PASADENA, Calif., Oct. 24, 2022 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE:ARE) announced financial and operating results for the third quarter ended September 30, 2022.
Key highlights | YTD | ||||||
Operating results | 3Q22 | 3Q21 | 3Q22 | 3Q21 | |||
Total revenues: | |||||||
In millions | $ 659.9 | $ 547.8 | $ 1,918.7 | $ 1,537.2 | |||
Growth | 20.5 % | 24.8 % | |||||
Net income attributable to Alexandria's common stockholders – diluted | |||||||
In millions | $ 341.4 | $ 101.3 | $ 461.5 | $ 490.6 | |||
Per share | $ 2.11 | $ 0.67 | $ 2.88 | $ 3.38 | |||
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted | |||||||
In millions | $ 344.7 | $ 296.0 | $ 1,008.1 | $ 841.3 | |||
Per share | $ 2.13 | $ 1.95 | $ 6.28 | $ 5.80 |
A REIT industry-leading, high-quality roster of over 1,000 tenants and operational excellence, 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 | 49 % | |||
Sustained strength in tenant collections: | ||||
Tenant receivables as of September 30, 2022 | $ 7.8 | million | ||
Octobertenant rent and receivables collected as of October 24, 2022 | 99.9 % | |||
Occupancy of operating properties in North America | 94.3 % | |||
Operating margin | 70 % | |||
Adjusted EBITDA margin | 69 % | |||
Weighted-average remaining lease term: | ||||
All tenants | 7.2 | years | ||
Top 20 tenants | 9.7 | years |
Solid leasing volume and rental rate increase
3Q22 | YTD 3Q22 | |||
Total leasing activity – RSF | 1,662,069 | 6,405,265 | ||
Leasing of development and redevelopment space – RSF | 329,006 | 2,685,138 | ||
Lease renewals and re-leasing of space: | ||||
RSF (included in total leasing activity above) | 1,094,821 | 3,045,980 | ||
Rental rate increases | 27.1 % | 34.3 % | ||
Rental rate increases (cash basis) | 22.6 % | 24.2 % |
Continued strong net operating income and internal growth
Strong and flexible balance sheet with significant liquidity
Continued strategic value harvesting with strong valuations
During YTD 3Q22, we completed dispositions and sales of partial interests aggregating $2.2 billion, including $1.0 billion of dispositions during 3Q22:
Continued dividend strategy to share strong and consistent growth in operating cash flows with stockholders while also retaining a significant portion for reinvestment
Completion of unsecured senior line of credit upsizing and term extension
New Agreement | Change | |||||
Commitments available for borrowing | $4.0 billion | Up $1.0 billion | ||||
Maturity date | January 22, 2028 | Extended by 2 years | ||||
Interest rate | SOFR+0.875% | Converted to SOFR from LIBOR |
Alexandria's tenants drive visibility for future growth aggregating over $645 million of incremental net operating incomeHighly leased value-creation pipeline of current and seven near-term projects expected to generate greater than $645 million of incremental net operating income, primarily commencing from 4Q22 through 3Q25.
