News Release: Alexandria Real Estate Equities, Inc. Reports: 4Q22 and 2022 Net Income per Share – Diluted of $0.31 and $3.18, respectively; and 4Q22 and 2022 FFO per Share – Diluted, As Adjusted, of $2.14 and $8.42, respectively

During Q4, Alexandria started two new development projects totaling 467,567 square feet. One was 1450 Owens St., a seven-story, 212,796 square foot lab and office project in San Francisco’s Mission Bay area.

PASADENA, Calif., Jan. 30, 2023 /PRNewswire/ — Alexandria Real Estate Equities, Inc. (NYSE: ARE) announced financial and operating results for the fourth quarter and year ended December 31, 2022.

Key highlights

Operating results

4Q22

4Q21

2022

2021

Total revenues:

In millions

$  670.3

$     576.9

$  2,589.0

$  2,114.2

Growth

16.2 %

22.5 %

Net income attributable to Alexandria’s common stockholders – diluted

In millions

$    51.8

$       72.8

$     513.3

$     563.4

Per share

$    0.31

$       0.47

$       3.18

$       3.82

Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted

In millions

$  353.6

$     303.6

$  1,361.7

$  1,144.9

Per share

$    2.14

$       1.97

$       8.42

$       7.76

 

An operationally excellent, industry-leading REIT with a high-quality client base of approximately 1,000 tenants supporting high-quality revenues, cash flows, and strong margins

Percentage of total annual rental revenue in effect from investment-grade or
    publicly traded large cap tenants

48 %

Sustained strength in tenant collections:

Tenant receivables as of December 31, 2022

$     7.6

million

January 2023 tenant rent and receivables collected as of January 30, 2023

99.4 %

Occupancy of operating properties in North America

94.8 %

Operating margin

70 %

Adjusted EBITDA margin

69 %

Weighted-average remaining lease term:

All tenants

7.1

years

Top 20 tenants

9.4

years

Second-highest annual leasing volume and rental rate increases (cash basis)

  • Annual leasing volume of 8.4 million RSF in 2022 represents the second highest in Company history, with 74% generated from our client base of approximately 1,000 tenants.
  • 4Q22 leasing volume of 2.0 million RSF represents the fourth highest in Company history.
  • Rental rate increase (cash basis) of 22.1% on lease renewals and re-leasing of space represents the second-highest rental rate growth (cash basis) in Company history.

4Q22

2022

Total leasing activity – RSF

2,000,322

8,405,587

Lease renewals and re-leasing of space:

RSF (included in total leasing activity above)

1,494,345

4,540,325

Rental rate increases

26.0 %

(1)

31.0 %

Rental rate increases (cash basis)

19.6 %

(1)

22.1 %

(1)

Includes rental rate increases related to two recently acquired office leases, including one lease subject to a fixed-rate renewal option and one full-building lease in a non-core submarket. Excluding these leases, rental rate increases for the three months ended December 31, 2022 were 36.8% and 31.4% (cash basis).

Continued strong net operating income and internal growth, including highest annual same property and third-highest quarterly same property growth (cash basis)

  • Net operating income (cash basis) of $1.7 billion for 4Q22 annualized, up $248.4 million, or 17.3%, compared to 4Q21 annualized.
  • 96% of our leases contain contractual annual rent escalations approximating 3%.
  • Same property net operating income growth:
    • 4.7% and 10.9% (cash basis) for 4Q22 over 4Q21, representing the third-highest (cash basis) growth in Company history.
    • 6.6% and 9.6% (cash basis) for 2022 over 2021, with both increases representing the highest growth in Company history.
    • Our 2022 same property growth outperformed our 10-year averages of 3.6% and 6.7% (cash basis) as a result of an increase in same property occupancy of 100 bps and early lease renewals that commenced in late 2021/early 2022.

