Alexandria Real Estate Equities, Inc. Reports: 2Q23 and 1H23 Net Income per Share – Diluted of $0.51 and $0.95, respectively; and 2Q23 and 1H23 FFO per Share

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PASADENA, Calif., July 24, 2023 /PRNewswire/ — Alexandria Real Estate Equities, Inc. (NYSE: ARE) announced financial and operating results for the second quarter ended June 30, 2023.

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Key highlights

Operating results

2Q23

2Q22

1H23

1H22

Total revenues:

 In millions

$  713.9

$     643.8

$  1,414.7

$   1,258.8

 Growth

10.9 %

12.4 %

Net income attributable to Alexandria’s common stockholders – diluted

 In millions

$    87.3

$     269.3

$  162.5

$     118.5

 Per share

$    0.51

$       1.67

$    0.95

$       0.74

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

 In millions

$  382.4

$     338.8

$  756.1

$     663.4

 Per share

$    2.24

$       2.10

$    4.43

$       4.15

An operationally excellent, industry-leading REIT with a high-quality/diverse client base of approximately 825 tenants to support growing revenues, stable 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 June 30, 2023

$     7.0

million

 July 2023 tenant rent and receivables collected as of July 24, 2023

99.7 %

 2Q23 tenant rent and receivables collected as of July 24, 2023

99.9 %

Occupancy of operating properties in North America as of June 30, 2023

93.6 %

Adjusted EBITDA margin

70 %

Weighted-average remaining lease term as of June 30, 2023:

 Top 20 tenants

9.4

years

 All tenants

7.2

years

Continued solid leasing volume and rental rate increases with weighted-average lease terms of 13.0 years and 9.5 years for 2Q23 and 1H23, respectively

  • Solid leasing activity continued in 2Q23 with leasing volume aggregating 1.3 million RSF, 77% of which was generated from our client base of approximately 825 tenants.
  • 1H23 annualized leasing volume of 5.1 million RSF in line with pre-COVID leasing volume.

2Q23

1H23

Total leasing activity – RSF

1,325,326

2,548,753

Lease renewals and re-leasing of space:

 RSF (included in total leasing activity above)

1,052,872

2,172,910

 Rental rate increase

16.6 %

35.1 %

 Rental rate increase (cash basis)

8.3 %

17.9 %

Continued strong net operating income and internal growth

  • Net operating income (cash basis) of $1.8 billion for 2Q23 annualized, up $178.3 million, or 11.1%, compared to 2Q22 annualized.
  • Same property net operating income growth of 3.0% and 4.9% (cash basis) for 2Q23 over 2Q22 and 3.4% and 6.5% (cash basis) for 1H23 over 1H22.
  • 96% of our leases contain contractual annual rent escalations approximating 3%.

Alexandria’s banking syndicate continues to support our world-class brand, differentiated business model, and laboratory space market dominance

  • In June 2023, we increased the aggregate commitments available for borrowing under our unsecured senior line of credit to $5.0 billion from $4.0 billion. The increase was 1.7x oversubscribed, and we added one new banking relationship.

Continued strong and flexible balance sheet with 13.4 years of remaining term of debt and no debt maturities prior to 2025

  • Investment-grade credit ratings ranked in the top 10% among all publicly traded U.S. REITs.
  • $6.3 billion of liquidity.
  • No debt maturities prior to 2025.
  • 13.4 years weighted-average remaining term of debt.
  • 99.2% of our debt has a fixed rate.
  • Net debt and preferred stock to Adjusted EBITDA of 5.2x, matching our second-lowest level in Company history, and fixed-charge coverage ratio of 4.7x for 2Q23 annualized.
  • Total debt and preferred stock to gross assets of 27%.
  • $1.3 billion of expected capital contributions from existing real estate joint venture partners from 3Q23 through 2026 to fund construction.

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

  • Common stock dividend declared for 2Q23 of $1.24 per common share, aggregating $4.84 per common share for the twelve months ended June 30, 2023, up 24 cents, or 5%, over the twelve months ended June 30, 2022.
  • Dividend yield of 4.4% as of June 30, 2023.
  • Dividend payout ratio of 55% for the three months ended June 30, 2023.
  • Average annual dividend per-share growth of 6% from 2019 to 2Q23 annualized.

