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Highlights ---------- Second Quarter 2007: -- Alexandria Celebrates its 40th Reporting Quarter as a NYSE Listed Company -- Total Return Performance of 660% from May 28, 1997 to June 30, 2007, Assuming Reinvestment of All Dividends -- Second Quarter 2007 Funds from Operations (FFO) Per Share (Diluted) of $1.42, up 13%, Compared to Second Quarter 2006 FFO Per Share (Diluted) of $1.26 -- Second Quarter 2007 Total Revenues up 37%, FFO Available to Common Stockholders up 42% -- Second Quarter 2007 Earnings Per Share (Diluted) of $0.73, up 28%, Compared to Second Quarter 2006 Earnings Per Share (Diluted) of $0.57 -- Executed 38 Leases for 335,000 Square Feet -- Second Quarter 2007 GAAP Rental Rate Increase of 5.5% on Renewed/Released Space -- Second Quarter 2007 GAAP Same Property Revenues Less Operating Expenses up 4.2% -- Acquired Two Properties Aggregating 104,000 Square Feet -- Acquired One Land Parcel Aggregating 50,000 Developable Square Feet-- Completed Redevelopment of Multiple Spaces at Six Properties Aggregating 109,530 Square Feet -- Increased Credit Facility to $1.9 Billion Plus a $500 Million Accordion PASADENA, Calif., Aug. 2 /PRNewswire-FirstCall/ -- Alexandria RealEstate Equities, Inc. (NYSE: ARE) today announced operating and financialresults for the second quart For the second quarter of 2007, we reported total revenues of$95,902,000 and FFO available to common stockholders of $41,607,000, or$1.42 per share (diluted), compared to total revenues of $70,187,000 andFFO available to common stockholders of $29,227,000, or $1.26 per share(diluted), for the second quarter of 2006. Comparing the second quarter of2007 to the second quarter of 2006, total revenues increased 37%, FFOavailable to common stockholders increased 42% and FFO per share (diluted)increased 13%. For the six months ended June 30, 2007, we reported totalrevenues of $193,541,000 and FFO available to common stockholders of$79,153,000, or $2.70 per share (diluted), net of a preferred stockredemption charge, compared to total revenues of $138,470,000 and FFOavailable to common stockholders of $57,381,000, or $2.49 per share(diluted) for the six months ended June 30, 2006. Comparing the six monthsended June 30, 2007 to the six months ended June 30, 2006, total revenuesincreased 40%, FFO available to common stockholders increased 38% and FFOper share (diluted) increased 8%, net of a preferred stock redemptioncharge. In the first quarter of 2007, we recognized a preferred stockredemption charge of approximately $2,799,000, or $0.10 per share(diluted), related to the redemption of our Series B Preferred Stock.Excluding the preferred stock redemption charge, FFO available to commonstockholders for the six months ended June 30, 2007 increased by 43% andFFO per share (diluted) increased by 12% as compared to the six monthsended June 30, 2006. FFO is a non-GAAP measure widely used by publicly-traded real estateinvestment trusts. A reconciliation of GAAP net income available to commonstockholders to FFO available to common stockholders, on both an aggregateand per share diluted basis, is included in the financial informationaccompanying this press release. The primary reconciling item between GAAPnet income available to common stockholders and FFO available to commonstockholders is depreciation and amortization expense. Depreciation andamortization expense for the three months ended June 30, 2007 and 2006 was$22,654,000 and $16,169,000, respectively. Depreciation and amortizationexpense for the six months ended June 30, 2007 and 2006 was $46,172,000 and$31,612,000, respectively. Net income available to common stockholders forthe second quarter of 2007 was $21,334,000, or $0.73 per share (diluted),compared to net income available to common stockholders of $13,139,000, or$0.57 per share (diluted), for the second quarter of 2006. Net incomeavailable to common stockholders for the six months ended June 30, 2007 was$36,442,000, or $1.24 per share (diluted), compared to net income availableto common stockholders of $25,872,000, or $1.12 per share (diluted), forthe six months ended June 30, 2006. In the first quarter of 2007, werecognized a preferred stock redemption charge of approximately $2,799,000,or $0.10 per share (diluted), related to the redemption of our Series BPreferred Stock. Excluding the preferred stock redemption charge, netincome available to common stockholders for the six months ended June 30,2007 increased by 52% and net income per share (diluted) increased by 19%as compared to the six months ended June 30, 2006. For the second quarter of 2007, we executed a total of 38 leases forapproximately 335,000 square feet of space at 28 different properties(excluding month-to-month leases). Of this total, approximately 151,000square feet related to new or renewal leases of previously leased space andapproximately 184,000 square feet related to redeveloped, developed orpreviously vacant space. Of the 184,000 square feet, approximately 127,000square feet were delivered from our redevelopment or development programs,with the remaining approximately 57,000 square feet related to previouslyvacant space. Rental rates for these new or renewal leases were on averageapproximately 5.5% higher (on a GAAP basis) than rental rates for expiringleases. For the six months ended June 30, 2007, we executed a total of 79leases for approximately 796,000 square feet of space at 43 differentproperties (excluding month-to-month leases). Of this total, approximately496,000 square feet were for new or renewal leases related to previouslyleased space and approximately 