Key items included in operating results
Key items included in net income attributable to Alexandria's common stockholders: | |||||||||||||||
YTD | |||||||||||||||
3Q22 | 3Q21 | 3Q22 | 3Q21 | 3Q22 | 3Q21 | 3Q22 | 3Q21 | ||||||||
(In millions, except per share amounts) | Amount | Per Share – Diluted | Amount | Per Share – Diluted | |||||||||||
Unrealized (losses) gains on non-real estate investments | $ (56.5) | $ (14.4) | $ (0.35) | $ (0.10) | $ (388.1) | $ 183.3 | $ (2.42) | $ 1.26 | |||||||
Significant realized gains on non-real estate investments | — | 52.4 | — | 0.35 | — | 110.1 | — | 0.76 | |||||||
Gain (loss) on sales of real estate | 323.7 | (0.4) | 2.00 | — | 537.9 | 2.3 | 3.35 | 0.02 | |||||||
Impairment of real estate | (38.8) | (42.6) | (0.24) | (0.28) | (38.8) | (52.7) | (0.24) | (0.37) | |||||||
Loss on early extinguishment of debt | — | — | — | — | (3.3) | (67.3) | (0.02) | (0.46) | |||||||
Acceleration of stock compensation expense due to executive officer resignation | (7.2) | — | (0.04) | — | (7.2) | — | (0.04) | — | |||||||
Total | $ 221.2 | $ (5.0) | $ 1.37 | $ (0.03) | $ 100.5 | $ 175.7 | $ 0.63 | $ 1.21 |
Balance sheet management
Key metrics as of September 30, 2022
3Q22 | Goal | ||||||
Quarter | Trailing | 4Q22 | |||||
Annualized | 12 Months | Annualized | |||||
Net debt and preferred stock to Adjusted EBITDA | 5.4x | 5.6x | Less than or equal to 5.1x | ||||
Fixed-charge coverage ratio | 4.9x | 5.1x | Greater than or equal to 5.1x | ||||
Key capital events
Investments
External growth and investment in real estate
Delivery and commencement of value-creation projects
Value-creation pipeline of new Class A development and redevelopment projects as a percentage of gross assets | 3Q22 | |
Under construction projects 76% leased/negotiating | 10 % | |
Near-term projects expected to commence construction in the next fivequarters 88% leased | 1 % | |
Income-producing/potential cash flows/covered land play(1) | 8 % | |
Land | 3 % | |
(1) | Includes projects that have existing buildings that are generating or can generate operating cash flows. Alsoincludes development rights associated with existing operating campuses. |
Alexandria is at the vanguard of innovation for a high-quality roster of over 1,000 tenants, focused on accommodating their current needs and providing them with a path for future growth
Industry and ESG leadership: catalyzing and leading the way for positive change to benefit human health and society
Industry and ESG leadership (continued)
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 over 1,000 tenants, as of September 30, 2022, Alexandria has a total market capitalization of $33.3 billion and an asset base in North America of 74.5 million square feet ("SF"), which includes 41.1 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 17.9 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.
AcquisitionsSeptember 30, 2022(Dollars in thousands) | |||||||||||||||||||||||
Property | Submarket/Market | Date of Purchase | Number of Properties | Operating Occupancy | Square Footage | Purchase Price | |||||||||||||||||
Acquisitions With Development/Redevelopment Opportunities(1) | |||||||||||||||||||||||
Future Development | Operating With Future Development/ Redevelopment | Operating(2) | Operating | Total(3) | |||||||||||||||||||
Completed in 1H22 | 32 | 91 | % | 5,486,991 | 2,866,642 | 451,760 | — | 8,373,453 | $ | 2,120,863 | |||||||||||||
Completed in 3Q22: | |||||||||||||||||||||||
100 Edwin H. Land Boulevard | Cambridge/Inner Suburbs/ Greater Boston | 8/1/22 | 1 | 100 | % | TBD | 104,500 | — | — | 104,500 | 170,000 | ||||||||||||
10010 and 10140 Campus Point Drive and 4275 Campus Point Court | University Town Center/ San Diego | 9/29/22 | 3 | 100 | 750,000 | 226,144 | — | — | 750,000 | 106,380 | |||||||||||||
Other | Various | Various | 3 | 96 | 302,000 | 108,478 | — | — | 372,278 | 40,349 | |||||||||||||
7 | 99 | % | 1,052,000 | 439,122 | (4) | — | — | 1,226,778 | 316,729 | ||||||||||||||
