2015 Q2 Form 10-Q Financial Statement

#000103544315000077 Filed on July 29, 2015

View on sec.gov

Income Statement

Concept 2015 Q2 2014 Q2
Revenue $204.2M $176.4M
YoY Change 15.73% 14.6%
Cost Of Revenue $62.30M $52.40M
YoY Change 18.89% 13.17%
Gross Profit $141.9M $124.0M
YoY Change 14.44% 15.13%
Gross Profit Margin 69.51% 70.29%
Selling, General & Admin $15.00M $13.80M
YoY Change 8.7% 10.4%
% of Gross Profit 10.57% 11.13%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $62.20M $57.30M
YoY Change 8.55% 22.96%
% of Gross Profit 43.83% 46.21%
Operating Expenses $77.10M $71.10M
YoY Change 8.44% 21.12%
Operating Profit $64.80M $52.90M
YoY Change 22.5% 7.96%
Interest Expense $26.67M $17.43M
YoY Change 52.97% 9.11%
% of Operating Profit 41.15% 32.95%
Other Income/Expense, Net
YoY Change
Pretax Income $38.40M $35.50M
YoY Change 8.17% 9.91%
Income Tax $0.00
% Of Pretax Income 0.0%
Net Earnings $38.17M $34.96M
YoY Change 9.19% 8.87%
Net Earnings / Revenue 18.7% 19.82%
Basic Earnings Per Share
Diluted Earnings Per Share $535.0K $478.2K
COMMON SHARES
Basic Shares Outstanding 72.04M shares 71.65M shares
Diluted Shares Outstanding

Balance Sheet

Concept 2015 Q2 2014 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $437.0M $236.5M
YoY Change 84.77% -21.69%
Cash & Equivalents $76.38M $61.70M
Short-Term Investments $360.6M $174.8M
Other Short-Term Assets
YoY Change
Inventory
Prepaid Expenses
Receivables $9.000M $11.00M
Other Receivables $0.00 $0.00
Total Short-Term Assets $78.00M $73.00M
YoY Change 6.85% -76.45%
LONG-TERM ASSETS
Property, Plant & Equipment $7.322B $6.982B
YoY Change 4.87% 8.2%
Goodwill
YoY Change
Intangibles
YoY Change
Long-Term Investments $121.1M $223.0M
YoY Change -45.72% 3716566.67%
Other Assets $512.0M $433.0M
YoY Change 18.24% 16.09%
Total Long-Term Assets $8.447B $7.743B
YoY Change 9.1% 9.53%
TOTAL ASSETS
Total Short-Term Assets $78.00M $73.00M
Total Long-Term Assets $8.447B $7.743B
Total Assets $8.525B $7.816B
YoY Change 9.07% 5.91%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $357.0M $435.0M
YoY Change -17.93% 18.21%
Accrued Expenses $60.00M
YoY Change
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $478.0M $492.0M
YoY Change -2.85% 17.14%
LONG-TERM LIABILITIES
Long-Term Debt $4.093B $3.335B
YoY Change 22.73% 12.71%
Other Long-Term Liabilities $115.0M
YoY Change
Total Long-Term Liabilities $4.208B $3.335B
YoY Change 26.18% 12.71%
TOTAL LIABILITIES
Total Short-Term Liabilities $478.0M $492.0M
Total Long-Term Liabilities $4.208B $3.335B
Total Liabilities $4.686B $3.827B
YoY Change 22.45% 13.22%
SHAREHOLDERS EQUITY
Retained Earnings
YoY Change
Common Stock $717.0K $713.0K
YoY Change 0.56% 0.42%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $3.823B $3.907B
YoY Change
Total Liabilities & Shareholders Equity $8.525B $7.816B
YoY Change 9.07% 5.91%