300,000 square feet were for redeveloped,developed or previously vacant space. Of the 300,000 square feet,approximately 188,000 square feet were delivered from our redevelopment ordevelopment programs, with the remaining approximately 112,000 square feetfor previously vacant space. Rental rates for new or renewal leases were onaverage approximately 8.4% higher (on a GAAP basis) than rental rates forexpiring leases. During the second quarter of 2007, we acquired two properties withapproximately 104,000 rentable square feet. We paid approximately $12.9million cash for the properties. Also, during the second quarter of 2007,we acquired one land parcel with approximately 50,000 developable squarefeet. We paid approximately $4.5 million cash for the land parcel. As of June 30, 2007, approximately 89% of our leases (on a squarefootage basis) were triple net leases, requiring tenants to paysubstantially all real estate taxes and insurance, common area and otheroperating expenses, including increases thereto. In addition, as of June30, 2007, approximately 4% of our leases (on a square footage basis)required the tenants to pay a majority of operating expenses. Additionally,as of June 30, 2007, approximately 91% of our leases (on a square footagebasis) provided for the recapture of certain capital expenditures andapproximately 93% of our leases (on a square footage basis) containedeffective annual rent escalations that were either fixed or indexed basedon the consumer price index or another index. Based on our current view of existing market conditions and certaincurrent 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) $2.27 (1) Includes preferred stock redemption charge of $0.10 per share diluted recognized in first quarter 2007 and excludes gain on sales of real estate recognized in first and second quarter 2007. (2) Includes preferred stock redemption charge of $0.10 per share diluted recognized in first quarter 2007 and gain on sales of real estate recognized in first and second quarter 2007. Alexandria Real Estate Equities, Inc., Landlord and Developer of Choiceto the Life Science Industry(R), is a publicly-traded real estateinvestment trust focused principally on the ownership, operation,management, selective redevelopment, development and acquisition of lifescience properties. Our properties are designed and improved for leaseprimarily to institutional (universities and independent not-for-profitinstitutions), pharmaceutical, biotechnology, medical device, life scienceproduct, service, biodefense and translational medicine entities, as wellas governmental agencies. We are the largest and leading provider of realestate to the broad and diverse life science industry with an asset base,as of June 30, 2007, that will enable us to grow to approximately 18.8million square feet consisting of 155 properties approximating 10.8 millionsquare feet, properties undergoing ground-up development approximating 1.2million square feet, plus an imbedded pipeline for ground-up developmentapproximating 6.8 million square feet. This press release contains forward-looking statements, includingearnings guidance, within the meaning of the federal securities laws.Actual results may differ materially from those projected in theforward-looking statements. Additional information concerning factors thatcould cause actual results to differ materially from those in theforward-looking statements is contained in our Annual Report on Form 10-Kand our other periodic reports filed with the Securities and ExchangeCommission. (Tables follow) ALEXANDRIA REAL ESTATE EQUITIES, INC. Financial Information (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------------- ------------------------ 2007 2006 2007 2006 ----------- ----------- ---------- ----------- Income statement data Total revenues $ 95,902 $ 70,187 $ 193,541 $ 138,470 Expenses Rental operations 22,838 14,229 46,967 29,570 General and administrative 7,921 6,269 16,003 12,720 Interest 19,870 16,317 40,426 31,182 Depreciation and amortization 22,654 16,091 46,120 31,288 ----------- ---------- ---------- ---------- 73,283 52,906 149,516 104,760 Minority interest 902 370 1,809 740 ----------- ---------- ---------- ---------- Income from continuing operations 21,717 16,911 42,216 32,970 Income from discontinued operations, net 2,331 251 3,616 947 ------------ ----------- ----------- ----------- Net income 24,048 17,162 45,832 33,917 Dividends on preferred stock 2,714 4,023 6,591 8,045 Preferred stock redemption charge - - 2,799 - ----------- ---------- ---------- ---------- Net income available to common stockholders $ 21,334 $ 13,139 $ 36,442 $ 25,872 =========== ========== ========== ========== Weighted average shares of common stock outstanding Basic 29,045,354 22,856,380 28,972,732 22,590,811 =========== ========== ========== ========== Diluted 29,362,514 23,250,681 29,337,440 23,010,992 =========== ========== ========== ========== Earnings per share - basic Continuing operations (net of preferred stock dividends and preferred stock redemption charge) $ 0.65 $ 0.56 $ 1.14 $ 1.11 Discontinued operations, net 0.08 0.01 0.12 0.04 ----------- ---------- ---------- ---------- Earnings per share - basic $ 0.73 $ 0.57 $ 1.26 $ 1.15 =========== ========== ========== ========== Earnings per share - diluted Continuing operations (net of preferred stock dividends and preferred stock redemption charge) $ 0.65 $ 0.56 $ 1.12 $ 1.08 Discontinued operations, net 0.08 0.01 0.12 0.04 ------------ ----------- ----------- ----------- Earnings per share - diluted $ 0.73 $ 0.57 $ 1.24 $ 1.12 ============ =========== =========== =========== ALEXANDRIA