ALEXANDRIA REAL ESTATE EQUITIES, INC. Item 7.01. Regulation FD Disclosure.
Alexandria Real Estate Equities, Inc. (the "Company") previously provided guidance as ofApril 26, 2021 , 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 was included in its Form 8-K, filed with theSecurities and Exchange Commission onApril 26, 2021 . The Company hereby updates its guidance for 2021, including key assumptions and key 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
We continue to execute our unique and differentiated life science strategy at an accelerated pace, expand our collaborative campuses and asset base in each of our key life science cluster submarkets, and have strategically positioned ourselves to take maximum advantage of historic tenant demand. Historic demand for our value-creation development and redevelopment projects of high-quality office/laboratory space, as well as continued operational excellence at our world-class, sophisticated laboratory facilities and strong execution by our team, has translated into accelerated leasing activity.
Leasing activity of development and redevelopment projects:
Leased RSF In-Process RSF(1)
YTD 2021
2020 Through June 14, 2021 As of June 14, 2021
1.0 million 0.9 million 3.1 million
(1) Represents in-process leasing activity on near-term value-creation
development and redevelopment projects that are expected to commence
construction in 2021/2022. Includes 2.2 million RSF related to leases under
negotiation/executed letters of intent, and 0.9 million RSF related to
letters of intent under negotiation.
Value-creation development and redevelopment projects are expected to generate significant growth in rental revenues and cash flows
Our value-creation pipeline of development and redevelopment projects consists
of 7.6 million RSF, including 4.0 million RSF undergoing construction (79%
leased/negotiating, including RSF in service) and 3.6 million RSF of near-term
value-creation development and redevelopment projects (91% leased/negotiating)
expected to commence construction in 2021/2022. These projects are expected to
generate significant growth in annual rental revenues and cash flows as follows:
Projects Expected to Commence Incremental Projected
Under Construction Construction in 2021/2022 Annual Rental Revenues
4.0 million RSF 3.6 million RSF
31 Properties 17 Properties >$575 million
79% Leased/Negotiating 91% Leased/Negotiating
Expansion of our collaborative campuses, as well as our asset base in each of our key life science cluster markets, through strategic acquisitions is focused on value-creation development and redevelopment opportunities
· From
properties in key life science cluster submarkets aggregating 5.9 million SF,
including 5.0 million RSF of value-creation opportunities and 0.9 million RSF
of operating space, for an aggregate purchase price of
· Our current outlook for the remainder of 2021 includes projected acquisitions
aggregating
value-creation development and redevelopment opportunities.
· Refer to "Key Pending and Completed Acquisitions in our Key Life Science
Cluster Markets" section below for additional detail.
Key pending and completed acquisitions in our key life science cluster markets
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InJune 2021 , we entered into a definitive agreement to expand our campus at Alexandria Center® atKendall Square through the acquisition ofOne Rogers Street andOne Charles Park for a purchase price of$815.0 million . This acquisition provides a key expansion to our mega campus strategy in ourCambridge submarket, the premier life science market in the world, and consists of the following:
· Upon closing the acquisition, we expect to redevelop the two buildings
aggregating 400,000 RSF into technical office/laboratory space.
· These two buildings are 100% under lease negotiation with several cutting-edge
life science companies.
· The redevelopment project is targeting initial occupancy in 2023.
· Parking garage with approximately 650 spaces.
· We expect to pursue additional entitlement opportunities for future development
of additional office/laboratory space.
· We expect to complete this acquisition in
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InJune 2021 , we acquired five operating buildings at 6260, 6290, 6310, 6340, and6350 Sequence Drive , aggregating 487,023 RSF, located in our Sorrento Mesa submarket, for a purchase price of$298.5 million , with the opportunity to increase the campus by approximately 400,000 square feet through ground-up development.
· The five buildings are currently 100% occupied with a weighted-average
remaining lease term of 2.7 years. We expect to develop or redevelop these
spaces upon expiration of the existing in-place leases.
· The aggregate 887,000 RSF from this acquisition provides a significant future
development opportunity to expand our existing
into a flagship mega campus aggregating 1.9 million square feet.
