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, 2022 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 advanced 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 850 tenants, Alexandria has a total market capitalization of $33.0 billion and an asset base in North America of 75.6 million SF as of March 31, 2023, which includes 41.9 million RSF of operating properties and 5.5 million RSF of Class A properties undergoing construction, 9.7 million RSF of near-term and intermediate-term development and redevelopment projects, and 18.5 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 advanced 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 our unique business model and diligent underwriting allow us to attract a high-quality and diverse tenant base that results in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value.

As of March 31, 2023:

Investment-grade or publicly traded large cap tenants represented 49% of our total annual rental revenue;
Approximately 95% 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 93% 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 93% 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 stockholder 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 advanced 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 March 31,
	2023		2022
Net income (loss) attributable to Alexandria’s common stockholders – diluted:
In millions	$	75.3	$	(151.7)
Per share	$	0.44	$	(0.96)
Funds from operations attributable to Alexandria’s common stockholders – diluted, as adjusted:
In millions	$	373.7	$	324.6
Per share	$	2.19	$	2.05

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 within this Item 2.

An operationally excellent, industry-leading REIT with a high-quality and diverse client base of over 850 tenants supporting high-quality revenues, stable 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 March 31, 2023	$	8.2		million
April 2023 tenant rent and receivables collected as of the date of this report	99.7		%
Tenant rent and receivables for the three months ended March 31, 2023 collected as of the date of this report	99.9		%
On March 10, 2023, we held $108.3 million in letters of credit originally issued by Silicon Valley Bank, now a division of First Citizens Bank. As of April 24, 2023, our tenants have transitioned $26.0 million to new banks or new forms of lease security, $64.7 million are in the process of transitioning to new banks acceptable to us, and $17.6 million remain to be transitioned.

Occupancy of operating properties in North America	93.6		%
Operating margin	70		%	(1)
Adjusted EBITDA margin	69		%	(1)

Weighted-average remaining lease term:
All tenants	7.2			years
Top 20 tenants	9.5			years

(1)For the three months ended March 31, 2023.

Continued strong leasing volume and rental rate increases

During the three months ended March 31, 2023, rental rate increase of 48.3% represents the highest quarterly rental rate growth in Company history.
Strong leasing activity continued during the three months ended March 31, 2023 with leasing volume aggregating 1.2 million RSF, exceeding the 1.1 million RSF average in quarterly leasing for the five-year period prior to 2021, with 85% generated from our client base of over 850 tenants.



						Three Months Ended March 31, 2023
Total leasing activity – RSF						1,223,427

Lease renewals and re-leasing of space:
RSF (included in total leasing activity above)						1,120,038
Rental rate increase						48.3%
Rental rate increase (cash basis)						24.2%

Continued strong net operating income and internal growth

Total revenues of $700.8 million, up 13.9%, for the three months ended March 31, 2023, compared to $615.1 million for the three months ended March 31, 2022.
Net operating income (cash basis) of $1.8 billion for the three months ended March 31, 2023 annualized, increased by $245.0 million, or 16.2%, compared to the three months ended March 31, 2022 annualized. Refer to “Net operating income, net operating income (cash basis), and operating margin” in the “Non-GAAP measures and definitions” section within this Item 2 for a reconciliation of our net income to net operating income (cash basis).
Same property net operating income growth:
3.7% and 9.0% (cash basis) for the three months ended March 31, 2023, compared to the three months ended March 31, 2022.
Our same property growth for the three months ended March 31, 2023 outperformed our 10-year averages of 3.6% and 6.6% (cash basis).
95% of our leases contain contractual annual rent escalations approximating 3%.

Significant reductions to 2023 construction, acquisitions, and equity-type capital

Key updates to our 2023 guidance include the following changes to our 2023 sources and uses:

$325 million reduction in total uses of capital to $2.95 billion.
$325 million reduction in sources of capital to $2.95 billion.

•$950 million in net incremental debt for 2023 ($1.0 billion of unsecured senior notes payable issued in February 2023).

$375 million in net cash provided by operating activities after dividends.
$1.625 billion in dispositions, sales of partial interests, and future settlement of forward equity sales agreements that were outstanding as of December 31, 2022.
$965.4 million, or 59%, completed or subject to executed letters of intent or purchase and sale agreements, including $865.4 million from dispositions and sales of partial interests and approximately $100 million from forward equity sales agreements that were outstanding as of December 31, 2022.
$659.6 million of targeted dispositions and sales of partial interests.
$275 million of excess bond offering proceeds to reduce debt capital for 2024.

Continued strong and flexible balance sheet with 13.4 years of remaining term of debt

Investment-grade credit ratings ranked in the top 10% among all publicly traded U.S. REITs.
$5.3 billion of liquidity.
No debt maturities prior to 2025.
13.4 years weighted-average remaining term of debt.
96.1% of our debt has a fixed rate.
Net debt and preferred stock to Adjusted EBITDA of 5.3x and fixed-charge coverage ratio of 5.0x for the three months ended March 31, 2023 annualized.
Total debt and preferred stock to gross assets of 28%.

*•*In February 2023, we issued unsecured senior notes payable aggregating $1.0 billion at 4.95% for average term of 21.2 years.

$1.4 billion of expected capital contributions from existing real estate joint venture partners from the three months ended June 30, 2023 through 2026 to fund construction.

Continued strong and increasing dividends with a focus on retaining significant net cash flows from operating activities after dividends for reinvestment

Common stock dividend declared for the three months ended March 31, 2023 was $1.21 per common share, aggregating $4.78 per common share for the twelve months ended March 31, 2023, up 24 cents, or 5%, over the twelve months ended March 31, 2022.
Dividend yield of 3.9% as of March 31, 2023.
Dividend payout ratio of 55% for the three months ended March 31, 2023.
Average annual dividend per-share growth of 5.4% from 2019 to the three months ended March 31, 2023 annualized.

Strong balance sheet management

Key metrics as of March 31, 2023

$33.0 billion in total market capitalization.
$21.5 billion in total equity capitalization, which ranks in the top 10% among all publicly traded U.S. REITs.


	March 31, 2023		Goal for Fourth Quarter of 2023 Annualized
	Quarter Annualized	Trailing 12 Months
Net debt and preferred stock to Adjusted EBITDA	5.3x	5.6x	Less than or equal to 5.1x
Fixed-charge coverage ratio	5.0x	5.0x	4.5x to 5.0x

Key capital events

In February 2023, we opportunistically issued $1.0 billion of unsecured senior notes payable with a weighted-average interest rate of 4.95% and a weighted-average maturity of 21.2 years. The unsecured senior notes include:
$500.0 million of 4.75% green unsecured senior notes due 2035; and
$500.0 million of 5.15% unsecured senior notes due 2053.

Investments

As of March 31, 2023:
Our non-real estate investments aggregated $1.6 billion.
Unrealized gains presented in our consolidated balance sheets were $336.8 million, comprising gross unrealized gains and losses aggregating $459.3 million and $122.5 million, respectively.
For the three months ended March 31, 2023, investment loss of $45.1 million presented in our consolidated statements of operations consisted of $20.7 million of realized gains and $65.9 million of unrealized losses/changes in fair value.

External growth and investments in real estate

Alexandria’s value-creation pipeline drives visibility for future growth aggregating over $610 million of incremental net operating income

Highly leased value-creation pipeline of current and four near-term projects expected to generate greater than $610 million of incremental net operating income, primarily commencing from the second quarter of 2023 through the first quarter of 2026.
6.7 million RSF of value-creation projects, 74% of which is leased/negotiating.
79% of the leased RSF of our value-creation projects was generated from our client base of over 850 tenants.
During the three months ended March 31, 2023, we placed into service development and redevelopment projects aggregating 453,511 RSF across multiple submarkets, resulting in $23 million of incremental net operating income.
Annual net operating income (cash basis) is expected to increase by $41 million upon the burn-off of initial free rent from recently delivered projects.

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

In March 2023, Alexandria was named one of Newsweek’s Most Trustworthy Companies in America. The Company was one of only six S&P 500 REITs recognized based on three main public touchpoints of trust: customer trust, investor trust and employee trust.
During the three months ended March 31, 2023, Alexandria earned several awards in recognition of excellence in operations, asset management, development, and leasing across our regions:
In our Greater Boston market, Alexandria received two 2023 BOMA Mid-Atlantic TOBY (The Outstanding Building of the Year) awards — Corporate Facility of the Year for 225 Binney Street on our Alexandria Center® at Kendall Square mega campus and Building Under 100,000 SF for 700 Technology Square on our Alexandria Technology Square® mega campus. The TOBY Awards honor and recognize quality in commercial buildings and reward excellence in building management.
In our San Diego market, Alexandria was selected for two 2023 CoStar Impact Awards: Commercial Development of the Year for 10055 Barnes Canyon Road on our SD Tech by Alexandria mega campus; and Lease of the Year for a near-term development project on our Campus Point by Alexandria mega campus. The CoStar Impact Awards recognize exemplary commercial real estate transactions and projects completed in 2022 that have significantly influenced their communities.
In our Research Triangle market, Alexandria earned three awards in the Triangle Business Journal’s 2023 SPACE Awards — Top Office Development for 8 Davis Drive on our Alexandria Center® for Advanced Technologies mega campus, Top Life Science/Laboratory Lease at 7 Triangle Drive, and Top Flex Lease at our Alexandria Center® for Life Science – Durham mega campus. The annual SPACE Awards recognize the Research Triangle’s top real estate developments and transactions.
In January 2023, Alexandria became a founding sponsor of the International Institute for Sustainable Laboratories (I2SL) new Labs2Zero program. As a founding sponsor, we help drive the development of I2SL’s new roadmap, which aims to improve the energy and emissions performance of existing and future laboratory buildings.

(1)Reflects current score for Alexandria and latest scores available for the FTSE Nareit All REITs Index companies from Bloomberg Professional Services as of March 31, 2023.

(2)Reflects current scores for Alexandria and latest scores available for the FTSE Nareit All REITs Index companies on ISS’s website as of March 31, 2023.

(3)Top 10% ranking among FTSE Nareit All REITs Index companies, based on information available from Bloomberg Professional Services as of March 31, 2023.

Environmental data for 2022 reflected in the chart above received independent limited assurance from DNV. The Independent Assurance Statement from DNV is available at www.are.com/esg.html.

(1)2025 environmental goals relative to a 2015 baseline on a like-for-like basis for buildings in operation that Alexandria directly manages. The carbon emissions reduction goal relates to our Scope 1 and Scope 2 emissions.

(2)2025 environmental goal for buildings in operation that Alexandria indirectly and directly manages.

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 Advanced Technology Campuses
	Increasing cash flows
	Percentage of leases containing annual rent escalations			95%
	Stable cash flows
	Percentage of triple net leases			93%
	Lower capex burden
	Percentage of leases providing for the recapture of capital expenditures			93%


Historical Rental Rate Growth: Renewed/Re-Leased Space		Margins(3)

	Operating		Adjusted EBITDA
	70%		69%




Net Debt and Preferred Stock to Adjusted EBITDA(5)		Fixed-Charge Coverage Ratio(5)

Refer to “Same properties” and “Non-GAAP measures and definitions” within this Item 2 for additional details. “Non-GAAP measures and definitions” contains the definition of “Net operating income” and its reconciliation from the most directly comparable financial measure presented in accordance with GAAP.

(1)Percentages calculated based on annual rental revenue in effect as of March 31, 2023.

(2)The 10-year average represents the average for the years ended December 31, 2013 through December 31, 2022.

(3)Represents percentages for the three months ended March 31, 2023.

(4)Represents the highest quarterly rental rate growth in Company history.

(5)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 and Stable Cash Flows From High-Quality and Diverse Tenants

Investment-Grade or Publicly Traded Large Cap Tenants						REIT Industry-Leading Tenant Client Base

49%						90%
of ARE’s Total Annual Rental Revenue(1)						of ARE’s Top 20 Tenants Annual Rental Revenue(1) Is From Investment-Grade or Publicly Traded Large Cap Tenants

Long-Duration Lease Terms
7.2 Years
Weighted-Average Remaining Term(2)


Sustained Strength in Tenant Collections(3)

99.9%
For the Three Months Ended March 31, 2023

99.7%
April 2023

Represents annual rental revenue in effect as of March 31, 2023. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(1)Represents annual rental revenue in effect as of March 31, 2023.