REAL ESTATE EQUITIES, INC. Financial Information (Unaudited) Funds from Operations Generally accepted accounting principles ("GAAP") basis accounting forreal estate assets utilizes historical cost accounting and assumes realestate values diminish over time. In an effort to overcome the differencebetween real estate values and historical cost accounting for real estateassets, the Board of Governors of the National Association of Real EstateInvestment Trusts ("NAREIT") established the measurement tool of Funds FromOperations ("FFO"). Since its introduction, FFO has become a widely usednon-GAAP financial measure by REITs. We believe that FFO is helpful toinvestors as an additional measure of the performance of an equity REIT. Wecompute FFO in accordance with standards established by the Board ofGovernors of NAREIT in its April 2002 White Paper (the "White Paper") andrelated implementation guidance, which may differ from the methodology forcalculating FFO utilized by other equity REITs, and, accordingly, may notbe comparable to such other REITs. The White Paper defines FFO as netincome (loss) (computed in accordance with GAAP), excluding gains (orlosses) from sales, plus real estate related depreciation and amortization,and after adjustments for unconsolidated partnerships and joint ventures.While FFO is a relevant and widely used measure of operating performancefor REITs, it should not be considered as an alternative to net income(determined in accordance with GAAP) as an indication of financialperformance, or to cash flows from operating activities (determined inaccordance with GAAP) as a measure of our liquidity, nor is it indicativeof funds available to fund our cash needs, including our ability to makedistributions. The following table presents a reconciliation of net income available tocommon stockholders, the most directly comparable GAAP financial measure toFFO, to funds from operations available to common stockholders for the threeand six months ended June 30, 2007 and 2006 (in thousands, except per sharedata): Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2007 2006 2007 2006 ------------ ------------ ------------ ----------- Reconciliation of net income available to common stockholders to funds from operations available to common stockholders Net income available to common stockholders (1) $ 21,334 $ 13,139 $ 36,442 $ 25,872 Add: Depreciation and amortization (2) 22,654 16,169 46,172 31,612 Add: Minority interest 902 370 1,809 740 Subtract: Gain on sales of property (3) (2,340) (59) (3,461) (59) Subtract: FFO allocable to minority interest (943) (392) (1,809) (784) ------------ ------------ ------------ ---------- Funds from operations available to common stockholders (1) $ 41,607 $ 29,227 $ 79,153 $ 57,381 ============ ============ ============ ========== FFO per share Basic $ 1.43 $ 1.28 $ 2.73 $ 2.54 ============ ============ ============ ========== Diluted $ 1.42 $ 1.26 $ 2.70 $ 2.49 ============ ============ ============ ========== Reconciliation of earnings per share (diluted) to FFO per share (diluted) Earnings per share (diluted) $ 0.73 $ 0.57 $ 1.24 $ 1.12 Depreciation and amortization (2) 0.77 0.69 1.58 1.37 Minority interest 0.03 0.02 0.06 0.03 Gain on sales of property (3) (0.08) - (0.12) - FFO allocable to minority interest (0.03) (0.02) (0.06) (0.03) ------------ ------------ ------------ ---------- FFO per share (diluted) $ 1.42 $ 1.26 $ 2.70 $ 2.49 ============ ============ ============ ========== (1) During the first quarter of 2007, we redeemed our 9.10% Series B cumulative redeemable preferred stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge of $2,799,000, or $0.10 per share (diluted), in the first quarter of 2007 for costs related to the redemption of our Series B Preferred Stock. (2) Includes depreciation and amortization on assets "held for sale" reflected as discontinued operations (for the periods prior to when such assets were designated as "held for sale"). (3) Gain on sales of property relates to the disposition of one property during the second quarter of 2007, one property during the first quarter of 2007, and three properties during the second quarter of 2006. Gain on sales of property is included in the income statement in income from discontinued operations, net. ALEXANDRIA REAL ESTATE EQUITIES, INC. Supplemental Financial Information (Dollars in thousands, except per share data) (Unaudited) Quarterly Supplemental Financial Information For the Three Months Ended 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 2007 2007 2006 2006 2006 ---------- ---------- ---------- ---------- ---------- Operational data Breakdown of revenues from continuing operations(a) Rental income $ 73,369 $ 73,280 $ 70,435 $ 63,996 $ 54,485 Tenant recoveries 19,123 20,609 19,062 17,484 13,222 Other income 3,410 3,750 3,943 3,431 2,480 ---------- ---------- ---------- ---------- ---------- Total $ 95,902 $ 97,639 $ 93,440 $ 84,911 $ 70,187 ========== ========== ========== ========== ========== Funds from operations per share- diluted(b) $ 1.42 $ 1.28(c) $ 1.34 $ 1.32 $ 1.26 Dividends per share on common stock $ 0.76 $ 0.74 $ 0.74 $ 0.72 $ 0.70 Dividend payout ratio (common stock)(d) 53.8% 58.1% 55.6% 59.6% 63.7% Straight-line rent $ 2,720(e) $ 5,082 $ 5,671 $ 4,515 $ 3,674 Capitalized interest $ 13,548 $ 10,844 $ 9,010 $ 9,726 $ 8,825 As of 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 2007 2007 2006 2006 2006 ---------- ---------- ---------- ---------- ---------- Other data Number of shares of common stock outstanding at end of period 29,180,700 29,129,238 29,012,135 28,957,698 26,387,076 Number of properties(f) Acquired/added/ completed during period 2 - 8 10 4 Sold/ reconstructed during period/ transferred to development (4)(g) (1) - - (3) Owned at end of period 155 157 158 150 140 Rentable square feet(f) Acquired/added/ completed during period 104,312 - 573,027 1,343,365 316,448 Sold/ reconstructed during period/ transferred to development (375,112) (75,500) - - (268,099) Owned at end of period 10,817,539 11,088,339 11,163,839 10,590,812 9,247,447 Debt to total market capitalization (h) Total debt $ 2,274,269 $ 2,176,594 $ 2,024,866 $ 1,721,348 $ 1,305,103 Preferred stock market capitalization 132,593 140,579 193,360 194,142 193,866 Common stock market capitalization 2,825,275 2,923,702 2,912,818 2,716,232 2,340,006 ---------- ---------- ---------- ---------- ---------- Total market capital- ization $ 5,232,137 $ 5,240,875 $ 5,131,044 $ 4,631,722 $ 3,838,975 ---------- ---------- ---------- ---------- ---------- Debt to total market capitalization 43.5% 41.5% 39.5% 37.2% 34.0% (a) The historical results above exclude the results of assets "held for sale" which have been reflected as discontinued operations. (b) See page 5 for a reconciliation of earnings per share (diluted) to FFO per share (diluted). (c) During the first quarter of 2007, we redeemed our 9.10% Series B cumulative redeemable preferred stock. Accordingly, in compliance with EITF Topic D-42, we recorded a charge of $2,799,000, or $0.10 per share (diluted), in the first quarter of 2007 for costs related to the redemption of our Series B Preferred Stock. (d) Dividend payout ratio (common stock) is the ratio of the absolute dollar amount of dividends on our common stock (common stock shares outstanding on the respective record date multiplied by the related dividend per share) to funds from operations for the respective quarter. (e) Includes a rental payment of approximately $1.4 million from one tenant, the U.S. Government, in the second quarter of 2007. Pursuant to Statement of Financial Accounting Standards No. 13, "Accounting for Leases" rental payments due under this lease are recognized on a straight-line basis over the lease term. (f) Includes assets "held for sale" during the applicable periods such assets were "held for sale". (g) Represents one asset sold in the second quarter of 2007 and the transfer of three properties from operating assets to imbedded future development opportunities undergoing pre-construction activities. (h) Debt to total market capitalization is the ratio of total debt (secured notes payable, unsecured line of credit and unsecured term loan and unsecured convertible notes) to total market capitalization. Total market capitalization is equal to outstanding shares of preferred stock and common stock multiplied by the related closing price at the end of each period presented, plus total debt. ALEXANDRIA REAL ESTATE EQUITIES, INC. Condensed Consolidated Balance Sheets (In thousands) June 30, December 31, 2007 2006 ----------- ----------- (Unaudited) Assets Rental properties, net $2,802,568 $2,924,881 Properties undergoing development and land held for development 705,041 397,701 Cash and cash equivalents 7,017 2,948 Tenant security deposits and other restricted cash 48,332 34,360 Tenant receivables 6,360 6,330 Deferred rent 73,493 68,412 Investments 77,698 74,824 Other assets 126,377 108,021 ----------- ----------- Total assets $3,846,886 $3,617,477 =========== =========== Liabilities and Stockholders' Equity Secured notes payable $1,036,269 $1,174,866 Unsecured line of credit and unsecured term loan 778,000 850,000 Unsecured convertible notes 460,000 - Accounts payable, accrued expenses and tenant security deposits 176,993 158,119 Dividends payable 25,005 25,363 ----------- ----------- Total liabilities 2,476,267 2,208,348 Minority interest 58,429 57,477 Stockholders' equity: Series B preferred stock - 57,500 Series C preferred stock 129,638 129,638 Common stock 292 290 Additional paid-in capital 1,146,101 1,139,629 Accumulated other comprehensive income 36,159 24,595 ----------- ----------- Total stockholders' equity 1,312,190 1,351,652 ----------- ----------- Total liabilities and stockholders' equity $3,846,886 $3,617,477 =========== =========== ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Debt June 30, 2007 (Dollars in thousands) (Unaudited) Principal Maturities / Rates Secured Debt Unsecured Debt ----------------------------- --------------------------- Weighted Weighted Average Average Year Amount Interest Rate Amount Interest Rate --------- ----------- -------------- ----------- -------------- 2007 $ 25,494 6.15%(1) $ - - 2008 196,100 6.13%(2) - - 2009 45,986 6.27%(2) - - 2010 93,259 6.24%(2) 28,000 6.47%(3) 2011 108,191 6.10%(2) 750,000 5.95%(3) Thereafter 567,239 6.00%(2) 460,000 3.70%(4) ----------- ----------- Total $1,036,269 $1,238,000 =========== =========== Secured and Unsecured Debt Analysis Percentage Weighted Weighted of Average Average Balance Balance Interest Rate Maturity ---------- --------- ------------- ---------- Secured Debt $1,036,269 45.6% 6.15% 5.3 Years Unsecured Debt 1,238,000 54.4% 5.12%(5) 4.4 Years ---------- --------- ------------- ---------- Total Debt $2,274,269 100.0% 5.59% 4.8 Years ========== ========= ============= ========== Fixed and Floating Rate Debt Analysis Percentage Weighted Weighted of Average Average Balance Balance Interest Rate Maturity ---------- --------- ------------- ---------- Fixed Rate Debt $1,353,113 59.5% 5.27% 5.4 Years Floating Rate Debt - Hedged 628,500 27.6% 5.83%(5) 4.3 Years Floating Rate Debt - Unhedged 292,656 12.9% 6.54% 3.4 Years ---------- --------- ------------- ---------- Total Debt $2,274,269 100.0% 