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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q 
(Mark One)
    ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 
For the quarterly period ended September 30, 2024
OR
    ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 1-12993
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
Maryland
 
95-4502084
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification Number)
 26 North Euclid Avenue, Pasadena, California 91101
(Address of principal executive offices) (Zip code)
(626) 578-0777
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 par value per share
ARE
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes ☒  No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Smaller reporting company 
☐
Accelerated filer 
☐
Emerging growth company 
☐
Non-accelerated filer
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒
As of October 15, 2024, 174,762,259 shares of common stock, par value $0.01 per share, were outstanding.
i
TABLE OF CONTENTS
 
 
Page
 
 
 
 
Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023 ..................................................
 
Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2024 and 2023:
 
Consolidated Statements of Operations ...................................................................................................................
 
 
Consolidated Statements of Comprehensive Income ............................................................................................
 
 
 
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 ...................
 
 
Notes to Consolidated Financial Statements ....................................................................................................................
 
OPERATIONS ........................................................................................................................................................................
 
 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .........................................................
 
 
CONTROLS AND PROCEDURES .....................................................................................................................................
LEGAL PROCEEDINGS ......................................................................................................................................................
RISK FACTORS ....................................................................................................................................................................
OTHER INFORMATION .......................................................................................................................................................
EXHIBITS ...............................................................................................................................................................................
 
