Alexandria Real Estate Equities, Inc. Reports: 2Q24 and 1H24 Net Income per Share - Diluted of $0.25 and $1.22, respectively; and 2Q24 and 1H24 FFO per Share - Diluted, as Adjusted, of $2.36 and $4.71, respectively
Key highlights |
|
|
|
|
|
|
|
|
Operating results |
2Q24 |
|
2Q23 |
|
1H24 |
|
1H23 |
|
Total revenues: |
|
|
|
|
|
|
|
|
In millions |
$ 766.7 |
|
$ 713.9 |
|
$ 1,535.8 |
|
$ 1,414.7 |
|
Growth |
7.4 % |
|
|
8.6 % |
|
|
||
Net income attributable to Alexandria's common stockholders – diluted: |
||||||||
In millions |
$ 42.9 |
|
$ 87.3 |
|
$ 209.8 |
|
$ 162.5 |
|
Per share |
$ 0.25 |
|
$ 0.51 |
|
$ 1.22 |
|
$ 0.95 |
|
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted: |
|
|
||||||
In millions |
$ 405.5 |
|
$ 382.4 |
|
$ 809.4 |
|
$ 756.1 |
|
Per share |
$ 2.36 |
|
$ 2.24 |
|
$ 4.71 |
|
$ 4.43 |
|
An operationally excellent, industry-leading REIT with a high-quality, diverse client base to support growing revenues, stable cash flows, and strong margins
(As of
|
|
|
|
|
Percentage of annual rental revenue in effect from mega campuses |
|
74 % |
|
|
Percentage of annual rental revenue in effect from investment-grade or publicly traded large cap tenants |
|
53 % |
|
|
Sustained strength in tenant collections: |
|
|
|
|
Tenant receivables as a percentage of 2Q24 rental revenues |
|
0.9 % |
|
|
July 2024 tenant rents and receivables collected as of |
|
99.7 % |
|
|
2Q24 tenant rents and receivables collected as of |
|
99.9 % |
|
|
Occupancy of operating properties in |
|
94.6 % |
|
|
Operating margin |
|
72 % |
|
|
Adjusted EBITDA margin |
|
72 % |
|
|
Percentage of leases containing annual rent escalations |
|
96 % |
|
|
Weighted-average remaining lease term: |
|
|
|
|
Top 20 tenants |
|
9.4 |
years |
|
All tenants |
|
7.4 |
years |
Strong leasing volume and solid rental rate increases
- Strong leasing volume aggregating 1.1 million RSF during 2Q24.
- Solid rental rate increases of 7.4% and 3.7% (cash basis) for 2Q24 and 26.2% and 15.0% (cash basis) for 1H24.
- 79% of our leasing activity during the last twelve months was generated from our existing tenant base.
|
|
|
|
|
2Q24 |
|
|
1H24 |
|
|
|
|
Total leasing activity – RSF |
|
1,114,001 |
|
|
2,256,858 |
|
|
|
|
Leasing of development and redevelopment space – RSF |
|
340,989 |
|
|
441,221 |
|
|
|
|
Lease renewals and re-leasing of space: |
|
|
|
|
|
|
|
|
|
RSF (included in total leasing activity above) |
|
589,650 |
|
|
1,584,420 |
|
|
|
|
Rental rate increase |
|
7.4 % |
|
|
26.2 % |
|
|
|
|
Rental rate increase (cash basis) |
|
3.7 % |
|
|
15.0 % |
|
|
|
|
|
Continued solid net operating income and internal growth
- Net operating income (cash basis) of
$1.9 billion for 2Q24 annualized, up$122.7 million , or 6.9%, compared to 2Q23 annualized. - Same property net operating income growth of 1.5% and 3.9% (cash basis) for 2Q24 over 2Q23 and 1.1% and 3.7% (cash basis) for 1H24 over 1H23.
- 96% of our leases contain contractual annual rent escalations approximating 3%.
Strong and flexible balance sheet with significant liquidity; top 10% credit rating ranking among all publicly traded
- Net debt and preferred stock to Adjusted EBITDA of 5.4x and fixed-charge coverage ratio of 4.5x for 2Q24 annualized.
- Significant liquidity of
$5.6 billion . - 32% of our total debt matures in 2049 and beyond.
- 13.0 years weighted-average remaining term of debt.
- 97.3% of our debt has a fixed rate.
- Total debt and preferred stock to gross assets of 29%.
-
$1.1 billion of expected capital contribution commitments from existing consolidated real estate joint venture partners to fund construction from 3Q24 through 2027.
