Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking statements

Certain information and statements included in this quarterly report on Form 10-Q, including, without limitation, statements containing the words “forecast,” “guidance,” “goals,” “projects,” “estimates,” “anticipates,” “believes,” “expects,” “intends,” “may,” “plans,” “seeks,” “should,” “targets,” or “will,” or the negative of those words or similar words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve inherent risks and uncertainties regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, results of operations, and financial position. A number of important factors could cause actual results to differ materially from those included within or contemplated by the forward-looking statements, including, but not limited to, the following:

• Operating factors, such as a failure to operate our business successfully in comparison to market expectations or in comparison to our competitors, our inability to obtain capital when desired or refinance debt maturities when desired, and/or a failure to maintain our status as a REIT for federal tax purposes;

• Market and industry factors, such as adverse developments concerning the life science, agtech, and technology industries and/or our tenants;

• Government factors, such as any unfavorable effects resulting from federal, state, local, and/or foreign government policies, laws, and/or funding levels;

• Global factors, such as negative economic, social, political, financial, credit market, and/or banking conditions;

• Uncertain global, national, and local impacts of the ongoing COVID-19 pandemic; and

• Other factors, such as climate change, cyber intrusions, and/or changes in laws, regulations, and financial accounting standards.

This list of risks and uncertainties is not exhaustive. Additional information regarding risk factors that may affect us is included under “Item 1A. Risk factors” and “Item 7. Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for the year ended December 31, 2021, and respective sections within this quarterly report on Form 10-Q. Readers of this quarterly report on Form 10-Q should also read our other documents filed publicly with the SEC for further discussion regarding such factors.

Overview

We are a Maryland corporation formed in October 1994 that has elected to be taxed as a REIT for federal income tax purposes. We are an S&P 500® urban office REIT and the first, longest-tenured, and pioneering owner, operator, and developer uniquely focused on collaborative life science, agtech, and technology campuses in AAA innovation cluster locations, with a total market capitalization of $33.7 billion and an asset base in North America of 74.1 million SF as of June 30, 2022. The asset base in North America includes 41.1 million RSF of operating properties and 5.9 million RSF of Class A properties undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.2 million SF of future development projects. Founded in 1994, we pioneered this niche and have since established a significant market presence in key locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. We have a longstanding and proven track record of developing Class A properties clustered in urban life science, agtech, and technology campuses that provide our innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Alexandria also provides strategic capital to transformative life science, agtech, and technology companies through our venture capital platform. We believe these advantages result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

As of June 30, 2022:

• Investment-grade or publicly traded large cap tenants represented 50% of our total annual rental revenue;

• Approximately 97% of our leases (on an annual rental revenue basis) contained effective annual rent escalations approximating 3.0% that were either fixed or indexed based on a consumer price index or other index;

• Approximately 91% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent; and

• Approximately 94% of our leases (on an annual rental revenue basis) provided for the recapture of capital expenditures (such as HVAC maintenance and/or replacement, roof replacement, and parking lot resurfacing) that we believe would typically be borne by the landlord in traditional office leases.

Our primary business objective is to maximize long-term asset value and shareholder returns based on a multifaceted platform of internal and external growth. A key element of our strategy is our unique focus on Class A properties clustered in urban campuses located in AAA innovation cluster locations. These key urban campus locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space. They generally represent highly desirable locations for tenancy by life science, agtech, and technology entities because of their close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses. Our strategy also includes drawing upon our deep and broad real estate, life science, agtech, and technology relationships in order to identify and attract new and leading tenants and to source additional value-creation real estate.

Executive summary

Operating results

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Net income attributable to Alexandria’s common stockholders – diluted:
In millions			$	269.3					$	380.6					$	118.5					$	388.5
Per share			$	1.67					$	2.61					$	0.74					$	2.74
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions			$	338.8					$	282.3					$	663.4					$	545.2
Per share			$	2.10					$	1.93					$	4.15					$	3.84

The operating results shown above include certain items related to corporate-level investing and financing decisions. For additional information, refer to “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” in the “Non-GAAP measures and definitions” section and to the tabular presentation of these items in the “Results of operations” section within this Item 2 for additional information.

Ringing of the New York Stock Exchange Opening Bell to celebrate our 25th anniversary

In celebration of our 25th anniversary as a publicly traded company, we recently rang The Opening Bell® at the New York Stock Exchange to mark this momentous milestone. From our initial public offering on May 27, 1997 through May 27, 2022, we have generated a total stockholder return (“TSR”) of 1,902%, assuming reinvestment of dividends, substantially outperforming the MSCI U.S. REIT Index TSR of 803% and the FTSE Nareit Equity Office Index TSR of 457%.

A REIT industry-leading high-quality roster of over 1,000 tenants with high-quality revenues and cash flows, strong margins, and operational excellence

Percentage of total annual rental revenue in effect from investment-grade or publicly traded large cap tenants									50		%
Sustained strength in tenant collections:
Tenant receivables as of June 30, 2022									$	7.1		million
July tenant rent and receivables collected as of the date of this report									99.9		%
Occupancy of operating properties in North America									94.6		%
Occupancy of operating properties in North America (excluding vacancy at recently acquired properties)									98.4		%	(1)
Operating margin									70		%	(2)
Adjusted EBITDA margin									70		%	(2)
Weighted-average remaining lease term:
All tenants									7.1			years
Top 20 tenants									10.2			years

(1)Excludes 1.6 million RSF, or 3.8%, of vacancy at recently acquired properties representing lease-up opportunities that are expected to provide incremental annual rental revenue. Refer to the “Summary of occupancy percentages in North America” section within this Item 2 for additional information regarding vacancy from recently acquired properties.

(2)For the three months ended June 30, 2022.

Record rental rate increases and continued historic high leasing volume

• For the three months ended June 30, 2022, rental rate increases of 45.4% and 33.9% (cash basis) represent the second- highest and the highest quarterly increases in Company history, respectively.

• During the three months ended June 30, 2022, we executed 2,279,758 RSF of leasing activity, representing the third-highest quarter of leasing volume in Company history; 87% of this leasing activity was generated from a roster of over 1,000 tenants and other relationships.

						June 30, 2022
						Three Months Ended						Six Months Ended
Total leasing activity – RSF						2,279,758						4,743,196
Leasing of development and redevelopment space – RSF						916,436						2,356,132
Lease renewals and re-leasing of space:
RSF (included in total leasing activity above)						1,087,082						1,951,159
Rental rate increases						45.4%						39.0%
Rental rate increases (cash basis)						33.9%						25.2%

Continued strong net operating income and internal growth

• Total revenues:

• $643.8 million, up 26.3%, for the three months ended June 30, 2022, compared to $509.6 million for the three months ended June 30, 2021.

• $1.3 billion, up 27.2%, for the six months ended June 30, 2022, compared to $989.5 million for the six months ended June 30, 2021.

• Net operating income (cash basis) of $1.6 billion for the three months ended June 30, 2022, annualized, increased by $315.5 million, or 24.3%, compared to the three months ended June 30, 2021, annualized.

• 97% of our leases contain contractual annual rent escalations approximating 3%.

• Same property net operating income increases:

• 7.5% and 10.2% (cash basis) for the three months ended June 30, 2022, compared to the three months ended June 30, 2021, representing the second- and third-highest increases in the past 10 years, respectively.

• 7.7% and 8.6% (cash basis) for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

Strong valuations for partial interest sale and dispositions

During the three months ended June 30, 2022, we completed a partial interest sale and dispositions aggregating $548.7 million, including:

• Sale of a 70% interest in 300 Third Street in our Cambridge/Inner Suburbs submarket for a sales price of $166.5 million, or $1,802 per RSF, representing capitalization rates of 4.6% and 4.3% (cash basis).

• Sale of 12 properties in our Route 128 and Route 495 suburban submarkets of Greater Boston for an aggregate sales price of $334.4 million, or $542 per RSF, representing a capitalization rate (cash basis) of 5.1%.

Strong and flexible balance sheet with significant liquidity as of June 30, 2022

• Investment-grade credit ratings ranked in the top 10% among all publicly traded U.S. REITs.

• Net debt and preferred stock to Adjusted EBITDA of 5.5x and fixed-charge coverage ratio of 5.1x for the three months ended June 30, 2022, annualized.

• Total debt and preferred stock to gross assets of 28%.

• 98.3% of our debt has a fixed rate.

• 13.6 years weighted-average remaining term of debt.

• $5.5 billion of liquidity.

Continued high demand for Alexandria’s brand drives visibility for future growth aggregating $665 million of incremental annual rental revenue

Our highly leased value-creation pipeline of current and key near-term projects that are under construction or that will commence construction in the next six quarters is expected to generate greater than $665 million of incremental annual rental revenue, primarily commencing from the third quarter of 2022 through the second quarter of 2025.

• 7.8 million RSF of our value-creation projects, which are 78% leased/negotiating, are either under construction or expected to commence construction in the next six quarters.

Continued dividend strategy to share growth in cash flows with stockholders

Common stock dividend declared for the three months ended June 30, 2022 was $1.18 per common share, aggregating $4.60 per common share for the twelve months ended June 30, 2022, up 24 cents, or 6%, over the twelve months ended June 30, 2021. Our FFO payout ratio of 56% for the three months ended June 30, 2022 allows us to continue to share growth in cash flows from operating activities with our stockholders while also retaining a significant portion for reinvestment.

Seventh overall Nareit Investor CARE Award winner

We received the 2022 Nareit Investor CARE (Communications and Reporting Excellence) Silver Award in the Large Cap Equity REIT category for superior shareholder communications and reporting. This represents our fifth consecutive and seventh overall Nareit Investor CARE Award since 2015, demonstrating consistency in delivering best-in-class transparency, quality, and efficiency in communications and reporting to the investment community.

External growth and investments in real estate

Delivery and commencement of value-creation projects

• During the three months ended June 30, 2022, we placed into service development and redevelopment projects aggregating 375,394 RSF across multiple submarkets.

• 80% of construction costs related to active development and redevelopment projects aggregating 5.9 million RSF are under a guaranteed maximum price (“GMP”) contract or other fixed contracts. Our budgets also include construction cost contingencies in GMP contracts plus additional landlord contingencies that generally range between 3% and 5%.

• Annual net operating income (cash basis) is expected to increase by $39 million upon the burn-off of initial free rent from recently delivered projects.

*•*During the three months ended June 30, 2022, we commenced construction on six value-creation projects aggregating 917,599 RSF, including the following development projects:

• 320,809 RSF, 36% leased, at 99 Coolidge Avenue in our Cambridge/Inner Suburbs submarket;

• 248,018 RSF, 85% leased, at 500 North Beacon Street and 4 Kingsbury Avenue in our Cambridge/Inner Suburbs submarket;

• 90,000 RSF, 29% leased, at 9808 Medical Center Drive in our Rockville submarket; and

• 88,038 RSF, 100% leased, at our expansion at 6040 George Watts Hill Drive in our Research Triangle submarket.

*•*As of June 30, 2022, our highly leased value-creation pipeline of current and key near-term projects that are under construction or that will commence construction in the next six quarters aggregates 7.8 million RSF and is 78% leased/negotiating.

Value-creation pipeline of new Class A development and redevelopment projects as a percentage of gross assets						June 30, 2022
Under construction projects 75% leased/negotiating									10%
Pre-leased/negotiating near-term projects expected to commence construction in the next six quarters 89% leased/negotiating									1%
Income-producing/potential cash flows/covered land play(1)									8%
Land									2%

(1)Includes projects that have existing buildings that are generating or can generate operating cash flows. Also includes development rights associated with existing operating campuses.

Alexandria is at the vanguard of innovation for a high-quality roster of over 1,000 tenants, with a focus on accommodating their current needs and providing them with a path for future growth

• Reduced the upper end of our range of 2022 guidance for acquisitions by $750 million to a range from $2.6 billion to $2.8 billion.

• During the three months ended June 30, 2022, we completed acquisitions in our key life science cluster submarkets aggregating 1.1 million RSF of future development and redevelopment opportunities for an aggregate purchase price of $280.1 million.

Balance sheet management

Key metrics as of June 30, 2022

• $33.7 billion in total market capitalization.

• $23.4 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.

• No debt maturing prior to 2025.

• 13.6 years weighted-average remaining term of debt.

						June 30, 2022															Goal for Fourth Quarter of 2022, Annualized
						Quarter Annualized									Trailing 12 Months
Net debt and preferred stock to Adjusted EBITDA						5.5x									5.9x						Less than or equal to 5.1x
Fixed-charge coverage ratio						5.1x									5.1x						Greater than or equal to 5.1x

Key capital events

*•*During the three months ended June 30, 2022, we entered into new forward equity sales agreements aggregating $403.4 million to sell 2.4 million shares under our ATM program at an average price of $169.38 per share (before underwriting discounts). As of June 30, 2022, the remaining aggregate amount available under our ATM program for future sales of common stock was $246.6 million.

*•*During the three months ended June 30, 2022, we did not issue shares to settle our outstanding forward equity agreements. We expect to issue an aggregate of 9.0 million shares at an average price of $187.91 per share to settle all our outstanding forward equity sales agreements and receive net proceeds of approximately $1.7 billion in the second half of 2022.

• In April 2022, we repaid two secured notes payable aggregating $195.0 million due in 2024 with an effective interest rate of 3.40%. As a result, we recognized a loss on early extinguishment of debt of $3.3 million, including a prepayment penalty and the write-off of unamortized fees.

Investments

• As of June 30, 2022:

• Our investments aggregated $1.7 billion.

• Unrealized gains presented in our consolidated balance sheets were $459.8 million, comprising gross unrealized gains and losses aggregating $565.5 million and $105.7 million, respectively.

• Investment loss of $39.5 million, presented in our consolidated statements of operations, consisted of $28.6 million of realized gains and $68.1 million of unrealized losses/changes in fair value.

• Investment loss of $279.8 million for the six months ended June 30, 2022 included $51.8 million in realized gains and $331.6 million in unrealized losses (due to changes in fair value).

Subsequent events

• On July 1, 2022, Stephen A. Richardson, our Co-Chief Executive Officer, tendered his resignation from all of his positions with the Company and its subsidiaries, effective July 31, 2022, and notified the Company of his intent to retire from full-time employment and his professional career for family and personal reasons.

Industry and ESG leadership: catalyzing and leading the way for positive change to benefit human health and society

• In June 2022, we released our 2021 ESG Report, which highlights our longstanding ESG leadership. The report details our efforts to advance our ESG impact, including by driving high-performance building design and operations to reduce carbon emissions, mitigating climate-related risk in our real estate portfolio, and investing in and providing essential infrastructure for sustainable agrifoodtech companies. It also showcases Alexandria’s comprehensive efforts to catalyze the health, wellness, safety, and productivity of our employees, tenants, local communities, and the world through the built environment and beyond, including through our visionary social responsibility endeavors. Notable initiatives presented in the report that highlight our innovative approach include:

• Furthering the development of our approach to physical and transitional climate-related risk by initiating a process to assess and understand potential physical risk and pathways to mitigate and adapt to climate change, as well as preparing for the transition to a low-carbon economy and continuing to develop science-based targets;

• Implementing innovative solutions to minimize fossil fuel use in our state-of-the-art laboratory development projects, such as at 325 Binney Street, which will harness geothermal energy to target a LEED Zero Energy certification and a 92% reduction in fossil fuel use as a key component of its design to be the most sustainable laboratory building in Cambridge; at 751 Gateway Boulevard, which is pursuing electrification and is tracking to be the first all-electric laboratory building in South San Francisco; and at the Alexandria Center® for Life Science – South Lake Union mega campus in Seattle, where the Company is incorporating an innovative wastewater heat recovery system; and

• Increasing our investment in renewable electricity to mitigate carbon emissions in our existing asset base, including through a large-scale solar power purchase agreement that will significantly increase the supply of renewable electricity to our Greater Boston market starting in 2024.

(1)Source: Barron’s, “10 Real Estate Companies That Are Both Greener and More Profitable,” February 19, 2022.

Environmental data for 2021 reflected in the chart above received independent limited assurance from DNV Business Assurance USA, Inc.

(1)2025 environmental goal for Alexandria’s cumulative progress relative to a 2015 baseline on a like-for-like basis for buildings in operation that the company directly manages.

(2)2025 environmental goal for buildings in operation that Alexandria indirectly and directly manages. In alignment with industry best practice, the company reports waste diversion annually; the 2025 goal is to achieve a waste diversion rate of at least 45% by 2025.

(3)Progress toward 2025 goals.

Operating summary

Historical Same Property Net Operating Income Growth									Favorable Lease Structure**(1)**
									Strategic Lease Structure by Owner and Operator of Collaborative Life Science, Agtech, and Technology Campuses
			Increasing cash flows
			Percentage of leases containing annual rent escalations																		97%
			Stable cash flows
			Percentage of triple net leases																		91%
			Lower capex burden
			Percentage of leases providing for the recapture of capital expenditures																		94%
Historical Rental Rate Growth: Renewed/Re-Leased Space									Margins**(2)**
			Operating															Adjusted EBITDA
			70%															70%
Net Debt and Preferred Stock to Adjusted EBITDA**(3)**									Fixed-Charge Coverage Ratio**(3)**

(1)Percentages calculated based on annual rental revenue as of June 30, 2022.

(2)Represents percentages for the three months ended June 30, 2022.

(3)Quarter annualized. Refer to the definitions of “Net debt and preferred stock to Adjusted EBITDA” and “Fixed-charge coverage ratio” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details.

Long-Duration Cash Flows From High-Quality, Diverse, and Innovative Tenants
Investment-Grade or Publicly Traded Large Cap Tenants						Long-Duration Lease Terms
50%						7.1 Years
of ARE’s Total						Weighted-Average
Annual Rental Revenue(1)						Remaining Term(2)
Industry Mix of 1,000+ Tenants
Percentage of ARE’s Annual Rental Revenue(1)

(1)Represents annual rental revenue in effect as of June 30, 2022. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(2)Based on aggregate annual rental revenue in effect as of June 30, 2022. Refer to definition of “Annual rental revenue” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information on our methodology on annual rental revenue for unconsolidated real estate joint ventures.

(3)Represents annual rental revenue currently generated from space that is targeted for a future change in use. The weighted-average remaining term of these leases is 4.2 years.

(4)Our other tenants, aggregating 4.0% of our annual rental revenue, comprise 3.0% of annual rental revenue from technology, professional services, finance, telecommunications, and construction/real estate companies and only 1.0% from retail-related tenants.

High-Quality Cash Flows From High Quality Tenants and Class A Properties in AAA Locations
Industry-Leading Tenant Roster									AAA Locations
86%
of ARE’s Top 20 Tenants Annual Rental Revenue(1) Is From Investment-Grade or Publicly Traded Large Cap Tenants
									Percentage of ARE’s Annual Rental Revenue(2)
Solid Historical Occupancy**(3)**						Occupancy Across Key Locations
96%
Over 10 Years

(1)As of June 30, 2022. Represents the percentage of our annual rental revenue generated by our top 20 tenants that are also investment-grade or publicly traded large cap tenants.

(2)Represents annual rental revenue in effect as of June 30, 2022. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(3)Represents average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of June 30, 2022.

(4)Refer to the “Summary of occupancy percentages in North America” section within this Item 2 for additional information on vacancy at recently acquired properties.

Leasing

The following table summarizes our leasing activity at our properties:

						Three Months Ended																		Six Months Ended															Year Ended
						June 30, 2022																		June 30, 2022															December 31, 2021
						Including Straight-Line Rent									Cash Basis									Including Straight-Line Rent									Cash Basis						Including Straight-Line Rent						Cash Basis
(Dollars per RSF)
Leasing activity:
Renewed/re-leased space(1)
Rental rate changes						45.4%			(2)						33.9%			(2)						39.0%									25.2%						37.9%						22.6%
New rates						$54.34									$52.31									$56.61									$54.47						$59.00						$55.60
Expiring rates						$37.36									$39.07									$40.73									$43.50						$42.80						$45.36
RSF						1,087,082																		1,951,159															4,614,040
Tenant improvements/leasing commissions						$22.54																		$26.83															$41.05
Weighted-average lease term						5.2 years																		4.8 years															6.3 years
Developed/redeveloped/ previously vacant space leased(3)
New rates						$76.69									$68.39									$79.72									$70.20						$78.52						$69.42
RSF						1,192,676																		2,792,037															4,902,261
Weighted-average lease term						12.7 years																		12.9 years															11.2 years
Leasing activity summary (totals):
New rates						$66.03									$60.72									$70.21									$63.73						$69.05						$62.72
RSF						2,279,758																		4,743,196			(4)												9,516,301
Weighted-average lease term						9.1 years																		9.5 years															8.8 years
Lease expirations*(1)*
Expiring rates						$34.82									$36.26									$38.15									$38.30						$41.53						$43.70
RSF						1,572,185																		3,094,767															5,747,192

Leasing activity includes 100% of results for each property in which we have an investment in North America.

(1)Excludes month-to-month leases aggregating 210,038 RSF and 110,180 RSF as of June 30, 2022 and December 31, 2021, respectively.

(2)For the three months ended June 30, 2022, rental rate increases of 45.4% and 33.9% (cash basis) represent the second-highest and the highest quarterly increases in Company history, respectively.

(3)Refer to “New Class A development and redevelopment properties: summary of pipeline” section within this Item 2 for additional details on total project costs.

(4)During the six months ended June 30, 2022, we granted tenant concessions/free rent averaging 2.8 months with respect to the 4,743,196 RSF leased. Approximately 58% of the leases executed during the six months ended June 30, 2022 did not include concessions for free rent.