Focused execution on harvesting value from our asset recycling program

Our $1.85 billion capital plan for 2023 is focused on the enhancement of our asset base through the sale of non-core properties and/or properties not integral to our mega campus strategy and comprises:

(in millions)

Completed
During
2Q23

Expected

Completion

During 2H23

Dispositions of 100% interests in properties with strong capitalization rates

$           603

$              —

Strategic partial interest sales

98

Executed and pending transactions subject to signed letters of intent or
    purchase and sale agreements

175

Additional targeted non-core dispositions in process

874

Proceeds of forward equity sales agreements entered into during 2022

100

Completed and pending transactions

$           701

$         1,149

Total 2023 capital plan

$1,850

External growth and investments in real estate

Alexandria’s highly leased value-creation pipeline delivers annual incremental net operating income of $58 million commencing during 2Q23 and drives future annual incremental net operating income aggregating $605 million

 

(dollars in millions)

Incremental

Annual Net
Operating
Income

RSF

Project  

Leased  

Percentage   

Placed into service(1):

1Q23

$                 23

453,511

100

%

2Q23

58

387,076

100

  1H23

$                 81

840,587

100

%

Expected to be placed into service and
    stabilized(2):

2H23

$               150

1,175,382

99

%

2024

127

1,842,713

90

  2H23 through 4Q24

277

3,018,095

94

  1Q25 through 2Q26

328

3,695,763

43

$               605

6,713,858

70

%

(3)

(1)

Annual net operating income (cash basis) is expected to increase by $38 million upon the burn-off of initial free
rent from recently delivered projects, which has a weighted-average burn-off of three months.

(2)

Refer to “New Class A/A+ Development and Redevelopment Properties: Current Projects” of our Supplemental
Information for additional details.

(3)

77% of the leased RSF of our value-creation projects was generated from our client base.

Strong balance sheet management

Key metrics as of June 30, 2023

  • $30.6 billion in total market capitalization.
  • $19.4 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.

2Q23

Goal

Quarter
Annualized

Trailing
12 Months

4Q23
Annualized

Net debt and preferred stock to
    Adjusted EBITDA

5.2x

5.4x

Less than or equal to 5.1x

Fixed-charge coverage ratio

4.7x

4.9x

4.5x to 5.0x

Key capital events

  • In June 2023, we amended our unsecured senior line of credit to increase the aggregate commitments available for borrowing to $5.0 billion from $4.0 billion while maintaining the existing borrowing rate and maturity date.
  • In July 2023, we increased the aggregate amount we may issue from time to time under our commercial paper program to $2.5 billion from $2.0 billion.
  • As of 2Q23, we have outstanding forward equity agreements from 2022 aggregating 699 thousand shares of common stock with expected net proceeds of $102.8 million.
  • As of June 30, 2023, the remaining aggregate amount available under our ATM program for future sales of common stock was $141.9 million.

Investments

  • As of June 30, 2023:
  • Investment loss of $78.3 million for 2Q23, presented in our consolidated statements of operations, consisted of $77.9 million of unrealized losses and reclassifications, and $371 thousand of realized losses.

Other key highlights

Nareit Investor CARE Gold Award winner

We received the 2023 Nareit Investor CARE (Communications and Reporting Excellence) Gold Award in the Large Cap Equity REIT category for superior shareholder communications and reporting. Our most recent award contributes to an impressive milestone of our sixth consecutive Nareit Investor CARE Award, our seventh Gold award, and our eighth overall award since 2015, positioning us as the equity REIT with the most Gold awards. These recognitions are directly attributed to our world-class team’s operational excellence in upholding the highest levels of transparency, integrity, and accountability to our stockholders.

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

2Q23

2Q22

2Q23

2Q22

1H23

1H22

1H23

1H22

Unrealized losses on non-
 real estate investments

$ (77.9)

$   (68.1)

$ (0.46)

$ (0.42)

$  (143.8)

$  (331.6)

$ (0.84)

$ (2.07)

Gain on sales of real estate

214.8

214.2

1.26

1.33

214.8

214.2

1.26

1.34

Impairment of non-real
 estate investments

(23.0)

(0.13)

(23.0)

(0.13)

Impairment of real estate

(168.6)

(0.99)

(168.6)

(0.99)

Loss on early
 extinguishment of debt

(3.3)

(0.02)

(3.3)

(0.02)

Total

$ (54.7)

$ 142.8

$ (0.32)

$   0.89

$  (120.6)

$  (120.7)

$ (0.70)

$ (0.75)