Continued strong and flexible balance sheet with lowest leverage in Company history and 13.2 years of remaining term of outstanding debt

  • Investment-grade credit ratings ranked in the top 10% among all publicly traded U.S. REITs.
  • Net debt and preferred stock to Adjusted EBITDA of 5.1x, the lowest ratio in Company history, and fixed-charge coverage ratio of 5.0x for 4Q22 annualized.
  • Total debt and preferred stock to gross assets of 25%.
  • 99.4% of our debt has a fixed rate.
  • 13.2 years weighted-average remaining term of debt.
  • No debt maturities prior to 2025.
  • $5.3 billion of liquidity.
  • $1.4 billion of contractual construction funding commitments from existing real estate joint venture partners expected over the next four years.

Continued strong, consistent, and increasing dividends with a focus on retaining significant net cash flows from operating activities after dividends for reinvestment

  • Common stock dividend declared for 4Q22 of $1.21 per common share, aggregating $4.72 per common share for the year ended December 31, 2022, up 24 cents, or 5%, over the year ended December 31, 2021.
  • Dividend yield of 3.3% as of December 31, 2022.
  • Dividend payout ratio of 58% for the three months ended December 31, 2022.
  • Average annual dividend per-share growth of 6.5% over the last five years.

Alexandria’s value-creation pipeline drives visibility for future growth aggregating over $655 million of incremental net operating income

Highly leased value-creation pipeline of current and seven near-term projects expected to generate greater than $655 million of incremental net operating income, primarily commencing from 1Q23 through 4Q25.

  • 7.6 million RSF of value-creation projects, which are 72% leased.
  • 77% of the leased RSF of our value-creation projects was generated from our client base of approximately 1,000 tenants.

Key items included in operating results

Key items included in net income attributable to Alexandria’s common stockholders:

4Q22

4Q21

4Q22

4Q21

2022

2021

2022

2021

(In millions, except per share
     amounts)

Amount

Per Share –
Diluted

Amount

Per Share –
Diluted

Impairment of real estate

$ (26.2)

$      —

$ (0.16)

$      —

$ (65.0)

$ (52.7)

$ (0.40)

$ (0.35)

Loss on early
  extinguishment of debt

(3.3)

(67.3)

(0.02)

(0.46)

Gain on sales of real estate

124.2

0.80

537.9

126.6

3.33

0.86

Acceleration of stock
  compensation expense
  due to executive officer
  resignation

(7.2)

(0.04)

Unrealized (losses) gains
  on non-real estate
  investments

(24.1)

(139.7)

(0.15)

(0.91)

(412.2)

43.6

(2.55)

0.30

Impairment of non-real
  estate investments

(20.5)

(0.12)

(20.5)

(0.13)

Significant realized gains on
  non-real estate
  investments

110.1

0.75

Total

$ (70.8)

$ (15.5)

$ (0.43)

$ (0.11)

$   29.7

$ 160.3

$   0.19

$   1.10

Refer to “Funds from operations and funds from operations per share” of this Earnings Press Release for additional
details.

Strong balance sheet management

Key metrics as of December 31, 2022

  • $35.0 billion in total market capitalization.
  • $24.9 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.
  • No remaining LIBOR-based debt ahead of June 2023 phase-out.

4Q22

Goal

Quarter

Trailing

4Q23

Annualized

12 Months

Annualized

Net debt and preferred stock to
     Adjusted EBITDA

5.1x

5.2x

Less than or equal to 5.1x

Fixed-charge coverage ratio

5.0x

5.0x

4.5x to 5.0x

Key capital events

  • During 4Q22, we settled outstanding forward equity sales agreements by issuing 8.0 million shares of common stock at an average price of $186.87 and received net proceeds of $1.5 billion.
  • In December 2022, we entered into new forward equity sales agreements aggregating $104.7 million to sell 699,274 shares under our ATM program at an average price of $149.68 per share (before underwriter discounts). We expect to settle these forward equity sales agreements in 2023.
  • As of December 31, 2022, the remaining aggregate amount available under our ATM program for future sales of common stock was $141.9 million. We expect to establish a new ATM program in 1Q23.