 
SIGNATURES .................................................................................................................................................................................................
ii
GLOSSARY
The following abbreviations or acronyms that may be used in this document
shall have the adjacent meanings set forth below:
ASU
Accounting Standards Update
ATM
At the Market
CIP
Construction in Progress
EPS
Earnings per Share
FASB
Financial Accounting Standards Board
FFO
Funds From Operations
GAAP
U.S. Generally Accepted Accounting Principles
IRS
Internal Revenue Service
JV
Joint Venture
Nareit
National Association of Real Estate Investment Trusts
NAV
Net Asset Value
NYSE
New York Stock Exchange
REIT
Real Estate Investment Trust
RSF
Rentable Square Feet/Foot
SEC
Securities and Exchange Commission
SF
Square Feet/Foot
SoDo
South of Downtown submarket of Seattle
SOFR
Secured Overnight Financing Rate
SoMa
South of Market submarket of the San Francisco Bay Area
U.S.
United States
VIE
Variable Interest Entity
1
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Alexandria Real Estate Equities, Inc.
Consolidated Balance Sheets
(In thousands)
September 30, 2024
December 31, 2023
(Unaudited)
Assets
Investments in real estate
$32,951,777
$31,633,511
Investments in unconsolidated real estate joint ventures
40,170
37,780
Cash and cash equivalents
562,606
618,190
Restricted cash
17,031
42,581
Tenant receivables
6,980
8,211
Deferred rent
1,216,176
1,050,319
Deferred leasing costs
516,872
509,398
Investments
1,519,327
1,449,518
Other assets
1,657,189
1,421,894
Total assets
$38,488,128
$36,771,402
Liabilities, Noncontrolling Interests, and Equity
Secured notes payable
$145,000
$119,662
Unsecured senior notes payable
12,092,012
11,096,028
Unsecured senior line of credit and commercial paper
454,589
99,952
Accounts payable, accrued expenses, and other liabilities
2,865,886
2,610,943
Dividends payable
227,191
221,824
Total liabilities
15,784,678
14,148,409
Commitments and contingencies
Redeemable noncontrolling interests
16,510
16,480
Alexandria Real Estate Equities, Inc.’s stockholders’ equity:
Common stock
1,722
1,719
Additional paid-in capital
18,238,438
18,485,352
Accumulated other comprehensive loss
(22,529)
(15,896)
Alexandria Real Estate Equities, Inc.’s stockholders’ equity
18,217,631
18,471,175
Noncontrolling interests
4,469,309
4,135,338
Total equity
22,686,940
22,606,513
Total liabilities, noncontrolling interests, and equity
$38,488,128
$36,771,402
The accompanying notes are an integral part of these consolidated financial statements.
2
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Revenues:
Income from rentals
$775,744
$707,531
$2,286,457
$2,099,819
Other income
15,863
6,257
40,992
28,664
Total revenues
791,607
713,788
2,327,449
2,128,483
Expenses:
Rental operations
233,265
217,687
668,833
636,454
General and administrative
43,945
45,987
135,629
140,065
Interest
43,550
11,411
130,179
42,237
Depreciation and amortization
293,998
269,370
872,272
808,227
Impairment of real estate
5,741
20,649
36,504
189,224
Total expenses
620,499
565,104
1,843,417
1,816,207
Equity in earnings of unconsolidated real estate joint ventures
139
242
424
617
Investment income (loss)
15,242
(80,672)
14,866
(204,051)
Gain on sales of real estate
27,114
—
27,506
214,810
Net income
213,603
68,254
526,828
323,652
Net income attributable to noncontrolling interests
(45,656)
(43,985)
(141,634)
(131,584)
Net income attributable to Alexandria Real Estate Equities, Inc.’s
stockholders
167,947
24,269
385,194
192,068
Net income attributable to unvested restricted stock awards
(3,273)
(2,414)
(10,717)
(7,697)
Net income attributable to Alexandria Real Estate Equities, Inc.’s
common stockholders
$164,674
$21,855
$374,477
$184,371
Net income per share attributable to Alexandria Real Estate
Equities, Inc.’s common stockholders:
Basic
$0.96
$0.13
$2.18
$1.08
Diluted
$0.96
$0.13
$2.18
$1.08
The accompanying notes are an integral part of these consolidated financial statements.
3
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net income
$213,603
$68,254
$526,828
$323,652
Other comprehensive income (loss)
Unrealized gains (losses) on foreign currency
translation:
Unrealized foreign currency translation gains
(losses) arising during the period
5,056
(8,395)
(6,758)
(4,172)
Reclassification adjustment for losses included in net
income
125
—
125
—
Unrealized gains (losses) on foreign currency
translation, net
5,181
(8,395)
(6,633)
(4,172)
Total other comprehensive income (loss)
5,181
(8,395)
(6,633)
(4,172)
Comprehensive income
218,784
59,859
520,195
319,480
Less: comprehensive income attributable to
noncontrolling interests
(45,656)
(43,985)
(141,634)
(131,584)
Comprehensive income attributable to Alexandria Real
Estate Equities, Inc.’s stockholders
$173,128
$15,874
$378,561
$187,896
The accompanying notes are an integral part of these consolidated financial statements.
4
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity
Number of
Common
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Equity
Redeemable
Noncontrolling
Interests
Balance as of June 30, 2024
172,017,674
$1,720
$18,284,611
$—
$(27,710)
$4,391,806
$22,650,427
$16,440
Net income
—
—
—
167,947
—
45,385
213,332
271
Total other comprehensive income
—
—
—
—
5,181
—
5,181
—
Contributions from and sales of noncontrolling interests
—
—
490
—
—
91,118
91,608
—
Distributions to and redemption of noncontrolling interests
—
—
—
—
—
(59,000)
(59,000)
(201)
Issuance pursuant to stock plan
376,781
4
31,235
—
—
—
31,239
—
Taxes related to net settlement of equity awards
(150,054)
(2)
(18,654)
—
—
—
(18,656)
—
Dividends declared on common stock ($1.30 per share)
—
—
—
(227,191)
—
—
(227,191)
—
Reclassification of distributions in excess of earnings
—
—
(59,244)
59,244
—
—
—
—
Balance as of September 30, 2024
172,244,401
$1,722
$18,238,438
$—
$(22,529)
$4,469,309
$22,686,940
$16,510
The accompanying notes are an integral part of these consolidated financial statements.
5
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity
Number of
Common
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Equity
Redeemable
Noncontrolling
Interests
Balance as of June 30, 2023
170,869,778
$1,709
$18,812,318
$—
$(16,589)
$3,917,186
$22,714,624
$52,628
Net income
—
—
—
24,269
—
43,737
68,006
248
Total other comprehensive loss
—
—
—
—
(8,395)
—
(8,395)
—
Contributions from and sales of noncontrolling interests
—
—
6,455
—
—
130,271
136,726
—
Distributions to and redemption of noncontrolling interests
—
—
—
—
—
(57,881)
(57,881)
(1,218)
Issuance pursuant to stock plan
203,826
2
31,196
—
—
—
31,198
—
Taxes related to net settlement of equity awards
(76,765)
(1)
(8,603)
—
—
—
(8,604)
—
Dividends declared on common stock ($1.24 per share)
—
—
—
(214,450)
—
—
(214,450)
—
Reclassification of distributions in excess of earnings
—
—
(190,181)
190,181
—
—
—
—
Balance as of September 30, 2023
170,996,839
$1,710
$18,651,185
$—
$(24,984)
$4,033,313
$22,661,224
$51,658
The accompanying notes are an integral part of these consolidated financial statements.
6
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity
Number of
Common
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Equity
Redeemable
Noncontrolling
Interests
Balance as of December 31, 2023
171,910,599
$1,719
$18,485,352
$—
$(15,896)
$4,135,338
$22,606,513
$16,480
Net income
—
—
—
385,194
—
140,820
526,014
814
Total other comprehensive loss
—
—
—
—
(6,633)
—
(6,633)
—
Contributions from and sales of noncontrolling interests
—
—
8,190
—
—
350,003
358,193
—
Distributions to and redemption of noncontrolling interests
—
—
(8,084)
—
—
(186,787)
(194,871)
(1,034)
Transfer of noncontrolling interests
—
—
—
—
—
(250)
(250)
250
Reallocation of capital to joint venture partner
—
—
(30,185)
—
—
30,185
—
—
Issuance pursuant to stock plan
555,959
6
101,302
—
—
—
101,308
—
Taxes related to net settlement of equity awards
(222,157)
(3)
(26,598)
—
—
—
(26,601)
—
Dividends declared on common stock ($3.87 per share)
—
—
—
(676,733)
—
—
(676,733)
—
Reclassification of distributions in excess of earnings
—
—
(291,539)
291,539
—
—
—
—
Balance as of September 30, 2024
172,244,401
$1,722
$18,238,438
$—
$(22,529)
$4,469,309
$22,686,940
$16,510
The accompanying notes are an integral part of these consolidated financial statements.
7
Alexandria Real Estate Equities, Inc.
Consolidated Statement of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
(Unaudited)
Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity
Number of
Common
Shares
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interests
Total
Equity
Redeemable
Noncontrolling
Interests
Balance as of December 31, 2022
170,748,395
$1,707
$18,991,492
$—
$(20,812)
$3,701,248
$22,673,635
$9,612
Net income
—
—
—
192,068
—
130,934
323,002
650
Total other comprehensive loss
—
—
—
—
(4,172)
—
(4,172)
—
Contributions from and sales of noncontrolling interests
—
—
30,400
—
—
400,993
431,393
35,250
Distributions to and redemption of noncontrolling interests
—
—
—
—
—
(192,096)
(192,096)
(1,620)
Transfer of noncontrolling interests
—
—
—
—
—
(7,766)
(7,766)
7,766
Issuance pursuant to stock plan
412,755
4
96,648
—
—
—
96,652
—
Taxes related to net settlement of equity awards
(164,311)
(1)
(21,072)
—
—
—
(21,073)
—
Dividends declared on common stock ($3.69 per share)
—
—
—
(638,351)
—
—
(638,351)
—
Reclassification of distributions in excess of earnings
—
—
(446,283)
446,283
—
—
—
—
Balance as of September 30, 2023
170,996,839
$1,710
$18,651,185
$—
$(24,984)
$4,033,313
$22,661,224
$51,658
The accompanying notes are an integral part of these consolidated financial statements.
8
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September 30,
2024
2023
Operating Activities:
Net income
$526,828
$323,652
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
872,272
808,227
Impairment of real estate
36,504
189,224
Gain on sales of real estate
(27,506)
(214,810)
Equity in earnings of unconsolidated real estate joint ventures
(424)
(617)
Distributions of earnings from unconsolidated real estate joint ventures
2,637
2,590
Amortization of loan fees
12,510
11,427
Amortization of debt discounts
976
898
Amortization of acquired above- and below-market leases
(70,167)
(69,647)
Deferred rent
(125,676)
(92,331)
Stock compensation expense
47,157
48,266
Investment (income) loss
(14,866)
204,051
Changes in operating assets and liabilities:
Tenant receivables
1,216
1,199
Deferred leasing costs
(74,608)
(81,573)
Other assets
(36,334)
(20,907)
Accounts payable, accrued expenses, and other liabilities
79,827
92,284
Net cash provided by operating activities
1,230,346
1,201,933
Investing Activities:
Proceeds from sales of real estate
229,790
761,321
Additions to real estate
(1,932,351)
(2,600,999)
Purchases of real estate
(201,049)
(257,333)
Change in escrow deposits
(5,512)
(5,982)
Investments in unconsolidated real estate joint ventures
(4,039)
(499)
Additions to non-real estate investments
(185,560)
(156,363)
Sales of and distributions from non-real estate investments
141,762
149,299
Net cash used in investing activities
$(1,956,959)
$(2,110,556)
9
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine Months Ended September 30,
2024
2023
Financing Activities:
Borrowings under secured notes payable
$24,853
$49,578
Repayments of borrowings from secured notes payable
(32)
(30)
Proceeds from issuance of unsecured senior notes payable
998,806
996,205
Borrowings under unsecured senior line of credit
—
375,000
Repayments of borrowings under unsecured senior line of credit
—
(375,000)
Proceeds from issuances under commercial paper program
7,935,600
1,705,000
Repayments of borrowings under commercial paper program
(7,580,600)
(1,705,000)
Payments of loan fees
(36,366)
(16,047)
Taxes paid related to net settlement of equity awards
(45,670)
(20,203)
Dividends on common stock
(671,366)
(633,032)
Contributions from and sales of noncontrolling interests
251,252
436,207
Distributions to and purchases of noncontrolling interests
(231,072)
(193,716)
Net cash provided by financing activities
645,405
618,962
Effect of foreign exchange rate changes on cash and cash equivalents
74
(603)
Net decrease in cash, cash equivalents, and restricted cash
(81,134)
(290,264)
Cash, cash equivalents, and restricted cash as of the beginning of period
660,771
857,975
Cash, cash equivalents, and restricted cash as of the end of period
$579,637
$567,711
Supplemental Disclosure and Non-Cash Investing and Financing Activities:
Cash paid during the period for interest, net of interest capitalized
$87,660
$16,559
Accrued construction for current-period additions to real estate
$419,072
$641,705
Contribution of assets from and issuance of noncontrolling interest to real estate joint
venture partner
$106,941
$33,250
Reallocation of additional paid-in-capital to consolidated joint venture partner’s non-
controlling interest
$30,185
$—
Transfer of real estate assets and/or equipment from tenants
$107,562
$—
Initial recognition of right-of-use asset and lease liability
$265,110
$—
The accompanying notes are an integral part of these consolidated financial statements.
10
Alexandria Real Estate Equities, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1.ORGANIZATION AND BASIS OF PRESENTATION
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® life science REIT, is 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
mega campuses in AAA life science innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego,
Seattle, Maryland, Research Triangle, and New York City. As of September 30, 2024, Alexandria has a total market capitalization of
$33.1 billion and an asset base in North America that includes 41.8 million RSF of operating properties, 5.3 million RSF of Class A/A+
properties undergoing construction, and one committed near-term project expected to commence construction in the next two years. As
used in this quarterly report on Form 10-Q, references to the “Company,” “Alexandria,” “ARE,” “we,” “us,” and “our” refer to Alexandria
Real Estate Equities, Inc. and its consolidated subsidiaries. The accompanying unaudited consolidated financial statements include the
accounts of Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries. All significant intercompany balances and
transactions have been eliminated.
We have prepared the accompanying interim consolidated financial statements in accordance with GAAP and in conformity
with the rules and regulations of the SEC. In our opinion, these interim consolidated financial statements presented herein reflect all
adjustments, of a normal recurring nature, that are necessary to fairly present the interim consolidated financial statements. The results
of operations for the interim period are not necessarily indicative of the results that may be expected for the year ending December 31,
2024. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in our annual report on Form 10-K for the year ended December 31, 2023. Any references to
our total market capitalization, number or quality of buildings or tenants, quality of location, square footage, number of leases, or
occupancy percentage, and any amounts derived from these values in these notes to consolidated financial statements are outside the
scope of our independent registered public accounting firm’s procedures.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
On an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly
owned by us in accordance with the consolidation accounting guidance. Our evaluation considers all of our variable interests, including
equity ownership, as well as fees paid to us for our involvement in the management of each partially owned entity. To fall within the
scope of the consolidation guidance, an entity must meet both of the following criteria:
•The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity
can be in the form of a partnership, limited liability company, or corporation, among others; and
•We have a variable interest in the legal entity — i.e., variable interests that are contractual, such as equity ownership, or
other financial interests that change with changes in the fair value of the entity’s net assets.
If an entity does not meet both criteria above, we apply other accounting literature, such as the equity method of accounting. If
an entity does meet both criteria above, we evaluate such entity for consolidation under either the variable interest model if the legal
entity meets any of the characteristics below to qualify as a VIE, or under the voting model for all other legal entities that are not VIEs.
A legal entity is determined to be a VIE if it has any of the following three characteristics:
1)The entity does not have sufficient equity to finance its activities without additional subordinated financial support;
2)The entity is established with non-substantive voting rights (i.e., the entity deprives the majority economic interest
holder(s) of voting rights); or
3)The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion
if they lack any of the following:
•The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence
the entity’s economic performance, as evidenced by:
•Substantive participating rights in day-to-day management of the entity’s activities; or
•Substantive kick-out rights over the party responsible for significant decisions;
•The obligation to absorb the entity’s expected losses; or
•The right to receive the entity’s expected residual returns.
11
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
For an entity, including our real estate joint ventures, structured as a limited partnership or a limited liability company, our
evaluation of whether the equity holders (equity partners other than the general partner or the managing member of a joint venture) lack
the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members
(the noncontrolling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:
•Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating
decisions made in the ordinary course of business that most significantly influence the entity’s economic performance.
•Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause.
If we conclude that any of the three characteristics of a VIE are met, including that the equity holders lack the characteristics of
a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that
the entity is a VIE and evaluate it for consolidation under the variable interest model.
Variable interest model
If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is
a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits — that is, (i) we have the
power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power) and (ii) we have the
obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE (benefits). We
consolidate VIEs whenever we determine that we are the primary beneficiary. Refer to Note 4 – “Consolidated and unconsolidated real
estate joint ventures” and Note 7 – “Investments” to our unaudited consolidated financial statements for information on specific entities
that qualify as VIEs. If we have a variable interest in a VIE but are not the primary beneficiary, we account for our investment using the
equity method.
Voting model
If a legal entity fails to meet any of the three characteristics of a VIE (i.e., insufficiency of equity, existence of non-substantive
voting rights, or lack of a controlling financial interest), we then evaluate such entity under the voting model. Under the voting model, we
consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares (or own a majority of the
limited partnership’s kick-out rights through voting interests), and that other equity holders do not have substantive participating rights.
Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements for
information on specific joint ventures that qualify for evaluation under the voting model.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions
that affect the reported amounts of assets, liabilities, and equity; the disclosure of contingent assets and liabilities as of the date of the
consolidated financial statements; and the amounts of revenues and expenses during the reporting period. Actual results could
materially differ from those estimates.
Investments in real estate
Evaluation of business combination or asset acquisition
We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly
hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and
needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the
definition of a business is accounted for as an asset acquisition. If either of the following criteria is met, the integrated set of assets and
activities acquired would not qualify as a business:
•Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group
of similar identifiable assets; or
•The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).
An acquired process is considered substantive if:
•The process includes an organized workforce (or includes an acquired contract that provides access to an organized
workforce) that is skilled, knowledgeable, and experienced in performing the process;
•The process cannot be replaced without significant cost, effort, or delay; or
•The process is considered unique or scarce.
12
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Generally, our acquisitions of real estate or in-substance real estate do not meet the definition of a business because
substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings,
and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or
an acquired contract that cannot be replaced without significant cost, effort, or delay. When evaluating acquired service or management
contracts, we consider the nature of the services performed, the terms of the contract relative to similar arm’s-length contracts, and the
availability of comparable vendors in evaluating whether the acquired contract constitutes a substantive process.
Recognition of real estate acquired
We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly
hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and
needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the
definition of a business is accounted for as an asset acquisition.
For acquisitions of real estate or in-substance real estate that are accounted for as business combinations, we allocate the
acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, noncontrolling interests, and
previously existing ownership interests at fair value as of the acquisition date. Assets include intangible assets such as tenant
relationships, acquired in-place leases, and favorable intangibles associated with in-place leases in which we are the lessor. Liabilities
include unfavorable intangibles associated with in-place leases in which we are the lessor. In addition, for acquired in-place finance or
operating leases in which we are the lessee, acquisition consideration is allocated to lease liabilities and related right-of-use assets,
adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. Any excess (deficit) of the
consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill (bargain purchase gain).
Acquisition costs related to business combinations are expensed as incurred.
Generally, we expect that acquisitions of real estate or in-substance real estate will not meet the definition of a business
because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land,
buildings, and related intangible assets). The accounting model for asset acquisitions is similar to the accounting model for business
combinations, except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and
liabilities assumed on a relative fair value basis. Any excess (deficit) of the consideration transferred relative to the sum of the fair value
of the assets acquired and liabilities assumed is allocated to the individual assets and liabilities based on their relative fair values. As a
result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. Incremental and external direct
acquisition costs related to acquisitions of real estate or in-substance real estate (such as legal and other third-party services) are
capitalized.
We exercise judgment to determine the key assumptions used to allocate the purchase price of real estate acquired among its
components. The allocation of the consideration to the various components of properties acquired during the year can have an effect on
our net income due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related
depreciation and amortization expense in our consolidated statements of operations. We apply judgment in utilizing available
comparable market information to assess relative fair value. We assess the relative fair values of tangible and intangible assets and
liabilities based on available comparable market information, including estimated replacement costs, rental rates, and recent market
transactions. In addition, we may use estimated cash flow projections that utilize appropriate discount and capitalization rates.
Estimates of future cash flows are based on a number of factors, including the historical operating results, known and anticipated
trends, and market/economic conditions that may affect the property.
The value of tangible assets acquired is based upon our estimation of fair value on an “as if vacant” basis. The value of
acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been
incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. If there is a
bargain fixed-rate renewal option for the period beyond the noncancelable lease term of an in-place lease, we evaluate intangible
factors, such as the business conditions in the industry in which the lessee operates, the economic conditions in the area in which the
property is located, and the ability of the lessee to sublease the property during the renewal term, in order to determine the likelihood
that the lessee will renew. When we determine that there is reasonable assurance that such bargain purchase option will be exercised,
we consider the option in determining the intangible value of such lease and its related amortization period. We also recognize the
relative fair values of assets acquired, the liabilities assumed, and any noncontrolling interest in acquisitions of less than a 100%
interest when the acquisition constitutes a change in control of the acquired entity.
13
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Depreciation and amortization
The values allocated to buildings and building improvements, land improvements, tenant improvements, and equipment are
depreciated on a straight-line basis. For buildings and building improvements, we depreciate using the shorter of the respective ground
lease terms or their estimated useful lives, not to exceed 40 years. Land improvements are depreciated over their estimated useful
lives, not to exceed 20 years. Tenant improvements are depreciated over their respective lease terms or estimated useful lives, and
equipment is depreciated over the shorter of the lease term or its estimated useful life. The values of the right-of-use assets are
amortized on a straight-line basis over the remaining terms of each related lease. The values of acquired in-place leases and
associated favorable intangibles (i.e., acquired above-market leases) are classified in other assets in our consolidated balance sheets
and are amortized over the remaining terms of the related leases as a reduction of income from rentals in our consolidated statements
of operations. The values of unfavorable intangibles (i.e., acquired below-market leases) associated with acquired in-place leases are
classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets and are amortized over the
remaining terms of the related leases as an increase in income from rentals in our consolidated statements of operations.
Capitalized project costs
We capitalize project costs, including pre-construction costs, interest, property taxes, insurance, and other costs directly
related and essential to the development, redevelopment, pre-construction, or construction of a project. Capitalization of development,
redevelopment, pre-construction, and construction costs is required while activities are ongoing to prepare an asset for its intended use.
Fluctuations in our development, redevelopment, pre-construction, and construction activities could result in significant changes to total
expenses and net income. Costs incurred after a project is substantially complete and ready for its intended use are expensed as
incurred. Should development, redevelopment, pre-construction, or construction activity cease, interest, property taxes, insurance, and
certain other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and
maintenance are expensed as incurred.
Real estate sales
A property is classified as held for sale when all of the following criteria for a plan of sale have been met: (i) management,
having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its
present condition, subject only to terms that are usual and customary; (iii) an active program to locate a buyer and other actions
required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within
one year; (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and
(vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn. Depreciation of assets ceases upon designation of a property as held for sale. Refer to Note 15 – “Assets
classified as held for sale” to our unaudited consolidated financial statements for additional details.
If the disposal of a property represents a strategic shift that has (or will have) a major effect on our operations or financial
results, such as (i) a major line of business, (ii) a major geographic area, (iii) a major equity method investment, or (iv) other major parts
of an entity, then the operations of the property, including any interest expense directly attributable to it, are classified as discontinued
operations in our consolidated statements of operations, and amounts for all prior periods presented are reclassified from continuing
operations to discontinued operations. The disposal of an individual property generally will not represent a strategic shift and therefore
will typically not meet the criteria for classification as a discontinued operation.
We recognize gains or losses on real estate sales in accordance with the accounting standard on the derecognition of
nonfinancial assets arising from contracts with noncustomers. Our ordinary output activities consist of the leasing of space to our
tenants in our operating properties, not the sales of real estate. Therefore, sales of real estate (in which we are the seller) qualify as
contracts with noncustomers. In our transactions with noncustomers, we apply certain recognition and measurement principles
consistent with our method of recognizing revenue arising from contracts with customers. Derecognition of the asset is based on the
transfer of control. If a real estate sales contract includes our ongoing involvement with the property, then we evaluate each promised
good or service under the contract to determine whether it represents a separate performance obligation, constitutes a guarantee, or
prevents the transfer of control. If a good or service is considered a separate performance obligation, an allocated portion of the
transaction price is recognized as revenue as we transfer the related good or service to the buyer.
The recognition of gain or loss on the sale of a partial interest also depends on whether we retain a controlling or
noncontrolling interest in the property. If we retain a controlling interest in the property upon completion of the sale, we continue to
reflect the asset at its book value, record a noncontrolling interest for the book value of the partial interest sold, and recognize additional
paid-in capital for the difference between the consideration received and the partial interest at book value. Conversely, if we retain a
noncontrolling interest upon completion of the sale of a partial interest of real estate, we recognize a gain or loss as if 100% of the asset
were sold.
14
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of long-lived assets
Prior to and subsequent to the end of each quarter, we review current activities and changes in the business conditions of all of
our long-lived assets to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If
triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows, including, if
necessary, a probability-weighted approach if multiple outcomes are under consideration.
Long-lived assets to be held and used, including our rental properties, CIP, land held for development, right-of-use assets
related to operating leases in which we are the lessee, and intangibles, are individually evaluated for impairment when conditions exist
that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be
held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual
disposition of the asset. Triggering events or impairment indicators for long-lived assets to be held and used are assessed by project
and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations,
current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market
factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, construction
costs, available market information, current and historical operating results, known trends, current market/economic conditions that may
affect the asset, and our assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple
outcomes are under consideration. 
Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount of the asset to
its estimated fair value. If an impairment charge is not required to be recognized, the recognition of depreciation or amortization is
adjusted prospectively, as necessary, to reduce the carrying amount of the asset to its estimated disposition value over the remaining
period that the asset is expected to be held and used. We may adjust depreciation of properties that are expected to be disposed of or
redeveloped prior to the end of their useful lives.
We use the held for sale impairment model for our properties classified as held for sale, which is different from the held and
used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the
long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for
a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held
for sale.
International operations
In addition to operating properties in the U.S., we have 11 properties in Canada. The functional currency for our subsidiaries
operating in the U.S. is the U.S. dollar. The local currency of a foreign subsidiary serves as its functional currency. The assets and
liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect as of the financial statement date.
Revenue and expense accounts of our foreign subsidiaries are translated using the weighted-average exchange rate for the periods
presented. Gains or losses resulting from the translation are classified in accumulated other comprehensive income (loss) as a
separate component of total equity and are excluded from net income (loss).
Whenever a foreign investment meets the criteria for classification as held for sale, we evaluate the recoverability of the
investment under the held for sale impairment model. We may recognize an impairment charge if the carrying amount of the investment
exceeds its fair value less cost to sell. In determining an investment’s carrying amount, we consider its net book value and any
cumulative unrealized foreign currency translation adjustment related to the investment.
The appropriate amounts of foreign exchange rate gains or losses classified in accumulated other comprehensive income
(loss) are reclassified to net income (loss) when realized upon the sale of our investment or upon the complete or substantially
complete liquidation of our investment.
Investments
We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. As a
REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10%. We evaluate each investment to
determine whether we have the ability to exercise significant influence, but not control, over an investee. We evaluate investments in
which our ownership is equal to or greater than 20%, but less than or equal to 50%, of an investee’s voting stock with a presumption
that we have this ability. For our investments in limited partnerships that maintain specific ownership accounts, we presume that such
ability exists when our ownership interest exceeds 3% to 5%. In addition to our ownership interest, we consider whether we have a
board seat or whether we participate in the investee’s policy-making process, among other criteria, to determine if we have the ability to
exert significant influence, but not control, over an investee. If we determine that we have such ability, we account for the investment
under the equity method, as described below.
From time to time, we may hold equity investments that are subject to contractual sale restrictions. We do not recognize a
discount related to a contractual sale restriction.
15
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Investments accounted for under the equity method
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying
amount of the investment for our share of earnings or losses reported by the investee, distributions received, and other-than-temporary
impairments. For more information about our investments accounted for under the equity method, refer to Note 7 – “Investments” to our
unaudited consolidated financial statements.
Investments that do not qualify for the equity method of accounting
For investees over which we determine that we do not have the ability to exercise significant influence or control, we account
for each investment depending on whether it is an investment in a (i) publicly traded company, (ii) privately held entity that reports NAV
per share, or (iii) privately held entity that does not report NAV per share, as described below.
Investments in publicly traded companies
Our investments in publicly traded companies are classified as investments with readily determinable fair values and are
presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. The fair values for our investments in publicly traded companies are determined based on sales
prices or quotes available on securities exchanges.
Investments in privately held companies
Our investments in privately held entities without readily determinable fair values consist of (i) investments in privately held
entities that report NAV per share and (ii) investments in privately held entities that do not report NAV per share. These investments are
accounted for as follows:
Investments in privately held entities that report NAV per share
Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships,
are presented at fair value using NAV as a practical expedient, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. We use NAV per share reported by limited partnerships generally without adjustment, unless we
are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the
investment at our reporting date.
Investments in privately held entities that do not report NAV per share
Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative,
under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes classified
in investment income (loss) in our consolidated statements of operations.
An observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is
observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity
transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity
transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we
evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution
preferences, and conversion rights to the investments we hold.
16
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment evaluation of equity method investments and investments in privately held entities that do not report NAV per
share
We monitor equity method investments and investments in privately held entities that do not report NAV per share for new
developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements,
capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment
for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators:
(i)a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;
(ii)a significant adverse change in the regulatory, economic, or technological environment of the investee;
(iii)a significant adverse change in the general market condition, including the research and development of technology and
products that the investee is bringing or attempting to bring to the market;
(iv)significant concerns about the investee’s ability to continue as a going concern; and/or
(v)a decision by investors to cease providing support or reduce their financial commitment to the investee.
If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an
impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
Investment income/loss recognition and classification
We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified in
investment income (loss) in our consolidated statements of operations. Unrealized gains and losses represent:
(i)changes in fair value for investments in publicly traded companies;
(ii)changes in NAV for investments in privately held entities that report NAV per share;
(iii)observable price changes for investments in privately held entities that do not report NAV per share; and
(iv)our share of unrealized gains or losses reported by our equity method investees.
Realized gains and losses on our investments represent the difference between proceeds received upon disposition of
investments and their historical or adjusted cost basis. For our equity method investments, realized gains and losses represent our
share of realized gains or losses reported by the investee. Impairments are realized losses, which result in an adjusted cost basis, and
represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share and equity
method investments, if impairments are deemed other than temporary, to their estimated fair value.
Revenues
The table below provides details of our consolidated total revenues for the three and nine months ended September 30, 2024
and 2023 (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Income from rentals:
Revenues subject to the lease accounting standard:
Operating leases
$763,947
$696,601
$2,255,634
$2,069,042
Direct financing leases
665
653
1,986
1,951
Revenues subject to the lease accounting standard
764,612
697,254
2,257,620
2,070,993
Revenues subject to the revenue recognition
accounting standard
11,132
10,277
28,837
28,826
Income from rentals
775,744
707,531
2,286,457
2,099,819
Other income
15,863
6,257
40,992
28,664
Total revenues
$791,607
$713,788
$2,327,449
$2,128,483
During the three and nine months ended September 30, 2024, revenues that were subject to the lease accounting standard
aggregated $764.6 million and $2.3 billion, respectively, and represented 96.6% and 97.0%, respectively, of our total revenues. During
the three and nine months ended September 30, 2023, revenues that were subject to the lease accounting standard aggregated
$697.3 million and $2.1 billion, respectively, and represented 97.7% and 97.3%, respectively, of our total revenues. Our other income
consisted primarily of management fees and interest income earned during each period presented. For a detailed discussion related to
our revenue streams, refer to “Lease accounting” and “Recognition of revenue arising from contracts with customers” in Note 2 –
“Summary of significant accounting policies” to our unaudited consolidated financial statements.
17
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Lease accounting
Definition and classification of a lease
When we enter into a contract or amend an existing contract, we evaluate whether the contract meets the definition of a lease.
To meet the definition of a lease, the contract must meet all three criteria:
(i)One party (lessor) must hold an identified asset;
(ii)The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset
throughout the period of the contract; and
(iii)The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.
We classify our leases as either finance leases or operating leases if we are the lessee, or sales-type, direct financing, or
operating leases if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type
or direct financing lease (as a lessor):
(i)Ownership is transferred from lessor to lessee by the end of the lease term;
(ii)An option to purchase is reasonably certain to be exercised;
(iii)The lease term is for the major part of the underlying asset’s remaining economic life;
(iv)The present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset; or
(v)The underlying asset is specialized and is expected to have no alternative use at the end of the lease term.
If we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do
not meet any of the criteria, we account for the lease as an operating lease.
A lease is accounted for as a sales-type lease if it is considered to transfer control of the underlying asset to the lessee. A
lease is accounted for as a direct financing lease if risks and rewards are conveyed without the transfer of control, which is normally
indicated by the existence of a residual value guarantee from an unrelated third party other than the lessee.
This classification will determine the method of recognition of the lease:
•For an operating lease, we recognize income from rentals if we are the lessor, or rental operations expense if we are the
lessee, over the term of the lease on a straight-line basis.
•For a sales-type lease or a direct financing lease, we recognize the income from rentals, or for a finance lease, we
recognize rental operations expense, over the term of the lease using the effective interest method.
•At inception of a sales-type lease or a direct financing lease, if we determine the fair value of the leased property is lower
than its carrying amount, we recognize a selling loss immediately at lease commencement. If fair value exceeds the
carrying amount of a lease, a gain is recognized at lease commencement on a sales-type lease. For a direct financing
lease, a gain is deferred at lease commencement and amortized over the lease term.
Lessor accounting
Costs to execute leases
We capitalize initial direct costs, which represent only incremental costs to execute a lease that would not have been incurred
if the lease had not been obtained. Costs that we incur to negotiate or arrange a lease, regardless of its outcome, such as for fixed
employee compensation, tax or legal advice to negotiate lease terms, and other costs, are expensed as incurred.
Operating leases
We account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires
us to account for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single
component if two criteria are met:
(i)The timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
(ii)The lease component would be classified as an operating lease if it were accounted for separately.
Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our
leases, and contingent rental payments. Nonlease components consist primarily of tenant recoveries representing reimbursements of
rental operating expenses under our triple net lease structure, including recoveries for property taxes, insurance, utilities, repairs and
maintenance, and common area expenses.
18
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
If the lease component is the predominant component, we account for all revenues under such lease as a single component in
accordance with the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues
under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for
the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all
revenues from our operating leases under the lease accounting standard and classify these revenues as income from rentals in our
consolidated statements of operations.
We commence recognition of income from rentals related to the operating leases at the date the property is ready for its
intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. When a lease includes
construction of tenant improvements, we determine whether the improvements are landlord or tenant assets. In determining if the
improvements are landlord or tenant improvements, we consider various factors including, but not limited to, the following:
•Which party retains legal title to the improvements upon lease expiration;
•Whether the improvements are expected to have significant residual value at the end of the lease term;
•Whether the improvements are unique to the tenant;
•What happens to the improvements upon lease expiration (i.e., whether they are removed or preserved for the landlord)
•Which party bears all costs of the improvements (including the risk of cost overruns); and
•Which party supervises the construction of the improvements.
If the improvements are landlord assets, we capitalize such improvements. If the improvements are tenant assets, we do not
capitalize these assets. Such improvements, if funded by us, are accounted for as lease incentives and amortized as a reduction of
revenue over the term of the lease. If the tenant funds improvements without reimbursement from us and we determine these
improvements to be landlord assets, we consider the amount associated with the improvements to be noncash lease payments, which
are recognized as incremental revenue over the term of the lease.
Income from rentals related to fixed rental payments under operating leases is recognized on a straight-line basis over the
respective operating lease terms. We classify amounts expected to be received in later periods as deferred rent in our consolidated
balance sheets. Amounts received currently but recognized as revenue in future periods are classified in accounts payable, accrued
expenses, and other liabilities in our consolidated balance sheets.
Income from rentals related to variable payments includes tenant recoveries and contingent rental payments. Tenant
recoveries, including reimbursements of utilities, repairs and maintenance, common area expenses, real estate taxes and insurance,
and other operating expenses, are recognized as revenue in the period during which the applicable expenses are incurred and the
tenant’s obligation to reimburse us arises. Income from rentals related to other variable payments is recognized when associated
contingencies are removed.
We assess collectibility from our tenants of future lease payments for each of our operating leases. If we determine that
collectibility is probable, we recognize income from rentals based on the methodology described above. If we determine that
collectibility is not probable, we recognize an adjustment to lower our income from rentals. Furthermore, we may recognize a general
allowance at a portfolio level (not the individual level) if we do not expect to collect future lease payments in full.
For each lease for which we determine that collectibility of future lease payments is not probable, we cease the recognition of
income from rentals on a straight-line basis and limit the recognition of income to the lesser of payments collected from the lessee or
lease income that would have been recognized on a straight-line basis. We do not resume straight-line recognition of income from
rentals for these leases until we determine that the collectibility of future payments related to these leases is probable. We also record a
general allowance related to the deferred rent balances that at the portfolio level (not the individual level) are not expected to be
collected in full through the lease term. As of September 30, 2024 and December 31, 2023, our general allowance balance aggregated
$21.3 million and $21.4 million, respectively.
Direct financing and sales-type leases
Income from rentals related to direct financing and sales-type leases is recognized over the lease term using the effective
interest rate method. At lease commencement, we record an asset within other assets in our consolidated balance sheets, which
represents our net investment in the lease. This initial net investment is determined by aggregating the present values of the total future
lease payments attributable to the lease and the estimated residual value of the property, less any unearned income related to our
direct financing lease. Over the lease term, the investment in the lease accretes in value, producing a constant periodic rate of return on
the net investment in the lease. Income from these leases is classified in income from rentals in our consolidated statements of
operations. Our net investment is reduced over time as lease payments are received. We evaluate our net investment in direct financing
and sales-type leases for impairment under the current expected credit loss accounting standard. For more information, refer to
“Allowance for credit losses” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial
statements.
As a lessor, we classify a lease with variable lease payments that do not depend on an index or a rate as an operating lease
19
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
on the commencement date of the lease if both of the following criteria are met:
(i)The lease would have been classified as a sales-type lease or direct financing lease under the current lease accounting
standard; and
(ii)The sales-type lease or direct financing lease classification would have resulted in a selling loss at lease commencement.
We do not derecognize the underlying asset and do not recognize a loss upon lease commencement but continue to
depreciate the underlying asset over its useful life.
Lessee accounting
We have operating lease agreements in which we are the lessee consisting of ground and office leases. At the lease
commencement date (or at the acquisition date if the lease is acquired as part of a real estate acquisition), we are required to recognize
a liability to account for our future obligations under these operating leases, and a corresponding right-of-use asset.
The lease liability is measured based on the present value of the future lease payments, including payments during the term
under our extension options that we are reasonably certain to exercise. The present value of the future lease payments is calculated for
each operating lease using each respective remaining lease term and a corresponding estimated incremental borrowing rate, which is
the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to
the lease payments. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement
date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period. We classify
the operating lease liability in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets.
The right-of-use asset is measured based on the corresponding lease liability, adjusted for initial direct leasing costs and any
other consideration exchanged with the landlord prior to the commencement of the lease, as well as adjustments to reflect favorable or
unfavorable terms of an acquired lease when compared with market terms at the time of acquisition. Subsequently, the right-of-use
asset is amortized on a straight-line basis during the lease term. We classify the right-of-use asset in other assets in our consolidated
balance sheets.
Recognition of revenue arising from contracts with customers
We recognize revenues associated with transactions arising from contracts with customers, excluding revenues subject to the
lease accounting standard discussed in “Lease accounting” above, in accordance with the revenue recognition accounting standard. A
customer is distinguished from a noncustomer by the nature of the goods or services that are transferred. Customers are provided with
goods or services that are generated by a company’s ordinary output activities, whereas noncustomers are provided with nonfinancial
assets that are outside of a company’s ordinary output activities.
We generally recognize revenue representing the transfer of goods and services to customers in an amount that reflects the
consideration to which we expect to be entitled in the exchange. In order to determine the recognition of revenue from customer
contracts, we use a five-step model to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract,
(iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will
not occur, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we
satisfy the performance obligation.
We identify contractual performance obligations and determine whether revenue should be recognized at a point in time or
over time, based on when control of goods and services transfers to a customer. We consider whether we control the goods or services
prior to the transfer to the customer in order to determine whether we should account for the arrangement as a principal or agent. If we
determine that we control the goods or services provided to the customer, then we are the principal to the transaction, and we recognize
the gross amount of consideration expected in the exchange. If we simply arrange but do not control the goods or services being
transferred to the customer, then we are considered to be an agent to the transaction, and we recognize the net amount of
consideration we are entitled to retain in the exchange.
Total revenues subject to the revenue recognition accounting standard and classified within income from rentals in our
consolidated statements of operations for the three and nine months ended September 30, 2024 included $11.1 million and
$28.8 million, respectively, primarily related to short-term parking revenues associated with long-term lease agreements. Short-term
parking revenues do not qualify for the single component accounting policy, as discussed in “Lessor accounting” in Note 2 – “Summary
of significant accounting policies”, due to the difference in the timing and pattern of transfer of our parking service obligations and
associated lease components within the same lease agreement. We recognize short-term parking revenues in accordance with the
revenue recognition accounting standard when the service is provided and the performance obligation is satisfied, which normally
occurs at a point in time.
20
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Monitoring of tenant credit quality
During the term of each lease, we monitor the credit quality and any related material changes of our tenants by (i) monitoring
the credit rating of tenants that are rated by a nationally recognized credit rating agency, (ii) reviewing financial statements of the
tenants that are publicly available or that are required to be delivered to us pursuant to the applicable lease, (iii) monitoring news
reports regarding our tenants and their respective businesses, and (iv) monitoring the timeliness of lease payments.
Allowance for credit losses
We are required to estimate and recognize lifetime expected losses, rather than incurred losses, for most of our financial
assets measured at amortized cost and certain other instruments, including trade and other receivables (excluding receivables arising
from operating leases), loans, held-to-maturity debt securities, net investments in leases arising from sales-type and direct financing
leases, and off-balance-sheet credit exposures (e.g., loan commitments). The recognition of such expected losses, even if the expected
risk of credit loss is remote, typically results in earlier recognition of credit losses. An assessment of the collectibility of operating lease
payments and the recognition of an adjustment to lease income based on this assessment is governed by the lease accounting
standard discussed in “Lease accounting” earlier in Note 2 — “Summary of significant accounting policies” to our unaudited
consolidated financial statements.
At each reporting date, we reassess our credit loss allowances on the aggregate net investment of direct financing and sales-
type leases and our trade receivables. If necessary, we recognize a credit loss adjustment for our current estimate of expected credit
losses, which is classified within rental operations in our consolidated statements of operations. Refer to Note 5 – “Leases” to our
unaudited consolidated financial statements for additional details.
Income taxes
We are organized and operate as a REIT pursuant to the Internal Revenue Code (the “Code”). Under the Code, a REIT that
distributes at least 90% of its REIT taxable income to its stockholders annually (excluding net capital gains) and meets certain other
conditions is not subject to federal income tax on its distributed taxable income, but could be subject to certain federal, foreign, state,
and local taxes. We distribute 100% of our taxable income annually; therefore, a provision for federal income taxes is not required. In
addition to our REIT returns, we file federal, foreign, state, and local tax returns for our subsidiaries. We file with jurisdictions located in
the U.S., Canada, and other international locations. Our tax returns are subject to routine examination in various jurisdictions for the
2018 through 2023 calendar years.
Employee and non-employee share-based payments
We have implemented an entity-wide accounting policy to account for forfeitures related to unmet service conditions of share-
based awards granted to employees and non-employees when they occur. Under this policy, when forfeitures occur, any previously
recognized expense related to those forfeited awards is reversed in the period of forfeiture.
Our employee and non-employee share-based awards are measured at fair value on the grant date and recognized over the
recipient’s required service period. For share-based awards with performance conditions, we continue to assess the probability of
achieving the performance conditions and recognize expense only when it becomes probable that the performance targets will be met.
Conversely, for share-based awards with market conditions, expense is recognized regardless of whether the market condition is
achieved.
All nonforfeitable dividends paid on share-based awards are initially classified in retained earnings and reclassified to
compensation cost only if forfeitures of the underlying awards occur.
Forward equity sales agreements
From time to time, we enter into forward equity sales agreements and account for them in accordance with the accounting
guidance governing financial instruments and derivatives. Under the accounting guidance, our forward equity sales agreements are not
deemed to be liabilities as they do not embody obligations to repurchase our shares, nor do they embody obligations to issue a variable
number of shares for which the monetary value is predominantly fixed, varied with something other than the fair value of our shares, or
varied inversely in relation to our shares. We also evaluate whether the agreements meet the derivatives and hedging guidance scope
exception to be accounted for as equity instruments. Our forward equity sales agreements are classified as equity contracts based on
the following assessment: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides
those related to the market for our own stock price and operations; and (ii) none of the settlement provisions preclude the agreements
from being indexed to our own stock.
21
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Issuer and guarantor subsidiaries of guaranteed securities
Generally, a parent entity of an issuer that holds guaranteed securities must provide separate subsidiary issuer or guarantor
financial statements, unless it qualifies for disclosure exceptions. A parent entity may be eligible for disclosure exceptions if it meets the
following criteria:
(i)The subsidiary issuer or guarantor is a consolidated subsidiary of the parent company, and
(ii)The subsidiary issues a registered security that is issued jointly and severally with the parent company, or is fully and
unconditionally guaranteed by the parent company.
A parent entity that meets the above criteria may instead present summarized financial information (“alternative disclosures”)
either within the consolidated financial statements or within “Management’s discussion and analysis of financial condition and results of
operations” in Item 2. We evaluated the criteria and determined that we are eligible for the disclosure exceptions, which allow us to
provide alternative disclosures; as such, we present alternative disclosures in “Management’s discussion and analysis of financial
condition and results of operations” in Item 2.
Loan fees
Fees incurred in obtaining long-term financing are capitalized and classified with the corresponding debt instrument appearing
on our consolidated balance sheets. Loan fees related to our unsecured senior line of credit are capitalized and classified within other
assets. Capitalized amounts are amortized over the term of the related loan, and the amortization is classified in interest expense in our
consolidated statements of operations.
Distributions from equity method investments
We use the “nature of the distribution” approach to determine the classification within our consolidated statements of cash
flows of cash distributions received from equity method investments, including our unconsolidated real estate joint ventures and equity
method non-real estate investments. Under this approach, distributions are classified based on the nature of the underlying activity that
generated the cash distributions. If we lack the information necessary to apply this approach in the future, we will be required to apply
the “cumulative earnings” approach as an accounting change on a retrospective basis. Under the cumulative earnings approach,
distributions up to the amount of cumulative equity in earnings recognized are classified as cash inflows from operating activities, and
those in excess of that amount are classified as cash inflows from investing activities.
Restricted cash
We present cash and cash equivalents separately from restricted cash within our consolidated balance sheets. However, we
include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown
in the consolidated statements of cash flows. We provide a reconciliation between the consolidated balance sheets and the
consolidated statements of cash flows, as required, when the balance includes more than one line item for cash, cash equivalents, and
restricted cash. We also provide a disclosure of the nature of the restrictions related to material restricted cash balances.
Recent accounting pronouncements
On August 23, 2023, the FASB issued an ASU that will require a joint venture, upon formation, to measure its assets and
liabilities at fair value in its standalone financial statements. A joint venture will recognize the difference between the fair value of its
equity and the fair value of its identifiable assets and liabilities as goodwill (or an equity adjustment, if negative) using the business
combination accounting guidance regardless of whether the net assets meet the definition of a business. The new accounting standard
is intended to reduce diversity in practice. This ASU will apply to joint ventures that meet the definition of a corporate joint venture under
GAAP, thus limiting its scope to joint ventures not controlled and therefore not consolidated by any joint venture investor. We generally
seek to maintain control of our real estate joint ventures and therefore expect this ASU to apply to a limited number, if any, of our
unconsolidated real estate joint ventures formed after the adoption of this accounting standard. This standard does not change the
accounting of investments by the investors in a joint venture in their individual financial statements, and therefore, its adoption will have
no impact on our consolidated financial statements. This accounting standard will become effective for joint ventures with a formation
date on or after January 1, 2025, with early adoption permitted. We expect to adopt this ASU on January 1, 2025.
On November 27, 2023, the FASB issued an ASU that will require quarterly disclosure of segment expenses if they are (i)
significant to the segment, (ii) regularly provided to the chief operating decision maker (“CODM”), and (iii) included in each reported
measure of a segment’s profit or loss. In addition, this ASU requires an annual disclosure of the CODM’s title and a description of how
the CODM uses the segment’s profit/loss measure to assess segment performance and to allocate resources. Pursuant to this ASU, the
footnotes to our consolidated financial statements may include incremental disclosures. The compliance with this ASU will be required
beginning with our annual report on Form 10-K for the year ending December 31, 2024, followed by interim disclosures in our quarterly
reports on Form 10-Q thereafter, with early adoption permitted. We will adopt this ASU for our annual report on Form 10-K for the year
ending December 31, 2024.
22
3.INVESTMENTS IN REAL ESTATE
Our consolidated investments in real estate, including real estate assets classified as held for sale as described in Note 15 –
“Assets classified as held for sale” to our unaudited consolidated financial statements, consisted of the following as of September 30,
2024 and December 31, 2023 (in thousands):
September 30, 2024
December 31, 2023
Rental properties:
Land (related to rental properties)
$4,267,297
$4,385,515
Buildings and building improvements
20,651,577
20,320,866
Other improvements
4,317,120
3,681,628
Rental properties
29,235,994
28,388,009
Development and redevelopment projects
9,340,425
8,226,309
Gross investments in real estate
38,576,419
36,614,318
Less: accumulated depreciation
(5,624,642)
(4,980,807)
Investments in real estate(1)
$32,951,777
$31,633,511
(1)Balances as of September 30, 2024 and December 31, 2023 include investments in real estate aggregating $228.4 million and $185.4 million, respectively, related to our
assets held for sale as of each respective date. Refer to Note 15 – “Assets held for sale” to our unaudited consolidated financial statements for additional details.
Acquisitions
Our real estate asset acquisitions during the nine months ended September 30, 2024 consisted of the following (dollars in
thousands):
Property
Submarket/Market
Date of
Purchase
Number of
Properties
Future
Development
Square Footage
Purchase
Price(1)
285, 299, 307, and 345 Dorchester Avenue(2)
Seaport Innovation District/
Greater Boston
1/30/24
—
1,040,000
$155,321
Other
46,490
$201,811
(1)Represents the aggregate contractual purchase price of our acquisitions, which differs from purchases of real estate in our unaudited consolidated statements of cash
flows due to the timing of payment, closing costs, and other acquisition adjustments such as prorations of rents and expenses.
(2)Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements for additional details.
Based upon our evaluation of each acquisition, we determined that substantially all of the fair value related to each acquisition
was concentrated in a single identifiable asset or a group of similar identifiable assets or was associated with a land parcel with no
operations. Accordingly, each transaction did not meet the definition of a business and therefore was accounted for as an asset
acquisition. In each of these transactions, we allocated the total consideration for each acquisition to the individual assets and liabilities
acquired on a relative fair value basis.
Sales of real estate assets and impairment charges
Our completed dispositions of real estate assets during the nine months ended September 30, 2024 consisted of the following
(dollars in thousands):
Property
Submarket/Market
Date of
Sale
Interest
Sold
RSF
Sales Price
Gain on Sales
of Real Estate
99 A Street
Seaport Innovation District/
Greater Boston
3/8/24
100%
235,000
$13,350
$—
1165 Eastlake Avenue East
Lake Union/Seattle
9/12/24
100%
100,086
149,985
21,535
219 East 42nd Street
New York City/New York City
7/9/24
100%
349,947
60,000
—
Other
15,374
5,971
$238,709
(1)
$27,506
(1)Represents the aggregate contractual sales price of our dispositions, which differs from proceeds from sales of real estate and contributions from and sales of
noncontrolling interests in our consolidated statements of cash flows under “Investing activities” and “Financing activities,” respectively, primarily due to the timing of
payment, closing costs, and other sales adjustments such as prorations of rents and expenses.
23
3.INVESTMENTS IN REAL ESTATE (continued)
Impairment charges
During the nine months ended September 30, 2024, we recognized real estate impairment charges aggregating $36.5 million,
consisting of the following:
•Impairment charges aggregating $30.8 million primarily consisting of the pre-acquisition costs related to two potential
acquisitions aggregating 1.4 million RSF of future development in our Greater Boston market. We executed purchase
agreements for these potential acquisitions with the total purchase price aggregating $366.8 million in 2020 and 2022, and we
initially expected to close these acquisitions after 2024. Our intent for each site included the demolition of existing buildings
upon expiration of the existing in-place leases and the development of life science properties. During the three months ended
June 30, 2024, due to the existing macroeconomic environment that negatively impacted the financial outlooks for these
projects, we decided to no longer proceed with these acquisitions, resulting in the recognition of impairment charges. 
•Impairment charge of $5.7 million to adjust the carrying amount of one property in Canada that continued to meet the held-for-
sale classification to the sales price under negotiation with a potential buyer less costs to sell. We expect to sell this property
within 12 months.
Other
In 2006, ARE-East River Science Park, LLC, a subsidiary of Alexandria Real Estate Equities, Inc., was granted an option to
incorporate a land parcel adjacent to and north of the Alexandria Center® for Life Science – New York City (“ACLS-NYC”) campus
(“Option Parcel”) into the existing ground lease of that campus. The Option Parcel will allow ARE-East River Science Park, LLC to
develop a future world-class life science building within the ACLS-NYC campus. ARE-East River Science Park, LLC’s investment in pre-
construction costs related to the development of the Option Parcel, including costs related to design, engineering, environmental,
survey/title, and permitting and legal costs, aggregate $165.1 million as of September 30, 2024.
On August 6, 2024, ARE-East River Science Park, LLC filed a lawsuit in the United States District Court for the Southern
District of New York against its landlord, New York City Health + Hospitals Corporation (“H+H”), and the New York City Economic
Development Corporation (“EDC”). The lawsuit alleges two principal claims against H+H and EDC: fraud in the inducement, and, in the
alternative, breach of contract in violation of the implied covenant of good faith and fair dealing. As alleged in the complaint, ARE-East
River Science Park, LLC’s claims arise from H+H’s and EDC’s misrepresentations and concealment of material facts in connection with
a floodwall, which H+H and EDC are seeking to require ARE-East River Science Park, LLC to integrate into the development of the
Option Parcel. ARE-East River Science Park, LLC alleges that H+H’s and EDC’s misconduct have prevented it from commencing the
development of the Option Parcel. In light of the pending litigation, the closing date for the option and thus the commencement date for
construction of the third tower at the campus are presently indeterminate. Among other things, ARE-East River Science Park, LLC is
seeking significant damages and equitable relief to maintain the option.
This matter exposes us to potential losses ranging from zero to the full amount of the investment in the project aggregating
$165.1 million as of September 30, 2024, depending on any collection of damages and/or the ability to develop the project. We
performed a probability-weighted recoverability analysis based on initial estimates of various possible outcomes and determined no
impairment was present as of September 30, 2024.
24
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES
From time to time, we enter into joint venture agreements through which we own a partial interest in real estate entities that
own, develop, and operate real estate properties. As of September 30, 2024, our real estate joint ventures held the following properties:
Property
Market
Submarket
Our Ownership
Interest(1)
Consolidated real estate joint ventures(2):
50 and 60 Binney Street
Greater Boston
Cambridge/Inner Suburbs
34.0%
75/125 Binney Street
Greater Boston
Cambridge/Inner Suburbs
40.0%
100 and 225 Binney Street and 300 Third Street
Greater Boston
Cambridge/Inner Suburbs
30.0%
99 Coolidge Avenue
Greater Boston
Cambridge/Inner Suburbs
75.0%
15 Necco Street
Greater Boston
Seaport Innovation District
56.7%
285, 299, 307, and 345 Dorchester Avenue
Greater Boston
Seaport Innovation District
60.0%
Alexandria Center® for Science and Technology –
Mission Bay(3)
San Francisco Bay Area
Mission Bay
25.0%
1450 Owens Street
San Francisco Bay Area
Mission Bay
25.4%
(4)
601, 611, 651, 681, 685, and 701 Gateway
Boulevard
San Francisco Bay Area
South San Francisco
50.0%
751 Gateway Boulevard
San Francisco Bay Area
South San Francisco
51.0%
211 and 213 East Grand Avenue
San Francisco Bay Area
South San Francisco
30.0%
500 Forbes Boulevard
San Francisco Bay Area
South San Francisco
10.0%
Alexandria Center® for Life Science – Millbrae
San Francisco Bay Area
South San Francisco
47.9%
3215 Merryfield Row
San Diego
Torrey Pines
30.0%
Campus Point by Alexandria(5)
San Diego
University Town Center
55.0%
5200 Illumina Way
San Diego
University Town Center
51.0%
9625 Towne Centre Drive
San Diego
University Town Center
30.0%
SD Tech by Alexandria(6)
San Diego
Sorrento Mesa
50.0%
Pacific Technology Park
San Diego
Sorrento Mesa
50.0%
Summers Ridge Science Park(7)
San Diego
Sorrento Mesa
30.0%
1201 and 1208 Eastlake Avenue East
Seattle
Lake Union
30.0%
199 East Blaine Street
Seattle
Lake Union
30.0%
400 Dexter Avenue North
Seattle
Lake Union
30.0%
800 Mercer Street
Seattle
Lake Union
60.0%
Unconsolidated real estate joint ventures(2):
1655 and 1725 Third Street
San Francisco Bay Area
Mission Bay
10.0%
1401/1413 Research Boulevard
Maryland
Rockville
65.0%
(8)
1450 Research Boulevard
Maryland
Rockville
73.2%
(8)
101 West Dickman Street
Maryland
Beltsville
58.2%
(8)
(1)Refer to the table on the next page that shows the categorization of our joint ventures under the consolidation framework.
(2)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in three other consolidated real estate joint ventures in North
America and we hold an interest in one insignificant unconsolidated real estate joint venture in North America.
(3)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South.
(4)During the nine months ended September 30, 2024, our equity ownership decreased from 40.6% to 25.4% based on continued funding of construction costs by our joint
venture partner and a reallocation of equity to our joint venture partner of $30.2 million from us. The noncontrolling interest share of our joint venture partner is
anticipated to increase to 75% and ours to decrease to 25% as our partner contributes additional equity to fund the construction of the project.
(5)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4165, 4224, and 4242 Campus Point Court.
(6)Includes 9605, 9645, 9675, 9725, 9735, 9805, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road.
(7)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road.
(8)Represents a joint venture with a local real estate operator in which our joint venture partner manages the day-to-day activities that significantly affect the economic
performance of the joint venture.
25
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
Our consolidation policy is described under “Consolidation” in Note 2 – “Summary of significant accounting policies” to our
unaudited consolidated financial statements. Consolidation accounting is highly technical, but its framework is primarily based on the
controlling financial interests and benefits of the joint ventures. We generally consolidate a joint venture that is a legal entity that we
control (i.e., we have the power to direct the activities of the joint venture that most significantly affect its economic performance)
through contractual rights, regardless of our ownership interest, and where we determine that we have benefits through the allocation of
earnings or losses and fees paid to us that could be significant to the joint venture (the “VIE model”).
We also generally consolidate joint ventures when we have a controlling financial interest through voting rights and where our
voting interest is greater than 50% (the “voting model”). Voting interest differs from ownership interest for some joint ventures. We
account for joint ventures that do not meet the consolidation criteria under the equity method of accounting by recognizing our share of
income and losses.
The table below shows the categorization of our real estate joint ventures under the consolidation framework:
Property(1)
Consolidation
Model
Voting Interest
Consolidation Analysis
Conclusion
50 and 60 Binney Street
VIE model
Not applicable
under VIE
model
Consolidated
75/125 Binney Street
We have:
100 and 225 Binney Street and 300
Third Street
99 Coolidge Avenue
(i)
The power to direct the
activities of the joint venture
that most significantly affect its
economic performance; and
15 Necco Street
285, 299, 307, and 345 Dorchester
Avenue
Alexandria Center® for Science and
Technology – Mission Bay
1450 Owens Street
601, 611, 651, 681, 685, and 701
Gateway Boulevard
751 Gateway Boulevard
211 and 213 East Grand Avenue
(ii)
Benefits that can be significant
to the joint venture.
500 Forbes Boulevard
Alexandria Center® for Life Science –
Millbrae
3215 Merryfield Row
Campus Point by Alexandria
5200 Illumina Way
Therefore, we are the primary
beneficiary of each VIE
9625 Towne Centre Drive
SD Tech by Alexandria
Pacific Technology Park
Summers Ridge Science Park
1201 and 1208 Eastlake Avenue East
199 East Blaine Street
400 Dexter Avenue North
800 Mercer Street
1401/1413 Research Boulevard
We do not control the joint venture
and are therefore not the primary
beneficiary.
Equity method
of accounting
1450 Research Boulevard
101 West Dickman Street
1655 and 1725 Third Street
Voting model
Does not
exceed 50%
Our voting interest is 50% or less.
(1)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in three other consolidated real estate joint ventures in North
America and we hold an interest in one insignificant unconsolidated real estate joint venture in North America.
26
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
Formation of consolidated real estate joint ventures
We evaluated each of our real estate joint ventures described below under the consolidation framework outlined above and
further detailed in “Consolidation” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial
statements.
Refer to “Consolidation” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial
statements for additional information. For a summary of our completed dispositions of real estate assets during the nine months ended
September 30, 2024, refer to “Sales of real estate assets and impairment charges” in Note 3 – “Investments in real estate” to our
unaudited consolidated financial statements.
285, 299, 307, and 345 Dorchester Avenue
During the three months ended March 31, 2024, we formed real estate joint ventures to develop a mega campus. We
contributed $155.3 million to these real estate joint ventures, and our partner’s share of contributed real estate assets aggregated
$103.5 million. As of March 31, 2024, these joint ventures owned four land parcels at 285, 299, 307, and 345 Dorchester Avenue in our
Seaport Innovation District submarket, with future development opportunities aggregating 1.0 million SF. We determined that we have
control over these real estate joint ventures, and we therefore consolidate the joint ventures. As of September 30, 2024, we have a 60%
ownership interest in the joint ventures.
1201 and 1208 Eastlake Avenue East
In September 2024, our prior joint venture partner sold its ownership interest in each of 1201 and 1208 Eastlake Avenue East
joint ventures to our new joint venture partner, who is also our longstanding tenant at the 1201 and 1208 Eastlake Avenue East
properties, occupying 117,479 RSF out of the total 207,774 RSF. Alexandria’s ownership interest in each of 1201 and 1208 Eastlake
Avenue East remained unchanged at 30.0%. Upon completion of the sale, we reassessed our consolidation analysis for this joint
venture and determined that we retain control, and we therefore continue to consolidate the joint venture.
Consolidated VIEs’ balance sheet information
We, together with joint venture partners, hold interests in real estate joint ventures that we consolidate in our financial
statements. These existing joint ventures provide significant equity capital to fund a portion of our future construction spend, and our
joint venture partners may also contribute equity into these entities for financing-related activities.
The table below aggregates the balance sheet information of our consolidated VIEs as of September 30, 2024 and
December 31, 2023 (in thousands):
September 30, 2024
December 31, 2023
Investments in real estate
$8,801,576
$8,032,315
Cash and cash equivalents
334,329
306,475
Other assets
785,377
728,390
Total assets
$9,921,282
$9,067,180
Secured notes payable
$144,412
$119,042
Other liabilities
629,119
608,665
Mandatorily redeemable noncontrolling interest
—
35,250
Total liabilities
773,531
762,957
Redeemable noncontrolling interests
6,898
6,868
Alexandria Real Estate Equities, Inc.’s share of equity
4,671,544
4,162,017
Noncontrolling interests’ share of equity
4,469,309
4,135,338
Total liabilities and equity
$9,921,282
$9,067,180
27
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
In determining whether to aggregate the balance sheet information of consolidated VIEs, we considered the similarity of each
VIE, including the primary purpose of these entities to own, manage, operate, and lease real estate properties owned by the VIEs, and
the similar nature of our involvement in each VIE as a managing member. Due to the similarity of the characteristics, we present the
balance sheet information of these entities on an aggregated basis. None of our consolidated VIEs’ assets have restrictions that limit
their use to settle specific obligations of the VIE. There are no creditors or other partners of our consolidated VIEs that have recourse to
our general credit, and our maximum exposure to our consolidated VIEs is limited to our variable interests in each VIE, except for our
99 Coolidge Avenue real estate joint venture in which the VIE’s secured construction loan is guaranteed by us. Refer to Note 10 –
“Secured and unsecured senior debt” to our unaudited consolidated financial statements for additional information.
Unconsolidated real estate joint ventures
Our maximum exposure to our unconsolidated VIEs is limited to our investment in each VIE, except for our 1450 Research
Boulevard and 101 West Dickman Street unconsolidated real estate joint ventures in which we guarantee up to $6.7 million of the
outstanding balance related to each VIE’s secured loan. Our investments in unconsolidated real estate joint ventures, accounted for
under the equity method and classified in investments in unconsolidated real estate joint ventures in our consolidated balance sheets,
consisted of the following as of September 30, 2024 and December 31, 2023 (in thousands):
Property
September 30, 2024
December 31, 2023
1655 and 1725 Third Street
$10,792
$11,718
1450 Research Boulevard
9,197
6,041
101 West Dickman Street
9,733
9,290
Other
10,448
10,731
$40,170
$37,780
The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of
September 30, 2024 (dollars in thousands):
Interest
Rate(1)
At 100%
Our
Share
Unconsolidated Joint Venture
Maturity Date
Stated Rate
Aggregate
Commitment
Debt
Balance(2)
1401/1413 Research Boulevard(3)
12/23/24
2.70%
3.31%
$28,500
$28,461
65.0%
1655 and 1725 Third Street(4)
3/10/25
4.50%
4.57%
600,000
599,823
10.0%
101 West Dickman Street
11/10/26
SOFR+1.95%
(5)
7.39%
26,750
18,565
58.2%
1450 Research Boulevard
12/10/26
SOFR+1.95%
(5)
7.45%
13,000
8,616
73.2%
$668,250
$655,465
(1)Includes interest expense and amortization of loan fees.
(2)Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2024.
(3)We have executed a purchase and sale agreement to sell the unconsolidated real estate joint venture and expect to complete the sale during the fourth quarter of 2024.
Our net proceeds from the sale are expected to exceed our share of the outstanding debt balance and the carrying amount of this investment as of September 30, 2024.
(4)The unconsolidated real estate joint venture is in the process of working with prospective lenders to refinance this debt. In the event that all or a portion of the debt
cannot be refinanced, we may consider contributing additional equity into this unconsolidated real estate joint venture. As of September 30, 2024, our investment in this
unconsolidated real estate joint venture was $10.8 million.
(5)This loan is subject to a fixed SOFR floor of 0.75%.
28
5.LEASES
Refer to “Lease accounting” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial
statements for information about lease accounting standards that set principles for the recognition, measurement, presentation, and
disclosure of leases for both parties to a lease agreement (i.e., lessees and lessors).
Leases in which we are the lessor
As of September 30, 2024, we had 406 properties aggregating 41.8 million operating RSF in key cluster locations, including
Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. We primarily focus
on developing Class A/A+ properties in AAA life science innovation cluster locations that offer the scale and strategic design integral to
our mega campus strategy. Strategically located near top academic medical institutions and equipped with curated amenities, services,
and transit access, our mega campuses are designed to support our tenants in attracting and retaining top talent, which we believe is a
key driver of tenant demand for our properties.
As of September 30, 2024, all leases in which we are the lessor were classified as operating leases, with the exception of one
direct financing lease. Our leases are described below.
Operating leases
As of September 30, 2024, our 406 properties were subject to operating lease agreements. Four of these properties are
subject to operating lease agreements that each contain a purchase option as described below:
(i)Two properties, representing two land parcels, are subject to lease agreements that each contain an option for the lessee
to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing on the dates
that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The remaining lease
term related to each of the two land parcels is 68.2 years.
(ii)Two operating properties aggregating 207,774 RSF owned by our 1201 and 1208 Eastlake Avenue East consolidated real
estate joint venture are subject to purchase options held by our partner in this joint venture, who is also a tenant
occupying 117,479 RSF at these properties. One purchase option allows our partner to purchase our 30% interest in 1208
Eastlake Avenue East for $40.0 million in 2031. Contingent upon the exercise of this option, the second purchase option
allows our partner to purchase our 30% interest in 1201 Eastlake Avenue East for $69.1 million in 2034. Our partner’s
remaining lease terms for its operating leases at 1201 and 1208 Eastlake Avenue East are 20.0 years and 6.4 years,
respectively.
We evaluated the impact of the purchase options on the classification of the existing operating leases and determined that
each lease continues to meet the criteria for classification as an operating lease.
Our leases generally contain options to extend lease terms at prevailing market rates at the time of expiration. Certain
operating leases contain early termination options that require advance notification and payment of a penalty, which in most cases is
substantial enough to be deemed economically disadvantageous by a tenant to exercise. Future lease payments to be received under
the terms of our operating lease agreements, excluding expense reimbursements, in effect as of September 30, 2024 are outlined in the
table below (in thousands):
Year
Amount
2024
$485,925
2025
1,888,408
2026
1,842,590
2027
1,764,075
2028
1,621,117
Thereafter
11,131,473
Total
$18,733,588
Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements for additional information
about our owned real estate assets, which are the underlying assets under our operating leases.
Direct financing lease
As of September 30, 2024, we had one direct financing lease agreement, with a net investment balance of $40.6 million, for a
parking structure with a remaining lease term of 68.2 years. The lessee has an option to purchase the underlying asset at fair market
value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent
commencement date of October 1, 2017.
29
5.LEASES (continued)
The components of our aggregate net investment in our direct financing lease as of September 30, 2024 and December 31,
2023 are summarized in the table below (in thousands):
September 30, 2024
December 31, 2023
Gross investment in direct financing lease
$251,886
$253,324
Less: unearned income on direct financing lease
(208,402)
(210,388)
Less: allowance for credit losses
(2,839)
(2,839)
Net investment in direct financing lease
$40,645
$40,097
As of September 30, 2024, our estimated credit loss related to our direct financing lease was $2.8 million. No adjustment to the
estimated credit loss balance was required during the nine months ended September 30, 2024. For further details, refer to “Allowance
for credit losses” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements.
Future lease payments to be received under the terms of our direct financing lease as of September 30, 2024 are outlined in
the table below (in thousands):
Year
Total
2024
$481
2025
1,976
2026
2,036
2027
2,097
2028
2,160
Thereafter
243,136
Total
$251,886
Income from rentals
Our income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes
revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Income from rentals:
Revenues subject to the lease accounting standard:
Operating leases
$763,947
$696,601
$2,255,634
$2,069,042
Direct financing leases
665
653
1,986
1,951
Revenues subject to the lease accounting standard
764,612
697,254
2,257,620
2,070,993
Revenues subject to the revenue recognition
accounting standard
11,132
10,277
28,837
28,826
Income from rentals
$775,744
$707,531
$2,286,457
$2,099,819
Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist
primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to
“Revenues” and “Recognition of revenue arising from contracts with customers” in Note 2 – “Summary of significant accounting policies”
to our unaudited consolidated financial statements for additional information.
Residual value risk management strategy
Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual
value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business
objective to invest primarily in high-demand markets, (ii) directly managing our leased properties, conducting frequent property
inspections, proactively addressing potential maintenance issues before they arise, and/or timely resolving any occurring issues, and
(iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms.
30
5.LEASES (continued)
Leases in which we are the lessee
Operating lease agreements
We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these
leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or
covenants imposed by the leases, nor guarantees of residual value.
We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related
liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to
account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to “Lessee accounting”
in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements.
As of September 30, 2024, the present value of the remaining contractual payments aggregating $1.1 billion under our
operating lease agreements, including our extension options that we are reasonably certain to exercise, was $648.3 million. Our
corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the
landlord prior to the commencement of the lease, aggregated $776.7 million. As of September 30, 2024, the weighted-average
remaining lease term of operating leases in which we are the lessee was approximately 49 years, including extension options that we
are reasonably certain to exercise, and the weighted-average discount rate was 5.1%. The weighted-average discount rate is based on
the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on
a collateralized basis over a similar term for an amount equal to the lease payments.
Included in the operating lease liability balance as of September 30, 2024 is the liability related to an amendment to our
existing ground lease agreement at the Alexandria Technology Square® mega campus aggregating 1.2 million RSF in our Cambridge
submarket, which extended the lease term by 24 years from January 1, 2065 to December 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. Upon the execution of the amendment in July 2024, we recognized $265.1 million,
representing the present value of our rent obligation related to the amendment, as operating lease liability.
Ground lease obligations as of September 30, 2024 included leases for 36 of our properties, which accounted for
approximately 9% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property
with a net book value of $5.8 million as of September 30, 2024, our ground lease obligations have remaining lease terms ranging from
approximately 30 to 97 years, including extension options that we are reasonably certain to exercise.
The reconciliation of future lease payments under noncancelable operating leases in which we are the lessee to the operating
lease liability reflected in our unaudited consolidated balance sheet as of September 30, 2024 is in the table below (in thousands):
Year
Total
2024
$140,553
2025
158,233
2026
23,427
2027
22,508
2028
22,176
Thereafter
757,389
Total future payments under our operating leases in which we are the lessee
1,124,286
Effect of discounting
(475,948)
Operating lease liability
$648,338
31
5.LEASES (continued)
Lessee operating costs
Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed
annual rent payments and may also include escalation clauses and renewal options. Our operating lease obligations related to our
office leases have remaining terms of up to 12 years, exclusive of extension options. For the nine months ended September 30, 2024
and 2023, amounts paid and classified as operating activities in our unaudited consolidated statements of cash flows for leases in which
we are the lessee aggregated $24.7 million and $24.6 million, respectively. For the three and nine months ended September 30, 2024
and 2023, our costs for operating leases in which we are the lessee were as follows (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Gross operating lease costs
$10,701
$9,005
$29,842
$30,277
Capitalized lease costs
(521)
(688)
(1,567)
(4,906)
Expenses for operating leases in which we are the lessee
$10,180
$8,317
$28,275
$25,371
6. CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash, cash equivalents, and restricted cash consisted of the following as of September 30, 2024 and December 31, 2023 (in
thousands):
 