Summary of contractual lease expirations

The following table summarizes information with respect to the contractual lease expirations at our properties as of June 30, 2022:

Year												RSF												Percentage of Occupied RSF												Annual Rental Revenue (per RSF)(1)												Percentage of Total Annual Rental Revenue
			2022			(2)									987,720												2.6		%										$	51.62											2.6		%
			2023												3,897,615												10.1		%										$	44.39											9.0		%
			2024												3,444,777												8.9		%										$	45.38											8.1		%
			2025												3,488,483												9.0		%										$	48.77											8.8		%
			2026												2,515,497												6.5		%										$	50.94											6.6		%
			2027												2,671,591												6.9		%										$	53.50											7.4		%
			2028												3,782,340												9.8		%										$	49.10											9.6		%
			2029												2,345,066												6.1		%										$	58.28											7.1		%
			2030												2,486,008												6.4		%										$	56.28											7.3		%
			2031												3,034,985												7.9		%										$	52.91											8.3		%
Thereafter															9,987,771												25.8		%										$	48.39											25.2		%

(1)Represents amounts in effect as of June 30, 2022.

(2)Excludes month-to-month leases aggregating 210,038 RSF as of June 30, 2022.

The following tables present information by market with respect to our lease expirations in North America as of June 30, 2022, for the remainder of 2022, and for all of 2023:

						2022 Contractual Lease Expirations (in RSF)																														Annual Rental Revenue (per RSF)(4)
Market						Leased						Negotiating/ Anticipating						Targeted for Development/ Redevelopment(1)						Remaining Expiring Leases(2)						Total(3)
Greater Boston						36,379						—						48,793						118,677						203,849						$	75.06
San Francisco Bay Area						—						74,992						—						60,622						135,614						44.87
New York City						—						—						—						24,303						24,303						N/A
San Diego						165,146						—						34,715						91,376						291,237						47.45
Seattle						—						7,566						50,552						41,087						99,205						13.67
Maryland						34,001						21,241						—						59,988						115,230						22.95
Research Triangle						—						—						—						30,855						30,855						35.48
Texas						65,188						—						—						—						65,188						24.89
Canada						—						14,590						—						—						14,590						34.66
Non-cluster/other markets						—						—						—						7,649						7,649						82.26
Total						300,714						118,389						134,060						434,557						987,720						$	51.62
Percentage of expiring leases						30		%				12		%				14		%				44		%				100		%
						2023 Contractual Lease Expirations (in RSF)																														Annual Rental Revenue (per RSF)(4)
Market						Leased						Negotiating/ Anticipating						Targeted for Development/ Redevelopment						Remaining Expiring Leases						Total
Greater Boston						110,943						80,506						323,110						637,785						1,152,344						$	57.53
San Francisco Bay Area						15,711						160,622						250,000						338,410						764,743						59.11
New York City						—						—						—						85,055						85,055						N/A
San Diego						6,619						10,563						269,048						699,206						985,436						26.62
Seattle						—						—						110,885						266,752						377,637						25.19
Maryland						—						74,054						—						218,233						292,287						28.18
Research Triangle						—						81,956						—						126,941						208,897						32.40
Texas						—						—						—						—						—						—
Canada						—						13,321						—						—						13,321						29.99
Non-cluster/other markets						—						—						—						17,895						17,895						68.01
Total						133,273						421,022						953,043						2,390,277						3,897,615						$	44.39
Percentage of expiring leases						3		%				11		%				24		%				62		%				100		%

(1)Represents RSF targeted for development or redevelopment upon expiration of existing in-place leases primarily related to recently acquired properties with an average contractual lease expiration date of September 29, 2022 and January 30, 2023 for 2022 and 2023, respectively, weighted by annual rental revenue. Refer to “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details on value-creation square feet currently included in rental properties.

(2)The largest remaining contractual expiration is 73,273 RSF in our Cambridge/Inner Suburbs submarket.

(3)Excludes month-to-month leases aggregating 210,038 RSF as of June 30, 2022.

(4)Represents amounts in effect as of June 30, 2022.

Top 20 tenants

86% of Top 20 Annual Rental Revenue From Investment-Grade

or Publicly Traded Large Cap Tenants**(1)**

Our properties are leased to a high-quality and diverse group of tenants, with no individual tenant accounting for more than 3.5% of our annual rental revenue in effect as of June 30, 2022. The following table sets forth information regarding leases with our 20 largest tenants in North America based upon annual rental revenue in effect as of June 30, 2022 (dollars in thousands, except average market cap):

												Remaining Lease Term(1) (in Years)															Aggregate RSF									Annual Rental Revenue(1)												Percentage of Aggregate Annual Rental Revenue (1)									Investment-Grade Credit Ratings												Average Market Cap(1) (in billions)
						Tenant																								Moody’s						S&P
1						Bristol-Myers Squibb Company									6.4												919,292									$			67,575									3.5		%							A2						A+						$	146.4
2						Eli Lilly and Company									7.0												733,781												48,836									2.5									A2						A+						$	252.5
3						Moderna, Inc.									15.1												878,933												48,777									2.5									—						—						$	98.2
4						Sanofi									6.3												490,154												42,284									2.2									A1						AA						$	129.6
5						Takeda Pharmaceutical Company Limited									7.5												549,760												37,399									1.9									Baa2						BBB+						$	47.3
6						Illumina, Inc.									8.1												891,495												36,196									1.9									Baa3						BBB						$	57.0
7						2seventy bio, Inc.(2)									11.2												312,805												33,617									1.7									—						—						$	0.5
8						Novartis AG									6.1												447,831												30,582									1.6									A1						AA-						$	211.3
9						TIBCO Software Inc.									4.7			(3)									292,013												28,537									1.5									—						—						$	—
10						Uber Technologies, Inc.									60.2			(4)									1,009,188												27,677									1.4									—						—						$	71.9
11						Roche									7.0												416,833												26,541									1.4									Aa3						AA						$	326.1
12						Merck & Co., Inc.									10.4												339,344												21,889									1.1									A1						A+						$	204.3
13						Maxar Technologies									3.5			(5)									478,000												21,803									1.1									—						—						$	2.2
14						Massachusetts Institute of Technology									6.5												257,626												21,165									1.1									Aaa						AAA						$	—
15						The Children's Hospital Corporation									14.3												269,816												20,066									1.0									Aa2						AA						$	—
16						New York University									9.4												203,500												19,241									1.0									Aa2						AA-						$	—
17						Pfizer Inc.									3.0												416,996												17,742									0.9									A2						A+						$	276.2
18						Apple Inc.									2.9												604,382												17,512									0.9									Aaa						AA+						$	2,560.6
19						United States Government									7.6												315,908												17,491									0.9									Aaa						AA+						$	—
20						Alphabet Inc.									4.7												354,304												16,985									0.9									Aa2						AA+						$	1,775.6
						Total/weighted-average									10.2			(4)									10,181,961									$			601,915									31.0		%

Annual rental revenue and RSF include 100% of each property managed by us in North America.

(1)Based on aggregate annual rental revenue in effect as of June 30, 2022. Represents the percentage of our annual rental revenue generated by our top 20 tenants that are also investment-grade or publicly traded large cap tenants. Refer to the definitions of “Annual rental revenue” and “Investment-grade or publicly traded large cap tenants” in the “Non-GAAP measures and definitions” section within this Item 2 for our methodologies on annual rental revenue from unconsolidated real estate joint ventures and average market capitalization, respectively.

(2)Represents two leases in our Greater Boston and Seattle markets with in-place cash rents that are 5%–10% below current market. As of March 31, 2022, 2seventy bio, Inc. held $270.9 million of cash and cash equivalents.

(3)Represents the remaining lease term at four recently acquired properties with future redevelopment and development opportunities. The leases with this tenant were in place when we acquired the properties during the three months ended March 31, 2022.

(4)Includes (i) ground leases for land at 1455 and 1515 Third Street (two buildings aggregating 422,980 RSF) and (ii) leases at 1655 and 1725 Third Street (two buildings aggregating 586,208 RSF) owned by our unconsolidated real estate joint venture in which we have an ownership interest of 10%. Annual rental revenue is presented using 100% of the annual rental revenue from our consolidated properties and our share of annual rental revenue from our unconsolidated real estate joint ventures. Refer to footnote 1 for additional details. Excluding the ground leases, the weighted-average remaining lease term for our top 20 tenants was 7.8 years as of June 30, 2022.

(5)Represents the remaining lease term at two acquired properties with future redevelopment and development opportunities. The leases with this tenant were in place when we acquired the properties in 2019.

Locations of properties

The locations of our properties are diversified among a number of life science, agtech, and technology cluster markets. The following table sets forth the total RSF, number of properties, and annual rental revenue in effect as of June 30, 2022 in each of our markets in North America (dollars in thousands, except per RSF amounts):

						RSF																														Number of Properties						Annual Rental Revenue
Market						Operating						Development						Redevelopment						Total						% of Total									Total						% of Total						Per RSF
Greater Boston						10,654,420						1,887,038						1,300,281						13,841,739						29		%				85						$	661,389					34		%				$	65.33
San Francisco Bay Area						8,678,996						230,592						300,010						9,209,598						20						72						477,206						25						61.26
New York City						1,204,461						—						65,558						1,270,019						3						5						96,228						5						82.14
San Diego						8,000,319						229,094						—						8,229,413						18						102						331,296						17						42.98
Seattle						2,813,803						311,631						213,976						3,339,410						7						46						108,333						6						39.60
Maryland						3,427,753						282,000						122,856						3,832,609						8						50						111,204						6						33.79
Research Triangle						3,550,170						329,718						376,871						4,256,759						9						42						94,291						5						28.41
Texas						1,668,718						—						201,499						1,870,217						4						14						36,884						1						28.20
Canada						614,028						—						—						614,028						1						7						11,190						—						23.74
Non-cluster/other markets						412,128						—						—						412,128						1						12						14,415						1						45.58
Properties held for sale						58,733						—						—						58,733						—						1						428						—						N/A
North America						41,083,529						3,270,073						2,581,051						46,934,653						100		%				436						$	1,942,864					100		%				$	50.80
												5,851,124

Summary of occupancy percentages in North America

The following table sets forth the occupancy percentages for our operating properties and our operating and redevelopment properties in each of our North America markets, excluding properties held for sale, as of the following dates:

						Operating Properties																		Operating and Redevelopment Properties
Market						6/30/22						3/31/22						6/30/21						6/30/22						3/31/22						6/30/21
Greater Boston						95.0		%	(1)			95.4		%				95.5		%				84.7		%				85.0		%				91.0		%
San Francisco Bay Area						95.8						95.6						94.0						92.6						92.4						92.9
New York City						97.3			(2)			98.4						99.4						92.2						91.9						90.1
San Diego						96.3						94.2						93.8						96.3						92.7						92.3
Seattle						97.2						97.9						97.6						90.4						91.0						90.2
Maryland						97.6			(3)			100.0						98.9						94.2						96.4						90.3
Research Triangle						93.5						93.6						92.8						84.5						85.5						84.1
Texas						78.4						N/A						N/A						69.9						N/A						N/A
Subtotal						95.1						95.7						95.2						89.3						89.8						90.9
Canada						76.8						76.5						77.0						76.8						76.5						77.0
Non-cluster/other markets						76.7						80.4						46.0						76.7						75.7						46.0
North America						94.6		%	(4)			94.7		%				94.3		%				89.0		%				88.9		%				90.1		%

(1)Decline in occupancy primarily related to temporary vacancy of 40,282 RSF at one property in our Cambridge submarket.

(2)Decline in occupancy related to temporary vacancy of 13,298 RSF at 450 E. 29th Street. This space is leased with occupancy to commence in the third quarter of 2022.

(3)Decline in occupancy primarily related to temporary vacancy at one property in our Alexandria Technology Center® – Gaithersburg II campus. This space is leased with occupancy to commence in first quarter of 2023.

(4)Includes 1.6 million RSF, or 3.8%, of vacancy at recently acquired properties (noted below) representing lease-up opportunities that are expected to generate incremental annual rental revenue. Approximately 34% of the vacant 1.6 million RSF is currently leased/negotiating. Additionally, approximately 23% of the vacant 1.6 million RSF represents spaces, spread across multiple recently acquired properties, that are expected to be converted to laboratory/office space in the future. We expect to deliver 19% of the 1.6 million RSF over the next two quarters. Excluding recently acquired vacancies, occupancy of operating properties in North America was 98.4% as of June 30, 2022. The following table provides vacancy detail for our recent acquisitions:

												As of June 30, 2022																		Percentage of Vacancy Leased/Negotiating RSF
												Vacant RSF						Operating Properties Occupancy Impact
Property						Market/Submarket									Region						North America
Intersection Campus						Texas/Austin						159,638						9.6		%				0.4		%				100		%
601 and 611 Gateway Boulevard						San Francisco Bay Area/South San Francisco						153,596						1.8		%				0.4						46
Alexandria Center® for Life Science – Durham						Research Triangle/Research Triangle						128,387						3.6		%				0.3						53
275 Grove Street						Greater Boston/Route 128						124,240						1.2		%				0.3						—			(5)
Alexandria Center® for Life Science – Fenway						Greater Boston/Fenway						89,458						0.8		%				0.2						20
Other acquisitions						Various						909,833						N/A						2.2						24
												1,565,152												3.8		%				34		%

(5)We are evaluating options to develop or redevelop this space for laboratory space in the future.

Investments in real estate

A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new Class A properties located in collaborative life science, agtech, and technology campuses in AAA innovation clusters. These projects are focused on providing high-quality, generic, and reusable spaces that meet the real estate requirements of, and are reusable by, a wide range of tenants. Upon completion, each value-creation project is expected to generate a significant increase in rental income, net operating income, and cash flows. Our development and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. Our pre-construction activities are undertaken in order to prepare the property for its intended use and include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements.

Our investments in real estate consisted of the following as of June 30, 2022 (dollars in thousands):

												Development and Redevelopment
						Operating						Under Construction						Near Term						Intermediate Term						Future						Subtotal						Total
Investments in real estate
Gross book value as of June 30, 2022(1)						$	24,153,058					$	3,746,801					$	1,578,141					$	687,091					$	1,831,371					$	7,843,404					$	31,996,462
Square footage
Operating						41,083,529						—						—						—						—						—						41,083,529
New Class A development and redevelopment properties						—						5,851,124						6,984,447			(2)			3,920,041						20,419,252						37,174,864						37,174,864
Value-creation square feet currently included in rental properties(3)						—						—						(944,983)						(28,535)						(3,197,239)						(4,170,757)						(4,170,757)
Total square footage						41,083,529						5,851,124						6,039,464						3,891,506						17,222,013						33,004,107						74,087,636

(1)Balances exclude accumulated depreciation and our share of the cost basis associated with our properties held by our unconsolidated real estate joint ventures, which is classified as investments in unconsolidated real estate joint ventures in our consolidated balance sheets.

(2)Includes 2.0 million RSF currently 89% leased/negotiating and expected to commence construction in the next six quarters. Refer to “New Class A development and redevelopment properties: current projects” within this Item 2 for additional details.

(3)Refer to “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details on value-creation square feet currently included in rental properties.

Acquisitions

Our real estate asset acquisitions for the six months ended June 30, 2022 consisted of the following (dollars in thousands):

Property						Submarket/Market						Date of Purchase						Number of Properties						Operating Occupancy									Square Footage																																				Purchase Price
												Acquisitions With Development and Redevelopment Opportunities(1)
												Future Development												Operating With Future Development/ Redevelopment						Operating(2)						Operating						Total(3)
Six months ended June 30, 2022:
One Hampshire Street(4)						Cambridge/Inner Suburbs/Greater Boston						6/23/22						1						100%									—												88,591						—						—						88,591																								$			140,000
421 Park Drive						Fenway/Greater Boston						1/13/22						—						N/A									202,997			(5)									—						—						—						202,997																											81,119			(5)
225 and 235 Presidential Way						Route 128/Greater Boston						1/28/22						2						100									—												440,130						—						—						440,130																											124,673
1150 El Camino Real						South San Francisco/San Francisco Bay Area						2/8/22						1						99									610,000												431,940						70,000						—						680,000																											118,000
3301, 3303, 3305, and 3307 Hillview Avenue						Greater Stanford/ San Francisco Bay Area						1/6/22						4						100									—												292,013						—						—						292,013																											446,000
Costa Verde by Alexandria						University Town Center/ San Diego						1/11/22						2						100									537,000												8,730						—						—						545,730																											125,000
800 Mercer Street (60% interest in consolidated JV)						Lake Union/Seattle						3/18/22						—						N/A									869,000												—						—						—						869,000																											87,608
Alexandria Center® for Life Science – Durham						Research Triangle/Research Triangle						1/11/22						—						N/A									1,175,000												—						—						—						1,175,000																											99,428
104 and 108/110/112/114 TW Alexander Drive, 2752 East NC Highway 54, and 10 South Triangle Drive(6)						Research Triangle/Research Triangle						1/6/22						4						89									750,000												69,485						—						—						819,485																											80,000
Intersection Campus						Texas						2/18/22						9						81									—												998,099						—						—						998,099																											400,400
Other						Various						Various						9						90									1,342,994												537,654						381,760						—						2,262,408																											418,635
																		32						91		%							5,486,991												2,866,642						451,760						—						8,373,453																								$			2,120,863

(1)We expect to provide total estimated costs and related yields for development and redevelopment projects in the future, subsequent to the commencement of construction.

(2)Represents the operating component of our value-creation acquisitions that is not expected to undergo future development or redevelopment.

(3)Represents total square footage upon completion of development or redevelopment of a new Class A property. Square footage presented includes RSF of buildings currently in operations with future development or redevelopment opportunities. We intend to demolish and develop or redevelop the existing properties upon expiration of the existing in-place leases. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(4)Represents the acquisition of a condominium interest in two floors of a seven-story building.

(5)Represents the incremental purchase price related to the achievement of additional entitlement rights aggregating 202,997 SF at our Alexandria Center® for Life Science – Fenway mega campus.

(6)Includes the acquisition of fee simple interests in the land underlying our recently acquired 108/110/112/114 TW Alexander Drive buildings, which were previously subject to ground leases.

Dispositions and sales of partial interest

Our completed dispositions of and sales of partial interests in real estate assets during the six months ended June 30, 2022 consisted of the following (dollars in thousands, except for sales price per RSF):

																																										Capitalization Rate (Cash Basis)																					Sales Price per RSF						Gain or Consideration in Excess of Book Value
Property						Submarket/Market						Date of Sale						Interest Sold									RSF						Capitalization Rate												Sales Price
Six months ended June 30, 2022:
100 Binney Street						Cambridge/Inner Suburbs/Greater Boston						3/30/22						70		%							432,931						3.6		%							3.5		%							$	713,228								(1)			$	2,353					$	413,615		(2)
300 Third Street						Cambridge/Inner Suburbs/Greater Boston						6/27/22						70		%							131,963						4.6		%							4.3		%							166,485									(1)			$	1,802					113,020			(2)
Alexandria Park at 128, 285 Bear Hill Road, 111 and 130 Forbes Boulevard, and 20 Walkup Drive						Route 128 and Route 495/Greater Boston						6/8/22						100		%							617,043						5.1		%							5.1		%							334,397												$	542					202,325
Other																																	N/A									N/A									47,800												N/A						11,895
																																																			$	1,261,910																	$	740,855

(1)Represents the contractual sales price for the percentage interest of the property sold by us.

(2)We retained control over the newly formed real estate joint venture and therefore continue to consolidate this property. We accounted for the difference between the consideration received and the book value of the interest sold as an equity transaction, with no gain or loss recognized in earnings.

New Class A development and redevelopment properties

Demand for our value-creation development and redevelopment projects consisting of high-quality office/laboratory space, and for our continued operational excellence at our world-class and sophisticated laboratory facilities, has translated into record leasing activity.

Projects Either Under Construction or Expected to Commence Construction in the Next Six Quarters(1)
>$665 Million Projected Incremental Annual Rental Revenue Primarily Commencing From the Third Quarter of 2022 Through the Second Quarter of 2025
7.8 million RSF**(2)**
78% Leased/Negotiating

As of June 30, 2022.

(1)We may also commence additional projects in this time frame, subject to market conditions.

(2)Includes 5.9 million RSF under construction that is 75% leased/negotiating and 2.0 million RSF expected to commence construction in the next six quarters that is 89% leased/negotiating.

New Class A development and redevelopment properties: recent deliveries

The Arsenal on the Charles						201 Haskins Way						825 and 835 Industrial Road						3160 Porter Drive
Greater Boston/ Cambridge/Inner Suburbs						San Francisco Bay Area/ South San Francisco						San Francisco Bay Area/ Greater Stanford						San Francisco Bay Area/ Greater Stanford
287,570 RSF						323,190 RSF						526,129 RSF						92,300 RSF
100% Occupancy						100% Occupancy						100% Occupancy						83% Occupancy

30-02 48th Avenue						3115 Merryfield Row						10055 Barnes Canyon Road						5505 Morehouse Drive
New York City/New York City						San Diego/Torrey Pines						San Diego/Sorrento Mesa						San Diego/Sorrento Mesa
71,629 RSF						146,456 RSF						110,454 RSF						79,945 RSF
100% Occupancy						93% Occupancy						100% Occupancy						100% Occupancy

New Class A development and redevelopment properties: recent deliveries (continued)

						9601 and 9603 Medical Center Drive						9950 Medical Center Drive						20400 Century Boulevard
						Maryland/Rockville						Maryland/Rockville						Maryland/Gaithersburg
						17,378 RSF						84,264 RSF						36,227 RSF
						100% Occupancy						100% Occupancy						100% Occupancy

						2400 Ellis Road, 40 and 41 Moore Drive, and 14 TW Alexander Drive**(1)**						5 and 9 Laboratory Drive**(2)**						8 and 10 Davis Drive**(3)**
						Research Triangle/Research Triangle						Research Triangle/Research Triangle						Research Triangle/Research Triangle
						326,445 RSF						278,720 RSF						250,000 RSF
						100% Occupancy						100% Occupancy						94% Occupancy

(1)Image represents 2400 Ellis Road in our Alexandria Center® for Life Science – Durham mega campus.

(2)Image represents 9 Laboratory Drive in our Alexandria Center® for AgTech campus.

(3)Image represents 10 Davis Drive in our Alexandria Center® for Advanced Technologies mega campus.