5.59% 4.8 Years ========== ========= ============= ========== (1) The weighted average interest rate is calculated based on outstanding debt as of June 30, 2007. (2) The weighted average interest rate is calculated based on outstanding debt as of December 31st of the year immediately preceding the year presented. (3) The weighted average interest rates related to our unsecured line of credit and unsecured term loan are calculated based on borrowings outstanding as of June 30, 2007. The unsecured line of credit matures in October 2010 and may be extended at our sole option for an additional one year period. The unsecured term loan matures in October 2011 and may be extended at our sole option for an additional one year period. The weighted average interest rate includes the impact of our interest rate swap agreements. (4) On or after January 15, 2012, we have the right to redeem our unsecured convertible notes, in whole or in part, at any time from time to time, for cash equal to 100% of the principal amounts of the notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date. Holders of the notes may require us to repurchase their notes, in whole or in part, on January 15, 2012, 2017 and 2022 for cash equal to 100% of the principal amount of the notes to be purchased plus any accrued and unpaid interest to, but excluding, the repurchase date. Additional information regarding our unsecured convertible notes is contained in our Form 10-K filed with the Securities and Exchange Commission. (5) The weighted average interest rates include the impact of our interest rate swap agreements. See page 9 for further details of our interest rate swap agreements. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Interest Rate Swap Agreements June 30, 2007 (Dollars in thousands) (Unaudited) Interest Pay Transaction Effective Notional Effective at Rates Termination Dates Dates Amounts June 30, 2007 (1) Dates ----------- ------------ --------- ------------- ------ ------------ December December 29, October 31, 2003 2006 $ 50,000 $ 50,000 5.090% 2008 April April 30, April 30, 2004 2007 50,000 50,000 4.850% 2008 December December 31, January 2, 2004 2004 50,000 50,000 3.590% 2008 December January 3, July 1, 2004 2006 50,000 50,000 3.927% 2008 May November 30, November 30, 2005 2006 25,000 25,000 4.330% 2007 May June 29, June 30, 2005 2007 50,000 50,000 4.400% 2008 May November 30, November 28, 2005 2007 25,000 - 4.460% 2008 May June 30, June 30, 2005 2008 50,000 - 4.509% 2009 May November 28, November 30, 2005 2008 25,000 - 4.615% 2009 December December 29, November 30, 2005 2006 50,000 50,000 4.730% 2009 December December 29, 50,000 50,000 4.740% November 30, 2005 2006 2009 December January 2, 50,000 - 4.768% December 31, 2005 2008 2010 June June 30, 125,000 125,000 5.299% September 30, 2006 2006 2009 June October 31, 50,000 - 5.340% December 31, 2006 2008 2010 June October 31, December 31, 2006 2008 50,000 - 5.347% 2010 June June 30, June 30, 2006 2008 50,000 - 5.325% 2010 June June 30, June 30, 2006 2008 50,000 - 5.325% 2010 December December 29, March 31, 2006 2006 50,000 50,000 4.990% 2014 December June 29, October 31, 2006 2007 50,000 50,000 4.920% 2008 December November 30, March 31, 2006 2009 75,000 - 5.015% 2014 December November 30, March 31, 2006 2009 75,000 - 5.023% 2014 December December 31, October 31, 2006 2010 100,000 - 5.015% 2012 December January 2, January 3, 2006 2007 28,500 28,500 5.003% 2011 ---------- Total $ 628,500 ========== (1) The interest pay rates represent the interest rate we will pay for one month LIBOR under the respective interest rate swap agreement. These rates do not include any spread in addition to one month LIBOR that is due monthly as interest expense. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Same Property Comparisons (Dollars in thousands) (Unaudited) GAAP Basis (1) Cash Basis (1) Quarter Ended Quarter Ended --------------------------- --------------------------- % % 6/30/2007 6/30/2006 Change 6/30/2007 6/30/2006 Change --------- --------- ------ --------- --------- ------ Revenue (2) $58,513 $54,475 7.4% $56,828 $51,233 10.9% Operating expenses 13,532 11,307 19.7% 13,532 11,307 19.7% --------- --------- ------ --------- --------- ------ Revenue less operating expenses $44,981 $43,168 4.2% $43,296 $39,926 8.4% ========= ========= ====== ========= ========= ====== GAAP Basis (1) Cash Basis (1) Six Months Ended Six Months Ended --------------------------- --------------------------- % % 6/30/2007 6/30/2006 Change 6/30/2007 6/30/2006 Change --------- --------- ------ --------- --------- ------ Revenue (2) $111,958 $105,309 6.3% $109,140 $100,666 8.4% Operating expenses 26,394 22,456 17.5% 26,394 22,456 17.5% --------- --------- ------ --------- --------- ------ Revenue less operating expenses $85,564 $82,853 3.3% $82,746 $78,210 5.8% ========= ========= ====== ========= ========= ====== NOTE: This summary represents operating data for all properties thatwere owned and fully operating for the entire periods presented (the"Second Quarter Same Properties") for the Quarter periods and (the "SixMonths Same Properties") for the Six Month periods. Same Property Occupancyfor the quarters ended June 30, 2007 and 2006 was 93.8% and 93.3%,respectively. Same Property Occupancy for the six months ended June 30,2007 and 2006 was 94.0% and 94.5%, respectively. Properties underredevelopment are excluded from same property results. (1) Revenue less operating expenses computed under GAAP is total revenue associated with the Second Quarter Same Properties and Six Months Same Properties, as applicable, (excluding lease termination fees, if