PASADENA, Calif., July 25, 2022 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE:ARE) announced financial and operating results for the second quarter ended June 30, 2022.
Key highlights | |||||||
Operating results | 2Q22 | 2Q21 | 1H22 | 1H21 | |||
Total revenues: | |||||||
In millions | $ 643.8 | $ 509.6 | $ 1,258.8 | $ 989.5 | |||
Growth | 26.3 % | 27.2 % | |||||
Net income attributable to Alexandria's common stockholders – diluted | |||||||
In millions | $ 269.3 | $ 380.6 | $ 118.5 | $ 388.5 | |||
Per share | $ 1.67 | $ 2.61 | $ 0.74 | $ 2.74 | |||
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted | |||||||
In millions | $ 338.8 | $ 282.3 | $ 663.4 | $ 545.2 | |||
Per share | $ 2.10 | $ 1.93 | $ 4.15 | $ 3.84 |
Ringing of the New York Stock Exchange Opening Bell to celebrate our 25th anniversary
In celebration of our 25th anniversary as a publicly traded company, we recently rang The Opening Bell® at the New York Stock Exchange to mark this momentous milestone. From our initial public offering on May 27, 1997 through May 27, 2022, we have generated a total stockholder return ("TSR") of 1,902%, assuming reinvestment of dividends, substantially outperforming the MSCI U.S. REIT Index TSR of 803% and the FTSE Nareit Equity Office Index TSR of 457%.
A REIT industry-leading high-quality roster of over 1,000 tenants with high-quality revenues and cash flows, strong margins, and operational excellence
Percentage of total annual rental revenue in effect from investment-grade or publicly traded large cap tenants | 50 % | |||
Sustained strength in tenant collections: | ||||
Tenant receivables as of June 30, 2022 | $ 7.1 | million | ||
July tenant rent and receivables collected as of July 25, 2022 | 99.9 % | |||
Occupancy of operating properties in North America | 94.6 % | |||
Occupancy of operating properties in North America (excluding vacancy at recently acquired properties) | 98.4 % | (1) | ||
Operating margin | 70 % | |||
Adjusted EBITDA margin | 70 % | |||
Weighted-average remaining lease term: | ||||
All tenants | 7.1 | years | ||
Top 20 tenants | 10.2 | years | ||
(1) | Excludes 1.6 million RSF, or 3.8%, of vacancy at recently acquired properties representing lease-up opportunities that are expected to provide incremental annual rental revenue. Refer to "Occupancy" in our Supplemental Information. |
Record rental rate increases and continued historic high leasing volume
2Q22 | 1H22 | |||
Total leasing activity – RSF | 2,279,758 | 4,743,196 | ||
Leasing of development and redevelopment space – RSF | 916,436 | 2,356,132 | ||
Lease renewals and re-leasing of space: | ||||
RSF (included in total leasing activity above) | 1,087,082 | 1,951,159 | ||
Rental rate increases | 45.4 % | 39.0 % | ||
Rental rate increases (cash basis) | 33.9 % | 25.2 % |
Continued strong net operating income and internal growth
Strong valuations for partial interest sale and dispositions
During 2Q22, we completed a partial interest sale and dispositions aggregating $548.7 million, including:
Strong and flexible balance sheet with significant liquidity as of June 30, 2022
Continued high demand for Alexandria's brand drives visibility for future growth aggregating $665 million of incremental annual rental revenue
Our highly leased value-creation pipeline of current and key near-term projects that are under construction or that will commence construction in the next six quarters is expected to generate greater than $665 million of incremental annual rental revenue, primarily commencing from 3Q22 through 2Q25.
Continued dividend strategy to share growth in cash flows with stockholders
Common stock dividend declared for 2Q22 of $1.18 per common share, aggregating $4.60 per common share for the twelve months ended June 30, 2022, up 24 cents, or 6%, over the twelve months ended June 30, 2021. Our FFO payout ratio of 56% for the three months ended June 30, 2022 allows us to continue to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.
Seventh overall Nareit Investor CARE Award winner
We received the 2022 Nareit Investor CARE (Communications and Reporting Excellence) Silver Award in the Large Cap Equity REIT category for superior shareholder communications and reporting. This represents our fifth consecutive and seventh overall Nareit Investor CARE Award since 2015, demonstrating consistency in delivering best-in-class transparency, quality, and efficiency in communications and reporting to the investment community.