Cashflow Statement

Concept 2015 Q2 2014 Q2
OPERATING ACTIVITIES
Net Income $38.17M $34.96M
YoY Change 9.19% 8.87%
Depreciation, Depletion And Amortization $62.20M $57.30M
YoY Change 8.55% 22.96%
Cash From Operating Activities $44.60M $71.20M
YoY Change -37.36% -26.52%
INVESTING ACTIVITIES
Capital Expenditures -$165.2M -$154.7M
YoY Change 6.79% -3.13%
Acquisitions
YoY Change
Other Investing Activities $19.30M $44.20M
YoY Change -56.33% 245.31%
Cash From Investing Activities -$145.9M -$110.5M
YoY Change 32.04% -24.83%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $5.052M
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities 79.40M 25.40M
YoY Change 212.6% -90.49%
NET CHANGE
Cash From Operating Activities 44.60M 71.20M
Cash From Investing Activities -145.9M -110.5M
Cash From Financing Activities 79.40M 25.40M
Net Change In Cash -21.90M -13.90M
YoY Change 57.55% -106.41%
FREE CASH FLOW
Cash From Operating Activities $44.60M $71.20M
Capital Expenditures -$165.2M -$154.7M
Free Cash Flow $209.8M $225.9M
YoY Change -7.13% -11.96%

