filings.toolsItem 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) and (2)Financial Statements and Financial Statement Schedule
The financial statements and financial statement schedule required by this Item are included as a separate section in this
annual report on Form 10-K beginning on page F-1.
| Page | |
| Report of Independent Registered Public Accounting Firm (PCAOB ID: 00042) ................................................................................... | F-1 |
| Audited Consolidated Financial Statements of Alexandria Real Estate Equities, Inc.: | |
| Consolidated Balance Sheets as of December 31, 2024 and 2023 ................................................................................................ | F-3 |
| Consolidated Financial Statements for the Years Ended December 31, 2024, 2023, and 2022: ............................................... | |
| Consolidated Statements of Operations ........................................................................................................................................ | F-4 |
| Consolidated Statements of Comprehensive Income ................................................................................................................. | F-5 |
| Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests ............................................... | F-6 |
| Consolidated Statements of Cash Flows ...................................................................................................................................... | F-8 |
| Notes to Consolidated Financial Statements ....................................................................................................................................... | F-10 |
| Schedule III – Consolidated Financial Statement Schedule of Real Estate and Accumulated Depreciation ............................ | F-55 |
(a)(3) Exhibits
| Exhibit Number | Exhibit Title | Incorporated by Reference to: | Date Filed | |||
| 14.1 | The Company’s Business Integrity Policy and Procedures for Reporting Non-Compliance (code of ethics pursuant to Item 406 of Regulation S-K) | N/A | Filed herewith | |||
| 19.1 | Alexandria Real Estate Equities, Inc. Amended and Restated Policy Statement on Trading in Securities | N/A | Filed herewith | |||
| 21.1 | List of Subsidiaries of the Company | N/A | Filed herewith | |||
| 22.1 | List of Guarantor Subsidiaries of the Company | N/A | Filed herewith | |||
| 23.1 | Consent of Ernst & Young LLP | N/A | Filed herewith | |||
| 31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
| 31.2 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
| 31.3 | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
| 32.0 | Certification of Principal Executive Officers and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | N/A | Filed herewith | |||
| 97.1(1) | Incentive Compensation Recoupment Policy | N/A | Filed herewith | |||
| 101.1 | The following materials from the Company’s annual report on Form 10-K for the three months and year ended December 31, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2024 and 2023, (ii) Consolidated Statements of Operations for the years ended December 31, 2024, 2023, and 2022, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023, and 2022, (iv) Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests for the years ended December 31, 2024, 2023, and 2022, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022, (vi) Notes to Consolidated Financial Statements, and (vii) Schedule III — Consolidated Financial Statement Schedule of Real Estate and Accumulated Depreciation of the Company. | N/A | Filed herewith | |||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | N/A | Filed herewith |
(*) Incorporated by reference.
(1) Management contract or compensatory arrangement.
S-1
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
| ALEXANDRIA REAL ESTATE EQUITIES, INC. | |||
| Dated: | January 27, 2025 | By: | /s/ Joel S. Marcus |
| Joel S. Marcus Executive Chairman (Principal Executive Officer) | |||
| /s/ Peter M. Moglia | |||
| Peter M. Moglia Chief Executive Officer and Chief Investment Officer (Principal Executive Officer) |
S-2
KNOW ALL THOSE BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Joel
S. Marcus, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in
his or her name, place, and stead, in any and all capacities, to sign any and all amendments to this annual report on Form 10-K, and to
file the same, with exhibits thereto and other documents in connection therewith, if any, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent of their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report on Form 10-K has been signed below
by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Joel S. Marcus | Executive Chairman (Principal Executive Officer) | January 27, 2025 | ||
| Joel S. Marcus | ||||
| /s/ Peter M. Moglia | Chief Executive Officer and Chief Investment Officer (Principal Executive Officer) | January 27, 2025 | ||
| Peter M. Moglia | ||||
| /s/ Marc E. Binda | Chief Financial Officer and Treasurer (Principal Financial Officer) | January 27, 2025 | ||
| Marc E. Binda | ||||
| /s/ Andres R. Gavinet | Chief Accounting Officer (Principal Accounting Officer) | January 27, 2025 | ||
| Andres R. Gavinet | ||||
| /s/ Steven R. Hash | Lead Director | January 27, 2025 | ||
| Steven R. Hash | ||||
| /s/ James P. Cain | Director | January 27, 2025 | ||
| James P. Cain | ||||
| /s/ Cynthia L. Feldmann | Director | January 27, 2025 | ||
| Cynthia L. Feldmann | ||||
| /s/ Maria C. Freire | Director | January 27, 2025 | ||
| Maria C. Freire | ||||
| /s/ Richard H. Klein | Director | January 27, 2025 | ||
| Richard H. Klein | ||||
| /s/ Sheila K. McGrath | Director | January 27, 2025 | ||
| Sheila K. McGrath | ||||
| /s/ Michael A. Woronoff | Director | January 27, 2025 | ||
| Michael A. Woronoff |
F-1
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Alexandria Real Estate Equities, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Alexandria Real Estate Equities, Inc. (the Company) as of
December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income, changes in stockholders’
equity and noncontrolling interests and cash flows for each of the three years in the period ended December 31, 2024, and the related
notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control –
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our
report dated January 27, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
F-2
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the
critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures
to which it relates.
Impairment of investments in real estate
| Description of the Matter | At December 31, 2024, the carrying value of the Company’s investments in real estate was $32.1 billion. As discussed in Note 2 to the consolidated financial statements, the Company reviews current activities and changes in the business conditions of its investment in real estate to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If triggering events or impairment indicators are identified, the Company will review an estimate of the future undiscounted cash flows of the particular investment in real estate which will include a probability-weighted approach if multiple outcomes are under consideration. Auditing the Company’s evaluation of whether its investments in real estate are recoverable was complex and involved a high degree of subjectivity in evaluating management’s key assumptions in estimating the undiscounted future cash flows, including projected rental rates, exit capitalization rates, construction costs for projects under development, and probability-weighting multiple scenarios under consideration, as they are based on assumptions about construction costs, available market information, current and historical operating results, known trends and current market/ economic conditions that may affect the asset, and management’s assumptions about the use of the asset, including a probability-weighted approach if multiple outcomes are under consideration. | |
| How we Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over the Company’s investments in real estate impairment assessment process. For example, we tested controls over management’s process for estimating and evaluating the assumptions used in the calculations of the future undiscounted cash flows for investments in real estate where impairment indicators existed. For real estate investments with identified indicators of impairment, we performed audit procedures over the Company’s estimation of the assets’ undiscounted future cash flows. For example, we compared significant assumptions used to estimate future cash flows to the Company’s historical accounting records or to available market data. We also tested the mathematical accuracy of management’s forecasted cash flows. Additionally, for certain assumptions, we assessed management’s sensitivity analyses in addition to performing our own sensitivity analyses to evaluate the changes in the undiscounted cash flows of the investments in real estate that would result from changes in the assumptions. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1994.
Los Angeles, California
January 27, 2025
F-3
Alexandria Real Estate Equities, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
| December 31, | |||
| 2024 | 2023 | ||
| Assets | |||
| Investments in real estate | $32,110,039 | $31,633,511 | |
| Investments in unconsolidated real estate joint ventures | 39,873 | 37,780 | |
| Cash and cash equivalents | 552,146 | 618,190 | |
| Restricted cash | 7,701 | 42,581 | |
| Tenant receivables | 6,409 | 8,211 | |
| Deferred rent | 1,187,031 | 1,050,319 | |
| Deferred leasing costs | 485,959 | 509,398 | |
| Investments | 1,476,985 | 1,449,518 | |
| Other assets | 1,661,306 | 1,421,894 | |
| Total assets | $37,527,449 | $36,771,402 | |
| Liabilities, Noncontrolling Interests, and Equity | |||
| Secured notes payable | $149,909 | $119,662 | |
| Unsecured senior notes payable | 12,094,465 | 11,096,028 | |
| Unsecured senior line of credit and commercial paper | — | 99,952 | |
| Accounts payable, accrued expenses, and other liabilities | 2,654,351 | 2,610,943 | |
| Dividends payable | 230,263 | 221,824 | |
| Total liabilities | 15,128,988 | 14,148,409 | |
| Commitments and contingencies | |||
| Redeemable noncontrolling interests | 19,972 | 16,480 | |
| Alexandria Real Estate Equities, Inc.’s stockholders’ equity: | |||
| Common stock, $0.01 par value per share, 400,000,000 shares authorized as of December 31, 2024 and 2023; 172,203,443 and 171,910,599 shares issued and outstanding as of December 31, 2024 and 2023, respectively | 1,722 | 1,719 | |
| Additional paid-in capital | 17,933,572 | 18,485,352 | |
| Accumulated other comprehensive loss | (46,252) | (15,896) | |
| Alexandria Real Estate Equities, Inc.’s stockholders’ equity | 17,889,042 | 18,471,175 | |
| Noncontrolling interests | 4,489,447 | 4,135,338 | |
| Total equity | 22,378,489 | 22,606,513 | |
| Total liabilities, noncontrolling interests, and equity | $37,527,449 | $36,771,402 |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
| Year Ended December 31, | |||||
| 2024 | 2023 | 2022 | |||
| Revenues: | |||||
| Income from rentals | $3,049,706 | $2,842,456 | $2,576,040 | ||
| Other income | 66,688 | 43,243 | 12,922 | ||
| Total revenues | 3,116,394 | 2,885,699 | 2,588,962 | ||
| Expenses: | |||||
| Rental operations | 909,265 | 859,180 | 783,153 | ||
| General and administrative | 168,359 | 199,354 | 177,278 | ||
| Interest | 185,838 | 74,204 | 94,203 | ||
| Depreciation and amortization | 1,202,380 | 1,093,473 | 1,002,146 | ||
| Impairment of real estate | 223,068 | 461,114 | 64,969 | ||
| Loss on early extinguishment of debt | — | — | 3,317 | ||
| Total expenses | 2,688,910 | 2,687,325 | 2,125,066 | ||
| Equity in earnings of unconsolidated real estate joint ventures | 7,059 | 980 | 645 | ||
| Investment loss | (53,122) | (195,397) | (331,758) | ||
| Gain on sales of real estate | 129,312 | 277,037 | 537,918 | ||
| Net income | 510,733 | 280,994 | 670,701 | ||
| Net income attributable to noncontrolling interests | (187,784) | (177,355) | (149,041) | ||
| Net income attributable to Alexandria Real Estate Equities, Inc.’s stockholders | 322,949 | 103,639 | 521,660 | ||
| Net income attributable to unvested restricted stock awards | (13,394) | (11,195) | (8,392) | ||
| Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $309,555 | $92,444 | $513,268 | ||
| Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders: | |||||
| Basic | $1.80 | $0.54 | $3.18 | ||
| Diluted | $1.80 | $0.54 | $3.18 |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Comprehensive Income
(In thousands)
| Year Ended December 31, | |||||
| 2024 | 2023 | 2022 | |||
| Net income | $510,733 | $280,994 | $670,701 | ||
| Other comprehensive (loss) income | |||||
| Unrealized (losses) gains on foreign currency translation: | |||||
| Unrealized foreign currency translation (losses) gains arising during the period | (29,719) | 4,916 | (13,518) | ||
| Reclassification adjustment for gains included in net income | (637) | — | — | ||
| Unrealized (losses) gains on foreign currency translation, net | (30,356) | 4,916 | (13,518) | ||
| Total other comprehensive (loss) income | (30,356) | 4,916 | (13,518) | ||
| Comprehensive income | 480,377 | 285,910 | 657,183 | ||
| Less: comprehensive income attributable to noncontrolling interests | (187,784) | (177,355) | (149,041) | ||
| Comprehensive income attributable to Alexandria Real Estate Equities, Inc.’s stockholders | $292,593 | $108,555 | $508,142 |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests
(Dollars in thousands)
| Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity | ||||||||||||||||
| Number of Common Shares | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
| Balance as of December 31, 2021 | 158,043,880 | $1,580 | $16,195,256 | $— | $(7,294) | $2,834,096 | $19,023,638 | $9,612 | ||||||||
| Net income | — | — | — | 521,660 | — | 148,236 | 669,896 | 805 | ||||||||
| Total other comprehensive loss | — | — | — | — | (13,518) | — | (13,518) | — | ||||||||
| Contributions from and sales of noncontrolling interests | — | — | 649,623 | — | — | 910,506 | 1,560,129 | — | ||||||||
| Distributions to and redemption of noncontrolling interests | — | — | (111) | — | — | (191,590) | (191,701) | (805) | ||||||||
| Issuance of common stock | 12,250,645 | 123 | 2,346,321 | — | — | — | 2,346,444 | — | ||||||||
| Issuance pursuant to stock plan | 749,101 | 7 | 109,217 | — | — | — | 109,224 | — | ||||||||
| Taxes related to net settlement of equity awards | (295,231) | (3) | (47,448) | — | — | — | (47,451) | — | ||||||||
| Dividends declared on common stock ($4.72 per share) | — | — | — | (783,026) | — | — | (783,026) | — | ||||||||
| Reclassification of distributions in excess of earnings | — | — | (261,366) | 261,366 | — | — | — | — | ||||||||
| Balance as of December 31, 2022 | 170,748,395 | 1,707 | 18,991,492 | — | (20,812) | 3,701,248 | 22,673,635 | 9,612 | ||||||||
| Net income | — | — | — | 103,639 | — | 176,431 | 280,070 | 924 | ||||||||
| Total other comprehensive income | — | — | — | — | 4,916 | — | 4,916 | — | ||||||||
| Contributions from and sales of noncontrolling interests | — | — | 33,896 | — | — | 508,693 | 542,589 | 35,250 | ||||||||
| Distributions to and redemption of noncontrolling interests | — | — | — | — | — | (243,268) | (243,268) | (37,072) | ||||||||
| Transfer of noncontrolling interest | — | — | — | — | — | (7,766) | (7,766) | 7,766 | ||||||||
| Issuance of common stock | 699,274 | 7 | 103,839 | — | — | — | 103,846 | — | ||||||||
| Issuance pursuant to stock plan | 798,729 | 8 | 156,257 | — | — | — | 156,265 | — | ||||||||
| Taxes related to net settlement of equity awards | (335,799) | (3) | (43,595) | — | — | — | (43,598) | — | ||||||||
| Dividends declared on common stock ($4.96 per share) | — | — | — | (860,176) | — | — | (860,176) | — | ||||||||
| Reclassification of distributions in excess of earnings | — | — | (756,537) | 756,537 | — | — | — | — | ||||||||
| Balance as of December 31, 2023 | 171,910,599 | $1,719 | $18,485,352 | $— | $(15,896) | $4,135,338 | $22,606,513 | $16,480 |
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Alexandria Real Estate Equities, Inc.
Consolidated Statements of Changes in Stockholders’ Equity and Noncontrolling Interests (continued)
(Dollars in thousands)
| Alexandria Real Estate Equities, Inc.’s Stockholders’ Equity | ||||||||||||||||
| Number of Common Shares | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
| Balance as of December 31, 2023 | 171,910,599 | $1,719 | $18,485,352 | $— | $(15,896) | $4,135,338 | $22,606,513 | $16,480 | ||||||||
| Net income | — | — | — | 322,949 | — | 186,694 | 509,643 | 1,090 | ||||||||
| Total other comprehensive loss | — | — | — | — | (30,356) | — | (30,356) | — | ||||||||
| Contributions from and sales of noncontrolling interests | — | — | 8,396 | — | — | 405,016 | 413,412 | — | ||||||||
| Distributions to and redemption of noncontrolling interests | — | — | (8,084) | — | — | (264,149) | (272,233) | (1,235) | ||||||||
| Transfer of noncontrolling interests | — | — | — | — | — | (3,637) | (3,637) | 3,637 | ||||||||
| Reallocation of capital to joint venture partner | — | — | (30,185) | — | — | 30,185 | — | — | ||||||||
| Issuance of common stock | 229,558 | 2 | 27,101 | — | — | — | 27,103 | — | ||||||||
| Issuance pursuant to stock plan | 951,195 | 10 | 129,288 | — | — | — | 129,298 | — | ||||||||
| Taxes related to net settlement of equity awards | (391,633) | (4) | (44,147) | — | — | — | (44,151) | — | ||||||||
| Repurchase of common stock | (496,276) | (5) | (50,102) | — | — | — | (50,107) | — | ||||||||
| Dividends declared on common stock ($5.19 per share) | — | — | — | (906,996) | — | — | (906,996) | — | ||||||||
| Reclassification of distributions in excess of earnings | — | — | (584,047) | 584,047 | — | — | — | — | ||||||||
| Balance as of December 31, 2024 | 172,203,443 | $1,722 | $17,933,572 | $— | $(46,252) | $4,489,447 | $22,378,489 | $19,972 |
The accompanying notes are an integral part of these consolidated financial statements.
F-8
| Alexandria Real Estate Equities, Inc. Consolidated Statements of Cash Flows (In thousands) | |||||
| Year Ended December 31, | |||||
| 2024 | 2023 | 2022 | |||
| Operating Activities | |||||
| Net income | $510,733 | $280,994 | $670,701 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||
| Depreciation and amortization | 1,202,380 | 1,093,473 | 1,002,146 | ||
| Impairment of real estate | 223,068 | 461,114 | 64,969 | ||
| Gain on sales of real estate | (129,312) | (277,037) | (537,918) | ||
| Loss on early extinguishment of debt | — | — | 3,317 | ||
| Equity in earnings of unconsolidated real estate joint ventures | (7,059) | (980) | (645) | ||
| Distributions of earnings from unconsolidated real estate joint ventures | 2,982 | 3,257 | 3,374 | ||
| Amortization of loan fees | 17,130 | 15,486 | 13,549 | ||
| Amortization of debt discounts | 1,309 | 1,207 | 384 | ||
| Amortization of acquired above- and below-market leases | (85,679) | (93,331) | (74,346) | ||
| Deferred rent | (143,329) | (133,917) | (118,003) | ||
| Stock compensation expense | 59,634 | 82,858 | 57,740 | ||
| Investment loss | 53,122 | 195,397 | 331,758 | ||
| Changes in operating assets and liabilities: | |||||
| Tenant receivables | 1,766 | (102) | (273) | ||
| Deferred leasing costs | (108,346) | (109,339) | (181,322) | ||
| Other assets | (37,052) | 798 | (18,960) | ||
| Accounts payable, accrued expenses, and other liabilities | (56,823) | 110,672 | 77,850 | ||
| Net cash provided by operating activities | 1,504,524 | 1,630,550 | 1,294,321 | ||
| Investing Activities | |||||
| Proceeds from sales of real estate | 1,220,206 | 1,195,743 | 994,331 | ||
| Additions to real estate | (2,422,625) | (3,418,296) | (3,307,313) | ||
| Purchases of real estate | (248,699) | (265,750) | (2,877,861) | ||
| Change in escrow deposits | 3,864 | (5,582) | 155,968 | ||
| Investments in unconsolidated real estate joint ventures | (3,927) | (658) | (1,442) | ||
| Return of capital from unconsolidated real estate joint ventures | 2,916 | — | 471 | ||
| Additions to non-real estate investments | (236,357) | (189,472) | (242,932) | ||
| Sales of and distributions from non-real estate investments | 173,927 | 183,396 | 198,320 | ||
| Net cash used in investing activities | $(1,510,695) | $(2,500,619) | $(5,080,458) | ||
| The accompanying notes are an integral part of these consolidated financial statements. |
F-9
| Alexandria Real Estate Equities, Inc. Consolidated Statements of Cash Flows (In thousands) | |||||
| Year Ended December 31, | |||||
| 2024 | 2023 | 2022 | |||
| Financing Activities | |||||
| Borrowings under secured notes payable | $29,919 | $59,957 | $49,715 | ||
| Repayments of borrowings under secured notes payable | (32) | (30) | (934) | ||
| Payment for the defeasance of secured note payable | — | — | (198,304) | ||
| Proceeds from issuances of unsecured senior notes payable | 998,806 | 996,205 | 1,793,318 | ||
| Borrowings under unsecured senior line of credit | — | 1,245,000 | 1,181,000 | ||
| Repayments of borrowings under unsecured senior line of credit | — | (1,245,000) | (1,181,000) | ||
| Proceeds from issuances under commercial paper program | 13,010,600 | 9,234,000 | 14,641,500 | ||
| Repayments of borrowings under commercial paper program | (13,110,600) | (9,134,000) | (14,911,500) | ||
| Payments of loan fees | (35,871) | (16,047) | (35,612) | ||
| Taxes paid related to net settlement of equity awards | (62,413) | (24,592) | (47,289) | ||
| Proceeds from issuance of common stock | 27,103 | 103,846 | 2,346,444 | ||
| Repurchase of common stock | (50,107) | — | — | ||
| Dividends on common stock | (898,557) | (847,483) | (757,742) | ||
| Contributions from and sales of noncontrolling interests | 306,473 | 547,391 | 1,542,347 | ||
| Distributions to and purchases of noncontrolling interests | (308,636) | (245,091) | (192,171) | ||
| Net cash (used in) provided by financing activities | (93,315) | 674,156 | 4,229,772 | ||
| Effect of foreign exchange rate changes on cash and cash equivalents | (1,438) | (1,291) | (887) | ||
| Net (decrease) increase in cash, cash equivalents, and restricted cash | (100,924) | (197,204) | 442,748 | ||
| Cash, cash equivalents, and restricted cash as of the beginning of period | 660,771 | 857,975 | 415,227 | ||
| Cash, cash equivalents, and restricted cash as of the end of period | $559,847 | $660,771 | $857,975 | ||
| Supplemental Disclosure and Non-Cash Investing and Financing Activities: | |||||
| Cash paid during the period for interest, net of interest capitalized | $160,082 | $46,583 | $63,193 | ||
| Accrued construction for current-period additions to real estate | $465,611 | $629,351 | $561,538 | ||
| Contribution of assets from and issuance of noncontrolling interest to real estate joint venture partner | $106,941 | $33,250 | $19,146 | ||
| Transfer of real estate assets and/or equipment from tenants | $129,154 | $31,310 | $— | ||
| Reallocation of additional paid-in-capital to consolidated joint venture partner’s non-controlling interest | $30,185 | $— | $— | ||
| Notes receivable issued in connection with sales of real estate | $104,166 | $— | $— | ||
| Initial recognition of right-of-use asset and lease liability | $265,203 | $— | $21,776 | ||
| Payable for purchase of noncontrolling interest | $— | $(35,250) | $— |
The accompanying notes are an integral part of these consolidated financial statements.
F-10
Alexandria Real Estate Equities, Inc.
Notes to Consolidated Financial Statements
**1.**ORGANIZATION AND BASIS OF PRESENTATION
Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® life science REIT, is the pioneer of the life science real estate
niche since its founding in 1994. Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative
Megacampus™ ecosystems in AAA life science innovation cluster locations, including Greater Boston, the San Francisco Bay Area, San
Diego, Seattle, Maryland, Research Triangle, and New York City. As of December 31, 2024, Alexandria has a total market capitalization
of $29.0 billion and an asset base in North America that includes 39.8 million RSF of operating properties and 4.4 million RSF of Class
A/A+ properties undergoing construction. As used in this annual report on Form 10-K, references to the “Company,” “Alexandria,”
“ARE,” “we,” “us,” and “our” refer to Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries. The accompanying
consolidated financial statements include the accounts of Alexandria Real Estate Equities, Inc. and its consolidated subsidiaries. All
significant intercompany balances and transactions have been eliminated.