Completed in October 2022: | |||||||||||||||||||||||
1001 Trinity Street and 1020 Red River Street | Austin/Texas | 10/4/22 | 2 | 100 | % | 123,976 | 198,972 | — | — | 322,948 | 108,000 | ||||||||||||
Other | 360 | ||||||||||||||||||||||
108,360 | |||||||||||||||||||||||
Pending | Various | 104,048 | |||||||||||||||||||||
Total | $ | 2,650,000 | |||||||||||||||||||||
2022 guidance range | $2,550,000 – $2,750,000 |
(1) | We expect to provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction. |
(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) | We expect the acquisitions completed during the three months ended September 30, 2022 to generate initial annual net operating income of approximately $12 million for the twelve months following acquisition. These acquisitions included seven operating properties with a weighted-average acquisition date of August 27, 2022 (weighted by initial annual net operating income). |
Dispositions and Sales of Partial InterestSeptember 30, 2022(Dollars in thousands, except per RSF amounts) | ||||||||||||||||||||||||||
Capitalization Rate (Cash Basis) | Sales Priceper RSF | Gain or Consideration in Excess ofBook Value | ||||||||||||||||||||||||
Property | Submarket/Market | Date of Sale | Interest Sold | RSF | CapitalizationRate | Sales Price | ||||||||||||||||||||
Completed 1H22: | ||||||||||||||||||||||||||
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 | |||||||||||||||||
Other | N/A | N/A | 47,800 | N/A | 11,894 | |||||||||||||||||||||
1,261,910 | 740,854 | |||||||||||||||||||||||||
Completed 3Q22: | ||||||||||||||||||||||||||
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 | |||||||||||||||||
13112 Evening Creek Drive | Other/San Diego | 9/26/22 | 100 % | 109,780 | 5.3 % | 5.3 % | 55,500 | $ 506 | 31,001 | |||||||||||||||||
Other | Various | N/A | N/A | 127,196 | N/A | 34,108 | ||||||||||||||||||||
960,386 | 441,093 | |||||||||||||||||||||||||
Total | $ 2,222,296 | $ 1,181,947 | ||||||||||||||||||||||||
2022 guidance range | $1,450,000 – $2,600,000 |
(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 September 30, 2022, the noncontrolling interest share of our joint venture partner was 34.5%. |
GuidanceSeptember 30, 2022(Dollars in millions, except per share amounts) | ||||
The following updated guidance is based on our current view of existing market conditions and assumptions for the year ending December 31, 2022. There can be no assurance that actual amounts 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. | ||||
2022 Guidance Midpoint | ||||
Summary of Key Changes in Guidance | As of 10/24/22 | As of 7/25/22 | ||
EPS, FFO per share, and FFO per share, as adjusted | See updates below | |||
Occupancy percentage in North America as of December 31, 2022 | 95.0%to 95.6% | 95.2% to 95.8% | ||
Straight-line rent revenue | $139to $149 | $144 to $154 | ||
Projected 2022 Earnings per Share and Funds From Operations per Share Attributable to Alexandria's Common Stockholders – Diluted | |||||||||
As of 10/24/22 | As of 7/25/22 | ||||||||
Earnings per share(1) | $3.56 to $3.58 | $2.14 to $2.20 | |||||||
Depreciation and amortization of real estate assets | 5.50 | 5.50 | |||||||
Gain on sales of real estate | (3.35) | (1.34) | |||||||
Allocation to unvested restricted stock awards | (0.01) | (0.02) | |||||||
Funds from operations per share(2) | $5.70 to $5.72 | $6.28 to $6.34 | |||||||
Unrealized losses on non-real estate investments | 2.42 | 2.07 | |||||||
Impairment of real estate | 0.24 | — | |||||||
Loss on early extinguishment of debt | 0.02 | 0.02 | |||||||
Acceleration of stock compensation expense due to executive officer resignation | 0.04 | 0.04 | |||||||
Allocation to unvested restricted stock awards | (0.03) | (0.02) | |||||||
Other | 0.01 | (0.01) | |||||||
Funds from operations per share, as adjusted(2) | $8.40 to $8.42 | $8.38 to $8.44 | |||||||
Midpoint | $8.41 | $8.41 | |||||||
Key Assumptions | Low | High | |||