(2)Based on total annual rental revenue in effect as of March 31, 2023.

(3)Represents the portion of total receivables billed for each indicated period collected through the date of this report. .


High-Quality and Diverse Client Base in AAA Locations

Industry Mix of Over 850 Tenants(1)		AAA Locations



Percentage of ARE’s Annual Rental Revenue(4)

Solid Occupancy From Historically Strong Demand for Class A Properties in AAA Locations

Solid Historical Occupancy(5)	Occupancy Across Key Locations

96%
Over 10 Years

Represents annual rental revenue in effect as of March 31, 2023. Refer to the “Non-GAAP measures and definitions” section within this Item 2 for additional information.

(1)Tenant count declined from approximately 1,000 tenants during the three months ended March 31, 2023 due to the planned move-outs at our recently acquired retail property, The Shops at Tanforan, representing a future multi-building development project.

(2)Represents annual rental revenue currently generated from space that is targeted for a future change in use, including 1.1% of total annual rental revenue that is generated from covered land play projects. The weighted-average remaining term of these leases is 5.3 years.

(3)Our other tenants, which represent an aggregate of 3.0% 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.

(4)Represents annual rental revenue in effect as of March 31, 2023.

(5)Represents average occupancy of operating properties in North America as of each December 31 for the last 10 years and as of March 31, 2023.

Leasing

The following table summarizes our leasing activity at our properties:


	Three Months Ended			Year Ended
	March 31, 2023			December 31, 2022
	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	48.3%	(2)	24.2%			31.0%		22.1%
New rates	$62.75		$59.87			$50.37		$48.48
Expiring rates	$42.31		$48.21			$38.44		$39.69
RSF	1,120,038					4,540,325
Tenant improvements/leasing commissions	$16.59					$27.83
Weighted-average lease term	5.3 years					5.0 years

Developed/redeveloped/ previously vacant space leased(3)
New rates	$39.54		$38.29			$73.46		$64.04
RSF	103,389					3,865,262
Weighted-average lease term	7.5 years					11.8 years

Leasing activity summary (totals):
New rates	$60.79		$58.05			$60.98		$55.64
RSF	1,223,427					8,405,587
Weighted-average lease term	5.5 years					8.1 years

Lease expirations(1)
Expiring rates	$43.47		$47.45			$37.41		$38.06
RSF	2,012,525					6,572,286

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

(1)Excludes month-to-month leases aggregating 115,520 RSF and 266,292 RSF as of March 31, 2023 and December 31, 2022, respectively.

(2)Represents the highest quarterly rental rate growth in Company history.

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

Summary of contractual lease expirations

The following table summarizes information with respect to the contractual lease expirations at our properties as of March 31, 2023:


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

	2023	(2)		1,700,031		4.4	%		$	46.10		3.9	%
	2024			3,739,274		9.6	%		$	49.15		9.2	%
	2025			3,369,852		8.6	%		$	48.66		8.2	%
	2026			2,787,746		7.2	%		$	49.08		6.8	%
	2027			2,729,791		7.0	%		$	55.00		7.5	%
	2028			4,608,140		11.8	%		$	51.98		12.0	%
	2029			2,398,269		6.2	%		$	54.31		6.5	%
	2030			2,830,567		7.3	%		$	57.36		8.1	%
	2031			3,086,116		7.9	%		$	54.15		8.3	%
	2032			1,298,945		3.3	%		$	56.91		3.7	%
Thereafter				10,413,780		26.7	%		$	49.67		25.8	%

(1)Represents amounts in effect as of March 31, 2023.

(2)Excludes month-to-month leases aggregating 115,520 RSF as of March 31, 2023.

The following tables present information by market with respect to our lease expirations in North America as of March 31, 2023, for the remainder of 2023, and for all of 2024:


	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(2)		Total(3)

Greater Boston	37,017		21,675		10,265		(5)	283,576		352,533		$	62.34
San Francisco Bay Area	56,253		41,381		—			182,743		280,377		57.96
New York City	—		—		—			20,790		20,790		N/A
San Diego	199,402		72,292		—			229,740		501,434		31.62
Seattle	—		—		—			255,460		255,460		31.87
Maryland	—		89,831		—			116,938		206,769		32.26
Research Triangle	—		—		—			59,398		59,398		46.88
Texas	—		—		—			—		—		—
Canada	13,321		—		—			2,484		15,805		28.07
Non-cluster/other markets	—		4,354		—			3,111		7,465		58.48
Total	305,993		229,533		10,265			1,154,240		1,700,031		$	46.10
Percentage of expiring leases	18	%	14	%	1	%		67	%	100	%

	2024 Contractual Lease Expirations (in RSF)											Annual Rental Revenue (per RSF)(4)
Market	Leased		Negotiating/ Anticipating		Targeted for Future Development/ Redevelopment(1)			Remaining Expiring Leases(2)		Total

Greater Boston	51,564		—		122,465			535,690		709,719		$	75.28
San Francisco Bay Area	35,798		—		107,250			555,209		698,257		61.98
New York City	—		—		349,947			8,227		358,174		N/A
San Diego	28,698		28,264		580,021			345,518		982,501		31.60
Seattle	—		186,923		50,552			220,425		457,900		23.44
Maryland	—		26,627		—			44,919		71,546		23.04
Research Triangle	15,519		103,171		—			106,254		224,944		65.25
Texas	—		—		126,034			72,938		198,972		33.91
Canada	—		—		—			6,786		6,786		23.45
Non-cluster/other markets	—		—		—			30,475		30,475		65.94
Total	131,579		344,985		1,336,269			1,926,441		3,739,274		$	49.15
Percentage of expiring leases	4	%	9	%	36	%		51	%	100	%

(1)Represents RSF targeted for future development or redevelopment, subject to market conditions, upon expiration of existing in-place leases primarily related to recently acquired properties with an average contractual lease expiration dates of August 31, 2023 and July 20, 2024 for 2023 and 2024, respectively, weighted by annual rental revenue. Refer to “Investments in real estate – value-creation square footage currently in rental properties” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details on value-creation square feet currently included in rental properties.

(2)The largest remaining contractual expirations for 2023 and 2024 are 108,020 RSF in our Bothell submarket and 97,702 RSF in our Mission Bay submarket.

(3)Excludes month-to-month leases aggregating 115,520 RSF as of March 31, 2023.

(4)Represents amounts in effect as of March 31, 2023.

(5)Represents one lease at 840 Winter Street in our Route 128 submarket. 840 Winter Street is a 168,214 RSF property undergoing redevelopment and is 100% leased.

Top 20 tenants

90% of Top 20 Tenants Annual Rental Revenue Is 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 March 31, 2023. 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 March 31, 2023 (dollars in thousands, except average market cap amounts):


		Remaining Lease Term(1) (in Years)			Aggregate RSF		Annual Rental Revenue(1)		Percentage of Aggregate Annual Rental Revenue (1)		Investment-Grade Credit Ratings		Average Market Cap(1) (in billions)

	Tenant					Moody’s	S&P
1	Bristol-Myers Squibb Company		6.2		969,852		$	73,073	3.6	%	A2	A+	$	157.0
2	Moderna, Inc.		13.6		908,436			51,934	2.6		—	—	$	61.1
3	Eli Lilly and Company		6.0		743,267			49,896	2.5		A2	A+	$	310.9
4	Takeda Pharmaceutical Company Limited		6.8		549,760			37,399	1.9		Baa2	BBB+	$	45.8
5	Alphabet Inc.		3.7		654,423			36,809	1.8		Aa2	AA+	$	1,371.1
6	Illumina, Inc.		7.4		890,389			36,204	1.8		Baa3	BBB	$	34.9
7	2seventy bio, Inc.(2)		10.4		312,805			33,617	1.7		—	—	$	0.5
8	Harvard University		6.8		391,625			31,889	1.6		Aaa	AAA	$	—
9	Novartis AG		5.4		447,831			30,749	1.5		A1	AA-	$	205.7
10	Sanofi		8.5		393,278			29,350	1.5		A1	AA	$	119.9
11	Cloud Software Group, Inc.		3.9	(3)	292,013			28,537	1.4		—	—	$	—
12	Uber Technologies, Inc.		59.5	(4)	1,009,188			27,716	1.4		—	—	$	55.8
13	Roche		6.3		416,417			27,026	1.3		Aa2	AA	$	272.3
14	Pfizer Inc.		1.5		405,165			21,461	1.1		A1	A+	$	269.4
15	Massachusetts Institute of Technology		5.8		257,626			21,438	1.1		Aaa	AAA	$	—
16	Boston Children's Hospital		13.6		269,816			20,066	1.0		Aa2	AA	$	—
17	AstraZeneca PLC		4.3		360,450			19,616	1.0		A3	A	$	200.5
18	United States Government		7.1		313,778			19,527	1.0		Aaa	AA+	$	—
19	New York University		8.6		203,500			19,241	1.0		Aa2	AA-	$	—
20	Merck & Co., Inc.		11.1		300,930			18,913	0.9		A1	A+	$	245.3
	Total/weighted-average		9.5	(4)	10,090,549		$	634,461	31.7	%

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

(1)Based on total annual rental revenue in effect as of March 31, 2023. 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)As of December 31, 2022, 2seventy bio, Inc. held $266.3 million of cash, cash equivalents, and marketable securities, and during the first quarter of 2023, the company raised an additional $117 million in net proceeds in an underwritten follow-on public offering.

(3)Includes leases at recently acquired properties with future development and redevelopment opportunities. These leases with Cloud Software Group, Inc. (formerly known as TIBCO Software, Inc.) 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 7.3 years as of March 31, 2023.

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 March 31, 2023 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	11,245,830	1,439,791	1,513,018	14,198,639	30	%	84		$	718,876		36	%		$	68.91
San Francisco Bay Area	7,820,195	728,734	300,010	8,848,939	19		68		451,960			22			64.85
New York City	1,270,019	—	—	1,270,019	3		5		95,160			5			83.98
San Diego	8,099,957	—	—	8,099,957	16		93		328,647			16			43.07
Seattle	2,831,613	311,631	178,129	3,321,373	7		45		112,156			6			41.24
Maryland	3,493,094	532,000	57,515	4,082,609	9		51		115,883			6			34.94
Research Triangle	3,874,491	88,038	—	3,962,529	8		40		114,389			6			31.85
Texas	1,795,353	—	130,765	1,926,118	4		15		46,990			2			29.15
Canada	834,968	—	217,798	1,052,766	2		11		16,358			1			22.58
Non-cluster/other markets	382,961	—	—	382,961	1		11		15,973			—			52.36
Properties held for sale	297,284	—	—	297,284	1		10	(1)	2,041			—			N/A
North America	41,945,765	3,100,194	2,397,235	47,443,194	100	%	433		$	2,018,433		100	%		$	52.46
		5,497,429

(1)Represents properties classified as held for sale in three submarkets, including eight contiguous properties aggregating 128,870 RSF in a non-core submarket.