Any references to our total market capitalization, number or quality of buildings or tenants, quality of location, square footage,
number of leases, or occupancy percentage, and any amounts derived from these values in these notes to consolidated financial
statements are outside the scope of our independent registered public accounting firm’s procedures.
**2.**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
On an ongoing basis, as circumstances indicate the need for reconsideration, we evaluate each legal entity that is not wholly
owned by us in accordance with the consolidation accounting guidance. Our evaluation considers all of our variable interests, including
equity ownership, as well as fees paid to us for our involvement in the management of each partially owned entity. To fall within the
scope of the consolidation guidance, an entity must meet both of the following criteria:
- The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity can
be in the form of a partnership, limited liability company, or corporation, among others; and
- We have a variable interest in the legal entity — i.e., variable interests that are contractual, such as equity ownership, or
other financial interests that change with changes in the fair value of the entity’s net assets.
If an entity does not meet both criteria above, we apply other accounting literature, such as the equity method of accounting. If
an entity does meet both criteria above, we evaluate such entity for consolidation under either the variable interest model if the legal
entity meets any of the characteristics below to qualify as a VIE, or under the voting model for all other legal entities that are not VIEs.
A legal entity is determined to be a VIE if it has any of the following three characteristics:
1)The entity does not have sufficient equity to finance its activities without additional subordinated financial support;
2)The entity is established with non-substantive voting rights (i.e., the entity deprives the majority economic interest holder(s)
of voting rights); or
3)The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion if
they lack any of the following:
- The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence the
entity’s economic performance, as evidenced by:
-
Substantive participating rights in day-to-day management of the entity’s activities; or
-
Substantive kick-out rights over the party responsible for significant decisions;
-
The obligation to absorb the entity’s expected losses; or
-
The right to receive the entity’s expected residual returns.
For an entity, including our real estate joint ventures, structured as a limited partnership or a limited liability company, our
evaluation of whether the equity holders (equity partners other than the general partner or the managing member of a joint venture) lack
the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members
(the noncontrolling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:
- Participating rights provide the noncontrolling equity holders the ability to direct significant financial and operating decisions
made in the ordinary course of business that most significantly influence the entity’s economic performance.
- Kick-out rights allow the noncontrolling equity holders to remove the general partner or managing member without cause.
If we conclude that any of the three characteristics of a VIE are met, including that the equity holders lack the characteristics of
a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that
the entity is a VIE and evaluate it for consolidation under the variable interest model.
F-11
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Variable interest model
If an entity is determined to be a VIE, we evaluate whether we are the primary beneficiary. The primary beneficiary analysis is
a qualitative analysis based on power and benefits. We consolidate a VIE if we have both power and benefits — that is, (i) we have the
power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power) and (ii) we have the
obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant to the VIE (benefits). We
consolidate VIEs whenever we determine that we are the primary beneficiary. Refer to Note 4 – “Consolidated and unconsolidated real
estate joint ventures” and Note 7 – “Investments” to our consolidated financial statements for information on specific entities that qualify
as VIEs. If we have a variable interest in a VIE but are not the primary beneficiary, we account for our investment using the equity
method.
Voting model
If a legal entity fails to meet any of the three characteristics of a VIE (i.e., insufficiency of equity, existence of non-substantive
voting rights, or lack of a controlling financial interest), we then evaluate such entity under the voting model. Under the voting model, we
consolidate the entity if we determine that we, directly or indirectly, have greater than 50% of the voting shares (or own a majority of the
limited partnership’s kick-out rights through voting interests), and that other equity holders do not have substantive participating rights.
Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our consolidated financial statements for
information on specific joint ventures that qualify for evaluation under the voting model.
Use of estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions
that affect the reported amounts of assets, liabilities, and equity; the disclosure of contingent assets and liabilities as of the date of the
consolidated financial statements; and the amounts of revenues and expenses during the reporting period. Actual results could
materially differ from those estimates.
Investments in real estate
Evaluation of business combination or asset acquisition
We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly
hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and
needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the
definition of a business is accounted for as an asset acquisition. If either of the following criteria is met, the integrated set of assets and
activities acquired would not qualify as a business:
- Substantially all of the fair value of the gross assets acquired is concentrated in either a single identifiable asset or a group
of similar identifiable assets; or
- The integrated set of assets and activities is lacking, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs (i.e., revenue generated before and after the transaction).
An acquired process is considered substantive if:
- The process includes an organized workforce (or includes an acquired contract that provides access to an organized
workforce) that is skilled, knowledgeable, and experienced in performing the process;
-
The process cannot be replaced without significant cost, effort, or delay; or
-
The process is considered unique or scarce.
Generally, our acquisitions of real estate or in-substance real estate do not meet the definition of a business because
substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land, buildings,
and related intangible assets) or because the acquisition does not include a substantive process in the form of an acquired workforce or
an acquired contract that cannot be replaced without significant cost, effort, or delay. When evaluating acquired service or management
contracts, we consider the nature of the services performed, the terms of the contract relative to similar arm’s-length contracts, and the
availability of comparable vendors in evaluating whether the acquired contract constitutes a substantive process.
F-12
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recognition of real estate acquired
We evaluate each acquisition of real estate or in-substance real estate (including equity interests in entities that predominantly
hold real estate assets) to determine whether the integrated set of assets and activities acquired meets the definition of a business and
needs to be accounted for as a business combination. An acquisition of an integrated set of assets and activities that does not meet the
definition of a business is accounted for as an asset acquisition.
For acquisitions of real estate or in-substance real estate that are accounted for as business combinations, we allocate the
acquisition consideration (excluding acquisition costs) to the assets acquired, liabilities assumed, noncontrolling interests, and
previously existing ownership interests at fair value as of the acquisition date. Assets include intangible assets such as tenant
relationships, acquired in-place leases, and favorable intangibles associated with in-place leases in which we are the lessor. Liabilities
include unfavorable intangibles associated with in-place leases in which we are the lessor. In addition, for acquired in-place finance or
operating leases in which we are the lessee, acquisition consideration is allocated to lease liabilities and related right-of-use assets,
adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. Any excess (deficit) of the
consideration transferred relative to the fair value of the net assets acquired is accounted for as goodwill (bargain purchase gain).
Acquisition costs related to business combinations are expensed as incurred.
Generally, we expect that acquisitions of real estate or in-substance real estate will not meet the definition of a business
because substantially all of the fair value is concentrated in a single identifiable asset or group of similar identifiable assets (i.e., land,
buildings, and related intangible assets). The accounting model for asset acquisitions is similar to the accounting model for business
combinations, except that the acquisition consideration (including acquisition costs) is allocated to the individual assets acquired and
liabilities assumed on a relative fair value basis. Any excess (deficit) of the consideration transferred relative to the sum of the fair value
of the assets acquired and liabilities assumed is allocated to the individual assets and liabilities based on their relative fair values. As a
result, asset acquisitions do not result in the recognition of goodwill or a bargain purchase gain. Incremental and external direct
acquisition costs related to acquisitions of real estate or in-substance real estate (such as legal and other third-party services) are
capitalized.
We exercise judgment to determine the key assumptions used to allocate the purchase price of real estate acquired among its
components. The allocation of the consideration to the various components of properties acquired during the year can have an effect on
our net income due to the useful depreciable and amortizable lives applicable to each component and the recognition of the related
depreciation and amortization expense in our consolidated statements of operations. We apply judgment in utilizing available
comparable market information to assess relative fair value. We assess the relative fair values of tangible and intangible assets and
liabilities based on available comparable market information, including estimated replacement costs, rental rates, and recent market
transactions. In addition, we may use estimated cash flow projections that utilize appropriate discount and capitalization rates.
Estimates of future cash flows are based on a number of factors, including the historical operating results, known and anticipated
trends, and market/economic conditions that may affect the property.
The value of tangible assets acquired is based upon our estimation of fair value on an “as if vacant” basis. The value of
acquired in-place leases includes the estimated costs during the hypothetical lease-up period and other costs that would have been
incurred in the execution of similar leases under the market conditions at the acquisition date of the acquired in-place lease. If there is a
bargain fixed-rate renewal option for the period beyond the noncancelable lease term of an in-place lease, we evaluate intangible
factors, such as the business conditions in the industry in which the lessee operates, the economic conditions in the area in which the
property is located, and the ability of the lessee to sublease the property during the renewal term, in order to determine the likelihood
that the lessee will renew. When we determine that there is reasonable assurance that such bargain purchase option will be exercised,
we consider the option in determining the intangible value of such lease and its related amortization period. We also recognize the
relative fair values of assets acquired, the liabilities assumed, and any noncontrolling interest in acquisitions of less than a 100%
interest when the acquisition constitutes a change in control of the acquired entity.
Depreciation and amortization
The values allocated to buildings and building improvements, land improvements, tenant improvements, and equipment are
depreciated on a straight-line basis. For buildings and building improvements, we depreciate using the shorter of the respective ground
lease terms or their estimated useful lives, not to exceed 40 years. Land improvements are depreciated over their estimated useful
lives, not to exceed 20 years. Tenant improvements are depreciated over their respective lease terms or estimated useful lives, and
equipment is depreciated over the shorter of the lease term or its estimated useful life. The values of the right-of-use assets are
amortized on a straight-line basis over the remaining terms of each related lease. The values of acquired in-place leases and
associated favorable intangibles (i.e., acquired above-market leases) are classified in other assets in our consolidated balance sheets
and are amortized over the remaining terms of the related leases as a reduction of income from rentals in our consolidated statements
of operations. The values of unfavorable intangibles (i.e., acquired below-market leases) associated with acquired in-place leases are
classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets and are amortized over the
remaining terms of the related leases as an increase in income from rentals in our consolidated statements of operations.
F-13
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Capitalized project costs
We capitalize project costs, including pre-construction costs, interest, property taxes, insurance, and other costs directly
related and essential to the development, redevelopment, pre-construction, or construction of a project. Capitalization of development,
redevelopment, pre-construction, and construction costs is required while activities are ongoing to prepare an asset for its intended use.
Fluctuations in our development, redevelopment, pre-construction, and construction activities could result in significant changes to total
expenses and net income. Costs incurred after a project is substantially complete and ready for its intended use are expensed as
incurred. Should development, redevelopment, pre-construction, or construction activity cease, interest, property taxes, insurance, and
certain other costs would no longer be eligible for capitalization and would be expensed as incurred. Expenditures for repairs and
maintenance are expensed as incurred.
Real estate sales
A property is classified as held for sale when all of the following criteria for a plan of sale have been met: (i) management,
having the authority to approve the action, commits to a plan to sell the property; (ii) the property is available for immediate sale in its
present condition, subject only to terms that are usual and customary; (iii) an active program to locate a buyer and other actions
required to complete the plan to sell have been initiated; (iv) the sale of the property is probable and is expected to be completed within
one year; (v) the property is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and
(vi) actions necessary to complete the plan of sale indicate that it is unlikely that significant changes to the plan will be made or that the
plan will be withdrawn. Depreciation of assets ceases upon designation of a property as held for sale.
If the disposal of a property represents a strategic shift that has (or will have) a major effect on our operations or financial
results, such as (i) a major line of business, (ii) a major geographic area, (iii) a major equity method investment, or (iv) other major parts
of an entity, then the operations of the property, including any interest expense directly attributable to it, are classified as discontinued
operations in our consolidated statements of operations, and amounts for all prior periods presented are reclassified from continuing
operations to discontinued operations. The disposal of an individual property generally will not represent a strategic shift and therefore
will typically not meet the criteria for classification as a discontinued operation.
We recognize gains or losses on real estate sales in accordance with the accounting standard on the derecognition of
nonfinancial assets arising from contracts with noncustomers. Our ordinary output activities consist of the leasing of space to our
tenants in our operating properties, not the sales of real estate. Therefore, sales of real estate (in which we are the seller) qualify as
contracts with noncustomers. In our transactions with noncustomers, we apply certain recognition and measurement principles
consistent with our method of recognizing revenue arising from contracts with customers. Derecognition of the asset is based on the
transfer of control. If a real estate sales contract includes our ongoing involvement with the property, then we evaluate each promised
good or service under the contract to determine whether it represents a separate performance obligation, constitutes a guarantee, or
prevents the transfer of control. If a good or service is considered a separate performance obligation, an allocated portion of the
transaction price is recognized as revenue as we transfer the related good or service to the buyer.
The recognition of gain or loss on the sale of a partial interest also depends on whether we retain a controlling or
noncontrolling interest in the property. If we retain a controlling interest in the property upon completion of the sale, we continue to
reflect the asset at its book value, record a noncontrolling interest for the book value of the partial interest sold, and recognize additional
paid-in capital for the difference between the consideration received and the partial interest at book value. Conversely, if we retain a
noncontrolling interest upon completion of the sale of a partial interest of real estate, we recognize a gain or loss as if 100% of the asset
were sold.
Impairment of long-lived assets
Prior to and subsequent to the end of each quarter, we review current activities and changes in the business conditions of all of
our long-lived assets to determine the existence of any triggering events or impairment indicators requiring an impairment analysis. If
triggering events or impairment indicators are identified, we review an estimate of the future undiscounted cash flows, including, if
necessary, a probability-weighted approach if multiple outcomes are under consideration.
Long-lived assets to be held and used, including our rental properties, CIP, land held for development, right-of-use assets
related to operating leases in which we are the lessee, and intangibles, are individually evaluated for impairment when conditions exist
that may indicate that the carrying amount of a long-lived asset may not be recoverable. The carrying amount of a long-lived asset to be
held and used is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual
disposition of the asset. Triggering events or impairment indicators for long-lived assets to be held and used are assessed by project
and include significant fluctuations in estimated net operating income, occupancy changes, significant near-term lease expirations,
current and historical operating and/or cash flow losses, construction costs, estimated completion dates, rental rates, and other market
factors. We assess the expected undiscounted cash flows based upon numerous factors, including, but not limited to, projected rental
rates, exit capitalization rates, and construction costs for projects under development, which are based on available market information,
current and historical operating results, known trends, current market/economic conditions that may affect the asset, and our
assumptions about the use of the asset, including, if necessary, a probability-weighted approach if multiple outcomes are under
consideration.
F-14
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Upon determination that an impairment has occurred, a write-down is recognized to reduce the carrying amount of the asset to
its estimated fair value. If an impairment charge is not required to be recognized, the recognition of depreciation or amortization is
adjusted prospectively, as necessary, to reduce the carrying amount of the asset to its estimated disposition value over the remaining
period that the asset is expected to be held and used. We may adjust depreciation of properties that are expected to be disposed of or
redeveloped prior to the end of their useful lives.
We use the held for sale impairment model for our properties classified as held for sale, which is different from the held and
used impairment model. Under the held for sale impairment model, an impairment charge is recognized if the carrying amount of the
long-lived asset classified as held for sale exceeds its fair value less cost to sell. Because of these two different models, it is possible for
a long-lived asset previously classified as held and used to require the recognition of an impairment charge upon classification as held
for sale.
International operations
In addition to operating properties in the U.S., we have 11 properties in Canada. The functional currency for our subsidiaries
operating in the U.S. is the U.S. dollar. The local currency of a foreign subsidiary serves as its functional currency. The assets and
liabilities of our foreign subsidiaries are translated into U.S. dollars at the exchange rate in effect as of the financial statement date.
Revenue and expense accounts of our foreign subsidiaries are translated using the weighted-average exchange rate for the periods
presented. Gains or losses resulting from the translation are classified in accumulated other comprehensive income (loss) as a
separate component of total equity and are excluded from net income (loss).
Whenever a foreign investment meets the criteria for classification as held for sale, we evaluate the recoverability of the
investment under the held for sale impairment model. We may recognize an impairment charge if the carrying amount of the investment
exceeds its fair value less cost to sell. In determining an investment’s carrying amount, we consider its net book value and any
cumulative unrealized foreign currency translation adjustment related to the investment.
The appropriate amounts of foreign exchange rate gains or losses classified in accumulated other comprehensive income
(loss) are reclassified to net income (loss) when realized upon the sale of our investment or upon the complete or substantially
complete liquidation of our investment.
F-15
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
I****nvestments
We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. As a
REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10%. We evaluate each investment to
determine whether we have the ability to exercise significant influence, but not control, over an investee. We evaluate investments in
which our ownership is equal to or greater than 20%, but less than or equal to 50%, of an investee’s voting stock with a presumption
that we have this ability. For our investments in limited partnerships that maintain specific ownership accounts, we presume that such
ability exists when our ownership interest exceeds 3% to 5%. In addition to our ownership interest, we consider whether we have a
board seat or whether we participate in the investee’s policymaking process, among other criteria, to determine if we have the ability to
exert significant influence, but not control, over an investee. If we determine that we have such ability, we account for the investment
under the equity method, as described below.
From time to time, we may hold equity investments in publicly traded companies that are subject to contractual sale
restrictions. We do not recognize a discount related to a contractual sale restriction.
Investments accounted for under the equity method
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying
amount of the investment for our share of earnings or losses reported by the investee, distributions received, and other-than-temporary
impairments. For more information about our investments accounted for under the equity method, refer to Note 7 – “Investments” to our
consolidated financial statements.
Investments that do not qualify for the equity method of accounting
For investees over which we determine that we do not have the ability to exercise significant influence or control, we account
for each investment depending on whether it is an investment in a (i) publicly traded company, (ii) privately held entity that reports NAV
per share, or (iii) privately held entity that does not report NAV per share, as described below.
Investments in publicly traded companies
Our investments in publicly traded companies are classified as investments with readily determinable fair values and are
presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. The fair values for our investments in publicly traded companies are determined based on sales
prices or quotes available on securities exchanges.
Investments in privately held companies
Our investments in privately held entities without readily determinable fair values consist of (i) investments in privately held
entities that report NAV per share and (ii) investments in privately held entities that do not report NAV per share. These investments are
accounted for as follows:
Investments in privately held entities that report NAV per share
Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships,
are presented at fair value using NAV as a practical expedient, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. We use NAV per share reported by limited partnerships generally without adjustment, unless we
are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the
investment at our reporting date.
Investments in privately held entities that do not report NAV per share
Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative
under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes classified
in investment income (loss) in our consolidated statements of operations.
An observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is
observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity
transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity
transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we
evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution
preferences, and conversion rights to the investments we hold.
F-16
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment evaluation of equity method investments and investments in privately held entities that do not report NAV per
share
We monitor equity method investments and investments in privately held entities that do not report NAV per share for new
developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements,
capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment
for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators:
(i)a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;
(ii)a significant adverse change in the regulatory, economic, or technological environment of the investee;
(iii)a significant adverse change in the general market condition, including the research and development of technology and
products that the investee is bringing or attempting to bring to the market;
(iv)significant concerns about the investee’s ability to continue as a going concern; and/or
(v)a decision by investors to cease providing support or reduce their financial commitment to the investee.
If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an
impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
Investment income/loss recognition and classification
We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified in
investment income (loss) in our consolidated statements of operations. Unrealized gains and losses represent:
(i)changes in fair value for investments in publicly traded companies;
(ii)changes in NAV for investments in privately held entities that report NAV per share;
(iii)observable price changes for investments in privately held entities that do not report NAV per share; and
(iv)our share of unrealized gains or losses reported by our equity method investees.
Realized gains and losses on our investments represent the difference between proceeds received upon disposition of
investments and their historical or adjusted cost basis. For our equity method investments, realized gains and losses represent our
share of realized gains or losses reported by the investee. Impairments are realized losses, which result in an adjusted cost basis, and
represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share and equity
method investments, if impairments are deemed other than temporary, to their estimated fair value.
Revenues
The table below provides details of our consolidated total revenues for the years ended December 31, 2024, 2023, and 2022
(in thousands):
| Year Ended December 31, | ||||||
| 2024 | 2023 | 2022 | ||||
| Income from rentals: | ||||||
| Revenues subject to the lease accounting standard: | ||||||
| Operating leases | $3,005,137 | $2,802,567 | $2,534,862 | |||
| Direct financing leases | 2,653 | 2,608 | 3,094 | |||
| Revenues subject to the lease accounting standard | 3,007,790 | 2,805,175 | 2,537,956 | |||
| Revenues subject to the revenue recognition accounting standard | 41,916 | 37,281 | 38,084 | |||
| Income from rentals | 3,049,706 | 2,842,456 | 2,576,040 | |||
| Other income | 66,688 | 43,243 | 12,922 | |||
| Total revenues | $3,116,394 | $2,885,699 | $2,588,962 |
During the years ended December 31, 2024, 2023, and 2022, revenues that were subject to the lease accounting standard
aggregated $3.0 billion, $2.8 billion, and $2.5 billion, respectively, and represented 96.5%, 97.2%, and 98.0%, respectively, of our total
revenues. Our other income consisted primarily of management fees and interest income earned during each year presented. For a
detailed discussion related to our revenue streams, refer to “Lease accounting” and “Recognition of revenue arising from contracts with
customers” in Note 2 – “Summary of significant accounting policies” to our consolidated financial statements.
F-17
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Lease accounting
Definition and classification of a lease
When we enter into a contract or amend an existing contract, we evaluate whether the contract meets the definition of a lease.
To meet the definition of a lease, the contract must meet all three criteria:
(i)One party (lessor) must hold an identified asset;
(ii)The counterparty (lessee) must have the right to obtain substantially all of the economic benefits from the use of the asset
throughout the period of the contract; and
(iii)The counterparty (lessee) must have the right to direct the use of the identified asset throughout the period of the contract.
We classify our leases as either finance leases or operating leases if we are the lessee, or sales-type, direct financing, or
operating leases if we are the lessor. We use the following criteria to determine if a lease is a finance lease (as a lessee) or sales-type
or direct financing lease (as a lessor):
(i)Ownership is transferred from lessor to lessee by the end of the lease term;
(ii)An option to purchase is reasonably certain to be exercised;
(iii)The lease term is for the major part of the underlying asset’s remaining economic life;
(iv)The present value of lease payments equals or exceeds substantially all of the fair value of the underlying asset; or
(v)The underlying asset is specialized and is expected to have no alternative use at the end of the lease term.
If we meet any of the above criteria, we account for the lease as a finance, a sales-type, or a direct financing lease. If we do
not meet any of the criteria, we account for the lease as an operating lease.
A lease is accounted for as a sales-type lease if it is considered to transfer control of the underlying asset to the lessee. A
lease is accounted for as a direct financing lease if risks and rewards are conveyed without the transfer of control, which is normally
indicated by the existence of a residual value guarantee from an unrelated third party other than the lessee.
This classification will determine the method of recognition of the lease:
- For an operating lease, we recognize income from rentals if we are the lessor, or rental operations expense if we are the
lessee, over the term of the lease on a straight-line basis.
- For a sales-type lease or a direct financing lease, we recognize the income from rentals, or for a finance lease, we
recognize rental operations expense, over the term of the lease using the effective interest method.
- At inception of a sales-type lease or a direct financing lease, if we determine the fair value of the leased property is lower
than its carrying amount, we recognize a selling loss immediately at lease commencement. If fair value exceeds the
carrying amount of a lease, a gain is recognized at lease commencement on a sales-type lease. For a direct financing
lease, a gain is deferred at lease commencement and amortized over the lease term.
Lessor accounting
Costs to execute leases
We capitalize initial direct costs, which represent only incremental costs to execute a lease that would not have been incurred
if the lease had not been obtained. Costs that we incur to negotiate or arrange a lease, regardless of its outcome, such as for fixed
employee compensation, tax or legal advice to negotiate lease terms, and other costs, are expensed as incurred.