Occupancy percentage in North America as of December 31, 2022(4) | 95.0 % | 95.6 % | |||
Lease renewals and re-leasing of space: | |||||
Rental rate increases | 30.0 % | 35.0 % | |||
Rental rate increases (cash basis) | 18.0 % | 23.0 % | |||
Same property performance: | |||||
Net operating income increase | 6.0 % | 8.0 % | |||
Net operating income increase (cash basis) | 6.8 % | 8.8 % | |||
Straight-line rent revenue(5) | $ 139 | $ 149 | |||
General and administrative expenses | $ 172 | $ 180 | |||
Capitalization of interest | $ 269 | $ 279 | |||
Interest expense | $ 90 | $ 100 | |||
Key Credit Metrics | 2022 Guidance | |
Net debt and preferred stock to Adjusted EBITDA – 4Q22 annualized | Less than or equal to 5.1x | |
Fixed-charge coverage ratio – 4Q22 annualized | Greater than or equal to 5.1x | |
Key Sources and Uses of Capital | Range | Midpoint | Certain CompletedItems | |||||||
Sources of capital: | ||||||||||
Net cash provided by operating activities after dividends | $ 275 | $ 325 | $ | 300 | ||||||
Incremental debt | 1,383 | 583 | 983 | See below | ||||||
Dispositions and sales of partial interests (refer to page 5) | 1,450 | 2,600 | 2,025 | $ 2,222 | ||||||
Common equity | 2,342 | 2,342 | 2,342 | $ 2,342 | (3) | |||||
Total sources of capital | $ 5,450 | $ 5,850 | $ | 5,650 | ||||||
Uses of capital: | ||||||||||
Construction (refer to page 47) | $ 2,900 | $ 3,100 | $ | 3,000 | ||||||
Acquisitions (refer to page 4) | 2,550 | 2,750 | 2,650 | $ 2,546 | ||||||
Total uses of capital | $ 5,450 | $ 5,850 | $ | 5,650 | ||||||
Incremental debt (included above): | ||||||||||
Issuance of unsecured senior notes payable | $ 1,800 | $ 1,800 | $ | 1,800 | $ 1,800 | |||||
Repayments of secured notes payable | (195) | (195) | (195) | $ (195) | ||||||
Unsecured senior line of credit, commercial paper, and other | (22) | (722) | (372) | |||||||
Cash expected to be held at December 31, 2022(6) | (200) | (300) | (250) | |||||||
Incremental debt | $ 1,383 | $ 583 | $ | 983 | ||||||
(1) | Excludes unrealized gains or losses after September 30, 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 3 of this Earnings Press Release for additional details. During the nine months ended September 30, 2022, we entered into new forward equity sales agreements aggregating $2.3 billion to sell 12.3 million shares of our common stock, and settled a portion of these forward equity sales agreements by issuing 4.2 million shares and received net proceeds of $847.9 million. We expect to issue 8.0 million shares to settle our remaining outstanding forward equity sales agreements and receive net proceeds of approximately $1.5 billion in 4Q22. |
(4) | Updated guidance for occupancy percentage in North America as of December 31, 2022, reflects one property acquired in 3Q22 with 70,278 operating RSF that was occupied by the seller through September 30, 2022. |
(5) | Reduction in our guidance range for straight-line rent revenue by $5 million is primarily attributable to: i) completed and projected dispositions, and ii) the write-off of deferred rent in 3Q22 in connection with the early termination of one below-market lease aggregating 21,621 RSF, with no downtime in occupancy, at rental rate increases of 23% and 36% (cash basis). |
(6) | Represents cash expected to be held at December 31, 2022, which reduces our 2023 debt capital needs. |
Earnings Call Information and About the CompanySeptember 30, 2022
We will host a conference call on Tuesday, October 25, 2022, 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 third quarter ended September 30, 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, October 25, 2022. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 9685874.
Additionally, a copy of this Earnings Press Release and Supplemental Information for the third quarter ended September 30, 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/2022q3.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, at (626) 578-0777.