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	3/31/23			12/31/22		3/31/22		3/31/23		12/31/22		3/31/22
Greater Boston	92.8	%		94.5	%	95.4	%	81.8	%	85.5	%	85.0	%
San Francisco Bay Area	95.9			96.7		95.6		92.3		93.3		92.4
New York City	89.2			92.3		98.4		89.2		92.3		91.9
San Diego	94.2			95.4		94.2		94.2		95.4		92.7
Seattle	96.0			97.0		97.9		90.4		90.1		91.0
Maryland	95.7			95.8		100.0		94.2		93.3		96.4
Research Triangle	92.7			94.0		93.6		92.7		85.0		85.5
Texas	89.8			91.2		N/A		83.7		81.6		N/A
Subtotal	93.9			95.1		95.7		89.1		89.9		89.8
Canada	86.8			80.8		76.5		68.8		68.2		76.5
Non-cluster/other markets	79.7			75.0		80.4		79.7		75.0		75.7
North America	93.6	%	(1)	94.8	%	94.7	%	88.5	%	89.4	%	88.9	%

(1)Decline in occupancy primarily relates to: (i) seven lease expirations spread across four markets, which aggregate 370,797 RSF at properties that are expected to have rental rate increases of 109.7% and 115.1% (cash basis) and for which we have successfully re-leased an aggregate 28.9% with occupancy expected to commence on a portion of the RSF as early as the third quarter of 2023, and (ii) in connection with our strategic review of projected 2023 construction spending, our temporary pause of construction work at one building aggregating 70,734 RSF, which was undergoing redevelopment in our Greater Houston submarket, until further lease-up of the building. As of March 31, 2023, the vacant asset was classified as an operating property.

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, and property enhancements identified during the underwriting of certain acquired properties, located in collaborative life science, agtech, and advanced 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 increases 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 March 31, 2023 (dollars in thousands):


			Development and Redevelopment
			Active and Near-Term Construction				Future Opportunities Subject to Market Conditions and Leasing
	Operating		Under Construction 69% Leased/Negotiating		Committed Near Term 100% Leased(1)		Near Term		Intermediate Term		Future		Subtotal		Total
Square footage
Operating	41,945,765		—		—		—		—		—		—		41,945,765
New Class A development and redevelopment properties	—		5,497,429		1,206,281		3,354,990		5,864,406		21,966,051		37,889,157		37,889,157
Value-creation square feet currently included in rental properties(2)	—		—		—		(290,532)		(434,776)		(3,502,022)		(4,227,330)		(4,227,330)
Total square footage	41,945,765		5,497,429		1,206,281		3,064,458		5,429,630		18,464,029		33,661,827		75,607,592

Investments in real estate
Gross book value as of March 31, 2023(3)	$	25,931,643	$	4,574,701	$	346,278	$	1,013,145	$	1,281,930	$	2,287,366	$	9,503,420	$	35,435,063

(1)Represents near-term projects expected to commence construction during the next four quarters after March 31, 2023.

(2)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.

(3)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.

Acquisitions

Our real estate asset acquisitions for the three months ended March 31, 2023 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	Active Development/Redevelopment	Operating With Future Development/ Redevelopment				Total(2)

Three months ended March 31, 2023:
Canada	Canada	1/30/23	1	100	%	—	—		247,743		247,743	$	100,837
Other	Various		2	100		715,000	110,717		10,000		835,717		71,103
			3	100	%	715,000	110,717		257,743		1,083,460	$	171,940

(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 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.

New Class A development and redevelopment properties

Refer to “Net operating income” in the “Non-GAAP measures and definitions” section within this Item 2 for additional details and its reconciliation from the most directly comparable financial measures presented in accordance with GAAP.

(1)As of March 31, 2023 Represents projects under construction aggregating 5.5 million RSF and four near term projects, aggregating 1.2 million RSF, expected to commence construction during the next four quarters after March 31, 2023.

New Class A development and redevelopment properties: recent deliveries

The following table presents value-creation development and redevelopment of new Class A properties placed into service during the three months ended March 31, 2023 (dollars in thousands):

Deliveries in 1Q23 commenced $23 million in annual incremental net operating income


201 Brookline Avenue	Alexandria Center® for Advanced Technologies – Monte Villa Parkway	9601 and 9603 Medical Center Drive	2400 Ellis Road, 40 Moore Drive, and 14 TW Alexander Drive(1)
Greater Boston/Fenway	Seattle/Bothell	Maryland/Rockville	Research Triangle/Research Triangle
447,247 RSF	35,847 RSF	48,516 RSF	603,316 RSF
100% Occupancy	100% Occupancy	100% Occupancy	100% Occupancy


Property/Market/Submarket	1Q23 Delivery Date(2)		Our Ownership Interest		RSF Placed in Service			Occupancy Percentage(3)		Total Project			Unlevered Yields
		Prior to 1/1/23		1Q23					Total		Initial Stabilized			Initial Stabilized (Cash Basis)
							RSF	Investment
Development projects
201 Brookline Avenue/Greater Boston/Fenway	3/15/23		98.8%		340,073	107,174				447,247		100%			510,116	$	775,000	7.2	%	6.5	%



Redevelopment projects
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Seattle/Bothell	1/19/23		100%		—	35,847				35,847		100%			460,623	229,000		6.3		6.2
9601 and 9603 Medical Center Drive/Maryland/Rockville	1/9/23		100%		34,589	13,927				48,516		100%			95,911	54,000		8.4		7.1
20400 Century Boulevard/Maryland/Gaithersburg	3/1/23		100%		50,738	19,692				70,430		100%			80,550	35,000		8.5		8.6
2400 Ellis Road, 40 Moore Drive, and 14 TW Alexander Drive/Research Triangle/Research Triangle(4)	2/17/23		100%		326,445	276,871				603,316		100%			603,316	241,000		8.1		6.8
Weighted average/total	2/27/23				751,845	453,511				1,205,356					1,750,516	$	1,334,000	7.3	%	6.6	%

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

(2)Represents the average delivery date for deliveries that occurred during the three months ended March 31, 2023, weighted by annual rental revenue.

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

(4)During the three months ended March 31, 2023, we delivered 276,871 RSF of our 14 TW Alexander Drive and 40 Moore Drive redevelopment project. Due to current market conditions and in connection with our strategic review of projected 2023 construction spending, we updated our plans for our redevelopment project aggregating 100,000 SF at 41 Moore Drive. As of March 31, 2023, this project was classified as a future development project, rather than a redevelopment, which will allow us to upzone this project to a larger building to meet future market demand.

New Class A development and redevelopment properties: current projects


325 Binney Street	140 First Street	99 Coolidge Avenue	500 North Beacon Street and 4 Kingsbury Avenue(1)	201 Brookline Avenue
Greater Boston/ Cambridge/Inner Suburbs	Greater Boston/ Cambridge/Inner Suburbs	Greater Boston/ Cambridge/Inner Suburbs	Greater Boston/ Cambridge/Inner Suburbs	Greater Boston/Fenway
462,100 RSF	403,892 RSF	320,809 RSF	248,018 RSF	62,869 RSF
100% Leased	100% Leased	36% Leased/Negotiating	85% Leased/Negotiating	98% Leased/Negotiating


15 Necco Street	40, 50, and 60 Sylvan Road(2)	1450 Owens Street	651 Gateway Boulevard	230 Harriet Tubman Way
Greater Boston/ Seaport Innovation District	Greater Boston/Route 128	San Francisco Bay Area/ Mission Bay	San Francisco Bay Area/ South San Francisco	San Francisco Bay Area/ South San Francisco
345,995 RSF	515,273 RSF	212,796 RSF	300,010 RSF	285,346 RSF
97% Leased/Negotiating	—% Leased/Negotiating	—% Leased/Negotiating	22% Leased/Negotiating	100% Leased

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

(2)Image represents 50 Sylvan Road.

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


751 Gateway Boulevard	1150 Eastlake Avenue East	Alexandria Center® for Advanced Technologies – Monte Villa Parkway
San Francisco Bay Area/ South San Francisco	Seattle/Lake Union	Seattle/Bothell
230,592 RSF	311,631 RSF	178,129 RSF
100% Leased	99% Leased/Negotiating	82% Leased/Negotiating


9810 and 9820 Darnestown Road	9808 Medical Center Drive	9601 and 9603 Medical Center Drive	6040 George Watts Hill Drive, Phase II
Maryland/Rockville	Maryland/Rockville	Maryland/Rockville	Research Triangle/Research Triangle
442,000 RSF	90,000 RSF	47,395 RSF	88,038 RSF
100% Leased	47% Leased/Negotiating	100% Leased	100% Leased

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 March 31, 2023 (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
140 First 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
201 Brookline Avenue/Fenway		Dev		447,247		62,869		510,116		97			98					3Q22		2023
15 Necco Street/Seaport Innovation District		Dev		—		345,995		345,995		97			97					2023		2024
40, 50, and 60 Sylvan Road/Route 128		Redev		—		515,273		515,273		—			—		(2)			2024		2026
840 Winter Street/Route 128		Redev		28,230		139,984		168,214		100			100					2024		2024
Other		Redev		—		453,869		453,869		—			—		(2)		2024			2025
San Francisco Bay Area
1450 Owens Street/Mission Bay		Dev		—		212,796		212,796		—			—		(2)			2024		2025
651 Gateway Boulevard/South San Francisco		Redev		—		300,010		300,010		7			22					2023		2025
230 Harriet Tubman Way/South San Francisco		Dev		—		285,346		285,346		100			100					2024		2024
751 Gateway Boulevard/South San Francisco		Dev		—		230,592		230,592		100			100					2023		2023
Seattle
1150 Eastlake Avenue East/Lake Union		Dev		—		311,631		311,631		89			99					2023		2024
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell		Redev		282,494		178,129		460,623		82			82					1Q23		2024
Maryland
9820 Darnestown Road/Rockville		Dev		—		250,000		250,000		100			100					2024		2024
9810 Darnestown Road/Rockville		Dev		—		192,000		192,000		100			100					2024		2024
9808 Medical Center Drive/Rockville		Dev		—		90,000		90,000		29			47					2023		2024
9601 and 9603 Medical Center Drive/Rockville		Redev		48,516		47,395		95,911		100			100					4Q21		2023
20400 Century Boulevard/Gaithersburg		Redev		70,430		10,120		80,550		100			100					1Q22		2023
Research Triangle
6040 George Watts Hill Drive, Phase II/Research Triangle		Dev		—		88,038		88,038		100			100					2024		2024
Texas
8800 Technology Forest Place/Greater Houston		Redev		—		130,765		130,765		36			36					2023		2024
Canada
Canada		Redev		32,992		217,798		250,790		45			73					2023		2025
				914,276		5,497,429		6,411,705		67	%		69	%
(1)Initial occupancy dates are subject to leasing and/or market conditions. Multi-tenant projects may increase in occupancy 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 four quarters
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
4135 Campus Point Court/University Town Center		Dev		—		426,927		426,927		100			100
4155 Campus Point Court/University Town Center		Dev		—		171,102		171,102		100			100
				—		1,206,281		1,206,281		100			100
Total				914,276		6,703,710		7,617,986		72	%		74	%

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	%		$	—	$	565,955	$	325,045		$	891,000			8.5	%		7.2	%
140 First Street/Cambridge/Inner Suburbs	100	%		10,820		1,142,677		52,503			1,206,000				5.2	%		4.2	%
99 Coolidge Avenue/Cambridge/Inner Suburbs	75.0	%		—		201,961		TBD
500 North Beacon Street and 4 Kingsbury Avenue/Cambridge/Inner Suburbs	100	%		—		193,461		233,539			427,000				6.2	%		5.5	%
201 Brookline Avenue/Fenway	98.8	%		646,271		78,062		50,667			775,000				7.2	%		6.5	%
15 Necco Street/Seaport Innovation District	90.0	%		—		378,472		188,528			567,000				6.7	%		5.5	%
40, 50, and 60 Sylvan Road/Route 128	100	%		—		352,182		TBD
840 Winter Street/Route 128	100	%		13,644		109,835		84,521			208,000				7.5	%		6.5	%
Other	100	%		—		132,179		TBD
San Francisco Bay Area
1450 Owens Street/Mission Bay	54.0	%		—		147,041		TBD
651 Gateway Boulevard/South San Francisco	50.0	%		—		214,801
230 Harriet Tubman Way/South San Francisco	45.8	%		—		136,506		276,494			413,000				7.4	%		6.2	%
751 Gateway Boulevard/South San Francisco	51.0	%		—		186,565		103,435			290,000				6.5	%		6.3	%
Seattle
1150 Eastlake Avenue East/Lake Union	100	%		—		264,098		140,902			405,000				6.4	%		6.2	%
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell	100	%		73,148		89,512		66,340			229,000				6.3	%		6.2	%
Maryland
9820 Darnestown Road/Rockville	100	%		—		50,538		126,462			177,000				6.3	%		5.6	%
9810 Darnestown Road/Rockville	100	%		—		88,492		44,508			133,000				6.9	%		6.2	%
9808 Medical Center Drive/Rockville	100	%		—		66,786		TBD
9601 and 9603 Medical Center Drive/Rockville	100	%		31,411		18,760		3,829			54,000				8.4	%		7.1	%
20400 Century Boulevard/Gaithersburg	100	%		28,413		4,118		2,469			35,000				8.5	%		8.6	%
Research Triangle
6040 George Watts Hill Drive, Phase II/Research Triangle	100	%		—		36,543		27,457			64,000				8.0	%		7.0	%
Texas
8800 Technology Forest Place/Greater Houston	100	%		—		82,815		TBD
Canada
Canada	100	%		4,369		33,342		66,289			104,000				7.0	%		7.0	%

				$	808,076	$	4,574,701	$	3,140,000	(1)	$	8,530,000	(1)
(1) Amounts are rounded to the nearest $10 million and include preliminary estimated amounts for projects listed as TBD.