Investments

  • As of December 31, 2022:
    • Our non-real estate investments aggregated $1.6 billion.
    • Unrealized gains presented in our consolidated balance sheet were $397.0 million, comprising gross unrealized gains and losses aggregating $506.4 million and $109.4 million, respectively.
  • Investment loss of $19.7 million for the three months ended December 31, 2022 presented in our consolidated statement of operations consisted of $25.0 million of realized gains, $24.1 million of unrealized losses/changes in fair value, and $20.5 million of impairments primarily related to three non-real estate investments in privately held entities that do not report NAV.

External growth and investments in real estate

Delivery and commencement of value-creation projects

  • During 4Q22, we placed into service development and redevelopment projects aggregating 497,755 RSF across multiple submarkets, resulting in $28 million of incremental annual net operating income.
  • Annual net operating income (cash basis) is expected to increase by $57 million upon the burn-off of initial free rent from recently delivered projects.
  • Commenced two development projects aggregating 467,567 RSF during 4Q22, including 212,796 RSF at 1450 Owens Street in our Mission Bay submarket, which will be 100% funded by our joint venture partner, and 254,771 RSF at 10075 Barnes Canyon Road in our Sorrento Mesa submarket, which will be 50% funded by our joint venture partner.

Value-creation pipeline of new Class A development and redevelopment projects as
a percentage of gross assets

4Q22

Under construction projects 68% leased/negotiating

10 %

Near-term projects expected to commence construction in the next four quarters
     88% leased

2 %

Income-producing/potential cash flows/covered land play(1)

7 %

Land

3 %

(1)

Includes projects that have existing buildings that are generating or can generate operating cash flows. Also includes development rights associated with existing operating campuses. These projects aggregate 1.1% of total annual rental revenue as of December 31, 2022 and are included in targeted for a future change in use in our industry mix chart. Refer to “High-quality and diverse client base in AAA locations” in our Supplemental Information.

  • 81% of construction costs related to active development and redevelopment projects aggregating 5.6 million RSF are under a guaranteed maximum price (“GMP”) contract or other fixed contracts. Our budgets also include construction cost contingencies in GMP contracts plus additional landlord contingencies that generally range from 3% to 5%.

Industry and ESG leadership: catalyzing and leading the way for positive change to benefit human health and society

  • In January 2023, Alexandria Venture Investments was recognized by Silicon Valley Bank in its “Healthcare Investments and Exits: Annual Report 2022” as the #1 most active corporate investor in biopharma by new deal volume (2021-2022) for the sixth consecutive year. Alexandria’s venture activity provides us with, among other things, mission-critical data on and insights into key macro life science industry and innovation trends.
  • In November 2022, our executive chairman and founder, Joel S. Marcus, presented at the much-anticipated Annual Baron Investment Conference for a rare second time. Mr. Marcus opened the program with a presentation on what renowned author and business strategist Jim Collins describes as our “Superior Results, Distinctive Impact, and Lasting Endurance.”
  • In November 2022, Alexandria earned several 2022 TOBY (The Outstanding Building of the Year) Awards from BOMA (Building Owners and Managers Association) in Boston, Seattle, and Raleigh-Durham. The TOBY Awards recognize quality in commercial buildings and reward excellence in building management.
    • In our Cambridge/Inner Suburbs submarket: Four recognitions across three of our premier mega campuses – Alexandria Center® at Kendall Square, Alexandria Center® at One Kendall Square, and Alexandria Technology Square® – for Corporate Facility, Laboratory Building, Renovated Building, and Building Under 100,000 SF categories.
    • In our Lake Union submarket: A recognition for 1165 Eastlake Avenue East on The Eastlake Life Science Campus by Alexandria mega campus in the Corporate Facility category.
    • In our Research Triangle submarket: A recognition for 9 Laboratory Drive on our Alexandria Center® for AgTech campus in the Life Science category.
  • In October 2022, Mr. Marcus, as a newly appointed member of the Prix Galien USA’s esteemed Awards jury, honored groundbreaking medical innovations in life science. He served on the Prix Galien committee, alongside other influential science leaders, that recognized the Best Startup, Best Digital Health Solution and the inaugural Best Incubators, Accelerators and Equity.
  • In October 2022, 9880 Campus Point Drive on the Campus Point by Alexandria mega campus in our University Town Center submarket received an Orchid award for Architecture from the San Diego Architectural Foundation, and a People’s Choice Orchid. The facility is home to Alexandria GradLabs®, a dynamic platform that is accelerating the growth of promising early-stage life science companies.
  • Alexandria is addressing some of today’s most urgent societal challenges through our eight social responsibility pillars, including the mental health crisis and opioid addiction. In October 2022:
    • Alexandria presented a timely conversation on the state of mental health in America with former congressman Patrick J. Kennedy, one of the world’s leading voices and policymakers on mental health, at the Galien Forum USA 2022, which was held at the Alexandria Center® for Life Science – New York City.
    • OneFifteen, a novel, data-driven comprehensive care model we developed in partnership with Verily, celebrated its third anniversary of the campus’s opening in Dayton, Ohio. OneFifteen has treated over 5,800 patients since opening its doors in October 2019.

