PASADENA, Calif., May 7 /PRNewswire-FirstCall/ --
Highlights
First Quarter 2009:
- First Quarter 2009 Funds from Operations Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders of $1.89, up 56%, Compared to First Quarter 2008 Funds from Operations Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders of $1.21
- First Quarter 2009 Earnings Per Share (Diluted) Attributable to Alexandria Real Estate Equities, Inc.'s Common Stockholders of $1.01
- First Quarter 2009 GAAP Same Property Revenues Less Operating Expenses up 3.6%
- Executed 37 Leases for 465,000 Rentable Square Feet
- First Quarter 2009 GAAP Rental Rate Increase of 5.4% on Renewed/Released Space
- Occupancy at 94.3%; Average Occupancy Rate as of December 31 From 1997 to 2008 at 95.5%
- Completed Redevelopment of Multiple Spaces Aggregating 57,000 Rentable Square Feet
- Sold Three Properties to a Life Science User for $14 Million at a Gain of $2 Million
- Operating Margins Steady at 75%
- Closed Follow-on Common Stock Offering with Net Proceeds of $255 Million
- Extended Beyond 2012 $92 Million of Secured Debt Maturities
Other:
- In April, Closed 8.00% Unsecured Convertible Notes Offering with Net Proceeds of $233 Million
- In April, Repurchased, in Privately Negotiated Transactions, $75 Million (Par Value) of Our 3.70% Unsecured Convertible Notes
- In 2009, Reduced Debt Maturities Through 2013 by $363 Million
- In May, Leased 59,000 Rentable Square Foot Vacant Single Tenant Building to a Credit Tenant in the Suburban Washington, D.C. Market
- Since January 1, 2008, Completed Redevelopment of Multiple Spaces Aggregating 393,000 Rentable Square Feet; 90% Leased
Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the first quarter ended March 31, 2009.
For the first quarter of 2009, we reported Funds from Operations ('FFO') attributable to Alexandria Real Estate Equities, Inc.'s common stockholders of $61,329,000, or $1.89 per share (diluted), compared to FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders of $38,266,000, or $1.21 per share (diluted), for the first quarter of 2008. Comparing the first quarter of 2009 to the first quarter of 2008, FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders and FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders per share (diluted) increased 60% and 56%, respectively. In the first quarter of 2009, we recognized additional rental income related to a modification of a lease for a property in South San Francisco, California. Excluding the property in South San Francisco, California, FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders was $43,424,000, or $1.34 per share (diluted), and $36,204,000, or $1.14 per share (diluted), for the first quarter of 2009 and 2008, respectively.
FFO is a non-GAAP measure widely used by publicly traded real estate investment trusts. A reconciliation of GAAP net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders to FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders both on an aggregate and per share (diluted) basis, is included in the financial information accompanying this press release. The primary reconciling item between GAAP net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders and FFO attributable to Alexandria Real Estate Equities, Inc.'s common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended March 31, 2009 and 2008 was $31,446,000 and $25,810,000, respectively. Net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders for the first quarter of 2009 was $32,768,000, or $1.01 per share (diluted), compared to net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders of $32,769,000, or $1.03 per share (diluted), for the first quarter of 2008. Net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders for the first quarter of 2009 included a gain on sale of three properties of $2,234,000 and additional net income related to a modification of a lease for a property in South San Francisco, California. Net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders for the first quarter of 2008 included aggregate gains of $20,213,000 on sales of six properties. Excluding the gains on sales of properties and the property in South San Francisco, California, net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders for the first quarter of 2009 was $13,858,000, or $0.43 per share (diluted), compared to net income attributable to Alexandria Real Estate Equities, Inc.'s common stockholders of $11,288,000, or $0.36 per share (diluted), for the first quarter of 2008.
For the first quarter of 2009, we executed a total of 37 leases for approximately 465,000 rentable square feet of space at 23 different properties (excluding month-to-month leases). Of this total, approximately 252,000 rentable square feet related to new or renewal leases of previously leased space and approximately 213,000 rentable square feet related to developed, redeveloped or previously vacant space. Of the 213,000 rentable square feet, approximately 43,000 rentable square feet were delivered from our development or redevelopment programs, with the remaining approximately 170,000 rentable square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 5.4% higher (on a GAAP basis) than rental rates for expiring leases.
During the first quarter of 2009, we sold three properties aggregating 64,218 rentable square feet to a life science user. These properties were located in San Diego and were sold for approximately $14,449,000 at a gain of approximately $2,234,000.
As of March 31, 2009, approximately 89% of our leases (on a rentable square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, approximately 8% of our leases (on a rentable square footage basis) required the tenants to pay a majority of operating expenses. Additionally, approximately 92% of our leases (on a rentable square footage basis) provided for the recapture of certain capital expenditures, and approximately 94% of our leases (on a rentable square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.