Consistent dividend strategy with a focus on retaining significant net cash flows from operating activities after dividends for reinvestment
- Common stock dividend declared for 2Q24 of
$1.30 per common share aggregating$5.08 per common share for the twelve months endedJune 30, 2024 , up24 cents , or 5%, over the twelve months endedJune 30, 2023 . - Dividend yield of 4.4% as of
June 30, 2024 . - Dividend payout ratio of 55% for the three months ended
June 30, 2024 . - Average annual dividend per-share growth of 5% from 2020 through 2Q24 annualized.
- Significant net cash flows from operating activities after dividends retained for reinvestment aggregating
$2.1 billion for the years endedDecember 31, 2020 through 2023 and including the midpoint of our 2024 guidance range for net cash provided by operating activities after dividends.
Ongoing execution of Alexandria's 2024 capital strategy
We expect to continue pursuing our strategy to fund a significant portion of our capital requirements for the year ending
(in millions) |
|
|
|
Completed dispositions of 100% interest in properties not integral to our mega campus strategy |
|
$ 77 |
(1) |
Pending transactions subject to letters of intent or purchase and sale agreement negotiations |
|
807 |
|
Forward equity sales agreements expected to be settled in 2024 |
|
27 |
|
|
|
911 |
|
Additional targeted dispositions, sales of partial interests, and common equity |
|
639 |
|
2024 guidance midpoint for dispositions, sales of partial interests, and common equity |
|
$ 1,550 |
|
|
|
(1) |
Refer to "Dispositions and sales of partial interests" in the Earnings Press Release for additional details. |
Alexandria's highly leased value-creation pipeline delivered incremental annual net operating income of $16 million commencing during 2Q24 and is expected to deliver incremental annual net operating income aggregating $480 million by 1Q28
- During 2Q24, we placed into service development and redevelopment projects aggregating 284,982 RSF that are 100% leased across multiple submarkets and delivered incremental annual net operating income of
$16 million . 2Q24 deliveries included:- 195,435 and 25,655 RSF at
9810 Darnestown Road and9808 Medical Center Drive , respectively, located on the Alexandria Center® for Life Science –Shady Grove mega campus in ourRockville submarket.
- 195,435 and 25,655 RSF at
- Annual net operating income (cash basis) is expected to increase by
$80 million upon the burn-off of initial free rent, with a weighted-average burn-off period of approximately seven months, from recently delivered projects. - 69% of the RSF in our total value-creation pipeline is within our mega campuses.
|
|
|
Development and Redevelopment Projects |
|
Incremental Annual Net Operating Income |
|
RSF |
|
Leased/ Negotiating Percentage |
|||
|
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Placed into service: |
|
|
|
|
|
|
|
|
|
|
|
|
1Q24 |
|
$ 26 |
|
343,445 |
|
|
100 % |
|
|
|
|
|
2Q24 |
|
16 |
|
284,982 |
|
|
100 |
|
|
|
|
|
Placed into service in 1H24 |
|
$ 42 |
|
628,427 |
|
|
100 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected to be placed into service(1): |
|
|
|
|
|
|
|
|
|
|
|
|
3Q24 through 4Q25 |
|
$ 187 |
(2) |
5,432,915 |
|
|
|
|
|
|
|
|
1Q26 through 1Q28 |
|
293 |
|
|
|
61 % |
(3) |
||
|
|
|
|
|
$ 480 |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Represents expected incremental annual net operating income to be placed into service from deliveries of projects undergoing construction and one committed near-term project expected to commence construction in the next two years. |
|
|
|
(2) |
Includes 1.5 million RSF that is expected to stabilize through 2025 and is 87% leased, and partial deliveries through 4Q25 from projects expected to stabilize in 2026 and beyond. In addition to the projects represented, we are evaluating one priority anticipated development project that could commence active construction in 2H24 and may have initial delivery in 2025. Refer to the initial and stabilized occupancy years under "New Class A/A+ development and redevelopment properties: current projects" in the Supplemental Information for additional details. |
|
|
|
(3) |
71% of the leased RSF of our value-creation projects was generated from our existing tenant base. |
Strong balance sheet management
Key metrics as of or for the three months ended
-
$32.5 billion in total market capitalization. -
$20.1 billion in total equity capitalization, which ranks in the top 10% among all publicly tradedU.S. REITs.