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 since its founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science, agtech, and technology campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. The trusted partner to approximately 1,000 tenants, Alexandria has a total market capitalization of $35.0 billion and an asset base in North America of 74.6 million square feet (“SF”) as of December 31, 2022, which includes 41.8 million RSF of operating properties and 5.6 million RSF of Class A properties undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.3 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A properties clustered in life science, agtech, and technology 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, agrifoodtech, climate innovation, and technology 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.

Acquisitions
December 31, 2022
(Dollars in thousands)

Square Footage

Acquisitions With Development/Redevelopment
Opportunities(1)

Property

Submarket/Market

Date of
Purchase

Number of
Properties

Operating
Occupancy

Future
Development

Operating With
Future Development/
Redevelopment

Operating(2)

Total(3)

Purchase Price

Completed in YTD 3Q22

39

92

%

6,538,991

3,305,764

451,760

9,600,231

$

2,437,592

Completed in 4Q22:

35 Gatehouse Drive(4)

Route 128/Greater Boston

12/29/22

1

100

75,000

31,611

265,965

372,576

272,500

1001 Trinity Street and 1020 Red River Street

Austin/Texas

10/4/22

2

100

51,038

198,972

250,010

108,000

Other

360

3

100

126,038

230,583

(5)

265,965

(5)

622,586

380,860

Total 2022 acquisitions

42

93

%

6,665,029

3,536,347

717,725

10,222,817

$

2,818,452

(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.

(2)

Represents the operating component of our value-creation acquisitions that is not expected to undergo future development or redevelopment.

(3)

Represents total square footage upon completion of development or redevelopment of one or more new Class A properties. Square footage presented includes RSF of buildings currently in operation with future development or redevelopment opportunities. Refer to “Definitions and reconciliations” in our Supplemental Information for additional details on value-creation square feet currently included in rental properties.

(4)

Represents an opportunity to expand our existing properties at 40, 50, and 60 Sylvan Road and 840 Winter Street into a mega campus.

(5)

We expect the acquisitions completed during the three months ended December 31, 2022 to generate initial annual net operating income of approximately $28 million for the twelve months following acquisition. These acquisitions included three operating properties with a weighted-average acquisition date of December 8, 2022 (weighted by initial annual net operating income).

Dispositions and Sales of Partial Interests
December 31, 2022
(Dollars in thousands, except per RSF amounts)

Property

Submarket/Market

Date of
Sale

Interest
Sold

RSF

Capitalization
Rate

Capitalization
Rate
(Cash Basis)

Sales Price

Sales Price
per RSF

Gain or
Consideration
in Excess of
Book Value

100 Binney Street

Cambridge/Inner Suburbs/

Greater Boston

3/30/22

70 %

432,931

3.6 %

3.5 %

$            713,228

(1)

$    2,353

$     413,615

(2)

300 Third Street

Cambridge/Inner Suburbs/

Greater Boston

6/27/22

70 %

131,963

4.6 %

4.3 %

166,485

(1)