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


	Our Ownership Interest			At 100%
Market Property/Submarket			In Service	CIP		Cost to Complete			Total at Completion

Near-term projects expected to commence construction in the next four quarters
San Diego									TBD
11255 and 11355 North Torrey Pines Road/Torrey Pines	100	%		$	—	$	130,805
10931 and 10933 North Torrey Pines Road/Torrey Pines	100	%		—		97,503
4135 Campus Point Court/University Town Center	55.0	%		—		63,072
4155 Campus Point Court/University Town Center	55.0	%		—		54,898

				—		346,278			1,170,000		(1)	1,510,000		(1)
Total				$	808,076	$	4,920,979		$	4,310,000	(1)	$	10,040,000	(1)
Our share of investment(2)						$	4,440,000	(1)	$	3,620,000	(1)	$	8,860,000	(1)

(1)Amounts are rounded to the nearest $10 million and include preliminary estimated amounts for projects listed as TBD.

(2)Represents our share of investment based on our ownership percentages at the completion of development or redevelopment projects.

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 March 31, 2023 (dollars in thousands):


Market Property/Submarket	Our Ownership Interest			Book Value		Square Footage
			Development and Redevelopment						Total(1)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future

Greater Boston
Mega Campus: Alexandria Center® at One Kendall Square/Cambridge/Inner Suburbs	100	%		$	565,955	462,100	—	—	—	—	462,100
325 Binney Street
Mega Campus: Alexandria Center® at Kendall Square/Cambridge/Inner Suburbs	100	%		1,206,269		403,892	—	104,500	—	41,955	550,347
140 First Street and 100 Edwin H. Land Boulevard
99 Coolidge Avenue/Cambridge/Inner Suburbs	75.0	%		201,961		320,809	—	—	—	—	320,809
Mega Campus: The Arsenal on the Charles/Cambridge/Inner Suburbs	100	%		204,445		248,018	—	—	—	342,603	590,621
311 Arsenal Street, 500 North Beacon Street, and 4 Kingsbury Avenue
Mega Campus: Alexandria Center® for Life Science – Fenway/Fenway	(2)			420,433		62,869	—	507,997	—	—	570,866
201 Brookline Avenue and 421 Park Drive
15 Necco Street/Seaport Innovation District	90.0	%		378,472		345,995	—	—	—	—	345,995
Mega Campus: 40, 50, and 60 Sylvan Road, 35 Gatehouse Drive, and 840 Winter Street/Route 128	100	%		519,669		655,257	—	28,230	—	515,000	1,198,487
Mega Campus: 480 Arsenal Way and 446, 458, 500, and 550 Arsenal Street/Cambridge/Inner Suburbs	100	%		78,858		—	—	—	—	902,000	902,000
446, 458, 500, 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	%		127,011		—	—	—	—	1,000,000	1,000,000
99 A Street/Seaport Innovation District	100	%		50,472		—	—	—	—	235,000	235,000
10 Necco Street/Seaport Innovation District	100	%		99,649		—	—	—	—	175,000	175,000
Mega Campus: One Moderna Way/Route 128	100	%		25,112		—	—	—	—	1,100,000	1,100,000
215 Presidential Way/Route 128	100	%		6,808		—	—	—	—	112,000	112,000
Other value-creation projects	(3)			309,955		453,869	—	260,992	—	1,164,549	1,879,410
				$	4,202,950	2,952,809	—	901,719	—	5,688,107	9,542,635
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% interest in 201 Brookline Avenue aggregating 62,869 RSF, which is currently under construction, and a 100% interest in the near-term development project at 421 Park Drive aggregating 507,997 SF. (3)Includes a property in which we own a partial interest 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.

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)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future
San Francisco Bay Area
Mega Campus: Alexandria Center® for Science and Technology – Mission Bay/Mission Bay	54.0	%		$	147,041	212,796	—	—	—		—	212,796
1450 Owens Street
Mega Campus: Alexandria Technology Center® – Gateway/ South San Francisco	(2)			426,036		530,602	—	—	—		291,000	821,602
651 and 751 Gateway Boulevard
Alexandria Center® for Life Science – Millbrae/South San Francisco	45.8	%		285,392		285,346	—	198,188	150,213		—	633,747
230 Harriet Tubman Way, 201 and 231 Adrian Road, and 6 and 30 Rollins Road
Mega Campus: 211(3), 213(3), 249, 259, 269, and 279 East Grand Avenue/South San Francisco	100	%		6,655		—	—	107,250	—		90,000	197,250
211 and 269 East Grand Avenue
Mega Campus: Alexandria Center® for Life Science – San Carlos/Greater Stanford	100	%		404,962		—	—	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	%		13,087		—	—	56,924	—		—	56,924
3825 and 3875 Fabian Way/Greater Stanford	100	%		139,417		—	—	—	250,000		228,000	478,000
Mega Campus: 88 Bluxome Street/SoMa	100	%		352,379		—	—	—	1,070,925		—	1,070,925
Mega Campus: 1122, 1150, and 1178 El Camino Real/South San Francisco	100	%		361,206		—	—	—	—		1,930,000	1,930,000
Other value-creation projects	100	%		—		—	—	—	—		25,000	25,000
				2,136,175		1,028,744	—	467,362	2,171,138		3,256,830	6,924,074
New York City
Mega Campus: Alexandria Center® for Life Science – New York City/New York City	100	%		137,953		—	—	—	550,000	(4)	—	550,000
219 East 42nd Street/New York City	100	%		—		—	—	—	579,947		—	579,947
				$	137,953	—	—	—	1,129,947		—	1,129,947
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)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future
San Diego
Mega Campus: One Alexandria Square and One Alexandria North/Torrey Pines	100	%		$	281,313	—	608,252	—	125,280	—	733,532
10931, 10933, 11255, and 11355 North Torrey Pines Road and 10975 and 10995 Torreyana Road
Mega Campus: Campus Point by Alexandria/University Town Center	55.0	%		283,810		—	598,029	—	—	1,074,445	1,672,474
10010(2), 10140(2), and 10260 Campus Point Drive and 4110, 4135, 4155, 4161, and 4275(2) Campus Point Court
Mega Campus: SD Tech by Alexandria/Sorrento Mesa	50.0	%		144,480		—	—	254,771	160,000	333,845	748,616
9805 Scranton Road and 10065 and 10075 Barnes Canyon Road
Mega Campus: Sequence District by Alexandria/Sorrento Mesa	100	%		43,859		—	—	200,000	509,000	1,089,915	1,798,915
6260, 6290, 6310, 6340, 6350, and 6450 Sequence Drive
Scripps Science Park by Alexandria/Sorrento Mesa	100	%		71,539		—	—	105,000	175,041	164,000	444,041
10048 and 10219 Meanley Drive, and 10277 Scripps Ranch Boulevard
Mega Campus: University District/University Town Center	100	%		147,416		—	—	—	937,000	—	937,000
9363, 9373, and 9393 Towne Centre Drive, 8410-8750 Genesee Avenue, and 4282 Esplanade Court
Pacific Technology Park/Sorrento Mesa	50.0	%		22,415		—	—	—	149,000	—	149,000
9444 Waples Street
Mega Campus: 5200 Illumina Way/University Town Center	51.0	%		17,249		—	—	—	—	451,832	451,832
4025, 4031, 4045, and 4075 Sorrento Valley Boulevard/Sorrento Valley	100	%		21,820		—	—	—	—	247,000	247,000
Other value-creation projects	100	%		69,678		—	—	—	—	475,000	475,000
				$	1,103,579	—	1,206,281	559,771	2,055,321	3,836,037	7,657,410
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.

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)
			Active and Near-Term Construction			Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term		Near Term	Intermediate Term	Future
Seattle
Mega Campus: The Eastlake Life Science Campus by Alexandria/Lake Union	100	%		$	264,098	311,631	—	—	—	—	311,631
1150 Eastlake Avenue East
Alexandria Center® for Advanced Technologies – Monte Villa Parkway/Bothell	100	%		89,512		178,129	—	50,552	—	—	228,681
3301, 3555, and 3755 Monte Villa Parkway
Mega Campus: Alexandria Center® for Life Science – South Lake Union/Lake Union	(2)			397,795		—	—	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	%		55,385		—	—	—	—	597,313	597,313
Mega Campus: Alexandria Center® for Advanced Technologies – Canyon Park/Bothell	100	%		14,445		—	—	—	—	230,000	230,000
21660 20th Avenue Southeast
Other value-creation projects	100	%		86,739		—	—	—	—	691,000	691,000
				907,974		489,760	—	1,146,138	—	1,706,713	3,342,611
Maryland
Mega Campus: Alexandria Center® for Life Science – Shady Grove/Rockville	100	%		243,380		579,395	—	—	258,000	38,000	875,395
9603 and 9808 Medical Center Drive and 9810, 9820, and 9830 Darnestown Road
20400 Century Boulevard/Gaithersburg	100	%		4,118		10,120	—	—	—	—	10,120
				$	247,498	589,515	—	—	258,000	38,000	885,515
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 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)
			Active and Near-Term Construction				Future Opportunities Subject to Market Conditions and Leasing
			Under Construction	Committed Near Term			Near Term	Intermediate Term	Future
Research Triangle
6040 George Watts Hill Drive, Phase II/Research Triangle	100	%		$	36,543		88,038	—	—		—	—	88,038
Mega Campus: Alexandria Center® for Advanced Technologies/Research Triangle	100	%		88,407			—	—	180,000	(2)	—	990,000	1,170,000
4 and 12 Davis Drive
Mega Campus: Alexandria Center® for NextGen Medicines/ Research Triangle	100	%		101,356			—	—	100,000		100,000	855,000	1,055,000
3029 East Cornwallis Road
Mega Campus: Alexandria Center® for Life Science – Durham/Research Triangle	100	%		169,576			—	—	—		150,000	2,060,000	2,210,000
41 Moore Drive
120 TW Alexander Drive, 2752 East NC Highway 54, and 10 South Triangle Drive/Research Triangle	100	%		51,569			—	—	—		—	750,000	750,000
Other value-creation projects	100	%		4,185			—	—	—		—	76,262	76,262
				451,636			88,038	—	280,000		250,000	4,731,262	5,349,300
Texas
8800 Technology Forest Place/Greater Houston	100	%		100,300			130,765	—	—		—	116,287	247,052
1020 Red River Street/Austin	100	%		9,304			—	—	—		—	177,072	177,072
Other value-creation projects	100	%		129,215			—	—	—		—	1,694,000	1,694,000
				238,819			130,765	—	—		—	1,987,359	2,118,124

Canada	100	%		33,342			217,798	—	—		—	371,743	589,541
Other value-creation projects	100	%		43,494			—	—	—		—	350,000	350,000
Total pipeline as of March 31, 2023				$	9,503,420	(3)	5,497,429	1,206,281	3,354,990		5,864,406	21,966,051	37,889,157

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 4,227,330 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)Represents a ground-up development of one multi-tenant building for which major construction has been temporarily paused as of March 31, 2023. Importantly, should market conditions improve, we maintain the optionality to address demand for this development project.