|
|
2Q24 |
|
Target |
||
|
|
Quarter Annualized |
|
Trailing 12 Months |
|
4Q24 Annualized |
Net debt and preferred stock to Adjusted EBITDA |
|
5.4x |
|
5.6x |
|
Less than or equal to 5.1x |
Fixed-charge coverage ratio |
|
4.5x |
|
4.6x |
|
Greater than or equal to 4.5x |
Key capital events
- In
July 2024 , we executed an agreement with the lender group to amend and restate our unsecured senior line of credit to, among other changes, extend the maturity date fromJanuary 22, 2028 toJanuary 22, 2030 , including extension options that we control. We expect that the amendment and restatement will become effective inSeptember 2024 upon the satisfaction of certain conditions. - During 2Q24, we entered into new forward equity sales agreements aggregating
$27.8 million to sell 230 thousand shares of common stock under our ATM program at an average price of$122.32 (before underwriting discounts). We expect to settle these forward equity sales agreements in 2024. As ofJuly 22, 2024 , the remaining aggregate amount available under our ATM program for future sales of common stock was$1.47 billion .
Investments
- As of
June 30, 2024 :- Our non-real estate investments aggregated
$1.5 billion . - Unrealized gains presented in our consolidated balance sheet were
$159.8 million , comprising gross unrealized gains and losses aggregating$284.2 million and$124.4 million , respectively.
- Our non-real estate investments aggregated
- Investment loss of
$43.7 million for 2Q24 presented in our consolidated statement of operations consisted of$33.4 million of realized gains, partially offset by$12.8 million of impairment charges and$64.2 million of unrealized losses.
Other key highlights
- In
June 2024 , Alexandria was added to the Health Care REITs industry under the Global Industry Classification Standard (GICS®) byS&P Dow Jones Indices and MSCI, and to the FTSE NAREIT Equity Health Care Index.
Key items included in net income attributable to Alexandria's common stockholders: |
||||||||||||||||
|
|
2Q24 |
|
2Q23 |
|
2Q24 |
|
2Q23 |
|
1H24 |
|
1H23 |
|
1H24 |
|
1H23 |
(in millions, except per share amounts) |
|
Amount |
|
Per Share – Diluted |
|
Amount |
|
Per Share – Diluted |
||||||||
Unrealized losses on non-real estate investments |
|
|
|
|
|
$ (0.37) |
|
$ (0.46) |
|
|
|
$ (143.8) |
|
$ (0.20) |
|
$ (0.84) |
Gain on sales of real estate |
|
— |
|
214.8 |
|
— |
|
1.26 |
|
0.4 |
|
214.8 |
|
— |
|
1.26 |
Impairment of non-real estate investments |
|
(12.8) |
|
(23.0) |
|
(0.08) |
|
(0.13) |
|
(27.5) |
|
(23.0) |
|
(0.16) |
|
(0.13) |
Impairment of real estate |
|
(30.8) |
|
(168.6) |
|
(0.18) |
|
(0.99) |
|
(30.8) |
|
(168.6) |
|
(0.18) |
|
(0.99) |
Total |
|
$ (107.8) |
|
|
|
$ (0.63) |
|
$ (0.32) |
|
|
|
$ (120.6) |
|
$ (0.54) |
|
$ (0.70) |
|
||||||||||||||||
Refer to "Funds from operations and funds from operations per share" in the Earnings Press Release for additional details. |
Subsequent event
- In
July 2024 , we executed an amendment to our existing ground lease agreement at theAlexandria Technology Square ® mega campus aggregating 1.2 million RSF in ourCambridge submarket to extend the term by 24 years fromJanuary 1, 2065 toDecember 31, 2088 . The amendment requires that we prepay our entire rent obligation for the extended lease term aggregating$270.0 million in two equal installments during the fourth quarter of 2024 and the first quarter of 2025. This amount will be amortized on a straight-line basis over the remaining lease term fromJuly 2024 throughDecember 2088 , and the amended operating lease will result in an incremental annual rent expense of approximately$3.6 million .Alexandria Technology Square ® is a foundational mega campus in the heart of the global life science ecosystem inCambridge and is theGreater Boston base of operations of key strategic long-tenured tenants such as Novartis AG, GlaxoSmithKline plc,Massachusetts Institute of Technology , andMass General Brigham . Securing this ground lease throughDecember 2088 significantly enhances the long-term value of our investment in this critical mega campus.
Industry and corporate responsibility leadership: catalyzing and leading the way for positive change to benefit human health and society
- In
June 2024 , we released our 2023 Corporate Responsibility Report, which reinforces our longstanding operational excellence across our differentiated Labspace® platform and highlights:- Our new target to reduce operational greenhouse gas (GHG) emissions intensity by advancing our energy efficiency, electrification, alternative energy, and renewable electricity initiatives. As an example of our renewable electricity initiatives, a recent long-term power purchase agreement in our
Greater Boston market is expected to enable us to meet 100% of the electricity needs for Alexandria-paid accounts in this market with renewable energy. - Our pioneering corporate responsibility pillars, which aim to address the most pressing issues facing our nation, including the mental health and addiction crises.
