ALEXANDRIA REAL ESTATE EQUITIES, INC. Item 7.01. Regulation FD Disclosure.
Alexandria Real Estate Equities, Inc. (the "Company") previously provided guidance as ofOctober 29, 2019 for, among other things, earnings per share ("EPS"), funds from operations ("FFO") per share, FFO per share, as adjusted, and key sources and uses of capital, for the Company's fiscal year endingDecember 31, 2019 , which guidance was included in its Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2019 , filed with theSecurities and Exchange Commission onOctober 29, 2019 . The Company previously furnished guidance for the fiscal year endedDecember 31, 2020 , in a Form 8-K that was filed with theSecurities and Exchange Commission onDecember 3, 2019 . The Company hereby updates its guidance for 2019 and 2020, including key assumptions and sources and uses of capital. The key changes to guidance for 2019 and 2020 are attached hereto as Exhibit 99.1 and incorporated herein by reference. The guidance included in Exhibit 99.1 shall be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934. Item 8.01. Other Events. Recent Developments Acquisitions Square Footage Operating with Future Submarket/ Date of Number of Operating Future Active Development/ Purchase Property Market Purchase Properties Occupancy Development Redevelopment Redevelopment Operating Price 2019 acquisitions: Completed as of 9/30/19 24 87% 995,338 347,912 246,578 822,508$ 1,203,680 Completed in 4Q19: Arsenal on the Cambridge/Inner Charles Suburbs/Greater Boston 12/17/19 11 100% 200,000 153,157 154,855 (1) 526,770 525,500 Greater
3825-3875 Fabian Way
Francisco 12/10/19 2 100% - - 478,000 - 291,000
Other Various 4Q19 10 71% 1,155,000 - - 598,316 139,964
2019 acquisitions 2,350,338 501,069 879,433 1,947,594 $ 2,160,144
2020 acquisitions
guidance range:
Pending acquisitions:
Pending San Francisco 1Q20 - N/A 700,000 - - - $ 120,000
Lake
Mercer Mega Block Union/Seattle 2020 - N/A 800,000 - - - 143,000
Pending Greater Boston 1Q20 1 99% - - - 510,000 235,000
Pending San Francisco 1Q20 1 100% - - - 138,000 157,500
Pending San Diego 1Q20 2 88% - - - 220,000 102,250
Additional targeted
acquisitions 192,250
2020 acquisitions $900,000 -
guidance range 1,500,000 - - 868,000 $1,000,000
2020 formation of new
joint venture
(non-cash
transaction):
Pending JV (50%
interest in
consolidated JV) San Francisco 1Q20 3 73% 260,000 - 300,000 476,000 (2)
(1) Represents square footage with current occupancy that have near-term contractual lease expirations. Upon expiration of the existing leases, we anticipate this RSF will be redeveloped to office/laboratory space.
(2) Upon formation of the real estate joint venture, our initial ownership interest in the joint venture is expected to be 44%. Refer to "Pending 2020 Acquisitions " under the "Recent Developments" section within Item 8.01 of this Current Report on Form 8-K for additional information.
Key completed 4Q19 acquisitions and updated leverage guidance
InDecember 2019 , we acquired a campus, aggregating 834,782 of operating RSF, at Arsenal on the Charles located in ourCambridge /Inner Suburbs submarket ofGreater Boston , for$525.5 million . The campus currently has an operating occupancy of 100% on 681,625 RSF, including 154,855 RSF that is targeted for redevelopment into office/laboratory space upon expiration of existing leases in the near-term. The campus also includes 153,157 RSF of vacant space that we expect to redevelop into laboratory space, and an additional 200,000 RSF of future development opportunities, which will bring its aggregate size to 1,034,782 RSF. Upon stabilization, we expect that 508,012 RSF, or approximately 50% of the campus, will have undergone value-creation activities. We expect to provide total estimated costs and related yields for redevelopment or development in the future, subsequent to the commencement of construction. InDecember 2019 , we acquired two office buildings, aggregating 478,000 RSF, at3825 and 3875 Fabian Way located in our Greater Stanford submarket ofSan Francisco , for$291.0 million . The buildings comprise 250,000 RSF and 228,000 RSF, respectively, with operating occupancy of 100% and remaining lease terms of two and 10 years, respectively. Upon the expiration of the existing3825 Fabian Way lease term, we expect to redevelop the existing office space into office/laboratory space. Upon the expiration of the 10-year lease at3875 Fabian Way , we may consider options to develop new Class A office/laboratory, or another suitable type, of space on the site. We expect the initial stabilized yields for the operating properties to be 8.2% and 6.9% (cash basis), respectively. We expect to provide total estimated costs and related yields for redevelopment or development in the future, subsequent to the commencement
of construction.
Due to the timing of the closing of these acquisitions inDecember 2019 , we expect to fund a portion of these acquisitions in 2020 on a long-term basis. Consequently, we expect a temporary 0.4x increase in our guidance for net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA - fourth quarter of 2019, annualized. We remain committed to our guidance for net debt and preferred stock to Adjusted EBITDA - fourth quarter of 2020, annualized, of less than or equal to 5.2x. Pending 2020 acquisitions
We have executed letters of intent and/or purchase and sales agreements to acquire the following:
· One land parcel, aggregating 700,000 developable square feet, located in our
·
· One property, aggregating 510,000 RSF, with operating occupancy of 99% located
in ourGreater Boston market for$235.0 million .
· One property, aggregating 138,000 RSF, with operating occupancy of 100% located
in ourSan Francisco market for$157.5 million .
· Two properties, aggregating 220,000 RSF, with operating occupancy of 88%
located in ourSan Diego market for$102.3 million .
During the first quarter of 2020, we expect to complete the formation of a consolidated real estate joint venture with an established owner and operator in ourSan Francisco market, targeting a 50% ownership interest. Upon closing, our ownership interest in the real estate joint venture is expected to be 44%, and we anticipate contributing additional capital over time to accrete to our target ownership interest.
We may be unable to complete these acquisitions according to the timeline or the other terms described above.
Settlement of Forward Equity Sales Agreements
Consistent with our expected 2019 sources and uses of capital, as previously disclosed onOctober 29, 2019 , we issued 7.0 million shares of our common stock to settle our remaining outstanding forward equity sales agreements that were entered into during the three months endedJune 30, 2019 , and received net proceeds of$981.3 million duringDecember 2019 . The proceeds were used to fund construction projects during the second half of 2019 and to fund 2019 acquisitions completed prior toDecember 2019 .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits 99.1 Key Updates to 2019 and 2020 Guidance issued byAlexandria Real Estate
Equities, Inc. onJanuary 6, 2020 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). The exhibit referenced herein provides key assumptions included in our guidance for the years endedDecember 31, 2019 and 2020. Our expected sources and uses of capital are subject to a number of variables and uncertainties, including those discussed under the "Forward-looking statements" section under Part I and the "Risk Factors" section under Item 1A of our Annual Report on Form 10-K for the year endedDecember 31, 2018 and in our Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2019 . We expect to update our forecast of sources and uses of capital on a quarterly basis.
© Edgar Online, source
