EXHIBIT 99.1
ALEXANDRIA REAL ESTATE EQUITIES, INC.
2021 Guidance
The following provides our 2021 guidance based on our current view of existing market conditions and other assumptions for the year ending December 31, 2021. There can be no assurance that actual amounts will not be materially higher or lower than these expectations.
Projected 2021 earnings per share and funds from operations per share attributable to Alexandria's common stockholders - diluted | ||||||||
Earnings per share | $2.14 to $2.34 | |||||||
Depreciation and amortization of real estate assets | 5.50 | |||||||
Allocation to unvested restricted stock awards | (0.04) | |||||||
Funds from operations per share | $7.60 to $7.80 | |||||||
Midpoint | $7.70 |
Key credit metrics | 2021 Guidance | |||||||
Net debt and preferred stock to Adjusted EBITDA - 4Q21 annualized | Less than or equal to 5.2x | |||||||
Fixed-charge coverage ratio - 4Q21 annualized | Greater than or equal to 4.5x |
Key assumptions | Low | High | ||||||||||||
Occupancy percentage in North America as of December 31, 2021 | 96.2 | % | 96.8 | % | ||||||||||
Lease renewals and re-leasing of space: | ||||||||||||||
Rental rate increases | 29.0 | % | 32.0 | % | ||||||||||
Rental rate increases (cash basis) | 16.0 | % | 19.0 | % | ||||||||||
Same property performance: | ||||||||||||||
Net operating income increase | 1.0 | % | 3.0 | % | ||||||||||
Net operating income increase (cash basis) | 4.0 | % | 6.0 | % | ||||||||||
Straight-line rent revenue | $ | 114 | $ | 124 | ||||||||||
General and administrative expense | $ | 146 | $ | 151 | ||||||||||
Capitalization interest | $ | 146 | $ | 156 | ||||||||||
Interest expense | $ | 149 | $ | 159 |
Key sources and uses of capital (in millions) | Range | Midpoint | ||||||||||||||||||
Sources of capital: | ||||||||||||||||||||
Net cash provided by operating activities after dividends | $ | 210 | $ | 250 | $ | 230 | ||||||||||||||
Incremental debt | 365 | 625 | 495 | |||||||||||||||||
2020 debt capital proceeds held in cash | 150 | 250 | 200 | |||||||||||||||||
Real estate dispositions, partial interest sales, and common equity | 1,675 | 2,075 | 1,875 | |||||||||||||||||
Total sources of capital | $ | 2,400 | $ | 3,200 | $ | 2,800 | ||||||||||||||
Uses of capital: | ||||||||||||||||||||
Construction | $ | 1,500 | $ | 1,800 | $ | 1,650 | ||||||||||||||
Acquisitions | 900 | 1,400 | 1,150 | |||||||||||||||||
Total uses of capital | $ | 2,400 | $ | 3,200 | $ | 2,800 | ||||||||||||||
Incremental debt (included above): | ||||||||||||||||||||
Issuance of unsecured senior notes payable | $ | 600 | $ | 800 | $ | 700 | ||||||||||||||
Unsecured senior line of credit, commercial paper program, and other | (235) | (175) | (205) | |||||||||||||||||
Incremental debt | $ | 365 | $ | 625 | $ | 495 |
ALEXANDRIA REAL ESTATE EQUITIES, INC.
2021 Guidance - Definitions
Adjusted EBITDA
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 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 revenues.
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 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 revenues.
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.
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 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).
Funds from operations and funds from operations, as adjusted, attributable to Alexandria’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.
On January 1, 2019, we adopted standards established by the Nareit Board of Governors in its November 2018 White Paper (the “Nareit White Paper”) on a prospective basis. 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, gains or losses on early termination of interest rate hedge agreements, significant termination fees, acceleration of stock compensation expense due to the resignation of an executive officer, preferred stock redemption charges, deal costs, the income tax effect related to such items, and the amount of such items that is allocable to our unvested restricted stock awards. Neither funds from operations nor funds from operations, as adjusted, should be considered as alternatives to net income (determined in accordance with GAAP) as indications of financial performance, or to cash flows from operating activities (determined in accordance with GAAP) as measures of liquidity, nor are they indicative of the availability of funds for our cash needs, including our ability to make distributions.
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 to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA
Net debt to Adjusted EBITDA and net debt and preferred stock to Adjusted EBITDA are non-GAAP financial measures that we believe are useful to investors as supplemental measures in evaluating our balance sheet leverage. Net debt is equal to the sum of total consolidated debt less cash, cash equivalents, and restricted cash. Net debt and preferred stock is equal to the sum of net debt, as discussed above, plus preferred stock outstanding as of the end of the period. Refer to the definition of Adjusted EBITDA and Adjusted EBITDA margin for further information on the calculation of Adjusted EBITDA.
Net operating income
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.
Same property
Same property refers to all consolidated properties that were fully operating for the entirety of the comparative periods 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) are excluded from same property results. Additionally, termination fees, if any, are excluded from the results of same properties.