Key items included in operating results
Key items included in net income attributable to Alexandria's common stockholders: | |||||||||||||||
(In millions, except per share amounts) | Amount | Per Share – Diluted | Amount | Per Share – Diluted | |||||||||||
2Q22 | 2Q21 | 2Q22 | 2Q21 | 1H22 | 1H21 | 1H22 | 1H21 | ||||||||
Unrealized (losses) gains on non-real estate investments | $ (68.1) | $ 244.0 | $ (0.42) | $ 1.67 | $ (331.6) | $ 197.8 | $ (2.07) | $ 1.39 | |||||||
Significant realized gains on non-real estate investments | — | 34.8 | — | 0.24 | — | 57.7 | — | 0.41 | |||||||
Gain on sales of real estate | 214.2 | — | 1.33 | — | 214.2 | 2.8 | 1.34 | 0.02 | |||||||
Impairment of real estate | — | (4.9) | — | (0.03) | — | (10.1) | — | (0.07) | |||||||
Loss on early extinguishment of debt | (3.3) | — | (0.02) | — | (3.3) | (67.3) | (0.02) | (0.47) | |||||||
Total | $ 142.8 | $ 273.9 | $ 0.89 | $ 1.88 | $ (120.7) | $ 180.9 | $ (0.75) | $ 1.28 |
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 asa percentage of gross assets | 2Q22 | |
Under construction projects 75% leased/negotiating | 10 % | |
Pre-leased/negotiating near-term projects expected to commence construction in the next sixquarters 89% leased/negotiating | 1 % | |
Income-producing/potential cash flows/covered land play(1) | 8 % | |
Land | 2 % | |
(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. |
Alexandria is at the vanguard of innovation for a high-quality roster of over 1,000 tenants, with a focus on accommodating their current needs and providing them with a path for future growth
Balance sheet management
Key metrics as of June 30, 2022
2Q22 | Goal | ||||||
Quarter | Trailing | 4Q22 | |||||
Annualized | 12 Months | Annualized | |||||
Net debt and preferred stock to Adjusted EBITDA | 5.5x | 5.9x | Less than or equal to 5.1x | ||||
Fixed-charge coverage ratio | 5.1x | 5.1x | Greater than or equal to 5.1x | ||||
Key capital events
Investments
Subsequent event
Industry and ESG leadership: catalyzing and leading the way for positive change to benefit human health and society
About Alexandria Real Estate Equities, Inc.
Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office REIT, is the first, longest-tenured, and pioneering owner, operator, and developer uniquely focused on collaborative life science, agtech, and technology campuses in AAA innovation cluster locations, with a total market capitalization of $33.7 billion and an asset base in North America of 74.1 million SF as of June 30, 2022. The asset base in North America includes 41.1 million RSF of operating properties and 5.9 million RSF of Class A properties undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.2 million SF of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, 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, agtech, 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.
AcquisitionsJune 30, 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) | Operating | Total(3) | Purchase Price | |||||||||||||
Completed in 1Q22 | 29 | 91 % | 4,617,991 | 2,668,494 | 451,760 | — | 7,306,305 | $ | 1,840,717 | ||||||||||||||
Completed in 2Q22: | |||||||||||||||||||||||
One Hampshire Street(4) | Cambridge/Inner Suburbs/ Greater Boston | 6/23/22 | 1 | 100 % | — | 88,591 | — | — | 88,591 | 140,000 | |||||||||||||
Other | Various | Various | 2 | 76 | 869,000 | 109,557 | — | — | 978,557 | 140,146 | |||||||||||||
3 | 87 % | 869,000 | 198,148 | (5) | — | (5) | — | (5) | 1,067,148 | 280,146 | |||||||||||||
Completed in July 2022 | 9,561 | ||||||||||||||||||||||
2,130,424 | |||||||||||||||||||||||
Pending(6) | Various | 3Q22 | 275,000 | ||||||||||||||||||||
Other | 244,576 | ||||||||||||||||||||||
2022 acquisitions (midpoint) | $ | 2,650,000 | |||||||||||||||||||||
2022 guidance range(7) | $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 a new Class A property. Square footage presented includes RSF of buildings currently in operation with future development or redevelopment opportunities. We intend to demolish and develop or to redevelop the existing properties upon expiration of the existing in-place leases. Refer to "Definitions and reconciliations" in our Supplemental Information for additional details on value-creation square feet currently included in rental properties. |
(4) | Represents the acquisition of a condominium in two floors of a seven-story building. |