Facts In Submission

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us-gaap Costs And Expenses
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us-gaap Depreciation And Amortization
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0 USD
us-gaap Derivative Instruments Gain Loss Recognized In Income Ineffective Portion And Amount Excluded From Effectiveness Testing Net
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0 USD
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us-gaap Direct Costs Of Leased And Rented Property Or Equipment
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62250000 USD
us-gaap Direct Costs Of Leased And Rented Property Or Equipment
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123473000 USD
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CY2014Q4 us-gaap Disposal Group Including Discontinued Operation Property Plant And Equipment
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55700000 USD
us-gaap Dividends Common Stock Cash
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CY2015Q2 us-gaap Dividends Payable Current And Noncurrent
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us-gaap Dividends Preferred Stock
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us-gaap Dividends Preferred Stock
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us-gaap Equity Method Investment Dividends Or Distributions
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2121000 USD
us-gaap Gain Loss On Investments
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5833000 USD
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797000 USD
us-gaap Gain Loss On Sale Of Properties Net Of Applicable Income Taxes
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797000 USD
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0 USD
us-gaap Gain Loss On Sale Of Properties Net Of Applicable Income Taxes
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0 USD
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2185000 USD
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6225000 USD
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7773000 USD
us-gaap Gain On Sale Of Investments
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13710000 USD
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0 USD
us-gaap Gains Losses On Extinguishment Of Debt
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0 USD
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us-gaap Gains Losses On Extinguishment Of Debt
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us-gaap General And Administrative Expense
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us-gaap General And Administrative Expense
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us-gaap Impairment Of Real Estate
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CY2014Q4 us-gaap Impairment Of Real Estate
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16600000 USD
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us-gaap Impairment Of Real Estate
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CY2014Q2 us-gaap Income Loss From Continuing Operations
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us-gaap Income Loss From Continuing Operations
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us-gaap Income Loss From Continuing Operations
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us-gaap Income Loss From Continuing Operations Including Portion Attributable To Noncontrolling Interest
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us-gaap Income Loss From Continuing Operations Including Portion Attributable To Noncontrolling Interest
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us-gaap Income Loss From Continuing Operations Per Basic And Diluted Share
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us-gaap Income Loss From Continuing Operations Per Basic And Diluted Share
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us-gaap Income Loss From Discontinued Operations Net Of Tax
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0 USD
us-gaap Income Loss From Discontinued Operations Net Of Tax
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us-gaap Income Loss From Discontinued Operations Net Of Tax Per Basic And Diluted Share
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0.00
CY2015Q2 us-gaap Income Loss From Discontinued Operations Net Of Tax Per Basic And Diluted Share
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0.00
us-gaap Income Loss From Discontinued Operations Net Of Tax Per Basic And Diluted Share
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0.00
CY2014Q2 us-gaap Income Loss From Equity Method Investments
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541000 USD
us-gaap Income Loss From Equity Method Investments
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us-gaap Income Loss From Subsidiaries Before Tax
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0 USD
CY2015Q2 us-gaap Income Loss From Subsidiaries Before Tax
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0 USD
us-gaap Income Loss From Subsidiaries Before Tax
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0 USD
us-gaap Increase Decrease In Deferred Leasing Fees
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17452000 USD
us-gaap Increase Decrease In Deferred Leasing Fees
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24503000 USD
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735000 USD
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5916000 USD
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4921000 USD
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us-gaap Increase Decrease In Restricted Cash
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0 USD
us-gaap Increase Decrease In Restricted Cash For Operating Activities
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0 USD
us-gaap Increase Decrease In Restricted Cash For Operating Activities
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us-gaap Interest Costs Capitalized
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us-gaap Interest Costs Capitalized
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us-gaap Interest Costs Incurred
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us-gaap Interest Costs Incurred
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us-gaap Interest Income Operating
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1773000 USD
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379000 USD
us-gaap Interest Income Operating
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864000 USD
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3932000 USD
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us-gaap Investment Income Net
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us-gaap Investment Income Net
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0 USD
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CY2014Q4 us-gaap Line Of Credit
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0 USD
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us-gaap Net Cash Provided By Used In Financing Activities
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us-gaap Net Cash Provided By Used In Financing Activities
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us-gaap Net Cash Provided By Used In Investing Activities
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us-gaap Net Cash Provided By Used In Investing Activities
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144491000 USD
us-gaap Net Cash Provided By Used In Operating Activities
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us-gaap Net Income Loss Attributable To Noncontrolling Interest
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2502000 USD
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263000 USD
us-gaap Net Income Loss Attributable To Noncontrolling Interest
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755000 USD
CY2014Q2 us-gaap Net Income Loss Available To Common Stockholders Basic
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27932000 USD
us-gaap Net Income Loss Available To Common Stockholders Basic
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31291000 USD
us-gaap Net Income Loss Available To Common Stockholders Basic
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us-gaap Net Income Loss Including Portion Attributable To Nonredeemable Noncontrolling Interest
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62910000 USD
us-gaap Noncontrolling Interest Increase From Subsidiary Equity Issuance
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340000 USD
us-gaap Notes Assumed1
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us-gaap Notes Assumed1
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us-gaap Other Comprehensive Income Foreign Currency Transaction And Translation Gain Loss Arising During Period Net Of Tax
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2809000 USD
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-1507000 USD
us-gaap Other Comprehensive Income Foreign Currency Transaction And Translation Gain Loss Arising During Period Net Of Tax
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16451000 USD
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us-gaap Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax
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us-gaap Other Comprehensive Income Loss Before Reclassifications Net Of Tax
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us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
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0 USD
us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Reclassification Adjustment From Aoci Realized Upon Sale Or Liquidation Net Of Tax
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0 USD
CY2015Q2 us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Reclassification Adjustment From Aoci Realized Upon Sale Or Liquidation Net Of Tax
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0 USD
us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Reclassification Adjustment From Aoci Realized Upon Sale Or Liquidation Net Of Tax