$    1,802

113,020

(2)

Alexandria Park at 128, 285 Bear Hill
     Road, 111 and 130 Forbes
     Boulevard, and 20 Walkup Drive

Route 128 and Route 495/

Greater Boston

6/8/22

100 %

617,043

5.1 %

5.1 %

334,397

$       542

202,325

1450 Owens Street

Mission Bay/San Francisco Bay Area

7/1/22

20 %

 (3)

191,000

N/A

N/A

25,039

(1)

N/A   

10,083

(2)

341 and 343 Oyster Point Boulevard,
     7000 Shoreline Court, and Shoreway
     Science Center

South San Francisco and Greater
     Stanford/San Francisco Bay Area

9/15/22

100 %

330,379

5.2 %

5.2 %

383,635

$   1,161

223,127

3215 Merryfield Row

Torrey Pines/San Diego

9/1/22

70 %

170,523

4.5 %

4.2 %

149,940

(1)

$   1,256

42,214

(2)

Summers Ridge Science Park

Sorrento Mesa/San Diego

9/15/22

70 %

316,531

4.9 %

4.6 %

159,600

(1)

$      720

65,097

(2)

7330 and 7360 Carroll Road

Sorrento Mesa/San Diego

9/15/22

100 %

84,442

4.4 %

4.6 %

59,476

$      704

35,463

Other

Various

N/A

N/A

230,496

N/A   

77,003

Total 2022 dispositions and sales of
     partial interests

$         2,222,296

$  1,181,947

(1)

Represents the contractual sales price for the percentage interest of the property sold by us.

(2)

We retained control over the newly formed real estate joint venture and therefore continued to consolidate this property. We accounted for the difference between the consideration received and the book value of the interest sold as an equity transaction, with no gain or loss recognized in earnings.

(3)

Relates to the sale of a partial interest in a land parcel. The noncontrolling interest share of our joint venture partner is anticipated to increase to 75% as our partner contributes capital for construction over time. As of December 31, 2022, the noncontrolling interest share of our joint venture partner was 40.3%.

Guidance
December 31, 2022
(Dollars in millions, except per share amounts)

The following guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2023 and is consistent with the guidance issued on our Form 8-K filed on November 30, 2022, except for an update to “excess 2022 bond capital held as cash at December 31, 2022,” which reflects the actual amount of $300 million as of December 31, 2022, compared to the prior guidance range from $200 million to $300 million.

There can be no assurance that actual 2023 results will not be materially higher or lower than these expectations. Also, refer to our discussion of “forward-looking statements” on page 7 of this Earnings Press Release for additional details.

Projected 2023 Earnings per Share and Funds From Operations per Share Attributable to
   Alexandria’s Common Stockholders – Diluted

Earnings per share(1)

$3.41 to $3.61

 Depreciation and amortization of real estate assets

5.50

 Allocation to unvested restricted stock awards

(0.05)

Funds from operations per share(2)

$8.86 to $9.06

Midpoint

$8.96

Key Assumptions

Low

High

Occupancy percentage in North America as of December 31, 2023

94.8 %

95.8 %

Lease renewals and re-leasing of space:

 Rental rate increases

27.0 %

32.0 %

 Rental rate increases (cash basis)

11.0 %

16.0 %

Same property performance:

 Net operating income increase

2.0 %

4.0 %

 Net operating income increase (cash basis)

4.0 %

6.0 %

Straight-line rent revenue

$            130

$            145

General and administrative expenses

$            183

$            193

Capitalization of interest

$            342

$            362

Interest expense

$              74

$              94

Key Credit Metrics

2023 Guidance

Net debt and preferred stock to Adjusted EBITDA – 4Q23 annualized

Less than or equal to 5.1x

Fixed-charge coverage ratio – 4Q23 annualized

4.5x to 5.0x

Key Sources and Uses of Capital

Range

Midpoint

Sources of capital:

Incremental debt

$    550

$    850

$       700

Excess 2022 bond capital held as cash at December 31,
     2022

300

300

300

Net cash provided by operating activities after dividends

350

400

375

Real estate dispositions, sales of partial interests, and
     issuances of common equity