(3)Total book value includes $4.6 billion of projects currently under construction that are 69% leased/negotiating. We also expect to commence construction on four near-term projects aggregating $346.3 million, which are 100% leased, in the next four quarters after March 31, 2023.

Results of operations

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 months ended March 31, 2023:



						Three Months Ended March 31, 2023
Percentage change in net operating income over comparable period from prior year						3.7%
Percentage change in net operating income (cash basis) over comparable period from prior year						9.0%
Operating margin						71%
Number of Same Properties						314
RSF						32,224,933
Occupancy – current-period average						94.3%
Occupancy – same-period prior-year average						94.9%

The following table reconciles the number of Same Properties to total properties for the three months ended March 31, 2023:


Development – under construction						Properties
201 Brookline Avenue						1
15 Necco Street						1
751 Gateway Boulevard						1
325 Binney Street						1
1150 Eastlake Avenue East						1
9810 and 9820 Darnestown Road						2
99 Coolidge Avenue						1
500 North Beacon Street and 4 Kingsbury Avenue						2
9808 Medical Center Drive						1
6040 George Watts Hill Drive						1
1450 Owens Street						1
230 Harriet Tubman Way						1
						14
Development – placed into service after January 1, 2022						Properties
825 and 835 Industrial Road						2
9950 Medical Center Drive						1
3115 Merryfield Row						1
8 and 10 Davis Drive						2
5 and 9 Laboratory Drive						2
10055 Barnes Canyon Road						1
10102 Hoyt Park Drive						1
						10
Redevelopment – under construction						Properties
840 Winter Street						1
20400 Century Boulevard						1
9601 and 9603 Medical Center Drive						2
140 First 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						4
Other						2
						22


Redevelopment – placed into service after January 1, 2022						Properties
3160 Porter Drive						1
5505 Morehouse Drive						1
The Arsenal on the Charles						11
30-02 48th Avenue						1
2400 Ellis Road, 40 Moore Drive, and 14 TW Alexander Drive						3
						17
Acquisitions after January 1, 2022						Properties
3301, 3303, 3305, and 3307 Hillview Avenue						4
1150 El Camino Real						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						9
100 Edwin H. Land Boulevard						1
10010 and 10140 Campus Point Drive and 4275 Campus Point Court						3
446 and 458 Arsenal Street						2
35 Gatehouse Drive						1
1001 Trinity Street and 1020 Red River Street						2
Other						10
						42
Unconsolidated real estate JVs						4
Properties held for sale						10
Total properties excluded from Same Properties						119
Same Properties						314
Total properties in North America as of March 31, 2023						433

Comparison of results for the three months ended March 31, 2023 to the three months ended March 31, 2022

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 March 31, 2023, compared to the three months ended March 31, 2022. 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 March 31,
(Dollars in thousands)	2023		2022		$ Change		% Change
Income from rentals:
Same Properties	$	413,673	$	397,258	$	16,415	4.1	%
Non-Same Properties	104,629		72,279		32,350		44.8
Rental revenues	518,302		469,537		48,765		10.4

Same Properties	137,093		124,086		13,007		10.5
Non-Same Properties	32,554		18,931		13,623		72.0
Tenant recoveries	169,647		143,017		26,630		18.6

Income from rentals	687,949		612,554		75,395		12.3

Same Properties	177		225		(48)		(21.3)
Non-Same Properties	12,669		2,286		10,383		454.2
Other income	12,846		2,511		10,335		411.6

Same Properties	550,943		521,569		29,374		5.6
Non-Same Properties	149,852		93,496		56,356		60.3
Total revenues	700,795		615,065		85,730		13.9

Same Properties	161,805		146,453		15,352		10.5
Non-Same Properties	45,128		34,875		10,253		29.4
Rental operations	206,933		181,328		25,605		14.1

Same Properties	389,138		375,116		14,022		3.7
Non-Same Properties	104,724		58,621		46,103		78.6
Net operating income	$	493,862	$	433,737	$	60,125	13.9	%

Net operating income – Same Properties	$	389,138	$	375,116	$	14,022	3.7	%
Straight-line rent revenue	(20,132)		(32,912)		12,780		(38.8)
Amortization of acquired below-market leases	(8,032)		(10,959)		2,927		(26.7)
Net operating income – Same Properties (cash basis)	$	360,974	$	331,245	$	29,729	9.0	%

Income from rentals

Total income from rentals for the three months ended March 31, 2023 increased by $75.4 million, or 12.3%, to $687.9 million, compared to $612.6 million for the three months ended March 31, 2022, as a result of an increase in rental revenues and tenant recoveries, as discussed below.

Rental revenues

Total rental revenues for the three months ended March 31, 2023 increased by $48.8 million, or 10.4%, to $518.3 million, compared to $469.5 million for the three months ended March 31, 2022. The increase was primarily due to an increase in rental revenues from our Non-Same Properties related to 3.6 million RSF of development and redevelopment projects placed into service subsequent to January 1, 2022 and 42 operating properties aggregating 4.2 million RSF acquired subsequent to January 1, 2022.

Rental revenues from our Same Properties for the three months ended March 31, 2023 increased by $16.4 million, or 4.1%, to $413.7 million, compared to $397.3 million for the three months ended March 31, 2022. The increase was primarily due to rental rate increases on lease renewals and re-leasing of space since January 1, 2022.

Tenant recoveries

Tenant recoveries for the three months ended March 31, 2023 increased by $26.6 million, or 18.6%, to $169.6 million, compared to $143.0 million for the three months ended March 31, 2022. The increase was due to our Non-Same Properties related to our development and redevelopment projects placed into service and properties acquired subsequent to January 1, 2022, as discussed above under “Rental revenues,” and also from our Same Properties related to tenant recoveries from higher operating expenses, as described below.

Same Properties’ tenant recoveries for the three months ended March 31, 2023 increased by $13.0 million, or 10.5%, primarily due to higher operating expenses during the three months ended March 31, 2023, as discussed under “Rental operations” below. As of March 31, 2023, 93% 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 March 31, 2023 increased by $10.3 million, or 411.6%, to $12.8 million, compared to $2.5 million for the three months ended March 31, 2022. The increase in other income was primarily due to a $5.3 million leasing fee related to a joint venture in our Seattle market and an increase in interest income resulting from an increase in average interest rates earned by our money market accounts to over 4.0% during the three months ended March 31, 2023 from less than 0.1% during the three months ended March 31, 2022.

Rental operations

Total rental operating expenses for the three months ended March 31, 2023 increased by $25.6 million, or 14.1%, to $206.9 million, compared to $181.3 million for the three months ended March 31, 2022. 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 $15.4 million, or 10.5%, to $161.8 million during the three months ended March 31, 2023, compared to $146.5 million for the three months ended March 31, 2022. The increase was primarily the result of an increase in (i) utilities expenses aggregating $2.9 million, primarily due to higher rates and usage; (ii) repair and maintenance expenses aggregating $2.3 million, primarily due to an increase in usage of facilities at our properties; and (iii) higher contract services costs aggregating $2.1 million, primarily due to increases in security services.

General and administrative expenses

General and administrative expenses for the three months ended March 31, 2023 increased by $7.3 million, or 17.7%, to $48.2 million, compared to $40.9 million for the three months ended March 31, 2022. The increase was primarily due to costs related to the continued growth in the depth and breadth of our operations in multiple markets, including development and redevelopment projects placed into service and properties acquired, as discussed above under “Rental revenues.” As a percentage of net operating income, our general and administrative expenses for the trailing twelve months ended March 31, 2023 and 2022 were 9.9% and 10.0%, respectively.

Interest expense

Interest expense for the three months ended March 31, 2023 and 2022 consisted of the following (dollars in thousands):


	Three Months Ended March 31,
Component	2023			2022			Change
Gross interest	$	100,824		$	87,203		$	13,621
Capitalized interest	(87,070)			(57,763)			(29,307)
Interest expense	$	13,754		$	29,440		$	(15,686)

Average debt balance outstanding(1)	$	10,791,039		$	10,104,928		$	686,111
Weighted-average annual interest rate(2)	3.7		%	3.5		%	0.2		%

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

(2)Represents 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 March 31, 2023, compared to the three months ended March 31, 2022, 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	$	4,449
$800 million unsecured senior notes payable due 2034 – green bond		3.07	%	February 2022	2,973
$500 million unsecured senior notes payable due 2053		5.26	%	February 2023	3,224
$500 million unsecured senior notes payable due 2035 – green bond		4.88	%	February 2023	2,979
Rate increases on borrowings under commercial paper program and from unsecured senior line of credit					956
Other increase in interest					1,930
Total increases					16,511
Decreases in interest incurred due to:
Repayments of debt:
Secured notes payable		3.40	%	April 2022	(1,634)
Lower average outstanding balances under commercial paper program and unsecured senior line of credit					(1,256)
Total decreases					(2,890)
Change in gross interest					13,621
Increase in capitalized interest					(29,307)
Total change in interest expense					$	(15,686)

(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 March 31, 2023 increased by $24.6 million, or 10.2%, to $265.3 million, compared to $240.7 million for the three months ended March 31, 2022. 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.”

Investment loss

During the three months ended March 31, 2023, we recognized investment loss aggregating $45.1 million, which consisted of $65.9 million of unrealized losses and $20.7 million of realized gains. Unrealized losses of $65.9 million primarily consisted of decreases in fair values of our investments in publicly traded companies and investments in privately held entities that report NAV. Realized gains were primarily related to sales of investments and distributions received.

During the three months ended March 31, 2022, we recognized investment loss aggregating $240.3 million, which consisted of $263.4 million of unrealized losses and $23.1 million of realized gains. For more information about our investments, refer to Note 7 – “Investments” to our unaudited consolidated financial statements under Item 1 of this report.

Other comprehensive income

Total other comprehensive income for the three months ended March 31, 2023 decreased by $1.3 million to aggregate net unrealized gains of $276 thousand, compared to net unrealized gains of $1.6 million for the three months ended March 31, 2022.

Summary of capital expenditures

Our construction spending for the three months ended March 31, 2023 and projected spending for the remainder of the year ending December 31, 2023 consisted of the following (in thousands):


	Three Months Ended March 31, 2023		Projected Year Ending December 31, 2023

Construction spending(1)	$	927,903	$	3,471,000	(2)
Contributions from real estate joint venture partners:
Existing real estate joint ventures		(80,375)		(543,000)	(3)
Additional targeted real estate joint ventures in 2023		—		(203,000)
		(80,375)		(746,000)
Total construction spending	$	847,528	$	2,725,000
Guidance range			$2,575,000 – $2,875,000

(1)Includes our contributions into unconsolidated real estate joint ventures related to construction.

(2)Includes projected revenue-enhancing/repositioning capital expenditures and non-revenue-enhancing capital expenditures of $147 million and $60 million, respectively.

(3)Includes commitments from our new real estate joint venture partner related to the partial interest sale of 15 Necco Street completed in April 2023. Refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Projected capital contributions from partners in consolidated real estate joint ventures to fund construction

The following table summarizes projected capital contributions from partners in our consolidated joint ventures to fund construction through 2026 (in thousands):


Capital Contributions from Partners in Our Consolidated Real Estate Joint Ventures		Projected Contributions From Partners to Fund Construction(1)
	Nine Months Ending December 31, 2023			2024 Through 2026			Total
Existing real estate joint ventures as of December 31, 2022		$	355,000		$	923,000		$	1,278,000
Real estate joint venture formed in April 2023(2)		108,000			11,000			119,000
		463,000			934,000			1,397,000
Additional targeted real estate joint ventures in 2023		203,000			—			203,000
Total		$	666,000		$	934,000		$	1,600,000

(1)Amounts represent reductions to our consolidated construction spending. Excludes initial proceeds from sales of partial interests upon formation of these consolidated joint ventures.