September 30, 2024
December 31, 2023
Cash and cash equivalents
$562,606
$618,190
Restricted cash:
Funds held in escrow for real estate acquisitions
11,923
37,434
Other
5,108
5,147
17,031
42,581
Total
$579,637
$660,771
32
7.INVESTMENTS
We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. As a
REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10%. We evaluate each investment to
determine whether we have the ability to exercise significant influence, but not control, over an investee. We evaluate investments in
which our ownership is equal to or greater than 20%, but less than or equal to 50%, of an investee’s voting stock with a presumption
that we have this ability. For our investments in limited partnerships that maintain specific ownership accounts, we presume that such
ability exists when our ownership interest exceeds 3% to 5%. In addition to our ownership interest, we consider whether we have a
board seat or whether we participate in the investee’s policy-making process, among other criteria, to determine if we have the ability to
exert significant influence, but not control, over an investee. If we determine that we have such ability, we account for the investment
under the equity method, as described below.
Investments accounted for under the equity method
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying
amount of the investment for our share of earnings or losses reported by the investee, distributions received, and other-than-temporary
impairments.
As of September 30, 2024, we had 10 investments in limited partnerships maintaining specific ownership accounts for each
investor, which were accounted for under the equity method. These investments aggregated $137.7 million. Our ownership interest in
each of these 10 investments was greater than 5%.
Investments that do not qualify for the equity method of accounting
For investees over which we determine that we do not have the ability to exercise significant influence or control, we account
for each investment depending on whether it is an investment in a (i) publicly traded company, (ii) privately held entity that reports NAV
per share, or (iii) privately held entity that does not report NAV per share, as described below.
Investments in publicly traded companies
Our investments in publicly traded companies are classified as investments with readily determinable fair values and are
presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. The fair values for our investments in publicly traded companies are determined based on sales
prices or quotes available on securities exchanges.
Investments in privately held companies
Our investments in privately held entities without readily determinable fair values consist of (i) investments in privately held
entities that report NAV per share and (ii) investments in privately held entities that do not report NAV per share. These investments are
accounted for as follows:
Investments in privately held entities that report NAV per share
Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships,
are presented at fair value using NAV as a practical expedient, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. We use NAV per share reported by limited partnerships generally without adjustment, unless we
are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the
investment at our reporting date.
Investments in privately held entities that do not report NAV per share
Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative,
under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes classified
in investment income (loss) in our consolidated statements of operations.
An observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is
observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity
transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity
transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we
evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution
preferences, and conversion rights to the investments we hold.
33
7.INVESTMENTS (continued)
Impairment evaluation of equity method investments and investments in privately held entities that do not report NAV per
share
We monitor equity method investments and investments in privately held entities that do not report NAV per share for new
developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements,
capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment
for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators:
(i)a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;
(ii)a significant adverse change in the regulatory, economic, or technological environment of the investee;
(iii)a significant adverse change in the general market condition, including the research and development of technology and
products that the investee is bringing or attempting to bring to the market;
(iv)significant concerns about the investee’s ability to continue as a going concern; and/or
(v)a decision by investors to cease providing support or reduce their financial commitment to the investee.
If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an
impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
Investment income/loss recognition and classification
We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified in
investment income (loss) in our consolidated statements of operations. Unrealized gains and losses represent:
(i)changes in fair value for investments in publicly traded companies;
(ii)changes in NAV for investments in privately held entities that report NAV per share;
(iii)observable price changes for investments in privately held entities that do not report NAV per share; and
(iv)our share of unrealized gains or losses reported by our equity method investees.
Realized gains and losses on our investments represent the difference between proceeds received upon disposition of
investments and their historical or adjusted cost basis. For our equity method investments, realized gains and losses represent our
share of realized gains or losses reported by the investee. Impairments are realized losses, which result in an adjusted cost basis, and
represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share and equity
method investments, if impairments are deemed other than temporary, to their estimated fair value.
Funding commitments to investments in privately held entities that report NAV
We are committed to funding approximately $379.9 million for our investments in privately held entities that report NAV. Our
funding commitments expire at various dates over the next 12 years with a weighted-average expiration of 8.1 years as of September
30, 2024. These investments are not redeemable by us, but we may receive distributions from these investments throughout their
terms. Our investments in privately held entities that report NAV generally have expected initial terms in excess of 10 years. The
weighted-average remaining term during which these investments are expected to be liquidated was 5.3 years as of September 30,
2024.
34
7.INVESTMENTS (continued)
The following tables summarize our investments as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
Cost
Unrealized
Gains
Unrealized
Losses
Carrying
Amount
Publicly traded companies
$187,085
$50,933
$(85,592)
$152,426
Entities that report NAV
527,042
160,608
(31,225)
656,425
Entities that do not report NAV:
Entities with observable price changes
93,982
72,862
(1,337)
165,507
Entities without observable price changes
407,261
—
—
407,261
Investments accounted for under the equity method
N/A
N/A
N/A
137,708
Total investments
$1,215,370
$284,403
$(118,154)
$1,519,327
December 31, 2023
Cost
Unrealized
Gains
Unrealized
Losses
Carrying
Amount
Publicly traded companies
$203,467
$50,377
$(94,278)
$159,566
Entities that report NAV
507,059
192,468
(27,995)
671,532
Entities that do not report NAV:
Entities with observable price changes
97,892
77,600
(1,224)
174,268
Entities without observable price changes
368,654
—
—
368,654
Investments accounted for under the equity method
N/A
N/A
N/A
75,498
Total investments
$1,177,072
$320,445
$(123,497)
$1,449,518
Cumulative gains and losses (realized and unrealized) on investments in privately held entities that do not report NAV still held
as of September 30, 2024 aggregated to a loss of $73.4 million, which consisted of upward adjustments aggregating $72.9 million,
downward adjustments aggregating $1.3 million, and impairments aggregating $144.9 million.
Our investment income (loss) for the three and nine months ended September 30, 2024 and 2023 consisted of the following (in
thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Realized gains (losses)
$12,632
(1)
$(3,470)
$47,336
(1)
$16,903
Unrealized gains (losses)
2,610
(77,202)
(32,470)
(220,954)
Investment income (loss)
$15,242
$(80,672)
$14,866
$(204,051)
(1)Consists of realized gains of $23.0 million and $85.2 million, partially offset by impairment charges of $10.3 million and $37.8 million during the three and nine months
ended September 30, 2024, respectively.
During the nine months ended September 30, 2024, gains and losses on investments in privately held entities that do not
report NAV still held as of September 30, 2024 aggregated to a loss of $27.3 million, which consisted of upward adjustments
aggregating $17.6 million and downward adjustments and impairments aggregating $44.9 million.
During the nine months ended September 30, 2023, gains and losses on investments in privately held entities that do not
report NAV still held as of September 30, 2023 aggregated to a loss of $57.7 million, which consisted of upward adjustments
aggregating $16.5 million and downward adjustments and impairments aggregating $74.2 million.
Unrealized gains or losses related to investments still held (excluding investments accounted for under the equity method) as
of September 30, 2024 and 2023 aggregated to gains of $15.7 million and $97.8 million during the nine months ended
September 30, 2024 and 2023, respectively.
Our investment income of $14.9 million for the nine months ended September 30, 2024 also included $5.4 million of equity in
losses of our equity method investments.
Refer to “Investments” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial
statements for additional information.
35
8. OTHER ASSETS
The following table summarizes the components of other assets as of September 30, 2024 and December 31, 2023 (in
thousands):
September 30, 2024
December 31, 2023
Acquired in-place leases
$373,842
$461,613
Deferred compensation plan
46,471
40,365
Deferred financing costs – unsecured senior line of credit
51,470
(1)
30,897
Deposits
31,046
25,863
Furniture, fixtures, and equipment
35,967
26,560
Net investment in direct financing lease
40,645
40,097
Notes receivable
17,165
15,841
Operating lease right-of-use assets
776,740
(2)
516,452
Other assets
101,398
88,453
Prepaid expenses
40,271
30,969
Property, plant, and equipment
142,174
144,784
Total
$1,657,189
$1,421,894
(1)Increase is primarily due to the amendment and restatement of our unsecured senior line of credit to extend the maturity date from January 22, 2028 to January 22,
2030 in September 2024. Refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements for additional information.
(2)Includes the operating lease right-of-use asset related to an amendment executed in July 2024 to our existing ground lease agreement at the Alexandria Technology
Square® mega campus. For additional information, refer to “Leases in which we are the lessee” in Note 5 – “Leases” to our unaudited consolidated financial statements.
9.FAIR VALUE MEASUREMENTS
We provide fair value information about all financial instruments for which it is practicable to estimate fair value. We measure
and disclose the estimated fair value of financial assets and liabilities by utilizing a fair value hierarchy that distinguishes between data
obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant
assumptions. This hierarchy consists of three broad levels, as follows: (i) quoted prices in active markets for identical assets or liabilities
(Level 1), (ii) significant other observable inputs (Level 2), and (iii) significant unobservable inputs (Level 3). Significant other observable
inputs can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or
liability, such as interest rates, foreign exchange rates, and yield curves. Significant unobservable inputs are typically based on an
entity’s own assumptions, since there is little, if any, related market activity. In instances in which the determination of the fair value
measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the
entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety.
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers
factors specific to the asset or liability.
Assets and liabilities measured at fair value on a recurring basis
The following table sets forth the assets that we measure at fair value on a recurring basis by level in the fair value hierarchy
(in thousands). There were no liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023.
There were no transfers of assets measured at fair value on a recurring basis to or from Level 3 in the fair value hierarchy during the
nine months ended September 30, 2024.
Fair Value Measurement Using
Description
Total
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant
Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Investments in publicly traded companies:
As of September 30, 2024
$152,426
$152,426
$—
$—
As of December 31, 2023
$159,566
$159,566
$—
$—
Our investments in publicly traded companies represent investments with readily determinable fair values, and are carried at
fair value, with changes in fair value classified in investment income in our consolidated financial statements. We also hold investments
in privately held entities, which consist of (i) investments that report NAV and (ii) investments that do not report NAV, as further
described below.
36
9.FAIR VALUE MEASUREMENTS (continued)
Our investments in privately held entities that report NAV, such as our privately held investments in limited partnerships, are
carried at fair value using NAV as a practical expedient, with changes in fair value classified in net income. As of September 30, 2024
and December 31, 2023, the carrying values of investments in privately held entities that report NAV aggregated $656.4 million and
$671.5 million, respectively. These investments are excluded from the fair value hierarchy above as required by the fair value
accounting standards. We estimate the fair value of each of our investments in limited partnerships based on the most recent NAV
reported by each limited partnership. As a result, the determination of fair values of our investments in privately held entities that report
NAV generally does not involve significant estimates, assumptions, or judgments.
Assets and liabilities measured at fair value on a nonrecurring basis
The following table sets forth the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy
as of September 30, 2024 and December 31, 2023 (in thousands).
Fair Value Measurement Using
Description
Carrying
Amount
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant
Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Real estate assets held for sale with carrying
values adjusted to fair value less costs to sell:
As of September 30, 2024
$70,566
(1)
$—
$—
$70,566
(2)
As of December 31, 2023
$133,885
(1)
$—
$—
$133,885
(2)
Investments in privately held entities that do not
report NAV:
As of September 30, 2024
$180,833
$—
$165,507
(3)
$15,326
(4)
As of December 31, 2023
$188,689
$—
$174,268
(3)
$14,421
(4)
(1)These amounts are included in the total balances of our net assets classified as held for sale aggregating $272.7 million and $191.4 million as of September 30, 2024
and December 31, 2023, respectively, disclosed in Note 15 – “Assets classified as held for sale,” and represent assets held for sale as of September 30, 2024 and
December 31, 2023, respectively, for which impairments were recognized. Refer to Note 3 – “Investments in real estate” and Note 15 – “Assets classified as held for
sale” to our unaudited consolidated financial statements for additional information.
(2)These amounts represent the aggregate carrying amounts of assets held for sale after adjustments to their respective fair values less costs to sell based on executed
purchase and sale agreements, letters of intent, or valuations provided by third-party real estate brokers.
(3)These amounts represent the total carrying amounts of our equity investments in privately held entities with observable price changes, which are included in the
investments balances of $1.5 billion and $1.4 billion in our unaudited consolidated balance sheets as of September 30, 2024 and December 31, 2023, respectively,
disclosed in Note 7 – “Investments” to our unaudited consolidated financial statements.
(4)These amounts are included in the investments in privately held entities without observable price changes balances aggregating $407.3 million and $368.7 million as of 
September 30, 2024 and December 31, 2023, respectively, disclosed in Note 7 – “Investments” to our unaudited consolidated financial statements. The aforementioned
balances represent the carrying amounts of investments in privately held entities that do not report NAV for which impairments have been recognized in accordance with
the measurement alternative guidance described in “Investments” in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial
statements.
Real estate assets classified as held for sale measured at fair value less costs to sell
Our real estate assets classified as held for sale and measured at fair value less costs to sell are presented in the table above.
These properties are subsets of our total real estate assets classified as held for sale as of September 30, 2024 and December 31,
2023, respectively. The fair values for these real estate assets were estimated based on executed purchase and sale agreements,
letters of intent, or valuations provided by third-party real estate brokers. Refer to “Investments in real estate” in Note 2 – “Summary of
significant accounting policies” and Note 15 – “Assets classified as held for sale” to our unaudited consolidated financial statements for
additional information.
Investments in privately held entities that do not report NAV
Our investments in privately held entities that do not report NAV are measured at cost, adjusted for observable price changes
and impairments, with changes recognized in net income. These investments are adjusted based on the observable price changes in
orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until another
observable transaction occurs. Therefore, the determination of fair values of our investments in privately held entities that do not report
NAV does not involve significant estimates and assumptions or subjective and complex judgments.
We also subject our investments in privately held entities that do not report NAV to a qualitative assessment for indicators of
impairment. If indicators of impairment are present, we are required to estimate the investment’s fair value and immediately recognize
an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
37
9.FAIR VALUE MEASUREMENTS (continued)
The estimates of fair value typically incorporate valuation techniques that include an income approach reflecting a discounted
cash flow analysis, and a market approach that includes a comparative analysis of acquisition multiples and pricing multiples generated
by market participants. In certain instances, we may use multiple valuation techniques for a particular investment and estimate its fair
value based on an average of multiple valuation results.
Refer to Note 7 – “Investments” to our unaudited consolidated financial statements for additional information.
Assets and liabilities not measured at fair value in the statement of financial position but for which the fair value is disclosed
The fair values of our secured notes payable and unsecured senior notes payable, and the amounts outstanding on our
unsecured senior line of credit and commercial paper program, were estimated using widely accepted valuation techniques, including
discounted cash flow analyses using significant other observable inputs such as available market information on discount and
borrowing rates with similar terms, maturities, and credit ratings. Because the valuations of our financial instruments are based on these
types of estimates, the actual fair value of our financial instruments may differ materially if our estimates do not prove to be accurate.
Additionally, the use of different market assumptions or estimation methods may have a material effect on the estimated fair value
amounts.
As of September 30, 2024 and December 31, 2023, the book and estimated fair values of our secured notes payable and
unsecured senior notes payable and the amounts outstanding under our unsecured senior line of credit and commercial paper program,
including the level within the fair value hierarchy for which the estimates were derived, were as follows (in thousands):
September 30, 2024
Book Value
Fair Value Hierarchy
Estimated
Fair Value
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant
Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Liabilities:
Secured notes payable
$145,000
$—
$144,398
$—
$144,398
Unsecured senior notes payable
$12,092,012
$—
$10,927,583
$—
$10,927,583
Unsecured senior line of credit
$—
$—
$—
$—
$—
Commercial paper program
$454,589
$—
$454,575
$—
$454,575
December 31, 2023
Book Value
Fair Value Hierarchy
Estimated
Fair Value
Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
Significant
Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Liabilities:
Secured notes payable
$119,662
$—
$118,660
$—
$118,660
Unsecured senior notes payable
$11,096,028
$—
$9,708,930
$—
$9,708,930
Unsecured senior line of credit
$—
$—
$—
$—
$—
Commercial paper program
$99,952
$—
$99,915
$—
$99,915
The carrying values of cash and cash equivalents, restricted cash, tenant receivables, deposits, notes receivable, accounts
payable, accrued expenses, and other short-term liabilities approximate their fair value.
38
10.SECURED AND UNSECURED SENIOR DEBT
The following table summarizes our outstanding indebtedness and respective principal payments remaining as of September 30, 2024 (dollars in thousands):
Stated 
Rate
Interest
Rate(1)
Maturity
Date(2)
Principal Payments Remaining for the Periods Ending December 31,
Unamortized
(Deferred
Financing
Cost),
(Discount)/
Premium
Debt
2024
2025
2026
2027
2028
Thereafter
Principal
Total
Secured notes payable
Greater Boston(3)
SOFR+2.70%
8.40%
11/19/26
$—
$—
$144,527
$—
$—
$—
$144,527
$(114)
$144,413
San Francisco Bay Area
6.50%
6.50
7/1/36
—
34
36
38
41
438
587
—
587
Secured debt weighted-average interest rate/
subtotal
8.39
—
34
144,563
38
41
438
145,114
(114)
145,000
Unsecured senior line of credit and commercial
paper program(4)
(4)
5.05
(4)
1/22/30
(4)
—
—
—
—
—
455,000
455,000
(411)
454,589
Unsecured senior notes payable
3.45%
3.62
4/30/25
—
600,000
—
—
—
—
600,000
(518)
599,482
Unsecured senior notes payable
4.30%
4.50
1/15/26
—
—
300,000
—
—
—
300,000
(655)
299,345
Unsecured senior notes payable
3.80%
3.96
4/15/26
—
—
350,000
—
—
—
350,000
(776)
349,224
Unsecured senior notes payable
3.95%
4.13
1/15/27
—
—
—
350,000
—
—
350,000
(1,194)
348,806
Unsecured senior notes payable
3.95%
4.07
1/15/28
—
—
—
—
425,000
—
425,000
(1,418)
423,582
Unsecured senior notes payable
4.50%
4.60
7/30/29
—
—
—
—
—
300,000
300,000
(1,082)
298,918
Unsecured senior notes payable
2.75%
2.87
12/15/29
—
—
—
—
—
400,000
400,000
(2,167)
397,833
Unsecured senior notes payable
4.70%
4.81
7/1/30
—
—
—
—
—
450,000
450,000
(2,149)
447,851
Unsecured senior notes payable
4.90%
5.05
12/15/30
—
—
—
—
—
700,000
700,000
(4,926)
695,074
Unsecured senior notes payable
3.375%
3.48
8/15/31
—
—
—
—
—
750,000
750,000
(4,509)
745,491
Unsecured senior notes payable
2.00%
2.12
5/18/32
—
—
—
—
—
900,000
900,000
(7,198)
892,802
Unsecured senior notes payable
1.875%
1.97
2/1/33
—
—
—
—
—
1,000,000
1,000,000
(7,326)
992,674
Unsecured senior notes payable
2.95%
3.07
3/15/34
—
—
—
—
—
800,000
800,000
(7,425)
792,575
Unsecured senior notes payable
4.75%
4.88
4/15/35
—
—
—
—
—
500,000
500,000
(5,071)
494,929
Unsecured senior notes payable
5.25%
5.38
5/15/36
—
—
—
—
—
400,000
400,000
(4,195)
395,805
Unsecured senior notes payable
4.85%
4.93
4/15/49
—
—
—
—
—
300,000
300,000
(2,900)
297,100
Unsecured senior notes payable
4.00%
3.91
2/1/50
—
—
—
—
—
700,000
700,000
10,017
710,017
Unsecured senior notes payable
3.00%
3.08
5/18/51
—
—
—
—
—
850,000
850,000
(11,322)
838,678
Unsecured senior notes payable
3.55%
3.63
3/15/52
—
—
—
—
—
1,000,000
1,000,000
(13,782)
986,218
Unsecured senior notes payable
5.15%
5.26
4/15/53
—
—
—
—
—
500,000
500,000
(7,647)
492,353
Unsecured senior notes payable
5.625%
5.71
5/15/54
—
—
—
—
—
600,000
600,000
(6,745)
593,255
Unsecured debt weighted-average interest rate/
subtotal
3.85
—
600,000
650,000
350,000
425,000
10,605,000
12,630,000
(83,399)
12,546,601
Weighted-average interest rate/total
3.91%
$—
$600,034
$794,563
$350,038
$425,041
$10,605,438
$12,775,114
$(83,513)
$12,691,601
(1)Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
(2)Reflects any extension options that we control.
(3)Represents a secured construction loan held by our consolidated real estate joint venture for 99 Coolidge Avenue, of which we own a 75.0% interest. As of September 30, 2024, this joint venture has $50.8 million available under existing
lender commitments. The interest rate shall be reduced from SOFR+2.70% to SOFR+2.10% over time upon the completion of certain leasing, construction, and financial covenant milestones.
(4)Refer to “$5.0 billion unsecured senior line of credit” and “$2.5 billion commercial paper program” on the following page. In September 2024, we amended and restated our unsecured senior line of credit to, among other changes, extend
the maturity date from January 22, 2028 to January 22, 2030, including extension options that we control.
39
10.SECURED AND UNSECURED SENIOR DEBT (continued)
The following table summarizes our secured and unsecured senior debt and amounts outstanding under our unsecured senior
line of credit and commercial paper program as of September 30, 2024 (dollars in thousands):
Fixed-Rate
Debt
Variable-Rate
Debt
Weighted-Average
Interest
Remaining
Term
(in years)
Total
Percentage
Rate(1)
Secured notes payable
$587
$144,413
$145,000
1.1%
8.39%
2.2
Unsecured senior notes payable
12,092,012
—
12,092,012
95.3
3.81
13.0
Unsecured senior line of credit
and commercial paper program
—
454,589
454,589
(2)
3.6
5.05
(2)
5.3
(3)
Total/weighted average
$12,092,599
$599,002
$12,691,601
100.0%
3.91%
12.6
(3)
Percentage of total debt
95.3%
4.7%
100%
(1)Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to the amortization of loan fees, amortization of
debt premiums (discounts), and other bank fees.
(2)As of September 30, 2024, we had no outstanding balance on our unsecured senior line of credit and $454.6 million of commercial paper notes outstanding with a
weighted-average interest rate of 5.05%.
(3)We calculate the weighted-average remaining term of our commercial paper notes by using the maturity date of our unsecured senior line of credit. Using the maturity
date of our outstanding commercial paper notes, the consolidated weighted-average maturity of our debt is 12.5 years. The commercial paper notes sold during the nine
months ended September 30, 2024 were issued at a weighted-average yield to maturity of 5.55% and had a weighted-average maturity term of 17 days.
Unsecured senior notes payable
In February 2024, we issued $1.0 billion of unsecured senior notes payable with a weighted-average interest rate of 5.48%
and a weighted-average maturity of 23.1 years. The unsecured senior notes consisted of $400.0 million of 5.25% unsecured senior
notes due 2036 and $600.0 million of 5.625% unsecured senior notes due 2054.
$5.0 billion unsecured senior line of credit
As of September 30, 2024, our unsecured senior line of credit had aggregate commitments of $5.0 billion and bore an interest
rate of SOFR plus 0.855%. In addition to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of
0.145% based on the aggregate commitments outstanding. Based upon our ability to achieve certain annual sustainability metrics, the
interest rate and facility fee rate are also subject to upward or downward adjustments of up to four basis points with respect to the
interest rate and up to one basis point with respect to the facility fee rate.
Based on certain sustainability metrics achieved in accordance with the terms of our unsecured senior line of credit
agreement, the borrowing rate was reduced for a one-year period by two basis points to SOFR plus 0.855%, from SOFR plus 0.875%,
and the facility fee was reduced by 0.5 basis point to 0.145% from 0.15%. As of September 30, 2024, we had no outstanding balance
on our unsecured line of credit.
In September 2024, we amended and restated our unsecured senior line of credit to, among other changes, extend the
maturity date from January 22, 2028 to January 22, 2030, including extension options that we control.
$2.5 billion commercial paper program
Our commercial paper program provides us with the ability to issue up to $2.5 billion of commercial paper notes that bear
interest at short-term fixed rates with a maturity of generally 30 days or less and a maximum maturity of 397 days from the date of
issuance. Our commercial paper program is backed by our unsecured senior line of credit, and at all times we expect to retain a
minimum undrawn amount of borrowing capacity under our unsecured senior line of credit equal to any outstanding notes issued under
our commercial paper program. We use the net proceeds from the issuances of the notes for general working capital and other general
corporate purposes. General corporate purposes may include, but are not limited to, the repayment of other debt and selective
development, redevelopment, or acquisition of properties. During the nine months ended September 30, 2024, the commercial paper
notes were issued at a weighted-average yield to maturity of 5.55% and had a weighted-average maturity term of 17 days. As of
September 30, 2024, the outstanding balance under our commercial paper program was $454.6 million with a weighted-average
interest rate of 5.05%.
40
10.SECURED AND UNSECURED SENIOR DEBT (continued)
Interest expense
The following table summarizes interest expense for the three and nine months ended September 30, 2024 and 2023 (in
thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Interest incurred
$130,046
$107,530
$379,554
$317,100
Capitalized interest
(86,496)
(96,119)
(249,375)
(274,863)
Interest expense
$43,550
$11,411
$130,179
$42,237
11.ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
The following table summarizes the components of accounts payable, accrued expenses, and other liabilities as of
September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024
December 31, 2023
Accounts payable and accrued expenses
$469,970
$524,439
Accrued construction
586,074
606,333
Acquired below-market leases
249,053
322,040
Conditional asset retirement obligations
54,392
53,083
Deferred rent liabilities
12,029
15,183
Operating lease liability
648,338
(1)
382,883
Unearned rent and tenant security deposits
651,814
548,529
Other liabilities
194,216
158,453
Total
$2,865,886
$2,610,943
(1)Includes ground lease liability related to an amendment executed in July 2024 to our existing ground lease agreement at the Alexandria Technology Square® mega
campus. For additional information, refer to “Leases in which we are the lessee” in Note 5 – “Leases” to our unaudited consolidated financial statements.
As of September 30, 2024 and December 31, 2023, our conditional asset retirement obligations liability primarily consisted of
the soil and groundwater remediation liabilities associated with certain of our properties. Some of our properties may contain asbestos
or may be subjected to other hazardous or toxic substances, which, under certain conditions, requires remediation. We engage
independent environmental consultants to conduct Phase I or similar environmental assessments at our properties. This type of
assessment generally includes a site inspection, interviews, and a public records review; asbestos, lead-based paint, and mold surveys;
subsurface sampling; and other testing. We recognize a liability for the fair value of a conditional asset retirement obligation (including
asbestos) when the fair value of the liability can be reasonably estimated. In addition, environmental laws and regulations subject our
tenants, and potentially us, to liability that may result from our tenants’ routine handling of hazardous substances and wastes as part of
their operations at our properties. These assessments and investigations of our properties have not to date revealed any additional
environmental liability we believe would have a material adverse effect on our business and financial statements or that would require
additional disclosures or recognition in our consolidated financial statements.
41
12.EARNINGS PER SHARE
From time to time, we enter into forward equity sales agreements, which are discussed in Note 13 – “Stockholders’ equity” to
our unaudited consolidated financial statements. We consider the potential dilution resulting from the forward equity sales agreements
on the EPS calculations. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are
delivered until settlement. The common shares issued upon the settlement of the forward equity sales agreements, weighted for the
period these common shares were outstanding, are included in the denominator of basic EPS. To determine the dilution resulting from
the forward equity sales agreements during the period of time prior to settlement, we calculate the number of weighted-average shares
outstanding – diluted using the treasury stock method.
We account for unvested restricted stock awards that contain nonforfeitable rights to dividends as participating securities and
include these securities in the computation of EPS using the two-class method. Our forward equity sales agreements are not
participating securities and are therefore not included in the computation of EPS using the two-class method. Under the two-class
method, we allocate net income (after amounts attributable to noncontrolling interests) to common stockholders and unvested restricted
stock awards by using the weighted-average shares of each class outstanding for quarter-to-date and year-to-date periods
independently, based on their respective participation rights to dividends declared (or accumulated) and undistributed earnings.
The table below reconciles the numerators and denominators of the basic and diluted EPS computations for the three and nine
months ended September 30, 2024 and 2023 (in thousands, except per share amounts):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net income
$213,603
$68,254
$526,828
$323,652
Net income attributable to noncontrolling interests
(45,656)
(43,985)
(141,634)
(131,584)
Net income attributable to unvested restricted stock awards
(3,273)
(2,414)
(10,717)
(7,697)
Numerator for basic and diluted EPS – net income attributable
to Alexandria Real Estate Equities, Inc.’s common
stockholders
$164,674
$21,855
$374,477
$184,371
Denominator for basic EPS – weighted-average shares of
common stock outstanding
172,058
170,890
172,007
170,846
Dilutive effect of forward equity sales agreements
—
—
—
—
Denominator for diluted EPS – weighted-average shares of
common stock outstanding
172,058
170,890
172,007
170,846
Net income per share attributable to Alexandria Real Estate
Equities, Inc.’s common stockholders:
Basic
$0.96
$0.13
$2.18
$1.08
Diluted
$0.96
$0.13
$2.18
$1.08
42
13.STOCKHOLDERS’ EQUITY
Common equity transactions
In February 2024, we entered into a new ATM common stock offering program that allows us to sell up to an aggregate of
$1.5 billion of our common stock. 
During the three months ended June 30, 2024, we entered into new forward equity sales agreements aggregating $28 million
to sell 230 thousand shares of common stock under our ATM program at an average price of $122.32 (before underwriting discounts).
As of September 30, 2024, none of these agreements were settled.
During the three months ended September 30, 2024, we had no activity under our ATM program. As of September 30, 2024,
the remaining aggregate amount available under our ATM program for future sales of common stock was $1.47 billion.
Dividends
During the three months ended March 31, 2024, we declared cash dividends on our common stock aggregating $222.1 million,
or $1.27 per share. In April 2024, we paid the cash dividends on our common stock declared for the three months ended March 31,
2024.
During the three months ended June 30, 2024, we declared cash dividends on our common stock aggregating $227.4 million,
or $1.30 per share. In July 2024, we paid the cash dividends on our common stock declared for the three months ended June 30, 2024.
During the three months ended September 30, 2024, we declared cash dividends on our common stock aggregating
$227.2 million, or $1.30 per share. In October 2024, we paid the cash dividends on our common stock declared for the three months
ended September 30, 2024.
Accumulated other comprehensive loss
The change in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders
during the nine months ended September 30, 2024 was entirely due to net unrealized losses of $6.6 million on foreign currency
translation related to our operations primarily in Canada.
Common stock, preferred stock, and excess stock authorizations
Our charter authorizes the issuance of 400.0 million shares of common stock, of which 172.2 million shares were issued and
outstanding as of September 30, 2024. Our charter also authorizes the issuance of up to 100.0 million shares of preferred stock, none
of which were issued and outstanding as of September 30, 2024. In addition, 200.0 million shares of “excess stock” (as defined in our
charter) are authorized, none of which were issued and outstanding as of September 30, 2024.
14.NONCONTROLLING INTERESTS
Noncontrolling interests represent the third-party interests in certain entities in which we have a controlling interest. As of
September 30, 2024, these entities owned 67 properties, which are included in our consolidated financial statements. Noncontrolling
interests are adjusted for additional contributions and distributions, the proportionate share of the net earnings or losses, and other
comprehensive income or loss. Distributions, profits, and losses related to these entities are allocated in accordance with the respective
operating agreements. During the nine months ended September 30, 2024 and 2023, we distributed $179.1 million and $192.7 million,
respectively, to our consolidated real estate joint venture partners.
Certain of our noncontrolling interests have the right to require us to redeem their ownership interests in the respective entities.
We classify these ownership interests in the entities as redeemable noncontrolling interests outside of total equity in our consolidated
balance sheets. Redeemable noncontrolling interests are adjusted for additional contributions and distributions, the proportionate share
of the net earnings or losses, and other comprehensive income or loss. If the amount of a redeemable noncontrolling interest is less
than the maximum redemption value at the balance sheet date, such amount is adjusted to the maximum redemption value.
Subsequent declines in the redemption value are recognized only to the extent that previous increases have been recognized.
Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial
statements for additional information.
43
15.ASSETS CLASSIFIED AS HELD FOR SALE
As of September 30, 2024, we had nine properties aggregating 1.3 million RSF that were classified as held for sale in our
consolidated financial statements.
The disposal of properties classified as held for sale does not represent a strategic shift that has (or will have) a major effect
on our operations or financial results and therefore does not meet the criteria for classification as a discontinued operation. We cease
depreciation of our properties upon their classification as held for sale.
The following is a summary of net assets as of September 30, 2024 and December 31, 2023 for our real estate investments
that were classified as held for sale as of each respective date (in thousands):
September 30, 2024
December 31, 2023
Total assets(1)
$280,631
$194,223
Total liabilities
(9,355)
(4,750)
Total accumulated other comprehensive income
1,421
1,960
Net assets classified as held for sale
$272,697
$191,433
(1)Balances as of September 30, 2024 and December 31, 2023 include investments in real estate aggregating $228.4 million and $185.4 million, respectively, classified in
investments in real estate in our consolidated balance sheets as of each respective date.
For additional information, refer to “Real estate sales” in Note 2 – “Summary of significant accounting policies” to our unaudited
consolidated financial statements.
16.SUBSEQUENT EVENTS
Real estate acquisition and disposition in October 2024
In October 2024, we completed the sale of one property aggregating 248,186 RSF at 14225 Newbrook Drive in our Northern
Virginia submarket for a sales price of $80.5 million and recognized a gain on sale of real estate of $37.1 million.
In October 2024, we completed the acquisition of one property at 428 Westlake Avenue North in our Lake Union submarket for
a purchase price of $47.6 million.
Real estate impairment charges in October 2024
In October 2024, four properties located in our Greater Boston market met the criteria for classification as held for sale. We
expect to complete the sale of these properties for a sales price of $369.4 million during the fourth quarter of 2024 to the current tenant
of the properties. These properties are currently 100% leased for a weighted-average remaining lease term of 18 years to a single
tenant with whom we have a long-established relationship. The important tenant relationship and strategic nature of these properties
resulted in a limited pool of buyers we would be willing to sell this asset to and, as a result, the likelihood of selling this asset was not
probable until the buyer committed in October 2024 to acquire these properties. As a result, in October 2024, we recognized an
impairment charge aggregating $40.9 million to reduce the carrying amounts of these properties to the expected sales price less costs
to sell.
In October 2024, five operating properties aggregating 203,223 RSF and land parcels aggregating 1.5 million SF in our
Sorrento Mesa and University Town Center submarkets met the criteria for classification as held for sale. We expect to complete the
sale of these assets to buyers that are expected to develop residential properties on these sites for an aggregate sales price of
approximately $314.0 million during the fourth quarter of 2024. In October 2024, upon management obtaining the authority to sell these
assets and agreeing to acceptable terms, we recognized impairment charges aggregating $65.9 million to reduce the carrying amounts
of these properties to the expected aggregate sales price less costs to sell.
44
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements
Certain information and statements included in this quarterly report on Form 10-Q, including, without limitation, statements
containing the words “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, constitute “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. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions, and financial trends that
may affect our future plans of operations, business strategy, results of operations, and financial position. A number of important factors
could cause actual results to differ materially from those included within or contemplated by the forward-looking statements, including,
but not limited to, the following:
•Operating factors, such as a failure to operate our business successfully in comparison to market expectations or in
comparison to our competitors, our inability to obtain capital when desired or refinance debt maturities when desired, and/
or a failure to maintain our status as a REIT for federal tax purposes;
•Market and industry factors, such as adverse developments concerning the life science industry and/or our tenants;
•Government factors, such as any unfavorable effects resulting from federal, state, local, and/or foreign government
policies, laws, and/or funding levels;
•Global factors, such as negative economic, social, political, financial, credit market, banking conditions, and/or regional
armed hostilities; and
•Other factors, such as climate change, cyber intrusions, and/or changes in laws, regulations, and financial accounting
standards.
This list of risks and uncertainties is not exhaustive. Additional information regarding risk factors that may affect us is included
under Part I; “Item 1A. Risk factors”; and “Item 7. Management’s discussion and analysis of financial condition and results of
operations” in our annual report on Form 10-K for the year ended December 31, 2023 and under respective sections in this quarterly
report on Form 10-Q. Readers of this quarterly report on Form 10-Q should also read our other documents filed publicly with the SEC
for further discussion regarding such factors.
45
Overview
We are a Maryland corporation formed in October 1994 that has elected to be taxed as a REIT for federal income tax
purposes. 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 with our founding in 1994,
Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative mega campuses in AAA life science
innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle,
and New York City. As of September 30, 2024, Alexandria has a total market capitalization of $33.1 billion and an asset base in North
America that includes 41.8 million RSF of operating properties, 5.3 million RSF of Class A/A+ properties undergoing construction, and
one committed near-term project expected to commence construction in the next two years. Alexandria has a longstanding and proven
track record of developing Class A/A+ properties clustered in mega 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 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.
As of September 30, 2024:
•Investment-grade or publicly traded large cap tenants represented 53% of our annual rental revenue;
•Approximately 96% of our leases (on an annual rental revenue basis) contained effective annual rent escalations
approximating 3% that were either fixed or indexed based on a consumer price index or other index;
•Approximately 93% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay
substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other
operating expenses (including increases thereto) in addition to base rent;
•Approximately 92% of our leases (on an annual rental revenue basis) provided for the recapture of capital expenditures
(such as HVAC maintenance and/or replacement, roof replacement, and parking lot resurfacing) that we believe would
typically be borne by the landlord in traditional office leases; and
•80% of our leasing activity during the last twelve months was generated from our existing tenant base.
Our primary business objective is to maximize long-term asset value and stockholder returns based on a multifaceted platform
of internal and external growth. A key element of our strategy is our unique focus on Class A/A+ properties located in collaborative
mega campuses in AAA life science innovation clusters. Our mega campuses are designed for scalability, offering our tenants a clear
path for growth, including through our future developments and redevelopments. Strategically located near top academic medical
institutions and equipped with curated amenities, services, and transit access, our mega campuses are designed to support our tenants
in attracting and retaining top talent, which we believe is a key driver of tenant demand for our properties. Our strategy also includes
drawing upon our deep and broad real estate and life science relationships in order to identify and attract new and leading tenants and
to source additional value-creation real estate.
Executive summary
Operating results
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net income attributable to Alexandria’s common
stockholders – diluted:
In millions
$164.7
$21.9
$374.5
$184.4
Per share
$0.96
$0.13
$2.18
$1.08
Funds from operations attributable to Alexandria’s
common stockholders – diluted, as adjusted:
In millions
$407.9
$386.4
$1,217.3
$1,142.5
Per share
$2.37
$2.26
$7.08
$6.69
For additional information, refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria
Real Estate Equities, Inc.’s common stockholders” under “Definitions and reconciliations” and to the tabular presentation of these items
in “Results of operations” in Item 2.
46
Continued operational excellence and solid results amid challenging macroeconomics environment
(As of September 30, 2024, unless stated otherwise)
Occupancy of operating properties in North America
94.7%
Percentage of annual rental revenue in effect from mega campuses
76%
Percentage of annual rental revenue in effect from investment-grade or publicly traded large cap tenants
53%
Adjusted EBITDA margin for the three months ended September 30, 2024
70%
Percentage of leases containing annual rent escalations
96%
Weighted-average remaining lease term:
Top 20 tenants
9.5
years
All tenants
7.5
years
Sustained strength in tenant collections:
Tenant receivables as a percentage of rental revenues for the three months ended September 30, 2024
0.9%
October 2024 tenant rents and receivables collected as of the date of this report
99.6%
Tenant rents and receivables for the three months ended September 30, 2024 collected as of the date of this
report
99.9%
Strong and flexible balance sheet with significant liquidity; top 10% credit rating ranking among all publicly traded U.S. REITs
•As of September 30, 2024, our credit ratings from Moody’s Ratings and S&P Global Ratings were Baa1 and BBB+,
respectively, which rank in the top 10% among all publicly traded U.S. REITs.
•Net debt and preferred stock to Adjusted EBITDA of 5.5x and fixed-charge coverage ratio of 4.4x for the three months ended
September 30, 2024 annualized.
•Significant liquidity of $5.4 billion.
•31% of our total debt matures in 2049 and beyond.
•12.6 years weighted-average remaining term of debt.
•Since 2020, an average of 97.7% of our debt has been fixed rate.
•Total debt and preferred stock to gross assets of 29%.
•$1.0 billion of capital contribution commitments from existing consolidated real estate joint venture partners to fund
construction from October 1, 2024 through 2027.
Strong leasing volume and solid rental rates
•Strong leasing volume aggregating 1.5 million RSF for the three months ended September 30, 2024, up 48% compared to our
previous four-quarter average of 1.0 million RSF.
•Rental rate changes on lease renewals and re-leasing of space were 5.1% and 1.5% (cash basis) for the three months ended
September 30, 2024 and 16.4% and 8.9% (cash basis) for the nine months ended September 30, 2024.
•80% of our leasing activity during the last twelve months was generated from our existing tenant base.
September 30, 2024
Three Months Ended
Nine Months Ended
Total leasing activity – RSF
1,486,097
3,742,955
Leasing of development and redevelopment space – RSF
39,121
480,342
Lease renewals and re-leasing of space:
RSF (included in total leasing activity above)
1,278,857
2,863,277
Rental rate changes
5.1%
(1)
16.4%
Rental rate changes (cash basis)
1.5%
(1)
8.9%
(1)Includes a five-year lease extension to an investment-grade rated technology tenant aggregating 357,136 RSF of recently acquired tech R&D space in our
Texas market that was renewed with rental rate changes of (33.6)% and (4.8)% (cash basis). These spaces were originally targeted for a future change in
use at acquisition, but we instead renewed them with a lower capital investment while we continue to evaluate options to convert these spaces in the future,
subject to market conditions. Excluding this lease, rental rate changes for renewed/re-leased space for the three months ended September 30, 2024 were
13.0% and 2.3% (cash basis).
47
Continued solid net operating income and internal growth
•Total revenue growth
•$791.6 million, up 10.9%, for the three months ended September 30, 2024, compared to $713.8 million for the three
months ended September 30, 2023.
•$2.3 billion, up 9.3%, for the nine months ended September 30, 2024, compared to $2.1 billion for the nine months ended
September 30, 2023.
•Net operating income (cash basis) of $2.0 billion for the three months ended September 30, 2024 annualized, increased by
$274.2 million, or 15.5%, compared to the three months ended September 30, 2023 annualized. Refer to “Net operating
income, net operating income (cash basis), and operating margin” under “Definitions and reconciliations” in Item 2 for a
reconciliation of our net income to net operating income (cash basis).
•Same property net operating income growth
•1.5% and 6.5% (cash basis) for the three months ended September 30, 2024, compared to the three months ended
September 30, 2023.
•1.6% and 4.6% (cash basis) for the nine months ended September 30, 2024, compared to the nine months ended
September 30, 2023.
•96% of our leases contain contractual annual rent escalations approximating 3%.
Attractive dividend strategy to share net cash flows from operating activities with stockholders while retaining a significant portion for
reinvestment
•Common stock dividend declared for the three months ended September 30, 2024 of $1.30 per common share aggregating
$5.14 per common share for the twelve months ended September 30, 2024, up 24 cents, or 5%, over the twelve months
ended September 30, 2023.
•Dividend yield of 4.4% as of September 30, 2024.
•Dividend payout ratio of 55% for the three months ended September 30, 2024.
•Average annual dividend per-share growth of 5.4% from 2020 through the three months ended September 30, 2024
annualized.
•Significant net cash flows from operating activities after dividends retained for reinvestment aggregating $2.1 billion for the
years ended December 31, 2020 through 2023 and including the midpoint of our 2024 guidance range for net cash provided
by operating activities after dividends.
Ongoing successful 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
December 31, 2024 with dispositions primarily focused on sales of properties and land parcels not integral to our mega campus
strategy. Refer to “Dispositions” in Item 2 for additional details.
(in millions)
Completed dispositions of 100% interest in properties
$319
Pending dispositions subject to non-refundable deposits
577
Pending dispositions subject to executed letters of intent and/or purchase and sale agreement
603
Forward equity sales agreements
28
Total
$1,527
2024 guidance midpoint for dispositions and common equity
$1,550
•In September 2024, we completed the following transactions with our longstanding tenant, Fred Hutchinson Cancer Center
(“Fred Hutch”), in the Lake Union submarket:
•Sale of 1165 Eastlake Avenue East, a fully leased 100,086 RSF single-tenant Class A+ life science facility that was
developed in 2021. We sold the property for $150.0 million, or $1,499 per RSF, at strong capitalization rates of 4.7% and
4.9% (cash basis). Upon completion of the sale, we recognized a gain on sale of real estate aggregating $21.5 million.
•Fred Hutch executed early renewals aggregating 117,479 RSF at our 1201 and 1208 Eastlake Avenue East properties,
including a 15-year lease extension at 1201 Eastlake Avenue East.
•Our prior joint venture partner sold its ownership interest in each of 1201 and 1208 Eastlake Avenue East to Fred Hutch.
Our ownership interest in both properties remains unchanged at 30.0%. This sale, lease extensions, and new joint venture
affirm Fred Hutch’s commitment to South Lake Union.
48
Strong balance sheet management
Key capital metrics as of or for the three months ended September 30, 2024
September 30, 2024
Target for Fourth Quarter of
2024 Annualized
Quarter
Annualized
Trailing
12 Months
Net debt and preferred stock to Adjusted EBITDA
5.5x
5.6x
Less than or equal to 5.1x
Fixed-charge coverage ratio
4.4x
4.5x
Greater than or equal to 4.5x
•$33.1 billion in total market capitalization.
•$20.5 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.
•As of September 30, 2024, our non-real estate investments aggregated $1.5 billion:
•Unrealized gains presented in our consolidated balance sheet were $166.2 million, comprising gross unrealized gains and
losses aggregating $284.4 million and $118.2 million, respectively.
•Investment income of $15.2 million for the three months ended September 30, 2024 presented in our consolidated statement
of operations consisted of $23.0 million of realized gains  and $2.6 million of unrealized gains, offset by $10.3 million of
impairment charges. Investment income of $14.9 million for the nine months ended September 30, 2024 presented in our
consolidated statement of operations consisted of $85.2 million of realized gains and $32.5 million of unrealized losses, offset
by $37.8 million of impairment charges.
Key capital events
•In September 2024, we amended and restated our unsecured senior line of credit to, among other changes, extend the
maturity date from January 22, 2028 to January 22, 2030, including extension options that we control.
•During the three months ended September 30, 2024, we had no activity under our ATM program. As of the date of this report,
the remaining aggregate amount available for future sales of common stock was $1.47 billion.
External growth and investments in real estate
Alexandria’s development and redevelopment pipeline delivered incremental annual net operating income of $21 million, commencing
during the three months ended September 30, 2024, and is expected to deliver incremental annual net operating income aggregating
$510 million primarily by the first quarter of 2028
•During the three months ended September 30, 2024, we placed into service development and redevelopment projects
aggregating 316,691 RSF that are 100% leased across multiple submarkets and delivered incremental annual net operating
income of $21 million. Deliveries during the three months ended September 30, 2024 included 250,000 RSF at 9820
Darnestown Road on the Alexandria Center® for Life Science – Shady Grove mega campus in our Rockville submarket.
•Annual net operating income (cash basis) is expected to increase by $57 million upon the burn-off of initial free rent, with a
weighted-average burn-off period of approximately six months, from recently delivered projects.
•69% of the RSF in our total development and redevelopment 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:
Six months ended June 30, 2024
$42
628,427
100%
Three months ended September 30, 2024
21
316,691
100
Total placed into service during nine months ended September 30, 2024
$63
945,118
100%
Expected to be placed into service(1):
Fourth quarter of 2024 through fourth quarter of 2025
$158
(2)
5,467,897
55%
First quarter of 2026 through first quarter of 2028
352
(3)
$510
(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 (i) 1.0 million RSF that is expected to stabilize through 2025 and is 92% leased/negotiating and (ii) expected partial deliveries through fourth quarter of
2025 from projects expected to stabilize in 2026 and beyond. Refer to the initial and stabilized occupancy years under “New Class A/A+ development and
redevelopment properties: current projects” in Item 2 for additional details.
(3)70% of the leased RSF of our development and redevelopment projects was generated from our existing tenant base.
49
corporateresponsibilityv2.jpg
50
Operating summary
Same Property Net
Operating Income Growth
Rental Rate Growth:
Renewed/Re-Leased Space
Margins(1)
Favorable Lease Structure(2)
Operating
Adjusted EBITDA
Strategic Lease Structure by Owner and
Operator of Collaborative Mega Campuses
71%
70%
Increasing cash flows
Percentage of leases containing annual
rent escalations
96%
Stable cash flows
Weighted-Average Lease Term
of Executed Leases(3)
Percentage of triple
net leases
93%
Lower capex burden
8.8 years
Percentage of leases providing for the
recapture of capital expenditures
92%
Net Debt and Preferred Stock
to Adjusted EBITDA(4)
Fixed-Charge Coverage Ratio(4)
2748779069441
2748779069669
2748779069706
2748779069744
2748779069793
2748779069829
Refer to “Same properties” and “Definitions and reconciliations” in Item 2 for additional details. “Definitions and reconciliations” contains the definitions of “Fixed-charge
coverage ratio,” “Net debt and preferred stock to Adjusted EBITDA,” and “Net operating income” and their respective reconciliations from the most directly comparable
financial measures presented in accordance with GAAP.
(1)For the three months ended September 30, 2024.
(2)Percentages calculated based on our annual rental revenue in effect as of September 30, 2024.
(3)Represents the weighted-average lease term of executed leases based on annual rental revenue for the 10-year period from December 31, 2015 through September 30,
2024.
(4)Quarter annualized.
51
Stable Cash Flows From Our High-Quality and Diverse Mix of
Approximately 800 Tenants
Investment-Grade or Publicly Traded
Large Cap Tenants
92%
of ARE’s Top 20 Tenant
Annual Rental Revenue
53%
of ARE’s Annual
Rental Revenue
Percentage of ARE’s
Annual Rental Revenue
Solid Historical Occupancy of 96% Over Past 10 Years(2) From
Historically Strong Demand for Our Class A/A+ Properties in AAA Locations
Mega Campuses
Occupancy Across Key Locations
Percentage of ARE’s
Annual Rental Revenue
1099511627777
(3)
2748779069518
Life Science
Product,
Service, and
Device
Multinational
Pharmaceutical
Public
Biotechnology –
Approved or
Marketed
Product
Public
Biotechnology –
Preclinical or
Clinical Stage
Private
Biotechnology
Other(1)
Other Investment-Grade
or Large Cap Tech
Biomedical and
Government
Institutions
1099511628213
76%
Mega
Campuses
24%
Non-Mega
Campuses
As of September 30, 2024. Annual rental revenue represents amounts in effect as of September 30, 2024. Refer to “Definitions and reconciliations” in Item 2 for additional
information.
(1)Represents the percentage of our annual rental revenue generated by technology, professional services, finance, telecommunications, and construction/real estate
companies, as well as retail-related tenants, which generate less than 1.0% of our annual rental revenue.
(2)Represents average occupancy of operating properties as of each December 31 from 2015 through 2023 and as of September 30, 2024.
(3)Refer to footnote 1 under “Summary of occupancy percentages in North America” in Item 2 for additional details.
52
Long-Duration and Stable Cash Flows From
High-Quality and Diverse Tenants
Long-Duration Lease Terms
9.5 Years
Top 20 Tenants
7.5 Years
All Tenants
Weighted-Average Remaining Term(1)
Sustained Strength in Tenant Collections(2)
99.9%
For the Three Months Ended
September 30, 2024
99.6%
October 2024
(1)Based on annual rental revenue in effect as of September 30, 2024.
(2)Represents the portion of total receivables billed for each period collected through the date of this report.
53
Leasing Activity
The following table summarizes our leasing activity at our properties:
Three Months Ended
Nine Months Ended
Year Ended
September 30, 2024
September 30, 2024
December 31, 2023
Including
Straight-Line Rent
Cash Basis
Including
Straight-Line Rent
Cash Basis
Including
Straight-Line Rent
Cash Basis
(Dollars per RSF)
Leasing activity:
Renewed/re-leased space(1)
 
