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

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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 under 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. Alexandria Real Estate Equities, Inc. (NYSE: ARE), an S&P 500® company, is a best-in-class, mission-driven life science REIT making a positive and lasting impact on the world. As the pioneer of the life science real estate niche since its founding in 1994, Alexandria is the preeminent and longest-tenured owner, operator, and developer of collaborative life science, agtech, and technology campuses in AAA innovation cluster locations, including Greater Boston, the San Francisco Bay Area, New York City, San Diego, Seattle, Maryland, and Research Triangle. The trusted partner to over 1,000 tenants, as of September 30, 2022, Alexandria has a total market capitalization of $33.3 billion and an asset base in North America of 74.5 million square feet (“SF”), which includes 41.1 million RSF of operating properties and 5.6 million RSF of Class A properties undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.9 million SF of future development projects. Alexandria has a longstanding and proven track record of developing Class A properties clustered in 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, agrifoodtech, climate innovation, 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 September 30, 2022:

Investment-grade or publicly traded large cap tenants represented 49% of our total annual rental revenue;
Approximately 96% 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 located in collaborative life science, agtech, and technology campuses in AAA innovation clusters. These key 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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income attributable to Alexandria’s common stockholders – diluted:
In millions	$	341.4	$	101.3	$	461.5	$	490.6
Per share	$	2.11	$	0.67	$	2.88	$	3.38
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions	$	344.7	$	296.0	$	1,008.1	$	841.3
Per share	$	2.13	$	1.95	$	6.28	$	5.80

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.

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


Percentage of total annual rental revenue in effect from investment-grade or publicly traded large cap tenants	49		%

Sustained strength in tenant collections:
Tenant receivables as of September 30, 2022	$	7.8		million
October tenant rent and receivables collected as of the date of this report	99.9		%

Occupancy of operating properties in North America	94.3		%
Operating margin	70		%	(1)
Adjusted EBITDA margin	69		%	(1)
Weighted-average remaining lease term:
All tenants	7.2			years
Top 20 tenants	9.7			years

(1)For the three months ended September 30, 2022.

Solid leasing volume and rental rate increase

During the three months ended September 30, 2022, we completed 1.7 million RSF of leasing activity, 87% of which was generated from our roster of over 1,000 tenants.
Quarterly leasing volume continues to surpass our 10-year quarterly average of 1.3 million RSF and our pre-COVID 5-year quarterly average of 1.1 million RSF.
For the three months ended September 30, 2022, rental rate increases on lease renewals and re-leasing of space were 27.1% and 22.6% (cash basis).


	September 30, 2022
	Three Months Ended	Nine Months Ended
Total leasing activity – RSF	1,662,069	6,405,265
Leasing of development and redevelopment space – RSF	329,006	2,685,138
Lease renewals and re-leasing of space:
RSF (included in total leasing activity above)	1,094,821	3,045,980
Rental rate increases	27.1%	34.3%
Rental rate increases (cash basis)	22.6%	24.2%

Strong and flexible balance sheet with significant liquidity

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 5.4x and fixed-charge coverage ratio of 4.9x for the three months ended September 30, 2022, annualized.
Total debt and preferred stock to gross assets of 27%.
95.9% of our debt has a fixed rate.
13.2 years weighted-average remaining term of debt.
No debt maturities prior to 2025.
$6.4 billion of liquidity.

Continued strong net operating income and internal growth

Total revenues:
$659.9 million, up 20.5%, for the three months ended September 30, 2022, compared to $547.8 million for the three months ended September 30, 2021.
$1.9 billion, up 24.8%, for the nine months ended September 30, 2022, compared to $1.5 billion for the nine months ended September 30, 2021.
Net operating income (cash basis) of $1.6 billion for the three months ended September 30, 2022, annualized, increased by $306.0 million, or 22.9%, compared to the three months ended September 30, 2021, annualized.
96% of our leases contain contractual annual rent escalations approximating 3%.
Same property net operating income growth:
5.1% and 10.6% (cash basis) for the three months ended September 30, 2022, compared to the three months ended September 30, 2021, representing the third-highest same property net operating income (cash basis) growth in Company history.
7.0% and 8.9% (cash basis) for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.

Continued strategic value harvesting with strong valuations

During the nine months ended September 30, 2022, we completed dispositions and sales of partial interests aggregating $2.2 billion, including $1.0 billion of dispositions during the three months ended September 30, 2022:

Sale of five properties in our South San Francisco and Greater Stanford submarkets for an aggregate sales price of $383.6 million, or $1,161 per RSF, representing capitalization rates of 5.2% and 5.2% (cash basis).
Sale of a 70% interest in 3215 Merryfield Row in our Torrey Pines submarket for a sales price of $149.9 million, or $1,256 per RSF, representing capitalization rates of 4.5% and 4.2% (cash basis).
Sale of a 70% interest in Summers Ridge Science Park in our Sorrento Mesa submarket for a sales price of $159.6 million, or $720 per RSF, representing capitalization rates of 4.9% and 4.6% (cash basis).

Continued dividend strategy to share strong and consistent growth in operating cash flows with stockholders while also retaining a significant portion for reinvestment

Common stock dividend declared for the three months ended September 30, 2022 was $1.18 per common share, aggregating $4.66 per common share for the twelve months ended September 30, 2022, up 24 cents, or 5%, over the twelve months ended September 30, 2021.
Dividend yield of 3.4% as of September 30, 2022.
FFO payout ratio of 56% for the three months ended September 30, 2022.
Average annual dividend per-share growth of 6.5% over the last five years.

Completion of unsecured senior line of credit upsizing and term extension

*•*In September 2022, we amended our unsecured senior line of credit. Key changes include:


	New Agreement		Change
Commitments available for borrowing		$4.0 billion	Up $1.0 billion
Maturity date		January 2028	Extended by 2 years
Interest rate		SOFR+0.875%	Converted to SOFR from LIBOR

Alexandria’s tenants drive visibility for future growth aggregating over $645 million of incremental net operating income

Highly leased value-creation pipeline of current and seven near-term projects expected to generate greater than $645 million of incremental net operating income, primarily commencing from the fourth quarter of 2022 through the third quarter of 2025.
7.6 million RSF of our value-creation projects, which are 78% leased.
80% of the leased RSF was generated from our roster of over 1,000 tenants.

Balance sheet management

Key metrics as of September 30, 2022

$33.3 billion in total market capitalization.
$22.8 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.
13.2 years weighted-average remaining term of debt.
No remaining LIBOR-based debt ahead of June 2023 phase-out.


	September 30, 2022		Goal for Fourth Quarter of 2022, Annualized
	Quarter Annualized	Trailing 12 Months
Net debt and preferred stock to Adjusted EBITDA	5.4x	5.6x	Less than or equal to 5.1x
Fixed-charge coverage ratio	4.9x	5.1x	Greater than or equal to 5.1x

Key capital events

In September 2022, we amended our unsecured senior line of credit to increase the aggregate commitment to $4.0 billion and extend the maturity date to January 22, 2028. Refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements under Item 1 of this report for additional detail.
In September 2022, we increased the aggregate amount we may issue from time to time under our commercial paper program to $2.0 billion from $1.5 billion.

*•*During the three months ended September 30, 2022, we settled a portion of our outstanding forward equity sales agreements by issuing 1.0 million shares and received net proceeds of $199.7 million. We expect to issue an aggregate of 8.0 million shares at an average price of $186.03 per share to settle all our outstanding forward equity sales agreements and receive net proceeds of approximately $1.5 billion during the fourth quarter of 2022.

During the three months ended September 30, 2022, there was no sale activity under our ATM program. As of September 30, 2022, the remaining aggregate amount available under our ATM program for future sales of common stock was $246.6 million.

Investments

As of September 30, 2022:
Our investments aggregated $1.6 billion.
Unrealized gains presented in our consolidated balance sheets were $421.1 million, comprising gross unrealized gains and losses aggregating $529.0 million and $107.9 million, respectively.
Investment loss of $32.3 million for the three months ended September 30, 2022, presented in our consolidated statements of operations, consisted of $24.2 million of realized gains and $56.5 million of unrealized losses/changes in fair value.
Investment loss of $312.1 million for the nine months ended September 30, 2022, consisted of $76.0 million in realized gains and $388.1 million in unrealized losses/changes in fair value.

External growth and investments in real estate

Delivery and commencement of value-creation projects

During the three months ended September 30, 2022, we placed into service development and redevelopment projects aggregating 332,961 RSF across multiple submarkets resulting in $30 million of incremental net operating income.
82% of construction costs related to active development and redevelopment projects aggregating 5.6 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 from 3% to 5%.
Annual net operating income (cash basis) is expected to increase by $45 million upon the burn-off of initial free rent from recently delivered projects.


Value-creation pipeline of new Class A development and redevelopment projects as a percentage of gross assets	September 30, 2022
Under construction projects 76% leased/negotiating		10%
Near-term projects expected to commence construction in the next five quarters 88% leased		1%
Income-producing/potential cash flows/covered land play(1)		8%
Land		3%

(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, focused on accommodating their current needs and providing them with a path for future growth

During the three months ended September 30, 2022, we completed acquisitions in our key life science cluster submarkets aggregating 1.2 million RSF of value-creation opportunities for an aggregate purchase price of $316.7 million.

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

In October 2022, Alexandria continued to enhance its first social responsibility pillar focused on advancing human health by empowering NEXT for AUTISM’s development of important support services for autistic individuals and their families. Alexandria has been forging strategically supportive partnerships with highly impactful organizations that aim to accelerate groundbreaking medical innovation to advance vitally needed therapies for individuals with autism.
In October 2022, Alexandria’s position as a groundbreaking leader in ESG was reinforced in the 2022 GRESB Real Estate Assessment, with several achievements, including: (i) Regional and Global Sector Leader for buildings in development in the Science & Technology sector, (ii) #2 ranking for buildings in operation in the Diversified Listed sector, and (iii) “A” disclosure score for the fifth consecutive year. Alexandria has earned “Green Star” recognitions in the operating asset benchmark for the sixth consecutive year and in the development benchmark for the third consecutive year since its 2020 launch.
In October 2022, Alexandria was recognized as a Climate Leader by the Sponsors of Mass Save®, a collaborative of the energy utilities and energy efficiency service providers in Massachusetts. Utilizing these programs in our Greater Boston market, we have implemented over 65 energy conservation projects across more than 40 buildings over the last 10 years, resulting in estimated recurring annual energy savings of over 5 million kWh. Alexandria was the only real estate company to be selected in the inaugural cohort of honorees.
In September 2022, coinciding with National Suicide Prevention Month, we announced our deepened partnership with KITA, a non-profit providing tuition-free summer camp for children who have lost a loved one to suicide, and the advancement of our eighth social responsibility pillar addressing the mental health crisis. Through Alexandria’s significant support, KITA will have free, long-term access to 28 acres in Acton, Maine that will serve as the non-profit’s new home and enable it to grow its program and increase the number of children it serves.
In July 2022, Alexandria Venture Investments, our strategic venture capital platform, was recognized as the #1 most active corporate investor in biopharma by new deal volume (2021-1H22) for the fifth consecutive year by Silicon Valley Bank in its “Healthcare Investments and Exits: Mid-Year 2022 Report.” Alexandria’s venture activity provides us with, among other things, mission-critical data and insights into industry innovations and trends.

(1)Top 10% ranking based on information for FTSE Nareit All REITs Index from Bloomberg Professional Services as of September 30, 2022.

(2)Top 10% ranking for Sustainalytics Global Universe, from Bloomberg Professional Services as of September 30, 2022.

