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ALEXANDRIA REAL ESTATE EQUITIES, INC. REPORTS FIRST QUARTER 2007 RESULTS
Highlights
First Quarter 2007:
• Alexandria to Celebrate its 10th Anniversary as a NYSE Listed Company on May 28, 2007
• Total Return Performance of 677% from May 28, 1997 to December 31, 2006, Assuming Reinvestment of All Dividends
• First Quarter 2007 Funds from Operations (FFO) Per Share (Diluted) of $1.28 Net of $0.10 Per Share Preferred Stock Redemption Charge; FFO Per Share (Diluted) of $1.38, up 11%, Before the Preferred Stock Redemption Charge, Compared to First Quarter 2006 FFO Per Share (Diluted) of $1.24
• First Quarter 2007 Total Revenues up 43%, FFO Available to Common Stockholders up 33%
• First Quarter 2007 Earnings Per Share (Diluted) of $0.52 Net of the Preferred Stock Redemption Charge; Earnings Per Share (Diluted) of $0.61, up 9%, Before the Preferred Stock Redemption Charge, Compared to First Quarter 2006 Earnings Per Share (Diluted) of $0.56
• Entry into China Market – First Development Project of 275,000 Square Feet in Partnership with International Life Science Entity
• Redeemed 9.10% Series B Cumulative Redeemable Preferred Stock and Incurred Redemption Charge of $2.8 Million, or $0.10 Per Share (Diluted)
• Executed 46 Leases for 461,000 Square Feet
• First Quarter 2007 GAAP Rental Rate Increase of 8.2% on Renewed/Released Space
• First Quarter 2007 GAAP Same Property Revenues Less Operating Expenses up 3.3%
• Acquired Two Land Parcels Aggregating 151,000 Square Feet
• Completed Redevelopment of Multiple Spaces at Two Properties Aggregating 40,349 Square Feet
• Closed $460 Million of 3.70% Convertible Notes Due 2027
• In May 2007, Increased Credit Facility to $1.9 Billion Plus a $500 Million Accordion
PASADENA, CA. – May 3, 2007 -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) today announced operating and financial results for the first quarter ended March 31, 2007.
For the first quarter of 2007, we reported total revenues of $97,639,000 and FFO available to common stockholders of $37,546,000, or $1.28 per share (diluted), net of $0.10 per share (diluted) preferred stock redemption charge, compared to total revenues of $68,283,000 and FFO available to common stockholders of $28,154,000, or $1.24 per share (diluted), for the first quarter of 2006. Comparing the first quarter of 2007 to the first quarter of 2006, total revenues increased 43%, FFO available to common stockholders increased 33% and FFO per share (diluted) increased 3%, net of $0.10 per share preferred stock redemption charge.
In February 2007, the Company elected to redeem all 2,300,000 outstanding shares of its 9.10% Series B cumulative redeemable preferred stock (“Series B Preferred Stock”). The redemption occurred in March 2007 at a redemption price of $25.00 per share, plus $0.4107639 per share representing accumulated and unpaid dividends to the redemption date. In accordance with Emerging Issues Task Force Topic D-42 ("D-42"), the Company recorded a charge of approximately $2.8 million, or $0.10 per share (diluted), related to the redemption of our Series B Preferred Stock. Excluding the charge for the first quarter of 2007, FFO available to common stockholders increased by 43% and FFO per share (diluted) increased by 11%, net income available to common stockholders increased by 41% and earnings per share (diluted) increased by 9%, compared to the first quarter of 2006.
FFO is a non-GAAP measure widely used by publicly-traded real estate investment trusts. A reconciliation of GAAP net income available to common stockholders to FFO available to common stockholders, on both an aggregate and a per share diluted basis, is included in the financial information accompanying this press release. The primary reconciling item between GAAP net income available to common stockholders and FFO available to common stockholders is depreciation and amortization expense. Depreciation and amortization expense for the three months ended March 31, 2007 and 2006 was $23,518,000 and $15,443,000, respectively. Net income available to common stockholders for the first quarter of 2007 was $15,108,000, or $0.52 per share (diluted), net of $0.10 per share preferred stock redemption charge, compared to net income available to common stockholders of $12,733,000, or $0.56 per share (diluted) for the first quarter of 2006.
For the first quarter of 2007, we executed a total of 46 leases for approximately 461,000 square feet of space at 32 different properties (excluding month-to-month leases). Of this total, approximately 326,000 square feet related to new or renewal leases of previously leased space and approximately 135,000 square feet related to redeveloped, developed or previously vacant space. Of the 135,000 square feet, approximately 57,000 square feet were delivered from our redevelopment or development programs, with the remaining approximately 78,000 square feet related to previously vacant space. Rental rates for these new or renewal leases were on average approximately 8% higher (on a GAAP basis) than rental rates for expiring leases.
During the first quarter of 2007, we acquired two land parcels with approximately 151,000 developable square feet. We paid approximately $19 million cash for the land parcels.
As of March 31, 2007, approximately 90% of our leases (on a square footage basis) were triple net leases, requiring tenants to pay substantially all real estate taxes and insurance, common area and other operating expenses, including increases thereto. In addition, as of March 31, 2007, approximately 4% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses. Additionally, as of March 31, 2007, approximately 91% of our leases (on a square footage basis) provided for the recapture of certain capital expenditures and approximately 91% of our leases (on a square footage basis) contained effective annual rent escalations that were either fixed or indexed based on the consumer price index or another index.
Based on our current view of existing market conditions and certain current assumptions, we have updated our prior guidance for FFO per share (diluted) and earnings per share (diluted) as follows:
2007 FFO per share (diluted) (1) $5.61
Earnings per share (diluted) (2)
$2.25
Preferred stock redemption charge $(0.10)
(1) Includes preferred stock redemption charge and excludes gain on sale of real estate recognized in first quarter 2007.
(2) Includes preferred stock redemption charge and gain on sale of real estate recognized in first quarter 2007.
As a result of the redemption of all of the outstanding shares of the 9.10% Series B Preferred Stock, and in compliance with D-42, the Company recorded a charge of approximately $2.8 million in the first quarter of 2007 related to the costs of redemption of the Series B Preferred Stock. In providing our guidance above, the Company has included the charge for the costs of redemption of our Series B Preferred Stock in accordance with D-42.
Alexandria Real Estate Equities, Inc., Landlord and Developer of Choice to the Life Science Industry®, is a publicly-traded real estate investment trust focused principally on the ownership, operation, management, selective redevelopment, development and acquisition of life science properties. Our properties are designed and improved for lease primarily to institutional (universities and independent not-for-profit institutions), pharmaceutical, biotechnology, medical device, life science product, service, biodefense and translational medicine entities, as well as governmental agencies. We are the leading provider of real estate to the broad and diverse life science industry with a current asset base that will allow us to grow our Company to approximately 18.4 million square feet consisting of 158 properties approximating 11.1 million square feet, properties undergoing ground-up development approximating 1.2 million square feet, plus an imbedded pipeline for ground-up development approximating 6.1 million square feet.
This press release contains forward-looking statements, including earnings guidance, within the meaning of the federal securities laws. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our Annual Report on Form 10-K and our other periodic reports filed with the Securities and Exchange Commission.
For the financial tables associated with this press release, please visit the Alexandria Real Estate Equities website. |
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