 
 
 
 
 
Rental rate changes
5.1%
(2)
1.5%
(2)
16.4%
8.9%
29.4%
15.8%
New rates
$56.60
$55.77
$63.43
$62.39
$52.35
$50.82
Expiring rates
$53.86
$54.95
$54.47
$57.28
$40.46
$43.87
RSF
1,278,857
2,863,277
3,046,386
Tenant improvements/
leasing commissions
$43.73
(3)
$33.92
$26.09
Weighted-average lease
term
9.7 years
8.7 years
8.7 years
Developed/redeveloped/
previously vacant space
leased(4)
New rates
$52.66
$52.18
$64.59
$62.90
$65.66
$59.74
RSF
207,240
879,678
(5)
1,259,686
Weighted-average lease
term
10.6 years
8.1 years
13.8 years
Leasing activity summary
(totals):
New rates
$56.05
$55.27
$63.69
$62.50
$56.09
$53.33
RSF
1,486,097
3,742,955
4,306,072
Weighted-average lease
term
9.8 years
8.6 years
11.3 years
Lease expirations(1)
Expiring rates
$51.62
$53.17
$52.01
$54.40
$43.84
$45.20
RSF
1,500,213
3,801,559
5,027,773
Leasing activity includes 100% of results for properties in North America in which we have an investment.
(1)Excludes month-to-month leases aggregating 355,698 RSF and 86,092 RSF as of September 30, 2024 and December 31, 2023, respectively. Month-to-month leases
aggregating 355,698 RSF as of September 30, 2024 include 226,144 RSF in our University Town Center submarket primarily related to space being temporarily held over
by an expiring tenant at buildings that are targeted for the future development of laboratory space, subject to market conditions and leasing. During the trailing twelve
months ended September 30, 2024, we granted free rent concessions averaging 0.7 months per annum.
(2)Includes a five-year lease extension to an investment-grade rated technology tenant aggregating 357,136 RSF of recently acquired tech R&D space in our Texas market
that was renewed with rental rate changes of (33.6)% and (4.8)% (cash basis). These spaces were originally targeted for a future change in use at acquisition, but we
instead renewed them with a lower capital investment while we continue to evaluate options to convert these spaces in the future, subject to market conditions. Excluding
this lease, rental rate changes for renewed/re-leased space were 13.0% and 2.3% (cash basis) for three months ended September 30, 2024. Rental rate changes may
experience volatility from quarter to quarter based on the volume and mix of leases executed. Refer to “Projected results” in Item 2 for rental rate changes expected from
leases executed for the year ending December 31, 2024.
(3)Includes tenant improvements and leasing commissions related to a 10.5-year extension of a recently acquired lease aggregating 85,019 RSF in our Fenway submarket
to an investment-grade rated academic institution. Excluding this lease, tenant improvements and leasing commissions per RSF for the three and nine months ended
September 30, 2024 were $33.16 and $28.85, respectively, which are consistent with the five-year quarterly average of $32.17 per RSF.
(4)Refer to “New Class A/A+ development and redevelopment properties: summary of pipeline” in Item 2 for additional information, including total project costs.
(5)Includes the five-year extension of 171,102 RSF at our 4155 Campus Point Court property in San Diego, a fully leased development project expected to deliver during the
fourth quarter of 2024.
54
Summary of contractual lease expirations
The following table summarizes the contractual lease expirations at our properties as of September 30, 2024:
Year
RSF
Percentage of
Occupied RSF
Annual Rental Revenue
(per RSF)(1)
Percentage of
Annual Rental Revenue
2024
(2)
518,665
1.4%
$69.19
1.7%
2025
3,785,573
10.0%
$49.64
8.8%
2026
2,714,170
7.1%
$53.21
6.7%
2027
3,242,737
8.5%
$51.87
7.9%
2028
4,332,150
11.4%
$51.78
10.5%
2029
2,437,921
6.4%
$51.25
5.8%
2030
3,135,445
8.3%
$43.25
6.3%
2031
3,425,338
9.0%
$55.11
8.8%
2032
1,093,311
2.9%
$59.53
3.0%
2033
2,772,455
7.3%
$50.81
6.6%
Thereafter
10,541,840
27.7%
$68.66
33.9%
Contractual lease expirations at properties classified as held for sale as of September 30, 2024 are excluded from the information on this page.
(1)Represents amounts in effect as of September 30, 2024.
(2)Excludes month-to-month leases aggregating 355,698 RSF as of September 30, 2024.
55
The following tables present our lease expirations by market for the remainder of 2024 and for 2025 as of September 30,
2024:
2024 Contractual Lease Expirations (in RSF)
Market
Leased
Negotiating/
Anticipating
Targeted for Future
Development/Redevelopment(1)
Remaining
Expiring
Leases
Total(2)
Annual
Rental
Revenue
(per RSF)(3)
Committed
Near-Term/
Priority Anticipated
Future
Greater Boston
73,614
21,621
—
104,500
80,788
(4)
280,523
$86.07
San Francisco Bay Area
12,847
13,943
107,250
—
14,682
148,722
49.58
San Diego
27,119
—
—
—
17,408
44,527
55.30
Seattle
—
—
—
—
3,652
3,652
N/A
Maryland
—
—
—
—
182
182
N/A
Research Triangle
10,478
—
—
—
8,202
18,680
28.31
New York City
—
—
—
—
9,058
9,058
109.57
Texas
—
—
—
—
—
—
—
Canada
13,321
—
—
—
—
13,321
26.54
Non-cluster/other markets
—
—
—
—
—
—
—
Total
137,379
35,564
107,250
104,500
133,972
518,665
$69.19
Percentage of expiring leases
26%
7%
21%
20%
26%
100%
2025 Contractual Lease Expirations (in RSF)
Annual Rental
Revenue
(per RSF)(3)
Market
Leased
Negotiating/
Anticipating
Targeted for Future
Development/
Redevelopment(1)
Remaining
Expiring
Leases(5)
Total
Greater Boston
172,446
145,715
25,312
659,355
(4)
1,002,828
$76.13
San Francisco Bay Area
72,162
247,827
—
547,092
867,081
51.33
San Diego
83,546
—
269,048
260,627
613,221
22.98
Seattle
—
—
—
196,419
196,419
25.10
Maryland
35,055
6,926
—
151,958
193,939
27.51
Research Triangle
—
—
—
306,916
306,916
51.16
New York City
—
13,273
—
54,966
68,239
105.86
Texas
—
—
198,972
247,246
446,218
40.09
Canada
—
—
—
88,412
88,412
20.28
Non-cluster/other markets
—
—
—
2,300
2,300
40.17
Total
363,209
413,741
493,332
2,515,291
3,785,573
$49.64
Percentage of expiring leases
10%
11%
13%
66%
100%
Contractual lease expirations at properties classified as held for sale as of September 30, 2024 are excluded from the information on this page.
(1)Primarily represents assets that were recently acquired for future development and redevelopment opportunities, for which we expect, subject to market conditions and
leasing, to commence first-time conversion from non-laboratory space to laboratory space, or to commence future ground-up development. As of September 30, 2024,
annual rental revenue from these leases expiring in 2024, including 226,144 RSF of month-to-month leases in our University Town Center submarket primarily related to
space being temporarily held over by an expiring tenant, and 2025 is $20.9 million and $17.5 million, respectively. The weighted-average expiration date of these leases
expiring in 2024 and 2025 is October 20, 2024 and January 10, 2025, respectively. Refer to “Investments in real estate” under “Definitions and reconciliations” in Item 2
for additional details, including development and redevelopment square feet currently included in rental properties.
(2)Excludes month-to-month leases aggregating 355,698 RSF as of September 30, 2024. Refer to “Leasing Activity” in Item 2 for additional details.
(3)Represents amounts in effect as of September 30, 2024.
(4)Includes 41,908 RSF and 210,868 RSF expiring in 2024 and 2025, respectively, related to properties that are under executed letters of intent and/or purchase and sale
agreements to sell. Approximately 95% of the 2025 remaining expiring leases in Greater Boston are located in our Cambridge/Inner Suburbs submarket. Refer to
footnote 5 for additional details.
(5)Includes 768,080 RSF in four submarkets with a weighted-average expiration date of January 21, 2025 and annual rental revenue aggregating approximately
$47 million, with our share of this annual rental revenue aggregating $35 million, comprising the following: (i) existing laboratory spaces for which we are evaluating
options to re-lease or reposition from single tenancy to multi-tenancy that will remain in our same property pool at Alexandria Technology Square® in our Cambridge
submarket for 182,054 RSF and at 409 Illinois Street, where we have an ownership interest of 25.0%, in our Mission Bay submarket for 234,249 RSF (we are in early
discussions with a tenant to lease approximately 50% of this space); and (ii) non-laboratory space for which we are evaluating options to re-lease generally in their
current condition, reposition, or, subject to market conditions, may undergo a conversion through redevelopment in our Austin submarket for 247,246 RSF and in our
Research Triangle market for 104,531 RSF. Should we commence redevelopment efforts, these properties would be placed into our active pipeline and removed from
our same property pool; otherwise, they would remain in our same property pool. We expect downtime on the 768,080 RSF to range from 12 to 24 months on a
weighted-average basis.
56
Top 20 tenants
92% of Top 20 Tenant Annual Rental Revenue Is From Investment-Grade
or Publicly Traded Large Cap Tenants(1)
Our properties are leased to a high-quality and diverse group of tenants, with no individual tenant accounting for more than 5.8%
of our annual rental revenue in effect as of September 30, 2024. The following table sets forth information regarding leases with our 20
largest tenants in North America based upon annual rental revenue in effect as of September 30, 2024 (dollars in thousands, except
average market cap amounts):
Remaining
Lease
Term(1)
(in Years)
Aggregate
RSF
Annual
Rental
Revenue(1)
Percentage of
Annual Rental
Revenue (1)
Investment-Grade
Credit Ratings
Average
Market
Cap
(in billions)
Tenant
Moody’s
S&P
1
Moderna, Inc.
12.6
1,385,678
$
127,387
5.8%
—
—
$38.6
2
Eli Lilly and Company
8.2
1,166,754
94,814
4.3
A1
A+
$712.4
3
Bristol-Myers Squibb Company
6.4
999,379
76,363
3.5
A2
A
$99.1
4
Takeda Pharmaceutical Company Limited
10.7
549,759
47,899
2.2
Baa1
BBB+
$44.5
5
Roche
6.7
770,279
47,104
2.2
Aa2
AA
$227.8
6
Illumina, Inc.
7.4
857,967
35,362
1.6
Baa3
BBB
$19.7
7
Alphabet Inc.
3.1
625,015
34,899
1.6
Aa2
AA+
$1,916.3
8
2seventy bio, Inc.(2)
8.9
312,805
33,543
1.5
—
—
$0.2
9
Novartis AG
3.8
450,664
30,969
1.4
Aa3
AA-
$231.8
10
United States Government
5.9
429,359
28,593
1.3
Aaa
AA+
$—
11
Cloud Software Group, Inc.
2.4
(3)
292,013
28,537
1.3
—
—
$—
12
Uber Technologies, Inc.
58.0
(4)
1,009,188
27,776
1.3
Baa2
BBB-
$137.1
13
AstraZeneca PLC
5.1
450,848
27,156
1.2
A2
A+
$222.8
14
Harvard University
7.2
343,858
27,084
1.2
Aaa
AAA
$—
15
The Regents of the University of
California
6.6
372,647
23,670
1.1
Aa2
AA
$—
16
Sanofi
6.3
267,278
21,444
1.0
A1
AA
$126.6
17
Merck & Co., Inc.
8.8
337,703
21,401
1.0
A1
A+
$300.8
18
Amgen Inc.
8.3
428,227
21,314
1.0
Baa1
BBB+
$159.2
19
New York University
7.4
218,983
21,056
1.0
Aa2
AA-
$—
20
Massachusetts Institute of Technology
4.7
246,725
20,527
0.9
Aaa
AAA
$—
Total/weighted-average
9.5
(4)
11,515,129
$
796,898
36.4%
Annual rental revenue and RSF include 100% of each property managed by us in North America. Refer to “Annual rental revenue” and “Investment-grade or publicly traded large
cap tenants” under “Definitions and reconciliations” in Item 2 for additional details, including our methodologies of calculating annual rental revenue from unconsolidated real
estate joint ventures and average market capitalization, respectively.
(1)Based on annual rental revenue in effect as of September 30, 2024.
(2)As of June 30, 2024, 2seventy bio, Inc. held $201.9 million of cash, cash equivalents, and marketable securities. In March 2024, Regeneron Pharmaceuticals, Inc., a
publicly traded biotechnology company with investment-grade credit ratings of Baa1 and BBB+ assigned by Moody’s and S&P, respectively, entered into a sublease for
approximately 195,000 RSF, or 62.8% of our annual rental revenue generated from 2seventy bio as of September 30, 2024. Additionally, 90.2% of the annual rental
revenue generated by 2seventy bio is guaranteed by another related public biotechnology company.
(3)Consists of one lease at a property acquired in 2022 with future development and redevelopment opportunities. This lease with Cloud Software Group, Inc. (formerly known
as TIBCO Software, Inc.) was in place when we acquired the property.
(4)Includes (i) ground leases for land at 1455 and 1515 Third Street (two buildings aggregating 422,980 RSF) and (ii) leases at 1655 and 1725 Third Street (two buildings
aggregating 586,208 RSF) in our Mission Bay submarket owned by our unconsolidated real estate joint venture in which we have an ownership interest of 10%. Annual
rental revenue is presented using 100% of the annual rental revenue from our consolidated properties and our share of annual rental revenue from our unconsolidated real
estate joint ventures. Excluding these ground leases, the weighted-average remaining lease term for our top 20 tenants was 7.8 years as of September 30, 2024.
57
Locations of properties
The locations of our properties are diversified among a number of Class A/A+ assets strategically clustered in mega campuses
in AAA life science innovation cluster markets. The following table sets forth the total RSF, number of properties, and annual rental
revenue in effect as of September 30, 2024 in each of our markets in North America (dollars in thousands, except per RSF amounts):
RSF
Number of
Properties
Annual Rental Revenue
Market
Operating
Development
Redevelopment
Total
% of Total
Total
% of Total
Per RSF
Greater Boston
10,352,695
764,036
1,762,974
(1)
12,879,705
28%
72
$833,562
38%
$85.09
San Francisco Bay Area
7,784,590
498,142
259,689
8,542,421
18
65
432,102
20
63.54
San Diego
7,673,315
1,186,104
—
8,859,419
19
87
330,596
15
44.90
Seattle
3,108,593
227,577
34,306
3,370,476
7
45
137,044
6
47.78
Maryland
3,819,512
29,890
—
3,849,402
8
50
145,847
7
40.12
Research Triangle
3,770,927
—
—
3,770,927
8
38
116,318
5
31.64
New York City
921,686
—
—
921,686
2
4
72,439
3
92.37
Texas
1,845,159
—
73,298
1,918,457
4
15
54,958
3
31.19
Canada
887,737
—
139,311
1,027,048
2
11
19,790
1
23.33
Non-cluster/other markets
347,806
—
—
347,806
1
10
14,623
1
57.76
Properties held for sale
1,261,387
—
—
1,261,387
3
9
26,796
1
N/A
North America
41,773,407
2,705,749
2,269,578
46,748,734
100%
406
$2,184,075
100%
$57.09
4,975,327
(1)Primarily includes our active redevelopment projects aggregating 735,744 RSF at 40, 50, and 60 Sylvan Road and 840 Winter Street located on the Alexandria Center®
for Life Science – Waltham mega campus. This mega campus project is expected to capture demand in our Route 128 submarket.
Summary of occupancy percentages in North America
The following table sets forth the occupancy percentages for our operating properties and our operating and redevelopment
properties in each of our North America markets, excluding properties held for sale, as of the following dates:
 