Based on our current view of existing market conditions and certain current assumptions, our updated guidance for FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders and earnings per share (diluted) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders are as follows:
2009
---------
FFO per share (diluted) (1) $5.43 (1)
Earnings per share (diluted) (1) $2.50 (1)
(1) Our guidance for 2009 includes the estimated additional non-cash
interest we will recognize under FSP APB 14-1 which affects the
accounting treatment for convertible debt instruments, such as our
outstanding unsecured convertible notes. In addition, our guidance
for 2009 includes the estimated impact related to FSP EITF 03-6-1
which requires unvested share-based payment awards with nonforfeitable
rights to receive dividends or dividend equivalents to be considered
participating securities for the purposes of applying the two-class
method of calculating earnings per share. FFO per share (diluted) and
earnings per share (diluted) attributable to Alexandria Real Estate
Equities, Inc.'s common stockholders for 2008, as adjusted for FSP APB
14-1 and FSP EITF 03-6-1, was $5.62 and $2.89, respectively.
Alexandria Real Estate Equities, Inc. ('Alexandria') has a very broad and diversified quality client tenant base. As of March 31, 2009, on a rental revenue basis by sector, Alexandria's multinational pharmaceutical client tenants represented approximately 27% of its client tenant mix, led by its top three client tenants Novartis AG, GlaxoSmithKline plc and Roche Holding Ltd; public biopharmaceutical companies represented approximately 20% and included the three largest in the sector, Amgen Inc., Gilead Sciences, Inc. and Celgene Corporation; revenue producing life science product and service companies represented approximately 17%, led by Quest Diagnostics Incorporated, Laboratory Corporation of America Holdings and Qiagen N.V.; government agencies and renown medical and research institutions represented approximately 15%, including The Scripps Research Institute, Massachusetts Institute of Technology, Fred Hutchinson Cancer Research Center, University of Washington, the Burnham Institute for Medical Research and the United States Government; private biopharmaceutical companies represented approximately 14% and were dominated by high-quality, leading-edge companies with blue chip venture investors, including Ambrx, Inc., aTyr Pharma, Inc., BrainCells Inc., Genocea Biosciences, Inc., Ikaria Holdings, Inc. and Tolerx, Inc.; the remaining approximately 7% consisted of traditional office tenants. The two fastest growing sectors by revenue currently include leading institutional and multinational pharmaceutical client tenants. Alexandria's innovative business model, very strong and unique life sciences and financial underwriting skills with substantial experience and expertise, long-term client tenant relationships and sophisticated management with both real estate and life science operating experience and expertise, set Alexandria apart from all other publicly-traded real estate investment trusts ('REITs').
Alexandria Real Estate Equities, Inc., Landlord of Choice to the Life Science Industry(R), is the largest owner and pre-eminent first-in-class REIT focused principally on science-driven cluster formation. Alexandria is the leading provider of high-quality environmentally sustainable real estate, technical infrastructure, and services to the broad and diverse life science industry. Client tenants include institutional (universities and independent not-for-profit institutions), pharmaceutical, biopharmaceutical, medical device, product, service and translational entities, as well as government agencies. Alexandria's operating platform is based on the principle of 'clustering,' with assets and operations located in key life science markets. Our asset base approximates 12.8 million rentable square feet consisting of 156 properties approximating 11.7 million rentable square feet (including spaces undergoing active redevelopment) and properties undergoing ground-up development approximating 1.1 million rentable square feet.
This press release includes 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2009 earnings per share (diluted) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders, 2009 FFO per share (diluted) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders and our redevelopment and development projects. Our actual results may differ materially from those projected in such forward-looking statements. Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing and or equity) or refinance debt maturities, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully complete and lease our existing space held for redevelopment and new properties acquired for that purpose and any properties undergoing development, our failure to successfully operate or lease acquired properties, decreased rental rates or increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, general and local economic conditions and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission ('SEC'). All forward-looking statements are made as of today, and we assume no obligation to update this information. 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.
(Tables follow)
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
-----------------------
2009 2008 (1)
---------- ----------
Income statement data
Total revenues $132,757 $109,562
Expenses
Rental operations 32,684 28,261
General and administrative 9,418 8,787
Interest 20,199 23,460
Depreciation and amortization 31,446 25,591
Non-cash impairment on investments â' 1,985
---------- ----------
93,747 88,084
---------- ----------
Income from continuing operations 39,010 21,478
Income from discontinued operations,
net 2,239 15,673
---------- ----------
Net income 41,249 37,151
Net income attributable to
noncontrolling interests 875 951
Dividends on preferred stock 7,089 2,928
Net income attributable to unvested
restricted stock awards 517 503
---------- ----------
Net income attributable to
Alexandria Real Estate Equities,
Inc.'s common stockholders $32,768 $32,769
========== ==========
Earnings per share attributable to
Alexandria Real Estate Equities,
Inc.'s common stockholders - basic
Continuing operations $0.94 $0.55
Discontinued operations, net 0.07 0.49
---------- ----------
Earnings per share - basic $1.01 $1.04
========== ==========
Earnings per share attributable to
Alexandria Real Estate Equities,
Inc.'s common stockholders -
diluted
Continuing operations $0.94 $0.54
Discontinued operations, net 0.07 0.49
---------- ----------
Earnings per share - diluted $1.01 $1.03
========== ==========
Weighted average shares of common
stock outstanding
Basic 32,478,671 31,546,591
========== ==========
Diluted 32,498,107 31,687,241
========== ==========
(1) Includes the retrospective impact of FASB Staff Position No. APB
14-1, 'Accounting for Convertible Debt Instruments That May Be
Settled in Cash Upon Conversion (Including Partial Cash Settlement)'
('FSP APB 14-1'), FASB Staff Position No. EITF 03-6-1, 'Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities' ('FSP EITF 03-6-1') and Statement of
Financial Accounting Standards No. 160, 'Noncontrolling Interests in
Consolidated Financial Statements' ('SFAS 160').
