
Value-creation pipeline as a percentage of gross real estate as of
December 31, 2019
 
Less than 15%
 
Key Sources and Uses of Capital (in millions)
 
Range
 
Midpoint
 
Certain Completed Items
Sources of capital:
 
 
 
 
 
 
 
 
 
 
Net cash provided by operating activities after dividends
 
$
170

 
$
210

 
$
190

 
 
 
Incremental debt
 
610

 
570

 
 
590

 
 
 
Real estate dispositions and partial interest sales
 
820

 
920

 
 
870

 
$
438

(4)
Common equity
 
1,150

 
1,250

 
 
1,200

 
$
1,218

(5)
Total sources of capital
 
$
2,750

 
$
2,950

 
$
2,850

 
 
 
Uses of capital:
 
 
 
 
 
 
 
 
 
 
Construction
 
$
1,250

 
$
1,350

 
$
1,300

 
 
 
Acquisitions
 
1,500

 
1,600

 
 
1,550

 
(4)
Total uses of capital
 
$
2,750

 
$
2,950

 
$
2,850

 
 
 
Incremental debt (included above):
 
 
 
 
 
 
 
 
 
 
Issuance of unsecured senior notes payable
 
$
2,100

 
$
2,100

 
$
2,100

 
$
2,100

(3)
Assumption of secured note payable
 
28

 
28

 
 
28

 
$
28

 
Repayments of unsecured senior notes payable
 
(950
)
 
(950
)
 
 
(950
)
 
$
(950
)
(3)
Repayments of secured notes payable
 
(310
)
 
(320
)
 
 
(315
)
 
$
(300
)
 
Repayments of unsecured senior bank term loan
 
(175
)
 
(175
)
 
 
(175
)
 
$
(175
)
(3)
$2.2 billion unsecured senior line of credit/other
 
(83
)
 
(113
)
 
 
(98
)
 
 
 
Incremental debt
 
$
610

 
$
570

 
$
590

 
 
 
(1)
Excludes future unrealized gains or losses after June 30, 2019, that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.
(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”). Refer to the “Funds From Operations and Funds From Operations, As Adjusted, Attributable to Alexandria’s Common Stockholders” section in “Definitions and Reconciliations” of our Supplemental Information for additional information.
(3)
Refer to the first item under “Subsequent Events” in this Earnings Press Release for additional information.
(4)
Refer to “Acquisitions” and “Dispositions and Sales of Partial Interests in Core Class A Properties” in this Earnings Press Release for additional information.
(5)
Includes 602,484 shares of common stock for net proceeds of $86.1 million issued under our ATM program in 2Q19 and unsettled forward equity sales agreements related to 8.1 million shares of our common stock.
(6)
On June 20, 2019, we updated guidance for occupancy percentage for operating properties in North America as of December 31, 2019, to reflect the pending acquisition of a campus located in our San Diego market that includes multiple operating buildings aggregating 560,000 RSF, which is 76% leased. Additionally, as expected, we will commence renovations on 116,556 RSF at 3545 Cray Court in our Torrey Pines submarket upon expiration of the existing lease in 3Q19. In aggregate for these items, we expect a temporary decline in occupancy percentage in North America of approximately 1% from 2Q19 to 3Q19.
(7)
Approximately 45% of straight-line rent revenue represents initial free rent on recently delivered and expected 2019 deliveries of new Class A properties from our development and redevelopment pipeline.

 
6


 
 
 
398940868_q219logo1.jpg
Earnings Call Information and About the Company
June 30, 2019
 
 


We will host a conference call on Tuesday, July 30, 2019, 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, 2019. 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 30, 2019. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 10131624.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the second quarter ended June 30, 2019, is available in the “For Investors” section of our website at www.are.com or by following this link: http://www.are.com/fs/2019q2.pdf.

For any questions, please contact Joel S. Marcus, executive chairman and founder; Stephen A. Richardson, co-chief executive officer; Peter M. Moglia, co-chief executive officer and co-chief investment officer; Dean A. Shigenaga, co-president and chief financial officer; or Sara M. Kabakoff, assistant vice president – corporate communications, at (626) 578-0777.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office real estate investment trust (“REIT”), is the first and longest-tenured owner, operator, and developer uniquely focused on collaborative life science, technology, and agtech campuses in AAA innovation cluster locations, with a total market capitalization of $22.2 billion as of June 30, 2019, and an asset base in North America of 37.1 million square feet (“SF”) as of July 29, 2019, including pending acquisitions. The asset base in North America includes 24.5 million RSF of operating properties and 1.5 million RSF of Class A properties undergoing construction, with projected initial occupancy in 2019, 2.2 million RSF of Class A properties undergoing construction or pre-construction, with projected initial occupancy in 2020, 4.4 million RSF of Class A properties undergoing or nearing pre-construction, with projected initial occupancy in 2021 or 2022, and 4.5 million of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, technology, and agtech 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 and technology companies through our venture capital arm. We believe our unique business model and diligent underwriting ensure a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit www.are.com.

