Alexandria Real Estate Equities, Inc. Reports: 1Q24 Net Income per Share - Diluted of $0.97; and 1Q24 FFO per Share - Diluted, as Adjusted, of $2.35

Rhea-AI Summary

Alexandria Real Estate Equities, Inc. reported strong financial and operating results for the first quarter of 2024, with total revenues increasing by 9.7%, net income per share - diluted at $0.97, and FFO per share - diluted, as adjusted, at $2.35. The company demonstrated operational excellence, with high-quality tenants contributing to stable cash flows and strong margins. Tenant collections remained robust, with a 99.9% collection rate for 1Q24 rents. The company's leasing activities showed strong volume and rate increases, with a focus on value creation and net cash flow retention for reinvestment. Alexandria maintained a solid balance sheet, with a focus on dividend growth and strategic investments. The company also received recognition for industry and corporate responsibility leadership.

Positive

• Strong financial and operating results for 1Q24, with a 9.7% increase in total revenues.
• Net income per share - diluted at $0.97 and FFO per share - diluted, as adjusted, at $2.35.
• High-quality tenant base contributing to stable cash flows and strong margins.
• Robust tenant collections with a 99.9% collection rate for 1Q24 rents.
• Strong leasing volume and rental rate increases during 1Q24.
• Focus on value creation and net cash flow retention for reinvestment.
• Maintained a solid balance sheet with significant liquidity.
• Dividend growth strategy with a focus on retaining cash flows for reinvestment.
• Received industry recognition for corporate responsibility leadership.

Negative

• None.

Insights

Financial Analyst

The disclosed financials show a tangible uptick in several areas. Total revenues climbed by approximately 9.7%, an encouraging sign of the company's top-line growth. The net income per share - diluted almost more than doubled from $0.44 to $0.97, which indicates improved profitability. Furthermore, the 5% dividend increase signifies confidence in the company's cash flow stability and growth outlook, reflecting a shareholder-friendly approach. These elements combined suggest a strong operational performance. However, an astute investor would evaluate whether this growth aligns with sector trends and consider the sustainability of this performance amidst broader market conditions.

Real Estate Market Analyst

The report highlights a robust occupancy rate of 94.6% in operating properties and a large percentage of rental revenue coming from mega campuses and investment-grade tenants. This points to a stable tenant base and a reduced risk profile for the company. The impressive rental rate increases both on a GAAP basis and cash basis of 33.0% and 19.0% respectively, underscores the company’s potential for revenue growth. Investors should be cognizant of the inherent risks in the real estate market, particularly in the life sciences sector, which can fluctuate with economic cycles and sector-specific trends.

Debt and Equity Markets Analyst

From a financing standpoint, the net debt and preferred stock to Adjusted EBITDA ratio of 5.2x falls within a reasonable leverage range for a real estate investment trust (REIT), bearing in mind the capital-intensive nature of the industry. Additionally, the liquidity position of $6.0 billion and low near-term debt maturities provide financial flexibility. When evaluating the company’s creditworthiness, investors should take into account the weighted-average remaining term of debt and the fixed-charge coverage ratio, which stand at 13.4 years and 4.7x, respectively, as these metrics imply a stable debt profile with manageable obligations.

PASADENA, Calif., April 22, 2024 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) announced financial and operating results for the first quarter ended March 31, 2024.

 

Key highlights
Operating results	1Q24		1Q23
Total revenues:
In millions	$        769.1		$        700.8
Growth	9.7 %
Net income attributable to Alexandria's common stockholders – diluted:
In millions	$        166.9		$          75.3
Per share	$          0.97		$          0.44
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted:
In millions	$        403.9		$        373.7
Per share	$          2.35		$          2.19

An operationally excellent, industry-leading REIT with a high-quality, diverse client base to support growing revenues, stable cash flows, and strong margins

Percentage of annual rental revenue in effect from mega campuses as of    March 31, 2024		74 %
Percentage of annual rental revenue in effect from investment-grade or publicly    traded large cap tenants as of March 31, 2024		52 %
Sustained strength in tenant collections:
Tenant receivables as of March 31, 2024 represent 1.0% of rental revenues		$     7.5	million
April 2024 tenant rents and receivables collected as of April 22, 2024		99.7 %
1Q24 tenant rents and receivables collected as of April 22, 2024		99.9 %
Occupancy of operating properties in North America as of March 31, 2024		94.6 %
Operating margin		72 %
Adjusted EBITDA margin		72 %
Weighted-average remaining lease term as of March 31, 2024:
Top 20 tenants		9.7	years
All tenants		7.5	years

Strong leasing volume and rental rate increases

• Strong rental rate increases of 33.0% and 19.0% (cash basis).
• Strong leasing volume aggregating 1.1 million RSF during 1Q24.
• 77% of our leasing activity during the last twelve months was generated from our existing tenant base.