Environmental progress 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			96%
	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%		69%




Net Debt and Preferred Stock to Adjusted EBITDA(3)		Fixed-Charge Coverage Ratio(3)

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

(2)Represents percentages for the three months ended September 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


49%						7.2 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 September 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 September 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 of calculating 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 3.6 years.

(4)Our other tenants, which aggregate 2.0% of our annual rental revenue, comprise technology, professional services, finance, telecommunications, and construction/real estate companies and less than 1.0% of retail-related tenants by annual rental revenue.


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 Is From Investment-Grade or Publicly Traded Large Cap Tenants(1)
		Percentage of ARE’s Annual Rental Revenue(2)



Solid Historical Occupancy(3)	Occupancy Across Key Locations

96%
Over 10 Years

(1)As of September 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 September 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 September 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		Nine Months Ended			Year Ended
	September 30, 2022		September 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	27.1%	22.6%	34.3%		24.2%	37.9%	22.6%
New rates	$59.41	$57.35	$57.61		$55.50	$59.00	$55.60
Expiring rates	$46.73	$46.79	$42.89		$44.68	$42.80	$45.36
RSF	1,094,821		3,045,980			4,614,040
Tenant improvements/leasing commissions	$43.34		$33.26			$41.05
Weighted-average lease term	5.1 years		4.9 years			6.3 years

Developed/redeveloped/ previously vacant space leased(2)
New rates	$56.98	$51.55	$75.88		$67.05	$78.52	$69.42
RSF	567,248		3,359,285			4,902,261
Weighted-average lease term	11.7 years		12.7 years			11.2 years

Leasing activity summary (totals):
New rates	$58.58	$55.37	$67.20		$61.56	$69.05	$62.72
RSF	1,662,069		6,405,265	(3)		9,516,301
Weighted-average lease term	7.3 years		9.0 years			8.8 years

Lease expirations(1)
Expiring rates	$44.26	$46.56	$40.10		$40.93	$41.53	$43.70
RSF	1,436,203		4,525,413			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 265,199 RSF and 110,180 RSF as of September 30, 2022 and December 31, 2021, respectively.

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

(3)During the nine months ended September 30, 2022, we granted tenant concessions/free rent averaging 2.5 months with respect to the 6,405,265 RSF leased. Approximately 61% of the leases executed during the nine months ended September 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 September 30, 2022:


Year			RSF		Percentage of Occupied RSF			Annual Rental Revenue (per RSF)(1)			Percentage of Total Annual Rental Revenue

	2022	(2)		635,234		1.7	%		$	37.69		1.2	%
	2023			2,992,991		7.8	%		$	42.71		6.6	%
	2024			4,268,120		11.1	%		$	45.19		10.0	%
	2025			3,533,031		9.2	%		$	47.96		8.8	%
	2026			2,466,984		6.4	%		$	52.09		6.7	%
	2027			2,606,791		6.8	%		$	53.57		7.3	%
	2028			3,872,553		10.1	%		$	51.17		10.3	%
	2029			2,089,306		5.4	%		$	56.52		6.1	%
	2030			2,601,174		6.8	%		$	56.65		7.7	%
	2031			3,072,548		8.0	%		$	52.66		8.4	%
Thereafter				10,323,260		26.7	%		$	49.89		26.9	%

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

(2)Excludes month-to-month leases aggregating 265,199 RSF as of September 30, 2022.

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


	2022 Contractual Lease Expirations (in RSF)										Annual Rental Revenue (per RSF)(3)
Market	Leased		Negotiating/ Anticipating		Targeted for Future Development/ Redevelopment(1)		Remaining Expiring Leases		Total(2)

Greater Boston	22,383		—		—		34,758		57,141		$	62.22
San Francisco Bay Area	5,500		15,023		250,000		41,772		312,295		45.20
New York City	—		—		—		100		100		N/A
San Diego	70,419		—		9,199		62,073		141,691		26.84
Seattle	—		—		—		22,783		22,783		29.46
Maryland	5,720		—		—		4,266		9,986		22.18
Research Triangle	—		—		—		10,827		10,827		N/A
Texas	—		—		—		—		—		N/A
Canada	—		36,425		—		36,337		72,762		N/A
Non-cluster/other markets	—		—		—		7,649		7,649		82.26
Total	104,022		51,448		259,199		220,565		635,234		$	37.69
Percentage of expiring leases	16	%	8	%	41	%	35	%	100	%

	2023 Contractual Lease Expirations (in RSF)										Annual Rental Revenue (per RSF)(4)
Market	Leased		Negotiating/ Anticipating		Targeted for Future Development/ Redevelopment(1)		Remaining Expiring Leases(4)		Total

Greater Boston	49,191		148,923		323,110		430,936		952,160		$	53.01
San Francisco Bay Area	19,377		—		—		351,472		370,849		56.67
New York City	—		—		—		88,272		88,272		N/A
San Diego	82,462		22,429		—		671,263		776,154		30.81
Seattle	7,566		7,413		18,680		328,645		362,304		24.54
Maryland	—		139,540		—		85,369		224,909		30.19
Research Triangle	81,956		—		—		115,601		197,557		31.00
Texas	—		—		—		—		—		N/A
Canada	—		13,321		—		—		13,321		29.99
Non-cluster/other markets	—		—		—		7,465		7,465		58.48
Total	240,552		331,626		341,790		2,079,023		2,992,991		$	42.71
Percentage of expiring leases	8	%	11	%	11	%	70	%	100	%

(1)Represents RSF targeted for future development or redevelopment upon expiration of existing in-place leases primarily related to recently acquired properties with an average contractual lease expiration date of November 12, 2022 and January 8, 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)Excludes month-to-month leases aggregating 265,199 RSF as of September 30, 2022.

(3)Represents amounts in effect as of September 30, 2022.

(4)The largest remaining contractual expiration is 111,490 RSF in our Sorrento Mesa submarket.

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 3.6% of our annual rental revenue in effect as of September 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 September 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		4.5		961,883		$	69,687	3.6	%	A2	A+	$	148.5
2	Moderna, Inc.		14.1		908,340			51,914	2.7		—	—	$	75.9
3	Eli Lilly and Company		6.4		743,267			49,676	2.6		A2	A+	$	268.8
4	Takeda Pharmaceutical Company Limited		7.3		549,760			37,399	1.9		Baa2	BBB+	$	45.0
5	Illumina, Inc.		7.9		891,495			36,205	1.9		Baa3	BBB	$	47.1
6	Sanofi		7.3		463,935			35,407	1.8		A1	AA	$	125.6
7	2seventy bio, Inc.(2)		10.9		312,805			33,617	1.7		—	—	$	0.5
8	Novartis AG		5.8		447,831			30,582	1.6		A1	AA-	$	206.1
9	TIBCO Software, Inc.		4.4	(3)	292,013			28,537	1.5		—	—	$	—
10	Uber Technologies, Inc.		60.0	(4)	1,009,188			27,689	1.4		—	—	$	64.8
11	Roche		6.8		417,011			27,186	1.4		Aa2	AA	$	309.9
12	Maxar Technologies		3.1	(3)	478,000			22,133	1.1		—	—	$	2.1
13	Massachusetts Institute of Technology		6.3		257,626			21,438	1.1		Aaa	AAA	$	—
14	Harvard University		2.3	(3)	286,580			20,086	1.0		Aaa	AAA	$	—
15	Boston Children's Hospital		14.1		269,816			20,066	1.0		Aa2	AA	$	—
16	United States Government		7.6		315,908			19,413	1.0		Aaa	AA+	$	—
17	New York University		9.1		203,500			19,241	1.0		Aa2	AA-	$	—
18	Merck & Co., Inc.		11.6		300,930			18,913	1.0		A1	A+	$	212.7
19	Pfizer Inc.		2.8		416,996			17,742	0.9		A2	A+	$	282.4
20	Apple, Inc.		2.6		604,382			17,512	0.9		Aaa	AA+	$	2,581.6
	Total/weighted-average		9.7	(4)	10,131,266		$	604,443	31.1	%

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 September 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 of calculating 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 June 30, 2022, 2seventy bio, Inc. held $269.9 million of cash and cash equivalents.

(3)Includes leases at recently acquired properties with future development and redevelopment opportunities. The leases with these tenants were in place when we acquired the properties.

(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 7.4 years as of September 30, 2022.

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 September 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	11,068,440	1,625,048	1,256,930	13,950,418	30	%	86		$	694,386		36	%		$	66.49
San Francisco Bay Area	8,348,617	230,592	300,010	8,879,219	19		67		461,017			24			61.45
New York City	1,214,658	—	55,361	1,270,019	3		5		92,178			5			78.67
San Diego	8,022,378	219,621	—	8,241,999	18		102		320,365			16			41.96
Seattle	2,813,803	311,631	213,976	3,339,410	7		46		108,492			6			39.72
Maryland	3,434,218	282,000	116,391	3,832,609	8		50		111,300			6			34.24
Research Triangle	3,534,682	328,233	376,871	4,239,786	9		42		95,844			5			28.99
Texas	1,668,718	—	201,499	1,870,217	4		14		37,151			1			28.40
Canada	577,225	—	107,081	684,306	1		8		10,916			—			20.33
Non-cluster/other markets	382,960	—	—	382,960	1		11		14,981			1			52.18

North America	41,065,699	2,997,125	2,628,119	46,690,943	100	%	431		$	1,946,630		100	%		$	50.99
		5,625,244

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	9/30/22			6/30/22		9/30/21		9/30/22		6/30/22		9/30/21
Greater Boston	94.4	%		95.0	%	94.3	%	84.7	%	84.7	%	86.7	%
San Francisco Bay Area	96.2			95.8		94.5		92.8		92.6		94.0
New York City	96.5		(1)	97.3		98.3		92.3		92.2		90.2
San Diego	95.2		(2)	96.3		93.9		95.2		96.3		92.5
Seattle	97.1			97.2		96.2		90.2		90.4		89.2
Maryland	95.4		(3)	97.6		99.7		92.3		94.2		91.0
Research Triangle	93.5			93.5		94.1		84.5		84.5		85.4
Texas	78.4			78.4		N/A		69.9		69.9		N/A
Subtotal	94.5			95.1		95.0		88.9		89.3		90.1
Canada	93.0			76.8		82.8		78.5		76.8		82.8
Non-cluster/other markets	75.0			76.7		76.2		75.0		76.7		76.2
North America	94.3	%	(4)	94.6	%	94.4	%	88.6	%	89.0	%	89.6	%

(1)Decline in occupancy related to temporary vacancy of 23,603 RSF at 450 E. 29th Street. This space is partially leased with occupancy expected to commence in the first quarter of 2023.

(2)Decline in occupancy primarily related to temporary vacancy of 88,274 RSF at one property in our Sorrento Mesa submarket. This space is leased to a large cap tenant with occupancy expected to commence in the first half of 2023.

(3)Decline in occupancy primarily related to temporary vacancy of 68,573 RSF at one property in our Beltsville submarket. This space is partially leased with occupancy expected to commence in the first quarter of 2023.