- Our new target to reduce operational greenhouse gas (GHG) emissions intensity by advancing our energy efficiency, electrification, alternative energy, and renewable electricity initiatives. As an example of our renewable electricity initiatives, a recent long-term power purchase agreement in our
- In
April 2024 , Alexandria earned several 2024 regional TOBY (The Outstanding Building of the Year) Awards from BOMA (Building Owners and Managers Association ). The TOBY Awards are the commercial real estate industry's highest recognition honoring excellence in commercial building management and operations.- In the BOMA Mid-Atlantic region,
60 Binney Street on the Alexandria Center® atKendall Square mega campus won in the Life Science category and Building 1400 on the Alexandria Center® atOne Kendall Square mega campus won in theRenovated Building category. - In the BOMA Pacific Southwest region, the Alexandria Center® for Life Science –
San Carlos mega campus won in the Life Science category. - In the BOMA Pacific Northwest region,
1165 Eastlake Avenue East on the Alexandria Center® for Life Science – Eastlake mega campus won in the Life Science category.
- In the BOMA Mid-Atlantic region,
- Additionally, our innovative energy district at the Alexandria Center® for Life Science –
South Lake Union mega campus received theSeattle 2030 District's 2024 Vision Award for Energy, and6040 George Watts Hill Drive , Phase II, in Research Triangle was recognized as the Best Development Project in the 2024Triangle Commercial Real Estate Women's (TCREW) Champion Awards.
About
Guidance
|
The following guidance for 2024 has been updated to reflect our current view of existing market conditions and assumptions for the year ending
|
Changes to our guidance for 2024 key sources and uses of capital include a $150 million increase to the midpoint of our guidance range for dispositions, sales of partial interests, and common equity primarily to fund the first $135 million installment of the ground lease prepayment at our |
|
|
|
|
|
|
2024 Guidance Midpoint |
||||
Summary of Key Changes in Guidance |
|
As of |
|
As of |
|
Summary of Key Changes in Sources and Uses of Capital |
|
As of |
|
As of |
EPS, FFO per share, and FFO per share, as adjusted |
|
See updates below |
|
Dispositions, sales of partial interests, and common equity |
|
|
|
|
||
|
|
|
|
|
|
Ground lease prepayment(1) |
|
|
|
$— |
|
|
|
|
|
|
|
|
|
|
|
Key Credit Metric Targets(2) |
|
|
Net debt and preferred stock to Adjusted EBITDA – 4Q24 annualized |
|
Less than or equal to 5.1x |
Fixed-charge coverage ratio – 4Q24 annualized |
|
Greater than or equal to 4.5x |
|
|
|
Projected 2024 Earnings per Share and Funds From Operations per Share Attributable to Alexandria's Common Stockholders – Diluted |
|
||||||||
|
|
As of |
|
As of |
|
||||
Earnings per share(3) |
|
|
|
|
|
||||
Depreciation and amortization of real estate assets |
|
5.95 |
|
|
5.95 |
|
|
||
Impairment of real estate – rental properties and land |
|
0.01 |
|
|
— |
|
|
||
Allocation to unvested restricted stock awards |
|
(0.05) |
|
|
(0.06) |
|
|
||
Funds from operations per share(2) |
|
|
|
|
|
|
|
||
Unrealized losses (gains) on non-real estate investments |
|
0.20 |
|
|
(0.17) |
|
|
||
Impairment of non-real estate investments |
|
0.16 |
|
|
0.09 |
|
|
||
Impairment of real estate |
|
0.17 |
|
|
— |
|
|
||
Allocation to unvested restricted stock awards |
|
(0.01) |
|
|
— |
|
|
||
Funds from operations per share, as adjusted(2) |
|
|
|
|
|
|
|
||
Midpoint |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Certain Completed Items |
|||||
Key Sources and Uses of Capital |
|
Range |
|
Midpoint |