(2)Represents projected capital contributions from our new real estate joint venture partner following the completion of our partial interest sale at 15 Necco Street. Refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

Projected results

We present updated guidance for EPS attributable to Alexandria’s common stockholders – diluted, funds from operations per share attributable to Alexandria’s common stockholders – diluted, and funds from operations per share attributable to Alexandria’s common stockholders – diluted, as adjusted, based on our current view of existing market conditions and other assumptions for the year ending December 31, 2023 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, 2023. 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 2023 Earnings per Share and Funds From Operations per Share Attributable to Alexandria’s Common Stockholders – Diluted	As of 4/24/23		As of 1/30/23		Key Changes
Earnings per share(1)	$2.21 to $2.31		$3.41 to $3.61
Depreciation and amortization of real estate assets		5.55		5.50	5-cent increase

Impairment of real estate – rental properties		0.81		—	(2)
Allocation of unvested restricted stock awards		(0.04)		(0.05)
Funds from operations per share(3)	$8.53 to $8.63		$8.86 to $9.06
Unrealized losses on non-real estate investments		0.39		—






Allocation of unvested restricted stock awards		(0.01)		—
Funds from operations per share, as adjusted(2)	$8.91 to $9.01		$8.86 to $9.06		No change to midpoint; narrowed range by 10 cents
Midpoint		$8.96		$8.96

(1)Excludes unrealized gains or losses after March 31, 2023 that are required to be recognized in earnings and are excluded from funds from operations per share, as adjusted.

(2)Refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statement under Item 1 of this report for additional information.

(3)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)		As of 4/24/23						As of 1/30/23
	Low			High			Low			High			Key Changes
Occupancy percentage for operating properties in North America as of December 31, 2023		94.6%			95.6%			94.8%			95.8%			20 bps decline(2)
Lease renewals and re-leasing of space:
Rental rate increases		28.0%			33.0%			27.0%			32.0%			1.0% increase
Rental rate increases (cash basis)		12.0%			17.0%			11.0%			16.0%
Same property performance:
Net operating income increases		2.0%			4.0%			2.0%			4.0%			No change
Net operating income increases (cash basis)		4.0%			6.0%			4.0%			6.0%
Straight-line rent revenue		$	130		$	145		$	130		$	145
General and administrative expenses		$	183		$	193		$	183		$	193
Capitalization of interest		$	342		$	362		$	342		$	362
Interest expense		$	74		$	94		$	74		$	94

(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, 2022, as well as in “Item 1A. Risk factors” within “Part II – Other information” of this quarterly report on Form 10-Q.

(2)The decline of 20 basis points in our 2023 guidance range for occupancy percentage in North America as of December 31, 2023 relates to a two-building value-creation project aggregating 201,499 RSF in our Greater Houston submarket to convert office space to office/laboratory space through redevelopment. One building aggregates 130,765 RSF and is 36% leased, with initial occupancy expected to commence in 2023. In connection with our strategic review of projected 2023 construction spending, we temporarily paused construction work on the second building, which aggregates 70,734 RSF, until further lease-up of the 130,765 RSF building. As of March 31, 2023, the vacant 70,734 RSF building was classified as an operating property.


Key Credit Metrics	As of 4/24/23	As of 1/30/23	Key Changes

Net debt and preferred stock to Adjusted EBITDA – fourth quarter of 2023 annualized	Less than or equal to 5.1x	Less than or equal to 5.1x	No change
Fixed-charge coverage ratio – fourth quarter of 2023 annualized	4.5x to 5.0x	4.5x to 5.0x

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	%			870,106
99 Coolidge Avenue/Greater Boston/Cambridge/Inner Suburbs		25.0	%			—	(2)
15 Necco Street/Greater Boston/Seaport Innovation District		10.0	%	(3)		—	(2)
Other joint venture/Greater Boston		39.3	%			—	(2)
Alexandria Center® for Science and Technology – Mission Bay/San Francisco Bay Area/ Mission Bay(4)		75.0	%			1,005,879
1450 Owens Street/San Francisco Bay Area/Mission Bay		46.0	%	(5)		—	(2)
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	%			—	(2)
211(2) and 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		54.2	%			—	(2)
3215 Merryfield Row/San Diego/Torrey Pines		70.0	%			170,523
Campus Point by Alexandria/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	%			876,869
Pacific Technology Park/San Diego/Sorrento Mesa		50.0	%			544,352
Summers Ridge Science Park/San Diego/Sorrento Mesa(8)		70.0	%			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	%			290,754
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	%	(10)		42,679
101 West Dickman Street/Maryland/Beltsville		57.9	%	(10)		135,423

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

(2)Represents a property currently under construction or in our value-creation pipeline. Refer to the sections under “New Class A development and redevelopment properties” within this Item 2 for additional details.

(3)Refer to Note 16 – “Subsequent events” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(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 the remaining cost to complete the project over time.

(6)Includes 10210, 10260, 10290, and 10300 Campus Point Drive and 4110, 4135, 4155, 4161, 4224, and 4242 Campus Point Court.

(7)Includes 9605, 9645, 9675, 9685, 9725, 9735, 9808, 9855, and 9868 Scranton Road and 10055, 10065, and 10075 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 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.

(11)Represents a joint venture with a distinguished retail real estate developer for a retail shopping center aggregating 84,837 RSF.

The following table presents key terms related to our unconsolidated real estate joint ventures’ secured loans as of March 31, 2023 (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%		3.31	%	$	28,500	$	28,201	65.0%
1655 and 1725 Third Street		3/10/25		4.50%		4.57	%	600,000		599,187		10.0%
101 West Dickman Street		11/10/26		SOFR+1.95%	(3)	6.61	%	26,750		12,648		57.9%
1450 Research Boulevard		12/10/26		SOFR+1.95%	(3)	6.67	%	13,000		5,245		73.2%
								$	668,250	$	645,281

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

(2)Represents outstanding principal, net of unamortized deferred financing costs, as of March 31, 2023.

(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 positions of our consolidated and unconsolidated real estate joint ventures as of and for the three months ended March 31, 2023 (in thousands):


	Three Months Ended March 31, 2023
	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures		Our Share of Unconsolidated Real Estate Joint Ventures


Total revenues	$	101,968		$	2,717
Rental operations	(29,688)			(782)
	72,280			1,935
General and administrative	(467)			(32)
Interest	(5)			(850)
Depreciation and amortization of real estate assets	(28,178)			(859)

Fixed returns allocated to redeemable noncontrolling interests(1)	201			—
	$	43,831		$	194

Straight-line rent and below-market lease revenue	$	4,701		$	286
Funds from operations(2)	$	72,009		$	1,053

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

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


	As of March 31, 2023
	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures		Our Share of Unconsolidated Real Estate Joint Ventures
Investments in real estate	$	3,503,302	$	116,645
Cash, cash equivalents, and restricted cash	130,582		5,001
Other assets	390,096		11,368
Secured notes payable	(18,249)		(89,419)
Other liabilities	(202,958)		(5,240)
Redeemable noncontrolling interests	(44,862)		—
	$	3,757,911	$	38,355

During the three months ended March 31, 2023 and 2022, our consolidated real estate joint ventures distributed an aggregate of $63.2 million and $30.5 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 (dollars in thousands).



	Three Months Ended March 31, 2023		Year Ended December 31, 2022
Realized gains	$	20,744		$	80,435
Unrealized losses	(65,855)			(412,193)
Investment loss	$	(45,111)		$	(331,758)


	March 31, 2023									December 31, 2022
Investments	Cost			Unrealized Gains		Unrealized Losses		Carrying Amount		Carrying Amount
Publicly traded companies	$	200,833		$	63,308	$	(110,800)	$	153,341	$	207,139
Entities that report NAV	469,863			299,235		(10,144)		758,954		759,752
Entities that do not report NAV:
Entities with observable price changes	101,703			96,728		(1,574)		196,857		193,784
Entities without observable price changes	401,350			—		—		401,350		388,940
Investments accounted for under the equity method of accounting	N/A			N/A		N/A		62,516		65,459
March 31, 2023	$	1,173,749	(1)	$	459,271	$	(122,518)	$	1,573,018	$	1,615,074

December 31, 2022	$	1,152,613		$	506,404	$	(109,402)	$	1,615,074
(1)Represents 2.8% of gross assets as of March 31, 2023.


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

Liquidity


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

$5.3B			(in millions)





(In millions)
Availability under our unsecured senior line of credit, net of amounts outstanding under our commercial paper program	$	3,625
Outstanding forward equity sales agreements(1)	103
Cash, cash equivalents, and restricted cash	1,298
Remaining construction loan commitments	121
Investments in publicly traded companies	153
Liquidity as of March 31, 2023	$	5,300

(1)Represents expected net proceeds from the future settlement of 699 thousand shares of common stock under forward equity sales agreements after underwriter discounts.

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.

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;
Maintain significant balance sheet liquidity;
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;
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.
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; outstanding forward equity sales agreements; cash, cash equivalents, and restricted cash; availability under our secured construction loan; and investments in publicly traded companies as of March 31, 2023 (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+0.835%	$	4,000,000	$	374,536	$	3,625,000
Outstanding forward equity sales agreements(2)						102,547
Cash, cash equivalents, and restricted cash						1,298,384
Remaining construction loan commitments	SOFR+2.70%	$	195,300	$	72,996	121,156
Investments in publicly traded companies						153,341
Liquidity as of March 31, 2023						$	5,300,428

(1)Represents outstanding principal, net of unamortized deferred financing costs, as of March 31, 2023.

(2)Represents expected net proceeds from the future settlement of 699 thousand shares of common stock under forward equity sales agreements after underwriter discounts.

Cash, cash equivalents, and restricted cash

As of March 31, 2023 and December 31, 2022, we had $1.3 billion and $858.0 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, sales of partial interests, 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 senior notes payable, borrowings under our 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 three months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,
	2023		2022		Change
Net cash provided by operating activities	$	305,570	$	191,086	$	114,484
Net cash used in investing activities	$	(1,039,665)	$	(2,488,798)	$	1,449,133
Net cash provided by financing activities	$	1,174,810	$	2,752,570	$	(1,577,760)

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 three months ended March 31, 2023 increased by $114.5 million to $305.6 million, compared to $191.1 million for the three months ended March 31, 2022. The increase was primarily attributable to the following since January 1, 2022: (i) cash flows generated from our highly leased development and redevelopment projects recently placed into service, (ii) income-producing acquisitions, and (iii) increases in rental rates on lease renewals and re-leasing of space.

Investing activities

Cash used in investing activities for the three months ended March 31, 2023 and 2022 consisted of the following (in thousands):


	Three Months Ended March 31,				Increase (Decrease)
	2023		2022
Sources of cash from investing activities:
Sales of and distributions from non-real estate investments	$	49,385	$	44,842	$	4,543
Change in escrow deposits	9,366		100,635		(91,269)
Return of capital from unconsolidated real estate joint ventures	—		471		(471)
	58,751		145,948		(87,197)
Uses of cash for investing activities:
Purchases of real estate	177,543		1,903,800		(1,726,257)
Additions to real estate	873,366		666,364		207,002
Investments in unconsolidated real estate joint ventures	106		335		(229)
Additions to non-real estate investments	47,401		64,247		(16,846)
	1,098,416		2,634,746		(1,536,330)

Net cash used in investing activities	$	1,039,665	$	2,488,798	$	(1,449,133)

The decrease in net cash used in investing activities for the three months ended March 31, 2023 when compared to the three months ended March 31, 2022 was primarily due to a decreased use of cash for purchases of real estate, partially offset by increased use of cash 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 three months ended March 31, 2023 and 2022 consisted of the following (in thousands):


	Three Months Ended March 31,
	2023		2022		Change
Borrowings from secured notes payable	$	14,428	$	5,082	$	9,346
Repayments of borrowings from secured notes payable	—		(906)		906
Proceeds from issuance of unsecured senior notes payable	996,205		1,793,318		(797,113)
Borrowings from unsecured senior line of credit	375,000		1,180,000		(805,000)
Repayments of borrowings from unsecured senior line of credit	(375,000)		(1,180,000)		805,000
Proceeds from issuances under commercial paper program	775,000		6,120,000		(5,345,000)
Repayments of borrowings under commercial paper program	(400,000)		(6,390,000)		5,990,000
Payments of loan fees	(9,989)		(17,596)		7,607
Changes related to debt	1,375,644		1,509,898		(134,254)

Contributions from and sales of noncontrolling interests	79,337		819,610		(740,273)
Distributions to and purchases of noncontrolling interests	(63,186)		(30,501)		(32,685)
Proceeds from issuance of common stock	—		646,316		(646,316)
Dividends on common stock	(209,131)		(183,847)		(25,284)
Taxes paid related to net settlement of equity awards	(7,854)		(8,906)		1,052
Net cash provided by financing activities	$	1,174,810	$	2,752,570	$	(1,577,760)

Capital resources

We expect that our principal liquidity needs for the year ending December 31, 2023 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. Guidance for 2023 has been updated to reflect our current view of existing market conditions and assumptions for the year ending December 31, 2023. Key updates to our 2023 guidance include the following changes to the midpoints of our guidance ranges for our 2023 key sources and uses of capital:

$325 million reduction in total uses of capital to $2.95 billion.
$325 million reduction in sources of capital to $2.95 billion.