(4)Includes 1.7 million RSF, or 4.1%, 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 1.7 million RSF is currently leased/negotiating. Additionally, approximately 15% of the vacant 1.7 million RSF represents spaces, spread across multiple recently acquired properties, that are expected to be converted to office/laboratory space in the future. We expect to deliver 36% of the 1.7 million RSF over the next three quarters. Excluding recently acquired vacancies, occupancy of operating properties in North America was 98.4% as of September 30, 2022. The following table provides vacancy detail for our recent acquisitions:


		As of September 30, 2022							Percentage of Vacant RSF Leased/Negotiating
		Vacant RSF		Operating Properties Occupancy Impact
Property	Market/Submarket		Region			North America
275 Grove Street	Greater Boston/Route 128	173,033		1.6	%		0.4	%	—	%	(5)
Intersection Campus	Texas/Austin	159,433		9.6	%		0.4		100
Alexandria Center® for Life Science – Durham	Research Triangle/Research Triangle	128,387		3.6	%		0.3		62
601 and 611 Gateway Boulevard	San Francisco Bay Area/South San Francisco	114,680		1.4	%		0.3		40
Alexandria Center® for Life Science – Fenway	Greater Boston/Fenway	89,458		0.8	%		0.2		20
Other acquisitions	Various	1,010,833		N/A			2.5		27
		1,675,824					4.1	%	34	%

(5)We are evaluating options to develop or redevelop this space for office/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 September 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 September 30, 2022(1)	$	24,552,318	$	3,886,783	$	1,766,604		$	688,971	$	2,010,240	$	8,352,598	$	32,904,916

Square footage
Operating	41,065,699		—		—			—		—		—		41,065,699
New Class A development and redevelopment properties	—		5,625,244		7,158,947		(2)	3,825,041		21,296,252		37,905,484		37,905,484
Value-creation square feet currently included in rental properties(3)	—		—		(1,049,483)			(9,199)		(3,461,583)		(4,520,265)		(4,520,265)
Total square footage	41,065,699		5,625,244		6,109,464			3,815,842		17,834,669		33,385,219		74,450,918

(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 88% leased and expected to commence construction in the next five 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 nine months ended September 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)


One Hampshire Street(4)	Cambridge/Inner Suburbs/Greater Boston	6/23/22	1	100%			—			88,591	—	—	88,591		$	140,000
100 Edwin H. Land Boulevard	Cambridge/Inner Suburbs/Greater Boston	8/1/22	1	100			TBD			104,500	—	—	104,500			170,000
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
10010 and 10140 Campus Point Drive and 4275 Campus Point Court	University Town Center/ San Diego	9/29/22	3	100			750,000			226,144	—	—	750,000			106,380
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	Austin/Texas	2/18/22	9	81			—			998,099	—	—	998,099			400,400
Other	Various	Various	12	91			1,644,994			646,132	381,760	—	2,634,686			458,984
			39	92	%		6,538,991			3,305,764	451,760	—	9,600,231		$	2,437,592

(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 one or more new Class A properties. Square footage presented includes RSF of buildings currently in operations with future development or redevelopment opportunities. 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 interests

Our completed dispositions of and sales of partial interests in real estate assets during the nine months ended September 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

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
1450 Owens Street	Mission Bay/San Francisco Bay Area	7/1/22	20	%	(3)	191,000	N/A		N/A			25,039		(1)	N/A		10,083		(2)
341 and 343 Oyster Point Boulevard, 7000 Shoreline Court, and Shoreway Science Center	South San Francisco and Greater Stanford/San Francisco Bay Area	9/15/22	100	%		330,379	5.2%		5.2%			383,635			$	1,161	223,127
3215 Merryfield Row	Torrey Pines/San Diego	9/1/22	70	%		170,523	4.5%		4.2%			149,940		(1)	$	1,256	42,214		(2)
Summers Ridge Science Park	Sorrento Mesa/San Diego	9/15/22	70	%		316,531	4.9%		4.6%			159,600		(1)	$	720	65,097		(2)
7330 and 7360 Carroll Road	Sorrento Mesa/San Diego	9/15/22	100	%		84,442	4.4%		4.6%			59,476			$	704	35,463
13112 Evening Creek Drive	Other/San Diego	9/26/22	100	%		109,780	5.3%		5.3%			55,500			$	506	31,001
Other	Various						N/A		N/A			174,996			N/A		46,002
												$	2,222,296				$	1,181,947

(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.

(3)Relates to the sale of a partial interest in a land parcel. The noncontrolling interest share of our joint venture partner is anticipated to increase to 75% as our partner contributes capital for construction over time. As of September 30, 2022, the noncontrolling interest share of our joint venture partner was 34.5%.

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 sustained, strong leasing activity.


Projected Incremental Net Operating Income Primarily Commencing From the Fourth Quarter of 2022 Through the Third Quarter of 2025
$645 Million

7.6 million RSF(1)

78% Leased

As of September 30, 2022.

(1)Represents projects under construction aggregating 5.6 million RSF and seven near term projects, aggregating 2.0 million RSF, expected to commence construction during the next five quarters.

New Class A development and redevelopment properties: recent deliveries


The Arsenal on the Charles	201 Brookline Avenue	201 Haskins Way	825 and 835 Industrial Road
Greater Boston/ Cambridge/Inner Suburbs	Greater Boston/ Fenway	San Francisco Bay Area/ South San Francisco	San Francisco Bay Area/ Greater Stanford
330,921 RSF	261,990 RSF	323,190 RSF	526,129 RSF
100% Occupancy	100% Occupancy	100% Occupancy	100% Occupancy


3160 Porter Drive	30-02 48th Avenue	3115 Merryfield Row	10055 Barnes Canyon Road
San Francisco Bay Area/ Greater Stanford	New York City/New York City	San Diego/Torrey Pines	San Diego/Sorrento Mesa
92,300 RSF	81,826 RSF	146,456 RSF	119,927 RSF
83% Occupancy	100% Occupancy	93% Occupancy	100% Occupancy

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


5505 Morehouse Drive	9601 and 9603 Medical Center Drive	9950 Medical Center Drive	20400 Century Boulevard
San Diego/Sorrento Mesa	Maryland/Rockville	Maryland/Rockville	Maryland/Gaithersburg
79,945 RSF	17,378 RSF	84,264 RSF	42,692 RSF
100% Occupancy	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	280,205 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 September 30, 2022 (dollars in thousands):

Deliveries in 3Q22 commenced $30 million in net operating income


Property/Market/Submarket	3Q22 Delivery Date(1)		Our Ownership Interest	RSF Placed in Service				Occupancy Percentage(2)			Total Project		Unlevered Yields
		Prior to 1/1/22			1Q22		2Q22		3Q22			Total		Initial Stabilized		Initial Stabilized (Cash Basis)
						RSF		Investment
Development projects
201 Brookline Avenue/Greater Boston/Fenway	9/2/22		98.8%	—				—		—	261,990		261,990		100%		510,116	$	734,000	7.2	%	6.2	%
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
10055 Barnes Canyon Road/San Diego/ Sorrento Mesa	8/11/22		50%	—				—		110,454	9,473		119,927		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	7/6/22		100%	267,509				11,211		—	1,485		280,205		100%		340,400	216,000		7.2		7.1
8 and 10 Davis Drive/Research Triangle/ Research Triangle	N/A		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	9/13/22		100%	137,111				99,796		50,663	43,351		330,921		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	8/5/22		100%	41,848				11,092		18,689	10,197		81,826		100%		179,100	224,000		5.8		5.8
5505 Morehouse Drive/San Diego/Sorrento Mesa	N/A		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	9/1/22		100%	—				32,033		4,194	6,465		42,692		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	9/1/22			1,688,648				566,665		375,394	332,961		2,963,668				4,479,777	$	4,161,000	6.8	%	6.2	%

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

(2)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(1)	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	56,757 RSF
100% Leased	100% Leased	36% Leased/Negotiating	85% Leased/Negotiating	96% Leased/Negotiating


201 Brookline Avenue	15 Necco Street	40, 50, and 60 Sylvan Road(2)	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
248,126 RSF	345,995 RSF	202,428 RSF	139,984 RSF	300,010 RSF
97% Leased/Negotiating	97% Leased/Negotiating	61% Leased/Negotiating	100% Leased	7% Leased/Negotiating

(1)Image represents 500 North Beacon Street in our The Arsenal on the Charles mega campus.

(2)Image represents 50 Sylvan Road in our Reservoir Woods campus.

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	55,361 RSF	75,508 RSF	311,631 RSF	192,000 RSF
100% Leased	80% 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
38% 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 September 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		815,908		56,757		872,665		96			96					3Q21		2022
201 Brookline Avenue/Fenway		Dev		261,990		248,126		510,116		96			97					3Q22		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		—			—		(2)		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		123,739		55,361		179,100		72			80				4Q20			2022
San Diego
10055 Barnes Canyon Road/Sorrento Mesa		Dev		119,927		75,508		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		89			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			38					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		42,692		37,858		80,550		100			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		280,205		60,195		340,400		96			96					3Q21		2022
Texas
8800 Technology Forest Place/Greater Houston		Redev		—		201,499		201,499		23			23					2023		2024
Canada
Canada		Redev		22,992		107,081		130,073		62			80					2023		2024
				2,603,365		5,625,244		8,228,609		75	%		76	%
(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 project is focused on demand from our existing tenants in our adjacent properties/campuses and will also address demand from other non-Alexandria 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
Near-term projects expected to commence construction in the next five 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		—			—
Maryland
9820 Darnestown Road/Rockville		Dev		—		250,000		250,000		100			100
				—		1,968,213		1,968,213		88			88
				2,603,365		7,593,457		10,196,822		78	%		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	%		$	—	$	416,678	$	474,322		$	891,000			8.5	%		7.2	%
One Rogers Street/Cambridge/Inner Suburbs	100	%		10,807		970,641		224,552			1,206,000				5.2	%		4.2	%
99 Coolidge Avenue/Cambridge/Inner Suburbs	75.0	%		—		130,778		TBD
500 North Beacon Street and 4 Kingsbury Avenue/Cambridge/Inner Suburbs	100	%		—		121,622		305,378			427,000				6.2	%		5.5	%
The Arsenal on the Charles/Cambridge/Inner Suburbs	100	%		727,877		71,317		31,806			831,000				6.3	%		5.5	%
201 Brookline Avenue/Fenway	98.8	%		344,002		311,818		78,180			734,000				7.2	%		6.2	%
15 Necco Street/Seaport Innovation District	90.0	%		—		311,635		255,365			567,000				6.7	%		5.5	%
40, 50, and 60 Sylvan Road/Route 128	100	%		173,674		131,476		TBD
840 Winter Street/Route 128	100	%		13,635		91,069		103,296			208,000				7.5	%		6.5	%
Other	100	%		—		126,915		TBD
San Francisco Bay Area
651 Gateway Boulevard/South San Francisco	50.0	%		—		161,745		TBD
751 Gateway Boulevard/South San Francisco	51.0	%		—		162,756		127,244			290,000				6.5	%		6.3	%
New York City
30-02 48th Avenue/New York City	100	%		141,343		68,355		14,302			224,000				5.8	%		5.8	%
San Diego
10055 Barnes Canyon Road/Sorrento Mesa	50.0	%		77,618		43,792		59,590			181,000				7.2	%		6.6	%
10102 Hoyt Park Drive/Sorrento Mesa	100	%		—		93,025		20,975			114,000				7.4	%		6.5	%
Seattle
1150 Eastlake Avenue East/Lake Union	100	%		—		176,527		228,473			405,000				6.4	%		6.2	%
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell	100	%		57,311		88,289		TBD
Maryland
9810 Darnestown Road/Rockville	100	%		—		60,992		72,008			133,000				6.9	%		6.2	%
9808 Medical Center Drive/Rockville	100	%		—		37,666		TBD
9601 and 9603 Medical Center Drive/Rockville	100	%		6,464		37,787		9,749			54,000				8.4	%		7.1	%
20400 Century Boulevard/Gaithersburg	100	%		18,552		7,109		9,339			35,000				8.5	%		8.6	%
Research Triangle
2400 Ellis Road, 40 and 41 Moore Drive, and 14 TW Alexander Drive/Research Triangle	100	%		93,734		110,303		132,963			337,000				7.5	%		6.7	%
4 Davis Drive/Research Triangle	100	%		—		32,604		TBD
6040 George Watts Hill Drive, Phase II/Research Triangle	100	%		—		11,363		52,637			64,000				8.0	%		7.0	%
5 and 9 Laboratory Drive/Research Triangle	100	%		164,926		42,429		8,645			216,000				7.2	%		7.1	%
Texas
8800 Technology Forest Place/Greater Houston	100	%		—		53,708		TBD
Canada
Canada	100	%		3,079		14,384		TBD