Operating Properties
Operating and Redevelopment Properties
Market
9/30/24
6/30/24
9/30/23
9/30/24
6/30/24
9/30/23
Greater Boston
94.6%
94.2%
93.2%
80.9%
81.7%
83.3%
San Francisco Bay Area
94.1
94.0
95.3
91.1
90.7
91.9
San Diego
96.0
95.1
90.9
96.0
95.1
90.9
Seattle
92.3
(1)
94.7
95.1
91.3
93.7
90.3
Maryland
96.2
96.5
96.6
96.2
96.5
96.6
Research Triangle
97.5
97.4
96.9
97.5
97.4
96.9
New York City
85.1
(2)
85.1
89.4
85.1
85.1
89.4
Texas
95.5
95.5
95.1
91.8
91.8
91.5
Subtotal
94.9
94.7
93.9
90.0
90.2
89.9
Canada
95.5
94.9
88.9
82.6
82.5
75.7
Non-cluster/other markets
72.8
75.6
80.5
72.8
75.6
80.5
North America
94.7%
94.6%
93.7%
89.7%
89.9%
89.4%
(1)Decline in occupancy relates to the expiration of an acquired non-laboratory lease aggregating 87,273 RSF at one property in our Bothell submarket that is expected to
be converted to laboratory space subject to market conditions and leasing.
(2)The Alexandria Center® for Life Science – New York City mega campus is 95.3% occupied as of September 30, 2024. Occupancy percentage in our New York City
market reflects vacancy at the Alexandria Center® for Life Science – Long Island City property, which was 42.8% occupied as of September 30, 2024.
58
Investments in real estate
A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new
Class A/A+ properties, and property enhancements identified during the underwriting of certain acquired properties, located in
collaborative mega campuses in AAA life science innovation clusters. These projects are focused on providing high-quality, generic, and
reusable spaces that meet the real estate requirements of a wide range of tenants. Upon completion, each development and
redevelopment project is expected to generate increases in rental income, net operating income, and cash flows. Our development and
redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher
occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. Our pre-construction
activities are undertaken in order to prepare the property for its intended use and include entitlements, permitting, design, site work, and
other activities preceding commencement of construction of aboveground building improvements.
Our investments in real estate consisted of the following as of September 30, 2024 (dollars in thousands):
Development and Redevelopment
Active and Near-Term
Construction
Future Opportunities Subject to
Market Conditions and Leasing
Operating
Under
Construction
55% Leased/
Negotiating
Committed
Near Term
51% Leased/
Negotiating(1)
Priority
Anticipated
Future
Subtotal
Total
Square footage
Operating
40,512,020
—
—
—
—
—
40,512,020
New Class A/A+ development and
redevelopment properties
—
4,975,327
492,570
2,163,784
27,582,766
35,214,447
35,214,447
Future development and redevelopment
square feet currently included in rental
properties(2)
—
—
(159,884)
(258,596)
(2,957,559)
(3,376,039)
(3,376,039)
Total square footage, excluding properties
held for sale
40,512,020
4,975,327
332,686
1,905,188
24,625,207
31,838,408
72,350,428
Properties held for sale
1,261,387
—
—
—
—
—
1,261,387
Total square footage
41,773,407
4,975,327
332,686
1,905,188
24,625,207
31,838,408
73,611,815
(3)
Investments in real estate
Gross book value as of September 30,
2024(4)
$29,235,994
$4,335,573
$69,521
$578,694
$4,356,637
$9,340,425
$38,576,419
(1)Represents one committed near-term project expected to commence construction during the next two years after September 30, 2024.
(2)Refer to “Investments in real estate” under “Definitions and reconciliations” in Item 2 for additional details, including future development and redevelopment square feet
currently included in rental properties.
(3)We expect to continue pursuing our strategy to fund a significant portion of our capital requirements for the year ending December 31, 2024 with dispositions primarily
focused on sales of properties and land parcels not integral to our mega campus strategy.
(4)Balances exclude accumulated depreciation and our share of the cost basis associated with our properties held by our unconsolidated real estate joint ventures, which is
classified as investments in unconsolidated real estate joint ventures in our consolidated balance sheets.
59
Acquisitions
Our real estate asset acquisitions during the nine months ended September 30, 2024 and pending as of the date of this report consisted of the following (dollars in thousands):
Property
Submarket/Market
Date of
Purchase
Number of
Properties
Operating
Occupancy
Square Footage
Future
Development(1)
Operating With Future
Development/
Redevelopment(1)
Purchase Price
Completed during the nine months ended September 30, 2024:
285, 299, 307, and 345 Dorchester Avenue (60% interest in
consolidated JV)(2)
Seaport Innovation District/
Greater Boston
1/30/24
—
N/A
1,040,000
—
$155,321
Other
46,490
201,811
Completed in October 2024:
428 Westlake Avenue North
Lake Union/Seattle
10/1/24
1
100%
—
88,514
47,600
$249,411
2024 guidance range for acquisitions
$250,000 – $750,000
(1)We expect to provide total estimated costs and related yields for development and significant redevelopment projects in the future, subsequent to the commencement of construction.
(2)Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for additional details.
60
Dispositions
Our completed dispositions of real estate assets during the nine months ended September 30, 2024 and pending as of the date of this report consisted of the following (dollars in
thousands):
Property
Submarket/Market
Date of
Sale
Interest
Sold
RSF
Capitalization
Rate
Capitalization
Rate
(Cash Basis)
Sales Price
Sales Price
per RSF
Completed during the six months ended June 30, 2024:
Dispositions of 100% interest in properties not integral to our mega campus strategy
99 A Street(1)
Seaport Innovation District/
Greater Boston
3/8/24
100%
235,000
N/A
N/A
$13,350
N/A
Other
3,863
17,213
Completed during the three months ended September 30, 2024:
Sale to longstanding tenant
1165 Eastlake Avenue East
Lake Union/Seattle
9/12/24
100%
100,086
4.7%
4.9%
149,985
(2)
$1,499
Dispositions of properties not integral to our mega campus strategy
219 East 42nd Street
New York City/New York City
7/9/24
100%
349,947
N/A
N/A
60,000
(3)
N/A
Other
11,511
221,496
(4)
Dispositions completed during the nine months ended September 30, 2024
238,709
Completed in October 2024:
Dispositions of properties not integral to our mega campus strategy
14225 Newbrook Drive
Northern Virginia/Maryland
10/15/24
100%
248,186
7.6%
7.4%
80,500
(5)
$324
319,209
Pending dispositions for the fourth quarter of 2024 subsequent to the date of this report:
Subject to non-refundable deposits
Sale to longstanding tenant
Greater Boston
4Q24
100%
8.5%
6.3%
369,439
(6)
Other
207,713
577,152
Subject to executed letters of intent and/or purchase and sale
agreements
602,500
(6)
1,179,652
(7)
$1,498,861
2024 guidance range for dispositions and common equity
$1,050,000 – $2,050,000
(1)We completed the sale during the three months ended March 31, 2024 and recognized no gain or loss. Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements in Item 1 for additional information.
(2)Upon completion of the sale, we recognized a gain on sale of real estate aggregating $21.5 million during the three months ended September 30, 2024.
(3)The property was leased to a single tenant with a July 2024 lease expiration and had annual net operating income of $18.6 million based on three months ended June 30, 2024 annualized. This property was previously considered to be a
potential development project upon expiration of the in-place non-laboratory space lease.
(4)Dispositions completed during the three months ended September 30, 2024 had annual net operating income of $26.5 million (based on three months ended June 30, 2024 annualized) with a weighted-average disposition date of July 28,
2024 (weighted by net operating income for the three months ended June 30, 2024 annualized).
(5)Demonstrating the long-term enduring value of our laboratory facilities, Alexandria successfully operated our only asset in the Northern Virginia submarket from its acquisition in 1997 (prior to our IPO) through its sale in October 2024. Upon
completion of the sale, we recognized a gain on sale of real estate aggregating $37.1 million.
(6)Refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements in Item 1 for additional information.
(7)Pending dispositions subsequent to the date of this report have estimated annual net operating income of approximately $95.8 million (based on three months ended September 30, 2024 annualized) with a weighted-average estimated
disposition date of December 5, 2024 (weighted by net operating income for the three months ended September 30, 2024 annualized). Approximately half of our pending dispositions are non-core stabilized stand-alone properties with
weighted-average capitalization rates of 8.5% and 7.0% (cash basis), and the remaining half are land and non-stabilized properties that have vacancy or significant near-term lease expirations that will require capital to re-tenant, including
one building with approximately 72% of non-laboratory space.
61
New Class A/A+ development and redevelopment properties
q324pipeline.jpg
ALEXANDRIA’S FUTURE GROWTH IN
ANNUAL NET OPERATING INCOME FROM
DEVELOPMENT AND REDEVELOPMENT DELIVERIES
$510 MILLION
(1)
Placed Into Service
Expected to Be Placed Into Service
(2)
YTD 3Q24
3Q24
$63M
$21M
945,118 RSF
316,691 RSF
100% Leased
(3)
4Q24–4Q25
1Q26–1Q28
$158M
$352M
Aggregating 5.5M RSF
55% Leased/Negotiating
Refer to “Net operating income” under “Definitions and reconciliations” in Item 2 for additional details, including its reconciliation from the most directly comparable financial measures presented in accordance with GAAP.
(1)Our share of incremental annual net operating income from development and redevelopment projects expected to be placed into service primarily commencing from 4Q24 through 1Q28 is projected to be $407 million.
(2)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.
(3)Includes (i) 1.0 million RSF that is expected to stabilize through 2025 and is 92% leased/negotiating and (ii) expected partial deliveries through 4Q25 from projects expected to stabilize in 2026 and beyond. Refer to the initial and stabilized
occupancy years under “New Class A/A+ development and redevelopment properties: current projects” in Item 2 for additional details.
62
New Class A/A+ development and redevelopment properties: recent deliveries
500 North Beacon Street and
4 Kingsbury Avenue(1)
651 Gateway Boulevard
1150 Eastlake Avenue East
Greater Boston/
Cambridge/Inner Suburbs
San Francisco Bay Area/
South San Francisco
Seattle/Lake Union
138,537 RSF
67,017 RSF
311,631 RSF
100% Occupancy
100% Occupancy
100% Occupancy
arsenalphaseii.jpg
gateway651.jpg
1150eastlake.jpg
9810 Darnestown Road
9820 Darnestown Road
9808 Medical Center Drive
Maryland/Rockville
Maryland/Rockville
Maryland/Rockville
195,435 RSF
250,000 RSF
65,171 RSF
100% Occupancy
100% Occupancy
100% Occupancy
darnestown9810.jpg
darnestown9820.jpg
mcd9808.jpg
(1)Image represents 500 North Beacon Street on The Arsenal on the Charles mega campus.
63
New Class A/A+ development and redevelopment properties: recent deliveries (continued)
The following table presents development and redevelopment of new Class A/A+ projects placed into service during the nine months ended September 30, 2024 (dollars in
thousands):
Incremental Annual Net Operating Income Generated From YTD 3Q24 Deliveries
Aggregated $63 Million, Including $21 Million in 3Q24
Property/Market/Submarket
3Q24
Delivery
Date(1)
Our
Ownership
Interest
RSF Placed in Service
Occupancy
Percentage(2)
Total Project
Unlevered Yields
Prior to
1/1/24
1Q24
2Q24
3Q24
Total
Initial
Stabilized
Initial
Stabilized
(Cash Basis)
RSF
Investment
Development projects
99 Coolidge Avenue/Greater Boston/Cambridge/
Inner Suburbs
N/A
75.0%
43,568
72,846
—
—
116,414
100%
320,809
$468,000
7.1%
7.0%
500 North Beacon Street and 4 Kingsbury Avenue/
Greater Boston/Cambridge/Inner Suburbs
N/A
100%
—
100,624
37,913
—
138,537
100%
248,018
427,000
6.2
5.5
1150 Eastlake Avenue East/Seattle/Lake Union
7/16/24
100%
278,282
—
2,079
31,270
311,631
100%
311,631
442,000
6.6
6.7
9810 Darnestown Road/Maryland/Rockville
N/A
100%
—
—
195,435
—
195,435
100%
195,435
135,000
7.1
6.2
9820 Darnestown Road/Maryland/Rockville
8/21/24
100%
—
—
—
250,000
250,000
100%
250,000
177,000
8.7
5.6
9808 Medical Center Drive/Maryland/Rockville
7/25/24
100%
26,460
—
25,655
13,056
65,171
100%
95,061
115,000
5.4
5.4
Redevelopment projects
651 Gateway Boulevard/San Francisco Bay Area/
South San Francisco
7/12/24
50.0%
—
44,652
—
22,365
67,017
100%
326,706
487,000
5.0
5.1
Alexandria Center® for Advanced Technologies –
Monte Villa Parkway/Seattle/Bothell
N/A
100%
65,086
115,598
—
—
180,684
100%
460,934
229,000
6.3
6.2
Canada
N/A
100%
44,862
9,725
23,900
—
78,487
100%
250,790
113,000
6.4
6.3
Weighted average/total
8/11/24
458,258
343,445
284,982
316,691
1,403,376
2,459,384
$2,593,000
6.4%
6.0%
(1)Represents the average delivery date for deliveries that occurred during the three months ended September 30, 2024, weighted by annual rental revenue.
(2)Occupancy relates to total operating RSF placed in service as of the most recent delivery.
64
New Class A/A+ development and redevelopment properties: current projects
99 Coolidge Avenue
500 North Beacon Street and
4 Kingsbury Avenue(1)
311 Arsenal Street
201 Brookline Avenue
401 Park Drive
Greater Boston/
Cambridge/Inner Suburbs
Greater Boston/
Cambridge/Inner Suburbs
Greater Boston/
Cambridge/Inner Suburbs
Greater Boston/Fenway
Greater Boston/Fenway
204,395 RSF
109,481 RSF
308,446 RSF
58,149 RSF
159,959 RSF
40% Leased/Negotiating
92% Leased
21% Leased
100% Leased
14% Leased
coolidge.jpg
arsenalphaseii.jpg
arsenal311.jpg
201 Brookline v2.jpg
parkdrive401v2.jpg
421 Park Drive
40, 50, and 60 Sylvan Road(2)
840 Winter Street
1450 Owens Street(3)
651 Gateway Boulevard
Greater Boston/Fenway
Greater Boston/Route 128
Greater Boston/Route 128
San Francisco Bay Area/
Mission Bay
San Francisco Bay Area/
South San Francisco
392,011 RSF
596,064 RSF
139,680 RSF
212,796 RSF
259,689 RSF
13% Leased
31% Leased
100% Leased
—% Leased/Negotiating
25% Leased/Negotiating
parkdrive421.jpg
60 Sylvan.jpg
winter840.jpg
owens1450.jpg
gateway651.jpg
(1)Image represents 500 North Beacon Street on The Arsenal on the Charles mega campus.
(2)Image represents 60 Sylvan Road on the Alexandria Center® for Life Science – Waltham mega campus. The project is expected to capture demand in our Route 128 submarket.
(3)Image represents a multi-tenant project expanding our existing Alexandria Center® for Science and Technology – Mission Bay mega campus, where our joint venture partner will fund 100% of the construction cost until it attains an
ownership interest of 75%, after which it will contribute its respective share of additional capital. We are in negotiations with a biomedical institution for the sale of a 50% condominium interest in this property.
65
New Class A/A+ development and redevelopment properties: current projects (continued)
230 Harriet Tubman Way
10935, 10945, and 10955
Alexandria Way(1)
4135 Campus Point Court
4155 Campus Point Court
San Francisco Bay Area/
South San Francisco
San Diego/Torrey Pines
San Diego/
University Town Center
San Diego/
University Town Center
285,346 RSF
334,996 RSF
426,927 RSF
171,102 RSF
100% Leased
100% Leased
100% Leased
100% Leased
harriettubman.jpg
alexandriawayOAS.jpg
Campuspoint4135.jpg
campuspoint4155.jpg
10075 Barnes Canyon Road
701 Dexter Avenue North(2)
Alexandria Center® for Advanced
Technologies – Monte Villa Parkway(3)
9808 Medical Center Drive
8800 Technology Forest Place
San Diego/Sorrento Mesa
Seattle/Lake Union
Seattle/Bothell
Maryland/Rockville
Texas/Greater Houston
253,079 RSF
227,577 RSF
34,306 RSF
29,890 RSF
73,298 RSF
70% Leased
—% Leased/Negotiating
98% Leased
76% Leased/Negotiating
41% Leased
barnescanyon10075.jpg
701Dexter.jpg
montevilla3755.jpg
9808 Medical Center Drive - 6 v2.jpg
Techforest8800v3.jpg
(1)Image represents 10955 Alexandria Way on the One Alexandria Square mega campus.
(2)We initially started this project due to strong demand from neighboring tenants but strategically paused in the first quarter of 2023. We have resumed construction activities at this project in order to maintain our existing entitlements and
permits. We have interest from various prospective tenants, including from multinational pharmaceutical companies. Beyond this purpose-built life science asset, there is no competitive supply expected to be delivered in 2025 or 2026 in
our Lake Union submarket. As of September 30, 2024, we are 95.3% occupied in our Lake Union submarket.
(3)Image represents 3755 Monte Villa Parkway.
66
New Class A/A+ development and redevelopment properties: current projects (continued)
The following tables set forth a summary of our new Class A/A+ development and redevelopment properties under construction and pre-leased/negotiating near-term projects as of
September 30, 2024 (dollars in thousands):
Property/Market/Submarket
Square Footage
Percentage
Occupancy(1)
Dev/Redev
In Service
CIP
Total
Leased
Leased/
Negotiating
Initial
Stabilized
Under construction
2024 and 2025 stabilization
500 North Beacon Street and 4 Kingsbury Avenue/Greater Boston/
Cambridge/Inner Suburbs
Dev
138,537
109,481
248,018
92%
92%
1Q24
2025
201 Brookline Avenue/Greater Boston/Fenway
Dev
451,967
58,149
510,116
100
100
3Q22
4Q24
840 Winter Street/Greater Boston/Route 128
Redev
28,534
139,680
168,214
100
100
4Q24
2025
230 Harriet Tubman Way/San Francisco Bay Area/South San Francisco
Dev
—
285,346
285,346
100
100
1Q25
1Q25
4155 Campus Point Court/San Diego/University Town Center
Dev
—
171,102
171,102
100
100
4Q24
4Q24
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Seattle/Bothell
Redev
426,628
34,306
460,934
98
98
1Q23
4Q24
9808 Medical Center Drive/Maryland/Rockville
Dev
65,171
29,890
95,061
69
76
3Q23
4Q24
8800 Technology Forest Place/Texas/Greater Houston
Redev
50,094
73,298
123,392
41
41
2Q23
2025
Canada
Redev
111,479
139,311
250,790
73
73
3Q23
2025
1,272,410
1,040,563
2,312,973
91
92
2026 and beyond stabilization
One Hampshire Street/Greater Boston/Cambridge
Redev
—
104,956
104,956
—
—
2027
2028
311 Arsenal Street/Greater Boston/Cambridge/Inner Suburbs
Redev
82,216
(2)
308,446
390,662
21
21
2027
2027
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs
Dev
116,414
204,395
320,809
40
40
4Q23
2026
401 Park Drive/Greater Boston/Fenway
Redev
—
159,959
159,959
14
14
2024
2026
421 Park Drive/Greater Boston/Fenway
Dev
—
392,011
392,011
13
13
2026
2027
40, 50, and 60 Sylvan Road/Greater Boston/Route 128
Redev
—
596,064
596,064
31
31
2025
2027
Other/Greater Boston
Redev
—
453,869
453,869
—
—
(3)
2027
2027
1450 Owens Street/San Francisco Bay Area/Mission Bay
Dev
—
212,796
212,796
—
—
(4)
2025
2026
651 Gateway Boulevard/San Francisco Bay Area/South San Francisco
Redev
67,017
259,689
326,706
21
25
1Q24
2026
10935, 10945, and 10955 Alexandria Way/San Diego/Torrey Pines
Dev
—
334,996
334,996
100
100
4Q24
2026
4135 Campus Point Court/San Diego/University Town Center
Dev
—
426,927
426,927
100
100
2026
2026
10075 Barnes Canyon Road/San Diego/Sorrento Mesa
Dev
—
253,079
253,079
70
70
2025
2026
701 Dexter Avenue North/Seattle/Lake Union
Dev
—
227,577
227,577
—
—
(5)
2026
2027
265,647
3,934,764
4,200,411
35
36
1,538,057
4,975,327
6,513,384
55
55
Committed near-term project expected to commence construction in the next two years
4165 Campus Point Court/San Diego/University Town Center
Dev
—
492,570
492,570
—
51
Total
1,538,057
5,467,897
7,005,954
51%
55%
(1)Initial occupancy dates are subject to leasing and/or market conditions. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy. Multi-tenant projects may increase in occupancy over a period of time.
(2)We expect to redevelop an additional 25,312 RSF of space occupied as of September 30, 2024 into laboratory space upon expiration of the existing leases through the second half of 2025. Refer to “Investments in real estate” under
“Definitions and reconciliations” in Item 2 for additional information.
(3)Represents a project focused on demand from our existing tenants in our adjacent properties/campuses that will address demand from other non-Alexandria properties/campuses.
(4)Represents a multi-tenant project expanding our existing mega campus, where our joint venture partner will fund 100% of the construction cost until it attains an ownership interest of 75%, after which it will contribute its respective share
of additional capital. We are in negotiations with a biomedical institution for the sale of a 50% condominium interest in this property.
(5)We initially started this project due to strong demand from neighboring tenants but strategically paused in the first quarter of 2023. We have resumed construction activities at this project in order to maintain our existing entitlements and
permits. We have interest from various prospective tenants, including from multinational pharmaceutical companies. Beyond this purpose-built life science asset, there is no competitive supply expected to be delivered in 2025 or 2026 in
our Lake Union submarket. As of September 30, 2024, we are 95.3% occupied in our Lake Union submarket.
67
New Class A/A+ development and redevelopment properties: current projects (continued)
Our
Ownership
Interest
At 100%
Unlevered Yields
Property/Market/Submarket
In Service
CIP
Cost to
Complete
Total at
Completion
Initial
Stabilized
Initial Stabilized
(Cash Basis)
Under construction
2024 and 2025 stabilization
500 North Beacon Street and 4 Kingsbury Avenue/Greater Boston/
Cambridge/Inner Suburbs
100%
$284,645
$115,506
$26,849
$427,000
6.2%
5.5%
201 Brookline Avenue/Greater Boston/Fenway
99.0%
665,877
91,610
17,513
775,000
7.2%
6.5%
840 Winter Street/Greater Boston/Route 128
100%
13,653
187,366
35,981
237,000
7.6%
6.5%
230 Harriet Tubman Way/San Francisco Bay Area/South San Francisco
47.9%
—
350,231
159,769
510,000
7.4%
6.4%
4155 Campus Point Court/San Diego/University Town Center
55.0%
—
140,300
43,700
184,000
8.0%
6.4%
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Seattle/Bothell
100%
193,823
11,977
23,200
229,000
6.3%
6.2%
9808 Medical Center Drive/Maryland/Rockville
100%
79,320
33,018
2,662
115,000
5.4%
5.4%
8800 Technology Forest Place/Texas/Greater Houston
100%
57,315
46,202
8,483
112,000
6.3%
6.0%
Canada
100%
50,219
50,044
12,737
113,000
6.4%
6.3%
1,344,852
1,026,254
2026 and beyond stabilization(1)
One Hampshire Street/Greater Boston/Cambridge
100%
—
161,328
TBD
311 Arsenal Street/Greater Boston/Cambridge/Inner Suburbs
100%
60,625
233,563
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs
75.0%
136,527
192,432
139,041
468,000
7.1%
7.0%
401 Park Drive/Greater Boston/Fenway
100%
—
194,421
TBD
421 Park Drive/Greater Boston/Fenway
99.7%
—
422,278
40, 50, and 60 Sylvan Road/Greater Boston/Route 128
100%
—
437,356
Other/Greater Boston
100%
—
148,804
1450 Owens Street/San Francisco Bay Area/Mission Bay
25.4%
—
234,665
651 Gateway Boulevard/San Francisco Bay Area/South San Francisco
50.0%
87,357
256,413
143,230
487,000
5.0%
5.1%
10935, 10945, and 10955 Alexandria Way/San Diego/Torrey Pines
100%
—
359,926
143,074
503,000
6.2%
5.8%
4135 Campus Point Court/San Diego/University Town Center
55.0%
—
292,913
231,087
524,000
6.6%
6.2%
10075 Barnes Canyon Road/San Diego/Sorrento Mesa
50.0%
—
168,582
152,418
321,000
5.5%
5.7%
701 Dexter Avenue North/Seattle/Lake Union
100%
—
206,638
TBD
284,509
3,309,319
1,629,361
4,335,573
Committed near-term project expected to commence construction in the next two years
4165 Campus Point Court/San Diego/University Town Center
55.0%
—
69,521
TBD
Total
$1,629,361
$4,405,094
$3,780,000
(2)
$9,820,000
(2)
Our share of investment(2)(3)
$1,550,000
$3,570,000
$3,030,000
$8,150,000
Refer to “Initial stabilized yield (unlevered)” under “Definitions and reconciliations” in Item 2 for additional information.
(1)We expect to provide total estimated costs and related yields for each project with estimated stabilization in 2026 and beyond over the next several quarters.
(2)Represents dollar amount rounded to the nearest $10 million and includes preliminary estimated amounts for projects listed as TBD.
(3)Represents our share of investment based on our ownership percentage upon completion of development or redevelopment projects.
68
New Class A/A+ development and redevelopment properties: summary of pipeline
69% of Our Total Development and Redevelopment Pipeline RSF Is Within Our Mega Campuses
The following table summarizes the key information for all our development and redevelopment projects in North America as of September 30, 2024 (dollars in thousands):
Market
Property/Submarket
Our
Ownership
Interest
Book Value
Square Footage
Development and Redevelopment
Total(1)
Active and Near-Term
Construction
Future Opportunities Subject to
Market Conditions and Leasing
Under
Construction
Committed
Near Term
Priority
Anticipated
Future
Greater Boston
Mega Campus: Alexandria Center® at One Kendall Square/
Cambridge
100%
$161,328
104,956
—
—
—
104,956
One Hampshire Street
Mega Campus: The Arsenal on the Charles/Cambridge/Inner
Suburbs
100%
360,538
417,927
—
25,312
34,157
477,396
311 Arsenal Street, 500 North Beacon Street, and 4 Kingsbury
Avenue
Mega Campus: 480 Arsenal Way and 446, 458, 500, and 550
Arsenal Street, and 99 Coolidge Avenue/Cambridge/Inner
Suburbs
(2)
279,763
204,395
—
—
902,000
1,106,395
446, 458, 500, and 550 Arsenal Street, and 99 Coolidge Avenue
Mega Campus: Alexandria Center® for Life Science – Fenway/
Fenway
(3)
708,309
610,119
—
—
—
610,119
201 Brookline Avenue and 401 and 421 Park Drive
Mega Campus: Alexandria Center® for Life Science – Waltham/
Route 128
100%
687,346
735,744
—
—
515,000
1,250,744
40, 50, and 60 Sylvan Road, 35 Gatehouse Drive, and 840 Winter
Street
Mega Campus: Alexandria Center® at Kendall Square/
Cambridge
100%
126,688
—
—
—
216,455
216,455
100 Edwin H. Land Boulevard
Mega Campus: Alexandria Technology Square®/Cambridge
100%
7,881
—
—
—
100,000
100,000
Mega Campus: 285, 299, 307, and 345 Dorchester Avenue/
Seaport Innovation District
60.0%
286,300
—
—
—
1,040,000
1,040,000
10 Necco Street/Seaport Innovation District
100%
105,111
—
—
—
175,000
175,000
Mega Campus: One Moderna Way/Route 128
100%
26,052
—
—
—
1,085,000
1,085,000
215 Presidential Way/Route 128
100%
6,816
—
—
—
112,000
112,000
Other development and redevelopment projects
(4)
310,381
453,869
—
—
1,323,541
1,777,410
$3,066,513
2,527,010
—
25,312
5,503,153
8,055,475
Refer to “Mega campus” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes the RSF of buildings currently in operation at properties that also have
future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property subject to market conditions and leasing. Refer to “Investments in real
estate” under “Definitions and reconciliations” in Item 2 for additional information, including development and redevelopment square feet currently included in rental properties.
(2)We have a 75.0% interest in 99 Coolidge Avenue aggregating 204,395 RSF and 100.0% interest in 446, 458, 500, and 550 Arsenal Street aggregating 902,000 RSF.
(3)We have a 99.0% interest in 201 Brookline Avenue aggregating 58,149 RSF, a 100% interest in 401 Park Drive aggregating 159,959 RSF, and a 99.7% interest in 421 Park Drive aggregating 392,011 RSF.
(4)Includes a property in which we own a partial interest through a real estate joint venture.
69
New Class A/A+ development and redevelopment properties: summary of pipeline (continued)
Market
Property/Submarket
Our
Ownership
Interest
Book Value
Square Footage
Development and Redevelopment
Total(1)
Active and Near-Term
Construction
Future Opportunities Subject to
Market Conditions and Leasing
Under
Construction
Committed
Near Term
Priority
Anticipated
Future
San Francisco Bay Area
Mega Campus: Alexandria Center® for Science and Technology
– Mission Bay/Mission Bay
25.4%
$234,665
212,796
—
—
—
212,796
1450 Owens Street
Alexandria Center® for Life Science – Millbrae/South San Francisco
47.9%
510,162
285,346
—
198,188
150,213
633,747
230 Harriet Tubman Way, 201 and 231 Adrian Road, and 6 and 30
Rollins Road
Mega Campus: Alexandria Technology Center® – Gateway/
South San Francisco
50.0%
283,002
259,689
—
—
291,000
550,689
651 Gateway Boulevard
Mega Campus: Alexandria Center® for Advanced Technologies
– Tanforan/South San Francisco
100%
397,159
—
—
150,000
1,780,000
1,930,000
1122, 1150, and 1178 El Camino Real
Mega Campus: Alexandria Center® for Advanced Technologies
– South San Francisco/South San Francisco
100%
6,655
—
—
107,250
90,000
197,250
211(2) and 269 East Grand Avenue
Mega Campus: Alexandria Center® for Life Science – San
Carlos/Greater Stanford
100%
446,892
—
—
105,000
1,392,830
1,497,830
960 Industrial Road, 987 and 1075 Commercial Street, and 888
Bransten Road
3825 and 3875 Fabian Way/Greater Stanford
100%
154,174
—
—
—
478,000
478,000
2100, 2200, 2300, and 2400 Geng Road/Greater Stanford
100%
36,509
—
—
—
240,000
240,000
901 California Avenue/Greater Stanford
100%
19,770
—
—
—
56,924
56,924
Mega Campus: 88 Bluxome Street/SoMa
100%
392,785
—
—
—
1,070,925
1,070,925
Other development and redevelopment projects
100%
—
—
—
—
25,000
25,000
$2,481,773
757,831
—
560,438
5,574,892
6,893,161
Refer to “Mega campus” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes the RSF of buildings currently in operation at properties that also have
future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property subject to market conditions and leasing. Refer to “Investments in real
estate” under “Definitions and reconciliations” in Item 2 for additional information, including development and redevelopment square feet currently included in rental properties.
(2)We own a partial interest in this property through a real estate joint venture. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in Item 1 for additional details.
70
New Class A/A+ development and redevelopment properties: summary of pipeline (continued)
Market
Property/Submarket
Our
Ownership
Interest
Book Value
Square Footage
Development and Redevelopment
Total(1)
Active and Near-Term
Construction
Future Opportunities Subject to
Market Conditions and Leasing
Under
Construction
Committed
Near Term
Priority
Anticipated
Future
San Diego
Mega Campus: One Alexandria Square/Torrey Pines
100%
$417,621
334,996
—
—
125,280
460,276
10935, 10945, and 10955 Alexandria Way and 10975 and 10995
Torreyana Road
Mega Campus: Campus Point by Alexandria/University Town
Center
55.0%
671,303
598,029
492,570
—
650,000
1,740,599
10010(2), 10140(2), and 10260 Campus Point Drive and 4135, 4155,
4161, 4165, and 4275(2) Campus Point Court
Mega Campus: SD Tech by Alexandria/Sorrento Mesa
50.0%
317,172
253,079
—
250,000
243,845
746,924
9805 Scranton Road and 10065 and 10075 Barnes Canyon Road
11255 and 11355 North Torrey Pines Road/Torrey Pines
100%
150,187
—
—
153,000
62,000
215,000
Costa Verde by Alexandria/University Town Center
100%
138,107
—
—
—
537,000
537,000
8410-8750 Genesee Avenue and 4282 Esplanade Court
Mega Campus: 5200 Illumina Way/University Town Center
51.0%
17,441
—
—
—
451,832
451,832
ARE Towne Centre/University Town Center
100%
19,869
—
—
—
230,000
230,000
9363, 9373, and 9393 Towne Centre Drive
9625 Towne Centre Drive/University Town Center
30.0%
837
—
—
—
100,000
100,000
Mega Campus: Sequence District by Alexandria/Sorrento Mesa
100%
46,323
—
—
—
1,798,915
1,798,915
6260, 6290, 6310, 6340, 6350, and 6450 Sequence Drive
Scripps Science Park by Alexandria/Sorrento Mesa
100%
120,941
—
—
—
598,349
598,349
10048, 10219, 10256, and 10260 Meanley Drive and 10277
Scripps Ranch Boulevard
Pacific Technology Park/Sorrento Mesa
50.0%
23,857
—
—
—
149,000
149,000
9444 Waples Street
4025, 4031, 4045, and 4075 Sorrento Valley Boulevard/Sorrento
Valley
100%
43,641
—
—
—
247,000
247,000
Other development and redevelopment projects
(3)
75,716
—
—
—
475,000
475,000
$2,043,015
1,186,104
492,570
403,000
5,668,221
7,749,895
Refer to “Mega campus” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes the RSF of buildings currently in operation at properties that also have
future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property subject to market conditions and leasing. Refer to “Investments in real
estate” under “Definitions and reconciliations” in Item 2 for additional information, including development and redevelopment square feet currently included in rental properties.
(2)We have a 100% interest in this property.
(3)Includes a property in which we own a partial interest through a real estate joint venture.
71
New Class A/A+ development and redevelopment properties: summary of pipeline (continued)
Market
Property/Submarket
Our
Ownership
Interest
Book Value
Square Footage
Development and Redevelopment
Total(1)
Active and Near-Term
Construction
Future Opportunities Subject to
Market Conditions and Leasing
Under
Construction
Committed
Near Term
Priority
Anticipated
Future
Seattle
Mega Campus: Alexandria Center® for Life Science – South
Lake Union/Lake Union
(2)
$485,628
227,577
—
869,000
188,400
1,284,977
601 and 701 Dexter Avenue North and 800 Mercer Street
Alexandria Center® for Advanced Technologies – Monte Villa
Parkway/Bothell
100%
11,977
34,306
—
—
—
34,306
3301 Monte Villa Parkway
830 and 1010 4th Avenue South/SoDo
100%
59,262
—
—
—
597,313
597,313
410 West Harrison Street/Elliott Bay
100%
—
—
—
—
91,000
91,000
Mega Campus: Alexandria Center® for Advanced Technologies
– Canyon Park/Bothell
100%
17,439
—
—
—
230,000
230,000
21660 20th Avenue Southeast
Other development and redevelopment projects
100%
142,484
—
—
—
706,087
706,087
716,790
261,883
—
869,000
1,812,800
2,943,683
Maryland
Mega Campus: Alexandria Center® for Life Science – Shady
Grove/Rockville
100%
54,904
29,890
—
—
296,000
325,890
9808 Medical Center Drive and 9830 Darnestown Road
54,904
29,890
—
—
296,000
325,890
Research Triangle
Mega Campus: Alexandria Center® for Advanced Technologies
and Agtech – Research Triangle/Research Triangle
100%
103,653
—
—
180,000
990,000
1,170,000
4 and 12 Davis Drive
Mega Campus: Alexandria Center® for Life Science – Durham/
Research Triangle
100%
176,524
—
—
—
2,210,000
2,210,000
41 Moore Drive
Mega Campus: Alexandria Center® for NextGen Medicines/
Research Triangle
100%
$108,035
—
—
—
1,055,000
1,055,000
3029 East Cornwallis Road
Refer to “Mega campus” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Represents total square footage upon completion of development or redevelopment of one or more new Class A/A+ properties. Square footage presented includes the RSF of buildings currently in operation at properties that also have
future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property subject to market conditions and leasing. Refer to “Investments in real
estate” under “Definitions and reconciliations” in Item 2 for additional information, including development and redevelopment square feet currently included in rental properties.
(2)We have a 100% interest in 601 and 701 Dexter Avenue North aggregating 415,977 RSF and a 60% interest in the priority anticipated development project at 800 Mercer Street aggregating 869,000 RSF.
72
New Class A/A+ development and redevelopment properties: summary of pipeline (continued)
Market
Property/Submarket
Our
Ownership
Interest
Book Value
Square Footage
Development and Redevelopment
Total(1)
Active and Near-Term
Construction
Future Opportunities Subject to
Market Conditions and Leasing
Under
Construction
Committed
Near Term
Priority
Anticipated
Future
Research Triangle (continued)
Mega Campus: Alexandria Center® for Sustainable
Technologies/Research Triangle
100%
$53,326
—
—
—
750,000
750,000
120 TW Alexander Drive, 2752 East NC Highway 54, and 10 South
Triangle Drive
100 Capitola Drive/Research Triangle
100%
—
—
—
—
65,965
65,965
Other development and redevelopment projects
100%
4,185
—
—
—
76,262
76,262
445,723
—
—
180,000
5,147,227
5,327,227
New York City
Mega Campus: Alexandria Center® for Life Science – New York
City/New York City
100%
165,061
—
—
—
550,000
(2)
550,000
165,061
—
—
—
550,000
550,000
Texas
Alexandria Center® for Advanced Technologies at The Woodlands/
Greater Houston
100%
49,034
73,298
—
—
116,405
189,703
8800 Technology Forest Place
1001 Trinity Street and 1020 Red River Street/Austin
100%
10,177
—
—
126,034
123,976
250,010
Other development and redevelopment projects
100%
136,980
—
—
—
1,694,000
1,694,000
196,191
73,298
—
126,034
1,934,381
2,133,713
Canada
100%
50,044
139,311
—
—
371,743
511,054
Other development and redevelopment projects
100%
120,411
—
—
—
724,349
724,349
Total pipeline as of September 30, 2024
$9,340,425
(3)
4,975,327
492,570
2,163,784
27,582,766
35,214,447
Refer to “Mega campus” under “Definitions and reconciliations” in Item 2 for additional information.
(1)Total square footage includes 3,376,039 RSF of buildings currently in operation that we expect to demolish or redevelop and commence future construction subject to market conditions and leasing. Refer to “Investments in real estate”
under “Definitions and reconciliations” in Item 2 for additional information, including development and redevelopment square feet currently included in rental properties.
(2)During the three months ended September 30, 2024, we filed a lawsuit against the New York City Health + Hospitals Corporation and the New York City Economic Development Corporation for fraud and breach of contract concerning our
option to ground lease a land parcel to develop a future world-class life science building within the Alexandria Center® for Life Science – New York City campus. Refer to “Legal proceedings” in Item 1 under Part II – Other Information for
additional details.
(3)Includes $4.3 billion of projects that are currently under construction and are 55% leased/negotiating. We also expect to commence construction of one committed near-term project aggregating $69.5 million, which is 51% leased/
negotiating, in the next two years after September 30, 2024.
73
Results of operations
We present a tabular comparison of items, whether gain or loss, that may facilitate a high-level understanding of our results
and provide context for the disclosures included in our annual report on Form 10-K for the year ended December 31, 2023 and our
subsequent quarterly reports on Form 10-Q. We believe that such tabular presentation promotes a better understanding for investors of
the corporate-level decisions made and activities performed that significantly affect comparison of our operating results from period to
period. We also believe that this tabular presentation will supplement for investors an understanding of our disclosures and real estate
operating results. Gains or losses on sales of real estate and impairments of assets classified as held for sale are related to corporate-
level decisions to dispose of real estate. Gains or losses on early extinguishment of debt are related to corporate-level financing
decisions focused on our capital structure strategy. Significant realized and unrealized gains or losses on non-real estate investments,
impairments of real estate and non-real estate investments, and acceleration of stock compensation expense due to the resignations of
executive officers are not related to the operating performance of our real estate assets as they result from strategic, corporate-level
non-real estate investment decisions and external market conditions. Impairments of non-real estate investments are not related to the
operating performance of our real estate as they represent the write-down of non-real estate investments when their fair values
decrease below their respective carrying values due to changes in general market or other conditions outside of our control. Significant
items, whether a gain or loss, included in the tabular disclosure for current periods are described in further detail in Item 2. Key items
included in net income attributable to Alexandria’s common stockholders for the three and nine months ended September 30, 2024 and
2023 and the related per share amounts were as follows (in millions, except per share amounts):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
2024
2023
2024
2023
Amount
Per Share – Diluted
Amount
Per Share – Diluted
Unrealized gains (losses) on non-real estate
investments
$2.6
$(77.2)
$0.02
$(0.45)
$(32.5)
$(221.0)
$(0.19)
$(1.29)
Gain on sales of real estate
27.1
—
0.16
—
27.5
214.8
0.16
1.26
Impairment of non-real estate investments
(10.3)
(28.5)
(0.06)
(0.17)
(37.8)
(51.5)
(0.22)
(0.30)
Impairment of real estate
(5.7)
(20.6)
(0.03)
(0.12)
(36.5)
(189.2)
(0.22)
(1.11)
Acceleration of stock compensation expense
due to executive officer resignations
—
(1.9)
—
(0.01)
—
(1.9)
—
(0.01)
Total
$13.7
$(128.2)
$0.09
$(0.75)
$(79.3)
$(248.8)
$(0.47)
$(1.45)
Refer to Note 3 – “Investments in real estate” and Note 7 – “Investments” to our unaudited consolidated financial statements in
Item 1 for additional information.
74
Same properties
We supplement an evaluation of our results of operations with an evaluation of operating performance of certain of our
properties, referred to as “Same Properties.” For additional information on the determination of our Same Properties portfolio, refer to
“Same property comparisons” under “Definitions and reconciliations” in Item 2. The following table presents information regarding our
Same Properties for the three and nine months ended September 30, 2024:
September 30, 2024
Three Months Ended
Nine Months Ended
Percentage change in net operating income over comparable period from prior year
1.5%
1.6%
Percentage change in net operating income (cash basis) over comparable period
from prior year
6.5%
4.6%
Operating margin
68%
69%
Number of Same Properties
344
339
RSF
34,652,674
33,720,609
Occupancy – current-period average
94.8%
94.4%
Occupancy – same-period prior-year average
94.1%
94.3%
The following table reconciles the number of Same Properties to total properties for the nine months ended
September 30, 2024:
Development – under construction
Properties
201 Brookline Avenue
1
99 Coolidge Avenue
1
500 North Beacon Street and 4 Kingsbury Avenue
2
9808 Medical Center Drive
1
1450 Owens Street
1
230 Harriet Tubman Way
1
4155 Campus Point Court
1
10935, 10945, and 10955 Alexandria Way
3
10075 Barnes Canyon Road
1
421 Park Drive
1
4135 Campus Point Court
1
701 Dexter Avenue North
1
15
Development – placed into service after January 1, 2023
Properties
751 Gateway Boulevard
1
15 Necco Street
1
325 Binney Street
1
9810 Darnestown Road
1
9820 Darnestown Road
1
1150 Eastlake Avenue East
1
6
Redevelopment – under construction
Properties
840 Winter Street
1
40, 50, and 60 Sylvan Road
3
Alexandria Center® for Advanced Technologies – Monte
Villa Parkway
6
651 Gateway Boulevard
1
401 Park Drive
1
8800 Technology Forest Place
1
311 Arsenal Street
1
One Hampshire Street
1
Canada
4
Other
2
21
Redevelopment – placed into service after
January 1, 2023
Properties
20400 Century Boulevard
1
140 First Street
1
2400 Ellis Road, 40 Moore Drive, and 14 TW Alexander
Drive
3
9601 and 9603 Medical Center Drive
2
7
Acquisitions after January 1, 2023
Properties
Other
5
5
Unconsolidated real estate JVs
4
Properties held for sale
9
Total properties excluded from Same Properties
67
Same Properties
339
Total properties in North America as of September 30,
2024
406
75
Comparison of results for the three months ended September 30, 2024 to the three months ended September 30, 2023
The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same
Properties for the three months ended September 30, 2024, compared to the three months ended September 30, 2023 (dollars in
thousands). Refer to “Definitions and reconciliations” in Item 2 for definitions of “Tenant recoveries” and “Net operating income” and
their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and
net income, respectively.
Three Months Ended September 30,
2024
2023
$ Change
% Change
Income from rentals:
Same Properties
$452,417
$439,541
$12,876
2.9%
Non-Same Properties
127,152
86,811
40,341
46.5
Rental revenues
579,569
526,352
53,217
10.1
Same Properties
168,923
165,226
3,697
2.2
Non-Same Properties
27,252
15,953
11,299
70.8
Tenant recoveries
196,175
181,179
14,996
8.3
Income from rentals
775,744
707,531
68,213
9.6
Same Properties
386
619
(233)
(37.6)
Non-Same Properties
15,477
5,638
9,839
174.5
Other income
15,863
6,257
9,606
153.5
Same Properties
621,726
605,386
16,340
2.7
Non-Same Properties
169,881
108,402
61,479
56.7
Total revenues
791,607
713,788
77,819
10.9
Same Properties
199,369
189,368
10,001
5.3
Non-Same Properties
33,896
28,319
5,577
19.7
Rental operations
233,265
217,687
15,578
7.2
Same Properties
422,357
416,018
6,339
1.5
Non-Same Properties
135,985
80,083
55,902
69.8
Net operating income
$558,342
$496,101
$62,241
12.5%
Net operating income – Same Properties
$422,357
$416,018
$6,339
1.5%
Straight-line rent revenue
(4,974)
(23,981)
19,007
(79.3)
Amortization of acquired below-market leases
(14,582)
(13,792)
(790)
5.7
Net operating income – Same Properties (cash basis)
$402,801
$378,245
$24,556
6.5%
76
Income from rentals
Total income from rentals for the three months ended September 30, 2024 increased by $68.2 million, or 9.6%, to
$775.7 million, compared to $707.5 million for the three months ended September 30, 2023, as a result of an increase in rental
revenues and tenant recoveries, as discussed below.
Rental revenues
Total rental revenues for the three months ended September 30, 2024 increased by $53.2 million, or 10.1%, to $579.6 million,
compared to $526.4 million for the three months ended September 30, 2023. The increase was primarily due to an increase in rental
revenues from our Non-Same Properties related to 2.5 million RSF of development and redevelopment projects placed into service
subsequent to July 1, 2023 and four operating properties aggregating 486,610 RSF acquired subsequent to July 1, 2023.
Rental revenues from our Same Properties for the three months ended September 30, 2024 increased by $12.9 million, or
