PASADENA, Calif., Jan. 27, 2025 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) announced financial and operating results for the fourth quarter and year ended December 31, 2024.
Continue ReadingKey highlights | ||||||||
Operating results | 4Q24 | 4Q23 | 2024 | 2023 | ||||
Total revenues: | ||||||||
In millions | $ 788.9 | $ 757.2 | $ 3,116.4 | $ 2,885.7 | ||||
Growth | 4.2 % | 8.0 % | ||||||
Net (loss) income attributable to Alexandria's common stockholders - diluted: | ||||||||
In millions | $ (64.9) | $ (91.9) | $ 309.6 | $ 92.4 | ||||
Per share | $ (0.38) | $ (0.54) | $ 1.80 | $ 0.54 | ||||
Funds from operations attributable to Alexandria's common stockholders - diluted, as adjusted: | ||||||||
In millions | $ 411.8 | $ 389.8 | $ 1,629.1 | $ 1,532.3 | ||||
Per share | $ 2.39 | $ 2.28 | $ 9.47 | $ 8.97 | ||||
A sector-leading REIT with a high-quality, diverse tenant base and strong margins
(As of December 31, 2024, unless stated otherwise) | |||
Occupancy of operating properties in North America | 94.6 % | ||
Percentage of annual rental revenue in effect from Megacampus platform | 77 % | ||
Percentage of annual rental revenue in effect from investment-grade or publicly traded large cap tenants | 52 % | ||
Operating margin | 70 % | ||
Adjusted EBITDA margin | 72 % | ||
Percentage of leases containing annual rent escalations | 97 % | ||
Weighted-average remaining lease term: | |||
Top 20 tenants | 9.3 | years | |
All tenants | 7.5 | years | |
Sustained strength in tenant collections: | |||
January 2025 tenant rents and receivables collected as of January 27, 2025 | 99.5 % | ||
4Q24 tenant rents and receivables collected as of January 27, 2025 | 99.9 % |
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 4.3x for 4Q24 annualized.
- Significant liquidity of $5.7 billion.
- 32% of our total debt matures in 2049 and beyond.
- 12.7 years weighted-average remaining term of debt.
- Since 2020, an average of 98.4% of our year-end debt balances have been fixed rate.
- Total debt and preferred stock to gross assets of 28%.
- $684.1 million of capital contribution commitments from existing real estate joint venture partners to fund construction from 1Q25 through 2028.
Continued solid leasing volume and rental rate increases
- Continued solid leasing volume:
- 1.3 million RSF for 4Q24, up 19% compared to our previous five-quarter average.
- Fourth consecutive quarter with leasing volume exceeding 1 million RSF.
- 5.1 million RSF for 2024, up 19% compared to our 2014-2020 average of 4.3 million RSF.
- Rental rate increases on lease renewals and re-leasing of space were 18.1% and 3.3% (cash basis) for 4Q24 and 16.9% and 7.2% (cash basis) for 2024.
- 84% of our leasing activity during the last twelve months was generated from our existing tenant base.
- Tenant improvements and leasing commissions on renewed and re-leased space executed during the year ended December 31, 2024 represented only 8.4% of total lease term rents, the second lowest percentage of total lease term rents in the past five years.
4Q24 | 2024 | ||||||||
Total leasing activity - RSF | 1,310,999 | 5,053,954 | |||||||
Leasing of development and redevelopment space - RSF | 12,999 | (1) | 493,341 | ||||||
Lease renewals and re-leasing of space: | |||||||||
RSF (included in total leasing activity above) | 1,024,862 | 3,888,139 | |||||||
Rental rate increase | 18.1 % | 16.9 % | |||||||
Rental rate increase (cash basis) | 3.3 % | 7.2 % | |||||||
(1) As of December 31, 2024, our projects expected to stabilize in 2025 were 89% leased/negotiating. | |||||||||
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 4Q24 of $1.32 per common share aggregating $5.19 per common share for the year ended December 31, 2024, up 23 cents, or 5%, over the year ended December 31, 2023.
- Dividend yield of 5.4% as of December 31, 2024.
- Dividend payout ratio of 55% for the three months ended December 31, 2024.
- Average annual dividend per-share growth of 5.4% from 2020 through 2024.
- Significant net cash flows from operating activities after dividends retained for reinvestment aggregating $2.2 billion for the years ended December 31, 2020 through 2024.
Strong execution of Alexandria's 2024 capital strategy
Our 2024 capital plan included $1.4 billion in funding from strategic dispositions that focused on a portfolio of diversified assets, of which $1.1 billion was completed during 4Q24. Refer to "Dispositions" in the Earnings Press Release for additional details.
(in millions) | ||
YTD 3Q24 | $ 239 | |
4Q24 | 1,128 | |
Total 2024 dispositions | $ 1,367 |
- As of January 27, 2025, our share of pending dispositions subject to negotiations aggregated $539.5 million. These transactions represent approximately 32% of the $1.7 billion midpoint of our 2025 guidance range for dispositions and sales of partial interests.