(5) | We expect the acquisitions completed during the three months ended June 30, 2022 to generate initial annual net operating income of approximately $9 million for the twelve months following acquisition. These acquisitions included three operating properties with a weighted-average acquisition date of June 16, 2022 (weighted by initial annual net operating income). |
(6) | Represents acquisitions of land parcels to expand our mega campuses in our Cambridge and University Town Center submarkets. |
(7) | We reduced the upper end of our range of 2022 guidance for acquisitions by $750 million. Refer to "Guidance" on page 6 of this Earnings Press Release for additional information. |
Dispositions and Sales of Partial InterestJune 30, 2022(Dollars in thousands) | ||||||||||||||||||||||||||
Capitalization Rate (Cash Basis) | Sales Price per RSF | Gain or Consideration in Excess of Book Value | ||||||||||||||||||||||||
Property | Submarket/Market | Date of Sale | InterestSold | RSF | Capitalization Rate | 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 | 11,895 | |||||||||||||||||||||
1,261,910 | $ 740,855 | |||||||||||||||||||||||||
Completed in July 2022: | ||||||||||||||||||||||||||
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) | ||||||||||||||
1,286,949 | ||||||||||||||||||||||||||
Pending | San Diego | 3Q22 | TBD | TBD | 140,000 – 160,000 | TBD | ||||||||||||||||||||
Other | TBD | TBD | TBD | 588,051 | TBD | |||||||||||||||||||||
2022 dispositions (midpoint) | $ 2,025,000 | |||||||||||||||||||||||||
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 land parcel. Upon completion of the transaction, the noncontrolling interest share for our joint venture partner is 20% and is anticipated to increase to 75% as our partner contributes capital for construction over time. |
GuidanceJune 30, 2022(Dollars in millions)
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 8 of this Earnings Press Release for additional details.
Key changes to our guidance include the reduction of an aggregate $635 million to our uses of capital, comprising a $350 million reduction in acquisitions and a $285 million reduction in construction spending. This reduction was offset by construction spending from January through June 2022, which increased by $335 million to slightly above the high end of our previous guidance range, as a result of construction spending associated with the leasing of our development and redevelopment projects under construction and our near-term pipeline projects. In addition, the midpoint of our guidance for funds from operations per share, as adjusted increased by three cents driven by strong same property performance and general and administrative savings in 2H22 resulting from the retirement of Stephen A. Richardson, our Co-Chief Executive Officer.
2022 Guidance | |||||||||||||||
Reduction in uses of capital | Reduction | Summary of key changes in guidance | As of 7/25/22 | As of 4/25/22 | |||||||||||
Construction | $285 | EPS, FFO per share, and FFO per share, as adjusted | Refer to page 7 | ||||||||||||
Acquisitions | $350 | Same property net operating income increase | 6.0% to 8.0% | 5.9% to 7.9% | |||||||||||
Same property net operating income increase (cash basis) | 6.8% to 8.8% | 6.5% to 8.5% | |||||||||||||
General and administrative expenses | $172 to $180 | $168 to $176 |
As of 7/25/22 | |||||||||||||||
Key Sources and Uses of Capital | Range | Midpoint | Certain Completed Items | As of 4/25/22 Midpoint | Key Changes to Midpoint | ||||||||||
Sources of capital: | |||||||||||||||
Net cash provided by operating activities after dividends | $ 275 | $ 325 | $ | 300 | $ 300 | ||||||||||
Net incremental debt | 1,361 | 561 | 961 | See below | 950 | ||||||||||
Dispositions and sales of partial interest (refer to page 5) | 1,450 | 2,600 | 2,025 | $ 1,287 | 1,950 | $ 75 | |||||||||
Common equity | 2,364 | 2,364 | 2,364 | $ 2,364 | (1) | 2,750 | $ (386) | ||||||||
Total sources of capital | $ 5,450 | $ 5,850 | $ | 5,650 | $ 5,950 | ||||||||||
Uses of capital: | |||||||||||||||
Construction | $ 2,900 | $ 3,100 | $ | 3,000 | $ 2,950 | $ 50 | |||||||||
Acquisitions (refer to page 4) | 2,550 | 2,750 | 2,650 | $ 2,130 | 3,000 | $ (350) | |||||||||
Total uses of capital | $ 5,450 | $ 5,850 | $ | 5,650 | $ 5,950 | ||||||||||
Incremental debt (included above): | |||||||||||||||