2.9%, to $452.4 million, compared to $439.5 million for the three months ended September 30, 2023. The increase was primarily due to
rental rate changes on lease renewals and re-leasing of space since July 1, 2023 and a 0.7% increase in the occupancy of our Same
Properties to 94.8% for the three months ended September 30, 2024 from 94.1% for the three months ended September 30, 2023.
Tenant recoveries
Tenant recoveries for the three months ended September 30, 2024 increased by $15.0 million, or 8.3%, to $196.2 million,
compared to $181.2 million for the three months ended September 30, 2023. This increase was primarily from our Non-Same
Properties related to our development and redevelopment projects placed into service and properties acquired subsequent to July 1,
2023, as discussed above under “Rental revenues.”
Same Properties’ tenant recoveries for the three months ended September 30, 2024 increased by $3.7 million, or 2.2%, to
$168.9 million, compared to $165.2 million for the three months ended September 30, 2023, primarily due to higher operating expenses
during the three months ended September 30, 2024, as discussed under “Rental operations” below. As of September 30, 2024, 93% of
our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes,
insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in
addition to base rent.
Rental operations
Total rental operating expenses for the three months ended September 30, 2024 increased by $15.6 million, or 7.2%, to
$233.3 million, compared to $217.7 million for the three months ended September 30, 2023. The increase was primarily due to
incremental expenses related to our Same Properties, as discussed below.
Same Properties’ rental operating expenses increased by $10.0 million, or 5.3%, to $199.4 million during the three months
ended September 30, 2024, compared to $189.4 million for the three months ended September 30, 2023, primarily as the result of
increases in (i) utility expenses and contractual costs aggregating $5.0 million, due to higher rates and increases in services, and
(ii) higher ground lease expenses aggregating $1.6 million, due to increases in contractual rates related to lease extensions and higher
ground lease percentage rent.
Depreciation and amortization
Depreciation and amortization expense for the three months ended September 30, 2024 increased by $24.6 million, or 9.1%,
to $294.0 million, compared to $269.4 million for the three months ended September 30, 2023. The increase was primarily due to
additional depreciation from development and redevelopment projects placed into service and properties acquired, as discussed above
under “Rental revenues.”
General and administrative expenses
General and administrative expenses for the three months ended September 30, 2024 decreased by $2.0 million, or 4.4%, to
$43.9 million, compared to $46.0 million for the three months ended September 30, 2023, primarily due to a reduction in compensation
costs resulting from the resignations of two executive officers in the second half of 2023. As a percentage of net operating income, our
general and administrative expenses for the trailing twelve months ended September 30, 2024 and 2023 were 8.9% and 9.3%,
respectively.
77
Interest expense
Interest expense for the three months ended September 30, 2024 and 2023 consisted of the following (dollars in thousands):
Three Months Ended September 30,
Component
2024
2023
Change
Gross interest
$130,046
$107,530
$22,516
Capitalized interest
(86,496)
(96,119)
9,623
Interest expense
$43,550
$11,411
$32,139
Average debt balance outstanding(1)
$12,694,260
$11,193,343
$1,500,917
Weighted-average annual interest rate(2)
4.1%
3.8%
0.3%
(1)Represents the average debt balance outstanding during the respective periods.
(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.
The net change in interest expense during the three months ended September 30, 2024, compared to the three months ended
September 30, 2023, resulted from the following (dollars in thousands):
Component
Interest Rate(1)
Effective Date
Change
Increases in interest incurred due to:
Issuances of debt:
$600 million of unsecured senior notes payable due 2054
5.71%
February 2024
$8,440
$400 million of unsecured senior notes payable due 2036
5.38%
February 2024
5,264
Increases in construction borrowings and interest rates under secured notes payable
8.40%
849
Higher average outstanding balances and/or rate increases on borrowings under
commercial paper program and unsecured senior line of credit
7,681
Other increase in interest
282
Change in gross interest
22,516
Decrease in capitalized interest
9,623
Total change in interest expense
$32,139
(1)Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and
other bank fees.
Impairment of real estate
During the three months ended September 30, 2024, we recognized real estate impairment charges aggregating $5.7 million
to adjust the carrying amount of one property in Canada that continued to meet the held-for-sale classification to the sales price under
negotiation with a potential buyer less costs to sell. We expect to sell this property within 12 months.
During the three months ended September 30, 2023, we recognized real estate impairment charges aggregating $20.6 million
to further reduce the carrying amounts of primarily three non-laboratory properties located in our Greater Boston and Texas markets to
their respective estimated fair value less costs to sell.
Investment income
During the three months ended September 30, 2024, we recognized investment income aggregating $15.2 million. This
income primarily consisted of gains of $26.2 million from increases in fair values of our non-real estate investments in publicly traded
companies and in privately held entities that do not report NAV, partially offset by impairment charges of $10.3 million primarily related
to two non-real estate investments in privately held entities that do not report NAV. During the three months ended September 30, 2023,
we recognized an investment loss aggregating $80.7 million, which consisted of $77.2 million of unrealized losses and $3.5 million of
realized losses. For more information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial
statements. For our impairments accounting policy, refer to “Investments” in Note 2 – “Summary of significant accounting policies” to
our unaudited consolidated financial statements in Item 1.
Gain on sales of real estate
During the three months ended September 30, 2024, we recognized $27.1 million of gains primarily related the disposition of
1165 Eastlake Avenue East in our Lake Union submarket. The gains were classified in gain on sales of real estate within our
consolidated statement of operations for the three months ended September 30, 2024.
Other comprehensive income
Total other comprehensive income for the three months ended September 30, 2024 aggregated $5.1 million, compared to total
other comprehensive loss of $8.4 million for the three months ended September 30, 2023. The difference is primarily due to the
unrealized foreign currency translation gains related to our operations in Canada.
78
Comparison of results for the nine months ended September 30, 2024 to the nine months ended September 30, 2023
The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same
Properties for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 (dollars in
thousands). Refer to “Definitions and reconciliations” in Item 2 for definitions of “Tenant recoveries” and “Net operating income” and
their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and
net income, respectively.
Nine Months Ended September 30,
2024
2023
$ Change
% Change
Income from rentals:
Same Properties
$1,342,463
$1,307,866
$34,597
2.6%
Non-Same Properties
395,341
274,677
120,664
43.9
Rental revenues
1,737,804
1,582,543
155,261
9.8
Same Properties
473,061
461,555
11,506
2.5
Non-Same Properties
75,592
55,721
19,871
35.7
Tenant recoveries
548,653
517,276
31,377
6.1
Income from rentals
2,286,457
2,099,819
186,638
8.9
Same Properties
1,102
1,356
(254)
(18.7)
Non-Same Properties
39,890
27,308
12,582
46.1
Other income
40,992
28,664
12,328
43.0
Same Properties
1,816,626
1,770,777
45,849
2.6
Non-Same Properties
510,823
357,706
153,117
42.8
Total revenues
2,327,449
2,128,483
198,966
9.3
Same Properties
559,427
532,942
26,485
5.0
Non-Same Properties
109,406
103,512
5,894
5.7
Rental operations
668,833
636,454
32,379
5.1
Same Properties
1,257,199
1,237,835
19,364
1.6
Non-Same Properties
401,417
254,194
147,223
57.9
Net operating income
$1,658,616
$1,492,029
$166,587
11.2%
Net operating income – Same Properties
$1,257,199
$1,237,835
$19,364
1.6%
Straight-line rent revenue
(37,251)
(73,626)
36,375
(49.4)
Amortization of acquired below-market leases
(44,993)
(40,410)
(4,583)
11.3
Net operating income – Same Properties (cash basis)
$1,174,955
$1,123,799
$51,156
4.6%
79
Income from rentals
Total income from rentals for the nine months ended September 30, 2024 increased by $186.6 million, or 8.9%, to $2.3 billion,
compared to $2.1 billion for the nine months ended September 30, 2023, as a result of increase in rental revenues and tenant
recoveries, as discussed below.
Rental revenues
Total rental revenues for the nine months ended September 30, 2024 increased by $155.3 million, or 9.8%, to $1.7 billion,
compared to $1.6 billion for the nine months ended September 30, 2023. The increase was primarily due to an increase in rental
revenues from our Non-Same Properties related to 4.1 million RSF of development and redevelopment projects placed into service
subsequent to January 1, 2023 and five operating properties aggregating 734,353 RSF acquired subsequent to January 1, 2023.
Rental revenues from our Same Properties for the nine months ended September 30, 2024 increased by $34.6 million, or
2.6%, to $1.3 billion, compared to $1.3 billion for the nine months ended September 30, 2023. The increase was primarily due to rental
rate increases on lease renewals and re-leasing of space since January 1, 2023.
Tenant recoveries
Tenant recoveries for the nine months ended September 30, 2024 increased by $31.4 million, or 6.1%, to $548.7 million,
compared to $517.3 million for the nine months ended September 30, 2023. This increase was partially from our Non-Same Properties
related to our development and redevelopment projects placed into service and properties acquired subsequent to January 1, 2023, as
discussed above under “Rental revenues.”
Same Properties’ tenant recoveries for the nine months ended September 30, 2024 increased by $11.5 million, or 2.5%, to
$473.1 million, compared to $461.6 million for the nine months ended September 30, 2023, primarily due to higher operating expenses
during the nine months ended September 30, 2024, as discussed under “Rental operations” below. As of September 30, 2024, 93% of
our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes,
insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in
addition to base rent.
Rental operations
Total rental operating expenses for the nine months ended September 30, 2024 increased by $32.4 million, or 5.1%, to
$668.8 million, compared to $636.5 million for the nine months ended September 30, 2023.The increase  was primarily due to
incremental expenses related to our Same Properties’ rental operating expenses as discussed below.
Same Properties’ rental operating expenses increased by $26.5 million, or 5.0%, to $559.4 million during the nine months
ended September 30, 2024, compared to $532.9 million for the nine months ended September 30, 2023, primarily as the result of (i)
the increase in utilities expenses and contractual costs aggregating $12.2 million, primarily due to higher rates and increase in services;
(ii) the increase in property taxes aggregating $7.5 million, primarily due to increases from reassessments in values; and (iii) the
increase in property insurance expenses aggregating $2.1 million, primarily due to higher insurance premiums.
Depreciation and amortization
Depreciation and amortization expense for the nine months ended September 30, 2024 increased by $64.0 million, or 7.9%, to
$872.3 million, compared to $808.2 million for the nine months ended September 30, 2023. The increase was primarily due to additional
depreciation from development and redevelopment projects placed into service and properties acquired, as discussed above under
“Rental revenues.”
General and administrative expenses
General and administrative expenses for the nine months ended September 30, 2024 decreased by $4.4 million, or 3.2%, to
$135.6 million, compared to $140.1 million for the nine months ended September 30, 2023, primarily due to a reduction in
compensation costs resulting from the resignations of two executive officers in the second half of 2023. As a percentage of net
operating income, our general and administrative expenses for the trailing twelve months ended September 30, 2024 and 2023 were
8.9% and 9.3%, respectively.
80
Interest expense
Interest expense for the nine months ended September 30, 2024 and 2023 consisted of the following (dollars in thousands):
Nine Months Ended September 30,
Component
2024
2023
Change
Gross interest
$379,554
$317,100
$62,454
Capitalized interest
(249,375)
(274,863)
25,488
Interest expense
$130,179
$42,237
$87,942
Average debt balance outstanding(1)
$12,417,845
$11,060,327
$1,357,518
Weighted-average annual interest rate(2)
4.1%
3.8%
0.3%
(1)Represents the average debt balance outstanding during the respective periods.
(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.
The net change in interest expense during the nine months ended September 30, 2024, compared to the nine months ended
September 30, 2023, resulted from the following (dollars in thousands):
Component
Interest Rate(1)
Effective Date
Change
Increases in interest incurred due to:
Issuances of debt:
$500 million of unsecured senior notes payable due 2053
5.26%
February 2023
$3,226
$500 million of unsecured senior notes payable due 2035
4.88%
February 2023
2,983
$600 million of unsecured senior notes payable due 2054
5.71%
February 2024
21,194
$400 million of unsecured senior notes payable due 2036
5.38%
February 2024
13,219
Increases in construction borrowings and interest rates under secured notes
payable
8.40%
3,380
Higher average outstanding balances and/or rate increases on borrowings
under commercial paper program and unsecured senior line of credit
16,482
Other increase in interest
1,970
Change in gross interest
62,454
Decrease in capitalized interest
25,488
Total change in interest expense
$87,942
(1)Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and
other bank fees.
81
Impairment of real estate
During the nine months ended September 30, 2024, we recognized real estate impairment charges aggregating $36.5 million,
which primarily consisted of the following:
•Impairment charges aggregating $30.8 million primarily consisting of the pre-acquisition costs related to two potential
acquisitions aggregating 1.4 million RSF of future development in our Greater Boston market. We executed purchase
agreements for these potential acquisitions with the total purchase price aggregating $366.8 million in 2020 and 2022, and we
initially expected to close these acquisitions after 2024. Our intent for each site included the demolition of existing buildings
upon expiration of the existing in-place leases and the development of life science properties. During the three months ended
June 30, 2024, due to the existing macroeconomic environment that negatively impacted the financial outlooks for these
projects, we decided to no longer proceed with these acquisitions, resulting in the recognition of impairment charges. 
•Impairment charge of $5.7 million to adjust the carrying amount of one property in Canada that continued to meet the held-for-
sale classification to the sales price under negotiation with a potential buyer less costs to sell. We expect to sell this property
within 12 months.
During the nine months ended September 30, 2023, we recognized real estate impairment charges aggregating $189.2 million,
which primarily consisted of the following:
•Impairment charge aggregating $145.4 million to reduce the carrying amount of a three-building office campus in our Route
128 submarket to its fair value less costs to sell. We completed the sale of this campus in June 2023 for a sales price of
$109.3 million, with no gain or loss recognized in earnings.
•Impairment charge aggregating $20.6 million to further reduce the carrying amounts of primarily three non-laboratory
properties located in our Greater Boston and Texas markets to their respective estimated fair values less costs to sell. We
completed the sale of two of these properties in December 2023 and January 2024, and we expect to sell the remaining real
estate asset during the next 12 months.
•Impairment charge aggregating $17.1 million to fully write down the carrying amount of our one remaining property in Asia.
Investment income
During the nine months ended September 30, 2024, we recognized an investment income aggregating $14.9 million. This
income primarily consisted of gains of $51.2 million from increases in fair values of our non-real estate investments in privately held
entities that do not report NAV and in publicly traded companies, partially offset by impairment charges of $37.8 million primarily related
to non-real estate investments in privately held entities that do not report NAV.
During the nine months ended September 30, 2023, we recognized investment loss aggregating $204.1 million, which
consisted of $16.9 million of realized gains and $221.0 million of unrealized losses.
For more information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial statements
in Item 1. For our impairments accounting policy, refer to “Investments” in Note 2 – “Summary of significant accounting policies” to our
unaudited consolidated financial statements in Item 1.
Gain on sales of real estate
During the nine months ended September 30, 2024, we recognized $27.5 million of gains primarily related to the disposition of
1165 Eastlake Avenue East in our Lake Union submarket. The gains were classified in gain on sales of real estate within our
consolidated statement of operations for the nine months ended September 30, 2024.
During the nine months ended September 30, 2023, we recognized $214.8 million of gains related to the dispositions of six
real estate assets. The gains were classified in gain on sales of real estate within our consolidated statement of operations for the nine
months ended September 30, 2023.
Other comprehensive loss
Total other comprehensive loss for the nine months ended September 30, 2024 aggregated $6.6 million, compared to total
other comprehensive loss of $4.2 million for the nine months ended September 30, 2023. The difference is primarily due to the foreign
currency translation related to our operations in Canada.
82
Summary of capital expenditures
Our construction spending for the nine months ended September 30, 2024 and projected spending for the year ending
December 31, 2024 consisted of the following (in thousands):
Nine Months Ended
September 30, 2024
Projected Midpoint for
the Year Ending
December 31, 2024
Construction of Class A/A+ properties:
Active construction projects
Under construction and committed near-term projects(1) and projects
expected to commence active construction in the fourth quarter of 2024(2)
$
1,448,736
$
1,913,000
Future pipeline pre-construction
Primarily mega campus expansion pre-construction work (entitlement,
design, and site work)
349,082
652,000
Revenue- and non-revenue-enhancing capital expenditures
158,229
250,000
Construction spend (before contributions from noncontrolling interests or
tenants)
1,956,047
2,815,000
Contributions from noncontrolling interests (consolidated real estate joint
ventures)
(272,072)
(430,000)
(3)
Tenant-funded and -built landlord improvements
(107,562)
(135,000)
Total construction spending
$
1,576,413
$
2,250,000
2024 guidance range for construction spending
$1,950,000 – $2,550,000
(1)Includes projects under construction aggregating 5.0 million RSF and one committed near-term project aggregating 492,570 RSF expected to commence construction
during the next two years after September 30, 2024, which are 55% leased/negotiating and expected to generate $510 million in incremental annual net operating
income primarily commencing from the fourth quarter of 2024 through the first quarter of 2028.
(2)Includes certain priority anticipated development and redevelopment projects expected to commence active construction in the fourth quarter of 2024, subject to market
conditions and leasing. Refer to “Investments in real estate” under “Definitions and reconciliations” in Item 2 for additional details, including development and
redevelopment square feet currently included in rental properties.
(3)Represents contractual capital commitments from existing consolidated real estate joint venture partners to fund construction.
Projected capital contributions from partners in consolidated real estate joint ventures to fund construction
The following table summarizes projected capital contributions from partners in our existing consolidated joint ventures to fund
construction through 2027 (in thousands):
Timing
Amount(1)
October 1, 2024 through December 31, 2024
$157,928
2025 through 2027
885,526
Total
$1,043,454
(1)Represents contractual capital commitments from existing consolidated real estate joint venture partners to fund construction.
Average real estate basis used for capitalization of interest
Our construction spending includes capitalized interest. The table below provides key categories of real estate basis
capitalized during the nine months ended September 30, 2024:
Nine Months Ended September 30, 2024
Average Real Estate
Basis Capitalized
Percentage of Total
Average Real Estate
Basis Capitalized
Construction of Class A/A+ properties:
Active construction projects
Under construction and committed near-term projects
$2,849,742
35%
Future pipeline pre-construction
Priority anticipated projects
559,815
(1)
7
Primarily mega campus expansion pre-construction work (entitlement, design,
and site work)
3,692,497
(1)
45
Smaller redevelopments and repositioning capital projects
1,025,019
13
$8,127,073
100%
(1)Average real estate basis capitalized related to our future pipeline pre-construction activities includes 31% from four key active and future development and
redevelopment projects on mega campuses.
83
Projected results
We present updated guidance for EPS attributable to Alexandria’s common stockholders – diluted, 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, based on our current view of existing market conditions and other assumptions for the
year ending December 31, 2024 as set forth in the tables below. The tables below also provide a reconciliation of EPS attributable to
Alexandria’s common stockholders – diluted, the most directly comparable financial measure presented in accordance with GAAP, to
funds from operations per share and funds from operations per share, as adjusted, non-GAAP measures, and other key assumptions
included in our updated guidance for the year ending December 31, 2024. There can be no assurance that actual amounts will not be
materially higher or lower than these expectations. Refer to our discussion of “Forward-looking statements” at the beginning of this
Item 2.
Projected 2024 Earnings per Share and Funds From Operations per Share Attributable to
Alexandria’s Common Stockholders – Diluted
As of 10/21/24
As of 7/22/24
Earnings per share(1)
$2.60 to $2.64
$2.98 to $3.10
Depreciation and amortization of real estate assets
6.05
5.95
Gain on sales of real estate(2)
(0.38)
—
Impairment of real estate – rental properties and land(2)
0.67
0.01
Allocation of unvested restricted stock awards
(0.06)
(0.05)
Funds from operations per share(3)
$8.88 to $8.92
$8.89 to $9.01
Unrealized losses on non-real estate investments
0.19
0.20
Impairment of non-real estate investments
0.22
0.16
Impairment of real estate
0.17
0.17
Allocation to unvested restricted stock awards
(0.01)
(0.01)
Funds from operations per share, as adjusted(3)
$9.45 to $9.49
$9.41 to $9.53
Midpoint
$9.47
$9.47
(1)Excludes unrealized gains or losses on non-real estate investments after September 30, 2024 that are required to be recognized in earnings and are excluded from
funds from operations per share, as adjusted.
(2)Includes $37.1 million of gain on sales of real estate and $106.8 million of real estate impairments recognized in October 2024. Refer to Note 16 – “Subsequent Events”
to our unaudited consolidated financial statements in Item 1 for additional details.
(3)Refer to “Definitions and reconciliations” in Item 2 for additional information.
Key Assumptions(1)
(Dollars in millions)
2024 Guidance
Low
High
Occupancy percentage for operating properties in North America as of December 31, 2024
94.6%
95.6%
Lease renewals and re-leasing of space:
Rental rate changes
11.0%
19.0%
Rental rate changes (cash basis)
5.0%
13.0%
Same property performance:
Net operating income changes
0.5%
2.5%
Net operating income changes (cash basis)
3.0%
5.0%
Straight-line rent revenue(2)
$147
$162
General and administrative expenses(3)
$176
$186
Capitalization of interest
$325
$355
Interest expense
$154
$184
Realized gains on non-real estate investments(4)
$95
$125
(1)Our assumptions presented in the table above are subject to a number of variables and uncertainties, including those discussed as “Forward-looking statements” under
Part I; “Item 1A. Risk factors”; and “Item 7. Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for
the year ended December 31, 2023, as well as in “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-Q. To the extent our full-
year earnings guidance is updated during the year, we will provide additional disclosure supporting reasons for any significant changes to such guidance.
(2)Reduction in the midpoint of our guidance range for straight-line rent revenue by $22 million is primarily attributable to (i) the write-off of a deferred rent receivable of
$9 million related to the lease termination and a payment of $10 million from a tenant at 409 Illinois Street in our Mission Bay submarket, a 234,249 RSF property owned
by our consolidated real estate joint venture for which we have an ownership interest of 25%, and (ii) a change in the expected stabilization date from the fourth quarter
of 2024 to the first quarter of 2025 at our fully leased development project at 230 Harriet Tubman Way in our South San Francisco submarket as reported in our Form
10-Q for the quarterly period ended June 30, 2023.
(3)Reduction in the midpoint of our guidance range for general and administrative expense by $5 million is primarily attributable to the realization of savings associated with
overall efficiencies, including enhanced cost control measures, incremental use of technology, streamlined processes, and optimization of execution in connection with
the sale of non-core assets not integral to our mega campus strategy.
(4)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 Note 7 – “Investments” to our unaudited consolidated financial statements in Item 1 for additional details.
Key Credit Metric Targets(1)
Net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2024 annualized
Less than or equal to 5.1x
Fixed-charge coverage ratio – fourth quarter of 2024 annualized
Greater than or equal to 4.5x
(1)Refer to “Definitions and reconciliations” in Item 2 for additional information.
84
Consolidated and unconsolidated real estate joint ventures
We present components of balance sheet and operating results information for the noncontrolling interest share of our
consolidated real estate joint ventures and for our share of investments in unconsolidated real estate joint ventures to help investors
estimate balance sheet and operating results information related to our partially owned entities. These amounts are estimated by
computing, for each joint venture that we consolidate in our financial statements, the noncontrolling interest percentage of each financial
item to arrive at the cumulative noncontrolling interest share of each component presented. In addition, for our real estate joint ventures
that we do not control and do not consolidate, we apply our economic ownership percentage to the unconsolidated real estate joint
ventures to arrive at our proportionate share of each component presented. Refer to Note 4 – “Consolidated and unconsolidated real
estate joint ventures” to our unaudited consolidated financial statements in Item 1 for further discussion.
Consolidated Real Estate Joint Ventures
Property/Market/Submarket
Noncontrolling(1)
Interest Share
Operating RSF
at 100%
50 and 60 Binney Street/Greater Boston/Cambridge/Inner Suburbs
66.0%
532,395
75/125 Binney Street/Greater Boston/Cambridge/Inner Suburbs
60.0%
388,270
100 and 225 Binney Street and 300 Third Street/Greater Boston/Cambridge/Inner Suburbs
70.0%
870,106
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs
25.0%
116,414
(2)
15 Necco Street/Greater Boston/Seaport Innovation District
43.3%
345,996
285, 299, 307, and 345 Dorchester Avenue/Greater Boston/Seaport Innovation District
40.0%
—
(2)
Alexandria Center® for Science and Technology – Mission Bay/San Francisco Bay Area/
Mission Bay(3)
75.0%
996,181
1450 Owens Street/San Francisco Bay Area/Mission Bay
74.6%
(4)
—
(2)
601, 611, 651(2), 681, 685, and 701 Gateway Boulevard/San Francisco Bay Area/
South San Francisco
50.0%
853,794
751 Gateway Boulevard/San Francisco Bay Area/South San Francisco
49.0%
230,592
211(2) and 213 East Grand Avenue/San Francisco Bay Area/South San Francisco
70.0%
300,930
500 Forbes Boulevard/San Francisco Bay Area/South San Francisco
90.0%
155,685
Alexandria Center® for Life Science – Millbrae/San Francisco Bay Area/South San Francisco
52.1%
—
(2)
3215 Merryfield Row/San Diego/Torrey Pines
70.0%
170,523
Campus Point by Alexandria/San Diego/University Town Center(5)
45.0%
1,342,164
5200 Illumina Way/San Diego/University Town Center
49.0%
792,687
9625 Towne Centre Drive/San Diego/University Town Center
70.0%
163,648
SD Tech by Alexandria/San Diego/Sorrento Mesa(6)
50.0%
798,858
Pacific Technology Park/San Diego/Sorrento Mesa
50.0%
544,352
Summers Ridge Science Park/San Diego/Sorrento Mesa(7)
70.0%
316,531
1201 and 1208 Eastlake Avenue East/Seattle/Lake Union
70.0%
207,774
199 East Blaine Street/Seattle/Lake Union
70.0%
115,084
400 Dexter Avenue North/Seattle/Lake Union
70.0%
290,754
800 Mercer Street/Seattle/Lake Union
40.0%
—
(2)
Unconsolidated Real Estate Joint Ventures
Property/Market/Submarket
Our Ownership
Share(8)
Operating RSF
at 100%
1655 and 1725 Third Street/San Francisco Bay Area/Mission Bay
10.0%
586,208
1401/1413 Research Boulevard/Maryland/Rockville
65.0%
(9)(10)
(9)(10)
1450 Research Boulevard/Maryland/Rockville
73.2%
(10)
42,679
101 West Dickman Street/Maryland/Beltsville
58.2%
(10)
135,423
Refer to “Joint venture financial information” under “Definitions and reconciliations” in Item 2 for additional details.
(1)In addition to the consolidated real estate joint ventures listed, various joint venture partners hold insignificant noncontrolling interests in three other real estate joint
ventures in North America.
(2)Represents a property currently under construction or in our development and redevelopment pipeline. Refer to “New Class A/A+ development and redevelopment
properties” in Item 2 for additional details.
(3)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South.
(4)During the nine months ended September 30, 2024, our equity ownership decreased from 40.6% to 25.4% based on continued funding of construction costs by our joint
venture partner and a reallocation of equity to our joint venture partner of $30.2 million from us. The noncontrolling interest share of our joint venture partner is
anticipated to increase to 75% and ours to decrease to 25% as our partner contributes additional equity to fund the construction of the project.
(5)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4165, 4224, and 4242 Campus Point Court.
(6)Includes 9605, 9645, 9675, 9725, 9735, 9805, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road.
(7)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road.
(8)In addition to the unconsolidated real estate joint ventures listed, we hold an interest in one insignificant unconsolidated real estate joint venture in North America.
(9)We have executed a purchase and sale agreement to sell the unconsolidated real estate joint venture and expect to complete the sale during the fourth quarter of 2024.
(10)Represents a joint venture with a local real estate operator in which our joint venture partner manages the day-to-day activities that significantly affect the economic
performance of the joint venture.
85
The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of
September 30, 2024 (dollars in thousands):
Maturity Date
Stated Rate
Interest
Rate(1)
At 100%
Our
Share
Unconsolidated Joint Venture
Aggregate
Commitment
Debt Balance(2)
1401/1413 Research Boulevard(3)
12/23/24
2.70%
3.31%
$28,500
$28,461
65.0%
1655 and 1725 Third Street(4)
3/10/25
4.50%
4.57%
600,000
599,823
10.0%
101 West Dickman Street
11/10/26
SOFR+1.95%
(5)
7.39%
26,750
18,565
58.2%
1450 Research Boulevard
12/10/26
SOFR+1.95%
(5)
7.45%
13,000
8,616
73.2%
$668,250
$655,465
(1)Includes interest expense and amortization of loan fees.
(2)Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2024.
(3)We have executed a purchase and sale agreement to sell the unconsolidated real estate joint venture and expect to complete the sale during the fourth quarter of 2024.
Our net proceeds from the sale are expected to exceed our share of the outstanding debt balance and the carrying amount of this investment as of September 30, 2024.
(4)The unconsolidated real estate joint venture is in the process of working with prospective lenders to refinance this debt. In the event that all or a portion of the debt
cannot be refinanced, we may consider contributing additional equity into this unconsolidated joint venture. As of September 30, 2024, our investment in this
unconsolidated real estate joint venture was $10.8 million.
(5)This loan is subject to a fixed SOFR floor of 0.75%.
The following tables present information related to the operating results and financial positions of our consolidated and
unconsolidated real estate joint ventures as of and for the three and nine months ended September 30, 2024 (in thousands):
Noncontrolling Interest Share of
Consolidated Real Estate Joint Ventures
Our Share of Unconsolidated
Real Estate Joint Ventures
September 30, 2024
September 30, 2024
Three Months Ended
Nine Months Ended
Three Months Ended
Nine Months Ended
Total revenues
$113,479
$335,786
$3,141
$9,472
Rental operations
(34,697)
(97,009)
(965)
(2,984)
78,782
238,777
2,176
6,488
General and administrative
(586)
(2,268)
(10)
(80)
Interest
(284)
(753)
(952)
(2,807)
Depreciation and amortization of real
estate assets
(32,457)
(94,725)
(1,075)
(3,177)
Fixed returns allocated to
redeemable noncontrolling
interests(1)
201
603
—
—
$45,656
$141,634
$139
$424
Straight-line rent and below-market
lease revenue
$54
$15,588
$213
$743
Funds from operations(2)
$78,113
$236,359
$1,214
$3,601
Refer to “Joint venture financial information” under “Definitions and reconciliations” in Item 2 for additional details.
(1)Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These
redeemable noncontrolling interests earn a fixed return on their investment rather than participate in the operating results of the property.
(2)Refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” under “Definitions
and reconciliations” in Item 2 for the definition and its reconciliation from the most directly comparable financial measure presented in accordance with GAAP.
As of September 30, 2024
Noncontrolling Interest
Share of Consolidated
Real Estate Joint Ventures
Our Share of
Unconsolidated
Real Estate Joint Ventures
Investments in real estate
$4,211,942
$125,029
Cash, cash equivalents, and restricted cash
164,756
3,346
Other assets
425,293
13,411
Secured notes payable
(36,103)
(95,603)
Other liabilities
(280,069)
(6,013)
Redeemable noncontrolling interests
(16,510)
—
$4,469,309
$40,170
During the nine months ended September 30, 2024 and 2023, our consolidated real estate joint ventures distributed an
aggregate of $179.1 million and $192.7 million, respectively, to our joint venture partners. Refer to our consolidated statements of cash
flows and Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements in
Item 1 for additional information.
86
Investments
We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. The
tables below summarize components of our investment income (loss) and non-real estate investments (in thousands). Refer to Note 7 –
“Investments” to our unaudited consolidated financial statements in Item 1 for additional information.
September 30, 2024
Year Ended
December 31, 2023
Three Months Ended
Nine Months Ended
Realized gains
$12,632
(1)
$47,336
(1)
$6,078
(2)
Unrealized gains (losses)
2,610
(3)
(32,470)
(4)
(201,475)
(5)
Investment income (loss)
$15,242
$14,866
$(195,397)
September 30, 2024
December 31, 2023
Investments
Cost
Unrealized
Gains
Unrealized
Losses
Carrying
Amount
Carrying Amount
Publicly traded companies
$187,085
$50,933
$(85,592)
$152,426
$159,566
Entities that report NAV
527,042
160,608
(31,225)
656,425
671,532
Entities that do not report NAV:
Entities with observable price changes
93,982
72,862
(1,337)
165,507
174,268
Entities without observable price changes
407,261
—
—
407,261
368,654
Investments accounted for under the equity
method
N/A
N/A
N/A
137,708
75,498
September 30, 2024
$1,215,370
(6)
$284,403
$(118,154)
$1,519,327
$1,449,518
December 31, 2023
$1,177,072
$320,445
$(123,497)
$1,449,518
Public/Private Mix (Cost)
Tenant/Non-Tenant Mix (Cost)
1099511627777
1099511627795
86%
Private
14%
Public
27%
Tenant
73%
Non-Tenant
(1)Consists of realized gains of $23.0 million and $85.2 million, partially offset by impairment charges of $10.3 million and $37.8 million during the three and nine months
ended September 30, 2024, respectively.
(2)Consists of realized gains of $80.6 million, offset by impairment charges of $74.6 million during the year ended December 31, 2023.
(3)Consists of unrealized gains of $25.8 million primarily resulting from the increase in fair values of our investments in publicly traded entities and $23.2 million resulting
from accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our realization of investments during the three months ended
September 30, 2024.
(4)Primarily relates to the accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our realization of investments during the nine
months ended September 30, 2024.
(5)Consists of unrealized losses of $111.6 million primarily resulting from the decrease in the fair value of our investments in privately held entities that report NAV and
$89.9 million resulting from accounting reclassifications of unrealized gains recognized in prior periods into realized gains upon our sales of investments, during the year
ended December 31, 2023.
(6)Represents 2.8% of gross assets as of September 30, 2024. Refer to the definition of “Gross assets” under “Definitions and reconciliations” in Item 2 for additional
details.
87
Liquidity
Liquidity
Minimal Outstanding Borrowings and
Significant Availability on
Unsecured Senior Line of Credit
$5.4B
(in millions)
q324lineofcredit_v2.jpg
(In millions)
Availability under our unsecured senior line of credit, net of
amounts outstanding under our commercial paper program
$4,545
Outstanding forward equity sales agreements(1)
28
Cash, cash equivalents, and restricted cash
580
Availability under our secured construction loan
51
Investments in publicly traded companies
152
Liquidity as of September 30, 2024
$5,356
(1)Represents expected net proceeds from the future settlement of 230 thousand shares of common stock under forward equity sales agreements after underwriter
discounts.
We expect to meet certain long-term liquidity requirements, such as requirements for development, redevelopment, other
construction projects, capital improvements, tenant improvements, property acquisitions, leasing costs, non-revenue-enhancing capital
expenditures, scheduled debt maturities, distributions to noncontrolling interests, and payment of dividends through net cash provided
by operating activities, periodic asset sales, strategic real estate joint ventures, long-term secured and unsecured indebtedness,
borrowings under our unsecured senior line of credit, issuances under our commercial paper program, and issuances of additional debt
and/or equity securities.
We also expect to continue meeting our short-term liquidity and capital requirements, as further detailed in this section,
generally through our working capital and net cash provided by operating activities. We believe that the net cash provided by operating
activities will continue to be sufficient to enable us to make the distributions necessary to continue qualifying as a REIT.
For additional information on our liquidity requirements related to our contractual obligations and commitments, refer to
Note 5 – “Leases” and Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements in Item 1.
Over the next several years, our balance sheet, capital structure, and liquidity objectives are as follows:
•Retain cash flows from operating activities after payment of dividends and distributions to noncontrolling interests for
investment in development and redevelopment projects and/or acquisitions;
•Maintain significant balance sheet liquidity;
•Improve credit profile and relative long-term cost of capital;
•Maintain diverse sources of capital, including sources from net cash provided by operating activities, unsecured debt,
secured debt, selective real estate asset sales, strategic real estate joint ventures, non-real estate investment sales, and
common stock;
•Maintain commitment to long-term capital to fund growth;
•Maintain prudent laddering of debt maturities;
•Maintain solid credit metrics;
•Prudently manage variable-rate debt exposure;
•Maintain a large, unencumbered asset pool to provide financial flexibility;
•Fund common stock dividends and distributions to noncontrolling interests from net cash provided by operating activities;
•Manage a disciplined level of development and redevelopment projects as a percentage of our gross real estate assets;
and
•Maintain high levels of pre-leasing and percentage leased in development and redevelopment projects.
88
The following table presents the availability under our unsecured senior line of credit, net of amounts outstanding under our
commercial paper program; outstanding forward equity sales agreements; cash, cash equivalents, and restricted cash; availability
under our secured construction loan; and investments in publicly traded companies as of September 30, 2024 (in thousands):
Description
Stated Rate
Aggregate
Commitments
Outstanding
Balance(1)
Remaining
Commitments/
Liquidity
Availability under our unsecured senior line of credit, net of
amounts outstanding under our commercial paper program
SOFR+0.855%
$5,000,000
$454,589
$4,545,000
Outstanding forward equity sales agreements(2)
27,508
Cash, cash equivalents, and restricted cash
579,637
Construction loan
SOFR+2.70%
$195,300
$144,413
50,773
Investments in publicly traded companies
152,426
Liquidity as of September 30, 2024
$5,355,344
(1)Represents outstanding principal, net of unamortized deferred financing costs, as of September 30, 2024.
(2)Represents expected net proceeds from the future settlement of 230 thousand shares of common stock under forward equity sales agreements after underwriter
discounts.
Cash, cash equivalents, and restricted cash
As of September 30, 2024 and December 31, 2023, we had $579.6 million and $660.8 million, respectively, of cash, cash
equivalents, and restricted cash. We expect existing cash, cash equivalents, and restricted cash, net cash provided by operating
activities, proceeds from real estate asset sales, sales of partial interests, strategic real estate joint ventures, non-real estate investment
sales, borrowings under our unsecured senior line of credit, issuances under our commercial paper program, issuances of unsecured
senior notes payable, borrowings under our secured construction loans, and issuances of common stock to continue to be sufficient to
fund our operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends,
distributions to noncontrolling interests, scheduled debt repayments, acquisitions, and certain capital expenditures, including
expenditures related to construction activities.
Cash flows
We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following
table summarizes changes in our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):
Nine Months Ended September 30,
2024
2023
Change
Net cash provided by operating activities
$1,230,346
$1,201,933
$28,413
Net cash used in investing activities
$(1,956,959)
$(2,110,556)
$153,597
Net cash provided by financing activities
$645,405
$618,962
$26,443
Operating activities
Cash flows provided by operating activities are primarily dependent upon the occupancy level of our asset base, the rental
rates of our leases, the collectibility of rent and recovery of operating expenses from our tenants, the timing of completion of
development and redevelopment projects, and the timing of acquisitions and dispositions of operating properties. Net cash provided by
operating activities for the nine months ended September 30, 2024 increased by $28.4 million to $1.23 billion, compared to $1.20 billion
for the nine months ended September 30, 2023. The increase was primarily due to cash flows generated from our development and
redevelopment projects place into service since January 1, 2023.
89
Investing activities
Cash used in investing activities for the nine months ended September 30, 2024 and 2023 consisted of the following (in
thousands):
 