any) less property operating expenses. Under GAAP, rental revenue is recognized on a straight-line basis over the respective lease terms. Revenue less operating expenses on a cash basis is total revenue associated with the Second Quarter Same Properties and Six Months Same Properties, as applicable (excluding lease termination fees, if any) less property operating expenses, adjusted to exclude the effect of straight-line rent adjustments required by GAAP. Straight-line rent adjustments for the quarters ended June 30, 2007 and 2006 for the Second Quarter Same Properties were $1,685,000 and $3,242,000, respectively. Straight-line rent adjustments for the six months ended June 30, 2007 and 2006 for the Six Months Same Properties were $2,818,000 and $4,643,000, respectively. We believe that revenue less operating expenses on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent adjustments to rental revenue. (2) Fees received from tenants in connection with termination of their leases, if any, are excluded from revenue in the Summary of Same Property Comparisons. As of June 30, 2007, approximately 89% 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 June 30, 2007, approximately 4% of our leases (on a square footage basis) required the tenants to pay a majority of operating expenses. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Properties (Dollars in thousands) June 30, 2007 ------------------------------------------------ Number Rentable Square Feet of ------------------------------------ Properties Operating Redevelopment Total ------------------------------------------------ Markets California - Los Angeles Metro 2 31,343 29,660 61,003 California - San Diego 27 1,063,687 247,849 1,311,536 California - San Francisco Bay 22 1,574,285 30,238 1,604,523 Eastern Massachusetts 37 2,735,398 281,809 3,017,207 International - Canada 4 296,362 46,032 342,394 New Jersey/Suburban Philadelphia 8 443,349 - 443,349 Southeast 12 596,172 62,234 658,406 Suburban Washington D.C. 31 2,420,334 79,536 2,499,870 Washington - Seattle 12 843,824 35,427 879,251 --- ---------- ------- ---------- Total Properties (Continuing Operations) 155 10,004,754 812,785 10,817,539 === ========== ======= ========== June 30, March 31, 2007 2007 --------------------- ---------- Annualized Occupancy Occupancy Base Rent Percentage Percentage (1) (1) (2) (3) ---------- ---------- ---------- Markets California - Los Angeles Metro $696 70.8% 70.8% California - San Diego 27,419 89.9% 90.4% California - San Francisco Bay 51,231 96.7% 96.2% Eastern Massachusetts 95,859 95.7% 95.2% International - Canada 6,415 100.0% 100.0% New Jersey/Suburban Philadelphia 8,999 96.6% 96.6% Southeast 10,147 86.2%(4) 84.3%(4) Suburban Washington D.C. 47,936 90.4% 90.1% Washington - Seattle 26,445 93.7% 95.1% ---------- ---------- ---------- Total Properties (Continuing Operations) $275,147 93.3% 93.1% ========== ========== ========== (1) Excludes spaces at properties totaling 812,785 square feet undergoing a permanent change in use to office/laboratory space through redevelopment. (2) Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of June 30, 2007 was 86.3%. See page 16 for additional information on our redevelopment program. (3) Excludes spaces at properties totaling 830,255 square feet undergoing a permanent change in use to office/laboratory space through redevelopment. Including spaces undergoing a permanent change in use to office/laboratory space through redevelopment, occupancy as of March 31, 2007 was 85.7%. See page 16 for additional information on our redevelopment program. (4) Substantially all of the vacant space is office or warehouse space. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Leasing Activity For the Quarter Ended June 30, 2007 TI's/Lease Commis- sions Number Rental Per Average of Square Expiring New Rate Square Lease Leases Footage Rates Rates Change Foot Terms ------------------------------------------------------- Leasing Activity Lease Expirations Cash Basis 42 358,146 $25.47 - - - - GAAP Basis 42 358,146 $25.34 - - - - Renewed/Releasable Space Leased Cash Basis 12 150,601 $33.86 $34.97 3.3% $4.64 4.7 years GAAP Basis 12 150,601 $32.29 $34.05 5.5% $4.64 4.7 years Redeveloped/Developed/ Vacant Space Leased Cash Basis 26 183,907 - $36.05 - $5.98 5.0 years GAAP Basis 26 183,907 - $38.29 - $5.98 5.0 years Month-to-Month Leases In Effect Cash Basis 21 69,111 $23.24 $23.32 - - - GAAP Basis 21 69,111 $23.22 $23.32 - - - Leasing Activity Summary Excluding Month-to-Month Leases Cash Basis 38 334,508 - $35.56 - $5.38 4.9 years GAAP Basis 38 334,508 - $36.38 - $5.38 4.9 years Including Month-to-Month Leases Cash Basis 59 403,619 - $33.47 - - - GAAP Basis 59 403,619 - $34.15 - - - ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Leasing Activity For the Six Months Ended June 30, 2007 TI's/Lease Commis- sions Number Rental Per Average of Square Expiring New Rate Square Lease Leases Footage Rates Rates Change Foot Terms ------------------------------------------------------- Leasing Activity Lease Expirations Cash Basis 81 1,050,259 $23.84 - - - - GAAP Basis 81 1,050,259 $26.57 - - - - Renewed/Releasable Space Leased Cash Basis 36 495,238 $27.55 $29.22 6.1% $5.02 4.0 years GAAP Basis 36 495,238 $27.10 $29.37 8.4% $5.02 4.0 years Redeveloped/Developed/ Vacant Space Leased Cash Basis 43 300,379 - $34.14 - $6.28 4.7 years GAAP Basis 43 300,379 - $35.78 - $6.28 4.7 years Month-to-Month Leases In Effect Cash Basis 21 69,111 $22.18 $23.32 - - - GAAP Basis 21 69,111 $22.15 $23.32 - - - Leasing Activity Summary Excluding Month-to-Month Leases Cash Basis 79 795,617 - $31.08 - $5.49 4.3 years GAAP