•$950 million in net incremental debt for 2023 ($1.0 billion of unsecured senior notes payable issued in February 2023).

$375 million in net cash provided by operating activities after dividends.
$1.625 billion in dispositions, sales of partial interests, and future settlement of forward equity sales agreements that were outstanding as of December 31, 2022.
$965.4 million, or 59%, completed or subject to executed letters of intent or purchase and sale agreements, including $865.4 million from dispositions and sales of partial interests and approximately $100 million from forward equity sales agreements that were outstanding as of December 31, 2022.
$659.6 million of targeted dispositions and sales of partial interests.
$275 million of excess bond offering proceeds to reduce debt capital for 2024.


Key Sources and Uses of Capital (In millions)		Midpoint									2023 Guidance
	As of 1/30/23			Key Changes			As of 4/24/23			Range					Midpoint
Sources of capital:
Incremental debt		$	700		$	(50)		$	650		$	575	$	725		$	650
Excess 2022 bond capital held as cash at December 31, 2022		300			—			300			300		300			300		(1)
Net cash provided by operating activities after dividends		375			$	—		375			350		400			375
Dispositions and sales of partial interests		1,900			(275)			1,525			1,425		1,625			1,525		(2)
Future settlement of forward equity sales agreements outstanding as of December 31, 2022					100			100			100		100		(3)
Total sources of capital before excess cash expected to be held at December 31, 2023		$	3,275		$	(325)		$	2,950		$	2,750	$	3,150		$	2,950
Cash expected to be held at December 31, 2023(4)		$	—		$	275		275			125		425			275
Total sources of capital											$	2,875	$	3,575		$	3,225
Uses of capital:
Construction		$	2,975		$	(250)		$	2,725		$	2,575	$	2,875		$	2,725
Acquisitions		300			(75)			225			175		275			225		(5)
Total uses of capital		$	3,275		$	(325)		$	2,950		$	2,750	$	3,150		$	2,950
Incremental debt (included above):
Issuance of unsecured senior notes payable											$	1,000	$	1,000		$	1,000	(6)
Unsecured senior line of credit, commercial paper, and other											(425)		(275)			(350)
Net incremental debt											$	575	$	725		$	650

(1)Represents $300.0 million of excess 2022 bond capital proceeds held as cash at December 31, 2022 that was used to reduce our 2023 debt capital needs.

(2)As of the date of this report, we have completed dispositions and pending transactions subject to signed letters of intent or purchase and sale agreements aggregating $865.4 million.

(3)Represents outstanding forward equity sales agreements entered into during the three months ended December 31, 2022 to sell 699 thousand shares of common stock under our ATM program. Refer to Note 13 – “Stockholders’ equity” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

(4)Represents estimated excess 2023 bond capital proceeds expected to be held as cash at December 31, 2023, which reduces our 2024 debt capital needs.

(5)As of March 31, 2023, we have completed acquisitions aggregating $171.9 million. Refer to “Acquisitions” within this Item 2 for additional information.

(6)Represents $1.0 billion of unsecured senior notes payable issued in February 2023. Refer to Note 10 – “Secured and unsecured senior debt” to our unaudited consolidated financial statements under Item 1 of this report for additional information.

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, 2022; 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 for sources and uses of capital on a quarterly basis.

Sources of capital

Net cash provided by operating activities after dividends

We expect to retain $350.0 million to $400.0 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, 2023. For purposes of this calculation, changes in operating assets and liabilities are excluded as they represent timing differences. For the year ending December 31, 2023, we expect our recently delivered projects, our highly pre-leased value-creation projects expected to be delivered, and contributions from Same Properties and recently acquired properties to contribute increases in income from rentals, net operating income, and cash flows. We anticipate contractual near-term growth in annual net operating income (cash basis) of $41 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 three months ended March 31, 2023.

Debt

We expect to fund a portion of our capital needs for the remainder of 2023 from real estate dispositions, sales of partial interests, strategic real estate joint ventures, settlement of our outstanding forward equity sales agreements, cash on hand, issuances under our commercial paper program, borrowings under our unsecured senior line of credit, and borrowings under our secured construction loans.

Our unsecured senior line of credit has aggregate commitments of $4.0 billion and bears an interest rate of SOFR plus 0.835%. In addition to the cost of borrowing, the unsecured senior line of credit is subject to an annual facility fee of 0.14% 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 rate.

During the three months ended March 31, 2023, we achieved certain annual sustainability targets, as described in our unsecured senior line of credit agreement, which reduced the borrowing rate by four basis points for a one-year period to SOFR plus 0.835%, from SOFR plus 0.875%, and reduced the facility fee by one basis point to 0.14% from 0.15%. As of March 31, 2023, we had no outstanding balance on our unsecured senior line of credit.

We established a commercial paper program that provides us with the ability to issue up to $2.0 billion of commercial paper notes with a maturity of generally 30 days or less and with a maximum maturity of 397 days from the date of issuance. Our commercial paper program is backed by our unsecured senior line of credit, and at all times we expect to retain a minimum undrawn amount of borrowing capacity under our unsecured senior line of credit equal to any outstanding balance 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. The commercial paper notes sold during the three months ended March 31, 2023 were issued at a weighted-average yield to maturity of 5.08%. As of March 31, 2023, we had $374.5 million outstanding balance under our commercial paper program.

In February 2023, we opportunistically issued $1.0 billion of unsecured senior notes payable with a weighted-average interest rate of 4.95% and a weighted-average maturity of 21.2 years. The unsecured senior notes consisted of $500.0 million of 4.75% green unsecured senior notes due 2035 and $500.0 million of 5.15% unsecured senior notes due 2053.

The following table presents our average debt outstanding and weighted-average interest rate during the three months ended March 31, 2023:


	Three Months Ended March 31, 2023
	Average Debt Outstanding		Weighted-Average Interest Rate


Long-term fixed-rate debt	$	10,673,206		3.57	%
Short-term variable-rate unsecured senior line of credit and commercial paper program debt	86,314			5.39
Blended average interest rate	10,759,520			3.58
Loan fee amortization and annual facility fee related to unsecured senior line of credit	N/A			0.11
Total/weighted average	$	10,759,520		3.69	%

Real estate dispositions, sales of partial interests, and issuances of common equity

We expect to continue to focus on 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 2023, we expect real estate dispositions, sales of partial interests, and issuances of common equity ranging from $1.5 billion to $1.7 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.

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, 2022 for additional information about the “prohibited transaction” tax.

Common equity transactions

During the three months ended March 31, 2023, we did not issue shares to settle our outstanding forward equity agreements. We expect to issue an aggregate of 699 thousand shares of common stock to settle all our outstanding forward equity sales agreements, and to receive net proceeds of $102.5 million. In addition, the remaining amount available under our ATM program for future sales of common stock aggregated $141.9 million as of March 31, 2023.

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, together with joint venture partners, hold interests in real estate joint ventures that we consolidate in our financial statements. These existing joint ventures provide significant equity capital to fund a portion of our future construction spend, and our joint venture partners may also contribute equity into these entities for financing-related activities. From April 1, 2023 to December 31, 2026, we expect to receive capital contributions of $1.4 billion from existing real estate joint venture partners to fund construction. During the year ending December 31, 2023, contributions from noncontrolling interests are expected to aggregate $746.0 million, of which approximately 73% represents expected funding from our existing joint venture partners and the remaining amount represents expected funding from partners in future real estate joint ventures.

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 value-creation pipeline aggregating 5.5 million RSF of Class A properties undergoing construction, 9.7 million RSF of near-term and intermediate-term development and redevelopment projects, and 18.5 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 “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 three months ended March 31, 2023 and 2022 of $87.1 million and $57.8 million, respectively, was classified in investments in real estate in our consolidated balance sheets.

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 $23.6 million and $20.4 million, and property taxes, insurance on real estate and indirect project costs aggregating $29.8 million and $21.8 million during the three months ended March 31, 2023 and 2022, respectively.

The increase in capitalized costs for the three months ended March 31, 2023, compared to the same period in 2022, was primarily due to an increase in our value-creation pipeline projects undergoing construction and pre-construction activities in 2023 over 2022. 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 $11.1 million for the three months ended March 31, 2023.

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 three months ended March 31, 2023, we capitalized total initial direct leasing costs of $28.7 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 in 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 three months ended March 31, 2023 and 2022, we paid common stock dividends of $209.1 million and $183.8 million, respectively. The increase of $25.3 million in dividends paid on our common stock during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, was primarily due to an increase in the number of common shares outstanding subsequent to January 1, 2022 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 $1.21 per common share paid during the three months ended March 31, 2023 from $1.15 per common share paid during the three months ended March 31, 2022.

Secured notes payable

Secured notes payable as of March 31, 2023 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 7.56%. As of March 31, 2023, the total book value of our investments in real estate securing debt was approximately $243.0 million. As of March 31, 2023, our secured notes payable, including unamortized discounts and deferred financing costs, comprised approximately $649 thousand and $73.0 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 March 31, 2023 were as follows:


Covenant Ratios(1)	Requirement	March 31, 2023
Total Debt to Total Assets	Less than or equal to 60%	29%
Secured Debt to Total Assets	Less than or equal to 40%	0.2%
Consolidated EBITDA(2) to Interest Expense	Greater than or equal to 1.5x	20.8x
Unencumbered Total Asset Value to Unsecured Debt	Greater than or equal to 150%	334%

(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 March 31, 2023 were as follows:


Covenant Ratios(1)	Requirement	March 31, 2023
Leverage Ratio	Less than or equal to 60.0%	27.3%
Secured Debt Ratio	Less than or equal to 45.0%	0.1%
Fixed-Charge Coverage Ratio	Greater than or equal to 1.50x	4.31x
Unsecured Interest Coverage Ratio	Greater than or equal to 1.75x	24.51x

(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 March 31, 2023, 96.1% 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 March 31, 2023 included leases for 41 of our properties, which accounted for approximately 9% of our total number of properties. Excluding one ground lease that expires in 2036 related to one operating property with a net book value of $6.2 million as of March 31, 2023, 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 March 31, 2023, the remaining contractual payments under ground and office lease agreements in which we are the lessee aggregated $865.3 million and $33.1 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 March 31, 2023, the present value of the remaining contractual payments aggregating $898.5 million under our operating lease agreements, including our extension options that we are reasonably certain to exercise, was $405.2 million, which was classified in accounts payable, accrued expenses, and other liabilities in our consolidated balance sheets. As of March 31, 2023, 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 $554.9 million. We classify the right-of-use asset in other assets in our consolidated balance sheets. Refer to the “Lease accounting” section in Note 2 – “Summary of significant accounting policies” to our unaudited consolidated financial statements under Item 1 in this report for additional information.