New Class A development and redevelopment properties: recent deliveries (continued)

The following table presents value-creation development and redevelopment of new Class A properties placed into service during the three months ended June 30, 2022 (dollars in thousands):

Property/Market/Submarket						2Q22 Delivery Date**(1)**						Our Ownership Interest						RSF Placed in Service																								Occupancy Percentage**(3)**												Total Project												Unlevered Yields
									Prior to 1/1/22																														1Q22						2Q22**(2)**																		Total												Initial Stabilized												Initial Stabilized (Cash Basis)
																																										RSF						Investment
Development projects
201 Haskins Way/San Francisco Bay Area/South San Francisco						N/A						100%						270,879																														52,311						—																		323,190									100%									323,190						$	367,000								6.3		%										6.0		%
825 and 835 Industrial Road/San Francisco Bay Area/Greater Stanford						N/A						100%						476,211																														49,918						—																		526,129									100%									526,129						631,000									6.7												6.5
3115 Merryfield Row/San Diego/Torrey Pines						N/A						100%						—																														146,456						—																		146,456									93%									146,456						150,000									6.3												6.2
9804 Medical Center Drive/Maryland/Rockville						N/A						100%						—																														—																								—									100%
10055 Barnes Canyon Road/San Diego/Sorrento Mesa						5/11/22						50%						—																														—						110,454																		110,454									100%									195,435						181,000									7.2												6.6
9950 Medical Center Drive/Maryland/Rockville						N/A						100%						—																														84,264						—																		84,264									100%									84,264						57,000									8.9												7.8
5 and 9 Laboratory Drive/Research Triangle/Research Triangle						N/A						100%						267,509																														11,211						—																		278,720									100%									340,400						216,000									7.2												7.1
8 and 10 Davis Drive/Research Triangle/Research Triangle						6/21/22						100%						65,247																														44,980						139,773																		250,000									94%									250,000						159,000									7.6												7.3
Redevelopment projects
The Arsenal on the Charles/Greater Boston/Cambridge/Inner Suburbs						5/7/22						100%						137,111																														99,796						50,663																		287,570									100%									872,665						831,000									6.3												5.5
3160 Porter Drive/San Francisco Bay Area/Greater Stanford						N/A						100%						57,696																														34,604						—																		92,300									83%									92,300						117,000									4.6												4.6
30-02 48th Avenue/New York City/New York City						5/16/22						100%						41,848																														11,092						18,689																		71,629									100%									179,100						224,000									5.8												5.8
5505 Morehouse Drive/San Diego/Sorrento Mesa						4/27/22						100%						28,324																														—						51,621																		79,945									100%									79,945						68,000									7.1												7.2
9601 and 9603 Medical Center Drive/Maryland/Rockville						N/A						100%						17,378																														—						—																		17,378									100%									95,911						54,000									8.4												7.1
20400 Century Boulevard/Maryland/Gaithersburg						6/1/22						100%						—																														32,033						4,194																		36,227									100%									80,550						35,000									8.5												8.6
2400 Ellis Road, 40 and 41 Moore Drive, and 14 TW Alexander Drive/Research Triangle/Research Triangle						N/A						100%						326,445																														—						—																		326,445									100%									703,316						337,000									7.5												6.7
Total						5/18/22												1,688,648																														566,665						375,394																		2,630,707																		3,969,661						$	3,427,000								6.7		%										6.2		%

(1)Represents the average delivery date for deliveries that occurred during the three months ended June 30, 2022, weighted by annual rental revenue.

(2)We expect the development and redevelopment RSF placed in service during the three months ended June 30, 2022 to generate initial annual net operating income of approximately $21 million for the twelve months following delivery.

(3)Relates to total operating RSF placed in service as of the most recent delivery.

New Class A development and redevelopment properties: current projects

325 Binney Street						One Rogers Street						99 Coolidge Avenue						500 North Beacon Street and 4 Kingsbury Avenue						The Arsenal on the Charles
Greater Boston/ Cambridge/Inner Suburbs						Greater Boston/ Cambridge/Inner Suburbs						Greater Boston/ Cambridge/Inner Suburbs						Greater Boston/ Cambridge/Inner Suburbs						Greater Boston/ Cambridge/Inner Suburbs
462,100 RSF						403,892 RSF						320,809 RSF						248,018 RSF						100,108 RSF
100% Leased						100% Leased						36% Leased/Negotiating						85% Leased/Negotiating						95% Leased/Negotiating

201 Brookline Avenue						15 Necco Street						40, 50, and 60 Sylvan Road						840 Winter Street						651 Gateway Boulevard
Greater Boston/Fenway						Greater Boston/ Seaport Innovation District						Greater Boston/Route 128						Greater Boston/Route 128						San Francisco Bay Area/ South San Francisco
510,116 RSF						345,995 RSF						202,428 RSF						139,984 RSF						300,010 RSF
96% Leased/Negotiating						97% Leased/Negotiating						61% Leased/Negotiating						100% Leased						7% Leased/Negotiating

New Class A development and redevelopment properties: current projects (continued)

751 Gateway Boulevard						30-02 48th Avenue						10055 Barnes Canyon Road												1150 Eastlake Avenue East						9810 Darnestown Road
San Francisco Bay Area/ South San Francisco						New York City/New York City						San Diego/Sorrento Mesa												Seattle/Lake Union						Maryland/Rockville
230,592 RSF						65,558 RSF						84,981 RSF												311,631 RSF						192,000 RSF
100% Leased						72% Leased/Negotiating						100% Leased												89% Leased/Negotiating						100% Leased

9808 Medical Center Drive						9601 and 9603 Medical Center Drive						2400 Ellis Road, 40 and 41 Moore Drive, and 14 TW Alexander Drive**(1)**						4 Davis Drive												6040 George Watts Hill Drive, Phase II
Maryland/Rockville						Maryland/Rockville						Research Triangle/Research Triangle						Research Triangle/Research Triangle												Research Triangle/Research Triangle
90,000 RSF						78,533 RSF						376,871 RSF						180,000 RSF												88,038 RSF
29% Leased/Negotiating						100% Leased						86% Leased/Negotiating						—% Leased/Negotiating												100% Leased

(1)Image represents 14 TW Alexander Drive in our Alexandria Center® for Life Science – Durham mega campus.

New Class A development and redevelopment properties: current projects (continued)

The following tables set forth a summary of our new Class A development and redevelopment properties under construction and pre-leased/negotiating near-term projects as of June 30, 2022 (dollars in thousands):

Market Property/Submarket												Square Footage																		Percentage																		Occupancy**(1)**
			Dev/Redev						In Service						CIP						Total						Leased									Leased/Negotiating									Initial												Stabilized
Under construction
Greater Boston
325 Binney Street/Cambridge/Inner Suburbs						Dev						—						462,100						462,100						100		%							100		%										2023									2024
One Rogers Street/Cambridge/Inner Suburbs						Redev						4,367						403,892						408,259						100									100												2023									2023
99 Coolidge Avenue/Cambridge/Inner Suburbs						Dev						—						320,809						320,809						36									36												2024									2025
500 North Beacon Street and 4 Kingsbury Avenue/Cambridge/Inner Suburbs						Dev						—						248,018						248,018						85									85												2024									2025
The Arsenal on the Charles/Cambridge/Inner Suburbs						Redev						772,557						100,108						872,665						95									95												3Q21									2022
201 Brookline Avenue/Fenway						Dev						—						510,116						510,116						96									96												2022									2023
15 Necco Street/Seaport Innovation District						Dev						—						345,995						345,995						97									97												2024									2024
40, 50, and 60 Sylvan Road/Route 128						Redev						312,845						202,428						515,273						61									61												2023									2024
840 Winter Street/Route 128						Redev						28,230						139,984						168,214						100									100												2024									2024
Other						Redev						—						453,869						453,869						—									—									2023												2025
San Francisco Bay Area
651 Gateway Boulevard/South San Francisco						Redev						—						300,010						300,010						—									7			(2)									2023									2025
751 Gateway Boulevard/South San Francisco						Dev						—						230,592						230,592						100									100												2023									2023
New York City
30-02 48th Avenue/New York City						Redev						113,542						65,558						179,100						67									72									4Q20												2022
San Diego
10055 Barnes Canyon Road/Sorrento Mesa						Dev						110,454						84,981						195,435						100									100												2Q22									2022
10102 Hoyt Park Drive/Sorrento Mesa						Dev						—						144,113						144,113						100									100												2023									2023
Seattle
1150 Eastlake Avenue East/Lake Union						Dev						—						311,631						311,631						73									89												2023									2024
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell						Redev						246,647						213,976						460,623						70									70												2022									2023
Maryland
9810 Darnestown Road/Rockville						Dev						—						192,000						192,000						100									100												2024									2024
9808 Medical Center Drive/Rockville						Dev						—						90,000						90,000						29									29												2023									2024
9601 and 9603 Medical Center Drive/Rockville						Redev						17,378						78,533						95,911						100									100												4Q21									2023
20400 Century Boulevard/Gaithersburg						Redev						36,227						44,323						80,550						77									100												1Q22									2023
Research Triangle
2400 Ellis Road, 40 and 41 Moore Drive, and 14 TW Alexander Drive/ Research Triangle						Redev						326,445						376,871						703,316						86									86									2Q21												2024
4 Davis Drive/Research Triangle						Dev						—						180,000						180,000						—									—			(2)									2023									2024
6040 George Watts Hill Drive, Phase II/Research Triangle						Dev						—						88,038						88,038						100									100												2024									2024
5 and 9 Laboratory Drive/Research Triangle						Redev/Dev						278,720						61,680						340,400						96									96												3Q21									2022
Texas
8800 Technology Forest Place/Greater Houston						Redev						—						201,499						201,499						23									23												2023									2024
												2,247,412						5,851,124						8,098,536						74		%							75		%
(1)Initial occupancy dates are subject to leasing and/or market conditions. Multi-tenant projects may have occupancy by tenants over a period of time. Stabilized occupancy may vary depending on single tenancy versus multi-tenancy. (2)This development project is focused on demand from our existing tenants in our adjacent properties/campuses. This project will also address demand from other non-ARE properties/campuses.

New Class A development and redevelopment properties: current projects (continued)

Market Property/Submarket												Square Footage																		Percentage
			Dev/Redev						In Service						CIP						Total						Leased									Leased/Negotiating
Pre-leased/negotiating near-term projects expected to commence construction in the next six quarters
San Francisco Bay Area
230 Harriet Tubman Way/South San Francisco						Dev						—						285,346						285,346						100		%							100		%
San Diego
11255 and 11355 North Torrey Pines Road/Torrey Pines						Dev						—						309,094						309,094						100									100
10931 and 10933 North Torrey Pines Road/Torrey Pines						Dev						—						299,158						299,158						100									100
Alexandria Point, Phase II/University Town Center						Dev						—						426,927						426,927						100									100
Alexandria Point, Phase I/University Town Center						Dev						—						171,102						171,102						100									100
Seattle
701 Dexter Avenue North/Lake Union						Dev						—						226,586						226,586						—									9
Maryland
9820 Darnestown Road/Rockville						Dev						—						250,000						250,000						—									100
												—						1,968,213						1,968,213						76									89
												2,247,412						7,819,337						10,066,749						74		%							78		%

New Class A development and redevelopment properties: current projects (continued)

						Our Ownership Interest																																	Unlevered Yields
Market Property/Submarket									In Service						CIP						Cost to Complete						Total at Completion						Initial Stabilized												Initial Stabilized (Cash Basis)
Under construction
Greater Boston
325 Binney Street/Cambridge/Inner Suburbs						100		%							$	—					$	334,164					$	446,836					$	781,000								8.6		%										7.2		%
One Rogers Street/Cambridge/Inner Suburbs						100		%							10,765						916,883						278,352						1,206,000									5.2		%										4.2		%
99 Coolidge Avenue/Cambridge/Inner Suburbs						75.0		%							—						103,179						TBD
500 North Beacon Street and 4 Kingsbury Avenue/Cambridge/Inner Suburbs						100		%							—						85,054						341,946						427,000									6.2		%										5.5		%
The Arsenal on the Charles/Cambridge/Inner Suburbs						100		%							668,330						112,141						50,529						831,000									6.3		%										5.5		%
201 Brookline Avenue/Fenway						98.6		%							—						600,014						133,986						734,000									7.2		%										6.2		%
15 Necco Street/Seaport Innovation District						90.0		%							—						268,155						298,845						567,000									6.7		%										5.5		%
40, 50, and 60 Sylvan Road/Route 128						100		%							173,674						110,661						TBD
840 Winter Street/Route 128						100		%							13,227						86,450						108,323						208,000									7.5		%										6.5		%
Other						100		%							—						120,171						TBD
San Francisco Bay Area
651 Gateway Boulevard/South San Francisco						50.0		%							—						129,655						TBD
751 Gateway Boulevard/South San Francisco						51.0		%							—						134,513						155,487						290,000									6.5		%										6.3		%
New York City
30-02 48th Avenue/New York City						100		%							115,134						83,635						25,231						224,000									5.8		%										5.8		%
San Diego
10055 Barnes Canyon Road/Sorrento Mesa						50.0		%							67,997						44,054						68,949						181,000									7.2		%										6.6		%
10102 Hoyt Park Drive/Sorrento Mesa						100		%							—						65,628						48,372						114,000									7.4		%										6.5		%
Seattle
1150 Eastlake Avenue East/Lake Union						100		%							—						154,126						250,874						405,000									6.4		%										6.2		%
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell						100		%							56,563						76,841						TBD
Maryland
9810 Darnestown Road/Rockville						100		%							—						49,148						83,852						133,000									6.9		%										6.2		%
9808 Medical Center Drive/Rockville						100		%							—						30,123						TBD
9601 and 9603 Medical Center Drive/Rockville						100		%							6,288						28,911						18,801						54,000									8.4		%										7.1		%
20400 Century Boulevard/Gaithersburg						100		%							15,296						9,747						9,957						35,000									8.5		%										8.6		%
Research Triangle
2400 Ellis Road, 40 and 41 Moore Drive, and 14 TW Alexander Drive/Research Triangle						100		%							93,455						101,799						141,746						337,000									7.5		%										6.7		%
4 Davis Drive/Research Triangle						100		%							—						21,362						TBD
6040 George Watts Hill Drive, Phase II/Research Triangle						100		%							—						4,256						59,744						64,000									8.0		%										7.0		%
5 and 9 Laboratory Drive/Research Triangle						100		%							162,721						37,986						15,293						216,000									7.2		%										7.1		%
Texas
8800 Technology Forest Place/Greater Houston						100		%							—						38,145						TBD
															$	1,383,450					$	3,746,801					$	4,210,000		(1)			$	9,340,000		(1)

(1)Amounts rounded to the nearest $10 million.

New Class A development and redevelopment properties: summary of pipeline

The following table summarizes the key information for all our development and redevelopment projects in North America as of June 30, 2022 (dollars in thousands):

Market Property/Submarket						Our Ownership Interest									Book Value						Square Footage
									Development and Redevelopment																								Total**(1)**
									Under Construction						Near Term						Intermediate Term						Future
Greater Boston
Mega Campus: Alexandria Center® at One Kendall Square/Cambridge/Inner Suburbs						100		%							$	334,164					462,100						—						—						—						462,100
325 Binney Street
Mega Campus: Alexandria Center® at Kendall Square/Cambridge/ Inner Suburbs						100		%							916,883						403,892						—						—						—						403,892
One Rogers Street
Mega Campus: The Arsenal on the Charles/Cambridge/Inner Suburbs						100		%							207,990						348,126						—						—						34,157						382,283
311 Arsenal Street, 400 and 500 North Beacon Street, 100 Talcott Avenue, and 4 Kingsbury Avenue
99 Coolidge Avenue/Cambridge/Inner Suburbs						75.0		%							103,179						320,809						—						—						—						320,809
Mega Campus: Alexandria Center® for Life Science – Fenway/Fenway						(2)									868,320						510,116						507,997						—						—						1,018,113
201 Brookline Avenue and 421 Park Drive
15 Necco Street/Seaport Innovation District						90.0		%							268,155						345,995						—						—						—						345,995
Reservoir Woods/Route 128						100		%							159,850						202,428						312,845						—						440,000						955,273
40, 50, and 60 Sylvan Road
840 Winter Street/Route 128						100		%							86,450						139,984						28,230						—						—						168,214
275 Grove Street/Route 128						100		%							—						—						160,251						—						—						160,251
10 Necco Street/Seaport Innovation District						100		%							96,555						—						—						175,000						—						175,000
215 Presidential Way/Route 128						100		%							6,808						—						—						112,000						—						112,000
Mega Campus: 480 Arsenal Way and 500 and 550 Arsenal Street/Cambridge/Inner Suburbs						100		%							56,988						—						—						—						775,000						775,000
550 Arsenal Street
Mega Campus: Alexandria Technology Square®/Cambridge/ Inner Suburbs						100		%							7,881						—						—						—						100,000						100,000
Mega Campus: 380 and 420 E Street/Seaport Innovation District						100		%							123,514						—						—						—						1,000,000						1,000,000
99 A Street/Seaport Innovation District						100		%							48,882						—						—						—						235,000						235,000
Mega Campus: One Upland Road, 100 Tech Drive, and One Investors Way/Route 128						100		%							24,264						—						—						—						1,100,000						1,100,000
Other value-creation projects						100		%							174,664						453,869						190,992						—						466,504						1,111,365
															$	3,484,547					3,187,319						1,200,315						287,000						4,150,661						8,825,295
Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of a new Class A property. Square footage presented includes RSF of buildings currently in operation at properties that also have inherent future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property and commence future construction. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (2)We have a 98.6% ownership interest in 201 Brookline Avenue aggregating 510,116 SF, which is currently under construction. We have a 100% ownership interest in the near-term development project at 421 Park Drive aggregating 507,997 SF.

New Class A development and redevelopment properties: summary of pipeline (continued)

Market Property/Submarket						Our Ownership Interest									Book Value						Square Footage
									Development and Redevelopment																								Total**(1)**
									Under Construction						Near Term						Intermediate Term						Future
San Francisco Bay Area
Mega Campus: Alexandria Technology Center® – Gateway/ South San Francisco						(2)									$	286,827					530,602						—						—						291,000						821,602
651 and 751 Gateway Boulevard
Mega Campus: Alexandria Center® for Science and Technology – Mission Bay/Mission Bay						100		%							74,098						—						191,000						—						—						191,000
1450 Owens Street
Alexandria Center® for Life Science – Millbrae/South San Francisco						48.5		%							167,091						—						633,747						—						—						633,747
230 Harriet Tubman Way, 201 and 231 Adrian Road, and 6 and 30 Rollins Road
3825 and 3875 Fabian Way/Greater Stanford						100		%							—						—						250,000						—						228,000						478,000
Mega Campus: Alexandria Center® for Life Science – San Carlos/Greater Stanford						100		%							369,162						—						105,000						700,000						692,830						1,497,830
960 Industrial Road, 987 and 1075 Commercial Street, and 888 Bransten Road
901 California Avenue/Greater Stanford						100		%							6,337						—						56,924						—						—						56,924
Mega Campus: 88 Bluxome Street/SoMa						100		%							331,907						—						1,070,925						—						—						1,070,925
Mega Campus: 1122, 1150, and 1178 El Camino Real/South San Francisco						100		%							335,885						—						—						—						1,930,000						1,930,000
Mega Campus: 211(3), 213(3), 249, 259, 269, and 279 East Grand Avenue/ South San Francisco						100		%							6,624						—						—						—						90,000						90,000
211 East Grand Avenue
Other value-creation projects						100		%							—						—						—						—						25,000						25,000
															1,577,931						530,602						2,307,596						700,000						3,256,830						6,795,028
New York City
Alexandria Center® for Life Science – Long Island City/New York City						100		%							115,368						65,558						135,938						—						—						201,496
30-02 48th Avenue and 47-50 30th Street
Mega Campus: Alexandria Center® for Life Science – New York City/ New York City						100		%							98,380						—						—						550,000			(4)			—						550,000
219 East 42nd Street/New York City						100		%							—						—						—						—						579,947						579,947
															$	213,748					65,558						135,938						550,000						579,947						1,331,443
Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of a new Class A property. Square footage presented includes RSF of buildings currently in operation at properties that also have inherent future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property and commence future construction. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (2)We have a 50.0% ownership interest in 651 Gateway Boulevard aggregating 300,010 RSF and a 51.0% ownership interest in 751 Gateway Boulevard aggregating 230,592 RSF. (3)We own a partial interest in this property through a real estate joint venture. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional details. (4)Pursuant to an option agreement, we are currently negotiating a long-term ground lease with the City of New York for the future site of a new building approximating 550,000 SF.