Operating leases
We account for the revenue from our lease contracts by utilizing the single component accounting policy. This policy requires
us to account for, by class of underlying asset, the lease component and nonlease component(s) associated with each lease as a single
component if two criteria are met:
(i)The timing and pattern of transfer of the lease component and the nonlease component(s) are the same; and
(ii)The lease component would be classified as an operating lease if it were accounted for separately.
Lease components consist primarily of fixed rental payments, which represent scheduled rental amounts due under our
leases, and contingent rental payments. Nonlease components consist primarily of tenant recoveries representing reimbursements of
rental operating expenses under our triple net lease structure, including recoveries for property taxes, insurance, utilities, repairs and
maintenance, and common area expenses.
F-18
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
If the lease component is the predominant component, we account for all revenues under such lease as a single component in
accordance with the lease accounting standard. Conversely, if the nonlease component is the predominant component, all revenues
under such lease are accounted for in accordance with the revenue recognition accounting standard. Our operating leases qualify for
the single component accounting, and the lease component in each of our leases is predominant. Therefore, we account for all
revenues from our operating leases under the lease accounting standard and classify these revenues as income from rentals in our
consolidated statements of operations.
We commence recognition of income from rentals related to the operating leases at the date the property is ready for its
intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset. When a lease includes
construction of improvements, we determine whether the improvements are landlord or tenant assets. In determining if the
improvements are landlord or tenant improvements, we consider various factors, including, but not limited to, the following:
-
Which party retains legal title to the improvements upon lease expiration;
-
Whether the improvements are expected to have significant residual value at the end of the lease term;
-
Whether the improvements are unique to the tenant;
-
What happens to the improvements upon lease expiration (i.e., whether they are removed or preserved for the landlord);
-
Which party bears all costs of the improvements (including the risk of cost overruns); and
-
Which party supervises the construction of the improvements.
If the improvements are landlord assets, we capitalize such improvements. If the improvements are tenant assets, we do not
capitalize these assets. Improvements that qualify as tenant assets, if funded by us, are accounted for as lease incentives and
amortized as a reduction of revenue over the term of the lease. If the tenant funds improvements without reimbursement from us, and
we determine these improvements to be landlord assets, we consider the amount associated with the improvements to be non-cash
lease payments, which are recognized as incremental revenue over the term of the lease.
Income from rentals related to fixed rental payments under operating leases is recognized on a straight-line basis over the
respective operating lease terms. We classify amounts expected to be received in later periods as deferred rent in our consolidated
balance sheets. Amounts received currently but recognized as revenue in future periods are classified in accounts payable, accrued
expenses, and other liabilities in our consolidated balance sheets.
Income from rentals related to variable payments includes tenant recoveries and contingent rental payments. Tenant
recoveries, including reimbursements of utilities, repairs and maintenance, common area expenses, real estate taxes and insurance,
and other operating expenses, are recognized as revenue in the period during which the applicable expenses are incurred and the
tenant’s obligation to reimburse us arises. Income from rentals related to other variable payments is recognized when associated
contingencies are removed.
We assess collectibility from our tenants of future lease payments for each of our operating leases. If we determine that
collectibility is probable, we recognize income from rentals based on the methodology described above. If we determine that
collectibility is not probable, we recognize an adjustment to lower our income from rentals. Furthermore, we may recognize a general
allowance at a portfolio level (not the individual level) if we do not expect to collect future lease payments in full.
For each lease for which we determine that collectibility of future lease payments is not probable, we cease the recognition of
income from rentals on a straight-line basis and limit the recognition of income to the lesser of payments collected from the lessee or
lease income that would have been recognized on a straight-line basis. We do not resume straight-line recognition of income from
rentals for these leases until we determine that the collectibility of future payments related to these leases is probable. We also record a
general allowance related to the deferred rent balances that at the portfolio level (not the individual level) are not expected to be
collected in full through the lease term. As of December 31, 2024 and 2023, our general allowance balance aggregated $21.3 million
and $21.4 million, respectively.
Direct financing and sales-type leases
Income from rentals related to direct financing and sales-type leases is recognized over the lease term using the effective
interest rate method. At lease commencement, we record an asset within other assets in our consolidated balance sheets, which
represents our net investment in the lease. This initial net investment is determined by aggregating the present values of the total future
lease payments attributable to the lease and the estimated residual value of the property, less any unearned income related to our
direct financing lease. Over the lease term, the investment in the lease accretes in value, producing a constant periodic rate of return on
the net investment in the lease. Income from these leases is classified in income from rentals in our consolidated statements of
operations. Our net investment is reduced over time as lease payments are received.
We evaluate our net investment in direct financing and sales-type leases for impairment under the current expected credit
losses accounting standard. For more information, refer to “Provision for expected credit losses” in Note 2 – “Summary of significant
accounting policies” to our consolidated financial statements.
F-19
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
As a lessor, we classify a lease with variable lease payments that do not depend on an index or a rate as an operating lease
on the commencement date of the lease if both of the following criteria are met:
(i)The lease would have been classified as a sales-type lease or direct financing lease under the current lease accounting
standard; and
(ii)The sales-type lease or direct financing lease classification would have resulted in a selling loss at lease commencement.
We do not derecognize the underlying asset and do not recognize a loss upon lease commencement but continue to
depreciate the underlying asset over its useful life.
Lessee accounting
We have operating lease agreements in which we are the lessee consisting of ground and office leases. At the lease
commencement date (or at the acquisition date if the lease is acquired as part of a real estate acquisition), we are required to recognize
a liability to account for our future obligations under these operating leases, and a corresponding right-of-use asset.
The lease liability is measured based on the present value of the future lease payments, including payments during the term
under our extension options that we are reasonably certain to exercise. The present value of the future lease payments is calculated for
each operating lease using each respective remaining lease term and a corresponding estimated incremental borrowing rate, which is
the interest rate that we estimate we would have to pay to borrow on a collateralized basis over a similar term for an amount equal to
the lease payments. Subsequently, the lease liability is accreted by applying a discount rate established at the lease commencement
date to the lease liability balance as of the beginning of the period and is reduced by the payments made during the period. We classify
the operating lease liability in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets.
The right-of-use asset is measured based on the corresponding lease liability, adjusted for initial direct leasing costs and any
other consideration exchanged with the landlord prior to the commencement of the lease, as well as adjustments to reflect favorable or
unfavorable terms of an acquired lease when compared with market terms at the time of acquisition. Subsequently, the right-of-use
asset is amortized on a straight-line basis during the lease term. We classify the right-of-use asset in other assets in our consolidated
balance sheets.
Recognition of revenue arising from contracts with customers
We recognize revenues associated with transactions arising from contracts with customers, excluding revenues subject to the
lease accounting standard discussed in “Lease accounting” above, in accordance with the revenue recognition accounting standard. A
customer is distinguished from a noncustomer by the nature of the goods or services that are transferred. Customers are provided with
goods or services that are generated by a company’s ordinary output activities, whereas noncustomers are provided with nonfinancial
assets that are outside of a company’s ordinary output activities.
We generally recognize revenue representing the transfer of goods and services to customers in an amount that reflects the
consideration to which we expect to be entitled in the exchange. In order to determine the recognition of revenue from customer
contracts, we use a five-step model to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract,
(iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will
not occur, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) we
satisfy the performance obligation.
We identify contractual performance obligations and determine whether revenue should be recognized at a point in time or
over time, based on when control of goods and services transfers to a customer. We consider whether we control the goods or services
prior to the transfer to the customer in order to determine whether we should account for the arrangement as a principal or agent. If we
determine that we control the goods or services provided to the customer, then we are the principal to the transaction, and we recognize
the gross amount of consideration expected in the exchange. If we simply arrange but do not control the goods or services being
transferred to the customer, then we are considered to be an agent to the transaction, and we recognize the net amount of
consideration we are entitled to retain in the exchange.
Total revenues subject to the revenue recognition accounting standard and classified within income from rentals in our
consolidated statements of operations for the years ended December 31, 2024 and 2023 included $41.9 million and $37.3 million,
respectively, primarily related to short-term parking revenues associated with long-term lease agreements. Short-term parking revenues
do not qualify for the single component accounting policy, as discussed in “Lessor accounting” in Note 2 – “Summary of significant
accounting policies,” due to the difference in the timing and pattern of transfer of our parking service obligations and associated lease
components within the same lease agreement. We recognize short-term parking revenues in accordance with the revenue recognition
accounting standard when the service is provided and the performance obligation is satisfied, which normally occurs at a point in time.
F-20
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Monitoring of tenant credit quality
During the term of each lease, we monitor the credit quality and any related material changes of our tenants by (i) monitoring
the credit rating of tenants that are rated by a nationally recognized credit rating agency, (ii) reviewing financial statements of the
tenants that are publicly available or that are required to be delivered to us pursuant to the applicable lease, (iii) monitoring news
reports regarding our tenants and their respective businesses, and (iv) monitoring the timeliness of lease payments.
Notes receivable
We carry notes receivable at amortized cost, net of any unamortized discounts or premiums and adjusted for the estimated
provision for expected credit losses. Interest income on notes receivable is recognized using the effective-interest method and is
classified within other income in our consolidated statements of operations. Direct costs incurred in originating notes, along with any
premium or discount, are deferred and amortized as an adjustment to interest income over the note’s term using the effective interest
method. Notes receivable are classified within other assets in our consolidated balance sheets. Refer to Note 8 – “Other assets” to our
consolidated financial statements for additional details.
Provision for expected credit losses
We are required to estimate and recognize lifetime expected losses, rather than incurred losses, for most of our financial
assets measured at amortized cost and certain other instruments, including trade and other receivables (excluding receivables arising
from operating leases), loans, held-to-maturity debt securities, net investments in leases arising from sales-type and direct financing
leases, and off-balance-sheet credit exposures (e.g., loan commitments). The recognition of such expected losses, even if the expected
risk of credit loss is remote, typically results in earlier recognition of credit losses. At each reporting date, we reassess our provision for
expected credit losses, and, if necessary, we recognize an adjustment for our current estimate of expected credit losses. Refer to Note
5 – “Leases” and Note 8 – “Other assets” to our consolidated financial statements for additional details.
An assessment of the collectibility of operating lease payments and the recognition of an adjustment to lease income based
on this assessment is governed by the lease accounting standard discussed in “Lease accounting” earlier in Note 2 – “Summary of
significant accounting policies” to our consolidated financial statements.
Income taxes
We are organized and operate as a REIT pursuant to the Internal Revenue Code (the “Code”). Under the Code, a REIT that
distributes at least 90% of its REIT taxable income to its stockholders annually (excluding net capital gains) and meets certain other
conditions is not subject to federal income tax on its distributed taxable income, but could be subject to certain federal, foreign, state,
and local taxes. We distribute 100% of our taxable income annually; therefore, a provision for federal income taxes is not required. In
addition to our REIT returns, we file federal, foreign, state, and local tax returns for our subsidiaries. We file with jurisdictions located in
the U.S., Canada, and other international locations. Our tax returns are subject to routine examination in various jurisdictions for the
2018 through 2023 calendar years.
Employee and non-employee share-based payments
We have implemented an entity-wide accounting policy to account for forfeitures related to unmet service conditions of share-
based awards granted to employees and non-employees when they occur. Under this policy, when forfeitures occur, any previously
recognized expense related to those forfeited awards is reversed in the period of forfeiture.
Our employee and non-employee share-based awards are measured at fair value on the grant date and recognized over the
recipient’s required service period. For share-based awards with performance conditions, we continue to assess the probability of
achieving the performance conditions and recognize expense only when it becomes probable that the performance targets will be met.
Conversely, for share-based awards with market conditions, expense is recognized regardless of whether the market condition is met.
Dividends paid on share-based awards with nonforfeitable rights to dividends are initially classified in retained earnings and
reclassified to compensation cost only if the underlying awards are forfeited. Conversely, for share-based awards with forfeitable rights
to dividends, declared dividends are initially classified in retained earnings and in dividends payable within our consolidated balance
sheets. If the underlying awards are forfeited, the corresponding accrual is reversed in the period of forfeiture. Upon vesting of the
underlying share-based awards with forfeitable rights to dividends, the accumulated dividend payment is made and the dividend
payable liability is settled.
F-21
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Forward equity sales agreements
From time to time, we enter into forward equity sales agreements and account for them in accordance with the accounting
guidance governing financial instruments and derivatives. Under the accounting guidance, our forward equity sales agreements are not
deemed to be liabilities as they do not embody obligations to repurchase our shares, nor do they embody obligations to issue a variable
number of shares for which the monetary value is predominantly fixed, varied with something other than the fair value of our shares, or
varied inversely in relation to our shares. We also evaluate whether the agreements meet the derivatives and hedging guidance scope
exception to be accounted for as equity instruments. Our forward equity sales agreements are classified as equity contracts based on
the following assessment: (i) none of the agreements’ exercise contingencies are based on observable markets or indices besides
those related to the market for our own stock price and operations; and (ii) none of the settlement provisions preclude the agreements
from being indexed to our own stock.
Issuer and guarantor subsidiaries of guaranteed securities
Generally, a parent entity of an issuer that holds guaranteed securities must provide separate subsidiary issuer or guarantor
financial statements, unless it qualifies for disclosure exceptions. A parent entity may be eligible for disclosure exceptions if it meets the
following criteria:
(i)The subsidiary issuer or guarantor is a consolidated subsidiary of the parent company, and
(ii)The subsidiary issues a registered security that is:
-
issued jointly and severally with the parent company, or
-
fully and unconditionally guaranteed by the parent company.
A parent entity that meets the above criteria may instead present summarized financial information (“alternative disclosures”)
either within the consolidated financial statements or in “Management’s discussion and analysis of financial condition and results of
operations” in Item 7. We evaluated the criteria and determined that we are eligible for the disclosure exceptions, which allow us to
provide alternative disclosures; as such, we present alternative disclosures in “Management’s discussion and analysis of financial
condition and results of operations” in Item 7.
Loan fees
Fees incurred in obtaining long-term financing are capitalized and classified with the corresponding debt instrument appearing
on our consolidated balance sheets. Loan fees related to our unsecured senior line of credit are capitalized and classified within other
assets. Capitalized amounts are amortized over the term of the related loan, and the amortization is classified in interest expense in our
consolidated statements of operations.
Distributions from equity method investments
We use the “nature of the distribution” approach to determine the classification within our consolidated statements of cash
flows of cash distributions received from equity method investments, including our unconsolidated real estate joint ventures and equity
method non-real estate investments. Under this approach, distributions are classified based on the nature of the underlying activity that
generated the cash distributions. If we lack the information necessary to apply this approach in the future, we will be required to apply
the “cumulative earnings” approach as an accounting change on a retrospective basis. Under the cumulative earnings approach,
distributions up to the amount of cumulative equity in earnings recognized are classified as cash inflows from operating activities, and
those in excess of that amount are classified as cash inflows from investing activities.
Restricted cash
We present cash and cash equivalents separately from restricted cash within our consolidated balance sheets. However, we
include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown
in the consolidated statements of cash flows. We provide a reconciliation between the consolidated balance sheets and the
consolidated statements of cash flows, as required when the balance includes more than one line item for cash, cash equivalents, and
restricted cash. We also provide a disclosure of the nature of the restrictions related to material restricted cash balances.
F-22
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent accounting pronouncements
On August 23, 2023, the FASB issued an ASU 2023-05, Business Combinations — Joint Venture Formations (Subtopic
805-60): Recognition and Initial Measurement, that requires a joint venture, upon formation, to measure its assets and liabilities at fair
value in its standalone financial statements. A joint venture must recognize the difference between the fair value of its equity and the fair
value of its identifiable assets and liabilities as goodwill (or an equity adjustment, if negative) using the business combination accounting
guidance regardless of whether the net assets meet the definition of a business. The new accounting standard is intended to reduce
diversity in practice.
This ASU will apply to joint ventures that meet the definition of a corporate joint venture under GAAP, thus limiting its scope to
joint ventures not controlled and therefore not consolidated by any joint venture investor. We generally seek to maintain control of our
real estate joint ventures and therefore expect this ASU to apply to a limited number, if any, of our unconsolidated real estate joint
ventures formed after the adoption of this accounting standard. This standard does not change the accounting of investments by the
investors in a joint venture in their individual financial statements, and therefore, its adoption will have no impact on our consolidated
financial statements. This accounting standard is effective for joint ventures with a formation date on or after January 1, 2025. We
adopted this ASU on January 1, 2025.
On November 27, 2023, the FASB issued an ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures, that requires the quarterly disclosure of segment expenses if they are (i) significant to the segment, (ii) regularly
provided to the chief operating decision maker (“CODM”), and (iii) included in each reported measure of a segment’s profit or loss. In
addition, this ASU requires an annual disclosure of the CODM’s title and a description of how the CODM uses the segment’s profit/loss
measure to assess segment performance and to allocate resources. We adopted this accounting standard on January 1, 2024. While
the adoption has no impact on our financial statements, it has resulted in incremental disclosures within the footnotes to our
consolidated financial statements.
On November 4, 2024, the FASB issued an ASU 2024-03, Disaggregation of Income Statement Expenses, that will require
entities to provide enhanced disclosures related to certain expense categories included in income statement captions. The ASU aims to
increase transparency and provide investors with more detailed information about the nature of expenses reported on the face of the
income statement. The new standard does not change the requirements for the presentation of expenses on the face of the income
statement.
Under this ASU, entities are required to disaggregate, in a tabular format, expense captions presented on the face of the
income statement — excluding earnings or losses from equity method investments — if they include any of the following expense
categories: purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depreciation or depletion.
For any remaining items within each relevant expense caption, entities must provide a qualitative description of the nature of those
expenses. The new ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods
beginning after December 15, 2027. Early adoption is permitted. We expect to adopt this ASU on January 1, 2027. While the adoption is
not expected to have an impact on our financial statements, it is expected to result in incremental disclosures within the footnotes to our
consolidated financial statements.
F-23
3.INVESTMENTS IN REAL ESTATE
Our consolidated investments in real estate consisted of the following as of December 31, 2024 and 2023 (in thousands):
| December 31, | ||||
| 2024 | 2023 | |||
| Rental properties: | ||||
| Land (related to rental properties) | $3,863,027 | $4,296,048 | ||
| Buildings and building improvements | 20,377,935 | 20,153,572 | ||
| Other improvements | 4,354,785 | 3,674,251 | ||
| Rental properties | 28,595,747 | 28,123,871 | ||
| Development and redevelopment projects | 8,618,727 | 8,220,672 | ||
| Gross investments in real estate | 37,214,474 | 36,344,543 | ||
| Less: accumulated depreciation | (5,477,082) | (4,896,479) | ||
| Investments in real estate assets held for sale(1) | 372,647 | 185,447 | ||
| Investments in real estate | $32,110,039 | $31,633,511 |
(1)See “Assets held for sale” below.
Assets held for sale
As of December 31, 2024, we had 10 properties aggregating 600,870 RSF and land parcels aggregating 2.4 million SF that
were classified as held for sale in our consolidated financial statements.
The disposal of properties classified as held for sale does not represent a strategic shift that has (or will have) a major effect
on our operations or financial results and therefore does not meet the criteria for classification as a discontinued operation. We cease
depreciation of our properties upon their classification as held for sale.
The following is a summary of net assets as of December 31, 2024 and 2023 for our real estate investments that were
classified as held for sale as of each respective date (in thousands):
| December 31, | |||
| 2024 | 2023 | ||
| Investments in real estate | $372,647 | $185,447 | |
| Other assets | 9,488 | 8,776 | |
| Total assets | 382,135 | 194,223 | |
| Total liabilities | (13,462) | (4,750) | |
| Total accumulated other comprehensive income | 2,584 | 1,960 | |
| Net assets classified as held for sale | $371,257 | $191,433 |
For additional information, refer to “Real estate sales” in Note 2 – “Summary of significant accounting policies” to our
consolidated financial statements.
F-24
3. INVESTMENTS IN REAL ESTATE (continued)
Acquisitions
Our real estate asset acquisitions during the year ended December 31, 2024 consisted of the following (dollars in thousands):
| Square Footage | ||||||||||||
| Property | Submarket/Market | Date of Purchase | Number of Properties | Future Development | Operating With Future Development/ Redevelopment | Purchase Price(1) | ||||||
| 285, 299, 307, and 345 Dorchester Avenue(2) | Seaport Innovation District/Greater Boston | 1/30/24 | — | 1,040,000 | — | $155,321 | ||||||
| 428 Westlake Avenue North | Lake Union/Seattle | 10/1/24 | 1 | — | 90,626 | 47,600 | ||||||
| Other | 46,490 | |||||||||||
| Total | 1,040,000 | 90,626 | $249,411 |
(1)Represents the aggregate contractual purchase price of our acquisitions, which differs from purchases of real estate in our consolidated statements of cash flows
due to the timing of payment, closing costs, and other acquisition adjustments such as prorations of rents and expenses.
(2)Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our consolidated financial statements for additional details.
Based upon our evaluation of each acquisition, we determined that substantially all of the fair value related to each acquisition
was concentrated in a single identifiable asset or a group of similar identifiable assets, or was associated with a land parcel with no
operations. Accordingly, each transaction did not meet the definition of a business and therefore was accounted for as an asset
acquisition. In each of these transactions, we allocated the total consideration for each acquisition to the individual assets and liabilities
acquired on a relative fair value basis.
During the year ended December 31, 2024, we acquired real estate assets for an aggregate purchase price of $249.4 million.
In connection with our acquisitions, we recorded in-place lease assets aggregating $4.4 million and above-market lease asset in which
we are the lessor aggregating $492 thousand. As of December 31, 2024, the weighted-average amortization period remaining on our in-
place leases and above-market leases acquired during the year ended December 31, 2024 was 2.5 years and 5.1 years, respectively,
and 2.8 years in total.
Acquired below-market leases
The balances of acquired below-market tenant leases existing as of December 31, 2024 and 2023 and related accumulated
amortization, classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets as of
December 31, 2024 and 2023, were as follows (in thousands):
| December 31, | ||||
| 2024 | 2023 | |||
| Acquired below-market leases | $652,757 | $696,875 | ||
| Accumulated amortization | (472,350) | (374,835) | ||
| $180,407 | $322,040 |
For the years ended December 31, 2024, 2023, and 2022, we recognized in rental revenues approximately $89.4 million,
$96.9 million, and $78.0 million, respectively, related to the amortization of acquired below-market leases existing as of the end of each
respective year.