Nine Months Ended September 30,
Increase (Decrease)
 
2024
2023
Sources of cash from investing activities:
Proceeds from sales of real estate
$229,790
$761,321
$(531,531)
Sales of and distributions from non-real estate investments
141,762
149,299
(7,537)
371,552
910,620
(539,068)
Uses of cash for investing activities:
Purchases of real estate
201,049
257,333
(56,284)
Additions to real estate
1,932,351
2,600,999
(668,648)
Change in escrow deposits
5,512
5,982
(470)
Investments in unconsolidated real estate joint ventures
4,039
499
3,540
Additions to non-real estate investments
185,560
156,363
29,197
2,328,511
3,021,176
(692,665)
Net cash used in investing activities
$1,956,959
$2,110,556
$(153,597)
The decrease in net cash used in investing activities for the nine months ended September 30, 2024, compared to the nine
months ended September 30, 2023, was primarily due to a decrease in cash used for real estate purchases and additions, partially
offset by lower proceeds from sales of real estate. Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial
statements in Item 1 for additional information.
Financing activities
Cash flows provided by financing activities for the nine months ended September 30, 2024 and 2023 consisted of the following
(in thousands):
Nine Months Ended September 30,
2024
2023
Change
Borrowings under secured notes payable
$24,853
$49,578
$(24,725)
Repayments of borrowings under secured notes payable
(32)
(30)
(2)
Proceeds from issuance of unsecured senior notes payable
998,806
996,205
2,601
Borrowings under unsecured senior line of credit
—
375,000
(375,000)
Repayments of borrowings under unsecured senior line of credit
—
(375,000)
375,000
Proceeds from issuances under commercial paper program
7,935,600
1,705,000
6,230,600
Repayments of borrowings under commercial paper program
(7,580,600)
(1,705,000)
(5,875,600)
Payments of loan fees
(36,366)
(16,047)
(20,319)
Changes related to debt
1,342,261
1,029,706
312,555
Contributions from and sales of noncontrolling interests
251,252
436,207
(184,955)
Distributions to and purchases of noncontrolling interests
(231,072)
(193,716)
(37,356)
Dividends on common stock
(671,366)
(633,032)
(38,334)
Taxes paid related to net settlement of equity awards
(45,670)
(20,203)
(25,467)
Net cash provided by financing activities
$645,405
$618,962
$26,443
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Capital resources
We expect that our principal liquidity needs for the year ending December 31, 2024 will be satisfied by the following multiple
sources of capital, as shown in the table below. There can be no assurance that our sources and uses of capital will not be materially
higher or lower than these expectations.
Key Sources and Uses of Capital
(In millions)
2024 Guidance
Certain
Completed
Items
Range
Midpoint
Sources of capital:
Incremental debt
$885
$1,185
$1,035
See below
Net cash provided by operating activities after dividends
400
500
450
Dispositions and common equity(1)
1,050
2,050
1,550
(1)
Total sources of capital
$2,335
$3,735
$3,035
Uses of capital:
Construction
$1,950
$2,550
$2,250
Acquisitions
250
750
500
$249
Ground lease prepayment(2)
135
135
135
Cash expected to be held at December 31, 2024(3)
—
300
150
Total uses of capital
$2,335
$3,735
$3,035
Incremental debt (included above):
Issuance of unsecured senior notes payable(4)
$1,000
$1,000
$1,000
$1,000
(4)
Unsecured senior line of credit, commercial paper program, and other
(115)
185
35
Incremental debt
$885
$1,185
$1,035
(1)Refer to “Dispositions” in Item 2 for additional detail. We expect to fund our remaining capital requirements for the year ending December 31, 2024 with real estate
dispositions. As of the date of this report, we completed real estate dispositions aggregating $319.2 million, have additional pending transactions subject to (i) non-
refundable deposits aggregating $577.2 million and (ii) executed letters of intent and/or purchase and sale agreements aggregating $602.5 million and forward equity
sales agreements aggregating $28 million, which in aggregate, represents 98% of the $1.55 billion midpoint of our guidance range. We do not expect to issue additional
equity in 2024 beyond the existing forward equity sales agreements outstanding.
(2)In July 2024, we executed an amendment to our existing ground lease agreement at the Alexandria Technology Square® mega campus in our Cambridge submarket,
which 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.
(3)The increase in cash expected to be held at December 31, 2024 is primarily due to changes in the mix and timing of pending dispositions that are subject to non-
refundable deposits or subject to executed letters of intent and/or purchase and sale agreements that are expected to close in the fourth quarter of 2024. This cash is
expected to reduce our 2025 debt capital needs.
(4)Represents $1.0 billion of unsecured senior notes payable issued in February 2024. Subject to market conditions, we may seek additional opportunities in 2024 to fund
all or a portion of the proceeds necessary for the repayment of our $600.0 million of 3.45% unsecured senior notes payable due on April 30, 2025 through the issuance
of additional unsecured senior notes payable that is not assumed in our current 2024 guidance.
The key assumptions behind the sources and uses of capital in the table above include a favorable real estate transaction and
capital market environments, performance of our core operating properties, lease-up and delivery of current and future development
and redevelopment projects, and leasing activity. Our expected sources and uses of capital are subject to a number of variables and
uncertainties, including those discussed as “Forward-looking statements” under Part I; “Item 1A. Risk factors”; and “Item 7.
Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for the year
ended December 31, 2023; as well as in “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-
Q. We expect to update our forecast for key sources and uses of capital on a quarterly basis.
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Sources of capital
Net cash provided by operating activities after dividends
We expect to retain $400 million to $500 million of net cash flows from operating activities after payment of common stock
dividends, and distributions to noncontrolling interests for the year ending December 31, 2024. For purposes of this calculation,
changes in operating assets and liabilities are excluded as they represent timing differences. For the year ending December 31, 2024,
we expect our recently delivered projects, our highly development and redevelopment projects expected to be delivered, contributions
from Same Properties, and recently acquired income-producing properties to contribute increases in income from rentals, net operating
income, and cash flows. We anticipate contractual near-term growth in annual net operating income (cash basis) of $57 million related
to the commencement of contractual rents on the projects recently placed into service that are near the end of their initial free rent
period. Refer to “Cash flows” in Item 2 for a discussion of cash flows provided by operating activities for the nine months ended
September 30, 2024.
Debt
We expect to fund a portion of our capital needs for 2024 from issuances under our commercial paper program, issuances of
unsecured senior notes payable, borrowings under our unsecured senior line of credit, and/or borrowings under our secured
construction loan.
As of September 30, 2024, our unsecured senior line of credit had aggregate commitments of $5.0 billion and bore an interest
rate of SOFR plus 0.855%. In addition to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of
0.145% based on the aggregate commitments outstanding. Based upon our ability to achieve certain annual sustainability targets, the
interest rate and facility fee rate are also subject to upward or downward adjustments of up to four basis points with respect to the
interest rate and up to one basis point with respect to the facility fee rate.
Based on certain sustainability metrics achieved in accordance with the terms of our unsecured senior line of credit
agreement, the borrowing rate was reduced for a one-year period by two basis points to SOFR plus 0.855%, from SOFR plus 0.875%,
and the facility fee was reduced by 0.5 basis point to 0.145% from 0.15%. As of September 30, 2024, we had no outstanding balance
on our unsecured line of credit.
In September 2024, we amended and restated our unsecured senior line of credit to, among other changes, extend the
maturity date from January 22, 2028 to January 22, 2030, including extension options that we control.
Our commercial paper program provides us with the ability to issue up to $2.5 billion of commercial paper notes with a maturity
of generally 30 days or less and with a maximum maturity of 397 days from the date of issuance. Our commercial paper program is
backed by our unsecured senior line of credit, and at all times we expect to retain a minimum undrawn amount of borrowing capacity
under our unsecured senior line of credit equal to any outstanding balance under our commercial paper program. We use borrowings
under the program to fund short-term capital needs. The notes issued under our commercial paper program are sold under customary
terms in the commercial paper market. They are typically issued at a discount to par, representing a yield to maturity dictated by market
conditions at the time of issuance. In the event we are unable to issue commercial paper notes or refinance outstanding commercial
paper notes under terms equal to or more favorable than those under the unsecured senior line of credit, we expect to borrow under the
unsecured senior line of credit. The commercial paper notes sold during the nine months ended September 30, 2024 were issued at a
weighted-average yield to maturity of 5.55%. As of September 30, 2024, we had an outstanding balance of $454.6 million under our
commercial paper program with a weighted-average interest rate of 5.05%.
In February 2024, we issued $1.0 billion of unsecured senior notes payable with a weighted-average interest rate of 5.48%
and a weighted-average maturity of 23.1 years. The unsecured senior notes consisted of $400.0 million of 5.25% unsecured senior
notes due 2036 and $600.0 million of 5.625% unsecured senior notes due 2054.
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The following table presents our average debt outstanding and weighted-average interest rates during the three and nine
months ended September 30, 2024 (dollars in thousands):
Average Debt Outstanding
Weighted-Average Interest Rate
September 30, 2024
September 30, 2024
Three Months
Ended
Nine Months
Ended
Three Months
Ended
Nine Months
Ended
Long-term fixed-rate debt
$12,171,936
$12,008,857
3.79%
3.76%
Short-term variable-rate unsecured senior
line of credit and commercial paper
program debt
545,848
471,070
5.48
5.57
Blended average interest rate
12,717,784
12,479,927
3.86
3.83
Loan fee amortization and annual facility fee
related to unsecured senior line of credit
N/A
N/A
0.12
0.13
Total/weighted average
$12,717,784
$12,479,927
3.98%
3.96%
Real estate dispositions and issuances of common equity
We expect to continue to focus on the disciplined execution of select sales of real estate. Future sales will provide an important
source of capital to fund a portion of pending and recently completed acquisitions and our development and redevelopment projects,
and also provide significant capital for growth. For the year ending December 31, 2024, we expect real estate dispositions and
issuances of common equity to range from $1.1 billion to $2.1 billion. The amount of asset sales necessary to meet our forecasted
sources of capital will vary depending upon the amount of EBITDA associated with the assets sold.
Refer to Note 3 – “Investments in real estate,” Note 4 – “Consolidated and unconsolidated real estate joint ventures,” and
Note 13 – “Stockholders’ equity” to our unaudited consolidated financial statements in Item 1 and to “Dispositions” in Item 2 for
additional information on our real estate dispositions.
As a REIT, we are generally subject to a 100% tax on the net income from real estate asset sales that the IRS characterizes as
“prohibited transactions.” We do not expect our sales will be categorized as prohibited transactions. However, unless we meet certain
“safe harbor” requirements, whether a real estate asset sale is a “prohibited transaction” will be based on the facts and circumstances
of the sale. Our real estate asset sales may not always meet such “safe harbor” requirements. Refer to “Item 1A. Risk factors” of our
annual report on Form 10-K for the year ended December 31, 2023 for additional information about the “prohibited transaction” tax.
Common equity transactions
During the three months ended June 30, 2024, we entered into new forward equity sales agreements aggregating $28 million
to sell 230 thousand shares of common stock under our ATM program at an average price of $122.32 (before underwriting discounts).
As of September 30, 2024, the remaining aggregate amount available under our ATM program for future sales of common stock was
$1.47 billion.
Other sources
As a well-known seasoned issuer, we may, from time to time, issue securities at our discretion based on our needs and market
conditions, including, as necessary, to balance our use of incremental debt capital.
Additionally, we, together with joint venture partners, hold interests in real estate joint ventures that we consolidate in our
financial statements. These existing joint ventures provide significant equity capital to fund a portion of our future construction spend,
and our joint venture partners may also contribute equity into these entities for financing-related activities. From October 1, 2024
through December 31, 2027, we expect to receive capital contributions aggregating $1.0 billion from existing consolidated real estate
joint venture partners to fund construction. During the year ending December 31, 2024, contributions from noncontrolling interests from
existing joint venture partners are expected to aggregate $430.0 million.
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Uses of capital
Summary of capital expenditures
One of our primary uses of capital relates to the development, redevelopment, pre-construction, and construction of properties.
We currently have projects in our development and redevelopment pipeline aggregating 5.3 million RSF of Class A/A+ properties
undergoing construction, one committed near-term project expected to commence construction in the next two years, and 1.9 million
RSF of priority anticipated development and redevelopment projects. We incur capitalized construction costs related to development,
redevelopment, pre-construction, and other construction activities. We also incur additional capitalized project costs, including interest,
property taxes, insurance, and other costs directly related and essential to the development, redevelopment, pre-construction, or
construction of a project, during periods when activities necessary to prepare an asset for its intended use are in progress. Refer to
“New Class A/A+ development and redevelopment properties: current projects” and “Summary of capital expenditures” in Item 2 for
more information on our capital expenditures.
We capitalize interest cost as a cost of the project only during the period in which activities necessary to prepare an asset for
its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has been incurred. Capitalized
interest for the nine months ended September 30, 2024 and 2023 of $249.4 million and $274.9 million, respectively, was classified in
investments in real estate in our consolidated balance sheets. The decrease in capitalized interest was related to a lower weighted-
average capitalized cost basis of $8.1 billion for the nine months ended September 30, 2024, as compared to $9.6 billion for the nine
months ended September 30, 2023, partially offset by an increase in weighted-average interest rate used to capitalize interest to 3.96%
for the nine months ended September 30, 2024 from 3.74% for the nine months ended September 30, 2023. 
Property taxes, insurance on real estate, and indirect project costs, such as construction, administration, legal fees, and office
costs that clearly relate to projects under development or construction, are capitalized as incurred during the period an asset is
undergoing activities to prepare it for its intended use. We capitalized payroll and other indirect costs related to development,
redevelopment, pre-construction, and construction projects, aggregating $76.8 million and $74.5 million, and property taxes, insurance
on real estate, and indirect project costs aggregating $96.5 million and $96.7 million during the nine months ended September 30, 2024
and 2023, respectively.
The decrease in our capitalized costs for the nine months ended September 30, 2024, compared to the same period in 2023,
was primarily driven by a reduction in the average real estate basis of our development and redevelopment pipeline following significant
deliveries in 2023, most of which were placed into service during the fourth quarter of 2023. Pre-construction activities include
entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building
improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective
tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of
buildings. Should we cease activities necessary to prepare an asset for its intended use, the interest, taxes, insurance, and certain
other direct and indirect project costs related to the asset would be expensed as incurred. Expenditures for repairs and maintenance
are expensed as incurred.
Fluctuations in our development, redevelopment, and construction activities could result in significant changes to total
expenses and net income. For example, had we experienced a 10% reduction in development, redevelopment, and construction
activities without a corresponding decrease in indirect project costs, including interest and payroll, total expenses would have increased
by approximately $42.3 million for the nine months ended September 30, 2024.
We use third-party brokers to assist in our leasing activity, who are paid on a contingent basis upon successful leasing. We are
required to capitalize initial direct costs related to successful leasing transactions that result directly from and are essential to the lease
transaction and would not have been incurred had that lease transaction not been successfully executed. During the nine months
ended September 30, 2024, we capitalized total initial direct leasing costs of $67.0 million. Costs that we incur to negotiate or arrange a
lease regardless of its outcome, such as fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs,
are expensed as incurred.
94
Acquisitions
During the nine months ended September 30, 2024, the purchase price of our completed acquisitions aggregated
$201.8 million. As of September 30, 2024, the total purchase price of our pending acquisitions under executed letters of intent and/or
purchase and sale agreements expected to be completed in the fourth quarter of 2024 and in 2025 aggregated $47.6 million and $47.8
million, respectively. In October 2024, we completed one acquisition pending as of September 30, 2024 for a purchase price of $47.6
million. For additional information, refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements in Item 1.
For the year ending December 31, 2024, we expect real estate acquisitions to range from $250 million to $750 million.
Refer to “Acquisitions” in Note 3 – “Investments in real estate” and to Note 4 – “Consolidated and unconsolidated real estate
joint ventures” to our unaudited consolidated financial statements in Item 1, and “Acquisitions” in Item 2 for information on our
acquisitions.
Dividends
During the nine months ended September 30, 2024 and 2023, we paid common stock dividends of $671.4 million and
$633.0 million, respectively. The increase of $38.3 million in dividends paid on our common stock during the nine months ended
September 30, 2024, compared to the nine months ended September 30, 2023, was primarily due to an increase in the number of
common shares outstanding subsequent to January 1, 2023 as a result of settled forward equity sales agreements, and an increase in
the related dividends paid to $3.84 per common share during the nine months ended September 30, 2024 from $3.66 per common
share during the nine months ended September 30, 2023.
Secured notes payable
Secured notes payable as of September 30, 2024 consisted of three notes secured by two properties. Our secured notes
payable typically require monthly payments of principal and interest and had a weighted-average interest rate of approximately 8.39%.
As of September 30, 2024, the total book value of our investments in real estate securing debt was approximately $364.3 million. As of
September 30, 2024, our secured notes payable, including unamortized discounts and deferred financing costs, comprised
approximately $587 thousand and $144.4 million of fixed-rate debt and unhedged variable-rate debt, respectively.
As of September 30, 2024, our unconsolidated real estate joint venture, in which we hold a 10% ownership interest, located at
1655 and 1725 Third Street in our Mission Bay submarket, has a $600.0 million secured loan outstanding maturing on March 10, 2025.
The unconsolidated real estate joint venture is in the process of working with prospective lenders to refinance this debt. In the event that
all or a portion of the debt cannot be refinanced, we may consider contributing additional equity into this unconsolidated real estate joint
venture.
Unsecured senior notes payable and unsecured senior line of credit
The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior
notes payable as of September 30, 2024 were as follows:
Covenant Ratios(1)
Requirement
September 30, 2024
Total Debt to Total Assets
Less than or equal to 60%
30%
Secured Debt to Total Assets
Less than or equal to 40%
0.3%
Consolidated EBITDA(2) to Interest Expense
Greater than or equal to 1.5x
12.3x
Unencumbered Total Asset Value to Unsecured Debt
Greater than or equal to 150%
326%
(1)All covenant ratio titles utilize terms as defined in the respective debt agreements.
(2)The calculation of consolidated EBITDA is based on the definitions contained in our loan agreements and is not directly comparable to the computation of EBITDA as
described in Exchange Act Release No. 47226.
In addition, the terms of the indentures, among other things, limit the ability of the Company, Alexandria Real Estate Equities,
L.P., and the Company’s subsidiaries to (i) consummate a merger, or consolidate or sell all or substantially all of the Company’s assets,
and (ii) incur certain secured or unsecured indebtedness.
95
The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior line
of credit as of September 30, 2024 were as follows:
Covenant Ratios(1)
Requirement
September 30, 2024
Leverage Ratio
Less than or equal to 60.0%
29.7%
Secured Debt Ratio
Less than or equal to 45.0%
0.3%
Fixed-Charge Coverage Ratio
Greater than or equal to 1.50x
3.95x
Unsecured Interest Coverage Ratio
Greater than or equal to 1.75x
12.55x
(1)All covenant ratio titles utilize terms as defined in the credit agreement.
Estimated interest payments
Estimated interest payments on our fixed-rate debt are calculated based upon contractual interest rates, including interest
payment dates and scheduled maturity dates. As of September 30, 2024, 95.3% of our debt was fixed-rate debt. For additional
information regarding our debt, refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial
statements in Item 1.
Ground lease obligations
Ground lease obligations as of September 30, 2024 included leases for 36 of our properties and accounted for approximately
9% of our total number of properties. Among these 36 properties, 17 properties are subject to ground leases with a weighted-average
remaining lease term of 41 years, including extension options that we are reasonably certain to exercise. These leases are with a single
lessor in our Greater Stanford submarket, with whom we have extended three ground leases over the past 10 years.
Our remaining 19 properties subject to ground leases are located across multiple submarkets and have remaining lease terms
ranging from approximately 46 to 97 years. The weighted-average remaining lease term of these ground leases is 70 years, including
extension options that we are reasonably certain to exercise.
In many cases, we seek to extend our ground leases well ahead of their scheduled contractual expirations. If we are
successful in extending ground leases, we could see significant up-front or increased recurring future payments to the ground lessor
and/or increased ground lease expense, which may require us to increase our capital funding needs.
Operating lease agreements
As of September 30, 2024, the remaining contractual payments under ground and office lease agreements in which we are the
lessee aggregated $1.1 billion and $25.3 million, respectively. As of September 30, 2024, our operating lease liability, calculated as the
present value of the remaining payments aggregating $1.1 billion under our operating lease agreements, including our extension
options that we are reasonably certain to exercise, was $648.3 million, which was classified in accounts payable, accrued expenses,
and other liabilities in our consolidated balance sheets. As of September 30, 2024, the weighted-average remaining lease term of
operating leases in which we are the lessee was approximately 49 years, including extension options that we are reasonably certain to
exercise, and the weighted-average discount rate was 5.1%. Our corresponding operating lease right-of-use assets, adjusted for initial
direct leasing costs and other consideration exchanged with the landlord prior to the commencement of the lease, aggregated $776.7
million. We classify the right-of-use asset in other assets in our consolidated balance sheets. Refer to “Lease accounting” in Note 2 –
“Summary of significant accounting policies” to our unaudited consolidated financial statements in Item 1 for additional information.
Included in the aforementioned September 30, 2024 balances is the ground lease recorded in July 2024 upon our execution of
an amendment to our existing ground lease agreement at the Alexandria Technology Square® mega campus aggregating 1.2 million
RSF in our Cambridge submarket, which extended the term by 24 years from January 1, 2065 to December 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. Alexandria Technology Square® is a foundational mega campus in the
heart of the global life science ecosystem in Cambridge and is the Greater Boston base of operations of key strategic tenants such as
Novartis AG, GlaxoSmithKline plc, Massachusetts Institute of Technology, and Mass General Brigham. Securing this ground lease
through December 2088 significantly enhances the long-term value of our investment in this critical mega campus.
Commitments
As of September 30, 2024, remaining aggregate costs under contract for the construction of properties undergoing
development, redevelopment, and improvements under the terms of leases approximated $1.3 billion. We expect payments for these
obligations to occur over one to three years, subject to capital planning adjustments from time to time. We may have the ability to cease
the construction of certain projects, which would result in the reduction of our commitments.
96
As of September 30, 2024, the purchase price of pending acquisitions under executed letters of intent and/or purchase and
sale agreements expected to be completed in the fourth quarter of 2024 and in 2025, aggregated $47.6 million and $47.8 million,
respectively. In October 2024, we completed one acquisition pending as of September 30, 2024 for a purchase price of $47.6 million.
For additional information, refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements in Item 1. In
addition, we have letters of credit and performance obligations aggregating $29.5 million primarily related to our development and
redevelopment projects.
We are committed to funding approximately $406.0 million related to our non-real estate investments. These funding
commitments are primarily associated with our investments in privately held entities that report NAV and expire at various dates over
the next 12 years, with a weighted-average expiration of 8.1 years as of September 30, 2024.
In July 2024, we executed an amendment to our existing ground lease agreement at the Alexandria Technology Square® mega
campus in our Cambridge submarket, which 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. Refer to “Operating lease
agreements” above for additional details.
Exposure to environmental liabilities
In connection with the acquisition of all of our properties, we have obtained Phase I environmental assessments to ascertain
the existence of any environmental liabilities or other issues. The Phase I environmental assessments of our properties have not
revealed any environmental liabilities that we believe would have a material adverse effect on our financial condition or results of
operations taken as a whole, nor are we aware of any material environmental liabilities that have occurred since the Phase I
environmental assessments were completed. In addition, we carry a policy of pollution legal liability insurance covering exposure to
certain environmental losses at substantially all of our properties.
Foreign currency translation gains and losses
The following table presents the change in accumulated other comprehensive loss attributable to Alexandria Real Estate
Equities, Inc.’s stockholders during the nine months ended September 30, 2024 primarily due to the changes in the foreign exchange
rates for our real estate investments in Canada (in thousands). We reclassify unrealized foreign currency translation gains and losses
into net income as we dispose of these holdings.
Total
Balance as of December 31, 2023
$(15,896)
Other comprehensive loss before reclassifications
(6,758)
Reclassification adjustment for gains included in net income
125
Net other comprehensive loss
(6,633)
Balance as of September 30, 2024
$(22,529)
Inflation
As of September 30, 2024, approximately 93% of our leases (on an annual rental revenue basis) were triple net leases, which
require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and
other operating expenses (including increases thereto) in addition to base rent. Approximately 96% of our leases (on an annual rental
revenue basis) contained effective annual rent escalations approximating 3% that were either fixed or indexed based on a consumer
price index or other indices. Accordingly, we do not believe that our cash flows or earnings from real estate operations are subject to
significant risks from inflation. A period of inflation, however, could cause an increase in the cost of our variable-rate borrowings,
including borrowings under our unsecured senior line of credit and commercial paper program, issuances of unsecured senior notes
payable, and borrowings under our secured construction loans, and secured loans held by our unconsolidated real estate joint ventures.
97
Issuer and guarantor subsidiary summarized financial information
Alexandria Real Estate Equities, Inc. (the “Issuer”) has sold certain debt securities registered under the Securities Act of 1933,
as amended, that are fully and unconditionally guaranteed by Alexandria Real Estate Equities, L.P. (the “LP” or the “Guarantor
Subsidiary”), an indirectly 100% owned subsidiary of the Issuer. The Issuer’s other subsidiaries, including, but not limited to, the
subsidiaries that own substantially all of its real estate (collectively, the “Combined Non-Guarantor Subsidiaries”), will not provide a
guarantee of such securities, including the subsidiaries that are partially or 100% owned by the LP. The following summarized financial
information presents, on a combined basis, balance sheet information as of September 30, 2024 and December 31, 2023, and results
of operations and comprehensive income for the nine months ended September 30, 2024 and year ended December 31, 2023 for the
Issuer and the Guarantor Subsidiary. The information presented below excludes eliminations necessary to arrive at the information on a
consolidated basis. In presenting the summarized financial statements, the equity method of accounting has been applied to (i) the
Issuer’s interests in the Guarantor Subsidiary, (ii) the Guarantor Subsidiary’s interests in the Combined Non-Guarantor Subsidiaries,
and (iii) the Combined Non-Guarantor Subsidiaries’ interests in the Guarantor Subsidiary, where applicable, even though all such
subsidiaries meet the requirements to be consolidated under GAAP. All assets and liabilities have been allocated to the Issuer and the
Guarantor Subsidiary generally based on legal entity ownership.
The following tables present combined summarized financial information as of September 30, 2024 and December 31, 2023
and for the nine months ended September 30, 2024 and year ended December 31, 2023 for the Issuer and Guarantor Subsidiary.
Amounts provided do not represent our total consolidated amounts (in thousands):
September 30, 2024
December 31, 2023
Assets:
Cash, cash equivalents, and restricted cash
$143,087
$210,755
Other assets
151,170
115,373
Total assets
$294,257
$326,128
Liabilities:
Unsecured senior notes payable
$12,092,012
$11,096,028
Unsecured senior line of credit and commercial paper
454,589
99,952
Other liabilities
548,982
504,659
Total liabilities
$13,095,583
$11,700,639
Nine Months Ended
September 30, 2024
Year Ended
December 31, 2023
Total revenues
$42,358
$54,230
Total expenses
(263,299)
(273,990)
Net loss
(220,941)
(219,760)
Net income attributable to unvested restricted stock awards
(10,717)
(11,195)
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders
$(231,658)
$(230,955)
As of September 30, 2024, 391 of our 406 properties were held indirectly by the REIT’s wholly owned consolidated subsidiary,
Alexandria Real Estate Equities, L.P.
Critical accounting estimates
Refer to our annual report on Form 10-K for the year ended December 31, 2023 for a discussion of our critical accounting
estimates related to recognition of real estate acquired, impairment of long-lived assets, impairment of non-real estate investments, and
monitoring of tenant credit quality.
98
Definitions and reconciliations
This section contains additional information on certain non-GAAP financial measures, including reconciliations to the most
directly comparable financial measure calculated and presented in accordance with GAAP and the reasons why we use these
supplemental measures of performance and believe they provide useful information to investors, as well as the definitions of other
terms used in this report.
Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common
stockholders
GAAP-basis accounting for real estate assets utilizes historical cost accounting and assumes that real estate values diminish
over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the
Nareit Board of Governors established funds from operations as an improved measurement tool. Since its introduction, funds from
operations has become a widely used non-GAAP financial measure among equity REITs. We believe that funds from operations is
helpful to investors as an additional measure of the performance of an equity REIT. Moreover, we believe that funds from operations, as
adjusted, allows investors to compare our performance to the performance of other real estate companies on a consistent basis, without
having to account for differences recognized because of real estate acquisition and disposition decisions, financing decisions, capital
structure, capital market transactions, variances resulting from the volatility of market conditions outside of our control, or other
corporate activities that may not be representative of the operating performance of our properties.
The 2018 White Paper published by the Nareit Board of Governors (the “Nareit White Paper”) defines funds from operations as
net income (computed in accordance with GAAP), excluding gains or losses on sales of real estate, and impairments of real estate, plus
depreciation and amortization of operating real estate assets, and after adjustments for our share of consolidated and unconsolidated
partnerships and real estate joint ventures. Impairments represent the write-down of assets when fair value over the recoverability
period is less than the carrying value due to changes in general market conditions and do not necessarily reflect the operating
performance of the properties during the corresponding period.
We compute funds from operations, as adjusted, as funds from operations calculated in accordance with the Nareit White
Paper, excluding significant gains, losses, and impairments realized on non-real estate investments, unrealized gains or losses on non-
real estate investments, impairment of real estate primarily consisting of pre-acquisition costs incurred in connection with acquisitions
we decided to no longer pursue, gains or losses on early extinguishment of debt, significant termination fees, acceleration of stock
compensation expense due to the resignations of executive officers, deal costs, the income tax effect related to such items, and the
amount of such items that is allocable to our unvested restricted stock awards. We compute the amount that is allocable to our
unvested restricted stock awards using the two-class method. Under the two-class method, we allocate net income (after amounts
attributable to noncontrolling interests) to common stockholders and to unvested restricted stock awards by applying the respective
weighted-average shares outstanding during each quarter-to-date and year-to-date period. This may result in a difference of the
summation of the quarter-to-date and year-to-date amounts. Neither funds from operations nor funds from operations, as adjusted,
should be considered as alternatives to net income (determined in accordance with GAAP) as indications of financial performance, or to
cash flows from operating activities (determined in accordance with GAAP) as measures of liquidity, nor are they indicative of the
availability of funds for our cash needs, including our ability to make distributions.
The following table reconciles net income to funds from operations for the share of consolidated real estate joint ventures
attributable to noncontrolling interests and our share of unconsolidated real estate joint ventures for the three and nine months ended
September 30, 2024 (in thousands):
Noncontrolling Interest Share of
Consolidated Real Estate Joint Ventures
Our Share of Unconsolidated
Real Estate Joint Ventures
September 30, 2024
September 30, 2024
Three Months Ended
Nine Months Ended
Three Months Ended
Nine Months Ended
Net income
$45,656
$141,634
$139
$424
Depreciation and amortization of
real estate assets
32,457
94,725
1,075
3,177
Funds from operations
$78,113
$236,359
$1,214
$3,601
99
The following tables present a reconciliation of net income attributable to Alexandria Real Estate Equities, Inc.’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 attributable to Alexandria Real Estate Equities,
Inc.’s common stockholders – diluted, and funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common
stockholders – diluted, as adjusted, and the related per share amounts for the three and nine months ended September 30, 2024 and
2023 (in thousands, except per share amounts). Per share amounts may not add due to rounding.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net income attributable to Alexandria Real Estate Equities,
Inc.’s common stockholders – basic and diluted
$164,674
$21,855
$374,477
$184,371
Depreciation and amortization of real estate assets
291,258
266,440
864,326
798,590
Noncontrolling share of depreciation and amortization from
consolidated real estate JVs
(32,457)
(28,814)
(94,725)
(85,212)
Our share of depreciation and amortization from
unconsolidated real estate JVs
1,075
910
3,177
2,624
Gain on sales of real estate
(27,114)
—
(27,506)
(214,810)
Impairment of real estate – rental properties and land
5,741
(1)
19,844
7,923
(1)
186,446
Allocation to unvested restricted stock awards
(2,908)
(838)
(7,657)
(3,050)
Funds from operations attributable to Alexandria Real Estate
Equities, Inc.’s common stockholders – diluted(2)
400,269
279,397
1,120,015
868,959
Unrealized (gains) losses on non-real estate investments
(2,610)
77,202
32,470
220,954
Impairment of non-real estate investments
10,338
(3)
28,503
37,824
51,456
Impairment of real estate
—
805
28,581
(1)
2,778
Acceleration of stock compensation expense due to
executive officer resignations
—
1,859
—
1,859
Allocation to unvested restricted stock awards
(125)
(1,330)
(1,640)
(3,503)
Funds from operations attributable to Alexandria Real Estate
Equities, Inc.’s common stockholders – diluted, as
adjusted
$407,872
$386,436
$1,217,250
$1,142,503
(1)Refer to “Sales of real estate assets and impairment charges” in Note 3 – “Investments in real estate” to our unaudited consolidated financial statements in Item 1 for
additional information.
(2)Calculated in accordance with standards established by the Nareit Board of Governors.
(3)Primarily related to two non-real estate investments in privately held entities that do not report NAV. Refer to Note 7 – “Investments” to our unaudited consolidated
financial statements in Item 1 for additional information.
100
Three Months Ended
September 30,
Nine Months Ended
September 30,
(Per share)
2024
2023
2024
2023
Net income per share attributable to Alexandria Real Estate
Equities, Inc.’s common stockholders – diluted
$0.96
$0.13
$2.18
$1.08
Depreciation and amortization of real estate assets
1.51
1.40
4.49
4.19
Gain on sales of real estate
(0.16)
—
(0.16)
(1.26)
Impairment of real estate – rental properties and land
0.03
0.12
0.05
1.09
Allocation to unvested restricted stock awards
(0.01)
(0.01)
(0.05)
(0.01)
Funds from operations per share attributable to Alexandria
Real Estate Equities, Inc.’s common stockholders – diluted
2.33
1.64
6.51
5.09
Unrealized (gains) losses on non-real estate investments
(0.02)
0.45
0.19
1.29
Impairment of non-real estate investments
0.06
0.17
0.22
0.30
Impairment of real estate
—
—
0.17
0.02
Acceleration of stock compensation expense due to
executive officer resignations
—
0.01
—
0.01
Allocation to unvested restricted stock awards
—
(0.01)
(0.01)
(0.02)
Funds from operations per share attributable to Alexandria
Real Estate Equities, Inc.’s common stockholders –
diluted, as adjusted
$2.37
$2.26
$7.08
$6.69
Weighted-average shares of common stock outstanding –
diluted(1)
172,058
170,890
172,007
170,846
(1)Refer to “Weighted-average shares of common stock outstanding – diluted” in this section for additional information.
101
Adjusted EBITDA and Adjusted EBITDA margin
We use Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-
making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated
as earnings before interest, taxes, depreciation, and amortization (“EBITDA”), excluding stock compensation expense, gains or losses
on early extinguishment of debt, gains or losses on sales of real estate, impairments of real estate, and significant termination fees.
Adjusted EBITDA also excludes unrealized gains or losses and significant realized gains or losses and impairments that result from our
non-real estate investments. These non-real estate investment amounts are classified in our consolidated statements of operations
outside of total revenues.
We believe Adjusted EBITDA provides investors with relevant and useful information as it allows investors to evaluate the
operating performance of our business activities without having to account for differences recognized because of investing and
financing decisions related to our real estate and non-real estate investments, our capital structure, capital market transactions, and
variances resulting from the volatility of market conditions outside of our control. For example, we exclude gains or losses on the early
extinguishment of debt to allow investors to measure our performance independent of our indebtedness and capital structure. We
believe that adjusting for the effects of impairments and gains or losses on sales of real estate, significant impairments and realized
gains or losses on non-real estate investments, and significant termination fees allows investors to evaluate performance from period to
period on a consistent basis without having to account for differences recognized because of investing and financing decisions related
to our real estate and non-real estate investments or other corporate activities that may not be representative of the operating
performance of our properties.
In addition, we believe that excluding charges related to stock compensation and unrealized gains or losses facilitates for
investors a comparison of our business activities across periods without the volatility resulting from market forces outside of our control.
Adjusted EBITDA has limitations as a measure of our performance. Adjusted EBITDA does not reflect our historical expenditures or
future requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant measure of performance,
it does not represent net income (loss) or cash flows from operations calculated and presented in accordance with GAAP, and it should
not be considered as an alternative to those indicators in evaluating performance or liquidity.
In order to calculate the Adjusted EBITDA margin, we divide Adjusted EBITDA by total revenues as presented in our
consolidated statements of operations. We believe that this supplemental performance measure provides investors with additional
useful information regarding the profitability of our operating activities.
We are not able to forecast fourth quarter net income without unreasonable effort and therefore do not provide a reconciliation
for Adjusted EBITDA on a forward-looking basis. This is due to the inherent difficulty of forecasting the timing and/or amount of items
that depend on market conditions outside of our control, including the timing of dispositions, capital events, and financing decisions, as
well as quarterly components such as gain on sales of real estate, unrealized gains or losses on non-real estate investments,
impairment of real estate, and impairment of non-real estate investments. Our attempt to predict these amounts may produce significant
but inaccurate estimates, which would be potentially misleading for our investors.
102
The following table reconciles net income (loss), the most directly comparable financial measure calculated and presented in
accordance with GAAP, to Adjusted EBITDA and calculates the Adjusted EBITDA margin for the three and nine months ended
September 30, 2024 and 2023 (dollars in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net income
$213,603
$68,254
$526,828
$323,652
Interest expense
43,550
11,411
130,179
42,237
Income taxes
1,877
1,183
4,823
4,565
Depreciation and amortization
293,998
269,370
872,272
808,227
Stock compensation expense
15,525
16,288
47,157
48,266
Gain on sales of real estate
(27,114)
—
(27,506)
(214,810)
Unrealized (gains) losses on non-real estate investments
(2,610)
77,202
32,470
220,954
Impairment of real estate
5,741
20,649
36,504
189,224
Impairment of non-real estate investments
10,338
28,503
37,824
51,456
Adjusted EBITDA
$554,908
$492,860
$1,660,551
$1,473,771
Total revenues
$791,607
$713,788
$2,327,449
$2,128,483
Adjusted EBITDA margin
70%
69%
71%
69%
Annual rental revenue
 