New Class A development and redevelopment properties: summary of pipeline (continued)

Market Property/Submarket						Our Ownership Interest									Book Value						Square Footage
									Development and Redevelopment																								Total**(1)**
									Under Construction						Near Term						Intermediate Term						Future
San Diego
Mega Campus: SD Tech by Alexandria/Sorrento Mesa						50.0		%							$	143,560					84,981						190,074						160,000						333,845						768,900
9805 Scranton Road and 10055 and 10075 Barnes Canyon Road
Scripps Science Park by Alexandria/Sorrento Mesa						100		%							121,206						144,113						105,000						70,041						164,000						483,154
10102 Hoyt Park Drive, 10048 and 12019 Meanley Drive, and 10277 Scripps Ranch Boulevard
Mega Campus: One Alexandria Square/Torrey Pines						100		%							224,288						—						608,252						—						125,280						733,532
10931, 10933, 11255, and 11355 North Torrey Pines Road and 10975 and 10995 Torreyana Road
Mega Campus: Alexandria Point/University Town Center						55.0		%							130,202						—						598,029						—						324,445						922,474
10260 Campus Point Drive and 4110, 4150, and 4161 Campus Point Court
Mega Campus: Sequence District by Alexandria/Sorrento Mesa						100		%							41,334						—						200,000						509,000						1,089,915						1,798,915
6260, 6290, 6310, 6340, 6350, and 6450 Sequence Drive
Mega Campus: University District/University Town Center						100		%							193,622						—						—						1,137,000						—						1,137,000
9363, 9373, 9393 Towne Centre Drive, 4555 Executive Drive, 8410-8750 Genesee Avenue, and 4282 Esplanade Court
9444 Waples Street/Sorrento Mesa						50.0		%							21,058						—						—						149,000						—						149,000
Mega Campus: 5200 Illumina Way/University Town Center						51.0		%							14,487						—						—						—						451,832						451,832
4025, 4031, 4045, and 4075 Sorrento Valley Boulevard/Sorrento Valley						100		%							20,281						—						—						—						247,000						247,000
Other value-creation projects						100		%							71,919						—						—						—						539,235						539,235
															981,957						229,094						1,701,355						2,025,041						3,275,552						7,231,042
Seattle
Mega Campus: The Eastlake Life Science Campus by Alexandria/ Lake Union						100		%							154,126						311,631						—						—						—						311,631
1150 Eastlake Avenue East
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell						100		%							76,841						213,976						50,552						—						—						264,528
3301, 3555, and 3755 Monte Villa Parkway
Mega Campus: Alexandria Center® for Life Science – South Lake Union/ Lake Union						(2)									342,946						—						1,095,586						—						188,400						1,283,986
601 and 701 Dexter Avenue North and 800 Mercer Street
830 and 1010 4th Avenue South/SoDo						100		%							$	52,789					—						—						—						597,313						597,313
Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (1)Represents total square footage upon completion of development or redevelopment of a new Class A property. Square footage presented includes RSF of buildings currently in operation at properties that also have inherent future development or redevelopment opportunities. Upon expiration of existing in-place leases, we have the intent to demolish or redevelop the existing property and commence future construction. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information. (2)We have a 100% ownership interest in 601 and 701 Dexter Avenue North aggregating 414,986 SF and a 60% ownership interest in the near-term development project at 800 Mercer Street aggregating 869,000 SF.

New Class A development and redevelopment properties: summary of pipeline (continued)

Market Property/Submarket						Our Ownership Interest									Book Value						Square Footage
									Development and Redevelopment																								Total**(1)**
									Under Construction						Near Term						Intermediate Term						Future
Seattle (continued)
Mega Campus: Alexandria Center® for Advanced Technologies – Canyon Park/Bothell						100		%							$	13,392					—						—						—						230,000						230,000
21660 20th Avenue Southeast
Other value-creation projects						100		%							79,258						—						—						—						691,000						691,000
															719,352						525,607						1,146,138						—						1,706,713						3,378,458
Maryland
Mega Campus: Alexandria Center® for Life Science – Shady Grove/Rockville						100		%							143,407						360,533						250,000						258,000						38,000						906,533
9601, 9603, and 9808 Medical Center Drive and 9810, 9820, and 9830 Darnestown Road																																													—
20400 Century Boulevard/Gaithersburg						100		%							9,747						44,323						—						—						—						44,323
															153,154						404,856						250,000						258,000						38,000						950,856
Research Triangle
Mega Campus: Alexandria Center® for Life Science – Durham/ Research Triangle						100		%							248,421						376,871						—						—						2,060,000						2,436,871
40 and 41 Moore Drive and 14 TW Alexander Drive
Mega Campus: Alexandria Center® for Advanced Technologies/ Research Triangle						100		%							56,401						180,000						—						—						990,000						1,170,000
4 and 12 Davis Drive
6040 George Watts Hill Drive, Phase II/Research Triangle						100		%							4,256						88,038						—						—						—						88,038
Alexandria Center® for AgTech/Research Triangle						100		%							37,986						61,680						—						—						—						61,680
9 Laboratory Drive
Mega Campus: Alexandria Center® for NextGen Medicines/ Research Triangle						100		%							98,089						—						100,000						100,000						855,000						1,055,000
3029 East Cornwallis Road
120 TW Alexander Drive, 2752 East NC Highway 54, and 10 South Triangle Drive/Research Triangle						100		%							50,121						—						—						—						750,000						750,000
Other value-creation projects						100		%							4,185						—						—						—						76,262						76,262
															499,459						706,589						100,000						100,000						4,731,262						5,637,851
Texas
8800 Technology Forest Place/Greater Houston						100		%							42,981						201,499						—						—						116,287						317,786
Other value-creation projects						100		%							136,837						—						143,105						—						2,090,000						2,233,105
															179,818						201,499						143,105						—						2,206,287						2,550,891
Other value-creation projects						100		%							33,438						—						—						—						474,000						474,000
Total pipeline as of June 30, 2022															$	7,843,404		(2)			5,851,124						6,984,447						3,920,041						20,419,252						37,174,864			(1)

Refer to the definition of “Mega campus” in the “Definitions and reconciliations” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(1)Total square footage includes 4,170,757 RSF of buildings currently in operation that will be redeveloped or replaced with new development RSF upon commencement of future construction. Refer to the definition of “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(2)Total book value includes $3.7 billion of projects currently under construction that are 75% leased/negotiating. We also expect to commence construction on pre-leased/negotiating near-term projects aggregating $441.8 million in the next six quarters that are 89% leased/negotiating.

Results of operations

We present a tabular comparison of items, whether gain or loss, that may facilitate a high-level understanding of our results and provide context for the disclosures included in our annual report on Form 10-K for the year ended December 31, 2021 and our subsequent quarterly reports on Form 10-Q. We believe that such tabular presentation promotes a better understanding for investors of the corporate-level decisions made and activities performed that significantly affect comparison of our operating results from period to period. We also believe that this tabular presentation will supplement for investors an understanding of our disclosures and real estate operating results. Gains or losses on sales of real estate and impairments of held for sale assets are related to corporate-level decisions to dispose of real estate. Gains or losses on early extinguishment of debt are related to corporate-level financing decisions focused on our capital structure strategy. Significant realized and unrealized gains or losses on non-real estate investments and impairments of real estate and non-real estate investments are not related to the operating performance of our real estate assets as they result from strategic, corporate-level non-real estate investment decisions and external market conditions. Impairments of non-real estate investments are not related to the operating performance of our real estate as they represent the write-down of non-real estate investments when their fair values decrease below their respective carrying values due to changes in general market or other conditions outside of our control. Significant items included in the tabular disclosure for current periods are described in further detail within this Item 2. Key items included in net income attributable to Alexandria’s common stockholders for the three and six months ended June 30, 2022 and 2021 and the related per share amounts were as follows (in millions, except per share amounts):

			Three Months Ended June 30,																								Six Months Ended June 30,
			2022						2021						2022						2021						2022						2021						2022						2021
			Amount												Per Share – Diluted												Amount												Per Share – Diluted
Unrealized (losses) gains on non-real estate investments			$	(68.1)					$	244.0					$	(0.42)					$	1.67					$	(331.6)					$	197.8					$	(2.07)					$	1.39
Significant realized gains on non-real estate investments			—						34.8						—						0.24						—						57.7						—						0.41
Gain on sales of real estate			214.2						—						1.33						—						214.2						2.8						1.34						0.02
Impairment of real estate			—						(4.9)						—						(0.03)						—						(10.1)						—						(0.07)
Loss on early extinguishment of debt			(3.3)						—						(0.02)						—						(3.3)						(67.3)						(0.02)						(0.47)
Total			$	142.8					$	273.9					$	0.89					$	1.88					$	(120.7)					$	180.9					$	(0.75)					$	1.28

Same properties

We supplement an evaluation of our results of operations with an evaluation of operating performance of certain of our properties, referred to as Same Properties. For additional information on the determination of our Same Properties portfolio, refer to the definition of “Same property comparisons” in the “Non-GAAP measures and definitions” section within this Item 2. The following table presents information regarding our Same Properties for the three and six months ended June 30, 2022:

						June 30, 2022
						Three Months Ended						Six Months Ended
Percentage change in net operating income over comparable period from prior year						7.5%						7.7%
Percentage change in net operating income (cash basis) over comparable period from prior year						10.2%						8.6%
Operating margin						71%						71%
Number of Same Properties						287						266
RSF						28,897,189						27,008,468
Occupancy – current-period average						95.9%						95.8%
Occupancy – same-period prior-year average						94.5%						94.6%

The following table reconciles the number of Same Properties to total properties for the six months ended June 30, 2022:

Development – under construction						Properties
5 and 9 Laboratory Drive						2
4 Davis Drive						1
201 Brookline Avenue						1
10055 Barnes Canyon Road						1
15 Necco Street						1
751 Gateway Boulevard						1
325 Binney Street						1
1150 Eastlake Avenue East						1
10102 Hoyt Park Drive						1
9810 Darnestown Road						1
99 Coolidge Avenue						1
500 North Beacon Street and 4 Kingsbury Avenue						2
9808 Medical Center Drive						1
6040 George Watts Hill Drive						1
						16
Development – placed into service after January 1, 2021						Properties
1165 Eastlake Avenue East						1
201 Haskins Way						1
825 and 835 Industrial Road						2
9950 Medical Center Drive						1
3115 Merryfield Row						1
8 and 10 Davis Drive						2
						8
Redevelopment – under construction						Properties
30-02 48th Avenue						1
The Arsenal on the Charles						11
2400 Ellis Road, 40 and 41 Moore Drive, and 14 TW Alexander Drive						4
840 Winter Street						1
20400 Century Boulevard						1
9601 and 9603 Medical Center Drive						2
One Rogers Street						1
40, 50, and 60 Sylvan Road						3
Alexandria Center® for Advanced Technologies – Monte Villa Parkway						6
651 Gateway Boulevard						1
8800 Technology Forest Place						1
Other						2
						34

Redevelopment – placed into service after January 1, 2021						Properties
700 Quince Orchard Road						1
3160 Porter Drive						1
5505 Morehouse Drive						1
Other						1
						4
Acquisitions after January 1, 2021						Properties
3301, 3303, 3305, 3307, 3420, and 3440 Hillview Avenue						6
Sequence District by Alexandria						5
Alexandria Center® for Life Science – Fenway						1
550 Arsenal Street						1
1501-1599 Industrial Road						6
One Investors Way						2
2475 Hanover Street						1
10975 and 10995 Torreyana Road						2
Pacific Technology Park						6
1122 and 1150 El Camino Real						2
12 Davis Drive						1
7360 Carroll Road						1
8505 Costa Verde Boulevard and 4260 Nobel Drive						2
225 and 235 Presidential Way						2
104 TW Alexander Drive						4
One Hampshire Street						1
Intersection Campus						12
Other						48
						103
Unconsolidated real estate JVs						4
Properties held for sale						1
Total properties excluded from Same Properties						170
Same Properties						266
Total properties in North America as of June 30, 2022						436

Comparison of results for the three months ended June 30, 2022 to the three months ended June 30, 2021

The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same Properties for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for definitions of “Tenant recoveries” and “Net operating income” and their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and net income, respectively.

Refer to “Item 1A. Risk factors” in our annual report on Form 10-K for the year ended December 31, 2021 for a discussion about risks that COVID-19 directly or indirectly may pose to our business.

						Three Months Ended June 30,
(Dollars in thousands)						2022						2021						$ Change						% Change
Income from rentals:
Same Properties						$	378,130					$	350,577					$	27,553					7.9		%
Non-Same Properties						106,937						46,227						60,710						131.3
Rental revenues						485,067						396,804						88,263						22.2
Same Properties						124,693						101,088						23,605						23.4
Non-Same Properties						31,199						10,479						20,720						197.7
Tenant recoveries						155,892						111,567						44,325						39.7
Income from rentals						640,959						508,371						132,588						26.1
Same Properties						193						134						59						44.0
Non-Same Properties						2,612						1,114						1,498						134.5
Other income						2,805						1,248						1,557						124.8
Same Properties						503,016						451,799						51,217						11.3
Non-Same Properties						140,748						57,820						82,928						143.4
Total revenues						643,764						509,619						134,145						26.3
Same Properties						147,045						120,686						26,359						21.8
Non-Same Properties						49,239						23,269						25,970						111.6
Rental operations						196,284						143,955						52,329						36.4
Same Properties						355,971						331,113						24,858						7.5
Non-Same Properties						91,509						34,551						56,958						164.9
Net operating income						$	447,480					$	365,664					$	81,816					22.4		%
Net operating income – Same Properties						$	355,971					$	331,113					$	24,858					7.5		%
Straight-line rent revenue						(15,859)						(22,214)						6,355						(28.6)
Amortization of acquired below-market leases						(9,875)						(9,338)						(537)						5.8
Net operating income – Same Properties (cash basis)						$	330,237					$	299,561					$	30,676					10.2		%

Income from rentals

Total income from rentals for the three months ended June 30, 2022 increased by $132.6 million, or 26.1%, to $641.0 million, compared to $508.4 million for the three months ended June 30, 2021, as a result of increase in rental revenues and tenant recoveries, as discussed below.

Rental revenues

Total rental revenues for the three months ended June 30, 2022 increased by $88.3 million, or 22.2%, to $485.1 million, compared to $396.8 million for the three months ended June 30, 2021. The increase was primarily due to an increase in rental revenues from our Non-Same Properties related to 2.5 million RSF of development and redevelopment projects placed into service subsequent to April 1, 2021 and 83 operating properties aggregating 7.3 million RSF acquired subsequent to April 1, 2021.

Rental revenues from our Same Properties for the three months ended June 30, 2022 increased by $27.6 million, or 7.9%, to $378.1 million, compared to $350.6 million for the three months ended June 30, 2021. The increase was primarily due to rental rate increases on lease renewals and re-leasing of space since April 1, 2021 and an increase of occupancy to 95.9% for the three months ended June 30, 2022 from 94.5% for the three months ended June 30, 2021.

Tenant recoveries

Tenant recoveries for the three months ended June 30, 2022 increased by $44.3 million, or 39.7%, to $155.9 million, compared to $111.6 million for the three months ended June 30, 2021. The increase was primarily from our Non-Same Properties related to our development and redevelopment projects placed into service and properties acquired subsequent to April 1, 2021, as discussed above under “Rental revenues.”

Same Properties’ tenant recoveries for the three months ended June 30, 2022 increased by $23.6 million, or 23.4%, primarily due to higher operating expenses during the three months ended June 30, 2022, as discussed under “Rental operations” below. As of June 30, 2022, 91% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent.

Other income

Other income for the three months ended June 30, 2022 and 2021, was $2.8 million and $1.2 million, respectively, which primarily consisted of construction management fees and interest income earned during each respective period.

Rental operations

Total rental operating expenses for the three months ended June 30, 2022 increased by $52.3 million, or 36.4%, to $196.3 million, compared to $144.0 million for the three months ended June 30, 2021. The increase was partially due to incremental expenses related to our Non-Same Properties, which consist of development and redevelopment projects placed into service and acquired properties, as discussed above under “Income from rentals.”

Same Properties’ rental operating expenses increased by $26.4 million, or 21.8%, to $147.0 million during the three months ended June 30, 2022, compared to $120.7 million for the three months ended June 30, 2021. The increase was primarily the result of higher repairs and maintenance expenses, contract services expenses, utilities expenses, and property insurance expenses.

General and administrative expenses

General and administrative expenses for the three months ended June 30, 2022 increased by $5.5 million, or 14.6%, to $43.4 million, compared to $37.9 million for the three months ended June 30, 2021. The increase was primarily due to costs related to the continued growth in the depth and breadth of our operations in multiple markets, including development and redevelopment projects placed into service and properties acquired, as discussed above under “Income from rentals.” As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended June 30, 2022 and 2021 were 9.8% and 9.8%, respectively.

Interest expense

Interest expense for the three months ended June 30, 2022 and 2021 consisted of the following (dollars in thousands):

						Three Months Ended June 30,
Component						2022						2021						Change
Gross interest						$	92,459					$	78,650					$	13,809
Capitalized interest						(68,202)						(43,492)						(24,710)
Interest expense						$	24,257					$	35,158					$	(10,901)
Average debt balance outstanding(1)						$	10,300,789					$	8,805,891					$	1,494,898
Weighted-average annual interest rate(2)						3.6		%				3.6		%				—		%

(1)Represents the average debt balance outstanding during the respective periods.

(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.

The net change in interest expense during the three months ended June 30, 2022, compared to the three months ended June 30, 2021, resulted from the following (dollars in thousands):

Component						Interest Rate(1)												Effective Date						Change
Increases in interest incurred due to:
Issuances of debt:
$800 million unsecured senior notes payable due 2034 – green bond									3.07		%							February 2022						5,944
$1.0 billion unsecured senior notes payable due 2052									3.63		%							February 2022						8,896
Other increases in interest incurred																								486
Total increases																								15,326
Decreases in interest incurred due to:
Repayments of debt:
Secured notes payable									3.40		%							April 2022						(1,517)
Total decreases																								(1,517)
Change in gross interest																								13,809
Increase in capitalized interest																								(24,710)
Total change in interest expense																								$	(10,901)

(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.

Depreciation and amortization

Depreciation and amortization expense for the three months ended June 30, 2022 increased by $52.0 million, or 27.4%, to $242.1 million, compared to $190.1 million for the three months ended June 30, 2021. The increase was primarily due to additional depreciation from 2.5 million RSF of development and redevelopment projects placed into service subsequent to April 1, 2021 and 83 operating properties aggregating 7.3 million RSF acquired subsequent to April 1, 2021.

Impairments of real estate

During the three months ended June 30, 2021, we recognized impairment charges aggregating $4.9 million, primarily related to two office properties located in our Seattle market, to reduce the carrying amounts to their estimated fair values less costs to sell. We completed the sales of these properties during the three months ended September 30, 2021.

Loss on early extinguishment of debt

During the three months ended June 30, 2022, we recognized a loss on early extinguishment of debt of $3.3 million, including a prepayment penalty and the write-off of unamortized loan fees, related to the repayment of two secured notes payable.

Equity in earnings of unconsolidated real estate joint ventures

During the three months ended June 30, 2022 and 2021, we recognized equity in earnings of unconsolidated real estate joint ventures of $213 thousand and $2.6 million, respectively. The decrease is primarily related to the sale of our investment in an unconsolidated real estate joint venture in our Greater Stanford submarket in December 2021.

Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Investment loss

During the three months ended June 30, 2022, we recognized investment losses aggregating $39.5 million, which consisted of $28.6 million of realized gains and $68.1 million of unrealized losses. Realized gains were primarily related to sales of investments and distributions received. Unrealized losses of $68.1 million primarily consisted of decreases in fair values of our investments in publicly traded companies.

During the three months ended June 30, 2021, we recognized investment income aggregating $304.3 million, which consisted of $60.2 million of realized gains and $244.0 million of unrealized gains.

For more information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report. For our impairments accounting policy, refer to the “Investments” section of Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements under Item 1 of this report.

Gain on sales of real estate

During the three months ended June 30, 2022, we recognized $214.2 million of gains related to the completion of 14 real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the three months ended June 30, 2022.

For more information about our sales of real estate, refer to the “Sales of real estate assets” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report.

Other comprehensive income

Total other comprehensive income for the three months ended June 30, 2022 decreased by $7.4 million to aggregate net unrealized losses of $6.1 million, compared to net unrealized gains of $1.3 million for the three months ended June 30, 2021, primarily due to the unrealized losses on foreign currency translation related to our operations in Canada and China.

Comparison of results for the six months ended June 30, 2022 to the six months ended June 30, 2021

The following table presents a comparison of the components of net operating income for our Same Properties and Non-Same Properties for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for definitions of “Tenant recoveries” and “Net operating income” and their reconciliations from the most directly comparable financial measures presented in accordance with GAAP, income from rentals and net income, respectively.

Refer to “Item 1A. Risk factors” in our annual report on Form 10-K for the year ended December 31, 2021 for a discussion about risks that COVID-19 directly or indirectly may pose to our business.

						Six Months Ended June 30,
(Dollars in thousands)						2022						2021						$ Change						% Change
Income from rentals:
Same Properties						$	708,840					$	656,182					$	52,658					8.0		%
Non-Same Properties						245,764						110,855						134,909						121.7
Rental revenues						954,604						767,037						187,567						24.5
Same Properties						235,108						196,835						38,273						19.4
Non-Same Properties						63,801						23,194						40,607						175.1
Tenant recoveries						298,909						220,029						78,880						35.8
Income from rentals						1,253,513						987,066						266,447						27.0
Same Properties						324						209						115						55.0
Non-Same Properties						4,992						2,193						2,799						127.6
Other income						5,316						2,402						2,914						121.3
Same Properties						944,272						853,226						91,046						10.7
Non-Same Properties						314,557						136,242						178,315						130.9
Total revenues						1,258,829						989,468						269,361						27.2
Same Properties						271,903						228,963						42,940						18.8
Non-Same Properties						105,709						52,880						52,829						99.9
Rental operations						377,612						281,843						95,769						34.0
Same Properties						672,369						624,263						48,106						7.7
Non-Same Properties						208,848						83,362						125,486						150.5
Net operating income						$	881,217					$	707,625					$	173,592					24.5		%
Net operating income – Same Properties						$	672,369					$	624,263					$	48,106					7.7		%
Straight-line rent revenue						(41,101)						(41,360)						259						(0.6)
Amortization of acquired below-market leases						(14,063)						(14,365)						302						(2.1)
Net operating income – Same Properties (cash basis)						$	617,205					$	568,538					$	48,667					8.6		%

Income from rentals

Total income from rentals for the six months ended June 30, 2022 increased by $266.4 million, or 27.0%, to $1.3 billion, compared to $987.1 million for the six months ended June 30, 2021, as a result of increase in rental revenues and tenant recoveries, as discussed below.

Rental revenues

Total rental revenues for the six months ended June 30, 2022 increased by $187.6 million, or 24.5%, to $1.0 billion, compared to $767.0 million for the six months ended June 30, 2021. The increase was primarily due to an increase in rental revenues from our Non-Same Properties related to 3.0 million RSF of development and redevelopment projects placed into service subsequent to January 1, 2021 and 103 operating properties aggregating 9.1 million RSF acquired subsequent to January 1, 2021.

Rental revenues from our Same Properties for the six months ended June 30, 2022 increased by $52.7 million, or 8.0%, to $708.8 million, compared to $656.2 million for the six months ended June 30, 2021. The increase was primarily due to rental rate increases on lease renewals and re-leasing of space and occupancy increases since January 1, 2021 and an increase of occupancy to 95.8% for the six months ended June 30, 2022 from 94.6% for the six months ended June 30, 2021.