Issuance of unsecured senior notes payable | $ 1,800 | $ 1,800 | $ | 1,800 | $ 1,800 | $ 1,800 | |||||||||
Repayments of secured notes payable | (195) | (195) | (195) | $ (195) | (195) | ||||||||||
Unsecured senior line of credit, commercial paper, and other | (44) | (744) | (394) | (655) | |||||||||||
Incremental cash expected to be held at December 31, 2022(2) | (200) | (300) | (250) | — | $ (250) | ||||||||||
Net incremental debt | $ 1,361 | $ 561 | $ | 961 | $ 950 | ||||||||||
(1) | Refer to "Key capital events" on page 3 of this Earnings Press Release for additional details. During the six months ended June 30, 2022, we entered into new forward equity sales agreements aggregating $2.4 billion to sell 12.3 million shares of our common stock. During 1Q22, we settled a portion of these forward equity sales agreements by issuing 3.2 million shares and received net proceeds of $648.2 million. We expect to issue 9.0 million shares to settle our remaining outstanding forward equity sales agreements and receive net proceeds of approximately $1.7 billion in 2022. |
(2) | We expect this forecasted cash at December 31, 2022 to result in a reduction of our 2023 debt capital needs. |
Projected 2022 Earnings per Share and Funds From Operations per Share Attributable to Alexandria's Common Stockholders – Diluted | |||||||||
As of 7/25/22 | As of 4/25/22 | ||||||||
Earnings per share(1) | $2.14 to $2.20 | $1.08 to $1.18 | |||||||
Depreciation and amortization of real estate assets | 5.50 | 5.65 | |||||||
Gain on sales of real estate | (1.34) | — | |||||||
Allocation to unvested restricted stock awards | (0.02) | (0.02) | |||||||
Funds from operations per share(2) | $6.28 to $6.34 | $6.71 to $6.81 | |||||||
Unrealized losses on non-real estate investments | 2.07 | 1.67 | |||||||
Loss on early extinguishment of debt(3) | 0.02 | 0.02 | |||||||
Acceleration of stock compensation due to executive officer resignation(4) | 0.04 | — | |||||||
Allocation to unvested restricted stock awards | (0.02) | (0.02) | |||||||
Other | (0.01) | (0.05) | |||||||
Funds from operations per share, as adjusted(1) | $8.38 to $8.44 | $8.33 to $8.43 | |||||||
Midpoint | $8.41 | $8.38 | |||||||
As of 7/25/22 | As of 4/25/22 | ||||||||
Key Assumptions | Low | High | Low | High | |||||
Occupancy percentage in North America as of December 31, 2022 | 95.2 % | 95.8 % | 95.2 % | 95.8 % | |||||
Lease renewals and re-leasing of space: | |||||||||
Rental rate increases | 30.0 % | 35.0 % | 30.0 % | 35.0 % | |||||
Rental rate increases (cash basis) | 18.0 % | 23.0 % | 18.0 % | 23.0 % | |||||
Same property performance: | |||||||||
Net operating income increase | 6.0 % | 8.0 % | 5.9 % | 7.9 % | |||||
Net operating income increase (cash basis) | 6.8 % | 8.8 % | 6.5 % | 8.5 % | |||||
Straight-line rent revenue(5) | $ 144 | $ 154 | $ 154 | $ 164 | |||||
General and administrative expenses(4) | $ 172 | $ 180 | $ 168 | $ 176 | |||||
Capitalization of interest | $ 269 | $ 279 | $ 269 | $ 279 | |||||
Interest expense | $ 90 | $ 100 | $ 90 | $ 100 | |||||
Key Credit Metrics | As of 7/25/22 | As of 4/25/22 | ||
Net debt and preferred stock to Adjusted EBITDA – 4Q22 annualized | Less than or equal to 5.1x | Less than or equal to 5.1x | ||
Fixed-charge coverage ratio – 4Q22 annualized | Greater than or equal to 5.1x | Greater than or equal to 5.1x |
(1) | Excludes unrealized gains or losses after June 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. |
(4) | Relates to the resignation of an executive officer in July 2022. General & administrative expenses increased by $4 million, including $7 million related to the acceleration of stock compensation due to the resignation of Stephen A. Richardson, our Co-Chief Executive Officer, partially offset by compensation savings in 2H22. Refer to "Subsequent event" on page 3 of this Earnings Press release for additional information. |
(5) | The $10 million reduction in our guidance range for straight-line rent revenue includes reductions attributable to the following items: |
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Earnings Call Information and About the CompanyJune 30, 2022
We will host a conference call on Tuesday, July 26, 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 second quarter ended June 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, July 26, 2022. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 7939670.