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

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

  • In June 2023, Alexandria released our 2022 ESG Report, which highlights our longstanding and continued leadership in ESG. The report details the advancement of our decarbonization strategy and our roadmap to climate resilience within our life science real estate asset base. It also showcases Alexandria’s comprehensive efforts to catalyze the health, wellness, safety, and productivity of our employees, tenants, local communities, and the world through the built environment and beyond, including through our visionary social responsibility initiatives. Notable ESG initiatives and achievements include the following:
  • In our Lake Union submarket, Alexandria received the 2023 BOMA Pacific Northwest TOBY (The Outstanding Building of the Year) Award in the Corporate Facility category for 1165 Eastlake Avenue East on The Eastlake Life Science by Alexandria mega campus. The TOBY Awards honor and recognize quality in commercial buildings and reward excellence in building management.

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 advanced 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 825 tenants, Alexandria has a total market capitalization of $30.6 billion and an asset base in North America of 74.9 million SF as of June 30, 2023, which includes 41.1 million RSF of operating properties and 5.3 million RSF of Class A/A+ properties undergoing construction, 9.4 million RSF of near-term and intermediate-term development and redevelopment projects, and 19.1 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in life science, agtech, and advanced 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.

Guidance
June 30, 2023
(Dollars in millions)

Guidance for 2023 has been updated to reflect our current view of existing market conditions and assumptions for the year ending December 31, 2023. 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 updates to the midpoints of our guidance ranges for our 2023 key sources and uses of capital include the following:

•     During the three months ended June 30, 2023, we pivoted our strategy toward harvesting value by selling 100% interests in non-core properties and/or properties not integral to our mega
      campus strategy in lieu of seeking a new real estate joint venture partner for one of our active development projects.

      •     This resulted in increases to (i) proceeds from dispositions and sales of partial interests by $225 million, and (ii) our share of construction spending by $210 million, as this amount
             was previously expected to be funded by a future joint venture partner.

      •     The revised midpoint to our 2023 guidance range for dispositions and sales of partial interests is $1.75 billion.

      •     The revised midpoint to our 2023 guidance range for construction spending is $2.9 billion. Total 2023 construction spending before contributions from real estate joint venture partners
             remains unchanged from our prior forecast at $3.5 billion.

Midpoint

As of 7/24/23

Key Sources and Uses of Capital

As of
4/24/23

Key
Changes

As of
7/24/23

Range

Midpoint

Certain
Completed
Items

Sources of capital:

  Incremental debt

$         650

$          (15)

$         635

$         560

$         710

$         635

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

300

300

300

300

300

$            300

(1)

  Net cash provided by operating activities after dividends

375

375

350

400

375

  Dispositions and sales of partial interests

1,525

225

1,750

1,650

1,850

1,750

$            701

(2)

  Future settlement of forward equity sales agreements outstanding as of December 31, 2022

100

100

100

100

100

$            100

(3)

Total sources of capital before excess cash expected to be held at December 31, 2023

$      2,950

$         210

$      3,160

2,960

3,360

3,160

 Cash expected to be held at December 31, 2023(4)

$         275

$            —

$         275

125

425

275

Total sources of capital

$      3,085

$      3,785

$      3,435

Uses of capital:

 Construction

$      2,725

$         210

$      2,935

$      2,785

$      3,085

$      2,935

 Acquisitions

225

225

175

275

225

$            235

Total uses of capital

$      2,950

$         210

$      3,160

$      2,960

$      3,360

$      3,160

Incremental debt (included above):

 Issuance of unsecured senior notes payable

$      1,000

$      1,000

$      1,000

$         1,000

(5)

 Unsecured senior line of credit, commercial paper, and other

(440)

(290)

(365)

Net incremental debt

$         560

$         710

$         635

(1)

Represents $300.0 million of excess 2022 bond capital proceeds held as cash at December 31, 2022, which we used to reduce our 2023 debt capital needs.

(2)

In addition to completed transactions, we have pending transactions subject to signed letters of intent or purchase and sale agreements aggregating $175.0 million as of July 24, 2023.

(3)

Represents outstanding forward equity sales agreements to sell 699 thousand shares of common stock under our ATM program entered into during 2022 and expected to be settled during the second half of 2023.

(4)

Represents estimated excess 2023 bond capital proceeds expected to be held as cash at December 31, 2023, which reduces our 2024 debt capital needs.

(5)

Represents $1.0 billion of unsecured senior notes payable issued in February 2023.