					1Q24
			Total leasing activity – RSF		1,142,857
			Leasing of development and redevelopment space – RSF		100,232
			Lease renewals and re-leasing of space:
			RSF (included in total leasing activity above)		994,770
			Rental rate increase		33.0 %
			Rental rate increase (cash basis)		19.0 %

Continued solid net operating income and internal growth

• Net operating income (cash basis) of $1.9 billion for 1Q24 annualized, up $132.7 million, or 7.6%, compared to 1Q23 annualized.
• Same property net operating income growth of 1.0% and 4.2% (cash basis) for 1Q24 over 1Q23.
• 96% of our leases contain contractual annual rent escalations approximating 3%.

Strong and flexible balance sheet with significant liquidity; top 10% credit rating ranking among all publicly traded U.S. REITs

• Net debt and preferred stock to Adjusted EBITDA of 5.2x and fixed-charge coverage ratio of 4.7x for 1Q24 annualized.
• Significant liquidity of $6.0 billion.
• 32% of our total debt matures in 2049 and beyond.
• 13.4 years weighted-average remaining term of debt.
• 98.9% of our debt has a fixed rate.
• Total debt and preferred stock to gross assets of 28%.
• $1.3 billion of expected capital contribution commitments from existing consolidated real estate joint venture partners to fund construction from 2Q24 through 2027.

Consistent dividend strategy with a focus on retaining significant net cash flows from operating activities after dividends for reinvestment

• Common stock dividend declared for 1Q24 of $1.27 per common share, aggregating $5.02 per common share for the twelve months ended March 31, 2024, up 24 cents, or 5%, over the twelve months ended March 31, 2023.
• Dividend yield of 3.9% as of March 31, 2024.
• Dividend payout ratio of 54% for the three months ended March 31, 2024.
• Average annual dividend per-share growth of 5% from 2020 through 1Q24 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 for the midpoint of our 2024 guidance range for net cash provided by operating activities after dividends.

Alexandria's highly leased value-creation pipeline delivered incremental annual net operating income of $26 million commencing during 1Q24 and will drive future incremental annual net operating income aggregating $480 million

• During 1Q24, we placed into service development and redevelopment projects aggregating 343,445 RSF that are 100% leased across multiple submarkets and delivered incremental annual net operating income of $26 million. 1Q24 deliveries include:
  • 100,624 RSF at 500 North Beacon Street located on The Arsenal on the Charles mega campus in our Cambridge/Inner Suburbs submarket;
  • 115,598 RSF at the Alexandria Center^® for Advanced Technologies – Monte Villa Parkway in our Bothell submarket; and
  • 72,846 RSF at 99 Coolidge Avenue in our Cambridge/Inner Suburbs submarket.
• Annual net operating income (cash basis) is expected to increase by $101 million upon the burn-off of initial free rent from recently delivered projects. Initial free rent has a weighted-average burn-off period of approximately seven months.
• 69% of the RSF in our total value-creation pipeline is within our mega campuses.

			Development and Redevelopment Projects			Incremental Annual Net  Operating Income		RSF		Leased/ Negotiating Percentage
			(dollars in millions)
			Placed into service in 1Q24			$                      26		343,445			100 %
			Expected to be placed into service(1):
				2Q24 through 4Q24		$                    120	(2)	5,541,380			63 %
				2025		109	(3)					(4)
				1Q26 through 4Q27		251
						$                    480

			(1)	Represents expected incremental annual net operating income to be placed into service from deliveries of projects undergoing construction and one committed near-term project expected to commence construction in the next two years, including partial deliveries of projects that stabilize in future years.
			(2)	Includes 1.2 million RSF that is expected to stabilize in 2024 and is 98% leased/negotiating. Refer to the initial and stabilized occupancy years under "New Class A/A+ development and redevelopment properties: current projects" in the Supplemental Information for additional details.
			(3)	In addition to the projects represented, we are evaluating one priority anticipated development project that could commence active construction in 2024 and may have initial delivery in 2025.
			(4)	72% of the leased RSF of our value-creation projects was generated from our existing tenant base.