The weighted-average amortization period of the value of acquired below-market leases existing as of December 31, 2024
was approximately 7.0 years, and the estimated annual amortization of the value of acquired below-market leases as of December 31,
2024 is as follows (in thousands):
| Year | Amount | |
| 2025 | $38,074 | |
| 2026 | 25,502 | |
| 2027 | 24,674 | |
| 2028 | 12,822 | |
| 2029 | 10,333 | |
| Thereafter | 69,002 | |
| Total | $180,407 |
F-25
3. INVESTMENTS IN REAL ESTATE (continued)
Acquired in-place leases
The balances of acquired in-place leases and related accumulated amortization, classified in other assets in our consolidated
balance sheets as of December 31, 2024 and 2023, were as follows (in thousands):
| December 31, | ||||
| 2024 | 2023 | |||
| Acquired in-place leases | $1,032,744 | $1,115,259 | ||
| Accumulated amortization | (727,600) | (653,646) | ||
| $305,144 | $461,613 |
Amortization for these intangible assets, classified in depreciation and amortization expense in our consolidated statements of
operations, was approximately $108.7 million, $160.6 million, and $169.5 million for the years ended December 31, 2024, 2023, and
2022, respectively. The weighted-average amortization period of the value of acquired in-place leases was approximately 6.8 years, and
the estimated annual amortization of the value of acquired in-place leases as of December 31, 2024 is as follows (in thousands):
| Year | Amount | |
| 2025 | $71,513 | |
| 2026 | 58,706 | |
| 2027 | 46,211 | |
| 2028 | 33,983 | |
| 2029 | 28,407 | |
| Thereafter | 66,324 | |
| Total | $305,144 |
F-26
3. INVESTMENTS IN REAL ESTATE (continued)
Sales of real estate assets and impairment charges
Our completed dispositions of real estate assets during the year ended December 31, 2024 consisted of the following (dollars
in thousands):
| Property | Submarket/Market | Date of Sale | Interest Sold | RSF | Land and Future SF | Sales Price | Gain on Sales of Real Estate | ||||||||
| 4755 and 4757 Nexus Center Drive and 4796 Executive Drive | University Town Center/San Diego | 12/30/24 | 100% | 177,804 | — | $120,000 | (1) | $47,511 | |||||||
| 14225 Newbrook Drive | Northern Virginia/Maryland | 10/15/24 | 100% | 248,186 | — | 80,500 | 37,074 | ||||||||
| 1165 Eastlake Avenue East | Lake Union/Seattle | 9/12/24 | 100% | 100,086 | — | 149,985 | 21,535 | ||||||||
| 9444 Waples Street (50% consolidated JV) | Sorrento Mesa/San Diego | 12/23/24 | 100% | — | 149,000 | 31,000 | (2) | 8,175 | (2) | ||||||
| 6040 George Watts Hill Drive | Research Triangle/Research Triangle | 12/10/24 | 100% | 149,585 | — | 93,500 | 5,004 | ||||||||
| 100 Minuteman Road | Other/Greater Boston | 11/15/24 | 100% | 308,970 | — | 67,300 | 4,042 | ||||||||
| 849 and 863 Mitten Road and 866 Malcolm Road | South San Francisco/San Francisco Bay Area | 11/20/24 | 100% | 103,857 | — | 24,000 | — | ||||||||
| 99 A Street | Seaport Innovation District/ Greater Boston | 3/8/24 | 100% | — | 235,000 | 13,350 | — | ||||||||
| 219 East 42nd Street | New York City/New York City | 7/9/24 | 100% | 349,947 | — | 60,000 | — | ||||||||
| 6101 Quadrangle Drive | Research Triangle/Research Triangle | 12/16/24 | 100% | 31,600 | — | 11,310 | — | ||||||||
| Other | 38,617 | 5,971 | |||||||||||||
| $129,312 | |||||||||||||||
| One Moderna Way | Route 128/Greater Boston | 12/17/24 | 100% | 722,130 | — | 369,439 | (3) | ||||||||
| 215 First Street, 150 Second Street, and 11 Hurley Street | Cambridge/Greater Boston | 12/20/24 | 100% | 552,513 | — | 245,539 | |||||||||
| 10048 and 10219 Meanley Drive and 10277 Scripps Ranch Boulevard | Sorrento Mesa/San Diego | 12/20/24 | 100% | — | 444,041 | 55,000 | (1) | ||||||||
| $1,359,540 | (4) | ||||||||||||||
| 1401/1413 Research Boulevard (65% unconsolidated JV) | Rockville/Maryland | 10/31/24 | 100% | (5) | — | $22,913 | (5) | $3,328 | (5) | ||||||
(1)As part of the transaction, we provided partial seller financing. Refer to Note 8 – “Other assets” to our consolidated financial statements for additional information.
(2)Our share of the sales price is $15.5 million, and our share of gain on sale is $3.2 million.
(3)Refer to “Impairment charges” below for details on impairments recognized in connection with these transactions during the year ended December 31, 2024.
(4)Represents the aggregate contractual sales price of our dispositions, which differs from proceeds from sales of real estate and contributions from and sales of
noncontrolling interests in our consolidated statement of cash flows under “Investing activities” and “Financing activities,” respectively, primarily due to the timing of
payment, closing costs, and other sales adjustments such as prorations of rents and expenses.
(5)The unconsolidated real estate joint venture completed the sale of a retail shopping center aggregating 84,837 RSF. We received cash proceeds, net of our $18.6 million
share of the debt balance, approximating our $3.3 million share of the gain on sale, which is classified in equity in earnings of unconsolidated real estate joint ventures in
our consolidated statement of operations. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our consolidated financial statements for
additional information.
Impairment charges
During the year ended December 31, 2024, we recognized real estate impairment charges aggregating $223.1 million, which
primarily consisted of the following:
- In October 2024, four properties at One Moderna Way in our Route 128 submarket met the criteria for classification as held for
sale, when a single tenant, occupying 100% of these properties with a weighted-average remaining lease term of 18 years,
committed to purchasing them. Due to our important long-established relationship with this tenant and the strategic nature of
these properties, there were no other buyers to whom we would be willing to sell these properties. As a result, the sale of these
assets became probable and all criteria for classification as held for sale were met when the tenant’s commitment to acquire
these properties was confirmed in October 2024. Upon meeting the asset held for sale criteria, we recognized an impairment
charge of $40.9 million to reduce the carrying amounts of these properties to the expected sales price less costs to sell. In
December 2024, we completed the sale of these properties for a sales price of $369.4 million, with no incremental gain or loss
recognized.
F-27
3. INVESTMENTS IN REAL ESTATE (continued)
- In October 2024, five operating properties aggregating 203,223 RSF and land parcels aggregating 1.5 million SF in our
Sorrento Mesa and University Town Center submarkets met the criteria for classification as held for sale. In October 2024,
after meeting all criteria for classification as held for sale, including (i) our commitment to sell these assets, (ii) Board of
Directors’ approval, and (iii) our determination that the sale of each property was probable within one year, we recognized
impairment charges aggregating $65.9 million to reduce the carrying amounts of these properties to the expected aggregate
sales price less costs to sell. Subsequent to October 2024, we had the following additional developments related to these
transactions:
- In December 2024, we completed the sale of land parcels aggregating 444,041 SF (included in the 1.5 million SF
discussed above) in our Sorrento Mesa submarket for a sales price of $55.0 million, with no gain or loss recognized in
earnings, to a buyer that is expected to develop residential properties on this site. As part of the transaction, we provided
$25.0 million of seller financing. This note receivable is classified within “Other assets” in our consolidated balance sheet.
Refer to Note 8 – “Other assets” to our consolidated financial statements for additional information.
- In December 2024, based on an executed purchase and sale agreement, we recognized an additional $36.9 million
impairment charge related to three operating properties aggregating 100,831 RSF and land parcels aggregating
1.0 million SF (included in the aforementioned 203,223 RSF and 1.5 million SF, respectively) in our University Town
Center submarket to further reduce the carrying amounts of these properties to their estimated fair values less costs to
sell of approximately $200 million. As of December 31, 2024, these assets were classified as held for sale, and we expect
to complete the sales of these assets within 12 months.
- We continue to hold two operating properties aggregating 102,392 RSF (included in the aforementioned 203,223 RSF) in
our Sorrento Mesa submarket with a carrying amount of $18.2 million as held for sale as of December 31, 2024. We
expect to complete the sale of these properties within 12 months.
- During the three months ended December 31, 2024, three properties aggregating 552,513 RSF in our Cambridge submarket
met the criteria for classification as held for sale upon our decision to dispose of them as a result of our determination that they
were not core to our Megacampus strategy due to their size, location, and existing use. Upon meeting the criteria for
classification as held for sale, we recognized an impairment charge of $6.3 million to reduce the carrying amounts of these
properties to their estimated fair values less costs to sell. In December 2024, we completed the sale of these properties for a
sales price of $245.5 million.
- In addition, we recognized impairment charges aggregating $30.8 million primarily consisting of the pre-acquisition costs
related to two potential acquisitions aggregating 1.4 million RSF of future development in our Greater Boston market. We
executed purchase agreements for these potential acquisitions with the total purchase price aggregating $366.8 million in 2020
and 2022 and initially expected to close these acquisitions after 2024. Our intent for each site included the demolition of
existing buildings upon expiration of the existing in-place leases and the development of life science properties. During the
three months ended June 30, 2024, due to the existing macroeconomic environment that negatively impacted the financial
outlook for these projects, we decided to no longer proceed with these acquisitions, resulting in the recognition of impairment
charges.
- In December 2024, we recognized an impairment charge of $13.7 million to reduce the carrying amount of a property
aggregating 45,615 RSF in our Seattle market to its estimated fair value less costs to sell of approximately $8 million, upon
meeting the criteria for classification as held for sale. We expect to sell this project within 12 months.
- In December 2024, we recognized an impairment charge of $6.1 million to reduce the carrying amount of a development
project aggregating 1.4 million SF in our Texas market to its estimated fair value less costs to sell of approximately $70 million,
upon meeting the criteria for classification as held for sale. We expect to sell this project within 12 months.
F-28
3. INVESTMENTS IN REAL ESTATE (continued)
Other
In 2006, ARE-East River Science Park, LLC, a subsidiary of Alexandria Real Estate Equities, Inc., was granted an option to
incorporate a land parcel adjacent to and north of the Alexandria Center® for Life Science – New York City (“ACLS-NYC”) campus
(“Option Parcel”) into the existing ground lease of that campus. The Option Parcel will allow ARE-East River Science Park, LLC to
develop a future world-class life science building within the ACLS-NYC campus. ARE-East River Science Park, LLC’s investment in pre-
construction costs related to the development of the Option Parcel, including costs related to design, engineering, environmental,
survey/title, and permitting and legal costs, aggregated $168.4 million as of December 31, 2024.
On August 6, 2024, ARE-East River Science Park, LLC filed a lawsuit in the United States District Court for the Southern
District of New York against its landlord, New York City Health + Hospitals Corporation (“H+H”), and the New York City Economic
Development Corporation (“EDC”). On January 24, 2025, ARE-East River Science Park, LLC filed a First Amended Complaint. The
lawsuit alleges two principal claims against H+H and EDC: fraud in the inducement, and, in the alternative, breach of contract in
violation of the implied covenant of good faith and fair dealing. As alleged in the complaint, ARE-East River Science Park, LLC’s claims
arise from H+H’s and EDC’s misrepresentations and concealment of material facts in connection with a floodwall, which H+H and EDC
are seeking to require ARE-East River Science Park, LLC to integrate into the development of the Option Parcel. ARE-East River
Science Park, LLC alleges that H+H’s and EDC’s misconduct have prevented it from commencing the development of the Option
Parcel. In light of the pending litigation, the closing date for our option and thus the commencement date for construction of the third
tower at the campus are presently indeterminate. Among other things, ARE-East River Science Park, LLC is seeking significant
damages and equitable relief from the court to confirm our understanding that the option is in full force and effect.
This matter exposes us to potential losses ranging from zero to the full amount of the investment in the project aggregating
$168.4 million as of December 31, 2024, depending on any collection of damages and/or the ability to develop the project. We
performed a probability-weighted recoverability analysis based on estimates of various possible outcomes and determined no
impairment was present as of December 31, 2024.
F-29
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES
From time to time, we enter into joint venture agreements through which we own a partial interest in real estate entities that
own, develop, and operate real estate properties. As of December 31, 2024, our real estate joint ventures held the following properties:
| Property | Market | Submarket | Our Ownership Interest(1) | ||||||
| Consolidated real estate joint ventures*(2)**:* | |||||||||
| 50 and 60 Binney Street | Greater Boston | Cambridge/Inner Suburbs | 34.0% | ||||||
| 75/125 Binney Street | Greater Boston | Cambridge/Inner Suburbs | 40.0% | ||||||
| 100 and 225 Binney Street and 300 Third Street | Greater Boston | Cambridge/Inner Suburbs | 30.0% | ||||||
| 99 Coolidge Avenue | Greater Boston | Cambridge/Inner Suburbs | 75.0% | ||||||
| 15 Necco Street | Greater Boston | Seaport Innovation District | 56.7% | ||||||
| 285, 299, 307, and 345 Dorchester Avenue | Greater Boston | Seaport Innovation District | 60.0% | ||||||
| Alexandria Center® for Science and Technology – Mission Bay(3) | San Francisco Bay Area | Mission Bay | 25.0% | ||||||
| 1450 Owens Street | San Francisco Bay Area | Mission Bay | 25.1% | (4) | |||||
| 601, 611, 651, 681, 685, and 701 Gateway Boulevard | San Francisco Bay Area | South San Francisco | 50.0% | ||||||
| 751 Gateway Boulevard | San Francisco Bay Area | South San Francisco | 51.0% | ||||||
| 211 and 213 East Grand Avenue | San Francisco Bay Area | South San Francisco | 30.0% | ||||||
| 500 Forbes Boulevard | San Francisco Bay Area | South San Francisco | 10.0% | ||||||
| Alexandria Center® for Life Science – Millbrae | San Francisco Bay Area | South San Francisco | 48.2% | ||||||
| 3215 Merryfield Row | San Diego | Torrey Pines | 30.0% | ||||||
| Campus Point by Alexandria(5) | San Diego | University Town Center | 55.0% | ||||||
| 5200 Illumina Way | San Diego | University Town Center | 51.0% | ||||||
| 9625 Towne Centre Drive | San Diego | University Town Center | 30.0% | ||||||
| SD Tech by Alexandria(6) | San Diego | Sorrento Mesa | 50.0% | ||||||
| Pacific Technology Park | San Diego | Sorrento Mesa | 50.0% | ||||||
| Summers Ridge Science Park(7) | San Diego | Sorrento Mesa | 30.0% | ||||||
| 1201 and 1208 Eastlake Avenue East | Seattle | Lake Union | 30.0% | ||||||
| 199 East Blaine Street | Seattle | Lake Union | 30.0% | ||||||
| 400 Dexter Avenue North | Seattle | Lake Union | 30.0% | ||||||
| 800 Mercer Street | Seattle | Lake Union | 60.0% | ||||||
| Unconsolidated real estate joint ventures*(2)**:* | |||||||||
| 1655 and 1725 Third Street | San Francisco Bay Area | Mission Bay | 10.0% | ||||||
| 1450 Research Boulevard | Maryland | Rockville | 73.2% | (8) | |||||
| 101 West Dickman Street | Maryland | Beltsville | 58.4% | (8) |
(1)Refer to the table on the next page that shows the categorization of our joint ventures under the consolidation framework.
(2)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in three other consolidated real estate joint ventures in North
America and we hold an interest in one insignificant unconsolidated real estate joint venture in North America.
(3)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South.
(4)During the year ended December 31, 2024, our equity ownership decreased from 40.6% to 25.1% based on continued funding of construction costs by our joint venture
partner and a reallocation of equity to our joint venture partner of $30.2 million from us. The noncontrolling interest share of our joint venture partner is anticipated to
increase to 75% and ours to decrease to 25% as our partner contributes additional equity to fund the construction of the project.
(5)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4165, 4224, and 4242 Campus Point Court.
(6)Includes 9605, 9645, 9675, 9725, 9735, 9805, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 Barnes Canyon Road.
(7)Includes 9965, 9975, 9985, and 9995 Summers Ridge Road.
(8)Represents a joint venture with a local real estate operator in which our joint venture partner manages the day-to-day activities that significantly affect the economic
performance of the joint venture.
Our consolidation policy is described under “Consolidation” in Note 2 – “Summary of significant accounting policies” to our
consolidated financial statements. Consolidation accounting is highly technical, but its framework is primarily based on the controlling
financial interests and benefits of the joint ventures. We generally consolidate a joint venture that is a legal entity that we control (i.e.,
we have the power to direct the activities of the joint venture that most significantly affect its economic performance) through contractual
rights, regardless of our ownership interest, and where we determine that we have benefits through the allocation of earnings or losses
and fees paid to us that could be significant to the joint venture (the “VIE model”).
F-30
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
We also generally consolidate joint ventures when we have a controlling financial interest through voting rights and where our
voting interest is greater than 50% (the “voting model”). Voting interest differs from ownership interest for some joint ventures. We
account for joint ventures that do not meet the consolidation criteria under the equity method of accounting by recognizing our share of
income and losses.
The table below shows the categorization of our real estate joint ventures under the consolidation framework:
| Property(1) | Consolidation Model | Voting Interest | Consolidation Analysis | Conclusion | |||||
| 50 and 60 Binney Street | VIE model | Not applicable under VIE model | Consolidated | ||||||
| 75/125 Binney Street | We have: | ||||||||
| 100 and 225 Binney Street and 300 Third Street | |||||||||
| 99 Coolidge Avenue | (i) | The power to direct the activities of the joint venture that most significantly affect its economic performance; and | |||||||
| 15 Necco Street | |||||||||
| 285, 299, 307, and 345 Dorchester Avenue | |||||||||
| Alexandria Center® for Science and Technology – Mission Bay | |||||||||
| 1450 Owens Street | |||||||||
| 601, 611, 651, 681, 685, and 701 Gateway Boulevard | |||||||||
| 751 Gateway Boulevard | |||||||||
| 211 and 213 East Grand Avenue | (ii) | Benefits that can be significant to the joint venture. | |||||||
| 500 Forbes Boulevard | |||||||||
| Alexandria Center® for Life Science – Millbrae | |||||||||
| 3215 Merryfield Row | |||||||||
| Campus Point by Alexandria | |||||||||
| 5200 Illumina Way | Therefore, we are the primary beneficiary of each VIE. | ||||||||
| 9625 Towne Centre Drive | |||||||||
| SD Tech by Alexandria | |||||||||
| Pacific Technology Park | |||||||||
| Summers Ridge Science Park | |||||||||
| 1201 and 1208 Eastlake Avenue East | |||||||||
| 199 East Blaine Street | |||||||||
| 400 Dexter Avenue North | |||||||||
| 800 Mercer Street | |||||||||
| 1450 Research Boulevard | We do not control the joint venture and are therefore not the primary beneficiary. | Equity method of accounting | |||||||
| 101 West Dickman Street | |||||||||
| 1655 and 1725 Third Street | Voting model | Does not exceed 50% | Our voting interest is 50% or less. | ||||||
(1)In addition to the real estate joint ventures listed, various partners hold insignificant noncontrolling interests in three other consolidated real estate joint ventures in North
America and we hold an interest in one insignificant unconsolidated real estate joint venture in North America.
Formation of consolidated real estate joint ventures
We evaluated each of our real estate joint ventures described below under the consolidation framework outlined above and
further detailed in “Consolidation” in Note 2 – “Summary of significant accounting policies” to our consolidated financial statements.
For a summary of our completed dispositions of real estate assets during the year ended December 31, 2024, refer to “Sales
of real estate assets and impairment charges” in Note 3 – “Investments in real estate” to our consolidated financial statements.
F-31
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
285, 299, 307, and 345 Dorchester Avenue
During the three months ended March 31, 2024, we formed real estate joint ventures to develop a Megacampus. We
contributed $155.3 million to these real estate joint ventures, and our partner’s share of contributed real estate assets aggregated
$103.5 million. As of March 31, 2024, these joint ventures owned four land parcels at 285, 299, 307, and 345 Dorchester Avenue in our
Seaport Innovation District submarket, with future development opportunities aggregating 1.0 million SF. We determined that we have
control over these real estate joint ventures, and we therefore consolidate the joint ventures. As of December 31, 2024, we have a 60%
ownership interest in the real estate joint ventures.
1201 and 1208 Eastlake Avenue East
In September 2024, our prior joint venture partner sold its ownership interest in each of 1201 and 1208 Eastlake Avenue East
real estate joint ventures to our new joint venture partner, who is also our longstanding tenant at the 1201 and 1208 Eastlake Avenue
East properties, occupying 115,839 RSF out of the total 206,134 RSF. Alexandria’s ownership interest in each of 1201 and 1208
Eastlake Avenue East remained unchanged at 30.0%. Upon completion of the sale, we reassessed our consolidation analysis for this
joint venture and determined that we retain control, and we therefore continue to consolidate the real estate joint venture.
Consolidated VIEs’ balance sheet information
We, together with joint venture partners, hold interests in real estate joint ventures that we consolidate in our financial
statements. These existing joint ventures provide significant equity capital to fund a portion of our future construction spend, and our
joint venture partners may also contribute equity into these entities for financing-related activities.
The table below aggregates the balance sheet information of our consolidated VIEs as of December 31, 2024 and 2023 (in
thousands):
| December 31, | ||||
| 2024 | 2023 | |||
| Investments in real estate | $8,917,718 | $8,032,315 | ||
| Cash and cash equivalents | 335,223 | 306,475 | ||
| Other assets | 777,033 | 728,390 | ||
| Total assets | $10,029,974 | $9,067,180 | ||
| Secured notes payable | $149,321 | $119,042 | ||
| Other liabilities | 626,460 | 608,665 | ||
| Mandatorily redeemable noncontrolling interest | — | 35,250 | ||
| Total liabilities | 775,781 | 762,957 | ||
| Redeemable noncontrolling interests | 10,360 | 6,868 | ||
| Alexandria Real Estate Equities, Inc.’s share of equity | 4,754,386 | 4,162,017 | ||
| Noncontrolling interests’ share of equity | 4,489,447 | 4,135,338 | ||
| Total liabilities and equity | $10,029,974 | $9,067,180 | ||
In determining whether to aggregate the balance sheet information of consolidated VIEs, we considered the similarity of each
VIE, including the primary purpose of these entities to own, manage, operate, and lease real estate properties owned by the VIEs, and
the similar nature of our involvement in each VIE as a managing member. Due to the similarity of the characteristics, we present the
balance sheet information of these entities on an aggregated basis. None of our consolidated VIEs’ assets have restrictions that limit
their use to settle specific obligations of the VIE. There are no creditors or other partners of our consolidated VIEs that have recourse to
our general credit, and our maximum exposure to our consolidated VIEs is limited to our variable interests in each VIE, except for our
99 Coolidge Avenue real estate joint venture in which the VIE’s secured construction loan is guaranteed by us. Refer to Note 10 –
“Secured and unsecured senior debt” to our consolidated financial statements for additional information.
F-32
4.CONSOLIDATED AND UNCONSOLIDATED REAL ESTATE JOINT VENTURES (continued)
Unconsolidated real estate joint ventures
Our maximum exposure to our unconsolidated VIEs is limited to our investment in each VIE, except for our 1450 Research
Boulevard and 101 West Dickman Street unconsolidated real estate joint ventures in which we guarantee up to $6.7 million of the
outstanding balance related to each VIE’s secured loan. Our investments in unconsolidated real estate joint ventures, accounted for
under the equity method and classified in investments in unconsolidated real estate joint ventures in our consolidated balance sheets,
consisted of the following as of December 31, 2024 and 2023 (in thousands):
| December 31, | ||||
| Property | 2024 | 2023 | ||
| 1655 and 1725 Third Street | $10,574 | $11,718 | ||
| 1450 Research Boulevard | 9,193 | 6,041 | ||
| 101 West Dickman Street | 9,749 | 9,290 | ||
| Other | 10,357 | 10,731 | ||
| $39,873 | $37,780 |
1401/1413 Research Boulevard
We held a 65.0% ownership interest in an unconsolidated real estate joint venture at 1401/1413 Research Boulevard located
in our Rockville submarket of Maryland. In October 2024, this unconsolidated real estate joint venture completed the sale of its sole real
estate asset, a retail shopping center aggregating 84,837 RSF, and repaid its debt during the three months ended December 31, 2024.
We received cash proceeds, net of our $18.6 million share of the debt balance, approximating our $3.3 million share of the gain on sale
classified in equity in earnings of unconsolidated real estate joint ventures in our consolidated statement of operations. The
unconsolidated joint venture is in the process of dissolution, pending completion of regulatory and legal requirements.