Alexandria's development and redevelopment pipeline delivered incremental annual net operating income of $55 million commencing during 4Q24 and is expected to deliver incremental annual net operating income aggregating $395 million by 2Q28
- During 4Q24, we placed into service Megacampus development and redevelopment projects aggregating 602,593 RSF that are 98% occupied across multiple submarkets and delivered incremental annual net operating income of $55 million. Key 4Q24 deliveries included:
- 171,102 RSF at 4155 Campus Point Court located on the Campus Point by Alexandria Megacampus in our University Town Center submarket;
- 139,984 RSF at 840 Winter Street located on the Alexandria Center® for Life Science - Waltham Megacampus in our Route 128 submarket; and
- 93,492 RSF at 10935, 10945, and 10955 Alexandria Way located on the One Alexandria Square Megacampus in our Torrey Pines submarket.
- Annual net operating income (cash basis) is expected to increase by $70 million upon the burn-off of initial free rent, with a weighted-average burn-off period of approximately three months, from recently delivered projects.
- 68% of the RSF in our total development and redevelopment pipeline is within our Megacampus ecosystems.
Development and Redevelopment Projects | Incremental Annual Net | RSF | Occupancy Percentage | |||||||
(dollars in millions) | ||||||||||
Placed into service: | ||||||||||
YTD 3Q24 | $ 63 | 945,118 | 100 % | |||||||
4Q24 | 55 | 602,593 | 98 | |||||||
Placed into service in 2024 | $ 118 | 1,547,711 | 98 % | |||||||
Expected to be placed into service: | ||||||||||
2025 | $ 83 | (1) | 4,357,276 | |||||||
1Q26 through 2Q28 | 312 | |||||||||
$ 395 | ||||||||||
(1) | Includes (i) 461,101 RSF that is expected to stabilize through 2025 and is 89% 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 the Supplemental Information for additional details. |
Continued solid net operating income and internal growth
- Net operating income (cash basis) growth:
- $2.1 billion for 4Q24 annualized, up $177.9 million, or 9.5%, compared to 4Q23 annualized.
- $2.0 billion for 2024, up $176.9 million, or 9.8%, compared to 2023.
- Same property net operating income growth of 0.6% and 6.3% (cash basis) for 4Q24 over 4Q23 and 1.2% and 4.6% (cash basis) for 2024 over 2023.
- 97% of our leases contain contractual annual rent escalations approximating 3%.
Continued rigorous focus on management of general and administrative costs
- General and administrative expenses as a percentage of net operating income of 7.6% for 2024, compared to 9.8% for 2023.
- We expect general and administrative cost savings of approximately $32 million in 2025, based on the midpoint of our guidance, compared to 2024, from a variety of cost-control and efficiency initiatives, including:
- Personnel-related matters: reduction in headcount over the last two years and restructuring of compensation plans.
- Streamlining of business processes: systems upgrades, process improvements, and cost reduction in legal, technology, and operational support services.
Strong balance sheet management
Key metrics as of or for the three months ended December 31, 2024
- $29.0 billion in total market capitalization.
- $16.8 billion in total equity capitalization.
4Q24 | Target | ||||||||||
Quarter | Trailing | 4Q25 | |||||||||
Net debt and preferred stock to | 5.2x | 5.3x | Less than or equal to 5.2x | ||||||||
Fixed-charge coverage ratio | 4.3x | 4.5x | 4.0x to 4.5x | ||||||||
Key capital events
- On December 9, 2024, we announced that our board of directors authorized a common stock repurchase program under which we may repurchase up to $500.0 million of our common stock through December 31, 2025. Repurchases are expected to be funded on a leverage-neutral basis.
- In December 2024, we repurchased $50.1 million of common stock.
- From January 1, 2025 through January 27, 2025, we repurchased $150.0 million of additional common stock.
- As of January 27, 2025, cumulative repurchases under the program aggregated $200.1 million and 2.0 million shares of common stock at an average price per share of $98.16.
- As of January 27, 2025, the approximate value of shares authorized and remaining under this program was $299.9 million.
- During 4Q24, we settled all outstanding forward equity sales agreements by issuing 230 thousand shares of common stock at an average price per share of $120.93 and received net proceeds of $27.8 million. As of January 27, 2025, the remaining aggregate amount available for future sales of common stock under our ATM program was $1.47 billion.
Investments
- As of December 31, 2024:
- Our non-real estate investments aggregated $1.5 billion.
- Unrealized gains presented in our consolidated balance sheet were $83.6 million, comprising gross unrealized gains and losses aggregating $228.1 million and $144.5 million, respectively.
- Investment loss of $68.0 million for 4Q24 presented in our consolidated statement of operations consisted of $32.1 million of realized gains, $79.8 million of unrealized losses, and $20.3 million of impairment charges.
- Investment loss of $53.1 million for 2024 presented in our consolidated statement of operations consisted of $117.2 million of realized gains, $112.2 million of unrealized losses, and $58.1 million of impairment charges.