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 over 1,000 tenants, as of September 30, 2022, Alexandria has a total market capitalization of $33.3 billion and an asset base in North America of 74.5 million SF, which includes 41.1 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 17.9 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 2022 earnings per share attributable to Alexandria's common stockholders – diluted, 2022 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 OperationsSeptember 30, 2022(Dollars in thousands, except per share amounts) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||||
Revenues: | ||||||||||||||
Income from rentals | $ 656,853 | $ 640,959 | $ 612,554 | $ 574,656 | $ 546,527 | $ 1,910,366 | $ 1,533,593 | |||||||
Other income | 2,999 | 2,805 | 2,511 | 2,267 | 1,232 | 8,315 | 3,634 | |||||||
Total revenues | 659,852 | 643,764 | 615,065 | 576,923 | 547,759 | 1,918,681 | 1,537,227 | |||||||
Expenses: | ||||||||||||||
Rental operations | 201,189 | 196,284 | 181,328 | 175,717 | 165,995 | 578,801 | 447,838 | |||||||
General and administrative | 49,958 | (1) | 43,397 | 40,931 | 41,654 | 37,931 | 134,286 | 109,807 | ||||||
Interest | 22,984 | 24,257 | 29,440 | 34,862 | 35,678 | 76,681 | 107,303 | |||||||
Depreciation and amortization | 254,929 | 242,078 | 240,659 | 239,254 | 210,842 | 737,666 | 581,807 | |||||||
Impairment of real estate | 38,783 | (1) | — | — | — | 42,620 | 38,783 | 52,675 | ||||||
Loss on early extinguishment of debt | — | 3,317 | — | — | — | 3,317 | 67,253 | |||||||
Total expenses | 567,843 | 509,333 | 492,358 | 491,487 | 493,066 | 1,569,534 | 1,366,683 | |||||||
Equity in earnings of unconsolidated real estate joint ventures | 40 | 213 | 220 | 3,018 | 3,091 | 473 | 9,237 | |||||||
Investment (loss) income | (32,305) | (39,481) | (240,319) | (112,884) | 67,084 | (312,105) | 372,361 | |||||||
Gain (loss) on sales of real estate | 323,699 | 214,219 | — | 124,226 | (435) | 537,918 | 2,344 | |||||||
Net income (loss) | 383,443 | 309,382 | (117,392) | 99,796 | 124,433 | 575,433 | 554,486 | |||||||
Net income attributable to noncontrolling interests | (38,747) | (37,168) | (32,177) | (24,901) | (21,286) | (108,092) | (58,134) | |||||||
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s stockholders | 344,696 | 272,214 | (149,569) | 74,895 | 103,147 | 467,341 | 496,352 | |||||||
Net income attributable to unvested restricted stock awards | (3,257) | (2,934) | (2,081) | (2,098) | (1,883) | (5,866) | (5,750) | |||||||
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders | $ 341,439 | $ 269,280 | $ (151,650) | $ 72,797 | $ 101,264 | $ 461,475 | $ 490,602 | |||||||
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders: | ||||||||||||||
Basic | $ 2.11 | $ 1.67 | $ (0.96) | $ 0.47 | $ 0.67 | $ 2.88 | $ 3.39 | |||||||
Diluted | $ 2.11 | $ 1.67 | $ (0.96) | $ 0.47 | $ 0.67 | $ 2.88 | $ 3.38 | |||||||
Weighted-average shares of common stock outstanding: | ||||||||||||||
Basic | 161,554 | 161,412 | 158,198 | 153,464 | 150,854 | 160,400 | 144,716 | |||||||
Diluted | 161,554 | 161,412 | 158,198 | 154,307 | 151,561 | 160,400 | 145,153 | |||||||
Dividends declared per share of common stock | $ 1.18 | $ 1.18 | $ 1.15 | $ 1.15 | $ 1.12 | $ 3.51 | $ 3.33 |
(1) | Refer to "Funds from operations and funds from operations per share" of this Earnings Press Release for additional details. |
Consolidated Balance SheetsSeptember 30, 2022(In thousands) | ||||||||||