				$	1,833,022	$	3,886,783	$	3,800,000	(1)	$	9,520,000	(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 September 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	%		$	416,678	462,100	—	—	—	462,100
325 Binney Street
Mega Campus: Alexandria Center® at Kendall Square/Cambridge/ Inner Suburbs	100	%		970,641		403,892	104,500	—	—	508,392
One Rogers Street and 100 Edwin H. Land Boulevard
99 Coolidge Avenue/Cambridge/Inner Suburbs	75.0	%		130,778		320,809	—	—	—	320,809
Mega Campus: The Arsenal on the Charles/Cambridge/Inner Suburbs	100	%		203,812		304,775	—	—	34,157	338,932
311 Arsenal Street, 400 and 500 North Beacon Street, 100 Talcott Avenue, and 4 Kingsbury Avenue
Mega Campus: Alexandria Center® for Life Science – Fenway/Fenway	(2)			604,733		248,126	507,997	—	—	756,123
201 Brookline Avenue and 421 Park Drive
15 Necco Street/Seaport Innovation District	90.0	%		311,635		345,995	—	—	—	345,995
Reservoir Woods/Route 128	100	%		181,412		202,428	312,845	—	440,000	955,273
40, 50, and 60 Sylvan Road
840 Winter Street/Route 128	100	%		91,069		139,984	28,230	—	—	168,214
275 Grove Street/Route 128	100	%		—		—	160,251	—	—	160,251
10 Necco Street/Seaport Innovation District	100	%		97,498		—	—	175,000	—	175,000
215 Presidential Way/Route 128	100	%		6,808		—	—	112,000	—	112,000
Mega Campus: 480 Arsenal Way and 446, 458, 500, and 550 Arsenal Street/Cambridge/Inner Suburbs	100	%		75,126		—	—	—	902,000	902,000
446, 458, and 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	%		124,644		—	—	—	1,000,000	1,000,000
99 A Street/Seaport Innovation District	100	%		49,334		—	—	—	235,000	235,000
Mega Campus: One Upland Road, 100 Tech Drive, and One Investors Way/Route 128	100	%		24,366		—	—	—	1,100,000	1,100,000
Other value-creation projects	100	%		216,392		453,869	260,992	—	466,504	1,181,365
				$	3,512,807	2,881,978	1,374,815	287,000	4,277,661	8,821,454
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 one or more new Class A properties. 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 98.8% ownership interest in 201 Brookline Avenue aggregating 248,126 RSF, which is currently under construction, and 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)			$	347,759	530,602	—	—		291,000	821,602
651 and 751 Gateway Boulevard
Mega Campus: Alexandria Center® for Science and Technology – Mission Bay/Mission Bay	65.5	%		102,515		—	191,000	—		—	191,000
1450 Owens Street
Alexandria Center® for Life Science – Millbrae/South San Francisco	44.3	%		221,441		—	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	%		386,999		—	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	%		8,432		—	56,924	—		—	56,924
Mega Campus: 88 Bluxome Street/SoMa	100	%		335,963		—	1,070,925	—		—	1,070,925
Mega Campus: 1122, 1150, and 1178 El Camino Real/South San Francisco	100	%		342,139		—	—	—		1,930,000	1,930,000
Mega Campus: 211(3), 213(3), 249, 259, 269, and 279 East Grand Avenue/ South San Francisco	100	%		6,655		—	—	—		90,000	90,000
211 East Grand Avenue
Other value-creation projects	100	%		—		—	—	—		25,000	25,000
				1,751,903		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	%		100,589		55,361	135,938	—		—	191,299
30-02 48th Avenue and 47-50 30th Street
Mega Campus: Alexandria Center® for Life Science – New York City/ New York City	100	%		124,489		—	—	550,000	(4)	—	550,000
219 East 42nd Street/New York City	100	%		—		—	—	—		579,947	579,947
				$	225,078	55,361	135,938	550,000		579,947	1,321,246
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 one or more new Class A properties. 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 of approximately 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
Scripps Science Park by Alexandria/Sorrento Mesa	100	%		$	160,958	144,113	105,000	175,041	164,000	588,154
10102 Hoyt Park Drive, 10048 and 12019 Meanley Drive, and 10277 Scripps Ranch Boulevard
Mega Campus: SD Tech by Alexandria/Sorrento Mesa	50.0	%		159,464		75,508	190,074	160,000	333,845	759,427
9805 Scranton Road and 10055 and 10075 Barnes Canyon Road
Mega Campus: One Alexandria Square/Torrey Pines	100	%		235,561		—	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	%		251,801		—	598,029	—	1,074,445	1,672,474
10010(2), 10140(2), and 10260 Campus Point Drive and 4110, 4150, 4161, and 4275(2) Campus Point Court
Mega Campus: Sequence District by Alexandria/Sorrento Mesa	100	%		42,443		—	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	%		140,659		—	—	937,000	—	937,000
9363, 9373, and 9393 Towne Centre Drive, 8410-8750 Genesee Avenue, and 4282 Esplanade Court
9444 Waples Street/Sorrento Mesa	50.0	%		21,632		—	—	149,000	—	149,000
Mega Campus: 5200 Illumina Way/University Town Center	51.0	%		15,526		—	—	—	451,832	451,832
4025, 4031, 4045, and 4075 Sorrento Valley Boulevard/Sorrento Valley	100	%		20,668		—	—	—	247,000	247,000
Other value-creation projects	100	%		74,616		—	—	—	539,235	539,235
				1,123,328		219,621	1,701,355	1,930,041	4,025,552	7,876,569
Seattle
Mega Campus: The Eastlake Life Science Campus by Alexandria/ Lake Union	100	%		176,527		311,631	—	—	—	311,631
1150 Eastlake Avenue East
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell	100	%		88,289		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	(3)			355,603		—	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	%		$	53,301	—	—	—	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 one or more new Class A properties. 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 this property. (3)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	%		$	13,804	—	—	—	230,000	230,000
21660 20th Avenue Southeast
Other value-creation projects	100	%		81,696		—	—	—	691,000	691,000
				769,220		525,607	1,146,138	—	1,706,713	3,378,458
Maryland
Mega Campus: Alexandria Center® for Life Science – Shady Grove/Rockville	100	%		174,064		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	%		7,109		37,858	—	—	—	37,858
				181,173		398,391	250,000	258,000	38,000	944,391
Research Triangle
Mega Campus: Alexandria Center® for Life Science – Durham/ Research Triangle	100	%		258,450		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	%		67,910		180,000	—	—	990,000	1,170,000
4 and 12 Davis Drive
6040 George Watts Hill Drive, Phase II/Research Triangle	100	%		11,363		88,038	—	—	—	88,038
Alexandria Center® for AgTech/Research Triangle	100	%		42,429		60,195	—	—	—	60,195
9 Laboratory Drive
Mega Campus: Alexandria Center® for NextGen Medicines/ Research Triangle	100	%		99,335		—	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	%		50,593		—	—	—	750,000	750,000
Other value-creation projects	100	%		4,185		—	—	—	76,262	76,262
				$	534,265	705,104	100,000	100,000	4,731,262	5,636,366
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 one or more new Class A properties. 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.

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

Texas
8800 Technology Forest Place/Greater Houston	100	%		$	61,425		201,499	—	—	116,287	317,786
Other value-creation projects	100	%		140,754			—	143,105	—	2,090,000	2,233,105
				202,179			201,499	143,105	—	2,206,287	2,550,891
Canada	100	%		14,384			107,081	—	—	124,000	231,081
Other value-creation projects	100	%		38,261			—	—	—	350,000	350,000
Total pipeline as of September 30, 2022				$	8,352,598	(2)	5,625,244	7,158,947	3,825,041	21,296,252	37,905,484

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 4,520,265 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 $3.9 billion of projects currently under construction that are 76% leased/negotiating. We also expect to commence construction on seven near-term projects aggregating $494.6 million in the next five quarters that are 88% leased.

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, impairments of real estate and non-real estate investments, and acceleration of stock compensation expense due to the resignation of an executive officer 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 nine months ended September 30, 2022 and 2021 and the related per share amounts were as follows (in millions, except per share amounts):


	Three Months Ended September 30,								Nine Months Ended September 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	$	(56.5)	$	(14.4)	$	(0.35)	$	(0.10)	$	(388.1)	$	183.3	$	(2.42)	$	1.26
Significant realized gains on non-real estate investments	—		52.4		—		0.35		—		110.1		—		0.76
Gain (loss) on sales of real estate	323.7		(0.4)		2.00		—		537.9		2.3		3.35		0.02
Impairment of real estate	(38.8)		(42.6)		(0.24)		(0.28)		(38.8)		(52.7)		(0.24)		(0.37)
Loss on early extinguishment of debt	—		—		—		—		(3.3)		(67.3)		(0.02)		(0.46)
Acceleration of stock compensation expense due to executive officer resignation	(7.2)		—		(0.04)		—		(7.2)		—		(0.04)		—
Total	$	221.2	$	(5.0)	$	1.37	$	(0.03)	$	100.5	$	175.7	$	0.63	$	1.21

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 nine months ended September 30, 2022:


	September 30, 2022
	Three Months Ended	Nine Months Ended
Percentage change in net operating income over comparable period from prior year	5.1%	7.0%
Percentage change in net operating income (cash basis) over comparable period from prior year	10.6%	8.9%
Operating margin	69%	70%
Number of Same Properties	296	256
RSF	29,758,169	26,421,903
Occupancy – current-period average	95.6%	95.7%
Occupancy – same-period prior-year average	94.4%	94.6%

The following table reconciles the number of Same Properties to total properties for the nine months ended September 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
Canada						2
Other						2
						36


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
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
100 Edwin H. Land Boulevard						1
10010 and 10140 Campus Point Drive and 4275 Campus Point Court						3
446 and 458 Arsenal Street						2
Other						47
						107
Unconsolidated real estate JVs						4
Properties held for sale						—
Total properties excluded from Same Properties						175
Same Properties						256
Total properties in North America as of September 30, 2022						431

Comparison of results for the three months ended September 30, 2022 to the three months ended September 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 September 30, 2022, compared to the three months ended September 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.