The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of
December 31, 2024 (dollars in thousands):
| At 100% | Our Share | |||||||||||||||
| Unconsolidated Joint Venture | Maturity Date | Stated Rate | Interest Rate(1) | Aggregate Commitment | Debt Balance(2) | |||||||||||
| 1655 and 1725 Third Street(3) | 3/10/25 | 4.50% | 4.57% | $600,000 | $599,930 | 10.0% | ||||||||||
| 101 West Dickman Street | 11/10/26 | SOFR + 1.95% | (4) | 6.36% | 26,750 | 18,884 | 58.4% | |||||||||
| 1450 Research Boulevard | 12/10/26 | SOFR + 1.95% | (4) | 6.42% | 13,000 | 8,637 | 73.2% | |||||||||
| $639,750 | $627,451 |
(1)Includes interest expense and amortization of loan fees.
(2)Represents outstanding principal, net of unamortized deferred financing costs, as of December 31, 2024.
(3)The unconsolidated real estate joint venture is in the process of refinancing approximately $500 million of this debt with a new secured note payable, which is expected
to close in the first quarter of 2025. The remaining debt balance of approximately $100 million will be repaid through contributions from the joint venture partners. We
expect to contribute our share of approximately $10 million in the first quarter of 2025. As of December 31, 2024, our investment in this unconsolidated real estate joint
venture was $10.6 million.
(4)This loan is subject to a fixed SOFR floor of 0.75%.
F-33
5.LEASES
Refer to “Lease accounting” in Note 2 – “Summary of significant accounting policies” to our consolidated financial statements
for information about lease accounting standards that set principles for the recognition, measurement, presentation, and disclosure of
leases for both parties to a lease agreement (i.e., lessees and lessors).
Leases in which we are the lessor
As of December 31, 2024, we had 391 properties aggregating 39.8 million operating RSF in key cluster locations, including
Greater Boston, the San Francisco Bay Area, San Diego, Seattle, Maryland, Research Triangle, and New York City. We primarily focus
on developing Class A/A+ properties in AAA life science innovation cluster locations that offer the scale and strategic design integral to
our Megacampus strategy. Strategically located near top academic and medical research institutions and equipped with curated
amenities and services, and convenient access to transit, our Megacampus ecosystems are designed to support our tenants in
attracting and retaining top talent, which we believe is a key driver of tenant demand for our properties.
As of December 31, 2024, all leases in which we are the lessor were classified as operating leases, with the exception of one
direct financing lease. Our leases are described below.
Operating leases
As of December 31, 2024, our 391 properties were subject to operating lease agreements. Four of these properties are subject
to operating lease agreements that each contain a purchase option as described below:
(i)Two of these properties, representing two land parcels, are subject to lease agreements that each contain an option for
the lessee to purchase the underlying asset from us at fair market value during each of the 30-day periods commencing
on the dates that are 15 years, 30 years, and 74.5 years after the rent commencement date of October 1, 2017. The
remaining lease term related to each of the two land parcels is 67.9 years.
(ii)Two operating properties, held by a consolidated real estate joint venture, are subject to purchase options held by our
partner in this joint venture, which is also a tenant at these properties. One purchase option allows our partner to purchase
our 30% interest in one property for $40.0 million in 2031. Contingent upon the exercise of this option, the second
purchase option allows our partner to purchase our 30% interest in one property for $69.1 million in 2034. Our partner’s
remaining lease terms for these operating leases are 19.7 years and 6.2 years, respectively.
We evaluated the impact of the purchase options on the classifications of the existing operating leases and determined that
each lease continues to meet the criteria for classification as an operating lease.
Certain operating leases contain options for the tenant to extend their lease at prevailing market rates at the time of expiration.
In addition, certain operating leases contain an early termination option that requires advance notification and payment of an early
termination fee by the tenant.
At the commencement of each lease, we establish the lease term comprised of the noncancelable period for each lease
together with periods covered by options to extend or terminate the lease that we determine the lessee is reasonably certain to
exercise. Our assessment of whether a lessee is reasonably certain to exercise or not exercise an option considers all economic factors
relevant to the assessment, including property-based, market-based, and tenant-based factors.
Future lease payments to be received under the terms of our operating lease agreements, excluding expense
reimbursements, in effect as of December 31, 2024 are outlined in the table below (in thousands):
| Year | Amount | |
| 2025 | $1,849,925 | |
| 2026 | 1,775,175 | |
| 2027 | 1,708,433 | |
| 2028 | 1,577,208 | |
| 2029 | 1,460,001 | |
| Thereafter | 9,503,137 | |
| Total | $17,873,879 |
Refer to Note 3 – “Investments in real estate” to our consolidated financial statements for additional information about our
owned real estate assets, which are the underlying assets under our operating leases.
F-34
5.LEASES (continued)
Direct financing lease
As of December 31, 2024, we had one direct financing lease agreement, with a net investment balance of $41.5 million, for a
parking structure with a remaining lease term of 67.9 years. The lessee has an option to purchase the underlying asset at fair market
value during each of the 30-day periods commencing on the dates that are 15 years, 30 years, and 74.5 years after the rent
commencement date of October 1, 2017.
The components of our aggregate net investment in our direct financing lease as of December 31, 2024 and 2023 are
summarized in the table below (in thousands):
| December 31, | ||||
| 2024 | 2023 | |||
| Gross investment in direct financing lease | $251,405 | $253,324 | ||
| Less: unearned income on direct financing lease | (207,734) | (210,388) | ||
| Less: provision for expected credit losses | (2,168) | (2,839) | ||
| Net investment in direct financing lease | $41,503 | $40,097 |
During the year ended December 31, 2024, we recorded an adjustment of $671 thousand to reduce our estimated expected
credit loss related to our direct financing lease to $2.2 million as of December 31, 2024 from $2.8 million as of December 31, 2023. We
estimate an expected credit loss related to our direct financing lease using a probability of default methodology that incorporates the
credit rating of the borrower to evaluate the probability of default, and projected value of the real estate assets securing the investment
to estimate recoveries in the event of default, among other inputs. The adjustment during the year ended December 31, 2024 was
recognized in other income in our consolidated statement of operations in connection with the improvement of the credit rating of the
lessee. For further details, refer to “Provision for expected credit losses” in Note 2 – “Summary of significant accounting policies” to our
consolidated financial statements.
Future lease payments to be received under the terms of our direct financing lease as of December 31, 2024 are outlined in
the table below (in thousands):
| Year | Total | |
| 2025 | $1,976 | |
| 2026 | 2,036 | |
| 2027 | 2,097 | |
| 2028 | 2,160 | |
| 2029 | 2,224 | |
| Thereafter | 240,912 | |
| Total | $251,405 |
Income from rentals
Our income from rentals includes revenue related to agreements for the rental of our real estate, which primarily includes
revenues subject to the lease accounting standard and the revenue recognition accounting standard as shown below (in thousands):
| Year Ended December 31, | ||||||
| 2024 | 2023 | 2022 | ||||
| Income from rentals: | ||||||
| Revenues subject to the lease accounting standard: | ||||||
| Operating leases | $3,005,137 | $2,802,567 | $2,534,862 | |||
| Direct financing leases | 2,653 | 2,608 | 3,094 | |||
| Revenues subject to the lease accounting standard | 3,007,790 | 2,805,175 | 2,537,956 | |||
| Revenues subject to the revenue recognition accounting standard | 41,916 | 37,281 | 38,084 | |||
| Income from rentals | $3,049,706 | $2,842,456 | $2,576,040 |
F-35
5.LEASES (continued)
Our revenues that are subject to the revenue recognition accounting standard and are classified in income from rentals consist
primarily of short-term parking revenues that are not considered lease revenues under the lease accounting standard. Refer to
“Revenues” and “Recognition of revenue arising from contracts with customers” in Note 2 – “Summary of significant accounting policies”
to our consolidated financial statements for additional information.
Deferred leasing costs
The following table summarizes our deferred leasing costs as of December 31, 2024 and 2023 (in thousands):
| December 31, | ||||
| 2024 | 2023 | |||
| Deferred leasing costs | $1,061,924 | $1,035,339 | ||
| Accumulated amortization | (575,965) | (525,941) | ||
| Deferred leasing costs, net | $485,959 | $509,398 |
Residual value risk management strategy
Our leases do not have guarantees of residual value on the underlying assets. We manage risk associated with the residual
value of our leased assets by (i) evaluating each potential acquisition of real estate to determine whether it meets our business
objective to invest primarily in high-demand markets, (ii) directly managing our leased properties, conducting frequent property
inspections, proactively addressing potential maintenance issues before they arise, and/or timely resolving any occurring issues, and
(iii) carefully selecting our tenants and monitoring their credit quality throughout their respective lease terms.
Leases in which we are the lessee
Operating lease agreements
We have operating lease agreements in which we are the lessee consisting of ground and office leases. Certain of these
leases have options to extend or terminate the contract terms upon meeting certain criteria. There are no notable restrictions or
covenants imposed by the leases, nor guarantees of residual value.
We recognize a right-of-use asset, which is classified within other assets in our consolidated balance sheets, and a related
liability, which is classified within accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets, to
account for our future obligations under ground and office lease arrangements in which we are the lessee. Refer to “Lessee accounting”
in Note 2 – “Summary of significant accounting policies” to our consolidated financial statements.
As of December 31, 2024, the present value of the remaining contractual payments aggregating $949.4 million under our
operating lease agreements, including our extension options that we are reasonably certain to exercise, was $507.1 million. Our
corresponding operating lease right-of-use assets, adjusted for initial direct leasing costs and other consideration exchanged with the
landlord prior to the commencement of the lease, aggregated $764.5 million. As of December 31, 2024, the weighted-average
remaining lease term of operating leases in which we are the lessee was approximately 56 years, including extension options that we
are reasonably certain to exercise, and the weighted-average discount rate was 4.9%. The weighted-average discount rate is based on
the incremental borrowing rate estimated for each lease, which is the interest rate that we estimate we would have to pay to borrow on
a collateralized basis over a similar term for an amount equal to the lease payments.
Included in the operating lease liability balance as of December 31, 2024 is the $134.3 million liability related to an amendment
to our existing ground lease agreement at the Alexandria Technology Square® Megacampus aggregating 1.2 million RSF in our
Cambridge submarket, which extended the lease term by 24 years from January 1, 2065 to December 31, 2088. The amendment
required that we prepay our entire rent obligation for the extended lease term aggregating $270.0 million in two equal installments in
December 2024 and in January 2025. In December 2024, we made the first installment payment aggregating $135.0 million. On
January 14, 2025, we made the second and final installment payment of $135.0 million.
Ground lease obligations as of December 31, 2024, included leases for 32 of our properties, which accounted for
approximately 8% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property
with a net book value of $5.6 million as of December 31, 2024, our ground lease obligations have remaining lease terms ranging from
approximately 30 to 82 years, including extension options that we are reasonably certain to exercise.
F-36
5.LEASES (continued)
The reconciliation of future lease payments under noncancelable operating leases in which we are the lessee to the operating
lease liability reflected in our consolidated balance sheet as of December 31, 2024 is in the table below (in thousands):
| Year | Total | |
| 2025 | $157,887 | |
| 2026 | 23,081 | |
| 2027 | 22,162 | |
| 2028 | 21,830 | |
| 2029 | 21,338 | |
| Thereafter | 703,148 | |
| Total future payments under our operating leases in which we are the lessee | 949,446 | |
| Effect of discounting | (442,319) | |
| Operating lease liability | $507,127 |
Lessee operating costs
Operating lease costs relate to our ground and office leases in which we are the lessee. Ground leases generally require fixed
annual rent payments and may also include escalation clauses and renewal options. For the years ended December 31, 2024, 2023,
and 2022, amounts paid and classified as operating activities in our consolidated statements of cash flows for leases in which we are
the lessee were $167.8 million, $32.2 million, and $55.2 million, respectively. The increase in 2024 from 2023 primarily relates to a
$135.0 million payment made in December 2024 in connection with an amendment to our ground lease agreement at the Alexandria
Technology Square® Megacampus, as described in the previous section. The decrease in 2023 from 2022 primarily relates to a
$26.3 million payment made during the three months ended March 31, 2022 in connection with the execution of ground lease
extensions at two properties in our Greater Stanford submarket. Our operating lease obligations related to our office leases have
remaining terms of up to 12 years, exclusive of extension options. For the years ended December 31, 2024, 2023, and 2022, our costs
for operating leases in which we are the lessee were as follows (in thousands):
| Year Ended December 31, | ||||||
| 2024 | 2023 | 2022 | ||||
| Gross operating lease costs | $40,740 | $39,879 | $36,527 | |||
| Capitalized lease costs | (1,780) | (5,544) | (3,661) | |||
| Expenses for operating leases in which we are the lessee | $38,960 | $34,335 | $32,866 | |||
6.CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
Cash, cash equivalents, and restricted cash consisted of the following as of December 31, 2024 and 2023 (in thousands):
| December 31, | |||
| 2024 | 2023 | ||
| Cash and cash equivalents | $552,146 | $618,190 | |
| Restricted cash: | |||
| Funds held in escrow for real estate acquisitions | 2,954 | 37,434 | |
| Other | 4,747 | 5,147 | |
| 7,701 | 42,581 | ||
| Total | $559,847 | $660,771 |
F-37
7.INVESTMENTS
We hold investments in publicly traded companies and privately held entities primarily involved in the life science industry. As a
REIT, we generally limit our ownership of each individual entity’s voting stock to less than 10%. We evaluate each investment to
determine whether we have the ability to exercise significant influence, but not control, over an investee. We evaluate investments in
which our ownership is equal to or greater than 20%, but less than or equal to 50%, of an investee’s voting stock with a presumption
that we have this ability. For our investments in limited partnerships that maintain specific ownership accounts, we presume that such
ability exists when our ownership interest exceeds 3% to 5%. In addition to our ownership interest, we consider whether we have a
board seat or whether we participate in the investee’s policymaking process, among other criteria, to determine if we have the ability to
exert significant influence, but not control, over an investee. If we determine that we have such ability, we account for the investment
under the equity method, as described below.
From time to time, we may hold equity investments in publicly traded companies that are subject to contractual sale
restrictions. We do not recognize a discount related to a contractual sale restriction.
Investments accounted for under the equity method
Under the equity method of accounting, we initially recognize our investment at cost and subsequently adjust the carrying
amount of the investment for our share of earnings or losses reported by the investee, distributions received, and other-than-temporary
impairments.
As of December 31, 2024, we had 11 investments in limited partnerships maintaining specific ownership accounts for each
investor, which were accounted for under the equity method. These investments aggregated $186.2 million. Our ownership interest in
each of these 11 investments was greater than 5%.
Investments that do not qualify for the equity method of accounting
For investees over which we determine that we do not have the ability to exercise significant influence or control, we account
for each investment depending on whether it is an investment in a (i) publicly traded company, (ii) privately held entity that reports NAV
per share, or (iii) privately held entity that does not report NAV per share, as described below.
Investments in publicly traded companies
Our investments in publicly traded companies are classified as investments with readily determinable fair values and are
presented at fair value in our consolidated balance sheets, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. The fair values for our investments in publicly traded companies are determined based on sales
prices or quotes available on securities exchanges.
Investments in privately held companies
Our investments in privately held entities without readily determinable fair values consist of (i) investments in privately held
entities that report NAV per share and (ii) investments in privately held entities that do not report NAV per share. These investments are
accounted for as follows:
Investments in privately held entities that report NAV per share
Investments in privately held entities that report NAV per share, such as our privately held investments in limited partnerships,
are presented at fair value using NAV as a practical expedient, with changes in fair value classified in investment income (loss) in our
consolidated statements of operations. We use NAV per share reported by limited partnerships generally without adjustment, unless we
are aware of information indicating that the NAV reported by a limited partnership does not accurately reflect the fair value of the
investment at our reporting date.
Investments in privately held entities that do not report NAV per share
Investments in privately held entities that do not report NAV per share are accounted for using a measurement alternative
under which these investments are measured at cost, adjusted for observable price changes and impairments, with changes classified
in investment income (loss) in our consolidated statements of operations.
An observable price arises from an orderly transaction for an identical or similar investment of the same issuer, which is
observed by an investor without expending undue cost and effort. Observable price changes result from, among other things, equity
transactions of the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity
transactions related to the same issuer. To determine whether these transactions are indicative of an observable price change, we
evaluate, among other factors, whether these transactions have similar rights and obligations, including voting rights, distribution
preferences, and conversion rights to the investments we hold.
F-38
7.INVESTMENTS (continued)
Impairment evaluation of equity method investments and investments in privately held entities that do not report NAV per
share
We monitor equity method investments and investments in privately held entities that do not report NAV per share for new
developments, including operating results, prospects and results of clinical trials, new product initiatives, new collaborative agreements,
capital-raising events, and merger and acquisition activities. These investments are evaluated on the basis of a qualitative assessment
for indicators of impairment by monitoring the presence of the following triggering events or impairment indicators:
(i)a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee;
(ii)a significant adverse change in the regulatory, economic, or technological environment of the investee;
(iii)a significant adverse change in the general market condition, including the research and development of technology and
products that the investee is bringing or attempting to bring to the market;
(iv)significant concerns about the investee’s ability to continue as a going concern; and/or
(v)a decision by investors to cease providing support or reduce their financial commitment to the investee.
If such indicators are present, we are required to estimate the investment’s fair value and immediately recognize an
impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
Investment income/loss recognition and classification
We recognize both realized and unrealized gains and losses in our consolidated statements of operations, classified in
investment income (loss) in our consolidated statements of operations. Unrealized gains and losses represent:
(i)changes in fair value for investments in publicly traded companies;
(ii)changes in NAV for investments in privately held entities that report NAV per share;
(iii)observable price changes for investments in privately held entities that do not report NAV per share; and
(iv)our share of unrealized gains or losses reported by our equity method investees.
Realized gains and losses on our investments represent the difference between proceeds received upon disposition of
investments and their historical or adjusted cost basis. For our equity method investments, realized gains and losses represent our
share of realized gains or losses reported by the investee. Impairments are realized losses, which result in an adjusted cost basis, and
represent charges to reduce the carrying values of investments in privately held entities that do not report NAV per share and equity
method investments, if impairments are deemed other than temporary, to their estimated fair value.
Funding commitments to investments in privately held entities that report NAV
We are committed to funding approximately $372.9 million for our investments in privately held entities that report NAV. Our
funding commitments expire at various dates over the next 12 years, with a weighted-average expiration of 8.2 years as of December
31, 2024. These investments are not redeemable by us, but we may receive distributions from these investments throughout their
terms. Our investments in privately held entities that report NAV generally have expected initial terms in excess of 10 years. The
weighted-average remaining term during which these investments are expected to be liquidated was 5.3 years as of December 31,
F-39
7.INVESTMENTS (continued)
The following tables summarize our investments as of December 31, 2024 and 2023 (in thousands):
| December 31, 2024 | |||||||
| Cost | Unrealized Gains | Unrealized Losses | Carrying Amount | ||||
| Publicly traded companies | $188,653 | $24,262 | $(107,248) | $105,667 | |||
| Entities that report NAV | 518,074 | 126,077 | (34,285) | 609,866 | |||
| Entities that do not report NAV: | |||||||
| Entities with observable price changes | 99,932 | 77,761 | (2,956) | 174,737 | |||
| Entities without observable price changes | 400,487 | — | — | 400,487 | |||
| Investments accounted for under the equity method | N/A | N/A | N/A | 186,228 | |||
| Total investments | $1,207,146 | $228,100 | $(144,489) | $1,476,985 |
| December 31, 2023 | |||||||
| Cost | Unrealized Gains | Unrealized Losses | Carrying Amount | ||||
| Publicly traded companies | $203,467 | $50,377 | $(94,278) | $159,566 | |||
| Entities that report NAV | 507,059 | 192,468 | (27,995) | 671,532 | |||
| Entities that do not report NAV: | |||||||
| Entities with observable price changes | 97,892 | 77,600 | (1,224) | 174,268 | |||
| Entities without observable price changes | 368,654 | — | — | 368,654 | |||
| Investments accounted for under the equity method | N/A | N/A | N/A | 75,498 | |||
| Total investments | $1,177,072 | $320,445 | $(123,497) | $1,449,518 | |||
Cumulative gains and losses (realized and unrealized) on investments in privately held entities that do not report NAV still held
as of December 31, 2024 aggregated to a loss of $90.4 million, which consisted of upward adjustments aggregating $77.8 million,
downward adjustments aggregating $3.0 million, and impairments aggregating $165.2 million.
Our investment income (loss) for the years ended December 31, 2024, 2023, and 2022 consisted of the following (in
thousands):
| Year Ended December 31, | ||||||
| 2024 | 2023 | 2022 | ||||
| Realized gains | $59,124 | (1) | $6,078 | $80,435 | ||
| Unrealized losses | (112,246) | (201,475) | (412,193) | |||
| Investment loss | $(53,122) | $(195,397) | $(331,758) | |||
(1)Consists of realized gains of $117.2 million, partially offset by impairment charges of $58.1 million during the year ended December 31, 2024.
During the year ended December 31, 2024, gains and losses on investments in privately held entities that do not report NAV
still held as of December 31, 2024 aggregated to a loss of $37.7 million, which consisted of upward adjustments aggregating
$22.8 million and downward adjustments and impairments aggregating $60.5 million.
During the year ended December 31, 2023, gains and losses on investments in privately held entities that do not report NAV
still held as of December 31, 2023 aggregated to a loss of $77.7 million, which consisted of upward adjustments aggregating
$16.8 million and downward adjustments and impairments aggregating $94.6 million.
During the year ended December 31, 2022, gains and losses on investments in privately held entities that do not report NAV
still held as of December 31, 2022 aggregated to a loss of $18.3 million, which consisted of upward adjustments aggregating
$26.3 million and downward adjustments and impairments aggregating $44.6 million.
Unrealized gains or losses related to investments still held (excluding investments accounted for under the equity method) as
of December 31, 2024, 2023, and 2022 aggregated to losses of $32.7 million, $58.8 million, and $276.5 million, respectively.
Our investment loss of $53.1 million for the year ended December 31, 2024 also included $2.6 million of equity in losses of our
equity method investments.
Refer to “Investments” in Note 2 – “Summary of significant accounting policies” to our consolidated financial statements for
additional information.
F-40
8. OTHER ASSETS
The following table summarizes the components of other assets as of December 31, 2024 and 2023 (in thousands):
| December 31, | |||
| 2024 | 2023 | ||
| Acquired in-place leases | $305,144 | $461,613 | |
| Deferred compensation plan | 47,727 | 40,365 | |
| Deferred financing costs – unsecured senior line of credit | 49,056 | (1) | 30,897 |
| Deposits | 21,768 | 25,863 | |
| Furniture, fixtures, equipment, and software | 39,558 | 26,560 | |
| Net investment in direct financing lease | 41,503 | 40,097 | |
| Notes receivable | 120,546 | (2) | 15,841 |
| Operating lease right-of-use assets | 764,472 | (3) | 516,452 |
| Other assets | 96,690 | 88,453 | |
| Prepaid expenses | 33,567 | 30,969 | |
| Property, plant, and equipment | 141,275 | 144,784 | |
| Total | $1,661,306 | $1,421,894 |
(1)Increase is primarily due to the amendment and restatement of our unsecured senior line of credit to extend the maturity date from January 22, 2028 to January 22,
2030, which was completed in September 2024. Refer to Note 10 – “Secured and unsecured senior debt” to our consolidated financial statements for additional
information.