Commitments

As of March 31, 2023, remaining aggregate costs under contract for the construction of properties undergoing development, redevelopment, and improvements under the terms of leases approximated $2.9 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 $22.4 million primarily related to construction projects and an anticipated acquisition.

We are committed to funding approximately $419.2 million related to our non-real estate investments. These funding commitments are primarily associated with our investments in privately held entities that report NAV and expire at various dates over the next 12 years, with a weighted-average expiration of 8.5 years as of March 31, 2023.

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 three months ended March 31, 2023 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, 2022	$	(20,812)

Other comprehensive income before reclassifications	276
Net other comprehensive income	276

Balance as of March 31, 2023	$	(20,536)

Inflation

As of March 31, 2023, approximately 93% 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 95% 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 under our unsecured senior line of credit and commercial paper program, issuances of unsecured senior notes payable, and borrowings under our 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” in 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 March 31, 2023 and December 31, 2022, and results of operations and comprehensive income for the three months ended March 31, 2023 and year ended December 31, 2022 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 March 31, 2023 and December 31, 2022, for the three months ended March 31, 2023, and for the year ended December 31, 2022 for the Issuer and Guarantor Subsidiary. Amounts provided do not represent our total consolidated amounts (in thousands):


(in thousands)	March 31, 2023		December 31, 2022
Assets:
Cash, cash equivalents, and restricted cash	$	940,093	$	465,707
Other assets	108,875		107,287
Total assets	$	1,048,968	$	572,994

Liabilities:
Unsecured senior notes payable	$	11,089,124	$	10,100,717
Unsecured senior line of credit and commercial paper	374,536		—
Other liabilities	424,481		466,369
Total liabilities	$	11,888,141	$	10,567,086


(in thousands)	Three Months Ended March 31, 2023		Year Ended December 31, 2022
Total revenues	$	12,296	$	33,052
Total expenses	(62,452)		(277,647)
Net loss	(50,156)		(244,595)
Net income attributable to unvested restricted stock awards	(2,606)		(8,392)
Net loss attributable to Alexandria Real Estate Equities, Inc.’s common stockholders	$	(52,762)	$	(252,987)

As of March 31, 2023, 421 of our 433 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, 2022 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. We compute the amount that is allocable to our unvested restricted stock awards using the two-class method. Under the two-class method, we allocate net income (after amounts attributable to noncontrolling interests) to common stockholders and to unvested restricted stock awards by applying the respective weighted-average shares outstanding during each quarter-to-date and year-to-date period. This may result in a difference of the summation of the quarter-to-date and year-to-date amounts. 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 months ended March 31, 2023 (in thousands):


	Three Months Ended March 31, 2023
	Noncontrolling Interest Share of Consolidated Real Estate Joint Ventures		Our Share of Unconsolidated Real Estate Joint Ventures


Net income	$	43,831		$	194
Depreciation and amortization of real estate assets	28,178			859

Funds from operations	$	72,009		$	1,053

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 months ended March 31, 2023 and 2022. Per share amounts may not add due to rounding.


	Three Months Ended March 31,
(In thousands)	2023		2022
Net income (loss) attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – basic and diluted	$	75,256	$	(151,650)
Depreciation and amortization of real estate assets	262,124		237,160
Noncontrolling share of depreciation and amortization from consolidated real estate JVs	(28,178)		(23,681)
Our share of depreciation and amortization from unconsolidated real estate JVs	859		955
Allocation to unvested restricted stock awards	(1,359)		—
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted(1)	308,702		62,784
Unrealized losses on non-real estate investments	65,855		263,433
Allocation to unvested restricted stock awards	(867)		(1,604)
Funds from operations attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted	$	373,690	$	324,613

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


	Three Months Ended March 31,
(Per share)	2023		2022
Net income (loss) per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted	$	0.44	$	(0.96)
Depreciation and amortization of real estate assets	1.38		1.36
Allocation to unvested restricted stock awards	(0.01)		—
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted	1.81		0.40
Unrealized losses on non-real estate investments	0.39		1.67
Allocation to unvested restricted stock awards	(0.01)		(0.02)
Funds from operations per share attributable to Alexandria Real Estate Equities, Inc.’s common stockholders – diluted, as adjusted	$	2.19	$	2.05

Weighted-average shares of common stock outstanding for calculation of:
EPS – diluted	170,784		158,198
Funds from operations – diluted, per share	170,784		158,209
Funds from operations – diluted, as adjusted, per share	170,784		158,209

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 months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,
	2023		2022
Net income (loss)	$	121,693	$	(117,392)
Interest expense	13,754		29,440
Income taxes	1,131		3,571
Depreciation and amortization	265,302		240,659
Stock compensation expense	16,486		14,028
Unrealized losses on non-real estate investments	65,855		263,433
Adjusted EBITDA	$	484,221	$	433,739

Total revenues	$	700,795	$	615,065

Adjusted EBITDA margin	69%		71%

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 March 31, 2023, approximately 93% 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” in this section within 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 (“GMP”) construction contract or other fixed contracts, and (iii) our maximum committed tenant improvement allowances under our executed leases. The general contractor’s GMP 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 advanced 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 increases 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 space. We generally will not commence new development projects for aboveground construction of new Class A office/laboratory, agtech, and tech 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 months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,
	2023		2022
Adjusted EBITDA	$	484,221	$	433,739

Interest expense	$	13,754	$	29,440
Capitalized interest	87,070		57,763
Amortization of loan fees	(3,639)		(3,103)
Amortization of debt (discounts) premiums	(288)		424
Cash interest and fixed charges	$	96,897	$	84,524

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

Gross assets

Gross assets are calculated as total assets plus accumulated depreciation as of March 31, 2023 and December 31, 2022 (in thousands):


	March 31, 2023		December 31, 2022
Total assets	$	36,912,465	$	35,523,399
Accumulated depreciation	4,561,854		4,354,063
Gross assets	$	41,474,319	$	39,877,462

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 March 31, 2023, 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 – our value-creation pipeline of new Class A development and redevelopment projects as a percentage of gross assets

The following table presents our value-creation pipeline of new Class A development and redevelopment projects as a percentage of gross assets as of March 31, 2023:


	Percentage of Gross Assets
Under construction projects 69% leased/negotiating		11%
Near-term projects expected to commence construction in the next four quarters 100% leased		1%
Income-producing/potential cash flows/covered land play(1)		8%
Land		3%

(1)Includes projects with existing buildings that are generating or can generate operating cash flows. Also includes development rights associated with existing operating campuses. These projects aggregated 1.1% of total annual rental revenue as of March 31, 2023 and are included in our industry mix chart as targeted for a future change in use. Refer to “High-quality and diverse client base in AAA locations” section within this Item 2 for additional information.

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 March 31, 2023, primarily representing lease expirations or vacant space at recently acquired properties and projects that have an opportunity for first-time conversion from non-laboratory space to laboratory space that also have inherent future development or redevelopment opportunities and for which we have the intent to, subject to market conditions, demolish or redevelop 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		2023		2024		Thereafter(1)		Total
Near-term projects:
100 Edwin H. Land Boulevard/Cambridge/Inner Suburbs	Redev		—		104,500		—		104,500
840 Winter Street/Route 128	Redev		10,265		17,965		—		28,230
269 East Grand Avenue/South San Francisco	Redev		—		107,250		—		107,250
3301 Monte Villa Parkway/Bothell	Redev		—		50,552		—		50,552
			10,265		280,267		—		290,532
Intermediate-term projects:
219 East 42nd Street/New York City	Dev		—		349,947		—		349,947
10975 and 10995 Torreyana Road/Torrey Pines	Dev		—		84,829		—		84,829
			—		434,776		—		434,776
Future projects:
311 Arsenal Street/Cambridge/Inner Suburbs	Redev		—		—		308,446		308,446
446, 458, 500, and 550 Arsenal Street/Cambridge/Inner Suburbs	Dev		—		—		392,583		392,583
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		—		—		375,232		375,232
3875 Fabian Way/Greater Stanford	Dev		—		—		228,000		228,000
960 Industrial Road/Greater Stanford	Dev		—		—		110,000		110,000
Campus Point by Alexandria/University Town Center	Dev		—		495,192		—		495,192
Sequence District by Alexandria/Sorrento Mesa	Dev/Redev		—		—		688,034		688,034
4025 and 4045 Sorrento Valley Boulevard/Sorrento Valley	Dev		—		—		22,886		22,886
830 4th Avenue South/SoDo	Dev		—		—		42,380		42,380
Other/Seattle	Dev		—		—		102,437		102,437
1020 Red River Street/Austin	Redev		—		126,034		—		126,034
Canada	Redev		—		—		247,743		247,743
			—		621,226		2,880,796		3,502,022
			10,265		1,336,269		2,880,796		4,227,330

(1)Includes vacant square footage as of March 31, 2023.

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 March 31, 2023:


	Operating RSF
Mega campus	28,341,978
Non-mega campus	13,603,787
Total	41,945,765

Mega campus RSF as a percentage of total operating property RSF	68	%

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 March 31, 2023 and December 31, 2022 (dollars in thousands):


	March 31, 2023			December 31, 2022
Secured notes payable	$	73,645		$	59,045
Unsecured senior notes payable	11,089,124			10,100,717
Unsecured senior line of credit and commercial paper	374,536			—
Unamortized deferred financing costs	82,831			74,918
Cash and cash equivalents	(1,263,452)			(825,193)
Restricted cash	(34,932)			(32,782)
Preferred stock	—			—
Net debt and preferred stock	$	10,321,752		$	9,376,705

Adjusted EBITDA:
– quarter annualized	$	1,936,884		$	1,846,936
– trailing 12 months	$	1,848,018		$	1,797,536

Net debt and preferred stock to Adjusted EBITDA:
– quarter annualized	5.3		x	5.1		x
– trailing 12 months	5.6		x	5.2		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 months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,
	2023		2022
Net income (loss)	$	121,693	$	(117,392)

Equity in earnings of unconsolidated real estate joint ventures	(194)		(220)
General and administrative expenses	48,196		40,931
Interest expense	13,754		29,440
Depreciation and amortization	265,302		240,659
Investment loss	45,111		240,319
Net operating income	493,862		433,737
Straight-line rent revenue	(33,191)		(42,025)
Amortization of acquired below-market leases	(21,636)		(13,915)
Net operating income (cash basis)	$	439,035	$	377,797

Net operating income (cash basis) – annualized	$	1,756,140	$	1,511,188

Net operating income (from above)	$	493,862	$	433,737
Total revenues	$	700,795	$	615,065
Operating margin	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 within 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 revenues 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 March 31, 2023 to the three months ended March 31, 2022” 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 months ended March 31, 2023 and 2022 (in thousands):


	Three Months Ended March 31,
	2023		2022
Income from rentals	$	687,949	$	612,554
Rental revenues	(518,302)		(469,537)
Tenant recoveries	$	169,647	$	143,017

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 months ended March 31, 2023 and 2022 (dollars in thousands):


	Three Months Ended March 31,
	2023		2022
Unencumbered net operating income	$	492,860	$	420,960
Encumbered net operating income	1,002		12,777
Total net operating income	$	493,862	$	433,737
Unencumbered net operating income as a percentage of total net operating income	100%		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 Agreements under the treasury stock method while the Forward Agreements are outstanding. As of March 31, 2023, we had Forward Agreements outstanding to sell an aggregate of 699 thousand 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 months ended March 31, 2023 and 2022 are calculated as follows. Also shown are the weighted-average unvested shares associated with restricted stock awards used in calculating the amounts allocable to unvested stock award holders for each of the respective periods presented below (in thousands):


	Three Months Ended March 31,
	2023	2022
Basic shares for earnings per share	170,784	158,198
Forward Agreements	—	—
Diluted shares for earnings per share	170,784	158,198

Basic shares for funds from operations per share and funds from operations per share, as adjusted	170,784	158,198
Forward Agreements	—	11
Diluted shares for funds from operations per share and funds from operations per share, as adjusted	170,784	158,209

Weighted-average unvested restricted shares used in the allocations of net income, funds from operations, and funds from operations, as adjusted	2,277	1,826

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