Strong balance sheet management
Key metrics as of or for the three months ended March 31, 2024

• $34.4 billion in total market capitalization.
• $22.2 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.

		1Q24				Target
		Quarter Annualized		Trailing 12 Months		4Q24 Annualized
Net debt and preferred stock to     Adjusted EBITDA		5.2x		5.6x		Less than or equal to 5.1x
Fixed-charge coverage ratio		4.7x		4.7x		Greater than or equal to 4.5x

Key capital events

• 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 include:
  • $400.0 million of 5.25% unsecured senior notes due 2036; and
  • $600.0 million of 5.625% unsecured senior notes due 2054.
• In January 2024, our ATM program became inactive upon expiration of the associated shelf registration. In February 2024, we entered into a new ATM common stock offering program, which allows us to sell up to an aggregate of $1.5 billion of our common stock. As of April 22, 2024, the full amount remained available for future sales of our common stock.

Investments

• As of March 31, 2024:
  • Our non-real estate investments aggregated $1.5 billion.
  • Unrealized gains presented in our consolidated balance sheet were $220.2 million, comprising gross unrealized gains and losses aggregating $320.4 million and $100.2 million, respectively.
• Investment income of $43.3 million for 1Q24 presented in our consolidated statement of operations consisted of $28.8 million of realized gains, partially offset by impairment charges of $14.7 million, and $29.2 million of unrealized gains.

Other key highlights

Key items included in net income attributable to Alexandria's common stockholders:
	1Q24		1Q23		1Q24		1Q23
(in millions, except per share amounts)	Amount				Per Share – Diluted
Unrealized gains (losses) on non-real estate investments	$   29.2		$  (65.9)		$  0.17		$ (0.39)
Gain on sales of real estate	0.4		—		—		—
Impairment of non-real estate investments	(14.7)		—		(0.09)		—
Total	$   14.9		$  (65.9)		$  0.08		$ (0.39)
Refer to "Funds from operations and funds from operations per share" in the Earnings Press Release for additional details.

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

• In March 2024, Alexandria was named one of Newsweek's Most Trustworthy Companies in America for the second consecutive year based on three touchpoints of trust: customer trust, investor trust, and employee trust. On the 2024 list, Alexandria holds the top rank among the three S&P 500 REITs recognized in the real estate and housing category.
• In March 2024, Alexandria's executive chairman and founder, Joel S. Marcus, was selected to receive the inaugural Bisnow Life Sciences Icon & Influencer Award. This prestigious award highlights Mr. Marcus and the company's significant contributions to and lasting impact on the life science real estate sector and broader life science industry. Mr. Marcus will accept the award on behalf of Alexandria at Bisnow's International Life Sciences & Biotech Conference in September 2024.
• During 1Q24, Alexandria earned several awards in recognition of operational excellence in asset management, leasing, real estate transactions, and sustainability across our regions:
  • In our Greater Boston market, Alexandria won two 2023 Commercial Broker Association Achievement Awards: Life Science Deal of the Year for our lease with Novo Nordisk at 60 Sylvan Road on the Alexandria Center^® for Life Science – Waltham mega campus and Investment Sale of the Year – Urban for our strategic sale of partial interest in 15 Necco Street.
  • In our San Francisco Bay Area market, the Alexandria Center^® for Life Science – San Carlos mega campus won a TOBY (The Outstanding Building of the Year) Award from BOMA (Building Owners and Managers Association) in the region's new Life Science category. Alexandria also received a San Francisco Business Times' 2024 Real Estate Deal of the Year Award for our lease with CARGO Therapeutics, a clinical-stage biotechnology company, at 835 Industrial Road on this mega campus.
  • In our Seattle market, Alexandria was an honoree in the Water Stewardship category of the Puget Sound Business Journal's 2024 Environmental and Sustainability Awards in recognition of our implementation of an innovative energy district at the Alexandria Center^® for Life Science – South Lake Union mega campus featuring one of the largest wastewater heat recovery systems in North America. This wastewater heat recovery system, which will provide an alternative energy source to heat our buildings and enhance building resilience and operating performance, demonstrates our continued focus on reducing greenhouse gas emissions in our laboratory facilities.
  • In our Research Triangle market, we earned the Top Life Sciences/Laboratory Lease in the Triangle Business Journal's 2024 SPACE Awards for our lease with Pairwise, a health-focused food and agriculture company, at 110 and 112 TW Alexander Drive on the Alexandria Center^® for Sustainable Technologies mega campus. The annual SPACE Awards recognize the Research Triangle's top commercial real estate developments and transactions.
• In February 2024, Alexandria, in partnership with former congressman Patrick J. Kennedy and The Kennedy Forum, held its second Alexandria Summit^® on Mental Health in Washington, DC. Alexandria convened a diverse set of key decision makers, influential life science industry thought leaders, members of Congress, regulatory agency executives, and other key policymakers to advance the development of novel, effective psychiatric therapies to address vast unmet need.