1,400

2,400

1,900

(3)

Total sources of capital

$ 2,600

$ 3,950

$    3,275

Uses of capital:

Construction (refer to page 48)

$ 2,400

$ 3,550

$    2,975

Acquisitions (refer to page 4)

200

400

300

Total uses of capital

$ 2,600

$ 3,950

$    3,275

Incremental debt (included above):

 Issuance of unsecured senior notes payable

$    500

$ 1,000

$       750

 Unsecured senior line of credit, commercial paper, and other

50

(150)

(50)

Incremental debt

$    550

$    850

$       700

(1)

Excludes unrealized gains or losses after December 31, 2022 that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.

(2)

Refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria’s common stockholders” in the “Definitions and reconciliations” of our Supplemental Information for additional details.

(3)

Refer to “Key capital events” on page 2 of this Earnings Press Release for additional details. During the three months ended December 31, 2022, we entered into new forward equity sales agreements aggregating $104.7 million to sell 699,274 shares under our ATM program at an average price of $149.68 per share (before underwriter discounts). We expect to settle these forward equity sales agreements in 2023 and establish a new ATM program in 1Q23.

Earnings Call Information and About the Company
December 31, 2022

We will host a conference call on Tuesday, January 31, 2023, 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 fourth quarter and year ended December 31, 2022. 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, January 31, 2023. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 7024203.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the fourth quarter and year ended December 31, 2022 is available in the “For Investors” section of our website at www.are.com or by following this link: https://www.are.com/fs/2022q4.pdf.

For any questions, please contact Joel S. Marcus, executive chairman and founder; Peter M. Moglia, chief executive officer and co-chief investment officer; Dean A. Shigenaga, president and chief financial officer; Paula Schwartz, managing director of Rx Communications Group, at (917) 633-7790; or Sara M. Kabakoff, vice president – strategic communications.

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 since its founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science, agtech, and technology campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. The trusted partner to approximately 1,000 tenants, Alexandria has a total market capitalization of $35.0 billion and an asset base in North America of 74.6 million SF as of December 31, 2022, which includes 41.8 million RSF of operating properties and 5.6 million RSF of Class A properties undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.3 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A properties clustered in life science, agtech, and technology 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, agrifoodtech, climate innovation, and technology 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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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 2023 earnings per share attributable to Alexandria’s common stockholders – diluted, 2023 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,” “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.

Alexandria®, Lighthouse Design® logo, Building the Future of Life-Changing Innovation®, That’s What’s in Our DNA®, 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
December 31, 2022
(Dollars in thousands, except per share amounts)

Three Months Ended

Year Ended

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

Revenues:

Income from rentals

$       665,674

$       656,853

$       640,959

$       612,554

$       574,656

$    2,576,040

$    2,108,249

Other income

4,607

2,999

2,805

2,511

2,267

12,922

5,901

Total revenues

670,281

659,852

643,764

615,065

576,923

2,588,962

2,114,150

Expenses:

Rental operations

204,352

201,189

196,284

181,328

175,717

783,153

623,555

General and administrative

42,992

49,958

43,397

40,931

41,654

177,278

151,461

Interest

17,522

22,984

24,257

29,440

34,862

94,203

142,165

Depreciation and amortization

264,480

254,929

242,078

240,659

239,254

1,002,146

821,061

Impairment of real estate

26,186

38,783

64,969

52,675

Loss on early extinguishment of debt

3,317

3,317

67,253

Total expenses

555,532

567,843

509,333

492,358

491,487

2,125,066

1,858,170

Equity in earnings of unconsolidated real estate joint ventures

172

40

213

220

3,018

645

12,255

Investment (loss) income

(19,653)

(32,305)

(39,481)

(240,319)

(112,884)

(331,758)

259,477

Gain on sales of real estate

323,699

214,219

124,226

537,918

126,570

Net income (loss)

95,268

383,443

309,382

(117,392)