***********

This document includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2019 earnings per share attributable to Alexandria’s common stockholders – diluted, 2019 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,” “goals,” “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.

Alexandria®, Lighthouse Design® logo, Building the Future of Life-Changing Innovation™, LaunchLabs®, Alexandria Center®, Alexandria Technology Square®, Alexandria Summit®, Alexandria Technology Center®, Alexandria Innovation Center®, and GradLabs™ are trademarks of Alexandria Real Estate Equities, Inc. All other company names, trademarks, and logos referenced herein are the property of their respective owners.

 
7


 
 
Consolidated Statements of Operations
398940868_q219logo1.jpg
June 30, 2019
(Dollars in thousands, except per share amounts)
 
 

 
 
Three Months Ended
 
Six Months Ended
 
 
6/30/19

3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
6/30/19
 
6/30/18
Revenues:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Income from rentals(1)
 
$
371,618

 
$
354,749

 
$
337,785

 
$
336,547

 
$
322,794

 
$
726,367

 
$
640,449

Other income
 
2,238

 
4,093

 
2,678

 
5,276

 
2,240

 
6,331

 
4,724

Total revenues
 
373,856

 
358,842

 
340,463

 
341,823

 
325,034

 
732,698


645,173

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental operations
 
105,689

 
101,501

 
97,682

 
99,759

 
91,908

 
207,190

 
183,679

General and administrative
 
26,434

 
24,677

 
22,385

 
22,660

 
22,939

 
51,111

 
45,360

Interest
 
42,879

 
39,100

 
40,239

 
42,244

 
38,097

 
81,979

 
75,012

Depreciation and amortization
 
134,437

 
134,087

 
124,990

 
119,600

 
118,852

 
268,524

 
233,071

Impairment of real estate
 

 

 

 

 
6,311

 

 
6,311

Loss on early extinguishment of debt
 


7,361

 

 
1,122

 

 
7,361

 

Total expenses
 
309,439

 
306,726

 
285,296

 
285,385

 
278,107

 
616,165

 
543,433

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity in earnings of unconsolidated real estate joint ventures
 
1,262

 
1,146

 
1,029

 
40,718

 
1,090

 
2,408

 
2,234

Investment income (loss)
 
21,500

 
83,556

 
(83,531
)
 
122,203

 
12,530

 
105,056

 
98,091

Gain on sales of real estate
 

 

 
8,704

 

 

 

 

Net income (loss)
 
87,179

 
136,818

 
(18,631
)
 
219,359

 
60,547

 
223,997

 
202,065

Net income attributable to noncontrolling interests
 
(8,412
)
 
(7,659
)
 
(6,053
)
 
(5,723
)
 
(5,817
)
 
(16,071
)
 
(11,705
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s stockholders
 
78,767

 
129,159

 
(24,684
)
 
213,636

 
54,730

 
207,926

 
190,360

Dividends on preferred stock
 
(1,005
)
 
(1,026
)
 
(1,155
)
 
(1,301
)
 
(1,302
)
 
(2,031
)
 
(2,604
)
Preferred stock redemption charge
 

 
(2,580
)
 
(4,240
)
 

 

 
(2,580
)
 

Net income attributable to unvested restricted stock awards
 
(1,432
)
 
(1,955
)
 
(1,661
)
 
(3,395
)
 
(1,412
)
 
(3,134
)
 
(2,765
)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
52,016

 
$
200,181

 
$
184,991

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
2.01

 
$
0.51

 
$
1.80

 
$
1.83

Diluted
 
$
0.68

 
$
1.11

 
$
(0.30
)
 
$
1.99

 
$
0.51

 
$
1.80

 
$
1.83

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
111,433

 
111,054

 
106,033

 
104,179

 
101,881

 
111,245

 
100,878

Diluted
 
111,501

 
111,054

 
106,033

 
105,385

 
102,236

 
111,279

 
101,191

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per share of common stock
 
$
1.00

 
$
0.97

 
$
0.97

 
$
0.93

 
$
0.93

 
$
1.97

 
$
1.83


(1)
Upon the adoption of new lease accounting standards on January 1, 2019, rental revenues and tenant recoveries are aggregated within income from rentals. Prior periods have been reclassified to conform to new standards. Refer to “Financial and Asset Base Highlights” and the “Lease Accounting” and “Tenant Recoveries” sections in “Definitions and Reconciliations” of our Supplemental Information for additional information.