About Alexandria Real Estate Equities, Inc.
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500^® company, is a best-in-class, mission-driven life science REIT making a positive and lasting impact on the world. As the pioneer of the life science real estate niche since our founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science mega campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. Alexandria has a total market capitalization of $34.4 billion and an asset base in North America of 74.1 million SF as of March 31, 2024, which includes 42.2 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, 2.5 million RSF of priority anticipated development and redevelopment projects, and 24.1 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in life science 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. For additional information on Alexandria, please visit www.are.com. 

Guidance March 31, 2024 (Dollars in millions, except per share amounts)
The following guidance for 2024 has been updated to reflect our current view of existing market conditions and assumptions for the year ending December 31, 2024. There can be no assurance that actual results will not be materially higher or lower than these expectations. Also, refer to our discussion of "forward-looking statements"  on page 7 of this Earnings Press Release for additional details. Key updates to our 2024 guidance from January 29, 2024 include updates to earnings per share, funds  from operations per share, and funds from operations per share, as adjusted, as shown in the table below. We updated our guidance range for 2024 earnings per share  and funds from operations per share. In addition, we narrowed our guidance range for 2024 funds from operations per share, as adjusted, to 12 cents from 20 cents with  the midpoint of $9.47 unchanged from our prior guidance on January 29, 2024.

Key Credit Metric Targets(1)
Net debt and preferred stock to Adjusted EBITDA – 4Q24 annualized		Less than or equal to 5.1x
Fixed-charge coverage ratio – 4Q24 annualized		Greater than or equal to 4.5x

Projected 2024 Earnings per Share and Funds From Operations per Share Attributable to    Alexandria's Common Stockholders – Diluted
		As of 4/22/2024				As of 1/29/2024
Earnings per share(2)		$3.60 to $3.72				$3.49 to $3.69
Depreciation and amortization of real estate assets			5.95				5.95
Allocation to unvested restricted stock awards			(0.06)				(0.07)
Funds from operations per share(1)		$9.49 to $9.61				$9.37 to $9.57
Unrealized gains on non-real estate investments			(0.17)				—
Impairment of non-real estate investments			0.09				—
Funds from operations per share, as adjusted(1)		$9.41 to $9.53				$9.37 to $9.57
Midpoint		$9.47				$9.47

Key Sources and Uses of Capital		Range				Midpoint
Sources of capital:
Incremental debt		$          900		$          900		$          900
Net cash provided by operating activities after dividends		400		500		450
Dispositions, sales of partial interests, and common    equity(3)		900		1,900		1,400
Total sources of capital		$       2,200		$       3,300		$       2,750
Uses of capital:
Construction		$       1,950		$       2,550		$       2,250
Acquisitions		250		750		500
Total uses of capital		$       2,200		$       3,300		$       2,750
Incremental debt (included above):
Issuance of unsecured senior notes payable(4)		$       1,000		$       1,000		$       1,000
Unsecured senior line of credit, commercial paper, and    other		(100)		(100)		(100)
Net incremental debt		$          900		$          900		$          900