Additionally, a copy of this Earnings Press Release and Supplemental Information for the second quarter ended June 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/2022q2.pdf.
For any questions, please contact Joel S. Marcus, executive chairman and founder; Peter M. Moglia, co-chief executive officer and co-chief investment officer; Stephen A. Richardson, co-chief executive 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 – communications, at (626) 578-0777.
About the Company
Alexandria Real Estate Equities, Inc. (NYSE:ARE), an S&P 500® urban office real estate investment trust ("REIT"), is the first, longest-tenured, and pioneering owner, operator, and developer uniquely focused on collaborative life science, agtech, and technology campuses in AAA innovation cluster locations, with a total market capitalization of $33.7 billion and an asset base in North America of 74.1 million square feet ("SF") as of June 30, 2022. The asset base in North America includes 41.1 million RSF of operating properties and 5.9 million RSF of Class A properties undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.2 million SF of future development projects. Founded in 1994, Alexandria pioneered this niche and has since established a significant market presence in key locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. Alexandria has a longstanding and proven track record of developing Class A properties clustered in urban life science, 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, agtech, 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 OperationsJune 30, 2022(Dollars in thousands, except per share amounts) | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 6/30/22 | 6/30/21 | ||||||||
Revenues: | ||||||||||||||
Income from rentals | $ 640,959 | $ 612,554 | $ 574,656 | $ 546,527 | $ 508,371 | $ 1,253,513 | $ 987,066 | |||||||
Other income | 2,805 | 2,511 | 2,267 | 1,232 | 1,248 | 5,316 | 2,402 | |||||||
Total revenues | 643,764 | 615,065 | 576,923 | 547,759 | 509,619 | 1,258,829 | 989,468 | |||||||
Expenses: | ||||||||||||||
Rental operations | 196,284 | 181,328 | 175,717 | 165,995 | 143,955 | 377,612 | 281,843 | |||||||
General and administrative | 43,397 | 40,931 | 41,654 | 37,931 | 37,880 | 84,328 | 71,876 | |||||||
Interest | 24,257 | 29,440 | 34,862 | 35,678 | 35,158 | 53,697 | 71,625 | |||||||
Depreciation and amortization | 242,078 | 240,659 | 239,254 | 210,842 | 190,052 | 482,737 | 370,965 | |||||||
Impairment of real estate | — | — | — | 42,620 | 4,926 | — | 10,055 | |||||||
Loss on early extinguishment of debt | 3,317 | — | — | — | — | 3,317 | 67,253 | |||||||
Total expenses | 509,333 | 492,358 | 491,487 | 493,066 | 411,971 | 1,001,691 | 873,617 | |||||||
Equity in earnings of unconsolidated real estate joint ventures | 213 | 220 | 3,018 | 3,091 | 2,609 | 433 | 6,146 | |||||||
Investment (loss) income | (39,481) | (240,319) | (112,884) | 67,084 | 304,263 | (279,800) | 305,277 | |||||||
Gain (loss) on sales of real estate | 214,219 | — | 124,226 | (435) | — | 214,219 | 2,779 | |||||||
Net income (loss) | 309,382 | (117,392) | 99,796 | 124,433 | 404,520 | 191,990 | 430,053 | |||||||
Net income attributable to noncontrolling interests | (37,168) | (32,177) | (24,901) | (21,286) | (19,436) | (69,345) | (36,848) | |||||||
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s stockholders | 272,214 | (149,569) | 74,895 | 103,147 | 385,084 | 122,645 | 393,205 | |||||||
Net income attributable to unvested restricted stock awards | (2,934) | (2,081) | (2,098) | (1,883) | (4,521) | (4,134) | (4,663) | |||||||
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders | $ 269,280 | $ (151,650) | $ 72,797 | $ 101,264 | $ 380,563 | $ 118,511 | $ 388,542 | |||||||
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders: | ||||||||||||||