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

As of 7/24/23

As of 4/24/23

Key Changes

Earnings per share(1)

$2.72 to $2.78

$2.21 to $2.31

 Depreciation and amortization of real estate assets

5.55

5.55

 Gain on sales of real estate

(1.26)

(2)

 Impairment of real estate – rental properties

0.98

0.81

(3)

 Allocation to unvested restricted stock awards

(0.04)

(0.04)

Funds from operations per share(4)

$7.95 to $8.01

$8.53 to $8.63

 Unrealized losses on non-real estate investments

0.84

0.39

(3)

 Impairment of non-real estate investments

0.13

 Impairment of real estate

0.02

 Allocation to unvested restricted stock awards

(0.01)

(0.01)

Funds from operations per share, as adjusted(4)

$8.93 to $8.99

$8.91 to $9.01

No change to midpoint;

range narrowed by 4 cents

Midpoint

$8.96

$8.96

As of 7/24/23

As of 4/24/23

Key Assumptions

Low

High

Low

High

Key Changes

Occupancy percentage in North America as of December 31, 2023

94.6 %

95.6 %

94.6 %

95.6 %

No change

Lease renewals and re-leasing of space:

 Rental rate increases

28.0 %

33.0 %

28.0 %

33.0 %

 Rental rate increases (cash basis)

12.0 %

17.0 %

12.0 %

17.0 %

Same property performance:

 Net operating income increases

2.0 %

4.0 %

2.0 %

4.0 %

 Net operating income increases (cash basis)

4.0 %

6.0 %

4.0 %

6.0 %

Straight-line rent revenue

$              130

$              145

$              130

$              145

General and administrative expenses

$              183

$              193

$              183

$              193

Capitalization of interest

$              342

$              362

$              342

$              362

Interest expense

$                74

$                94

$                74

$                94

Key Credit Metrics

As of 7/24/23

As of 4/24/23

Key Changes

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

Less than or equal to 5.1x

Less than or equal to 5.1x

No change

Fixed-charge coverage ratio – 4Q23 annualized

4.5x to 5.0x

4.5x to 5.0x

(1)

Excludes unrealized gains or losses after June 30, 2023 that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.

(2)

Refer to “Dispositions and sales of partial interests” in this Earnings Press Release for additional information.

(3)

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

(4)

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.

Acquisitions 
June 30, 2023 
(Dollars in thousands)

Square Footage

Acquisitions With Development/Redevelopment Opportunities(1)

Property

Submarket/Market

Date of

Purchase

Number of
Properties

Operating

Occupancy

Future
Development

Active
Development/
Redevelopment

Operating With Future
Development/
Redevelopment

Total(2)

 

Purchase
Price

Completed in 1H23:

  Canada

Canada

1/30/23

1

100 %

247,743

247,743

$

100,837

  Other

Various

2

100

1,089,349

110,717

10,000

1,210,066

125,103

3

100 %

1,089,349

110,717

257,743

1,457,809

225,940

Completed in July 2023

9,495

2023 acquisitions completed as of July 24, 2023

$

235,435

2023 guidance range

$175,000 – $275,000

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

Dispositions and Sales of Partial Interests
June 30, 2023
(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

Completed in 1H23:

Value harvesting dispositions and recycling of assets not integral to our

  mega campus strategy

225, 266, and 275 Second Avenue and 780 and 790
    Memorial Drive(1)

Route 128 and Cambridge/Inner
    Suburbs/Greater Boston

6/13/23

100 %

428,663

5.0 %

(1)

5.2 %

(1)

$       365,226

$           852

11119 North Torrey Pines Road(2)

Torrey Pines/San Diego

5/4/23

100 %

72,506

4.4 %

(2)

4.6 %

(2)

86,000

$        1,186

275 Grove Street(3)

Route 128/Greater Boston

6/27/23

100 %

509,702

N/A

N/A

109,349

N/A   

Other

42,092

602,667

(4)

Strategic partial interest sales

15 Necco Street(5)

Seaport Innovation District/

 Greater Boston

4/11/23

18 %

(5)

345,995

6.6 %

5.4 %

66,108

$        1,626

9625 Towne Centre Drive(6)

University Town Center/San Diego

6/21/23

20.1 %

163,648

4.2 %

4.5 %

32,261

$           981

98,369

701,036

Pending as of July 24, 2023:

421 Park Drive(7)

Fenway/Greater Boston

(7)

(7)

155,000

Executed and pending transactions subject to signed letters
    of intent or purchase and sale agreements

20,000

Total pending and under executed letters of intent or
    purchase and sales agreements

175,000

876,036

Additional targeted non-core dispositions in process

873,964

2023 dispositions and sales of partial interests (midpoint)

$    1,750,000

2023 guidance range

$1,650,000 – $1,850,000

(1)

We calculated capitalization rates based upon net operating income and net operating income (cash basis) for 2Q23 annualized that includes vacancy available for redevelopment. Upon completion of the sale, we recognized a gain on sale
of real estate aggregating $187.2 million and a value-creation margin of 80%.