Key Assumptions		Low		High
Occupancy percentage in North America as of December 31, 2024		94.6 %		95.6 %
Lease renewals and re-leasing of space:
Rental rate increases		11.0 %		19.0 %
Rental rate increases (cash basis)		5.0 %		13.0 %
Same property performance:
Net operating income increases		0.5 %		2.5 %
Net operating income increases (cash basis)		3.0 %		5.0 %
Straight-line rent revenue		$            169		$            184
General and administrative expenses		$            181		$            191
Capitalization of interest		$            325		$            355
Interest expense		$            154		$            184
Realized gains on non-real estate investments(5)		$              95		$            125

(1)	Refer to "Definitions and reconciliations" in the Supplemental Information for additional details.
(2)	Excludes unrealized gains or losses on non-real estate investments after March 31, 2024 that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.
(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 and sales of partial interests and are actively pursuing several dispositions and partial interest sale opportunities. In February 2024, we entered into a new ATM common stock offering program, which allows us to sell up to an aggregate of $1.5 billion of our common stock. As of April 22, 2024, the full amount remained available for future sales of our common stock.
(4)	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. Our 2024 guidance for issuance of unsecured senior notes payable assumes we issue new unsecured senior notes payable in 2025 to fund the repayment of our $600.0 million unsecured senior notes payable due on April 30, 2025. Subject to market conditions, we may seek opportunities in 2024 to fund the repayment of our 2025 debt maturity through issuance of additional unsecured senior notes payable.
(5)	Represents realized gains and losses included in funds from operations per share – diluted, as adjusted, and excludes significant impairments realized on non-real estate investments, if any. Refer to "Investments" in the Supplemental Information for additional details.

 

Acquisitions March 31, 2024 (Dollars in thousands)

Property

Submarket/Market

Date of Purchase

Operating Occupancy

Future Development RSF(1)

Purchase Price

Completed in 1Q24:

285, 299, 307, and 345 Dorchester Avenue (60% interest in consolidated JV)

Seaport Innovation District/Greater Boston

1/30/24

N/A

1,040,000

$

155,321

Other

39,490

194,811

Completed in April 2024

7,000

Pending acquisitions subject to signed letters of intent or purchase and sale agreements

75,350

$

277,161

2024 guidance range

$250,000 – $750,000

(1)	We expect to provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction.

 

Dispositions and Sales of Partial Interests March 31, 2024 (Dollars in thousands)

Property

Submarket/Market

Date of Sale

Interest Sold

RSF

Sales Price

Value harvesting dispositions of 100% interest in properties not integral to our mega campus strategy

Completed in 1Q24:

99 A Street(1)

Seaport Innovation District/Greater Boston

3/8/24

100 %

235,000

$             13,350

Other

3,863

17,213

Pending transactions subject to letters of intent or purchase and sale agreement negotiations

258,095

Additional targeted dispositions and sales of partial interests

TBD

$           275,308

(1)	We completed the sale during the three months ended March 31, 2024 and recognized no gain or loss.

 

Earnings Call Information and About the Company 
March 31, 2024

We will host a conference call on Tuesday, April 23, 2024, at 3:00 p.m. Eastern Time ("ET")/noon Pacific Time ("PT"), which is open to the general public, to discuss our financial and operating results for the first quarter ended March 31, 2024. To participate in this conference call, dial (833) 366-1125 or (412) 902-6738 shortly before 3:00 p.m. ET/noon PT and ask the operator to join the call for Alexandria Real Estate Equities, Inc. The audio webcast can be accessed at www.are.com in the "For Investors" section. A replay of the call will be available for a limited time from 5:00 p.m. ET/2:00 p.m. PT on Tuesday, April 23, 2024. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 1133562.

Additionally, a copy of this Earnings Press Release and Supplemental Information for the first quarter ended March 31, 2024 is available in the "For Investors" section of our website at www.are.com or by following this link: https://www.are.com/fs/2024q1.pdf. 

For any questions, please contact corporateinformation@are.com; Joel S. Marcus, executive chairman and founder; Peter M. Moglia, chief executive officer and chief investment officer; Marc E. Binda, chief financial officer and treasurer; Paula Schwartz, managing director of Rx Communications Group, at (917) 633-7790; or Sara M. Kabakoff, senior vice president – chief content officer.

About the Company

Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500^® company, is a best-in-class, mission-driven life science REIT making a positive and lasting impact on the world. As the pioneer of the life science real estate niche since our founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science mega campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. Alexandria has a total market capitalization of $34.4 billion and an asset base in North America of 74.1 million SF as of March 31, 2024, which includes 42.2 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, 2.5 million RSF of priority anticipated development and redevelopment projects, and 24.1 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in life science 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. For additional information on Alexandria, please visit www.are.com. 