|
||||
Sources of capital: |
|
|
|
|
|
|
|
|
|
Incremental debt |
|
$ 885 |
|
$ 885 |
|
$ 885 |
|
See below |
|
Net cash provided by operating activities after dividends |
|
400 |
|
500 |
|
450 |
|
|
|
Dispositions, sales of partial interests, and common equity(4) (refer to page 6) |
|
1,050 |
|
2,050 |
|
1,550 |
|
(4) |
|
Total sources of capital |
|
$ 2,335 |
|
$ 3,435 |
|
$ 2,885 |
|
|
|
Uses of capital: |
|
|
|
|
|
|
|
|
|
Construction |
|
$ 1,950 |
|
$ 2,550 |
|
$ 2,250 |
|
|
|
Acquisitions (refer to page 5) |
|
250 |
|
750 |
|
500 |
|
$ 202 |
|
Ground lease prepayment(1) |
|
135 |
|
135 |
|
135 |
|
|
|
Total uses of capital |
|
$ 2,335 |
|
$ 3,435 |
|
$ 2,885 |
|
|
|
Incremental debt (included above): |
|
|
|
|
|
|
|
|
|
Issuance of unsecured senior notes payable(5) |
|
$ 1,000 |
|
$ 1,000 |
|
$ 1,000 |
|
$ 1,000 |
(5) |
Unsecured senior line of credit, commercial paper, and other |
|
(115) |
|
(115) |
|
(115) |
|
|
|
Net incremental debt |
|
$ 885 |
|
$ 885 |
|
$ 885 |
|
|
|
|
|||||
Key Assumptions |
|
Low |
|
High |
|
Occupancy percentage in |
|
94.6 % |
|
95.6 % |
|
Lease renewals and re-leasing of space: |
|
|
|
|
|
Rental rate increases |
|
11.0 % |
|
19.0 % |
|
Rental rate increases (cash basis) |
|
5.0 % |
|
13.0 % |
|
Same property performance: |
|
|
|
|
|
Net operating income increases |
|
0.5 % |
|
2.5 % |
|
Net operating income increases (cash basis) |
|
3.0 % |
|
5.0 % |
|
Straight-line rent revenue |
|
$ 169 |
|
$ 184 |
|
General and administrative expenses |
|
$ 181 |
|
$ 191 |
|
Capitalization of interest |
|
$ 325 |
|
$ 355 |
|
Interest expense |
|
$ 154 |
|
$ 184 |
|
Realized gains on non-real estate investments(6) |
|
$ 95 |
|
$ 125 |
|
|
|
(1) |
Refer to "Subsequent event" in the Earnings Press Release for additional details. |
(2) |
Refer to "Definitions and reconciliations" in the Supplemental Information for additional details. |
(3) |
Excludes unrealized gains or losses on non-real estate investments after |
(4) |
We expect to continue pursuing our strategy to fund a significant portion of our capital requirements for the year ending |
(5) |
Represents |
(6) |
Represents realized gains and losses included in funds from operations per share – diluted, as adjusted, and excludes significant impairments realized on non-real estate investments, if any. Refer to "Investments" in the Supplemental Information for additional details. |
Acquisitions
(Dollars in thousands) |
|||||||||||||
Property |
|
Submarket/Market |
|
Date of Purchase |
|
Operating Occupancy |
|
Future Development RSF(1) |
|
Purchase Price |
|||
Completed in 1Q24: |
|
|
|
|
|
|
|
|
|
|
|
|
|
285, 299, 307, and |
|
|
|
|
|
N/A |
|
1,040,000 |
|
$ |
155,321 |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
39,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
194,811 |
|
Completed in 2Q24: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
7,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
201,811 |
|
Pending acquisitions subject to signed letters of intent or purchase and sale agreements |
|
|
|
|
|
|
|
|
|
|
|
47,600 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
249,411 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 guidance range |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. |
Dispositions and Sales of Partial Interests
(Dollars in thousands) |
||||||||||||
|
||||||||||||
Property |
|
Submarket/Market |
|
Date of Sale |
|
Interest Sold |
|
RSF |
|
Sales Price |
|
|
Dispositions of 100% interest in properties not integral to our mega campus strategy |
|
|
|
|
|
|
|
|
|
|
|
|
Completed in 1H24: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 % |
|
235,000 |
|
$ 13,350 |