9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | ||||||
Assets | ||||||||||
Investments in real estate | $ 28,771,745 | $ 27,952,931 | $ 27,100,009 | $ 24,980,669 | $ 23,071,514 | |||||
Investments in unconsolidated real estate joint ventures | 38,285 | 37,587 | 38,456 | 38,483 | 321,737 | |||||
Cash and cash equivalents | 533,824 | 420,258 | 775,060 | 361,348 | 325,872 | |||||
Restricted cash | 332,344 | 97,404 | 95,106 | 53,879 | 42,182 | |||||
Tenant receivables | 7,759 | 7,069 | 7,570 | 7,379 | 7,749 | |||||
Deferred rent | 918,995 | 905,699 | 881,743 | 839,335 | 816,219 | |||||
Deferred leasing costs | 506,864 | 498,434 | 484,184 | 402,898 | 329,952 | |||||
Investments | 1,624,921 | 1,657,461 | 1,661,101 | 1,876,564 | 2,046,878 | |||||
Other assets | 1,633,877 | 1,667,210 | 1,801,027 | 1,658,818 | 1,596,615 | |||||
Total assets | $ 34,368,614 | $ 33,244,053 | $ 32,844,256 | $ 30,219,373 | $ 28,558,718 | |||||
Liabilities, Noncontrolling Interests, and Equity | ||||||||||
Secured notes payable | $ 40,594 | $ 24,986 | $ 208,910 | $ 205,198 | $ 198,758 | |||||
Unsecured senior notes payable | 10,098,588 | 10,096,462 | 10,094,337 | 8,316,678 | 8,314,851 | |||||
Unsecured senior line of credit and commercial paper | 386,666 | 149,958 | — | 269,990 | 749,978 | |||||
Accounts payable, accrued expenses, and other liabilities | 2,393,764 | 2,317,940 | 2,172,692 | 2,210,410 | 2,149,450 | |||||
Dividends payable | 193,623 | 192,571 | 187,701 | 183,847 | 173,560 | |||||
Total liabilities | 13,113,235 | 12,781,917 | 12,663,640 | 11,186,123 | 11,586,597 | |||||
Commitments and contingencies | ||||||||||
Redeemable noncontrolling interests | 9,612 | 9,612 | 9,612 | 9,612 | 11,681 | |||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity: | ||||||||||
Common stock | 1,626 | 1,615 | 1,614 | 1,580 | 1,532 | |||||
Additional paid-in capital | 17,639,434 | 17,149,571 | 16,934,094 | 16,195,256 | 14,727,735 | |||||
Accumulated other comprehensive loss | (24,725) | (11,851) | (5,727) | (7,294) | (6,029) | |||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity | 17,616,335 | 17,139,335 | 16,929,981 | 16,189,542 | 14,723,238 | |||||
Noncontrolling interests | 3,629,432 | 3,313,189 | 3,241,023 | 2,834,096 | 2,237,202 | |||||
Total equity | 21,245,767 | 20,452,524 | 20,171,004 | 19,023,638 | 16,960,440 | |||||
Total liabilities, noncontrolling interests, and equity | $ 34,368,614 | $ 33,244,053 | $ 32,844,256 | $ 30,219,373 | $ 28,558,718 |
Funds From Operations and Funds From Operations per ShareSeptember 30, 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 inaccordance 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 | Nine Months Ended | |||||||||||||
9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||||
Net income (loss) attributable to Alexandria's common stockholders | $ 341,439 | $ 269,280 | $ (151,650) | $ 72,797 | $ 101,264 | $ 461,475 | $ 490,602 | |||||||
Depreciation and amortization of real estate assets | 251,453 | 238,565 | 237,160 | 234,979 | 205,436 | 727,178 | 569,654 | |||||||
Noncontrolling share of depreciation and amortization from consolidated real estate JVs | (27,790) | (26,418) | (23,681) | (21,265) | (17,871) | (77,889) | (49,615) | |||||||
Our share of depreciation and amortization from unconsolidated real estate JVs | 795 | 934 | 955 | 3,058 | 3,465 | 2,684 | 10,676 | |||||||
(Gain) loss on sales of real estate | (323,699) | (214,219) | — | (124,226) | 435 | (537,918) | (2,344) | |||||||