Other key highlights
Executive management change, effective December 31, 2024
Effective on December 31, 2024, Vincent Ciruzzi retired from his position as Chief Development Officer after nearly 30 years of exemplary service. His responsibilities will be assumed by multiple members within our Real Estate Development Team, which Mr. Ciruzzi formed and led over his tenure with Alexandria.
Key items included in net income attributable to Alexandria's common stockholders: | |||||||||||||||
4Q24 | 4Q23 | 4Q24 | 4Q23 | 2024 | 2023 | 2024 | 2023 | ||||||||
(in millions, except per share amounts) | Amount | Per Share - | Amount | Per Share - | |||||||||||
Unrealized (losses) gains on | $ (79.8) | $ 19.5 | $ (0.46) | $ 0.11 | $ (112.2) | $ (201.5) | $ (0.65) | $ (1.18) | |||||||
Gain on sales of real estate | 101.8 | 62.2 | 0.59 | 0.36 | 129.3 | 277.0 | 0.75 | 1.62 | |||||||
Impairment of non-real estate | (20.3) | (23.1) | (0.12) | (0.13) | (58.1) | (74.6) | (0.34) | (0.44) | |||||||
Impairment of real estate(1) | (186.6) | (271.9) | (1.08) | (1.59) | (223.1) | (461.1) | (1.30) | (2.70) | |||||||
Acceleration of stock | - | (18.4) | - | (0.11) | - | (20.3) | - | (0.12) | |||||||
Provision for expected credit | 0.4 | - | - | - | 0.4 | - | - | - | |||||||
Total | $ (184.5) | $ (231.7) | $ (1.07) | $ (1.36) | $ (263.7) | $ (480.5) | $ (1.54) | $ (2.82) | |||||||
(1) Refer to "Funds from operations and funds from operations per share" in the Earnings Press Release for additional details. | |||||||||||||||
Subsequent events
- In January 2025, pursuant to an amendment executed in July 2024 to our existing ground lease agreement at the Alexandria Technology Square® Megacampus, we made the second and final installment payment aggregating $135.0 million related to our rent obligation for the extended ground lease term.
Industry and corporate responsibility leadership: catalyzing and leading the way for positive change to benefit human health and society
- Alexandria's longstanding sustainability leadership and performance was reinforced by our achievements in the 2024 GRESB Real Estate Assessment. We received the GRESB Green Star designation for the eighth consecutive year and an "A" disclosure score for the seventh consecutive year, signifying best-in-class transparency regarding our sustainability practices and reporting.
- 325 Binney Street, a 462,100 RSF development on the Alexandria Center® at One Kendall Square Megacampus in our Cambridge submarket, earned LEED Platinum certification, the highest level of certification under the U.S. Green Building Council's Core and Shell rating system. Home to Moderna's global headquarters and R&D center, the ultra-efficient building is targeting LEED Zero Energy certification, reduced fossil fuel use through the implementation of a geothermal system, and 100% renewable electricity, resulting in an estimated 97% reduction of greenhouse gas emissions relative to the MA 2020 Stretch Code baseline.
- 8 Davis Drive on the Alexandria Center® for Advanced Technologies and AgTech - Research Triangle Megacampus won a BOMA Raleigh-Durham TOBY (The Outstanding Building of the Year) Award in the Life Science category. The TOBY Awards are the commercial real estate industry's highest recognition honoring excellence in commercial building management and operations.
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. With our founding in 1994, Alexandria pioneered the life science real estate niche. Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative Megacampus ecosystems 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 December 31, 2024, Alexandria has a total market capitalization of $29.0 billion and an asset base in North America that includes 39.8 million RSF of operating properties and 4.4 million RSF of Class A/A+ properties undergoing construction. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in highly dynamic and collaborative Megacampus environments that enhance our tenants' 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 more information on Alexandria, please visit www.are.com.