(2)Increase is attributable to the seller financing provided in December 2024 to the buyers of our real estate assets. Refer to "Notes receivable” below for additional
information.
(3)Includes the operating lease right-of-use asset related to an amendment executed in July 2024 to our existing ground lease agreement at the Alexandria Technology
Square® Megacampus. Refer to “Leases in which we are the lessee” in Note 5 – “Leases” to our consolidated financial statements for additional information.
Notes receivable
Our notes receivable as of December 31, 2024 consisted of the following (dollars in thousands):
| Notes Receivable | Effective Interest Rate | Maturity Date | Balance | |||
| Secured by real estate assets in San Diego | 8.6% | 7/5/29 | $103,427 | |||
| Other | 17,356 | |||||
| Less: provision for expected credit losses | (237) | |||||
| Notes receivable | $120,546 |
Our notes receivable represent held-to-maturity debt securities carried at amortized costs and are generally secured by real
estate. Under the current expected credit losses accounting standard, we are required to estimate and, if necessary, recognize
expected credit losses related to these notes. We do not have a history of losses on such securities; therefore, we utilize available
information on historical losses for the commercial real estate industry. We determine expected credit losses for our notes receivable
using historical industry losses and considering loan-specific information, including credit ratings of the borrowers, estimated fair values
of underlying real estate assets, loan-to-value ratios, the presence of guarantors, and/or other available information. During the three
months ended December 31, 2024, we recognized a provision for expected credit losses of $237 thousand related to our notes
receivable, reducing the notes receivable balance in our consolidated balance sheet and other income in our consolidated statement of
operations accordingly. This provision will be reevaluated periodically, with any necessary adjustments recognized in the corresponding
period.
F-41
9.FAIR VALUE MEASUREMENTS
We provide fair value information about all financial instruments for which it is practicable to estimate fair value. We measure
and disclose the estimated fair value of financial assets and liabilities by utilizing a fair value hierarchy that distinguishes between data
obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant
assumptions. This hierarchy consists of three broad levels, as follows: (i) quoted prices in active markets for identical assets or liabilities
(Level 1), (ii) significant other observable inputs (Level 2), and (iii) significant unobservable inputs (Level 3). Significant other observable
inputs can include quoted prices for similar assets or liabilities in active markets, as well as inputs that are observable for the asset or
liability, such as interest rates, foreign exchange rates, and yield curves. Significant unobservable inputs are typically based on an
entity’s own assumptions, since there is little, if any, related market activity. In instances in which the determination of the fair value
measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the
entire fair value measurement falls is based on the lowest level of input that is significant to the fair value measurement in its entirety.
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers
factors specific to the asset or liability.
Assets and liabilities measured at fair value on a recurring basis
The following table sets forth the assets that we measure at fair value on a recurring basis by level in the fair value hierarchy
(in thousands). There were no liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023. There were no
transfers of assets measured at fair value on a recurring basis to or from Level 3 in the fair value hierarchy during the year ended
December 31, 2024.
| Fair Value Measurement Using | ||||||||
| Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||
| Investments in publicly traded companies: | ||||||||
| As of December 31, 2024 | $105,667 | $105,667 | $— | $— | ||||
| As of December 31, 2023 | $159,566 | $159,566 | $— | $— |
Our investments in publicly traded companies represent investments with readily determinable fair values, and are carried at
fair value, with changes in fair value classified in investment income (loss) in our consolidated financial statements. We also hold
investments in privately held entities, which consist of (i) investments that report NAV and (ii) investments that do not report NAV, as
further described below.
Our investments in privately held entities that report NAV, such as our privately held investments in limited partnerships, are
carried at fair value using NAV as a practical expedient, with changes in fair value classified in net income. As of December 31, 2024
and 2023, the carrying values of investments in privately held entities that report NAV aggregated $609.9 million and $671.5 million,
respectively. These investments are excluded from the fair value hierarchy above as required by the fair value accounting standard. We
estimate the fair value of each of our investments in limited partnerships based on the most recent NAV reported by each limited
partnership. As a result, the determination of fair values of our investments in privately held entities that report NAV generally does not
involve significant estimates, assumptions, or judgments.
F-42
9.FAIR VALUE MEASUREMENTS (continued)
Assets and liabilities measured at fair value on a nonrecurring basis
The following table sets forth the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy
as of December 31, 2024 and 2023 (in thousands).
| Fair Value Measurement Using | |||||||||||
| Description | Carrying Amount | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||
| Real estate assets held for sale with carrying values adjusted to fair value less costs to sell: | |||||||||||
| As of December 31, 2024 | $322,662 | (1) | $— | $— | $322,662 | (2) | |||||
| As of December 31, 2023 | $133,885 | (1) | $— | $— | $133,885 | (2) | |||||
| Investments in privately held entities that do not report NAV: | |||||||||||
| As of December 31, 2024 | $184,236 | $— | $174,737 | (3) | $9,499 | (4) | |||||
| As of December 31, 2023 | $188,689 | $— | $174,268 | (3) | $14,421 | (4) |
(1)These amounts are included in the total balances of our net assets classified as held for sale aggregating $371.3 million and $191.4 million as of December 31, 2024
and 2023, respectively, disclosed in Note 3 – “Investments in real estate” and represent assets held for sale as of December 31, 2024 and 2023, respectively, for which
impairments were recognized.
(2)These amounts represent the aggregate carrying amounts of assets held for sale after adjustments to their respective fair values less costs to sell based on executed
purchase and sale agreements, letters of intent, or valuations provided by third-party real estate brokers.
(3)These amounts represent the total carrying amounts of our equity investments in privately held entities with observable price changes, which are included in the
investments balances of $1.5 billion and $1.4 billion in our consolidated balance sheets as of December 31, 2024 and 2023, respectively, disclosed in Note 7 –
“Investments” to our consolidated financial statements.
(4)These amounts are included in the investments in privately held entities without observable price changes balances aggregating $400.5 million and $368.7 million as of
December 31, 2024 and 2023, respectively, disclosed in Note 7 – “Investments” to our consolidated financial statements. The aforementioned balances represent the
carrying amounts of investments in privately held entities that do not report NAV for which impairments have been recognized in accordance with the measurement
alternative guidance described in “Investments” in Note 2 – “Summary of significant accounting policies” to our consolidated financial statements.
Real estate assets classified as held for sale measured at fair value less costs to sell
Our real estate assets classified as held for sale and measured at fair value less costs to sell are presented in the table above.
These properties are subsets of our total real estate assets classified as held for sale as of December 31, 2024 and 2023, respectively.
The fair values for these real estate assets were estimated based on executed purchase and sale agreements, letters of intent, or
valuations provided by third-party real estate brokers. Refer to “Investments in real estate” in Note 2 – “Summary of significant
accounting policies,” and “Sales of real estate assets and impairment charges” within Note 3 – “Investments in real estate” to our
consolidated financial statements for additional information.
Investments in privately held entities that do not report NAV
Our investments in privately held entities that do not report NAV are measured at cost, adjusted for observable price changes
and impairments, with changes recognized in net income (loss). These investments are adjusted based on the observable price
changes in orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until
another observable transaction occurs. Therefore, the determination of fair values of our investments in privately held entities that do
not report NAV does not involve significant estimates and assumptions or subjective and complex judgments.
We also subject our investments in privately held entities that do not report NAV to a qualitative assessment for indicators of
impairment. If indicators of impairment are present, we are required to estimate the investment’s fair value and immediately recognize
an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
The estimates of fair value typically incorporate valuation techniques that include an income approach reflecting a discounted
cash flow analysis, and a market approach that includes a comparative analysis of acquisition multiples and pricing multiples generated
by market participants. In certain instances, we may use multiple valuation techniques for a particular investment and estimate its fair
value based on an average of multiple valuation results.
Refer to Note 7 – “Investments” to our consolidated financial statements for additional information.
F-43
9.FAIR VALUE MEASUREMENTS (continued)
Assets and liabilities not measured at fair value in the statement of financial position but for which the fair value is disclosed
The fair values of our secured notes payable and unsecured senior notes payable, and the amounts outstanding on our
unsecured senior line of credit and commercial paper program, were estimated using widely accepted valuation techniques, including
discounted cash flow analyses using significant other observable inputs such as available market information on discount and
borrowing rates with similar terms, maturities, and credit ratings. Because the valuations of our financial instruments are based on these
types of estimates, the actual fair value of our financial instruments may differ materially if our estimates do not prove to be accurate.
Additionally, the use of different market assumptions or estimation methods may have a material effect on the estimated fair value
amounts.
As of December 31, 2024 and 2023, the book and estimated fair values of our secured notes payable and unsecured senior
notes payable and the amounts outstanding under our unsecured senior line of credit and commercial paper program, including the
level within the fair value hierarchy for which the estimates were derived, were as follows (in thousands):
| December 31, 2024 | |||||||||
| Book Value | Fair Value Hierarchy | Estimated Fair Value | |||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||
| Liabilities: | |||||||||
| Secured notes payable | $149,909 | $— | $149,413 | $— | $149,413 | ||||
| Unsecured senior notes payable | $12,094,465 | $— | $10,472,993 | $— | $10,472,993 | ||||
| Unsecured senior line of credit | $— | $— | $— | $— | $— | ||||
| Commercial paper program | $— | $— | $— | $— | $— |
| December 31, 2023 | |||||||||
| Book Value | Fair Value Hierarchy | Estimated Fair Value | |||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||
| Liabilities: | |||||||||
| Secured notes payable | $119,662 | $— | $118,660 | $— | $118,660 | ||||
| Unsecured senior notes payable | $11,096,028 | $— | $9,708,930 | $— | $9,708,930 | ||||
| Unsecured senior line of credit | $— | $— | $— | $— | $— | ||||
| Commercial paper program | $99,952 | $— | $99,915 | $— | $99,915 |
The carrying values of cash and cash equivalents, restricted cash, tenant receivables, deposits, notes receivable, accounts
payable, accrued expenses, and other short-term liabilities approximate their fair value.
F-44
10.SECURED AND UNSECURED SENIOR DEBT
The following table summarizes our outstanding indebtedness and respective principal payments remaining as of December 31, 2024 (dollars in thousands):
| Stated Rate | Interest Rate(1) | Maturity Date(2) | Principal Payments Remaining for the Periods Ending December 31, | Unamortized (Deferred Financing Cost), (Discount) Premium | ||||||||||||||||||||
| Debt | 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Principal | Total | ||||||||||||||||
| Secured notes payable | ||||||||||||||||||||||||
| Greater Boston(3) | SOFR+2.70% | 7.52% | 11/19/26 | $— | $149,594 | $— | $— | $— | $— | $149,594 | $(272) | $149,322 | ||||||||||||
| San Francisco Bay Area | 6.50% | 6.50 | 7/1/36 | 34 | 36 | 38 | 41 | 44 | 394 | 587 | — | 587 | ||||||||||||
| Secured debt weighted-average interest rate/subtotal | 7.51 | 34 | 149,630 | 38 | 41 | 44 | 394 | 150,181 | (272) | 149,909 | ||||||||||||||
| Unsecured senior line of credit and commercial paper program(4) | (4) | N/A | (4) | 1/22/30 | (4) | — | — | — | — | — | — | — | — | — | ||||||||||
| Unsecured senior notes payable | 3.45% | 3.62 | 4/30/25 | 600,000 | — | — | — | — | — | 600,000 | (296) | 599,704 | ||||||||||||
| Unsecured senior notes payable | 4.30% | 4.50 | 1/15/26 | — | 300,000 | — | — | — | — | 300,000 | (532) | 299,468 | ||||||||||||
| Unsecured senior notes payable | 3.80% | 3.96 | 4/15/26 | — | 350,000 | — | — | — | — | 350,000 | (653) | 349,347 | ||||||||||||
| Unsecured senior notes payable | 3.95% | 4.13 | 1/15/27 | — | — | 350,000 | — | — | — | 350,000 | (1,067) | 348,933 | ||||||||||||
| Unsecured senior notes payable | 3.95% | 4.07 | 1/15/28 | — | — | — | 425,000 | — | — | 425,000 | (1,312) | 423,688 | ||||||||||||
| Unsecured senior notes payable | 4.50% | 4.60 | 7/30/29 | — | — | — | — | 300,000 | — | 300,000 | (1,027) | 298,973 | ||||||||||||
| Unsecured senior notes payable | 2.75% | 2.87 | 12/15/29 | — | — | — | — | 400,000 | — | 400,000 | (2,064) | 397,936 | ||||||||||||
| Unsecured senior notes payable | 4.70% | 4.81 | 7/1/30 | — | — | — | — | — | 450,000 | 450,000 | (2,057) | 447,943 | ||||||||||||
| Unsecured senior notes payable | 4.90% | 5.05 | 12/15/30 | — | — | — | — | — | 700,000 | 700,000 | (4,730) | 695,270 | ||||||||||||
| Unsecured senior notes payable | 3.375% | 3.48 | 8/15/31 | — | — | — | — | — | 750,000 | 750,000 | (4,348) | 745,652 | ||||||||||||
| Unsecured senior notes payable | 2.00% | 2.12 | 5/18/32 | — | — | — | — | — | 900,000 | 900,000 | (6,967) | 893,033 | ||||||||||||
| Unsecured senior notes payable | 1.875% | 1.97 | 2/1/33 | — | — | — | — | — | 1,000,000 | 1,000,000 | (7,109) | 992,891 | ||||||||||||
| Unsecured senior notes payable | 2.95% | 3.07 | 3/15/34 | — | — | — | — | — | 800,000 | 800,000 | (7,236) | 792,764 | ||||||||||||
| Unsecured senior notes payable | 4.75% | 4.88 | 4/15/35 | — | — | — | — | — | 500,000 | 500,000 | (4,958) | 495,042 | ||||||||||||
| Unsecured senior notes payable | 5.25% | 5.38 | 5/15/36 | — | — | — | — | — | 400,000 | 400,000 | (4,109) | 395,891 | ||||||||||||
| Unsecured senior notes payable | 4.85% | 4.93 | 4/15/49 | — | — | — | — | — | 300,000 | 300,000 | (2,872) | 297,128 | ||||||||||||
| Unsecured senior notes payable | 4.00% | 3.91 | 2/1/50 | — | — | — | — | — | 700,000 | 700,000 | 9,985 | 709,985 | ||||||||||||
| Unsecured senior notes payable | 3.00% | 3.08 | 5/18/51 | — | — | — | — | — | 850,000 | 850,000 | (11,227) | 838,773 | ||||||||||||
| Unsecured senior notes payable | 3.55% | 3.63 | 3/15/52 | — | — | — | — | — | 1,000,000 | 1,000,000 | (13,673) | 986,327 | ||||||||||||
| Unsecured senior notes payable | 5.15% | 5.26 | 4/15/53 | — | — | — | — | — | 500,000 | 500,000 | (7,592) | 492,408 | ||||||||||||
| Unsecured senior notes payable | 5.625% | 5.71 | 5/15/54 | — | — | — | — | — | 600,000 | 600,000 | (6,691) | 593,309 | ||||||||||||
| Unsecured debt weighted-average interest rate/subtotal | 3.81 | 600,000 | 650,000 | 350,000 | 425,000 | 700,000 | 9,450,000 | 12,175,000 | (80,535) | 12,094,465 | ||||||||||||||
| Weighted-average interest rate/total | 3.86% | $600,034 | $799,630 | $350,038 | $425,041 | $700,044 | $9,450,394 | $12,325,181 | $(80,807) | $12,244,374 |
(1)Represents the weighted-average interest rate as of the end of the applicable period, including amortization of loan fees, amortization of debt premiums (discounts), and other bank fees.
(2)Reflects any extension options that we control.
(3)Represents a secured construction loan held by our consolidated real estate joint venture for 99 Coolidge Avenue, of which we own a 75.0% interest. As of December 31, 2024, this joint venture has $45.7 million available under existing
lender commitments. The interest rate shall be reduced from SOFR+2.70% to SOFR+2.10% over time upon the completion of certain leasing, construction, and financial covenant milestones. During the three months ended December 31,
2024, we extended the maturity date for a secured construction loan held by our consolidated real estate joint venture at 99 Coolidge Avenue to November 19, 2025. We have a one-year option to extend the maturity date to November 19,
2026, subject to certain conditions.
(4)Refer to “$5.0 billion unsecured senior line of credit” and “$2.5 billion commercial paper program” on the following page.
F-45
10.SECURED AND UNSECURED SENIOR DEBT (continued)
The following table summarizes our secured and unsecured senior debt and amounts outstanding under our unsecured senior
line of credit and commercial paper program as of December 31, 2024 (dollars in thousands):
| Fixed-Rate Debt | Variable-Rate Debt | Weighted-Average | ||||||||||
| Interest | Remaining Term (in years) | |||||||||||
| Total | Percentage | Rate(1) | ||||||||||
| Secured notes payable | $587 | $149,322 | $149,909 | 1.2% | 7.51% | 1.9 | ||||||
| Unsecured senior notes payable | 12,094,465 | — | 12,094,465 | 98.8 | 3.81 | 12.8 | ||||||
| Unsecured senior line of credit and commercial paper program | — | — | — | (2) | — | N/A | (2) | 5.1 | (3) | |||
| Total/weighted average | $12,095,052 | $149,322 | $12,244,374 | 100.0% | 3.86% | 12.7 | (3) | |||||
| Percentage of total debt | 98.8% | 1.2% | 100% |
(1)Represents the weighted-average interest rate as of the end of the applicable period, including expense/income related to the amortization of loan fees, amortization of
debt premiums (discounts), and other bank fees.
(2)As of December 31, 2024, we had no outstanding balance on our unsecured senior line of credit and no commercial paper notes outstanding.
(3)We calculate the weighted-average remaining term of our commercial paper notes by using the maturity date of our unsecured senior line of credit. Using the maturity
date of our outstanding commercial paper notes, the consolidated weighted-average maturity of our debt is 12.7 years. The commercial paper notes sold during the year
ended December 31, 2024 were issued at a weighted-average yield to maturity of 5.30% and had a weighted-average maturity term of 18 days.
U****nsecured senior notes payable
In February 2024, we issued $1.0 billion of unsecured senior notes payable with a weighted-average interest rate of 5.48%
and a weighted-average maturity of 23.1 years. The unsecured senior notes consisted of $400.0 million of 5.25% unsecured senior
notes due 2036 and $600.0 million of 5.625% unsecured senior notes due 2054.
$5.0 billion unsecured senior line of credit
As of December 31, 2024, our unsecured senior line of credit had aggregate commitments of $5.0 billion and bore an interest
rate of SOFR plus 0.855%. In addition to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of
0.145% based on the aggregate commitments outstanding. Based upon our ability to achieve certain annual sustainability metrics, the
interest rate and facility fee rate are also subject to upward or downward adjustments of up to four basis points with respect to the
interest rate and up to one basis point with respect to the facility fee rate.
Based on certain sustainability metrics achieved in accordance with the terms of our unsecured senior line of credit
agreement, the borrowing rate was reduced for a one-year period by two basis points to SOFR plus 0.855%, from SOFR plus 0.875%,
and the facility fee was reduced by 0.5 basis point to 0.145% from 0.15%. As of December 31, 2024, we had no outstanding balance on
our unsecured line of credit.
In September 2024, we amended and restated our unsecured senior line of credit to, among other changes, extend the
maturity date from January 22, 2028 to January 22, 2030, including extension options that we control.
$2.5 billion co****mmercial paper program
Our commercial paper program provides us with the ability to issue up to $2.5 billion of commercial paper notes that bear
interest at short-term fixed rates with a maturity of generally 30 days or less and a maximum maturity of 397 days from the date of
issuance. Our commercial paper program is backed by our unsecured senior line of credit, and at all times we expect to retain a
minimum undrawn amount of borrowing capacity under our unsecured senior line of credit equal to any outstanding notes issued under
our commercial paper program. We use the net proceeds from the issuances of the notes for general working capital and other general
corporate purposes. General corporate purposes may include, but are not limited to, the repayment of other debt and selective
development, redevelopment, or acquisition of properties. During the year ended December 31, 2024, the commercial paper notes were
issued at a weighted-average yield to maturity of 5.30% and had a weighted-average maturity term of 18 days. As of December 31,
2024, we had no outstanding balance on our commercial paper program.
F-46
10.SECURED AND UNSECURED SENIOR DEBT (continued)
Interest expense
The following table summarizes interest expense for the years ended December 31, 2024, 2023, and 2022 (in thousands):
| Year Ended December 31, | ||||||
| 2024 | 2023 | 2022 | ||||
| Interest incurred | $516,799 | $438,182 | $372,848 | |||
| Capitalized interest | (330,961) | (363,978) | (278,645) | |||
| Interest expense | $185,838 | $74,204 | $94,203 |
11.ACCOUNTS PAYABLE, ACCRUED EXPENSES, AND OTHER LIABILITIES
The following table summarizes the components of accounts payable, accrued expenses, and other liabilities as of December
31, 2024 and 2023 (in thousands):
| December 31, | |||
| 2024 | 2023 | ||
| Accounts payable and accrued expenses | $534,803 | $524,439 | |
| Accrued construction | 500,890 | 606,333 | |
| Acquired below-market leases | 180,407 | 322,040 | |
| Conditional asset retirement obligations | 53,968 | 53,083 | |
| Deferred rent liabilities | 11,461 | 15,183 | |
| Operating lease liability | 507,127 | (1) | 382,883 |
| Unearned rent and tenant security deposits | 691,873 | 548,529 | |
| Other liabilities | 173,822 | 158,453 | |
| Total | $2,654,351 | $2,610,943 |
(1)Balance as of December 31, 2024 includes a $135.0 million ground lease liability related to an amendment executed in July 2024 to our existing ground lease
agreement at the Alexandria Technology Square® Megacampus. For additional information, refer to “Leases in which we are the lessee” in Note 5 – “Leases” to our
consolidated financial statements.
As of December 31, 2024 and 2023, our conditional asset retirement obligations liability primarily consisted of the soil and
groundwater remediation liabilities associated with certain of our properties. Some of our properties may contain asbestos or may be
subjected to other hazardous or toxic substances, which, under certain conditions, requires remediation. We engage independent
environmental consultants to conduct Phase I or similar environmental assessments at our properties. This type of assessment
generally includes a site inspection, interviews, and a public records review; asbestos, lead-based paint, and mold surveys; subsurface
sampling; and other testing. We recognize a liability for the fair value of a conditional asset retirement obligation (including asbestos)
when the fair value of the liability can be reasonably estimated. In addition, environmental laws and regulations subject our tenants, and
potentially us, to liability that may result from our tenants’ routine handling of hazardous substances and wastes as part of their
operations at our properties. These assessments and investigations of our properties have not to date revealed any additional
environmental liability we believe would have a material adverse effect on our business and financial statements or that would require
additional disclosures or recognition in our consolidated financial statements.
F-47
12.EARNINGS PER SHARE
With respect to dividend rights, we have granted two types of restricted stock awards: (i) restricted stock awards with
nonforfeitable rights to dividends and (ii) restricted stock awards with forfeitable rights to dividends.
We account for unvested restricted stock awards (“RSAs”) that contain nonforfeitable rights to dividends as participating
securities and include these securities in the computation of EPS using the two-class method. Under the two-class method, we allocate
net income (after amounts attributable to noncontrolling interests) to common stockholders and unvested RSAs with nonforfeitable
rights to dividends by using the weighted-average shares of each class outstanding for quarter-to-date and year-to-date periods
independently, based on their respective participation rights to dividends declared (or accumulated) and undistributed earnings.