 
8


 
 
Consolidated Balance Sheets
398940868_q219logo1.jpg
June 30, 2019
(In thousands)
 
 

 
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
Assets
 
 
 
 

 
 

 
 

 
 

Investments in real estate
 
$
12,872,824

 
$
12,410,350

 
$
11,913,693

 
$
11,587,312

 
$
11,190,771

Investments in unconsolidated real estate joint ventures
 
334,162

 
290,405

 
237,507

 
197,970

 
192,972

Cash and cash equivalents
 
198,909

 
261,372

 
234,181

 
204,181

 
287,029

Restricted cash
 
39,316

 
54,433

 
37,949

 
29,699

 
34,812

Tenant receivables
 
9,228

 
9,645

 
9,798

 
11,041

 
8,704

Deferred rent
 
585,082

 
558,103

 
530,237

 
511,680

 
490,428

Deferred leasing costs
 
247,468

 
241,268

 
239,070

 
238,295

 
232,964

Investments
 
1,057,854

 
1,000,904

 
892,264

 
957,356

 
790,753

Other assets
 
694,627

 
653,726

 
370,257

 
368,032

 
333,757

Total assets
 
$
16,039,470

 
$
15,480,206

 
$
14,464,956

 
$
14,105,566

 
$
13,562,190

 
 
 
 
 
 
 
 
 
 
 
Liabilities, Noncontrolling Interests, and Equity
 
 
 
 
 
 
 
 
 
 
Secured notes payable
 
$
354,186

 
$
356,461

 
$
630,547

 
$
632,792

 
$
776,260

Unsecured senior notes payable
 
5,140,914

 
5,139,500

 
4,292,293

 
4,290,906

 
4,289,521

Unsecured senior line of credit
 
514,000

 

 
208,000

 
413,000

 

Unsecured senior bank term loans
 
347,105

 
347,542

 
347,415

 
347,306

 
548,324

Accounts payable, accrued expenses, and tenant security deposits
 
1,157,417

 
1,171,377

 
981,707

 
907,094

 
849,274

Dividends payable
 
114,379

 
110,412

 
110,280

 
101,084

 
98,676

Total liabilities
 
7,628,001

 
7,125,292

 
6,570,242

 
6,692,182

 
6,562,055

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable noncontrolling interests
 
10,994

 
10,889

 
10,786

 
10,771

 
10,861

 
 
 
 
 
 
 
 
 
 
 
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
7.00% Series D cumulative convertible preferred stock
 
57,461

 
57,461

 
64,336

 
74,386

 
74,386

Common stock
 
1,120

 
1,112

 
1,110

 
1,058

 
1,033

Additional paid-in capital
 
7,581,573

 
7,518,716

 
7,286,954

 
6,801,150

 
6,387,527

Accumulated other comprehensive loss
 
(11,134
)
 
(10,712
)
 
(10,435
)
 
(3,811
)
 
(2,485
)
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
 
7,629,020

 
7,566,577

 
7,341,965

 
6,872,783

 
6,460,461

Noncontrolling interests
 
771,455

 
777,448

 
541,963

 
529,830

 
528,813

Total equity
 
8,400,475

 
8,344,025

 
7,883,928

 
7,402,613

 
6,989,274

Total liabilities, noncontrolling interests, and equity
 
$
16,039,470

 
$
15,480,206

 
$
14,464,956

 
$
14,105,566

 
$
13,562,190



 
9


 
 
Funds From Operations and Funds From Operations per Share
398940868_q219logo1.jpg
June 30, 2019
(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 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
 
 
6/30/19
 
3/31/19
 
12/31/18
 
9/30/18
 
6/30/18
 
6/30/19
 
6/30/18
Net income (loss) attributable to Alexandria’s common stockholders – basic
 
$
76,330

 
$
123,598

 
$
(31,740
)
 
$
208,940

 
$
52,016

 
$
200,181

 
$
184,991

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 

 

 

 
1,301

 

 

 

Net income (loss) attributable to Alexandria’s common stockholders – diluted
 
76,330

 
123,598

 
(31,740
)
 
210,241

 
52,016

 
200,181

 
184,991

Depreciation and amortization
 
134,437

 
134,087

 
124,990

 
119,600

 
118,852

 
268,524

 
233,071

Noncontrolling share of depreciation and amortization from consolidated real estate JVs
 
(6,744
)
 
(5,419
)
 
(4,252
)
 
(4,044
)
 
(3,914
)
 
(12,163
)
 
(7,781
)
Our share of depreciation and amortization from unconsolidated real estate JVs
 
973

 
846

 
719

 
1,011

 
807

 
1,819

 
1,451

Gain on sales of real estate
 

 

 
(8,704
)
 

 

 

 

Our share of gain on sales of real estate from unconsolidated real estate JVs
 

 

 

 
(35,678
)
 

 

 

Assumed conversion of 7.00% Series D cumulative convertible preferred stock(1)
 
1,005

 
1,026

 

 

 

 
2,031

 
2,604

Allocation to unvested restricted stock awards
 
(1,445
)
 
(2,054
)
 

 
(1,312
)
 
(1,042
)
 
(3,740
)
 
(3,212
)
Funds from operations attributable to Alexandria’s common stockholders – diluted(2)
 
204,556

 
252,084

 
81,013

 
289,818

 
166,719

 
456,652

 
411,124

Unrealized (gains) losses on non-real estate investments
 
(11,058
)
 
(72,206
)
 
94,850

 
(117,188
)
 
(5,067
)
 
(83,264
)
 
(77,296
)
Realized gains on non-real estate investments
 

 

 
(6,428
)
 

 

 

 
(8,252
)
Impairment of real estate – land parcels