Basic | $ 1.67 | $ (0.96) | $ 0.47 | $ 0.67 | $ 2.61 | $ 0.74 | $ 2.74 | |||||||
Diluted | $ 1.67 | $ (0.96) | $ 0.47 | $ 0.67 | $ 2.61 | $ 0.74 | $ 2.74 | |||||||
Weighted-average shares of common stock outstanding: | ||||||||||||||
Basic | 161,412 | 158,198 | 153,464 | 150,854 | 145,825 | 159,814 | 141,596 | |||||||
Diluted | 161,412 | 158,198 | 154,307 | 151,561 | 146,058 | 159,814 | 141,896 | |||||||
Dividends declared per share of common stock | $ 1.18 | $ 1.15 | $ 1.15 | $ 1.12 | $ 1.12 | $ 2.33 | $ 2.21 |
Consolidated Balance SheetsJune 30, 2022(In thousands) | ||||||||||
6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | ||||||
Assets | ||||||||||
Investments in real estate | $ 27,952,931 | $ 27,100,009 | $ 24,980,669 | $ 23,071,514 | $ 21,692,385 | |||||
Investments in unconsolidated real estate joint ventures | 37,587 | 38,456 | 38,483 | 321,737 | 323,622 | |||||
Cash and cash equivalents | 420,258 | 775,060 | 361,348 | 325,872 | 323,876 | |||||
Restricted cash | 97,404 | 95,106 | 53,879 | 42,182 | 33,697 | |||||
Tenant receivables | 7,069 | 7,570 | 7,379 | 7,749 | 6,710 | |||||
Deferred rent | 905,699 | 881,743 | 839,335 | 816,219 | 781,600 | |||||
Deferred leasing costs | 498,434 | 484,184 | 402,898 | 329,952 | 321,005 | |||||
Investments | 1,657,461 | 1,661,101 | 1,876,564 | 2,046,878 | 1,999,283 | |||||
Other assets | 1,667,210 | 1,801,027 | 1,658,818 | 1,596,615 | 1,536,672 | |||||
Total assets | $ 33,244,053 | $ 32,844,256 | $ 30,219,373 | $ 28,558,718 | $ 27,018,850 | |||||
Liabilities, Noncontrolling Interests, and Equity | ||||||||||
Secured notes payable | $ 24,986 | $ 208,910 | $ 205,198 | $ 198,758 | $ 227,984 | |||||
Unsecured senior notes payable | 10,096,462 | 10,094,337 | 8,316,678 | 8,314,851 | 8,313,025 | |||||
Unsecured senior line of credit and commercial paper | 149,958 | — | 269,990 | 749,978 | 299,990 | |||||
Accounts payable, accrued expenses, and other liabilities | 2,317,940 | 2,172,692 | 2,210,410 | 2,149,450 | 1,825,387 | |||||
Dividends payable | 192,571 | 187,701 | 183,847 | 173,560 | 170,647 | |||||
Total liabilities | 12,781,917 | 12,663,640 | 11,186,123 | 11,586,597 | 10,837,033 | |||||
Commitments and contingencies | ||||||||||
Redeemable noncontrolling interests | 9,612 | 9,612 | 9,612 | 11,681 | 11,567 | |||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity: | ||||||||||
Common stock | 1,615 | 1,614 | 1,580 | 1,532 | 1,507 | |||||
Additional paid-in capital | 17,149,571 | 16,934,094 | 16,195,256 | 14,727,735 | 14,194,023 | |||||
Accumulated other comprehensive loss | (11,851) | (5,727) | (7,294) | (6,029) | (4,508) | |||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity | 17,139,335 | 16,929,981 | 16,189,542 | 14,723,238 | 14,191,022 | |||||
Noncontrolling interests | 3,313,189 | 3,241,023 | 2,834,096 | 2,237,202 | 1,979,228 | |||||
Total equity | 20,452,524 | 20,171,004 | 19,023,638 | 16,960,440 | 16,170,250 | |||||
Total liabilities, noncontrolling interests, and equity | $ 33,244,053 | $ 32,844,256 | $ 30,219,373 | $ 28,558,718 | $ 27,018,850 |
Funds From Operations and Funds From Operations per ShareJune 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 in accordance with U.S. generally accepted accounting principles ("GAAP"), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria's common stockholders – diluted, and funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below: | ||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||
6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 6/30/22 | 6/30/21 | ||||||||
Net income (loss) attributable to Alexandria's common stockholders | $ 269,280 | $ (151,650) | $ 72,797 | $ 101,264 | $ 380,563 | $ 118,511 | $ 388,542 | |||||||