Guidance |
The following guidance for 2025 has been updated to reflect our current view of existing market conditions and assumptions for the year ending December 31, 2025. 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" of the Earnings Press Release for additional details. Key updates to our 2025 guidance from December 4, 2024 are summarized in the tables below and include changes to the midpoints of our guidance ranges for key sources of capital as follows: (i) a $150 million increase in dispositions and sales of partial interests representing pending transactions that were originally expected to close in 4Q24, and are now anticipated to be completed in 2025 and (ii) a corresponding $150 million decrease in excess 2024 bond capital held as cash at December 31, 2024. |
2025 Guidance Midpoint | 2025 Guidance Midpoint | |||||||||
Summary of Key Changes in Guidance | As of 1/27/25 | As of 12/4/24 | Summary of Key Changes in Sources and Uses of Capital | As of 1/27/25 | As of 12/4/24 | |||||
EPS, FFO per share, and FFO per share, as adjusted | No Change | Excess 2024 bond capital expected to be held as cash at December 31, 2024 | $ - | $ 150 | ||||||
Dispositions and sales of partial interests | $ 1,700 | $ 1,550 | ||||||||
Key Credit Metric Targets (1) | ||
Net debt and preferred stock to Adjusted EBITDA - 4Q25 annualized | Less than or equal to 5.2x | |
Fixed-charge coverage ratio - 4Q25 annualized | 4.0x to 4.5x |
Projected 2025 Earnings per Share and Funds From Operations per Share Attributable to | ||||
Earnings per share(2) | $2.57 to $2.77 | |||
Depreciation and amortization of real estate assets | 6.70 | |||
Allocation to unvested restricted stock awards | (0.04) | |||
Funds from operations per share and funds from operations per share, as adjusted(1) | $9.23 to $9.43 | |||
Midpoint | $9.33 | |||
Key Sources and Uses of Capital | Range | Midpoint | ||||
Sources of capital: | ||||||
Reduction in debt | $ (40) | $ (340) | $ (190) | |||
Net cash provided by operating activities after dividends | 425 | 525 | 475 | |||
Dispositions and sales of partial interests(3) | 1,200 | 2,200 | 1,700 | |||
Total sources of capital | $ 1,585 | $ 2,385 | $ 1,985 | |||
Uses of capital: | ||||||
Construction | $ 1,450 | $ 2,050 | $ 1,750 | |||
Acquisitions and other opportunistic uses of capital(4) | - | 200 | 100 | |||
Ground lease prepayment(5) | 135 | 135 | 135 | |||
Total uses of capital | $ 1,585 | $ 2,385 | $ 1,985 | |||
Reduction in debt (included above): | ||||||
Issuance of unsecured senior notes payable | $ 300 | $ 900 | $ 600 | |||
Repayment of secured notes payable | (600) | (600) | (600) | |||
Unsecured senior line of credit, commercial paper, and other | 260 | (640) | (190) | |||
Net reduction in debt | $ (40) | $ (340) | $ (190) | |||
Key Assumptions | Low | High | |||
Occupancy percentage in North America as of December 31, 2025 | 91.6 % | 93.2 % | |||
Lease renewals and re-leasing of space: | |||||
Rental rate changes | 9.0 % | 17.0 % | |||
Rental rate changes (cash basis) | 0.5 % | 8.5 % | |||
Same property performance: | |||||
Net operating income | (3.0) % | (1.0) % | |||
Net operating income (cash basis) | (1.0) % | 1.0 % | |||
Straight-line rent revenue | $ 111 | $ 131 | |||
General and administrative expenses | $ 129 | $ 144 | |||
Capitalization of interest | $ 340 | $ 370 | |||
Interest expense | $ 165 | $ 195 | |||
Realized gains on non-real estate investments(6) | $ 100 | $ 130 |
(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 December 31, 2024 that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted. |
(3) | As of January 27, 2025, our share of pending dispositions subject to negotiations aggregated $539.5 million. These transactions represent approximately 32% of the $1.7 billion midpoint of our 2025 guidance range for dispositions and sales of partial interests. |
(4) | On December 9, 2024, we announced that our board of directors authorized a common stock repurchase program under which we may repurchase up to $500.0 million of our common stock in the open market or in privately negotiated transactions through December 31, 2025. In January 2025, we repurchased common stock aggregating $150.0 million at an average price per share of $97.26. As of January 27, 2025, the approximate value of shares authorized and remaining under this program was $299.9 million. |
(5) | Refer to "Subsequent event" in the Earnings Press Release for additional information. |
(6) | Represents realized gains and losses included in funds from operations per share - diluted, as adjusted, and excludes significant impairments realized on non-real estate investments, if any. Refer to "Investments" in the Supplemental Information for additional details. |
Acquisitions | |||||||||||||||||
Property | Submarket/Market | Date of Purchase | Number of | Operating Occupancy | Square Footage | Purchase Price | |||||||||||
Future | Operating With | ||||||||||||||||
Completed in 2024: | |||||||||||||||||
285, 299, 307, and 345 Dorchester Avenue (60% | Seaport Innovation District/Greater | 1/30/24 | - | N/A | 1,040,000 | - | $ | 155,321 | |||||||||
428 Westlake Avenue North | Lake Union/Seattle | 10/1/24 | 1 | 100 % | - | 90,626 | 47,600 | ||||||||||
Other | 46,490 | ||||||||||||||||
Total 2024 acquisitions | $ | 249,411 | |||||||||||||||
(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. |
2024 Dispositions | ||||||||||||||||||||||||
Property | Submarket/Market | Date of | Interest | RSF | Capitalization | Capitalization (Cash Basis) | Sales Price | Seller | Sales | Gain on | ||||||||||||||
Completed in YTD 3Q24 | $ 238,709 | $ 27,506 | ||||||||||||||||||||||