Our completed and projected real estate asset acquisitions for 2021 consist of
the following:
Square Footage
Acquisitions with Development/Redevelopment Opportunities
Operating With
Active Future
Submarket/ Date of Number of Operating Future Development/ Development/ Purchase Price
Property Market Purchase Properties Occupancy Development Redevelopment Redevelopment Operating Operating Total (in thousands)
Completed in 1Q21 1Q21 25 94 % 374,426 849,411 431,066 1,353,247 80,032 3,088,182 $ 1,873,750
Completed 4/1/21 -
6/14/21:
Alexandria Center® Sorrento Mesa/San
for Advanced Diego
Technologies -
Sorrento Mesa 6/10/21 5 100 % 887,000 - 487,023 - - 1,374,023 298,476 (1)
550 Arsenal Street Cambridge/Inner
Suburbs/Greater
Boston 4/21/21 1 98 % 515,000 - 260,867 - - 775,867 130,000 (1)
One Investors Way Route 128/Greater
Boston 4/6/21 1 100 % 350,000 - - 240,000 - 590,000 105,000 (1)
Other Various 2Q21 11 94 % 2,121,280 131,523 289,873 645,220 - 3,187,896 432,979
18 97 % 3,873,280 131,523 1,037,763 885,220 - 5,927,786 966,455
Pending
acquisitions:
Charles Park Cambridge/Greater
Boston December 2021 2 N/A TBD(2) 400,000 - - - 400,000 815,000 (1)
Mercer Mega Block Lake
Union /Seattle 2H21 - N/A 800,000 - - - - 800,000 143,500
2 800,000 400,000 - - - 1,200,000 958,500
45 5,047,706 1,380,934 1,468,829 2,238,467 80,032 10,215,968 3,798,705
Other future
acquisitions 1,161,295
$ 4,960,000 2021 acquisition guidance range as of6/14/21
$4,460,000 -$5,460,000
(1) We will provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction.
(2) We expect to pursue additional entitlement opportunities for future development of additional office/laboratory space.
Vacancy within the operating RSF of our recent value-creation acquisitions represents lease-up opportunities that will generate growth in annual rental revenues and cash flows
A portion of certain recent acquisitions with development/redevelopment opportunities also included operating properties with vacant space. As ofMarch 31, 2021 , we had 1.2 million RSF of vacancy from recently completed value-creation acquisitions. This 1.2 million RSF is now 37% leased/negotiating (31% leased and 6% negotiating), of which the majority is expected to commence occupancy by the end of 2021. For example, inAugust 2020 , we acquired Alexandria Center® for Life Science -Durham , a 16-building collaborative life science campus aggregating 2.2 million RSF, located in our Research Triangle market for$590.4 million . The campus comprises 12 operating properties, one operating property with future redevelopment opportunities, and three properties that are currently undergoing redevelopment. As ofMarch 31, 2021 , the operating properties contained 233,362 RSF of vacant space. Currently, this space is 72% leased/negotiating. As of March 31, 2021 June 14, 2021 Vacancy Acquired Percentage of Incremental Property from Value-Creation Vacancy Leased/ Projected Annual Market/Submarket Opportunities Negotiating Rental Revenues Alexandria Center® for Life Science -Durham Research Triangle/Research Triangle 233,362 72 % 601, 611, and651 Gateway Blvd San Francisco Bay Area/South San Francisco 254,582 4 Alexandria Center® for Life Science - Fenway Greater Boston/Fenway 98,174 39 >$50 million SD Tech by Alexandria San Diego/Sorrento Mesa 83,171 10 Other acquisitions/Various 518,830 41 1,188,119 37 % Our completed and pending value-creation acquisitions subsequent toMarch 31, 2021 include an estimated 350,000 RSF of vacant operating space that will provide additional opportunities to grow annual rental revenues and cash flows. Our updated guidance assumes that we complete these pending acquisitions prior toDecember 31, 2021 . The additional vacancy from these acquisitions is projected to result in a temporary 1.0% decline in our overall operating occupancy as ofDecember 31, 2021 . As such, our guidance for occupancy as ofDecember 31, 2021 , was updated to a range from 94.3% to 94.9%.
Updated guidance as of
We have updated key components of our 2021 guidance that was provided on
New Class A development and redevelopment properties: current projects
The following tables set forth a summary of our new Class A development and
redevelopment properties under construction and pre-leased near-term projects as
of
Square Footage Percentage
Market Leased/
Property/Submarket Dev/Redev In Service CIP Total Leased Negotiating
Under construction
Greater Boston
The Arsenal on the
Charles/Cambridge /Inner
Suburbs Redev 475,743 360,545 836,288 84 % 91 %
201 Brookline
Avenue/Fenway Dev - 510,116 510,116 17 80
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits 99.1 2021 Guidance issued byAlexandria Real Estate Equities, Inc. onJune 14, 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, 2020 and in our Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2021 . We expect to update our forecast of key sources and uses of capital on a quarterly basis.
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