Tenant recoveries

Tenant recoveries for the six months ended June 30, 2022 increased by $78.9 million, or 35.8%, to $298.9 million, compared to $220.0 million for the six months ended June 30, 2021. This increase was primarily from our Non-Same Properties related to our development and redevelopment projects placed into service and properties acquired subsequent to January 1, 2021, as discussed above under “Rental revenues.”

Same Properties’ tenant recoveries for the six months ended June 30, 2022 increased by $38.3 million, or 19.4%, primarily due to higher operating expenses during the six months ended June 30, 2022, as discussed under “Rental operations” below. As of June 30, 2022, 91% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent.

Other income

Other income for the six months ended June 30, 2022 and 2021 was $5.3 million and $2.4 million, respectively, which primarily consisted of construction management fees and interest income earned during each respective period.

Rental operations

Total rental operating expenses for the six months ended June 30, 2022 increased by $95.8 million, or 34.0%, to $377.6 million, compared to $281.8 million for the six months ended June 30, 2021. The increase was primarily due to incremental expenses related to our Non-Same Properties, which consist of development and redevelopment projects placed into service and acquired properties, as discussed above under “Income from rentals.”

Same Properties’ rental operating expenses increased by $42.9 million, or 18.8%, to $271.9 million during the six months ended June 30, 2022, compared to $229.0 million for the six months ended June 30, 2021. The increase was primarily the result of higher utilities expenses, repairs and maintenance expenses, property insurance expenses, and contract services expenses.

General and administrative expenses

General and administrative expenses for the six months ended June 30, 2022 increased by $12.5 million, or 17.3%, to $84.3 million, compared to $71.9 million for the six months ended June 30, 2021. The increase was primarily due to the costs related to corporate related costs, additional headcount, and corporate responsibility efforts, as well as the continued growth in the depth and breadth of our operations in multiple markets, including development and redevelopment projects placed into service and properties acquired, as discussed above under “Income from rentals.” As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended June 30, 2022 and 2021 were 9.8% and 9.8%, respectively.

Interest expense

Interest expense for the six months ended June 30, 2022 and 2021 consisted of the following (dollars in thousands):

						Six Months Ended June 30,
Component						2022						2021						Change
Gross interest						$	179,662					$	155,003					$	24,659
Capitalized interest						(125,965)						(83,378)						(42,587)
Interest expense						$	53,697					$	71,625					$	(17,928)
Average debt balance outstanding(1)						$	10,188,517					$	8,773,651					$	1,414,866
Weighted-average annual interest rate(2)						3.5		%				3.5		%				—		%

(1)Represents the average debt balance outstanding during the respective periods.

(2)Represents annualized total interest incurred divided by the average debt balance outstanding during the respective periods.

The net change in interest expense during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, resulted from the following (dollars in thousands):

Component						Interest Rate(1)												Effective Date						Change
Increases in interest incurred due to:
Issuances of debt:
$900 million unsecured senior notes payable – green bond									2.12		%							February 2021						$	2,382
$850 million unsecured senior notes payable									3.08		%							February 2021						3,341
$800 million unsecured senior notes payable – green bond									3.07		%							February 2022						8,915
$1.0 billion unsecured senior notes payable									3.63		%							February 2022						13,344
Other increase in interest																								1,191
Total increases																								29,173
Decreases in interest incurred due to:
Repayments of debt:
Secured notes payable									3.40		%							April 2022						(1,569)
$650 million unsecured senior notes payable – green bond									4.03		%							March 2021						(2,945)
Total decreases																								(4,514)
Change in gross interest																								24,659
Increase in capitalized interest																								(42,587)
Total change in interest expense																								$	(17,928)

(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.

Depreciation and amortization

Depreciation and amortization expense for the six months ended June 30, 2022 increased by $111.8 million, or 30.1%, to $482.7 million, compared to $371.0 million for the six months ended June 30, 2021. The increase was primarily due to additional depreciation from 3.0 million RSF of development and redevelopment projects placed into service subsequent to January 1, 2021 and 103 operating properties aggregating 9.1 million RSF acquired subsequent to January 1, 2021.

Impairment of real estate

During the six months ended June 30, 2021, we recognized impairment charges aggregating $10.1 million, primarily related to additional impairment charges for three of our office properties located in our San Francisco Bay Area and Seattle markets, to further reduce the carrying amounts to their estimated fair values less costs to sell. We completed the sales of these properties during the three months ended September 30, 2021.

Loss on early extinguishment of debt

During the six months ended June 30, 2022, we recognized a loss on early extinguishment of debt of $3.3 million, including a prepayment penalty and the write-off of unamortized loan fees, related to the repayment of two secured notes payable.

During the six months ended June 30, 2021, we recognized a loss on early extinguishment of debt of $67.3 million, including the write-off of unamortized loan fees primarily related to the refinancing of our 4.00% unsecured senior notes payable aggregating $650.0 million due in 2024 pursuant to a partial cash tender offer completed on February 10, 2021 and a subsequent call for redemption of the remaining outstanding amounts completed on March 12, 2021.

Equity in earnings of unconsolidated real estate joint ventures

During the six months ended June 30, 2022 and 2021, we recognized equity in earnings of unconsolidated real estate joint ventures of $433 thousand and $6.1 million, respectively. The decrease is primarily related to the sale of our investment in an unconsolidated real estate joint venture in our Greater Stanford submarket in December 2021.

Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Investment income

During the six months ended June 30, 2022, we recognized investment losses aggregating $279.8 million, which consisted of $51.8 million of realized gains and $331.6 million of unrealized losses. Realized gains of $51.8 million primarily consisted of sales of investments and distributions received. Unrealized losses of $331.6 million during the six months ended June 30, 2022 primarily consisted of decreases in fair values of our investments in publicly traded companies and investments in privately held entities that report NAV.

During the six months ended June 30, 2021, we recognized investment income aggregating $305.3 million, which consisted of $107.5 million of realized gains and $197.8 million of unrealized gains.

For more information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report. For our impairments accounting policy, refer to the “Investments” section of Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements under Item 1 of this report.

Gain on sales of real estate

During the six months ended June 30, 2022, we recognized $214.2 million of gains related to the completion of 15 real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the six months ended June 30, 2022.

During the six months ended June 30, 2021, we recognized $2.8 million of gains related to the completion of two real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the six months ended June 30, 2021.

For more information about our sales of real estate, refer to the “Sales of real estate assets” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report.

Other comprehensive income

Total other comprehensive income for the six months ended June 30, 2022, decreased by $6.7 million to aggregate net unrealized losses of $4.6 million, compared to net unrealized gains of $2.1 million for the six months ended June 30, 2021, primarily due to the unrealized losses on foreign currency translation related to our operations in Canada and China.

Summary of capital expenditures

Our construction spending for the six months ended June 30, 2022 consisted of the following (in thousands):

Construction Spending						Six Months Ended June 30, 2022
Additions to real estate – consolidated projects						$	1,377,589
Investments in unconsolidated real estate joint ventures						336
Contributions from noncontrolling interests						(99,215)
Construction spending (cash basis)						1,278,710
Change in accrued construction						115,575
Construction spending for the six months ended June 30, 2022						1,394,285
Projected construction spending for the six months ending December 31, 2022						1,605,715
Guidance midpoint						$	3,000,000		(1)

The following table summarizes the total projected construction spending for the year ending December 31, 2022, which includes interest, property taxes, insurance, payroll, and other indirect project costs (in thousands):

Projected Construction Spending						Year Ending December 31, 2022
Development, redevelopment, and pre-construction projects						$			3,106,000
Contributions from noncontrolling interests (consolidated real estate joint ventures)									(286,000)
Revenue-enhancing and repositioning capital expenditures									98,000
Non-revenue-enhancing capital expenditures									82,000
Guidance midpoint						$			3,000,000									(1)

(1)During the three months ended June 30, 2022, we reduced our projected construction spending for the remainder of 2022 by $285 million. Refer to the “Capital resources” section within this Item 2 for additional information.

Projected results

We present updated guidance for EPS attributable to Alexandria’s common stockholders – diluted, funds from operations per share attributable to Alexandria’s common stockholders – diluted, and funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted, based on our current view of existing market conditions and other assumptions for the year ending December 31, 2022 as set forth in the tables below. The tables below also provide a reconciliation of EPS attributable to Alexandria’s common stockholders – diluted, the most directly comparable financial measure presented in accordance with GAAP, to funds from operations per share, a non-GAAP measure, and other key assumptions included in our updated guidance for the year ending December 31, 2022. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of “Forward-looking statements” within this Item 2.

Projected 2022 Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted						As of 7/25/22												As of 4/25/22
Earnings per share(1)						$2.14 to $2.20												$1.08 to $1.18
Depreciation and amortization of real estate assets									5.50												5.65
Gain on sales of real estate									(1.34)												—
Allocation of unvested restricted stock awards									(0.02)												(0.02)
Funds from operations per share(2)						$6.28 to $6.34												$6.71 to $6.81
Unrealized losses on non-real estate investments									2.07												1.67
Loss on early extinguishment of debt(3)									0.02												0.02
Acceleration of stock compensation due to executive officer resignation(4)									0.04												—
Allocation to unvested restricted stock awards									(0.02)												(0.02)
Other									(0.01)												(0.05)
Funds from operations per share, as adjusted(2)						$8.38 to $8.44												$8.33 to $8.43
Midpoint									$8.41												$8.38

(1)Excludes unrealized gains or losses after June 30, 2022 that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.

(2)Refer to the definition of “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” in the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(3)Refer to the “Extinguishment of secured notes payable” section in Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements of this report for additional information.

(4)Relates to the resignation of an executive officer in July 2022. General & administrative expenses increased by $4 million, including $7 million related to the acceleration of stock compensation due to the resignation of Stephen A. Richardson, our Co-Chief Executive Officer, partially offset by compensation savings in the second half of 2022. Refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements of this report for additional information.

Key Assumptions**(1)** (Dollars in millions)						As of 7/25/22												As of 4/25/22
			Low						High						Low						High
Occupancy percentage for operating properties in North America as of December 31, 2022						95.2%						95.8%						95.2%						95.8%
Lease renewals and re-leasing of space:
Rental rate increases						30.0%						35.0%						30.0%						35.0%
Rental rate increases (cash basis)						18.0%						23.0%						18.0%						23.0%
Same property performance:
Net operating income increase						6.0%						8.0%						5.9%						7.9%
Net operating income increase (cash basis)						6.8%						8.8%						6.5%						8.5%
Straight-line rent revenue(2)						$	144					$	154					$	154					$	164
General and administrative expenses(3)						$	172					$	180					$	168					$	176
Capitalization of interest						$	269					$	279					$	269					$	279
Interest expense						$	90					$	100					$	90					$	100

(1)Our assumptions presented in the table above are subject to a number of variables and uncertainties, including those discussed as “Forward-looking statements” under Part I; “Item 1A. Risk factors”; and “Item 7. Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for the year ended December 31, 2021, as well as in “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-Q.

(2)The $10 million reduction in our guidance range for straight-line rent revenue includes reductions attributable to the following items:

• Changes to our capital plan for 2022 as highlighted in our updated guidance for key sources and uses of capital in the “Capital resources” section in this Item 2, including the following:

• Lower acquisitions with operating activities in 2022 as well as the $350 million reduction in the midpoint of our guidance range for acquisitions; and

• Higher dispositions compared to sales of partial interest.

• Acceleration of $2 million contractual rental payments due under one long-term lease in our Cambridge/Inner Suburbs submarket.

• Early terminations of below-market leases:

• Includes two spaces aggregating 141,649 RSF in two markets, of which 51% has been re-leased at aggregate rental rate increases of 114% and 140% (cash basis). We expect the re-leased spaces to take occupancy by the third quarter of 2022.

(3)General and administrative expenses increased by $4 million, including $7 million related to the acceleration of stock compensation due to the resignation of Stephen A. Richardson, our Co-Chief Executive Officer, partially offset by compensation savings in the second half of 2022. Refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements of this report for additional information.

Key Credit Metrics						As of 7/25/22						As of 4/25/22
Net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2022, annualized						Less than or equal to 5.1x						Less than or equal to 5.1x
Fixed-charge coverage ratio – fourth quarter of 2022, annualized						Greater than or equal to 5.1x						Greater than or equal to 5.1x

Consolidated and unconsolidated real estate joint ventures

We present components of balance sheet and operating results information for the noncontrolling interest share of our consolidated real estate joint ventures and for our share of investments in unconsolidated real estate joint ventures to help investors estimate balance sheet and operating results information related to our partially owned entities. These amounts are estimated by computing, for each joint venture that we consolidate in our financial statements, the noncontrolling interest percentage of each financial item to arrive at the cumulative noncontrolling interest share of each component presented. In addition, for our real estate joint ventures that we do not control and do not consolidate, we apply our economic ownership percentage to the unconsolidated real estate joint ventures to arrive at our proportionate share of each component presented. Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for further discussion.

Consolidated Real Estate Joint Ventures
Property/Market/Submarket						Noncontrolling(1) Interest Share												Operating RSF at 100%
50 and 60 Binney Street/Greater Boston/Cambridge/Inner Suburbs									66.0		%										532,395
75/125 Binney Street/Greater Boston/Cambridge/Inner Suburbs									60.0		%										388,270
100 Binney Street/Greater Boston/Cambridge/Inner Suburbs									70.0		%	(2)									432,931
225 Binney Street/Greater Boston/Cambridge/Inner Suburbs									70.0		%										305,212
300 Third Street/Greater Boston/Cambridge/Inner Suburbs									70.0		%										131,963
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs									25.0		%										—			(3)
Alexandria Center® for Science and Technology – Mission Bay/San Francisco Bay Area/Mission Bay(4)									75.0		%										1,005,989
601, 611, 651, 681, 685, and 701 Gateway Boulevard/San Francisco Bay Area/South San Francisco									50.0		%										789,567
751 Gateway Boulevard/San Francisco Bay Area/South San Francisco									49.0		%										—			(3)
213 East Grand Avenue/San Francisco Bay Area/South San Francisco									70.0		%										300,930
500 Forbes Boulevard/San Francisco Bay Area/South San Francisco									90.0		%										155,685
Alexandria Center® for Life Science – Millbrae/San Francisco Bay Area/South San Francisco									51.5		%										—
Alexandria Point/San Diego/University Town Center(5)									45.0		%										1,337,916
5200 Illumina Way/San Diego/University Town Center									49.0		%										792,687
9625 Towne Centre Drive/San Diego/University Town Center									49.9		%										163,648
SD Tech by Alexandria/San Diego/Sorrento Mesa(6)									50.0		%										793,957
Pacific Technology Park/San Diego/Sorrento Mesa									50.0		%										572,887
1201 and 1208 Eastlake Avenue East and 199 East Blaine Street /Seattle/Lake Union									70.0		%										321,218
400 Dexter Avenue North/Seattle/Lake Union									70.0		%										290,111
800 Mercer Street/Seattle/Lake Union									40.0		%	(2)									—
Unconsolidated Real Estate Joint Ventures
Property/Market/Submarket						Our Ownership Share(7)												Operating RSF at 100%
1655 and 1725 Third Street/San Francisco Bay Area/Mission Bay									10.0		%										586,208
1401/1413 Research Boulevard/Maryland/Rockville									65.0		%	(8)									(9)
1450 Research Boulevard/Maryland/Rockville									73.2		%	(10)									42,679
101 West Dickman Street/Maryland/Beltsville									57.9		%	(10)									135,423

(1)In addition to the consolidated real estate joint ventures listed, various partners hold insignificant noncontrolling interests in three other real estate joint ventures in North America.

(2)Refer to the “Formation of consolidated real estate joint ventures and sales of partial interests” subsection in Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(3)Represents a property currently under construction. Refer to “New Class A development and redevelopment properties: current projects” within this Item 2 for additional details.

(4)Includes 409 and 499 Illinois Street, 1500 and 1700 Owens Street, and 455 Mission Bay Boulevard South.

(5)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4150, 4161, 4224, and 4242 Campus Point Court in our University Town Center submarket.

(6)Includes 9605, 9645, 9675, 9685, 9725, 9735, 9808, 9855, and 9868 Scranton Road and 10055 and 10065 Barnes Canyon Road in our Sorrento Mesa submarket.

(7)In addition to the unconsolidated real estate joint ventures listed, we hold an interest in one other insignificant unconsolidated real estate joint venture in North America.

(8)Represents our ownership interest; our voting interest is limited to 50%.

(9)Represents a joint venture with a distinguished retail real estate developer for an approximately 90,000 RSF retail shopping center.

(10)Represents a joint venture with a local real estate operator in which our partner manages the day-to-day activities that significantly affect the economic performance of the joint venture.

The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of June 30, 2022 (dollars in thousands):

												Maturity Date												Stated Rate						Interest Rate(1)												Aggregate Commitment at 100%						Debt Balance at 100%(2)
Unconsolidated Joint Venture						Our Share
1401/1413 Research Boulevard						65.0%									12/23/24									2.70%									3.32		%							$	28,500					$	28,064
1655 and 1725 Third Street						10.0%									3/10/25									4.50%									4.57		%							600,000						598,868
101 West Dickman Street						57.9%									11/10/26									SOFR+1.95%			(3)						3.51		%							26,750						10,129
1450 Research Boulevard						73.2%									12/10/26									SOFR+1.95%			(3)						N/A									13,000						—
																																										$	668,250					$	637,061

(1)Includes interest expense and amortization of loan fees.

(2)Represents outstanding principal, net of unamortized deferred financing costs, as of June 30, 2022.

(3)This loan is subject to a fixed SOFR floor rate of 0.75%.

The following tables present information related to the operating results and financial position of our consolidated and unconsolidated real estate joint ventures as of and for the three and six months ended June 30, 2022 (in thousands):

			Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures												Our Share of Unconsolidated Real Estate Joint Ventures
			June 30, 2022												June 30, 2022
			Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
Total revenues			$	89,263					$	167,940					$	2,728					$	5,566
Rental operations			(25,331)						(48,028)						(638)						(1,370)
			63,932						119,912						2,090						4,196
General and administrative			(547)						(870)						(25)						(96)
Interest			—						—						(918)						(1,778)
Depreciation and amortization of real estate assets			(26,418)						(50,099)						(934)						(1,889)
Fixed returns allocated to redeemable noncontrolling interests(1)			201						402						—						—
			$	37,168					$	69,345					$	213					$	433
Straight-line rent and below-market lease revenue			$	4,309					$	8,633					$	287					$	540
Funds from operations(2)			$	63,586					$	119,444					$	1,147					$	2,322

(1)Represents an allocation of joint venture earnings to redeemable noncontrolling interests primarily in one property in our South San Francisco submarket. These redeemable noncontrolling interests earn a fixed return on their investment rather than participate in the operating results of the property.

(2)Refer to the definition of “Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders” in the “Non-GAAP measures and definitions” section within this Item 2 for the definition and the reconciliation from the most directly comparable financial measure, presented in accordance with GAAP.

			As of June 30, 2022
			Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures						Our Share of Unconsolidated Real Estate Joint Ventures
Investments in real estate			$	3,036,883					$	110,461
Cash, cash equivalents, and restricted cash			110,417						4,466
Other assets			351,455						10,400
Secured notes payable			(6,077)						(83,998)
Other liabilities			(169,877)						(3,742)
Redeemable noncontrolling interests			(9,612)						—
			$	3,313,189					$	37,587

During the six months ended June 30, 2022 and 2021, our consolidated real estate joint ventures distributed an aggregate of $92.1 million and $53.8 million, respectively, to our joint venture partners. Refer to our consolidated statements of cash flows and Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Investments

We hold investments in publicly traded companies and privately held entities primarily involved in the life science, agtech, and technology industries. The tables below summarize components of our non-real estate investments and investment income. For additional information, refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report.

						June 30, 2022
(In thousands)						Three Months Ended									Six Months Ended									Year Ended December 31, 2021
Realized gains						$	28,647								$	51,761								$	215,845		(1)
Unrealized (losses) gains						(68,128)									(331,561)									43,632
Investment (loss) income						$	(39,481)								$	(279,800)								$	259,477

Investments (In thousands)						Cost									Unrealized Gains									Carrying Amount
Publicly traded companies						$	220,033								$	24,292		(2)						$	244,325
Entities that report NAV						433,133									355,062									788,195
Entities that do not report NAV:
Entities with observable price changes						68,744									80,457									149,201
Entities without observable price changes						395,271									—									395,271
Investments accounted for under the equity method of accounting						N/A									N/A									80,469
June 30, 2022						$	1,117,181		(3)						$	459,811		(4)						$	1,657,461
December 31, 2021						$	1,007,303								$	797,673								$	1,876,564

(1)Includes six separate significant realized gains aggregating $110.1 million related to the following transactions: (i) the sales of investments in three publicly traded biotechnology companies, (ii) a distribution received from a limited partnership investment, and (iii) the acquisition of two of our privately held non-real estate investments in a biopharmaceutical company and a biotechnology company.

(2)Comprises gross unrealized gains and losses of $122.5 million and $98.2 million, respectively.

(3)Represents 3.0% of gross assets as of June 30, 2022.

(4)Comprises gross unrealized gains and losses of $565.5 million and $105.7 million, respectively.

			Public/Private Mix (Cost)
			Tenant/Non-Tenant Mix (Cost)

Liquidity

Liquidity									Minimal Outstanding Borrowings and Significant Availability on Unsecured Senior Line of Credit
$5.5B									(in millions)
(In millions)
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program			$	2,850
Outstanding forward equity sales agreements(1)			1,697
Cash, cash equivalents, and restricted cash			518
Remaining construction loan commitments			169
Investments in publicly traded companies			244
Liquidity as of June 30, 2022			$	5,478

(1)Represents expected net proceeds from the future settlement of 9.0 million shares of forward equity sales agreements.