Forward-Looking Statements

This document includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements regarding our 2024 earnings per share, 2024 funds from operations per share, 2024 funds from operations per share, as adjusted, net operating income, and our projected sources and uses of capital. You can identify the forward-looking statements by their use of forward-looking words, such as "forecast," "guidance," "goals," "projects," "estimates," "anticipates," "believes," "expects," "intends," "may," "plans," "seeks," "should," "targets," or "will," or the negative of those words or similar words. These forward-looking statements are based on our current expectations, beliefs, projections, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts, as well as a number of assumptions concerning future events. There can be no assurance that actual results will not be materially higher or lower than these expectations. These statements are subject to risks, uncertainties, assumptions, and other important factors that could cause actual results to differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, without limitation, our failure to obtain capital (debt, construction financing, and/or equity) or refinance debt maturities, lower than expected yields, increased interest rates and operating costs, adverse economic or real estate developments in our markets, our failure to successfully place into service and lease any properties undergoing development or redevelopment and our existing space held for future development or redevelopment (including new properties acquired for that purpose), our failure to successfully operate or lease acquired properties, decreased rental rates, increased vacancy rates or failure to renew or replace expiring leases, defaults on or non-renewal of leases by tenants, adverse general and local economic conditions, an unfavorable capital market environment, decreased leasing activity or lease renewals, failure to obtain LEED and other healthy building certifications and efficiencies, and other risks and uncertainties detailed in our filings with the Securities and Exchange Commission ("SEC"). Accordingly, you are cautioned not to place undue reliance on such forward-looking statements. All forward-looking statements are made as of the date of this Earnings Press Release and Supplemental Information, and unless otherwise stated, we assume no obligation to update this information and expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. For more discussion relating to risks and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent annual report on Form 10-K and any subsequent quarterly reports on Form 10-Q.

This document is not an offer to sell or a solicitation to buy securities of Alexandria Real Estate Equities, Inc. Any offers to sell or solicitations to buy our securities shall be made only by means of a prospectus approved for that purpose. Unless otherwise indicated, the "Company," "Alexandria," "ARE," "we," "us," and "our" refer to Alexandria Real Estate Equities, Inc. and our consolidated subsidiaries. Alexandria^®, Lighthouse Design^® logo, Building the Future of Life-Changing Innovation^®, That's What's in Our DNA^®, At the Vanguard and Heart of the Life Science Ecosystem™, Alexandria Center^®, Alexandria Technology Square^®, Alexandria Technology Center^®, and Alexandria Innovation Center^® are copyrights and trademarks of Alexandria Real Estate Equities, Inc. All other company names, trademarks, and logos referenced herein are the property of their respective owners.

Consolidated Statements of Operations March 31, 2024 (Dollars in thousands, except per share amounts)
		Three Months Ended
		3/31/24		12/31/23		9/30/23		6/30/23		3/31/23
Revenues:
Income from rentals		$       755,551		$      742,637		$       707,531		$       704,339		$       687,949
Other income		13,557		14,579		6,257		9,561		12,846
Total revenues		769,108		757,216		713,788		713,900		700,795
Expenses:
Rental operations		218,314		222,726		217,687		211,834		206,933
General and administrative		47,055		59,289		45,987		45,882		48,196
Interest		40,840		31,967		11,411		17,072		13,754
Depreciation and amortization		287,554		285,246		269,370		273,555		265,302
Impairment of real estate		—		271,890		20,649		168,575		—
Total expenses		593,763		871,118		565,104		716,918		534,185
Equity in earnings of unconsolidated real estate joint ventures		155		363		242		181		194
Investment income (loss)		43,284		8,654		(80,672)		(78,268)		(45,111)
Gain on sales of real estate		392		62,227		—		214,810		—
Net income (loss)		219,176		(42,658)		68,254		133,705		121,693
Net income attributable to noncontrolling interests		(48,631)		(45,771)		(43,985)		(43,768)		(43,831)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s stockholders		170,545		(88,429)		24,269		89,937		77,862
Net income attributable to unvested restricted stock awards		(3,659)		(3,498)		(2,414)		(2,677)		(2,606)
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.'s common stockholders		$       166,886		$       (91,927)		$         21,855		$         87,260		$         75,256
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.'s common stockholders:
Basic		$             0.97		$           (0.54)		$             0.13		$             0.51		$             0.44
Diluted		$             0.97		$           (0.54)		$             0.13		$             0.51		$             0.44
Weighted-average shares of common stock outstanding:
Basic		171,949		171,096		170,890		170,864		170,784
Diluted		171,949		171,096		170,890		170,864		170,784
Dividends declared per share of common stock		$             1.27		$            1.27		$             1.24		$             1.24		$             1.21