Basis 79 795,617 - $31.79 - $5.49 4.3 years Including Month-to-Month Leases Cash Basis 100 864,728 - $30.46 - - - GAAP Basis 100 864,728 - $31.11 - - - ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Lease Expirations June 30, 2007 Year Number Square Percentage of Annualized of of Footage of Aggregate Base Rent Lease Leases Expiring Leased Square of Expiring Expiration Expiring Leases Feet Leases(per square foot) ---------- -------- ---------- ---------------- ------------ 2007 51(1) 410,231 4.4% $26.66 2008 46 829,357 8.9% $27.19 2009 55 710,657 7.6% $22.82 2010 41 1,010,063 10.8% $27.35 2011 49 1,374,152 14.7% $27.82 Square Footage of Expiring Leases Markets 2007 2008 California - Los Angeles Metro - 4,006 California - San Diego 88,439 100,478 California - San Francisco Bay 87,441 262,462 Eastern Massachusetts 105,481 196,432 International - Canada - - New Jersey/Suburban Philadelphia - 40,000 Southeast 17,374 21,300 Suburban Washington D.C. 76,810 69,408 Washington - Seattle 34,686 135,271 Total 410,231(1) 829,357 (1) Includes month-to-month leases for approximately 69,000 square feet. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Additions and Dispositions of Properties For the Quarter Ended June 30, 2007 (Dollars in thousands) Acquisition Month of Rentable Markets Amount Acquisition Square Feet ----------------------------- ----------- ----------- ----------- Additions to Operating Properties: Eastern Massachusetts $ 6,500 May 58,280 Additions to Properties Under Redevelopment: International - Canada 6,400 May 46,032 ---------- ------------ Total additions to Operating Properties/Properties Under Redevelopment: $ 12,900 104,312 ========== ============ Acquisition Month of Developable Markets Amount Acquisition Square Footage ----------------------------- ----------- ----------- -------------- Additions of Land: California - San Francisco Bay $ 4,472 May 50,000 ========== ============ Disposition Month of Rentable Markets Amount Disposition Square Feet ----------------------------- ----------- ----------- ----------- Dispositions: California - San Francisco Bay $ 12,500 April 58,400 ========== =========== ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Square Footage Undergoing Redevelopment June 30, 2007 Square Footage Placed Estimated Estimated ----------------- in In- Investment Undergoing Markets/ Redevel- Service Per Square Redevelopment/ Submarkets opment Dates Foot Total Property Status ------------- --------- ---------- -------- ----------------- ------------ California - Los Angeles Metro 2006 2008 $80-100 29,660/29,660 Construction California - San Diego/ Torrey Pines (1) 2004 2009 $100-120 87,140/87,140 Redesign/ Construction (Entitlements Recently Completed) California - San Diego/ Torrey Pines 2006 2009 $80-100 43,600/43,600 Redesign California - San Diego/ Sorrento 2006 2008 $70-80 30,147/30,147 Redesign/ Demolition California - San Diego/ Torrey Pines 2007 2009 $80-100 86,962/86,962 Redesign California - San Francisco Bay/Peninsula 2007 2008 $80-100 30,238/82,712 Construction Eastern Massachusetts /Cambridge 2007 2009 $70-80 113,045/113,045 Redesign Eastern Massachusetts /Cambridge 2006 2008 $120-175 155,090/155,090 Construction Eastern Massachusetts /Suburban 2006 2008 $100-120 13,674/82,330 Construction International - Canada 2007 2008 $140-160 46,032/46,032 Entitlements /Redesign Southeast/ Florida 2006 2008 $80-100 45,841/45,841 Construction Southeast/ Research Triangle Park 2007 2008 $100-120 16,393/77,395 Design Suburban Washington DC/Shady Grove 2007 2008 $70-80 10,170/60,495 Construction Suburban Washington DC/Shady Grove 2007 2009 $70-80 69,366/125,004 Redesign/ Construction Washington - Seattle/First Hill 2006 2007 $70-80 35,427/164,345 Construction ----------------- 812,785/1,229,798 ================= Our redevelopment program involves ongoing activities necessary for thepermanent change of use of applicable redevelopment space tooffice/laboratory space. Spaces currently built out with laboratoryimprovements are generally not placed into our value-add redevelopmentprogram. As required under GAAP, interest and other costs directly relatedand essential to the project are capitalized on redevelopment properties onthe basis allocable only to that portion of space undergoing redevelopment.In addition to properties undergoing redevelopment, as of June 30, 2007 ourasset base contained imbedded opportunities for future permanent change ofuse to office/laboratory space through redevelopment aggregatingapproximately 1,476,000 rentable square feet. See Summary of ImbeddedFuture Development and Redevelopment Square Footage on page 18. (1) This project also includes site work and a multi-story below and above ground parking structure to support both the existing building undergoing redevelopment (for which entitlements have just been received) and an additional building targeted for development in the future. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Properties Undergoing Ground-Up Development June 30, 2007 Esti- mated Esti- Invest- Construc- mated ment tion In- Per Rentable Markets/ Building Start Service Square Square Submarkets Descriptions Dates Dates Foot(1) Footage Status -------------------------------------------------------------------------- California - San Francisco Bay/ Mission One Multi- Bay tenant Bldg. 2005 2007 $300-350 154,000 Construction California - Two Bldgs, San Francisco Single or Bay/ So. San Multi- Francisco tenant 2006 2009 $300-350 162,000 Construction California - One Single San Francisco or Multi- Bay/ So. San tenant Francisco Bldg. 2006 2009 $300-350 135,000 Construction New York - Two Multi- 2009/ New York City/ tenant 2010/ New York City Bldgs. 