Completed in 4Q24: | ||||||||||||||||||||||||
Stabilized Properties | ||||||||||||||||||||||||
One Moderna Way | Route 128/Greater Boston | 12/17/24 | 100 % | 722,130 | 8.5 % | 6.3 % | 369,439 | $ 512 | - | |||||||||||||||
14225 Newbrook Drive | Northern Virginia/Maryland | 10/15/24 | 100 % | 248,186 | 7.6 % | 7.4 % | 80,500 | $ 324 | 37,074 | |||||||||||||||
6040 George Watts Hill Drive | Research Triangle/ | 12/10/24 | 100 % | 149,585 | 8.0 % | 7.1 % | 93,500 | $ 625 | 5,004 | |||||||||||||||
Other | 78,610 | 4,042 | ||||||||||||||||||||||
622,049 | ||||||||||||||||||||||||
Properties with vacancy or significant near-term capital requirements | ||||||||||||||||||||||||
215 First Street | Cambridge/Greater Boston | 12/20/24 | 100 % | 369,520 | (1) | (1) | 245,539 | (1) | (1) | - | ||||||||||||||
150 Second Street and 11 Hurley Street | Cambridge/Greater Boston | 182,993 | ||||||||||||||||||||||
4755 and 4757 Nexus Center Drive and | University Town Center/ | 12/30/24 | 100 % | 177,804 | (2) | (2) | 120,000 | (2) | $ 79,166 | $ 675 | 47,511 | |||||||||||||
Other | 47,243 | - | ||||||||||||||||||||||
412,782 | ||||||||||||||||||||||||
Land and other | ||||||||||||||||||||||||
10048 and 10219 Meanley Drive and | Sorrento Mesa/San Diego | 12/20/24 | 100 % | 444,041 | (3) | (3) | 55,000 | 25,000 | - | |||||||||||||||
9444 Waples Street (50% consolidated JV) | Sorrento Mesa/San Diego | 12/23/24 | (4) | 149,000 | (4) | (4) | 31,000 | (4) | 8,175 | (4) | ||||||||||||||
Other(5) | (5) | 22,913 | (5) | (5) | ||||||||||||||||||||
108,913 | ||||||||||||||||||||||||
1,143,744 | (6) | |||||||||||||||||||||||
Total 2024 dispositions | $ 1,382,453 | $ 104,166 | $ 129,312 | |||||||||||||||||||||
Our share of 2024 dispositions, including amounts recognized within | $ 1,366,953 | $ 127,615 | (7) | |||||||||||||||||||||
Refer to "Definitions and reconciliations" in the Supplemental Information for additional details. | |
(1) | Represents properties that were 87% occupied as of 3Q24, with 61% of the aggregate RSF, primarily located at 215 First Street, scheduled to expire by 4Q25. These properties were not core to our Megacampus strategy due to their size, location, or existing use. They are also expected to require significant re-leasing capital over the next few years, including at 215 First Street, a historical building with infrastructure limitations and challenging floor plates. Acquired in 2007, 215 First Street came with significant entitlements which were later used to develop new adjacent projects at Alexandria Center® at Kendall Square. Since then, this property has served as a reliable asset, providing primarily office space to our tenants. However, given the low occupancy and the significant reinvestment required for upgrades, we plan to recycle the capital generated by the disposition into our development and redevelopment pipeline. |
(2) | Represents properties that were 65% occupied as of 3Q24, with 26% of the aggregate RSF scheduled to expire by 2Q25. |
(3) | Represents the sale of land parcels. |
(4) | Represents 100% of the contractual sales price. We held a 50% interest in this property through a consolidated real estate joint venture, and our share of the sales price and gain on real estate is $15.5 million and $3.2 million, respectively. |
(5) | Represents the disposition of an unconsolidated real estate joint venture for which we recognized a gain on sale of real estate of $3.3 million, which is classified as equity in earnings of unconsolidated real estate joint ventures in our consolidated statement of operations. |
(6) | Dispositions completed during 4Q24 had annual net operating income of $97.9 million (based on 3Q24 annualized) with a weighted-average disposition date of December 10, 2024 (weighted by net operating income for 3Q24 annualized). |
(7) | Refer to footnotes 4 and 5. |
2025 Dispositions and Sales of Partial Interests | ||||||||||
Property | Submarket/Market | Date of | Interest | Sales Price | ||||||
Pending 2025 dispositions and sales of partial interests expected to close subsequent to January 27, 2025: | ||||||||||
Subject to non-refundable deposits: | ||||||||||
Pending | San Diego | 1Q25 | 100 % | $ 124,000 | ||||||
Pending | Texas | 1Q25 | 100 % | 33,000 | ||||||
Pending | San Diego | 2H25 | 100 % | 50,000 | ||||||
Other | 20,850 | |||||||||
227,850 | ||||||||||
Subject to executed letters of intent and/or purchase and sale agreement negotiations: | ||||||||||
1450 Owens Street (25.1% consolidated JV) | Mission Bay/San Francisco Bay Area | 2H25 | (1) | 144,705 | (1) | |||||
Other | Various | 276,612 | ||||||||
421,317 | ||||||||||
$ 649,167 | ||||||||||
Our share of 2025 dispositions | $ 539,462 | |||||||||
2025 guidance range for dispositions and sales of partial interests | $1,200,000 - $2,200,000 | |||||||||
(1) | Represents 100% of the contractual sales price. In 4Q24, we executed a letter of intent with a biomedical institution for the sale of a condominium interest aggregating 103,361 RSF, or approximately 49% of the development project. We own a 25.1% interest in this property through a consolidated real estate joint venture, and our share of the sales price is $36 million. We expect to complete the transaction in 2025. |
Earnings Call Information and About the Company
December 31, 2024
We will host a conference call on Tuesday, January 28, 2025, 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 fourth quarter and year ended December 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, January 28, 2025. The replay number is (877) 344-7529 or (412) 317-0088, and the access code is 1012884.