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us-gaap Other Comprehensive Income Loss Net Of Tax
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us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Net Of Tax
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us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Net Of Tax
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us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci On Derivatives Net Of Tax
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us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci On Derivatives Net Of Tax
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52738000 USD
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97785000 USD
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137493000 USD
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210792000 USD
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226302000 USD
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5052000 USD
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42867000 USD
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637000000 USD
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19410000 USD
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340000 USD
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1212000 USD
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8794000 USD
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22474000 USD
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400909000 USD
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Background</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">As used in this quarterly report on Form 10-Q, references to the &#8220;Company,&#8221; &#8220;Alexandria,&#8221; &#8220;ARE,&#8221; &#8220;we,&#8221; &#8220;us,&#8221; and &#8220;our&#8221; refer to Alexandria Real Estate Equities Inc., and its consolidated subsidiaries. </font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:115%;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Alexandria Real Estate Equities, Inc. (NYSE:ARE) is a self-administered, and self-managed office REIT uniquely focused on collaborative science and technology campuses in urban innovation clusters with a total market capitalization of </font><font style="font-family:inherit;font-size:10pt;">$10.7 billion</font><font style="font-family:inherit;font-size:10pt;"> as of </font><font style="font-family:inherit;font-size:10pt;">June 30, 2015</font><font style="font-family:inherit;font-size:10pt;">, and an asset base of </font><font style="font-family:inherit;font-size:10pt;">31.1 million</font><font style="font-family:inherit;font-size:10pt;"> square feet, including </font><font style="font-family:inherit;font-size:10pt;">18.8 million</font><font style="font-family:inherit;font-size:10pt;"> RSF of operating and current value-creation projects, as well as an additional </font><font style="font-family:inherit;font-size:10pt;">12.3 million</font><font style="font-family:inherit;font-size:10pt;"> square feet of near-term and future ground-up value-creation development projects. Alexandria pioneered this niche in 1994 and has since established a dominant market presence in AAA locations, including Greater Boston, San Francisco, New York City, San Diego, Seattle, Maryland, and Research Triangle Park. Alexandria is known for its high-quality and diverse client tenant base. Alexandria has a longstanding and proven track record of developing Class A assets clustered in urban science and technology campuses that provide its innovative client 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. We believe these advantages result in higher occupancy levels, longer lease terms, higher rental income, higher returns, and greater long-term asset value. For additional information on Alexandria, please visit our website at www.are.com.</font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our asset base consisted of&#160;the following, as of </font><font style="font-family:inherit;font-size:10pt;">June 30, 2015</font><font style="font-family:inherit;font-size:10pt;">:</font></div><div style="line-height:120%;text-align:center;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:100%;border-collapse:collapse;text-align:left;"><tr><td colspan="4" rowspan="1"></td></tr><tr><td width="81%" rowspan="1" colspan="1"></td><td width="1%" rowspan="1" colspan="1"></td><td width="17%" rowspan="1" colspan="1"></td><td width="1%" rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="text-align:center;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Square Feet</font></div></td></tr><tr><td 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style="overflow:hidden;height:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Near-term value-creation projects (CIP)</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">2,026,669</font></div></td><td 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style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">North America</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">3,807,375</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Asia</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">6,419,707</font></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">10,227,082</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;height:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;height:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;height:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Near-term and future value-creation projects</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">12,253,751</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;height:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;height:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1"><div style="overflow:hidden;height:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Total</font></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;" rowspan="1" colspan="1"><div style="overflow:hidden;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">&#160;</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:right;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">31,071,674</font></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;" rowspan="1" colspan="1"><div style="text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></td></tr></table></div><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">As of </font><font style="font-family:inherit;font-size:10pt;">June 30, 2015</font><font style="font-family:inherit;font-size:10pt;">:</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><table cellpadding="0" cellspacing="0" style="padding-bottom:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:60px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Investment-grade client tenants represented approximately </font><font style="font-family:inherit;font-size:10pt;">53%</font><font style="font-family:inherit;font-size:10pt;"> of our total annualized base rent;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-bottom:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:60px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Approximately </font><font style="font-family:inherit;font-size:10pt;">94%</font><font style="font-family:inherit;font-size:10pt;"> of our leases (on an RSF basis) contained effective annual rent escalations that were either fixed (generally ranging from </font><font style="font-family:inherit;font-size:10pt;">3%</font><font style="font-family:inherit;font-size:10pt;"> to </font><font style="font-family:inherit;font-size:10pt;">3.5%</font><font style="font-family:inherit;font-size:10pt;">) or indexed based on a consumer price index or other indices;</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-bottom:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:60px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Approximately </font><font style="font-family:inherit;font-size:10pt;">96%</font><font style="font-family:inherit;font-size:10pt;"> of our leases (on an RSF basis) were triple net leases, requiring client tenants to pay substantially all real estate taxes, insurance, utilities, common area, and other operating expenses (including increases thereto) in addition to base rent; and</font></div></td></tr></table><table cellpadding="0" cellspacing="0" style="padding-bottom:4px;font-family:Times New Roman; font-size:10pt;"><tr><td style="width:60px;" rowspan="1" colspan="1"></td><td rowspan="1" colspan="1"></td></tr><tr><td style="vertical-align:top" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;padding-left:48px;"><font style="font-family:inherit;font-size:10pt;">&#8226;</font></div></td><td style="vertical-align:top;" rowspan="1" colspan="1"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Approximately </font><font style="font-family:inherit;font-size:10pt;">94%</font><font style="font-family:inherit;font-size:10pt;"> of our leases (on an RSF basis) provided for the recapture of certain capital expenditures (such as HVAC systems maintenance and/or replacement, roof replacement, and parking lot resurfacing) that we believe would typically be borne by the landlord in traditional office leases.</font></div></td></tr></table><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Any references to the number of buildings, square footage, number of leases, occupancy, and any amounts derived from these values in the notes to the consolidated financial statements are unaudited and outside the scope of our independent registered public accounting firm&#8217;s review of our interim consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board.</font></div></div>
us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;text-decoration:underline;">Use of estimates</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-indent:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, and equity; the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements; and the amounts of revenues and expenses during the reporting period.&#160; Actual results could materially differ from those estimates.</font></div></div>

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