 

Consolidated Balance Sheets March 31, 2024 (In thousands)
		3/31/24		12/31/23		9/30/23		6/30/23		3/31/23
Assets
Investments in real estate		$  32,323,138		$  31,633,511		$  31,712,731		$  31,178,054		$ 30,889,395
Investments in unconsolidated real estate joint ventures		40,636		37,780		37,695		37,801		38,355
Cash and cash equivalents		722,176		618,190		532,390		924,370		1,263,452
Restricted cash		9,519		42,581		35,321		35,920		34,932
Tenant receivables		7,469		8,211		6,897		6,951		8,197
Deferred rent		1,138,936		1,050,319		1,012,666		984,366		974,865
Deferred leasing costs		520,616		509,398		512,216		520,610		527,848
Investments		1,511,588		1,449,518		1,431,766		1,495,994		1,573,018
Other assets		1,424,968		1,421,894		1,501,611		1,475,191		1,602,403
Total assets		$  37,699,046		$  36,771,402		$  36,783,293		$  36,659,257		$ 36,912,465
Liabilities, Noncontrolling Interests, and Equity
Secured notes payable		$       130,050		$       119,662		$       109,110		$         91,939		$        73,645
Unsecured senior notes payable		12,087,113		11,096,028		11,093,725		11,091,424		11,089,124
Unsecured senior line of credit and commercial paper		—		99,952		—		—		374,536
Accounts payable, accrued expenses, and other liabilities		2,503,831		2,610,943		2,653,126		2,494,087		2,479,047
Dividends payable		222,134		221,824		214,450		214,555		209,346
Total liabilities		14,943,128		14,148,409		14,070,411		13,892,005		14,225,698
Commitments and contingencies
Redeemable noncontrolling interests		16,620		16,480		51,658		52,628		44,862
Alexandria Real Estate Equities, Inc.'s stockholders' equity:
Common stock		1,720		1,719		1,710		1,709		1,709
Additional paid-in capital		18,434,690		18,485,352		18,651,185		18,812,318		18,902,821
Accumulated other comprehensive loss		(23,815)		(15,896)		(24,984)		(16,589)		(20,536)
Alexandria Real Estate Equities, Inc.'s stockholders' equity		18,412,595		18,471,175		18,627,911		18,797,438		18,883,994
Noncontrolling interests		4,326,703		4,135,338		4,033,313		3,917,186		3,757,911
Total equity		22,739,298		22,606,513		22,661,224		22,714,624		22,641,905
Total liabilities, noncontrolling interests, and equity		$  37,699,046		$  36,771,402		$  36,783,293		$  36,659,257		$ 36,912,465

 

Funds From Operations and Funds From Operations per Share  March 31, 2024  (In thousands)

The following table presents a reconciliation of net income (loss) attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles ("GAAP"), including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria's common stockholders – diluted, and funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below:

		Three Months Ended
		3/31/24		12/31/23		9/30/23		6/30/23		3/31/23
Net income (loss) attributable to Alexandria's common stockholders		$    166,886		$    (91,927)		$      21,855		$      87,260		$      75,256
Depreciation and amortization of real estate assets		284,950		281,939		266,440		270,026		262,124
Noncontrolling share of depreciation and amortization from consolidated real estate JVs		(30,904)		(30,137)		(28,814)		(28,220)		(28,178)
Our share of depreciation and amortization from unconsolidated real estate JVs		1,034		965		910		855		859
Gain on sales of real estate		(392)		(62,227)		—		(214,810)		—
Impairment of real estate – rental properties		—		263,982		19,844		166,602		—
Allocation to unvested restricted stock awards		(3,469)		(2,268)		(838)		(872)		(1,359)
Funds from operations attributable to Alexandria's common stockholders – diluted(1)		418,105		360,327		279,397		280,841		308,702
Unrealized (gains) losses on non-real estate investments		(29,158)		(19,479)		77,202		77,897		65,855
Impairment of non-real estate investments		14,698	(2)	23,094		28,503		22,953		—
Impairment of real estate		—		7,908		805		1,973		—
Acceleration of stock compensation expense due to executive officer resignations		—		18,436		1,859		—		—
Allocation to unvested restricted stock awards		247		(472)		(1,330)		(1,285)		(867)
Funds from operations attributable to Alexandria's common stockholders – diluted, as adjusted		$    403,892		$    389,814		$    386,436		$    382,379		$    373,690