Additionally, a copy of this Earnings Press Release and Supplemental Information for the fourth quarter and year ended December 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/2024q4.pdf.
For any questions, please contact [email protected]; 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. With our founding in 1994, Alexandria pioneered the life science real estate niche. Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative Megacampus ecosystems 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 December 31, 2024, Alexandria has a total market capitalization of $29.0 billion and an asset base in North America that includes 39.8 million RSF of operating properties and 4.4 million RSF of Class A/A+ properties undergoing construction. Alexandria has a longstanding and proven track record of developing Class A/A+ properties clustered in highly dynamic and collaborative Megacampus environments that enhance our tenants' 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 more 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 projected 2025 earnings per share, projected 2025 funds from operations per share, projected 2025 funds from operations per share, as adjusted, projected 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®, Megacampus, Labspace®, Alexandria Summit®, 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 | ||||||||||||||
Three Months Ended | Year Ended | |||||||||||||
12/31/24 | 9/30/24 | 6/30/24 | 3/31/24 | 12/31/23 | 12/31/24 | 12/31/23 | ||||||||
Revenues: | ||||||||||||||
Income from rentals | $ 763,249 | $ 775,744 | $ 755,162 | $ 755,551 | $ 742,637 | $ 3,049,706 | $ 2,842,456 | |||||||
Other income | 25,696 | 15,863 | 11,572 | 13,557 | 14,579 | 66,688 | 43,243 | |||||||
Total revenues | 788,945 | 791,607 | 766,734 | 769,108 | 757,216 | 3,116,394 | 2,885,699 | |||||||
Expenses: | ||||||||||||||
Rental operations | 240,432 | 233,265 | 217,254 | 218,314 | 222,726 | 909,265 | 859,180 | |||||||
General and administrative | 32,730 | 43,945 | 44,629 | 47,055 | 59,289 | 168,359 | 199,354 | |||||||
Interest | 55,659 | 43,550 | 45,789 | 40,840 | 31,967 | 185,838 | 74,204 | |||||||
Depreciation and amortization | 330,108 | 293,998 | 290,720 | 287,554 | 285,246 | 1,202,380 | 1,093,473 | |||||||
Impairment of real estate | 186,564 | (1) | 5,741 | 30,763 | - | 271,890 | 223,068 | 461,114 | ||||||
Total expenses | 845,493 | 620,499 | 629,155 | 593,763 | 871,118 | 2,688,910 | 2,687,325 | |||||||
Equity in earnings of unconsolidated real estate joint ventures | 6,635 | (2) | 139 | 130 | 155 | 363 | 7,059 | 980 | ||||||
Investment (loss) income | (67,988) | 15,242 | (43,660) | 43,284 | 8,654 | (53,122) | (195,397) | |||||||
Gain on sales of real estate | 101,806 | 27,114 | - | 392 | 62,227 | 129,312 | 277,037 | |||||||
Net (loss) income | (16,095) | 213,603 | 94,049 | 219,176 | (42,658) | 510,733 | 280,994 | |||||||
Net income attributable to noncontrolling interests | (46,150) | (45,656) | (47,347) | (48,631) | (45,771) | (187,784) | (177,355) | |||||||
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.'s | (62,245) | 167,947 | 46,702 | 170,545 | (88,429) | 322,949 | 103,639 | |||||||
Net income attributable to unvested restricted stock awards | (2,677) | (3,273) | (3,785) | (3,659) | (3,498) | (13,394) | (11,195) | |||||||
Net (loss) income attributable to Alexandria Real Estate Equities, Inc.'s | $ (64,922) | $ 164,674 | $ 42,917 | $ 166,886 | $ (91,927) | $ 309,555 | $ 92,444 | |||||||
Net (loss) income per share attributable to Alexandria Real Estate Equities, | ||||||||||||||
Basic | $ (0.38) | $ 0.96 | $ 0.25 | $ 0.97 | $ (0.54) | $ 1.80 | $ 0.54 | |||||||
Diluted | $ (0.38) | $ 0.96 | $ 0.25 | $ 0.97 | $ (0.54) | $ 1.80 | $ 0.54 | |||||||
Weighted-average shares of common stock outstanding - basic and | 172,262 |
172,058 | 172,013 | 171,949 | 171,096 | 172,071 | 170,909 | |||||||
Dividends declared per share of common stock | $ 1.32 | $ 1.30 | $ 1.30 | $ 1.27 | $ 1.27 | $ 5.19 | $ 4.96 | |||||||
(1) | Refer to "Funds from operations and funds from operations per share" in the Earnings Press Release for additional details. |
