Item 7.01. Regulation FD Disclosure.
Alexandria Real Estate Equities, Inc. (the "Company") previously provided guidance as ofDecember 1, 2020 for, among other things, earnings per share ("EPS"), funds from operations ("FFO") per share, and key sources and uses of capital, for the Company's fiscal year endingDecember 31, 2021 , which guidance was included in its Form 8-K, filed with theSecurities and Exchange Commission onDecember 1, 2020 . The Company hereby updates its guidance for 2021, including key assumptions and sources and uses of capital. The key changes to guidance for 2021 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 Key Pending Acquisition
InJanuary 2021 , we entered into a definitive agreement to acquire401 Park Drive ,201 Brookline Avenue , and one future development opportunity, located in the heart of ourGreater Boston life science cluster market, for a purchase price of$1.52 billion . The campus, aggregating 1.8 million RSF, consists of the following:
·
· Highly amenitized Class A office/R&D building aggregating 973,145 RSF,
currently 93% occupied with a weighted-average remaining lease term of 8.8
years
· 50% of annual rental revenue generated from investment-grade tenants
· In-place rents are 38% below market; 30% of the RSF has a weighted average
remaining lease term of 3.3 years with rents approximately 41% below market
· Initial stabilized yields of 5.7% and 4.5% (cash basis)
· Future opportunity to convert up to 221,000 RSF, or 23% of the building, to
office/laboratory space
·
· Office/laboratory building undergoing ground-up development, aggregating
510,116 RSF, targeting initial occupancy in 2022
· 17% pre-leased to high-quality tenants
· Future development opportunity for one office/laboratory building for which we
are pursuing net new entitlement rights totaling approximately 400,000 SF of
office/lab plus retail, and common spaces. Achievement of entitlement rights
greater than 305,000 SF will increase our purchase price by a maximum of
million. Completed acquisitions During the three months endedDecember 31, 2020 , we completed the acquisition of 16 properties in key submarkets aggregating 3.3 million SF, including 1.9 million RSF of future value-creation opportunities, 383,000 RSF of active redevelopment, and 1.0 million of operating RSF that is 80% occupied, for an aggregate purchase price of$580.7 million . Of the 1.0 million operating RSF, approximately 50% has future development or redevelopment opportunities upon expiration of existing leases in the near-term, and the acquired vacancy represents lease-up opportunities that will contribute to growth in cash flows.
The following table summarizes the vacancy in our
Projected As of December 31, 2020 As of September 30, 2020 Vacant Vacant Property Submarket/Market RSF Occupancy Impact RSF Occupancy Impact Alexandria Center® for Research Life Science - Durham Triangle/ Research Triangle 251,465 0.8 % 251,465 0.8 % 601, 611, and 651 Gateway South San Boulevard Francisco/San Francisco 199,895 0.6 202,871 0.7 SD Tech by Alexandria Sorrento Mesa/San Diego 86,812 0.3 76,639 0.2
Mesa/San Diego N/A N/A 71,021 0.2 Other acquisitions(2) Various 445,419 1.4 257,483 0.9 983,591 3.1 % 859,479 2.8 %
(1) We commenced redevelopment activities on this property during the three
months ended
(2) Increase in vacant RSF primarily from a
three months endedDecember 31, 2020 . Based on the changes in the acquired vacancy noted in the table above, we expect operating occupancy inNorth America as ofDecember 31, 2020 to be in a range from 94.5% to 95.0%.
Completed and pending dispositions
During the three months ended
In
Common Equity Transactions
During the three months ended
• We issued 1.8 million shares of common stock to settle our remaining forward
equity sales agreements that were outstanding at the beginning of the quarter
and received proceeds of
• We issued 1.5 million shares of common stock under our ATM program at a price
of
• We sold 0.4 million shares under forward equity sales agreements that remain
outstanding under our ATM program at a price of
underwriting discounts). We expect to settle these forward equity sales
agreements in 2021.
As of
Extinguishment of Secured Notes Payables
In
As a result of these extinguishments, we have no debt maturing until 2024.
Collection of Tenant Receivables
As of
Updated Guidance as of
We have updated key components of our 2021 guidance that was introduced on
• Key updates to sources and uses of capital ranges related to the pending
acquisition of
opportunity:
• Acquisitions:
• Construction:$1.6 to$1.9 billion ;$90 million increase at midpoint
• Real estate dispositions, partial interest sales, and common equity:
$3.5 billion ;$1.4 billion increase at midpoint
• Incremental debt:
• Occupancy
• Decrease in operating occupancy as of
range from 95.6% to 96.2%, related to vacancy at recently acquired properties
during the three months ended
of
properties represent opportunities for future growth in cash flows.
• See discussion of occupancy as of
Acquisitions" section above • Interest expense and capitalized interest
• Capitalization of interest:
midpoint
• Interest expense:
Other than as updated above, there are no changes to our 2021 guidance that was
introduced on
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits 99.1 Key Updates to 2021 Guidance issued byAlexandria Real Estate Equities, Inc. onJanuary 5, 2021 . 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 year endingDecember 31, 2021 . 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, 2019 and in our Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2020 . We expect to update our forecast of sources and uses of capital on a quarterly basis.
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