ALEXANDRIA REAL ESTATE EQUITIES, INC.
Financial Information
(Unaudited)
Funds from Operations
United States generally accepted accounting principles ('GAAP') basis
accounting for real estate assets utilizes historical cost accounting and
assumes real estate values diminish over time. In an effort to overcome
the difference between real estate values and historical cost accounting
for real estate assets, the Board of Governors of the National Association
of Real Estate Investment Trusts ('NAREIT') established the measurement
tool of Funds from Operations ('FFO'). Since its introduction, FFO has
become a widely used non-GAAP financial measure among real estate
investment trusts ('REITs'). We believe that FFO is helpful to investors
as an additional measure of the performance of an equity REIT. We compute
FFO in accordance with standards established by the Board of Governors of
NAREIT in its April 2002 White Paper (the 'White Paper') and related
implementation guidance, which may differ from the methodology for
calculating FFO utilized by other equity REITs, and, accordingly, may not
be comparable to such other REITs. The White Paper defines FFO as net
income (loss) (computed in accordance with GAAP), excluding gains (or
losses) from sales, plus real estate related depreciation and
amortization, and after adjustments for unconsolidated partnerships and
joint ventures.
FFO should not be considered as an alternative to net income (determined
in accordance with GAAP) as an indication of financial performance, or to
cash flows from operating activities (determined in accordance with GAAP)
as a measure of our liquidity, nor is it indicative of funds available to
fund our cash needs, including our ability to make distributions.
The following tables present 1) a reconciliation of net income
attributable to Alexandria Real Estate Equities, Inc.'s common
stockholders, the most directly comparable GAAP financial measure to FFO,
to FFO attributable to Alexandria Real Estate Equities, Inc.'s common
stockholders and 2) a reconciliation of earnings per share (diluted)
attributable to Alexandria Real Estate Equities, Inc.'s common
stockholders to FFO per share (diluted) attributable to Alexandria Real
Estate Equities, Inc.'s common stockholders, in each case, for the three
months ended March 31, 2009 and 2008 (in thousands, except per share
data):
Reconciliation of net income attributable to
Alexandria Real Estate Equities, Inc.'s common
stockholders to FFO attributable to Alexandria
Real Estate Equities, Inc.'s common Three Three
Stockholders Months Months
Ended Ended
March 31, March 31,
2009 2008 (1)
------- --------
Net income attributable to
Alexandria Real Estate Equities,
Inc.'s common stockholders $32,768 $32,769
Add: Depreciation and amortization (2) 31,446 25,810
Add: Net income attributable to
noncontrolling interests 875 951
Add: Net income attributable to unvested
restricted stock awards 517 503
Subtract: Gain on sales of property (3) (2,234) (20,213)
Subtract: FFO attributable to noncontrolling
interests (1,077) (967)
Subtract: FFO attributable to unvested
restricted stock awards (966) (587)
------- -------
FFO attributable to Alexandria Real Estate, Inc.'s
common stockholders $61,329 $38,266
======= =======
FFO per share attributable to Alexandria Real
Estate Equities, Inc.'s common stockholders
Basic $1.89 $1.21
======= =======
Diluted $1.89 $1.21
======= =======
Reconciliation of earnings per share (diluted)
attributable to Alexandria Real Estate Equities,
Inc.'s common stockholders to FFO per share (diluted)
attributable to Alexandria Real Estate Equities, Inc.'s
common stockholders
Earnings per share (diluted) attributable to
Alexandria Real Estate Equities, Inc.'s common
Stockholders $ 1.01 $ 1.03
Depreciation and amortization (2) 0.97 0.82
Net income attributable to noncontrolling interests 0.03 0.03
Net income attributable to unvested restricted
stock awards 0.01 0.02
Gain on sales of property (3) (0.07) (0.64)
FFO attributable to noncontrolling interests (0.03) (0.03)
FFO attributable to unvested stock awards (0.03) (0.02)
------- -------
FFO per share (diluted) attributable to Alexandria
Real Estate Equities, Inc.'s common stockholders $ 1.89 $ 1.21
======= =======
(1) Includes the retrospective impact of FSP APB 14-1, FSP EITF 03-6-1
and SFAS 160.
(2) Includes depreciation and amortization for assets 'held for sale'
reflected as discontinued operations (for the periods prior to when
such assets were designated as 'held for sale').
(3) Gain on sales of property relates to the disposition of three
properties sold during the first quarter 2009 and six properties sold
during the first quarter 2008.