Unvested RSAs that contain forfeitable rights to dividends do not qualify as participating securities under the two-class method
because the dividend rights are forfeited if the awards do not vest. As a result, undistributed earnings are not allocated to these awards
prior to vesting, and these awards have no effect on the computation of basic EPS while unvested. Once these awards vest, they are
included in the denominator of basic EPS, weighted for the portion of the reporting period they were vested. Prior to vesting, these
awards are included in the denominator of diluted EPS if they are dilutive, which is determined using the treasury stock method. Under
this method, incremental shares are calculated as the difference between the total unvested shares and the number of shares that
could hypothetically be repurchased using the assumed proceeds (including unrecognized compensation cost related to these awards).
These incremental shares are weighted for the portion of the reporting period they were unvested, and are included in the diluted EPS
denominator only if their inclusion reduces EPS (i.e., if they are not antidilutive).
In addition, from time to time, we enter into forward equity sales agreements, which are discussed in Note 15 – “Stockholders’
equity” to our consolidated financial statements. We consider the potential dilution resulting from the forward equity sales agreements
on the EPS calculations. At inception, the agreements do not have an effect on the computation of basic EPS as no shares are
delivered until settlement. The common shares issued upon the settlement of the forward equity sales agreements, weighted for the
period these common shares were outstanding, are included in the denominator of basic EPS. To determine the dilution resulting from
the forward equity sales agreements during the period of time prior to settlement, we calculate the number of weighted-average shares
outstanding – diluted using the treasury stock method.
The table below reconciles the numerators and denominators of the basic and diluted EPS computations for the years ended
December 31, 2024, 2023, and 2022 (in thousands, except per share amounts):
| Year Ended December 31, | |||||
| 2024 | 2023 | 2022 | |||
| Net income | $510,733 | $280,994 | $670,701 | ||
| Net income attributable to noncontrolling interests | (187,784) | (177,355) | (149,041) | ||
| Net income attributable to unvested RSAs with nonforfeitable rights to dividends | (13,394) | (11,195) | (8,392) | ||
| Numerator for basic and diluted EPS – net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders | $309,555 | $92,444 | $513,268 | ||
| Denominator for basic EPS – weighted-average shares of common stock outstanding | 172,071 | 170,909 | 161,659 | ||
| Dilutive effect of unvested RSAs with forfeitable rights to dividends | — | — | — | ||
| Dilutive effect of forward equity sales agreements | — | — | — | ||
| Denominator for diluted EPS – weighted-average shares of common stock outstanding | 172,071 | 170,909 | 161,659 | ||
| Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders: | |||||
| Basic | $1.80 | $0.54 | $3.18 | ||
| Diluted | $1.80 | $0.54 | $3.18 |
F-48
13. INCOME TAXES
We have elected to be taxed as a REIT, under the Code. We believe we have qualified and continue to qualify as a REIT.
Under the Code, a REIT that distributes at least 90% of its REIT taxable income to its stockholders annually and meets certain other
conditions is not subject to federal income taxes, but could be subject to certain state, local, and foreign taxes. We distribute 100% of
our taxable income annually; therefore, a provision for federal income taxes is not required.
We distributed all of our REIT taxable income in 2023 and 2022 and, as a result, did not incur federal income tax in those
years on such income. For the year ended December 31, 2024, we expect to distribute all of our REIT taxable income and, as a result,
do not expect to incur federal income tax. We expect to finalize our 2024 REIT taxable income when we file our 2024 federal income tax
return in 2025.
The income tax treatment of distributions and dividends declared on our common stock for the years ended December 31,
2024, 2023, and 2022 was as follows (unaudited):
| Year Ended December 31, | |||||
| 2024 | 2023 | 2022 | |||
| Ordinary income | 65.7% | 87.8% | 57.4% | ||
| Return of capital | 1.6 | — | — | ||
| Capital gains at 25% | 13.9 | 0.2 | 8.1 | ||
| Capital gains at 20% | 18.8 | 12.0 | 34.5 | ||
| Total | 100.0% | 100.0% | 100.0% | ||
| Dividends declared | $5.19 | $4.96 | $4.72 |
Beginning in 2018, the Tax Cuts and Jobs Act of 2017 added Section 199A to allow for a new tax deduction based on certain
qualified business income. Section 199A provides eligible individual taxpayers a deduction of up to 20% of their qualified REIT
dividends. This deduction applies to the portion of dividends classified as ordinary income in the table above.
Our dividends declared in a given quarter are generally paid during the subsequent quarter. The taxability information
presented above for our dividends paid in 2024 is based upon management’s estimate. Our federal tax return for 2024 is due on or
before October 15, 2025, assuming we file for an extension of the due date. Our federal tax returns for previous tax years have not
been examined by the IRS. Consequently, the taxability of distributions and dividends is subject to change.
In addition to our REIT tax returns, we file federal, state, and local tax returns for our subsidiaries. We file with jurisdictions
located in the U.S., Canada, China, and other international locations and may be subject to audits, assessments, or other actions by
local taxing authorities. We recognize tax benefits of uncertain tax positions only if it is more likely than not that the tax position will be
sustained, based solely on its technical merits, with the taxing authority having full knowledge of all relevant information. The
measurement of a tax benefit for an uncertain tax position that meets the “more likely than not” threshold is based on a cumulative
probability model under which the largest amount of tax benefit recognized is the amount with a greater than 50% likelihood of being
realized upon ultimate settlement with the taxing authority that has full knowledge of all relevant information.
As of December 31, 2024, there were no material unrecognized tax benefits. We do not anticipate a significant change to the
total amount of unrecognized tax benefits within the next 12 months. Interest expense and penalties, if any, are recognized in the first
period during which the interest or penalties begin accruing, according to the provisions of the relevant tax law at the applicable
statutory rate of interest. We did not incur any significant tax-related interest expense or penalties for the years ended December 31,
2024, 2023, and 2022.
F-49
13. INCOME TAXES (continued)
The following reconciles net income (determined in accordance with GAAP) to taxable income as filed with the IRS for the
years ended December 31, 2023 and 2022 (in thousands and unaudited):
| Year Ended December 31, | ||||
| 2023 | 2022 | |||
| Net income | $280,994 | $670,701 | ||
| Net income attributable to noncontrolling interests | (177,355) | (149,041) | ||
| Book/tax differences: | ||||
| Rental revenue recognition | 134,778 | (6,824) | ||
| Depreciation and amortization | 331,322 | 225,319 | ||
| Share-based compensation | 73,320 | 45,656 | ||
| Interest expense | (126,756) | (104,519) | ||
| Sales of property | 7,784 | (330,820) | ||
| Impairments | 80,134 | 26,322 | ||
| Non-real estate investments loss | 209,092 | 369,021 | ||
| Other | 15,463 | 10,653 | ||
| Taxable income before dividend deduction | 828,776 | 756,468 | ||
| Dividend deduction necessary to eliminate taxable income(1) | (828,776) | (756,468) | ||
| Estimated income subject to federal income tax | $— | $— |
(1)Total common stock dividend distributions paid were approximately $847.5 million and $757.7 million during the years ended December 31, 2023 and 2022, respectively.
**14.**COMMITMENTS AND CONTINGENCIES
Employee retirement savings plan
We have a retirement savings plan pursuant to Section 401(k) of the Code whereby our employees may contribute a portion of
their compensation to their respective retirement accounts in an amount not to exceed the maximum allowed under the Code. In
addition to employee contributions, we have elected to provide company discretionary profit-sharing contributions (subject to statutory
limitations), which amounted to approximately $7.8 million, $8.6 million, and $8.7 million for the years ended December 31, 2024, 2023,
and 2022, respectively. Employees who participate in the plan are immediately vested in their contributions and in the contributions
made on their behalf by the Company.
Concentration of credit risk
We maintain our cash and cash equivalents at insured financial institutions. The combined account balances at each institution
periodically exceed the FDIC insurance coverage of $250,000, and, as a result, there is a concentration of credit risk related to amounts
in excess of FDIC insurance coverage. We have not experienced any losses to date on our invested cash.
Our rental revenue is generated by a diverse array of many tenants. As of December 31, 2024, we had over 1,000 leases. The
inability of any single tenant to make its lease payments is unlikely to have a severe or financially disruptive effect on our operations.
Commitments
As of December 31, 2024, remaining aggregate costs under contract for the construction of properties undergoing
development, redevelopment, and improvements under the terms of leases approximated $1.0 billion. We expect payments for these
obligations to occur over one to three years, subject to capital planning adjustments from time to time. We may have the ability to cease
the construction of certain projects, which would result in the reduction of our commitments. In addition, we have letters of credit and
performance obligations aggregating $29.5 million.
We are committed to funding approximately $399.2 million related to our non-real estate investments. These funding
commitments are primarily associated with our investments in privately held entities that report NAV and expire at various dates over
the next 12 years, with a weighted-average expiration of 8.2 years as of December 31, 2024.
As of December 31, 2024, the second installment payment related to the amendment of our existing ground lease agreement
at the Alexandria Technology Square® Megacampus aggregating $135.0 million remained outstanding and was paid on January 14,
- Refer to “Operating lease agreements” in Note 5 – “Leases” to our consolidated financial statements for additional information.
F-50
15.STOCKHOLDERS’ EQUITY
Common equity transactions
Common stock repurchase program
On December 9, 2024, we announced that our Board of Directors authorized a common stock repurchase program under
which we may repurchase up to $500.0 million of our common stock, until December 31, 2025 in the open market, in privately
negotiated transactions, or otherwise. Stock repurchases are expected to be funded with net cash provided by operating activities after
dividends and proceeds from dispositions and sales of partial interests.
In December 2024, we repurchased 496,276 shares of common stock under this repurchase program at an average price per
share of $100.95. As of December 31, 2024, the approximate value of shares that may yet be purchased under this program was
$449.9 million.
From January 1, 2025 through January 27, 2025, we repurchased 1.5 million shares of additional common stock under this
repurchase program at an average price per share of $97.26. As of the date of this report, the approximate value of shares authorized
and remaining under this program was $299.9 million.
ATM common stock offering program
In February 2024, we entered into a new ATM common stock offering program that allows us to sell up to an aggregate of
$1.5 billion of our common stock.
During the three months ended June 30, 2024, we entered into new forward equity sales agreements aggregating $28 million
to sell 230 thousand shares of common stock under our ATM program at an average price per share of $122.32 (before underwriting
discounts).
During the three months ended December 31, 2024, we settled all outstanding forward equity sales agreements by issuing
230 thousand shares of common stock at an average price per share of $120.93 and received net proceeds of $27.8 million, before
offering costs. As of December 31, 2024, the remaining aggregate amount available under our ATM program for future sales of common
stock was $1.47 billion.
Accumulated other comprehensive loss
The change in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders
during the year ended December 31, 2024 was entirely due to net unrealized losses of $30.4 million on foreign currency translation
related to our operations primarily in Canada.
Common stock, p****referred stock, and excess stock authorizations
Our charter authorizes the issuance of 400.0 million shares of common stock, of which 172.2 million shares were issued and
outstanding as of December 31, 2024. Our charter also authorizes the issuance of up to 100.0 million shares of preferred stock, none of
which were issued and outstanding as of December 31, 2024. In addition, 200.0 million shares of “excess stock” (as defined in our
charter) are authorized, none of which were issued and outstanding as of December 31, 2024.
F-51
16.SHARE-BASED COMPENSATION
Stock award and incentive plan
For the purpose of attracting and retaining the highest-quality personnel, providing for additional incentives, and promoting the
success of our Company, we generally issue share-based compensation in the form of restricted stock, pursuant to our stock award and
incentive plan. We have not granted any options since 2002. Each restricted share issued reduced our share reserve by one share (1:1
ratio). As of December 31, 2024, there were 4,665,494 shares reserved for the granting of future stock-based awards under our stock
award and incentive plan.
In addition, our stock award and incentive plan permits us to issue share awards to our employees, non-employees, and non-
employee directors. A share award is an award of common stock that (i) may be fully vested upon issuance or (ii) may be subject to the
risk of forfeiture under Section 83 of the Code. Shares issued generally vest over a four-year period from the date of issuance, and the
sale of the shares is restricted prior to the date of vesting. Certain restricted share awards are also subject to an additional one-year
holding period after vesting. The unearned portion of time-based share awards is amortized as share-based compensation expense on
a straight-line basis over the vesting period. Certain restricted share awards are subject to vesting based upon the satisfaction of levels
of performance or market conditions. Failure to satisfy the threshold performance conditions will result in the forfeiture of shares and in
a reversal of previously recognized share-based compensation expense. Failure to satisfy the market condition results in the forfeiture
of shares but does not result in a reversal of previously recognized share-based compensation expense, provided that the requisite
service has been rendered. Forfeiture of time-based, performance-based, or market-based awards due to the failure to meet the service
requirement results in the reversal of previously recognized share-based compensation expense.
The following is a summary of the stock awards activity under our equity incentive plan and related information for the years
ended December 31, 2024, 2023, and 2022 (dollars in thousands, except per share information):
| Number of Share Awards | Weighted-Average Grant Date Fair Value per Share | |||||||
| Outstanding at December 31, 2021 | 1,823,460 | $ | 150.89 | |||||
| Granted | 1,032,731 | $ | 141.58 | |||||
| Vested | (749,101) | $ | 146.25 | |||||
| Forfeited | (19,569) | $ | 160.83 | |||||
| Outstanding at December 31, 2022 | 2,087,521 | $ | 149.96 | |||||
| Granted | 1,522,058 | $ | 108.22 | |||||
| Vested | (798,729) | $ | 149.41 | |||||
| Forfeited | (56,689) | $ | 104.65 | |||||
| Outstanding at December 31, 2023 | 2,754,161 | $ | 127.34 | |||||
| Granted | 615,192 | $ | 102.96 | |||||
| Vested | (951,195) | $ | 136.09 | |||||
| Forfeited | (180,253) | $ | 109.63 | |||||
| Outstanding at December 31, 2024 | 2,237,905 | $ | 118.34 | |||||
| Year Ended December 31, | ||||||||
| 2024 | 2023 | 2022 | ||||||
| Total grant date fair value of stock awards vested | $129,449 | $119,335 | $109,557 | |||||
| Total gross compensation recognized for stock awards | $118,439 | $139,675 | $104,424 | |||||
| Capitalized stock compensation | $58,805 | $56,817 | $46,684 |
Certain restricted stock awards granted during 2024, 2023, and 2022 are subject to performance and market conditions. The
grant date fair value of these awards is determined using a Monte Carlo simulation pricing model using the following assumptions for
2024, 2023, and 2022, respectively: (i) expected term of 3.0 years, 3.0 years, and 2.8 years (equal to the remaining performance
measurement period at the grant date), (ii) volatility of 28.7%, 32.0%, and 30.0% (approximating a blended average of implied and
historical volatilities), (iii) dividend yield of 3.3%, 2.8%, and 2.5%, and (iv) risk-free rate of 4.18%, 4.22%, and 2.47%.
As of December 31, 2024, there was $177.2 million of unrecognized compensation related to unvested share awards under
the equity incentive plan, which is expected to be recognized over the next four years and has a weighted-average vesting period of
approximately 20 months.
F-52
17.NONCONTROLLING INTERESTS
Noncontrolling interests represent the third-party interests in certain entities in which we have a controlling interest. As of
December 31, 2024, these entities owned 67 properties, which are included in our consolidated financial statements. Noncontrolling
interests are adjusted for additional contributions and distributions, the proportionate share of the net earnings or losses, and other
comprehensive income or loss. Distributions, profits, and losses related to these entities are allocated in accordance with the respective
operating agreements. During the years ended December 31, 2024 and 2023, we distributed $256.7 million and $244.1 million,
respectively, to our consolidated real estate joint venture partners.
Certain of our noncontrolling interests have the right to require us to redeem their ownership interests in the respective entities.
We classify these ownership interests in the entities as redeemable noncontrolling interests outside of total equity in our consolidated
balance sheets. Redeemable noncontrolling interests are adjusted for additional contributions and distributions, the proportionate share
of the net earnings or losses, and other comprehensive income or loss. If the amount of a redeemable noncontrolling interest is less
than the maximum redemption value at the balance sheet date, such amount is adjusted to the maximum redemption value.
Subsequent declines in the redemption value are recognized only to the extent that previous increases have been recognized. Refer to
Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our consolidated financial statements for additional information.
**18.**SEGMENT INFORMATION
We are a life science real estate investment trust focused on developing, redeveloping, and operating properties that provide
space for lease to tenants primarily in the life science industry. Our properties are leased predominantly through triple-net lease
agreements and share key characteristics, including generic and reusable improvements, consistent lease structures, and business
strategy. All properties are located within North America, predominantly in the U.S., and operate within a comparable regulatory
environment. Our foreign operations, located in Canada, represent approximately 1% of our total revenues and total assets.
Operating segments
In 2024, our Chief Operating Decision Maker (“CODM”), represented by our Executive Chairman and our Chief Executive
Officer, revised their review approach from evaluating operating results at the individual property level to evaluating operating results at
the geographic market level to assess performance and allocate resources. This change reflects the growth and evolving structure of
our organization, as well as targeted initiatives implemented to streamline our business processes and enhance operational efficiencies.
We note that the recent accounting standard update on segment reporting, which became effective for us on January 1, 2024, had no
impact on the reassessment of our operating segments, as it does not change the principles for determining operating segments or
aggregation under ASC 280. Instead, our change was driven by organizational developments, as described below.
As a result, beginning in 2024, our operating segments aligned with our markets, including Greater Boston, San Francisco Bay
Area, San Diego, and Seattle, among others. The transition from a property-level to a market-level review of operating results was
driven by the following key factors:
- Organizational growth and complexity. As our portfolio expanded, regular reviews of individual property-level operating results
became increasingly granular and operationally inefficient for the CODM. Shifting to a market-level review allowed for a more
strategic focus on key performance drivers and resource allocation priorities.
•Streamlining business processes and enhancing efficiencies. We have implemented significant organizational initiatives to
improve efficiency and reduce costs. These initiatives included upgrading systems, improving processes, integrating smarter
technology, and optimizing workflows to enhance operating effectiveness.
- Personnel-related changes. Reallocation and consolidation of roles and responsibilities, reduction in headcount, including
retirement of certain executives, and elimination of redundancies across the company.
As a result of these measures, starting in 2024, regular market performance updates are now provided directly to the CODM.
These updates include each market’s net operating income (“NOI”), which serves as the profit or loss measure used by the CODM for
performance assessment and resource allocation. NOI provides useful information regarding performance of each market as it reflects
income and expenses incurred in connection with real estate operations in each market. This metric enables the CODM to evaluate the
profitability and performance of each market on a consistent and comparable basis, supporting decisions on capital resource allocation,
including in connection with development, redevelopment, acquisition, and disposition activities in each market.
Evaluation of economic similarity and aggregation of operating segments
In accordance with the segment reporting accounting standard, we evaluated the economic similarity of our operating
segments. Seven of our nine operating segments exhibit consistent long-term economic characteristics, including similar historical long-
term NOI margins, which are also expected to remain similar in the future. Additionally, these markets share similar operational
characteristics, including nature of services provided (i.e., leasing, operating, developing, and redeveloping life science properties),
tenant base (i.e., a variety of tenants involved in the life science industry), methods of operation (i.e., consistent lease structures,
property management practices, and business strategies), nature of the regulatory environment (consistent across North America,
F-53
18.SEGMENT INFORMATION (continued)
where all of our operating segments are located). Given these shared economic characteristics, we have aggregated our seven
operating segments into one reportable segment for segment reporting purposes. Two of our operating segments did not meet the
aggregation criteria, and individually did not meet the quantitative thresholds to qualify as reportable segments. Therefore, these
operating segments are included in the “all other” category in the tables below*.*
The following table presents the reportable segment profit or loss measure — net operating income.
| Year Ended December 31, | |||||
| (in thousands) | 2024 | 2023 | 2022 | ||
| Reportable segment revenues: | |||||
| Revenues from external customers | $2,897,524 | $2,685,027 | $2,443,865 | ||
| Other income | 30,028 | 21,408 | 10,214 | ||
| Reportable segment total revenues | 2,927,552 | 2,706,435 | 2,454,079 | ||
| Reportable segment total rental operating expenses | (831,258) | (763,700) | (695,226) | ||
| Reportable segment net operating income (reportable segment profit or loss) | $2,096,294 | $1,942,735 | $1,758,853 |
Significant expenses included in the reportable segment profit or loss measure (i.e., net operating income) are represented by
the reportable segment total rental operating expenses and are disclosed in the table above. These expenses primarily include property
taxes, utilities, repairs and maintenance, engineering, janitorial personnel, and other costs.
Presented below are reconciliations of the reportable segment total revenues to the consolidated revenues, the reportable
segment total rental operating expenses to consolidated rental operations, the reportable segment NOI to the consolidated net income,
and the reportable segment investments in real estate assets to the consolidated investments in real estate assets:
| Year Ended December 31, | |||||
| (in thousands) | 2024 | 2023 | 2022 | ||
| Reconciliation of reportable segment revenues to consolidated total revenues: | |||||
| Reportable segment total revenues | $2,927,552 | $2,706,435 | $2,454,079 | ||
| All other revenues | 188,842 | 179,264 | 134,883 | ||
| Consolidated revenues | $3,116,394 | $2,885,699 | $2,588,962 | ||
| Reconciliation of reportable segment total rental operating expenses to consolidated rental operations: | |||||
| Reportable segment total rental operating expenses | $(831,258) | $(763,700) | $(695,226) | ||
| All other rental operating expenses | (78,007) | (95,480) | (87,927) | ||
| Consolidated rental operations | $(909,265) | $(859,180) | $(783,153) | ||
| Reconciliation of reportable segment net operating income to consolidated net income: | |||||
| Reportable segment net operating income (reportable segment profit or loss) | $2,096,294 | $1,942,735 | $1,758,853 | ||
| All other revenues | 188,842 | 179,264 | 134,883 | ||
| All other rental operating expenses | (78,007) | (95,480) | (87,927) | ||
| Other items not allocated to segments: | |||||
| General and administrative | (168,359) | (199,354) | (177,278) | ||
| Interest expense | (185,838) | (74,204) | (94,203) | ||
| Depreciation and amortization | (1,202,380) | (1,093,473) | (1,002,146) | ||
| Impairment of real estate | (223,068) | (461,114) | (64,969) | ||
| Loss on early extinguishment of debt | — | — | (3,317) | ||
| Equity in earnings of unconsolidated real estate joint ventures | 7,059 | 980 | 645 | ||
| Investment loss | (53,122) | (195,397) | (331,758) | ||
| Gain on sale of real estate | 129,312 | 277,037 | 537,918 | ||
| Consolidated net income | $510,733 | $280,994 | $670,701 |
| As of December 31, | |||
| (in thousands) | 2024 | 2023 | |
| Reconciliation of reportable segment assets to consolidated investments in real estate assets | |||
| Reportable segment investments in real estate | $30,393,144 | $29,810,981 | |
| All other investments in real estate | 1,716,895 | 1,822,530 | |
| Consolidated investments in real estate | $32,110,039 | $31,633,511 |
F-54
19.SUBSEQUENT EVENTS
Ground lease payment in January 2025
In January 2025, pursuant to an amendment executed in July 2024 to our existing ground lease agreement at the Alexandria
Technology Square® Megacampus, we made the second and final installment payment aggregating $135.0 million related to our rent
obligation for the extended lease term. For additional information, refer to Note 5 – “Leases” to our consolidated financial statements.
Common stock repurchase program
From January 1, 2025 through January 27, 2025, we repurchased 1.5 million shares of common stock under this repurchase
program at an average price per share of $97.26. As of the date of this report, the approximate value of shares authorized and
remaining under this program was $299.9 million.