	Three Months Ended September 30,
(Dollars in thousands)	2022		2021		$ Change		% Change
Income from rentals:
Same Properties	$	382,282	$	359,457	$	22,825	6.3	%
Non-Same Properties	113,864		56,461		57,403		101.7
Rental revenues	496,146		415,918		80,228		19.3

Same Properties	132,988		113,246		19,742		17.4
Non-Same Properties	27,719		17,363		10,356		59.6
Tenant recoveries	160,707		130,609		30,098		23.0

Income from rentals	656,853		546,527		110,326		20.2

Same Properties	196		197		(1)		(0.5)
Non-Same Properties	2,803		1,035		1,768		170.8
Other income	2,999		1,232		1,767		143.4

Same Properties	515,466		472,900		42,566		9.0
Non-Same Properties	144,386		74,859		69,527		92.9
Total revenues	659,852		547,759		112,093		20.5

Same Properties	158,708		133,530		25,178		18.9
Non-Same Properties	42,481		32,465		10,016		30.9
Rental operations	201,189		165,995		35,194		21.2

Same Properties	356,758		339,370		17,388		5.1
Non-Same Properties	101,905		42,394		59,511		140.4
Net operating income	$	458,663	$	381,764	$	76,899	20.1	%

Net operating income – Same Properties	$	356,758	$	339,370	$	17,388	5.1	%
Straight-line rent revenue	(11,726)		(26,373)		14,647		(55.5)
Amortization of acquired below-market leases	(10,200)		(10,249)		49		(0.5)
Net operating income – Same Properties (cash basis)	$	334,832	$	302,748	$	32,084	10.6	%

Income from rentals

Total income from rentals for the three months ended September 30, 2022 increased by $110.3 million, or 20.2%, to $656.9 million, compared to $546.5 million for the three months ended September 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 September 30, 2022 increased by $80.2 million, or 19.3%, to $496.1 million, compared to $415.9 million for the three months ended September 30, 2021. The increase was primarily due to an increase in rental revenues from our Non-Same Properties related to 2.1 million RSF of development and redevelopment projects placed into service subsequent to July 1, 2021 and 69 operating properties aggregating 6.3 million RSF acquired subsequent to July 1, 2021.

Rental revenues from our Same Properties for the three months ended September 30, 2022 increased by $22.8 million, or 6.3%, to $382.3 million, compared to $359.5 million for the three months ended September 30, 2021. The increase was primarily due to rental rate increases on lease renewals and re-leasing of space since July 1, 2021 and an increase in occupancy to 95.6% for the three months ended September 30, 2022 from 94.4% for the three months ended September 30, 2021.

Tenant recoveries

Tenant recoveries for the three months ended September 30, 2022 increased by $30.1 million, or 23.0%, to $160.7 million, compared to $130.6 million for the three months ended September 30, 2021. The increase was primarily from our Same Properties related to higher operating expenses, as discussed below. The increase was also due to our Non-Same Properties related to our development and redevelopment projects placed into service and properties acquired subsequent to July 1, 2021, as discussed above under “Rental revenues.”

Same Properties’ tenant recoveries for the three months ended September 30, 2022 increased by $19.7 million, or 17.4%, primarily due to higher operating expenses during the three months ended September 30, 2022, as discussed under “Rental operations” below. As of September 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 September 30, 2022 and 2021, was $3.0 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 September 30, 2022 increased by $35.2 million, or 21.2%, to $201.2 million, compared to $166.0 million for the three months ended September 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 “Rental revenues.”

Same Properties’ rental operating expenses increased by $25.2 million, or 18.9%, to $158.7 million during the three months ended September 30, 2022, compared to $133.5 million for the three months ended September 30, 2021. The increase was primarily the result of an increase in: (i) utilities expenses aggregating $6.9 million, primarily due to higher electricity rates and an increase in occupancy; (ii) property tax expenses aggregating $5.3 million, primarily related to changes in the ownership of four of our consolidated joint ventures located in our Mission Bay submarket during the three months ended December 31, 2021 and resulting tax reassessment of values of the properties held by these joint ventures; and (iii) higher contract services costs aggregating $5.2 million, primarily due to increases in consumption and rates.

General and administrative expenses

General and administrative expenses for the three months ended September 30, 2022 increased by $12.0 million, or 31.7%, to $50.0 million, compared to $37.9 million for the three months ended September 30, 2021. Approximately $7.2 million of the increase

was the result of the acceleration of stock compensation expense recognized in connection with the resignation of Stephen A. Richardson, our former Co-Chief Executive Officer, effective on July 31, 2022.

The remaining increase in general and administrative expenses was 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 “Rental revenues.” As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended September 30, 2022 and 2021 were 10.1% and 10.1%, respectively.

Interest expense

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


	Three Months Ended September 30,
Component	2022			2021			Change
Gross interest	$	96,173		$	78,863		$	17,310
Capitalized interest	(73,189)			(43,185)			(30,004)
Interest expense	$	22,984		$	35,678		$	(12,694)

Average debt balance outstanding(1)	$	10,672,372		$	9,257,859		$	1,414,513
Weighted-average annual interest rate(2)	3.6		%	3.4		%	0.2		%

(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 September 30, 2022, compared to the three months ended September 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:
$1.0 billion unsecured senior notes payable due 2052		3.63	%	February 2022	$	8,897
$800 million unsecured senior notes payable due 2034 – green bond		3.07	%	February 2022	5,944
Fluctuation in interest rate and average balance:
$2.0 billion commercial paper program					3,600
Other increases in interest incurred					529
Total increases					18,970
Decreases in interest incurred due to:
Repayments of debt:
Secured notes payable		3.40	%	April 2022	(1,660)
Total decreases					(1,660)
Change in gross interest					17,310
Increase in capitalized interest					(30,004)
Total change in interest expense					$	(12,694)

(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 September 30, 2022 increased by $44.1 million, or 20.9%, to $254.9 million, compared to $210.8 million for the three months ended September 30, 2021. The increase was primarily due to additional depreciation from development and redevelopment projects placed into service and properties acquired, as discussed above under “Rental revenues.”

Impairments of real estate

During the three months ended September 30, 2022, we recognized real estate impairment charges aggregating $38.8 million, primarily related to a $38.3 million write-off our entire investment in a future development project in one of our existing submarkets in California. This impairment was recognized upon our decision to no longer proceed with this project as a result of the deteriorated macroeconomic environment that negatively impacted the financial outlook for this project. For more information, refer to the “Sales of real estate assets and impairment charges” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report.

During the three months ended September 30, 2021, we recognized impairment charges aggregating $42.6 million, primarily related to impairment charges for a land parcel in our SoMa submarket for the development of an office property and a property located in our non-core submarket, to its estimated fair value less costs to sell.

Equity in earnings of unconsolidated real estate joint ventures

During the three months ended September 30, 2022 and 2021, we recognized equity in earnings of unconsolidated real estate joint ventures of $40 thousand and $3.1 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 loss

During the three months ended September 30, 2022, we recognized investment losses aggregating $32.3 million, which consisted of $24.2 million of realized gains and $56.5 million of unrealized losses. Realized gains were primarily related to sales of investments and distributions received. Unrealized losses of $56.5 million 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 three months ended September 30, 2021, we recognized investment income aggregating $67.1 million, which consisted of $81.5 million of realized gains and $14.4 million of unrealized losses.

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 September 30, 2022, we recognized $323.7 million of gains related to the completion of seven 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 September 30, 2022.

During the three months ended September 30, 2021, we completed the sales of three office properties located in our San Francisco Bay Area and Seattle markets for the aggregate purchase price of $73.1 million and recognized a loss on sale of real estate aggregating $435 thousand.

For more information about our sales of real estate, refer to the “Sales of real estate assets and impairment charges” 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 September 30, 2022 decreased by $11.4 million to aggregate net unrealized losses of $12.9 million, compared to net unrealized losses of $1.5 million for the three months ended September 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 nine months ended September 30, 2022 to the nine months ended September 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 nine months ended September 30, 2022, compared to the nine months ended September 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.


	Nine Months Ended September 30,
(Dollars in thousands)	2022		2021		$ Change		% Change
Income from rentals:
Same Properties	$	1,041,128	$	967,378	$	73,750	7.6	%
Non-Same Properties	409,622		215,577		194,045		90.0
Rental revenues	1,450,750		1,182,955		267,795		22.6

Same Properties	355,063		299,072		55,991		18.7
Non-Same Properties	104,553		51,566		52,987		102.8
Tenant recoveries	459,616		350,638		108,978		31.1

Income from rentals	1,910,366		1,533,593		376,773		24.6

Same Properties	496		386		110		28.5
Non-Same Properties	7,819		3,248		4,571		140.7
Other income	8,315		3,634		4,681		128.8

Same Properties	1,396,687		1,266,836		129,851		10.3
Non-Same Properties	521,994		270,391		251,603		93.1
Total revenues	1,918,681		1,537,227		381,454		24.8

Same Properties	413,666		347,933		65,733		18.9
Non-Same Properties	165,135		99,905		65,230		65.3
Rental operations	578,801		447,838		130,963		29.2

Same Properties	983,021		918,903		64,118		7.0
Non-Same Properties	356,859		170,486		186,373		109.3
Net operating income	$	1,339,880	$	1,089,389	$	250,491	23.0	%

Net operating income – Same Properties	$	983,021	$	918,903	$	64,118	7.0	%
Straight-line rent revenue	(49,851)		(60,316)		10,465		(17.4)
Amortization of acquired below-market leases	(20,765)		(20,698)		(67)		0.3
Net operating income – Same Properties (cash basis)	$	912,405	$	837,889	$	74,516	8.9	%

Income from rentals

Total income from rentals for the nine months ended September 30, 2022 increased by $376.8 million, or 24.6%, to $1.9 billion, compared to $1.5 billion for the nine months ended September 30, 2021, as a result of increase in rental revenues and tenant recoveries, as discussed below.

Rental revenues

Total rental revenues for the nine months ended September 30, 2022 increased by $267.8 million, or 22.6%, to $1.5 billion, compared to $1.2 billion for the nine months ended September 30, 2021. The increase was primarily due to an increase in rental revenues from our Non-Same Properties related to 3.4 million RSF of development and redevelopment projects placed into service subsequent to January 1, 2021 and 107 operating properties aggregating 9.4 million RSF acquired subsequent to January 1, 2021.

Rental revenues from our Same Properties for the nine months ended September 30, 2022 increased by $73.8 million, or 7.6%, to $1.0 billion, compared to $967.4 million for the nine months ended September 30, 2021. The increase was primarily due to rental rate increases on lease renewals and re-leasing of space since January 1, 2021 and an increase in occupancy to 95.7% for the nine months ended September 30, 2022 from 94.6% for the nine months ended September 30, 2021.

Tenant recoveries

Tenant recoveries for the nine months ended September 30, 2022 increased by $109.0 million, or 31.1%, to $459.6 million, compared to $350.6 million for the nine months ended September 30, 2021. This increase was partially 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 nine months ended September 30, 2022 increased by $56.0 million, or 18.7%, primarily due to higher operating expenses during the nine months ended September 30, 2022, as discussed under “Rental operations” below. As of September 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 nine months ended September 30, 2022 and 2021 was $8.3 million and $3.6 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 nine months ended September 30, 2022 increased by $131.0 million, or 29.2%, to $578.8 million, compared to $447.8 million for the nine months ended September 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 “Rental revenues.”

Same Properties’ rental operating expenses increased by $65.7 million, or 18.9%, to $413.7 million during the nine months ended September 30, 2022, compared to $347.9 million for the nine months ended September 30, 2021. The increase was primarily the result of increases in: (i) utilities expenses aggregating $17.3 million, primarily due to increased electricity usage and rates; (ii) property tax expenses aggregating $13.0 million, primarily related to changes in the ownership of four of our consolidated joint ventures located in our Mission Bay submarket during the three months ended December 31, 2021, and resulting tax reassessment of values of the properties held by these joint ventures; and (iii) higher contract services costs aggregating $10.3 million, primarily due to increases in consumption and rates.

General and administrative expenses

General and administrative expenses for the nine months ended September 30, 2022 increased by $24.5 million, or 22.3%, to $134.3 million, compared to $109.8 million for the nine months ended September 30, 2021. Approximately $7.2 million of the increase

The remaining 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 “Rental revenues.” As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended September 30, 2022 and 2021 were 10.1% and 10.1%, respectively.