Refer to "Definitions and reconciliations" in the Supplemental Information for additional details.
(1)	Calculated in accordance with standards established by the Nareit Board of Governors.
(2)	Primarily related to one non-real estate investment in a privately held entity that does not report NAV.

 

Funds From Operations and Funds From Operations per Share (continued)  March 31, 2024 (In thousands, except per share amounts)

The following table presents a reconciliation of net income (loss) per share attributable to Alexandria's common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations per share attributable to Alexandria's common stockholders – diluted, and funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted, for the periods below. Per share amounts may not add due to rounding.

		Three Months Ended
		3/31/24		12/31/23		9/30/23		6/30/23		3/31/23
Net income (loss) per share attributable to Alexandria's common stockholders – diluted		$         0.97		$       (0.54)		$         0.13		$         0.51		$         0.44
Depreciation and amortization of real estate assets		1.48		1.48		1.40		1.42		1.38
Gain on sales of real estate		—		(0.36)		—		(1.26)		—
Impairment of real estate – rental properties		—		1.54		0.12		0.98		—
Allocation to unvested restricted stock awards		(0.02)		(0.01)		(0.01)		(0.01)		(0.01)
Funds from operations per share attributable to Alexandria's common stockholders – diluted		2.43		2.11		1.64		1.64		1.81
Unrealized (gains) losses on non-real estate investments		(0.17)		(0.11)		0.45		0.46		0.39
Impairment of non-real estate investments		0.09		0.13		0.17		0.13		—
Impairment of real estate		—		0.05		—		0.02		—
Loss on early extinguishment of debt		—		—		—		—		—
Acceleration of stock compensation expense due to executive officer resignations		—		0.11		0.01		—		—
Allocation to unvested restricted stock awards		—		(0.01)		(0.01)		(0.01)		(0.01)
Funds from operations per share attributable to Alexandria's common stockholders – diluted, as adjusted		$         2.35		$         2.28		$         2.26		$         2.24		$         2.19
Weighted-average shares of common stock outstanding – diluted		171,949		171,096		170,890		170,864		170,784

Refer to "Definitions and reconciliations" in the Supplemental Information for additional details.

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/alexandria-real-estate-equities-inc-reports-1q24-net-income-per-share--diluted-of-0-97-and-1q24-ffo-per-share--diluted-as-adjusted-of-2-35--302123655.html

SOURCE Alexandria Real Estate Equities, Inc.

FAQ

What were Alexandria Real Estate Equities, Inc.'s total revenues for 1Q24?

Total revenues for 1Q24 were $769.1 million.

What was the net income per share - diluted for 1Q24?

The net income per share - diluted for 1Q24 was $0.97.

What was the FFO per share - diluted, as adjusted, for 1Q24?

The FFO per share - diluted, as adjusted, for 1Q24 was $2.35.

What was the percentage of annual rental revenue from mega campuses as of March 31, 2024?

74% of annual rental revenue was in effect from mega campuses as of March 31, 2024.

What was the occupancy rate of operating properties in North America as of March 31, 2024?

The occupancy rate of operating properties in North America was 94.6% as of March 31, 2024.

What was the common stock dividend declared for 1Q24?

The common stock dividend declared for 1Q24 was $1.27 per common share.

What percentage of total debt of Alexandria Real Estate Equities, Inc. matures in 2049 and beyond?

32% of the total debt matures in 2049 and beyond.

What industry recognition did Alexandria Real Estate Equities, Inc. receive in March 2024?

In March 2024, Alexandria was named one of Newsweek's Most Trustworthy Companies in America for the second consecutive year.