|
|
Other |
|
|
|
|
|
|
|
|
|
|
3,863 |
|
|
|
|
|
|
|
|
|
|
|
|
17,213 |
|
Completed in |
|
|
|
|
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
|
|
60,000 |
|
|
|
|
|
|
|
|
|
|
|
|
77,213 |
|
Pending transactions subject to letters of intent or purchase and sale agreement negotiations |
|
|
|
|
|
|
|
|
806,728 |
|
||
Additional targeted dispositions and sales of partial interests |
|
|
|
|
|
|
|
|
|
|
TBD |
|
|
|
|
|
|
|
|
|
|
|
|
$ 883,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 guidance range for dispositions, sales of partial interests, and common equity |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
We completed the sale during the three months ended |
(2) |
The disposition completed in |
Earnings Call Information and About the Company
We will host a conference call on
Additionally, a copy of this Earnings Press Release and Supplemental Information for the second quarter ended
For any questions, please contact corporateinformation@are.com;
About the Company
Forward-Looking Statements
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 2024 earnings per share, 2024 funds from operations per share, 2024 funds from operations per share, as adjusted, 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
This document is not an offer to sell or a solicitation to buy securities of
Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
|
||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from rentals |
|
$ 755,162 |
|
$ 755,551 |
|
$ 742,637 |
|
$ 707,531 |
|
$ 704,339 |
|
$ 1,510,713 |
|
$ 1,392,288 |
Other income |
|
11,572 |
|
13,557 |
|
14,579 |
|
6,257 |
|
9,561 |
|
25,129 |
|
22,407 |
Total revenues |
|
766,734 |
|
769,108 |
|
757,216 |
|
713,788 |
|
713,900 |
|
1,535,842 |
|
1,414,695 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental operations |
|
217,254 |
|
218,314 |
|
222,726 |
|
217,687 |
|
211,834 |
|
435,568 |
|
418,767 |
General and administrative |
|
44,629 |
|
47,055 |
|
59,289 |
|
45,987 |
|
45,882 |
|
91,684 |
|
94,078 |
Interest |
|
45,789 |
|
40,840 |
|
31,967 |
|
11,411 |
|
17,072 |
|
86,629 |
|
30,826 |
Depreciation and amortization |
|
290,720 |
|
287,554 |
|
285,246 |
|
269,370 |
|
273,555 |
|
578,274 |
|
538,857 |
Impairment of real estate |
|
30,763 |
|
— |
|
271,890 |
|
20,649 |
|
168,575 |
|
30,763 |
|
168,575 |
Total expenses |
|
629,155 |
|
593,763 |
|
871,118 |
|
565,104 |
|
716,918 |
|
1,222,918 |
|
1,251,103 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of unconsolidated real estate joint ventures |
|
130 |
|
155 |
|
363 |
|
242 |
|
181 |
|
285 |
|
375 |
Investment (loss) income |
|
(43,660) |
|
43,284 |
|
8,654 |
|
(80,672) |
|
(78,268) |
|
(376) |
|
(123,379) |
Gain on sales of real estate |
|
— |
|
392 |
|
62,227 |
|
— |
|
214,810 |
|
392 |
|
214,810 |
Net income (loss) |
|
94,049 |
|
219,176 |
|
(42,658) |
|
68,254 |
|
133,705 |
|
313,225 |
|
255,398 |
Net income attributable to noncontrolling interests |
|
(47,347) |
|
(48,631) |
|
(45,771) |
|
(43,985) |
|
(43,768) |
|
(95,978) |
|
(87,599) |
Net income (loss) attributable to stockholders |
|
46,702 |
|
170,545 |
|
(88,429) |
|
24,269 |
|
89,937 |
|
217,247 |
|
167,799 |
Net income attributable to unvested restricted stock awards |
|
(3,785) |
|
(3,659) |
|
(3,498) |
|
(2,414) |
|
(2,677) |
|
(7,444) |
|
(5,283) |
Net income (loss) attributable to common stockholders |
|
$ 42,917 |
|
$ 166,886 |
|
$ (91,927) |
|
$ 21,855 |
|
$ 87,260 |
|
$ 209,803 |
|
$ 162,516 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to Inc.'s common stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ 0.25 |
|
$ 0.97 |
|
$ (0.54) |
|
$ 0.13 |
|
$ 0.51 |
|
$ 1.22 |
|
$ 0.95 |