We expect to meet certain long-term liquidity requirements, such as requirements for development, redevelopment, other construction projects, capital improvements, tenant improvements, property acquisitions, leasing costs, non-revenue-enhancing capital expenditures, scheduled debt maturities, distributions to noncontrolling interests, and payment of dividends through net cash provided by operating activities, periodic asset sales, strategic real estate joint venture capital, long-term secured and unsecured indebtedness, borrowings under our unsecured senior line of credit, issuances under our commercial paper program, and issuances of additional debt and/or equity securities.

We also expect to continue meeting our short-term liquidity and capital requirements, as further detailed in this section, generally through our working capital and net cash provided by operating activities. We believe that the net cash provided by operating activities will continue to be sufficient to enable us to make the distributions necessary to continue qualifying as a REIT.

For additional information on our liquidity requirements related to our contractual obligations and commitments, refer to Note 5 – “Leases” and Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Over the next several years, our balance sheet, capital structure, and liquidity objectives are as follows:

• Retain positive cash flows from operating activities after payment of dividends and distributions to noncontrolling interests for investment in development and redevelopment projects and/or acquisitions;

• Improve credit profile and relative long-term cost of capital;

• Maintain diverse sources of capital, including sources from net cash provided by operating activities, unsecured debt, secured debt, selective real estate asset sales, partial interest sales, non-real estate investment sales, and common stock;

• Maintain commitment to long-term capital to fund growth;

• Maintain prudent laddering of debt maturities;

• Maintain solid credit metrics;

• Maintain significant balance sheet liquidity;

• Prudently manage variable-rate debt exposure through the reduction of short-term and medium-term variable-rate debt;

• Maintain a large, unencumbered asset pool to provide financial flexibility;

• Fund common stock dividends and distributions to noncontrolling interests from net cash provided by operating activities;

• Manage a disciplined level of value-creation projects as a percentage of our gross real estate assets; and

• Maintain high levels of pre-leasing and percentage leased in value-creation projects.

The following table presents the availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program; availability under our secured construction loan; outstanding forward equity sales agreements; cash, cash equivalents, and restricted cash; and investments in publicly traded companies as of June 30, 2022 (dollars in thousands):

Description						Stated Rate						Aggregate Commitments						Outstanding Balance(1)						Remaining Commitments/Liquidity
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program						L+0.815%						$	3,000,000					$	149,958					$	2,850,000
Outstanding forward equity sales agreements(2)																								1,696,960
Cash, cash equivalents, and restricted cash																								517,662
Remaining construction loan commitments						SOFR+2.70%						$	195,300					$	24,308					169,325
Investments in publicly traded companies																								244,325
Liquidity as of June 30, 2022																								$	5,478,272

(1)Represents outstanding principal, net of unamortized deferred financing costs, as of June 30, 2022.

(2)Represents expected net proceeds from the future settlement of 9.0 million shares of forward equity sales agreements.

Cash, cash equivalents, and restricted cash

As of June 30, 2022 and December 31, 2021, we had $517.7 million and $415.2 million, respectively, of cash, cash equivalents, and restricted cash. We expect existing cash, cash equivalents, and restricted cash, net cash from operating activities, proceeds from real estate asset sales and partial interest sales, non-real estate investment sales, borrowings under our unsecured senior line of credit, issuances under our commercial paper program, issuances of unsecured notes payable, borrowings under secured construction loans, and issuances of common stock to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities, such as regular quarterly dividends, distributions to noncontrolling interests, scheduled debt repayments, acquisitions, and certain capital expenditures, including expenditures related to construction activities.

Cash flows

We report and analyze our cash flows based on operating activities, investing activities, and financing activities. The following table summarizes changes in our cash flows for the six months ended June 30, 2022 and 2021 (in thousands):

			Six Months Ended June 30,
			2022						2021						Change
Net cash provided by operating activities			$	530,120					$	451,814					$	78,306
Net cash used in investing activities			$	(3,096,199)					$	(4,136,457)					$	1,040,258
Net cash provided by financing activities			$	2,668,900					$	3,444,082					$	(775,182)

Operating activities

Cash flows provided by operating activities are primarily dependent upon the occupancy level of our asset base, the rental rates of our leases, the collectibility of rent and recovery of operating expenses from our tenants, the timing of completion of development and redevelopment projects, and the timing of acquisitions and dispositions of operating properties. Net cash provided by operating activities for the six months ended June 30, 2022 increased by $78.3 million to $530.1 million, compared to $451.8 million for the six months ended June 30, 2021. The increase was primarily attributable to (i) cash flows generated from our highly leased development and redevelopment projects recently placed into service, (ii) income-producing acquisitions since January 1, 2021, and (iii) increases in rental rates on lease renewals and re-leasing of space since January 1, 2021.

Investing activities

Cash used in investing activities for the six months ended June 30, 2022 and 2021 consisted of the following (in thousands):

			Six Months Ended June 30,												Increase (Decrease)
			2022						2021
Sources of cash from investing activities:
Proceeds from sales of real estate			$	375,379					$	25,695					$	349,684
Change in escrow deposits			138,440						—						138,440
Return of capital from unconsolidated real estate joint ventures			471						—						471
Sales of and distributions from non-real estate investments			90,228						162,550						(72,322)
			604,518						188,245						416,273
Uses of cash for investing activities:
Additions to real estate			1,377,589						1,001,983						375,606
Purchases of real estate			2,182,699						2,947,469						(764,770)
Change in escrow deposits			—						131,974						(131,974)
Acquisition of interest in unconsolidated real estate joint venture			—						9,048						(9,048)
Investments in unconsolidated real estate joint ventures			336						720						(384)
Additions to non-real estate investments			140,093						233,508						(93,415)
			3,700,717						4,324,702						(623,985)
Net cash used in investing activities			$	3,096,199					$	4,136,457					$	(1,040,258)

The decrease in net cash used in investing activities for the six months ended June 30, 2022 when compared to the six months ended June 30, 2021 was primarily due to a decreased use of cash for purchases of real estate and increase in cash obtained from dispositions of real estate, partially offset by increased cash used for additions to real estate. Refer to Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Financing activities

Cash flows provided by financing activities for the six months ended June 30, 2022 and 2021 consisted of the following (in thousands):

			Six Months Ended June 30,
			2022						2021						Change
Borrowings from secured notes payable			$	15,973					$	—					$	15,973
Repayments of borrowings from secured notes payable			(906)						(16,250)						15,344
Payment for the defeasance of secured notes payable			(198,304)						—						(198,304)
Proceeds from issuance of unsecured senior notes payable			1,793,318						1,743,716						49,602
Repayments of unsecured senior notes payable			—						(650,000)						650,000
Premium paid for early extinguishment of debt			—						(66,829)						66,829
Borrowings from unsecured senior line of credit			1,180,000						2,101,000						(921,000)
Repayments of borrowings from unsecured senior line of credit			(1,180,000)						(2,101,000)						921,000
Proceeds from issuance under commercial paper program			7,410,000						12,290,000						(4,880,000)
Repayments of borrowings from commercial paper program			(7,530,000)						(12,090,000)						4,560,000
Payments of loan fees			(17,596)						(16,870)						(726)
Changes related to debt			1,472,485						1,193,767						278,718
Contributions from and sales of noncontrolling interests			1,029,134						357,597						671,537
Distributions to and purchases of noncontrolling interests			(92,224)						(53,812)						(38,412)
Proceeds from the issuance of common stock			646,316						2,266,464						(1,620,148)
Dividend payments			(371,547)						(311,760)						(59,787)
Taxes paid related to net settlement of equity awards			(15,264)						(8,174)						(7,090)
Net cash provided by financing activities			$	2,668,900					$	3,444,082					$	(775,182)

Capital resources

We expect that our principal liquidity needs for the year ending December 31, 2022 will be satisfied by the multiple sources of capital shown in the table below. There can be no assurance that our sources and uses of capital will not be materially higher or lower than these expectations.

Key changes to our guidance include the reduction of an aggregate $635 million to our uses of capital, comprising a $350 million reduction in acquisitions and a $285 million reduction in construction spending. This reduction was offset by construction spending from January through June 2022, which increased by $335 million to slightly above the high end of our previous guidance range, as a result of construction spending associated with the leasing of our development and redevelopment projects under construction and our near-term pipeline projects. In addition, the midpoint of our guidance for funds from operations per share, as adjusted increased by three cents driven by strong same property performance and general and administrative savings in the second half of 2022 resulting from the retirement of Stephen A. Richardson, our Co-Chief Executive Officer.

Key Sources and Uses of Capital (In millions)						2022 Guidance																											As of 4/25/22 Midpoint						Key Changes to Midpoint
			Range												Midpoint						Certain Completed Items
Sources of capital:
Net cash provided by operating activities after dividends						$	275					$	325					$	300														$	300
Net incremental debt						1,361						561						961						See below									950
Dispositions and sales of partial interest (refer to the “Dispositions and sales of partial interest” section within Item 2 for additional information)						1,450						2,600						2,025						$	1,287								1,950						$	75
Common equity						2,364						2,364						2,364						$	2,364		(1)						2,750						$	(386)
Total sources of capital						$	5,450					$	5,850					$	5,650														$	5,950
Uses of capital:
Construction (refer to the “Summary of capital expenditures” section within Item 2 for additional information)						$	2,900					$	3,100					$	3,000														$	2,950					$	50
Acquisitions (refer to the “Acquisitions” section within Item 2 for additional information)						2,550						2,750						2,650						$	2,130								3,000						$	(350)
Total uses of capital						$	5,450					$	5,850					$	5,650														$	5,950
Incremental debt (included above):
Issuance of unsecured senior notes payable						$	1,800					$	1,800					$	1,800					$	1,800								$	1,800
Repayments of secured notes payable						(195)						(195)						(195)						$	(195)								(195)
Unsecured senior line of credit, commercial paper, and other						(44)						(744)						(394)															(655)
Incremental cash expected to be held at December 31, 2022(2)						(200)						(300)						(250)															—						$	(250)
Net incremental debt						$	1,361					$	561					$	961														$	950

(1)During the six months ended June 30, 2022, we entered into new forward equity sales agreements aggregating $2.4 billion to sell 12.3 million shares of our common stock. During the three months ended March 31, 2022, we settled a portion of these forward equity sales agreements by issuing 3.2 million shares and received net proceeds of $648.2 million. We expect to issue 9.0 million shares to settle our remaining outstanding forward equity sales agreements and receive net proceeds of approximately $1.7 billion in 2022. Refer to Note 13 – “Stockholders’ equity” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(2)We expect this forecasted cash at December 31, 2022 to result in a reduction of our 2023 debt capital needs.

The key assumptions behind the sources and uses of capital in the table above include a favorable capital market environment, performance of our core operating properties, lease-up and delivery of current and future development and redevelopment projects, and leasing activity. Our expected sources and uses of capital are subject to a number of variables and uncertainties, including those discussed as “Forward-looking statements” under Part I; “Item 1A. Risk factors”; and “Item 7. Management’s discussion and analysis of financial condition and results of operations” of our annual report on Form 10-K for the year ended December 31, 2021; as well as “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-Q. We expect to update our forecast of sources and uses of capital on a quarterly basis.

Sources of capital

Net cash provided by operating activities after dividends

We expect to retain $275.0 million to $325.0 million of net cash flows from operating activities after payment of common stock dividends, and distributions to noncontrolling interests for the year ending December 31, 2022. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences. For the year ending December 31, 2022, we expect our recently delivered projects, our highly pre-leased value-creation projects expected to be completed and contributions from Same Properties and recently acquired properties, to contribute significant increases in income from rentals, net operating income, and cash flows. We anticipate significant contractual near-term growth in annual cash rents of $39 million related to the commencement of contractual rents on the projects recently placed into service that are near the end of their initial free rent period. Refer to the “Cash flows” subsection of the “Liquidity” section within this Item 2 for a discussion of cash flows provided by operating activities for the six months ended June 30, 2022.

Debt

We expect to fund a portion of our capital needs for the remainder of 2022 from the real estate dispositions and sales of partial interest, settlement of our outstanding forward equity sales agreements, issuances under our commercial paper program discussed below, borrowings under our unsecured senior line of credit, and borrowings under secured construction loans.

As of June 30, 2022, we have no outstanding balance on our unsecured senior line of credit. Our unsecured senior line of credit has an aggregate commitment of $3.0 billion and bears an interest rate of LIBOR plus 0.825% with a zero percent LIBOR floor and is subject to certain annual sustainability measures entitling us to a temporary reduction in the interest rate margin of one basis point, but not below zero percent per year. During the year ended December 31, 2021, we achieved certain sustainability measures, as described in our unsecured senior line of credit agreement, which reduced our borrowing rate to LIBOR plus 0.815% for a one-year period. In addition to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of 0.15% based on the aggregate commitments outstanding. We plan to amend and extend our unsecured senior line of credit during the second half of 2022. We may also consider increasing the size of our commercial paper program up to to 50% of the total commitments under our unsecured senior line of credit.

We use our unsecured senior line of credit to fund working capital, construction activities, and, from time to time, acquisition of properties. Borrowings under the unsecured senior line of credit bear interest at a “Eurocurrency Rate,” a “LIBOR Floating Rate,” or a “Base Rate” specified in the unsecured senior line of credit agreement plus, in any case, the Applicable Margin. The Eurocurrency Rate specified in the unsecured senior line of credit agreement is, as applicable, the rate per annum equal to either (i) the LIBOR or a successor rate thereto as agreed to by the administrative agent and the Company for loans denominated in a LIBOR quoted currency (i.e., U.S. dollars, euro, sterling, or yen), (ii) the average annual yield rates applicable to Canadian dollar bankers’ acceptances for loans denominated in Canadian dollars, (iii) the Bank Bill Swap Reference Bid rate for loans denominated in Australian dollars, or (iv) the rate designated with respect to the applicable alternative currency for loans denominated in a non-LIBOR quoted currency (other than Canadian or Australian dollars). The LIBOR Floating Rate means, for any day, one-month LIBOR, or a successor rate thereto as agreed to by the administrative agent and the Company for loans denominated in U.S. dollars. The Base Rate means, for any day, a fluctuating rate per annum equal to the highest of (i) the federal funds rate plus 1/2 of 1.00%, (ii) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate,” and (iii) the Eurocurrency Rate plus 1.00%. Our unsecured senior line of credit contains a feature that allows lenders to competitively bid on the interest rate for borrowings under the facility. This may result in an interest rate that is below the stated rate.

We established a commercial paper program that provides us with the ability to issue up to $1.5 billion of commercial paper notes with a maturity of generally 30 days or less and with 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 balance on our commercial paper program. We use borrowings under the program to fund short-term capital needs. The notes issued under our commercial paper program are sold under customary terms in the commercial paper market. They are typically issued at a discount to par, representing a yield to maturity dictated by market conditions at the time of issuance. In the event we are unable to issue commercial paper notes or refinance outstanding commercial paper notes under terms equal to or more favorable than those under the unsecured senior line of credit, we expect to borrow under the unsecured senior line of credit at LIBOR plus 0.815%. The commercial paper notes sold during the three months ended June 30, 2022 were issued at a weighted-average yield to maturity of 1.35%. As of June 30, 2022, we had an outstanding balance of $150.0 million under our commercial paper program.

In February 2022, we opportunistically issued $1.8 billion of unsecured senior notes payable with a weighted-average interest rate of 3.28% and a weighted-average maturity of 22.0 years. The unsecured senior notes consisted of $800.0 million of 2.95% green unsecured senior notes due 2034 and $1.0 billion of 3.55% unsecured senior notes due 2052.

In April 2022, we repaid two secured notes payable aggregating $195.0 million due in 2024 with an effective interest rate of 3.40% and recognized a loss on early extinguishment of debt of $3.3 million, including a prepayment penalty and the write-off of unamortized loan fees.

Proactive management of transition away from LIBOR

LIBOR has been used extensively in the U.S. and globally as a reference rate for various commercial and financial contracts, including variable-rate debt and interest rate swap contracts. However, based on an announcement made by the Financial Conduct Authority (“FCA”) on March 5, 2021, one-week and two-month LIBOR rates ceased to be published after December 31, 2021; all other LIBOR settings will effectively cease after June 30, 2023, and it is expected that LIBOR will no longer be used after this date. In addition, it is expected that LIBOR will no longer be used in new contracts entered into after December 31, 2021. To address the impending discontinuation of LIBOR, in the U.S. the Alternative Reference Rates Committee (“ARRC”) was established to help ensure the successful transition from LIBOR. In June 2017, the ARRC selected SOFR, a new index calculated by reference to short-term repurchase agreements backed by U.S. Treasury securities, as its preferred replacement for U.S. dollar LIBOR. We have been closely monitoring developments related to the transition away from LIBOR and have implemented numerous proactive measures to minimize the potential impact of the transition to the Company, specifically:

• We have proactively eliminated outstanding LIBOR-based borrowings under our unsecured senior bank term loans and secured construction loans through repayments. From January 2017 through June 2022, we retired approximately $1.5 billion of all such debt.

• During 2020, we increased the aggregate amount of our commercial paper program to $1.5 billion from $750.0 million. This program provides us with ability to issue commercial paper notes bearing interest at short-term fixed rates, with a maturity of generally 30 days or less and with a maximum maturity of 397 days from the date of issuance. Our commercial paper program is not subject to LIBOR and is used for funding short-term working capital needs. As of June 30, 2022, we had $150.0 million outstanding under our commercial paper program.

• We continue to prudently manage outstanding borrowings under our unsecured senior line of credit. As of June 30, 2022, we had no borrowings outstanding under our unsecured senior line of credit. Additionally, new loans that we’ve entered into recently are SOFR-based rather than LIBOR-based. Our consolidated real estate joint venture at 99 Coolidge Avenue holds a SOFR-based secured construction loan with an outstanding balance of $24.3 million. In addition, two of our unconsolidated real estate joint ventures at 1450 Research Boulevard and 101 West Dickman Street each hold a SOFR-based secured construction loan. As of June 30, 2022, 1450 Research Boulevard had no outstanding balance on its secured construction loan and 101 West Dickman Street had an outstanding balance of $10.1 million.

• Our unsecured senior line of credit contains fallback language generally consistent with the ARRC’s Amendment Approach, which provides a streamlined amendment approach for negotiating a benchmark replacement.

• We continue to monitor developments by the FCA, the ARRC, and other governing bodies involved in LIBOR transition.

• As of June 30, 2022, our unsecured senior line of credit represents our only debt instrument tied to LIBOR. We plan to amend and extend our unsecured senior line of credit during the second half of 2022. In connection with this amendment, we expect to convert the borrowing rate from a LIBOR-based rate to a SOFR-based rate.

Refer to Note 10 – “Secured and unsecured senior debt” and Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report and “Item 1A. Risk factors” of our annual report on Form 10-K for the year ended December 31, 2021 for additional information about our management of risks related to the transition away from LIBOR.

Real estate dispositions and partial interest sales

We expect to continue the disciplined execution of select sales of operating assets. Future sales will provide an important source of capital to fund a portion of pending and recently completed opportunistic acquisitions and our highly leased value-creation development and redevelopment projects, and also provide significant capital for growth. We may also consider additional sales of partial interests in core Class A properties and/or development projects. For 2022, we expect real estate dispositions and sales of partial interest ranging from $1.5 billion to $2.6 billion. The amount of asset sales necessary to meet our forecasted sources of capital will vary depending upon the amount of EBITDA associated with the assets sold.

Refer to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report, and the “Dispositions and sales of partial interests” subsection of “Investments in real estate” within this Item 2 for additional information on our dispositions and sales of partial interests.

As a REIT, we are generally subject to a 100% tax on the net income from real estate asset sales that the IRS characterizes as “prohibited transactions.” We do not expect our sales will be categorized as prohibited transactions. However, unless we meet certain “safe harbor” requirements, whether a real estate asset sale is a “prohibited transaction” will be based on the facts and circumstances of the sale. Our real estate asset sales may not always meet such “safe harbor” requirements. Refer to “Item 1A. Risk factors” of our annual report on Form 10-K for the year ended December 31, 2021 for additional information about the “prohibited transaction” tax.

Common equity transactions

During the six months ended June 30, 2022, our common equity transactions included the following:

• In January 2022, we entered into new forward equity sales agreements aggregating $1.7 billion to sell 8.1 million shares of our common stock (including the exercise of an underwriters’ option) at a public offering price of $210.00 per share, before underwriting discounts and commissions.

• In March 2022, we settled a portion of these forward equity sales agreements by issuing 3.2 million shares and received net proceeds of $648.2 million.

• In December 2021, we entered into a new ATM common stock offering program, which allows us to sell up to an aggregate of $1.0 billion of our common stock.

• During the three months ended March 31, 2022, we entered into new forward equity sales agreements aggregating $350.0 million to sell 1.8 million shares under our ATM program at an average price of $192.42 per share (before underwriting discounts).

• During the three months ended June 30, 2022, we entered into additional forward equity sales agreements aggregating $403.4 million to sell 2.4 million shares under our ATM program at an average price of $169.38 per share (before underwriting discounts).

• As of June 30, 2022, the remaining aggregate amount available under our ATM program for future sales of common stock is $246.6 million. We expect to settle these forward equity sales agreements in 2022.

During the three months ended June 30, 2022, we did not issue shares to settle our outstanding forward equity agreements. We expect to issue an aggregate of 9.0 million shares at an average price of $187.91 per share to settle all our outstanding forward equity sales agreements and receive net proceeds of approximately $1.7 billion in the second half of 2022.

Other sources

Under our current shelf registration statement filed with the SEC, we may offer common stock, preferred stock, debt, and other securities. These securities may be issued, from time to time, at our discretion based on our needs and market conditions, including, as necessary, to balance our use of incremental debt capital.

Additionally, we hold interests, together with joint venture partners, in real estate joint ventures that we consolidate in our financial statements. These joint venture partners may contribute equity into these entities primarily related to their share of funds for construction and financing-related activities. During the six months ended June 30, 2022, we received $1.0 billion of contributions from and sales of noncontrolling interests.