Annual rental revenue represents the annualized fixed base rental obligations, calculated in accordance with GAAP, including
the amortization of deferred revenue related to tenant-funded and -built landlord improvements, for leases in effect as of the end of the
period, related to our operating RSF. Annual rental revenue is presented using 100% of the annual rental revenue from our consolidated
properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Annual rental revenue per RSF is
computed by dividing annual rental revenue by the sum of 100% of the RSF of our consolidated properties and our share of the RSF of
properties held in unconsolidated real estate joint ventures. As of September 30, 2024, approximately 93% of our leases (on an annual
rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs
and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Annual
rental revenue excludes these operating expenses recovered from our tenants. Amounts recovered from our tenants related to these
operating expenses, along with base rent, are classified in income from rentals in our consolidated statements of operations.
Capitalization rates
Capitalization rates are calculated based on net operating income and net operating income (cash basis) annualized,
excluding lease termination fees, on stabilized operating assets for the quarter preceding the date on which the property is sold, or
near-term prospective net operating income.
Capitalized interest
We capitalize interest cost as a cost of a project during periods for which activities necessary to develop, redevelop, or
reposition a project for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has
been incurred. Activities necessary to develop, redevelop, or reposition a project include pre-construction activities such as
entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building
improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective
tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of
buildings. If we cease activities necessary to prepare a project for its intended use, interest costs related to such project are expensed
as incurred.
Cash interest
Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of
loan fees and debt premiums (discounts). Refer to “Fixed-charge coverage ratio” in this section for a reconciliation of interest expense,
the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest.
103
Class A/A+ properties and AAA locations
Class A/A+ properties are properties clustered in AAA locations that provide 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. Class A/A+ properties generally command higher annual rental rates than other classes of similar
properties. AAA locations are in close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses.
Development, redevelopment, and pre-construction
A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new
Class A/A+ properties, and property enhancements identified during the underwriting of certain acquired properties, located in
collaborative mega campuses in AAA life science innovation clusters. These projects are generally focused on providing high-quality,
generic, and reusable spaces that meet the real estate requirements of a wide range of tenants. Upon completion, each development
and redevelopment project is expected to generate increases in rental income, net operating income, and cash flows. Our development
and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher
occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.
Development projects generally consist of the ground-up development of generic and reusable laboratory facilities.
Redevelopment projects consist of the permanent change in use of acquired office, warehouse, or shell space into laboratory space.
We generally will not commence new development projects for aboveground construction of new Class A/A+ laboratory space without
first securing significant pre-leasing for such space, except when there is solid market demand for high-quality Class A/A+ properties.
Priority anticipated projects are those most likely to commence future ground-up development or first-time conversion from
non-laboratory space to laboratory space prior to our other future projects, pending market conditions and leasing negotiations.
Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of
construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time
required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and
are required for the vertical construction of buildings. Ultimately, these projects will provide high-quality facilities and are expected to
generate significant revenue and cash flows.
Development, redevelopment, and pre-construction spending also includes the following costs: (i) amounts to bring certain
acquired properties up to market standard and/or other costs identified during the acquisition process (generally within two years of
acquisition) and (ii) permanent conversion of space for highly flexible, move-in-ready laboratory space to foster the growth of promising
early- and growth-stage life science companies.
Revenue-enhancing and repositioning capital expenditures represent spending to reposition or significantly change the use of
a property, including through improvement in the asset quality from Class B to Class A/A+.
Non-revenue-enhancing capital expenditures represent costs required to maintain the current revenues of a stabilized
property, including the associated costs for renewed and re-leased space.
Dividend payout ratio (common stock)
Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (shares of
common stock outstanding on the respective record dates multiplied by the related dividend per share) to funds from operations
attributable to Alexandria’s common stockholders – diluted, as adjusted.
Dividend yield
Dividend yield for the quarter represents the annualized quarter dividend divided by the closing common stock price at the end
of the quarter.
104
Fixed-charge coverage ratio
Fixed-charge coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to cash interest and
fixed charges. We believe that this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing
obligations and preferred stock dividends. Cash interest is equal to interest expense calculated in accordance with GAAP plus
capitalized interest, less amortization of loan fees and debt premiums (discounts).
The following table reconciles interest expense, the most directly comparable financial measure calculated and presented in
accordance with GAAP, to cash interest and computes fixed-charge coverage ratio for the three and nine months ended September 30,
2024 and 2023 (dollars in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Adjusted EBITDA
$554,908
$492,860
$1,660,551
$1,473,771
Interest expense
$43,550
$11,411
$130,179
$42,237
Capitalized interest
86,496
96,119
249,375
274,863
Amortization of loan fees
(4,222)
(4,059)
(12,510)
(11,427)
Amortization of debt discounts
(330)
(306)
(976)
(898)
Cash interest and fixed charges
$125,494
$103,165
$366,068
$304,775
Fixed-charge coverage ratio:
– quarter annualized
4.4x
4.8x
4.5x
4.8x
– trailing 12 months
4.5x
4.9x
4.5x
4.9x
We are not able to forecast fourth quarter net income without unreasonable effort and therefore do not provide a reconciliation
for fixed-charge coverage ratio on a forward-looking basis. This is due to the inherent difficulty of forecasting the timing and/or amount
of items that depend on market conditions outside of our control, including the timing of dispositions, capital events, and financing
decisions, as well as quarterly components such as gain on sales of real estate, unrealized gains or losses on non-real estate
investments, impairment of real estate, and impairment of non-real estate investments. Our attempt to predict these amounts may
produce significant but inaccurate estimates, which would be potentially misleading for our investors.
Gross assets
Gross assets are calculated as total assets plus accumulated depreciation as of September 30, 2024 and December 31, 2023
(in thousands):
September 30, 2024
December 31, 2023
Total assets
$38,488,128
$36,771,402
Accumulated depreciation
5,624,642
4,985,019
Gross assets
$44,112,770
$41,756,421
Initial stabilized yield (unlevered)
Initial stabilized yield is calculated as the estimated amounts of net operating income at stabilization divided by our investment
in the property. For this calculation, we exclude any tenant-funded and -built landlord improvements from our investment in the property.
Our initial stabilized yield excludes the benefit of leverage. Our cash rents related to our development and redevelopment projects are
generally expected to increase over time due to contractual annual rent escalations. Our estimates for initial stabilized yields, initial
stabilized yields (cash basis), and total costs at completion represent our initial estimates at the commencement of the project. We
expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields
or costs.
•Initial stabilized yield reflects rental income, including contractual rent escalations and any rent concessions over the
term(s) of the lease(s), calculated on a straight-line basis, and any amortization of deferred revenue related to tenant-
funded and -built landlord improvements.
•Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have
elapsed and our total cash investment in the property.
105
Investment-grade or publicly traded large cap tenants
Investment-grade or publicly traded large cap tenants represent tenants that are investment-grade rated or publicly traded
companies with an average daily market capitalization greater than $10 billion for the twelve months ended September 30, 2024, as
reported by Bloomberg Professional Services. Credit ratings from Moody’s Ratings and S&P Global Ratings reflect credit ratings of the
tenant’s parent entity, and there can be no assurance that a tenant’s parent entity will satisfy the tenant’s lease obligation upon such
tenant’s default. We monitor the credit quality and related material changes of our tenants. Material changes that cause a tenant’s
market capitalization to decrease below $10 billion, which are not immediately reflected in the twelve-month average, may result in their
exclusion from this measure.
Investments in real estate
The following table presents our new Class A/A+ development and redevelopment pipeline, excluding properties held for sale,
as a percentage of gross assets and as a percentage of annual rental revenue as of September 30, 2024 (dollars in thousands):
Percentage of
Book Value
Gross Assets
Annual Rental
Revenue
Under construction projects and one committed near-term project expected to
commence construction in the next two years (55% leased/negotiating)
$4,405,094
10%
—%
Income-producing/potential cash flows/covered land play(1)
2,861,653
6
2
Land
2,073,678
5
—
$9,340,425
21%
2%
(1)Includes projects with existing buildings that are generating or can generate operating cash flows. Also includes development rights associated with existing operating
campuses.
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The square footage presented in the table below is classified as operating as of September 30, 2024. These lease expirations
or vacant space at recently acquired properties represent future opportunities for which we have the intent, subject to market conditions
and leasing, to commence first-time conversion from non-laboratory space to laboratory space, or to commence future ground-up
development:
Dev/Redev
RSF of Lease Expirations Targeted for
Development and Redevelopment
Property/Submarket
2024
2025
Thereafter(1)
Total
Committed near-term project:
4161 Campus Point Court/University Town Center
Dev
—
159,884
—
159,884
Priority anticipated projects:
311 Arsenal Street/Cambridge/Inner Suburbs
Redev
—
25,312
—
25,312
269 East Grand Avenue/South San Francisco
Redev
107,250
—
—
107,250
1020 Red River Street/Austin
Redev
—
126,034
—
126,034
107,250
151,346
—
258,596
Future projects:
100 Edwin H. Land Boulevard/Cambridge
Dev
104,500
—
—
104,500
446, 458, 500, and 550 Arsenal Street/Cambridge/Inner
Suburbs
Dev
—
—
375,898
375,898
Other/Greater Boston
Redev
—
—
167,549
167,549
1122 and 1150 El Camino Real/South San Francisco
Dev
—
—
375,232
375,232
3875 Fabian Way/Greater Stanford
Dev
—
—
228,000
228,000
2100, 2200, and 2400 Geng Road/Greater Stanford
Dev
—
—
78,501
78,501
960 Industrial Road/Greater Stanford
Dev
—
—
112,590
112,590
Campus Point by Alexandria/University Town Center
Dev
—
109,164
226,144
(2)
335,308
Sequence District by Alexandria/Sorrento Mesa
Dev/Redev
—
—
686,290
686,290
830 4th Avenue South/SoDo
Dev
—
—
45,615
45,615
410 West Harrison Street/Elliott Bay
Dev
—
—
17,205
17,205
Other/Seattle
Dev
—
—
75,663
75,663
100 Capitola Drive/Research Triangle
Dev
—
—
34,527
34,527
1001 Trinity Street/Austin
Dev
—
72,938
—
72,938
Canada
Redev
—
—
247,743
247,743
104,500
182,102
2,670,957
2,957,559
211,750
493,332
2,670,957
3,376,039
(1)Includes vacant square footage as of September 30, 2024.
(2)Represents 226,144 RSF of month-to-month leases in our University Town Center submarket primarily related to space being temporarily held over by an expiring tenant
at buildings that are targeted for the future development of laboratory space, subject to market conditions and leasing.
107
Joint venture financial information
We present components of balance sheet and operating results information related to our real estate joint ventures, which are
not presented, or intended to be presented, in accordance with GAAP. We present the proportionate share of certain financial line items
as follows: (i) for each real estate joint venture that we consolidate in our financial statements, which are controlled by us through
contractual rights or majority voting rights, but of which we own less than 100%, we apply the noncontrolling interest economic
ownership percentage to each financial item to arrive at the amount of such cumulative noncontrolling interest share of each component
presented; and (ii) for each real estate joint venture that we do not control and do not consolidate, and are instead controlled jointly or
by our joint venture partners through contractual rights or majority voting rights, we apply our economic ownership percentage to each
financial item to arrive at our proportionate share of each component presented.
The components of balance sheet and operating results information related to our real estate joint ventures do not represent
our legal claim to those items. For each entity that we do not wholly own, the joint venture agreement generally determines what equity
holders can receive upon capital events, such as sales or refinancing, or in the event of a liquidation. Equity holders are normally
entitled to their respective legal ownership of any residual cash from a joint venture only after all liabilities, priority distributions, and
claims have been repaid or satisfied.
We believe that this information can help investors estimate the balance sheet and operating results information related to our
partially owned entities. Presenting this information provides a perspective not immediately available from consolidated financial
statements and one that can supplement an understanding of the joint venture assets, liabilities, revenues, and expenses included in
our consolidated results.
The components of balance sheet and operating results information related to our real estate joint ventures are limited as an
analytical tool as the overall economic ownership interest does not represent our legal claim to each of our joint ventures’ assets,
liabilities, or results of operations. In addition, joint venture financial information may include financial information related to the
unconsolidated real estate joint ventures that we do not control. We believe that in order to facilitate for investors a clear understanding
of our operating results and our total assets and liabilities, joint venture financial information should be examined in conjunction with our
consolidated statements of operations and balance sheets. Joint venture financial information should not be considered an alternative
to our consolidated financial statements, which are presented and prepared in accordance with GAAP.
Mega campus
Mega campuses are cluster campuses that consist of approximately 1 million RSF or more, including operating, active
development/redevelopment, and land RSF less operating RSF expected to be demolished. The following table reconciles our annual
rental revenue and development and redevelopment pipeline RSF as of September 30, 2024 (dollars in thousands):
Annual Rental Revenue
Development and
Redevelopment Pipeline
RSF
Mega campus
$1,666,759
21,957,791
Non-mega campus
517,316
9,880,617
Total
$2,184,075
31,838,408
Mega campus as a percentage of annual rental revenue and of total
development and redevelopment pipeline RSF
76%
69%
Net cash provided by operating activities after dividends
Net cash provided by operating activities after dividends includes the deduction for distributions to noncontrolling interests. For
purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences.
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Net debt and preferred stock to Adjusted EBITDA
Net debt and preferred stock to Adjusted EBITDA is a non-GAAP financial measure that we believe is useful to investors as a
supplemental measure of evaluating our balance sheet leverage. Net debt and preferred stock is equal to the sum of total consolidated
debt less cash, cash equivalents, and restricted cash, plus preferred stock outstanding as of the end of the period. Refer to “Adjusted
EBITDA and Adjusted EBITDA margin” in this section for further information on the calculation of Adjusted EBITDA.
We are not able to forecast fourth quarter net income without unreasonable effort and therefore do not provide a reconciliation
for net debt and preferred stock to Adjusted EBITDA on a forward-looking basis. This is due to the inherent difficulty of forecasting the
timing and/or amount of items that depend on market conditions outside of our control, including the timing of dispositions, capital
events, and financing decisions, as well as quarterly components such as gain on sales of real estate, unrealized gains or losses on
non-real estate investments, impairment of real estate, and impairment of non-real estate investments. Our attempt to predict these
amounts may produce significant but inaccurate estimates, which would be potentially misleading for our investors.
The following table reconciles debt to net debt and preferred stock and computes the ratio to Adjusted EBITDA as of
September 30, 2024 and December 31, 2023 (dollars in thousands):
September 30, 2024
December 31, 2023
Secured notes payable
$145,000
$119,662
Unsecured senior notes payable
12,092,012
11,096,028
Unsecured senior line of credit and commercial paper
454,589
99,952
Unamortized deferred financing costs
79,610
76,329
Cash and cash equivalents
(562,606)
(618,190)
Restricted cash
(17,031)
(42,581)
Preferred stock
—
—
Net debt and preferred stock
$12,191,574
$10,731,200
Adjusted EBITDA:
– quarter annualized
$2,219,632
$2,094,988
– trailing 12 months
$2,184,298
$1,997,518
Net debt and preferred stock to Adjusted EBITDA:
– quarter annualized
5.5x
5.1x
– trailing 12 months
5.6x
5.4x
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Net operating income, net operating income (cash basis), and operating margin
The following table reconciles net income to net operating income and net operating income (cash basis) and computes
operating margin for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net income
$213,603
$68,254
$526,828
$323,652
Equity in earnings of unconsolidated real estate joint ventures
(139)
(242)
(424)
(617)
General and administrative expenses
43,945
45,987
135,629
140,065
Interest expense
43,550
11,411
130,179
42,237
Depreciation and amortization
293,998
269,370
872,272
808,227
Impairment of real estate
5,741
20,649
36,504
189,224
Gain on sales of real estate
(27,114)
—
(27,506)
(214,810)
Investment (income) loss
(15,242)
80,672
(14,866)
204,051
Net operating income
558,342
496,101
1,658,616
1,492,029
Straight-line rent revenue
(29,087)
(29,805)
(125,676)
(92,331)
Amortization of deferred revenue related to tenant-funded
and -built landlord improvements
(329)
—
(329)
—
Amortization of acquired below-market leases
(17,312)
(23,222)
(70,167)
(69,647)
Net operating income (cash basis)
$511,614
$443,074
$1,462,444
$1,330,051
Net operating income (cash basis) – annualized
$2,046,456
$1,772,296
$1,949,925
$1,773,401
Net operating income (from above)
$558,342
$496,101
$1,658,616
$1,492,029
Total revenues
$791,607
$713,788
$2,327,449
$2,128,483
Operating margin
71%
70%
71%
70%
Net operating income is a non-GAAP financial measure calculated as net income (loss), the most directly comparable financial
measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our unconsolidated real estate joint
ventures, general and administrative expenses, interest expense, depreciation and amortization, impairments of real estate, gains or
losses on early extinguishment of debt, gains or losses on sales of real estate, and investment income or loss. We believe net operating
income provides useful information to investors regarding our financial condition and results of operations because it primarily reflects
those income and expense items that are incurred at the property level. Therefore, we believe net operating income is a useful measure
for investors to evaluate the operating performance of our consolidated real estate assets. Net operating income on a cash basis is net
operating income adjusted to exclude the effect of straight-line rent, amortization of acquired above- and below-market lease revenue,
and amortization of deferred revenue related to tenant-funded and -built landlord improvements adjustments required by GAAP. We
believe that net operating income on a cash basis is helpful to investors as an additional measure of operating performance because it
eliminates straight-line rent revenue and the amortization of acquired above- and below-market leases and tenant-funded and -built
landlord improvements.
110
Furthermore, we believe net operating income is useful to investors as a performance measure of our consolidated properties
because, when compared across periods, net operating income reflects trends in occupancy rates, rental rates, and operating costs,
which provide a perspective not immediately apparent from net income or loss. Net operating income can be used to measure the initial
stabilized yields of our properties by calculating net operating income generated by a property divided by our investment in the property.
Net operating income excludes certain components from net income in order to provide results that are more closely related to the
results of operations of our properties. For example, interest expense is not necessarily linked to the operating performance of a real
estate asset and is often incurred at the corporate level rather than at the property level. In addition, depreciation and amortization,
because of historical cost accounting and useful life estimates, may distort comparability of operating performance at the property level.
Impairments of real estate have been excluded in deriving net operating income because we do not consider impairments of real estate
to be property-level operating expenses. Impairments of real estate relate to changes in the values of our assets and do not reflect the
current operating performance with respect to related revenues or expenses. Our impairments of real estate represent the write-down in
the value of the assets to the estimated fair value less cost to sell. These impairments result from investing decisions or a deterioration
in market conditions. We also exclude realized and unrealized investment gain or loss, which results from investment decisions that
occur at the corporate level related to non-real estate investments in publicly traded companies and certain privately held entities.
Therefore, we do not consider these activities to be an indication of operating performance of our real estate assets at the property
level. Our calculation of net operating income also excludes charges incurred from changes in certain financing decisions, such as
losses on early extinguishment of debt, as these charges often relate to corporate strategy. Property operating expenses included in
determining net operating income primarily consist of costs that are related to our operating properties, such as utilities, repairs, and
maintenance; rental expense related to ground leases; contracted services, such as janitorial, engineering, and landscaping; property
taxes and insurance; and property-level salaries. General and administrative expenses consist primarily of accounting and corporate
compensation, corporate insurance, professional fees, rent, and supplies that are incurred as part of corporate office management. We
calculate operating margin as net operating income divided by total revenues.
We believe that in order to facilitate for investors a clear understanding of our operating results, net operating income should
be examined in conjunction with net income or loss as presented in our consolidated statements of operations. Net operating income
should not be considered as an alternative to net income or loss as an indication of our performance, nor as an alternative to cash flows
as a measure of our liquidity or our ability to make distributions.
Operating statistics
We present certain operating statistics related to our properties, including number of properties, RSF, occupancy percentage,
leasing activity, and contractual lease expirations as of the end of the period. We believe these measures are useful to investors
because they facilitate an understanding of certain trends for our properties. We compute the number of properties, RSF, occupancy
percentage, leasing activity, and contractual lease expirations at 100%, excluding RSF at properties classified as held for sale, for all
properties in which we have an investment, including properties owned by our consolidated and unconsolidated real estate joint
ventures. For operating metrics based on annual rental revenue, refer to “Annual rental revenue” in this section.
Same property comparisons
As a result of changes within our total property portfolio during the comparative periods presented, including changes from
assets acquired or sold, properties placed into development or redevelopment, and development or redevelopment properties recently
placed into service, the consolidated total income from rentals, as well as rental operating expenses in our operating results, can show
significant changes from period to period. In order to supplement an evaluation of our results of operations over a given quarterly or
annual period, we analyze the operating performance for all consolidated properties that were fully operating for the entirety of the
comparative periods presented, referred to as same properties. We separately present quarterly and year-to-date same property results
to align with the interim financial information required by the SEC in our management’s discussion and analysis of our financial
condition and results of operations. These same properties are analyzed separately from properties acquired subsequent to the first day
in the earliest comparable quarterly or year-to-date period presented, properties that underwent development or redevelopment at any
time during the comparative periods, unconsolidated real estate joint ventures, properties classified as held for sale, and corporate
entities (legal entities performing general and administrative functions), which are excluded from same property results. Additionally,
termination fees, if any, are excluded from the results of same properties. Refer to “Same properties” in Item 2 for additional information.
Stabilized occupancy date
The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or
greater.
111
Tenant recoveries
Tenant recoveries represent revenues comprising reimbursement of real estate taxes, insurance, utilities, repairs and
maintenance, common area expenses, and other operating expenses and earned in the period during which the applicable expenses
are incurred and the tenant’s obligation to reimburse us arises.
We classify rental revenues and tenant recoveries generated through the leasing of real estate assets within revenues in
income from rentals in our consolidated statements of operations. We provide investors with a separate presentation of rental revenues
and tenant recoveries in “Results of operations” in Item 2 because we believe it promotes investors’ understanding of our operating
results. We believe that the presentation of tenant recoveries is useful to investors as a supplemental measure of our ability to recover
operating expenses under our triple net leases, including recoveries of utilities, repairs and maintenance, insurance, property taxes,
common area expenses, and other operating expenses, and of our ability to mitigate the effect to net income for any significant
variability to components of our operating expenses.
The following table reconciles income from rentals to tenant recoveries for the three and nine months ended September 30,
2024 and 2023 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Income from rentals
$775,744
$707,531
$2,286,457
$2,099,819
Rental revenues
(579,569)
(526,352)
(1,737,804)
(1,582,543)
Tenant recoveries
$196,175
$181,179
$548,653
$517,276
Total equity capitalization
Total equity capitalization is equal to the outstanding shares of common stock multiplied by the closing price on the last trading
day at the end of each period presented.
Total market capitalization
Total market capitalization is equal to the sum of total equity capitalization and total debt.
Unencumbered net operating income as a percentage of total net operating income
 
Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we
believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it
reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income is
derived from assets classified in continuing operations, which are not subject to any mortgage, deed of trust, lien, or other security
interest, as of the period for which income is presented.
The following table summarizes unencumbered net operating income as a percentage of total net operating income for the
three and nine months ended September 30, 2024 and 2023 (dollars in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Unencumbered net operating income
$553,589
$495,012
$1,644,687
$1,488,795
Encumbered net operating income
4,753
1,089
13,929
3,234
Total net operating income
$558,342
$496,101
$1,658,616
$1,492,029
Unencumbered net operating income as a percentage of total
net operating income
99.1%
99.8%
99.2%
99.8%
112
Weighted-average shares of common stock outstanding – diluted
From time to time, we enter into capital market transactions, including forward equity sales agreements (“Forward
Agreements”), to fund acquisitions, to fund construction of our development and redevelopment projects, and for general working
capital purposes. We are required to consider the potential dilutive effect of our Forward Agreements under the treasury stock method
while the Forward Agreements are outstanding. As of September 30, 2024, we had Forward Agreements outstanding to sell an
aggregate of 230 thousand shares of common stock. Refer to Note 13 – “Stockholders’ equity” to our unaudited consolidated financial
statements in Item 1 for additional information.
The weighted-average shares of common stock outstanding used in calculating EPS – diluted, funds from operations per
share – diluted, and funds from operations per share – diluted, as adjusted, for the three and nine months ended September 30, 2024
and 2023 are calculated as follows. Also shown are the weighted-average unvested shares associated with restricted stock awards
used in calculating the amounts allocable to unvested stock award holders pursuant to the two-class method for each of the respective
periods presented below (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Basic shares for earnings per share
172,058
170,890
172,007
170,846
Forward Agreements
—
—
—
—
Diluted shares for earnings per share
172,058
170,890
172,007
170,846
Basic shares for funds from operations per share and
funds from operations per share, as adjusted
172,058
170,890
172,007
170,846
Forward Agreements
—
—
—
—
Diluted shares for funds from operations per share and
funds from operations per share, as adjusted
172,058
170,890
172,007
170,846
Weighted-average unvested restricted shares used in
calculating the allocations of net income, funds from
operations, and funds from operations, as adjusted
2,838
2,124
2,901
2,187
113
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
The primary market risk to which we believe we may be exposed is interest rate risk, which may result from many factors,
including government monetary and tax policies, domestic and international economic and political considerations, and other factors
that are beyond our control.
In order to modify and manage the interest rate characteristics of our outstanding debt and to limit the effects of interest rate
risks on our operations, we may utilize a variety of financial instruments, including interest rate hedge agreements, caps, floors, and
other interest rate exchange contracts. The use of these types of instruments to hedge a portion of our exposure to changes in interest
rates may carry additional risks, such as counterparty credit risk and the legal enforceability of hedge agreements. As of September 30,
2024, we did not have any outstanding interest rate hedge agreements.
Our future earnings and fair values relating to our outstanding debt are primarily dependent upon prevalent market rates of
interest. The following tables illustrate the effect of a 1% change in interest rates, assuming a zero percent interest rate floor, on our
fixed- and variable-rate debt as of September 30, 2024 (in thousands):
Annualized effect on future earnings due to variable-rate debt:
Rate increase of 1%
$(1,166)
Rate decrease of 1%
$1,166
Effect on fair value of total consolidated debt:
Rate increase of 1%
$(824,796)
Rate decrease of 1%
$945,937
These amounts are determined by considering the effect of the hypothetical interest rates on our borrowings as of
September 30, 2024. These analyses do not consider the effects of the reduced level of overall economic activity that could exist in
such an environment. Furthermore, in the event of a change of such magnitude, we would consider taking actions to further mitigate our
exposure to the change. Because of the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity
analyses assume no changes in our capital structure.
Equity price risk
We have exposure to equity price market risk because we hold equity investments in publicly traded companies and privately
held entities. All of our investments in actively traded public companies are reflected in our consolidated balance sheets at fair value.
Our investments in privately held entities that report NAV per share are measured at fair value using NAV as a practical expedient to fair
value. Our equity investments in privately held entities that do not report NAV per share are measured at cost less impairments,
adjusted for observable price changes during the period. Changes in fair value of public investments, changes in NAV per share
reported by privately held entities, and observable price changes of privately held entities that do not report NAV per share are
classified as investment income in our consolidated statements of operations. There is no assurance that future declines in value will
not have a material adverse effect on our future results of operations. The following table illustrates the effect that a 10% change in the
value of our equity investments would have on earnings as of September 30, 2024 (in thousands):
Equity price risk:
Fair value increase of 10%
$151,933
Fair value decrease of 10%
$(151,933)
114
Foreign currency exchange rate risk
We have exposure to foreign currency exchange rate risk related to our subsidiaries operating in Canada. The functional
currencies of our foreign subsidiaries are the local currencies in each respective country. Gains or losses resulting from the translation
of our foreign subsidiaries’ balance sheets and statements of operations are classified in accumulated other comprehensive income
(loss) as a separate component of total equity and are excluded from net income (loss). Gains or losses will be reflected in our
consolidated statements of operations when there is a sale or partial sale of our investment in these operations or upon a complete or
substantially complete liquidation of the investment. The following tables illustrate the effect that a 10% change in foreign currency rates
relative to the U.S. dollar would have on our potential future earnings and on the fair value of our net investment in foreign subsidiaries
based on our current operating assets outside the U.S. as of September 30, 2024 (in thousands):
Effect on potential future earnings due to foreign currency exchange rate:
Rate increase of 10%
$223
Rate decrease of 10%
$(223)
Effect on the fair value of net investment in foreign subsidiaries due to foreign currency exchange rate:
Rate increase of 10%
$40,407
Rate decrease of 10%
$(40,407)
The sensitivity analyses assume a parallel shift of all foreign currency exchange rates with respect to the U.S. dollar; however,
foreign currency exchange rates do not typically move in such a manner, and actual results may differ materially.
Our exposure to market risk elements for the nine months ended September 30, 2024 was consistent with the risk elements
presented above, including the effects of changes in interest rates, equity prices, and foreign currency exchange rates.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
As of September 30, 2024, we had performed an evaluation, under the supervision of our principal executive officers and
principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. These controls and
procedures have been designed to ensure that information required for disclosure is recorded, processed, summarized, and reported
within the requisite time periods. Based on our evaluation, the principal executive officers and principal financial officer concluded that
our disclosure controls and procedures were effective as of September 30, 2024.
Changes in internal control over financial reporting
There has not been any change in our internal control over financial reporting during the three months ended September 30,
2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
115
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In 2006, ARE-East River Science Park, LLC, a subsidiary of Alexandria Real Estate Equities, Inc., was granted an option to
incorporate a land parcel adjacent to and north of the Alexandria Center® for Life Science – New York City (“ACLS-NYC”) campus
(“Option Parcel”) into the existing ground lease of that campus. The Option Parcel will allow ARE-East River Science Park, LLC to
develop a future world-class life science building within the ACLS-NYC campus. ARE-East River Science Park, LLC’s investment in pre-
construction costs related to the development of the Option Parcel, including costs related to design, engineering, environmental,
survey/title, and permitting and legal costs, aggregate $165.1 million as of September 30, 2024.
On August 6, 2024, ARE-East River Science Park, LLC filed a lawsuit in the United States District Court for the Southern
District of New York against its landlord, New York City Health + Hospitals Corporation (“H+H”), and the New York City Economic
Development Corporation (“EDC”). The lawsuit alleges two principal claims against H+H and EDC: fraud in the inducement, and, in the
alternative, breach of contract in violation of the implied covenant of good faith and fair dealing. As alleged in the complaint, ARE-East
River Science Park, LLC’s claims arise from H+H’s and EDC’s misrepresentations and concealment of material facts in connection with
a floodwall, which H+H and EDC are seeking to require ARE-East River Science Park, LLC to integrate into the development of the
Option Parcel. ARE-East River Science Park, LLC alleges that H+H’s and EDC’s misconduct have prevented it from commencing the
development of the Option Parcel. In light of the pending litigation, the closing date for the option and thus the commencement date for
construction of the third tower at the campus are presently indeterminate. Among other things, ARE-East River Science Park, LLC is
seeking significant damages and equitable relief to maintain the option.
This matter exposes us to potential losses ranging from zero to the full amount of the investment in the project aggregating
$165.1 million as of September 30, 2024, depending on any collection of damages and/or the ability to develop the project. We
performed a probability-weighted recoverability analysis based on initial estimates of various possible outcomes and determined no
impairment was present as of September 30, 2024.
ITEM 1A. RISK FACTORS
In addition to the information set forth in this quarterly report on Form 10-Q, one should also carefully review and consider the
information contained in the other reports and periodic filings that we make with the SEC, including, without limitation, the information
contained under the caption “Item 1A. Risk factors” in our annual report on Form 10-K for the year ended December 31, 2023. Those
risk factors could materially affect our business, financial condition, and results of operations. The risks that we describe in our public
filings are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we presently deem to be
immaterial, also may materially adversely affect our business, financial condition, and results of operations.
There have been no material changes in our risk factors from those disclosed under the caption “Item 1A. Risk factors” in our
annual report on Form 10-K for the year ended December 31, 2023, except for the following updates:
The increased use of artificial intelligence (“AI”) and automation in life science research and development
(“R&D”) activities may change the uses, space configurations and tenant requirements for our laboratory properties
in currently unforeseen ways.
In recent years, some life science companies have augmented their traditional laboratory-based R&D efforts by
integrating AI, cloud computing, quantum computing and other advanced computational technologies into their R&D programs. 
It is expected that such technologies will accelerate and streamline a number of R&D functions, including, for example, through
the targeted design and evaluation of clinical trials and the efficient identification of the most promising drug development
candidates from among multiple possible drugs. In addition, life science companies, like companies in many other industries,
are increasingly integrating new technologies, such as robotics and advanced automation of recurring tasks, into their
businesses, including their R&D activities. It is widely thought that the life science and healthcare industries, like most
industries, are in only the early stages of an advanced technology revolution that may have profound, and largely currently
unknown, impacts on their businesses, including the processes and strategies underlying R&D and commercialization of new
products. 
We have always strived to provide our tenants with state-of-the-art laboratory facilities incorporating cutting-edge
infrastructure features (including energy delivery, environmental, sustainability, security, and waste disposal features) to enable
our tenants to perform at the highest levels. It is currently unknown how the ongoing adoption of advanced technologies and
automation in the life science industry will impact the optimal space configurations and infrastructure features of the “laboratory
of the future,” and we may face new tenant requirements and requests that will require significant expenditures that may not be
entirely recoverable through increased rents. For example, the adoption of AI by our tenants may lead to infrastructure
requirements that our buildings currently do not accommodate, such as increased power needs due to high-performance
computing. Infrastructure upgrades may necessitate substantial capital expenditures and could potentially impact the
environmental footprint of our building operations.
116
If technological developments result in a reduction or reconfiguration in space requirements by our tenants, demand by
individual tenants and prospective tenants for space may decrease over time. If we are not able to offset any reduction in demand from
the foregoing developments through repurposing space, property dispositions, or other means, the realization of any of the
aforementioned risks could have a material adverse impact on our revenues, net operating income, results of operations, funds from
operations, operating margins, occupancy, earnings per share, FFO per share, our overall business, and the market value of our
common stock.
ITEM 5. OTHER INFORMATION
Disclosure of 10b5-1 plans
None of our officers or directors had any contract, instruction, or written plan for the purchase or sale of our securities that was
intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” in effect at any
time during the three months ended September 30, 2024.
117
ITEM 6. EXHIBITS
Exhibit
Number
Exhibit Title
Incorporated by
Reference to:
Date Filed
3.1*
Form 10-Q
August 14, 1997
3.2*
Form 10-Q
August 14, 1997
3.3*
Form 8-K
May 12, 2017
3.4*
Form 8-K
May 19, 2022
3.5*
Form 10-Q
August 13, 1999
3.6*
Form 8-K
February 10, 2000
3.7*
Form 8-K
February 10, 2000
3.8*
Form 8-A
January 18, 2002
3.9*
Form 8-A
June 28, 2004
3.10*
Form 8-K
March 25, 2008
3.11*
Form 8-K
March 14, 2012
3.12*
Form 8-K
May 12, 2017
3.13*
Form 8-K
September 21, 2023
10.1
N/A
Filed herewith
22.1
N/A
Filed herewith
31.1
N/A
Filed herewith
31.2
N/A
Filed herewith
31.3
N/A
Filed herewith
32.0
N/A
Filed herewith
101.1
The following materials from the Company’s quarterly report on Form 10-Q for
the quarterly period ended September 30, 2024, formatted in iXBRL (Inline
eXtensible Business Reporting Language): (i) Consolidated Balance Sheets
as of September 30, 2024 and December 31, 2023 (unaudited), (ii)
Consolidated Statements of Operations for the three and nine months ended
September 30, 2024 and 2023 (unaudited), (iii) Consolidated Statements of
Comprehensive Income for the three and nine months ended September 30,
2024 and 2023 (unaudited), (iv) Consolidated Statements of Changes in
Stockholders’ Equity and Noncontrolling Interests for the three and nine
months ended September 30, 2024 and 2023 (unaudited), (v) Consolidated
Statements of Cash Flows for the nine months ended September 30, 2024
and 2023 (unaudited), and (vi) Notes to Consolidated Financial Statements
(unaudited)
N/A
Filed herewith
104
Cover Page Interactive Data File – the cover page from this Quarterly Report
on Form 10-Q for the quarter ended September 30, 2024 is formatted in Inline
XBRL and contained in Exhibit 101.1
N/A
Filed herewith
(*) Incorporated by reference.
118
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on October 21, 2024.
 
ALEXANDRIA REAL ESTATE EQUITIES, INC.
/s/ Joel S. Marcus
Joel S. Marcus
Executive Chairman
(Principal Executive Officer)
/s/ Peter M. Moglia
Peter M. Moglia
Chief Executive Officer and Chief Investment Officer
(Principal Executive Officer)
/s/ Marc E. Binda
Marc E. Binda
Chief Financial Officer and Treasurer
(Principal Financial Officer)