(2) | Refer to "2024 Dispositions" in the Earnings Press Release for additional details. |
Consolidated Balance Sheets | ||||||||||
12/31/24 | 9/30/24 | 6/30/24 | 3/31/24 | 12/31/23 | ||||||
Assets | ||||||||||
Investments in real estate | $ 32,110,039 | $ 32,951,777 | $ 32,673,839 | $ 32,323,138 | $ 31,633,511 | |||||
Investments in unconsolidated real estate joint ventures | 39,873 | 40,170 | 40,535 | 40,636 | 37,780 | |||||
Cash and cash equivalents | 552,146 | 562,606 | 561,021 | 722,176 | 618,190 | |||||
Restricted cash | 7,701 | 17,031 | 4,832 | 9,519 | 42,581 | |||||
Tenant receivables | 6,409 | 6,980 | 6,822 | 7,469 | 8,211 | |||||
Deferred rent | 1,187,031 | 1,216,176 | 1,190,336 | 1,138,936 | 1,050,319 | |||||
Deferred leasing costs | 485,959 | 516,872 | 519,629 | 520,616 | 509,398 | |||||
Investments | 1,476,985 | 1,519,327 | 1,494,348 | 1,511,588 | 1,449,518 | |||||
Other assets | 1,661,306 | 1,657,189 | 1,356,503 | 1,424,968 | 1,421,894 | |||||
Total assets | $ 37,527,449 | $ 38,488,128 | $ 37,847,865 | $ 37,699,046 | $ 36,771,402 | |||||
Liabilities, Noncontrolling Interests, and Equity | ||||||||||
Secured notes payable | $ 149,909 | $ 145,000 | $ 134,942 | $ 130,050 | $ 119,662 | |||||
Unsecured senior notes payable | 12,094,465 | 12,092,012 | 12,089,561 | 12,087,113 | 11,096,028 | |||||
Unsecured senior line of credit and commercial paper | - | 454,589 | 199,552 | - | 99,952 | |||||
Accounts payable, accrued expenses, and other liabilities | 2,654,351 | 2,865,886 | 2,529,535 | 2,503,831 | 2,610,943 | |||||
Dividends payable | 230,263 | 227,191 | 227,408 | 222,134 | 221,824 | |||||
Total liabilities | 15,128,988 | 15,784,678 | 15,180,998 | 14,943,128 | 14,148,409 | |||||
Commitments and contingencies | ||||||||||
Redeemable noncontrolling interests | 19,972 | 16,510 | 16,440 | 16,620 | 16,480 | |||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity: | ||||||||||
Common stock | 1,722 | 1,722 | 1,720 | 1,720 | 1,719 | |||||
Additional paid-in capital | 17,933,572 | 18,238,438 | 18,284,611 | 18,434,690 | 18,485,352 | |||||
Accumulated other comprehensive loss | (46,252) | (22,529) | (27,710) | (23,815) | (15,896) | |||||
Alexandria Real Estate Equities, Inc.'s stockholders' equity | 17,889,042 | 18,217,631 | 18,258,621 | 18,412,595 | 18,471,175 | |||||
Noncontrolling interests | 4,489,447 | 4,469,309 | 4,391,806 | 4,326,703 | 4,135,338 | |||||
Total equity | 22,378,489 | 22,686,940 | 22,650,427 | 22,739,298 | 22,606,513 | |||||
Total liabilities, noncontrolling interests, and equity | $ 37,527,449 | $ 38,488,128 | $ 37,847,865 | $ 37,699,046 | $ 36,771,402 | |||||
Funds From Operations and Funds From Operations per Share |
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 | Year Ended | |||||||||||||
12/31/24 | 9/30/24 | 6/30/24 | 3/31/24 | 12/31/23 | 12/31/24 | 12/31/23 | ||||||||
Net (loss) income attributable to Alexandria's common stockholders - basic | $ (64,922) | $ 164,674 | $ 42,917 | $ 166,886 | $ (91,927) | $ 309,555 | $ 92,444 | |||||||
Depreciation and amortization of real estate assets | 327,198 | 291,258 | 288,118 | 284,950 | 281,939 | 1,191,524 | 1,080,529 | |||||||
Noncontrolling share of depreciation and amortization from consolidated real | (34,986) | (32,457) | (31,364) | (30,904) | (30,137) | (129,711) | (115,349) | |||||||
Our share of depreciation and amortization from unconsolidated real estate JVs | 1,061 | 1,075 | 1,068 | 1,034 | 965 | 4,238 | 3,589 | |||||||
Gain on sales of real estate | (100,109) | (1) | (27,114) | - | (392) | (62,227) | (127,615) | (277,037) | ||||||
Impairment of real estate - rental properties and land | 184,532 | (2) | 5,741 | 2,182 | - | 263,982 | 192,455 | 450,428 | ||||||
Allocation to unvested restricted stock awards | (1,182) | (2,908) | (1,305) | (3,469) | (2,268) | (8,696) | (5,175) | |||||||
Funds from operations attributable to Alexandria's common stockholders - | 311,592 | 400,269 | 301,616 | 418,105 | 360,327 | 1,431,750 | 1,229,429 | |||||||
Unrealized losses (gains) on non-real estate investments | 79,776 | (2,610) | 64,238 | (29,158) | (19,479) | 112,246 | 201,475 | |||||||
Impairment of non-real estate investments | 20,266 | (4) | 10,338 | 12,788 | 14,698 | 23,094 | 58,090 | 74,550 | ||||||