(2)

We calculated capitalization rates based upon net operating income and net operating income (cash basis) for 1Q23 annualized. Upon completion of the sale, we recognized a gain on sale of real estate aggregating $27.6 million and a
value-creation margin of 34%.

(3)

During 2Q23, we recognized a real estate impairment charge of $145.4 million to reduce our investment to its current fair value less costs to sell.

(4)

Dispositions completed during the three months ended June 30, 2023 had annual net operating income of $32.4 million with a weighted-average disposition date of June 13, 2023 (weighted by net operating income for 2Q23 annualized).

(5)

Represents a development project under construction aggregating 345,995 RSF, 97% of which is leased to Eli Lilly and Company for the Lilly Institute for Genetic Medicine. In April 2023, an investor acquired a 20% interest in this joint
venture, which consisted of an 18% interest sold by us and a 2% interest sold by our existing partner. Upon completion of the sale, our ownership interest in the consolidated real estate joint venture was 72% and our existing and new
partners’ noncontrolling interests were 8% and 20%, respectively. We retained control over this real estate joint venture and therefore continue to consolidate this property. The sales price of the 18% interest sold by us was $66.1 million, or
$1,626 per RSF, representing capitalization rates of 6.6% and 5.4% (cash basis). We expect our new joint venture partner to contribute capital approximating $130 million to fund construction of the project over time and to accrete its
ownership interest in the joint venture to 37% from 20%.

(6)

An investor acquired a 70% interest in this consolidated real estate joint venture, which consisted of a 20.1% interest sold by us and a 49.9% interest held by our previous joint venture partner. Our portion of the sales price was
$32.3 million, or $981 per RSF, representing capitalization rates of 4.2% and 4.5% (cash basis) based upon net operating income and net operating income (cash basis) for 2Q23 annualized. We retained control over this real estate joint
venture and therefore continue to consolidate this property. This transaction resulted in consideration in excess of book value of $15.6 million and a value-creation margin of 88%. 

(7)

Represents the disposition of 268,023 RSF of a 660,034 RSF near-term development at 421 Park Drive. The proceeds from this transaction will help fund our remaining 392,011 RSF of the project. The project is expected to commence
vertical construction later this year and be completed in 2026. The buyer will fund the project costs related to its 268,023 RSF, and these costs are not included in our projected construction spending. We will develop and operate the
completed project and will earn development fees over the next three years.

Earnings Call Information and About the Company
June 30, 2023

We will host a conference call on Tuesday, July 25, 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 second quarter ended June 30, 2023. 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 25, 2023. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 6301307.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the second quarter ended June 30, 2023 is available in the “For Investors” section of our website at www.are.com or by following this link: https://www.are.com/fs/2023q2.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, senior vice president – chief content officer.

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 advanced 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 825 tenants, Alexandria has a total market capitalization of $30.6 billion and an asset base in North America of 74.9 million SF as of June 30, 2023, which includes 41.1 million RSF of operating properties and 5.3 million RSF of Class A/A+ properties undergoing construction, 9.4 million RSF of near-term and intermediate-term development and redevelopment projects, and 19.1 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in life science, agtech, and advanced 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.

***********

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.