Interest expense

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


	Nine Months Ended September 30,
Component	2022			2021			Change
Gross interest	$	275,835		$	233,866		$	41,969
Capitalized interest	(199,154)			(126,563)			(72,591)
Interest expense	$	76,681		$	107,303		$	(30,622)

Average debt balance outstanding(1)	$	10,373,770		$	8,960,600		$	1,413,170
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 nine months ended September 30, 2022, compared to the nine months ended September 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:
$850 million unsecured senior notes payable		3.08	%	February 2021	$	3,341
$900 million unsecured senior notes payable – green bond		2.12	%	February 2021	2,383
$1.0 billion unsecured senior notes payable		3.63	%	February 2022	22,241
$800 million unsecured senior notes payable – green bond		3.07	%	February 2022	14,859
Fluctuation in interest rate and average balance:
$2.0 billion commercial paper program					4,474
Other increase in interest					845
Total increases					48,143
Decreases in interest incurred due to:
Repayments of debt:
$650 million unsecured senior notes payable – green bond		4.03	%	March 2021	(2,945)
Secured notes payable		3.40	%	April 2022	(3,229)
Total decreases					(6,174)
Change in gross interest					41,969
Increase in capitalized interest					(72,591)
Total change in interest expense					$	(30,622)

(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 nine months ended September 30, 2022 increased by $155.9 million, or 26.8%, to $737.7 million, compared to $581.8 million for the nine months ended September 30, 2021. The increase was primarily due to additional depreciation from development and redevelopment projects placed into service and properties acquired, as discussed above under Rental revenues.

Impairment of real estate

During the nine months ended September 30, 2022, we recognized real estate impairment charges aggregating $38.8 million, including $38.3 million to write off our entire investment in a future development project in one of our existing submarkets in California. This impairment was recognized upon our decision to no longer proceed with this project as a result of the deteriorated macroeconomic environment that negatively impacted the financial outlook for this project. For more information, refer to the “Sales of real estate assets and impairment charges” section of Note 3 – “Investments in real estate” to our unaudited consolidated financial statements under Item 1 of this report.

During the nine months ended September 30, 2021, we recognized impairment charges aggregating $52.7 million, primarily related to impairment charges for a land parcel in our SoMa submarket for the development of an office property and a property located in our non-core submarket, to its estimated fair value less costs to sell.

Loss on early extinguishment of debt

During the nine months ended September 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 nine months ended September 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 nine months ended September 30, 2022 and 2021, we recognized equity in earnings of unconsolidated real estate joint ventures of $473 thousand and $9.2 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 nine months ended September 30, 2022, we recognized investment losses aggregating $312.1 million, which consisted of $76.0 million of realized gains and $388.1 million of unrealized losses. Realized gains of $76.0 million primarily consisted of sales of investments and distributions received. Unrealized losses of $388.1 million during the nine months ended September 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 nine months ended September 30, 2021, we recognized investment income aggregating $372.4 million, which consisted of $189.0 million of realized gains and $183.3 million of unrealized gains.

Gain on sales of real estate

During the nine months ended September 30, 2022, we recognized $537.9 million of gains related to the completion of nine real estate dispositions. The gains were classified in gain on sales of real estate within our consolidated statements of operations for the nine months ended September 30, 2022.

During the nine months ended September 30, 2021, we recognized $2.3 million of gains, which included $2.8 million of gains related to the completion of two real estate dispositions and a loss of $435 thousand related to the sale of an office property located in our San Francisco Bay Area market. The net gains were classified in gain on sales of real estate within our consolidated statements of operations for the nine months ended September 30, 2021.

Other comprehensive income

Total other comprehensive income for the nine months ended September 30, 2022, decreased by $18.0 million to aggregate net unrealized losses of $17.4 million, compared to net unrealized gains of $596 thousand for the nine months ended September 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 nine months ended September 30, 2022 consisted of the following (in thousands):


Construction Spending	Nine Months Ended September 30, 2022
Additions to real estate – consolidated projects	$	2,324,017
Investments in unconsolidated real estate joint ventures	1,245
Contributions from noncontrolling interests	(205,117)
Construction spending (cash basis)	2,120,145
Change in accrued construction	118,203
Construction spending for the nine months ended September 30, 2022	2,238,348
Projected construction spending for the three months ending December 31, 2022	761,652
Guidance midpoint	$	3,000,000

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

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 10/24/22		As of 7/25/22
Earnings per share(1)	$3.56 to $3.58		$2.14 to $2.20
Depreciation and amortization of real estate assets		5.50		5.50
Gain on sales of real estate		(3.35)		(1.34)

Allocation of unvested restricted stock awards		(0.01)		(0.02)
Funds from operations per share(2)	$5.70 to $5.72		$6.28 to $6.34
Unrealized losses on non-real estate investments		2.42		2.07


Impairment of real estate		0.24		—
Loss on early extinguishment of debt		0.02		0.02
Acceleration of stock compensation expense due to executive officer resignation		0.04		0.04
Allocation to unvested restricted stock awards		(0.03)		(0.02)
Other		0.01		(0.01)
Funds from operations per share, as adjusted(2)	$8.40 to $8.42		$8.38 to $8.44
Midpoint		$8.41		$8.41

(1)Excludes unrealized gains or losses after September 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.


Key Assumptions(1) (Dollars in millions)		2022 Guidance
	Low			High
Occupancy percentage for operating properties in North America as of December 31, 2022(2)		95.0%			95.6%
Lease renewals and re-leasing of space:
Rental rate increases		30.0%			35.0%
Rental rate increases (cash basis)		18.0%			23.0%
Same property performance:
Net operating income increase		6.0%			8.0%
Net operating income increase (cash basis)		6.8%			8.8%
Straight-line rent revenue(3)		$	139		$	149
General and administrative expenses		$	172		$	180
Capitalization of interest		$	269		$	279
Interest expense		$	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; and “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)Updated guidance for occupancy percentage in North America as of December 31, 2022, reflects one property acquired during the three months ended September 30, 2022 with 70,278 operating RSF that was occupied by the seller through September 30, 2022.

(3)Reduction in our guidance range for straight-line rent revenue by $5 million is primarily attributable to: i) completed and projected dispositions, and ii) the write-off of deferred rent in 3Q22 in connection with the early termination of one below-market lease aggregating 21,621 RSF, with no downtime in occupancy, at rental rate increases of 23% and 36% (cash basis).


Key Credit Metrics						2022 Guidance
Net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2022, annualized						Less than or equal to 5.1x
Fixed-charge coverage ratio – fourth quarter of 2022, annualized						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 and 225 Binney Street and 300 Third Street/Greater Boston/Cambridge/Inner Suburbs		70.0	%	(2)		870,106
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
1450 Owens Street/San Francisco Bay Area/Mission Bay		34.5	%	(2)(5)		—
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		55.7	%			—
3215 Merryfield Row/San Diego/Torrey Pines		70.0	%	(2)		170,523
Alexandria Point/San Diego/University Town Center(6)		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(7)		50.0	%			803,430
Pacific Technology Park/San Diego/Sorrento Mesa		50.0	%			553,551
Summers Ridge Science Park/San Diego/Sorrento Mesa(8)		70.0	%	(2)		316,531
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(9)				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	%	(10)		(11)
1450 Research Boulevard/Maryland/Rockville		73.2	%	(12)		42,679
101 West Dickman Street/Maryland/Beltsville		57.9	%	(12)		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)The noncontrolling interest share of our joint venture partner is anticipated to increase to 75% as our partner contributes capital for construction over time.

(6)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4150, 4161, 4224, and 4242 Campus Point Court.

(7)Includes 9605, 9645, 9675, 9685, 9725, 9735, 9808, 9855, and 9868 Scranton Road and 10055 and 10065 Barnes Canyon Road.

(8)Includes 9965, 9975, 9985 and 9995 Summers Ridge Road.

(9)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.

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

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

(12)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 September 30, 2022 (dollars in thousands):


	Maturity Date			Stated Rate		Interest Rate(1)		At 100%				Our Share
Unconsolidated Joint Venture			Aggregate Commitment		Debt Balance(2)
1401/1413 Research Boulevard		12/23/24		2.70%		3.32	%	$	28,500	$	28,079	65.0%
1655 and 1725 Third Street		3/10/25		4.50%		4.57	%	600,000		598,974		10.0%
101 West Dickman Street		11/10/26		SOFR+1.95%	(3)	4.33	%	26,750		10,439		57.9%
1450 Research Boulevard		12/10/26		SOFR+1.95%	(3)	N/A		13,000		—		73.2%
								$	668,250	$	637,492

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

(2)Represents outstanding principal, net of unamortized deferred financing costs, as of September 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 nine months ended September 30, 2022 (in thousands):



	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures				Our Share of Unconsolidated Real Estate Joint Ventures
	September 30, 2022				September 30, 2022
	Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
Total revenues	$	96,841	$	264,781	$	2,875	$	8,441
Rental operations	(30,154)		(78,182)		(1,074)		(2,444)
	66,687		186,599		1,801		5,997
General and administrative	(352)		(1,222)		—		(96)
Interest	—		—		(966)		(2,744)
Depreciation and amortization of real estate assets	(27,790)		(77,889)		(795)		(2,684)

Fixed returns allocated to redeemable noncontrolling interests(1)	202		604		—		—
	$	38,747	$	108,092	$	40	$	473

Straight-line rent and below-market lease revenue	$	3,285	$	11,918	$	322	$	862
Funds from operations(2)	$	66,537	$	185,981	$	835	$	3,157

(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.


	As of September 30, 2022
	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures		Our Share of Unconsolidated Real Estate Joint Ventures
Investments in real estate	$	3,327,281	$	111,614
Cash, cash equivalents, and restricted cash	130,145		4,799
Other assets	385,072		10,982
Secured notes payable	(9,986)		(84,198)
Other liabilities	(193,468)		(4,912)
Redeemable noncontrolling interests	(9,612)		—
	$	3,629,432	$	38,285

During the nine months ended September 30, 2022 and 2021, our consolidated real estate joint ventures distributed an aggregate of $139.5 million and $81.9 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.


	September 30, 2022
(In thousands)	Three Months Ended		Nine Months Ended		Year Ended December 31, 2021
Realized gains	$	24,210	$	75,971	$	215,845	(1)
Unrealized (losses) gains	(56,515)		(388,076)		43,632
Investment (loss) income	$	(32,305)	$	(312,105)	$	259,477


Investments (In thousands)	Cost			Unrealized Gains		Unrealized Losses		Carrying Amount
Publicly traded companies	$	220,787		$	102,196	$	(99,441)	$	223,542
Entities that report NAV	438,087			331,477		(6,297)		763,267
Entities that do not report NAV:
Entities with observable price changes	104,337			95,289		(2,166)		197,460
Entities without observable price changes	384,278			—		—		384,278
Investments accounted for under the equity method of accounting	N/A			N/A		N/A		56,374
September 30, 2022	$	1,147,489	(2)	$	528,962	$	(107,904)	$	1,624,921

December 31, 2021	$	1,007,303		$	830,863	$	(33,190)	$	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)Represents 3.0% of gross assets as of September 30, 2022.