Impairment of real estate | 2,032 | - | 28,581 | - | 7,908 | 30,613 | 10,686 | |||||||
Acceleration of stock compensation expense due to executive officer resignations | - | - | - | - | 18,436 | - | 20,295 | |||||||
Provision for expected credit losses on financial instruments | (434) | (5) | - | - | - | - | (434) | - | ||||||
Allocation to unvested restricted stock awards | (1,407) | (125) | (1,738) | 247 | (472) | (3,188) | (4,121) | |||||||
Funds from operations attributable to Alexandria's common stockholders - | $ 411,825 | $ 407,872 | $ 405,485 | $ 403,892 | $ 389,814 | $ 1,629,077 | $ 1,532,314 | |||||||
Refer to "Definitions and reconciliations" in the Supplemental Information for additional details. | |
(1) | Includes our share of gain on sale of real estate from one consolidated real estate joint venture and one unconsolidated real estate joint venture. Refer to "2024 Dispositions" in the Earnings Press Release for additional details. |
(2) | Primarily represents impairment charges to reduce the carrying amount of our investments in real estate assets to their respective estimated fair values less costs to sell upon their classification as held for sale in 4Q24, including (i) $102.8 million primarily related to land parcels in our Sorrento Mesa and University Town Center submarkets, including land parcels sold during 4Q24 for a sales price aggregating $55.0 million and additional land parcels expected to be sold in 2025 with an approximate sales price aggregating approximately $243.0 million, and (ii) $40.9 million for four properties at One Moderna Way in our Route 128 submarket, which was sold during 4Q24. |
(3) | Calculated in accordance with standards established by the Nareit Board of Governors. |
(4) | Primarily related to three non-real estate investments in privately held entities that do not report NAV. |
(5) | Represents an adjustment to the provision for expected credit losses for a direct financing lease, as well as the initial recognition of a provision for expected credit losses for two notes receivable issued in connection with dispositions completed during 4Q24. |
Funds From Operations and Funds From Operations per Share (continued) |
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 | Year Ended | |||||||||||||
12/31/24 | 9/30/24 | 6/30/24 | 3/31/24 | 12/31/23 | 12/31/24 | 12/31/23 | ||||||||
Net (loss) income per share attributable to Alexandria's common stockholders - | $ (0.38) | $ 0.96 | $ 0.25 | $ 0.97 | $ (0.54) | $ 1.80 | $ 0.54 | |||||||
Depreciation and amortization of real estate assets | 1.70 | 1.51 | 1.50 | 1.48 | 1.48 | 6.20 | 5.67 | |||||||
Gain on sales of real estate | (0.58) | (0.16) | - | - | (0.36) | (0.74) | (1.62) | |||||||
Impairment of real estate - rental properties and land | 1.07 | 0.03 | 0.01 | - | 1.54 | 1.12 | 2.64 | |||||||
Allocation to unvested restricted stock awards | - | (0.01) | (0.01) | (0.02) | (0.01) | (0.06) | (0.04) | |||||||
Funds from operations per share attributable to Alexandria's common | 1.81 | 2.33 | 1.75 | 2.43 | 2.11 | 8.32 | 7.19 | |||||||
Unrealized losses (gains) on non-real estate investments | 0.46 | (0.02) | 0.37 | (0.17) | (0.11) | 0.65 | 1.18 | |||||||
Impairment of non-real estate investments | 0.12 | 0.06 | 0.08 | 0.09 | 0.13 | 0.34 | 0.44 | |||||||
Impairment of real estate | 0.01 | - | 0.17 | - | 0.05 | 0.18 | 0.06 | |||||||
Acceleration of stock compensation expense due to executive officer resignations | - | - | - | - | 0.11 | - | 0.12 | |||||||
Provision for expected credit losses on financial instruments | - | - | - | - | - | - | - | |||||||
Allocation to unvested restricted stock awards | (0.01) | - | (0.01) | - | (0.01) | (0.02) | (0.02) | |||||||
Funds from operations per share attributable to Alexandria's common | $ 2.39 | $ 2.37 | $ 2.36 | $ 2.35 | $ 2.28 | $ 9.47 | $ 8.97 | |||||||
Weighted-average shares of common stock outstanding - diluted | 172,262 | 172,058 | 172,013 | 171,949 | 171,096 | 172,071 | 170,909 | |||||||
Refer to "Definitions and reconciliations" in the Supplemental Information for additional details. |
SOURCE Alexandria Real Estate Equities, Inc.