This document is not an offer to sell or a solicitation to buy securities of Alexandria Real Estate Equities, Inc. Any offers to sell or solicitations to buy our securities shall be made only by means of a prospectus approved for that purpose. Unless otherwise indicated, the “Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and our consolidated subsidiaries. Alexandria®, 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
June 30, 2023
(Dollars in thousands, except per share amounts)

Three Months Ended

Six Months Ended

6/30/23

3/31/23

12/31/22

9/30/22

6/30/22

6/30/23

6/30/22

Revenues:

  Income from rentals

$       704,339

$       687,949

$       665,674

$       656,853

$       640,959

$    1,392,288

$    1,253,513

  Other income

9,561

12,846

4,607

2,999

2,805

22,407

5,316

Total revenues

713,900

700,795

670,281

659,852

643,764

1,414,695

1,258,829

Expenses:

 Rental operations

211,834

206,933

204,352

201,189

196,284

418,767

377,612

 General and administrative

45,882

48,196

42,992

49,958

43,397

94,078

84,328

 Interest

17,072

13,754

17,522

22,984

24,257

30,826

53,697

 Depreciation and amortization

273,555

265,302

264,480

254,929

242,078

538,857

482,737

 Impairment of real estate

168,575

(1)

26,186

38,783

168,575

 Loss on early extinguishment of debt

3,317

3,317

Total expenses

716,918

534,185

555,532

567,843

509,333

1,251,103

1,001,691

Equity in earnings of unconsolidated real estate joint ventures

181

194

172

40

213

375

433

Investment loss

(78,268)

(45,111)

(19,653)

(32,305)

(39,481)

(123,379)

(279,800)

Gain on sales of real estate

214,810

323,699

214,219

214,810

214,219

Net income

133,705

121,693

95,268

383,443

309,382

255,398

191,990

Net income attributable to noncontrolling interests

(43,768)

(43,831)

(40,949)

(38,747)

(37,168)

(87,599)

(69,345)

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

89,937

77,862

54,319

344,696

272,214

167,799

122,645

Net income attributable to unvested restricted stock awards

(2,677)

(2,606)

(2,526)

(3,257)

(2,934)

(5,283)

(4,134)

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

$         87,260

$         75,256

$         51,793

$       341,439

$       269,280

$       162,516

$       118,511

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

 Basic

$             0.51

$             0.44

$             0.31

$             2.11

$             1.67

$             0.95

$             0.74

 Diluted

$             0.51

$             0.44

$             0.31

$             2.11

$             1.67

$             0.95

$             0.74

Weighted-average shares of common stock outstanding:

 Basic

170,864

170,784

165,393

161,554

161,412

170,824

159,814

 Diluted

170,864

170,784

165,393

161,554

161,412

170,824

159,814

Dividends declared per share of common stock

$             1.24

$             1.21

$             1.21

$             1.18

$             1.18

$             2.45

$             2.33

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

Consolidated Balance Sheets
June 30, 2023 
(In thousands)

6/30/23

3/31/23

12/31/22

9/30/22

6/30/22

Assets

Investments in real estate

$  31,178,054

$  30,889,395

$  29,945,440

$  28,771,745

$ 27,952,931

Investments in unconsolidated real estate joint ventures

37,801

38,355

38,435

38,285

37,587

Cash and cash equivalents

924,370

1,263,452

825,193

533,824

420,258

Restricted cash

35,920

34,932

32,782

332,344

97,404

Tenant receivables

6,951

8,197

7,614

7,759

7,069

Deferred rent

984,366

974,865

942,646

918,995

905,699

Deferred leasing costs

520,610

527,848

516,275

506,864

498,434

Investments

1,495,994

1,573,018

1,615,074

1,624,921

1,657,461

Other assets

1,475,191

1,602,403

1,599,940

1,633,877

1,667,210

Total assets

$  36,659,257

$  36,912,465

$  35,523,399

$  34,368,614

$ 33,244,053

Liabilities, Noncontrolling Interests, and Equity

Secured notes payable

$         91,939

$         73,645

$         59,045

$         40,594

$         24,986

Unsecured senior notes payable

11,091,424

11,089,124

10,100,717

10,098,588

10,096,462

Unsecured senior line of credit and commercial paper

374,536

386,666

149,958

Accounts payable, accrued expenses, and other liabilities

2,494,087

2,479,047

2,471,259

2,393,764

2,317,940

Dividends payable

214,555

209,346

209,131

193,623

192,571

Total liabilities

13,892,005

14,225,698

12,840,152

13,113,235

12,781,917

Commitments and contingencies

Redeemable noncontrolling interests

52,628

44,862

9,612

9,612

9,612

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

 Common stock

1,709

1,709

1,707

1,626

1,615

 Additional paid-in capital

18,812,318

18,902,821

18,991,492

17,639,434

17,149,571

 Accumulated other comprehensive loss

(16,589)

(20,536)

(20,812)

(24,725)

(11,851)