99,796

670,701

654,282

Net income attributable to noncontrolling interests

(40,949)

(38,747)

(37,168)

(32,177)

(24,901)

(149,041)

(83,035)

Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s
    stockholders

54,319

344,696

272,214

(149,569)

74,895

521,660

571,247

Net income attributable to unvested restricted stock awards

(2,526)

(3,257)

(2,934)

(2,081)

(2,098)

(8,392)

(7,848)

Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s
    common stockholders

$         51,793

$       341,439

$       269,280

$     (151,650)

$         72,797

$       513,268

$       563,399

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

  Basic

$             0.31

$             2.11

$             1.67

$            (0.96)

$             0.47

$             3.18

$             3.83

  Diluted

$             0.31

$             2.11

$             1.67

$            (0.96)

$             0.47

$             3.18

$             3.82

Weighted-average shares of common stock outstanding:

  Basic

165,393

161,554

161,412

158,198

153,464

161,659

146,921

  Diluted

165,393

161,554

161,412

158,198

154,307

161,659

147,460

Dividends declared per share of common stock

$             1.21

$             1.18

$             1.18

$             1.15

$             1.15

$             4.72

$             4.48

Consolidated Balance Sheets
December 31, 2022
(In thousands)

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

Assets

Investments in real estate

$  29,945,440

$  28,771,745

$  27,952,931

$  27,100,009

$  24,980,669

Investments in unconsolidated real estate joint ventures

38,435

38,285

37,587

38,456

38,483

Cash and cash equivalents

825,193

533,824

420,258

775,060

361,348

Restricted cash

32,782

332,344

97,404

95,106

53,879

Tenant receivables

7,614

7,759

7,069

7,570

7,379

Deferred rent

942,646

918,995

905,699

881,743

839,335

Deferred leasing costs

516,275

506,864

498,434

484,184

402,898

Investments

1,615,074

1,624,921

1,657,461

1,661,101

1,876,564

Other assets

1,599,940

1,633,877

1,667,210

1,801,027

1,658,818

Total assets

$  35,523,399

$  34,368,614

$  33,244,053

$  32,844,256

$  30,219,373

Liabilities, Noncontrolling Interests, and Equity

Secured notes payable

$         59,045

$         40,594

$         24,986

$       208,910

$       205,198

Unsecured senior notes payable

10,100,717

10,098,588

10,096,462

10,094,337

8,316,678

Unsecured senior line of credit and commercial paper

386,666

149,958

269,990

Accounts payable, accrued expenses, and other liabilities

2,471,259

2,393,764

2,317,940

2,172,692

2,210,410

Dividends payable

209,131

193,623

192,571

187,701

183,847

Total liabilities

12,840,152

13,113,235

12,781,917

12,663,640

11,186,123

Commitments and contingencies

Redeemable noncontrolling interests

9,612

9,612

9,612

9,612

9,612

Alexandria Real Estate Equities, Inc.’s stockholders’ equity:

Common stock

1,707

1,626

1,615

1,614

1,580

Additional paid-in capital

18,991,492

17,639,434

17,149,571

16,934,094

16,195,256

Accumulated other comprehensive loss

(20,812)

(24,725)

(11,851)

(5,727)

(7,294)

Alexandria Real Estate Equities, Inc.’s stockholders’ equity

18,972,387

17,616,335

17,139,335

16,929,981

16,189,542

Noncontrolling interests

3,701,248

3,629,432

3,313,189

3,241,023

2,834,096

Total equity

22,673,635

21,245,767

20,452,524

20,171,004

19,023,638

Total liabilities, noncontrolling interests, and equity

$  35,523,399

$  34,368,614

$  33,244,053

$  32,844,256

$  30,219,373

Funds From Operations and Funds From Operations per Share
December 31, 2022
(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

Year Ended

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

Net income (loss) attributable to Alexandria’s common stockholders

$     51,793

$   341,439

$   269,280

$ (151,650)