Diluted |
|
$ 0.25 |
|
$ 0.97 |
|
$ (0.54) |
|
$ 0.13 |
|
$ 0.51 |
|
$ 1.22 |
|
$ 0.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
172,013 |
|
171,949 |
|
171,096 |
|
170,890 |
|
170,864 |
|
171,981 |
|
170,824 |
Diluted |
|
172,013 |
|
171,949 |
|
171,096 |
|
170,890 |
|
170,864 |
|
171,981 |
|
170,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock |
|
$ 1.30 |
|
$ 1.27 |
|
$ 1.27 |
|
$ 1.24 |
|
$ 1.24 |
|
$ 2.57 |
|
$ 2.45 |
Consolidated Balance Sheets
(In thousands) |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
Investments in real estate |
|
$ 32,673,839 |
|
$ 32,323,138 |
|
$ 31,633,511 |
|
$ 31,712,731 |
|
|
Investments in unconsolidated real estate joint ventures |
|
40,535 |
|
40,636 |
|
37,780 |
|
37,695 |
|
37,801 |
Cash and cash equivalents |
|
561,021 |
|
722,176 |
|
618,190 |
|
532,390 |
|
924,370 |
Restricted cash |
|
4,832 |
|
9,519 |
|
42,581 |
|
35,321 |
|
35,920 |
Tenant receivables |
|
6,822 |
|
7,469 |
|
8,211 |
|
6,897 |
|
6,951 |
Deferred rent |
|
1,190,336 |
|
1,138,936 |
|
1,050,319 |
|
1,012,666 |
|
984,366 |
Deferred leasing costs |
|
519,629 |
|
520,616 |
|
509,398 |
|
512,216 |
|
520,610 |
Investments |
|
1,494,348 |
|
1,511,588 |
|
1,449,518 |
|
1,431,766 |
|
1,495,994 |
Other assets |
|
1,356,503 |
|
1,424,968 |
|
1,421,894 |
|
1,501,611 |
|
1,475,191 |
Total assets |
|
$ 37,847,865 |
|
$ 37,699,046 |
|
$ 36,771,402 |
|
$ 36,783,293 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities, Noncontrolling Interests, and Equity |
|
|
|
|
|
|
|
|
|
|
Secured notes payable |
|
$ 134,942 |
|
$ 130,050 |
|
$ 119,662 |
|
$ 109,110 |
|
$ 91,939 |
Unsecured senior notes payable |
|
12,089,561 |
|
12,087,113 |
|
11,096,028 |
|
11,093,725 |
|
11,091,424 |
Unsecured senior line of credit and commercial paper |
|
199,552 |
|
— |
|
99,952 |
|
— |
|
— |
Accounts payable, accrued expenses, and other liabilities |
|
2,529,535 |
|
2,503,831 |
|
2,610,943 |
|
2,653,126 |
|
2,494,087 |
Dividends payable |
|
227,408 |
|
222,134 |
|
221,824 |
|
214,450 |
|
214,555 |
Total liabilities |
|
15,180,998 |
|
14,943,128 |
|
14,148,409 |
|
14,070,411 |
|
13,892,005 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests |
|
16,440 |
|
16,620 |
|
16,480 |
|
51,658 |
|
52,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
1,720 |
|
1,720 |
|
1,719 |
|
1,710 |
|
1,709 |
Additional paid-in capital |
|
18,284,611 |
|
18,434,690 |
|
18,485,352 |
|
18,651,185 |
|
18,812,318 |
Accumulated other comprehensive loss |
|
(27,710) |
|
(23,815) |
|
(15,896) |
|
(24,984) |
|
(16,589) |
|
|
18,258,621 |
|
18,412,595 |
|
18,471,175 |
|
18,627,911 |
|
18,797,438 |
Noncontrolling interests |
|
4,391,806 |
|
4,326,703 |
|
4,135,338 |
|
4,033,313 |
|
3,917,186 |
Total equity |
|
22,650,427 |
|
22,739,298 |
|
22,606,513 |
|
22,661,224 |
|
22,714,624 |
Total liabilities, noncontrolling interests, and equity |
|
$ 37,847,865 |
|
$ 37,699,046 |
|
$ 36,771,402 |
|
$ 36,783,293 |
|
|
Funds From Operations and Funds From Operations per Share
(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 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Alexandria's common stockholders – basic and diluted |
|
$ 42,917 |
|
$ 166,886 |
|
$ (91,927) |
|
$ 21,855 |
|
$ 87,260 |
|
$ 209,803 |
|
$ 162,516 |
Depreciation and amortization of real estate assets |
|
288,118 |
|
284,950 |
|
281,939 |
|
266,440 |
|
270,026 |
|
573,068 |
|
532,150 |
Noncontrolling share of depreciation and amortization from consolidated real estate JVs |
|
(31,364) |
|
(30,904) |
|
(30,137) |
|
(28,814) |
|
(28,220) |
|
(62,268) |
|
(56,398) |
Our share of depreciation and amortization from unconsolidated real estate JVs |
|
1,068 |
|
1,034 |