Impairment of real estate – rental properties | — | — | — | — | 18,602 | — | 25,485 | |||||||
Allocation to unvested restricted stock awards | 1,002 | — | — | — | (1,472) | (81) | (6,574) | |||||||
Funds from operations attributable to Alexandria's common stockholders – diluted(1) | 243,200 | 268,142 | 62,784 | 165,343 | 309,859 | 575,449 | 1,037,884 | |||||||
Unrealized losses (gains) on non-real estate investments | 56,515 | 68,128 | 263,433 | 139,716 | 14,432 | 388,076 | (183,348) | |||||||
Significant realized gains on non-real estate investments | — | — | — | — | (52,427) | — | (110,119) | |||||||
Impairment of real estate | 38,783 | (2) | — | — | — | 24,018 | 38,783 | 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 | (3) | — | — | — | — | 7,185 | — | ||||||
Allocation to unvested restricted stock awards | (1,033) | (778) | (1,604) | (1,432) | 149 | (4,743) | 2,400 | |||||||
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted | $ 344,650 | $ 338,809 | $ 324,613 | $ 303,627 | $ 296,031 | $ 1,008,067 | $ 841,260 |
(1) | Calculated in accordance with standards established by the Nareit Board of Governors. |
(2) | Includes $38.3 million related to the impairment of one future development, which we recognized upon our decision not to proceed with the project. |
(3) | Relates to the resignation of Stephen A. Richardson, our former Co-Chief Executive Officer, in July 2022. |
Funds From Operations and Funds From Operations per Share (continued)September 30, 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 | Nine Months Ended | |||||||||||||
9/30/22 | 6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | 9/30/22 | 9/30/21 | ||||||||
Net income (loss) per share attributable to Alexandria's common stockholders – diluted | $ 2.11 | $ 1.67 | $ (0.96) | $ 0.47 | $ 0.67 | $ 2.88 | $ 3.38 | |||||||
Depreciation and amortization of real estate assets | 1.39 | 1.32 | 1.36 | 1.40 | 1.26 | 4.06 | 3.66 | |||||||
Gain on sales of real estate | (2.00) | (1.33) | — | (0.80) | — | (3.35) | (0.02) | |||||||
Impairment of real estate – rental properties | — | — | — | — | 0.12 | — | 0.18 | |||||||
Allocation to unvested restricted stock awards | 0.01 | — | — | — | (0.01) | — | (0.05) | |||||||
Funds from operations per share attributable to Alexandria's common stockholders – diluted | 1.51 | 1.66 | 0.40 | 1.07 | 2.04 | 3.59 | 7.15 | |||||||
Unrealized losses (gains) on non-real estate investments | 0.35 | 0.42 | 1.67 | 0.91 | 0.10 | 2.42 | (1.26) | |||||||
Significant realized gains on non-real estate investments | — | — | — | — | (0.35) | — | (0.76) | |||||||
Impairment of real estate | 0.24 | — | — | — | 0.16 | 0.24 | 0.19 | |||||||
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) | 0.02 | |||||||
Funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted | $ 2.13 | $ 2.10 | $ 2.05 | $ 1.97 | $ 1.95 | $ 6.28 | $ 5.80 | |||||||
Weighted-average shares of common stock outstanding for calculation of: | ||||||||||||||
Earnings per share – diluted | 161,554 | 161,412 | 158,198 | 154,307 | 151,561 | 160,400 | 145,153 | |||||||
Funds from operations, diluted, per share | 161,554 | 161,412 | 158,209 | 154,307 | 151,561 | 160,400 | 145,153 | |||||||
Funds from operations, diluted, as adjusted, per share | 161,554 | 161,412 | 158,209 | 154,307 | 151,561 | 160,400 | 145,153 |
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SOURCE Alexandria Real Estate Equities, Inc.