$     72,797

$   513,268

$   563,399

Depreciation and amortization of real estate assets

261,185

251,453

238,565

237,160

234,979

988,363

804,633

Noncontrolling share of depreciation and amortization from consolidated real
    estate JVs

(29,702)

(27,790)

(26,418)

(23,681)

(21,265)

(107,591)

(70,880)

Our share of depreciation and amortization from unconsolidated real estate JVs

982

795

934

955

3,058

3,666

13,734

Gain on sales of real estate

(323,699)

(214,219)

(124,226)

(537,918)

(126,570)

Impairment of real estate – rental properties

20,899

(1)

20,899

25,485

Allocation to unvested restricted stock awards

(953)

1,002

(1,118)

(6,315)

Funds from operations attributable to Alexandria’s common stockholders –
    diluted(2)

304,204

243,200

268,142

62,784

165,343

879,569

1,203,486

Unrealized losses (gains) on non-real estate investments

24,117

56,515

68,128

263,433

139,716

412,193

(43,632)

Significant realized gains on non-real estate investments

(110,119)

Impairment of non-real estate investments

20,512

(3)

20,512

(3)

Impairment of real estate

5,287

38,783

44,070

27,190

Loss on early extinguishment of debt

3,317

3,317

67,253

Acceleration of stock compensation expense due to executive officer resignation

7,185

7,185

Allocation to unvested restricted stock awards

(482)

(1,033)

(778)

(1,604)

(1,432)

(5,137)

710

Funds from operations attributable to Alexandria’s common stockholders –
    diluted, as adjusted

$   353,638

$   344,650

$   338,809

$   324,613

$   303,627

$  1,361,709

$  1,144,888

(1)

Primarily consists of an impairment of one real estate asset recognized to reduce the carrying amount of the asset to its estimated fair value, less costs to sell, upon its classification as held for sale in December 2022. We expect to complete the sale of this asset during 2023.

(2)

Calculated in accordance with standards established by the Nareit Board of Governors.

(3)

Primarily relates to three investments in privately held entities that do not report NAV.

Funds From Operations and Funds From Operations per Share (continued)
December 31, 2022
(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

Year Ended

12/31/22

9/30/22

6/30/22

3/31/22

12/31/21

12/31/22

12/31/21

Net income (loss) per share attributable to Alexandria’s common
     stockholders – diluted

$         0.31

$         2.11

$         1.67

$        (0.96)

$         0.47

$         3.18

$         3.82

Depreciation and amortization of real estate assets

1.41

1.39

1.32

1.36

1.40

5.47

5.07

Gain on sales of real estate

(2.00)

(1.33)

(0.80)

(3.33)

(0.86)

Impairment of real estate – rental properties

0.13

(1)

0.13

0.17

Allocation to unvested restricted stock awards

(0.01)

0.01

(0.01)

(0.04)

Funds from operations per share attributable to Alexandria’s common
     stockholders – diluted

1.84

1.51

1.66

0.40

1.07

5.44

8.16

Unrealized losses (gains) on non-real estate investments

0.15

0.35

0.42

1.67

0.91

2.55

(0.30)

Significant realized gains on non-real estate investments

(0.75)

Impairment of non-real estate investments

0.12

(1)

0.13

(1)

Impairment of real estate

0.03

0.24

0.27

0.18

Loss on early extinguishment of debt

0.02

0.02

0.46

Acceleration of stock compensation expense due to executive officer resignation

0.04

0.04

Allocation to unvested restricted stock awards

(0.01)

(0.02)

(0.01)

(0.03)

0.01

Funds from operations per share attributable to Alexandria’s common
     stockholders – diluted, as adjusted

$         2.14

$         2.13

$         2.10

$         2.05

$         1.97

$         8.42

$         7.76

Weighted-average shares of common stock outstanding for calculation of:

Earnings per share – diluted

165,393

161,554

161,412

158,198

154,307

161,659

147,460

Funds from operations, diluted, per share

165,393

161,554

161,412

158,209

154,307

161,659

147,460

Funds from operations, diluted, as adjusted, per share

165,393

161,554

161,412

158,209

154,307

161,659

147,460

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