Uses of capital

Summary of capital expenditures

One of our primary uses of capital relates to the development, redevelopment, pre-construction, and construction of properties. We currently have projects in our growth pipeline aggregating 5.9 million RSF of Class A office/laboratory, agtech, and technology office space undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.2 million SF of future development projects in North America. We incur capitalized construction costs related to development, redevelopment, pre-construction, and other construction activities. We also incur additional capitalized project costs, including interest, property taxes, insurance, and other costs directly related and essential to the development, redevelopment, pre-construction, or construction of a project, during periods when activities necessary to prepare an asset for its intended use are in progress. Refer to the “New Class A development and redevelopment properties: current projects” and “Summary of capital expenditures” subsections of the “Investments in real estate” section within this Item 2 for more information on our capital expenditures.

We capitalize interest cost as a cost of the project only during the period in which activities necessary to prepare an asset for its intended use are ongoing, provided that expenditures for the asset have been made and interest cost has been incurred. Capitalized interest for the six months ended June 30, 2022 and 2021 of $126.0 million and $83.4 million, respectively, was classified in investments in real estate.

Property taxes, insurance on real estate, and indirect project costs, such as construction administration, legal fees, and office costs that clearly relate to projects under development or construction, are capitalized as incurred during the period an asset is undergoing activities to prepare it for its intended use. We capitalized payroll and other indirect costs related to development, redevelopment, pre-construction, and construction projects aggregating $43.9 million and $34.0 million and property taxes, insurance on real estate and other operating costs aggregating $45.2 million and $34.6 million for the six months ended June 30, 2022 and 2021, respectively.

The increase in capitalized costs for the six months ended June 30, 2022, compared to the same period in 2021, was primarily due to an increase in our value-creation pipeline projects undergoing construction and pre-construction activities in 2022 over 2021. Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. Should we cease activities necessary to prepare an asset for its intended use, the interest, taxes, insurance, and certain other direct and indirect project costs related to the asset would be expensed as incurred. Expenditures for repairs and maintenance are expensed as incurred.

Fluctuations in our development, redevelopment, and construction activities could result in significant changes to total expenses and net income. For example, had we experienced a 10% reduction in development, redevelopment, and construction activities without a corresponding decrease in indirect project costs, including interest and payroll, total expenses would have increased by approximately $17.0 million for the six months ended June 30, 2022.

We use third-party brokers to assist in our leasing activity, who are paid on a contingent basis upon successful leasing. We are required to capitalize initial direct costs related to successful leasing transactions that result directly from and are essential to the lease transaction and would not have been incurred had that lease transaction not been successfully executed. During the six months ended June 30, 2022, we capitalized total initial direct leasing costs of $129.5 million. Costs that we incur to negotiate or arrange a lease regardless of its outcome, such as fixed employee compensation, tax, or legal advice to negotiate lease terms, and other costs, are expensed as incurred.

Acquisitions

Refer to the “Acquisitions” section of Note 3 – “Investments in real estate” and to Note 4 – “Consolidated and unconsolidated real estate joint ventures” to our unaudited consolidated financial statements under Item 1 of this report, and the “Acquisitions” subsection of the “Investments in real estate” section within this Item 2 for information on our acquisitions.

Dividends

During the six months ended June 30, 2022 and 2021, we paid common stock dividends of $371.5 million and $311.8 million, respectively. The increase of $59.8 million in dividends paid on our common stock during the six months ended June 30, 2022, compared to the six months ended June 30, 2021, was primarily due to an increase in number of common shares outstanding subsequent to January 1, 2021 as a result of issuances of common stock under our ATM program and settlement of forward equity sales agreements, and partially due to the increase in the related dividends to $2.30 per common share paid during the six months ended June 30, 2022 from $2.18 per common share paid during the six months ended June 30, 2021.

Secured notes payable

Secured notes payable as of June 30, 2022 consisted of three notes secured by one property. Our secured notes payable typically require monthly payments of principal and interest and had a weighted-average interest rate of approximately 3.78%. As of June 30, 2022, the total book value of our investments in real estate securing debt was approximately $146.7 million. As of June 30, 2022, our secured notes payable, including unamortized discounts and deferred financing costs, comprised approximately $678 thousand and $24.3 million of fixed-rate debt and unhedged variable-rate debt, respectively.

Unsecured senior notes payable and unsecured senior line of credit

The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior notes payable as of June 30, 2022 were as follows:

Covenant Ratios(1)						Requirement						June 30, 2022
Total Debt to Total Assets						Less than or equal to 60%						29%
Secured Debt to Total Assets						Less than or equal to 40%						0.1%
Consolidated EBITDA(2) to Interest Expense						Greater than or equal to 1.5x						15.7x
Unencumbered Total Asset Value to Unsecured Debt						Greater than or equal to 150%						333%

(1)All covenant ratio titles utilize terms as defined in the respective debt agreements.

(2)The calculation of consolidated EBITDA is based on the definitions contained in our loan agreements and is not directly comparable to the computation of EBITDA as described in Exchange Act Release No. 47226.

In addition, the terms of the indentures, among other things, limit the ability of the Company, Alexandria Real Estate Equities, L.P., and the Company’s subsidiaries to (i) consummate a merger, or consolidate or sell all or substantially all of the Company’s assets, and (ii) incur certain secured or unsecured indebtedness.

The requirements of, and our actual performance with respect to, the key financial covenants under our unsecured senior line of credit as of June 30, 2022 were as follows:

Covenant Ratios(1)						Requirement						June 30, 2022
Leverage Ratio						Less than or equal to 60.0%						28.5%
Secured Debt Ratio						Less than or equal to 45.0%						0.1%
Fixed-Charge Coverage Ratio						Greater than or equal to 1.50x						4.55x
Unsecured Interest Coverage Ratio						Greater than or equal to 1.75x						11.91x

(1)All covenant ratio titles utilize terms as defined in the credit agreement.

Estimated interest payments

Estimated interest payments on our fixed-rate debt were calculated based upon contractual interest rates, including interest payment dates and scheduled maturity dates. As of June 30, 2022, 98.3% of our debt was fixed-rate debt. For additional information regarding our debt, refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements under Item 1 of this report.

Ground lease obligations

Operating lease agreements

Ground lease obligations as of June 30, 2022 included leases for 41 of our properties, which accounted for approximately 9% 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 $6.6 million as of June 30, 2022, our ground lease obligations have remaining lease terms ranging from approximately 31 to 100 years, including available extension options that we are reasonably certain to exercise.

As of June 30, 2022, the remaining contractual payments under ground and office lease agreements in which we are the lessee aggregated $893.1 million and $32.5 million, respectively. We are required to recognize a right-of-use asset and a related liability to account for our future obligations under operating lease arrangements in which we are the lessee. The operating lease liability is measured based on the present value of the remaining lease payments, including payments during the term under our extension options that we are reasonably certain to exercise. The right-of-use asset is equal to the corresponding operating lease liability, adjusted for the initial direct leasing cost 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. As of June 30, 2022, the present value of the remaining contractual payments aggregating $925.6 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $412.5 million, which was classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets. As of June 30, 2022, the weighted-average remaining lease term of operating leases in which we are the lessee was approximately 42 years, and the weighted-average discount rate was 4.61%. 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 $567.7 million. We classify the right-of-use asset in other assets in our consolidated balance sheets. Refer to the “Lease accounting” section of Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Commitments

As of June 30, 2022, remaining aggregate costs under contract for the construction of properties undergoing development, redevelopment, and improvements under the terms of leases approximated $3.9 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 $21.0 million primarily related to construction projects and an anticipated acquisition .

We are committed to funding approximately $420.5 million related to our non-real estate investments. These funding commitments are primarily associated with our investments in privately held entities that report NAV, which expire at various dates over the next 11 years, with a weighted-average expiration of 8.8 years as of June 30, 2022.

Exposure to environmental liabilities

In connection with the acquisition of all of our properties, we have obtained Phase I environmental assessments to ascertain the existence of any environmental liabilities or other issues. The Phase I environmental assessments of our properties have not revealed any environmental liabilities that we believe would have a material adverse effect on our financial condition or results of operations taken as a whole, nor are we aware of any material environmental liabilities that have occurred since the Phase I environmental assessments were completed. In addition, we carry a policy of pollution legal liability insurance covering exposure to certain environmental losses at substantially all of our properties.

Foreign currency translation gains and losses

The following table presents the change in accumulated other comprehensive loss attributable to Alexandria Real Estate Equities, Inc.’s stockholders during the six months ended June 30, 2022 due to the changes in the foreign exchange rates for our real estate investments in Canada and Asia. We reclassify unrealized foreign currency translation gains and losses into net income as we dispose of these holdings.

(In thousands)						Total
Balance as of December 31, 2021						$	(7,294)
Other comprehensive loss before reclassifications						(4,557)
Net other comprehensive loss						(4,557)
Balance as of June 30, 2022						$	(11,851)

Inflation

As of June 30, 2022, approximately 91% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Approximately 97% of our leases (on an annual rental revenue basis) contained effective annual rent escalations that were either fixed (generally ranging from 3.0% to 3.5%) or indexed based on a consumer price index or other indices. Accordingly, we do not believe that our cash flows or earnings from real estate operations are subject to significant risks from inflation. A period of inflation, however, could cause an increase in the cost of our variable-rate borrowings, including borrowings related to our unsecured senior line of credit, commercial paper program, secured construction loans, and secured loans held by our unconsolidated real estate joint ventures.

In addition, refer to “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-Q for a discussion about risks that inflation directly or indirectly may pose to our business.

Issuer and guarantor subsidiary summarized financial information

Alexandria Real Estate Equities, Inc. (the “Issuer”) has sold certain debt securities registered under the Securities Act of 1933, as amended, that are fully and unconditionally guaranteed by Alexandria Real Estate Equities, L.P. (the “LP” or the “Guarantor Subsidiary”), an indirectly 100% owned subsidiary of the Issuer. The Issuer’s other subsidiaries, including, but not limited to, the subsidiaries that own substantially all of its real estate (collectively, the “Combined Non-Guarantor Subsidiaries”), will not provide a guarantee of such securities, including the subsidiaries that are partially or 100% owned by the LP. The following summarized financial information presents, on a combined basis, balance sheet information as of June 30, 2022 and December 31, 2021, and results of operations and comprehensive income for the six months ended June 30, 2022 and year ended December 31, 2021 for the Issuer and the Guarantor Subsidiary. The information presented below excludes eliminations necessary to arrive at the information on a consolidated basis. In presenting the summarized financial statements, the equity method of accounting has been applied to (i) the Issuer’s interests in the Guarantor Subsidiary, (ii) the Guarantor Subsidiary’s interests in the Combined Non-Guarantor Subsidiaries, and (iii) the Combined Non-Guarantor Subsidiaries’ interests in the Guarantor Subsidiary, where applicable, even though all such subsidiaries meet the requirements to be consolidated under GAAP. All assets and liabilities have been allocated to the Issuer and the Guarantor Subsidiary generally based on legal entity ownership.

The following tables present combined summarized financial information as of June 30, 2022 and December 31, 2021, for the six months ended June 30, 2022, and for the year ended December 31, 2021 for the Issuer and Guarantor Subsidiary. Amounts provided do not represent our total consolidated amounts (in thousands):

						June 30, 2022						December 31, 2021
Assets:
Cash, cash equivalents, and restricted cash						$	124,597					$	78,856
Other assets						98,647						101,956
Total assets						$	223,244					$	180,812
Liabilities:
Unsecured senior notes payable						$	10,096,462					$	8,316,678
Unsecured senior line of credit and commercial paper						149,958						269,990
Other liabilities						422,943						401,721
Total liabilities						$	10,669,363					$	8,988,389

						Six Months Ended June 30, 2022						Year Ended December 31, 2021
Total revenues						$	16,116					$	26,798
Total expenses						(140,904)						(363,525)
Net loss						(124,788)						(336,727)
Net income attributable to unvested restricted stock awards						(4,134)						(7,848)
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders						$	(128,922)					$	(344,575)

As of June 30, 2022, 424 of our 436 properties were held indirectly by the REIT’s wholly owned consolidated subsidiary, Alexandria Real Estate Equities, L.P.

Critical accounting estimates

Refer to our annual report on Form 10-K for the year ended December 31, 2021 for a discussion of our critical accounting estimates related to recognition of real estate acquired, impairment of long-lived assets, monitoring of tenant credit quality, and allowance for credit losses.

Non-GAAP measures and definitions

This section contains additional information of certain non-GAAP financial measures and the reasons why we use these supplemental measures of performance and believe they provide useful information to investors, as well as the definitions of other terms used in this report.

Funds from operations and funds from operations, as adjusted, attributable to Alexandria Real Estate Equities, Inc.’s common stockholders

GAAP-basis accounting for real estate assets utilizes historical cost accounting and assumes that real estate values diminish over time. In an effort to overcome the difference between real estate values and historical cost accounting for real estate assets, the Nareit Board of Governors established funds from operations as an improved measurement tool. Since its introduction, funds from operations has become a widely used non-GAAP financial measure among equity REITs. We believe that funds from operations is helpful to investors as an additional measure of the performance of an equity REIT. Moreover, we believe that funds from operations, as adjusted, allows investors to compare our performance to the performance of other real estate companies on a consistent basis, without having to account for differences recognized because of real estate acquisition and disposition decisions, financing decisions, capital structure, capital market transactions, variances resulting from the volatility of market conditions outside of our control, or other corporate activities that may not be representative of the operating performance of our properties.

The 2018 White Paper published by the Nareit Board of Governors (the “Nareit White Paper”) defines funds from operations as net income (computed in accordance with GAAP), excluding gains or losses on sales of real estate, and impairments of real estate, plus depreciation and amortization of operating real estate assets, and after adjustments for our share of consolidated and unconsolidated partnerships and real estate joint ventures. Impairments represent the write-down of assets when fair value over the recoverability period is less than the carrying value due to changes in general market conditions and do not necessarily reflect the operating performance of the properties during the corresponding period.

We compute funds from operations, as adjusted, as funds from operations calculated in accordance with the Nareit White Paper, excluding significant gains, losses, and impairments realized on non-real estate investments, unrealized gains or losses on non-real estate investments, gains or losses on early extinguishment of debt, significant termination fees, acceleration of stock compensation expense due to the resignation of an executive officer, deal costs, the income tax effect related to such items, and the amount of such items that is allocable to our unvested restricted stock awards. Neither funds from operations nor funds from operations, as adjusted, should be considered as alternatives to net income (determined in accordance with GAAP) as indications of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as measures of liquidity, nor are they indicative of the availability of funds for our cash needs, including our ability to make distributions.

The following table reconciles net income to funds from operations for the share of consolidated real estate joint ventures attributable to noncontrolling interests and our share of unconsolidated real estate joint ventures for the three and six months ended June 30, 2022 (in thousands):

			Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures												Our Share of Unconsolidated Real Estate Joint Ventures
			June 30, 2022												June 30, 2022
			Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
Net income			$	37,168					$	69,345					$	213					$	433
Depreciation and amortization of real estate assets			26,418						50,099						934						1,889
Funds from operations			$	63,586					$	119,444					$	1,147					$	2,322

The following tables present a reconciliation of net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders, the most directly comparable financial measure presented in accordance with GAAP, including our share of amounts from consolidated and unconsolidated real estate joint ventures, to funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, and funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted, and the related per share amounts for the three and six months ended June 30, 2022 and 2021. Per share amounts may not add due to rounding.

						Three Months Ended June 30,												Six Months Ended June 30,
(In thousands)						2022						2021						2022						2021
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic and diluted						$	269,280					$	380,563					$	118,511					$	388,542
Depreciation and amortization of real estate assets						238,565						186,498						475,725						364,218
Noncontrolling share of depreciation and amortization from consolidated real estate JVs						(26,418)						(16,301)						(50,099)						(31,744)
Our share of depreciation and amortization from unconsolidated real estate JVs						934						4,135						1,889						7,211
Gain on sales of real estate						(214,219)						—						(214,219)						(2,779)
Impairment of real estate – rental properties						—						1,754						—						6,883
Allocation to unvested restricted stock awards						—						(2,191)						—						(4,427)
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(1)						268,142						554,458						331,807						727,904
Unrealized losses (gains) on non-real estate investments						68,128						(244,031)						331,561						(197,780)
Significant realized gains on non-real estate investments						—						(34,773)						—						(57,692)
Impairment of real estate						—						3,172						—						3,172
Loss on early extinguishment of debt						3,317						—						3,317						67,253
Allocation to unvested restricted stock awards						(778)						3,428						(3,264)						2,382
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted						$	338,809					$	282,254					$	663,421					$	545,239

(1)Calculated in accordance with standards established by the Nareit Board of Governors.

						Three Months Ended June 30,												Six Months Ended June 30,
(Per share)						2022						2021						2022						2021
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted						$	1.67					$	2.61					$	0.74					$	2.74
Depreciation and amortization of real estate assets						1.32						1.19						2.68						2.39
Gain on sales of real estate						(1.33)						—						(1.34)						(0.02)
Impairment of real estate – rental properties						—						0.01						—						0.05
Allocation to unvested restricted stock awards						—						(0.01)						—						(0.03)
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted						1.66						3.80						2.08						5.13
Unrealized losses (gains) on non-real estate investments						0.42						(1.67)						2.07						(1.39)
Significant realized gains on non-real estate investments						—						(0.24)						—						(0.41)
Impairment of real estate						—						0.02						—						0.02
Loss on early extinguishment of debt						0.02						—						0.02						0.47
Allocation to unvested restricted stock awards						—						0.02						(0.02)						0.02
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted						$	2.10					$	1.93					$	4.15					$	3.84
Weighted-average shares of common stock outstanding for calculation of:
Earnings per share – diluted						161,412						146,058						159,814						141,896
Funds from operations, diluted, per share						161,412						146,058						159,814						141,896
Funds from operations, diluted, as adjusted, per share						161,412						146,058						159,814						141,896

Adjusted EBITDA and Adjusted EBITDA margin

We use Adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization (“EBITDA”), excluding stock compensation expense, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, impairments of real estate, and significant termination fees. Adjusted EBITDA also excludes unrealized gains or losses and significant realized gains or losses and impairments that result from our non-real estate investments. These non-real estate investment amounts are classified in our consolidated statements of operations outside of total revenues.

We believe Adjusted EBITDA provides investors with relevant and useful information as it allows investors to evaluate the operating performance of our business activities without having to account for differences recognized because of investing and financing decisions related to our real estate and non-real estate investments, our capital structure, capital market transactions, and variances resulting from the volatility of market conditions outside of our control. For example, we exclude gains or losses on the early extinguishment of debt to allow investors to measure our performance independent of our indebtedness and capital structure. We believe that adjusting for the effects of impairments and gains or losses on sales of real estate, significant impairments and realized gains or losses on non-real estate investments, and significant termination fees allows investors to evaluate performance from period to period on a consistent basis without having to account for differences recognized because of investing and financing decisions related to our real estate and non-real estate investments or other corporate activities that may not be representative of the operating performance of our properties.

In addition, we believe that excluding charges related to stock compensation and unrealized gains or losses facilitates for investors a comparison of our business activities across periods without the volatility resulting from market forces outside of our control. Adjusted EBITDA has limitations as a measure of our performance. Adjusted EBITDA does not reflect our historical expenditures or future requirements for capital expenditures or contractual commitments. While Adjusted EBITDA is a relevant measure of performance, it does not represent net income (loss) or cash flows from operations calculated and presented in accordance with GAAP, and it should not be considered as an alternative to those indicators in evaluating performance or liquidity.

In order to calculate the Adjusted EBITDA margin, we divide Adjusted EBITDA by total revenues as presented in our consolidated statements of operations. We believe that this supplemental performance measure provides investors with additional useful information regarding the profitability of our operating activities.

The following table reconciles net (loss) income, the most directly comparable financial measure calculated and presented in accordance with GAAP, to Adjusted EBITDA and calculates the Adjusted EBITDA margin for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Net income			$	309,382					$	404,520					$	191,990					$	430,053
Interest expense			24,257						35,158						53,697						71,625
Income taxes			2,089						2,800						5,660						4,226
Depreciation and amortization			242,078						190,052						482,737						370,965
Stock compensation expense			14,340						12,242						28,368						24,688
Loss on early extinguishment of debt			3,317						—						3,317						67,253
Gain on sales of real estate			(214,219)						—						(214,219)						(2,779)
Significant realized gains on non-real estate investments			—						(34,773)						—						(57,692)
Unrealized losses (gains) on non-real estate investments			68,128						(244,031)						331,561						(197,780)
Impairment of real estate			—						4,926						—						10,055
Adjusted EBITDA			$	449,372					$	370,894					$	883,111					$	720,614
Total revenues			$	643,764					$	509,619					$	1,258,829					$	989,468
Adjusted EBITDA margin			70%						73%						70%						73%

Annual rental revenue

Annual rental revenue represents the annualized fixed base rental obligations, calculated in accordance with GAAP, for leases in effect as of the end of the period, related to our operating RSF. Annual rental revenue is presented using 100% of the annual rental revenue from our consolidated properties and our share of annual rental revenue for our unconsolidated real estate joint ventures. Annual rental revenue per RSF is computed by dividing annual rental revenue by the sum of 100% of the RSF of our consolidated properties and our share of the RSF of properties held in unconsolidated real estate joint ventures. As of June 30, 2022, approximately 91% of our leases (on an annual rental revenue basis) were triple net leases, which require tenants to pay substantially all real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses (including increases thereto) in addition to base rent. Annual rental revenue excludes these operating expenses recovered from our tenants. Amounts recovered from our tenants related to these operating expenses, along with base rent, are classified in income from rentals in our consolidated statements of operations.

Capitalization rates

Capitalization rates are calculated based on net operating income and net operating income (cash basis) annualized for the quarter preceding the date on which the property is sold, or near term prospective net operating income.

Cash interest

Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts). Refer to the definition of “Fixed-charge coverage ratio” within this section of this Item 2 for a reconciliation of interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest.

Class A properties and AAA locations

Class A properties are properties clustered in AAA locations that provide innovative tenants with highly dynamic and collaborative environments that enhance their ability to successfully recruit and retain world-class talent and inspire productivity, efficiency, creativity, and success. Class A properties generally command higher annual rental rates than other classes of similar properties.