2007 2011 $500 725,000(2) Site Work ---------- Total Properties Undergoing Ground-Up Development(1) 1,176,000 =========== In accordance with Statement of Financial Accounting Standards No. 34,"Capitalization of Interest Cost" ("SFAS 34") and Statement of FinancialAccounting Standards No. 67, "Accounting for Costs and Initial RentalOperations of Real Estate Projects" ("SFAS 67"), we are required tocapitalize direct construction, including pre-construction costs, interest,property taxes, insurance and other costs directly related and essential tothe construction of a project while activities are ongoing to prepare anasset for its intended use. Pre-construction costs include costs related tothe development of plans and the process of obtaining entitlements andpermits from government authorities. Costs incurred after a project issubstantially complete and ready for its intended use are expensed asincurred. Should development, redevelopment or construction activity cease,construction costs, including interest, would no longer be eligible forcapitalization, under SFAS 34 and SFAS 67, and would be expensed asincurred. (1) Our aggregate construction costs to date approximate $144 per developable square foot. Amounts exclude our investment per square foot in land. (2) In addition, we have the right to develop an additional parcel with approximately 442,000 square feet. This square footage is not included in the imbedded developable square footage shown on page 18. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Imbedded Future Development and Redevelopment Square Footage June 30, 2007 Imbedded Future Development ------------------------------- Total Imbedded Development/ Imbedded Future Pre-construction Development Redevelopment Square Square Square Markets Footage(1) Footage Footage Total ----------------- ----------- ------------- ----------- California - San Diego 435,000 443,000 118,000 61,000 California - San Francisco Bay/Mission Bay 1,994,000 2,544,000 - 2,544,000 California - San Francisco Bay/So. San Francisco 849,000 970,000 100,000 1,070,000 Eastern Massachusetts 674,000 899,000 345,000 1,244,000 International - China 275,000 275,000 - 275,000 Suburban Washington D.C. 494,000 856,000 520,000 1,376,000 Washington - Seattle 280,000 421,000 146,000 567,000 Other - 400,000 247,000 647,000 ----------------- ----------- ------------- ----------- Total 5,001,000 6,808,000(2) 1,476,000 8,284,000 ================= =========== ============= =========== The imbedded future development and redevelopment square footage shownabove represents future ground-up development projects and futureredevelopment (permanent change in use of applicable space tooffice/laboratory space) projects. A significant portion of our imbeddedfuture development square footage is in the development/pre-constructionphase (entitlement, permitting, design, etc.). See discussion on SFAS 34and SFAS 67 on page 17. The exact date of physical construction will dependon successful completion of development/pre-construction activities andmanagement's assessment of overall market conditions. As required underGAAP, direct construction, interest, property taxes, insurance and othercosts directly related and essential to the development/pre-construction,or construction of a project, is mandated to be capitalized duringpre-construction when activities are ongoing to bring these assets to theirintended use. (1) Development/pre-construction square footage is included in Imbedded Future Development-Total Imbedded Development Square Footage shown above. (2) In addition, we have the right to develop an additional parcel with approximately 442,000 square feet. This square footage is not included in the imbedded developable square footage shown above. ALEXANDRIA REAL ESTATE EQUITIES, INC. Summary of Capital Costs For the Six Months Ended June 30, 2007 (In thousands) Property-related capital expenditures (1) $ 695 Leasing costs (2) $ 121 Property-related redevelopment costs (3) $ 81,416 Property-related development costs (3) $ 163,992 (1) Property-related capital expenditures include all major capital and recurring capital expenditures except capital expenditures that are recoverable from tenants, revenue-enhancing capital expenditures, or costs related to the redevelopment of a property. Major capital expenditures consist of roof replacements and HVAC systems which are typically identified and considered at the time the property is acquired. Capital expenditures fluctuate in any given period due to the nature, extent or timing of improvements required and the extent to which they are recoverable from tenants. Approximately 91% of our leases (based on rentable square feet) provide for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement and parking lot resurfacing). In addition, we implement an active preventative maintenance program at each of our properties to minimize capital expenditures. (2) Leasing costs consist of tenant improvements and leasing commissions related to leasing of acquired vacant space and second generation space. (3) Amount includes leasing costs related to development and redevelopment projects. ALEXANDRIA REAL ESTATE EQUITIES, INC. Conference Call Information For the Second Quarter Ended June 30, 2007 Alexandria Real Estate Equities, Inc. will be hosting a conference callto discuss its operating and financial results for the second quarter andsix months ended June 30, 2007: Date: August 3, 2007 Time: 2:00 P.M. Eastern Daylight Time/ 11:00 A.M. Pacific Daylight Time Phone Number: (719) 457-2679 Confirmation Code: 4231330