|
965 |
|
910 |
|
855 |
|
2,102 |
|
1,714 |
Gain on sales of real estate |
|
— |
|
(392) |
|
(62,227) |
|
— |
|
(214,810) |
|
(392) |
|
(214,810) |
Impairment of real estate – rental properties and land |
|
2,182 |
|
— |
|
263,982 |
|
19,844 |
|
166,602 |
|
2,182 |
|
166,602 |
Allocation to unvested restricted stock awards |
|
(1,305) |
|
(3,469) |
|
(2,268) |
|
(838) |
|
(872) |
|
(4,736) |
|
(2,220) |
Funds from operations attributable to Alexandria's common stockholders – diluted(1) |
|
301,616 |
|
418,105 |
|
360,327 |
|
279,397 |
|
280,841 |
|
719,759 |
|
589,554 |
Unrealized losses (gains) on non-real estate investments |
|
64,238 |
|
(29,158) |
|
(19,479) |
|
77,202 |
|
77,897 |
|
35,080 |
|
143,752 |
Impairment of non-real estate investments |
|
12,788 |
(2) |
14,698 |
|
23,094 |
|
28,503 |
|
22,953 |
|
27,486 |
|
22,953 |
Impairment of real estate |
|
28,581 |
(3) |
— |
|
7,908 |
|
805 |
|
1,973 |
|
28,581 |
|
1,973 |
Acceleration of stock compensation expense due to executive officer resignations |
|
— |
|
— |
|
18,436 |
|
1,859 |
|
— |
|
— |
|
— |
Allocation to unvested restricted stock awards |
|
(1,738) |
|
247 |
|
(472) |
|
(1,330) |
|
(1,285) |
|
(1,528) |
|
(2,164) |
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted |
|
$ 405,485 |
|
$ 403,892 |
|
$ 389,814 |
|
$ 386,436 |
|
$ 382,379 |
|
$ 809,378 |
|
$ 756,068 |
|
|
Refer to "Definitions and reconciliations" in the Supplemental Information for additional details. |
|
|
|
(1) |
Calculated in accordance with standards established by the Nareit Board of Governors. |
(2) |
Primarily related to two non-real estate investments in privately held entities that do not report NAV. |
(3) |
Primarily related to two potential acquisitions in our |
Funds From Operations and Funds From Operations per Share (continued)
(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 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to Alexandria's common stockholders – diluted |
|
$ 0.25 |
|
$ 0.97 |
|
$ (0.54) |
|
$ 0.13 |
|
$ 0.51 |
|
$ 1.22 |
|
$ 0.95 |
Depreciation and amortization of real estate assets |
|
1.50 |
|
1.48 |
|
1.48 |
|
1.40 |
|
1.42 |
|
2.98 |
|
2.80 |
Gain on sales of real estate |
|
— |
|
— |
|
(0.36) |
|
— |
|
(1.26) |
|
— |
|
(1.26) |
Impairment of real estate – rental properties and land |
|
0.01 |
|
— |
|
1.54 |
|
0.12 |
|
0.98 |
|
0.01 |
|
0.98 |
Allocation to unvested restricted stock awards |
|
(0.01) |
|
(0.02) |
|
(0.01) |
|
(0.01) |
|
(0.01) |
|
(0.02) |
|
(0.02) |
Funds from operations per share attributable to Alexandria's common stockholders – diluted |
|
1.75 |
|
2.43 |
|
2.11 |
|
1.64 |
|
1.64 |
|
4.19 |
|
3.45 |
Unrealized losses (gains) on non-real estate investments |
|
0.37 |
|
(0.17) |
|
(0.11) |
|
0.45 |
|
0.46 |
|
0.20 |
|
0.84 |
Impairment of non-real estate investments |
|
0.08 |
|
0.09 |
|
0.13 |
|
0.17 |
|
0.13 |
|
0.16 |
|
0.13 |
Impairment of real estate |
|
0.17 |
|
— |
|
0.05 |
|
— |
|
0.02 |
|
0.17 |
|
0.02 |
Acceleration of stock compensation expense due to executive officer resignations |
|
— |
|
— |
|
0.11 |
|
0.01 |
|
— |
|
— |
|
— |
Allocation to unvested restricted stock awards |
|
(0.01) |
|
— |
|
(0.01) |
|
(0.01) |
|
(0.01) |
|
(0.01) |
|
(0.01) |
Funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted |
|
$ 2.36 |
|
$ 2.35 |
|
$ 2.28 |
|
$ 2.26 |
|
$ 2.24 |
|
$ 4.71 |
|
$ 4.43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding – diluted |
|
172,013 |
|
171,949 |
|
171,096 |
|
170,890 |
|
170,864 |
|
171,981 |
|
170,824 |
|
Refer to "Definitions and reconciliations" in the Supplemental Information for additional details. |
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