			Public/Private Mix (Cost)


			Tenant/Non-Tenant Mix (Cost)

Liquidity


Liquidity			Minimal Outstanding Borrowings and Significant Availability on Unsecured Senior Line of Credit

$6.4B			(in millions)





(In millions)
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program	$	3,613
Outstanding forward equity sales agreements(1)	1,494
Cash, cash equivalents, and restricted cash	866
Remaining construction loan commitments	154
Investments in publicly traded companies	224
Liquidity as of September 30, 2022	$	6,351

(1)Represents expected net proceeds from the future settlement of 8.0 million shares under 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 ventures, 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, strategic real estate joint ventures, 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 September 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	SOFR+0.875%	$	4,000,000	$	386,666	$	3,613,185
Outstanding forward equity sales agreements(2)						1,493,913
Cash, cash equivalents, and restricted cash						866,168
Remaining construction loan commitments	SOFR+2.70%	$	195,300	$	39,944	153,862
Investments in publicly traded companies						223,542
Liquidity as of September 30, 2022						$	6,350,670

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

(2)Represents expected net proceeds from the future settlement of 8.0 million shares under forward equity sales agreements.

Cash, cash equivalents, and restricted cash

As of September 30, 2022 and December 31, 2021, we had $866.2 million and $415.2 million, respectively, of cash, cash equivalents, and restricted cash. We expect existing cash, cash equivalents, and restricted cash, net cash provided by operating activities, proceeds from real estate asset sales, partial interest sales, strategic real estate joint ventures, 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 nine months ended September 30, 2022 and 2021 (in thousands):


	Nine Months Ended September 30,
	2022		2021		Change
Net cash provided by operating activities	$	893,158	$	760,637	$	132,521
Net cash used in investing activities	$	(3,720,618)	$	(5,433,393)	$	1,712,775
Net cash provided by financing activities	$	3,279,025	$	4,442,763	$	(1,163,738)

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 nine months ended September 30, 2022 increased by $132.5 million to $893.2 million, compared to $760.6 million for the nine months ended September 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 nine months ended September 30, 2022 and 2021 consisted of the following (in thousands):


	Nine Months Ended September 30,				Increase (Decrease)
	2022		2021
Sources of cash from investing activities:
Proceeds from sales of real estate	$	994,331	$	65,245	$	929,086
Change in escrow deposits	146,640		—		146,640
Return of capital from unconsolidated real estate joint ventures	471		—		471
Sales of and distributions from non-real estate investments	149,666		278,554		(128,888)
	1,291,108		343,799		947,309
Uses of cash for investing activities:
Purchases of real estate	2,499,772		3,758,704		(1,258,932)
Additions to real estate	2,324,017		1,542,210		781,807
Change in escrow deposits	—		147,414		(147,414)
Acquisition of interest in unconsolidated real estate joint venture	—		9,048		(9,048)
Investments in unconsolidated real estate joint ventures	1,245		739		506
Additions to non-real estate investments	186,692		319,077		(132,385)
	5,011,726		5,777,192		(765,466)

Net cash used in investing activities	$	3,720,618	$	5,433,393	$	(1,712,775)

The decrease in net cash used in investing activities for the nine months ended September 30, 2022 when compared to the nine months ended September 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 nine months ended September 30, 2022 and 2021 consisted of the following (in thousands):


	Nine Months Ended September 30,
	2022		2021		Change
Borrowings from secured notes payable	$	31,436	$	—	$	31,436
Repayments of borrowings from secured notes payable	(934)		(17,108)		16,174
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	11,661,500		21,850,000		(10,188,500)
Repayments of borrowings from commercial paper program	(11,544,685)		(21,200,000)		9,655,315
Payments of loan fees	(35,598)		(16,870)		(18,728)
Changes related to debt	1,706,733		1,642,909		63,824

Contributions from and sales of noncontrolling interests	1,463,454		629,138		834,316
Distributions to and purchases of noncontrolling interests	(139,685)		(81,926)		(57,759)
Proceeds from the issuance of common stock	845,746		2,758,545		(1,912,799)
Dividend payments	(564,118)		(482,408)		(81,710)
Taxes paid related to net settlement of equity awards	(33,105)		(23,495)		(9,610)
Net cash provided by financing activities	$	3,279,025	$	4,442,763	$	(1,163,738)

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 Sources and Uses of Capital (In millions)		2022 Guidance
	Range					Midpoint			Certain Completed Items
Sources of capital:
Net cash provided by operating activities after dividends		$	275	$	325		$	300
Net incremental debt		1,383		583			983			See below
Dispositions and sales of partial interests (refer to the “Dispositions and sales of partial interests” section within Item 2 for additional information)		1,450		2,600			2,025			$	2,222
Common equity		2,342		2,342			2,342			$	2,342	(1)
Total sources of capital		$	5,450	$	5,850		$	5,650

Uses of capital:
Construction (refer to the “Summary of capital expenditures” section within Item 2 for additional information)		$	2,900	$	3,100		$	3,000
Acquisitions (refer to the “Acquisitions” section within Item 2 for additional information)		2,550		2,750			2,650			$	2,546
Total uses of capital		$	5,450	$	5,850		$	5,650

Incremental debt (included above):
Issuance of unsecured senior notes payable		$	1,800	$	1,800		$	1,800		$	1,800
Repayments of secured notes payable		(195)		(195)			(195)			$	(195)
Unsecured senior line of credit, commercial paper, and other		(22)		(722)			(372)
Cash expected to be held at December 31, 2022(2)		(200)		(300)			(250)
Net incremental debt		$	1,383	$	583		$	983

(1)During the nine months ended September 30, 2022, we entered into new forward equity sales agreements aggregating $2.3 billion to sell 12.3 million shares of our common stock, and settled a portion of these forward equity sales agreements by issuing 4.2 million shares and received net proceeds of $847.9 million. We expect to issue 8.0 million shares to settle our remaining outstanding forward equity sales agreements and receive net proceeds of approximately $1.5 billion during the fourth quarter of 2022. Refer to Note 13 – “Stockholders’ equity” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(2)Represents cash expected to be held at December 31, 2022, which reduces 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; and “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 $45 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 nine months ended September 30, 2022.

Debt

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

In September 2022, we amended our unsecured senior line of credit to extend the maturity date to January 22, 2028 from January 6, 2026, increase the commitments to $4.0 billion from $3.0 billion, and convert the interest rate to SOFR plus 0.875% from LIBOR plus 0.815%. As of September 30, 2022, we had no outstanding balance on our unsecured senior line of credit. 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. Based upon our ability to achieve certain annual sustainability targets, the interest rate and facility fee rate are also subject to upward or downward adjustments of up to four basis points with respect to the interest rate and up to one basis point with respect to the facility fee.

In September 2022, we increased the aggregate amount we may issue from time to time under our commercial paper program to $2.0 billion from $1.5 billion. Commercial notes under our commercial paper program can have a maximum maturity of 397 days from the date of issuance and are generally issued with a maturity of 30 days or less. 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 under 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 SOFR plus 0.875%. The commercial paper notes sold during the three months ended September 30, 2022 were issued at a weighted-average yield to maturity of 2.69%. As of September 30, 2022, we had an outstanding balance of $386.7 million under our commercial paper program with a weighted-average interest rate of 3.48%.

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 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 connection with this change, 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 from LIBOR and have implemented numerous proactive measures to eliminate the potential transition-related impacts to the Company, specifically:

Since January 2017, we had proactively eliminated outstanding LIBOR-based borrowings and, as of September 30, 2022, had no LIBOR-based debt or financial contracts.
As of September 30, 2022, none of our consolidated or unconsolidated real estate joint ventures had LIBOR-based debt.
From 2020 through September 30, 2022, we increased the aggregate amount available under our commercial paper program to $2.0 billion from $750.0 million. Our commercial paper program is not subject to LIBOR and is used for funding short-term working capital needs. This program provides us with the 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.

*•*In September 2022, we amended our unsecured senior line of credit to convert its interest rate to SOFR, among other changes. As of September 30, 2022, we had no borrowings outstanding under our unsecured senior line of credit.

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 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 interests 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 nine months ended September 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.
We settled a portion of these forward equity sales agreements by issuing 4.2 million shares and received net proceeds of $847.9 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.
We entered into new forward equity sales agreements aggregating $753.4 million to sell 4.2 million shares under our ATM program at an average price of $179.36 per share (before underwriting discounts).
As of September 30, 2022, the remaining aggregate amount available under our ATM program for future sales of common stock is $246.6 million.

As of September 30, 2022, we expect to issue an aggregate of 8.0 million shares at an average price of $186.03 per share to settle all our outstanding forward equity sales agreements and receive net proceeds of approximately $1.5 billion during the three months ended December 31, 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 nine months ended September 30, 2022, we received $1.5 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 5.6 million RSF of Class A properties undergoing construction, 9.9 million RSF of near-term and intermediate-term development and redevelopment projects, and 17.9 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 nine months ended September 30, 2022 and 2021 of $199.2 million and $126.6 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 $63.1 million and $51.2 million and property taxes, insurance on real estate and indirect project costs aggregating $72.2 million and $53.5 million for the nine months ended September 30, 2022 and 2021, respectively.

The increase in capitalized costs for the nine months ended September 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 $26.2 million for the nine months ended September 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 nine months ended September 30, 2022, we capitalized total initial direct leasing costs of $161.4 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 nine months ended September 30, 2022 and 2021, we paid common stock dividends of $564.1 million and $482.4 million, respectively. The increase of $81.7 million in dividends paid on our common stock during the nine months ended September 30, 2022, compared to the nine months ended September 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 $3.48 per common share paid during the nine months ended September 30, 2022 from $3.30 per common share paid during the nine months ended September 30, 2021.

Secured notes payable

Secured notes payable as of September 30, 2022 consisted of three notes secured by two properties. Our secured notes payable typically require monthly payments of principal and interest and had a weighted-average interest rate of approximately 5.36%. As of September 30, 2022, the total book value of our investments in real estate securing debt was approximately $173.6 million. As of September 30, 2022, our secured notes payable, including unamortized discounts and deferred financing costs, comprised approximately $650 thousand and $39.9 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 September 30, 2022 were as follows:


Covenant Ratios(1)	Requirement	September 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	16.1x
Unencumbered Total Asset Value to Unsecured Debt	Greater than or equal to 150%	337%

(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 September 30, 2022 were as follows:


Covenant Ratios(1)	Requirement	September 30, 2022
Leverage Ratio	Less than or equal to 60.0%	27.8%
Secured Debt Ratio	Less than or equal to 45.0%	0.1%
Fixed-Charge Coverage Ratio	Greater than or equal to 1.50x	4.46x
Unsecured Interest Coverage Ratio	Greater than or equal to 1.75x	14.88x

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

Estimated interest payments

Estimated interest payments on our fixed-rate debt are calculated based upon contractual interest rates, including interest payment dates and scheduled maturity dates. As of September 30, 2022, 95.9% 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 September 30, 2022 included leases for 40 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 $6.4 million as of September 30, 2022, our ground lease obligations have remaining lease terms ranging from approximately 31 to 99 years, including available extension options that we are reasonably certain to exercise.

As of September 30, 2022, the remaining contractual payments under ground and office lease agreements in which we are the lessee aggregated $874.8 million and $36.0 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 September 30, 2022, the present value of the remaining contractual payments aggregating $910.8 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $409.0 million, which was classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets. As of September 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 4.6%. 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 $561.9 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 September 30, 2022, remaining aggregate costs under contract for the construction of properties undergoing development, redevelopment, and improvements under the terms of leases approximated $3.5 billion. In addition, we may be required to incur construction costs associated with our future development projects aggregating 643,331 RSF in our Greater Boston market pursuant to an agreement whereby our counterparty may elect to execute future lease agreements on mutually agreeable terms.