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

18,797,438

18,883,994

18,972,387

17,616,335

17,139,335

Noncontrolling interests

3,917,186

3,757,911

3,701,248

3,629,432

3,313,189

Total equity

22,714,624

22,641,905

22,673,635

21,245,767

20,452,524

Total liabilities, noncontrolling interests, and equity

$  36,659,257

$  36,912,465

$  35,523,399

$  34,368,614

$ 33,244,053

Funds From Operations and Funds From Operations per Share
June 30, 2023 
(In thousands)

The following table presents a reconciliation of net income 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

6/30/23

3/31/23

12/31/22

9/30/22

6/30/22

6/30/23

6/30/22

Net income attributable to Alexandria’s common stockholders

$     87,260

$     75,256

$     51,793

$   341,439

$   269,280

$   162,516

$   118,511

 Depreciation and amortization of real estate assets

270,026

262,124

261,185

251,453

238,565

532,150

475,725

 Noncontrolling share of depreciation and amortization from consolidated real estate
     JVs

(28,220)

(28,178)

(29,702)

(27,790)

(26,418)

(56,398)

(50,099)

 Our share of depreciation and amortization from unconsolidated real estate JVs

855

859

982

795

934

1,714

1,889

 Gain on sales of real estate

(214,810)

(323,699)

(214,219)

(214,810)

(214,219)

 Impairment of real estate – rental properties

166,602

(1)

20,899

166,602

 Allocation to unvested restricted stock awards

(872)

(1,359)

(953)

1,002

(2,220)

Funds from operations attributable to Alexandria’s common stockholders –

    diluted(2)

280,841

308,702

304,204

243,200

268,142

589,554

331,807

 Unrealized losses on non-real estate investments

77,897

65,855

24,117

56,515

68,128

143,752

331,561

 Impairment of non-real estate investments

22,953

(3)

20,512

22,953

 Impairment of real estate

1,973

5,287

38,783

1,973

 Loss on early extinguishment of debt

3,317

3,317

 Acceleration of stock compensation expense due to executive officer resignation

7,185

 Allocation to unvested restricted stock awards

(1,285)

(867)

(482)

(1,033)

(778)

(2,164)

(3,264)

Funds from operations attributable to Alexandria’s common stockholders –

    diluted, as adjusted

$   382,379

$   373,690

$   353,638

$   344,650

$   338,809

$   756,068

$   663,421

(1)

Primarily related to an impairment charge aggregating $145.4 million at an office campus located at 275 Grove Street in our Route 128 submarket to reduce our investment in this campus to fair value less costs to sell.

(2)

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

(3)

Primarily related to three non-real estate investments in privately held entities that do not report NAV.

Funds From Operations and Funds From Operations per Share (continued)
June 30, 2023 
(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

6/30/23

3/31/23

12/31/22

9/30/22

6/30/22

6/30/23

6/30/22

Net income per share attributable to Alexandria’s common stockholders –

    diluted

$         0.51

$         0.44

$         0.31

$         2.11

$         1.67

$         0.95

$         0.74

 Depreciation and amortization of real estate assets

1.42

1.38

1.41

1.39

1.32

2.80

2.68

 Gain on sales of real estate

(1.26)

(2.00)

(1.33)

(1.26)

(1.34)

 Impairment of real estate – rental properties

0.98

0.13

0.98

 Allocation to unvested restricted stock awards

(0.01)

(0.01)

(0.01)

0.01

(0.02)

Funds from operations per share attributable to Alexandria’s common

   stockholders – diluted

1.64

1.81

1.84

1.51

1.66

3.45

2.08

 Unrealized losses on non-real estate investments

0.46

0.39

0.15

0.35

0.42

0.84

2.07

 Impairment of non-real estate investments

0.13

0.12

0.13

 Impairment of real estate

0.02

0.03

0.24

0.02

 Loss on early extinguishment of debt

0.02

0.02

 Acceleration of stock compensation expense due to executive officer resignation

0.04

 Allocation to unvested restricted stock awards

(0.01)

(0.01)

(0.01)

(0.01)

(0.02)

Funds from operations per share attributable to Alexandria’s common

   stockholders – diluted, as adjusted

$         2.24

$         2.19

$         2.14

$         2.13

$         2.10

$         4.43

$         4.15

Weighted-average shares of common stock outstanding – diluted

170,864

170,784

165,393

161,554

161,412

170,824

159,814

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SOURCE Alexandria Real Estate Equities, Inc.

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