Depreciation and amortization of real estate assets | 238,565 | 237,160 | 234,979 | 205,436 | 186,498 | 475,725 | 364,218 | |||||||
Noncontrolling share of depreciation and amortization from consolidated real estate JVs | (26,418) | (23,681) | (21,265) | (17,871) | (16,301) | (50,099) | (31,744) | |||||||
Our share of depreciation and amortization from unconsolidated real estate JVs | 934 | 955 | 3,058 | 3,465 | 4,135 | 1,889 | 7,211 | |||||||
(Gain) loss on sales of real estate | (214,219) | — | (124,226) | 435 | — | (214,219) | (2,779) | |||||||
Impairment of real estate – rental properties | — | — | — | 18,602 | 1,754 | — | 6,883 | |||||||
Allocation to unvested restricted stock awards | — | — | — | (1,472) | (2,191) | — | (4,427) | |||||||
Funds from operations attributable to Alexandria's common stockholders – diluted(1) | 268,142 | 62,784 | 165,343 | 309,859 | 554,458 | 331,807 | 727,904 | |||||||
Unrealized losses (gains) on non-real estate investments | 68,128 | 263,433 | 139,716 | 14,432 | (244,031) | 331,561 | (197,780) | |||||||
Significant realized gains on non-real estate investments | — | — | — | (52,427) | (34,773) | — | (57,692) | |||||||
Impairment of real estate | — | — | — | 24,018 | 3,172 | — | 3,172 | |||||||
Loss on early extinguishment of debt | 3,317 | — | — | — | — | 3,317 | 67,253 | |||||||
Allocation to unvested restricted stock awards | (778) | (1,604) | (1,432) | 149 | 3,428 | (3,264) | 2,382 | |||||||
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted | $ 338,809 | $ 324,613 | $ 303,627 | $ 296,031 | $ 282,254 | $ 663,421 | $ 545,239 |
(1) | Calculated in accordance with standards established by the Nareit Board of Governors. |
Funds From Operations and Funds From Operations per Share (continued)June 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 | Six Months Ended | |||||||||||||
6/30/22 | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 6/30/22 | 6/30/21 | ||||||||
Net income (loss) per share attributable to Alexandria's common stockholders – diluted | $ 1.67 | $ (0.96) | $ 0.47 | $ 0.67 | $ 2.61 | $ 0.74 | $ 2.74 | |||||||
Depreciation and amortization of real estate assets | 1.32 | 1.36 | 1.40 | 1.26 | 1.19 | 2.68 | 2.39 | |||||||
Gain on sales of real estate | (1.33) | — | (0.80) | — | — | (1.34) | (0.02) | |||||||
Impairment of real estate – rental properties | — | — | — | 0.12 | 0.01 | — | 0.05 | |||||||
Allocation to unvested restricted stock awards | — | — | — | (0.01) | (0.01) | — | (0.03) | |||||||
Funds from operations per share attributable to Alexandria's common stockholders – diluted | 1.66 | 0.40 | 1.07 | 2.04 | 3.80 | 2.08 | 5.13 | |||||||
Unrealized losses (gains) on non-real estate investments | 0.42 | 1.67 | 0.91 | 0.10 | (1.67) | 2.07 | (1.39) | |||||||
Significant realized gains on non-real estate investments | — | — | — | (0.35) | (0.24) | — | (0.41) | |||||||
Impairment of real estate | — | — | — | 0.16 | 0.02 | — | 0.02 | |||||||
Loss on early extinguishment of debt | 0.02 | — | — | — | — | 0.02 | 0.47 | |||||||
Allocation to unvested restricted stock awards | — | (0.02) | (0.01) | — | 0.02 | (0.02) | 0.02 | |||||||
Funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted | $ 2.10 | $ 2.05 | $ 1.97 | $ 1.95 | $ 1.93 | $ 4.15 | $ 3.84 | |||||||
Weighted-average shares of common stock outstanding for calculation of: | ||||||||||||||
Earnings per share – diluted | 161,412 | 158,198 | 154,307 | 151,561 | 146,058 | 159,814 | 141,896 | |||||||
Funds from operations, diluted, per share | 161,412 | 158,209 | 154,307 | 151,561 | 146,058 | 159,814 | 141,896 | |||||||
Funds from operations, diluted, as adjusted, per share | 161,412 | 158,209 | 154,307 | 151,561 | 146,058 | 159,814 | 141,896 |
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SOURCE Alexandria Real Estate Equities, Inc.