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 $418.7 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 12 years, with a weighted-average expiration of 8.8 years as of September 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 nine months ended September 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	(17,431)
Net other comprehensive loss	(17,431)

Balance as of September 30, 2022	$	(24,725)

Inflation

As of September 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 96% 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 September 30, 2022 and December 31, 2021, and results of operations and comprehensive income for the nine months ended September 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 September 30, 2022 and December 31, 2021, for the nine months ended September 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):


	September 30, 2022		December 31, 2021
Assets:
Cash, cash equivalents, and restricted cash	$	222,214	$	78,856
Other assets	107,578		101,956
Total assets	$	329,792	$	180,812

Liabilities:
Unsecured senior notes payable	$	10,098,588	$	8,316,678
Unsecured senior line of credit and commercial paper	386,666		269,990
Other liabilities	407,438		401,721
Total liabilities	$	10,892,692	$	8,988,389


	Nine Months Ended September 30, 2022		Year Ended December 31, 2021
Total revenues	$	24,250	$	26,798
Total expenses	(216,276)		(363,525)
Net loss	(192,026)		(336,727)
Net income attributable to unvested restricted stock awards	(5,866)		(7,848)
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders	$	(197,892)	$	(344,575)

As of September 30, 2022, 419 of our 431 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 nine months ended September 30, 2022 (in thousands):



	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures				Our Share of Unconsolidated Real Estate Joint Ventures
	September 30, 2022				September 30, 2022
	Three Months Ended		Nine Months Ended		Three Months Ended		Nine Months Ended
Net income	$	38,747	$	108,092	$	40	$	473
Depreciation and amortization of real estate assets	27,790		77,889		795		2,684

Funds from operations	$	66,537	$	185,981	$	835	$	3,157

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 nine months ended September 30, 2022 and 2021. Per share amounts may not add due to rounding.


	Three Months Ended September 30,					Nine Months Ended September 30,
(In thousands)	2022			2021		2022		2021
Net income attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic and diluted	$	341,439		$	101,264	$	461,475	$	490,602
Depreciation and amortization of real estate assets	251,453			205,436		727,178		569,654
Noncontrolling share of depreciation and amortization from consolidated real estate JVs	(27,790)			(17,871)		(77,889)		(49,615)
Our share of depreciation and amortization from unconsolidated real estate JVs	795			3,465		2,684		10,676
(Gain) loss on sales of real estate	(323,699)			435		(537,918)		(2,344)
Impairment of real estate – rental properties	—			18,602		—		25,485
Allocation to unvested restricted stock awards	1,002			(1,472)		(81)		(6,574)
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(1)	243,200			309,859		575,449		1,037,884
Unrealized losses (gains) on non-real estate investments	56,515			14,432		388,076		(183,348)
Significant realized gains on non-real estate investments	—			(52,427)		—		(110,119)
Impairment of real estate	38,783		(2)	24,018		38,783		27,190
Loss on early extinguishment of debt	—			—		3,317		67,253
Acceleration of stock compensation expense due to executive officer resignation	7,185		(3)	—		7,185		—
Allocation to unvested restricted stock awards	(1,033)			149		(4,743)		2,400
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted	$	344,650		$	296,031	$	1,008,067	$	841,260

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

(2)Includes $38.3 million related to the impairment of one future development, which we recognized upon our decision not to proceed with the project.

(3)Relates to the resignation of Stephen A. Richardson, our former Co-Chief Executive Officer, in July 2022.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Per share)	2022		2021		2022		2021
Net income per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted	$	2.11	$	0.67	$	2.88	$	3.38
Depreciation and amortization of real estate assets	1.39		1.26		4.06		3.66
Gain on sales of real estate	(2.00)		—		(3.35)		(0.02)
Impairment of real estate – rental properties	—		0.12		—		0.18
Allocation to unvested restricted stock awards	0.01		(0.01)		—		(0.05)
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted	1.51		2.04		3.59		7.15
Unrealized losses (gains) on non-real estate investments	0.35		0.10		2.42		(1.26)
Significant realized gains on non-real estate investments	—		(0.35)		—		(0.76)
Impairment of real estate	0.24		0.16		0.24		0.19
Loss on early extinguishment of debt	—		—		0.02		0.46
Acceleration of stock compensation expense due to executive officer resignation	0.04		—		0.04		—
Allocation to unvested restricted stock awards	(0.01)		—		(0.03)		0.02
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted	$	2.13	$	1.95	$	6.28	$	5.80

Weighted-average shares of common stock outstanding for calculation of:
Earnings per share – diluted	161,554		151,561		160,400		145,153
Funds from operations, diluted, per share	161,554		151,561		160,400		145,153
Funds from operations, diluted, as adjusted, per share	161,554		151,561		160,400		145,153

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 income (loss), 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 nine months ended September 30, 2022 and 2021 (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	383,443	$	124,433	$	575,433	$	554,486
Interest expense	22,984		35,678		76,681		107,303
Income taxes	1,950		3,672		7,610		7,898
Depreciation and amortization	254,929		210,842		737,666		581,807
Stock compensation expense	17,786		9,728		46,154		34,416
Loss on early extinguishment of debt	—		—		3,317		67,253
(Gain) loss on sales of real estate	(323,699)		435		(537,918)		(2,344)
Significant realized gains on non-real estate investments	—		(52,427)		—		(110,119)
Unrealized losses (gains) on non-real estate investments	56,515		14,432		388,076		(183,348)
Impairment of real estate	38,783		42,620		38,783		52,675
Adjusted EBITDA	$	452,691	$	389,413	$	1,335,802	$	1,110,027

Total revenues	$	659,852	$	547,759	$	1,918,681	$	1,537,227

Adjusted EBITDA margin	69%		71%		70%		72%

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 September 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 nine months ended September 30, 2022 and 2021 (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Adjusted EBITDA	$	452,691	$	389,413	$	1,335,802	$	1,110,027

Interest expense	$	22,984	$	35,678	$	76,681	$	107,303
Capitalized interest	73,189		43,185		199,154		126,563
Amortization of loan fees	(3,235)		(2,854)		(9,574)		(8,530)
Amortization of debt (discounts) premiums	(269)		498		(112)		1,539
Cash interest and fixed charges	$	92,669	$	76,507	$	266,149	$	226,875

Fixed-charge coverage ratio:
– period annualized	4.9x		5.1x		5.0x		4.9x
– trailing 12 months	5.1x		4.8x		5.1x		4.8x

Gross assets

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


	September 30, 2022		December 31, 2021
Total assets	$	34,368,614	$	30,219,373
Accumulated depreciation	4,148,230		3,771,241
Gross assets	$	38,516,844	$	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 September 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 September 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(1)		Total
Near-term projects:
100 Edwin H. Land Boulevard/Cambridge/Inner Suburbs	Redev		—		—		104,500		104,500
40 Sylvan Road/Route 128	Redev		—		312,845		—		312,845
275 Grove Street/Route 128	Redev		—		—		160,251		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		143,105
			250,000		323,110		476,373		1,049,483
Intermediate-term projects:
9444 Waples Street/Sorrento Mesa	Dev		9,199		—		—		9,199
			9,199		—		—		9,199
Future projects:
550 Arsenal Street/Cambridge/Inner Suburbs	Dev		—		—		260,867		260,867
446 and 458 Arsenal Street/Cambridge/Inner Suburbs	Dev		—		—		38,200		38,200
380 and 420 E Street/Seaport Innovation District	Dev		—		—		195,506		195,506
Other/Greater Boston	Redev		—		—		167,549		167,549
1122 and 1150 El Camino Real/South San Francisco	Dev		—		—		655,172		655,172
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
Alexandria Point/University Town Center	Dev		—		—		495,192		495,192
Sequence District by Alexandria/Sorrento Mesa	Dev/Redev		—		—		689,938		689,938
4025 and 4045 Sorrento Valley Boulevard/Sorrento Valley	Dev		—		—		22,886		22,886
601 Dexter Avenue North/Lake Union	Dev		—		18,680		—		18,680
830 4th Avenue South/SoDo	Dev		—		—		42,380		42,380
Other/Seattle	Dev		—		—		102,437		102,437
			—		18,680		3,442,903		3,461,583
			259,199		341,790		3,919,276		4,520,265

(1)Includes vacant square footage as of September 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 September 30, 2022:


	Operating RSF
Mega campus	27,716,476
Non-mega campus	13,349,223
Total	41,065,699

Mega campus RSF as a percentage of total operating property RSF	67	%

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 September 30, 2022 and December 31, 2021 (dollars in thousands):


	September 30, 2022			December 31, 2021
Secured notes payable	$	40,594		$	205,198
Unsecured senior notes payable	10,098,588			8,316,678
Unsecured senior line of credit and commercial paper	386,666			269,990
Unamortized deferred financing costs	76,947			65,476
Cash and cash equivalents	(533,824)			(361,348)
Restricted cash	(332,344)			(53,879)
Preferred stock	—			—
Net debt and preferred stock	$	9,736,627		$	8,442,115

Adjusted EBITDA:
– quarter annualized	$	1,810,764		$	1,631,244
– trailing 12 months	$	1,743,613		$	1,517,838

Net debt and preferred stock to Adjusted EBITDA:
– quarter annualized	5.4		x	5.2		x
– trailing 12 months	5.6		x	5.6		x

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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	383,443	$	124,433	$	575,433	$	554,486

Equity in earnings of unconsolidated real estate joint ventures	(40)		(3,091)		(473)		(9,237)
General and administrative expenses	49,958		37,931		134,286		109,807
Interest expense	22,984		35,678		76,681		107,303
Depreciation and amortization	254,929		210,842		737,666		581,807
Impairment of real estate	38,783		42,620		38,783		52,675
Loss on early extinguishment of debt	—		—		3,317		67,253
(Gain) loss on sales of real estate	(323,699)		435		(537,918)		(2,344)
Investment loss (income)	32,305		(67,084)		312,105		(372,361)
Net operating income	458,663		381,764		1,339,880		1,089,389
Straight-line rent revenue	(24,431)		(33,918)		(93,818)		(89,203)
Amortization of acquired below-market leases	(23,546)		(13,664)		(54,221)		(39,043)
Net operating income (cash basis)	$	410,686	$	334,182	$	1,191,841	$	961,143

Net operating income (cash basis) – annualized	$	1,642,744	$	1,336,728	$	1,589,121	$	1,281,524

Net operating income (from above)	$	458,663	$	381,764	$	1,339,880	$	1,089,389
Total revenues	$	659,852	$	547,759	$	1,918,681	$	1,537,227
Operating margin	70%		70%		70%		71%

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 September 30, 2022 to the three months ended September 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 nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Income from rentals	$	656,853	$	546,527	$	1,910,366	$	1,533,593
Rental revenues	(496,146)		(415,918)		(1,450,750)		(1,182,955)
Tenant recoveries	$	160,707	$	130,609	$	459,616	$	350,638

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 nine months ended September 30, 2022 and 2021 (dollars in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Unencumbered net operating income	$	457,656	$	371,026	$	1,325,089	$	1,054,290
Encumbered net operating income	1,007		10,738		14,791		35,099
Total net operating income	$	458,663	$	381,764	$	1,339,880	$	1,089,389
Unencumbered net operating income as a percentage of total net operating income	100%		97%		99%		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 September 30, 2022, we had Forward Agreements outstanding to sell an aggregate of 8.0 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 nine months ended September 30, 2022 and 2021 are calculated as follows (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Basic shares for earnings per share	161,554	150,854	160,400	144,716
Forward Agreements	—	707	—	437
Diluted shares for earnings per share	161,554	151,561	160,400	145,153

Basic shares for funds from operations per share and funds from operations per share, as adjusted	161,554	150,854	160,400	144,716
Forward Agreements	—	707	—	437
Diluted shares for funds from operations per share and funds from operations per share, as adjusted	161,554	151,561	160,400	145,153

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