AAA locations are in close proximity to concentrations of specialized skills, knowledge, institutions, and related businesses. Such locations are generally characterized by high barriers to entry for new landlords, high barriers to exit for tenants, and a limited supply of available space.

Construction costs related to active development and redevelopment projects under contract

Includes (i) costs incurred to date, (ii) remaining costs to complete under a general contractor's guaranteed maximum price construction contract or other fixed contracts, and (iii) our maximum committed tenant improvement allowances under our executed leases. The general contractor's guaranteed maximum price contract or other fixed contracts reduce our exposure to costs of construction materials, labor, and services from third-party contractors and suppliers, unless the overruns result from, among other things, a force majeure event or a change in the scope of work covered by the contract.

Development, redevelopment, and pre-construction

A key component of our business model is our disciplined allocation of capital to the development and redevelopment of new Class A properties, and property enhancements identified during the underwriting of certain acquired properties, located in collaborative life science, agtech, and technology campuses in AAA innovation clusters. These projects are generally focused on providing high-quality, generic, and reusable spaces that meet the real estate requirements of, and are reusable by, a wide range of tenants. Upon completion, each value-creation project is expected to generate a significant increase in rental income, net operating income, and cash flows. Our development and redevelopment projects are generally in locations that are highly desirable to high-quality entities, which we believe results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

Development projects generally consist of the ground-up development of generic and reusable facilities. Redevelopment projects consist of the permanent change in use of office, warehouse, and shell space into office/laboratory, agtech, or tech office space. We generally will not commence new development projects for aboveground construction of new Class A office/laboratory, agtech, and tech office space without first securing significant pre-leasing for such space, except when there is solid market demand for high-quality Class A properties.

Pre-construction activities include entitlements, permitting, design, site work, and other activities preceding commencement of construction of aboveground building improvements. The advancement of pre-construction efforts is focused on reducing the time required to deliver projects to prospective tenants. These critical activities add significant value for future ground-up development and are required for the vertical construction of buildings. Ultimately, these projects will provide high-quality facilities and are expected to generate significant revenue and cash flows.

Development, redevelopment, and pre-construction spending also includes the following costs: (i) amounts to bring certain acquired properties up to market standard and/or other costs identified during the acquisition process (generally within two years of acquisition) and (ii) permanent conversion of space for highly flexible, move-in-ready office/laboratory space to foster the growth of promising early- and growth-stage life science companies.

Revenue-enhancing and repositioning capital expenditures represent spending to reposition or significantly change the use of a property, including through improvement in the asset quality from Class B to Class A.

Non-revenue-enhancing capital expenditures represent costs required to maintain the current revenues of a stabilized property, including the associated costs for renewed and re-leased space.

Fixed-charge coverage ratio

Fixed-charge coverage ratio is a non-GAAP financial measure representing the ratio of Adjusted EBITDA to fixed charges. We believe that this ratio is useful to investors as a supplemental measure of our ability to satisfy fixed financing obligations and preferred stock dividends. Cash interest is equal to interest expense calculated in accordance with GAAP plus capitalized interest, less amortization of loan fees and debt premiums (discounts).

The following table reconciles interest expense, the most directly comparable financial measure calculated and presented in accordance with GAAP, to cash interest and fixed charges and computes the fixed-charge coverage ratio for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

						Three Months Ended June 30,												Six Months Ended June 30,
						2022						2021						2022						2021
Adjusted EBITDA						$	449,372					$	370,894					$	883,111					$	720,614
Interest expense						$	24,257					$	35,158					$	53,697					$	71,625
Capitalized interest						68,202						43,492						125,965						83,378
Amortization of loan fees						(3,236)						(2,859)						(6,339)						(5,676)
Amortization of debt (discounts) premiums						(267)						465						157						1,041
Cash interest and fixed charges						$	88,956					$	76,256					$	173,480					$	150,368
Fixed-charge coverage ratio:
– period annualized						5.1x						4.9x						5.1x						4.8x
– trailing 12 months						5.1x						4.6x						5.1x						4.6x

Gross assets

Gross assets are calculated as total assets plus accumulated depreciation as of June 30, 2022 and December 31, 2021 (in thousands):

			June 30, 2022						December 31, 2021
Total assets			$	33,244,053					$	30,219,373
Accumulated depreciation			4,060,536						3,771,241
Gross assets			$	37,304,589					$	33,990,614

Initial stabilized yield (unlevered)

Initial stabilized yield is calculated as the estimated amounts of net operating income at stabilization divided by our investment in the property. Our initial stabilized yield excludes the benefit of leverage. Our cash rents related to our value-creation projects are generally expected to increase over time due to contractual annual rent escalations. Our estimates for initial stabilized yields, initial stabilized yields (cash basis), and total costs at completion represent our initial estimates at the commencement of the project. We expect to update this information upon completion of the project, or sooner if there are significant changes to the expected project yields or costs.

• Initial stabilized yield reflects rental income, including contractual rent escalations and any rent concessions over the term(s) of the lease(s), calculated on a straight-line basis.

• Initial stabilized yield (cash basis) reflects cash rents at the stabilization date after initial rental concessions, if any, have elapsed and our total cash investment in the property.

Investment-grade or publicly traded large cap tenants

Investment-grade or publicly traded large cap tenants represent tenants that are investment-grade rated or publicly traded companies with an average daily market capitalization greater than $10 billion for the twelve months ended June 30, 2022, as reported by Bloomberg Professional Services. Credit ratings from Moody’s Investors Service and S&P Global Ratings reflect credit ratings of the tenant’s parent entity, and there can be no assurance that a tenant’s parent entity will satisfy the tenant’s lease obligation upon such tenant’s default. We monitor the credit quality and related material changes of our tenants. Material changes that cause a tenant’s market capitalization to decrease below $10 billion, which are not immediately reflected in the twelve-month average, may result in their exclusion from this measure.

Investments in real estate – value-creation square footage currently in rental properties

The square footage presented in the table below includes RSF of buildings in operation as of June 30, 2022, primarily representing lease expirations at recently acquired properties that also have inherent future development or redevelopment opportunities and for which we have the intent to demolish or redevelop the existing property upon expiration of the existing in-place leases and commencement of future construction:

						Dev/Redev						RSF of Lease Expirations Targeted for Development and Redevelopment
Property/Submarket									2022						2023						Thereafter						Total
Near-term projects:
40 Sylvan Road/Route 128						Redev						—						312,845						—						312,845
275 Grove Street/Route 128						Redev						48,793						—						111,458			(1)			160,251
840 Winter Street/Route 128						Redev						—						10,265						17,965						28,230
3825 Fabian Way/Greater Stanford						Redev						—						250,000						—						250,000
3301 Monte Villa Parkway/Bothell						Redev						50,552						—						—						50,552
Other/Texas						Redev						—						—						143,105			(1)			143,105
												99,345						573,110						272,528						944,983
Intermediate-term projects:
9444 Waples Street/Sorrento Mesa						Dev						23,789						—						4,746						28,535
												23,789						—						4,746						28,535
Future projects:
550 Arsenal Street/Cambridge/Inner Suburbs						Dev						—						—						260,867			(1)			260,867
380 and 420 E Street/Seaport Innovation District						Dev						—						—						195,506						195,506
Other/Greater Boston						Redev						—						—						167,549			(1)			167,549
1122 El Camino Real/South San Francisco						Dev						—						—						223,232						223,232
1150 El Camino Real/South San Francisco						Dev						—						—						431,940			(1)			431,940
3875 Fabian Way/Greater Stanford						Redev						—						—						228,000						228,000
960 Industrial Road/Greater Stanford						Dev						—						—						110,000						110,000
219 East 42nd Street/New York City						Dev						—						—						349,947						349,947
10975 and 10995 Torreyana Road/Torrey Pines						Dev						—						—						84,829						84,829
4161 Campus Point Court/University Town Center						Dev						—						159,884						—						159,884
10260 Campus Point Drive/University Town Center						Dev						—						109,164						—						109,164
Sequence District by Alexandria/Sorrento Mesa						Dev/Redev						—						—						689,938						689,938
4025 and 4045 Sorrento Valley Boulevard/Sorrento Valley						Dev						10,926						—						11,960			(1)			22,886
601 Dexter Avenue North/Lake Union						Dev						—						18,680						—						18,680
830 4th Avenue South/SoDo						Dev						—						—						42,380			(1)			42,380
Other/Seattle						Dev						—						92,205						10,232			(1)			102,437
												10,926						379,933						2,806,380						3,197,239
												134,060						953,043						3,083,654						4,170,757

(1)Includes vacant square footage as of June 30, 2022.

Joint venture financial information

We present components of balance sheet and operating results information related to our real estate joint ventures, which are not presented, or intended to be presented, in accordance with GAAP. We present the proportionate share of certain financial line items as follows: (i) for each real estate joint venture that we consolidate in our financial statements, which are controlled by us through contractual rights or majority voting rights, but of which we own less than 100%, we apply the noncontrolling interest economic ownership percentage to each financial item to arrive at the amount of such cumulative noncontrolling interest share of each component presented; and (ii) for each real estate joint venture that we do not control and do not consolidate, and are instead controlled jointly or by our joint venture partners through contractual rights or majority voting rights, we apply our economic ownership percentage to each financial item to arrive at our proportionate share of each component presented.

The components of balance sheet and operating results information related to our real estate joint ventures do not represent our legal claim to those items. For each entity that we do not wholly own, the joint venture agreement generally determines what equity holders can receive upon capital events, such as sales or refinancing, or in the event of a liquidation. Equity holders are normally entitled to their respective legal ownership of any residual cash from a joint venture only after all liabilities, priority distributions, and claims have been repaid or satisfied.

We believe that this information can help investors estimate the balance sheet and operating results information related to our partially owned entities. Presenting this information provides a perspective not immediately available from consolidated financial statements and one that can supplement an understanding of the joint venture assets, liabilities, revenues, and expenses included in our consolidated results.

The components of balance sheet and operating results information related to our real estate joint ventures are limited as an analytical tool as the overall economic ownership interest does not represent our legal claim to each of our joint ventures’ assets, liabilities, or results of operations. In addition, joint venture financial information may include financial information related to the unconsolidated real estate joint ventures that we do not control. We believe that in order to facilitate for investors a clear understanding of our operating results and our total assets and liabilities, joint venture financial information should be examined in conjunction with our consolidated statements of operations and balance sheets. Joint venture financial information should not be considered an alternative to our consolidated financial statements, which are presented and prepared in accordance with GAAP.

Mega campus

Mega campuses are cluster campuses that consist of approximately 1 million RSF or more, including operating, active development/redevelopment, and land RSF less operating RSF expected to be demolished. The following table reconciles our operating RSF as of June 30, 2022:

						Operating RSF
Mega campus						27,046,236
Non-mega campus						14,037,293
Total						41,083,529
Mega campus RSF as a percentage of total operating property RSF						66		%

Net cash provided by operating activities after dividends

Net cash provided by operating activities after dividends includes the deduction for distributions to noncontrolling interests. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences.

Net debt and preferred stock to Adjusted EBITDA

Net debt and preferred stock to Adjusted EBITDA is a non-GAAP financial measure that we believe is useful to investors as a supplemental measure of evaluating our balance sheet leverage. Net debt and preferred stock is equal to the sum of total consolidated debt less cash, cash equivalents, and restricted cash, plus preferred stock outstanding as of the end of the period. Refer to the definition of “Adjusted EBITDA and Adjusted EBITDA margin” within this section of this Item 2 for further information on the calculation of Adjusted EBITDA.

The following table reconciles debt to net debt and preferred stock and computes the ratio to Adjusted EBITDA as of June 30, 2022 and December 31, 2021 (dollars in thousands):

			June 30, 2022						December 31, 2021
Secured notes payable			$	24,986					$	205,198
Unsecured senior notes payable			10,096,462						8,316,678
Unsecured senior line of credit and commercial paper			149,958						269,990
Unamortized deferred financing costs			78,978						65,476
Cash and cash equivalents			(420,258)						(361,348)
Restricted cash			(97,404)						(53,879)
Preferred stock			—						—
Net debt and preferred stock			$	9,832,722					$	8,442,115
Adjusted EBITDA:
– quarter annualized			$	1,797,488					$	1,631,244
– trailing 12 months			$	1,680,335					$	1,517,838
Net debt and preferred stock to Adjusted EBITDA:
– quarter annualized			5.5		x				5.2		x
– trailing 12 months			5.9		x				5.6		x

Net operating income, net operating income (cash basis), and operating margin

The following table reconciles net (loss) income to net operating income and net operating income (cash basis) and computes operating margin for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

						Three Months Ended June 30,												Six Months Ended June 30,
						2022						2021						2022						2021
Net income						$	309,382					$	404,520					$	191,990					$	430,053
Equity in earnings of unconsolidated real estate joint ventures						(213)						(2,609)						(433)						(6,146)
General and administrative expenses						43,397						37,880						84,328						71,876
Interest expense						24,257						35,158						53,697						71,625
Depreciation and amortization						242,078						190,052						482,737						370,965
Impairment of real estate						—						4,926						—						10,055
Loss on early extinguishment of debt						3,317						—						3,317						67,253
Gain on sales of real estate						(214,219)						—						(214,219)						(2,779)
Investment loss (income)						39,481						(304,263)						279,800						(305,277)
Net operating income						447,480						365,664						881,217						707,625
Straight-line rent revenue						(27,362)						(27,903)						(69,387)						(55,285)
Amortization of acquired below-market leases						(16,760)						(13,267)						(30,675)						(25,379)
Net operating income (cash basis)						$	403,358					$	324,494					$	781,155					$	626,961
Net operating income (cash basis) – annualized						$	1,613,432					$	1,297,976					$	1,562,310					$	1,253,922
Net operating income (from above)						$	447,480					$	365,664					$	881,217					$	707,625
Total revenues						$	643,764					$	509,619					$	1,258,829					$	989,468
Operating margin						70%						72%						70%						72%

Net operating income is a non-GAAP financial measure calculated as net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, excluding equity in the earnings of our unconsolidated real estate joint ventures, general and administrative expenses, interest expense, depreciation and amortization, impairments of real estate, gains or losses on early extinguishment of debt, gains or losses on sales of real estate, and investment income or loss. We believe net operating income provides useful information to investors regarding our financial condition and results of operations because it primarily reflects those income and expense items that are incurred at the property level. Therefore, we believe net operating income is a useful measure for investors to evaluate the operating performance of our consolidated real estate assets. Net operating income on a cash basis is net operating income adjusted to exclude the effect of straight-line rent and amortization of acquired above- and below-market lease revenue adjustments required by GAAP. We believe that net operating income on a cash basis is helpful to investors as an additional measure of operating performance because it eliminates straight-line rent revenue and the amortization of acquired above- and below-market leases.

Furthermore, we believe net operating income is useful to investors as a performance measure of our consolidated properties because, when compared across periods, net operating income reflects trends in occupancy rates, rental rates, and operating costs, which provide a perspective not immediately apparent from net income or loss. Net operating income can be used to measure the initial stabilized yields of our properties by calculating net operating income generated by a property divided by our investment in the property. Net operating income excludes certain components from net income in order to provide results that are more closely related to the results of operations of our properties. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level rather than at the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort comparability of operating performance at the property level. Impairments of real estate have been excluded in deriving net operating income because we do not consider impairments of real estate to be property-level operating expenses. Impairments of real estate relate to changes in the values of our assets and do not reflect the current operating performance with respect to related revenues or expenses. Our impairments of real estate represent the write-down in the value of the assets to the estimated fair value less cost to sell. These impairments result from investing decisions or a deterioration in market conditions. We also exclude realized and unrealized investment gain or loss, which results from investment decisions that occur at the corporate level related to non-real estate investments in publicly traded companies and certain privately held entities. Therefore, we do not consider these activities to be an indication of operating performance of our real estate assets at the property level. Our calculation of net operating income also excludes charges incurred from changes in certain financing decisions, such as losses on early extinguishment of debt, as these charges often relate to corporate strategy. Property operating expenses included in determining net operating income primarily consist of costs that are related to our operating properties, such as utilities, repairs, and maintenance; rental expense related to ground leases; contracted services, such as janitorial, engineering, and landscaping; property taxes and insurance; and property-level salaries. General and administrative expenses consist primarily of accounting and corporate compensation, corporate insurance, professional fees, office rent, and office supplies that are incurred as part of corporate office management. We calculate operating margin as net operating income divided by total revenues.

We believe that in order to facilitate for investors a clear understanding of our operating results, net operating income should be examined in conjunction with net income or loss as presented in our consolidated statements of operations. Net operating income should not be considered as an alternative to net income or loss as an indication of our performance, nor as an alternative to cash flows as a measure of our liquidity or our ability to make distributions.

Operating statistics

We present certain operating statistics related to our properties, including number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations as of the end of the period. We believe these measures are useful to investors because they facilitate an understanding of certain trends for our properties. We compute the number of properties, RSF, occupancy percentage, leasing activity, and contractual lease expirations at 100% for all properties in which we have an investment, including properties owned by our consolidated and unconsolidated real estate joint ventures. For operating metrics based on annual rental revenue, refer to the definition of “Annual rental revenue” in this “Non-GAAP measures and definitions” section of this Item 2.

Same property comparisons

As a result of changes within our total property portfolio during the comparative periods presented, including changes from assets acquired or sold, properties placed into development or redevelopment, and development or redevelopment properties recently placed into service, the consolidated total income from rentals, as well as rental operating expenses in our operating results, can show significant changes from period to period. In order to supplement an evaluation of our results of operations over a given quarterly or annual period, we analyze the operating performance for all consolidated properties that were fully operating for the entirety of the comparative periods presented, referred to as same properties. We separately present quarterly and year-to-date same property results to align with the interim financial information required by the SEC in our management’s discussion and analysis of our financial condition and results of operations. These same properties are analyzed separately from properties acquired subsequent to the first day in the earliest comparable quarterly or year-to-date period presented, properties that underwent development or redevelopment at any time during the comparative periods, unconsolidated real estate joint ventures, properties classified as held for sale, and corporate entities (legal entities performing general and administrative functions), which are excluded from same property results. Additionally, termination fees, if any, are excluded from the results of same properties. Refer to the “Same properties” subsection in the “Results of operations” section within this Item 2 for additional information.

Stabilized occupancy date

The stabilized occupancy date represents the estimated date on which the project is expected to reach occupancy of 95% or greater.

Tenant recoveries

Tenant recoveries represent revenues comprising reimbursement of real estate taxes, insurance, utilities, repairs and maintenance, common area expenses, and other operating expenses and earned in the period during which the applicable expenses are incurred and the tenant’s obligation to reimburse us arises.

We classify rental revenues and tenant recoveries generated through the leasing of real estate assets within revenue in income from rentals in our consolidated statements of operations. We provide investors with a separate presentation of rental revenues and tenant recoveries in the “Comparison of results for the three months ended June 30, 2022 to the three months ended June 30, 2021” subsection of the “Results of operations” section within this Item 2 because we believe it promotes investors’ understanding of our operating results. We believe that the presentation of tenant recoveries is useful to investors as a supplemental measure of our ability to recover operating expenses under our triple net leases, including recoveries of utilities, repairs and maintenance, insurance, property taxes, common area expenses, and other operating expenses, and of our ability to mitigate the effect to net income for any significant variability to components of our operating expenses.

The following table reconciles income from rentals to tenant recoveries for the three and six months ended June 30, 2022 and 2021 (in thousands):

						Three Months Ended June 30,												Six Months Ended June 30,
						2022						2021						2022						2021
Income from rentals						$	640,959					$	508,371					$	1,253,513					$	987,066
Rental revenues						(485,067)						(396,804)						(954,604)						(767,037)
Tenant recoveries						$	155,892					$	111,567					$	298,909					$	220,029

Total equity capitalization

Total equity capitalization is equal to the outstanding shares of common stock multiplied by the closing price on the last trading day at the end of each period presented.

Total market capitalization

Total market capitalization is equal to the sum of total equity capitalization and total debt.

Unencumbered net operating income as a percentage of total net operating income

Unencumbered net operating income as a percentage of total net operating income is a non-GAAP financial measure that we believe is useful to investors as a performance measure of the results of operations of our unencumbered real estate assets as it reflects those income and expense items that are incurred at the unencumbered property level. Unencumbered net operating income is derived from assets classified in continuing operations, which are not subject to any mortgage, deed of trust, lien, or other security interest, as of the period for which income is presented.

The following table summarizes unencumbered net operating income as a percentage of total net operating income for the three and six months ended June 30, 2022 and 2021 (dollars in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Unencumbered net operating income			$	446,473					$	353,104					$	867,433					$	683,264
Encumbered net operating income			1,007						12,560						13,784						24,361
Total net operating income			$	447,480					$	365,664					$	881,217					$	707,625
Unencumbered net operating income as a percentage of total net operating income			100%						97%						98%						97%

Weighted-average shares of common stock outstanding – diluted

From time to time, we enter into capital market transactions, including forward equity sales agreements (“Forward Agreements”), to fund acquisitions, to fund construction of our highly leased development and redevelopment projects, and for general working capital purposes. We are required to consider the potential dilutive effect of our forward equity sales agreements under the treasury stock method while the forward equity sales agreements are outstanding. As of June 30, 2022, we had Forward Agreements outstanding to sell an aggregate of 9.0 million shares of common stock. Refer to Note 13 – “Stockholders’ equity” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

The weighted-average shares of common stock outstanding used in calculating EPS – diluted, funds from operations per share – diluted, and funds from operations per share – diluted, as adjusted, for the three and six months ended June 30, 2022 and 2021 are calculated as follows (in thousands):

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Basic shares for earnings per share			161,412						145,825						159,814						141,596
Forward Agreements			—						233						—						300
Diluted shares for earnings per share			161,412						146,058						159,814						141,896
Basic shares for funds from operations per share and funds from operations per share, as adjusted			161,412						145,825						159,814						141,596
Forward Agreements			—						233						—						300
Diluted shares for funds from operations per share and funds from operations per share, as adjusted			161,412						146,058						159,814						141,896