F-55
SCHEDULE III
Alexandria Real Estate Equities, Inc. and Subsidiaries
Schedule III
Consolidated Financial Statement Schedule of Real Estate and Accumulated Depreciation
December 31, 2024
(Dollars in thousands)
| Initial Costs | Costs Capitalized Subsequent to Acquisitions | Total Costs | ||||||||||||||||||||||
| Property | Market | Encumbrances | Land | Buildings & Improvements | Buildings & Improvements | Land | Buildings & Improvements | Total(1) | Accumulated Depreciation(2) | Net Cost Basis | Date of Construction(3) | Date Acquired | ||||||||||||
| Alexandria Center® at Kendall Square | Greater Boston | $— | $558,885 | $783,224 | $1,792,818 | $558,885 | $2,576,042 | $3,134,927 | $(465,409) | $2,669,518 | 1981 - 2023 | 2005 - 2022 | ||||||||||||
| Alexandria Center® at One Kendall Square | Greater Boston | — | 405,164 | 576,213 | 1,200,230 | 405,164 | 1,776,443 | 2,181,607 | (289,414) | 1,892,193 | 1985 - 2023 | 2016 - 2022 | ||||||||||||
| Alexandria Technology Square® | Greater Boston | — | — | 619,658 | 305,387 | — | 925,045 | 925,045 | (394,582) | 530,463 | 2001 - 2012 | 2006 | ||||||||||||
| The Arsenal on the Charles | Greater Boston | — | 191,797 | 354,611 | 776,601 | 191,797 | 1,131,212 | 1,323,009 | (116,965) | 1,206,044 | 2000 - 2024 | 2019 - 2021 | ||||||||||||
| 480 Arsenal Way 446, 458, 500, and 550 Arsenal Street, and 99 Coolidge Avenue | Greater Boston | 149,321 | 164,658 | 24,464 | 431,701 | 164,658 | 456,165 | 620,823 | (85,681) | 535,142 | 1962 - 2023 | 2000 - 2022 | ||||||||||||
| Alexandria Center® for Life Science – Fenway | Greater Boston | — | 912,016 | 617,552 | 797,446 | 912,016 | 1,414,998 | 2,327,014 | (91,870) | 2,235,144 | 2019 - 2024 | 2021 | ||||||||||||
| 285, 299, 307, and 345 Dorchester Avenue | Greater Boston | — | 264,554 | — | 22,917 | 264,554 | 22,917 | 287,471 | — | 287,471 | N/A | 2024 | ||||||||||||
| 5, 10, and 15 Necco Street | Greater Boston | — | 277,554 | 55,897 | 411,062 | 277,554 | 466,959 | 744,513 | (19,786) | 724,727 | 2019 - 2023 | 2019 | ||||||||||||
| Alexandria Center® for Life Science – Waltham | Greater Boston | — | 141,629 | 513,901 | 359,436 | 141,629 | 873,337 | 1,014,966 | (30,015) | 984,951 | 1999 - 2024 | 2020 - 2022 | ||||||||||||
| 19, 215, 225, and 235 Presidential Way | Greater Boston | — | 32,136 | 118,391 | 29,014 | 32,136 | 147,405 | 179,541 | (36,009) | 143,532 | 1999 - 2001 | 2005 - 2022 | ||||||||||||
| Other | Greater Boston | — | 156,221 | 187,205 | 89,097 | 156,221 | 276,302 | 432,523 | (5,331) | 427,192 | Various | Various | ||||||||||||
| Alexandria Center® for Science and Technology – Mission Bay | San Francisco | — | 213,014 | 218,556 | 703,020 | 213,014 | 921,576 | 1,134,590 | (252,874) | 881,716 | 2007 - 2014 | 2004 - 2017 | ||||||||||||
| Alexandria Technology Center® – Gateway | San Francisco | — | 193,004 | 364,078 | 763,530 | 193,004 | 1,127,608 | 1,320,612 | (209,196) | 1,111,416 | 1984 - 2024 | 2002 - 2020 | ||||||||||||
| Alexandria Center® for Life Science – Millbrae | San Francisco | — | 69,989 | — | 490,449 | 69,989 | 490,449 | 560,438 | — | 560,438 | N/A | 2021 - 2022 | ||||||||||||
| Alexandria Center® for Advanced Technologies – South San Francisco | San Francisco | — | 59,199 | — | 565,673 | 59,199 | 565,673 | 624,872 | (151,635) | 473,237 | 2008 - 2019 | 2004 - 2005 | ||||||||||||
| Alexandria Center® for Advanced Technologies – Tanforan | San Francisco | — | 330,154 | 51,145 | 80,707 | 330,154 | 131,852 | 462,006 | (17,465) | 444,541 | 1971 - 2007 | 2021 - 2022 | ||||||||||||
| Alexandria Center® for Life Science – South San Francisco | San Francisco | — | 32,245 | 1,287 | 487,452 | 32,245 | 488,739 | 520,984 | (167,608) | 353,376 | 2012 - 2022 | 2002 - 2017 | ||||||||||||
| 500 Forbes Boulevard | San Francisco | — | 35,596 | 69,091 | 23,748 | 35,596 | 92,839 | 128,435 | (38,068) | 90,367 | 2001 | 2007 | ||||||||||||
| Alexandria Center® for Life Science – San Carlos | San Francisco | — | 433,634 | 28,323 | 759,478 | 433,634 | 787,801 | 1,221,435 | (121,222) | 1,100,213 | 1970 - 2022 | 2017 - 2021 | ||||||||||||
| Alexandria Stanford Life Science District | San Francisco | — | — | 599,401 | 113,748 | — | 713,149 | 713,149 | (117,277) | 595,872 | 2002 - 2022 | 2003 - 2022 | ||||||||||||
| 3412, 3420, 3440, 3450, and 3460 Hillview Avenue | San Francisco | — | — | 304,318 | 101,390 | — | 405,708 | 405,708 | (28,201) | 377,507 | 1978 - 2018 | 2020 - 2021 |
F-56
SCHEDULE III (continued)
| Initial Costs | Costs Capitalized Subsequent to Acquisitions | Total Costs | ||||||||||||||||||||||
| Property | Market | Encumbrances | Land | Buildings & Improvements | Buildings & Improvements | Land | Buildings & Improvements | Total(1) | Accumulated Depreciation(2) | Net Cost Basis | Date of Construction(3) | Date Acquired | ||||||||||||
| 3825 and 3875 Fabian Way | San Francisco | $— | $194,424 | $54,519 | $24,262 | $194,424 | $78,781 | $273,205 | $(13,885) | $259,320 | 1969 - 2014 | 2019 | ||||||||||||
| 2475 and 2625/2627/2631 Hanover Street and 1450 Page Mill Road | San Francisco | — | — | 187,472 | 13,683 | — | 201,155 | 201,155 | (38,735) | 162,420 | 2000 - 2017 | 1999 - 2021 | ||||||||||||
| 2100, 2200, 2300, and 2400 Geng Road | San Francisco | — | 72,859 | 53,309 | 42,129 | 72,859 | 95,438 | 168,297 | (23,335) | 144,962 | 1984 - 2019 | 2018 | ||||||||||||
| 3350 West Bayshore Road | San Francisco | — | 4,800 | 6,693 | 45,196 | 4,800 | 51,889 | 56,689 | (16,948) | 39,741 | 1982 | 2005 | ||||||||||||
| 88 Bluxome Street | San Francisco | — | 148,551 | 21,514 | 227,887 | 148,551 | 249,401 | 397,952 | (23,098) | 374,854 | N/A | 2017 | ||||||||||||
| One Alexandria Square | San Diego | — | 140,318 | 161,293 | 948,146 | 140,318 | 1,109,439 | 1,249,757 | (274,785) | 974,972 | 1995 - 2024 | 1994 - 2021 | ||||||||||||
| ARE Torrey Ridge | San Diego | — | 22,124 | 152,840 | 109,164 | 22,124 | 262,004 | 284,128 | (80,763) | 203,365 | 2004 - 2021 | 2016 | ||||||||||||
| ARE Nautilus | San Diego | — | 6,684 | 27,600 | 142,569 | 6,684 | 170,169 | 176,853 | (77,155) | 99,698 | 2009 - 2012 | 1994 - 1997 | ||||||||||||
| One Alexandria North | San Diego | — | 103,937 | 1,354 | 49,172 | 103,937 | 50,526 | 154,463 | (1,359) | 153,104 | 1980 - 1990 | 2020 | ||||||||||||
| Campus Point by Alexandria | San Diego | — | 119,760 | 395,527 | 996,383 | 119,760 | 1,391,910 | 1,511,670 | (245,906) | 1,265,764 | 1989 - 2024 | 2010 - 2022 | ||||||||||||
| 5200 Illumina Way | San Diego | — | 39,051 | 96,606 | 200,123 | 39,051 | 296,729 | 335,780 | (90,245) | 245,535 | 2004 - 2017 | 2010 | ||||||||||||
| 9625 Towne Centre Drive | San Diego | — | 7,686 | 13,748 | 66,703 | 7,686 | 80,451 | 88,137 | (31,002) | 57,135 | 2018 | 2014 | ||||||||||||
| SD Tech by Alexandria | San Diego | — | 76,820 | 248,969 | 532,373 | 76,820 | 781,342 | 858,162 | (57,256) | 800,906 | 2014 - 2022 | 2019 - 2020 | ||||||||||||
| Sequence District by Alexandria | San Diego | — | 163,610 | 281,389 | 34,644 | 163,610 | 316,033 | 479,643 | (27,741) | 451,902 | 1997 - 2000 | 2020 - 2021 | ||||||||||||
| Pacific Technology Park | San Diego | — | 96,796 | 66,660 | 5,033 | 96,796 | 71,693 | 168,489 | (5,889) | 162,600 | 1989 - 1991 | 2021 | ||||||||||||
| Summers Ridge Science Park | San Diego | — | 21,154 | 102,046 | 4,816 | 21,154 | 106,862 | 128,016 | (19,699) | 108,317 | 2005 | 2018 | ||||||||||||
| Scripps Science Park by Alexandria | San Diego | — | 35,420 | 43,767 | 85,252 | 35,420 | 129,019 | 164,439 | (9,419) | 155,020 | 2001 - 2022 | 2021 - 2022 | ||||||||||||
| ARE Portola | San Diego | — | 6,991 | 25,153 | 41,671 | 6,991 | 66,824 | 73,815 | (27,649) | 46,166 | 2005 - 2012 | 2007 | ||||||||||||
| 5810/5820 Nancy Ridge Drive | San Diego | — | 3,492 | 18,285 | 33,648 | 3,492 | 51,933 | 55,425 | (22,090) | 33,335 | 2021 | 2004 | ||||||||||||
| 9877 Waples Street | San Diego | — | 5,092 | 11,908 | 13,289 | 5,092 | 25,197 | 30,289 | (10,990) | 19,299 | 2020 | 2020 | ||||||||||||
| 5871 Oberlin Drive | San Diego | — | 1,349 | 8,016 | 20,610 | 1,349 | 28,626 | 29,975 | (6,058) | 23,917 | 2021 | 2010 | ||||||||||||
| 3911, 3931, 3985, 4025, 4031, 4045, and 4075 Sorrento Valley Boulevard | San Diego | — | 18,177 | 42,723 | 44,918 | 18,177 | 87,641 | 105,818 | (44,128) | 61,690 | 2007 - 2015 | 2010 - 2019 | ||||||||||||
| 11045 and 11055 Roselle Street | San Diego | — | 1,386 | 4,288 | 34,110 | 1,386 | 38,398 | 39,784 | (12,572) | 27,212 | 2008 - 2014 | 2000 - 2013 | ||||||||||||
| Other | San Diego | — | 104,027 | 70,212 | 66,352 | 104,027 | 136,564 | 240,591 | (17,047) | 223,544 | Various | Various | ||||||||||||
| Alexandria Center® for Life Science – Eastlake | Seattle | — | 46,300 | 83,012 | 933,691 | 46,300 | 1,016,703 | 1,063,003 | (267,005) | 795,998 | 1997 - 2024 | 2002 - 2024 | ||||||||||||
| Alexandria Center® for Life Science – South Lake Union | Seattle | — | 243,959 | 28,950 | 511,473 | 243,959 | 540,423 | 784,382 | (58,962) | 725,420 | 1984 - 2017 | 2007 - 2024 | ||||||||||||
| 219 Terry Avenue North | Seattle | — | 1,819 | 2,302 | 23,127 | 1,819 | 25,429 | 27,248 | (11,598) | 15,650 | 2012 | 2007 | ||||||||||||
| 1010 4th Avenue South | Seattle | — | 46,200 | — | 13,796 | 46,200 | 13,796 | 59,996 | — | 59,996 | N/A | 2020 | ||||||||||||
| 410 West Harrison Street and 410 Elliott Avenue West | Seattle | — | 3,857 | 1,989 | 20,788 | 3,857 | 22,777 | 26,634 | (11,367) | 15,267 | 2006 - 2008 | 2004 | ||||||||||||
| Alexandria Center® for Advanced Technologies – Canyon Park | Seattle | — | 133,558 | 206,374 | 22,001 | 133,558 | 228,375 | 361,933 | (22,391) | 339,542 | 1985 - 2007 | 2021 - 2022 | ||||||||||||
| Alexandria Center® for Advanced Technologies – Monte Villa Parkway | Seattle | — | 52,464 | 64,753 | 89,543 | 52,464 | 154,296 | 206,760 | (8,280) | 198,480 | 1994 - 2024 | 2020 |
F-57
SCHEDULE III (continued)
| Initial Costs | Costs Capitalized Subsequent to Acquisitions | Total Costs | ||||||||||||||||||||||
| Property | Market | Encumbrances | Land | Buildings & Improvements | Buildings & Improvements | Land | Buildings & Improvements | Total(1) | Accumulated Depreciation(2) | Net Cost Basis | Date of Construction(3) | Date Acquired | ||||||||||||
| Other | Seattle | $— | $108,900 | $931 | $34,311 | $108,900 | $35,242 | $144,142 | $(1,070) | $143,072 | Various | Various | ||||||||||||
| Alexandria Center® for Life Science – Shady Grove | Maryland | — | 85,365 | 253,567 | 770,709 | 85,365 | 1,024,276 | 1,109,641 | (177,208) | 932,433 | 1998 - 2024 | 2004 - 2021 | ||||||||||||
| 1330 Piccard Drive | Maryland | — | 2,800 | 11,533 | 38,404 | 2,800 | 49,937 | 52,737 | (26,693) | 26,044 | 2005 | 1997 | ||||||||||||
| 1405 Research Boulevard | Maryland | — | 899 | 21,946 | 16,056 | 899 | 38,002 | 38,901 | (20,386) | 18,515 | 2006 | 1997 | ||||||||||||
| 1500 and 1550 East Gude Drive | Maryland | — | 1,523 | 7,731 | 10,713 | 1,523 | 18,444 | 19,967 | (12,754) | 7,213 | 1995 - 2003 | 1997 | ||||||||||||
| 5 Research Place | Maryland | — | 1,466 | 5,708 | 31,457 | 1,466 | 37,165 | 38,631 | (20,626) | 18,005 | 2010 | 2001 | ||||||||||||
| 5 Research Court | Maryland | — | 1,647 | 13,258 | 24,152 | 1,647 | 37,410 | 39,057 | (19,916) | 19,141 | 2007 | 2004 | ||||||||||||
| 12301 Parklawn Drive | Maryland | — | 1,476 | 7,267 | 1,741 | 1,476 | 9,008 | 10,484 | (4,767) | 5,717 | 2007 | 2004 | ||||||||||||
| Alexandria Technology Center® – Gaithersburg I | Maryland | — | 20,980 | 121,952 | 63,723 | 20,980 | 185,675 | 206,655 | (65,594) | 141,061 | 1992 - 2019 | 1997 - 2019 | ||||||||||||
| Alexandria Technology Center® – Gaithersburg II | Maryland | — | 17,134 | 67,825 | 110,446 | 17,134 | 178,271 | 195,405 | (54,029) | 141,376 | 2000 - 2021 | 1997 - 2020 | ||||||||||||
| 20400 Century Boulevard | Maryland | — | 3,641 | 4,759 | 26,600 | 3,641 | 31,359 | 35,000 | (6,400) | 28,600 | 2023 | 2021 | ||||||||||||
| 401 Professional Drive | Maryland | — | 1,129 | 6,941 | 12,234 | 1,129 | 19,175 | 20,304 | (10,506) | 9,798 | 2007 | 1996 | ||||||||||||
| 950 Wind River Lane | Maryland | — | 2,400 | 10,620 | 1,602 | 2,400 | 12,222 | 14,622 | (4,746) | 9,876 | 2009 | 2010 | ||||||||||||
| 620 Professional Drive | Maryland | — | 784 | 4,705 | 8,271 | 784 | 12,976 | 13,760 | (8,847) | 4,913 | 2012 | 2005 | ||||||||||||
| 8000/9000/10000 Virginia Manor Road | Maryland | — | — | 13,679 | 12,054 | — | 25,733 | 25,733 | (14,302) | 11,431 | 2003 | 1998 | ||||||||||||
| Alexandria Center® for Life Science – Durham | Research Triangle | — | 190,236 | 471,263 | 290,512 | 190,236 | 761,775 | 952,011 | (77,489) | 874,522 | 1985 - 2023 | 2020 - 2022 | ||||||||||||
| Alexandria Center® for Advanced Technologies and AgTech– Research Triangle | Research Triangle | — | 30,584 | 23,714 | 480,461 | 30,584 | 504,175 | 534,759 | (66,898) | 467,861 | 2007 - 2022 | 2012 - 2021 | ||||||||||||
| Alexandria Center® for Sustainable Technologies | Research Triangle | — | 54,908 | 18,849 | 140,271 | 54,908 | 159,120 | 214,028 | (66,435) | 147,593 | 1966 - 2022 | 1998 - 2022 | ||||||||||||
| Alexandria Technology Center® – Alston | Research Triangle | — | 1,430 | 17,482 | 35,264 | 1,430 | 52,746 | 54,176 | (30,051) | 24,125 | 1985 - 2009 | 1998 | ||||||||||||
| Alexandria Innovation Center® – Research Triangle | Research Triangle | — | 1,065 | 21,218 | 32,335 | 1,065 | 53,553 | 54,618 | (26,865) | 27,753 | 2005 - 2008 | 2000 | ||||||||||||
| 2525 East NC Highway 54 | Research Triangle | — | 713 | 12,827 | 21,217 | 713 | 34,044 | 34,757 | (18,986) | 15,771 | 1995 | 2004 | ||||||||||||
| 407 Davis Drive | Research Triangle | — | 1,229 | 17,733 | 13,746 | 1,229 | 31,479 | 32,708 | (6,323) | 26,385 | 1998 | 2013 | ||||||||||||
| 601 Keystone Park Drive | Research Triangle | — | 785 | 11,546 | 16,517 | 785 | 28,063 | 28,848 | (10,183) | 18,665 | 2009 | 2006 | ||||||||||||
| Alexandria Center® for NextGen Medicines | Research Triangle | — | 94,184 | — | 15,184 | 94,184 | 15,184 | 109,368 | — | 109,368 | N/A | 2021 | ||||||||||||
| Alexandria Center® for Life Science – New York City | New York City | — | — | — | 1,145,948 | — | 1,145,948 | 1,145,948 | (328,535) | 817,413 | 2010 - 2016 | 2006 | ||||||||||||
| Alexandria Center® for Life Science – Long Island City | New York City | — | 22,746 | 53,093 | 165,179 | 22,746 | 218,272 | 241,018 | (11,817) | 229,201 | 2022 | 2018 | ||||||||||||
| Intersection Campus | Texas | — | 159,310 | 440,295 | 45,603 | 159,310 | 485,898 | 645,208 | (38,942) | 606,266 | 2000 - 2019 | 2021 - 2022 | ||||||||||||
| 1001 Trinity Street and 1020 Red River Street | Texas | — | 66,451 | 61,732 | 2,964 | 66,451 | 64,696 | 131,147 | (20,008) | 111,139 | 1987 - 1990 | 2022 |
F-58
SCHEDULE III (continued)
| Initial Costs | Costs Capitalized Subsequent to Acquisitions | Total Costs | ||||||||||||||||||||||
| Property | Market | Encumbrances | Land | Buildings & Improvements | Buildings & Improvements | Land | Buildings & Improvements | Total(1) | Accumulated Depreciation(2) | Net Cost Basis | Date of Construction(3) | Date Acquired | ||||||||||||
| Alexandria Center® for Advanced Technologies at The Woodlands | Texas | $— | $2,116 | $9,784 | $133,579 | $2,116 | $143,363 | $145,479 | $(3,199) | $142,280 | 2002 - 2023 | 2020 | ||||||||||||
| Other | Texas | — | 44,217 | — | 12,580 | 44,217 | 12,580 | 56,797 | — | 56,797 | Various | Various | ||||||||||||
| Canada | Canada | — | 75,225 | 163,161 | 114,376 | 75,225 | 277,537 | 352,762 | (31,304) | 321,458 | 1989 - 2023 | 2005 - 2023 | ||||||||||||
| Various | Various | 587 | 426,017 | 136,472 | 403,747 | 426,017 | 540,219 | 966,236 | (240,180) | 726,056 | Various | Various | ||||||||||||
| North America | 149,908 | 7,815,474 | 9,982,177 | 19,933,412 | 7,815,474 | 29,915,589 | 37,731,063 | (5,621,024) | 32,110,039 | |||||||||||||||
| Asia | — | — | — | 4,155 | — | 4,155 | 4,155 | (4,155) | — | 2015 | 2008 | |||||||||||||
| $149,908 | $7,815,474 | $9,982,177 | $19,937,567 | $7,815,474 | $29,919,744 | $37,735,218 | $(5,625,179) | $32,110,039 |
(1)As of December 31, 2024, the total cost of our real estate assets aggregated $37.7 billion, which exceeded the cost of real estate for federal income tax purposes aggregating $37.2 billion by approximately $489.4 million.
(2)The depreciable life is up to 40 years for buildings and building improvements, up to 20 years for land improvements, and the term of the respective lease for tenant improvements.
(3)Represents the later of the date of original construction or the date of the latest renovation.
F-59
SCHEDULE III (continued)
Alexandria Real Estate Equities, Inc.
Consolidated Financial Statement Schedule of Rental Properties and Accumulated Depreciation
December 31, 2024
(Dollars in thousands)
A summary of activity of consolidated investments in real estate and accumulated depreciation is as follows:
| December 31, | ||||||
| Real Estate | 2024 | 2023 | 2022 | |||
| Balance at beginning of period | $36,618,530 | $34,299,503 | $28,751,910 | |||
| Acquisitions (including real estate, land, and joint venture consolidation) | 248,378 | 296,694 | 2,722,214 | |||
| Additions to real estate | 2,368,086 | 3,107,612 | 3,388,478 | |||
| Deductions (including dispositions and direct financing leases) | (1,499,776) | (1,085,279) | (563,099) | |||
| Balance at end of period | $37,735,218 | $36,618,530 | $34,299,503 | |||
| December 31, | ||||||
| Accumulated Depreciation | 2024 | 2023 | 2022 | |||
| Balance at beginning of period | $4,985,019 | $4,354,063 | $3,771,241 | |||
| Depreciation expense on properties | 996,550 | 841,893 | 751,584 | |||
| Sale of properties | (356,390) | (210,937) | (168,762) | |||
| Balance at end of period | $5,625,179 | $4,985,019 | $4,354,063 |
Previous: Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES